RESTRICTED  
  
WT/TPR/S/397  
22 January  2020 
(20-0553) Page: 1/209 
Trade Policy Review Body   
 
TRADE POLICY REVIEW  
REPORT BY THE SECRET ARIAT  
JAPAN 
This report, prepared for the fourteenth Trade Policy Review of Japan, has been drawn up by the 
WTO Secretariat on its own responsibility. The Secretariat has, as required by the Agreement 
establishing the Trade Policy Review Mechanism (Annex 3 of the Marrakesh Agreement Establishing 
the World Trade Organization), sought clarification from Japan on its trade policies and practices.  
 
Any technical questions arising from this report may be addressed to Mr. Sergios Stamnas (tel.: 022 
739 5382);  Mr. Pierre Latrille (tel.: 022 739 5266)  and Ms.  Katie Waters (tel.: 022 739 5067) . 
 
Document WT/TPR/G/397 contains the policy statement submitted by Japan.  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Note: This report is subject to restricted circulation and press embargo until the end of the first 
session of the meeting of the Trade Policy Review Body on Japan. This report was drafted in English.  
  WT/TPR/S/397 • Japan  
 
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CONTENTS  
SUMMARY  ................................ ................................ ................................ ......................  10 
1   ECONOMIC ENVIRONMEN T ................................ ................................ ........................  15 
1.1   Main Features of the Economy  ................................ ................................ ..................... 15 
1.2   Recent Economic Developments  ................................ ................................ ................... 17 
1.2.1    Growth, income, and employment  ................................ ................................ ............. 17 
1.2.2    Prices  ................................ ................................ ................................ ..................... 20 
1.2.3    Main macroeconomic policy developments  ................................ ................................ ..20 
1.2.3.1    Monetary and exchange rate policy  ................................ ................................ ......... 20 
1.2.3.2    Fiscal policy  ................................ ................................ ................................ .......... 22 
1.2.4    Structural policies  ................................ ................................ ................................ ....22 
1.2.4. 1   Tax reform  ................................ ................................ ................................ ........... 22 
1.2.4.2    Privatization  ................................ ................................ ................................ ......... 23 
1.2.4.3    Competition policy and corporate governance  ................................ ........................... 23 
1.2.4.4    Labour market policies  ................................ ................................ ........................... 24 
1.2.5    Balance of payments  ................................ ................................ ................................ 25 
1.3   Developments in Trade and Investment  ................................ ................................ ........ 26 
1.3.1    Trends and patterns in merchandise and services trade  ................................ ................ 26 
1.3.2    Trends and patterns in foreign direct investment (FDI)  ................................ ................. 29 
2   TRADE AND INVESTMEN T REGIMES ................................ ................................ ...........  34 
2.1   General Framework  ................................ ................................ ................................ ....34 
2.2   Trade Policy Formulation and Objectives  ................................ ................................ ........ 35 
2.3   Trade Agreements and Arrangements  ................................ ................................ ........... 37 
2.3.1    WTO ................................ ................................ ................................ ...................... 37 
2.3.2    Regional and preferential agreements  ................................ ................................ ........ 41 
2.3.2.1    Regional trade agreements (RTAs)  ................................ ................................ .......... 41 
2.3.2.1.1    CPTPP  ................................ ................................ ................................ ............... 42 
2.3.2.1.2    EU-Japan Economic Partnership Agreement  ................................ ........................... 43 
2.3.2.2    Preferential trade agreements (PTAs)  ................................ ................................ ......43 
2.3.2.3    Other agreements and arrangements  ................................ ................................ ......45 
2.3.2.3.1    Asia-Pacific Economic Cooperation (APEC)  ................................ ............................. 45 
2.3.2.3.2    Other  ................................ ................................ ................................ ................ 46 
2.4   Investment  Regime  ................................ ................................ ................................ ....46 
2.4.1    Investment framework  ................................ ................................ ............................. 46 
2.4.2    Business environment  ................................ ................................ .............................. 49 
3   TRADE POLICIES AND P RACTICES BY MEASURE  ................................ ........................  52 
3.1   Measures Directly Affecting Imports  ................................ ................................ .............. 52 
3.1.1    Customs procedures, valuation, and requirements  ................................ ....................... 52 
3.1.2    Customs valuation  ................................ ................................ ................................ ...54 
3.1.3    Rules of origin  ................................ ................................ ................................ ......... 54 WT/TPR/S/397 • Japan  
 
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3.1.4    Tariffs  ................................ ................................ ................................ .................... 55 
3.1.4.1    MFN applied tariff  ................................ ................................ ................................ ..55 
3.1.4.2    Bound tariff  ................................ ................................ ................................ .......... 60 
3.1.4.3    Tariff reductions and exemptions  ................................ ................................ ............ 60 
3.1.4.4    Preferential tariff  ................................ ................................ ................................ ...62 
3.1.4.5    Retaliatory tariff system ................................ ................................ ......................... 63 
3.1.5    Other charges affecting imports  ................................ ................................ ................. 63 
3.1.6    Import prohibitions, licensing and quotas  ................................ ................................ ....63 
3.1.6.1    Import prohibitions  ................................ ................................ ............................... 63 
3.1.6.2    Import licensing (approvals) and quotas  ................................ ................................ ..63 
3.1.7    Anti-dumping, countervailing, and safeguard measures  ................................ ................ 68 
3.1.7.1    Anti-dumping measures  ................................ ................................ ......................... 68 
3.1.7.2    Countervailing measures  ................................ ................................ ........................ 69 
3.1.7.3    Safeguards  ................................ ................................ ................................ ........... 69 
3.2   Measur es Directly Affecting Exports  ................................ ................................ .............. 70 
3.2.1    Customs procedures and requirements  ................................ ................................ .......70 
3.2.2    Taxes, charges, and levies  ................................ ................................ ........................ 70 
3.2.3    Export prohibitions, restrictions, and licensing  ................................ ............................. 70 
3.2.4    Export support and promotion  ................................ ................................ ................... 73 
3.2.4.1    Export subsidies  ................................ ................................ ................................ ...73 
3.2.4.2    Taxation and special customs procedures  ................................ ................................ .73 
3.2.4.3    Free zones and free ports  ................................ ................................ ...................... 73 
3.2.4.4    Export promotion  ................................ ................................ ................................ ..74 
3.2.5    Export finance, insurance, and guarantees  ................................ ................................ ..74 
3.3   Measures Directly Affecting Production and Trade  ................................ ........................... 76 
3.3.1    Incentives  ................................ ................................ ................................ ............... 76 
3.3.1.1    Taxation  ................................ ................................ ................................ .............. 77 
3.3.1.2    Subsidies  and other assistance programmes  ................................ ............................. 79 
3.3.2    Standards and other technical requiremen ts ................................ ............................... 81 
3.3.2.1    Legal and institutional framework  ................................ ................................ ........... 81 
3.3.2.2    Standards  ................................ ................................ ................................ ............ 83 
3.3.2.3    Technical regulations  ................................ ................................ ............................. 84 
3.3.2.4    Conformity assessment and inspection  ................................ ................................ ....84 
3.3.2.5    Labelling requirements  ................................ ................................ .......................... 85 
3.3.3    Sanitary and phytosanitary (SPS) requirement s ................................ ........................... 86 
3.3.3.1    SPS measures  ................................ ................................ ................................ ......86 
3.3.3.2    Legislative framework  ................................ ................................ ............................ 87 
3.3.3.2.1    The Food Safety Basic Act  ................................ ................................ ................... 87 
3.3.3.2.2    The Food Sanitation Act  ................................ ................................ ...................... 88 
3.3.3.2.3    The Plant Protection Act  ................................ ................................ ...................... 89 WT/TPR/S/397 • Japan  
 
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3.3.3.2.4    Act on Livestock Infectious Diseases Control  ................................ .......................... 89 
3.3.3.2.5    Agricultural Chemicals Control Act  ................................ ................................ ........ 90 
3.3.3.2.6    Other  ................................ ................................ ................................ ................ 90 
3.3.4    Competition policy and price controls  ................................ ................................ ......... 91 
3.3.4.1    Competition policy  ................................ ................................ ................................ 91 
3.3.4.2    Price controls ................................ ................................ ................................ ........ 94 
3.3.4.3    Corporate governance  ................................ ................................ ........................... 95 
3.3.5    State trading, state -owned enterprises (SOEs), and privatization  ................................ ...96 
3.3.6    Government procurement  ................................ ................................ ......................... 99 
3.3.7   Intellectual property rights (IPRs)  ................................ ................................ ............  105 
3.3.7.1    Features and IP strategy  ................................ ................................ ......................  105 
3.3.7.2    Policies on promotion and commercialization of innovation  ................................ ....... 107 
3.3.7.3    International cooperation and harmonization  ................................ ..........................  110 
3.3.7.4    General regulatory framework  ................................ ................................ ..............  112 
3.3.7.5    Patents  ................................ ................................ ................................ ..............  113 
3.3.7.6    Utility models (UMs)  ................................ ................................ ............................  116 
3.3.7.7    Designs  ................................ ................................ ................................ .............  116 
3.3.7.8    Trademarks  ................................ ................................ ................................ ........  117 
3.3.7.9    Geographical indications  ................................ ................................ ......................  119 
3.3.7.10    Undisclosed information and trade secrets  ................................ ............................  119 
3.3.7.11    Copyright  ................................ ................................ ................................ .........  120 
3.3.7.12    Enforcement  ................................ ................................ ................................ ..... 121 
4   TRADE POLICIES BY S ECTOR  ................................ ................................ ...................  125  
4.1   Agriculture, Forestry, and Fisheries  ................................ ................................ .............  125 
4.1.1    Agriculture  ................................ ................................ ................................ ............  125 
4.1.1.1    Trade  ................................ ................................ ................................ ................  126 
4.1.1.2    Agricultural policy  ................................ ................................ ...............................  127 
4.1.1.3    Institutional and legal framework  ................................ ................................ ..........  129 
4.1.1.4    Trade policies and border measures  ................................ ................................ ...... 130 
4.1.1.5    Domestic support  ................................ ................................ ................................  134 
4.1.1.5.1    General support programmes  ................................ ................................ ............  134 
4.1.1.5.2    Support levels ................................ ................................ ................................ .. 135 
4.1.1.5.2.1    WTO notifications  ................................ ................................ ..........................  135 
4.1.1.5.2.2    OECD indicators  ................................ ................................ ............................  136 
4.1.1.5.3    Specific products  ................................ ................................ ..............................  138 
4.1.1.5.3.1    Rice ................................ ................................ ................................ .............  138 
4.1.1.5.3.2    Other cereals, sugar beet, starch potatoes, buckwheat, and rapeseed  ..................  139 
4.1.1.5.3.3    Fruits and vegetables  ................................ ................................ .....................  139 
4.1.1.5.3.4    Tobacco  ................................ ................................ ................................ ....... 140 
4.1.1.5.3.5    Livestock and livestock products  ................................ ................................ ..... 140 WT/TPR/S/397 • Japan  
 
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4.1.1.5.3.6    Dairy  ................................ ................................ ................................ ...........  141 
4.1.2    Fisheries  ................................ ................................ ................................ ...............  142 
4.1.2.1    Features  ................................ ................................ ................................ ............  142 
4.1.2.2    Policy and institutional issues  ................................ ................................ ...............  146 
4.1.2.3    Regulatory developments  ................................ ................................ .....................  146 
4.1.2.4    Stock management  ................................ ................................ .............................  146 
4.1.2.5    International agreements  ................................ ................................ .....................  147 
4.1.2.6    Border and dom estic support measures  ................................ ................................ . 147 
4.2   Mining and Energy  ................................ ................................ ................................ .... 149 
4.2.1    Mining  ................................ ................................ ................................ ..................  149 
 Policy and institutional developments  ................................ ................................ .... 150 
 Regulatory and operational developments  ................................ ..............................  150 
 Energy  ................................ ................................ ................................ .................  151 
 Hydrocarbons  ................................ ................................ ................................ ..... 155 
4.2.2.1.1    Coal ................................ ................................ ................................ ...............  155 
4.2.2.1.2    Oil ................................ ................................ ................................ ..................  156 
4.2.2.1.3    Gas ................................ ................................ ................................ ................  156 
 Electricity  ................................ ................................ ................................ ...........  157 
4.3   Manu facturing  ................................ ................................ ................................ ..........  160 
4.3.1    Features  ................................ ................................ ................................ ...............  160 
4.3.2    Policy and institutional developments  ................................ ................................ ....... 161 
4.3.3    Border measures  ................................ ................................ ................................ ... 162 
4.3.4    Domestic support measures  ................................ ................................ ....................  163 
4.4   Services  ................................ ................................ ................................ ..................  164 
4.4.1    Financial services  ................................ ................................ ................................ ... 164 
4.4.1.1    Regulatory evolutions in the banking sector  ................................ ...........................  167 
4.4.1.2    Regulatory evolution in other financial services sectors  ................................ ............  169 
4.4.2    Telecommunication services  ................................ ................................ ....................  169 
4.4.3    Postal, courier and express services  ................................ ................................ .........  172 
4.4.4    Transport services  ................................ ................................ ................................ . 175 
4.4.4.1    Maritime transport  ................................ ................................ ..............................  175 
4.4.4.1.1   Market overview  ................................ ................................ ..............................  175 
4.4.4.1.2    Regulatory developments  ................................ ................................ ..................  176 
4.4.4.2    Air transport  ................................ ................................ ................................ ....... 179 
4.4.5    Environmental  services  ................................ ................................ ...........................  182 
4.4.5.1    Water distribution services and waste water treatment/sewage services  ....................  182 
4.4.5.2    Waste management services  ................................ ................................ ................  184 
4.4.5.3    Air and noise pollution abatement services  ................................ .............................  186 
4.4.5.4    Remediation, and nature and landscape protection services  ................................ ..... 186 
4.4.6    Distribution services with a specific focus on e –commerce  ................................ ..........  187 WT/TPR/S/397 • Japan  
 
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4.4.7    Legal services  ................................ ................................ ................................ ....... 189 
5   APPENDIX TABLES  ................................ ................................ ................................ .. 192  
 
CHARTS  
 
Chart 1.1 Product composition of merchandise trade, 2015 and 2018  ................................ .......27 
Chart 1.2 Direction of merchandise trade, 2015 and 2018  ................................ ....................... 28 
Chart 3.1 Tariff distribution by type of duty, FY2019  ................................ .............................. 56 
Chart 3.2 Share of non -ad valorem  duties, by HS section, FY2019  ................................ ........... 57 
Chart 3.3 Tariff escalation by 2 -digit ISIC industry, FY2019  ................................ ..................... 59 
Chart 3.4 Simple average applied MFN t ariff rates, by HS section, FY2016 and FY2019  ............... 60 
Chart 3.5 Systems for reduction and exemption of customs duty  ................................ ............. 61 
Chart 3.6 IP revenue, 1996 -2018 ................................ ................................ .......................  106 
Chart 3.7 Charges for the use of IP, n.i.e., 1996 -2018 ................................ ..........................  106 
Chart 3.8 Import seizure, 2014 -18 ................................ ................................ .....................  122 
Chart 3.9 IP cases handled by courts, and individuals arrested for IP infringement, 2009 -18 ..... 123 
Chart 4.1 Trade in agriculture, 2014 -18 ................................ ................................ ..............  126 
Chart 4.2 Support notified t o the WTO Committee on Agriculture, FY2012 -16 ..........................  135 
Chart 4.3 Amber Box support, FY2012 -16 ................................ ................................ ...........  136 
Chart 4.4 Value of production and support to agriculture, 2012 -18 ................................ .........  137 
Chart 4.5 Fisheries and aquaculture production, FY2017  ................................ .......................  142 
Chart 4. 6 Trade of fish and fishery products, by main partners, 2017  ................................ ..... 145 
Chart 4.7 Primary energy supply  ................................ ................................ ........................  152 
Chart 4.8 Relative shares of the various renewable energies for FY2017 and FY2030 (planned)  . 152 
Chart 4.9 Target costs of energy storage systems in households  ................................ ............  153 
Chart 4.10 Electricity and oil prices trend  ................................ ................................ ............  158 
Chart 4.11 Power -generation mix  ................................ ................................ .......................  158 
Chart 4.12 Electricity system reform  ................................ ................................ ..................  159 
 
TABLES  
 
Table 1.1 Selected macroeconomic indicators, 2014 -18 ................................ .......................... 16 
Table 1.2 Basic economic indicators, 2014 -17 ................................ ................................ ........ 18 
Table 1.3 Balance of payments, 2014 -18 ................................ ................................ .............. 25 
Table 1.4 Trade in services, 2014 -18 ................................ ................................ .................... 29 
Table 1.5 Inbound and outbound flows of direct investment, by activity, 2014 -18 ...................... 30 
Table 1.6 Inbound and outbound flows of direct investment, by main origin and destination, 
2014-18 ................................ ................................ ................................ ........................... 31 
Table 1.7 Inbound and outbound stock of direct investment, by main origin and destination, 
2014-18 ................................ ................................ ................................ ........................... 32 
Table 2.1 Major trade -related laws and regulations, November 2019  ................................ ........ 35 
Table 2.2 Selected notifications under WTO agreements, January 2017 -November 2019  ............. 38 WT/TPR/S/397 • Japan  
 
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Table 2.3 Selected features of RTAs in force  ................................ ................................ .......... 42 
Table 2.4 GSP graduation rules  ................................ ................................ ............................ 44 
Table 2.5 Main beneficiaries of GSP scheme, 2017 -18 ................................ ............................ 45 
Table 2.6 FDI restrictions, 2019  ................................ ................................ ........................... 47 
Table 3.1 Structure of MFN tariffs FY2016 and FY2019  ................................ ............................ 56 
Table 3.2 Tariff summary, FY2019  ................................ ................................ ........................ 58 
Table 3.3 Summary analysis of preferential tar iffs, FY2019  ................................ ..................... 62 
Table 3.4 Goods subject to import licensing under the Import Trade Control Order ..................... 64 
Table 3.5 Allocation of import quotas by item, FY2018  ................................ ............................ 66 
Table 3.6 Import quotas on fisheries products 2016 -17 ................................ .......................... 67 
Table 3.7 Anti -dumping mea sures in force, July 2019  ................................ ............................. 68 
Table 3.8 Bonded areas, features  ................................ ................................ ......................... 73 
Table 3.9 NEXI trade insurance products, 2018 ................................ ................................ ......75 
Table 3.10 Tax revenue, FY2015 -19 ................................ ................................ ..................... 76 
Table 3.11 Central government tax incentives, 2019  ................................ .............................. 78 
Table 3.12 Subsidy and other assistance schemes terminated, 2017 -19 ................................ ...79 
Table 3.13 Subsidy to promote clean energy vehicle purchases  ................................ ............... 80 
Table 3.14 Main laws on standards and technical regulations  ................................ ................... 81 
Table 3.15 JISs established, revised, and withdrawn, April 2018 -March 2019  ............................ 83 
Table 3.16 Exemptions from the Anti -Monopoly Act (AMA), 2019  ................................ ............. 92 
Table 3.17 Enforcement of competition policy, 2012 -18 ................................ .......................... 94 
Table 3.18 Large state enterprises, FY2017  ................................ ................................ ........... 97 
Table 3.19 State -trading enterprises notified to the WTO under Article XVII, 2018  ..................... 98 
Table 3.20 Use of different procurement methods by the central Government and IAA 
entities, 2017  ................................ ................................ ................................ ..................  101 
Table 3.21 Foreign participation in central government and IAA entity procurement  .................  102 
Table 3.22 Awards to foreign suppliers by origin, 2017  ................................ .........................  102 
Table 3.23 Central gover nment and IAA entity procurement, by product and by origin, 
2016 and 2017  ................................ ................................ ................................ ................  102 
Table 3.24 Central government and IAA entity procurement, by type of service, 2016 and 
2017 ................................ ................................ ................................ ..............................  103 
Table 3.25 Patent applications and patents granted, 2009 -18 ................................ ................  114 
Table 3.26 Patent applications to the JPO, by field of technology and origin, top five fields 
of technology in 2016  ................................ ................................ ................................ ....... 115 
Table 3.27 UM applications and registrations, 2009 -18 ................................ .........................  116 
Table 3.28 Design applications and registrations, 2009 -18 ................................ ....................  117 
Table 3.29 Trademark applications and registrations, 2009 -18 ................................ ..............  118 
Table 3.30 Confiscated IPR -infringing good s, 2013 -18 ................................ ..........................  122 
Table 4.1 Farm households and average farm size, 2015 -18 ................................ .................  125 
Table 4.2 Total agricultural production and production of selected products, 2014 -18 ...............  126 
Table 4.3 Imports of agricultural products, 2014 -18 ................................ .............................  126 
Table 4.4 Exports of agr icultural products, 2014 -18 ................................ .............................  127 WT/TPR/S/397 • Japan  
 
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Table 4.5 SSGs, FY2017/18  ................................ ................................ ...............................  131 
Table 4.6 TRQ fill ratio, FY2017/18  ................................ ................................ .....................  132 
Table 4.7 Other products for which tariff quotas are applied, 2019  ................................ .........  133 
Table 4.8 Imports under the SBS system, FY2013 -17 ................................ ...........................  134 
Table 4.9 Food assistance FY2013 -FY2016  ................................ ................................ ..........  134 
Table 4.10 Total PSE and SCT values for selected commodities, 2012 -18 ................................  137 
Table 4.11 Payment rates for other cereals, sugar beet, starch potatoes, buckwheat, and 
rapeseed, 2016 and 2019  ................................ ................................ ................................ . 139 
Table 4.12 Administered prices for calves, FY2019 (JPY)  ................................ .......................  141 
Table 4.13 Exports of fish and fish products, 2014 -18 ................................ ..........................  143 
Table 4.14 Imports of fish and fish products, 2014 -18 ................................ ..........................  144 
Table 4.15 Fisheries subsidies notified in July 2019 for FY2016 and FY2017 .............................  148 
Table 4.16 Basic indicators on m ining, 2016  ................................ ................................ ........  149 
Table 4.17 Mining production, 2015 -18 ................................ ................................ ...............  149 
Table 4.18 Major mining imports  ................................ ................................ ........................  150 
Table 4.19 Domestic support to energy -related projects, 2020  ................................ ..............  154 
Table 4.20 Domestic support to some manufacturing -related projects  ................................ .... 163 
Table 4.21 Telecommunication prices, 2017  ................................ ................................ ........  171 
Table 4.22 Maritime transport, main economic indicators  ................................ ......................  176 
Table 4.23 Overview of the ports' recently accorded terminal concessions  ...............................  178 
Table 4.24 Overview of airlines,  2018 ................................ ................................ .................  180 
Table 4.25 Overview of airport concession process  ................................ ...............................  181 
Table 4.26 Main characteristics of public -private contractual arrangements for the 
management and operation of water distribution  ................................ ................................ . 183 
Table 4.27 Main characteristics of public -private contractual arrangements for the 
management and operation of sewage treatment facilities  ................................ ....................  184 
Table 4.28 Number of individuals and firms exercising legal professions  ................................ . 189 
 
BOXES  
 
Box 2.1 Investment framework  ................................ ................................ ............................ 49 
Box 2.2 National Strategic Special Zones  ................................ ................................ .............. 51 
Box 3.1 Changes to goods listed in Appended Tables I and II of the Export Trade Control 
Order, 2017 -19................................ ................................ ................................ .................. 72 
Box 3.2 Key agencies responsible for SPS measures  ................................ ............................... 87 
Box 4.1 Main economic indicators of the financial services sector, 2016 -18 .............................  164 
Box 4.2 Main indicators of the banking sector, 2015 -18 ................................ ........................  165 
Box 4.3 Main indicators of the insurance sector, 2015 -18 ................................ ......................  165 
Box 4.4 Main indicators of the pension fund and stock exchange and securities sectors  ............  166 
Box 4.5 Main economic indicators of the telecommunications sector  ................................ ....... 169 
Box 4.6 Postal, courier and express domestic regime ................................ ............................  172 
Box 4.7 Ma rket overview of water distribution and waste water treatment/sewage services  ...... 182 WT/TPR/S/397 • Japan  
 
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Box 4.8 Market overview of waste management services  ................................ ......................  185 
Box 4.9 Noise pollution abatement services  ................................ ................................ .........  186 
Box 4.10 Regulatory overview of remediation, and nature and landscape protection services  .... 187 
 
APPENDIX TABLES  
 
Table A1.1 Merchandise exports by group of products, 2014 -18 ................................ .............  192 
Table A1.2 Merchandise imports by group of products, 2014 -18 ................................ ............  194 
Table A1.3 Merchandise exports by destination, 2014 -18 ................................ ......................  196 
Table A1.4 Merchandise imports by origin, 2014 -18 ................................ .............................  197 
 
 
Table A3.1 Taxation rates, November 2019  ................................ ................................ .........  198 
Table A3.2 Tax credit for R&D expenses  ................................ ................................ ..............  200 
Table A3.3 Provisions of the IP chapters of the CPTPP and EU -Japan EPA  ................................  201 
Table A3.4 Summary of laws protecting IPRs, 2019  ................................ ..............................  203 
 
 
Table A4.1 Self -sufficiency at the product -specific level on a volume basis, 2014 -2018 .............  205 
Table A4.2 Bilateral air transport agreements, 2019  ................................ .............................  206 
Table A4.3 State of implementation of the Basel regulatory framework  ................................ ... 208 
 
 
  WT/TPR/S/397 • Japan  
 
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SUMMARY  
1. Since the previous Trade Policy Review in 2017, the Government continued to support growth 
by easing financial conditions, reducing the fiscal deficit, and raising employment and female labour 
force participation, thus ensuring Japan's longest economic expansion of the post -war era. Annual 
GDP growth peaked at 1.9% in 2017, and its annual average rate stood at 1.1% (2016 -18), a minor 
slowdown compared to previous performance (averaging 1.2% over 2013 -15). Monetary and fiscal 
stimulus measures are being used to spur economic recovery. Japan has maintained its position as 
the world's third largest and fifth most competitive economy (2018). According to latest available 
data, income inequality and a poverty gap remained virtually unc hanged. Inflation dropped 
considerably below the Bank of Japan's target before picking up (1% in 2018), whereas the relatively 
low unemployment rate continued to decline (2.4% in 2018).  
2. During the review period, trade -related structural reforms (e.g. in th e areas of taxation, 
competition policy, corporate governance, and labour market policies) were undertaken. Both multi 
factor and labour productivity registered positive growth, and targets were set for the latter; SMEs' 
productivity in manufacturing remai ns relatively low compared to large firms. Monetary policy, 
involving, among others, Quantitative and Qualitative Monetary Easing (QQE) with negative interest 
rate, continued to provide a monetary stimulus to growth and help building a stable financial 
environment.  
3. Japan maintains a free -floating exchange rate regime; no foreign exchange intervention took 
place during the review period. Heightened global uncertainty contributed to a slight appreciation in 
the JPY/USD exchange rate. The current account regis tered a larger overall surplus, that peaked at 
4.1% of GDP in 2017, inter alia , due to a rising primary income surplus deriving mainly from 
investment income, and shrank in 2018 to 3.5% of GDP, reflecting smaller goods trade and income 
balances; this ratio  was estimated to remain virtually unchanged in 2019. Foreign exchange reserves 
(excluding gold) increased steadily. Gross external debt also rose steadily over the review period 
(81% of GDP in 2018). The fiscal deficit, often financed through supplementar y budgets to the 
annual budget, declined slightly (3.2% of GDP in 2017 and 2018) but the gross financial liabilities 
of general government rose (224.2% of GDP in 2018). The authorities envisaged taking temporary 
and special offsetting/mitigating fiscal mea sures in the initial budgets for FY 2019 and FY 2020 to 
address concerns related to the increase in the consumption tax rate from 8% to 10% on 1 October 
2019.  
4. The relative importance of international trade in Japan's economy, its degree of openness, 
and its integration into the world economy and global value chains continued to be reflected by the 
ratio of its trade (exports plus imports) in goods and services to GDP; despite a drop from its 2014 
peak to a 2016 trough, this ratio increased to 36.7% in 2018 . Notwithstanding some minor 
fluctuations in trade shares, Japan's main trading partners remain China, the United States and the 
European Union, whereas its main inbound/outbound foreign direct investment (FDI) partners were 
virtually the same, i.e. the Un ited States, the British Cayman Islands, the European Union and the 
Republic of Korea. The FDI inbound stock continued to rise steadily and was largely held by European 
Union investors. Government initiatives to attract FDI have been focused on providing m atching and 
advisory services. Over the review period, the main law governing FDI, the Foreign Exchange and 
Foreign Trade Act, was amended for reasons of security protection, by: expanding the scope of prior 
checking of unlisted stock transfers between for eign investors; and introducing a provision that 
unregistered foreign investors may be subject to executive orders, including orders to sell their 
holding stocks. Prior notification and approval requirements are in place for investments where there 
could b e significant adverse effects on the smooth management of the national economy or on the 
grounds of public order, public safety or national security. FDI restrictions remain in place in the 
telecommunications, broadcasting and radio sectors.  
5. Japan aims to  develop "free, fair and high -level trade rules" domestically, with key trading 
partners and in international fora (including the WTO), as well as to make progress in reinforcing 
economic ties and cooperation with emerging economies. Its 2018 White Paper o n International 
Economy and Trade includes promoting exports and the use of Economic Partnership Agreements 
(EPAs). Trade -related policy objectives are also contained in various other strategies also being 
implemented, including: the evolving Abenomics pro gramme; the 2016 Japan Revitalization 
Strategy; the Future Investment Strategy; the New Economic Policy Package; and the 2019 Growth 
Strategy. Over the review period, Japan was involved in three new dispute settlement cases as 
complainant, and reserved its  third-party rights in 34 cases. Japan maintained a strong record of WT/TPR/S/397 • Japan  
 
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notifications to the WTO, although up -to-date notifications on domestic support in agriculture and 
government procurement are outstanding. Since 2017, new regional trade agreements that h ave 
entered into force for Japan are: the Comprehensive and Progressive Agreement for Trans -Pacific 
Partnership (CPTPP) and the EU -Japan EPA. Japan also signed the First Protocol to Amend the 
Agreement on ASEAN -Japan Comprehensive Economic Partnership (AJC EP), which includes chapters 
on trade in services and on investment, as well as a trade agreement with the United States. Changes 
were made to the framework for graduation from Japan's GSP scheme, with a view to granting 
preferences to the economies that n eed them most. Key initiatives to improve the business 
environment include: introducing labour force reforms; improving corporate governance; and 
lowering corporate tax. Regulatory reform pilot schemes continue to be undertaken through the 
National Strateg ic Special Zone initiative.  
6. The general thrust of Japan's trade policy remained relatively unchanged during the period 
under review. The tariff remains one of the main trade policy instruments and a minor source of tax 
revenue (1.65% of total tax revenue in FY2019). The structure of the MFN applied tariff remains 
complex, with a total of 272 tariff rates (same as in FY2016); there are 136 different ad valorem  
rates, 75 different specific rates, 29 different alternate rates and 24 different compound rates, as 
well as 8 different other types of duty. In FY2019, Japan's overall simple average applied MFN tariff 
rate rose slightly to 6.3% (up from 6.1% in FY2016), mainly due to higher AVEs and, to a much 
lesser extent, to a HS nomenclature change. The simple av erage tariff rate for agricultural products 
(WTO definition) is 17.9% compared with 3.5% for non -agricultural products. Duty -free lines 
represent 40.5% of all lines. 7.1% of Japan's tariff lines are non -ad valorem , and all the highest 
tariffs have non -ad valorem  rates. Japan bound 98.1% of tariff lines, and the overall gap between 
the simple averages of MFN applied and bound rates remains minimal, at 0.05 percentage points, 
thus conferring a high level of predictability. Under Japan's RTAs, preferential ta riffs have 
significantly increased market access for these trading partners by around doubling the number of 
duty-free tariff lines.  
7. Since 2017, there have only been minor changes to Japan's customs procedures. These 
include the introduction of: tougher p enalties for failure to obtain the required import/export 
permissions; a new principle on cargo reporting; and flexibility to authorized economic operators to 
lodge their import/export declarations at any customs office, not just the one where their 
import s/exports are stored.  
8. During the review period, changes to Japan's import licensing regime related to the removal 
of import restrictions on whales and their preparations, due to Japan's withdrawal from the 
International Whaling Commission, and the lifting  of restrictions in line with the removal of United 
Nations sanctions. Import quotas continue to be applied to various marine products, with the aim of 
conserving exhaustible natural resources and enforcing government measures to restrict quantities 
of the  like domestic products; quota fill rates in 2017 ranged from 2.7% to 98.4%.  
9. Amendments to the legislation on anti -dumping and countervailing measures aimed to ease 
the conditions for applicants requesting the imposition of these measures. Japan maintains seven 
anti-dumping measures, relating to four products and applying to two trading partners. Definitive 
duties were imposed for the first time during the review period on polyethylene terephthalate from 
China and carbon steel butt -welding fittings from Chi na and the Republic of Korea; they were 
removed on electrolytic manganese dioxide from South Africa and Spain. Japan did not apply any 
safeguard or countervailing measures during the review period, nor did it initiate any investigations 
in these areas.  
10. Over the review period, there were various changes to Japan's export control regime with 
respect to goods and destinations. Japan does not levy any export taxes, nor does it maintain any 
export quotas or operate export subsidy programmes. The Nippon Export a nd Investment Insurance, 
one of Japan's official export credit agencies, was transformed from an incorporated administrative 
agency to a wholly government owned special stock company, in order to, inter alia , better reflect 
in its business practices the Go vernment's priority areas.  
11. Domestic support to production and trade remains in place. It is available to foreign and 
domestic companies through tax incentives, grants and loan schemes. New programmes launched 
over the review period were aimed at: promotin g business investment by local SMEs, assisting the 
business succession of SMEs, and spurring wage hikes and productivity. Activity -specific support 
was provided by central or local governments.  WT/TPR/S/397 • Japan  
 
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12. During the review period, various amendments were made to stan dards legislation, inter alia , 
to expand the scope of Japanese Industrial Standards to encompass services, programmes and other 
electronic records and business management systems, as well as to allow standards to be drafted 
by accredited private -sector ass ociations. The scope of Japanese Agricultural Standards was 
enlarged to include production processes, handling methods (related to services) and testing 
methods. Amendments to food labelling standards, inter alia , require the place of origin of the 
product 's heaviest ingredient to be labelled, and introduce stricter requirements for the use of "non -
GM" labels.  
13. Concerning SPS, the Food Sanitation Act was amended in order to reflect changing dietary 
patterns and the environment surrounding food in Japan, as well as to increase hygiene controls; 
with respect to imports, control processes applied to the competent authorities in the country of 
export have been strengthened. The Agricultural Chemicals Control Act was also amended, with a 
view to improving pestici de safety and contribute to more efficient agriculture. Japan sets some 
standards on food additives and maximum residue limits (MRLs) that are different from Codex 
standards and MRLs; these are apparently based on scientific evidence. Over the review perio d, 
Japan expanded the scope of animal quarantine for raw milk to also include milk products.  
14. State participation in certain activities persists. State trading entities engaging in leaf tobacco, 
opium, rice, wheat, barley, and milk products remained in pla ce. Major commercial state -owned 
enterprises include those engaging in energy, financial services, telecommunications and some 
transport -related activities. Market monopolies are retained in the domestic manufacturing of 
tobacco and in the importation of l eaf tobacco. During the review period, the basic rules on 
government procurement remained virtually unchanged. Japan, a WTO Government Procurement 
Agreement signatory, promotes Green procurement and the participation of SMEs in the market. 
Despite no origi n-based restrictions, foreign companies continue to retain a low share in the public 
procurement market.  
15. Since the last Review, the legal framework governing competition policy was updated to, inter 
alia, introduce procedural undertakings under the CPTPP. The number of cease -and-desist orders, 
as well as the surcharge payment amounts, dropped. Price surveys remain in place on certain 
pharmaceutical products based on a drug price standard. Action was taken to improve corporate 
governance by amending the main  regulatory framework in this area.  
16. Intellectual property (IP) remains of vital importance to the economy, and revenue from IP 
rights grew exponentially in recent years. A new IP Strategy Vision was released in 2018 to offer a 
medium - to long -term perspect ive on the evolution of society and the IP system. Recent 
amendments to legislation were linked to this Strategy, and related to: patents, trademarks and 
geographical indications; expansions in the scope and length of protection for designs; new data 
prote ctions; new copyright restrictions; and measures to facilitate IP right enforcement. An 
Integrated Innovation Strategy was adopted in 2018 and an Integrated Innovation Strategy 
Promotion Council was set up.  
17. The agricultural sector accounts for a small sha re of GDP (1.2% in 2017) and employment 
(3.8% in the same year), and continues to be characterized by small farm holdings, most of which 
are run as side -businesses. While agricultural output and exports were on a growing trend over the 
review period, Japan  continues to run a significant trade deficit in agricultural goods. Agricultural 
policy goals, inter alia , include making agriculture a growth industry, with greater private -sector 
participation, increasing exports, and reaching certain self -sufficiency t argets. Support to the 
agricultural sector (0.84% of GDP in 2018) remains relatively high, and was estimated to be over 
double the OECD average. Tariffs vary considerably among agricultural products, with just below 
one quarter duty -free and a maximum tari ff (AVE, out of quota) of 499.7%. Japan applies 18 tariff 
rate quotas, covering 101 tariff lines (HS six -digit level); fill rates ranged from 23.4% to 305.6%. 
Over the review period, Japan applied either volume - or price -based special safeguards several ti mes 
to out -of-quota imports of a variety of products. Key developments over the review period were: 
the abolition of direct payments for rice and rice production volume targets (although direct 
payments to rice farmers remain in place for optimizing the us e of paddy fields); the introduction of 
a new revenue insurance programme applicable to almost all farm products; a review of the 
Agricultural Mutual Aid system; the abolition of administered prices for beef and pig meat; increased 
support for domestic bee f and pork producers; and the introduction of a modified support system 
for milk.  WT/TPR/S/397 • Japan  
 
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18. During the review period, the fisheries production, fishing fleet, number of fishermen and fish 
consumption all declined. Japan amended its Fisheries Act in 2018 to adopt th e system of individual 
quotas, transferrable under certain conditions, within a Total Allowable Catch system, and to open 
the sector to private investors in addition to cooperatives by reforming the allocation of fishing rights. 
For FY2019, the average MFN  tariff applied on fish and fish products was 6.1%, and rates ranged 
from zero to 15% (same in FY2016). Programmes to support fisheries totalled JPY 68.7 billion in 
FY2017. Various measures against illegal, unreported and unregulated fishing were taken. In  
December 2018, Japan withdrew from the International Convention for the Regulation of Whaling, 
with effect from June 2019, in order to resume commercial whaling.  
19. The mining and quarrying sector continued to contribute a small share to GDP and 
employment (0.1% in 2017). Mineral resource exploitation is undertaken under concession 
agreements. Japan continues to import nearly 92% of its energy supplies and, as such, remains 
vulnerable to global commodity price movements. A 2018 Strategic Energy Plan is aimed , inter alia, 
at increasing the share of locally produced renewable energy (including nuclear) in the total energy 
mix, from 12% in 2017 to 24% in 2030, restoring nuclear capacity, meeting national objectives for 
the reduction of greenhouse gas emissions, developing electric and hydrogen vehicles, and 
promoting energetically autonomous housing, and raising energy efficiency. During the review 
period, Japan pursued the liberalization and reform of its electricity and gas sectors. For both sectors, 
entry to t he retail market was completely liberalized, and the next phase, i.e. the unbundling of 
vertically integrated regional utility, is underway. Electricity retail prices remain regulated.   
20. Manufacturing (20.8% of GDP in 2018) accounts for the majority of mer chandise exports, and 
remains driven by the transport equipment, machinery (general purpose, production and business -
oriented), food products, chemical, and basic metals activities. During the review period, certain 
manufacturing policy developments, inclu ding artificial intelligence, robotics and related plans 
interlinked with services activities, were undertaken. Since the previous review, the average MFN 
applied tariff for manufactured products dropped, and TRQs continued to apply on 62 manufactured 
items; peak rates (AVEs) affect footwear (219.4%) and silk (97.9%). A few more industrial items, 
were subject to anti -dumping duties. Domestic support continued under several non -industry -
specific schemes, involving tax and non -tax incentives; activity -specifi c incentives were available, 
inter alia , to the bekko (tortoiseshell) and ivory crafts industries, the leather and leather goods 
industries, the manufacture of traditional craft products, R&D for care robot equipment, sochu 
manufacture, and fuel -cell vehic les and connected industries  
21. The share of services in GDP and total employment stood at 69.5% and 72.7%, respectively, 
in 2017; in 2018, services represented 7.2% of total merchandise and services exports. During the 
review period, the financial services r egime remained basically unchanged. The Financial Services 
Authority was reorganized to be less sanction -oriented and to encourage financial services 
stakeholders to develop and consolidate their position in the market. Basel IV principles and anti -
money l aundering measures were progressively implemented. Japan is in the process of developing 
a safe regulatory framework for e -payments and crypto currencies. High -speed trading of securities 
was further regulated.  
22. During the period under review, changes to th e telecommunications services regulatory 
framework involved the protection of consumers and their ability to change operators without 
excessive penalties and keep the same number. The prices of telecom services remain relatively 
high by international stand ards. Modern networks and equipment, such as LTE, 5G and IoT, are 
being actively deployed.  
23. The regime governing the postal, courier and express regimes remained stable during the 
period. The Japan Post Holdings privatization process was relaunched in 2017, with the sale of 23.6% 
of government shares, and a further sale is scheduled. The universal service encompasses the 
totality of postal items and services. "General correspondence services" and "special correspondence 
services" were libe ralized in 2002, but no licences were awarded to private operators for general 
correspondence services, and the 532 special correspondence services operators are all Japanese 
despite a non -discriminatory regime. Some foreign express carriers operate in Jap an and receive 
national treatment except air cabotage rights . 
24. The air transport regime remains basically unchanged, except for the concession process of 
airports which was accelerated. Japan signed several air services agreements, liberalizing additional 
frequencies and capacities, during the review period. Regarding maritime transport, the ports WT/TPR/S/397 • Japan  
 
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concession process was also accelerated, and support for the Japanese merchant fleet was prolonged 
and extended. Japan imposes no restrictions on foreign carriers,  except for access to the flag and 
cabotage. The port sector remains open to foreign investment . 
25. During the review period, the regime of distribution services remained unchanged. There are 
no economic needs tests for large stores, and several major foreign  distributors are present in the 
market. The share of e -commerce in the distribution of physical goods is progressing smoothly but 
at a faster pace in the Business to Business than in the Business to Consumers segment.  
26. Network environmental services, such  as distribution of water, sewage and waste disposal, 
remain open to the private sector, including foreign operators and investors, via various PPP 
formulas. However, no foreign operators are present in these segments. National treatment applies 
across the  board to all environmental services.  
27. The practice of legal services is not reserved for nationals but, with respect to the practice of 
Japanese law, a Japanese qualification is required. Foreign firms can establish and employ Japanese 
lawyers to practice Japanese law.  
 WT/TPR/S/397 • Japan  
 
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1  ECONOMIC  ENVIRONMENT  
1.1  Main Features  of the Economy  
1.1.  Japan's highly -developed, high -income and market -oriented economy , with a population of 
126.2 million (as at 1 March 2019 ), remains the world's third largest , behind the United States and 
China, in gross domestic product ( GDP) terms.1 According to the World Bank economic complexity 
index, it remains the world's most diverse economy, due to the sophistication of its exports, with 
the services sector constituting  the backbone of the economy.2 Japan has an ageing population , and 
the highest ratio of public debt (gross financial liabilities of general government) to GDP of any 
developed nation. Small and medium -sized enterprises (SMEs) continue to play a considerabl e role 
in the economy . However , according to the Organisation for Economic Co -operation and 
Development ( OECD ), despite public support, they face a productivity gap with large companies , 
and struggle to take advantage of international trade opportunities ( Section 1.2.1).3 The 
Government continued to support growth (Table 1.1) by easing financial conditions, reducing the 
fiscal deficit, and raising employment and female labour force participation, thus ensuring Japan's 
longest economic expansion in the post -war era.4 According to latest available data, between 2012 
and 2015 , Japan's income inequality and poverty gap remained virtually unchanged.5  
1.2.  Despite an estimated growth above the potential growth (Section 1.2.1), as at May 2019, risks 
to the outlook were  skewed to the downside.6 Endogenous risks involving macro -financial 
vulnerabilities, fiscal consolidation needs, and limited monetary policy space make the economy 
vulnerable to adverse shocks. The intertwined challenges of rapid population ageing, involv ing a 
sharp rise in social spending, and high government debt (gross financial liabilities of general 
government) intensified during the review period. Risks have also risen from deteriorating global 
conditions. Exogenous risks involve developments in over seas economies , including the 
consequences of protectionist moves, developments in the Chinese economy, and progress in global 
adjustments in IT -related goods.7  
                                                
