Japan Unhappy With WTO Drafts

Japan claims proposed import tariff cuts for developing nations’ industrial goods not deep enough to create new trade flows.

TOKYO (Kyodo) - Japan on Wednesday voiced discontent with proposals floated Tuesday by the World Trade Organization on farm trade and industrial market access, saying envisaged cuts in import tariffs on industrial goods in developing nations are not deep enough to generate new trade flows.

Although Japan does not agree with the proposals at this point, it will see them as a basis for negotiations starting next week in Geneva and will request revisions if deemed necessary, four ministries involved in WTO policy said in a joint statement.

''Our country will actively take part in negotiations toward concluding the Doha Round by the end of the year,'' the statement said. ''(Japan) will cooperate with developed and developing nations to win ambitious and balanced results'' which would satisfy both farm importing and exporting nations, it said.

The proposals, in the form of two draft texts, were filed with the WTO's 150 member economies by Crawford Falconer, chairman of the WTO Committee on Agriculture, and Don Stephenson, chairman in charge of negotiations on non-agricultural market access, or NAMA.

The move is seen as a final effort to conclude by the year-end the Doha Round of trade liberalization talks, launched in 2001 with the aim of adding billions of dollars to the world economy and lifting millions out of poverty through new trade flows.

The draft NAMA text proposed a figure of 8 or 9 for developed economies and a figure ranging from 19 to 23 for developing countries as coefficients for calculating industrial tariff cuts under the so-called Swiss formula. A lower figure corresponds to higher tariff cuts.

Japan believes the figure for developing countries is ''too high'' and that it will not generate new trade flows and lead to real new market access, said Naoshi Hirose, director for WTO Affairs at the Ministry of Economy, Trade and Industry.

''The margin of coefficients between industrialized and developing countries is wider than what we have sought,'' Hirose told reporters.

Japan, the United States and the European Union have proposed a figure of 10 for industrialized nations and 15 for developing countries. Developing nations such as Brazil have called for a figure of 30.

Japan is also unhappy with the draft text on agriculture, which proposed that the number of ''sensitive'' farm products developed nations can protect with high tariffs total 4-6 percent of all farm produce subject to tariffs, according to Hirose.

Japan, allied with other farm-product importing countries such as South Korea and Switzerland, has requested that the number total 10-15 percent of all farm products.

The proposed 4-6 percent limit would force Japan and others to substantially cut import tariffs on many politically sensitive products, such as rice, wheat and dairy products for Japan.

Hirose declined to comment whether Japan thinks a WTO proposal on the level of U.S. farm subsidy cuts is deep enough to satisfy other trade powers, only saying that Tokyo is now studying the draft in detail.

The draft farm text calls for lowering the ceiling for trade-distorting subsidies for U.S. farmers by 66-73 percent to $13 billion-$16.4 billion a year.

The figure is lower than Washington's recent offer of $17 billion in an annual cap, and moves closer to about the $12 billion the country has actually spent in recent years for that purpose.

According to Japanese officials, the WTO member economies will start negotiations based on the draft papers from next week, and will go into recess at the end of month before resuming talks on Sept. 3.

If any of the WTO member economies rejects the documents as the basis from which to negotiate a deal, the Doha Round could be put on hold for several more years as farm subsidy and tariff concessions are unlikely in 2008, when U.S. elections are to be held, and 2009, when elections are scheduled in India.

The officials said key WTO members are now considering setting a framework for a deal to reduce barriers to commerce in farm products, manufacturing and services by the end of September or early October, instead of the end of July as envisaged.

Earlier this month, trade ministers from the 21 member economies of the Asia-Pacific Economic Cooperation forum reaffirmed their strong commitment at their meeting in Cairns, Australia, to successfully conclude the Doha Round by the end of the year.

APEC, whose members include Japan, China and the United States, accounts for half the world's trade.

The ministers indirectly urged the United States to further reduce its farm subsidies, Japan and the European Union to cut agricultural tariffs and developing nations such as Brazil and India to slash tariffs on industrial goods.

The Doha Round has missed deadline after deadline as major developing countries such as Brazil and India have refused to offer new market opportunities for manufacturing exports without sharper reductions in agricultural support in the United States and Europe.

More in Supply Chain