Monday, June 23, 2008

Nothing Personal, Mr. McCain

Here I go comparing Barack Obama favorably to John McCain from a Japanese viewpoint. The Japanese version is here, at least until it’s archived. Bad title, since my thoughts on that occasion stopped well before I got to Asia. (I think I’ll ask them to alter the title). And like everything I post on this blog, they are my personal thoughts and nothing more. If I seem unusually lucid and coherent, I owe it all to Professor Miyao and his GLOCOM staff, who did an excellent job of compressing and editing the tapes.

Incidentally were you aware, Okumura, when you gave the talk that Mr. Obama had been slagging Japan alongside South Korea over import restrictions on U.S. beef? To quote: “You can’t get American beef into Japan…even though we have the highest safety standards. They don’t want the competition”? Um no. But I’d expect Mr. McCain to claim that he would push no less harder to do away with Japanese restrictions if he were “[s]peaking to a crowd of farmers in a barn” too.

ADD: Titles corrected, in a matter of seconds after I asked Professor Miyao to correct them (totally my fault), by email. The world is not flat, fool, it dances on a pin.


kuriharu said...

The fact is that BOTH Obama and McCain will be bad for Japan, but Obama will probably be slightly worse as he'll be bad for the US as well.

Obama wants to tax the American public, which means less money for consumer goods. Since Japan's biggest customer of consumer goods is the US, and Japan's economy is largely based in selling consumer goods, this does not bode well for Japan.

The fact that Obama is criticized Japan ALREADY ought to make him disliked by Japan. But maybe they're buying the "change" thing as much as Californians are.

Jun Okumura said...

Kuiharu: It looks like Mr. Obama wants to rebalance the tax burden in favor of people with less income. The fairness of anything in that direction is subject to argument, but it should be a plus, if anything, for consumption. The net effect of that on Japanese exports would be something that I could not begin to guess at. Universal healthcare doesn’t seem to be a negative, as least in the short-run. No FTA or a Doha Round compromise is likely to pass a Democratic Congress (unless a Democratic President decides to put his muscle behind them, and even then, it will be a huge chore). There must be other significant issues that I’m missing. But so far, I don’t see an Obama economic policy that would be noticeably worse for the US economy. Or the other way around, for that matter. If I were an American, I wouldn’t be too critical of either one. The circumstances are such that the next US President, whoever he is, will be faced with an unenviable clean-up job.

One of the things that I’ve noticed (or have been hammered into my brain by the US media) is that the US media have been nice to both Mr. Obama and Mr. McCain, and I suspect that something similar has been happening in the foreign media with regard to Mr. Obama. Race and Iraq are obviously the main causes of this disparity. However, I haven’t seen the Japanese media really taking sides so far. Remember, the Africa and Islam connections do not resonate among the Japanese public. The media probably needs to see more before they can develop Japan-oriented angles. That need will be satisfied if more and more alarming pronouncements and campaign promises emanate from both candidates as the pair engage in the real battle.

Janne Morén said...

As far as beef export is concerned, the US has always been able to export any beef into Japan as long as it is properly tested first, something they do not want to do. Apparently giving customers what they want (in this case, tested meat) is not a priority. There is the slight detail that US forbids any import of Japanese beef into their country, tested or not.

Adding reciprocity clauses to any agreement seems like a prudent course of action with any international deals nowadays.

Jun Okumura said...


My understanding is that the Japanese authorities made it clear that they would be willing to amend regulations to allow the import of any US beef tested according to Japanese standards. Some US producers were willing to do it but the USFDA did not allow them. The United States did rescind its ban on Japanese beef in 2005 December as part of their end of the bargain.

I don't think that a formal reciprocity clause on exports per se would be allowed under WTO rules. Remember, Japan had (and continues to have) BSE cases that the US side used as the pretext for banning Japanese beef. So legally, the US authorities must have argued that it had nothing to do with reciprocity and everything to do with food safety.

Gotta go. I may return to the matter of BSE-positive cows in Japan in a separate post, since the issue may actually explain why we are worried more about US beef.

Janne Morén said...

I know why I'm worried.

Cattle raising is to some extent similar across the world, and the animals are all very much the same. It is rather unlikely that US beef is any less prone to get various diseases than cattle in other parts of the world. And since the use of antibiotics and hormones as growth factors is allowed in the US, it is likely to contain traces of that as well.

But we don't know. With European and Japanese beef, the BSE scare means that every single animal is examined and tested - not just for BSE but for a range of possible problems. US beef is not tested. It is thus more likely, not less, to have issues when it is delivered to consumers.

I'd rather have food safety based on doubt that things are safe than based on faith that it surely must be.

Jun Okumura said...

To whom it may concern, Janne in particular:

US beef is imported to Japan under the following conditions:
1) It must come from cattle 20 months old or under at the time of slaughter.
2) It must not include Specified Risk Material (SRM; body parts that could cause vCJD (the human form of BSE), such as brains, spinal cords, etc.).

Now authorities everywhere regulate slaughtering and preparation of cattle so that SRM will not enter the human food chain directly or indirectly (by contaminating otherwise safe body parts). In a perfect world, that would be enough to keep Japan vCJD-free. However, the Japanese authorities take the extra precaution of testing every dead cow, cattle infected with BSE—a very small number, mind you—keep popping up. The youngest examples, both discovered in 2003, were 21 and 23 months old respectively.

Some beef imports from the US have been found to contain banned body parts, so we know that we do not live in a perfect world. The US authorities, moreover, only do sample testing. It is in part based on such sample tests that the US has been given a seal of approval of sorts by the international authorities.

So is the risk from US beef now de minimus? I suppose so; we haven’t heard of a vCJD case in the US for a quite a while. However, individuals have a hard time evaluating risks from large-impact, low-probability events, and I am no exception. My mind says that we could drop the 20-month requirement on US beef with no harm to our long-term well-being, but my heart says that I’d pick Australian beef over US beef as long as I have that choice.

I believe that the Japanese public is somewhat more suspicious. It is not going to allow authorities to stop testing domestic cattle and, barring the development of a miracle cure for vCJD, there’s no way that it will allow the authorities to permit the import of US beef from untested 20-months-and-over cattle in the foreseeable future.

As a business matter, I think that the US authorities should have allowed US producers to test all slaughtered cattle for the Japanese (and Korean, I suppose) market in order to minimize market share loss. My guess is that US beef producers worried that it would face similar demands from the US public and possibility of added costs.