WORLD TRADE
ORGANIZATIONWT/GC/W/145
8 February 1999
(99-0460)
General Council Original:  English
PREPARATIONS FOR THE 1999 MINISTERIAL CONFERENCE
General Council Discussion on Paragraphs 9(b) and (d) of the 1998 Ministerial Declaration
27 January and 2 February 1999
Communication from Japan
The following communication, dated 27 January, has been received from the Permanent
Mission of Japan.
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1. Introduction
1. Japan considers that,  in order to expand the global flows of trade and investment most
effectively, the next negotiations should be comprehensive, including not only those mandated in the
BIA but also such areas as tariff negotiations on industrial goods and the establishment of multilateral
investment rules.  We should also aim at completing the next negotiations as a single undertaking and
in a relatively short period, that is, within around three years. The mandated negotiations, e.g.
agriculture and services, should not take precedence leaving other areas untouched.
2. On this occasion of the last of a series of four intersessional meetings at the "first stage," we
would like to take this opportunity to express Ja pan's  views on the areas of its interests in rather
comprehensive terms, in a way that, while focusing our attention on the work program initiated at
Singapore (i.e. paragraph 9(b)), we might also t ouch upon other paragraphs of the Geneva Ministerial
Declaration, thereby contributing to discussions in the "second phase" which start in February.
2. Trade and investment
3. Today, investment has become a major tool for corporate business strategy, and as the
globalization of economies proceeds, the pace of its fl ow has now surpassed that of trade.  Evidently,
investment is likely to assume an even greater role in the world economy.  Foreign direct investment
(FDI), in particular, will ensure stable long-te rm capital flows, and will enhance the transfer of
technology through the admission of foreign firms with superior technology into host countries.  At
the same time, it will have positive effects on employment and increase demand in regionaleconomies, thereby contributing to the economic development of both home and host countries. These
advantages of  FDI have proved all the more important as a result of the recent economic crisis in
Asia and other various developing countries.
4. At present,  there are no comprehensive multilateral rules on investment.  The content of
existing bilateral investment treaties varies and the areas covered are uneven.  Therefore, from theviewpoint of firms who need predicta bility in their investment projects,  it must be admitted that the
current legal environment for investment is far from satisfactory.  History has proved thatWT/GC/W/145
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comprehensive and multilateral trade rules resulting from our past trade liberalization efforts under
the GATT/WTO are better than  compartmentalized  bilateral trade agreements for promoting trade.
This will most certainly also be the case in the area of investment. That is, the formulation of
comprehensive multilateral investment rules which set out appropriate levels of  investment protection
and liberalization can be expected to contribute to economic development through an improvedinvestment environment for the mid to long term.  Let us underline in this context that Japan is of the
view that future investment rules should allow Me mbers the flexibility to pursue development policy,
giving due consideration to the stage of the economic development of Members.
5. Since trade and investment are closely interlinked, Japan believes that the WTO, with its
abundant experience in the field of trade,  and whose decisions are made by consensus among both
developed and developing countries, will provide a good forum for negotiating multilateral
investment rules.    That is why Japan proposes placing the formulation of multilateral investmentrules on the next WTO negotiation agenda.
6. As to the work done by the Working Group on Trade and Investment, we evaluate positively
its discussions as they have contributed to deepening Members' understanding of the economic effects
of  investment as well as the benefits of investment rule-making.  We therefore would like to advocate
that the Working Group should proceed further and go on to more specific discussions on possiblemultilateral investment rules on the basis of its past discussions.
3. Trade and competition
7. Japan has actively participated in the discussions of the Working Group on the Interaction
between Trade and Competition and appreciates  the results it has achieved.  Through the discussions
in this Working Group, a wide range of Members have now come to understand that developing theirlaws and policy  on competition  and ensuring their enforcement is important for the expansion of
trade and the economic development of developing countries and that certain trade measures have
anti-competitive effects.
8. Japan believes that it would be useful to d eepen our discussions about formulating minimum
standards on competition.  From this perspective, we would like to propose that the followingquestions should be discussed in the Working Group:
 (a) What kind of general principles can be sought in the area of the laws and policy on
competition?
(b) Among the various anti-competitive practices, what elements affect trade flows?
(c) What  jurisdiction do the enforcement authorities need and what are the rules of
procedure in order to ensure the proper enforcement of the laws and policy on
competition?
 (d) What kind of framework can be envisaged for international cooperation in order to
curtail international anti-competitive practices?
