Japan Reports Increase in Trade-Distorting Farm Subsidies

Japan has increased its trade-distorting support to farmers, according to new figures for 2010-2012 that the country has reported to the WTO.

The growth in these farm subsidies is mostly due to a 2010 increase in “de minimis” payments and production-limiting “blue box” programmes. Blue box subsidies peaked that year, when ¥307 billion was provided in support to rice producers - compared to ¥22 billion in 2009 - in an effort to support an aging and declining farm population.

However, these payments then fell to ¥153 billion in 2011. (US$1.5 billion, at today’s exchange rate)

The notification also suggests that Japan’s combined overall trade-distorting support - which along with blue box spending also includes amber and de minimis - fell from ¥1280 billion in 2010 to ¥1140 billion in 2012. While these payments would be disciplined under the draft Doha Round texts, there is currently no WTO ceiling on this category of support.

De minimis payments were concentrated on eggs, vegetables, and fruits, along with non-product-specific crop income stabilisation payments. Developed countries can provide de minimis payments so long as these fall below five percent of the value of production.

Amber box subsidies rose from ¥577 billion in 2010 to ¥609 billion in 2012. However, the proportion of this support of Japan’s total agricultural subsidies remained relatively constant, at around 20 percent over both the 2010-2012 and 2007-2009 time periods.

Green box

The bulk of Japan’s agricultural support was in green box spending, which is meant to avoid causing more than minimal trade distortion under WTO rules. Green box spending made up 61 percent of all subsidies, the latter of which rose from ¥2085 to 3016 billion over that time period.

Within green box support, “general services” - which cover areas such as research, plant protection, and disease control - accounted for the bulk of this spending.

International negotiations

Japan has traditionally been hesitant to liberalise its agricultural sector, which has created friction during the 12-country Trans-Pacific Partnership talks. The US has been one of the most vocal advocates for increased agricultural market access in countries such as Japan, and many trade observers say this issue is the biggest hurdle for concluding the negotiations.

Notably, Japan has also recently announced agreement on a bilateral trade pact with Australia, which will lower Japanese import tariffs on Australian beef, dairy, wine, and sugar.