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Japan’s Agriculture Trade Negotiations and the 2-Level Game – Insights from The Diplomat

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Japan is a prime example of Robert Putnam’s theory of “two-level game” in international negotiations. This theory suggests that negotiations not only take place with foreign counterparts but also involve domestic audiences. Successful negotiators are able to form alliances among domestic political actors and use international agreements to overcome domestic resistance, as seen in the 1979 G-7 Bonn Summit. In Japan, this strategy is known as gaiatsu or external pressure. Throughout history, Japan has attributed significant changes in its national path to foreign pressure, such as the Meiji Restoration and the establishment of a modern, democratic state after World War II under General MacArthur’s U.S. occupation.

Gaiatsu is a common practice in modern Japanese politics. During the 1980s, liberal-leaning Japanese leaders used the Japan-U.S. trade dispute as a means of pressuring the conservative Japanese bureaucracy into adopting economic reform plans. Prime Minister Nakasone Yasuhiro, for example, employed trade negotiations with the United States to stimulate structural reform and liberalize the Japanese economy. The 1985 Plaza Accord, which led to a rapid appreciation of the yen, served as the necessary external pressure to drive structural reform. Nakasone assigned former Bank of Japan Governor Maekawa Haruo to study the transition of the Japanese economy following the Plaza Accord. The resulting Maekawa Report proposed strategies to rebalance the economy, reduce trade surplus friction with the United States, stimulate domestic demand, implement a low-interest-rate policy, and undertake structural adjustments.

One of the main obstacles to economic and trade liberalization in Japan is the agricultural sector. During international trade talks, the Japanese agricultural sector has consistently opposed tariff reductions and sought special quotas to protect its market share. The small-scale production system dominated by part-time rice farmers, who heavily rely on state subsidies, has hindered progress in trade liberalization despite the potential benefits for the economy.

When Shinzo Abe returned to power in 2012, he adopted an ambitious structural reform plan that aimed to make the agricultural sector profitable and globally competitive. Abe saw the Trans-Pacific Partnership (TPP) negotiation as an opportunity to achieve this goal through internationalization. He intended to use the TPP negotiations to open the Japanese agricultural market, which would disrupt the small-scale production system and weaken the Japan Agricultural Cooperative’s political power.

However, Abe faced significant opposition within his party, particularly from the Liberal Democratic Party (LDP) Diet members who relied on the Japan Agricultural Cooperative to secure rural voter support. These “agricultural tribe” members lobbied for protectionist policies and opposed agriculture reforms. Moriyama Hiroshi, a powerful figure within the LDP and head of the Diet Agriculture Committee, played a crucial role in the TPP negotiations by demanding exemptions for certain agricultural products and vetting TPP-related policies.

According to Putnam’s theory, figures like Moriyama, who vehemently oppose certain aspects of international negotiations, can actually improve a chief negotiator’s standing by demonstrating their inability to compromise. However, domestic interest groups can act as veto players and block the implementation of policies, even if they are agreed upon internationally. Chief negotiators like Abe must find ways to neutralize these veto players to expand the potential for a “win-set.”

In the case of the TPP negotiations, Abe’s administration provided compensation to livestock farmers, including Moriyama, to overcome their opposition to tariff reductions. However, the effects of the tariff reductions were minimal, as Wagyu beef was exempted and safeguard measures were put in place. The compensation served as a cushion against potential losses for the sectoral interests represented by Moriyama and other opposing LDP members.

In conclusion, Japan’s history demonstrates the use of gaiatsu or external pressure to bring about domestic change. In recent times, Shinzo Abe attempted to use the TPP negotiations to push for agricultural reforms, but faced opposition from powerful agricultural lobby groups within his party. Compensations were provided to neutralize these veto players and allow the negotiations to proceed.

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