NCPA - National Center for Policy Analysis

Rice Tariffs Hurt Japan

August 12, 2003

Japan now uses a quota system to import less than 10 percent of all rice consumed, tariff-free; the rest runs up against that whopping 500 percent wall. As a result, Japanese consumers pay three to four times more for food than people do elsewhere.

According to economist Keijiro Otsuka:

  • If the tariffs were abolished or significantly reduced, Japan would find itself importing more than half the rice it consumes.
  • An open Japanese market would probably create a trickle-down effect for other rice-producing nations.
  • Farmers in California, Australia and China -- where producer prices are one-tenth those in Japan -- would be the biggest beneficiaries; they produce the short-grain, stickier Japonica rice that Japanese consumers prefer.
  • Poorer tropical countries unable to produce such rice would, probably sell more of their own rice to China, which would most likely shift some of its production over to Japonica for export.

The country's farm policies have stymied many potential free-trade deals with exporting countries. The farmers' aversion to regional and bilateral trade agreements has also hurt Japanese manufacturers in dealing with countries where competing nations enjoy duty-free privileges. Over the long run, it could affect Japan's critical relationship with China, which is eager to sell Japan cheap rice.

Japanese farmers equate that kind of change with the end of Japanese agriculture, but Otsuka and other Japanese economists don't agree. They say a restructuring of the farming sector might mean that farms of tomorrow would be larger and more efficient.

Source: Andres Martinez, "Who Said Anything About Rice? Free Trade Is About Cars and PlayStations," New York Times, August 10, 2003.

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