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Commentary: Government’s optimistic estimate on TPP impact fuels anxiety

  • 2016-01-26 15:00:00
  • , Tokyo Shimbun
  • Translation

(Tokyo Shimbun: January 26, 2016 – p. 11)

 

 By Izumi Shiroyama, economic news department

 

 The government has estimated that the Trans-Pacific Partnership free trade pact will reduce domestic agricultural, forestry, and fishery output by not more than 210 billion yen, compared with the 3 trillion yen prediction presented before trade negotiations began. The drastic reduction owes much to changes in the preconditions. The public is becoming increasingly distrustful of the way the government tampers with figures.

 

 There was a moment when I felt that the government crafted domestic measures to ease the impact of the TPP just to get an upper hand in the upcoming House of Councilors election. When the budget compilation for fiscal 2016 entered the final stage at the end of last year, a senior executive with a farm industry group said at a meeting of Liberal Democratic Party’s farm and forestry related divisions, “We will do our best (to provide support) in the Upper House election.” More than 300 billion yen was earmarked in the supplementary budget for fiscal 2015 to support farmers. All participants applauded the comment. A politician in attendance said, “That is what we all wanted to hear.”

 

 The government’s estimate that the reduction in agricultural, forestry, and fishery output would come to around 130 billion yen to 210 billion yen was released two days later. Before joining TPP negotiations, the trade deal was expected to cut more than 30% of farm output, or 3 trillion yen. The latest estimate gives the impression that “the impact will be limited.”

 

 The huge difference between the two estimates is a result of changes in preconditions. The latest calculation was done based on the precondition that output value would be reduced due to price declines and output itself would remain unchanged. It also factored in the effects of domestic measures. In this sense, the figure the government has presented is closer to a “goal” than an “estimate.”

 

 When the estimated reduction of 3 trillion yen was released, the Ministry of Agriculture, Forestry and Fisheries was wary of joining TPP negotiations. That is why it appears the ministry overestimated the impact. On the other hand, the latest estimate hints that the government wanted to stress that the impact would be minimal. Many rice farmers are flabbergasted. “It’s an arbitrary figure made up with the election in mind and to manipulate public opinion,” said one farmer.

 

 The government fueled farmers’ concerns when it released the estimate of 3 trillion yen. Because of this, it should be responsible for performing the calculation based on the same conditions. But it has declined to release an estimate of the impact with no measures put in place. “The figure may give a wrong impression,” said a MAFF official.

 

 Opinion was divided when Japan’s participation in TPP negotiations was discussed, but at the Diet session convened after a trade deal was clinched, the government hardly provided a convincing explanation. Discussions on the credibility of the estimate and effects of domestic measures have not deepened. If the government goes ahead with procedures to approve the trade pact based on the optimistic estimate, it will become difficult to win public understanding. (Abridged)

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