By Matthew Linley, a Designated Professor at Nagoya University. Matthew holds an LLM from the Graduate School of Law at Nagoya University and a PhD in Political Science and International Relations from the Australian National University.For Japan, the visit by Tony Abbott was important for one reason and one reason only: the agreement on the Economic Partnership Agreement (EPA). Australia is Japan's fourth-largest trading partner and the first country with a large agricultural sector to sign such an agreement with Tokyo. Australian beef makes up about 36% of the Japanese domestic beef market.
A few observations:
1. The EPA is important for Australia and for Abe's domestic agenda
The signing of the EPA attracted considerable interest in the Japanese media and, therefore, we can assume, among the public. Although very little was said about Tony Abbott personally – in fact, almost nothing in the major newspapers – there was great interest in the EPA itself.
The importance of an agreement to lower tariffs on (a few) agricultural products, despite opposition from the Japanese farming lobby, should not be underestimated.
While many Australians may see this as a watered down agreement, the fact that a Japanese prime minister was seen to push for a reduction in tariffs despite opposition from the farm lobby (and many of his backbenchers) is important. Many people are hoping that this is at least a step toward the major structural reforms of the economy that Abe has been promising for well over a year now but has failed to deliver.
2. The EPA is linked to Japan-US trade negotiations
Two editorials in major newspapers – one in Mainichi and the other in Asahi – explicitly linked the EPA to a breakthrough in negotiations with the US over the Trans Pacific Partnership (TPP). Japanese insistence on protecting the five 'sacred' agricultural products in the TPP negotiations – rice, wheat, beef and pork, dairy products, and sugar – has brought talks with Washington to a standstill.
Asahi pointed out that Australia and the US are rivals over exporting beef to Japan. The concessions Japan was able to get with Australia (significant reduction of tariffs on selected products rather than their elimination and no reduction of tariffs on rice) may serve as a model for negotiations with the US. Japan may also be hoping for Australia to be an ally within the TPP to support its goal of protecting particular agricultural products.
3. Japanese cattle farmers fear the EPA
Japanese cattle farmers remain fearful of the consequences of reducing tariffs on Australian imported beef. They do not believe they can compete with the cheaper Australian imports and they do not appear confident in their ability to export domestic beef to foreign markets. Some farmers in Hokkaido in the north of Japan are arguing that the EPA could lead to the collapse of their entire industry.
4. Japanese beef consumers are the winners
Japanese gyudon (slices of beef on a bed of rice) restaurants and supermarkets, as well as their customers, should be happy. Even with the tariffs currently in place, Australian beef is far cheaper than the domestic alternative. The fact that the Japanese sales tax has just been raised from 5% to 8% also means consumers are likely to be in the mood for cheaper food prices (though it will be some time before the tariffs actually come down).
5. Abe and Abbott avoided whaling
Abe and Abbott avoided any contentious issues that could take the focus away from the EPA. No mention was made of the recent ruling in the ICJ about Japanese research whaling, for instance. Security discussions were held but received far less attention than the EPA. Issues discussed included North Korean missiles, the abductions of Japanese citizens by Pyongyang, and the crisis in Ukraine.
Overall, the EPA seems to have been greeted positively but cautiously in Japan. It will not be long, though, before we can see whether or not it has any effect on the TPP negotiations with the US — Japan is rolling out the red carpet for President Obama on 24-25 April as a state guest.
Photo by Flickr user Jessica Alpern.