Safeguard Use
Rice Imports
Beef Imports
Phytosanitary Restrictions
Labeling and Food Safety Issues
Organic Certification
Life Sciences Research
Demographic Change

Safeguard Use

Safeguards are actions to raise tariffs or limit import quantities for prescribed periods of time, in response to increased volumes or decreased prices in domestic markets when imports are increasing. Japan's government has access to three different safeguard mechanisms through the World Trade Organization (WTO). The first is based on the Uruguay Round (UR) Agreement on Safeguards and was used for the first time in agriculture on Japan's imports of Welsh onions, shiitake mushrooms, and certain reeds in 2001. The Agreement on Safeguards applies to all commodities, not just agricultural commodities.

A second mechanism is available through the UR Agreement on Agriculture and is available only for commodities in which Japan's UR commitment involved converting a nontariff barrier to a tariff or tariff-rate quota (TRQ). Japan and other countries use these safeguards extensively, notifying the WTO at the time the safeguard is first imposed and in annual summary reports.

A third mechanism was specially negotiated in the UR by Japan for pork and beef imports. This safeguard has been used more often for pork (in which the standard import price, a minimum import price, is raised) than for beef. Further detail on the safeguard used for pork is available in Pork Policies in Japan (March 2003) and a publication from USDA's Foreign Agricultural Service, Japan's Safeguard on Pork Imports Re-Implemented-Imports Likely to Diminish (2002).

In 2003, Japan applied this safeguard to fresh and chilled beef imports, raising the tariff from 38.5 to 50.0 percent from August 1, 2003, through March 31, 2004.

Rice Imports

Japan delayed liberalizing trade in rice for many years after it gave up its balance-of-payments justification for trade barriers in 1963. Instead, it reserved the right to import rice to Japan's Ministry of Agriculture, Forestry, and Fisheries (MAFF). Okinawa sake (rice wine) brewers were permitted to import relatively small quantities of rice, an arrangement made as part of the transfer of control of Okinawa from the United States to Japan in 1971. With the exception of 1994, following an extraordinarily poor rice harvest in 1993, Japan did not import large quantities of rice.

In the Uruguay Round, Japan successfully negotiated an exemption from trade liberalization for rice. However, as part of the agreement, Japan was obliged to open a minimum-access quota in 1995 equivalent to 4 percent of its consumption in the 1986-88 UR base period, and then expand the size of the quota until, in 2000, it reached the equivalent of 8 percent of base-period consumption. No imports over the quota were permitted, and the quota was to be administered by MAFF's Food Agency (subsequently replaced by the Food Department in MAFF).

By 1999, the annual expansion of the minimum-access quota had led to unwelcome large stocks, as the imported rice was stockpiled rather than released to private markets. Japan used an escape clause in the UR Agreement to change its import regime to a TRQ, which enabled it to avoid the obligation to expand the size of its import quota by the final amount, due in 2000. The quota remains at 682,000 metric tons, equivalent to 7.2 percent of base-period consumption. The operation of the quota otherwise remained as before. However, the "tariffication," or liberalization, of the import regime allowed imports outside the quota. The over-quota tariff, 450 yen/kilogram, is so high that, in practice, imports are not feasible. For more information, see Rice Tariffication in Japan (April 1999).

Japan uses two mechanisms to purchase rice within the quota: imports commissioned by the Food Department, and a Simultaneous-Buy-Sell portion of the quota, which allows commercial buyers and sellers to jointly work out a bid to take part of the quota. More information is available in Rice Sector Policies in Japan (March 2003) and in periodic Attaché Reports by USDA's Foreign Agricultural Service.

Beef Imports

Japan's beef trade was liberalized in 1991, when the quota was abolished according to the 1988 Beef-Citrus agreements between Japan, the United States, and other beef-exporting countries (see U.S.-Japan Agreements on Beef Imports: A Case of Successful Bilateral Negotiations,November 1998). In the Uruguay Round (1995), Japan agreed to lower its beef import tariff from 50.0 percent to 38.5 percent over the period 1995-2000. Since then, beef consumption and trade have been volatile, while domestic production has remained roughly stable. After reaching a peak in 1995, beef consumption has been affected by food safety concerns, which first arose from a series of highly publicized outbreaks of human infections with the dangerous bacterium strainE. coli O157 in the mid-1990s.

