How did external pressures change Japan's protectionist farm policies from the Uruguay Round to TPP?: A Surplus Transformation Curve (STC) analysis

Japan’s seemingly monolithic protectionist farm policies were often easily moderated by external pressures. This study analyzes the change of the degree and the methods of protectionist farm policies, focusing on Japan’s most important crop, rice. It calculates consumer surplus, producer surplus and government spending in the past fifty years and integrates these figures into one diagram utilizing the STC (surplus transformation curve) analysis, developed by Bruce Gardner in 1983. The result of the analyses suggests that external pressures have a considerable impact on domestic protectionist farm policies. For example, in 1986 when the demand by the RMA (Rice Milling Association) in the U.S. that Japan should open its rice market was issued, the STC diagram clearly shows that the level of protection estimated from the international market price diminished. Nevertheless, at that time the level of protection estimated from the domestic equilibrium did not fall. This implies that the government successfully pretended to resist external pressure, but in reality reduced the level of protection, considering the US demands. Furthermore, in 1994 when the Uruguay Round agreement was finalized, the STC diagram also shows that Japan’s acceptance reduced its level of protection. The level of protection estimated from the domestic equilibrium was also reduced at the same time. These two observations suggest that external pressures distinctly affect the degree of protectionist farm policies, while the method of protection depends on domestic political conditions.