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Trans-Pacific Partnership, GMOs, and Japan’s Agricultural Trade

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  • Schmitz, Andrew
  • Zilberman, David
  • Zhu, Manhong

Abstract

Japan’s resistance to open its agricultural market access, especially for the five politically sensitive (sensitive) agricultural categories consisting of rice, wheat and barley, beef and pork, sugar, and dairy products, has largely contributed to the lengthy negotiation of the Trans-Pacific Partnership (TPP) which was finally concluded on October 5, 2015. All commodities in these five categories are not genetically modified (GM) varieties, and we found the TPP agreement between the United States and Japan was not impeded by genetically modified organisms (GMOs). Special interest groups of the five categories have pressured the Japanese government to create trade distortions concerning domestic support programs and border measures. To better understand the difficulties in liberalizing Japan’s five sensitive agricultural categories, we empirically estimate Japanese welfare gains and losses from trade liberalization over seven commodities within these categories: rice, wheat, barley, beef, pork, raw sugar, and butter. Consumers of these commodities would gain from free trade. The first and second largest gains would be obtained by rice consumers ($15.8 billion to $42.4 billion) and raw sugar consumers ($6.02 billion to 16.0 billion), respectively. For all these commodities, except butter, the welfare changes of the Japanese government would all be negative due to tariff revenue losses and resale revenue losses. Even though the net welfare gains would be positive for all commodity sectors, with the largest net gain being in the rice sector, all producers would lose, especially with rice producers being confronted with the largest annual loss ranging from $6.37 billion to $7.69 billion. Detailed provisions of the TPP regarding Japan’s agricultural trade policy show that Japan made certain concessions regarding its agricultural market access. However, Japan’s ratification of the TPP would very likely be contingent upon its compensation countermeasures to the losers from free trade.

Suggested Citation

  • Schmitz, Andrew & Zilberman, David & Zhu, Manhong, 2015. "Trans-Pacific Partnership, GMOs, and Japan’s Agricultural Trade," 2015: Trade and Societal Well-Being, December 13-15, 2015, Clearwater Beach, Florida 229242, International Agricultural Trade Research Consortium.
  • Handle: RePEc:ags:iats15:229242
    DOI: 10.22004/ag.econ.229242
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    References listed on IDEAS

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    Keywords

    Agricultural and Food Policy; International Relations/Trade;

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