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WTO ruling throws wrench in export strategy

The Yomiuri Shimbun

Sea pineapple being harvested Friday morning in Ishinomaki, Miyagi Prefecture. South Korea is a major export destination for sea pineapple.

By Shinsuke Ishiguro and Tatsuhiro Ishizawa / Yomiuri Shimbun Staff WritersExpecting a victory, the government of Japan and members of the fishery industry affected by the 2011 nuclear disaster were deeply shocked by the recent decision by the World Trade Organization’s highest judicial authority to overturn an earlier ruling that supported Japan’s complaint against South Korean’s ban on marine products from eight prefectures due to the disaster.

A serious setback

Senior officials from the Foreign Ministry and the Fisheries Agency were seen entering the Prime Minister’s Office early Friday morning to brief Prime Minister Shinzo Abe on the ruling by the WTO’s Appellate Body.

“I honestly cannot understand the reasoning behind this ruling. Even after reading the report I can’t accept it,” a senior Foreign Ministry official said.

Believing Japan was going to win the case, a senior official from the ministry had made demands to South Korea up until just before the ruling was announced, saying, “We expect South Korea to properly respond [to the ruling] based on the rule of law.”

Also prior to the ruling, South Korean civic organizations and others had criticized their government for pursuing a trade dispute with Japan. The South Korean media were clearly surprised, with the Yonhap News Agency calling the ruling an “unexpected victory.”

At a press conference Friday, Agriculture, Forestry and Fisheries Minister Takamori Yoshikawa said, “All we can do is sincerely accept that this is the result.”

Unusual interpretation

The report by the Appellate Body reversed the first panel’s decision that South Korea’s import restrictions represent “unjustifiable discrimination,” though it did not find that the measures were in compliance with WTO rules. This left room for Japan and South Korea to interpret the ruling differently based on their diverging perspectives.

WTO rules on food safety are laid out in the Sanitary and Phytosanitary Measures Agreement and elsewhere, and allow each nation to set its own standards.

Nevertheless, the first panel found that South Korea’s restrictions could be considered “arbitrary or unjustifiable discrimination,” which is prohibited by the sanitary agreement.

In reversing the first panel’s ruling, the Appellate Body’s report stated it was unable to determine whether the standards used in the import restrictions were valid, and would not express an opinion on safety issues such as allowable standards for radioactive substances.

However, it did not rule on whether South Korea’s measures were justified. Thus, while the South Korean side welcomed the ruling, the Japanese side insisted it “upheld the findings of the first panel,” creating a complicated situation.

However, the latest ruling is final, meaning South Korea’s restrictions are expected to remain in place for the time being, essentially making this a loss for Japan.

Although eight years have passed since the disaster at the Fukushima No. 1 nuclear plant, China and 22 other countries and regions continue to restrict imports of Japanese food products.

The government had hoped to use a favorable ruling in this case to press other nations to relax their restrictions. With a ruling that runs counter to these expectations, the government’s export strategy will likely face headwinds.

Tough road ahead

South Korea is an important market for Japanese food products. Japan exports ¥63.4 billion worth of agricultural and food products to South Korea, making it the fifth-largest export destination. Marine exports there are valued at ¥15.8 billion, putting it at No. 7 worldwide.

The ruling came as a shock to producers in the areas that were affected by the disaster, who have worked hard to show their products are safe.

“It’s all the more disappointing because we’d been looking overseas for the future. It’s a shock because I thought the WTO was an organization that would give us a rational ruling,” said the chairman of the Fukushima Prefectural Federation of Fisheries Co-operative Associations.

The federation’s standards for radioactive cesium are stricter than those of the national government, and they have created a system that prevents fish that test positive from reaching the market.

The ruling did not deny the safety of their products.

Foreign Minister Taro Kono indicated the government would seek a solution through bilateral talks.

“Our position that South Korea should remove all of its restrictions is unchanged. Through discussions with South Korea, we will continue to seek the elimination of these measures,” he said.

However, Japan-South Korea relations have deteriorated recently over disputes about wartime labor and other issues. Reaching an agreement to end the import restrictions will not be easy.

The following countries and regions have restricted the importation of Japanese food products following the nuclear disaster:

Hong Kong, China, Taiwan, South Korea, Singapore, Macao, United States, Philippines, Indonesia, Brunei, French Polynesia, United Arab Emirates, Egypt, Lebanon, Democratic Republic of Congo, Morocco, EU, Iceland, Norway, Switzerland, Liechtenstein, Russia and IsraelSpeech

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