Free Trade Food Fight: Is Free Trade Really Unsustainable and Destructive?

japan-1For decades, debates surrounding the costs and benefits of free trade have raged. In both developing and developed nations, opinions remain mixed, particularly because the impact of major international trade agreements means different things to different people. On Wednesday morning, in central Tokyo, thousands of people gathered to stage a rally voicing their opposition to Japan's entry into the U.S.-backed trans-Pacific free-trade agreement. The protesters, representing nearly every layer of the Japanese social spectrum, argued vehemently that the acceptance of such a trade agreement would destroy Japan's agriculture sector. Interestingly, some protesters, many who were farmers, even argued that the government's decision to explore such an agreement was criminal. At first glance, I found myself sympathetic to the arguments posed by the protesters. Then, after consideration, I found myself questioning many of my initial emotions and reactions. Is free trade really destructive and unsustainable? Will Japan's agriculture sector really be destroyed it if chooses to enter into the proposed free trade agreement? More importantly, how should other nations approach the question of free trade, particularly when faced with forceful  rhetoric from industry groups who argue that trade agreements are inherently destructive and unsustainable?

japan-2In forming an educated response to the question of free trade's sustainability, the most logical starting point seems to be an analysis of Japan's agricultural environment (one that faces challenges similar to many other nations around the world). As a nation, Japan has a fairly modernized agricultural sector which produces fairly high yields. Its agricultural sector is generally self-sufficient, at least in its ability to produce enough rice to feed its nation's citizen. Unfortunately, while the sector is presently sustainable, the industry's long term sustainability remains suspect. Currently, Japan only has approximately 4.6 million hectares of arable land available for farming. This number is low in proportion to the nation's population. Moreover, as the population increases, the shortage of land is likely to negatively impact the nation's food supply, forcing it to rely on imports to fill the agricultural supply gaps. Additionally, despite enjoying higher than average yields, Japanese agriculture is extremely reliant on governmental support. This support, in the form of internal payments (as well as high import tariffs which insulate the industry) maintains the solvency of many businesses - particularly unproductive ones. Additionally, while the overall average productivity per farm is high, many farms, particularly those outside of the northern island of Hokkaido, are small an inefficient. This is a major problem. When one takes into account the disparity in overall output efficiency, along with the fact that nearly 60% of Japan's agricultural workers are over 65 (with little interest in farming among the younger generations), it is hard not to be concerned. No matter how you slice it, decreasing and uncertain supply, coupled with increased demand, create a problematic resource equation.

japan-3Accepting this, we can now return to the question posed by many of the protesters: Is agricultural free trade destructive and unstable, particularly when a nation's entrance into such trade agreements is motivated by a resource supply shortage? Or, is entrance into such an agreement a viable solution that will address Japan's unsettling agriculture crisis? While the final answer to the question is complex, a high level overview of the facts makes it hard to accept the arguments posed by the protesters. As a researcher and perpetual student of developmental economics, I do not disagree that free trade will increase the pressure that many of Japan's smaller, less efficient farms will face (pressure that may lead to bankruptcy and personal distress). Unfortunately, a prolonged focus on this ignores the fundamental fact that, by not exploring imports and free trade, Japan may not be able to provide its citizens with enough food (in both the short and long term). When such a deficit arises, where will the supply come from? Moreover, if one refuses outright to consider increasing supply, and believes that Japan (like many other nations) must retool its consumption patterns to conform to the new reality, is it truly realistic to expect that Japan's citizen's will change their consumption habits if domestic food supply wains?

trade-1Overall, while I am sympathetic to the fact that the proposed free trade environment may impose hardship on some businesses and families, I refuse to blame free trade outright for such hardship. On the contrary, I believe that the pain and duress that many of Japan's unproductive businesses might face once imports begin is entirely self created - one that is amplified by Japanese government's decision to commit significant dollars to support an industry which is highly unsustainable. Accepting this, I believe that international free trade which undermines the solvency of the unproductive farms would help - rather than hurt - Japan's economy. Japan, like many developed and developing nations, needs food. Unfortunately, if consumption habits (demand) will not change, then supply must. With this in mind, I believe that we should focus our blame on the consumption patterns that have created the need for free trade's existence, not free trade itself. Failure to address consumption and demand issues will mean that countries facing food and resource shortages will be forced to increase their reliance on international trade, particularly if individual citizens refuse to change their voracious consumption patterns. Sadly, until we collectively recognize this, and admit that consumption itself is the real culprit, "free trade" will continue to be unnecessarily ostracized and "criminalized."