After the ill-fated G20 meeting in Seoul, where President Obama botched an opportunity to secure an attractive free-trade deal, Kati Suominen of the German Marshall Fund warned of an “economic Cold War.” Then North Korea revived memories of the real Cold War when it launched an unprovoked artillery attack on a South Korean island, killing four and raising tensions throughout the region.
But not all of the news from Asia was bad, however. Some of it was downright encouraging–especially the reports that said Japan may try to step away from agricultural protectionism and strengthen its trade ties with the Pacific nations, including the United States.
Now that’s an example of change we can believe in.
Japan is one of the wealthiest nations on the planet, with a prosperity built on the twin foundations of a skilled workforce and the ability to sell its products to the rest of the world. Yet the island nation’s economy isn’t growing like it should and now even its conservative leadership has come to support trade liberalization. Prime Minister Naoto Kan has indicated that he would like to lead Japan into the Trans-Pacific Partnership, a multilateral zero-tariff trade alliance.
Brunei, Chile, New Zealand, and Singapore already belong to the TPP. The United States, Australia, Malaysia, Peru, and Vietnam are negotiating to join. The addition of Japan would do nothing but add to the TPP’s growing clout. Obama has said that he would like to see the current round of TPP talks conclude by November 2011, when he hosts a meeting of Pacific nations in Hawaii.
It remains to be seen how far Kan can go. He faces strong opposition from within his own political party, especially from agricultural interests that fear competition from imports.
Yet the potential for improvement is enormous–for both the Japanese as well as Americans.
Japan already relies on the rest of the world for what it eats: About 60 percent of the calories its citizens consume come from imports. Despite this, the country has thrown up high barriers to food. Beef faces a special duty of 38 percent. That’s high, but you better believe it’s not butter, which pays a tariff of 482 percent. Worst of all is rice, with an import tax of 778 percent.
The Organization for Economic Cooperation and Development estimates that the absence of free trade in food forces Japanese consumers to spend twice what they should to feed themselves.
Ordinary Japanese families have the most to gain from free trade. Smart entrepreneurs would benefit too. As Clayton Yeutter and Warren Maruyama point out in a recent article for the Wall Street Journal, Japan won’t compete in the production bulk food commodities but surely it can dominate niche markets that involve specialty foods such as sushi. Who better to satisfy the global demand for Japanese cuisine than the Japanese?
American farmers have much to gain as well. We already sell a lot of agricultural products to Japan: almost $12 billion last year. Nobody buys more corn from us. We export more corn to Japan than to all of our foreign customers in the Western hemisphere combined.
This is an old relationship that dates to the early days of the Cold War. I gained a new appreciation for it earlier this year on a trip to Japan for the purpose of commemorating the 50th anniversary of the Yamanashi Hog Lift. In 1959, a pair of typhoons devastated Japan’s livestock industry. The next year, Iowa farmers responded by shipping 35 hogs to Japan–an event that led to the formation of the U.S. Grains Council and helped cement an international economic relationship that has helped millions of people in both countries ever since.
In the 21st century, we can do even better. If Japan joins the TPP and these multi-country talks realize their full potential, we’ll have our chance. Many tariffs would vanish immediately and even the most sensitive ones involving dairy products and rice possibly would disappear over time.
Half a century from now, maybe we’ll know it as the Yamanashi Tariff Lift.
Tim Burrack raises corn and soybeans on a NE Iowa family farm. Tim volunteers as a Board Member of Truth About Trade and Technology www.truthabouttrade.org