The discovery of bovine spongiform encephalopathy (BSE, or mad cow disease) in cattle in Japan in 2001 triggered more fear about beef consumption, and caused beef imports in 2002 to be 36 percent below imports in 2000, the last year before BSE was discovered. A further shock came at the end of 2003, when a single cow in Washington State was discovered to have BSE. Japan banned imports of U.S. beef on December 24, 2003. Bilateral discussions between the United States and Japan have sought to develop mutually acceptable measures that would allow the trade to resume. Since Canadian beef was banned after discovery of one case in Alberta earlier in 2003, only Australia and New Zealand, among major beef-exporting nations, were allowed to export to Japan. Trade in 2004 fell 31 percent below year-earlier levels, affecting consumption in Japan, which normally receives over 60 percent of its beefs from imports. Trade recovered slightly in 2005. Market Context for BSE provides more information on BSE issues and developments.

Late in 2005, Japan agreed to reopen beef trade from the United States and Canada, but only allowing imports of beef from cattle slaughtered at less than 21 months of age. Imports from the United States were suspended in January 2006 because of the inclusion of a spinal column in a shipment of veal, and resumed in August 2006. Bovine-product imports from Canada have remained small. An Economic Chronology of Bovine Spongiform Encephalopathy in North America (June 2006) provides a record of important events.

Japan used its unique safeguard provisions for beef in 1996, when frozen beef imports were rising quickly enough to trigger the imposition of the safeguard from August 1, 1996, through March 31, 1997, raising the frozen-beef tariff from 46.2 percent before the safeguard to 50.0 percent while the safeguard was in effect. The safeguard on fresh/chilled beef was triggered in 2003, and the tariff rose from 38.5 percent to 50.0 percent.

Japan used the 2003 safeguard not because of consistent growth in trade, but because trade in 2002 and 2003 was rebounding after the sharp drop in 2001 caused by the BSE outbreak. The beef safeguard is triggered when imports rise by 17 percent over a corresponding period in the previous year and is in effect until the end of Japan's fiscal year (ending March 31) in which the safeguard was triggered.

However, for fiscal year 2006 (April 1, 2006-March 31, 2007), the 2006 Temporary Tariff Measures Law modified the normal safeguard mechanism, recognizing the unusual market situation caused by the BSE trade bans. For fiscal 2006, the base period for triggering a safeguard action was set as the average of the imports in fiscal years 2002-03, when beef imports were higher than in 2005, which would have been the normal base period. This temporary adjustment greatly reduced the chance of triggering a safeguard in 2006. Similar annual modifications were made for fiscal years 2007-2011.

Phytosanitary Restrictions

Japan's use of certain phytosanitary restrictions has been challenged in the WTO as having little or no scientific justification. In 2003, the WTO dispute resolution panel found that Japan's restrictions on planting and handling of apples for export to Japan were not necessary to prevent the transmission of fire blight into Japan. After Japan appealed the ruling, an appellate body confirmed that Japan was in violation of the Sanitary and Phytosanitary (SPS) Agreement of the WTO, and Japan was requested by the WTO's Dispute Settlement Body to bring its rules into compliance with the SPS Agreement. Full detail on the WTO case on Japan's requirements for imported apples is at Japan-Measures Affecting the Importation of Apples (Dispute DS245). Implications are discussed in Resolution of the U.S.-Japan Apple Dispute(October 2005).

In 1997, the WTO examined Japan's requirements that each variety of a fruit or nut be tested to see whether strategies to prevent codling moth importation were successful. The case was settled by mutual agreement between Japan and the United States that Japan would lift the requirement for varietal testing for the affected products. For more detail, see the WTO website for "Japan: Measures Affecting Agricultural Products" (DS76, April 1997).

Sanitary measures currently being challenged include Japan's use of fumigation when cosmopolitan pests are detected in a shipment. Cosmopolitan pests are those pests already established in Japan, so their presence in a shipment does not introduce a new pest.

Labeling and Food Safety Issues

Japan is moving fast to increase the amount of labeling on foods and the information on labels. As of April 1, 2000, fresh foods-including fruits, vegetables, meat, and seafood-were required to be labeled with the place of origin. In the case of imports, this means country of origin, and for domestic products, it means the prefecture of origin. The requirement was extended to ingredients of pickled foods on April 1, 2002.

