Financial Liberalization and Japan's Agricultural Cooperatives

The system of agricultural cooperatives, called JA, is one of the most politically powerful organizations in Japan, and it has continuously called for agricultural protection. In spite of its importance, information on JA's banking and insurance businesses has been limited for foreign researchers because of the uniqueness and complexity of the JA system. This paper provides a clear understanding of JA's activities and explains the political dynamics in Japan's agricultural sector. Up until the early 1990s, JA could count on stable profits from its banking and insurance businesses because of the government's favorable treatment of JA. Using these profits, JA had been successfully forming farmers into a solid voting group until the mid-1990s. However, the government gradually abandoned its favorable treatment of JA in order to introduce more competition in financial markets. As a result, profitability of J's banking and insurance businesses became unstable in the mid-1990s. The mid-1990s can be regarded as the turning point of the political dynamics of Japan's agricultural sector. As JA lost stable profits, its organizing ability and political power also weakened. The political pressure for agricultural protection also decreased. Because of this decrease in political pressure, there is now a prime opportunity for the Japanese government to reform its agricultural policies. It is not agricultural market and/or trade liberalization that is providing this opportunity. Instead, financial liberalization is providing this opportunity.Agribusiness, Financial Economics, E5, Q13, Q18,

Economics and Politics of Rice Policy in Japan: A Perspective on the Uruguay Round

This paper reviews the recent problems of the opening of Japan's rice market and evaluates the Japanese government's rice policy from both an economic and political viewpoint. The Japanese government made strenuous resistance to the opening of Japan's rice market during the negotiations on agricultural trade at the GATT Uruguay Round. Eventually Japan's rice was made exempt from tariffication by compensating in the form of increased 'minimum access' import quotas. However, the tariffication rule of the final agreement guarantees that importing countries can impose considerably high tariffs. Thus, the volume of Japan's rice imports could be decreased if the Japanese government accepted the tariffication agreement. In retrospect the decisions made by the Japanese government have effectively protected the vested interests of the domestic rice distribution system, while hindering the structural improvement of the Japanese rice industry.

The changing economic performance and political significance of Japan's agricultural cooperatives

Nokyo, the system of agricultural cooperatives in Japan, is one of the most politically powerful organisations in Japanese politics. It is a mammoth economic entity that provides almost every kind of service to rural areas. Nokyo’s economic performance has never been properly analysed because of the complexity of its business statistics. This paper fills this gap by compiling data on Nokyo’s economic activities over the past three decades. It finds that the mid-1990s was a turning point for Nokyo. Nokyo’s strength had been based on its privileged position in financial services, creating stability in its operations in the 1970s and 1980s. In the mid-1990s, as fierce competition began in Japan’s financial markets, Nokyo’s existence became less secure

Japan: Shadow WTO Agricultural Domestic Support Notifications

"The purpose of this paper is to provide a comprehensive review of Japan's agricultural domestic policy since 1995 in the context of the current international negotiations in the WTO Doha Round, which has as one aim further reductions of trade-distorting support among member countries. An overwhelming majority of farmers in Japan own small plots of rice paddy fields and earn their living mainly on their off-farm income. They go out into rice paddy fields in their spare time as a subsidiary business. Traditional small farming communities are powerful voting groups that seek to maintain their political power. By exerting political pressures on the authorities, farmers can obtain large returns through the manipulation of farmland use regulations, even though such manipulation causes social harm by preventing efficient land use. These inefficiencies in land use are a major reason why Japan is the only country whose food self-sufficiency rate keeps declining in spite of its heavy agricultural protection. In this sense, Japan is in sharp contrast to European and North American countries, where heavy agricultural domestic supports have resulted in an increased output of agricultural commodities and subsequent distortions in international markets. Apparently, Japan's attitude towards agricultural domestic policy reform is one of compliance with the WTO, which requests member countries to reduce their Aggregate Measure of Support (AMS) through trimming trade-distorting (amber box) support and/or transforming traditional-type agricultural subsidies to decoupled-type ones. Japan reduced its amber box support by nearly 80 percent between 1995 and 2000. This drastic reduction is mainly attributable to Japan's removal of rice from the amber box in 1998. In addition, following the WTO's principle of decoupling, Japan launched an extensive agricultural subsidy reform in 2007. This paper, however, shows the ironical realities of Japanese agricultural policy. Neither a sharp reduction of amber box support nor Japan's 2007 reform necessarily mean there will be a reduction of trade-distorting effects. On the contrary, the 2007 reform may in fact stimulate domestic rice production. In 2007, Japan's AMS is as little as 18 percent of its commitment level from the Uruguay Round WTO agreements. In addition, this paper projects that Japan's overall trade-distorting support (OTDS) for 2013 will be 469 billion yen, which is much less than the limit of 1,635 billion yen that is proposed in the modalities under discussion in July 2008 for the WTO Doha Round. Thus, the WTO Doha Round negotiations on domestic support policy are unlikely to restrict Japan's domestic agricultural support policy." from authors' abstractJapan's agricultural support, WTO Doha Round, WTO compliance, Notification of domestic support, trade,

Estimation of Average Years of Schooling for Japan, Korea and the United States

This paper presents a new dataset of education stock for Japan, Korea and the US. This dataset has three major advantages over exiting ones such as Barro and Lee (2000), Kim and Lau (1995) and Nehru, Swanson and Dubey (1995). First, this paper's dataset covers nearly one hundred years while all the existing dataset do several decades in the postwar period. Second, this paper provides more detailed information such as average years of schooling by gender, age and levels of education. Third, more accuracy is guaranteed by exhaustive study on original dataset and careful treatments.The author hopes that future researchers use this paper's dataset as a 'public good' to analyze the macroeconomic role of education.

Evaluation of Japanese Agricultural Policy Reforms Under the WTO Agreement on Agriculture

Until 2009, Japan’s attitude towards domestic agricultural policy reforms had been one of compliance with the guidelines provided by the WTO, which requests that member countries reduce their aggregate measures of support by trimming trade-distorting (amber box) support and/or transforming traditional agricultural subsidies to decoupled ones. However, in 2010, Japan repealed the 2007 reforms and implemented a new direct payment program called the Income Compensation Program, which has led to obvious trade-distorting effects. The present paper provides a comprehensive picture of how and why Japanese agricultural policy has changed in recent decades

Evaluation of Japanese Agricultural Policy Reforms Under the WTO Agreement on Agriculture

Until 2009, Japan’s attitude towards domestic agricultural policy reforms had been one of compliance with the guidelines provided by the WTO, which requests that member countries reduce their aggregate measures of support by trimming trade-distorting (amber box) support and/or transforming traditional agricultural subsidies to decoupled ones. However, in 2010, Japan repealed the 2007 reforms and implemented a new direct payment program called the Income Compensation Program, which has led to obvious trade-distorting effects. The present paper provides a comprehensive picture of how and why Japanese agricultural policy has changed in recent decades

The Changing Political Dynamics of Japanese Agricultural Cooperatives

The system of agricultural cooperatives, collectively referred to as JA, is one of the most politically powerful organizations in Japanese politics. Based on its strong ties with the ruling Liberal Democratic Party, which has been in government for almost the entire postwar period, JA has lobbied the Japanese government to maintain its various restrictive trade policies regarding agricultural commodities. JA is regarded by many as being Japan’s biggest obstacle to further international trade liberalization. How has JA become so politically powerful, and will JA continue to dictate the position of the Japanese government in international trade negotiations? In order to provide clear answers to these questions, this study focuses on JA’s sociopolitical role and influence in rural communities