9. Japan also shares the concerns of other Members about the anti-competitive effects of trade
measures.   In this context, we are of the view that trade measures must be reviewed from the
perspective of competition even if they are consid ered to be in conformity with the existing WTO
rules.  As we have reiterated in the Working Group, a common core objective of trade laws and
competition laws is to maximize economic welfare by improving the environment for the more
efficient  allocation of resources. However, as many Members have said in the Working Group, tradeWT/GC/W/145
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laws and competition laws have not only complementary effects but also contradictory effects, and
when we proceed with our study on the interaction between trade and competition policy, we should
address not only the former but also the latter.  Accordingly, the future work of the Working Group
should cover both the effects of competition policy on trade and those of trade policy on competition
in a balanced manner.
4. Transparency in government procurement
10. Japan evaluates positively the progress made during the last two years in the Working Group
and considers it important that, building upon that achievement, we accelerate our work so that all the
WTO Members will be able to agree on a legal framework to secure transparency in government
procurement before the start of the next negotiations.
11. Specifically, rules in transparency in government procurement should consist of the following
basic elements:  (a) ensuring access to information on relevant procurement rules, opportunities andresults, and (b) putting in place procedures for rectification for cases where transparency is not
practiced.  With an agreement which incorporates these elements, potential suppliers would be able to
enjoy improved predictability when seeking to meet the requirements set by procuring entities.  At the
same time, taxpayers would receive better value for money.  A transparency  agreement would thus
benefit suppliers and taxpayers, both in developing and developed countries.
12. After two years of intensive work at the Working Group, we now have a Secretariat paper
which synthesizes various national practices and international instruments.  A Chairman's note, which
analyses various options to solve the key issues, is now also available. Thus, the first part of the
mandate given at Singapore, that is, to conduct a study on transparency in government procurement
practices, has substantially been achieved.  Even for the second part, which requires us to developelements for reaching an agreement, the basic preparations have already been made.
13. The most important task for us in the coming period is therefore to find common grounds
among Members.  In this regard,  past discussions have made it clear that not all Members can accept
the existing transparency clauses in the plurilateral Government Procurement Agreement(GPA).  As
our intention is to formulate a multilateral agreement, the legal framework should be flexible enoughto accommodate a variety of Members' views.  On the other hand, any possible new agreement should
be sufficiently effective to produce substantive benefits.  A good balance between flexibility and
effectiveness must be struck.  In this regard, Japan is of the view that it can be attained by focusing on
core principles, such as the publication of procurement opportunities, rather than on detailed technical
prescriptions.
14. Following this line of thinking, we intend to submit more concrete proposals to the Working
Group, and hope that at least the broad outline of a possible agreement will emerge before the ThirdMinisterial.  Our aim should be to reach an agreement by the end of this year.  But if this objective
unfortunately turns out to be unachievable, we believe work on transparency in government
procurement should be included in the mandate of the next round of negotiations.
5. Trade and environment
15. Japan shares the view that trade and environm ent policies must play a mutually supportive
role and the work of the WTO in this area should contribute to sustainable development.  In order to
advance our discussions on this area, we should foster common understanding among Members as
well as recognize the need for the WTO to respond appropriately to the various voices of civil society.
16. With these general points in mind, we should then focus our discussions on specific issues,
rather than remain in the domain of generalities.  For instance, while a certain degree of considerationWT/GC/W/145
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is given to the environment in  existing WTO agreements, do the agreements really provide an
adequate base for preventing unfair, unilateral, and protectionist measures which are disguised under
the name of "the environment"?  Or,  in what manner should we approach the relations between the
rules of the MEAs and those of the WTO?   With a view to addressing such specific questions, we
should address the issue of trade and environment.  In the course of those discussions, the WTO mustalso carry out close consultations with the MEAs' Secretariats and other environment-related
international organizations.
17. Due consideration to environmental aspects should also be paid when dealing with market
access issues.  However, what effects trade liberalization may have upon the environment varies from
country to country, due to the differences in their natural environment and production methods.  For
example, the trade liberalization of fishery and forestry products is closely related to environmental
issues such as the sustainable utilization of resources and their conservation.  Thus, the discussions inthese sectors should not exclusively focus on market access but rather should give due consideration
to the overall objectives and effects of fishery and forestry policies.  Bearing this in mind, Japan
would like to once again reiterate that one-sided arguments such as "market access improvement will
have uniformly positive effects on the environment" are inadequate. In addition, one must remember
that there are already individual agreements on market access.  Japan is therefore of the view that it isinappropriate to take up market access issues within  the context of trade and environment in the next
round, in order to avoid the overlapping of negotiations.