1 World Bank, The World by Income and Region . Viewed at: http://datatopics.worldbank.org/world -
development -indicators/the -world -by-income -and-region.html ; and World Bank Country and Lending Groups. 
Viewed at: https://datahelpdesk.worldbank.org/knowledgebase/articles/906519 -world -bank-country -and-
lending -groups . 
2 World Bank, Countries With The Most Diverse Economies.  Viewed at: 
https://www.worldatlas.com/articles/countries -with-the-most-diverse -economies.html . 
3 In 2016, SMEs  represent ed 68.9% of all employment,  99.7% of all enterprises and 52.9% (2015)  of 
total value added.  Data from the 2016 Economic Census for Business Activity, prepared by the Ministry of 
Internal Affairs and Communications and Ministry of Economy, Trade and Industry.  
4 The current economic plan of the Government ( Abenomics ) is anchored on "three arrows " — bold 
monetary easing, flexible fiscal policy , and structural reforms.  International Monetary Fund ( IMF) (2018), 
Japan:  2018 Article IV Consultation  — Press Release; Staff Report; and Statement by the Executive Director 
for Japan , IMF Country Report No. 1 8/333 , 28 November , Washington, D.C. Viewed at:  
https://www.imf.org/en/Publications/CR/Issu es/2018/11/27/Japan -2018-Article -IV-Consultation -Press -
Release -Staff-Report -and-Statement -by-the-Executive -46394 ; and OECD (2019), OECD Economic Surveys: 
Japan  2019, OECD Publishing, Paris. Viewed at: https://doi.org/10.1787/fd63f374 -en. 
5 As at 2015, Japan's income inequality indicator stood at 0.339 compared to 0.330 in 2012. The Gini 
coefficient is based on the comparison of cumulative proportions of the population against cumulative 
proportions of inco me they receive, and it ranges between 0 in the case of perfect equality and 1 in the case of 
perfect inequality.  As at 2015 , Japan's poverty gap stood at 0.337 compared to 0.339 in 2012. The poverty 
gap is the ratio by which the mean income of the poor falls below the poverty line. The poverty line is defined 
as half the median household income of the total population.  In 2015, t he relative poverty rate of the elderly in 
Japan was 20%, well above the 12.5% OECD average.  OECD (2019), OECD Economic Su rveys: Japan 2019 , 
OECD Publishing, Paris. Viewed at: https://doi.org/10.1787/fd63f374 -en OECD (2019), Income inequality 
(indicator)  (doi: 10.1787/459aa7f1 -en) (Accessed on 28 May 2019) ; OECD (2019), Pove rty gap (indicator) doi: 
10.1787/349eb41b -en (Accessed on 28 May 2019) . 
6 IMF (2018), Japan : 2018 Article IV Consultation  — Press Release; Staff Report; and Statement by the 
Executive Director for Japan,  IMF Country Report No. 18/333, 28 November, Washingt on, D.C. Viewed at: 
https://www.imf.org/en/Publications/CR/Issues/2018/11/27/Japan -2018-Article -IV-Consultation -Press -
Release -Staff-Report -and-Statement -by-the-Executive -46394 ; and OECD (2019), OECD Economic Surveys: 
Japan 2019 , OECD Publishing, Paris. Viewed at: https://doi.org/10.1787/fd63f374 -en. 
7 Bank of Japan,Statement by Haruhiko Kuroda, Governor of the Bank of Japan, concerning the Bank's 
Semiannual Report on Currency and Monetary Control before the Committee on Financial Affairs, House of 
Councillors, on M ay 9, 2019. Viewed at: 
https://www.boj.or.jp/en/announcements/press/koen_2019/data/ko190509a.pdf . WT/TPR/S/397 • Japan  
 
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Table 1.1 Selected macroeconomic indicators, 20 14-18 
  2014  2015  2016  2017  2018  
National accounts (% change, unless otherwise indicated)  
GDP real growth rate  0.4 1.2 0.6 1.9 0.8 
Consumption  -0.5 0.2 0.3 0.9 0.5 
Private consumption  -0.9 -0.2 -0.1 1.1 0.4 
Government consumption  0.5 1.5 1.4 0.3 0.8 
Gross fixed capital formation  3.1 1.6 -0.3 2.9 1.1 
Exports of goods and services  (XGS)  9.3 2.9 1.7 6.8 3.3 
Imports of goods and services  (MGS)  8.3 0.8 -1.6 3.5 3.4 
XGS/GDP (%) (at current market price)  17.5 17.6 16.3 17.8 18.5 
MGS/GDP (%) (at current market price)  20.0 18.0 15.3 16.8 18.2 
Unemployment rate (%)  3.6 3.4 3.1 2.8 2.4 
Productivity (% change)  
Labour productivity  0.1 1.4 -0.1 1.2 0.5 
Multi-factor  productivity  0.0 1.2 0.4 .. .. 
Prices and interest rates (%, unless otherwise indicated)  
Consumer price index (CPI) (average, % change)  2.8 0.8 -0.1 0.5 1.0 
GDP deflator (% change)  1.7 2.1 0.3 -0.2 -0.1 
Discount rate  0.30 0.30 0.30 0.30 .. 
Six-month London interbank offered rate (LIBOR )  0.178  0.132  0.013  0.015  0.015  
Deposit rate  0.415  0.406  0.300  0.321  .. 
Lending rate  1.219  1.143  1.045  0.994  .. 
Interest rate spread  0.804  0.737  0.744  0.673  .. 
Exchange rates       
JPY/USD (annual average)  105.94  121.04  108.79  112.17  110.42  
NEER based on Unit Labour Costs, Index 
(2010=100)  81.24  77.59  87.58  83.62  83.32  
NEER, Index (2010=100)  81.09  75.74  87.50  84.43  84.67  
REER based on C PI, Index (2010=100)  74.58  69.40  78.82  75.01  74.38  
REER based on Unit Labour Costs, Index 
(2010=100)  78.16  74.36  84.58  78.72  77.56  
Money and credit (% change)  
Broad money (M2)  3.4 3.7 3.4 4.0 2.9 
Domestic credit to private sector  2.5 3.0 1.7 5.2 0.1 
General government (% of current GDP)  
Revenue  33.3 34.2 34.3 34.2 33.9 
Expenditure  38.9 38.0 37.9 37.4 37.1 
Overall balance  -5.6 -3.8 -3.7 -3.2 -3.2 
Primary balance  -4.9 -3.2 -3.0 -2.7 -2.9 
Gross financial liabilities of general government  217.9  216.5  222.8  222.5  224.2  
Saving and investment (% of current GDP)       
National savings (gross)  24.7 27.1 27.4 27.9 27.9 
National investment  23.9 24.0 23.4 23.9 24.4 
External data (% of current GDP, unless otherwise indicated)  
Current account  0.7 3.1 4.0 4.1 3.5 
Merchandise trade balance  -2.1 -0.2 1.0 0.9 0.2 
Merchandise exports  14.4 14.2 12.9 14.2 14.8 
Merchandise imports  16.5 14.3 11.9 13.3 14.6 
Services balance  -0.6 -0.4 -0.2 -0.1 -0.1 
Capital account  3.4 3.7 3.6 3.8 3.9 
Financial account  4.0 4.1 3.8 4.0 4.0 
Direct investment  0.0 -0.1 -0.1 -0.1 0.0 
Merchandise exports (% change in USD)  0.6 -11.0 2.2 8.3 6.8 
Merchandise imports (% change in USD)  1.8 -21.2 -7.1 10.3 12.3 
Service exports (% change in USD)  21.0 -0.7 8.0 6.3 3.7 
Service imports (% change in USD)  12.7 -7.2 4.4 3.6 4.1 WT/TPR/S/397 • Japan  
 
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  2014  2015  2016  2017  2018  
Terms of trade  86.2 98.4 106.8  101.4  95.5 
Total reserves, excluding gold (US D billion)  1231.0  1207.0  1188.3  1232.2  1238.9  
% of GDP  25.4 27.5 24.1 25.4 24.9 
in months of imports of goods and services  14.2 16.8 17.0 16.2 14.7 
Gross external debt (JPY trillion, end -period)  328.9  356.0  399.5  406.4  444.7  
Short -term 247.1  265.6  296.0  292.2  321.1  
Long-term 78.6 86.9 97.9 108.3  116.7  
Direct investment: intercompany lending  3.2 3.5 5.6 5.9 6.9 
Debt service ratio  .. .. .. .. .. 
.. Not available.  
Note: Annual percentage changes under the national account are based on chain -linked 2011 real figures.  
Source:  Cabinet Office (Japan), Ministry of Finance (Japan), International Monetary Fund ( IMF), World Bank, 
and OECD online information.  
1.2  Recent Economic Developments  
1.2.1   Growth, income, and employme nt 
1.3.  During the review period (2016 -18), the annual average GDP growth rate stood at 1.1%, a 
minor slowdown compared to the average of 1.2% over the period 2013 -15 (Table 1.1).  Growth 
above its estimated potential rate continued to be supported by the "three arrows" of Abenomics , 
and by both domestic and external demand , where corporate profits and fixed business investment 
remain favourable, even after accounting for recent natural disasters.8 An increase in private 
consumption, which was supported by improvement in employment and income conditions, 
constituted another factor that stimulated growth.  Nevertheless, output growth slowed since 2017, 
reflecting weaker exports as world trade decelerated.9 As at May 2019, Japan's economy was likely 
to continue  on a moderate expanding trend, despite being affected by the current slowdown in 
overseas economies.10According to the IMF, underlying growth is to remain solid, notwithstanding 
the effects of the October 2019 consumption tax rate hike from 8% to 10% (Sect ion 1.2.4. 1), and 
growth will move closer to its estimated potential over the medium term.11 According to the OECD, 
output growth is expected to remain close to 0.75% through 2020, as shortages of labour and 
capacity, combined with record -high profits, cont inue to support business investment and wages.12  
1.4.  Since 2016, the overall sectoral pattern of Japan's GDP and employment has remained virtually 
unchanged (Table 1.2). According to OECD data, the annual growth rate of multi -factor productivity 
in the economy  was -0.05% (2014), 1.05% (2015), -0.02% (2016) and 1.20% (2017); the annual 
growth rate of labour productivity forecast stood at 0.99% (2014), 1 .00% (2015), 0.99% (2016), 
1.00% (2017) and 0.99 % (2018  and 2019).13 According to the OECD, since 2012 , labour 
productivity growth has slowed to an annual pace of 1.0%; the Government set a goal to double 
                                                
8 IMF (201 8), Japan : 2018 Article IV Consultation  — Press Release; S taff Report; and Statement by the 
Executive Director for Japan,  IMF Country Report No. 1 8/333 , 28 November , Washington, D.C. Viewed at:  
https://www.imf.org/en/Publications/CR/Issues/2018/11/27/Japan -2018-Article -IV-Consultation -Press -
Release -Staff-Report -and-Statement -by-the-Executive -46394 ; OECD (2019), OECD Economic Surveys: Japan 
2019, OECD Publishing, Paris.  Viewed at: https://doi.org/10.1787/fd63f374 -en. 
9 OECD (2019), OECD Economic Surveys: Japan 2019 , OECD Publishing, Paris. Viewed at: 
https://doi.org/10.1787/fd63f374 -en. 
10 Bank of Japan online information. Viewed  at: 
https://www.boj.or.jp/en/announcements/press/koen_2019/data/ko190509a.pdf . 
11 According to the IMF, in the absen ce of effective mitigating fiscal measures, the consumpti on tax 
increase could lead to volatility in private consumption and investment . Its effect is expected to  carry past 
2019 and adversely affect domestic demand and overall growth in 2020.  IMF (201 8), Japan:  2018 Article IV 
Consultation  — Press Release; Staf f Report; and Statement by the Executive Director for Japan , IMF Country 
Report No. 1 8/333 , 28 November , Washington, D.C. Viewed at:  
https://www.imf.org/en/Publications/CR/Issues/2018/11/27/Japan -2018-Article -IV-Consultation -Press -
Release -Staff-Report -and-Statement -by-the-Executive -46394 . 
12 OECD (2019), OECD Economic Surveys: Japan 2019, OECD Publishing, Paris.  Viewed at: 
https://doi.org/10.1787/fd63f374 -en. 
13 OECD data as at 12 November 2019. Viewed at:  https://data.oecd.org/lprdty/multifactor -
productivity.htm#indicator -chart and https://data.oecd.org/lprdty/labour -productivity -forecast.htm#i ndicator -
chart. WT/TPR/S/397 • Japan  
 
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productivity growth to 2% by 2020, including by promoting artificial intelligence and robots , as well 
as measures for the Supply System Innovation under the 2017 N ew Economic Policy Package 
(Sections 2.1 and 2.4.2).14 Furthermore, according to the OECD , despite a high level of public 
support for SMEs, in financial year ( FY) 2017, productivity in large firms was 2.5 times higher than 
in SMEs in manufacturing, a large gap by international standards (Sections 1.1, 1.2.4.1, 1.2.4.3, 
1.2.4.4 and 3.3. 1.2).15 Nevertheless, according to the World Economic Forum's Global 
Competitiveness report for 2018, Japan was the world's fifth most competitive nation out of 140 
countries (S ection 2.4.2). According to United Nations Conference on Trade and Development 
(UNCTAD ) estimates, in 2017 , Japan ranked 19th (17th in 2010) among the world's 25 top exporting 
economies by  global value chain  (GVC) participation rate , as its average GVC participation growth 
was zero in the period 2010 -17 compared to 9% between 2000 and 2010; its GVC participation in 
exports (48%) stood below the average level of both the developed (60%) and developing (56%) 
exporting economies.16  
Table  1.2 Basic economic indicators, 2014 -17 
  2014  2015  2016  2017a 
Real GDP  (JPY trillion, 2011 price (chain -linked))  510.7  516.9  520.1  530.1  
Current GDP (JPY trillion)  513.9  531.3  536.0  545.1  
Current GDP (USD billion)  4,850.4  4,389.5  4,926.7  4,859.8  
GDP per capita at current market price (USD)  38,156.2  34,568.8  38,804.9  38,342.7  
GDP by economic activity (2011 real price, chain -linked, % change)  
Agriculture, forestry, and fishing  -3.1 -4.5 -7.6 -1.7 
Mining  -3.5 -19.0 -9.5 11.4 
Manufacturing  3.0 4.1 -0.7 3.7 
Transport equipment  4.7 6.6 -1.0 6.1 
General -purpose, production and business -oriented 
machinery  3.5 5.9 -3.1 9.7 
Food products and beverages  1.7 3.8 1.1 -0.5 
Chemicals  0.7 12.7 9.7 -2.2 
Basic metals  3.6 -4.9 2.8 0.5 
Construction  3.9 0.9 1.5 4.2 
Electricity, gas and water supply  1.1 -9.7 1.2 9.4 
Electricity supply  6.0 -15.2 2.6 14.7 
Gas and water supply  -1.2 -6.3 0.2 4.9 
Services  -0.4 1.1 0.7 1.3 
Wholesale and retail trade  -3.8 2.0 0.0 1.5 
Wholesale trade  -5.3 3.6 1.5 2.8 
Retail trade  -1.5 -0.4 -2.1 -0.4 
Transport and postal services  2.3 -3.8 -1.6 3.2 
Accommodation and food service activities  1.1 -5.4 4.7 1.9 
Information and communications  0.6 2.3 -0.2 0.9 
Communications and broadcasting  -0.1 2.7 0.5 1.3 
Information, image and sound  1.2 2.0 -0.7 0.5 
Finance and insurance  0.0 4.1 -1.4 2.5 
Real estate  1.3 1.3 1.1 1.6 
Renting of dwellings  1.6 1.7 0.9 1.6 
Other real estate  -0.5 -1.4 2.1 1.7 
Professional, scientific and technical activities  -1.2 1.1 4.0 0.1 
Public administration  0.4 -0.2 0.0 0.0 
Education  0.7 1.1 0.4 0.6 
Human health and social work activities  -0.5 4.3 2.7 0.8 
Other service activities  -0.2 -1.5 -2.1 0.6 
Share of economic activities in current GDP, at factor cost (%)  
Agriculture, forestry, and fishing  1.1 1.1 1.2 1.2 
Mining  0.1 0.1 0.1 0.1 
                                                
14 According to the authorities, the productivity -enhancing measures of the Package included: the 
establishment and enforcement of the Act on Special Measures for Productivity Improvement (regulatory 
sandbox, promotion of industrial data uti lization, etc.); tax reduction on capital investment by SMEs; 
establishment and enforcement of tax policies, such as the reduction of corporate tax on companies actively 
investing in equipment and information technology; budget measures such as the Subsidy  for Manufacturing 
and Service of SMEs; and the promotion of regulatory reforms, such as the System Improvements of Self -
Driving -Cars.OECD, OECD Economic Surveys: Japan 2019 . Viewed at: https://doi.org/10 .1787/fd63f374 -en. 
15 OECD (2019), OECD Economic Surveys: Japan 2019 , OECD Publishing, Paris. Viewed at: 
https://doi.org/10.1787/fd63f374 -en. 
16 UNCTAD (2018) , World Investment Report 2018 – Investment and New Industrial Policies , Geneva. 
Viewed at: https://unctad.org/en/PublicationsLibrary/wir2018_en.pdf . WT/TPR/S/397 • Japan  
 
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  2014  2015  2016  2017a 
Manufacturing  19.9 20.9 20.8 20.8 
Transport equipment  3.1 3.4 3.2 3.3 
General -purpose, production and business -oriented 
machinery  2.9 3.1 3.0 3.2 
Food products and beverages  2.4 2.5 2.6 2.5 
Chemicals  1.9 2.2 2.3 2.2 
Basic metals  1.8 1.8 1.8 1.8 
Construction  5.6 5.6 5.6 5.8 
Electricity, gas and water supply  2.4 2.6 2.6 2.6 
Electricity supply  0.9 1.2 1.2 1.2 
Gas and water supply  1.5 1.5 1.4 1.4 
Services  71.0 69.7 69.7 69.5 
Wholesale and retail trade  14.4 14.1 13.9 14.0 
Wholesale trade  8.6 8.4 8.3 8.5 
Retail trade  5.8 5.6 5.6 5.5 
Transport and postal services  5.2 5.1 5.1 5.1 
Accommodation and food service activities  2.5 2.3 2.6 2.5 
Information and communications  5.1 5.1 5.0 4.9 
Communications and broadcasting  2.3 2.3 2.3 2.2 
Information, image and sound  2.8 2.7 2.7 2.7 
Finance and insurance  4.5 4.4 4.2 4.2 
Real estate  11.8 11.5 11.5 11.4 
Renting of dwellings  10.2 9.9 9.9 9.8 
Other real estate  1.6 1.5 1.6 1.6 
Professional, scientific and technical activities  7.3 7.3 7.5 7.5 
Public administration  5.2 5.0 5.0 5.0 
Education  3.7 3.6 3.6 3.6 
Human health and social work activities  6.8 6.9 7.1 7.0 
Other service activities  4.6 4.4 4.3 4.3 
Share of employment by economic activity (%)  
Agriculture, forestry, and fishing  4.1 4.0 3.9 3.8 
Mining  0.1 0.1 0.1 0.1 
Manufacturing  15.5 15.3 15.2 15.2 
Food products and beverages  2.4 2.3 2.3 2.3 
Transport equipment  2.0 2.0 2.1 2.1 
General -purpose, production and business -oriented 
machinery  2.0 2.0 2.0 2.0 
Fabricated metal products  1.3 1.3 1.3 1.3 
Electrical machinery, equipment and supplies  1.0 1.0 1.0 1.0 
Construction  7.7 7.6 7.4 7.4 
Electricity, gas and water supply  0.9 0.9 0.9 0.9 
Services  71.8 72.1 72.6 72.7 
Wholesale and retail trade  17.4 17.3 17.2 17.2 
Transport and postal services  6.0 5.9 5.9 5.9 
Accommodation and food service activities  6.2 6.1 6.1 6.1 
Information and communications  2.7 2.8 2.7 2.8 
Finance and insurance  2.4 2.4 2.5 2.6 
Real estate  1.5 1.6 1.6 1.6 
Professional, scientific and technical activities  8.3 8.5 8.7 8.9 
Public administration  2.9 2.9 2.9 2.9 
Education  2.9 2.9 2.8 2.8 
Human health and social work activities  12.0 12.4 12.7 12.6 
Other service activities  9.5 9.4 9.4 9.3 
a Latest available data as at end -November 2019.  
Source:  Cabinet Office ; and IMF online information.  
1.5.  Japan's relatively low unemployment rate declined significantly to 2.4% in 2018 (Table 1.1) or 
less than half of the OECD average (5.3%).17 This reflects growth developments and the increasingly 
tight labo ur market. Furthermore, Japan's labour market remains characterized by the simultaneous 
hiring of new graduates, which helps to avoid periods of joblessness and contributes to the relatively 
low youth unemployment rate.18  
                                                
17 OECD , Unemployment rate . Viewed at:  https://data.oecd.org/unemp/unemployment -rate.htm . 
18 OECD (2019), OECD Economic Surveys: Japan 2019 , OECD Publishing, Paris. Viewed at: 
https://doi.org/10.1787/fd63f3 74-en. WT/TPR/S/397 • Japan  
 
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1.2.2   Prices  
1.6.  During the review period, C PI inflation remained considerably below the Bank of Japan's target, 
picking up from -0.1% (2016) to 1 .0% in 2018, inter alia,  on the back of soaring vegetable prices, 
higher energy prices, high raw materials prices , and personnel expenses reflected in fir ms' prices , 
as well as quantitative and qualitative monetary easing, accompanied by yield curve control and 
negative interest rates since 2016 (Table 1.1, Section  1.2.3.1).19 According to the authoritie s, 
sluggish inflation was also partly due to firms' pre ference to invest in labour -saving technology rather 
than raise prices and wages. A ccording to the IMF , under current policies, including the 2.2% hike 
in unit labour costs in 2018,  a consumption tax -induced spike expected in 20 20 and the provision of 
free childcare for children aged three to five, with the output gap remaining positive, inflation is 
likely to rise gradually but to remain below target.20  
1.2.3   Main macroeconomic  policy developments  
1.2.3.1   Monetary and exchange rate policy  
1.7.  The B ank of Japan (BoJ), the independent central bank, has continued to carry out currency 
and monetary control to achieve a price stability target of 2%.21 To this end , it has encouraged 
short- and long -term interest rates to remain at target levels , and has pu rchased assets, mainly 
through open market operations classified into two broad categories: operations to supply funds to 
financial markets via loans or the purchase of Japanese government bonds (JGBs); and operations 
to absorb funds from financial markets , such as sales of bills issued by the BoJ and sales of Japanese 
government securities (JGSs) held by the BoJ with repurchase agreements.  
1.8.  A loose monetary policy continued to provide a monetary stimulus to growth , and helped to 
build a stable financial env ironment. Since  2013, the BoJ has maintained a framework of Quantitative 
and Qualitative Monetary Easing (QQE) . The 2016 QQE with a negative interest rate was 
strengthened in September 2016 with a QQE with Yield Curve Control.22 In July 2018, the BoJ 
decide d to strengthen its commitment to achieving the price stability by maintaining low levels of 
short- and long -term interest rates for an extended period of time, taking into account uncertainties 
regarding economic activity and prices , including the effects  of the October 2019 consumption tax 
                                                
19 IMF (201 8), Japan:  2018 Article IV Consultation  — Press Release; Staff Report; and Statement by the 
Executive Director for Japan , IMF Country Report No. 1 8/333 , 28 November , Washington, D.C. Viewed at:  
https://www.imf.org/en/Publications/CR/Issues/2018/11/27/Japan -2018-Article -IV-Consult ation-Press -
Release -Staff-Report -and-Statement -by-the-Executive -46394 ; OECD (2019), OECD Economic Surveys: Japan 
2019, OECD Publishing, Paris. Viewed at: https://doi.org/10.1787/fd63f374 -en; and BoJ, Statement by 
Haruhiko Kuroda, Governor of the Bank of Japan, concerning the Bank's Semiannual Report on Currency and 
Monetary Control before the Committee on Financial Affairs, House of Councillors, on 9 May 2019 . Viewed at:  
https://www.boj.or.jp/en/announcements/press/koen_2019/data/ko190509a.pdf . 
20 IMF (201 8), Japan:  2018 Article IV Consultation  — Press Release; Staff Report; and Statement by the 
Executive Director for Japan, IMF Country Report No. 1 8/333 , 28 November , Washington, D.C. Viewed at:  
https://www.imf.org/en/Publications/CR/Issues/2018/11/27/Japan -2018-Article -IV-Consultation -Press -
Release -Staff-Report -and-Statement -by-the-Executive -46394 ; OECD (2019), OECD Economic Surveys: Japan 
2019, OECD Publishing, Paris. Viewed at: https://doi.org/10.1787/fd63f374 -en; and BoJ, Statement by 
Haruhiko Kuroda, Governor of the Bank of Japan, concerning the Bank's Semiannual Report on Currency and 
Monetary Control before the Committee on Financial Affair s, House of Councillors, on May 9, 2019 . Viewed at:  
https://www.boj.or.jp/en/announcements/press/koen_2019/data/ko190509a.pdf . 
21 BoJ, About the Bank . Viewed at:  https://www.boj.or.jp/en/about/outline/index.htm/ ; and What is  
monetary policy and how is it carried out inJapan?  Viewed at: 
https://www.boj.or.jp/en/announcements/education/oshiete/seisaku/b26.htm/ . 
22 In January 2016 , the BoJ  introduc ed a negative interest rate of -0.1% on  part of  banks ' excess 
reserves, a policy also used by a number of European central banks. With headline inflation falling back into 
negative territory in the second quarter of 2016, it introduced QQE with yield curve control in September 2016 , 
that consists of two major  components: the first is yield curve control , in which the BoJ controls short - and 
long-term interest rates through market operations; and the second is an inflation -overshooting commitment , 
in which the BoJ commits to expanding the monetary base until th e year -on-year rate of increase in the 
observed CPI exceeds the price stability target of 2 % and stays above the target in a stable manner.  BoJ, What 
is Quantitative and Qualitative Monetary Easing (QQE) with Yield Curve Control?  Viewed at: 
https://www.boj.or.jp/en/announcements/education/oshiete/seisaku/b27.htm/ ; OECD (2019), OECD Economic 
Surveys: Japan 2019 , OECD Publishing, Paris. Viewed at: https://doi.org/10.1787/fd63f374 -en; and 
WTO document WT/TPR/S/351/Rev.1, 20 June 2017 . WT/TPR/S/397 • Japan  
 
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hike.23 The BoJ decided to conduct market operations and asset purchases in a more flexible manner 
(i.e. widening the range for the 10 -year JGB yield, in effect allowing yields to drift upward and 
downward) in order to e nhance the sustainability of the QQE with Yield Curve Control; it also 
explicitly committed to keep short - and long -term policy rates low for an extended period of time. 
Since then, the degree of market functioning has improved , with the BoJ conducting JGB  purchases 
in a flexible manner. In April 2019, the BoJ decided to clarify forward guidance for policy rates 
introduced in July 2018 , and maintain the current extremely low levels of short - and long -term 
interest rates for an extended period of time, at le ast through around spring 2020, taking into 
account uncertainties regarding economic activity and prices including developments in overseas 
economies and the effects of the scheduled consumption tax hike.24 At the same time , it decided to 
take measures for the expansion of eligible collateral for the BoJ's provision of credit, thereby 
contributing to smooth fund -provisioning , and securing market functioning. Under the QQE, as at 1 
March 2019 , the BoJ's holdings of JGBs had reached 85% of GDP.25 On 31 October 2019, the BoJ 
decided on a new forward guidance where , as for the policy rates, it expected short - and long -term 
interest rates to remain at their current or lower levels as long as it was necessary to pay close 
attention to the possibility that the momentum toward achieving the price stability target is lost .26 
Regarding the short -term rates, the BoJ would apply a negative interest rate of minus 0.1% to the 
Policy -Rate Balances in current accounts held by financial institutions at the BoJ. Concerning the 
long-term interest rate, the BoJ would purchase JGBs so that 10 -year JGB yields remain at around 
zero percent. Monetary policy is expected to remain accommodative , and support favourable 
financial conditions , possibly for an extended period , to successfully reflate the economy, while 
carefully monitoring and mi tigating side effects.27 
1.9.  Japan continues to maintain a free -floating exchange rate regime; there has been no foreign 
exchange intervention in recent years (last one in 2011).28 The exchange system is free of 
restrictions on the making of payments and transfe rs for current international transactions, with the 
exceptions of restrictions imposed solely for the preservation of national or international security. 
According to the IMF, Japan's 2018 external position and real exchange rate were projected to be 
broad ly consistent with fundamentals and desirable policies.29 Furthermore, the IMF indicated that 
heightened global uncertainty contributed to a slight appreciation in the JPY/USD exchange rate 
(Table 1.1) and weaker equity prices.   
                                                
23 The policy guideline set the short -term policy interest rate at minus 0.1 % on the Policy -Rate Balances 
in current accounts . While the target level of the  10-year JGB yields was maintained at around zero  interest , 
the B oJ made it clear that the actual yields might move upward or downward to some extent , mainly 
depending on developments in economic activity and prices. Regarding  the amount  of JGBs to be purchased, 
the B oJ would: purchase them promptly and appropriately  in case of a rapid increase in the yields ; and  
purchase them in a flexible manner so that their outstanding amount w ould increase at an annual pace of 
about  JPY 80 trillion.  IMF (201 8), Japan:  2018 Article IV Consultation  — Press Release; Staff Report; and 
Statement by the Executive Director for Japan , IMF Country Report No. 1 8/333 , 28 November , Washington, 
D.C. Viewed at:  https://www.imf.org/en/Publications/CR/Issues/2018/11/27/Japan -2018-Article -IV-
Consultation -Press -Release -Staff-Report -and-Statement -by-the-Executive -46394 ; BoJ,  Strengthening the 
Framework for Continuous Powerful Monetary Easing . Viewed at: 
http://www.boj.or.jp/en/mopo/mpmdeci/state_2018/k180731a.htm/ ; and BoJ,  Statement on Monetary Policy, 
25 April 2019 . Viewed at:  https://www.boj.or.jp/en/announcements/release_2019/k190425a.pdf . 
24 BoJ, Statement by Haruhiko Kuroda, Governor of the Bank of Japan, concerning the Bank's 
Semiannual Report on Currency and Monetary Control before the Committee on Financial Affairs, House of 
Councillors, on May 9, 2019.  Viewed at: 
https://www.boj.or.jp/en/announcements/press/koen_2019/data/ko190509a.pdf . 
25 OECD (2019), OECD Economic Surveys: Japan 2019 , OECD Publishing, Paris. Viewed at: 
https://doi.org/10.1787/fd63f3 74-en. 
26 BoJ, Statement on Monetary Policy 31 October 2019 . Viewed at: 
https://www.boj.or.jp/en/mopo/mpmdeci/state_2019/index.htm/ . 
27 IMF (201 8), Japan:  2018 Article IV Consultation  — Press Release; Staff Report; and Statement by the 
Executive Director for Japan , IMF Country Report No. 1 8/333 , 28 November , Washington, D.C. Viewed at:  
https://www.imf.org/en/Publications/CR/Issues/2018/11/27/Japan -2018-Article -IV-Consultation -Press -
Release -Staff-Report -and-Statement -by-the-Executive -46394 . 
28 IMF (201 8), Japan:  2018 Article IV Consultation  — Press Release; Staff Report; and Statement by the 
Executive Director for Japan , IMF Country Report No. 1 8/333 , 28 November , Washington, D.C. Viewed at:  
https://www.imf.org/en/Publications/CR/Issues/2018/11/27/Japan -2018-Article -IV-Consultation -Press -
Release -Staff-Report -and-Statement -by-the-Executive -46394 . 
29 IMF (201 8), Japan:  2018 Article IV Consultation  — Press Release; Staff Report; and Statement by the 
Executive Director for Japan , IMF Country Report No. 1 8/333 , 28 November , Washington, D.C. Viewed at:  
https://www.imf.org/en/Publications/CR/Issues/2018/11/27/Japan -2018-Article -IV-Consultation -Press -
Release -Staff-Report -and-Statement -by-the-Executive -46394 . WT/TPR/S/397 • Japan  
 
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1.2.3.2   Fiscal policy  
1.10.   The fiscal def icit of the general government (central Government, local government and social 
expenditure) declined slightly from 3.8% (2015) to 3.2% (2017 and 2018) of GDP (Table 1.1.) as a 
result of efforts to reduce the primary deficits of the central and local gover nments . With major 
expenditure consisting of social welfare, public works and defence, the fiscal deficit continues to be 
mainly financed by tax revenue and the issuance of JGBs.30 Gross financial liabilities of general 
government rose from 216.5% of GDP in  2015 to 224.2% in 2018, the highest ever recorded in the 
OECD area.31 Japan's sizeable fiscal shortfalls are partly due to either revenue shortfall or 
expenditure overruns, for which supplementary budgets are , inter alia , needed to supplement the 
annual bu dget. Due to lower -than-expected growth, repeated supplementary budgets (three in 
FY2016, one in FY2017, and two in FY2018) and delays in the consumption tax rate hike from 8% 
to 10%, the FY2018 benchmark for the primary deficit of central and local govern ments was 
missed.32 The New Plan to Advance Economic and Fiscal Revitalization (Cabinet Decision of 15 June 
2018) postponed the primary surplus target of central and local governments from FY2020 to 
FY2025; according to the IMF , while the Plan sets up a rev iew of the social security system by 
FY2020, the current framework lacks a long -term plan to address the increases in social security 
expenditures and ensure debt sustainability.33 The Council on Economic and Fiscal Policy, which is 
chaired by the Prime Min ister and includes five ministers, the central bank governor and four private -
sector experts, also formulated three benchmarks for FY2021 to monitor progress: halving the 
primary deficit of central and local governments from its FY2017 level to around 1.5%  of GDP; 
reducing the outstanding debt of central and local government s to 180% -185% of GDP (according 
to the Government, it was 189% in FY2017); and cutting the fiscal deficit of central and local 
governments to below 3% of GDP.34  
1.2.4   Structural  policies  
1.11.   Trade and domestic reform are considered intrinsically linked , and constitute the "third arrow" 
of Abenomics. Japan's ambitious structural reform agenda, inter alia,  covering deregulation efforts 
in the gas and electricity markets , was aimed at l ifting growth, including reflation . However,  
according to the IMF, bottlenecks remain in labour and product markets, and in the corporate sector 
(Sections 1.2.4.3, 1.2.4.4 and 2. 4.2).35  
1.2.4.1   Tax reform  
1.12.   The 2019 tax reform proposals were, inter alia,  aimed at levelling demand fluctuations that 
could occur upon the consumption tax rate hike (see below) , ensur ing the termination of deflation 
and economic revitalization, address ing international tax avoidanc e in an effective manner, and 
develop ing the environment for tax payments taking into account the diversification of economic 
transactions.36 On 27 March 2019, the Diet reportedly approved legislation for the Government's tax 
reform proposals for 2019. Some  of the main measures affecting corporate and international taxation 
included: tax treatment of virtual currencies; amendments to the taxation of reorganizations; 
                                                
30 Population ageing has a major impact on the fiscal situation . Public social spending doubled from  11% 
of GDP in 1991 to 22% in 2018, surpassing the OECD average. Around 80% of this is for pensions, health and 
long-term care, the second -highest share in the OECD.  OECD (2019), OECD Economic Surveys: Japan 2019 , 
OECD Publishing, Paris. Viewed at: https://doi.org/10.1787/fd63f374 -en. 
31 OECD (2019), OECD Economic Surveys: Japan 2019 , OECD Publishing, Paris. Viewed at: 
https://doi.org/10.1787/fd63f374 -en. 
32 OECD (2019), OECD Economic Surveys: Japan 2019 , OECD Publishing, Paris. Viewed at: 
https://doi.org/10.1787/fd63f374 -en; and Ministry of Finance. Viewe d at: 
https://www.mof.go.jp/english/budget/budget/index.html . 
33 IMF (201 8), Japan:  2018 Article IV Consultation  — Press Release; Staff Report; and Statement by the 
Executive Director for Japan , IMF Country Report No. 1 8/333 , 28 November , Washington, D.C. Viewed at:  
https://www.imf.org/en/Publications/CR/Issues/2018/11/27/Japan -2018-Article -IV-Consultation -Press -
Release -Staff-Report -and-Statement -by-the-Executive -46394 . 
34 OECD (2019), OECD Economic Su rveys: Japan 2019 , OECD Publishing, Paris. Viewed at: 
https://doi.org/10.1787/fd63f374 -en. 
35 IMF (201 8), Japan:  2018 Article IV Consultation  — Press Release; Staff Report; and Statement by the 
Executive Director for Japan , IMF Country Report No. 1 8/333 , 28 November , Washington, D.C. Viewed at:  
https://www.imf.org/en/Publications/CR/Issues/2018/11/27/Japan -2018-Article -IV-Consultation -Press -
Release -Staff-Report -and-Statement -by-the-Executive -46394 . 
36 FY2019 Tax Reform (Main Point s), (Cabinet decision 21 December 2018) . Viewed at:  
https://www.mof.go.jp/english/tax_policy/tax_reform/fy2019/tax2019.pdf . WT/TPR/S/397 • Japan  
 
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amendment of the Earnings Stripping Rules (in force from 1  April 2020); Controlled Foreign 
Company (CFC) Rules (fiscal years of Japanese companies ending on or after 1 April 2019 in respect 
of CFC fiscal years beginning on or after 1 April 2018); Transfer Pricing Rules in line with OECD 
guidelines (in force from 1 April 2020); and amendments to th e treatment of repo transactions by 
specified foreign companies.37 Other areas where measures were passed included: individual income 
taxation (enhancement of the tax credit for housing loans; and creation of Forest Environment Tax 
(provisional) and Forest Environment Transfer Tax (provisional); review of the furusato nozei  or 
hometown tax donation system; and tax exemption schemes for the individual inhabitant tax , to 
deal with child poverty); asset taxation (creation of a new tax system for business succes sion by 
sole proprietors, etc.; and review of the tax exemption schemes for lump -sum gifts of educational 
funds and marriage/childcare funds); corporate taxation (revision of the research and development 
(R&D) tax credit scheme ; investment -friendly package s for SMEs ; establishment of local taxation 
systems for the sustainable development of cities and rural areas, etc.); consumption taxation 
(revisions to automobile taxation; and improvement of convenience of the consumption tax 
exemption system for foreign  tourists); and customs tariffs (extension of the application period of 
temporary tariff rates, etc.; and review of tariff rates , etc., on individual items).  
1.13.   Issues related to the consumption tax rate  hike from 8% to 10% on 1  October  2019, such as 
economi c/demand fluctuations and the impact on low-income households , have been of major 
concern.38 The authorities have envisaged taking a number of fiscal measures in the initial budgets 
for FY 2019 and FY 2020 to avoid a situation similar to the economic volatility that followed the 2014 
consumption tax rate hike.39 The measures under consideration inc lude: providing free early 
childhood education and care for children aged three to five; maintaining the consumption tax rate 
at 8% for foods and drinks , excluding liquors and eating -out services; increasing public investment 
in FY 2019 -20; introducing tax  or spending measures to support purchases of cars and homes; 
increasing support for older persons through subsidies and reduced long -term care insurance 
premiums for those with low income; providing vouchers for purchases of goods and services by 
low-income households and those with children under the age of three; and introducing point s 
rewards for purchases using cashless payment at small retailers. According to OECD estimates , the 
implementation of these measures could cost around 1% of GDP, offsetting the revenue from the 
tax rate hike in FY 2019 -20.40  
1.2.4.2   Privatization  
1.14.   During the review period, state involvement in the economy remained relatively unchanged , 
and was spread over several activities (e.g. trading of leaf tobacco, rice, wheat, barley and milk 
products , as well as energy, financial services, telecommunications , water supply,  and some 
transport -related activities), as there was a virtual standstill in the privatization process (Section 
3.3.5); some airport operation concessions were granted , and a  reduction of the government 
shareholding in Japan Post Holdings was underway during the review period (Sections 4.4.2 and 
4.4.7.2).  
1.2.4.3   Competition policy and corporate governance  
1.15.   Since its last Review,  Japan undertook competition policy -related legislative  amendments . 
The Antimonopoly Law was amended to  fulfil its commitments under the Comprehensive and 
Progressive Agreement for Trans -Pacific Partnership (CPTPP) (Section  2.3.2.1. 1) in 2018 , and to 
revise the surcharge system in 2019. The Unfair Competition Prevention Law was amended to 
                                                
37 KPMG, Japan e -Tax News . View ed at:  https://assets.kpmg/content/dam/kpmg/jp/pdf/2019/jp -en-e-
taxnews -20190327.pdf ; and Orbitax, Japan Passes 2019 Tax Reform Measures . Viewed at:  
https://www.orbitax.com/news/archive.php/Japan -Passes -2019-Tax-Reform -M-37132 . 
38 The 8% consumption tax rate was one of the lowest in the OECD; it was last raised from 5% in 2014. 
According to the OECD, achieving a sufficient primary surplus (Section 1.2.3.2) through the consumption tax 
alone would require raising the rate to between 20% and 26%, above the 19% OECD average.  OECD (2019), 
OECD Economic Surveys: Japan 2019 , OECD Publishing, Paris. Viewed at: https://doi.org/10.1787/fd63f374 -
en. 
39 IMF (201 8), Japan:  2018 Article IV Consultation  — Press Release; Staff Report; and Statement by the 
Executive Director for Japan , IMF Country Report No. 1 8/333 , 28 November , Washington, D.C. Viewed at:  
https://www.imf.org/en/Publications/CR/Issues/2018/11/27/Japan -2018-Article -IV-Consultation -Press -
Release -Staff-Report -and-Statement -by-the-Executive -46394 . 
40 OECD (2019), OECD Economic Su rveys: Japan 2019 , OECD Publishing, Paris. Viewed at: 
https://doi.org/10.1787/fd63f374 -en. WT/TPR/S/397 • Japan  
 
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encourage businesses to utilize data and increase productivity from new information technologies 
(Sections 2.1, 2.4.2 and 3.3.4.1).  
1.16.   The 2017 New Economic Policy Package (Sections 2.1 and 2.4.2) called for improving 
corporate governance to boost strategic investment in fixed assets, R&D and human resources.41 
The revision of the 2015 Corporate Governance Code, based on the G20/OECD Principles of 
Corporate Governance, and the Corporate Governance System Guideline in 2018 made a n umber of 
important changes relating to cross -shareholdings annual assessments, the diversity of corporate 
boards, chief executive officer appointment s/dismissal s, and independent advisory committees for 
nominations/remuneration (Section 3.3.4. 3). In additi on, the Group Governance System Guideline 
was formulated in 2019, demonstrating best practices for governance in the management of group 
companies, including those in the management of listed subsidiaries with a controlling shareholder. 
Furthermore, the 20 14 Stewardship Code was revised in 2017 to require asset managers to resolve 
conflicts of interest and to promote effective monitoring of asset managers by asset owners (e.g. 
corporate pension funds) (Section 3.3.4. 3).  
1.2.4.4   Labour market policies   
1.17.   During the r eview period, action was taken to address labour market rigidities, which is a 
priority reform area.42 According to the IMF, despite challenges posed by the dual labour market, 
seniority system, and long -working -hours culture, new regulations on wage gaps, working hours and 
overtime (to come into effect in April 2020) are to boost productivity.43 On 29 June 2018, legislation , 
commonly referred to as the Work Style Reform Law , was passed , principally to address issues 
related to work ing hours and to the disparity in treatment between regular and non -regular 
employees. It provides for: an upper limit for permitted overtime hours of 45 hours per month and 
360 hours per year or , under agreeme nt with workers , up to 100 hours of overtime per month, as 
long as they do not exceed an annual limit of 720 hours (large companies since April 2019, SMEs 
from April 2020); fair treatment of employees, regardless of employment status (large companies 
from April 2020, SMEs from April 2021); mandatory Paid Time Off usage by employees ( since April 
2019); a mandatory minimum interval between working hours ( since April 2019); reinforcement of 
the protective role of industrial (company) doctors; and the obligatio n of awareness of employee 
working hours.44 To promote faster growth in base wages, after the FY2018 Tax Reform (Cabinet 
Decision 22 December 2017) , the Government implemented a three -year corporate tax credit for 
firms that increase employees' pay by 3% a year or more and reach a certain threshold for domestic 
investment.45 Since  2016, it has also raised the minimum wage, which is only around 40% of the 
median wage, by 3% per year. An Overtime Work Improvement Subsidy, established in FY2017, 
encourages the i ntroduction of rest periods in SMEs , and the recently revised Act on Special 
Measures for Improvement of Working Hours Arrangements requires all firms to make "efforts" to 
establish an interval time.46  
                                                
41 OECD (2019), OECD Economic Surveys: Japan 2019 , OECD Publishing, Paris. Viewed at: 
https://doi.org/10.1787/fd63f374 -en. 
42 According to the OECD, Japan's traditional labour model – lifetime employment, a seniority -based 
wage system and mandatory retir ement – discourages the employment of older persons and women, and 
labour mobility. In 2016, 81% of firms set a mandatory retirement age of 60.  Those who are re -hired tend to 
work in non -regular jobs that pay less and do not fully utilize their skills. Acc ording to the World Economic 
Forum's Global Competitiveness Index, Japan is ranked as the 10th most severe among OECD countries  
restrictions on hiring and firing of workers.  The employment rate for women rose sharply over the past five 
years, from 60.7% in  2012 to 69.6% in 2018, well above the 60.1% OECD average ; nevertheless , half of the 
new workers are non -regular workers.  OECD (2019), OECD Economic Surveys: Japan 2019 , OECD Publishing, 
Paris. Viewed at: https://doi.org/10.1787/fd63f374 -en. 
43 IMF (201 8), Japan:  2018 Article IV Consultation  — Press Release; Staff Report; and Statement by the 
Executive Director for Japan , IMF Country Report No. 1 8/333 , 28 November , Washington, D.C. Viewed at:  
https://www.imf.org/en/Publications/CR/Issues/2018/11/27/Japan -2018-Article -IV-Consult ation-Press -
Release -Staff-Report -and-Statement -by-the-Executive -46394 . 
44 OECD (2019), OECD Economic Surveys: Japan 2019 , OECD Publishing, Paris. Viewed at: 
https://doi.org/10.1787/fd63f374 -en; and Orrick,  Japan Enacts Work Style Reform Law . Viewed at:  
https://blogs.orrick.com/employment/2018/08/08/japan -enacts -work-style-reform -law/. 
45 FY2018 Tax Reform (Main  Points) (Cabinet Decision on December 22, 2017) . Viewed at: 
https://www.mof.go.jp/english/tax_policy/tax_reform/fy2018/tax2018a.pdf; OECD (2019), OECD Economic 
Surveys: Japan 2019 , OECD Publishing, Paris. Viewed at: https://doi.org/10.1787/fd63f374 -en. 
46 OECD (2019), OECD Economic Surveys: Japan 2019 , OECD Publishing, Paris. Viewed at: 
https://doi.org/10.1787/fd63f374 -en. WT/TPR/S/397 • Japan  
 
