Messages from Monthly Keidanren, March 2002

For Revitalizing Japanese Agriculture
through Strengthening its Competitiveness

Akio Kosai
Vice Chairman, Keidanren
Chairman, Sumitomo Chemical Co., Ltd.

Japan's Free Trade Agreement (FTA) with Singapore was signed on January 13. For Japan, it represented the first of its kind. Needless to say, an FTA is a bilateral initiative to abolish tariffs and form a common market between two countries or among neighboring countries and regions.

As the number of the participating countries rapidly increased, it has apparently become very tedious to reach agreements on multilateral trade through the WTO. Under the circumstance, the bulk of countries have decided to resort to FTAs. FTAs are becoming a global trend indeed. Since Japan had been giving high priority to the WTO system, it has not been following such trend.

With the successful conclusion of the FTA with Singapore as a starting point, Prime Minister Junichiro Koizumi proposed to other ASEAN nations to conclude comprehensive economic partnership agreements (EPAs) with Japan. His proposal was well received by the countries concerned.

On the part of the private sector, the Japan Federation of Economic Organizations (KEIDANREN) started having dialogue with its Korean counterpart, the Federation of Korean Industries with a view to concluding an FTA between Japan and South Korea since last year. Based on understanding reached so far, a Joint Communique Regarding a Japan-Korea FTA was issued. The two economic organizations have been urging their respective governments to initiate negotiations for an FTA as soon as practically possible.

Highly sensitive area in FTA negotiations is agriculture. An FTA requires the abolition of tariffs for substantially all trade. Countries such as Singapore have virtually no agricultural production, but with respect to Korea and other ASEAN countries, liberalization of agricultural markets would become a vital issue.

In December 2001, the Council for Regulatory Reform in Japan made a policy recommendation concerning deregulation on agriculture for the purpose of strengthening its international competitiveness. It contains a request to change the current regulatory system for the purpose of promoting private-sector companies to engage in agriculture through the formation of joint stock companies. Based on such recommendation, the Japanese government has begun its policy review.

Due to the low rate of growth of the population and the rapid aging thereof, it has become increasingly difficult to secure successors to agriculture in rural districts. We must improve productivity and strengthen the international competitiveness of Japanese agriculture, so that the younger generation engaged in agriculture can aspire to realize their hopes and dreams.

I believe the time has come for political leaders to make a significant policy change, establish a vision for revitalization of Japanese agriculture, and create a market economy for it.


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