6. Trade facilitation
18. Trade facilitation is another area of great interest to Japan and we intend to contribute to the
progress of discussions in this field. The specific scope of trade facilitation includes a wide range ofareas and its importance has been increasingly recognized through various activities including the
WTO Trade Facilitation Symposium held last March. Thus, we would like to proceed with necessary
discussions as a part of the WTO trade agenda, taking due consideration of the Members' condition as
well as the views of industry.  In order to advance the discussions, we will examine to which  areas
the WTO can make contributions, while avoiding overlapping conflicting work with the existing workbeing carried out  in various international orga nizations and fora such as the WCO, APEC, and
ASEM.
19. We have noted that there are requests from industry such as:  (a) a simplification and
rationalization of customs procedures;  (b) the harmonization of rules of origin;  (c) the steady
implementation of the Customs Valuation Agreement by WTO Members;  (d) a review of the
Agreement on Preshipment Inspection;  (e) the protection of intellectual property rights;  (f) the
simplification of sanitary and phytosanitary procedures;  (g) the international harmonization ofvarious standards including safety and environmental standards.  On the other hand, import and export
procedures contain socially  important functions such as to control socially illicit or intellectual
property rights infringing goods at the border, or to ensure the safety of the citizens.  Thus, our
objective is to attain speedy import and export procedures while securing these important social
functions. A proper balance has to be struck in this respect.  Japan intends to positively participate inthe discussions in the WTO, giving due consideration to requests from industry, the opinions of both
developed and developing countries, as well as to conformity with the relevant agreements.
7. Anti-dumping
20. Japan considers that the issues relating to the Anti-dumping Agreement should be discussed
now in view of the negotiations at the next r ound, not only from the viewpoint of the interaction
between trade and competition policy but also from the viewpoint of preventing its abuse as a
protectionist measure.WT/GC/W/145
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21. The anti-dumping measure stipulated in GATT Article VI is an exception to the rule of non-
discrimination as well as to the rule prohibiting imposing customs duties that exceed the bound rates.
Therefore, in order to maintain the multilateral trading system, an anti-dumping measure should be
taken in strict conformity with the rules set forth in the Agreement.  However, in reality, resort to anti-
dumping measures frequently lead to their abuse as protectionist measures, since they can be imposedrelatively easily compared to other trade measures, and their effects on the trade of the countries in
question are enormous.  One reason is a lack of strict  application of the provision.  Another is that the
obligations of the investigating authority and the methods of recognition, for example, the method of
determining the dumping margin, and identifyin g injury, or the mechanism of review are not
stipulated clearly enough in the Agreement.  These ambiguities leave room for protectionist
interpretations.  Inadequate anti-dumping measures, arising from these ambiguities, thus have
detrimental effects on trade.
22. From these standpoints, Japan supports the points raised by various Members including
developing country Members who expressed their c oncern about unfair anti-dumping measures and
pointed out the need to exclude ambiguity and any room for arbitrary application from certain
provisions of the Agreement.  Japan is also of the view that due consideration should be given to
developing country Members in light of Article 15 of the Agreement.
8. Industrial tariffs
23. International trade could be further expanded by the reduction of industrial tariffs through
negotiations on a reciprocal and mutually advantageous basis, paying due attention to the objectives
of the WTO Agreement and the varying needs of individual Members.  As we have mentioned in the
previous intersessional meeting, this is recognized by the WTO Members under Article XXVIII bis of
the GATT.
24. For the purpose of achieving wide ranging benefits to all Members, whether developed or
developing, the next tariff negotiations should proceed in a comprehensive manner, covering a wide
range of products and without specifying negotiating sectors in advance.  We should aim at achieving
agreements in a relatively short period.  In this regard, appropriate methods for reducing tariffs shouldbe explored, taking into account the characteristics of individual sectors and the different situations
each Member faces.
25. With regard to tariffs on forestry and fishery products, consideration should be given not only
to import tariffs reductions, but also to how to deal with possible concessions and reductions in export
taxes and non-tariff measures such as export restrictions in exporting countries.   This must be also
carried out from the viewpoint of achieving a balance between importing and exporting countries'
rights and obligations as well as of dealing with the global environmental issues.
