“OTHER countries in the world are opening themselves up and forming free trade areas, and I am concerned that our country has been left behind,” Prime Minister Naoto Kan told the Japanese Cabinet on Nov 10. He was right. While countries across Asia have been signing free trade agreements with major trading partners such as the US and EU in recent years, Japan hasn’t concluded even one.

Mr Kan wants to change all this by ensuring that Japan joins a plan for a regional free trade treaty known as the Trans-Pacific Partnership (TPP). But he has been forced to postpone the decision until June next year because of strong opposition within his own government and from local farmers.

Businessmen have urged the Prime Minister to ignore the farm lobby and grasp the nettle of reform, thus laying the foundations for what many economists believe will ultimately lead to the long- awaited revival of the Japanese economy.

But for the Prime Minister, the decision is a difficult one. A survey published in the Asahi newspaper last Tuesday revealed that support for Mr Kan’s government had slumped to 27 per cent, the lowest since he took office in June.

Admittedly, Mr Kan’s growing unpopularity owes little to his recent statements in support of TPP. It has been driven instead by popular discontent over his government’s handling of recent territorial disputes with Russia and China. But in a country that has seen five prime ministers in just three years, Mr Kan cannot take anything for granted.

One of the great puzzles of Japanese politics is how farmers have remained influential despite the transformation of the economy since World War II.

The number of farmers has fallen from 11.8 million in 1960 to about 1.9 million now, many of them part-timers. Agriculture contributes a mere 0.8 per cent to the nation’s gross domestic product. Yet the farming lobby remains a powerful political force. This is reflected in the huge tariff barriers on foreign imports – 778 per cent for rice, 252 per cent for wheat – and the enormous sums the cash-strapped government continues to spend on agricultural subsidies.

One oft-repeated joke is that if the governments continue to avoid taking action, the grim reaper will do the job for them. Reports say that around 61 per cent of Japanese farmers are over the age of 65, a point that reflects the limited career opportunities in the declining sector.

But while natural attrition will eventually leave governments with nothing to subsidise, the more serious point is that Japan simply can’t wait. By delaying its entry into the TPP until the middle of next year, Japan risks arriving too late to influence the course of the negotiations.

The TPP originally began as a strategic economic pact between Singapore, New Zealand, Chile and Brunei. However, in 2008, the United States, Australia and Peru expressed interest in joining. These countries began negotiations earlier this year. Since then, Vietnam has gained observer status, while Canada, Mexico, Malaysia, South Korea and Thailand have also said they want to sign up.

China has been attending the TPP negotiating sessions as an observer. Should China join before Japan, it could be a serious blow to Japanese exporters.

Japanese business leaders are certainly convinced of the need for Tokyo to participate. “If we dither over whether to join TPP negotiations, our country will be left out of global growth and prosperity,” Mr Hiromasa Yonekura, president of the Nippon Keidanren, told the Yomiuri newspaper earlier this month. The Nippon Keidanren is the nation’s largest employers’ organisation. Other major business groups have expressed similar concerns.

Opponents of Japan’s participation in the TPP say they fear that free trade will effectively destroy the country’s agriculture by forcing Tokyo to accept imports of cheap rice and other staples.

However, such critics tend to ignore the fact that a determined government could do much to improve the efficiency of agriculture. One way to do this would be to put wasteful expenditure on unnecessary infrastructure to more productive use. Another would be to formulate policies designed to encourage the consolidation of small farms.

Only 0.7 per cent of farmers have holdings of 10 hectares or more, the widely regarded minimum for efficient farming. Rules limiting corporations to no more than 10 per cent of the voting rights in agricultural companies could also be removed in order to encourage economies of scale and open up new distribution channels for farmers.

As host of the Apec summit in Yokohama last week, Prime Minister Kan seemed determined to press ahead with reforms that would bring his nation into the global mainstream. The struggle, however, is not going to be easy.

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