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1.18.   Efforts toward further boosting labour supply in order  to compensate for demographic 
headwinds, including from female (Section 2.4.2), older and foreign workers, continued. In 
December 2018, the Diet approved a new status of residence for work -ready foreigners with certain 
expertise and skills in industries t hat need more workers, such as construction, agriculture and care 
workers, to be employed for up to five years in Japan for the first time , beginning in April 2019.47 
In line with the Basic Policy 2018 , which has  the subtitle of "Realizing Sustainable Econo mic Growth 
by Overcoming the Decreasing Birth Rate and Aging Population" , and with  the Growth Strategy 2018 
and 2019, the Government is to , inter alia , promote investment in human resources by greater 
labour participation of female and older workers and fr ee early childhood education ("human 
resources development revolution").48  
1.2.5   Balance of payments  
1.19.   Japan's merchandise trade deficit shifted to a declining surplus in 2016, 2017 and 2018 , 
whereas its declining deficit in services bottomed out in 2017 and rose in 2018 (Table 1.3). The 
merchandise trade surplus exceeded the deficit in services. Consequently, the current account 
registered a larger overall surplus, that rose from 3.1% of GDP in 2015 to a peak of 4.1 % in 2017 
(Table 1.1), inter alia,  due to a rising primary income surplus  (almost entirely investment income).  
Direct investment abroad, particularly toward Asia, was continuously in net outflow in recent years.  
According to the IMF, the current account surplus shrunk in 2018 to 3.5% of GD P, reflecting smaller 
goods trade and income balances; it was projected to 3.485% in 2019 .49  
Table 1.3 Balance of payments, 2014 -18 
(USD billion)  
  2014  2015  2016  2017  2018  
Current account  36.4  136.5  197.0  201.6  174.7  
Goods and services balance  -128.6  -23.3  40.4  37.6  4.0  
Goods balance  -99.8  -7.3  51.2  43.8  11.2  
Exports  699.2  622.0  635.8  688.7  735.7  
Imports  799.0  629.4  584.7  644.8  724.5  
Services balance  -28.8  -15.9  -10.7  -6.2  -7.2  
Receipts  163.8  162.7  175.7  186.8  193.7  
Payments  192.6  178.6  186.4  193.0  200.9  
Primary income  183.9  176.0  176.3  183.0  189.1  
Credit  256.8  248.7  265.5  278.9  297.4  
Compensation of employees  0.2  0.2  0.2  0.2  0.2  
Investment income  256.6  248.5  265.3  278.6  297.2  
Debit  72.9  72.6  89.2  95.9  108.3  
Compensation of employees  0.2  0.2  0.3  0.3  0.3  
Investment income  71.5  71.7  88.0  95.0  107.2  
Secondary income  -19.0  -16.3  -19.7  -18.9  -18.4  
Credit  16.6  16.9  17.9  20.1  21.9  
Debit  35.5  33.2  37.7  39.0  40.3  
Capital account  -2.0  -2.3  -6.6  -2.5  -1.9  
Balance on current and capital account  34.4  134.2  190.5  199.1  172.8  
                                                
47 The number of foreign employees (including foreign trainees) reported by firms doubled from 0.70 
million in 2013 to 1.46 million in October 2018; they account for only about 2% of Japan 's labour force, one of 
the lowe st shares in the OECD . It is estimated that, under the new residency status , up to 345 ,150 foreign 
workers are to be accepted in 14 industries  in the period 2019-24. OECD (2019), OECD Economic Surveys: 
Japan 2019 , OECD Publishing, Paris. Viewed at: https://doi.org/10.1787/fd63f374 -en. 
48 IMF (201 8), Japan:  2018 Article IV Consultation  — Press Release; Staff Report; and Statement by the 
Executive Director for Japan , IMF Country Report No. 1 8/333 , 28 November , Washington, D.C. Viewed at:  
https://www.imf.org/en/Publications/CR/Issues/2018/11/27/Japan -2018-Article -IV-Consultation -Press -
Release -Staff-Report -and-Statement -by-the-Executive -46394 . 
49 IMF (201 8), Japan:  2018 Article IV Consultation  — Press Release; Staff Report; and Statement by the 
Executive Director for Japan , IMF Country Report No. 1 8/333 , 28 November , Washington, D.C. Viewed at:  
https://www.imf.org/en/Publications/CR/Issues/2018/11/27/Japan -2018-Article -IV-Consultation -Press -
Release -Staff-Report -and-Statement -by-the-Executive -46394 ; IMF (2019)  World Economic Outlook, April; and 
IMF, World Economic Outlook, April 2019, Growth Slowdown, Precarious Recovery.  Viewed at: 
https://www.imf.org/en /Publications/WEO/Issues/2019/03/28/world -economic -outlook -april-2019. WT/TPR/S/397 • Japan  
 
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  2014  2015  2016  2017  2018  
Financial account  58.7  180.9  264.8  166.2  181.9  
Direct investment  118.2  133.2  137.7  153.4  133.2  
Japan's direct investment abroad  137.9  138.4  178.6  173.8  159.1  
Direct investment in Japan  19.8  5.3  41.0  20.4  25.9  
Portfolio investment  -40.3  132.4  268.0  -49.2  92.2  
Financial derivatives  34.3  17.9  -15.2  30.6  1.0  
Other investment  -61.9  -107.7  -120.4  7.9  -68.5  
Reserve assets  8.5  5.1  -5.3  23.6  23.9  
Net errors and omissions  24.4  46.7  74.3  -32.9  9.1  
Source:  IMF e -library data.  
1.20.   Japan's gross external debt, which remains largely short -term (72.2% in 2018), rose steadily 
over the review period (Table 1.1). No debt service ratio data and/or analysis were available from 
the authorities.  
1.21.   Since 2016, a bottom year, the annual amount of Japan's foreign exchange reserves 
(excluding gold) have increased steadily by an overall 10.4% , to about USD 1,239 billion in 2018 
(Table 1.1); they were equivalent to 24.9% of GDP and 14.7 months of imports of goods and 
services, compared to 24.1% of GDP and 17 .0 months in 2016, and almost four times the short -
term external debt. On 3 1 August  2019, according to Ministry of Finance data, they totalled 
USD 1,331.5  billion .50 Japan, remains the second largest foreign creditor of the United States; as at 
February 2019 , its holdings of US Treasury Bills stood at USD  1.07 trillion (having pea ked at the end 
of 2014 at USD  1.24 trillion).51  
1.3  Developments  in Trade and Investment  
1.3.1   Trends and patterns in merchandise and services trade  
1.22.   The relative  importance of international trade in Japan's economy, its degree of openness , 
and its integration into t he world economy and global value chains continued to be reflected in the 
ratio of its trade (exports plus imports) in goods and services to GDP; despite a drop from its 2014 
peak to a 2016 trough, this ratio increased to 36.7% in 2018 (Table  1.1).  
1.23.   Since its previous Review, Japan's merchandise trade (both for imports and exports) has 
remained largely dependent on manufactures (Chart 1.1, Tables A1.1 and A1.2). The share of 
non-electrical machinery and chemicals in total exports has risen, whereas the shar e of automotive 
equipment, office machines and telecommunications equipment and iron and steel has dropped. The 
share of fuels and other mining rose to 23.3% and 6.5% of total imports respectively whereas 
manufactures and agriculture dropped to 5 7.4% and 1 1.1%, respectively.  
1.24.   At the same time, while Japan's merchandise exports to economies in the region rose, their 
share in imports was reduced (Chart 1. 1, Tables  A1.1 and A1. 2). Notwithstanding some minor 
fluctuations in trade shares, Japan's main trading pa rtners remain China, the United States and the 
European Union. The share of Japan's merchandise trade with the European Union increased. China's 
share in exports rose , and  that in imports decreased; regarding the United States , the opposite 
occurred.  
1.25.   Durin g the review period, Japan remained a net importer of services, running a declining 
deficit in the services account , amounting to 0.1% of GDP in 2017 and 2018 (Section 1.2.5, and 
                                                
50 Ministry of Finance, International Reserves/Foreign Currency Liquidity (as of August 31, 2019) . 
Viewed at:  https://www.mof.go.jp/english/international_policy/reference/official_reserve_assets/e0108.html ; 
and International Reserves/Foreign Currency Li quidity (as of April 30, 2019).  Viewed at: 
https://www.mof.go.jp/english/international_policy/reference/official_reserve_assets/e3104.html . 
51 The authorities clarified that  the amount of the holdings of US Treasury Bills includes Japan 's foreign 
exchange  reserves and also th ose of Japanese financial institutions and Japanese companies, etc.  Viewed at:  
https://wolfstreet.com/2019/04/15/who -bought -the-huge-1-26-trillion -of-new-us-government -debt-over-the-
past-12-months/ . WT/TPR/S/397 • Japan  
 
- 27 - 
 
Tables  1.1 and 1.4). Business services, charges for intellectual property, tr ansportation and travel 
remain the major traded services.  
Chart 1.1 Product composition of merchandise trade, 2015 and 2018  
 
Source:  UNSD, Comtrade database (SITC Rev.3).  
Chart 1.1     Product composition of merchandise trade, 2015 and 2018
2015 2018
Exports (f.o.b.)
Automotive products
21.9%
Mining
4.3%
Total:   USD 624.9 billion Total:  USD 738.2 billion
Imports (c.i.f.)
Chemicals
10.2%Transport 
equipment
4.9%
Manufactures
59.5%Electrical machines  
17.5%
Non-electrical 
machinery  
5.8%Electrical machines
16.3%Other semi -manufactures
4.4%
Other semi -manuf.  
5.1%
Chemicals
10.2%Manufactures
57.4%
Total:   USD 625.6 billion Total:  USD 748.2 billionManufactures
86.8%Consumer goods
8.8%
Non-electrical machinery
15.6%
Other consumer 
goods  9.1%
Other
1.8%Other semi -manufactures
4.7%Other electrical 
machines
6.5%Other transport equipment
4.9%
Mining
4.3%Other electrical 
machines
6.5%
Office machines & 
telecommunication 
equipment
9.6%
Source:  UNSD, Comtrade database (SITC Rev.3) .Other consumer goods
9.8%Other 
7.2%Automotive products
21.5%
Other semi -manuf.
5.5%Other 
6.8%
Agriculture
11.1%Agriculture
11.9%Transport 
equipment
4.9%Chemicals
10.1%Chemicals
10.7%Agriculture
1.7% Agriculture  
1.6%Other transport equipment
5.1%
Fuels
23.3%Textiles & 
clothing  5.9%
Other 
1.7%Non-electrical 
machinery  6.5%Iron & steel
4.9%Consumer goods
8.9%
Manufactures
87.2% Iron & steel
4.2%
Non-electrical machinery
16.9%Office machines & 
telecommunication 
equipment
8.9%
Fuels
20.5%Other mining
6.5%Textiles & 
clothing  5.2%
Other mining
6.3%WT/TPR/S/397 • Japan  
 
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Chart 1.2 Direction of merchandise trade, 2015 and 2018  
 
Source:  UNSD, Comtrade database.  
Chart 1.2   Direction of merchandise trade, 2015 and 2018
2015 2018
Exports (f.o.b.)
Asia
56.1%
Total:   USD 624.9 billion Total:  USD 738.2 billion
Imports (c.i.f.)
EU-28
11.4%
Australia 
5.6%United States
10.9%Other
6.2%
EU-28
11.7%Other
5.1%
Other 
Middle East
5.3%United States
11.2%
Total:   USD 625.6 billion Total:   USD 833.2 billionOther America
5.6%
Saudi Arabia  
4.5%
Korea, Rep. of
4.3% Korea, Rep. of  
4.3%United States
20.2%United States
19.1%
Hong Kong, 
China  4.7%
Source:  UNSD, Comtrade database.Other Middle East
4.3%
China
25.7%Other Asia
15.6%
EU-28
11.4%Hong Kong,
China  5.6%Other
3.4%
Other Asia
17.0%China
19.5%EU-28
10.6%Thailand
4.5%
Chinese Taipei
5.9%Thailand
4.4%
China
17.5%Middle East
3.0%
Chinese Taipei 
3.6%Other Asia
16.4%
Other Asia   
17.9%Korea, Rep. of
7.0%Other
3.3%
Chinese Taipei
5.7%
Chinese Taipei  
3.7%Asia
54.2%Asia
57.1%Asia
57.9%
Australia
6.1%Korea, Rep. of
7.1%
China
23.2%Middle East
4.2%Other America
5.3%
Other America
5.3%Other America
5.2%
United Arab
Emirates  3.8%
United Arab 
Emirates  3.7%WT/TPR/S/397 • Japan  
 
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Table 1.4 Trade in services, 2014 -18 
  2014  2015  2016  2017  2018  
Total credit (USD billion)  163.8  162.7  175.7  186.8  193.7   
(% of total credit)  
Manufacturing services on physical inputs owned by 
others  0.2 0.1 0.4 0.4 0.4 
Maintenance and repair  1.2 0.4 0.5 0.5 0.5 
Transportation  24.2 21.8 18.0 18.3 14.9 
Travel  11.5 15.3 17.5 18.2 21.7 
Business  1.6 1.6 1.5 1.4 1.8 
Personal  9.9 13.8 16.0 16.8 19.9 
Construction  6.9 6.6 5.3 5.6 4.8 
Insurance and pension  1.0 1.0 1.2 1.2 1.3 
Financial services  4.5 6.3 6.7 5.6 6.0 
Charges for the intellectual property  22.8 22.4 22.3 22.3 23.5 
Telecommunication, computer and information  2.0 2.0 2.2 2.7 2.4 
Other business services  22.9 21.0 22.4 22.1 21.8 
Personal, cultural and recreational services  0.3 0.4 0.5 0.6 0.3 
Government goods and services n.i.e.  2.7 2.7 2.9 2.6 2.4 
Total debit (USD million)  192.6  178.6  186.4  193.0  200.9   
(% of total debit)  
Manufacturing services on physical inputs owned by 
others  2.6 2.5 2.8 2.8 2.5 
Maintenance and repair  3.7 1.9 2.4 2.6 2.7 
Transportation  23.8 23.0 20.5 20.8 19.1 
Travel  10.0 8.9 10.0 9.4 10.1 
Business  1.6 1.4 1.6 1.4 1.7 
Personal  8.5 7.6 8.4 8.0 8.4 
Construction  5.4 4.6 4.0 4.3 4.1 
Insurance and pension  2.7 2.7 3.1 3.3 3.6 
Financial services  2.7 3.4 3.3 4.0 4.1 
Charges for the intellectual property  10.9 9.5 10.9 11.1 10.8 
Telecommunication, computer and information  6.0 7.5 7.7 7.4 7.9 
Other business services  30.7 34.2 33.6 32.7 33.9 
Personal, cultural and recreational services  0.4 0.7 0.7 0.6 0.3 
Government goods and services n.i.e.  1.0 1.1 1.1 1.0 1.0 
Source:  IMF e-library data.  
1.3.2   Trends  and patterns in foreign direct investment ( FDI) 
1.26.   FDI is not only an additional source of capital. It is also considered to bring with it 
entrepreneurship, management skills and, especially, new technology, which contribute to improved  
multi-factor productivity. Japan's inbound FDI stocks as a share of GDP (4% in 2016) are the lowest 
in the OECD, due to tradition -related challenges in certain areas (e.g. mergers and acquisitions, 
corporate governance, and labour market rigidities) that are being addressed by the authorities.52 
FDI inflows peaked at USD  19.4 billion in 2016 (Table 1.5). During the review period, inflows were 
largely concentrated in the manufacturing of electric machinery, transportation equipment, and 
chemicals and pharmac euticals, as well as in services, mainly finance and insurance (Tables 1.4 and 
1.5); in 2018, they originated mainly in the United States, the Cayman Islands, the European Union 
and the Republic of Korea. The FDI inbound stock continued to rise steadily an d was largely held by 
European Union investors (Table 1.7). Despite a decline in its share, the United States remains the 
second FDI stock holder, followed by Singapore. Within the European Union, in 2017, the largest 
single stock holder remained the Nethe rlands, where around 80% of investment was in electrical 
machinery, followed by France, where over 70% of investment was in transportation equipment; 
                                                
52 U.S. Department of State, 2018 Investment Cli mate Statements: Japan . Viewed at: 
https://www.state.gov/reports/2018 -investment -climate -statements/japan/ ; and OECD, Foreign direct 
investment (FDI).  Viewed at:  https://www.oecd -ilibrary.org/finance -and-investment/fdi -
stocks/indicator/english_80eca1f9 -en. WT/TPR/S/397 • Japan  
 
- 30 - 
 
around 80% of the stock from North America was in the non -manufacturing sector, with the majority 
in the finance and insurance industry.53 
1.27.   Japan remains not only one of the major exporters of goods, but also of capital. Monetary 
easing in Japan and "search -for-yield" by Japanese investors continued to support FDI outflows and 
overseas diversification by institu tional investors.54 FDI outflows peaked in 2017 and then dropped 
by an overall 14.4% in 2018 (Table 1.5) . Unlike inflows, during the review period , outflows were 
largely concentrated in services (communications, and finance and insurance) and manufacturing 
(chemicals and pharmaceuticals,  and transportation equipment) (Table 1.5). At the same time, the 
main individual destinations were the European Union, the United States (albeit a decline) and the 
Cayman Islands. Similar to the inbound stock, the outward FD I stock continued to rise steadily, with 
the United States and the European Union remaining the main destinations (Table 1.7).  
Table 1.5 Inbound and outbound flows of direct investment, by activity, 2014 -18 
  2014  2015  2016  2017  2018  
Inbound flows  
Total (JPY billion)  1,274.5  360.2  2,106.1  1,231.3  1,088.5  
Total (USD billion)  12.0 3.0 19.4 11.0 9.9  
(% of total inbound flows)  
Manufacturing  35.0 84.2 64.9 91.4 134.4  
Food 9.9 6.1 2.2 2.4 2.2 
Textile s 0.3 3.4 0.1 0.2 -0.3 
Lumber and pulp  0.2 0.6 0.1 0.0 0.0 
Chemicals and pharmaceuticals  -2.5 39.4 2.4 -0.8 15.2 
Petroleum  -5.8 -0.1 -6.9 1.8 2.2 
Rubber and leather  -0.8 0.0 0.0 0.0 -0.1 
Glass and ceramics  0.8 5.1 -0.1 0.9 0.2 
Iron, non -ferrous, and metals  0.9 -2.4 -0.3 -0.2 0.4 
General machinery  5.1 15.1 6.1 16.2 -1.6 
Electric machinery  9.9 9.0 38.6 40.9 75.1 
Transportation equipment  10.8 -34.9 19.1 31.4 28.1 
Precision machinery  3.6 -0.7 -0.5 -2.7 -0.7 
Other manufacturing  2.7 43.7 4.1 1.4 13.6 
Non-manufacturing  65.0 15.8 35.1 8.6 -34.4 
Farming and forestry  0.0 0.3 0.0 0.1 0.4 
Fishery and marine products  0.0 0.1 0.0 0.0 0.2 
Mining  0.1 0.5 0.1 1.5 0.3 
Construction  -0.1 2.1 0.5 0.4 -2.1 
Transportation  -7.1 19.7 7.7 6.4 0.2 
Communications  14.4 34.1 5.4 -2.1 -27.1 
Wholesale and retail  -20.3 -132.4  -12.5 -47.5 -65.2 
Finance and insurance  62.4 50.9 18.0 15.6 44.7 
Real estate  1.9 -4.5 1.9 4.2 8.5 
Services  2.9 9.1 7.9 21.7 -0.9 
Other non -manufacturing  10.9 35.9 6.3 8.1 6.9 
Outbound flows  
Total (JPY billion)  13,862.2  16,492.1  16,964.8  18,471.9  15,808.3  
Total (USD billion)  130.8  136.2  155.9  164.7  143.2   
(% of total outbound flows)  
Manufacturing  50.0 37.4 34.9 34.2 38.3 
Food 14.4 2.6 2.4 6.1 0.2 
                                                
53 JETRO  (2018), JETRO Invest Japan Report 2018 , Novem ber. Viewed 
at:https://www.jetro.go.jp/en/invest/reports/ . 
54 IMF (201 8), Japan:  2018 Article IV Consultation  — Press Release; Staff Report; and Statement by the 
Executive Director for Japan , IMF Co untry Report No. 1 8/333 , 28 November , Washington, D.C. Viewed at:  
https://www.imf.or g/en/Publications/CR/Issues/2018/11/27/Japan -2018-Article -IV-Consultation -Press -
Release -Staff-Report -and-Statement -by-the-Executive -46394 . WT/TPR/S/397 • Japan  
 
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  2014  2015  2016  2017  2018  
Textile s 0.9 0.3 1.0 0.5 1.2 
Lumber and pulp  1.2 0.7 0.7 0.1 0.7 
Chemicals and pharmaceuticals  5.0 6.5 5.0 6.4 10.0 
Petroleum  0.4 -0.1 0.0 0.1 0.3 
Rubber and leather  2.4 1.4 2.3 0.7 1.1 
Glass and ceramics  1.4 1.2 0.7 1.0 1.2 
Iron, non -ferrous, and metals  5.1 1.8 2.6 2.1 2.6 
General machinery  5.6 5.8 4.0 5.3 4.3 
Electric machinery  4.6 6.2 6.4 3.7 5.7 
Transportation equipment  7.4 9.5 8.1 5.5 8.9 
Precision machinery  0.5 0.6 0.8 1.9 0.8 
Other manufacturing  1.0 0.8 0.8 0.9 1.1 
Non-manufacturing  50.0 62.6 65.1 65.8 61.7 
Farming and forestry  0.2 0.1 -0.1 -0.1 0.0 
Fishery and marine products  1.1 0.1 0.1 0.0 0.0 
Mining  4.1 3.5 4.0 0.5 5.5 
Construction  0.3 0.3 1.1 1.0 1.7 
Transportation  1.2 5.9 1.4 0.6 1.5 
Communications  5.9 8.7 11.4 13.8 27.2 
Wholesale and retail  14.2 10.0 12.0 16.9 9.8 
Finance and insurance  14.7 25.4 5.5 20.3 17.4 
Real estate  1.2 2.7 3.3 3.9 3.2 
Services  5.0 4.0 24.1 5.5 -9.0 
Other non-manufacturing  2.1 1.8 2.2 3.3 4.4 
Memorandum:       
JPY/USD  105.94  121.04  108.79  112.17  110.42  
Source:  Ministry of Finance (Japan) , Outward/Inward Direct Investment, breakdown by Region and Industry . 
Viewed at: 
https://www.mof.go.jp/english/international_policy/reference/balance_of_payments/ebpfdii.htm . 
Table 1.6 Inbound and outbound flows of direct investment, by main origin and 
destination, 2014 -18 
  2014  2015  2016  2017  2018  
Inbound flows  
Total (JPY billion)  1,274.5  360.2  2,106.1  1,231.3  1,088.5  
Total inbound flows (USD billion)  12.0 3.0 19.4 11.0 9.9  
(% of total inbound flows)  
United States  56.8 107.0  23.3 37.5 47.7 
Cayman Islands  5.3 4.7 3.0 29.4 37.3 
EU-28 -18.7 -164.4  29.4 23.5 19.8 
France  11.7 73.6 24.2 31.8 31.8 
United Kingdom  9.9 28.2 -6.3 0.9 10.8 
Belgium  -2.3 -1.0 0.3 -1.5 6.1 
Sweden  -11.5 -9.2 -0.4 2.4 1.8 
Republic of Korea  6.4 30.4 3.1 8.5 19.2 
Israel  2.4 -1.0 -0.1 0.2 12.7 
Hong Kong, China  13.3 29.3 6.5 -0.9 7.6 
China  2.8 2.8 1.4 5.5 4.5 
Chinese Taipei  9.9 18.4 11.9 6.8 4.4 
British Virgin Islands  0.5 0.6 1.3 -0.3 4.1 
Australia  3.7 12.5 2.3 2.8 1.0 
Saudi Arabia, Kingdom of  0.1 1.8 0.3 0.5 0.8 
Outbound flows  
Total (JPY billion)  13,862.2  16,492.1  16,964.8  18,471.9  15,808.3  
Total (USD  billion)  130.8  136.2  155.9  164.7  143.2  WT/TPR/S/397 • Japan  
 
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  2014  2015  2016  2017  2018   
(% of total outbound flows)  
EU-28 16.4 24.3 33.5 35.0 31.2 
United Kingdom  5.6 12.0 27.5 15.8 12.6 
Netherland s 3.4 5.3 2.0 9.0 5.5 
Ireland  0.4 -0.6 1.7 1.2 4.4 
Spain  0.7 0.4 0.5 0.2 3.0 
Germany  1.4 2.2 1.1 1.6 1.6 
United States  37.6 36.0 33.0 28.8 14.3 
Cayman Islands  0.8 5.8 13.1 2.4 11.7 
Singapore  6.2 5.1 -11.8 4.1 8.8 
China  8.0 6.9 6.3 6.5 7.3 
Thailand  4.2 2.8 2.7 3.3 3.8 
Republic of Korea  2.5 1.1 1.1 1.0 3.3 
Indonesia  3.7 2.3 2.0 2.2 2.2 
India  1.8 -0.8 2.7 0.9 2.2 
British Virgin Islands  0.2 0.1 2.3 0.1 2.0 
Canada  1.4 0.9 0.5 0.6 1.7 
Brazil  2.4 -0.2 1.3 -0.8 1.5 
Hong Kong, China  2.0 1.9 1.2 1.7 1.5 
Viet Nam  1.3 1.1 1.1 1.2 1.3 
Memorandum:       
JPY/USD  105.94  121.04  108.79  112.17  110.42  
Source:  Ministry of Finance (Japan) , Outward/Inward Direct Investment, breakdown by Region and Industry . 
Viewed at: 
https://www.mof.go.jp/english/international_policy/reference/balance _of_payments/ebpfdii.htm . 
Table 1.7 Inbound and outbound stock of direct investment, by main origin and 
destination, 2014 -18 
  2014  2015  2016  2017  2018  
Inbound stock (USD billion)  198.2  205.7  241.1  256.8  278.2   
(% of total inbound stock)  
EU-28 41.9 42.4 43.8 45.2 44.4 
Netherlands  13.3 14.9 13.7 16.6 15.1 
France  11.8 12.3 12.0 12.1 12.2 
United Kingdom  8.0 7.8 7.8 6.2 8.5 
Germany  4.5 3.1 3.2 3.2 3.6 
Luxembourg  2.7 3.2 3.1 3.0 2.7 
Sweden  0.3 0.6 0.8 0.9 0.9 
United States  29.0 27.6 25.2 23.2 21.3 
Singapore  7.3 7.3 8.4 8.6 8.6 
Cayman Islands  4.4 4.3 4.2 4.7 5.4 
Switzerland  4.6 4.5 4.6 4.4 4.7 
Hong Kong, China  3.8 4.2 3.9 3.3 3.3 
Republic of Korea  1.2 1.6 1.4 2.0 2.4 
Chinese Taipei  1.7 2.1 2.7 2.3 2.4 
Australia  1.5 1.1 1.2 1.2 1.8 
China  0.6 0.9 0.7 1.0 1.2 
Thailand  0.6 0.7 0.8 0.8 0.8 
Canada  0.8 0.7 0.7 0.6 0.6 
Outbound stock (USD billion)  1,185.4  1,261.0  1,356.7  1,554.7  1,645.9   
(% of total outbound stock)  
United States  32.2 33.2 33.4 31.6 30.6 
EU-28 22.5 23.1 23.9 25.9 26.0 
United Kingdom  6.5 7.1 9.1 9.9 9.9 
Netherlands  8.2 8.4 7.8 8.4 8.1 WT/TPR/S/397 • Japan  
 
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  2014  2015  2016  2017  2018  
Germany  1.6 1.7 1.6 1.7 1.8 
Belgium  1.6 1.4 1.3 1.3 1.3 
France  1.2 1.0 1.0 1.0 1.0 
China  8.8 8.6 8.0 7.7 7.5 
Singapore  3.9 4.0 3.1 4.1 4.8 
Thailand  4.4 4.1 4.1 4.1 4.2 
Australia  5.3 5.3 4.9 4.4 4.1 
Cayman Islands  1.1 1.2 2.4 2.3 2.9 
Republic of Korea  2.7 2.5 2.4 2.4 2.4 
Hong Kong, China  2.0 2.0 2.1 2.0 2.0 
Indonesia  2.0 1.9 2.0 2.0 1.8 
India 1.2 1.1 1.3 1.4 1.5 
Brazil  2.6 2.0 1.8 1.4 1.3 
Canada  1.4 1.3 1.2 1.1 1.1 
Viet Nam  1.0 1.0 1.1 1.0 1.0 
Malaysia  1.2 1.1 0.9 0.9 1.0 
Chinese Taipei  1.0 1.0 1.0 1.0 0.9 
Note:  End-period figures.  
Source:  JETRO , Japanese Trade and Investment Statistics . Viewed at: 
https://www.jetro.go.jp/en/reports/statistics.html . 
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2  TRADE AND INVESTMENT  REGIMES  
2.1  General Framework  
2.1.  There were no changes to the Japanese Constitution over the review period. This, inter alia, 
sets out the roles and responsibilities of the legislature (the Diet1), the executive branch (the 
Cabinet) and the Judiciary.2 With respect to the legislative process, bills can be submitted either by 
Diet Members or by the Cabinet, but only the Cabinet can submit the national budget or treaties. 
Bills become law on passage by both Houses, except as otherwise provided by the Constitution. The 
newly enacted law must be promulgated before it comes into fo rce by publication in an official 
gazette.3 Under Article 73 of the Constitution, the Cabinet is responsible for enacting cabinet orders 
to execute the provisions of Constitution and the law.  
2.2.  The overall economic policy of Japan continues to be guided by the evolving  Abenomics 
programme, which has two key goals: Achieving Sustainable Growth, and Realizing Society 5.0. 
With respect to the former, the aim is to reach a nominal GDP of JPY 600 tril lion through a virtuous 
cycle of increases in production, income and consumption. Efforts are centred on four areas, relating 
to: (a) productive individuals; (b) smart regulations and laws; (c) attractive international 
opportunities; and (d) more competiti ve businesses.4 The goal of Realizing Society 5.0 is to enhance 
human comfort and sustainability, and resolve social challenges, such as the declining birth rate, an 
ageing population, and environmental and energy issues, through the development and use of  new 
innovations, including the Internet of Things, big data, artificial intelligence, robotics, and the sharing 
economy.5 
2.3.  As part of the implantation strategy for the Abenomics programme , the 2016 Japan 
Revitalization Strategy is being pursued.6 This invo lves reforms to: cultivate new promising markets; 
engender a productivity revolution to mitigate supply -side constraints  and impending workforce 
shortages; and enhance the capability of individuals to facilitate industrial transformation. Initiatives 
being  implemented  are: the launch of the 10 Strategic Public -Private Joint Projects (an initiative to 
cultivate new markets and for knowledge - and strategy -sharing between the public and private 
sectors); the introduction of a road -map method for the back calcu lation of goals7; regulatory 
reforms to reduce administrative costs for businesses; education/skills/workforce reforms; 
encouraging joint research between industry and academia; the introduction of a Japanese Green 
Card for Highly -Skilled Foreign Professio nals (see below); support to business to introduce 
information technology and robots; promotion of technology in the fields of health care, the 
environment and energy; development of a large -scale hydrogen supply chain (by  2030); 
development of the sports sector in connection with the 2020 Olympic Games; measures to improve 
the productivity of the services sector (Section 4.4); continued reform of the agriculture sector 
(Section 4.1); measures to enhance and promote tourism; encouragement of National Strate gic 
Special Zones utilization (see below); corporate governance reforms (see below); measures to 
ensure vibrant financial/capital markets (Section 4.4.1); and expansion of private participation in 
public services and assets. Various new entities were estab lished to guide some of these efforts, 
namely, the Public -Private Council for the Fourth Industrial Revolution, the Artificial Intelligence 
Technology Strategy Council; and the Council for Promoting Human Resource Development to 
Respond to the Fourth Indus trial Revolution.  
                                                
1 The Diet consists of two houses; a House of Representatives (Lower house) and a House of Councillors 
(Upper house) , and both sets of parliamentarians are directly elected.  For more information on their mandate, 
see House of Representatives, Powers of the National Diet . Viewed at: 
http://www.shugiin.go.jp/internet/itdb_english.nsf/html/statics/guide/powers.htm . 
2 The Constitution of Japan . Viewed at: 
http://japan.kantei.go.jp/co nstitution_and_government_of_japan/constitution_e.html . 
3 Cabinet Legislation Bureau , The law -making process . Viewed at:  
https://www.clb.go.jp/english/process.html . 
4 As reported by the authorities , simultaneous measures in a wide range of fields will also be necessary 
to achieve the nominal GDP target.  
5 Government of Japan, Abenomics . Viewed at: https://www.japan.go.jp/abenomics/index.ht ml. 
6 Japan Revitalization Strategy 2016 . Viewed at: 
http://www.kantei.go.jp/jp/singi/keizaisaisei/pdf/2016_hombun1_e.pdf . 
7 As explained by the authorities, the purpose of the road -map method for the back -calculation of goals 
is for the Government to implement reform in a timely manner through the sharing o f future images of 
technologies to be implemented between the public and private sectors, as well as coordinating the agreed 
reforms and their timing.  WT/TPR/S/397 • Japan  
 
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2.4.  In 2017, the Government released its Future Investment Strategy, which identifies five areas 
for the promotion of investment in order achieve Society 5.0, namely: the extension of a healthy 
lifespan; the realization of a mobility revoluti on; creating next -generation supply chains; building 
and developing pleasant infrastructure and towns; and advancing FinTech.8 
2.5.  Furthermore, in December 2017, the Cabinet released its New Economic Policy Package, which 
forms the framework up to 2020 for pro moting "supply system innovation" and a "human resources 
development revolution".9 With respect to supply system innovation, priority areas  include, inter 
alia: measures to support SMEs and small -scale entrepreneurs; the creation of a supportive 
environmen t for wage increases and business succession; the revitalization of regional economies; 
continued corporate governance reforms; the enactment of a regulatory sandbox; reforms to areas 
where there is sluggish productivity; innovation promotion; and infrastr ucture development for 
Society 5.0. With respect to the human resources development revolution, the focus is on reducing 
the costs and increasing the quality and accessibility of education, particularly for children; 
promoting flexible working styles; and improving compensation for care workers. These human 
resources -related initiatives will be financed through revenue obtained from a consumption tax 
increase planned for October 2019 (Section 3.3.1.1).  
2.2  Trade Policy Formulation and Objectives  
2.6.  The institution al framework for trade policy -making has not changed since Japan's previous 
Review. Overall coordination of trade policies rests with the Cabinet. The Ministry of Economy Trade 
and Industry (METI) and the Ministry of Foreign Affairs (MOFA) continue to form ulate and implement 
trade policy. Several other ministries and official agencies have trade policy related responsibilities 
(Sections 3 and 4). The mandates of various of the legislature's (Diet) committees include trade (i.e. 
committees on economy trade a nd industry; financial affairs; forestry and fisheries; and 
fundamental national policies). As indicated in a previous Review, ministries and agencies receive 
inputs from the private sector concerning matters related to trade policies, through, inter alia , 
exchanging opinions with private entities and receiving petitions from them.  
2.7.  Progress in realizing Japan's trade policy objective s are contained in the White Pa per on 
International Economy and Trade 2018. This Paper reports on steps taken to develop "fre e fair and 
high-level trade rules" domestically, with key trading partners and in international fora (including 
the WTO), as well as progress in reinforcing economic ties and cooperation with emerging economies 
in Asia, Africa, the Russian Federation  and the Middle East. Its "comprehensive trade policy" includes 
promoting the use of economic partnership agreements (EPAs), the establishment in 2016 of a 
Consortium for New Export Nation (Section  3.2), and measures to increase food exports 
(Section  4.1).10  
2.8.  All laws and regulations are published in the Government Gazette and are made available on 
the Internet11; some have been translated into English on a separate site.12 The main laws and 
regulations relating to trade, and amendments since January 2017, are pr esented in Table 2.1.  
Table 2.1 Major trade -related laws and regulations, November 2019  
Legislation  Latest 
amendment(s)  
Foreign trade and exchange restrictions  
Foreign Exchange and Foreign Trade Act (1949 Law No. 228)  2017, 2018  
Export and Import Transaction Act (1952 Law No. 299)  2019 
Foreign Exchange Order (1980 No. 260)  2018 
The Order on Inward Direct Investment (1980 No. 261)  2017 
Export Trade Control Order (1949 Order No. 378)  2017, 2018, 2019  
Import Trade Control Order (1949 Order No. 414)  2003 
                                                
8 Prime Minister's Office of Japan, Fundamental Ideas . Viewed at: 
https://www.kantei.go.jp/jp/singi/keizaisaisei/pdf/miraitousi2017_summary.pdf . 
9 New Economic Policy Package 2017  (English translation). Viewed at: 
https://www5.cao.go.jp/keizai1/package/20171208_package_en.pdf . 
10 METI, White Paper on International Economy and Trade 2018 . Viewed at: 
https://www.meti .go.jp/english/report/data/wp2018/wp2018.html . 
11 Government Gazette (contains documents in Japanese only). Viewed at: https://kanpou.npb.go.jp . 
12 Laws and regulations that have been translated into English may be vi ewed at: 
http://www.japaneselawtranslation.go.jp . WT/TPR/S/397 • Japan  
 
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Legislation  Latest 
amendment(s)  
Customs - and tariff -related regulations  
Customs Law (1954 Law No. 61)  2017, 2018  
Customs Tariff Law (1910 Law No. 54)  2017, 2018, 2019  
Temporary Tariff Measures Law (1960 Law No. 36)  2017, 2018, 2019 
Cabinet Order Relating to Countervailing Duties (1994 Order No. 415)  2017 
Cabinet Order Relating to Anti -Dumping Duties (1994 Order No. 416)  2017 
Cabinet Order Relating to Emergency Duties (1994 Order No. 417)  2009 
Cabinet Order Relating to Retaliatory Duties (1994 Order No. 418)  2000 
Cabinet Order on Tariff Quotas (1961 Order No. 153)  2017, 2018, 2019  
Act on the provision of information regarding originating goods declared under Economic 
Partnership Agreements (2014 Law No. 112)  2016, 2018  
Trade promotion  
Trade and Investment Insurance Act (1950 Law No. 67)  2017, 2019  
Services and energy  
Banking Law (1981 Law No. 59)  2019 
Insurance Business Law (1995 Law No. 105)  2019 
Financial Instruments and Exchange Law (1948 Law No. 25)  2017 
Telecommunications Business Act (1984 Law No. 86)  2017, 2018, 2019  
Law Concerning the Measures by Large -Scale Retail Stores for Preservation of the Living 
Environment (1998 Law No. 91)  2000 
Civil Aeronautics Act (1952 Law No. 231)  2017 
Marine Transportation Act (1949 Law No. 187)  2017 
Act on Special Measures concerning the Handling of Legal Services by Foreign Lawyers 
(1986 Law No. 66)  2014 
Certified Public Accountants Act (1948 Law No. 103)  2019 
Certified Tax Accountant Law (1951 Law No. 23 7) 2017, 2018  
Electricity Business Act (1964 Law No. 170)  2017 
Gas Business Act (1954 Law No. 51)  2017 
Oil Stockpiling Act (1975 Law No. 96)  2012 
Act on the Quality Control of Gasoline and Other Fuels (1976 Law No. 88)  2014 
Standards and technical regulations, SPS  
Industrial Standardization Act (1949 Law No. 185)  2017, 2018  
Act on Japanese Agricultural Standards (1950 Law No. 175)  2017 
Act on Securing Quality, Efficacy and Safety of Products including Pharmaceuticals and 
Medical Devices (1960 Law No. 145)  2016 
Food Sanitation Act (1947 Law No. 233)  2018 
Food Labelling Act (2013 Law No. 70)  2018 
Quarantine Act (1951 Law No. 201)  2014 
Plant Protection Act (1950 Law No. 151)  1996 
Act on Livestock  Infectious Diseases Control (195 1 Law No. 166)  2011 
Building Standard Law (Law No. 201)  2018 
Electrical Appliances and Materials Safety Act (1961 Law No. 234)  2014 
Consumer Product Safety Act (1973 Law No. 31)  2014 
High Pressure Gas Safety Act (1951 Law No. 204)  2017 
Act on the Rational Use of Energy (1979 Law No. 49)  2018 
Fire Service Law (1948 Law No. 186)  2017, 2018  
Intellectual property rights  
Patent Act (1959 Law No. 121)  2017, 2018, 2019  
Customs Law (1954 Law No. 61)  2017, 2018  
Unfair Competition Prevention Act (1993 Law No. 47)  2018 
Utility Model Act (1959 Law No. 123)  2019 
Design Act (1959 Law No. 125)  2018, 2019  
Trademark Act (1959 Law No. 127)  2017, 2018, 2019  
Copyright Law (1970 Law No. 48)  2018 
Civil Code (1896 Law No. 89)  2017, 2018, 2019  
Agriculture  
Basic Law on Food, Agriculture and Rural Areas (1999 Law No. 106)  1999 
Others  
Administrative Procedure Act (1993 Law No. 88)  2017 
Act on Prohibition of Private Monopolization and Maintenance of Fair Trade (Anti -Monopoly 
Act) (1947 Law No. 54)  2019 
Act Against Unjustifiable Premiums and Misleading Representations (1962 Law No.  134) 2014 
Source:  WTO document WT/TPR/S/351/Rev.1 , 20 June 2017 ; and Government Gazette. Viewed at: 
https://kanpou.npb. go.jp. WT/TPR/S/397 • Japan  
 
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2.9.  As indicated in a previous Review, under the 2001 Government Policy Evaluations Act (GPEA)13, 
the Cabinet Order for Enforcement of the Government Policy Evaluation Act14, and the Basic 
Guidelines for Implementing Policy Evaluations (as revised in 2017)15, the Cabinet Office and 
ministries are required to  evaluate  policies before and after implementation , and to publish the 
results of these evaluations. According to the auth orities, evaluation  reports  are published on each 
ministry's website , and they can also all be accessed (in Japanese only) through the Policy Evaluation 
Portal Site .16 The 2017 revision to the Basic Guidelines introduces the provision that , where ex ante 
evaluation of regulations is required by Cabinet Order for Enforcement of the GPEA, ex post  
evaluation is now also mandatory . Since 2007, draft  bills to enact, revise or abolish regulations  
through enactment, revision or abolition of a law or Cabinet Order  must be evaluated by ex ante  
regulatory impact analyses, the results of which are published on the Policy Evaluation Portal Site . 
The GPEA contains provisions that policy evaluations must use the findings of persons with relevant 
knowledge and experience in accordance with the special characteristics of the policy . While public 
comment procedures are not a requirement, the administrative organs do have discretion to ask for 
the opinions of stakeholders and the public.    
2.3  Trade Agreements and Arrangements  
2.3.1   WTO  
2.10.   Japan applies at least MFN treatment to all WTO Members. At present, countries or territories 
to which MFN treatment is not applied are Andorra, Equatorial Guinea, the State of Eritrea, L ebanon, 
the Democratic People's Republic of Korea, South Sudan, and the Democratic Republic of Timor -
Leste.  
2.11.   Japan is a signatory to the 1979 Agreement on Trade in Civil Aircraft, and is a party to the 
Plurilateral Agreement on Government Procurement (GPA),  as revised. It is a signatory to the WTO 
Information Technology Agreement (ITA), and participated in the ITA expansion negotiations; once 
fully implemented, tariff reductions are expected to bring considerable benefits for Japanese 
exports.17 Japan accepte d the 2005 Protocol Amending the TRIPS Agreement on 31 August 2007, 
and accepted the 2014 Protocol concerning the Trade Facilitation Agreement on 1 June 2015. During 
the 2017 WTO Ministerial Conference, Japan joined the joint ministerial statements on elec tronic 
commerce18; investment facilitation for development19; the establishment of a WTO informal 
programme for MSMEs20; and services domestic regulation.21 Japan also supported the Buenos Aires 
Joint Declaration on Trade and Women's Economic Empowerment.22 
2.12.   Since 1 January 2017, Japan has been involved in two new dispute settlement cases as a 
complainant, against the Republic of Korea (DS571 –Measures Affecting Trade in Commercial Vessels 
and DS553 – Sunset Review of Anti -Dumping Duties on Stainless Steel Bars) and one new complaint 
                                                
13 Government Policy Evaluations Act  (English translation) incorporating revisions in 2003. Viewed at: 
http://www.soumu.go.jp/english/kansatu/evaluation/evaluation_09.pdf . There were further minor revisions to 
the Act in 2015 . 
14 Cabinet Order for Enforcement of the Government Policy Evaluation Act . Viewed (in Japanese)  at: 
http://www.soumu.go.jp/main_content/000556219.pdf . This Order was most recently revised in 2015.  
15 Basic Guidelines for Implementing Policy Evaluation  (English translation). Vi ewed at: 
http://www.soumu.go.jp/main_content/000556221.pdf . 
16 Ministry of Internal Affairs and Communications, Policy Evaluation Portal Site . Viewed at: 
http://www.soumu.go.jp/main_sosiki/hyouka/seisaku_n/portal/ . 
17 According to the METI, the value of Japanese exports of the 201 products covered by the expansion 
negotiations is around JPY 9 trillion, and the value of tariff reductions from these negotiations is estimated at 
around JPY 170 billion. METI, White Paper on International Economy and Trade 2018 . Viewed at: 
https://www.meti.go.jp/e nglish/report/data/wp2018/pdf/3 -1-4.pdf. 
18 WTO document WT/MIN(17)/60, 13 December 2017.  
19 WTO document WT/MIN(17)/59, 13 December 2017.  
20 WTO document WT/MIN(17)/58, 13 December 2017.  
21 WTO document WT/MIN(17)/61, 13 December 2017.  
22 WTO, Joint Declaratio n on Trade and Women's Economic Empowerment on the Occasion of the WTO 
Ministerial Conference in Buenos Aires in December 2017. Viewed at: 
https://www.wto.org/ english/thewto_e/minist_e/mc11_e/genderdeclarationmc11_e.pdf . WT/TPR/S/397 • Japan  
 
