./.RESTRICTEDWORLD TRADE
ORGANIZATIONGPA/W/108
23 February 2000
(00-0670)
Committee on Government Procurement Original:  English
RESPONSES TO QUESTIONS FROM CANADA RELATING TO NTT
Communication from Japan
The following communication, dated 22 February 2000, has been received from the
Permanent Mission of Japan with the request that it be circulated to the Committee on Government
Procurement.
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Please find below Japan's replies to questions from Canada (GPA/W/97) regarding Japan's
notification to the Committee on Government Procurement on the reorganization of NTT.
The general notes to Appendix I of Japan in the WTO Agreement on Government
Procurement state:  "For goods and services (inclu ding construction services) of Canada and suppliers
of such goods and services, this Agreement does not apply to procurement by the entities listed inAnnexes 2 and 3".  While the results of the rectification do not apply to Canada, we answer the
questions posed by Canada since they may serve as a reference in examination by other Parties.
1. Under which of Article XXIV:6(a) or Article XXIV:6(b) has the notification been made?
Although the title of the document GPA/W/91 reads "Notifications from Japan under
Article XXIV:6(a)", it should be noted that Japan referred neither to Article XXIV:6(a) nor 6(b) in itsnotification.  Japan's position is as follows:
- Article XXIV:6(b) refers to the withdr awal of an entity from Appendix I on the
grounds that government control or influence over it has been effectively eliminated,
while Article XXIV:6(a) refers to rectifications, transfers of an entity from one annexto another or, in exceptional cases, other modifications relating to Appendices I
through IV.
- Japan considers that Article XXIV:6(b) would apply to paragraph (2) of Japan's
notification, which refers to the establishment of NTT Communications Corporationas a private company, even if the Corporation, created as a result of the restructuring
of the former NTT, is not "withdrawn" from  Japan's Appendix I in the literal sense of
the word.
2. What is the Japanese Government's control and influence over NTT Company (the holding
company?
NTT Company (the holding company) is regulated by NTT Law.  The Law requires that
resolution for the appointment or dismissal of direct ors and auditors, resolution for changes in articles
of incorporation, resolution for disposal of prof it, business programme, and other issues should beGPA/W/108
Page 2
approved by the Ministry of Posts and Telecommunications.  These regulations, however, do not
prevent NTT from advancing the process of company's decision.  Thus, NTT's independence from the
government and its autonomous management are respected, and none of the above regulations applies
to individual procurement activities of NTT.
Also, the NTT Law obliges the Government to hold at least one third of the issued shares of
NTT, so that the Government is able to secure the companies' public mission, such as the provision of
universal service.  It is not the intention of the Law that the Government shall exercise an influence on
the procurement activities of these companies through the ownership of the shares.
3. What is the Japanese Government's control and influence over NTT Communications?
NTT Communications Corporation is a private company established in accordance with the
Japanese Commercial Law, and as such is not regulated by NTT Law at all.  Thus, there is no
influence or supervision by the Japanese Government based on the NTT Law.  Additionally, while as
a communications carrier they must abide by the regulations of the Telecommunications Business
Law, this is exactly the same for other private telecommunications carriers.
4. What is the relationship between N TT Company (the holding company) and NTT
Communications?
The relationship between the holding company and NTT Communications Corporation is that
of a general parent company and subsidiary company.
5. How has the "balance of rights and obligations" and "comparable level of mutually agreed
coverage" been maintained?
NTT Communications Corporation's corresponding procurement value is, using 1997's actual
results as a base, merely 0.02 per cent of the Japanese Government total, and 0.54 per cent of the NTT
total.  Thus, there will be infinitesimal, if an y, consequences for the "balance of rights and
obligations" and "comparable level of mutually agreed coverage".
Additionally, the Government of Japan has le arned that NTT Communications Corporation
voluntarily continues to make procurement in a transparent and non-discriminatory manner even if itis not an entity covered by the WTO Agreement on Government Procurement.
6. Are all the functions of the former NTT Company now being carried out by the holding
company and the three new companies?
NTT (the holding company) is the company that secures the provision of the stable
telecommunications services by the regional companies (NTT East and NTT West), as well as
undertakes the fundamental research related to telecommunications technology.  NTT East and NTT
West are the companies that took over the regional telecommunications business, by which they are
obliged to offer universal service, as well as ot her accompanying businesses from the former NTT.
NTT Communications Corporation was established in accordance with the Japanese Commercial
Law, which took over the inter-prefectural communications business and other related business from
the former NTT.
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