(Saving Japan) Japan’s Current Trade Fiasco

December 15th, 2010By Category: Starting a Business

A recent article by the Wall Street Journal investigates Japan’s inability to sign off on potentially lucrative FTAs. The main reason? Farmers.

The author of the article points to the disproportionate amount of power farmers and special interests groups in Japan wield in government and notes that without political reform, the Japanese economy will continue its slow but gradual decline.

The “why” of it all is simple: Japan’s political system today has much in common with that of 18th century Britain. Both cases are characterized by the underrepresentation of urban areas, and too much power being given to rural constituencies. In Japan’s case, only 38% of the seats in its upper house are given to its six most urban prefectures. Any attempt to pass an FTA would (in all likelihood) be blocked by the farmers’ veto power despite its bicameral legislature.

Cross-ministry negotiations also takes place before any action can be taken. As it stands to take a loss, the Agriculture Ministry can simply veto the approval of the FTA regardless of the benefits it would bring to other sectors of the Japanese economy.

Japan must look back to examples in history in their attempt to find a solution to the problem.

The first examples that come to mind are 18th century Britain and post-Revolutionary America. Following its union with Ireland in 1801 and faced with a similar situation, Britain (now the United Kingdom) passed the Reform Act in 1832 with the help of enormous public pressure and a lot of violence. The result was a more balanced system that more accurately represented the will of the people.

Similarly, post-Revolutionary America was ruled by state governments and minority interests, which left the weak federal government with little to no power to make lucrative trade agreements with former parent Britain. After drafting the Constitution during the Constitutional Convention of 1787 and ratifying it the following year, however, the federal government managed to achieve its goals through the Connecticut Compromise and through the separation of powers.

Fast forward to present day Japan, and you’ll see that Japan is faced with a similar problem. In both of the cases above, political reform was the only means by which they were able to achieve progress. What Japan needs to do now is the exact same. Current negotiations within government are futile without overhauling its political system altogether. The country needs more accurate political representation of its urban areas (and consequently, the majority of the population), who stand to benefit the most from any major free trade agreement. What the Agriculture Ministry and many Japanese farmers have to realize is the disservice that they are doing in indirectly preventing the recovery of the Japanese economy from its current stagnation.

One has to realize, however, that it’s a two way street. Nothing can be done without the will and assent of the people. Like 18th century Britain, the majority must make a stand. It shouldn’t be a question of if, but rather how the Japanese can voice their support for the TPP. Without standing up for something that you would profit from, how can your voices be heard over the current megaphone of minority rule?

Japan is at an important turning point culturally, politically and economically. Political reform for the sake of achieving free trade would be the first step in the right direction.

Photo Credit: JATAWTF / Wikimedia

Author of this article


GaijinPot is an online community for foreigners living in Japan, providing information on everything you need to know about enjoying life here, from finding a job and accommodation to having fun.

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  • Doc says:

    Since Meiji times, Japan has always had a very powerful bureaucracy and I think this is where the real problem lies and not with the farmers. Since WWII, the legislature has for the most part been not much more that window dressing while the real power behind the throne has always been centered in the various ministries. This was a win-win situation for the politicians because all they really had to do is pontificate and twiddle their thumbs while deflecting blame back at the bureaucracy when anything went wrong.

    But as an organization matures, its inner workings fossilize and the same applies to government bureaucracies. In my opinion, this is the real reason that Japan has such a hard time changing with the times. I think you’re partially right in that if Japan is to change, more equal representation among the population is needed and will only help but, this is at best only a half measure. Neuter the bureaucracy, by that I mean cut out the waste and streamline procedures and I’m confident that you’ll see a lot of things change for the better and in a hurry.