The Way to Lift the Siege

Abstract

Agricultural protection in Japan has been raised to the highest level in the world in the process of great economic growth following the recovery from the Second World War. Demand for protection from the farm bloc has increased as Japan’s comparative advantage has shifted rapidly away from agriculture to industry, while internal resistance to protectionism has declined because the non-farm population has become increasingly more affluent and less resistant to shouldering the cost of agricultural protection in the form of high food prices or subsidies to farm producers. At the same time, flooding exports of manufactured commodities from Japan resulting from the same economic roots as the increasing domestic demand for agricultural protection have increased the demand for agricultural trade liberalization from overseas. Japan has thus been trapped in a sharp conflict between internal and the external demands, both stemming from the same roots. This conflict has intensified over time as the protection policies have impeded structural adjustments in agriculture by preserving inefficient farm units and, thereby, made it imperative further to raise the rate of protection relative to other countries. Meanwhile, the protection policies have become entrenched in vested interests that resist any demand for liberalization.