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against India (DS584 – Tariff Treatment on Certain Goods).23 It has been involved in no new cases 
as respondent over this period, and 34 new cases as third party.24  
2.13.   Over the review period, Japan submitted several notifications under di fferent WTO 
agreements (Table 2.2); notifications are outstanding in the areas of domestic support in agriculture 
and government procurement.  
Table 2.2 Selected notifications under WTO agreements, January 201 7-November 2019  
WTO Agreement  Description of requirement  Document symbol and date of 
most recent notification  
Agriculture  
Article 18.2  Domestic support (DS:1)  G/AG/N/JPN/219, 03/07/17  
G/AG/N/JPN/235 -236, 19/02/19  
Article 18.3  Domestic support (DS:2)  G/AG/N/JPN/220, 03/07/17  
Article 18.2  Volume of imports under tariff quotas (MA:2)  G/AG/N/JPN/217, 11/05/17  
G/AG/N/JPN/225, 22/05/18  
G/AG/N/JPN/238, 15/5/2019  
Article 5.7  Special safeguard (MA:3 and MA:4)  G/AG/N/JPN/218, 20/06/17  
G/AG/N/JPN/221, 09/01/18  
G/AG/N/JPN/222, 09/02/18  
G/AG/N/JPN/223, 12/03/18  
G/AG/N/JPN/227, 12/06/18  
G/AG/N/JPN/228, 10/07/18  
G/AG/N/JPN/234, 07/02/19  
G/AG/N/JPN/242, 09/09/19  
G/AG/N/JPN/241, 01/08/2019  
G/AG/N/JPN/242, 09/09/19  
G/AG/N/JPN/243, 08/10/19  
G/AG/N/JPN/244 -246, 08/11/19  
Articles 5.7 and 18.2  Special safeguard (MA:5)  G/AG/N/JPN/216, 11/05/17  
G/AG/N/JPN/226, 23/05/18  
G/AG/N/JPN/239, 15/05/19   
Articles 10 and 18.2  Export subsidies (outlays and quantities) (ES:1)  G/AG/N/JPN/215, 03/05/17  
G/AG/N/JPN/224, 15/05/18  
G/AG/N/JPN/240, 15/05/19   
Article 10 and 18.2  Volume of food aid in the context of export subsidy 
commitments (ES:3)  G/AG/N/JPN/230 -233, 03/12/18  
 
Article 16.2  Measures concerning the possible negative effects of 
the reform programme on least -developed and net 
food importing developing countries (NF:1)  G/AG/N/JPN/229, 15/11/18  
Anti-dumping  
Article 16.4 - semi Semi-annual report under Article 16.4 of the 
Agreement  G/ADP/N/294 /JPN, 07/02/17  
G/ADP/N/300 /JPN, 21/07/17  
G/ADP/N/308 /JPN, 02/02/18  
G/ADP/N/314 /JPN, 09/08/18  
G/ADP/N/322 /JPN, 04/02/19  
G/ADP/N/328/JPN, 22/10/19  
G/ADP/N/334 /JPN, 15/11/19  
Article 16.5  Notification of domestic procedures and authorities 
competent to initiate and conduct investigations  G/ADP/N/14/ JPN/Add.46, 
17/10/2018  
Article 18.5  Laws and regulations  G/ADP/N/1/JPN/2/Suppl.9, 
25/06/2018  
State trading  
GATT 1994 Article XVII:4(a) Understanding on the Interpretation of Article XVII  
 Notification of products traded by State enterprises, 
State trading activities  G/STR/N/17/JPN, 11/10/18  
Regional Trading Arrangements  
GATT 1994 Article XXIV:7(a) Free -Trade Areas  
 Notification of regional trade agreement  WT/REG277/N/3, 24/08/18  
 Notification of regional trade agreements  S/C/N/920; WT/REG395/N/1, 
20/12/18  
 Notification of regional trade agreement  S/C/N/921; WT/REG396/N/1, 
14/01/19  
                                                
23 WTO, Japan and the WTO . Viewed at: 
https://www.wto.org/english/thewto_e/countries_e/japan_e.htm . 
24 The new cases since 1 January 2017 in which Japan has been involved as a third party are cases: 
DS577; DS576; DS573; DS567; DS566; DS564; DS561; DS560; DS559; DS558; DS557; DS556; DS554; 
DS552 ; DS551; DS550; DS548;  DS547;  DS546; DS545; DS544; DS543; DS542; DS541; DS539; DS538; 
DS536; DS534; DS533; DS529; DS526; DS523; DS522  and DS521 . WTO , Japan and the WTO . Viewed at: 
https://www.wto.org/english/thewto_e/countries_e/japan_e.htm . WT/TPR/S/397 • Japan  
 
- 39 - 
 
WTO Agreement  Description of requirement  Document symbol and date of 
most recent notification  
GATS Article V:7(a)  
 Notification of regional trade agreements  S/C/N/920; WT/REG395/N/1, 
20/12/18  
 Notification of regional trade agreement  S/C/N/921; WT/REG396/N/1, 
14/01/19  
Government Procurement  
Article XVI:4 -5 Statistics for 2016 reported under Article  XVI:4 of 
the revised GPA  GPA/142/Add.9, 03/04/18  
Article XXII:8  Work Programme on the Collection and Reporting of 
Statistical Data  GPA/WPS/STAT/20, 14/06/17  
GPA/WPS/STAT/24, 14/09/17  
Annexes 1, 2 and 3 
of Appendix 1  Thresholds  GPA/THR/JPN/1, 07/02/18  
Import Licensing Procedures  
Articles 5.1 to 5.4  Agreement on Import Licensing Procedures - 
Notification  under Article 5.1 to 5.4 of the Agreement  G/LIC/N/2/JPN/4, 17/04/18  
Article 7.3  Replies to questionnaire on import licensing 
procedures - Notification under Article 7.3 of the 
Agreement on Import Licensing Procedures  G/LIC/N/3/JPN/16, 02/10/17  
G/LIC/N/3/JPN/17, 09/10/18  
G/LIC/N/3/JPN/18, 09/10/19  
Market Access  
Article XXVIII:5  Invocation of paragraph 5 of Article XXVIII  G/MA/344, 13/10/17  
QR (G/L/59) – 
biennal  Quantitative restrictions  G/MA/QR/N/JPN/4, 16/10/18  
Trade Facilitation  
Articles 22.1 and 
22.2 Notification under Article 22.1 and 22.2  G/TFA/N/JPN/1/Rev.1, 27/06/17  
G/TFA/N/JPN/3, 10/09/18  
G/TFA/N/JPN/4, 07/03/19  
Articles 1.4, 10.4.3, 
10.6.2 and 12.2.2  Notification under Article 1.4, 10.4.3, 10.6.2 and 
12.2.2  G/TFA/N/JPN/2, 10/08/17  
G/TFA/N/JPN/2/Corr.1, 19/12/18  
Subsidies and Countervailing Measures  
Article 25.11  Countervailing duty actions taken  G/SCM/N/321/Add.1, 23/10/17  
G/SCM/N/328/Add.1, 20/04/18  
G/SCM/N/334/Add.1, 19/10/18   
Article 25.1  Subsidies programmes  G/SCM/N/315/JPN, 09/06/17  
G/SCM/N/315/JPN/Corr.1, 
03/01/18  
G/SCM/N/343/JPN, 19/07/19  
Article 25.12  Notification of domestic procedures and authorities 
competent to initiate and conduct investigations  G/SCM/N/18/Add.46, 17/10/18  
Article 32.6  Laws and regulations  G/SCM/N/1/JPN/2/Suppl.9, 
25/06/18  
Rules of Origin  
 Notification of preferential rules of origin for LDCs  G/RO/LDC/N/JPN/1, 11/07/17  
 Notification of preferential rules of origin  G/RO/N/188, 16/10/2019  
Safeguards  
Article 12.5 and 8.2  
 Laws and regulations  G/L/1226; G/SG/N/12/JPN/3, 
06/04/18  
GL/1240; G/SG/N/12/JPN/4, 
22/05/18  
Sanitary and Phytosanitary Measures   
Article 7, Annex  B Notification of sanitary and phytosanitary measures  2017 – 48 notifications  
2018 – 65 notifications  
2019– 88 notifications  
Technical Barriers to Trade  
Article 2.10  Urgent technical regulations  G/TBT/N/JPN/ 543, 06/0 1/2017 
G/TBT/N/JPN/ 548, 01/0 3/2017 
G/TBT/N/JPN/ 560, 23/06/2017 
G/TBT/N/JPN/ 566, 05/0 9/2017 
G/TBT/N/JPN/ 571, 03/11/201 7 
G/TBT/N/JPN/ 575, 20/12/201 7 
G/TBT/N/JPN/ 587, 05/0 3/2018 
G/TBT/N/JPN/ 599, 22/06/2018 
G/TBT/N/JPN/ 606, 27/08/2018 
G/TBT/N/JPN/ 611, 21/11/201 8 
G/TBT/N/JPN/ 616, 21/12/201 8 
G/TBT/N/JPN/ 620, 26/02/2019 
G/TBT/N/JPN/ 626, 17/0 6/2019 
G/TBT/N/JPN/ 632, 11/09/201 9 
G/TBT/N/JPN/ 641, 18/11/201 9 WT/TPR/S/397 • Japan  
 
- 40 - 
 
WTO Agreement  Description of requirement  Document symbol and date of 
most recent notification  
Article 2.9  Technical regulations  2017 – 23 notifications  
2018 – 32 notifications  
G/TBT/N/JPN/ 617, 03/0 1/2019 
G/TBT/N/JPN/ 618, 18/0 1/2019 
G/TBT/N/JPN/ 619, 31/0 1/2019 
G/TBT/N/JPN/ 621, 01/0 3/2019 
G/TBT/N/JPN/ 622, 18/0 3/2019 
G/TBT/N/JPN/ 623-624, 21/0 3/2019 
G/TBT/N/JPN/ 625, 24/0 4/2019 
G/TBT/N/JPN/ 627, 19/0 7/2019 
G/TBT/N/JPN/ 628, 23/0 7/2019 
G/TBT/N/JPN/ 629-630, 09/0 8/2019 
G/TBT/N/JPN/ 631, 02/0 9/2019 
G/TBT/N/JPN/ 633, 03/10/2019 
G/TBT/N/JPN/ 634-635, 10/10/2019 
G/TBT/N/JPN/ 636, 17/10/2019 
G/TBT/N/JPN/ 637, 21/10/2019 
G/TBT/N/JPN/ 638-639, 
12/11/2019 
G/TBT/N/JPN/ 642, 18/11/2019 
G/TBT/N/JPN/ 643, 21/11/2019 
Articles 2.9 and 5.6  Notification with Article 10.6  G/TBT/N/JPN/562, 14/07/2017  
G/TBT/N/JPN/563, 28/07/2017  
G/TBT/N/JPN/576, 08/01/2018  
G/TBT/N/JPN/578, 09/01/2018  
G/TBT/N/JPN/596, 01/05/2018  
G/TBT/N/JPN/601, 28/06/2018  
G/TBT/N/JPN/640, 12/11/2019  
Unspecified  Notification with Article 10.6  G/TBT/N/JPN/552, 27/03/2017  
Article 5.6  Conformity assessment procedures  G/TBT/N/JPN/544, 23/01/2017  
Annex 3(c)  Notification of acceptance  G/TBT/CS/N/189, 20/04/2017  
G/TBT/CS/N/195, 21/11/2017  
Intellectual property  
TRIPS Article 63.2  Laws and regulations  IP/N/1/JPN/28; IP/N/1/JPN/G/2, 
17/02/2017  
IP/N/1/JPN/29; IP/N/1/JPN/G/3, 
17/02/2017  
IP/N/1/JPN/30; IP/N/1/JPN/P/13, 
06/08/2018  
IP/N/1/JPN/31; IP/N/1/JPN/T/8, 
06/08/2018  
IP/N/1/JPN/32; IP/N/1/JPN/D/8, 
06/08/2018  
IP/N/1/JPN/36; IP/N/1/JPN/C/6, 
07/03/2019  
IP/N/1/JPN/33; IP/ N/1/JPN/T/9, 
12/02/2019  
IP/N/1/JPN/34; IP/N/1/JPN/P/14, 
12/02/2019  
IP/N/1/JPN/35; IP/N/1/JPN/U/2, 
12/02/2019  
IP/N/1/JPN/39; IP/N/1/JPN/P/15, 
24/05/2019  
IP/N/1/JPN/40; IP/N/1/JPN/P/16, 
24/05/2019  
IP/N/1/JPN/41; IP/N/1/JPN/P/17, 
19/09/2019  
IP/N/1/JPN/43; IP/N/1/JPN/D/9, 
20/09/19  
IP/N/1/JPN/42; IP/N/1/JPN/U/3, 
20/09/19  
IP/N/1/JPN/44; IP/N/1/JPN/T/11, 
26/09/2019  
General Agreement on Trade in Services (GATS)   
 Notification pursuant to Article III:3 of the GATS  S/C/N/930, 07/03/19  
 Notification pursuant to Article VII:4 of the GATS  S/C/N/961, 15/10/2019  
Regional Trade Agreements  
Article V:7(a)  Notification of regional trade agreement  S/C/N/920; WT/REG395/N/1, 
20/12/18  
S/C/N/921; WT/REG396/N/1, 
14/01/19  
Source:  WTO documents online.  WT/TPR/S/397 • Japan  
 
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2.3.2   Regional and preferential agreements  
2.3.2.1   Regional trade agreements (RTAs)  
2.14.   As set out in the METI's 2018 White Paper on International Economy and Trade, expanding 
free trade and promoting economic partnerships is central to Japan's trade polic y. It is considered 
that tapping into the Asia -Pacific region's growth and large markets by creating a global web of 
economic partnerships is essential to the country's growth. In this regard, a target was set to raise 
free trade agreement (FTA) coverage t o 70% by 2018. Japan is aiming for the swift conclusion of 
Regional Comprehensive Economic Partnership negotiations, through which the FTA ratio will exceed 
70%25, as set out in the Growth Strategy 2019 (Section 1).  
2.15.   Japan has RTAs in force with: Australia;  Brunei Darussalam; Chile; India; Indonesia; 
Malaysia; Mexico; Mongolia; Peru; the Philippines; Singapore; Switzerland; Thailand; Viet Nam; 
ASEAN Member economies26; EU member economies27; and participants in the Comprehensive and 
Progressive Agreement for Trans -Pacific Partnership (CPTPP). New developments over the review 
period were the entry into force of the CPTPP and the EU -Japan Economic Partnership Agreement 
(see below). Taken together, these economies accounted for 38.7% of Japan's merc handise imports 
and 34.8% of its merchandise exports in 2018. All agreements provide for liberalization of goods 
and services. An overview of the services provisions in RTAs is provided in Section 4. Japan's 
transition period in most of its RTAs lasts up t o 15 years. However, in the RTAs with the European 
Union and the CPTPP, Japan has a transition period of 21 years, up to 2038. By the end of these 
transition periods, between 6% and 5%, respectively, of tariff lines remain subject to duties, most 
of which relate to agricultural products (Table 2.3). Most of the agreements have been considered 
in the WTO Committee on Regional Trade Agreements (CRTA) based upon factual presentations 
prepared by the WTO Secretariat, except for: the EU -Japan EPA, the CPTPP, and  the ASEAN -Japan 
EPA (factual presentations for which are currently being prepared).28  
2.16.   In February 2019, Japan signed the First Protocol to Amend the Agreement on ASEAN -Japan 
Comprehensive Partnership, which includes chapters on trade in services and inves tment. In 
September 2019, Japan signed the Japan -United States Trade Agreement to eliminate or reduce 
tariffs on certain agricultural and industrial products, and the Japan -United States Digital Trade 
Agreement, which is intended to establish high standard  rules in this area.29 
2.17.   Japan is a participant in the negotiations, launched in 2013, to create the Regional 
Comprehensive Economic Partnership, which would to bring together in a single RTA the member 
States of ASEAN and those economies with which ASEAN has  RTAs in force 30; the aim is to conclude 
this Agreement in 2019. Negotiations on an FTA between Japan, China and the Republic of Korea 
are ongoing. Bilateral RTAs are also being negotiated with Colombia and Turkey. Negotiations with 
the Gulf Cooperation Co uncil 31 have been postponed, and those with the Republic of Korea have 
been suspended.   
                                                
25 Share of trade value in total Japanese trade value with economies with which EPAs/FTAs have been 
signed or entered into force.  
26 ASEAN member economies are: Brunei Darussalam; Cambodia; Indon esia; Lao PDR; Malaysia; 
Myanmar; the Philippines; Singapore; Thailand; and Viet Nam.  
27 EU member economies: Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, 
Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, L ithuania, Luxembourg, Malta, 
Netherlands, Poland, Portugal, Romania, Slovak Republic, Slovenia, Spain, Sweden, and United Kingdom . 
28 Factual presentations are available on the WTO's Regional Trade Agreements Information System 
(RTA-IS). Viewed at: http://rtais.wto.org/UI/PublicMaintainRTAHome.aspx . 
29 Ministry of Foreign Affairs of Japan, Joint Statement of Japan and the United States, 25 September 
2019. Viewed at: https://www.mofa.go.jp/na/na1/us/page4e_001102.html . 
30 The economies with which ASEAN has RTAs in force are: Japan, China, the Republic of Korea; 
Australia; New Zealand and India. India opted out of RCEP in November  2019.  
31 The Gulf Cooperation Council consists of: Bahrain, Kingdom of; Kuwait, the State of; Oman; Qatar; 
Saudi Arabia, Kingdom of; and the United Arab Emirates.  WT/TPR/S/397 • Japan  
 
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Table 2.3 Selected features of RTAs in force  
Title 
(Entry into force)  Goods liberalization  Selected 
coveragea Japan's 
merchandise trade 
(2018)  
EU-Japan EPA  
(01.02.2019)  End transition period 2038 : 532 tariff lines 
will remain dutiable ( 6% of total)  S, GP, CP, E, 
L, e-com 11.7% total imports  
11.4% total exports  
CPTPP 
(30.12.2018)  End transition period 2038: 459 tariff lines 
will remain dutiable ( 5% of total)  S, GP, CP, E, 
L, e-com 17.1% total imports  
13.2% total exports  
Mongolia -Japan EPA  
(07.06.2016)  End transition period 2031: 1,115 tariff 
lines will remain dutiable (12.3% of t otal) S, CP, E, L, e -
com 0.004 % total imports  
0.1% total exports  
Australia -Japan EPA  
(15.01.2015)  End transition period 2029; 868 tariff lines 
will remain dutiable (9.5% of total)  S, GP, CP, e -
com 6.1% total imports  
2.3% total exports  
Peru-Japan EPA  
(01.03.2012)  End transition period 2027; 892 tariff lines 
will remain dutiable (10.1% of total)  S, GP, CP, E  0.3% total imports  
0.1% total exports  
India-Japan EPA  
(01.08.2011)  End transition period 2026; 986 tariff lines 
will remain dutiabl e (11.1% of total)  S, GP, CP, E  0.7% total imports  
1.5% total exports  
Viet Nam -Japan EPA  
(01.10.2009)  End transition period 2024; 946 tariff lines 
will remain dutiable (10.7% of total)  S, GP, CP, E  2.8% total imports  
2.2% total exports  
Switzerland -Japan EPA  
(01.09.2009)  End transition period 2024; 987 tariff lines 
will remain dutiable (11.2% of total)  S, GP, CP, E, 
e-com 1.0% total imports  
0.5% total exports  
Philippines -Japan EPA  
(11.12.2008)  End transition period 2023; 814 tariff lines  
will remain dutiable (9.1% of total)  S, GP, CP, E, 
L, e-com 1.4% total imports  
1.5% total exports  
ASEAN -Japan EPA  
(01.12.2008)  End transition period 2023: 1,225 tariff 
lines will remain dutiable ( 13.5% of total)   S 15.0% total imports  
15.5% total exports  
Brunei -Darussalam -
Japan EPA  
31.07.2008  End transition period 2023; 1,125 tariff 
lines will remain dutiable (12.6% of total)  S, GP, E  0.3% total imports  
0.01% total exports  
Indonesia -Japan EPA  
(01.07.2008)  End transition period 2023; 962 tariff li nes 
will remain dutiable ( 10.8% of total)  S, GP, CP, E  2.9% total imports  
2.1% total exports  
Thailand -Japan EPA  
(01.11.2007)  End transition period 2022 ; 870 tariff lines 
will remain dutiable ( 9.8% of total)  S, GP, CP, E, 
e-com 3.3% total imports  
4.4% total exports  
Chile-Japan EPA  
(03.09.2007)  End transition period 2022; 981 tariff lines 
will remain dutiable (11% of total)  S, GP, CPb 1.0% total imports  
0.3% total exports  
Malaysia -Japan EPA  
(13.07.2006)  End transition period 2021; 882 tariff lines 
will remain dutiable (9.9% of total)  S, CP, E  2.5% total imports  
1.9% total exports  
Mexico -Japan EPA  
(01.04.2005)  End transition period 2015: 1,180 tariff 
lines will remain dutiable (13% of total)  S, GP, CP, E, L  0.8% total imports  
1.6% total exports  
Singapore -Japan EPA  
(30.11.2002)  End transition period 2022: 1,281 tariff 
lines will remain dutiable ( 14% of total)  S, GP, CP, e -
com 1.3% total imports  
3.2% total exports  
a Services (S); government procurement (GP); competition policy (CP); environment (E); labour (L); 
e-commerce (e -com).   
b Under the Chile -Japan EPA, a joint statement issued upon signature of the Agreement includes 
attachments on environment and labour.  
Source:  WTO's RTA -IS. Viewed at: http://rtais.wto.org/UI/PublicMaintainRTAHome.aspx . 
2.3.2.1.1   CPTPP  
2.18.   Japan signed the CPTPP on 8 March 2018, and the agreement entered into force for Japan on 
30 December 2018. The agreement covers both  trade in goods and services.32 According to the 
authorities, the economic benefits are estimated to be a JPY 8 trillion boost to Japan's GDP and the 
creation of 460,000  jobs; it is expected to serve as a new growth engine for the Japanese economy.   
2.19.   CPTPP s ignatories are: Australia,  Brunei Darussalam , Canada,  Chile, Japan, Malaysia,  Mexico, 
New Zealand, Peru, Singapore, and Viet Nam. As at July 2019 , the CPTPP had not yet entered into 
force for: Brunei Darussalam , Chile, Malaysia , and Peru.33 
2.20.   Japan's Schedule  to Annex 2 -D sets out its reduction and elimination of customs duties. Upon 
entry into force of the agreement, 83.3% of tariff lines were duty free. The transition period is 
                                                
32 New Zealand Foreign Affairs and Trade, CPTPP text . Viewed at: 
https://www.mfat.govt.nz/en/trade/free -trade-agreements/free -trade -agreements -in-
force/cptpp/ comprehensive -and-progressive -agreement -for-trans-pacific -partnership -text#CPTPP . 
33 As notified to the WTO in WTO documents WT/REG395/N/1 and S/C/N/920 of 20 December 2018, the 
CPTPP entered into force on 30 December 2018 for Australia, Canada, Japan, Mexico, New Zealand, on 30 
December 2019 for Singapore, and on 14 January 2019 for Viet  Nam. For the rest of the parties, entry into 
force will be in accordance with Article 3, paragraph 2 of the CPTPP.  WT/TPR/S/397 • Japan  
 
- 43 - 
 
21 years for Japan (i.e. ending in 2038). At the end of this period, 459 tariff l ines will remain subject 
to duties.34 Tariff rate quotas, applied to 160 lines, are either CPTPP -wide or country -specific. 
Services commitments on investment and cross -border trade in services are scheduled on a negative 
list basis, while commitments on the  temporary entry of business persons are scheduled on a 
positive -list basis (Section 4.4).  
2.21.   The CPTPP contains a bilateral agreement between Japan and Canada on motor vehicle trade, 
which stipulates the rights and duties agreed between the two countries as  a result of bilateral 
market access negotiations on motor vehicles.35 This contains provisions on a 12 -year period for 
transitional safeguard measures; specific dispute settlement procedures; and the establishment of 
a special bilateral Committee on Motor Vehicles. Safeguard provisions are in place for agricultural 
products and forest goods (Section  4.1). 
2.22.   The CPTPP has provisions on, inter alia : trade facilitation; e -commerce; government 
procurement; competition policy; state -owned enterprises and designate d monopolies; intellectual 
property rights (Section 3.3.7); labour; environment; competitiveness and business facilitation; 
development; SMEs; regulatory coherence; and transparency and anti -corruption.  
2.3.2.1.2   EU-Japan Economic Partnership Agreement  
2.23.   The EU -Japan Economic Partnership Agreement (EPA) was signed on 17 July 2018, and 
entered into force on 1 February 2019.36 It was notified to the WTO on 14 January 2019.37 It covers 
both trade in goods and services. It is the world's largest RTA, with signatories toget her accounting 
for nearly one third of world GDP.38  
2.24.   Customs duty reductions/elimination are implemented over a 21 -year period, as set out in 
Annex 2 -A to the EPA, ending in 2038. At the end of this transition period, 94% of Japan's tariff lines 
at the HS n ine-digit level will be duty free. Tariffs, ranging from 3.7% to 22.5% will remain on 532 
products. Japan maintains tariff rate quotas on various agricultural products; under the EPA, quota 
quantities are subject to increases over a specified period, depen ding on the product.39 Services 
commitments on investment, and cross -border trade in services are scheduled on a negative list 
basis.  
2.25.   The EPA has provisions on, inter alia,  e-commerce; government procurement (Section  3.3.6); 
competition policy (Section 3.3.4); state -owned enterprises; enterprises granted special rights or 
privileges and designated monopolies; intellectual property (Section 3.3.7); trade and sustainable 
devel opment; agricultural cooperation; and SMEs.  
2.3.2.2   Preferential trade agreements (PTAs)  
2.26.   Japan offers preferential tariff treatment to 128 developing economies and five territories  
under its GSP scheme.40 This includes all least developed countries (LDCs) who qual ify for more 
extensive product coverage (98% of tariff lines41) and duty -free and quota -free treatment .42 In 
2017, Japan notified to the WTO its preferential rules of origin for LDCs.43 Product coverage under 
                                                
34 MFAT, Annex 2 -D – Tariff Schedule of Japan . Viewed at: https://www.mfat.govt.nz/assets/Trans -
Pacific -Partnership/Annexes/2 -D.-Japan -General -Notes -to-Tariff-Schedule.pdf ; and 
https://www.mfat.govt.nz/assets/Trans -Pacific -Partnership/Annexes/2 -D.-Japan -Tariff-Elimination -
Schedule.pdf . 
35 CPTPP Appendix D. Viewed at: https://www.mfat.govt.nz/assets/Trans -Pacific -Partnership/Text/2. -
National -Treatment -and-Market -Access -for-Goods.pdf . 
36 EU–Japan EPA. Viewed at: http://publications.europa.eu/resource/cellar/5805924c -09a3-11e9-81b4-
01aa75ed71a1.0006.01/DOC_1 . 
37 WTO documents WT/REG396/N/1; and S/C/N/921, 14 January 2019.  
38 WTO document WT/TPR/OV/21, 27 November  2018.  
39 EU-Japan EPA Annex 2 -A, Part 3, Section B.  
40 Japan Customs, List of GSP Beneficiaries . Viewed at: http://www.customs.go.jp/english/c -
answer_e/imtsukan/1504_e.htm . 
41 WTO document WT/TPR/G/351, 18 January 2017.  
42 Details of the evolution of Japan's GSP scheme are contained in WTO document WT/TPR/G/351, 
18 January 2017.  
43 WTO document G/RO/LDC/N/JPN/1, 11 July 2017. This notification was made pursuant to the 2015 
Ministerial Declaration on preferential rules of origin for LDCs (WT/L/917/Add.1).  WT/TPR/S/397 • Japan  
 
- 44 - 
 
the duty -free, quota -free scheme for LDCs and the GSP scheme is reviewed each year as part of the 
annual tariff revision. The GSP scheme itself is revised every ten years, with the next revision in 
March 2021.  
2.27.   Under the GSP scheme, preferential tariff rates apply to 400 tariff lines at the nine -digit lev el 
in Chapters 1 to 24 (agriculture and fisheries) (excluding in -quota rates), and to 2,621 tariff lines in 
Chapters 25 to 97 (industrial products).44 The main exclusions are rice and rice products, meat and 
meat products, fish, dairy products, pineapples, cereal products, textiles and clothing, leather and 
leather products, and footwear. The preferential margin varies from one product to another.  
2.28.   In 2017, Japan changed the criteria for graduation from its GSP scheme; it applies rules 
relating to entire grad uation, partial graduation and product -by-exclusion  (Table 2.4). Partial 
graduation has been enforced since 1  April 2018, and entire graduation has been enforced since 
1 April 2019.45 According to the authorities, the aim of the revision is to spread GSP be nefits fairly 
to the economies that really need the preferential treatment. Since 1 January 2017, the following 
economies have been entirely graduated from Japan's GSP scheme: Chile, Saint Christopher and 
Nevis, and Uruguay in 2017; Antigua and Barbuda, an d the Seychelles in 2018; and Brazil, China, 
Malaysia, Mexico, and Thailand in 2019. 868 items from China (such as food, chemical products and 
textiles) and 2 food -related items from Brazil were subject to partial graduation in 2018. As at 
mid-2019, only o ne product (grain sorghum (other than seed) (not for feeding purposes) from 
Argentina was subject to exclusion from preferential treatment under product -by-exclusion.  
Table 2.4 GSP graduation rules  
Graduation  type Rules applied  
Entire graduation  
(out) A country/territory shall be excluded from the list of GSP beneficiaries when it has been 
classified as a high -income economy in the World Bank Statistics for three consecutive 
years or has been classified as an  upper -middle economy and the value of the 
beneficiary's exports exceeds 1% of the total value of world exports in the WTO Statistics 
for three consecutive years.  
Entire graduation (in)  A country/territory which had been excluded once from the list of beneficiaries can be 
designated as a beneficiary again, if it so requests, if: it has not been classified as a high -
income country for three consecutive years; and has not been classified as an upper 
middle -income country and the value of the beneficiaries ' exports does not exceed 1% of 
the total value of world exports for three consecutive years.  
Partial graduation  A product originating from a beneficiary is to be excluded from application of Japan's GSP 
scheme for one year (renewable) when: (i) the benef iciary is classified as a high -income 
economy in the World Bank Statistics of the previous year or is classified as an upper 
middle -income economy and the value of the beneficiaries exports exceeds 1% of the 
total value of world exports in the WTO Statisti cs of the previous year; and (ii) the value 
of Japan's imports of the product originating from the beneficiary exceeds JPY 1 billion 
and 25% of the total value of Japan's imports of the product from all over the world in 
the trade statistics of two years p revious.  
Product -by-exclusion  A product originating from a beneficiary is to be excluded from Japan's GSP scheme for 
three years, when the total value of Japan's import of a product originating from the 
beneficiary for the previous three years exceeds bot h JPY 4.5 billion and 50% of the total 
value of Japan's imports of the product from all over the world.  
Source:  Japan Customs, Graduation/Exclusion from the GSP scheme. Viewed at: 
http://www.customs.go.jp/english/c -answer_e/imtsukan/1506_e.htm . 
2.29.   Around 1.7% of imports, out of the total amount of imports in 2018, enter under GSP benefits 
from developing countries and LDCs. In 2017 and 2018, China was the main beneficiary of the 
Scheme, followed by Bangladesh, Cambodia and Myanmar (Table 2.5).   
                                                
44 These figures are based on the 2019/20 tariff schedule in the HS17 nomenclatu re. 
45 Before this change, Japan applied the "entire graduation" to a beneficiary only when the beneficiary 
had been classified as a "high income economy" in the World Bank Statistics for three consecutive years; since 
April 2019, Japan also applies entire graduation to an "upper -middle income economy" when the value of its 
exports exceeds 1% of the total value of world exports in the WTO Statistics for three consecutive years as 
well. Japan used to apply "partial graduation" when the beneficiary was classif ied as a high -income country in 
the World Bank Statistics of the previous year; since April 2018, the exclusion was also applied to beneficiaries 
classified as upper -middle income economies, the value of whose exports exceeds 1% of the total value of 
world  exports in the WTO Statistics of the previous year. There were no changes to rules on product -by-
exclusion.  WT/TPR/S/397 • Japan  
 
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Table 2.5 Main beneficiaries of GSP scheme, 2017 -18  
Country/territory  Imports under GSP 2017  Country/territory  Imports under GSP 2018  
 JPY million  Share (%)   JPY million  Share (%)  
Total  1,375,507  100 Total  1,042,174  100 
China  903,295  65.7 China  510,337  49.0 
Bangladesh  113,468  8.2 Bangladesh  138,703  13.3 
Cambodia  109,930  8.0 Cambodia  138,123  13.3 
Myanmar  96,624  7.0 Myanmar  115,613  11.1 
Brazil  27,782  2.0 Madagascar  18,983  1.8 
South Africa  15,030  1.1 South Africa  16,892  1.6 
Ecuador  14,779  1.1 Brazil  16,690  1.6 
Mauritania  13,852  1.0 Mauritania  14,994  1.4 
Madagascar  11,988  0.9 Ecuador  11,211  1.1 
Indonesia  8,710  0.6 Turkey  7,838  0.8 
Sri Lanka  7,367  0.5 Colombia  7,706  0.7 
Colombia  6,869  0.5 Sri Lanka  7,726  0.7 
Turkey  6,707  0.5 Lao PDR 6,147  0.6 
Morocco  5,595  0.4 Morocco  4,058  0.4 
Lao PDR 5,410  0.4 Iran 3,173  0.3 
Source:  Information provided by the authorities. Japan Customs. Viewed at: 
http://www.customs.go.jp/kyotsu/import/tokkei/index.htm . 
2.3.2.3   Other agreements and arrangements  
2.3.2.3.1   Asia-Pacific Economic Coop eration ( APEC ) 
2.30.   Japan is member of APEC46, which accounted for 74% of its trade (imports and exports) in 
2018. One of its objectives is free and open trade and investment by 2020. In APEC's 2018 Bogor 
Goals Progress Report, which monitors progress towards th is target, it is noted that, while positive 
steps have been taken, there is a need for continuous improvement in various areas.47 With respect 
to Japan specifically, the Report, inter alia , highlights tariff liberalization undertaken; relaxation of 
rules in some services sectors; initiatives to attract and facilitate foreign investment; trade 
facilitation measures; developments in the areas of government procurement and intellectual 
property rights; energy liberalization; and measures to facilitate e ntry of visitors into Japan. 
Attention was also drawn to FDI restrictions in TV broadcasting.  
2.31.   In 2016, APEC leaders adopted the Lima Declaration on the Free Trade Area of the Asia Pacific 
(FTAAP), which envisages negotiations on a comprehensive RTA which w ould include "next -
generation trade and investment issues". These negotiations would be held outside of APEC but in 
parallel with the APEC process, building upon regional undertakings such as the CPTPP and the 
Regional Comprehensive Economic Partnership. A PEC members are now examining how current 
pathways could contribute to the realization of the FTAAP.48 Other key areas of the APEC's work over 
the review period related, inter alia , to: the digital economy; building a seamless and 
comprehensively connected and integrated Asia -Pacific by 2025; increasing the APEC's 
competitiveness in the services sector by 2025; developing policies to take advantage of global value 
chains; advancing economic, financial and social inclusion; and ensuring food security and 
sustainability.49  
                                                
46 APEC members are: Australia; Brunei Darussalam; Canada; Chile; China; Hong Kong, China; 
Indonesia; Japan; Korea , Republic of;  Malaysia; Mexico; N ew Zealand; Papua New Guinea; Peru; the 
Philippines; Russian Federation; Singapore; Chinese Taipei; Thailand; United States; and Viet Nam.  
47 Areas of progress at the APEC -wide level noted are: tariff and services liberalization; implementation 
of measures to attract FDI; trade facilitation efforts; improvements to the quality of regulations; and RTA 
expansion. Unfinished business relates to high agricultural tariffs, unilateral services restrictions, an increase in 
trade remedies, and an accumulation of spe cific trade concerns in areas like sanitary and phytosanitary 
measures. APEC, APEC's Bogor Goals Progress Report 2018 . Viewed at: 
https://www.apec.org/Publications/2018/11/APEC -Bogor -Goals -Progress -Report . 
48 APEC, Lima Declaration on FTAAP . Viewed at: https://www.apec.org/Meeting -Papers/Leaders -
Declarations/2016/2016_aelm/2016_Annex%20A.aspx . 
49 APEC, Leaders' Declarations 2016 -18. Viewed at: https://www.apec.org/Meeting -Papers/Leaders -
Declarations . WT/TPR/S/397 • Japan  
 
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2.3.2.3.2   Other  
2.32.   Japan participated in numerous trade -related meetings and arrangements, which include the 
Asia-Europe meeting (ASEM)50, the Organization for Economic Cooperation and Development 
(OECD); the G7; the G20; the ASEAN+3; and the Tokyo Interna tional Conference on African 
Development.  
2.4  Investment Regime  
2.4.1   Investment framework  
2.33.   The Office of Invest Japan, which falls under the Cabinet Office, is responsible for providing 
information on investments and related matters, and dealing with any investment -related 
complaints. It brings together contact points in various ministries, government organizations and 
local governments.51 It has three key committees: (i) the Council for Promotion of Foreign Direct 
Investment, which is responsible for  attracting new investment projects and coordinating with 
foreign businesses to undertake necessary reforms to promote FDI52; (ii) the Task Force for 
Promotion of Foreign Direct Investment in Japan, which manages the Investment Advisor 
Assignment System (see below); and (i ii) the Working Group for Revising Regulations and 
Administrative Procedures, which is responsible for simplifying regulations and administrative 
procedures associated with FDI in Japan, and coordinating the relative ministries and agencies.53 
2.34.   The Investmen t Advisor Assignment System has been operating since 2016; it provides the 
framework and conditions under which assigned state ministers may advise companies that have 
made major investments in Japan from abroad.54  
2.35.   Various laws and regulations govern investment in Japan: the Foreign Exchange and Foreign 
Trade Act (FEFTA)55 and its implementing regulations (the Cabinet Order on Inward Direct 
Investment; the Order on Inward Direct Investment56; and the Foreign Exchange Order57); and the 
Act for Promotion of  Japan as an Asian Business Center, 2012.  
2.36.   In 2017, the FEFTA was amended, inter alia , to expand the scope of a prior checking of 
unlisted stock transfers between foreign investors , and to introduce a provision that foreign investors 
investing in Japan with out being registered may be subject to executive orders, including orders to 
                                                
50 ASEM is a forum for informal dialogue and cooperation; it comprises 30 European economies, 
21 Asian economies, the European Union and the ASEAN Secretariat. ASEM. Viewed at:  
https://www.aseminfoboard.org . 
51 These contact points are: JETRO; Government of Japan; METI; Japan Fair Trade Commission; 
Financial Services Agency; Ministry of Land, Infrastructure and Transport; Ministry of Justice; Ministry of 
Education, Culture, Sports, Science and Technology; Ministry of Finance; Ministry of Environment; Ministry of 
Agriculture, Forestry and Fisheries; Reconstruction Agency; and local governments of Yokohama City and the 
Osaka prefecture. Cabinet Office, Invest Japan . Viewed at: http://www.invest -
japan.go.jp/link/link/en_index.html . 
52 Invest Japan. Viewed at: http://www.invest -japan.go.jp/committee/about_council.pdf . 
53 For details of the composition of these entities, see Invest Japan. Viewed at: http://www.invest -
japan.go.jp/committee/en_index.html . 
54 Invest Japan. Viewed at: http://www.invest -
japan.go.jp/policy/investment_advisor_assignment_system/implementation_en.pdf . 
55 FEFTA (as amended in 2017). Viewed at: 
http://www.japaneselawtr anslation.go.jp/law/detail/?id=3267&vm=04&re=01 . Notification requirements on 
inward direct investment are set out in Chapter V.  
56 Cabinet Order on Inward Direct Investment . Viewed at: 
http://www.japaneselawtranslation.go.jp/law/detail/?re=02&dn=1&x=0&y=0&co=1&ia=03&yo=&gn=&sy=&ht
=&no=&bu=&ta=&ky=order+on+inward+foreign+direct+inves tment&page=3 ; and 
http://www.japaneselawtranslation.go.jp/law/detail/?re=02&dn =1&x=0&y=0&co=1&ia=03&yo=&gn=&sy=&ht
=&no=&bu=&ta=&ky=order+on+inward+foreign+direct+investment&page=4 . 
57 Foreign Exchange Order (English translation). Viewed at: 
http://www.japaneselawtranslation.go.jp/law/detail/?ft=1&re=02&dn=1&co=01&ia=03&ja=04&x=72&y=12&k
y=foreign+exchange+order&page=6 . WT/TPR/S/397 • Japan  
 
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sell their holding stocks; these measures were taken in order to protect Japan's essential security.58 
There have been no further amendments since 2017.  
2.37.   Under the 2012 Act for the  Promotion of Japan as an Asian Business Centre, incentives are 
provided to encourage investment in establishing R&D and regional headquarters.59 Personal income 
tax benefits are provided under the Act on Special Measures Concerning Taxation.60 Other 
investm ent incentives are: assistance for fund raising by the Small and Medium Business Investment 
and Consultation Co. Ltd., applicable to SMEs (this also covers small and medium -sized stock 
companies with capital not less than JPY 300 million); acceleration of patent examinations; 
shortened investment procedures; and acceleration of the status of residency examinations.61 As 
indicated by the authorities, an evaluation has not been undertaken on the effectiveness of these 
incentive schemes.  
2.38.   As set out in Article 55-5 of the FEFTA, inward FDI generally requires ex post facto  reporting 
to the Minister of Finance and the minister in charge of the sector involved, by the 15th day of the 
month following the investment. The FEFTA and its implementing regulations set out  prior 
notification and approval requirements for industries where it is considered that there could be 
"significant adverse effect on the smooth management of the national economy". These include: 
agriculture, forestry and fisheries, crude oil, leather an d leather products, and air and maritime 
transport.62 According to the authorities, there were 226 such prior notifications in FY2017 and 220 
in FY2018. The FEFTA and its implementing regulations also set out prior notification and approval 
requirements in some other sectors, on the grounds of public order, public safety, and national 
security. These sectors include: aircraft, arms, explosives, nuclear power, electric utilities, gas 
utilities, water, heat generation, rail transport, passenger transport, tele communications 
(accompanying certain network facilities), television and cable television, and broadcasting 
sectors.63 Prior notifications may be filed within six months before the date of the investment, and 
the examination period for approval is about two  weeks; in FY2017, there were 666 such prior 
notifications and, in FY2018, 683 . 
2.39.   FDI restrictions exist in the following sectors: broadcasting; radio; and telecommunications 
(Table 2.6). No new FDI restrictions were introduced over the review period.  
Table 2.6 FDI restrictions, 2019  
Sector  Description of restriction  Legislative 
basis  
Broadcasting  Basic broadcasting operations may, inter alia , not be provided by a 
person who does not have Japanese nationality; a foreign 
government or its representative; or a foreign corporation or 
organization.  Broadcasting 
Act 
Radio Act  
Radio  Radio station licences may not be granted to: a person who does 
not have Japanese nationality; a foreign government or its 
representative; a foreign corporation or organization; a 
corporation or organization which is represented by any person 
listed in the  preceding items; or one third or more officers which 
are those persons; or one third or more voting rights of which are 
made up of the aggregate of voting rights held by those persons. 
These FDI restrictions do not apply to: experimental radio 
stations; a mateur radio stations; radio stations on board ships and 
aircraft; radio stations transmitting radio communications between Radio Act  
                                                
58 METI, Promulgation of the Cabinet and Ministerial Orders and the Public N otices for the Enforcement 
of the Revised Foreign Exchange and Foreign Trade Act. Viewed at: 
https://www.meti.go.jp/english/press/2017/0714_003.html . 
59 Among the various incentives, a programme to reduce patent fees paid in relation to R&Dproject 
outcomes ended at the end of FY2018.  
60 Act on Special Measures Concerning Taxation. Act No. 26 of 1957  (last amended by Act No. 23 of 
2008). Viewed at: http://www.japaneselawtranslation.go.jp/law/detail/?id=3132&vm=&re= . As noted by the 
authorities, corporate income tax incentives under this Act were abolished in the FY2015 tax reform.  
61 METI, Act for Promotion of Japan as an Asian Business Center . Viewed at: 
https://www.meti.go.jp/english/policy/external_economy/investment/act_information.html , supple mented by 
information provided by the authorities . 
62 The Public Notice setting out requirements in this regard . Viewed at: 
http://www.japanes elawtranslation.go.jp/common/data/notice/142713_checked_2016 -12-15-18-14-08.html . 
63 WTO document WT/TPR/S/276/Rev.1, 18 June 2013. The Public Notice setting out requirements in 
this regard was viewed at: http://www.japaneselawtranslation.go.jp/common/data/notice/143020.html . WT/TPR/S/397 • Japan  
 
