The Trans-Pacific Partnership and Japan’s Agricultural Trade

Abstract The Trans-Pacific Partnership Agreement (TPPA) was concluded on October 5, 2015, by twelve countries that include the United States, Japan, Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam. Under the TPPA, Japan will partially liberalize its five politically sensitive agricultural subsectors: (1) rice, (2) beef and pork, (3) wheat and barley, (4) sugar, and (5) dairy, none of which contain any genetically modified (GM) content. Under full liberalization, Japanese producers in these subsectors will lose (e. g., rice producers will lose over $6 billion and beef producers will lose over $2 billion). Excluding butter, the trade impact of the TPPA on the Japanese government will be negative because of tariff and resale-revenue losses. Our empirical results provide the full effects of complete trade liberalization. However, because the TPPA negotiations of 2015 resulted in only partial trade liberalization, our results can be easily modified to deal with the degree to which trade distortions are removed for each of the above agricultural subsectors. In terms of producers who lose from trade liberalization, the Japanese government will provide compensation.