9. TBT
26. We consider that the discussions about certain points of the TBT Agreement should be further
deepened.  For instance, we need to discuss several important elements of the TBT Agreement (e.g.,
international standards, guidelines and internationa l standardizing bodies) with a view to establishing
the procedures for formulating international standards and rules in cooperation with internationalstandardizing bodies.  In addition, in order to realize one-step-testing and to facilitate mutual
recognition, Japan considers that it is also important to review the provisions of the TBT Agreement if
necessary.WT/GC/W/145
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10. SPS
27. Japan is very interested in the issues relating to the SPS Agreement and will continue to
participate actively in discussions in this area.
11. Regional Integration
28. The recent trend towards regional integration has raised our concern over the probable
inconsistency of  some provisions of  regional trade agreements with the WTO rules.  Japan has
repeatedly expressed this concern in the Committee on Regional Trade Agreements(CRTA).  The
relation between the regional trade agreements and the WTO rules has been discussed as a systemic
issue in the CRTA, but progress is slow.  Although some improvements were brought in, delays in the
examination of regional trade agreements have become frequent and the CRTA has been unable to
come to a definitive decision on any of the examinations.
29. Japan believes it necessary to examine the matter of regionalism in a much stricter manner in
order to ensure the supremacy of the multilateral trading system.  Specifically, the following points
need to be examined:
(a) Clarifying the interpretation of  the WTO rules, such as Article XXIV of the GATT,
(b) strengthening the current rules where necess ary to cope with situations unforeseen at
the time of the formulation of Article XXIV of the GATT,
(c) reviewing the procedures for examining  regional trade agreements in order to secure
their consistency with WTO rules.
12. Agriculture
30. As there are a wide range of issues concerning agriculture and this area is closely related to
some of the other WTO agreements, Japan believes that the negotiations in agriculture should be a
part of a comprehensive package in terms of procedure and the time frame.
31. With regard to the Checklist of issues pertaining to the BIA, in particular to agriculture, Japan
is of the view that, first in examining the framework of the future negotiations, a careful review of the
experience gained through the implementation of the UR Agreements is necessary.  Second, due
attention must be paid to factors such as non-trade concerns.  With respect to the substantive issues
referred to in  the Checklist on the BIA, Japan would like to make the following points:
(a) Market access
The levels of tariffs have been established through a series of tariff negotiations
reflecting particular domestic situations and non-trade concerns.  Due consideration
should be paid to the fact that differences in the tariff levels of products have
reflected such circumstances.
Regarding the Special Safeguard, the fact that it was introduced as a package with
tariffication during the UR negotiations should be recalled. The current Agricultural
Agreement acknowledges that the Special Safeguard can be maintained as long as the
reform process continues.WT/GC/W/145
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(b) Domestic support
A necessary review of the scope of domestic subsidies which are subject to reduction
should be carried out, taking into account the experience gained through the
implementation of the Agreement as well as non-trade concerns and with a view tohelping each Member to transform its policy measures towards the Green-Box.
(c) Export subsidies
As there is grave concern about the trade-distorting effects of export subsidies, we
need to establish appropriate rules in this area.
(d) Export restrictions
We need to strengthen discipline concerning export taxes and export restrictions, in
order to ensure a stable food supply into importing countries both in terms of quantity
and prices, as well as to redress the balance of rights and obligations betweenexporting and importing countries.
(e) Net food-importing countries
The importance of food security to the net food-importing countries should be fully
recognized.  It must be also recognized that in order to ensure a stable food supply,
including its quantitative and price aspects in these countries, it is necessary to
combine appropriately policy measures such as domestic production, stable imports
and stockpiles.
(f) Special and differential treatment
The reform process which is leading toward s more liberalized agricultural trade may
have negative effects on the food supply in least-developed and net food-importing
developing countries.  Therefore, we should examine those effects closely, and
should utilize the knowledge of relevant international organizations such as FAO and
UNCTAD.
13. TRIPS
32. Protecting intellectual property rights is now recognized as a precondition for the healthy
development of free trade and national economies.  In this regard, it is extremely important that such
rights are adequately protected so that a predictable environment for trade and investments can bedeveloped and maintained.  Japan believes that the existing provisions of the TRIPs Agreement
should be implemented properly and in time by  Members including developing country Members.
Furthermore, Japan would like to stress that an appropriate review on the Agreement should be
conducted as part of the next round of negotiations.
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