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Sector  Description of restriction  Legislative 
basis  
specific fixed points for embassies/consulates etc.; radio stations 
established for the purpose of communicating with mobile radio 
stations or receiving equipment for portable use; radio stations 
established to conduct telecommunications services; radio stations 
established for the purpose of controlling the position, etc. of an 
artificial satellite equipped with radio equipment of a r adio station 
for the purpose of conducting telecommunications services.  
Telecommunications  Less than aggregate one third shares in Nippon Telegraph and 
Telephone Corporation may be directly held by the aggregate of (i) 
persons without Japanese n ationality; (ii) a foreign government or 
its representatives; (iii) foreign juridical persons or entities; and 
(iv) juridical persons/entities whose voting rights are directly held 
by those persons/entities listed in (i) to (iii) and which exceed the 
presc ribed ratio.  Act on Nippon 
Telegraph and 
Telephone 
Corporation  
Source:  Information provided by the authoriti es. 
2.40.   The Government's investment goals are to increase the inward FDI stock to JPY 35 trillion by 
2020.64 By end -2018, the inward FDI stock reached J PY 30.7 billion. Since its previous Review, the 
Council for Promotion of Foreign Direct Investment has continued to undertake initiatives to attract 
inward investment65, through the 2016 Policy Package for Promoting Foreign Direct Investment into 
Japan to M ake Japan a Global Hub.66 Specific programmes were adopted. Firstly, the Support 
Program for Regional Foreign Direct Investment in Japan (Support Program) was adopted in 
May 2018. Under this Program, relevant ministries and agencies are to : help local gover nments 
formulate plans to attract foreign companies; provide support in matching foreign and local 
companies; advise local governments on the effective use of available measures to attract foreign 
companies; and advise foreign companies and local governmen ts on regulations and administrative 
procedures.67 This Program is designed to ensure FDI inflows, which are currently concentrated in 
Tokyo, have broader geographical reach. Secondly, the Program to Intensively Attract Foreign Direct 
Investment in Regional  Japan was adopted in April 2019; this Program includes strengthening of the 
Support Program, and efforts to further improve Japan's business environment.68 Other programmes 
aimed at increasing the FDI stock are the Basic Policy on Economic and Fiscal Manag ement and 
Reform 2017, a Council on Economic and Fiscal Policy initiative decided by the Cabinet, the Japanese 
Revitalization Strategy 2016, and the Cabinet's 2019 Growth Strategy (Section 1).  
2.41.   Virtually all of Japan's RTAs in force contain investment provi sions; in this regard, new 
investment commitments entered into force over the review period with CPTPP partners and the 
European Union (see above). As at July 2019, Japan had bilateral investment treaties (BITs) in force 
with 30 economies. New BITs entered  into force with Uruguay, Saudi Arabia, Oman, Kenya, Israel 
and Iran in 2017, and with Armenia in 2019 (Box 2.1). BITs were also signed with Argentina, 
Armenia, Jordan, and the United Arab Emirates, but are not yet in force.69 As at May 2019, Japan 
had 61  tax conventions in force, dealing with the elimination of double taxation, with 71 jurisdictions. 
Over the review period, Japan signed new such tax conventions with Latvia, Lithuania, Estonia, 
Iceland,  Croatia, Colombia, Ecuador, and Argentina ; and amended existing conventions with:  
Austria, the Russian Federation, Denmark and Spain.70  
                                                
64 This target was set out in the Japan Revitalization Strategy 2013, and reaffirmed in the Japan 
Revitalization Strategy 2016. MOFA, Invest Japan . Viewed at: 
https://www.mofa.go.jp/policy/economy/japan/invest/index.html . 
65 The Council for Promotion of Foreign Direct Investment was established in 2014. It comprises several 
ministers who are advised by representatives from JETRO, universities, research institutes, corporations , and 
city mayors.  
66 Invest Japan, Policy Package for Promoting Foreign Direct Investment into Japan to Make Japan a 
Global Hub . Viewed at: http://www.invest -japan.go.jp/documents/pdf/policy_package_en.pdf . 
67 Invest Japan, Support Programme for Regional Foreign Direct Investment in Japan . Viewed at: 
http://www.invest -japan.go.jp/committee/support_program_en.pdf . 
68 Invest Japan. Viewed at: http://www.invest -japan.go.jp . 
69 UNCTAD, Investment Policy Hub . Viewed at: 
https://investmentpolicyhub.unctad.org/IIA/CountryBits/105#iiaInnerMenu . 
70 Ministry of Finance, Japan's Tax Convention Network . Viewe d at: 
https://www.mof.go.jp/english/tax_policy/tax_conventions/international_182.htm . This includes details of 
jurisdictions with which Japan has: (i) tax conven tions (mainly for the elimination of double taxation and the WT/TPR/S/397 • Japan  
 
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2.42.   From a domestic perspective, Japan considers that there is a strong need for tax and 
investment -related treaties to support and protect its increasing levels of investment abr oad, and to 
encourage investment into Japan. Guided by the Action Plan Aiming to Facilitate an Investment 
Environment Through Promoting the Conclusion of Investment -Related Treaties, formulated in 2016, 
the Government plans to accelerate the conclusion of investment -related treaties and the revision 
of existing ones; its target is to have in force investment -related treaties with 100 countries and 
regions by 2020. It is also considering inclusion of trade in services and e -commerce in these 
agreements, to r eflect economic and social developments.71 
Box 2.1 Investment framework  
RTAs in force  with investment provisions  
EU-Japan EPA (investment liberalization provisions only); CPTPP; Japan -Mongolia EPA; Australia -Japan EPA; 
Japan -Peru EPA; India -Japan EPA; Japan -Switzerland EPA; Japan -Philippines EPA; Indonesia -Japan EPA; 
Brunei Darussalam -Japan EPA; Japan -Thailand EPA; Chile -Japan EPA; Japan -Malaysia EPA; Japan -Mexico 
EPA; and Japan -Singapore EPA  
Other agreements in force with investment provisions  
China -Japan -Republic of Korea Trilateral Investment Agreement  
BITs in force  
Armenia; Bangladesh; Cambodia; China ; Colombia; Egypt; Hong Kong, China; Iran, Islamic Rep. of ; Iraq; 
Israel; Kazakhstan; Kenya; Korea, Rep.  of; Kuwait, State of ; Lao People's Democratic Republic ; 
Mozambique; Myanmar; Oman; Pakistan; Papua New Guinea; Peru; Russian Federation; Saudi Arabia, 
Kingdom of; Sri Lanka; Turkey; Ukraine; Uruguay; Uzbekistan; and Viet Nam  
Membership of  investment -related intergovernmental  agreements  
Multilateral Investment Guarantee Agency Convention; International Centre for Settlement of Investment 
Disputes Convention; and New York Convention; OECD Invisible Operations; OECD Capital Mov ements; and 
the Energy Charter Treaty  
Source:  UNCTAD , Investment Policy Hub . Viewed at: 
https://investmentpolicyhub.unctad.org/IIA/CountryOtherIias/105#iiaIn nerMenu .  
2.4.2   Business environment  
2.43.   Japan is ranked in 39th place out of 190 economies in the World Bank's 2019 Doing Business 
report; it scores well in the areas of resolving insolvency, getting electricity, dealing with construction 
permits, and registering a property. Its poorest rankings are for: starting a bu siness, getting credit, 
and protecting minority investors.72 It ranks in 5th place in the World Economic Forum's (WEF) 2018 
Global Competitiveness report, an improvement on the previous year. Its strongest rankings are in 
the areas of health, digital infras tructure, and physical infrastructure. Its weakest rankings are for: 
institutions (related to low levels of social capital); corporate governance; and skills. The WEF report 
further notes that, while Japan is an innovation hub, it needs to develop the "sof ter" drivers of 
innovation, such as risk aversion, creativity and critical thinking.73 While Japan is well -ranked in 
indices relating to perceptions of corruption74, it has been urged to take stronger measures against 
supply -side corruption by Japanese companies in their foreign business activities.75  
2.44.   Key measures being implemented to improve the business environment relate to: introducing 
labour force reforms (Section 1, and below); improving corporate governance (Section 3.3); and 
                                                
prevention of tax evasion and avoidance; (ii) tax information exchange agreements; and (iii) conventions on 
mutual administrative assistance in tax matters.  
71 METI, Investment -related treaties . Viewed at: 
https://www.meti.go.jp/english/report/data/wp2018/pdf/3 -1-2.pdf. 
72 World Bank , Doing Business 2019 – Training for Reform.  Viewed at: 
http://www.doingbusiness.org/content/dam/doingBusiness/media/Annual -Reports/English/DB2019 -
report_web -version.pdf . 
73 WEF, Global  Competitiveness Report  2018.  Viewed at: 
http://www3.weforum.org/docs/GCR2018/05FullReport/TheGlobalCompetitivenessReport2018.pdf . 
74 In Transparency In ternational's 2018 Corruption Perceptions Index, Japan is ranked in 18th place out 
of 180 economies. Viewed at: https://www.transparency.org/cpi2018 . 
75 OECD , Japan must make fighting international bribery a priority . Viewed at: 
http://www.oecd.org/daf/anti -bribery/japan -must-make -fighting -international -bribery -a-priority.h tm. WT/TPR/S/397 • Japan  
 
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lowering cor porate tax (Section 3.3.1.1). Given that SMEs and micro enterprises account for around 
99.7% of all companies and 70% of all employees in Japan76, the Government continues to 
implement various policy measures to assist them, namely: financing support, such as loans from 
public financial institutions; measures to realize wage increases; and productivity -improvement 
assistance.77 In 2017, a crisis -related guarantee scheme for SMEs was established, through revisions 
to the SME Credit Insurance Law, to provide an  additional safety net to these companies and to 
promote management and productivity improvements.78 The authorities indicated that efforts are 
also being made by the SME Agency Japan to help these companies deal with structural 
transformation challenges, s uch as ageing business owners, labour shortages, natural disaster 
prevention, and mitigation measures. In July 2019, the Act on the Strengthening of the Management 
of SMEs was enacted; this aims to strengthen SME management, and support the continuation of  
their business activities, particularly in light of the ageing of business owners. In order to help SMEs 
prepare for natural disasters, the Government established a plan approval system for specific 
measures SMEs should take before natural disasters, and strengthened the support systems of the 
Society of Commerce and Industry and the Chamber of Commerce and Industry. Additionally, to 
cope with ageing of business owners, the Government expanded coverage of special arrangements 
under the Civil Code in terms of a statutory reserved portion to include individuals, to effectively 
carry out the Tax System for Individual Business Succession, established in 2019.  In 2019, an 
innovation initiative was set up by a government council to assist start -ups become globall y 
competitive; it is aimed at doubling the number of innovative start -ups by 2024.79  
2.45.   With respect to labour force reforms, one element is to promote women's participation in the 
work force through measures such as increased childcare capacity, increased ch ild care leave 
benefits, training and education programmes, and more flexible working conditions80; according to 
official sources, the number of women joining the workforce increased by around 2.9 million between 
2012 and 2018, with Japan's women's labour f orce participation rate being 74% in 2017.81 However, 
it seems that Japan has large scope to make improvements in areas such as women's economic 
empowerment, increasing the number of women in management positions, and reducing the 
significant gender pay gap .82 As explained by the authorities,  Japan has positioned women's 
empowerment at the centre of its economic growth strategy, and promoted comprehensive and 
diverse policies, including: enactment of the Women's Empowerment Act; work -style reform; 
expanded ch ildcare facilities; increased childcare leave benefits; and promoting the participation of 
men in housework and childcare . Another element of labour reform is to attract experienced overseas 
professionals. Steps taken were the establishment of the Japanese  Green Card for Highly -Skilled 
Foreign Professionals.83 Skilled non -Japanese workers may apply for permanent residency after 
                                                
76 Latest data provided by the authorities (June 2016).  
77 WTO document WT/TPR/M/351/Add.1, 27 April 2017.  
78 METI, An Act to Amend the Small and Medium -Sized Enterprise Credit Insurance Act (Act No. 56 of 
2017). Viewed at: https://www.meti.go.jp/press/2017/10/20171020001/20171020001.html . 
79 Nippon , Japan to Pick Base Cities to Create Globally Competitive Startups . Viewed at : 
https://www.nippon.com/en/news/yjj2019061101169/japan -to-pick-base-cities-to-create -globally -
competitive -startups.html . 
80 The New Economic Policy Package sets out various of these initiatives. Additionally, in June 2018, a 
work reform bill was passed by the Diet, which limits overtime hours (except for white -collar workers) to 
address traditionally long working hours and associated work stress. It also provides for "equal p ay for equal 
work", to address wage gaps between regular and non -regular employees and promote flexible working. Nikkei 
Asian Review, Five things to know about Japan's work reform law . Viewed at: 
https://asia.nikkei.com/Economy/Five -things -to-know -about -Japan -s-work-reform -law. Since the OECD 
reports that more women than men are engaged in non -regular employment, this measure may benefit them 
more. OCED, Japan Economic Snapshot . Viewed at:  http://www.oecd.org/economy/surveys/japan -economic -
snapshot/ . Government of Japan, Women's Empowerment. Viewed at: 
https://www.japan.go.jp/diversity/women . 
81 Government of Japan, Women's Empowerment . Viewed at: 
https://www.japan.go.jp/diversity/women/ . 
82 As reported by the OECD, the ge nder pay gap in Japan is the third highest among OECD Members. 
OECD , Japan Economic Snapshot . Viewed at: http://www.oecd.org/economy/surveys/japan -economic -
snapshot /. In the WEF Global Gender Gap Report 2017 , Japan was ranked in 114th place out of 144 economies. 
Its rankings for the component pillars were: 114th place for economic participation and opportunity; 74th place 
for educational attainment; 1st place for health and survival; and 123rd place for political empowerment.  Viewed 
at: http://www3.weforum.org/docs/WEF_GGGR_2017.pdf . As reported by the authorities, women in 
management positions in the private sector approached 10%  by in 2018. Government of Japan, Women's 
Empowerment . Viewed at: https://www.japan.go.jp/diversity/women . 
83 METI, Working in Japan – Open for Professionals, March 2018 . Viewed at: 
https://www.meti.go.jp/english/policy/external_economy/professionals/pdf/recruitment201803.pdf . WT/TPR/S/397 • Japan  
 
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three years (one year for professionals with particularly high skills), rather than five, as previously. 
The system is operational s ince April 2017. Furthermore, in 2018, a new residency status was 
approved for foreigners with skills to work in industries where manpower is lacking, including 
construction, agriculture, and long -term care.84 As at end -June 2019, 20 foreign nationals had b een 
admitted as residents under the specified skills workers programme; as indicated by the authorities, 
while there are no targets set, Japan expects to admit around 345,000 such workers over the next 
five years. As at June 2018, the number of recognized Green Cards was 815.  
2.46.   As reported in the previous Review, regulatory reform pilot schemes were launched under the 
National Strategic Special Zone initiative, established in 2013. Under this initiative, regulatory 
reforms proposed by the private sector, and agreed with local and central governments, are tested 
within a "sandbox" environment. The idea is that, if pilot reforms are successful, they will be 
implemented country -wide. Ten zones were designated, each of which is focused on encouraging 
specific acti vities in certain spheres (Box 2.2), through regulatory reform.85 As at end -September 
2019, 335 projects had been undertaken. Examples of successful achievements in the Zones include: 
an automated bus driving test conducted on a public road in Semboku City,  and acceptance of non -
Japanese workers who have certain skills to help turn agriculture into a growth industry in Kyoto 
Prefecture, Niigata City, Okinawa Prefecture and Aichi Prefecture.  
Box 2.2 National Strate gic Special Zones  
Tokyo Zone  International business and innovation hub, and a multicultural city, and for the 
exhibition of near -future technologies  
Kansai Zone  Innovation in medical care, and entrepreneurial support  
Niigata City Zone  Agricultural refor m in large -scale farming  
Yabu City Zone  Agricultural reform in hilly and mountainous areas  
Fukuoka City and  
Kitakyushu City Zone  Employment system reform to promote business creation, and actions to address the 
declining and ageing population  
Okinawa Prefecture Zone  International tourism  
Senboku City Zone  Reform in agriculture and forestry, and for international exchange in the medical field  
Sendai City Zone  Promotion of active social participation of women and start -ups 
Aichi Prefecture Zone  General reform of education, employment, and agriculture, and fostering of industry 
leaders  
Hiroshima Prefecture and 
Imabari City Zone  International exchange and the utilization of big data  
Source : WTO document WT/TPR/S/351/Rev.1, 20 June  2017. 
                                                
84 MOFA, A New Status of Residence – "Specified Skilled Worker" – has been created . Viewed at: 
https://www.mofa.go.jp/files/000459527.pdf ; and Ministry of Justice, Efforts for Acceptance of Foreign Nations 
and Harmonious Coexistence . Viewed at: 
http://www.moj.go.jp/nyuukokukanri/kouhou/nyuukokukanri01_00127.html . 
85 Government of Japan, Abenomics . Viewed at: 
https://www.japan.go.jp/abenomics/_userdata/abenomics/pdf/1901_abenomics.pdf ; and WTO document 
WT/TPR/S/351/Rev.1, 20 June 2017.  WT/TPR/S/397 • Japan  
 
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3  TRADE POLICIES AND P RACTICES BY MEASURE  
3.1  Measures Directly  Affecting Imports  
3.1.1   Customs procedures, valuation, and requirements  
3.1.  Japan  Customs, under the Ministry of Finance, continues to administer and enforce customs 
legislation. Customs and tariff policies are formulated by the Customs and Tariff Bureau of the 
Ministry. Japan has nine regional Customs offices.1  
3.2.  The Customs Act remain s the principal piece of legislation covering customs procedures and 
documentation.2 Over the review period, amendments to the Customs Act in 2017 and 2018, inter 
alia, integrated a new principle regarding reporting on matters related to cargoes in electro magnetic 
records , and strengthened penalties for failure to obtain export and import permissions when 
required. Other regulations governing customs procedures are: Cabinet Order No.  150 of 1954 
(Order for Enforcement of the Customs Act) and the Ministry of  Finance Ordinance for Enforcement 
of the Customs Act (No. 55 of 1966).  
3.3.  Japan deposited  its instrument of acceptance of the Trade Facilitation Agreement (TFA) with 
the WTO in 2015. In the same year, it set up a national committee on trade facilitation (th e Liaison 
Conference on Trade Facilitation), which is a forum for information -sharing, at the director -general 
level, among the relevant ministries and agencies. Japan maintains various enquiry points, as 
stipulated in Article 1.3 of the TFA.3 Over the rev iew period, Japan notified its assistance and support 
for capacity building for the years 2015, 2016 and 20174; it also submitted a notification on 
publication and availability of information, on formalities connected with importation, exportation 
and tran sit, and on customs cooperation.5 
3.4.  There  are no registration requirements for importers. A customs declaration is needed for 
importation, and must be accompanied by an invoice, bill of lading, insurance certificate, freight 
account, and packing list. Additi onal documents may be necessary, depending on the type of goods.6 
There are no fees required by Customs for an import declaration, although Customs charges fees 
for certain services, such as granting permits for goods examination (both imports and exports)  
outside of designated areas.7 The authorities confirmed that Japan has no preshipment inspection 
(PSI) requirements in place.  
3.5.  Use of customs brokers is not mandatory. Online processing of procedures with customs and 
other related agencies is undertaken through the Nippon Automated Cargo and Port Consolidated 
System (NACCS), Japan's single electronic window. The NACCS Center collects  usage fees. In 2018, 
around 99% of import/export declarations were processed through this System. According to the 
authorities, no consideration is currently being given to making submission of customs declarations 
through the NACCS compulsory. Importers can pay the assessed customs duty electronically through 
the NACCS , which is connected to a multi -payment network, which links teller institutions 
(government authorities) with private banks. The NACCS also provides various online logistics 
                                                
1 Hakodate, Kobe, Moji, Nagasaki, Na goya, Okinawa, Osaka, Tokyo and Yokohama.  
2 Customs Act . Viewed at: http://www.kanzei.or.jp/kanzei_law/329AC0000000061.en.html#c1 . 
Amendments to the Customs Act were viewed (in Japanese) at: 
http://hourei.ndl.go.jp/SearchSys/viewEnkaku.do?i=nH9Wu%2Ffb7G0ZmTuWwPe%2FQA%3D%3D . 
3 These enquiry points are listed in the Secretariat Re port for Japan's previous Review. WTO document 
WT/TPR/S/351/Rev.1, 20 June 2017.  
4 Notification under Articles 22.1 and 22.2 of the TFA.  WTO document s G/TFA/N/JPN/3, 
10 September  2018; G/TFA/N/JPN/1/Rev.1, 27 June 2017; and G/TFA/N/JPN/4, 7 March 2019.  
5 Notification under Articles 1.4, 10.4.3, 10.6.2 and 12.2.2. WTO document s G/TFA/N/JPN/2, 
10 August  2017; and  G/TFA/N/JPN/2/Corr.1, 19 December 2018 . 
6 These additional documents may include certificates of origin; statement on reduction of, or exemption 
from, customs duty and excise tax (when such reduction or exemption is applicable to the goods); and 
documents required under Japan's generalized system of preferences.  
7 Japan Customs' rates for the fees and permits it issues  were viewed at: 
http://www.customs.go.jp/english/exp -imp/customsfee.htm . WT/TPR/S/397 • Japan  
 
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services to the  private sector, the scope of which were expanded through the program me 
development and modification of the NACCS in 2017.8 
3.6.  Importers  may submit documents to Customs before their cargo's arrival in Japan, so that they 
can be notified in advance as to wheth er a customs inspection of the cargo will be required. A pre -
arrival declaration form must be submitted to the customs office that controls the customs bonded 
(hozei ) area where the cargo is expected to be brought in (although this requirement does now not  
apply to Authorized Economic Operators (AEOs) (see below)). Inspection of a shipment under pre -
arrival is conducted before the cargo is transferred into a hozei area.  
3.7.  An AEO system remains in place which, inter alia,  simplifies customs procedures for AEO s9; 
AEO importers and customs brokers may submit import and duty/tax payment declarations 
separately, allowing them to submit import declarations in advance of cargo arrivals and to have 
goods released before submitting the duty/tax payment declaration. A full description of the AEO 
scheme (including legal and institutional framework, eligibility criteria, and mutual recognition 
agreements (MRAs) with trading partners) is contained in the previous Review.10 Since 2017, AEOs 
have been granted the flexibility to lodge their import/export declarations at any customs office, not 
just the one where the imported goods are stored.  The purpose of this change is to enable greater 
efficiencies and cost reductions.11 As at July 2019, there were 701 AEOs. In 2018, they ac counted 
for about 13% of imports and about 53% of exports on a trade value basis. AEO customs brokers 
deal with about 80% of imports and around 85% of exports. Over the review period, Customs signed 
MRAs for AEO programmes with China (October 2018), and Au stralia (June 2019). Additionally, an 
MRA with Chinese Taipei is based on a private -sector arrangement. Consultations on MRAs regarding 
AEO schemes are being held with Switzerland and the United Kingdom. Under the MRAs, Japan 
Customs takes into account the  status of the members of the other AEO programmes when 
conducting its own risk assessment.  
3.8.  Imports  are held at hozei areas at the ports of entry. Once the necessary inspection takes 
place, and customs duties and taxes are paid, an electronic "Notice of Im port Permit" is issued by 
Customs.  
3.9.  As indicated  by the authorities, Japan Customs undertook its most recent time release study 
in March 2018. Customs clearance times (measured from the time when traders submit their 
declarations to Customs to when Customs  permits the importation) were: 2.1 hours for sea cargo 
and 0.3 hours for air cargo. The World Bank's 2019 Doing Business report ranks Japan in 56th place 
out of 190 economies for ease of trading across borders; it indicates that the time to import average s 
3.4 hours for documentary compliance and 39.6 hours for border compliance. The cost to import is 
reported as USD 107 for documentary compliance and USD 299.2 for border compliance.12  
3.10.   Data is not publicly released on the percentage of imported goods which  are subject to the 
various types of inspection by Customs (i.e. physical inspection, or documentary inspection), nor is 
information available on the basis for which goods are physically inspected. Japan also uses post -
clearance audit (PCA); over the perio d 1 July 2017 to 30 June 2018, Japan Customs conducted PCA 
for 4,266 importers.  
                                                
8 The NACCS is managed and run by a private company, the Nippon Automated Cargo and Port 
Consolidated System, Inc. (NACCS Center) . The NACCS Center undertakes ( i) online  processing of procedures 
with customs and other relevant authorities; and (ii) private -sector services for arriving/departing ships and 
aircraft or import/export cargo. In 2010, the Sea -NACCS and the Air -NACCS were integrated into one 
integrated NACCS, along with the Port EDI System (integrated in 2008), and the METI's Japan Electronic Open 
Network Trade Control System (integrated in 2010). Its main features are: a system to complete 
administrative procedures; a data base system for cargo and transport management; and a communication 
system among users. NACCS. Viewed at: https://www.naccs.jp ; and UNESCAP, Towards a Single Window 
Trading Environment – Japan's Development of a Single Window – Case of NACCS . Viewed at: 
https://www.unescap.org/sites/default/files/brief6.pdf . 
9 Types of operators eligible to be AEOs are: importers, exporters, manufacturers, warehouse o perators, 
customs brokers, and logistics operators.  
10 WTO document WT/TPR/S/351/Rev.1, 20 June 2017.  
11 The regulation implementing this change is Cabinet Order No . 133 of 2017. Viewed at: 
http://www.customs.go.jp/kaisei/seirei/H29seirei133/yoko.pdf . 
12 World Bank, Doing Business 2019 . Viewed at: 
http://www.doingbusiness.org/content/dam/doingBusiness/media/Annual -Reports/English/DB2019 -
report_web -version.pdf . WT/TPR/S/397 • Japan  
 
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3.11.   As mentioned in the previous Review, advance rulings may be requested by importers or 
other interested parties on: tariff classification, customs valuation, the origin of goods, and duty 
relief/exemption for goods due for import. In principle, advance rulings are issued within 90 days of 
request for customs valuation, and within 30 days for other requests. Advance rulings are binding 
on Customs.  
3.12.   Complaints  against Customs' decisions may be made to the Director -General of Customs or 
directly to the Minister of Finance within three  months of the decision. Further appeals may be lodged 
with the Minister of Finance within one month of the decision by the Director -General of Cust oms. A 
lawsuit may be filed against the Minister's decision within six months of such a decision. Since 
1 January 2017, 99 complaints, eight appeals and two lawsuits against Customs decisions were filed; 
of these, 56 complaints and two appeals were decided  in favour of the complainant.  
3.13.   Japan  has signed agreements and arrangements for the exchange of customs information 
with 35 countries and regions.13 It became a signatory to the WCO's Revised Kyoto Convention in 
2001, and makes use of international standard s in customs and trade facilitation.  
3.1.2   Customs  valuation  
3.14.   Japan's  rules on customs valuation are contained in the Customs Tariff Act14; they were not 
changed over the review period. Customs valuation is determined on the basis of the transaction 
value of the g oods (c.i.f. value); should it not be possible to use this method, other methods used 
(in order) are: transaction value of identical or similar goods; computed value based on the domestic 
selling prices or the production costs of those goods; and values de termined by other methods.15 
The authorities noted that data is not available on Japan's use of the various different means of 
determining customs value.  
3.1.3   Rules of origin  
3.15.   Japan  notified the WTO that is has non -preferential rules of origin (ROOs)16; these are  to 
determine, inter alia , whether to apply most favoured nation (MFN) rates (as opposed to general 
rates (Section 3.1.4) to establish the country of origin for some trade remedy measures and import 
trade statistics. Non -preferential ROOs are detailed in A rticle 4 -2 of the Cabinet Order for 
Enforcement of the Customs Law, and Articles 1 -5 and 1 -6 of the Ordinance for Enforcement of the 
Customs Law. MFN tariff rates are applicable to imports from eligible countries, where the country 
of origin is defined as the country in which the goods concerned have been wholly obtained or have 
undergone substantial transformation (change of tariff classification at the Harmonized System (HS) 
four-digit level).  
3.16.   Japan  also applies preferential rules of origin under the Gen eralized System of Preferences 
(GSP) and its various RTAs (Section 2.3 and Section 3.1.4). To benefit from preferential duties, 
certificates of origin need to be provided by authorized institutions in the exporting country or by 
approved exporters (in the case of some RTAs). In order to prove the origin of the product being 
imported, it generally has to have been "wholly obtained" or "substantially transformed" (e.g. change 
of tariff classification at the HS four -digit level or 40% of value -added) in the ex porting country. For 
goods not wholly obtained, specific criteria based on change of tariff classification rules, processing 
rules, and value -added rules are applied, on a product -by-product basis.  
                                                
13 Australia;  Austria; Belgium; Brazil;  Brunei Darussalam; Canada; Chile; China;  Chinese Taipei;  
European Union; F rance; Germany; Hong Kong, C hina; India; Indonesia; Italy; Korea, Republic of; Macao, 
China; Malaysia; Mexico; Mongolia; Netherlands; New Zealand; Norway; Peru; Philippines; Russian Federation; 
Singapore; South Africa; Spain; Switzerland; Thailand; United Kingdom; United States; and Viet Nam. These 
agreements include customs cooperation provisions in EPAs with 12 countries and regions, and in the CPTPP.  
14 Customs Tariff Act. Viewed at: 
http://www.kanzei. or.jp/kanzei_law/143AC0000000054.en.html#a9_2 . 
15 Japan Customs, Rules of Origin . Viewed at: http://www.customs.go.jp/roo/english/index.htm . 
16 WTO documents G/RO/N/1, 9 May  1995; and G/RO/N/1/Add.1, 22 June 1995.  WT/TPR/S/397 • Japan  
 
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3.17.   Japan  Customs maintains a webpage, in English, on its ROO framework (both preferential and 
non-preferential), which includes, inter alia , contact points, legal texts and a facility for searching 
for product -specific ROOs.17  
3.1.4   Tariffs  
3.18.   The main laws  governing the s etting of tariffs are the Customs Tariff Act18 (which, inter alia,  
provides for customs duty rates through the appended Tariff Schedule, customs duty reductions and 
exemptions, and the application of tariff rate quotas) and the Temporary Tariff Measures Act19 (which 
provides for temporary exemptions to the Customs Act and the Customs Tariff Act to allow for 
customs duty adjustments, if needed, for the sound development of the national economy). Over 
the review period, the Customs Tariff Act was amended severa l times, inter alia , to extend the 
effective periods of temporary rates of customs duty and the related exemption system; review 
customs duties on individual items; extend special tariff measures in the Okinawa prefecture20; and 
apply duty-free rate s to certain products (as a result of the revision of the preferential tariff system.21  
3.19.   In FY2019 , customs duties amounted to 1.65% of central government tax revenue 
(Table  3.10).  
3.1.4.1   MFN applied  tariff  
3.20.   Since  2017, Japan has eliminated tariffs on:  p-nitrochlorobenzene, m-aramid, synthetic 
filament tow, certain toys and sanitary articles (effective 1  April 20 17)22; naphthols and their salts, 
vinylene carbonate, fluoroethylene carbonate, ethyl methyl carbonate, p ropylene carbonate and 
diethyl carbonate, hexamethylenediamine and its salts, crystal violet lactone, bio -polyethylene, and 
polytrimethylen terephtalate (effective 1  April 20 19).23 Additionally, import tariffs on seven  lines at 
the six-digit level were redu ced under the Expansion of the Information Technology Agreement.24 
3.21.   The Japanese tariff schedule has been based, since 2017, on the HS 2017, and contains 110 
more tariff lines than its HS12 version. It has three distinct sets of rates: statutory rates (inclu ding 
both general and temporary rates); WTO bound rates; and preferential rates (under the GSP and 
RTAs). In the case of statutory rates, the "temporary" rate, which is reviewed annually, is normally 
used instead of the higher general rate; the lower of th e statutory and WTO bound rates is applied 
to WTO Members on an MFN basis, except when preferential rates are applied. Where the temporary, 
general or preferential rate is above the WTO bound rate, the latter applies to WTO Members. As 
indicated by the aut horities, general rates are set with a long -term perspective, based upon, inter 
alia, the conditions of domestic industries. Temporary rates are applicable only for a certain period 
of time, in order to modify general rates to meet policy needs or for othe r reasons.  
3.22.   The structure of Japan's MFN applied tariff remains complex, with a total of 272 tariff rates 
(same as in FY2016); there are 136 different ad valorem  rates, 75 different specific rates, 29 
different alternate rates, and 24 different compound rat es, as well as 8 different other types of duty 
(6 differential duties and 4 sliding duties). In FY2019, Japan's tariff schedule comprised 9,181 lines, 
excluding in -quota rates (compared to 9,071 in FY2016) at the HS nine -digit level (Table 3.1).25 Of 
all tariff lines, 92.9% involve ad valorem  rates (including duty -free lines, which represent 40.5% of 
all lines). The remaining 7.1% (i.e. 648 lines) are non -ad valorem  (Chart 3.1).  
                                                
17 Japan Customs, Rules of Origin . Viewed at: http://www.customs.go.jp/roo/english/index.htm.  
18 Custom Tariff Act (Act No. 54 of 1910), as amended. View ed at: 
http://www.kanzei.or.jp/kanzei_law/143AC0000000054.en.html . 
19 Temporary Tariff Measures Act. Viewed at: 
http://www.kanzei.or.jp/kanzei_law/335AC0000000036.en.html#a1 . 
20 The application period of the "Selective Taxation" system was extended for two years, and the 
application period of the "Specified Duty -Free Shop" system was extended for three years.  
21 Japan Customs , Customs Tariff Act revision (2/2017) ; Customs Tariff A ct revision (2/201 8); and 
Customs Tariff Act revision and Temporary Tariff Measures Act revision (2/2019) . Viewed at: 
http://www.customs.go.jp/kaisei/horitsu.htm . 
22 HS 2904.99; 3908.90; 5501.10; 9 503.00; 9619.00 . 
23 HS 2907.15 ; 2920.90 ; 2921.22 ; 2932.20 ; 3901.10, 3901.20, 3901.40, 3901.90 ; 3907.99 . 
24 HS 3215.11; 3215 .19; 3506 .91; 3907 .99; 3506 .91; 3923 .10; 5911 .90. 
25 Excluding in -quota lines.  WT/TPR/S/397 • Japan  
 
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Table 3.1 Structure of MFN tariffs FY2016 and FY2019  
(%, unless otherwise indicated)   
MFN applied  Final  
  FY2016  FY2019  bounda 
Bound tariff lines (% of all tariff lines)  98.2 98.1 98.1 
Simple average rate  6.1 6.3 6.4 
 WTO agricultural products  16.3 17.9 18.3 
 WTO non -agricultural products  3.6 3.5 3.5 
 HS 01 -24 14.5 15.7 16.2 
 HS 25 -97 3.5 3.3 3.4 
Duty-free tariff lines (% of all tariff lines)  40.1 40.5 38.2 
Simple average rate of dutiable lines only  10.2 10.6 10.6 
Tariff quotas (% of all tariff lines)  1.7 2.0 2.0 
Non-ad valorem  tariffs (% of all tariff lines)  6.8 7.1 6.6 
Non-ad valorem  tariffs with no ad valorem  equivalents  (AVEs) (% of 
all tariff lines)  1.6 1.7 1.6 
Domestic tariff "peaks" (% of all tariff lines)b 6.7 6.9 6.7 
International tariff "peaks" (% of all tariff lines)c 7.6 7.9 8.0 
Standard deviation  16.7 18.0 18.3 
Nuisance applied rates (% of all tariff lines)d 1.5 1.6 1.5 
Number of lines  9,071  9,181  9,006  
 Ad valorem  rates 8,452  8,533  8,403  
 Duty-free lines  3,641  3,717  3,504  
 Non-ad valorem  rates 619 648 603 
 Specific  242 247 240 
 Compound  57 75 76 
 Alternate  288 295 287 
 Other  32 31 0 
a Final bound rates are based on the FY2019 tariff schedule. Calculations are based on 9,006 bound 
rates (including 19 partially -bound rates). Excluding 175 unbound rates.  
b Domestic tariff peaks are defined as those exceeding three times the overall simple average applied 
rate. 
c International tariff peaks are defined as those exceeding 15%.  
d Nuisance rates are those greater than zero, but less than or equal to 2%.  
Note:  All tariff calculations exclude in -quota lines. Including AVEs, as available, provided by the 
authorities. In case of unavailability, the ad valorem  part is used for compound a nd alternate rates. 
FY2016 and FY2019 are based on HS12 and HS17 nomenclature, respectively.  
Source:  WTO calculations, based on data provided by the authorities; and Japan Customs online information. 
Viewed at: https://www.customs.go.jp/english/tariff/ . 
Chart 3.1 Tariff distribution by type of duty, FY2019  
 
Source:  WTO Secretariat calculations, based on Japan Customs online information. Viewed at: 
https://www.customs.go.jp/english/tariff/ . 
Chart 3.[1]   Tariff distribution by type of duty, FY2017
Source:  WTO Secretariat calculations, based on Japan Customs online information.Ad valorem duty
52.5%
Duty free
40.5%Non-ad valorem duty
7.1%
A lternate duty  3.2%Specific duty  2.7%
O ther  0.3%C ompound duty  0.8%WT/TPR/S/397 • Japan  
 
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3.23.   The non -ad valorem  rates apply mainly to f ats and oils, followed by footwear, prepared foods, 
mineral products, live animals and animal products, vegetables, an d textiles and clothing  
(Chart  3.2). 
Chart 3.2 Share of non -ad valorem  duties, by HS section, FY2019  
 
Note:  Each bar depicts the percentage of tariff lines within each HS section that carry non -ad valorem  
duties; the figures in parentheses show the corresponding number of lines. In -quota rates are not 
included.  
Source:  WTO Secretariat estimates, based on Japan Customs online information. Viewed at: 
https://www.customs.go.jp/english/tariff/ . 
3.24.   In FY2019 , Japan's overall simple average applied MFN tariff rate was 6.3% (up from 6.1% 
in FY2016). This was mainly due to higher ad valorem  equivalents (AVEs) and, to a much lesser 
extent, because of a HS  nomenclature change. Import duties on agricultural products are hig her 
than duties on non -agricultural products: the simple average for agriculture (WTO definition) is 
17.9% (16.3% in FY2016), compared with 3.5% for non -agricultural products (3.6% in FY20 16) 
(Table 3.2) . The authorities provided data for 490 out of 648 A VEs based on import data as at 
26 April 2019 .26 Consequently, the tariff analysis is based on 99.2% of the 9,181 tariff lines . The 
simple average for all the AVEs supplied is 37.3%, higher than at the time of Japan's previous Review 
(when it was 32.7%, based on 2014 import data).  The highest rates, which are out -of-quota AVE 
rates, are 499.7% for certain broad and horse beans peas, followed by 389.8% for pegin beans, and 
for certain o ther beans. All the 100 highest tariffs had non -ad valorem  rates.  
                                                
26 For 54 of the 295 alternate rates, and for 27 of the 75  compound rates, no AVEs were provided (the 
ad valorem  parts were used). For 65 of the 247 specific rates and for 12 of the 31 "other" rates, no AVEs were 
provided.  
(103)
(71)(37)
(127)
(35)
(5)(6)
(0)(0)(0)(209)(25)
(0)(0)(28)
(0)(0)(0)(0)(2)(0)(648)
0%5%10%15%20%25%30%35%40%45%
Live animals & prod.
Vegetable products
Fats and oils
Prepared food, etc.
Mineral prod.
Chemicals & prod.
Plastic & rubber
Hides & skins
Wood & articles
Pulp, paper, etc.
Textiles & articles
Footwear
Articles of stone
Precious stones, etc.
Base metals & prod.
Machinery
Transport equipment
Precision instruments
Arms & ammunition
Misc. manufactures
Works of art, etc.
TotalChart 3.[]    Share of non -ad valorem duties, by HS section, FY2019
Note:
Source:Each bar depicts the percentage of tariff lines within each HS section that carry non -ad valorem duties;  
the figures in parentheses show the corresponding number of lines.  In -quota rates are not included.
WTO Secretariat estimates, based on Japan Customs online information.WT/TPR/S/397 • Japan  
 
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Table 3.2 Tariff summary, FY2019  
  Number 
of lines  Average 
(%) Range 
(%) Standard 
deviation  Duty free 
(%) Non-ad 
valorem 
rates (%)  
Total  9,181  6.3 0-499.7  18.0 40.5 7.1 
HS 01 -24 2,241  15.7 0-499.7  32.7 17.7 15.1 
HS 25 -97 6,940  3.3 0-219.4  7.2 47.8 4.5 
By WTO category  
WTO agricultural products  1,836  17.9 0-499.7  36.2 24.5 18.8 
 Animals and products thereof  230 10.6 0-72.4 14.0 33.5 17.8 
 Dairy products  82 74.9 5-298.2  65.2 0.0 76.8 
 Fruit, vegetables, and plants  509 14.2 0-499.7  40.8 14.9 2.9 
 Coffee and tea  69 19.3 0-108.1  14.5 10.1 8.7 
 Cereals and preparations  343 27.0 0-251.3  36.5 9.6 29.2 
 Oil seeds, fats, oil and their products  130 5.2 0-267.2  23.8 41.5 30.8 
 Sugars and confectionary  49 37.0 0-166.2  34.2 6.1 59.2 
 Beverages, spirits and tobacco  146 17.9 0-70.4 12.9 17.1 25.3 
 Cotton  5 0.0 0-0 0.0 100.0  0.0 
 Other agricultural products, n.e.s.  273 5.2 0-279.2  21.3 61.9 5.1 
WTO non -agricultural products  7,345  3.5 0-219.4  6.7 44.5 4.1 
 Fish and fishery products  528 6.1 0-15 3.6 4.7 0.2 
 Minerals and metals  1,253  0.9 0-10 1.6 72.2 2.4 
 Chemicals and photographic supplies  1,245  2.4 0-6.5 1.8 31.4 0.6 
 Wood, pulp, paper and furniture  508 1.9 0-10 2.7 63.8 0.0 
 Textiles  1,468  5.5 0-25 2.5 4.6 13.9 
 Clothing  400 9.0 0-13.4 2.1 1.0 0.0 
 Leather, rubber, footwear and travel goods  308 14.7 0-219.4  26.1 37.3 8.1 
 Non-electric machinery  607 0.0 0-0 0.0 100.0  0.0 
 Electric machinery  315 0.1 0-4.8 0.6 97.8 0.0 
 Transport equipment  151 0.0 0-0 0.0 100.0  0.0 
 Non-agricultural products, n.e.s.  472 1.3 0-8.4 2.3 72.5 0.4 
 Petroleum  90 1.6 0-7.9 1.9 32.2 36.7 
By ISIC sector  
 ISIC 1 - Agriculture, hunting and fishing  686 5.5 0-279.2  18.0 45.5 5.0 
 ISIC 2 - Mining  109 0.1 0-4.1 0.5 96.3 0.9 
 ISIC 3 - Manufacturing  8,386  6.4 0-499.7  18.2 39.4 7.3 
 Manufacturing, excluding food processing  6,731  3.4 0-219.4  7.3 46.4 4.6 
By stage of processing  
 First stage of processing  1,200  7.2 0-499.7  32.4 49.9 4.8 
 Semi-processed products  3,494  4.7 0-166.2  7.8 27.3 8.3 
 Fully processed products  4,487  7.3 0-298.2  18.3 48.2 6.7 
By HS section  
 01 Live animals and products  741 14.1 0-298.2  31.7 16.1 13.9 
 02 Vegetable products  596 15.8 0-499.7  47.9 30.7 11.9 
 03 Fats and oils  89 4.4 0-29.8 4.6 24.7 41.6 
 04 Prepared food, beverages and tobacco  815 18.3 0-201.3  18.6 9.0 15.6 
 05 Mineral products  249 0.7 0-7.9 1.4 67.5 14.1 
 06 Chemicals and products thereof  1,133  2.3 0-23.5 2.2 36.3 0.4 
 07 Plastics, rubber, and articles thereof  297 2.4 0-6.5 1.9 35.4 2.0 
 08 Raw hides and skins, leather, and its 
   products  193 10.5 0-30 10.8 33.7 0.0 
 09 Wood and articles of wood  322 3.2 0-10 2.9 37.6 0.0 
 10 Pulp of wood, paper and paperboard  167 0.0 0-0 0.0 100.0  0.0 
 11 Textiles and textile articles  1,851  6.4 0-97.9 5.3 4.6 11.3 
 12 Footwear, headgear, etc.  104 27.3 0-219.4  39.3 4.8 24.0 
 13 Articles of stone, plaster, cement  164 1.2 0-8 1.7 60.4 0.0 
 14 Precious stones and metals, pearls  75 1.4 0-10 2.3 70.7 0.0 
 15 Base metals and articles thereof  846 0.9 0-7.5 1.6 72.0 3.3 
 16 Machinery, electrical equipment, etc.  924 0.0 0-4.8 0.3 99.2 0.0 
 17 Transport equipment  162 0.1 0-8.4 0.7 99.4 0.0 
 18 Precision equipment  258 0.2 0-16 1.5 96.5 0.0 
 19 Arms and ammunition  22 6.9 5.4-8.4 1.5 0.0 0.0 
 20 Miscellaneous manufactured articles  166 1.7 0-6.6 2.1 58.4 1.2 
 21 Works of art, etc.  7 0.0 0-0 0.0 100.0  0.0 
Note:  Excluding in -quota lines and including AVEs, as available, provided by the authorities. In case of 
unavailability, the ad valorem  part is used for compound and alternate rates.  
Source:  WTO Secretariat calculations, based on data provided by the authorities; and Japan Customs online 
information. Viewed at: https://www.customs.go.jp/english/tariff/ . WT/TPR/S/397 • Japan  
 
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3.25.   Overall tariff escalation is high est for the first stage of processing, and lowest for semi -
processed products. However, this trend is not always reflected at the product level. For example, 
for food, beverages and tobacco, the semi -processed stage attracts the highest average tariffs 
(Chart 3.3). 
Chart 3.3 Tariff escalation by 2 -digit ISIC industry, FY2019  
 
n.a. Not applicable.  
Note:  Calculations exclude in -quota rates and include AVEs, as available. In case of unavailability, the ad 
valorem  part is used for compound and alternate rates.  
Source:  WTO Secretariat calculations, based on data provided by the authorities; and Japan Customs online 
information. Viewed at: https://www.customs. go.jp/english/tariff/ . 
3.26.   Simple  average applied MFN tariffs are relatively high for footwear and headgear, prepared 
foods, vegetables, live animals, hides and skins, arms and ammunition, and textiles and clothing 
(Chart  3.4). 
3.27.   In FY2019,  181 tariff lines (127  agricultural tariff lines (WTO definition) and 54 non -agriculture 
tariff lines were subject to MFN tariff rates quotas, of which 11 are subject to state -trading  
operations27 (Section 3.3. 3). The out -of-quota rates for 38 tariff lines are ad valorem, while those 
for 143 tariff lines are non -ad valorem . The average rates differ considerably: in -quota rates average 
18.4%, while out -of-quota rates average 81.7%. The quota allocation method and p rocess are 
described in Section 4.1.  
                                                