Smart labels (radio-frequency identification tags) with embedded semiconductors are replacing bar codes. In 2005, smart labels began to be attached to all pieces of meat processed from domestic cattle. The labels enable consumers to access details about the cow, farm, processing plant, and processes behind a particular piece of meat from home computers or in-store devices. Measures to ensure cattle traceability from the farm to the slaughterhouse took effect on December 1, 2003.

The Ministry of Agriculture, Forestry, and Fisheries and the Food Safety Commission assess environmental and food safety attributes before a food or beverage containing a genetically modified organism (GMO) can be imported into Japan. As of March 2006, 75 GMOs were approved for use in foods in Japan. Since April 2001, the Ministry of Health, Labor, and Welfare (MHLW) has been monitoring and testing food imports to see if they contain unapproved GMOs. Labeling on foods derived from genetically modified plants is required if there is any genetic change detectable in the food. For example, if products are made from a batch of soybeans that contains more than 5 percent of genetically modified soybeans, then the label must indicate that the soybeans used include some GMOs. This requirement applies to tofu, soy sauce, natto, soy milk, etc. However, it does not apply to soy oil or to soy meal.

The MHLW also monitors food imports for maximum residue levels from pesticides and food additives. Such monitoring became much stricter in 2002, and some reports of residue levels in imports from China alarmed the public. Japan instituted a positive list of pesticides in May 2006-pesticides not on the list are not permitted on foods entering Japan (see GAIN report JA6004, February 2006).

Economics of Food Labeling (January 2001) explains the costs and benefits associated with labeling and examines proposals for mandatory labeling.

Organic Certification

Organic production and sales of organic produce rose throughout the 1990s from a small base. In the past, some Japanese farmers labeled their output as organic even if that only meant reduced chemical use. In 2001, Japan revised its organic definitions so that they roughly correspond to the U.S. definitions implemented in 2002. Many farmers had to give up their organic claims. This tightening of regulations that initially hurt sizable numbers of farmers is notable as a case of regulatory discipline (without compensation) that has traditionally been hard to achieve in Japan because of political intervention.

Foreign producers are eligible to apply for organic certification under Japan's standards, and many have succeeded in being certified. Nevertheless, the cost of being certified may be significant.

The ERS website contains an Organic Agriculture topic and information about Organic Certification Issues and market developments.

Life Sciences Research

Japan has historically invested in biotechnology research for pharmaceutical applications and to improve productivity and efficiency in agriculture. Programs focus on dairy, beef, rice, and tobacco, but research also extends to a number of other commodities. Japan appears to be in the forefront of introducing commercial meat production based on cloning technology. Large-scale research continues on the genome for japonica rice (in collaboration with researchers in China, the United States, South Korea, and the United Kingdom).

The ERS Biotechnology topic provides an economic perspective on the development and adoption of biotechnology.

Demographic Change

Japan is undergoing profound changes as a result of its aging population. Agriculture is affected in a number of ways. The farm workforce is aging rapidly, forcing adjustment in Japan's small-scale farm structure (see Japan's Food Producers). Japan's rural areas in general are aging faster than the cities, and the population declined in most of Japan's prefectures during the 1990s and 2000s, hollowing out rural communities that have supported farm households in the past.

Japan's consumers are also aging. Recent research has shown that age affects the country's food consumption patterns. Cohorts of people of the same age have similar patterns of food consumption that they maintain throughout their lifespans. The oldest cohorts in today's Japan consume more fish, less meat, more fresh fruits, and more sake than younger cohorts. As these cohorts diminish in size, consumption of fish, fruits, and sake will be negatively affected. Also, as individuals age, they often consume a smaller volume of food. Finally, in 2005, Japan's statistical agency announced an absolute decline in Japan's population that year-the first such decline since World War II. The number of children being born has fallen to a degree that deaths exceed births. Population is expected to shrink for a number of years into the future.

Increasingly, Japan's oldest citizens are being cared for in daycare centers or in residences for the elderly, rather than in the homes of their children. Small family sizes (one or two grown children) and the increasing tendency for women to work outside the home have contributed to a greater reliance on social institutions for the care of older Japanese. Daycare for small children is also on the rise. These shifts have increased food use in institutional settings at the expense of food use in households.

Changing Structure of Global Food Consumption and Trade (June 2001) explores the consequences of demographic change for food consumption. The Japanese Market for Oranges (March 2008) explores one commodity market in which demographic changes have been important.

For more information on issues and analysis concerning Japan, see the Readings page.

Last updated: Monday, June 18, 2012

For more information contact: John Dyck