PERSPECTIVE ON JAPAN : Not Enough Rice? Let Them Eat Yen : A nation that bans imports suddenly comes up short, and now may pay for shunning the global trading system.

One cannot help but feel a twinge of pleasure in the news coming from Japan last week. The nation with the world’s largest trade surpluses for the past 25 years is finally discovering that it might actually need the global trading system. Its rice crop is short 2 million tons. The cause was the weather--a rainy growing season plus a couple of direct hits by typhoons on northern Honshu, where the koshikari, the tasty table rice that goes into sushi and other Japanese dishes, is grown. The Japanese government is scurrying to import rice, something that it vowed it would never do in order to maintain what it called “food security.” This so-called security meant that Japan had to produce its own rice, even though the same or better than koshikari can be grown in California or Thailand at a sixth of the cost.

Ever since the 1960s--when Japanese industries started to knock out American electronics, automotive and computer companies and their laid-off employees were told to “adjust” because this was part of free trade--the Japanese government has nonetheless maintained that Japanese farmers must never be allowed to confront any form of competition. They have been protected through a total ban on rice imports under a system that dates back ultimately to the “rice riots” of 1918 and directly to the total government control of the rice market that was put in place during World War II through the 1942 Food Control Law.

All rice in Japan is sold to the government at inflated prices and resold to the public at lesser prices, even though these consumer prices are still several times higher than the world market price. In the postwar world, this subsidy to Japanese farmers was continued in order to buy their votes for the Liberal Democratic Party, which reigned over the country from 1955 until its collapse this past summer due to serious internal corruption. The Ministry of Agriculture, Forestry and Fisheries has presided over this incredibly inefficient system both to service its political superiors and to guarantee its own continued influence in Japan’s system of government-guided capitalism.

The costs have not been just to the Japanese consumer, although these have been substantial. Japanese households spend a much larger share of their income on food than those in any other advanced industrial economy. This contributes to the warping of the global trading system and to $50-billion-a-year trade surpluses with the United States, because the average Japanese family does not have as much money for housing, public amenities, transportation and so forth as do families in other advanced countries with smaller per-capita incomes.

The even larger costs have been to the global trading system. Ever since the Reagan Administration, the United States has been trying to bring agricultural trade under the terms of the General Agreement on Tariffs and Trade. This effort has been known as the Uruguay Round because the negotiations began there in 1986. These negotiations are stalled today because of disagreements between the United States and France over subsidies to farmers, but if the Japanese had ever gotten on board and tried to settle the matter by gradually opening their own rice market, the world would long ago have come to a compromise. Instead the Japanese have taken a free ride on the GATT system without ever contributing anything to it.

Now it turns out that the Japanese need the global trading system. Even with their $130-billion trade surplus with the rest of the world, the Japanese may be unable to buy all the rice they suddenly need. Rice is not like oil; it has to grow for at least four months to be available at any price, and no foreign farmer is going to plant as much as the Japanese want this year unless he or she can be assured that future Japanese demand will reflect market forces, not political and bureaucratic vested interests. There is a very good chance that the Uruguay Round will fail before this year ends; most of the nations concerned are tired of talking about it. Japan will be the most affected if that occurs. The Japanese press is screaming about how rice prices are rising on commodities-futures markets around the world. They have no one but themselves to blame for the distortions in supply.

Meanwhile, what is Mickey Kantor, the U.S. trade representative, doing? In perfect conformity with the record of all of his predecessors going back to the Carter Administration: nothing. This past week Kantor declared himself pleased that after October, 1994, Japan might import some U.S. apples. This comes after 10 years of apple negotiations in which the Japanese have turned in Academy Award performances on how to use pesticide inspections as a non-tariff-barrier to trade.

Back in the Reagan Administration, when the U.S. Rice Millers Assn. asked the trade representative to bring a case against Japan’s closed rice market under Section 301 of the U.S. Trade Act, it was fobbed off with the promise that this issue would be settled under the Uruguay Round. If any one of the past five U.S. trade representatives had ever once enforced U.S. trade law, we would surely have had the Uruguay Round completed long ago.

Given the new government in Japan and the receptivity of the Japanese public to change in their old producer-oriented economy, this is the time for American pressure on the Japanese government to act. Otherwise the still-weak forces of political reform in Japan will lose out to the most entrenched of vested interests. As for the missing rice on the tables of Japanese households this coming year, I say, let them eat yen.