From Free Trade to Fair Trade
The Food Security Debate
The Food Security Debate
Senior Feature Writer/Editorial Writer
While free trade is the foundation of Japan’s trade policy, the focus in the West is on fair trade, with some countries beginning to push for restrictions on cheap agricultural imports from a food security perspective.
While the Abe administration has firmly maintained free trade as the basis of its trade policy, the focus in the West is on fair trade, with some countries beginning to push for restrictions on cheap agricultural imports from a food security perspective. In Switzerland, a national referendum held in September 2017 saw the country become the first major nation to include an explicit reference to food security in its constitution. How should states balance agricultural imports and domestic production? The Swiss move could lead to the erection of new trade barriers in place of tariffs, and as such will merit careful monitoring.
The Trump administration in the United States decided to renegotiate the North American Free Trade Agreement (NAFTA) and pull out of the Trans-Pacific Partnership Agreement (TPP) on the grounds that America needs fair trade, not free trade. The Abe administration, by contrast, has steadfastly maintained a free trade trajectory, working toward the early entry into force of the TPP among the remaining 11 countries party to the agreement and also reaching agreement in principle on an Economic Partnership Agreement (EPA) with the European Union (EU).
However, the call for fair trade over free trade is not restricted to the United States, where the primary interest is in maintaining manufacturing jobs. In Europe too, governments and non-governmental organizations (NGOs) have also been actively pushing the fair trade line, leading to the emergence of protest movements opposed to trade and investment liberalization. Particularly in Switzerland, which has a low food self-sufficiency ratio, consumer groups and environmental protection groups too are increasingly arguing for the need for fair trade when it comes to agricultural imports.
Switzerland’s mountainous terrain makes for poor agricultural production conditions, while its personnel costs are also high. Farmland has been dwindling in recent years, with the number of farming households shrinking from around 125,300 to around 55,200 in 30 years. There is also growing pressure to reduce the agricultural budget. Furthermore, Switzerland has been moving proactively on trade liberalization, putting a free trade agreement (FTA) with China into force in 2014 and launching FTA negotiations with MERCOSUR (a South American trade bloc comprising Argentina and Brazil, etc.) in January this year. Swiss farmers are concerned about imports of cheap agricultural products rising as a result.
Responding to this concern, the Swiss Farmers’ Union (SBV-USP) put forward a proposal in 2014 for integrating food security into the Swiss Constitution that collected 150,000 signatures in just three months—well over the 100,000 required for a national referendum on constitutional amendment. Environmental and consumer groups too are calling for food imports to meet the equivalent of domestic standards for the environment, labor and animal welfare, etc.
The Swiss government subsequently coordinated with the relevant parties to produce a counter-proposal to the SBV-USP’s popular proposal, which was withdrawn at the end of 2016 to avoid dividing public opinion. In the September 24 referendum, 78.7 percent voted for and 21.3 percent against, with the public opting overwhelmingly for constitutional amendment.
The government’s proposal entails the addition of five points to Article 104 (the agriculture provision) to safeguard the basis for agricultural production, ensure efficient use of natural resources, and ensure cross-border trade that contributes to the sustainable development of the agriculture and the food sector, etc.
Despite the massive support for the revision, major media outlets were openly critical, describing the vote as a “Voting about Nothing,” “The Farmers Save Face,” and “Start For New Surge Of Regulations.” Their argument was that the revision lacked specificity, was open to overly broad interpretation, and would not bring about any immediate change in agricultural policy.
In relation to cross-border trade in particular, economic groups see the amendment as promoting free trade, whereas agricultural groups argue that imports should complement domestic supply, and that Switzerland should import only those products that can’t be produced at home—in other words, not free trade but fair trade.
Switzerland’s agricultural policy is revised every four years, and a medium-term plan has already been developed for 2018-2021. The constitutional revision will be reflected in agricultural policy as of 2022, with the government using the interim period to continue harmonizing domestic opinion.
In terms of major trends, however, the idea that it is only “fair” to oppose “social dumping” and “ecological dumping” and require that imports comply with domestic standards, in order to ensure the sustainability is likely to take hold. In other words, agricultural products will have to meet not only hygiene but also labor, environmental, and animal welfare standards, with food imports from countries with low standards restricted accordingly.
This is a much cheaper policy course compared to protecting domestic agriculture with tariffs and budgetary subsidies, and could have a powerful impact. Why? Because if the government pushes food product labeling that indicates compliance, cheap food products that don’t meet standards will be weeded out at the consumer level without the government having to take any other administrative measures.
Undoubtedly, the SBV-USP’s withdrawal of its producer protection-focused popular proposal was not because the union compromised to realize constitutional revision, but rather because it realized that embracing the entire value chain from field to plate would bring in the consumer and consequently operate more effectively as a non-tariff barrier. That’s why the union spent the three years from the time it made the original popular proposal through to the referendum building consensus not on protection of domestic production and ways to increase production, but rather on consumer issues such as securing food supplies through imports, fair food distribution, and food waste.
The Abe administration has trumpeted the agreement in principle on the Japan-EU EPA as securing the elimination of EU duties on almost all products, which, according to the Ministry of Agriculture, Forestry and Fisheries, sets in place the conditions for promoting agricultural, fishing and forestry exports. However, if other European countries follow Switzerland’s example, tariff elimination might not have the expected market access.
The Abe administration’s agricultural policy emphasizes operational efficiency, such as expanding operational scale, but to sell Japanese agricultural produce to Switzerland and Europe, this focus may have to be switched to production methods that meet the new high standards expected of exporters in relation to sustainability and the environment, etc.
In Switzerland, the Greens (GPS/Les Verts) have proposed the “For Fair Food” initiative, requiring those countries exporting food products to Switzerland to engage in sustainable food production. This means not accepting agricultural produce from countries like the United States and Japan that use large quantities of fuel and chemical fertilizers at the production stage. The association of small-scale farmers, Uniterre, has proposed an initiative called “For Food Sovereignty,” and both initiatives are expected to be put to the federal referendum next year. What decisions will the Swiss public make on these strongly protectionist proposals? The impact of their choices will be felt—sooner or later—even in Japan.
[The opinions expressed in this article are the author’s own and do not necessarily reflect the view of Kyodo News.]