Assessing Quality and Impacts of Major Free Trade Agreements

The presentation made in this session covered the issues noted below. The presentation verified and assessed the quality of free trade agreements from empirical, case study and institutional approaches with a focus on liberalization of agricultural trade, a sensitive issue.

In FTA negotiations for the elimination of tariffs on agricultural products, what problems exist regarding barriers to agricultural imports?

What progress has been made in liberalization of agricultural trade in FTAs in Europe, North America, Japan, and Korea, and in the China-ASEAN FTA?

Responding to this presentation, the discussant of this session, Professor Ohga, commented on the liberalization of agricultural trade in Japan's FTAs from the perspective of the basic policies of the Ministry of Agriculture, Forestry and Fisheries.

The Session Chair summarized the entire session as follows. High-quality FTAs cannot be achieved unless progress is made in the liberalization of agricultural trade. It is necessary to undertake cross-country analysis to compare the levels of liberalization in various countries. Regarding Japan's agricultural policies, a time-series approach indicates that considerable liberalization has actually been achieved. However, further consideration is needed because Japan's level of liberalization remains lower than other countries.

Professor Cheong addressed the subject of "Agricultural Liberalization in Free Trade Agreements" and made the following points while comparing FTAs in Europe, North America, and Asia.

FTAs with major agricultural exporting countries generate both advantages and disadvantages in terms of agricultural trade.

Agricultural imports are more frequently subject to non-tariff barriers (NTBs) than tariffs. Therefore, in FTA negotiations, parallel to discussions on tariff elimination, it is also important to discuss agreements on the application of sanitary and phytosanitary measures (SPS), safeguard measures, and subsidies.

Basically, the United States does not allow for exceptions in FTA negotiations on the removal of tariffs on agricultural imports. (However, exceptions were allowed for Australia.) FTAs in the EU, Japan and Korea tend to contain many exceptions for agricultural products. (Liberalization of agricultural trade is one of the difficult issues in FTA negotiations between Japan and Korea.)

Unless wide-ranging liberalization of agricultural products is achieved, comprehensive and high quality FTAs cannot be achieved.

Professor Ohga responded to the Cheong Presentation with the following comments.

Regarding liberalization of agricultural trade, the Japanese government has shifted from a negative to a positive stance. This transition and its pertinent policy responses are clearly delineated in "Basic Policy on the Treatment of Agricultural, Forestry and Fisheries Products in FTA/EPA Negotiations," issued in June 2004. Furthermore, Japan's positive stance is outlined in "Promoting EPAs with Asian Countries in the Agricultural, Forestry and Fisheries Sectors - Green Asia EPA Promotion Strategy," issued in November 2004.

Japan's agricultural border measures are concentrated on a group of specific products consisting mainly of rice, wheat, diary products, beef, and sugar. It will be difficult to maintain domestic production of these products if high tariffs are sharply lowered. However, one of the advantages of bilateral EPA/FTA negotiations is that exceptions can be made.

Discussions of agricultural trade in Japan's FTAs are not limited to discussions of imports. Japan is also interested in promoting its agricultural exports and an Asian strategy of "Japan in Asia." When engaging in FTA negotiations, Japan needs to define some clear strategic directions.

The following question was received from the floor.

It seems that SPS agreements are frequently used as protectionist measures. Of course, countries must have the right to adopt measures for the protection of the lives and health of their citizens. However, it seems that further improvements need to be made in this area.

The following response was given to the above question.

Korea has once again started to import American beef. Import restrictions were adopted due to reported cases of BSE. There is no direct correlation between this problem and the issue of FTAs. However, FTA negotiations between Korea and the United States cannot go forward until this problem is resolved. It is true that WTO provisions concerning SPS agreements are ambiguous and difficult to understand. SPS agreements should not be used for agricultural protection, and should be used for their proper purpose.