27 In FY2016, there were 158 tariff lines with out -of-quota tariff rates. The increase is ex plained by the 
splitting of tariff lines under the HS subheading 0404 (whey).  
n.a.n.a.
0%2%4%6%8%10%12%14%16%18%20%
31 32 33 34 35 36 37 38 39 Total
manuf.Chart 3[].Tariff escalation by 2 -digit ISIC industry, FY2019
Average applied rate
in manufacturing
(6.4%)First stage of processing
Semi-processed
Fully processed
n.a.       Not applicable.31   Food , beverages and tobacco      
32   Textiles and leather  
33   Wood and furniture      37   Basic metals
38   Fabricated metal products and machinery
39   O ther manufacturing34   Paper, printing and publishing
35   C hemicals
36   Non -metallic mineral products
Note:  Calculations exclude in -quota rates and include AVEs, as available.  In case of unavailability, the ad valorem part is used for
compound and alternate rates.   
Source:  WTO Secretariat calculations, based on data provided by Japanese authorities and Japan Customs online information.WT/TPR/S/397 • Japan  
 
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Chart 3.4 Simple average applied MFN tariff rates, by HS section, FY2016 and FY2019  
 
Note:  Excluding in -quota rates. Including AVEs provided by the authorities, as availa ble. The ad valorem  
part of compound and alternate rates are used where AVEs are not available.  
Source:  WTO Secretariat calculations, based on data provided by the authorities ; and Japan Customs online 
information.  Viewed at: https://www.customs.go.jp/english/tariff/ . 
3.28.   Seasonal  tariffs, which differ from MFN rates, apply to six tariff lines, relating to plantains, 
bananas, oranges, and grapes.28 
3.1.4.2   Bound tariff  
3.29.   Japan  has bound 91.8% of its tariff lines (including partially -bound lines). 175 lines are 
unbound29; these relate mainly to  fisheries (fish, crustaceans, and seaweed), petroleum oils, and 
wood and articles thereof. There are no instances where MFN applied rates exceed bound rates. The 
overall gap between the simple averages of MFN applied and bound rates is low , at 0.05 percen tage 
points (Table 3.1). The highest gap (40  percentage points) is applied for beef jerky in airtight 
containers, other than chilled or frozen.  
3.1.4.3   Tariff reductions and exemptions  
3.30.   Customs  duty reduction and exemptions are  in place , inter alia , to develop dome stic 
industries, to promote trade and science, to meet requirements associated with social welfare , and 
to eliminate double taxation . There are two types of customs duty exemptions: ( i) a permanent 
                                                
28 The tariff lines for which seasonal tariffs are applied are: plantains, fresh (HS 0803.10.100); bananas, 
fresh (HS 0803.90.100); oranges, fresh or dried (HS 0805.10.000); grapes, fresh (HS 0806.10.000); bananas, 
provisionally preserved (HS 0812.90.100); a nd oranges, provisionally preserved (HS 0812.90.200). There are 
two tariff lines on grapefruit, on which seasonal tariffs are applied (grapefruit including pomelos, fresh or dried 
(HS 0805.40.000) and  grapefruit including pomelos, provisionally preserved ( HS 0812.90.300)). However, the 
MFN applied tariff and the seasonal tariff are the same (at 10%).  
29 The decrease in unbound tariff rates as compared with the situation in FY2016 is due to a 
nomenclature change.  
0%5%10%15%20%25%30%35%
Live animals & prod.
Vegetable products
Fats and oils
Prepared food, etc.
Mineral prod.
Chemicals & prod.
Plastic & rubber
Hides & skins
Wood & articles
Pulp, paper, etc.
Textiles & articles
Footwear, headgear
Articles of stone
Precious stones, etc.
Base metals & prod.
Machinery
Transport equipment
Precision instruments
Arms & ammunition
Misc. manufactures
Works of art, etc.
TotalChart 3.[]   Simple average applied MFN tariff rates, by HS section, FY2016 and FY2019
Excluding in -quota rates .  Including ad valorem equivalents (AVEs) provided by the Japanese authorities, 
as available.   The ad valorem part of compound and alternate rates are used where AVEs are not available.  
WTO Secretariat calculations, based on data provided by the Japanese authorities and Japan Customs online 
information.Note:
Source:FY2016 FY2019WT/TPR/S/397 • Japan  
 
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system , as set out in the Customs Tariff Law ; and ( ii) a temporary system , as set out in the 
Temporary Tariff Measures Law (Chart 3. 5).30  
Chart 3.5 Systems for reduction and exemption of customs duty  
 
Note:  In addition to the above -mentioned system for reduction and exemption of Customs duty, there are 
systems for reduction and exemption of Customs duty under certain international conventions.  
Source:  Ministry of Foreign Affairs ( MOFA ), Measures, Including Barriers, Affecting Trade and Investment . 
Viewed at:  https://www.mofa.go.jp/region/asia -paci/australia/study0504/chapter4 -2.pdf. 
3.31.   Among  these various provisions, Article 12 of the Customs Tariff L aw provides for duty 
reductions/exemptions in cases where the prices of imported daily necessities have increased (to 
prevent price increases of daily necessities , such as food and clothing), to maintain stability in 
people's everyday lives. The merchandis e goods currently subject to such duty 
reductions/exemptions are  imported rice, hulled or unhulled; barley; wheat foodstuffs; apparel; and 
other goods which are closely related to people's daily lives.   
3.32.   Under Article 13 of the Customs Tariff Law, customs d uties may be reduced or exempted on 
imported raw materials , to develop domestic industries manufacturing specific products , or to 
maintain stability in people's everyday lives  ("end -use concessions") . The merchandise goods 
currently subject to such duty re ductions/exemptions are : (i) mixed feeds: kaoliang and other grain 
sorghums; maize (corn); rye; powdered banana; sugar (with a specified sucrose content); molasses; 
                                                
30 Japan Customs, Customs Tariff Law  and Tempor ary Tariff Measures Law . Viewed at: 
http://www.customs.go.jp/english/c -answer_e/imtsukan/1602_e.htm . 
Source:  MOFA online information.  Viewed at: https://www.mofa.go.jp/region/asia -paci/australia/
study0504/chapter4 -2.pdf.Chart 3.5  Systems for reduction and exemption of custom duty
Customs Tariff Law (as at 1 April 2004):
Reduction for deterioration and damage (Art. 10)
Exemption for parts of aircrafts, etc. (Art. 4)Exemption for hand luggage brought out of Okinawa Prefecture by travellers (Art. 14)Reduction for products manufactured from goods exported for processing or assembling (Art. 8)Exemption for special uses (Art. 15)
Exemption on goods for diplomats (automobiles, liquors, tobacco (Art. 16 )
Reduction or exemption for re -exportation
Reduction for re -exportation (Art. 18)Exemption for re -exportation (Art. 17)Exemption for exportation of goods manufactured from duty -paid raw materials (Art. 19-2)Exemption for goods for diplomats (excluding automobiles, liquors and tobacco) (Art. 16)Reduction or exemption for marin e products, etc., collected or caught in foreign countries (Art. 14 -3)Reduction for re -importation (Art. 14 -2)Exemption for re -importation (Art. 14, 9 -11,13 and 14)Reduction for goods exports for processing or repair (Art. 11)Reduction or exemption
for re -importation 
Reduction or exemption on raw materials for manufacturing use (Art. 13)PermanentUnconditional
reduction of and 
exemption from 
Customs dutyUnconditional exemption (in a limited sense) (Art. 14, 1 -8, 16-18)Reduction or exemption for commodities, pork, sugar, etc. (Art. 12)
Conditional
reduction of and 
exemption from 
Customs duty 
(General)
Conditional
reduction of and 
exemption from 
Customs dutyReduction or exemption on raw materials for use in production of export goods (Art. 19)
Temporary Tariff measures Law:
TemporaryUnconditional
reduction of and 
exemption from 
Customs duty
Conditional
reduction of and 
exemption from 
Customs duty 
(General)
Conditional
reduction of and 
exemption from 
Customs duty
Note:  In addition to the above -mentioned system for reduction and exemption of Custom duty, there are systems
for reduction and exemption of Customs duty under certain international conventions.Exemption for goods exported for processing or repair under Economic Partnership Agreement (Art. 8 -7)WT/TPR/S/397 • Japan  
 
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manioc or sliced and half -dried sweet potatoes (including powder or pellets of manioc and s liced and 
half-dried sweet potatoes); (ii) unmixed feeds: kaoliang and other grain sorghums and maize (corn); 
and (iii) groundnut oil and groundnut. End -use concessions are published in the Official Gazette.  
3.33.   In FY2017, foregone tax revenue relating to customs duty reductions and exemptions 
amounted to just over JPY 165 billion (around 16.1% of tariffs collected).31  
3.1.4.4   Preferential  tariff  
3.34.   Japan  offers preferential tariff rates to 128 developing countries and 5 territories under the 
GSP; and 46 L DCs receive additional preferences. Japan also grants preferential access under its 
RTAs with ASEAN, Australia, Brunei Darussalam, Chile, CPTPP Member economies, the European 
Union, India, Indonesia, Malaysia, Mexico, Mongolia, Peru, Philippines, Singapore , Switzerland, 
Thailand and Viet Nam (Section 2.3).  
3.35.   Under Japan's RTAs, preferential tariffs significantly increased market access for these trading 
partners. While the percentage of duty -free rates under the MFN tariff was 40. 3% in FY2019, it was 
around d ouble under the respective RTAs (Table 3.3).  
Table 3.3 Summary analysis of preferential tariffs, FY2019  
 Total  WTO agriculture  WTO non-agriculture  
 Average 
(%) Duty -free 
rates (%)  Average 
(%) Duty -free 
rates (%)  Average 
(%) Duty -free 
rates (%)  
MFN 6.3 40.5 17.9 24.5 3.5 44.5 
GSP 5.3 58.3 16.8 32.7 2.4 64.8 
LDC 0.5 97.4 1.7 96.8 0.2 97.6 
RTAs   
Singapore  3.6 84.3 14.0 54.1 1.0 91.8  
Mexico  3.4 85.3 15.8 41.6 0.4 96.3  
Malaysia  3.1 86.3 13.8 54.4 0.5 94.3  
Chile 3.3 86.2 14.5 56.0 0.6 93.8  
Thailand  3.1 87.2 13.8 56.3 0.5 94.9  
Indonesia  3.3 85.9 14.6 54.7 0.5 93.8  
Brunei  Darussalam  3.7 84.5 14.7 54.5 1.0 91.8  
ASEAN  3.2 85.8 14.3 54.5 0.5 93.6  
Philippines  3.0 88.8 13.6 60.3 0.4 96.0  
Switzerland  3.3 85.2 14.3 54.9 0.6 92.8  
Viet Nam  3.2 86.5 14.3 55.3 0.5 94.3  
India 3.5 78.4 15.0 39.7 0.7 88.1  
Peru 3.3 83.8 14.6 46.7 0.5 93.1  
Australia  3.2 83.9 14.4 48.6 0.5 92.7  
Mongolia  3.9 78.5 15.8 39.6 1.1 88.2  
TPP11  3.0 84.6 13.3 49.2 0.6 93.4  
European Union 3.0 84.7 13.2 49.8 0.6 93.4 
Memorandum   
Singaporea 2.6 87.9 11.8 56.9 0.4 95.7  
Mexicob 2.7 88.1 12.6 55.0 0.3 96.3  
Malaysiaa 2.5 88.4 11.7 57.0 0.3 96.2  
Chileb 2.7 88.5 12.2 58.2 0.3 96.1  
Thailandc 3.1 87.2 13.8 56.5 0.5 94.9  
Indonesiac 3.1 86.4 14.1 54.9 0.5 94.3  
Brunei  Darussalama 2.6 87.9 12.1 57.0 0.4 95.7  
Philippinesc 3.0 88.9 13.6 60.4 0.4 96.0  
Viet Nama 2.6 88.2 12.0 57.4 0.3 95.9  
Perub 2.7 86.2 12.4 51.5 0.4 94.9  
Australiab 2.8 85.6 12.5 50.7 0.4 94.3 
a Based on the lowest rate applied from the country's EPA, the ASEAN EPA, and the TPP11.  
b Based on the lowest rate applied from the country's EPA and the TPP11.  
c Based on the lowest rate applied from the country's EPA and the ASEAN EPA.  
Note: Calculations exclude in -quota lines. Including AVEs, as available, provided by the authorities. In case 
of unavailability, the ad valorem  part is used for compound and alternate rates.  
Source:  WTO Secretariat calculations, based on information provided  by the authorities; and Japan Customs 
online information. Viewed at: https://www.customs.go.jp/english/tariff/ . 
                                                
31 In 2017, foregone tax revenue relating to customs duty reductions and exe mptions was 
JPY 165.3  billion. The customs revenue account settlement for the year was JPY 1,024.1 billion.  WT/TPR/S/397 • Japan  
 
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3.1.4.5   Retaliatory tariff  system  
3.36.   Under  Article 6 of the Customs Tariff Act32, Japan maintains a retaliatory tariff s ystem, under 
which additional tariffs may be imposed in either of the following situations: (i) when there is a need 
for taxation to defend Japan's interests and accomplish the ai m of a WTO agreement; or (ii) when a 
certain party or parties treat vessels, airplanes and cargoes from, or via, Japan with discrimination 
and inexpedience. The authorities noted that Japan currently does not impose this tariff.33  
3.1.5   Other charges  affecting i mports  
3.37.   Japan  levies a consumption tax of 10% (up from 8% in October 2019) on goods imported 
into, or manufactured in, Japan. With respect to imports, the tax is paid on the customs value of the 
goods, plus the customs duty and any other excise taxes payabl e.34  
3.38.   Details  of excise rates applied are set out in Section 3.3.1.1.  
3.1.6   Import prohibitions , licensing and quotas  
3.1.6.1   Import prohibitions   
3.39.   Import  prohibitions are contained in Article 69 -11 of Japan's Customs Law.35 There were no 
changes to these items over the re view period. Import prohibitions  include certain: drugs; arms; 
explosives; chemicals; pathogens; forged/altered money, bank notes, revenue stamps, and postal 
stamps; books, drawings, carvings , etc., detrimental to public security or corrupting public moral s; 
child pornography; intellectual property (IP) -infringing goods; and goods produced using unlawfully 
obtained trade secrets (as stipulated in the Unfair Competition Prevention Act).  Exceptions to some 
of these import prohibitions apply to persons authori zed to import such items under domestic 
laws/regulations or international treaties.  
3.1.6.2   Import licensing ( approvals ) and quotas  
3.40.   Article  52 of the Foreign Exchange and Foreign Trade Act provides the main legal basis for 
the imposition of import approvals, through a Cabinet Order.36 The implementing regulation in this 
regard is the Import Trade Control Order (last amended in 2003), under whi ch the Minister of 
Economy, Trade and Industry has the authority to (i) designate goods subject to import approval, 
based on places of origin or places of shipment of goods, and approve imports of these goods; and 
(ii) designate goods subject to import quo tas, and approve imports of these goods.37 In 2017, the 
Foreign Exchange and Foreign Trade Control Act was amended, inter alia,  to strengthen penalties 
(both fines and administrative penalties) for violations of import and export control regulations.38 
Impor t licensing requirements are also maintained under the Ethanol Business Act for alcohol of 
90% volume or over, from all trading partners.  
                                                
32 Customs Tariff Act. Viewed at: http://www.kanzei.or.jp/kanzei_law/ 143AC0000000054.en.html#a6 . 
33 According to the authorities, the most recent occasion when Japan applied a retaliatory tariff was with 
respect to certain goods originating in the United States, from September 2005 until August 2014. This was in 
relation to the Byrd Amendment. The authorities also indicated that Japan notified the WTO that it retains the 
right to impose this tariff.  
34 Japan Customs, Outline of Tariff and Duty Rates System . Viewed at: 
http://www.customs.go.jp/english/summary/tariff.htm . 
35 Customs Act. Viewed at: 
http://www.kanzei.or.jp/kanzei_law/329AC0000000061.en.html#c6s4ss2a69_11 . The goods listed in the 
Customs Act reflect goods which are prohibited under other laws and regulations. Details of these 
laws/regulations are contained in Japan's most recent notification on quantitative restrictions. WTO document 
G/MA/QR/N/JPN/4, 16 October  2018.  
36 Foreign Exchange and Foreign Trade Act. Viewed at: 
http://www.japaneselawtranslation.go.jp/law/detail/?id=3267&vm=04&re=01 . 
37 Import Trade Control Order, Cabinet Order No. 414 of 29 December 1949, as amended. Viewed at: 
http://www.japaneselawtranslation.go. jp/law/detail/?ft=1&re=2&dn=1&co=01&ia=03&x=37&y=17&ky=custo
ms&page=37 . 
38 Global Compliance News , Japan implements amendment of the Foreign Exchange and Foreign Trade 
Act. Viewed at: https://globalcompliancenews.com/japan -amendment -foreign -exchange -trade -20171018/ . WT/TPR/S/397 • Japan  
 
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3.41.   Japan  notified its replies to the WTO questionnaire on import licensing procedures for 2018 
and 2017.39 It also notifie d a new import licensing requirement for certain mercury and mercury -
added products; this is to implement the Minamata Convention on Mercury (adopted in 
October  2013), which aims to protect human health and the environment from anthropogenic 
emissions and releases of mercury and mercury compounds.40 No issues were raised about Japan's 
import licensing regime by Members in the WTO's Committee on Import Licensing over the review 
period.  
3.42.   Goods  subject to import approvals under the Import Trade Control Order ar e set out in 
Table  3.4. When there are changes to the items on this list, they are published as an "import notice" 
in the Official Gazette.  Import approvals are generally valid for six months. Over the review period, 
import licensing requirements were remo ved for: (i) whales and their preparations in July 2019, due 
to Japan's withdrawal from the International Whaling Commission (IWC); and (ii) weapons and other 
items from Eritrea because sanctions were lifted by a UN Security Council resolution and, hence, the 
restrictions were removed.  
Table 3.4 Goods subject to import licensing under the Import Trade Control Order  
Items  HS nos.  Application  Rationalea 
Marine animals and their preparations; 
fish, crustaceans, other aquatics and 
their preparations; products of animal 
origin (marine animals, fish, 
crustaceans and molluscs); seaweeds 
and their preparations  01.06; 02.08; 02.10; 
03.01 -03.07; 05.04; 
05.06 -05.08; 05.11; 
12.12; 15.04; 15.06; 
15.21; 16.01; 16.02; 
16.04; 16.05; 21.06; 
23.01; 23.09  Products shipped 
from outside 
Japanese waters  Prevent adverse effects 
on fishing activities of 
Japanese fishermen  
Salmon and (salmon) trout and their 
preparations  03.01; 03.02; 03.03; 
03.04; 03.05; 16.04  China, 
Democratic 
People's Republic 
of Korea , Chinese 
Taipei  Compliance with 
UNCLOS provisions  
Fresh and chilled Bluefin tuna farmed 
in the Atlantic Ocean and the 
Mediterranean  03.02; 03.04  Non-members of  
the ICCAT  Compliance with ICCAT 
resolution  
Fresh and chilled Southern bluefin tuna  03.02; 03.04  Products from 
non-members of 
the CCSBT  Compliance with CCSBT 
resolution  
Foot-and-mouth disease vaccine  Ex. 3002.30  All trading 
partners  Protection of animal 
life/health  
Propellant powders  36.01; 36.02; ex 36.03  All trading 
partners  Security  
Nuclear goods  26.12; ex 28.44; ex 
81.09; 84.01; ex 90.30  All trading 
partners  Security  
Weapons, ammunition , etc. ex 84.11; ex 84.12; 
87.10; ex 88.02; ex 
89.06; 93.01 -93.04; ex 
93.05; 93.06; 93.07  All trading 
partners  Security  
Wild animals and plants in Appendix I 
of the CITES Not provided  All trading 
partners  Compliance with CITES  
Wild animals and plants in CITES 
Appendices II and III  Not provided  CITES non -
members  Compliance with CITES  
Substances that dep lete the ozone 
layer, specified hazardous wastes, and 
waste chemical weapons goods  Not provided  All trading 
partners, with 
certain 
exceptionsb Compliance with various 
national laws and 
international 
conventions/protocols  
Foreign cultural property  Not provided  All trading 
partners  Compliance with the 
Hague Convention for 
the Protection of Cultural 
Property in the Event of 
Armed Conflict  
Rough diamonds  71.02  All trading 
partners  Compliance with the 
Kimberly Process 
Certification Scheme and 
UN Security Council 
Resolution 1343  
Cultural property illegally acquired in 
Iraq 97.01 - 97.06  Iraq Compliance with UN 
Security Council 
Resolution 1483  
                                                
39 WTO documents G/LIC/N/3/JPN/17, 9 Oct ober 2018; and G/LIC/N/3/JPN/1 6, 2 October 2017.  
40 WTO document G/LIC/N/2/JPN/4, 17 April  2018.  WT/TPR/S/397 • Japan  
 
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Items  HS nos.  Application  Rationalea 
All goods from the Democratic People's 
Republic of Korea  All Democratic 
People's Republic 
of Korea  To take the meas ures 
decided by the 
Government  
Weapons and other items from Libyan 
Arab Jamahiriya  Not provided  Libyan Arab 
Jamahiriya  Compliance with UN 
Security Council 
Resolution 1970  
Charcoal  44.02  Somalia  Compliance with UN 
Security Council 
Resolution 2036  
Chemical weapons and other items 
related to chemical weapons 
programme s, and cultural property 
illegally remove d from the Syrian Arab 
Republic  Includes: 97.01 -97.06  Syrian Arab 
Republic  Compliance with UN 
Security Council 
Resolutions 2118 and 
2199 
Mercury  HS 2805.40  Non-parties to 
the Minamata 
Convention  Compliance with the 
Minamata Convention on 
Mercury  
Mercury -added products  Not provided  All trading 
partners  Compliance with the 
Minamata Convention on 
Mercury  
a Abbreviations used in this column are: the United Nations Convention on the Law of the SEA 
(UNCLOS); the International Commission for the Conservation of Atlantic Tunas (ICCAT); the 
Commission for the Conservation of Southern Bluefin Tuna (CCSBT); and the Convention on 
International Trade in Endangered Species of Wild Fauna and Flora (CITES ).  
b The approval requirements do not apply to members of the Montreal Protocol and to the Chemical 
Weapons Convention for the goods that they cover , respectively.  
Source:  WTO document G/LIC/N/3/JPN/17, 9 October 2018; Import Trade Control Order ; and WTO 
document  G/MA/QR/N/JPN/4, 16 October 2018.  
3.43.   Japan has "prior confirmation" and "customs clearance confirmation" systems in place to 
facilitate trade an d, at the same time , ensure that imports of goods meet the standards of 
international treaties and agreements. Under these systems, if certificates or documents , such as 
export permits from the exporting country , are provided, then importers are not requir ed to also 
obtain import approval. While the purpose of the systems is the same, the "prior confirmation" 
system requires confirmation from the Minister of Economy, Trade and Industry or other relevant 
minister, whereas under the "customs clearance confirm ation" system, confirmation must be 
obtained during customs clearance.  
3.44.   Goods  subject to import quotas are set out in the METI's Public Notice No. 170 of 1966, as 
last amended by Public Notice No. 106 of 2019.41 Products subject to import quotas are: (i) certain 
marine products  (see below);  and (ii) controlled substances listed in  Annex A, Group 1 of  the 
Montreal Protocol on Substances that Deplete the Ozone Layer  (excluding, inter alia , those imported 
by persons required to obtain import approval (see above )). With respect to the latter, the list of 
these controlled substances was a dopted at the Montreal Protocol 28th Party Meeting held in October 
2016. Hydrofluorocarbons,  for which import restrictions came into effect from 1 January  2019, were 
added as controlled substances .  
3.45.   Import  quotas for marine products are determined on an annual basis, taking into 
consideration the balance of domestic supply and demand.42 The METI is responsible for determining 
quota volumes, based on consent from the Ministry of Agriculture, Forestry and Fisheries (MAFF), 
and for administering the import quota system. Announcements published (in Japanese) in the 
Official Gazette, the Official Bulletin of Economy, Trade and Industry, and the International Trade 
Bulletin specify quo ta volumes and application procedures. Quotas are allocated under the following 
categories43: 
• new importers. Trading companies,  on a first -come -first-served basis;  
 
                                                
41 METI, Public Notice No. 170 of  1966, as amended. Viewed (in Japanese) at:  
https://www.meti.go.jp/policy/external_economy/trade_control/01 _seido/03_law/download_yunyu/kokuji_yun
yukohyo.pdf . 
42 The amount of imports, domestic production, consumption, and prices in the previous year, as well as 
projections for the coming year, are taken into account.  
43 METI. Viewed at: 
https://www.meti.go.jp/policy/external_economy/trade_control/03_import/04_suisan/about/senchaku.html . WT/TPR/S/397 • Japan  
 
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• trading companies. Two categories apply: (i) allocations on a performance basis ( this is the 
allocation scheme for companies that have stably imported the items subject to import quota 
in the past) ; and ( ii) newcomer -oriented performance basis  (this is the  scheme for 
companies that have imported a certain amount or more of the quota on a first -come -first 
served basis in the previous year);  
 
• designated corporations. Quotas are allocated to corporations supplying raw materials to the 
fisheries processing  association appointed by the Commissioner of the Fisheries Agency (this 
association then supplies raw materials to processing industries) ; 
 
• fishery industr ies. Quotas are allocated to fisheries associations, approved by the 
Commissioner of the Fisheries Agency  (the purpose is to import fish caught by Japanese 
vessels operating in foreign E xclusive Economic Zones); and  
 
• foreign fishery development. Quotas are allocated to corporations designated by the fisheries 
associations or exporters associations which are a pproved by the foreign government that 
is developing the utilization of its fisheries resources based on effective and sustainable 
conservation and management measures.  
 
3.46.   Successful  applicants are issued with a certificate of import quota, normally for six months , 
and a certificate of import approval, which must be provided to Customs. No licensing fees or 
administrative charges are levied; and no deposits or advance payments are required. Most import 
quotas are applied globally, with exceptions for some products, such as laver, where only specific 
exporting countries have an interest; in such cases, country -specific quotas are applied in addition 
to global quotas.44 Importers are required to report to the METI on the actual volumes imported. 
Generally, unu sed allocations are not added to quotas for the following period.45 The allocation of 
import quotas for FY2018 is set out in Table 3.5.  
Table 3.5 Allocation of import quotas by item, FY2018  
 Trading 
companies  Designated 
corporations  Foreign 
fishery 
development  Fishery 
industries  First-
come -
first-
served 
basis  Total 
quota 
amounta Unitb 
Fish and shellfish 
(HS 0301.99.2;  
03.02;  03.03; 
03.04; 03.05; 
03.07)  1.2 0.8 n.a. 0.2 0.3 2.6 USD 
million  
Horse mackerel  79.6 30.3 n.a. 3.0 12.0 125.0  TMT 
Mackerel  127.0  80.1 n.a. 5.0 15.0 227.0  TMT 
Sardine s 15.0 13.0 n.a. 18.0 5.1 50.8 TMT 
Scallops  1.9 3.0 n.a. 0.08 0.6 5.7 TMT 
Herring (except 
Clupea pallasi ) 44.5 10.5 n.a. n.a. 10.0 65.0 TMT 
Herring ( Clupea 
pallasi ) 28.2 18.5 33.0 n.a. 12.2 92.0 TMT 
Cod 16.4 2.8 32.0 19.6 2.0 72.7 TMT 
Alaska pollock 111.8  52.1 700.0  160.0  3.0 1027.0  TMT 
Squid and 
cuttlefish  26.8 24.1 n.a. 18.4 5.6 75.0 TMT 
Dried squid  2.5 1.4 n.a. n.a. 0.5 4.5 TMT 
Cod and poll ock 
roe 40.4 15.2 30.0 7.1 5.5 98.3 TMT 
Dried laver  0.6 0.7 n.a. n.a. 0.005  1.3 Million 
sheets  
                                                
44 WTO document WT/TPR/M/351/Add.1, 27 April 2017.  
45 According to Japan's notification, exceptionally, the quota of the succeeding period can be added to if 
an importer has no responsibility for the cause of unused allocations, or if unused allocations are due to a 
prohibition on the exporter's side.  WT/TPR/S/397 • Japan  
 
- 67 - 
 
 Trading 
companies  Designated 
corporations  Foreign 
fishery 
development  Fishery 
industries  First-
come -
first-
served 
basis  Total 
quota 
amounta Unitb 
Dried seaweed 
(Enteromopha  
and Monostroma  
species)  n.a. 0.1 n.a. n.a. 0.005  0.1 TMT 
Kombu  n.a. 2.8 n.a. n.a. 0.2 3.0 TMT 
n.a. Not applicable.  
a Figures have been rounded up/down; hence, in some cases, the total quota amount may not exactly 
reflect the sum of the individual import quotas.  
b TMT = thousand tonnes . 
Source : METI. Viewed at: 
https://www.meti.go.jp/policy/external_economy/trade_control/03_import/04_suisan/index.html . 
3.47.   Steps  taken by the METI to ensure full use of import quot as are as follows: ( i) if any of the 
quota amount remains unallocated, the METI re -allocates the unallocated portion to any applicant 
requesting additional import quotas; and ( ii) the METI examines applicants' records in the previous 
year, so that , if a tr ading company fails to import more than 80% of the amount of its allocated 
import quota, without a rational reason, it will not receive an import quota for the following year. 
Quota volumes and actual imports over the period 2016 -17 are set out in Table 3. 6. In 2016 and 
2017, import quotas were only fully filled for dried laver; fill rates for other products ranged from 
2.7% to 91.3% in 2017 (Table 3.6 ). The authorities indicated that quotas are set based on an 
estimation of business needs; variations in fi ll rates relate to business demands.  Japan  indicated 
that its import quota administration system is consistent with the GATT (Articles XI 2(c) and XX(g)) , 
and was notified to the WTO.46 
Table 3.6 Import quotas on fisheries products 2016 -17 
Commodity  Unit 2016  
quota  Actual 
imports  Fill rate  
(%) 2017  
quota  Actual 
imports  Fill rate  
(%) 
Squid and cuttlefish  TMT 131.95  129.05  97.8 86.95  59.14  68.0 
Pacific herring  TMT 92.00  24.01  26.1 92.00  16.02  17.4 
Dried seaweed  Million 
sheets  1,199.00  756.16  63.1 1274.00  885.17  69.5 
Non-sugar seaweed  Million 
sheets  532.00  351.72  66.1 532.00  453.74  85.3 
Seaweed preparations  Million 
sheets  747.00  272.95  36.5 918.00  294.33  32.1 
Cod and pollock roe  TMT 98.33  37.25  37.9 98.33  36.43  37.0 
Dried squid cuttlefish  TMT 4.50 4.27 94.9 4.50 4.11 91.3 
Kombu preparations  TMT 0.60 0.47 78.3 0.60 0.33 55.0 
Mackerel  TMT 227.00  127.06  56.0 227.00  124.88  55.0 
Sardines  TMT 50.80  0.69 1.4 50.80  1.39 2.7 
Atlantic herring  TMT 65.00  4.85 7.5 65.00  4.54 7.0 
Fish and shellfish  USD 
million  45.00  27.49  61.1 45.00  20.68  46.0 
Kombu  TMT 2.96 1.55 52.4 2.96 1.74 58.8 
Dried laver  TMT 0.13 0.13 100.0  0.13 0.13 100.0  
Horse mackerel  TMT 125.00  18.50  14.8 125.00  16.89  13.5 
Callop  TMT 5.72 3.22 56.3 5.72 3.72 65.0 
Yellowtail, saury, 
adductor muscle of 
shellfish and dried 
sardines  USD 
million  26.40  22.29  84.4 26.40  22.19  84.1 
Note:  TMT = thousand tonnes.  
Source : Information provided by the authorities.  
3.48.   Japan's  tariff rate quota regime is described in Section 4.1.  
                                                
46 WTO document WT/TPR/M/351/Add.1, 27 April 2017.  WT/TPR/S/397 • Japan  
 
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3.1.7   Anti-dumping , countervailing, and safeguard measures  
3.1.7.1   Anti-dumping measures  
3.49.   Japan's  legislative framework for anti -dumping duties is the Customs Tariff Act47, the Cabinet 
Order Relating to Anti -Dumping Duties, and the Guidelines for Procedures  Relating to Anti -Dumping 
Duty.48 In 2017, the Cabinet Order and Guidelines were amended to change  the definition of 
"interested parties for domestic industry", and reduce the burden for applicants requesting the 
imposition of an anti -dumping duty by easing the conditions for making such a request. With respect 
to the latter, before the amendment, it w as not clear to what extent an applicant was required to 
substantiate the impact of the dumped product on domestic industry; the amendment specifies that 
such impact is to be indicated "by reasonably available information". Moreover, under the previous 
regime, the applicant was requested to show that the degree of support of the request for the 
imposition of an anti -dumping duty in the domestic industry satisfied the requirement; amendments 
authorize the minister in charge of the industry to confirm such de gree of support. These 
amendments were notified to the WTO49; no questions related to these changes were raised in the 
WTO Committee on Anti -Dumping Practices.  
3.50.   Anti-dumping investigations may be initiated when the Government considers it necessary, 
when an application for investigation is submitted by a domestic industry to the Minister of Finance, 
or when there is enough evidence.50 The decision is published as a public notice in the Official 
Gazette, by the Minister of Finance. Investigations are carried ou t by a team comprised of officials 
from the Ministry of Finance Office of Trade Remedy Affairs, the METI's Office for Trade Remedy 
Investigations, and the ministry in charge of the relevant industry. The final decision to impose an 
anti-dumping duty is iss ued as a Cabinet Order. Provisional measures may be applied no earlier than 
60 days from the initiation of the investigation, if affirmative preliminary determinations are made. 
Provisional measures are, in principle, applied for up to four months, althoug h a longer time -frame 
may apply upon request by exporters representing a significant percentage of the trade involved. 
Exporters may offer an undertaking to revise prices or cease exports, so that the injurious effect of 
the dumping on the domestic industr y is eliminated. Anti -dumping duties can be imposed for a period 
not exceeding five years, and may be extended thereafter following a review. Each extension of the 
measure may not be longer than five years.51  
3.51.   As at end -October 2019, seven anti -dumping meas ures were in force, relating to four products 
and applying to two trading partners. Definitive duties were imposed for the first time during the 
review period on: polyethylene terephthalate from China;  and carbon steel butt -welding fittings from  
China and the Republic of Korea  (Table 3.7). Anti -dumping duties on electrolytic manganese dioxide 
from South Africa and Spain were  removed in March 2019.52 
Table 3.7 Anti-dumping measures in force, July 2019  
Exporter 
affected  Products 
concerned  Status  
China  Electrolytic 
manganese dioxide  Initiation of investigation on 27 April 2007  
Provisional duties imposed on 14 June 2008 (34.3 %-46.5% duty rate)  
Definitive duty imposed on 1 September 2008 (34.3 %-46.5% duty rate)  
Sunset review on 30 October 2012  
Extension of definitive duty on 6 March 2014 (34.3 %-46.5% duty rate)  
Sunset review on 18 April 2018  
Extension of definitive duty on 29 February 2024  
                                                
47 Customs Tariff Act. Viewed at: 
http://www.kanzei.or.jp/kanzei_law/143AC0000000054.en.html#a9_2 . 
48 The Cabinet Order Relating to Anti-Dumping duties was viewed at: https://elaws.e -
gov.go.jp/search/elawsSearch/elaws_search/lsg0500/detail?lawId=406CO0000000416&op enerCode=1 . The 
Guidelines for Procedures Relating to Anti -Dumping Duty were viewed at: 
http://www.customs.go.jp/tokusyu/ad_gl.htm  and 
https://www.meti.go.jp/policy/external_economy/trade_control/boekikanri/trade -remedy/law/index.html . 
49 WTO document s G/ADP/N/1/JPN/2/Suppl.9, 25 June 2018 ; and G/ADP/N/1/JPN/2/Suppl.9, 
25 June 2018. 
50 Article 8(5) of the Customs Tariff Act.  
51 A more detailed description of Japan's anti -dumping procedures and time -frames is contained in the 
Secretariat Report for its previous Review. WTO document WT/TPR/S/351/Rev.1, 27 April 2017.  
52 WTO document G/ADP/N/ 328/JPN, 22 October 2019.  WT/TPR/S/397 • Japan  
 
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Exporter 
affected  Products 
concerned  Status  
 Toluenediis -
ocyanate  Initiation of investigation on 14 February 2014  
Provisional duties imposed on 25 December 2014 ( 69.4% duty rate)  
Definitive duty imposed on 25 April 2015 (69.4% duty rate)  
 Potassium 
hydroxide  Initiation of investigation on 26 May 20 15 
Provisional duties imposed on 9 April 2016 (73.7% duty rate)  
Definitive duty imposed on 9 August 2016 (73.7% duty rate)  
 Polyethylene 
terephthalate  Initiation of investigation on 30 September 2016  
Provisional duties imposed on 2 September 2017 (39.8% -53.0% duty rate)  
Definitive duty imposed on 28 December 2017 (39.8% -53.0% duty rate)  
 Carbon steel butt -
welding fittings  Initiation of investigation on 31  March 2017 
Provisional duties imposed on 28  December 2017 (57.3% duty rate)  
Definitive duty imposed on 31 March 2018 ( 57.3% duty rate)  
Korea,  
Rep. of  Potassium 
hydroxide  Initiation of investigation on 26  May 2015 
Provisional duties imposed on 09  April 2016 (49.5% duty rate)  
Definitive duty imposed on 09  August 2016 49.5%  
 Carbon steel butt -
welding fittings  Initiation of investigation  on 31 March 2017  
Provisional duties imposed on 28  December 2017 (41.8% -69.2% duty rates)  
Definitive duty  imposed on  31 March 2018 (41.8% -69.2% duty rates)  
Source:  WTO documents G/ADP/N/322/JPN, 4 February 2019; G/ADP/N/314/JPN, 9 August 2018; 
G/ADP/N/308/JPN, 2 February 2018; G/ADP/N/300/JPN, 21 July 2017; G/ADP/N/294/JPN, 
7 February 2017; and G/ADP/N/272/JPN, 23 July 2015; and information provided by the authorities.  
3.1.7.2   Countervailing  measures  
3.52.   The Customs Tariff Law, the Cabinet Order Relating to Countervailing Duties, and the 
Guidelines for Procedures relating to Countervailing Duty form the legal and regulatory framework 
for the application of countervailing duties.53 In 2017, the Cabinet Order wa s amended to change 
the definition of "interested parties for domestic industry"  in the  same way, and for the same 
reasons, as for the above -mentioned Order Relating to Anti -Dumping Duties. Likewise, the 
Guidelines were also amended in the same way, and fo r the same reasons, as the Guidelines for 
Procedures Relating to Anti -Dumping Duty (see above). These amendments were notified to the 
WTO54; no questions related to these changes were raised in the WTO Committee on Subsidies and 
Countervailing Measures.  
3.53.   As described in the previous Review, under the Customs Tariff Law, investigations may be 
initiated when the Government considers it necessary, when an application is submitted by domestic 
industry, or when there is enough evidence with regard, inter alia , to the importation of the 
subsidized product and the material injury to the domestic industry caused by such importation.55 
The decision to initiate an investigation is published as a public notice in the Official Gazette, by the 
Ministry of Finance. The final  decision to impose a countervailing duty must be made within 
approximately one year. Countervailing duties can be imposed for a period not exceeding five years, 
and each extension may not exceed five years.56  
3.54.   Japan  did not apply any countervailing measure s during the review period, nor did it initiate 
any countervailing investigations.  
3.1.7.3   Safeguards  
3.55.   The Customs Tariff Law, the Cabinet Order Relating to Emergency Duties, the Import Trade 
Control Order, and the Regulations to Govern Emergency Measures comprise the legal framework 
                                                
53 Cabinet Order Relating to Countervailing Duties. Viewed at: https://elaws.e -
gov.go.jp/search/elawsSearch/elaws_search/lsg0500/detail?lawId=406CO0000000415&openerCode=1 . 
Guidelines for Procedures  relating to Countervailing Duties. Viewed at: 
http://www.customs.go.jp/tokusyu/cvd_gl.htm  and 
https://www.meti.go.jp/policy/external_economy/trade_control/boekikanri/trade -remedy/law/index.html . 
54 WTO document G/ SCM/N/1/JPN/2/Suppl.9 , 25 June 2018; and G/SCM/N/1/JPN/2/Suppl.9, 
25 June 2018.  
55 As noted in the Secretariat Report  for Japan's previous Review, the Minister of Finance, the minister in 
charge of the relevant industry and the Minister of Economy, Trade and Industry must jointly make a decision 
to initiate an investigation.  
56 A more detailed description of Japan's countervail ing procedures and time -frames is contained in the 
Secretariat Report for its previous Review. WTO document WT/TPR/S/351/Rev.1, 20 June 2017.  WT/TPR/S/397 • Japan  
 
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for the application of safeguard measures in Japan.57 These are supplemented by procedural 
guidelines.58 There were no changes to these laws and regulations over the review period. A 
description of safeguard investigation procedures and t ime-frames is contained in the Secretariat 
Report for Japan's previous Review.59 Japan did not apply any safeguard measures during the review 
period, nor did it initiate any safeguard investigations.  
3.56.   Japan  reserved the right to use the special agricultural safeguard (SSG) on 147 tariff lines; 
details on its imposition of SSGs over the review period are contained in Section 4.1. All the RTAs 
to which Japan is signatory contain provisions on bilateral safeguards. The authorities confirmed that 
no bilateral saf eguards investigations were undertaken over the review period, and no safeguard 
measures were imposed under any of Japan's EPAs.  
3.2  Measures Directly Affecting Exports  
3.2.1   Customs  procedures and requirements  
3.57.   The Customs Law remains the principal piece of legisla tion covering customs procedures and 
documentation.  Japan Customs remains responsible for implementing export procedures. 
Documentary requirements remain unchanged. These are: the export declaration form (Customs 
form C -5010), invoices, and other documents  as required by specific laws and regulations. Some of 
the original documents must also be physically provided to customs during the customs clearance 
process. Japanese Customs does not levy fees for export declarations .  
3.2.2   Taxes, charges , and levies  
3.58.   No export  taxes, charges or levies are applied by the Government or other public authorities. 
Japan does not apply minimum export prices for any product.  
3.2.3   Export prohibitions , restrictions, and licensing  
Export prohibitions  
 
3.59.   Under the Customs Law, export prohi bitions apply to a limited range of products, including: 
narcotics and certain other drugs; child pornography; articles which infringe intellectual property 
rights; and certain articles that constitute unfair competition under the Unfair Competition 
Preven tion Act (essentially related to intellectual property rights). There were no changes to the list 
of export prohibitions over the review period.60 
3.60.   In 2019, Japan extended a prohibition on all exports to (and imports from) the Democratic 
People's Republic of  Korea. This was implemented under the Foreign Exchange and Foreign Trade 
Act61, which requires that exporters must obtain export approval from the Minister of Economic 
Trade and Industry62; and was effected through a change to the Supplementary Provisions o f the 
Export Trade Control Order (see below). The authorities confirmed that there are no circumstances 
under which such export approval will be granted.  
3.61.   Export prohibitions  in place for sanitary and phytosanitary purposes are available on the 
websites of  the Animal Quarantine Service and the Plant Protection Station . 
                                                
57 The Cabinet Order Relating to Emergency Duties and the Regulations to Govern Emergency Measures 
were viewed at: https://elaws.e -
gov.go.jp/search/elawsSearch/elaws_search/lsg0500/detail?lawId=406CO0000000417&openerCode=1 . 
58 The procedural guidel ines were viewed at: 
https://www.meti.go.jp/policy/external_economy/trade_control/boekikanri/trade -remedy/law/index.html . 
59 WTO document WT/ TPR/S/351/Rev.1, 20 June 2017.  
60 Export restrictions are set out in Article 69 -2 of the Customs Act. Viewed at: 
http://www.kanzei.or.jp/kanzei_law/329AC0000000061.en. html#c6s4ss1a69_2 . 
61 An English translation of the Foreign Exchange and Foreign Trade Act was viewed at: 
http://w ww.japaneselawtranslation.go.jp/law/detail/?ft=1&re=02&dn=1&co=01&ia=03&x=39&y=14&ky=expo
rt+trade+control+order&page=5 . 
62 METI, Extension of Ban on Imports from and Exports to North Korea, Pursuant to the Foreign 
Exchange and Foreign Trade Act . Viewed at: https://www.meti.go.jp/english/press/2019/0409_004.html . WT/TPR/S/397 • Japan  
 
- 71 - 
 
Export control measures  
 
3.62.   The Trade and Economic Cooperation Bureau in the METI is responsible for export control 
policy and legislation, and participates in international export control discu ssions and negotiations.  
3.63.   The Foreign  Exchange and Foreign Trade Act (FEFTA) provides the legal basis for applying 
various export licensing requirements.63 Product lists and detailed operational guidelines are found 
in secondary legislation, including Cabin et Orders and Ministerial Orders. The main Orders under the 
Act are the Export Trade Control Order of 1949 (last amended in 2019) and the Foreign Exchange 
Order of 1980 (last amended in 2019). In 2017, the FEFTA was amended, inter alia , to deter business 
actions designed to avoid administrative sanctions under the export (and import) prohibition order 
by using distinct companies.64 
3.64.   Normally , each export consignment falling under the scope of the Export Trade Control Order 
or the Foreign Exchange Order requir es an individual export licence. However, there are five different 
kinds of bulk export licences, which are described in the Secretariat Report of Japan's previous 
Review.65 Changes were introduced in July 2019 to the licensing system, with the result that the 
relevant bulk licences for exports of three items (fluorinated polyimide, resist and hydrogen fluoride, 
and their relevant technologies) to the Republic of Korea are no longer applicable.66 According to the 
Japanese authorities, so far, these changes ha ve had no impact on actual production or the global 
supply chain.  
Export Control Order  
 
