Japan Leaders Hint at Allowing Rice Imports

Ruling party warns farmers that move is needed to avert trade war

TOP leaders in Japan are quietly tilling the political soil to prepare the Japanese for an opening of the market to foreign rice, despite a potential farmer backlash and a shakeout in the nation's economic structure.

A slow process of consensus-making is under way to help politicians in the ruling Liberal Democratic Party (LDP) to avoid an open announcement and thus direct blame for a difficult choice. In recent weeks, Prime Minister Kiichi Miyazawa and Foreign Minister Michio Watanabe have suggested that the only remaining issues are the timing and conditions of lifting a ban on imported rice.

Mr. Miyazawa said it is "too early" to make a final decision, but indicated that one would come by March 1, the deadline for negotiations in the so-called Uruguay Round of trade talks.

Agriculture remains the chief stumbling block in the trade talks in Geneva, with Japan under pressure to convert banned imports into tariffed imports.

"It would be best to erect tariffs in the rice market without causing instability to rice producers and to farmers," Miyazawa said in a Jan. 20 television interview.

Mr. Watanabe assured farmers in his home district that they would be protected even if Japan accepts the proposal to allow imported rice - at tariffs of 600 percent. At present, small plots and a government-controlled market help make Japanese rice three to five times as high as world prices.

Just how long high tariffs would remain in effect is now a main negotiating point for Japan in the trade talks, say government officials, who do not want to acknowledge a softening in Japan's stance until they gain concessions from other nations.

LDP officials have decided they need not change the Staple Food Control Law, as once thought, to lift the ban. Instead they can move toward tariffs by government directive, without parliamentary debate.

Top LDP officials warn farmers that the ban needs to be lifted to avoid foreign criticism and perhaps trade retaliation by the United States.

Former Finance Minister Ryutaro Hashimoto said last week that an aging population is reducing the number of farmers.

"How much longer can we get by with the idea that Japan will never import a single grain of rice?" he asked.

Government projections show young people abandoning rice farming so fast that Japan will have only three-quarters of the people it needs to till the land by the year 2000. Representation in Japan's parliament favors rural districts, and rural votes are now worth three times more than urban votes. Unwilling to change this disparity, the LDP has been able to stay in power for more than 35 years by guarding the interests of farmers. But the cost has been a high number of scandals as politicians use money to

win over rural voters.

Even the high number of farmers inside big cities, including Tokyo, has survived because of LDP-backed tax breaks. The government, under US pressure, has agreed to tax urban farmland at higher rates but is delaying full implementation.

The rapid reduction of rice land in Japan that would occur if cheaper imports were allowed could also reduce land prices, economists say. That would undermine the easy credit that export industries now enjoy because of the collateral of their expensive real-estate holdings.

Many LDP leaders appear resigned to farmers' anger hurting the party in an upper house election this July.

"Farmers are increasingly anxious about statements by party and government officials which indicate approval of tariffication," Mitsugu Horiuchi, president of the Central Union of Agricultural Cooperatives, told the LDP in a speech. "I am not the only one who is worrying that farmers' trust in the LDP might suddenly turn into distrust."

Agriculture Minister Masami Tanabu, despite his support for the import ban, nonetheless says Japan will need to make a concession even before the US and the European Community possibly reach a compromise on their agricultural dispute in Geneva. He has ordered a study to help Japanese farmers become more competitive and efficient, possibly by promoting large-scale farms, paying farmers to give up farming, or relaxing policies to allow corporations to own rice lands.

The average Japanese rice farmer works just 1.65 acre, according to government figures. The typical rice farm in the US is 160 times larger.