US, Japan shake hands on beef and citrus pact. OPENING THE DOOR
Tokyo — One of the most intractable, emotion-laden issues between the United States and Japan - succulent beef and golden oranges - has finally been solved. Bowing to relentless American pressure, Japan has agreed to open its market totally to beef and citrus (mostly oranges) in three years' time.
US chief negotiator Clayton Yeutter hailed the settlement Monday as a ``landmark agreement in US-Japan economic relations,'' while Japanese chief negotiator Megumu Sato said he had ``come to the very edge of what was needed to preserve Japan's beef and citrus production'' - in other words, that he had nothing left to yield.
Freeing trade in agriculture worldwide is one of the major topics of the Toronto economic summit, which both President Reagan and Prime Minister Noboru Takeshita are attending. The beef and orange agreement enables Mr. Takeshita to keep a promise made to Mr. Reagan that he would settle the issue by the time of the summit.
Mr. Yeutter, the US special trade representative, and Mr. Sato, Japan's agriculture minister, fought tooth and claw over every item in the agreement, which is yet to be formally enshrined in a document that is expected to be signed in a couple of weeks.
According to a government source, when Sato last visited Washington at the end of April, he offered essentially whatever he could in the first day of talks, then stuck it out for six more days hoping to draw out US concessions.
The Americans, disappointed at the meagerness of Sato's offer, also stuck it out hoping he would have something to add.
Beef and oranges were the last major item remaining on the docket of US-Japan trade talks. The US stood on principle, arguing that both Tokyo and Washington were committed to free trade, not protectionism, and that Japan had no excuse for restricting beef and citrus imports when it had a $60 billion trade surplus with the US.
The Japanese retorted that every country, including the US, protects its agriculture, that Japan was already by far the world's largest importer of American farm exports, and that unrestricted imports of beef and oranges would ruin Japanese producers, whose farm plots are minuscule compared to huge US agribusinesses.
From Takeshita's perspective, the issue was not so much between the Japanese and the Americans as it was between his own countrymen. The ruling party, the Liberal-Democrats, depends heavily on the farm vote; but it also knows that partnership with the US is the bedrock of Japan's security and that it cannot allow a special interest, however powerful, to threaten the whole context of US-Japanese relations.
So Takeshita adopted Fabian tactics, offering just enough concessions to the Americans to keep the talks barely alive, while gradually wearing down resistance among farmers and legislators representing them. In the end, the tactics worked: resignation, not an explosion, has been the reaction of most Japanese beef and citrus farmers.
In the process, however, Takeshita caused immense frustration and resentment among the Americans, who sensed and to some extent sympathized with his political difficulties, but who had their own agenda, especially in talks with equally protectionist Europeans.
Beef was the principal problem. The agreement specifies that Japan will increase beef imports by 60,000 tons per year for the next three years and that from April 1, 1991, beef imports will be totally free of quota restrictions.
Thereafter, Japan will rely on a combination of tariffs and domestic subsidies to keep its own beef farmers competitive. The tariff, now 25 percent, will jump to 70 percent in 1991 and then be brought down to 60 percent in 1992 and 50 percent in 1993.
If in any given year beef imports rise by more than 20 percent over the previous year, Japan may impose a tariff as high as 95 percent. This was the provision over which the sides fought the hardest. The Japanese wanted the right to keep the emergency tariff indefinitely; the Americans insisted on a two- to three-year time limit. In the end both sides agreed they would see whether, in three years time, the international trade organization known as GATT would have worked out rules applicable to this situation. The controversy on this issue has therefore been deferred.
Oranges will be freed after three years also. In the meantime, Japan will increase imports by 22,000 tons per year. The Americans wanted lower tariffs on oranges (now 40 percent to 20 percent, depending on the season), but settled in the end for lower tariffs on grapefruit and six other items.
Will freeing of rice imports be next on the agenda? Yeutter says no, not on a bilateral basis. He knows that to the Japanese rice is an issue ten times more emotional than beef or oranges, and seems content to leave it to the next round of GATT talks, when all the world's trading countries will be bringing to the table some of their most cherished shibboleths.