3.65.   The Export  Trade Control Order sets out the goods and their destinations for which METI 
approval is required.67 In a few cases, prior approval of the Ministry of Agriculture, Forestry and 
Fisheries (MAFF) is also required, or permission must be obtained under other laws/regulations.68 
Several controlled products/destinations relate to Japan's international commitmen ts or non -binding 
arrangements.69 The specific goods/destinations subject to export approval are listed in several 
tables appended to the Order. Over the review period, there were various changes to the goods 
subject to export approval contained in Appended  Tables I and II (Box 3.1). The list of luxury goods 
subject to export approval to the Democratic People's Republic of Korea was extended to include 
tapestry and porcelain tableware (Appended Table II -2 to the Export Trade Control Order). With 
respect to c ountries/areas listed as subject to strict export control, South Sudan was added to, and 
Eritrea removed from, the list in 2019 and 2018, respectively, to implement UN Security Council 
                                                
63 An English translation of the FEFTA was viewed at: 
http://www.japaneselawtranslation.go.jp/law/detail/?ft=1&re=02&dn=1&co=01&ia=03&x=39&y=14&ky=expo
rt+trade+control+order&page=5 . 
64 The Revised Act introduces a new system unde r which Japan can issue a prohibition order on board 
members or employees of a company on which an import/export prohibition order has been imposed, 
preventing them from taking board member or other positions in charge of import/export operations in anothe r 
company. METI online information. Viewed at: https://www.meti.go.jp/english/press/2017/0714_003.html . 
65 WTO document WT/TPR/S/351/Rev.1, 20 June 2017.  
66 METI, Promulgation of the Ca binet and Ministerial Orders and the Public Notices for the 
Enforcement of the Revised Foreign Exchange and Foreign Trade Act. Viewed at: 
https://www.meti.go.jp/english/press/2019/0701_ 001.html . 
67 An English translation of the Export Trade Control Order containing latest amendments from the Extra 
Cabinet Order No. 19 of 2018 was viewed at: 
http://www.japaneselawtranslati on.go.jp/law/detail/?ft=1&re=02&dn=1&co=01&ia=03&x=39&y=14&ky=expo
rt+trade+control+order&page=58. More recent amendments to the Export Trade Control Order were viewed 
at: https://www.meti.go.jp/english/policy/external_economy/trade_control/index.html . 
68 Export Trade Control Order, Article 2.  
69 These international commitments and non -binding arrangements are: the CITES Convention; the 
Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposal; the 
Convention on the Proh ibition of the Development, Manufacture, Stockpiling and Use of Chemical Weapons and 
on their Destruction; the Convention on the Means of Prohibiting and Preventing the Illicit Import, Export and 
Transfer of Ownership of Cultural Property; the Convention o n the Safety of the Management of Spent Fuels 
and Radioactive Wastes; the Rotterdam Convention on the Prior Informed Consent Procedure for Certain 
Hazardous Chemicals and Pesticides in International Trade; the Minamata Convention on Mercury; the 
Wassenaar Arrangement on transfers of conventional arms and dual -use goods and technologies; the Missile 
Technology Control Regime; the Treaty on the Non -Proliferation of Nuclear Weapons; the Nuclear Suppliers 
Group; and the Australia Group.  WT/TPR/S/397 • Japan  
 
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resolutions.70 Recent changes to the system resulted in the Republic of Korea now being listed under 
"Group B" countries and regions.71 
Box 3.1 Changes to goods listed in Appended Tables I and II of the Export Trade Control 
Order, 2017 -19 
Goods removed from lists:  semi-finished or primary ceramic products; thermoplastic copolymers; robots 
capable, in real time, of three -dimensional image processi ng; high -speed cinema recording cameras, 
mechanical cameras, streak cameras, electronic cameras or related components; and some blood products.  
Goods added to the lists:  parts of plasma -melting furnaces and electron -beam melting furnaces; 
components design ed for encoders; specified hazardous wastes and other goods subject to special provisions 
for temporary landed goods; parts of devices used for the manufacture of tritium; assemblies or parts thereof 
used for the repair of reactor vessels or reactors and s torage tanks, containers or receivers; devices for the 
synthesis of nucleic acids or binding between nucleic acids; electro -optic modulators; substrates used for the 
manufacture of masks; and polycrystal substrates.  
Source:  Information provided by the aut horities; and METI, Cabinet Decision on the Bill for the Cabinet Order 
for Partial Revision of the Foreign Exchange Order and the Export Trade Control Order . Viewed at: 
https://www.met i.go.jp/english/press/2018/1106_001.html ; and Cabinet Decision on the Bill of the 
Cabinet Order for Partial Revision of the Export Trade Control Order. Viewed at: 
https://www.meti.go.j p/english/press/2017/1117_005.html . 
3.66.   To obtain  an export licence, the exporter must apply to the METI, using the relevant 
application form and supporting documents, including an end -use certificate for the end -user. In 
practice, licences are refused for mil itary weapons and certain materials which can be used in 
developing weapons of mass destruction. Japan permits arms exports to partner countries for joint 
development, provided the government of the country -of-destination obtained consent from Japan 
before  any item exported from Japan was transferred from a third country. For dual -use items, 
licence approval depends on the METI's risk assessment, which is based on the destination and the 
end-user.72 
Foreign Exchange Order  
 
3.67.   The Foreign Exchange Order sets out the technologies and destinations for which permission 
from the METI is required for transfer outside Japan73; amendments to the Order entered into force 
in 2019 to comply with a change in applicable goods subject to export control.74 
Export quotas  
 
3.68.   Japan does not maintain any export quotas.  
                                                
70 METI, New Listing of S outh Sudan in Appended Table 3 -2 of the Export Trade Control Order . Viewed 
at: https://www.meti.go.jp/english/press/2019/0409_003.html ; and Cabinet Decision on the Cabinet Order to 
Partially Amend the Export Trade Control Order. Viewed at: 
https://www.meti.go.jp/ english/press/2018/1214_003.html . Appended Table III -2 and Appended Table IV of 
the Export Control Order list the areas subject to strict export control ("Group D" countries and regions). 
Trading partners listed in Appended Table III -2 are Afghanistan, Cen tral African Republic, Democratic Republic 
of the Congo, Iraq, Lebanon, Libya, the Democratic People's Republic of Korea, Somalia, Sudan and South 
Sudan. Trading partners listed in Appended Table IV are: Iran, Iraq and the Democratic People's Republic of 
Korea. 
71 METI, The Cabinet Approved Partial Amendment to the Export Trade Control Order . Viewed at: 
https://www.meti.go.jp/english/press/2019/0802_001.html . 
72 WTO document WT/TPR/S/351/ Rev.1, 20 June 2017.  
73 An English translation of the Foreign Exchange Order was viewed at: 
http://www.japaneselawtranslation.go.jp/law/detail/?ft=1&re=02&dn=1&co=01&ia=03&x=39&y=14&ky=expo
rt+trade+control+o rder&page=6 . 
74 Technologies involving design, manufacture, or use of assemblies or parts thereof used for the repair 
of reactor vessels or reactors and storage tanks, containers or receivers were added. METI, Cabinet Decision on 
the Bill for the Cabinet Or der for Partial Revision of the Foreign Exchange Order and the Export Trade Control 
Order . Viewed at: https://www.meti.go.jp/english/press/2018/1106_001.html . WT/TPR/S/397 • Japan  
 
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3.2.4   Export support  and promotion  
3.2.4.1   Export subsidies  
3.69.   According  to the authorities, Japan has no export subsidy programmes in place; over the 
review period, it notified the WTO Committee on Agriculture that it had not provide d export subsidies 
for the fiscal years 2016 and 2017 (Table 2.2).  
3.2.4.2   Taxation and special customs procedures  
3.70.   Japan's  Bonded Area System allows for the storage, processing, manufacturing or display of 
foreign goods at designated locations or facilities (i.e. goods that have arrived in Japan from overseas 
but that have not received an import permit from the Director -General of Customs, hence duties 
and taxes would not have been paid). There are various types of bonded areas (Table 3 .8). 
Table 3.8 Bonded areas, features  
Types  Principal features  Length of storage  Number 
(2019)  
Designated 
bonded areas  Loading/unloading, transport and temporary 
storage of foreign goods  1 month  89 
Customs 
warehouses  Loading/unloading, transport and long -term 
storage of foreign goods  2 years (may be 
extended)  4,724  
Customs 
factories  Processing and manufacturing using foreign goods 
as material  2 years (may be 
extended)  249 
Customs display 
areas  Display and use of foreign goods  Decided by the 
Director -General of 
Customs  n.a. 
Integrated 
bonded areas  Loading/unloading, transport long -term storage, 
processing and manufacturing, and display of 
foreign goods  2 years (may be 
extended)  4 
n.a. Not available . 
Source : Japan Customs. Viewed at: https://www.customs.go.jp/english/c -answer_e/sonota/9203_e.htm . 
3.71.   Japan's Customs Transportation System allows for foreign goods to be transported between 
bonded areas, ports and airports. The approval of the Director -General of Customs is required.75 
3.72.   Under the Customs Tariff Law, customs duties are, either conditionally or unconditionally: 
(i) reduced for goods exported for processing or repair (Article 11); ( ii) exempt for exportation of 
goods manufactured from duty -paid raw materials (Article 19 -2); (iii) reduced or exempt for re -
exportation (Article 17 and 18); (iv) reduced or exempt for raw materials used in the production of 
export  goods (Article  19); (v) refunded on raw materials for manufacturing export goods (Article 
19); (vi) refunded on the export of products manufactured with duty -paid materials (Article 19 -2); 
and (vii) refunded on the export of goods whose nature and form ar e unchanged from the time of 
their importation (Article 19 -3).76 
3.2.4.3   Free zones and free ports  
3.73.   Japan operates International Logistics Hub Industry Development Zones (ILHIDZs) in Naha 
District (former a Free Trade Zone) and Uruma/Okinawa District. The ILHIDZs ar e special economic 
zones based on the Act on Special Measures for the Promotion and Development of Okinawa. 
Incentives offered to domestic and foreign companies include: a 40% deduction from corporation 
income  tax for a ten -year period following the establ ishment of the business (domestic companies 
only); an investment tax credit; and a special depreciation system. With respect to customs duties, 
a selective system applies77, and the customs bond permission fee is halved for customs warehouses 
                                                
75 Japan Customs , Outline of the Customs Bonded System . Viewed at: 
http://www.customs.go.jp/english/c -answer_e/sonota/9203_e.htm . 
76 Japan Customs , Systems for Reduction, Exemption, Refund and Repayment of Customs Duty Except 
Exemptions under International Conventions and Agreements . Viewed at: 
http://www.customs.go.jp/english/summary/refunds_system.pdf . 
77 With respect t o products accepted into Japan which are processed or manufactured in a bonded 
factory using foreign cargo, the choice is available to choose between a tax system whereby tax is paid either WT/TPR/S/397 • Japan  
 
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and customs fa ctories, customs display areas , and integrated bonded areas. Various local tax 
incentives are also offered. Subsidies of up to 25% are available for land and building expenses , and 
of up to 50% for transportation expenses related to the domestic transporta tion to and from  Okinawa 
prefecture of materials (targeted at manufacturing companies).78 Additionally, low -interest, 
long-term loans are offered to companies establishing in the ILHIDZs by the Okinawa Development 
Finance Corporation.79  
3.2.4.4   Export  promotion  
3.74.   The Japan External  Trade Organization (JETRO) remains the official agency responsible for 
promoting exports through information, research, support for , and participation in international 
trade fairs, and other activities to promote exports from, and investmen t in, Japan; it has 74 
overseas offices in 54 countries.80 Since 2016, JETRO has been providing export -related services 
under the Consortium for the New Export Nation; these include advice to Japanese SMEs  on their 
exports and overseas investment, for example, in terms of foreign country regulations and contract -
drafting in English. In 2017, JETRO established the Japan Agricultural and Foodstuff Exports as a 
new service in its Trade Tie -up Promotion Program me; this provides an Internet matching services 
for Japanese agricultural and food products.81 In the same year , it also established the Japan Food 
Product Overseas Promotion Center, in order to promote branding and marketing of Japanese 
agricultural, fores try, fishery and food products in overseas markets. Since 2019, JETRO has 
strengthened its support to promote innovation, expansion of Japanese start -ups overseas , and 
inward FDI in Japan, corresponding to global acceleration of cutting -edge technologies a nd the digital 
economy.  
3.2.5   Export finance, insurance, and guarantees  
3.75.   The Nippon  Export and Investment Insurance (NEXI) and the Japan Bank for International 
Cooperation (JBIC) remain the official export credit agencies. As noted in previous Reviews, in 
providing financial services, Japan follows the terms and conditions of the OECD Ar rangement on 
Officially Supported Export Credits.  
3.76.   In April 2017, NEXI was transformed , under the Act on General Rules for Incorporated 
Administrative Agencies, and the Trade and Investment Insurance Act , from an incorporated 
administrative agency into a sp ecial stock company wholly owned by the Government of Japan. It 
continues to be regulated by the METI. The stated rationale for this change was to strengthen NEXI's 
ties with the Government, to improve business management, and to better reflect the intenti ons of 
government policies in NEXI's business (these include support for: the expansion of SMEs in the 
agricultural, forestry and fisheries industries; the aircraft and ship sectors; overseas infrastructure 
development opportunities; and securing a stable supply of natural resources and energy). Also, in 
2017, the Government's Special Account for Trade Reinsurance was abolished, and the assets and 
liabilities of the account were absorbed by NEXI. Following this development, NEXI began to cede 
reinsurance to  private -sector reinsurance companies.  In October 2017, NEXI established a dollar -
based loan insurance policy , so that it can provide consistently dollar -based supports for Japanese 
companies.82 Other developments in terms of insurance products offered are:  the relaunch of the 
underwriting of Export Credit Insurance for projects with long -term deferred payment; the expansion 
of the scope of investment and loan insurance for natural resources and energy (aimed at securing 
natural resources and supporting rele vant businesses); and the establishment of loan insurance for 
green innovation (aimed at supporting environment protection -related businesses).  
                                                
on the materials or on the products. Prefecture of Okinawa , Indust rial Site Guide, 2019 -2020. Viewed at: 
https://www.pref.okinawa.jp/site/shoko/kigyoritchi/documents/eng1.pdf . 
78 Prefecture of Okinawa , Industrial Site Guide, 2019 -2020. Viewed at: 
https://www.pref.okinawa.jp/site/shoko/kigyoritchi/documents/eng1.pdf ; Invest Okinawa, Special Economic 
Zone & Promotional video . Viewed at: http://invest -okinawa.biz/en/charm/ . 
79 The Economist, Free ports, zones . Viewed at: 
http://country.eiu.com/article.aspx?articleid=1857197369&Country=Japan&topic=Regulation&subtopic=Trade
+policy&subsubtopic=Free+ports%2c+zones&oid=1767197360&aid=1 . 
80 JETRO is an incorporated administrative agency und er the Japan External Trade Organization 
Incorporated Administrative Agency Act of 2002.  
81 JETRO, Establishment of Japan Agricultural & Foodstuff Exports (JAFEX) . Viewed at: 
https://www.jetro.go.jp/en/news/releases/2017/a3e08559704012dd.html . 
82 Information provided by the authorities . WT/TPR/S/397 • Japan  
 
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3.77.   In conducting  its business, NEXI provides trade and investment insurance , with the objective 
of breaking  even, financially. If NEXI faces funding difficulties, the Government may step in to ensure 
insurance claims are paid83; over the review period, no such governmental countermeasures were 
required. NEXI offers several insurance products , and covers both political a nd commercial risks. 
Insurance products related to trade , and most recent data on premium income and claims paid , is 
set out in Table 3. 9.84 A description of NEXI's insurance products for investment and financing (which 
account for the larger share of NEXI' s premium income) are described in NEXI's 2017 Annual Report; 
these include buyer's credit insurance , which covers the risks of non -repayment of loans made by 
Japanese commercial banks to foreign companies for the purchase of goods exported from Japan.  
Table 3.9 NEXI trade insurance products, 2018  
(JPY million)  
Insurance type  Description  Premium 
income 
2018  Claims 
paid 
2018  Under -
written  
amount  
Export credit insurance  Insurance for export, intermediary trade 
and technical cooperation:  coverage of 
risks such as pre -shipment risks or non -
payment risks pertaining to export, 
intermediary trade and technical 
cooperation conducted by Japanese 
exporters  
Insurance for licence export: coverage of 
the non-payment risks that affect 
Japanese companies , related to licence 
fees (i.e. royalties on patents, know -
how, copyright , etc.) 12,032  18,082  5,030,034  
Trade insurance for 
standing orders from 
specific buyers  Coverage of risks such as pre-shipment 
risks or non -payment risks that affect 
Japanese companies who continually 
export or conduct intermediary trade 
with specific buyers  259 0 7,443  
Comprehensive export 
insurance with 
simplified procedure  Coverage of risks such as pre-shipment 
risks or non -payment risks that affect 
Japanese companies who continually and 
repeatedly export or conduct 
intermediary trade with numerous 
buyers  127 0 58,024  
Export credit insurance 
for SMEs and the 
agriculture forestry 
and fishery sector Coverage of non -payment risks 
pertaining to exports conducted by 
Japanese SMEs and organizations related 
to the agriculture forestry and fishery 
sector  84 78 9,812  
Export bill insurance  Coverage of non -payment of 
documentary bill s or exchange 
purchased by Japanese commercial 
banks  130 10 13,023  
Prepayment import 
insurance  Coverage of risks that affect Japanese 
importers who are unable to receive the 
refund of their payment made on 
advanced payment terms in the event 
the shipment d oes not arrive  3 0 214 
Source:  NEXI, Annual Report 2018 . Viewed at: https://www.nexi.go.jp/corporate/booklet/pdf/annual2018 -
e.pdf; and information provided by the authorities.  
3.78.   The JBIC was established under the Japan Bank for International Cooperation Act of 2011 , 
and is wholly government -owned. It provides loans and guarantees , and engages in equity 
participation, with a view to: promoting the overseas development and securing resource s which are 
important for Japan; maintaining and improving the international competitiveness of Japanese 
industries; promoting overseas business having the purpose of preserving the global environment; 
and preventing disruptions to the international financ ial order or taking appropriate measures with 
                                                
83 These governmental countermeasures are prescribed in the Trade and Investment Insurance Act.  
84 Both trade and investment insurance products are described in more detail in NEXI's 2017 Annual 
Report. Viewed at: https://www.nexi.go.jp/corporate/booklet/pdf/annual2017 -e.pdf. WT/TPR/S/397 • Japan  
 
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respect to damages caused by such disruptions.85 Only a small share of its total lending and 
investments is geared to wards  providing export loans, largely bank -to-bank loans and buyer's 
credits (some JPY 102.8 b illion in FY2018, representing 6% of all actual lending and investments in 
that year). According to the authorities, export loans are provided based on the conditions of the 
OECD Arrangement on Officially Supported Export Credits; export loans are also ava ilable from the 
private sector. Most of the JBIC's lending/investment activity is not trade -related: overseas 
investment loans accounted for 69% of lending commitments in FY2018; untied loans , 2%; 
guarantees , 20%; and equity participations , 3%. 
3.79.   JBIC fundin g comes from different sources , mostly government accounts or with government 
guarantees , including Government -Guaranteed Foreign Bonds, and borrowing from the Fiscal 
Investment and Loan Program and the Foreign Exchange Fund Special Account.86  
3.3  Measures Directly  Affecting Production and Trade  
3.3.1   Incentives  
3.80.   Total central government tax revenue in Japan in FY2019 was JPY 62,495 billion, with the 
biggest contributions from: income tax, the consumption tax, and corporation tax. Revenue from 
customs duties accounted  for 1.65% of the total in the same year (Table 3.10). Various local 
government taxes are levied at both the prefectural and local levels. Taxation rates at central and 
local government levels for FY2019 are set out in Table A3.1.  
Table 3.10 Tax revenue, FY2015 -19 
    FY2015  FY2016  FY2017  FY2018  FY2019  
Total for general account  
(JPY million)  56,285.4  55,468.6  58,787.5  59,928.0  62,495.0  
 
(% of total)  
Direct tax  54.4  54.2  56.4  56.8  56.0  
Income tax  31.6  31.7  32.1  32.5  31.9  
Corporation tax  19.2  18.6  20.4  20.5  20.6  
Inheritance tax  3.5  3.8  3.9  3.7  3.6  
Indirect tax  45.6  45.8  43.6  43.2  44.0  
Consumption tax  31.0  31.1  29.8  29.7  31.0  
Gasoline tax  4.4  4.4  4.1  3.9  3.7  
Liquor tax  2.4  2.4  2.2  2.2  2.0  
Stamp revenue  1.9  1.9  1.8  1.8  1.7  
Customs duty  1.9  1.7  1.7  1.7  1.7  
Tobacco tax  1.7  1.6  1.5  1.5  1.4  
Petroleum and coal tax  1.1  1.3  1.2  1.2  1.1  
Motor vehicle tonnage tax  0.7  0.7  0.6  0.7  0.6  
Promotion of power 
resources development tax  0.6  0.6  0.6  0.5  0.5  
Aviation fuel tax  0.1  0.1  0.1  0.1  0.1  
International tourist taxa n.a. n.a. n.a. 0.01  0.1  
Tonnage tax  0.02  0.02  0.02  0.02  0.02  
Liquefied petroleum gas tax  0.02  0.02  0.01  0.01  0.01  
n.a. Not applicable.  
a Imposed on travellers departing Japan since 7 January 2019.  
Note:  FY2015 -17 settled amount; FY2018 budgeted amount revised; FY2019 budgeted amount.  
Source:  Ministry of Finance, Tax and Stamp Revenues . Viewed at: 
https://www.mof.go.jp/english/tax_policy/taxes_and_stamp_revenues/index.htm . 
3.81.   Direct  taxes include individual income tax and corporation tax. Over the r eview period, the 
corporation tax rate (both national and local) was reduced from 29.97% to 29.74% in 2018 (the 
national corporation tax rate was reduced from 23.4% to 23.2%) The highest individual income tax 
rate (including local taxes) is 55% . Some refor ms to the individual income tax were also introduced 
                                                
85 JBIC Annual Report 2018. Viewed at: https://www.jbic.go.jp/en/information/annual -
report/pdf/2018E_01.pdf . 
86 Ministry of Finance, Fiscal Investment and Loan Program Report  2018. Viewed at: 
https://www.mof.go.jp/english/filp/filp_report/zaito2018/pdf/filp2018_eng.pdf . WT/TPR/S/397 • Japan  
 
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in 2018 with respect to allowable deductions87; and, in 2019 , with respect to tax credits, exemptions , 
donations , and environmental taxes.88 All income earned in Japan is taxable, both for residents and 
non-residents, and the corporation tax rate is the same for foreign and domestic corporations.  
3.82.   Indirect  taxes, including consumption tax (VAT) and excise taxes (applied, inter alia , to liquor, 
tobacco, gasoline, and automobiles), account for most of the rem ainder of total tax revenue. Recent 
tax reforms are detailed in Section 1.2.4.1. These include a consumption tax increase in 
October  2019; and amendments to the tobacco tax in FY2018. The consumption tax was increased 
from 8% to 10%. Reduced consumption ta x rates (of 8%) apply to food and beverages (except 
liquors and eating out), and subscribed newspapers issued twice or more per week; there are no 
exempt or zero -rated items.  
3.83.   Besides being subject to a motor vehicle tonnage tax, passenger cars are also sub ject to the 
automobile tax, an annual tax which is commensurate to the volume of the engine size of the vehicle. 
Rates did not change over the review period. A passenger car with a cylinder volume of between 
660 and 1,000 cc is subject to a tax of JPY 29,5 00 per year. Mini vehicles (Kei cars) which are no 
larger than 11.2 ft by 4.9 ft and with an engine below 660 cc are subject to a Kei car tax of JPY 
10,800. Tax reforms introduced in the 2019 Budget are to: reduce the automobile tax for those who 
purchased  automobiles after the consumption tax rate hike; revise the eco -car tax deduction under 
the motor vehicle tonnage tax; ensure that the local tax revenue loss will be fully supplemented by 
national taxes (i.e. through an increase in the compensation rate f or the motor vehicle tonnage tax 
and the gasoline tax); and reduce the tax rate on acquisitions of automobiles (a newly -introduced 
environmental performance excise) by 1%, as a one -year temporary measure from October 2019.89 
3.84.   The Aviation Fuel Tax is imposed  on the quantity of aviation fuel loaded on an aircraft in the 
territory of Japan.  Rates did not change over the review period. Aviation fuel for international airlines 
is exempt. Revenue from the tax is transferred to a special account for airport constru ction, and is 
also partly transferred to local public authorities to prevent obstacles such as aircraft noise.90 
3.85.   Under  the Liquor Tax Act, alcoholic beverages are classified into several categories based on 
their basic ingredients, manufacturing process, an d characteristics.  Rates did not change over the 
review period. Tax rates, applied to domestic and imported products, are stipulated for each 
category, considering factors such as how items are produced and consumed.91  
3.86.   National  and local taxes on tobacco a re being raised by JPY 3 per cigarette in a three -phased 
period (JPY 1 per cigarette in each phase) which started in 1 October 2018. A new tax category was 
created for heat -not-burn tobacco products, and the taxation system will be revised in consideration  
of the products' characteristics.92 The phase -out of the preferential tax treatment for Japanese -
produced "third class cigarettes" was completed in 201993; all cigarettes are now taxed at the same 
rates.  
3.3.1.1   Taxation   
3.87.   As indicated by an external source, foreig n investors generally have the same access to 
incentives offered by central and local governments; these include grants and loan assistance (see 
below) and tax incentives which generally favour SMEs.94 Central government tax incentives  are 
                                                
87 MOF, FY 2018 Tax Reform (Main Points).  Viewed at: 
https://www.mof.go.jp/english/tax_policy/tax_reform/fy2018/tax2018a.pdf . 
88 MOF, FY 2019 Tax Reform (Main Points) . Viewed at: 
http://www.mof.go.jp/english/tax_policy/tax_reform/fy2019/tax2019.pdf . 
89 MOF, FY 2019 Tax Reform (Main Points) . Viewed at: 
http://www.mof.go.jp/english/tax_policy/tax_reform/fy2019/tax2019.pdf  
90 WTO document WT/TPR/M/351/Add.1 , 27 April 2017.  
91 WTO document WT/TPR/M/351/Add.1, 27 April 2017.  
92 Tobacco Tax Law. Viewed (in Japanese) at: https://elaws.e -
gov.go.jp/search/e lawsSearch/elaws_search/lsg0500/detail?lawId=359AC0000000072 ; and Local tobacco tax 
law. Viewed (in Japanese) at:  https://elaws.e -
gov.go.jp/search/elawsSearch/elaws_search/lsg0500/detail?lawId=325AC0000000226 . 
93 WTO document WT/TPR/M/351/Add.1, 27 April 2017.  
94 The Economist, Japan, General incentives . Viewed at: 
http://country.ei u.com/article.aspx?articleid=1077197291&Country=Japan&topic=Regulation&subtopic=Nation
al+incentives&subsubtopic=General+incentives&aid=1&oid=1077197291 . The authorities indicated that the WT/TPR/S/397 • Japan  
 
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contained in Tabl e 3.11 . These are aimed, inter alia , at: promoting employment, regional 
revitalization, improving productivity, and encouraging research and investment. Tax incentives are 
also in place to promote the installation of energy -saving facilities.95 
3.88.   Over the review period, new or revised tax incentives for companies were, inter alia , designed 
to: promote business investment by local SMEs, promote business succession of SMEs, and spur 
wage hikes and productivity, including through revisions to the tax syst em for R&D (Table A3.2 ).96 
According to the authorities, no studies were undertaken over the review period on the effectiveness 
of tax (and non -tax) incentives.  
Table 3.11 Central government tax incentives, 2019  
Title Overview  
Tax incentives for strengthening local business facilities  
Employment promotion 
taxation  - Establishment/expansion of headquarters functions within  eligible areas  (incl. 
FDI in Japan): tax credit of  up to JPY 600,000 per new employee.  
- Relocation of headquarters functions to within eligible  areas from the 23 
wards of Tokyo: tax credit of up to JPY 900,000 per new employee.  
Corporate income tax 
incentives for capital 
investment  (tax cut for 
offices)  - Establishment/expansion of headquarters functions within eligible  areas (inc l. 
FDI in Japan):  a special initial depreciation of 15%  of the standard acquisition 
cost, or 4% tax credit on the acquisition value of specified business facilities.  
- Relocation of headquarters functions to within  eligible areas of  the 23 wards 
of Tokyo:  a special  initial  depreciation of 25% of the standard acquisition cost, 
or a 7% tax  credit on the acquisition value of specified business facilit ies. 
Incentives regarding Special Zones  
National Strategic Special 
Zone Special regulatory measures, tax treatment (for corporate income tax), and 
financial/monetary support are available for companies with business plans in 
National Strategic Special Zo nes. 
Comprehensive Special 
Zones Special regulatory measures, tax credit (for corporate income tax), and 
fiscal/financial support are available for companies with business plans in 
designated C omprehensive Special Zones. 
Special Zones for 
Reconstruction  Special measures , such as deregulation, tax incentives, etc. , are available in 
disaster -afflicted areas where local governments made designated plans.  
Incentives based on the Act on Special Measures for Productivity Improvement  
Connected Industries 
Taxation System  Tax measures supporting the introduction of systems, sensors, robots , etc. 
necessary in efforts to boost productivity, through collaboration  and utilization 
of data, and for which certain cybersecurity measures are taken.  
Tax measures: 30% special depreciation or a 3% tax deduction. The tax credit 
rate is 5% in the case of wage increases in which the rate of increased pay and 
allowance for emp loyees is over 3% from the previous year.  
Tax incentives based on the Regional Future Investment Promotion Act (Tax Credit for Regional 
Future Investment Promotion)  
Tax incentives for capital 
investment  - Machinery , appliances and fixtures : a special initial depreciation  of 40% of 
the standard acquisition cost, or a 4% tax credit (if certain requirements are 
met: 50% special initial depreciation, or 5% tax credit)  
- Buildings, attached facilities and structures of specific business facilities : a 
special initial depreciation of 20% of the standard acquisition cost, or a 2% tax 
credit.  Maximum amount of tax deduction: 20% of the amount of corporate or 
income tax in the period concerned.  
Companies must prepare a business project and obtain the required prefectural 
and ministerial approvals.  
Tax exemption or unequal 
taxation of local taxes  Confirmed companies may be able to receive exemptions or reductions on 
property acquisition taxes and property taxes by local authorities.  
                                                
Subsidy Programme for Projects Promoting Foreign Direct Investment, Site Location and Regional Development 
ended in March 2017.  
95 Corporations that install energy -saving facilities can apply 30% special depreciation of the price of 
those facilities. SMEs can alternatively apply a 7% tax credit for the purchase of these fac ilities. WTO document 
WT/TPR/M/351/Add.1, 27 April 2017.  
96 MOF, FY 2019 Tax Reform (Main points) . Viewed at: 
https://www.mof.go.jp/english/tax_policy/tax_reform/fy2019/t ax2019.pdf ; FY 2018 Tax Reform (Main points) . 
Viewed at: https://www.mof.go.jp/english/tax_policy/tax_reform/fy2018/tax2018a.pdf ; and FY 2017 Tax 
Reform (Main points) . Viewed at: https://www.mof.go.jp/english/tax _policy/tax_reform/fy201 7/tax2017a.pdf . WT/TPR/S/397 • Japan  
 
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Title Overview  
Tax incentives for  R&D 
R&D Tax Credit System  Table A3. 2  
Promotion of Open 
Innovation  Tax credit for the total amount of expenses for joint or contract research with 
universities, national research institutes, etc.  
Tax credit = total amount of special R&D expenses times 20% , 25%  or 30%.  
Maximum amount of tax credit: 10% of the amount of corporate or income tax 
in the period concerned  
Tax incentive for wage and productivity improvement  
Tax deduction system for 
wage and productivity 
improvement  Tax incentives  for companies which carry out: wage hikes (+3% year -on-year 
for large firms; 1.5% year -on-year for SMEs); and investment and employee 
training: maximum 20% tax credit (25% for SMEs). Maximum amount of tax 
credit: 20% of the amount of corporate o r income tax in the period concerned.   
Preferential tax treatment for Special Zones 
Special Zone for 
promoting investment in 
reconstruction of industry 
in Fukushima  Companies who contribute to maintaining employment opportunities in 
reconstruction industry accumulation areas are eligible to apply for  a special 
tax measure when they make capital investments or employ disaster victims  
Source:  JETRO, Incentive Programs . Viewed at: https://www.jetro.go.jp/en/invest/incentive_programs.html ; 
and information provided by the authorities . 
3.3.1.2   Subsidies  and other assistance programmes  
3.89.   In its latest notification  to the Committee on Subsidies and Countervailing Measures under 
Article XVI:1 of GATT 1994 and Article 25 of the Agreement on Subsidies, Japan listed 51 subsidy 
schemes provided by central or local governments , largely for fiscal years 2016 and 2017; supp ort 
was mainly targeted at the following activities/sectors: crafts; mining and energy; beverages (sake 
and shochu); agriculture; fisheries; leather; and R&D for next -generation technology. In most cases, 
subsidies took the form of grants. Interest subsidi es and loans were also used to subsidize some 
economic activities. The most significant subsidy programmes in value terms were ( i) loans for 
purchasing petroleum and liquefied petroleum gas  for stockpiling by private companies 
(JPY 517.9 billion in FY2016 and JPY 335 .2 billion in FY2017) ; and ( ii) grants for rice production, 
which have since been abolished (subsidy of JPY 98 .7 billion in FY 2015 and JPY  70.8 billion in FY 
2016). No new subsidy programmes were introduced over the reporting period covered by Japan's 
notification, but several were terminated (Table  3.12).  
Table 3.12 Subsidy and other assistance schemes terminated, 2017 -19 
Scheme  Date of 
termination  
Subsidy for the tortoiseshell and ivory crafts industries  3/2017  
Subsidy for supporting action to improve energy efficiency by private enterprises  3/2017  
Subsidy for developing the local energy supply basis  3/2019  
Geothermal energy programme  3/2017  
Subsidy for R&D for the practical applicati on of advanced ultra -supercritical technology for 
a thermal power plant  3/2017  
Grant for the technical development of a full-MOX ABWR plant system  3/2017  
Subsidy for R&D for care robot equipment  3/2018  
Measures for rice  2018 
Local subsidies for promoting the manufacture of traditional craft products (3 Prefectures)  End-FY2017; 
FY2018  
Local measures for eggs (1 Prefecture)  End-FY2016  
Local subsidy measures for vegetables (4 Prefectures)  End-FYs 
2016, 2017 
and 2018  
Local subsidy measures for fruit (1 Prefecture)  End-FY2018  
Subsidy for inland water aquaculture  End-FY2018  
Source:  WTO documents G/SCM/N/315/JPN, 9 June 2017 ; and G/SCM/N/343/JPN, 19 July 2019.  
3.90.   Subsidies  are available for the purchase of clean energy vehicles sold by car makers, a nd for 
building hydrogen fueling stations.97 The subsidy to promote clean energy vehicle purchases applies 
to the purchase of electric  battery vehicles, plug -in hybrid electric vehicles, fuel -cell energy vehicles, 
                                                
97 The Economist, Japan, Industry -specific incentives . Viewed at: 
http://country.eiu.com/article.aspx?articleid=1097197293&Countr y=Japan&topic=Regulation&subtopic=Nation
al+incentives&subsubtopic=Industry -specific+incentives&aid=1&oid=1077197291 . WT/TPR/S/397 • Japan  
 
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and clean diesel vehicles (Table 3.13). The  subsidy amount is calculated based on the grade of the 
clean energy vehicle, and is paid within the limits set per vehicle grade (it is not paid if the calculated 
amount is under JPY 15,000). The budgetary allocation for this subsidy scheme was JPY 16 mil lion 
in 2019. The upper limit of the subsidy scheme for building hydrogen stations is from JPY 180 million 
to JPY 390 million. The upper limit on the subsidy for the operation of hydrogen stations is from 
JPY16 million to JPY 26 million. These limits depen d on the type of machines involved.  
Table 3.13 Subsidy to promote clean energy vehicle purchases  
Vehicle type  Subsidy amount  
Electric battery vehicles  Subsidy is calculated on the driving range per charge. Maximum subsidy of 
JPY 400,000  
Plug-in hybrid vehicles  Subsidy of JPY 200,000 for all vehicles (limited to electric vehicles with 
calculated driving range of over 40 km)  
Fuel-cell energy vehicles  
Clean diesel vehicles  Subsidy amount is calculated  based on the price difference between the clean 
energy vehicle and the gasoline -powered vehicle of the same model/grade. 
Maximum subsidy amount for fuel -cell vehicles is JPY 2,250,000. Maximum 
subsidy amount for car -derived vans is JPY 150,000  
Source:  Information provided by the authorities.  
3.91.   Various  subsidies to encourage the establishment of foreign -affiliated businesses are also 
provided at the local level.98 These subsidies, inter alia , relate to rent costs; expenses; depreciable 
assets; investments; em ployment; and research costs.  
3.92.   Since  2016, new subsidy program mes were introduced in the following areas: subsidies for 
manufacturing, information and communications technology  introduction , and sustainability support 
for SMEs (FY2019 budget, allocation of JPY 110 .0 billion);  and group subsidies (FY2018 
supplementary budget, allocation of JPY  31.4 billion ).99  
3.93.   Various new support  program mes were introduced for the agriculture and fisheries sector s 
(Section 4.1) . 
3.94.   The Development Bank of Japan Inc. (DBJ), which is wholly owned by the Government, offers 
various financial services, including long -term loans and investment in both local and foreign projects 
involving natural resources and energy; technology development; m arine transport; urban renewal; 
and antipollution technology.100 According to the authorities, interest rates are market -based but 
the DBJ may offer longer -term loans than those available through commercial banks. Priorities for 
the DBJ are in the areas of c risis response operations (i.e. supply growth capital from the perspective 
of promoting the competitiveness of Japanese enterprises along with regional revitalization). The 
DBJ's capital, funded by the Government, was JPY  1,000.4 billion as at 31 March 201 9. As at the 
same date, the Bank had total assets of JPY 16,827 billion and loans of JPY 13,063 billion.101 
3.95.   As set out in government budgets over the period FY2017 -19, various new support 
programmes were introduced, namely: support for SME business successio n; establishment of bases 
for revitalizing local economies; transition to the production phase towards post -"K-computer"; 
promotion of capital investment by local core companies; expansion of measures to assist business 
succession; support to information t echnology innovation and artificial intelligence system co -
development; support for introducing leading -edge energy -saving equipment; grants to advance 
regional reinvigoration; and development and demonstration of smart agriculture technology. T he 
authorit ies indicated that , while the type of support is mainly subsidies, these do not constitute 
"subsidies" and are not "specific" under the WTO Subsidies and Countervailing Measures Agreement . 
                                                
98 JETRO, Incentive Programs . Viewed at: https://www.jetro.go.jp/e n/invest/incentive_programs.html . 
99 As explained by the a uthorities, the group subsidy is a special measure, based on the fact that 
physical damage, such as damage to facilities and equipment, is widespread, and the supply chain is damaged, 
resulting in a stagnation of the economy. Measures were taken in 2011, 2016 and 2018. In order to support 
the restoration of facilities and equipment affected by the disaster, the Government supports some expenses, 
such as the restoration of facilities based on the SME g roup's reconstruction project plan.  
100 The Economist, Japan, Industry -specific incentives . Viewed at: 
http://country.eiu.com/article.aspx?articleid=1097197293&Country=Japan&topic=Regulation&subtopic=Nation
al+incentives&subsubtopic=Industry -specific+incentives&aid=1&oid=1077197291 . 
101 DBJ, About DBF/Timeline . Viewed at: https://www.dbj.jp/en/co/info/outline.html . WT/TPR/S/397 • Japan  
 
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3.3.2   Standards and other technical  requirements  
3.96.   The Ministry  of Foreign Affairs (the International Trade Division, within the Economic Affairs 
Bureau) remains Japan's Notification Authority under the Agreement on Technical Barriers to Trade 
(TBT Agreement). Over the review period, no specific trade concerns on Japa n's measures were 
raised by other WTO Members in the TBT Committee. The WTO was notified that the Japan Standards 
Association and the Optoelectronics Industry and Technology Development Association accepted the 
Code of Good Practice for the Preparation, Ad option and Application of Standards (Annex 3 to the 
WTO TBT Agreement).102 
3.97.   Between  January 2017 and early September 2019, Japan submitted 93 regular notifications 
to the WTO Committee on Technical Barriers to Trade; the 60 -day period for comments was observe d 
for 77 regular notifications. The type of measures notified to the WTO included 69 technical 
regulations (Article 2.9) and 1 conformity assessment procedure (Article 5.6). Japan notified 13 
urgent technical regulations (Article 2.10) , mainly related to c onsumer and human health protection.  
3.98.   Japan  is a member of the International Organization for Standardization (ISO), the 
International Telecommunication Union, the International Electrotechnical Commission (IEC), the 
International Accreditation Forum, the Bureau international des poids et mesures , the Organisation 
internationale de métrologie légale , and the International Laboratory Accreditation Cooperation, as 
well as several regional standards and accreditation bodies.  
3.99.   Japan  has MRAs concerning standards , technical regulations and conformity assessment 
procedures in force with the European Communities, Singapore, the Philippines, Thailand, the United 
States, and Chinese Taipei.  
3.3.2.1   Legal and institutional framework   
3.100.   There  were no changes to the agencies in ch arge of TBT issues over the review period. These 
remain the METI; the Ministry of Internal Affairs and Communications (for communications 
equipment); the MAFF (for foodstuffs, agricultural, forestry and fisheries products); the Ministry of 
Health, Labour a nd Welfare (for drugs and medical devices); the Consumer Affairs Agency (for 
labelling) and the Ministry of Environment (for environment).103 
3.101.   The main laws on standards and technical regulations in Japan, together with the agency 
responsible, are described i n Table 3.14 . 
Table 3.14 Main laws on standards and technical regulations  
Legislation/ agency  Purpose  
Industrial Standardization Act , 
1949 /METI  Applies to: all products except medicines, agriculture and fertilizer 
chemicals, silk yarn, foodstuffs, agricultural and forestry products;  
data; services; and management systems.  
The Act establishes the Japanese Industrial Standards (JIS) 
Committee and the JIS Mark Scheme , and provides the legal basis for 
standards, certification, and accreditation of certification bodies and 
laboratories.  
Consumer Product Safety Act , 1973  
/METI Sets out requirements for: ( i) a narrow range of specified products 
which must comply with technical requirements; and ( ii) specified 
maintenance products (some types of domestic water heaters and 
electric appliances) which must be provided with information on 
maintenance. It also provides the legal basis for reporting product 
accident information for consumer products.  
Act on Securing Quality, Efficacy 
and Safety of Products including 
Pharmaceuticals and Medical 
Devices , 1960  /Ministry of Health, 
Labour and Welfare   Regulat es the manufacture, import and sale of pharmaceuticals, 
medical devices, regenerative and cellular the rapy products, gene 
therapy products , and cosmetics.  
                                                
102 WTO documents G/TBT/CS/N/189, 20 April 2017; and G/TBT/CS/N/195, 21 November 2017.  
103 A fuller description of the sub -entities responsible for TBT issues is contained in WTO document 
WT/TPR/S/351/Rev.1, 20 June 2017 (Box 3.2).  WT/TPR/S/397 • Japan  
 
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Legislation/ agency  Purpose  
Act on Japanese Agricultural 
Standards , 1950 /MAFF  Applies to foods, drinks, oils, and fats , and agricultural, forestry, 
livestock and fishery products and products made from them , except 
liquors, drugs,  cosmetics and regenerative medical products . It 
provides the legal basis for the Japanese Agricultural Standards , and 
criteria for adopting standards, quality grading, certification, and 
accreditation of certifying bodies, laboratories and inspectors.  
Building Standard Law , 1950 
/Ministry of Land, Infrastructure, 
Transport and Tourism   Applies to buildings and construction thereof . It provides for the 
establishment of standards for the construction of buildings, including 
fireproofing and procedures for inspection , certification of buildings, 
and type approval.  
Electrical Appliances and  Materials 
Safety Act , 1961/METI  Applies to electrical appliances and materials. The Act regulates the 
manufacture and sale of electrical appliances , and requires 
manufacturers and importers of these appliances to register with the 
METI and ensure conformity with technical requirements.  
Measurement Act , 1992/METI Establishes the units of the International System of Units (ISU)  as the 
measurement units in Japan , and provides the legal basis to apply and 
verify them and certify devices for their measurement.  
Food Labelling Act , 2013/Consumer 
Affairs Agency  Ensures a unified food -labelling system, by establishing standards and 
specifying other necessary information regarding the labelling of food 
that is intended for sale (see below).  
Source:  Information provided by the authorities.  
3.102.   Over the review period, amendments were made to some of these laws.  
3.103.   Amendments  to the Industrial Standardization Act, effective 1 July 2019, were to: expand 
the scope of standardization to: services; programmes and other electronic records and business 
management systems; simplify the process for establishing JISs (see below); strengthen penalties 
to ensure the reliability of the JIS mark104; and promote public and private standardization 
activities.105  
3.104.   In 2017, the Law Concerning Standardization of Agricultural and Forestry Products was 
amended, and was renamed the Act on Japanese Agricultural Standards.  The overall aim of the 
amendments was to expand a standardization framework for contributing to the sound development 
of industries related to agriculture, forestry and fishery, and to help protect the interests of general 
consumers. Under the previous La w, the scope of Japanese Agricultural Standards (JASs) was limited 
to the "quality" of covered goods, and amendments expanded the potential scope of JASs to include 
production processes; handling methods (related to services), and testing methods. Addition ally, 
the JAS accreditation framework was expanded, and a laboratory and inspector accreditation system 
was established (see below).106 In tandem with the aforementioned amendments, the Act on the 
Food and Agricultural Materials Inspection Center I ncorporate d Administrative Agency was amended 
to enable domestic operators to rapidly obtain certification if international standards are based on 
JASs.107 The authorities confirmed that , presently , no international standards are based on JASs.   
3.105.   The Building Standard Law was amended in 2018 (Act No. 67 of 2018) to improve building 
safety, particularly considering recent large -scale fires and technological developments relating to 
fire prevention. Main changes related to: ensuring the safety of buildings and urban areas ; utilizing 
existing building stock; and promoting the maintenance of wooden buildings.108 
                                                
104 Any juridical person who violates the Act, i.e. entities which indicate JIS marks on their products 
without a valid certificate, or which do not obey an o rder by a competent minister, will be fined up to JPY 100 
million (it was JPY 1 million before the amendment). The maximum fine for individuals remains unchanged, at 
JPY 1 million.  
105 Industrial Standardization Act. Viewed at (in Japanese): 
https://www.meti .go.jp/policy/economy/hyojun -kijun/jisho/jis.html.  
106 MAFF, About the new JAS system . Viewed at: http://www.maff.go.jp/j/jas/h29_jashou_kaisei.html . 
107 Business rules were established so that the FAMIC can certify international standards certification 
bodies. MAFF, About the new JAS system . Viewed at: http://www.maff.go.jp/j/jas/h29_jasho u_kaisei.html . 
108 Ministry of Land, Infrastructure, Transport and Tourism , About law (2018 law 67th) which revises a 
part of Building Standard Law . Viewed at: 
http://www.mlit.go.jp/jutakukentiku/build/jutakukentiku_house_tk_000097.html . WT/TPR/S/397 • Japan  
 
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3.3.2.2   Standards  
3.106.   There  are two types of standards in Japan: the JIS and the JAS.  
3.107.   JISs are drafted by interested parties or by industrial associations entrusted by the 
competent ministry. The draft is sent to the competent minister and, thereafter, the Japan Industrial 
Standards Committee undertakes its deliberation/consultation work, which includes a 60 -day period 
for public comment. Once completed, the draft is reporte d to the competent minister, to be 
established or revised as a JIS and notified in the Official Gazette. To speed up the development of 
a JIS, amendments to the Industrial Standards Act in 2019 (see above) enabled JIS drafts to be 
proposed by private assoc iations which are accredited by the competent minister as having expertise 
in developing JISs, thus skipping the Committee deliberation phase (the 60 -day public comment 
period remains a requirement).109 Each JIS is reviewed every five years, which can result  in 
withdrawal of outdated standards.110 As at end -March 2019, there were 10,773  JISs (Table  3.15). 
According to the authorities, the number of JISs with corresponding international standards was 
6,062 (end -March  2019), and other JISs (4,711) have no corresp onding international standards 
because the target products' features are exclusively for the domestic market. The proportion of 
those JISs which are harmonized with, or which modified, ISO or IEC international standards 
(according to the definition of ISO/ IEC Guide 21 -1), was 97%.  
Table 3.15 JISs established, revised, and withdrawn, April 2018 -March 2019  
 
Number of 
newly 
established  
JISs Number of 
revised  JISs Number of 
JISs 
withdrawn  JISs in force 
at end -March 
2019 
Civil engineering and architecture  14 27 0 601 
Mechanical engineering  46 38 8 1,778  
Electronic and electrical engineering  35 90 43 1,731  
Automotive engineering  9 12 4 367 
Railway engineering  1 10 3 151 
Shipbuilding  0 0 0 391 
Ferrous materials and metallurgy  6 23 1 461 
Non-ferrous materials and metallurgy  1 12 2 391 
Chemical engineering  20 67 5 1,782  
Textile engineering  6 2 0 237 
Mining  5 4 2 170 
Pulp and paper  1 1 0 80 
Management system s 4 8 0 105 
Ceramics  5 15 0 390 
Domestic wares  3 4 0 201 
Medical equipment and safety 
appliances  20 26 8 575 
Aircraft and aviation  0 0 0 8 
Information processing  7 6 5 468 
Miscellaneous packing,  welding,  
radioactivity, etc.  13 18 9 886 
Total  196 363 90 10,773  
Source:  Information provided by the authorities.  
3.108.   According  to the authorities, a pproximately 7,522 domestic and 1,005 foreign factories in 
24 countries and economies are certified to affix JIS marks (JIS Mark scheme). The authorities state 
that domestic and foreign factories are treated in the same manner regarding certification of th e JIS 
marks, and the JIS Mark scheme is internationally harmonized, based on ISO/IEC 17065. As at 
March 2019, 24 organizations were accredited as JIS mark certification bodies.  
3.109.   JASs are proposed either by the MAFF or by the private sector, and are drafted by a project 
team. With respect to technical regulations, the JAS draft is notified to the WTO, giving a 60 -day 
comment period. For non -compulsory JASs, a 30 -day public comment period is provided for.111 The 
                                                
109 Japanese Industrial Standards Committee, Flowchart of JIS development . Viewed at: 
https://www.jisc.go.jp/eng/jis -act/flow-dev.html . 
110 WTO document WT/TPR/M/351/Add.1, 27 April 2017.  
111 As indicated by the authorities, there was virtually no demand for public hearings; the most recent 
was held around 20 years ago.  WT/TPR/S/397 • Japan  
 
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draft is then submitted to the JAS Council for a f inal decision. JASs are issued as public notices, as 
specified in the Act on Japanese Agricultural Standards. As at March 2019 , there were 73 JASs. 
During the period from April 2016 to March 2019, 12 new standards were established, 46 were 
revised, and 1 w as abolished. At the time of the previous review, 78% of JASs were harmonized 
with international standards. Those not in harmony include canned asparagus and fruit juices. Except 
for the JAS for Organic Plants, the JAS for Organic Processed Foods, and the JAS for Organic 
Livestock and Organic Livestock Products (see below), JASs are voluntary. The JAS Law allows third -
party organizations to certify operators (i.e. manufacturers) to allow them to affix JAS marks. I n 
2017, the JAS certification framework was expanded, and a registered testing company system was 
established under  which the MAFF registers testing organizations that meet international 
standards .112 The Minister of Agriculture, Forestry and Fisheries, registered certifying bodies (RCBs) 
and register ed overseas certifying bodies (ROCBs) are responsible for monitoring and managing JAS 
marks.113 Foreign producers or manufacturers that are certified by RCBs and ROCBs may conduct 
their own grading and affix the JAS marks to their products. The authorities i ndicated that, as at 
March 2019, there were 22 ROCBs and 79 domestic RCBs. There are around 3,000 foreign certified 
operators and around 8,000 domestic certified operators.  
3.3.2.3   Technical regulations   
3.110.   With respect to the drafting of technical regulations and m andatory JASs, the 
development/consultation process is generally as follows: the agency responsible hears opinions 
from stakeholders, and prepares the draft of a technical regulation. The agency submits the draft to 
its relevant advisory council, which is generally composed of representatives from industry, 
academics, and consumer groups, for deliberation. The advisory council then deliberates the draft, 
and prepares its proposal; comments submitted from all stakeholders (including foreign businesses) 
are taken into consideration (a 60 -day period is provided for comments). A report is made of the 
result, and is sent to the competent minister. Finally, a public announcement of the technical 
regulation is published in the Official Gazette.114 The procedure for r evising and withdrawing 
technical regulations is basically the same as the procedure for preparing, adopting and applying 
them. As indicated by the authorities, no data is available on the number of technical regulations in 
force.  
3.111.   As reported by the authorities, regarding regulations on vehicle safety and environmental 
protection, Japan has taken measures such as the introduction of international regulations into its 
national regulations with respect to International Whole Vehicle Type Approval under the UN/ECE 
World Form for Harmonization of Vehicle Regulations. The authorities indicated that Japan adopted 
16 UN/ECE World Forum technical regulations out of the existing 20 . 
3.112.   There are three mandatory JASs: the JAS for Organic Plants (which was revised i n 2017), 
the JAS for Organic Processed Foods (revised in 2017 and 2018), and the JAS for Organic Livestock 
and Organic Livestock Products. The latter used to be a standard but was made a technical regulation 
in 2018.115  
3.3.2.4   Conformity assessment and inspection  
3.113.   Overseas  manufacturers of electrical and consumer products may undergo conformity 
assessment and certification conducted in foreign countries by foreign -registered conformity 
assessment bodies, in accordance with relevant laws (e.g. the Electrical Applianc es and Materials 
Safety Act and the Consumer Product Safety Act). Regarding the Consumer Product Safety Act, there 
are one foreign -registered and six domestically registered conformity assessment bodies. Regarding 
the Electrical Appliances and Materials Sa fety Act, there are seven foreign -registered and seven 
domestically registered conformity assessment bodies.116  
                                                
112 MAFF, About the new JAS system . Viewed at: http://www.maff.go.jp/j/jas/h29_jashou_kaisei.html . 
113 WTO document WT/TPR/S/243/Rev.1, 2 May 2011.  
114 WTO document WT/TPR/M/351/Add.1, 27 April 2017 . 
115 WTO documents G/TBT/N/JPN/580, 10 January 2018 (with addendum); G/TBT/N/JPN/581, 
10 January 2018 (with addendum); and G/TBT/N/JPN/603, 5 July 2018.  
116 At the time of the previous Review, a list of registered conformity assessment bodies was provided. 
WTO d ocument WT/TPR/M/351/Add.1, 27 April 2017.  WT/TPR/S/397 • Japan  
 
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3.114.   Japan accepts test data on chemical products developed in other countries, based on OECD 
Test Guidelines, OECD Good Laboratory Practice principle s, and the Decision of the OECD Council 
Concerning the Mutual Acceptance of Data in the Assessment of Chemicals.117  
3.115.   The METI has designated 24 inspection bodies, of which 7 are foreign. They include: 7 bodies 
under the Consumer Product Safety Act, 14 under the Electrical Appliances and Materials Safety Act, 
2 under the Act on the Securing of Safety and the Optimization of Transaction of Liquefied Petroleum 
Gas, and 1 under the Gas Business Act.   
3.3.2.5   Labelling requirements  
3.116.   Labelling  requirements are contained in various laws: the Food Labelling Act; the Consumer 
Product Safety Law; the Household Goods Quality Labelling Act; the Electrical Appliances and 
Materials Safety Act; the Industrial Safety and Health Act; the Act Concerning Business Associations 
and Measures for Securing Revenue from the Liquor Tax; and the Fertilizer Regulation Act. Over the 
review period, "labelling standards for manufacturing process and quality of wine"118, established by 
the National Tax Agency, entered into force in 2018.   
3.117.   The 20 13 Food Labelling Act, which entered into force in 2015, sets out nutritional labelling 
requirements and the inclusion of allergen information on imported and domestically produced pre -
packaged processed food products.119 The Act was amended in 2018 (Act No.  97 of 2018) to increase 
the transparency of food -related business operators and to improve food safety for consumers. 
Amendments included requirements for food -related business operators to notify government 
agencies when they recall foods that are not la belled according to food -labelling standards, and the 
application of fines for non - or false reporting.120 The implementing regulation for the Food Labelling 
Act is the Food Labelling Standard (Ordinance of the Cabinet Office No. 10 of 2015, as amended) . 
At the time of the previous Review, Members raised the issue of the Act's labelling requirements for 
plant products containing chemical substances applied post -harvest, a requirement that is not 
required for such substances applied pre -harvest. As explained b y the authorities, this relates to 
whether such substances are considered as pesticides (if applied pre -harvest) or food additives (if 
applied post -harvest); some Members noted that this labelling requirement places more burden on 
trading partners than on Japanese producers.121  
3.118.   The Food Labelling Standard covers all food and drink sold in Japan. Importers are 
responsible for ensuring that their products are properly labelled (standard -compliant product 
labelling is not required at the time of customs clearan ce).122 An amendment to the Food Labelling 
Standard in September 2017 (Cabinet Office Ordinance No. 43 of 2017) introduced the requirement 
to indicate on the label the place of origin of the heaviest ingredient of those contained in the final 
product; this a pplies to all processed foods domestically produced and sold123, with the exception of 
                                                
117 As reported at the time of the previous Review, a trading partner that wants its data to be accepted 
under the scheme of OECD Mutual Acceptance of Data must be an OECD member, with a recognized national 
complian ce programme, or a full adherent to the Council Acts related to the Mutual Acceptance of Data in the 
Assessment of Chemicals. WTO document WT/TPR/M/351/Add.1, 27 April 2017 (pg. 209).  
118 National Tax Agency, About the "Product Quality Labeling Standard for Fruit Sake" . Viewed at: 
https://www.nta.go.jp/taxes/sake/hyoji/kajitsushu/index.htm . 
119 Food Labelling Act. Viewed at: 
https://www.caa.go.jp/policies/policy/food_labeling/food_labeling_act/#laws . 
120 CAA (in Japanese). Viewed at: 
https://www.caa.go.jp/policies/policy/food_labeling/food_labeling_act/amendment_001/pdf/amendment_001_
190122_0001.pdf . 
121 USTR , Foreign Trade Barriers . Viewed 
at: https://ustr.gov/sites/default/files/files/Press/Reports/2018%20National%20Trade%20Estimate%20Report
.pdf. 
122 USDA, GAIN Report . Viewed at: 
https://gain.fas.usda.gov/Recent%20GAIN%20Publications/An%20Overview%20of%20the%20Food%20Labeli
ng%20Standar d_Tokyo_Japan_5 -26-2017.pdf . 
123 Japan's notifications to the WTO regarding this amendment are: G/TBT/N/JPN/551, 27 March 2017; 
G/TBT/N/JPN/551/Add.1, 21 July 2017; G/TBT/N/JPN/551/Add.2, 4 October 2017; and 
G/TBT/N/JPN/551/Add.3, 17 November 2017. The Add.1  and Add.2 documents contain explanatory materials 
on the new labelling system. The Add.3 document contains a link to an English translation of a comparison of 
provisions prior to and after the amendment.  WT/TPR/S/397 • Japan  
 
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a few items, for which separate standards apply.124 There is a transition period for compliance, which 
ends in 2022. Previously, the requirement was for specified processed foods to be labelled with the 
place of origin of the heaviest ingredient, provided it was over 50% of the product's weight.125 For 
imported processed foods, the country of origin of the product must be labelled (labelling the place 
of origin of ingredients i s not required). In May 2018, a further amendment to the Standard 
introduced a new labelling method for aseptic filling tofu; introduced labelling requirements for 
fungicides used for food; expanded the foods for which fungicides (fludioxonil) can be used;  and 
provided for "Mortadella Bologna" to be labelled as "Bologna sausage" as the generic term of the 
product.126  
3.119.   The Food Labelling Standard provides the legal basis for GM labelling requirements. 
Presently, the list of GM products that need to be labelled  comprises eight crops (soybeans, corn, 
rapeseed, potatoes, cottonseed, alfalfa, papaya, and sugar beet) and 33 kinds of designated 
processed food, mainly made of soybeans or corn; papaya; and processed foods containing papaya 
as a main ingredient.127 In Mar ch 2018, the report of an expert panel on GM labelling was compiled; 
it led to an amendment to the Food Labelling Standard, to ensure that "non -GM" labels may only be 
used if it is confirmed that the product is not comingled with GM products at all (previo usly the label 
could still be used with 5% GM comingling of soybean and corn).128  
3.120.   Other  developments over the review period were: (i) the introduction of new labelling 
requirements for pressure cookers and autoclaves for home use, as well as lighters (throu gh 
revisions to the Ministerial Ordinance of the Consumer Product Safety Law )129; (ii) "hats" were added 
to the Textile Goods Quality Labelling Regulation,  and "thermos bottles made of stainless steel for 
table use" were added to the Miscellaneous Manufactur ed Goods Quality Labelling Regulation (these 
Regulations fall under the Household Goods Quality Labelling Act); and (iii) fertilizer labelling 
requirements were simplified.130  
3.3.3   Sanitary and phytosanitary (SPS) requirements  
3.3.3.1   SPS measures  
3.121.   The Standards Informa tion Service , within the International Trade Division of the MOFA's 
Economic Affairs Bureau , remains Japan's enquiry point and national notification authority under the 
SPS Agreement. Over the review period,  Brazil raised a specific trade concern regarding Japan's  
restrictions on avocados .131 Japan is a member of the Codex Alimentarius Commission a nd the World 
Organization for Animal Health ( OIE), and is a contracting party to the International Plant Protection 
Convention.  
3.122.   The key agencies responsible for SPS measures are contained in Box 3.2; there were no 
major changes to this institutional framew ork over the review period.  
3.123.   Between January 2017 and early September 2019, Japan submitted 187 regular notifications 
to the WTO Committee on Sanitary and Phytosanitary Measures. Three  were emergency 
notifications.132 All notified measures related to interna tional standards, guidelines or 
recommendations.  
                                                
124 The following items have separate standards, whic h set out the ingredients that are subject to 
mandatory country of origin labelling: (i) pickled agricultural products (top 4 or 3 agricultural ingredients which 
constitute 5% or more); (ii) frozen vegetable products (top 3 predominant ingredients, which c onstitute 5% or 
more); (iii) processed eel products and eel; (iv) dried bonito flakes and dried bonito; and (v) rice balls.  
125 WTO. Viewed at: https://members.wto.org/crnat tachments/2017/TBT/JPN/17_5119_00_e.pdf . 
126 WTO document G/TBT/N/JPN/598, 7 June 2018.  
127 WTO document WT/TPR/S/351/Rev.1, 20 June 2017.  
128 WTO document G/TBT/N/JPN/608, 10 Oct ober 2018.  
129 WTO document G/TBT/N/JPN/596, 1 May  2018.  
130 WTO document s G/TBT/N/JPN/590, 15 March  2018; and G/TBT/N/JPN/ 591, 15 March 2018.  
131 WTO. Viewed at: https://www.wto.org/english/news_e/news19_e/sps_22jul19_e.htm . 
132 WTO SPS IMS. Viewed at: http://spsims.wto.org/ . WT/TPR/S/397 • Japan  
 
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Box 3.2 Key agencies responsible for SPS measures  
MAFF  
Food Safety and Consumer Affairs Bureau  
 Responsible for SPS measures relating to animal feed, animals, pla nts, veterinary drugs, etc.  
Ministry of Health, Labour and Welfare (MHLW)  
Pharmaceutical Safety and Environmental Health Bureau  
 Responsible for the administration of food safety, including specifications and standards for food, food 
additives, pesticide residues, animal drug residues, radioactive materials, GM foods, food containers, 
inspection, and safety measures for food.  
Cabinet Office – Food Safety Commission  
 Conducting risk assessment on food, and making recommendations to relevant ministries  
 Implementing risk communication among stakeholders, e.g. consumers and business operators  
 Responding to food -borne accidents and emergencies.  
Ministry of the Environment  
 Responsible for managing risks to the environment from imports , including from invasive alien species.  
MAFF and MHLW  
 Responsible for SPS measures relating to fish and fishery products (the MAFF is responsible for animal 
(including aquatic) health. The MHLW is responsible for food safety (including the establishment of criteria 
or standards for food and monitoring, and guidance of food distributed in Japan, including imported food)).  
Source:  WTO document WT/TPR/S /351/Rev.1, 20 June 2017.  
3.124.   As reported by the authorities during its last Review, SPS measures in Japan are in general 
based on relevant international standards or, where its measures do not conform to those, on 
scientific risk assessment.133 Risk assessments undertaken by the Food Safety Commission of Japan 
(FSCJ) are available on its websit e.134 Likewise, risk analyses for phytosanitary measures undertaken 
by the Risk Analysis Division of the Plant Protection Station are published online.135 However, during 
Japan's previous Review, various Members raised the issue of Japan's alignment with inter national 
Codex standards with respect to maximum residue limits (MRLs) and additives standards, and with 
OIE rules with respect to import restrictions on beef, poultry and other animal products. Japan 
responded to these questions at the time of its previou s Review.136 As indicated by the authorities, 
since its last Review, Japan has allowed beef imports from Austria and the United Kingdom, and 
lifted age restrictions to beef imported from Canada, Ireland and the United States. It has also 
started reviewing th e portions of commodities to which MRLs apply, with a view to harmonizing them 
with Codex standards.   
3.125.   Regarding food safety of imported foods, Japan accepts the results of inspections by 
inspection agencies that foreign governments recognize as having cer tain control by foreign 
government agencies and that have internationally valid inspection accuracy. Items for which the 
sanitary conditions are liable to change during transport by ship or air (for example, bacteria and 
mycotoxin) are excluded.137 
3.3.3.2   Legislati ve framework  
3.3.3.2.1   The Food Safety Basic Act  
3.126.   The Food Safety Basic Act falls under the responsibility of  the Food Safety Commission of 
Japan (FSCJ) and  the Consumer Affairs Agency.138 It aims to comprehensively promote policies to 
ensure food safety by: establishi ng basic policy principles; clarifying the  responsibilities of national 
and local governments and food -related business operators , and the roles of consumers; establish ing 
                                                
133 WTO document WT/TPR/M/351/Add.1, 27 April 2017  
134 FSCJ risk assessments are available (in Japanese) at: http://www.fsc.go.jp/hyouka/index.html .  
135 MAFF, Phytosanitary risk analyses (in Japanese) are available at: 
http://www.maff.go.jp/j/ syouan/keneki/kikaku/pra.html ; and 
http://www.maff.go.jp/j/syouan/keneki/kikaku/prareport.html . 
136 WTO document WT/TPR/M/351/Add.1, 27 April 2017.  
137 MHLW, List of Foreign Official L aboratories. Viewed at: 
https://www.mhlw.go.jp/english/topics/importedfoods/1 -10.html.  
138 FSCJ, Food Safety Basic Act (in Japanese). Viewed at: 
http://www.fsc.go.jp/hourei/index.da ta/kihonhou_20180615.pdf . WT/TPR/S/397 • Japan  
 
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a basic direction for policy formulation ; and set ting out the mandate of the FSCJ. There were minor 
amendments to the Act in 2018,  to reflect amendments to other laws.  
3.3.3.2.2   The Food Sanitation Act  
3.127.   The Food Sanitation Act, which falls under the responsibility of the MHLW, aims to prevent 
eating - and drinking -related sanitation hazards , through measures to ensure food safety.139 The Act 
applies to food and drink. Its implementing regulations are the  Order for Enforcement of the Food 
Sanitation Act (Cabinet Order No. 229, 1953), last amended in 2017, and the Ordinance for 
Enforcement of the Food Sanitation Act (Ordinance of the MHLW No 23, 1948), last amended in 
2018.   
3.128.   Over the review period, amendments were made to the Act (in 2018) to reflect changing 
dietary patterns and the environment surrounding food in Japan, as well as to increase hygiene 
controls to be compatible with international standards and prevent interregional food poisoning 
cases.140 New provisions directly related to imports and exports are: (i) meat and poultry meat, 
which are foods where control process es are particularly important to prevent the occurrence of 
health effects, may not be imported into Japan unless they are manufactured at facilities where the 
competent authorities of the exporting country confirm that food hygiene controls based on hazard  
analysis and critical control points (HACCP) principles are in place; and (ii) a requirement to attach 
a health certificate, which describes the status of hygiene control issued by the exporting country, 
regarding the import of food whose risk increases d epending on hygiene practices (namely: milk, 
milk products, oysters to be eaten raw, and puffer fish).  Other amendments include: strengthened 
cooperation between national and local governments with respect to interregional food poisoning 
cases; institution alized food hygiene controls for food business operators based on HACCP principles; 
tightened sanitary regulations for utensils, containers and packaging for food and food additives; 
revision of the licensing system for food businesses and the establishmen t of a notification system 
for the same; and the establishment of a reporting system for food recalls.141  
3.129.   Under the Act , the MHLW is responsible for establishing MRLs for agricultural chemicals 
(pesticides, feed additives and veterinary drugs). Foreign coun tries may apply to the MHLW to 
establish or revise MRLs for newly approved agricultural chemicals used in/on foods exported to 
Japan. In this regard, an application must be made to the MHLW, and risk assessments are 
undertaken by the FSCJ.142 Some concerns w ere expressed about the length of the review process 
for the registration of new pesticides and the establishment of MRLs.143 In this connection, Japan 
indicated that it has decided to streamline an approval process for pesticides and food additives by 
utilizing a unified application and deliberation process. Notifications on standard processing periods 
are published online.144 For items where no MRLs have been established, Japan maintains a positive 
list system for agricultural chemicals, so as to generally pr ohibit the distribution of foods that contain 
agricultural chemicals above a certain level. As indicated by the authorities, when violations of MRL 
standards are found in imported foods, Japan clarifies the increased surveillance measures for the 
targeted food and the requirements for lifting them. In so doing, it takes in consideration the test 
results and the status of control for pesticide residues in the exporting country; measures are based 
on the relevant Codex guidelines, and try to minimize the burd en on the exporting country. S ince 
Japan's previous Review, the following standards of pesticide residues and additives in f ood have 
been established, revised or revoked: colistin sulfate and virginiamycin; salinomycin; L -carnitine; 
alkaline protease; chlo rpropham; and guanidinoacetic acid.145  
                                                
139 MHLW, Food Sanitation Act (in Japanese). Viewed at: 
https://www.mhlw.go.jp/content/11131500/000345801.pdf . 
140 WTO, . G/SPS/N/JPN/552, 17 January 2018 and its r elated link.  Viewed at: 
https://members.wto.org/crnattachments/2018/SPS/JPN/18_0425_00_e.pdf . 
141 MHLW, Amendment of the Food Sanitation Act . Viewed at: 
https://www.mhlw.go.jp/stf/seisakunitsuite/bunya/kenkou_iryou/shokuhin/yunyu_kanshi/index_00016.html . 
142 Risk assessments are undertaken under  the provisions of the Food Safety Basic Act.  
143 USTR, Foreign Trade Barriers . Viewed at: 
https://ustr.gov/sites/default/files/files/Pre ss/Reports/2018%20National%20Trade%20Estimate%20Report.pdf . 
144 Standard processing period notification s are available online at: https://www.mhlw.go.jp . 
145 These were notified to the WTO in documents: G/SPS/N/JPN/523, 5 23/Corr.1, 24 July 2017 
/28 July 2017; G/SPS/N/JPN/524, 25 July 2017; G/SPS/N/JPN/564, 20 February 2018; G/SPS/N/JPN/580, 
21 June 2018; G/SPS/N/JPN/604, 22 November 2018; and G/SPS/N/JPN/619, 13 February 2019.  WT/TPR/S/397 • Japan  
 
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3.130.   As set out in the Act, when food and related products are imported into Japan, an import 
notification must be submitted to the Quarantine Station, containing information such as food 
ingredients, processing method and food additives. The MHLW's food sanitation inspectors undertake 
a documentary check to ensure compliance with standards set in the Food Sanitation Act; import 
inspections are undertaken if deemed necessary. An inspection order lists the various foods from all 
or specified trading partners which are subject to mandatory inspection.146 As noted in the previous 
Review, imported food may be exempt from inspection if a cargo is inspected by an official inspection 
organization in the exporting country which is registered with the Government of Japan and bears 
the result of the inspection; e xclusions apply to items whose characteristics may change during 
transportation. As at April 2019, 4,085 foreign testing laboratories were so registered in Japan.  
3.3.3.2.3   The Plant Protection Act  
3.131.   The Plant Protection Act, which falls under the responsibility of t he MAFF, provides the legal 
basis for regulations on plant protection , including quarantine for local, imported and exported 
plants.147 There were no changes to the Act over the review period. The Act's main implementing 
regulation is the Ordinance for Enfor cement of the Plant Protection Act .148 As notified by Japan to 
the WTO, revisions of the Ordinance's annex tables (relating to: quarantine pests; p lants subject to 
field inspection in exporting countries ; import prohibited plants ; and plants subject to speci fic 
phytosanitary measures to be carried out in exporting countries) will enter into force in January 
2020.149  
3.132.   All non -prohibited plants and plant products are subject to quarantine inspection. Importers 
must submit an "application for import plant inspecti on" to the Plant Protection Station at the point 
of entry, together with the phytosanitary certificate issued by the national plant protection 
organization of the exporting country.150 Import inspections are conducted upon the goods' arrival.   
3.133.   Over the revie w period, Japan notified the WTO of new measures to reduce the risk of the 
introduction of Candidatus Liberibacter solanacearum  through the import of carrots (seeds and 
seedlings) and celery (seedlings)151 and of Xylella fastidiosa  through the importation of  host plants 
for planting (excluding seeds and fruit).152 
3.3.3.2.4   Act on Livestock Infectious Diseases Control  
3.134.   The Act on Livestock  Infectious Diseases Control falls under the MAFF's responsibility.153 It 
aims to protect and promote the livestock industry , by preventing the outbreak and spread of 
infectious diseases in livestock . Over the review period , there were minor amendments to the Act in 
order to reflect amendments to other laws .  
3.135.   Under the Act (Chapter IV), a certificate of quarantine inspection issued by the governmental 
authority in the exporting country is required for: (i) animals, their carcasses or bones, meat, eggs, 
skin and hide, hair, and their containers and packing; (ii) straw fro m grain (with some exceptions) 
and forage for feed; and (iii) bedding material. Imports must arrive at designated locations.  
Inspections are undertaken by the Animal Quarantine Service.  
                                                
146 MHLW. This inspection order was viewed at: 
https://www.mhlw.go.jp/english/topics/importedfoods/16/schedule01.html . 
147 Plant Protection Act. Viewed at: 
http://www.japaneselawtranslation.go.jp/law/detail/?ft=1&re=2&dn=1&x=0&y=0&co=01&ia=03&ky=plant+pr
otection+act&page=22 . 
148 Ordinance for Enforcement of the Plant Protection Act. Viewed (in Japanese) at: 
http://www.maff.go.jp/pps/j/law/houki/shorei/shorei_12_html_12.html .  
149 Japan notified the WTO of proposed changes to these lists in 2019. WTO document 
G/SPS/N/JPN/620, 4 March 2019; and of the revision itself in WTO document G/SPS/N/JPN/620/Add.1, 7 
August 2019.  
150 Plant Protection Station, Import and Export Plant Quarantine – FAQ. Viewed at: 
http://www.pps.go.jp/english/faq/index.html . 
151 WTO document G/SPS/N/JPN/383/A dd.1,11 January 2017.  
152 WTO document G/SPS/N/JPN/405/ Add.2, 11 January 2017.  
153 The Act on Livestock Infectious Diseases Control. Viewed at: https://elaws.e -
gov.go.jp/search/elawsSearch/elaws_search/lsg0500/detail?lawId=326AC1000000166 . WT/TPR/S/397 • Japan  
 
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3.136.   Japan's Third Free Countries List catalogues the countries/areas consi dered to be free from 
various livestock diseases and are, hence, eligible to export to Japan. There are four sub -lists: (i) 
cloven -hoofed animals and meat; (ii) cervid animals or deer meat, etc; (iii) pigs and pig meat, etc.; 
and (iv) poultry and poultry m eat, etc.154 Imports from all other countries/regions are prohibited.  
3.137.   In November 2017, Japan introduced new animal quarantine regulations for raw milk and/or 
milk products155; imports must be accompanied by an inspection certificate issued by the competent 
authority of the exporting country, and dairy imports (and exports) are subject to inspection by the 
Animal Quarantine Service at designated entry points.156  
3.3.3.2.5   Agricultural Chemicals Control Act  
3.138.   The Agricultural Chemicals Control Act falls under the responsibi lity of the  MAFF  and the 
Ministry of Environment.157 It was amended in 2018 (Act No. 53 of 2018) in order to improve 
pesticide safety and contribute to more efficient agriculture. Amendments include: (i) the 
introduction of a re -evaluation system; and (ii) t he revision of evaluation for registration.158 From 
April 2020, risk assessment for pesticide operators and honeybees is to be introduced, and target species of 
animals and plants are to be added for ecological risk assessment.159 
3.3.3.2.6   Other  
3.139.   As indicated by the aut horities, from a food safety perspective, there are no hormone -specific 
regulations in Japan; they are subject to the same regulations as other veterinary drugs. With 
respect to hormone -fed animals (no products), there are no restrictions on imports. In th is regard, 
the authorities indicated that if "hormones" means Zeranol, r -BST or Ractopamine for growth 
promotion, they are not allowed to be used on animals, since they are not approved as veterinary 
drugs nor designated as feed additives.  
3.140.   The MHLW ensure s the safety of GM foods through safety assessments by the Food Safety 
Commission, which are based on scientific data. Without passing the safety assessment, GM foods 
and foods using them as raw materials, cannot be produced, imported or marketed.  
3.141.   In March 2011 , soon after the accident  at the Tokyo Electric Power Co. (TEPCO) Fukushima 
Daiichi Nuclear Power Station , Japan  started decontamination of crop land and fruit trees  and 
introduced control s over feeds and agricultural inputs . It also introduced  a risk -based food 
monitoring scheme  which is based on  Codex standards for radioactive caesium in food  but, 
apparently in practice, is even more stringently applied . Enforced by the national laws, food products 
that exceed this stringent maximum level are r ecalled and disposed of . As reported by the 
authorities, due to these measures , food products exceeding the Japanese maximum level drastically 
decreased after the accident , and detection rates  have remain ed low and stable for many years. 
They further indic ated that t he purpose of sampling  is to detect contamination or to remove 
restrictions ; most detections were limited to the wild harvest monitored at areas where distribution 
is already restricted. The authorities reported that, s ince early 2013 (the last case in April), none of 
the farm products and fishery harvests have exceeded the Codex guideline level defined as safe for 
human consumption, and even the wild edible fungi, fern sprout and leaf buds have not exceeded 
the level for food for small -scale consumption . The only harvests which still exceed the level are 
certain game meat, although the detection rate is very low, and those detected are neither 
distributed nor exported.  
                                                
154 MAFF, The Third Fr ee Countries List . Viewed at: http://www.maff.go.jp/aqs/english/news/third -
free.html . 
155 Previously, only raw milk fell within the scope of animal quarantine in terms of milk and dairy 
products.  
156 MAFF, Animal quarantine inspection for dairy products . Viewed at: 
http://www.maff.go.jp/aqs/topix/dairy_products_en.html . 
157 Agricultural Chemicals Control Act. Viewed (in Japanese) at: https://elaws.e -
gov.go.jp/search/elawsSearch/elaws_search/lsg0500/detail?lawId=323AC0000000082 . 
158 WTO document G/SPS/N/JPN/593, 1 August 2018; and MAFF (in Japanese). Viewed at: 
http://www.maff.go.jp/j/nouyaku/n_kaisei/h300615/attach/pdf/index -18.pdf . 
159 WTO docume nt G/SPS/N/JPN/624, 20 March  2019.  WT/TPR/S/397 • Japan  
 
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3.3.4   Competition policy and price controls  
3.3.4.1   Competition policy  
3.142.   Competition policy continues to be governed by the  Act on Prohibition of Private 
Monopolization and Maintenance of Fair Trade of 1947 (the Anti-Monopoly Act , or AMA)  (last 
amended in 2019, see below) , which aims to promote , inter alia , fair and free competition, stimulate 
the creative initiative of entrepreneurs, and encourage business activities for enhanced economic 
development and consumer welfare.160 The Japan F air Trade Commission (JFTC) is the  agency 
responsible for implementing the AMA . To ensure further tran sparency of law enforcement and to 
improve predictability for business operators, the JFTC issued guideline s on various monopoly or 
unfair trade issues under the AMA , and detailed rules on investigation. All the legislation and 
implementing rules are publi shed on the JFTC 's official website.161  
3.143.   During the review period , the main prohibitions under the AMA remained unchanged . They 
cover unreasonable restraint of trade,  exclusionary  private monopolization, unfair trade practices, 
and business combination.  Under exclusionary  private monopolization, four typical conducts, 
consisting of  "below -cost pricing ", "exclusive dealing ", "tying" and "refusal to support and 
discriminatory  treatment ", are considered most likely to fall into the prohibited conducts  category . 
According to the authorities, there are not many private monopolization cases in Japan. Regarding 
mergers and acquisition s, the JFTC maintains guidelines (issued on 31 May 2004 (last updated on 
14 June 2011)), through which it clarifie s the principles underlying the determination of whether a 
merger or acquisition  would restrai n competition . In FY2017 and FY201 8, the JFTC received 206 and 
321 notifications of busin ess combination plan s, respectively . The rule -of-reason approach  is 
generally used by the JFTC in investigations.  
3.144.   During the review period, the main regulatory change in this area was the AMA amendment 
introducing the Commitment Procedures under the CPTPP  (Section 2.3.2.1. 1, and below) . The 
amend ed AMA came into force on 30 December 2018, the same date as the CPTPP.162 The purpose 
of the Commitment Procedures is to establish a scheme to resolve suspected AMA violations by 
consent between the JFTC and the ent erprise concerned; as at end -October 2019 , there were no 
progress and plans  for the establishment of the scheme . According to the Procedures, where there 
is a suspicion of violation other than hardcore cartel such as price -cartel or bid -rigging cases, the 
JFTC and the enterprise can consult with each other and work out sufficient remedies to eliminate 
the violation. If such remedies are approved by the JFTC and are well-implemented, no orders will 
be issued by the JFTC. It is believed that the Commitment Pr ocedure s would facilitate early resolution 
of competition concerns , and contribute to the effective and efficient enforcement of the AMA through 
cooperation between the JFTC and alleged violators. To ensure the transparency and predictability 
of enforcement, the JFTC also established rules and policies , such as the "Rules  on Commitment 
Procedures by the Fair Trade Commission" in 2017 and the "Policies Concerning Commitment 
Procedures" in 2018.163  
3.145.   On 19 June 2019, the Antimonopoly Act (AMA) Amendment Bill was approved in the 198th 
ordinary session of the Diet, and the enacte d Act was promulgated on 26 June 2019. The purpose 
of the amended Act is to deter "unreasonable restraint of trade effectively, invigorate the economy, 
and enhance consumer interests by fair and free competition, through increasing incentives for 
enterpris es to cooperate in the JFTC 's investigation s and imposing an appropriate amount of 
surcharges according to the nature and extent of the violation. The enacted Act shall come into effect 
on the date specified in the Cabinet Order , within one year and six mo nths from 26 June 2019.  
                                                
160 JFTC, The Antimonopoly Act (AMA) . Viewed at: 
https://www.jftc.go.jp/en/legislation_gls/amended_ama09/index.html . 
161 Relevant legislation  can be viewed at: 
https://www.jftc.go.jp/en/legislation_gls/imonopoly_guidelines.html . 
162 Enactment of the Act for Partial Amendment of the Act on the Developmen t of Related Legislation 
Following the Conclusion of the Trans -Pacific Partnership Agreement . Viewed at: 
https://www.jftc.go.jp/en/pressreleases/yearly -2018/J une/180629_file/180629_1.pdf . 
163 Rules on Commitment Procedures by the Fair Trade Commission . Viewed at:  
https://www.jftc.go.jp/en/legislation_gls/antimonopoly_rules_files/rules_on_commitment_procedures_by_the_
fair_trade_commission.pdf ; and Policies Concerning Commitment Procedures . Viewed at:  
https://www.jftc.go.jp/en/legislation_gls/antimonopoly_rules_files/policies_concerning_commitment_procedur
es.pdf . WT/TPR/S/397 • Japan  
 
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3.146.   Several activities or business practices remain exempt from the scope of the AMA. 
Competition in these areas may be covered by other legislation and different institutions 
(Table  3.16). No other exemptions were introduced since 201 7. To ensure the smooth and 
appropriate pass -on of consumption tax when its rate is raised, the "Act Concerning Special Measures 
for Correcting Practices Impeding Consumption Tax Pass -on, etc. with the Aim to Ensure Smooth 
and Proper Pass -on of Consumption  Tax" was passed and promulgated in June 2013. The Act , which 
was valid until 31 March 2017 , came into effect on 1 October 2013. In November 2016, the Act was 
amended to be valid until 31 March 2021 , due to the postponement of the scheduled tax rate 
increa se (Sections 1.1 and 1.2) . The Act prohibits conduct including: refusal to shift consumption 
taxes by price reduction or slashing; and request to purchase goods, use of service, or provision of 
economic benefits in return for the acceptance of shifting of consumption taxes. It exempts pass -on 
cartels and representation  cartels by firms or trade associations from application of the AMA if the 
following requirements are met: prior notification submitted to the JFTC; with respect to pass -on 
cartels, two thirds or more of the participating firms must be small and medium -sized businesses; 
"decisions on agreement on prices " shall not be exempted; and , with respect to representation 
cartels, only the concerted practice in relation to decisions on representation methods concerning 
consumption taxes  is exempt . 
Table 3.16 Exemptions from the Anti -Monopoly Act (AMA), 2019  
Relevant ministries and 
agencies  Legislation  System  
1. Exemptions under the AMA (1 law, 3 systems)   
JFTC  Section 21  Acts under intellectual property 
rights  
 Section 22  Acts of cooperatives  
  Section 23  Resale price -maintenance 
contracts concerning published 
works  
2. Exemptions under various individual laws (16 laws, 21 systems)   
JFTC Act Concerning Special Measures for Correcting 
Practices Impeding Consumption Tax Pass -on, 
etc. with the Aim to Ensure Smooth and Proper 
Pass-on of Consumption Tax  Pass-on cartels  
Representation cartels  
Financial Services Agency  Insurance Business Act  Insurance cartels  
 Act on Non -Life Insurance Rating Organization 
of Japan  Certain conduct by non -life 
insurance rating bodies  
Ministry of Justice  Corporate Reorganization Act  Reorganization company's 
acquisition of its shares  
Ministry of Finance  Act Concerning Liquor Business Associations 
and Measures for Securing Revenue from 
Liquor Tax  Rationalization of cartels  
Ministry of Education, 
Culture, Sports, Science and 
Technology  Copyright Act Cartels on fees for secondary use 
of commercial phonograms  
MHLW   Act on Coordination and Improvement of 
Environmental Health Industry  Cartels to prevent excessive 
competition  
MAFF  Agricultural Cooperative Act  Certain conduct by agricultural 
cooperatives, federations of 
agricultural cooperatives, central 
unions of agricultural 
cooperatives , and agricultural 
producers' cooperative 
corporations  
METI Export and Import Transaction Act  Cartels on export  
 Act on the Organization of Small and Medium -
Sized Enterprise Association  Joint business activities  
 Small and Medium -Sized Enterprise 
Cooperatives Act  Certain conduct by federations of 
small business associations  
Ministry of Land, 
Infrastructure, Transport 
and Tourism  Marine Transportation Act  Maritime transportation cartels 
(international); and m aritime 
transportation cartels (coastal 
service)  
 Road Transportation Act  Transportation cartels  
 Civil Aeronautics Act  Aviation cartels (international); 
and a viation cartels (domestic)  WT/TPR/S/397 • Japan  
 
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Relevant ministries and 
agencies  Legislation  System  
 Coastal Shipping Association Act  Maritime transportation cartels 
(coastal service); and joint 
shipping businesses  
 Act Concerning Special Measures for Regulation 
and Vitalization of Public Motor Vehicle 
Transportation Services in Specified Area and 
Quasi -specified Area  Cartels to reduce supplied 
transportation capacity   
Source:  Information  provided  by the authorities.  
International arrangements and agreements  
3.147.   The JFTC remains actively involved in competition policy activities at multilateral 
frameworks , such as the International Competition Network, and those under the O ECD, the APEC, 
and the United Nations Conference on Trade and Development (UNCTAD). I t also  cooperates closely 
with foreign compet ition authorities through different types of agreements, including inter -agency  
memoranda of understanding (MoU s) and administrative agreements to conduct joint enforcement 
activities .164 During the review period, new agreements include d the inter -agency cooperation  MoUs 
with Canada (MoU, May 2017),  China (MoU, May 2019),  Mongolia (MoU, March 2017) and  Singapore 
(MoU, June 2017) .165  
3.148.   Most of Japan's RTAs contain  a competition -related  chapter  (Section 2.3.2.1) .166 In general, 
while respecting each party's domestic laws and regulations  in controlling  anti-competitive activities, 
focus is usually on the general principles that should be followed in competition enforcement, and 
the necessity  to enhance cooperation, coordination  and technical assistance .  
3.149.   Durin g the review period, the Japan -EU EPA (February 2019)  and the CPTPP  (December 
2018)  also included competition chapters.167 In the Japan -EU EPA, the two parties also emphasize 
the importance of non -discrimination, procedural fairness and transparency in compe tition 
enforcement , and the independence of compe tition agenc ies. They also agree to promote  
cooperat ion and coordinat ion between the competition  authorit ies within the framework of the 2003 
Agreement between the EC and Japan concerning  cooperation on anti -competitive activities.168 In 
the CPTPP, Japan , together  with other parties, focuses on the basic require ments on procedural 
fairness  and transparency, cooperation and technical cooperation. They also touch upon the private 
rights of action and consumer pro tection.169  
Enforcement  
3.150.   Japan maintains both a criminal enforcement system and a civil administrative enforcement 
route . The JFTC has the exclusive authority to impose administrative orders. With respect to criminal 
sanctions, the JFTC only has the authority to file criminal accusations with the Public Prosecutor's 
Office. An investigation on possible violations of the AMA may be initiated as a result of: a report 
from the general public, detection by the JFTC itself, notification by the Small and Medium Enterprise 
Agency, or a report by leniency applicants.  In addition, private damage actions may be brought by 
those affecte d by specific violations.   
3.151.   Japan maintains a 2005 leniency programme , under which , since 2009, a total of five 
violators and two or more violators belonging to the same company group are permitted to jointly 
file the application for surcharge  reduction  or immunity . In March 2019, the bill to amend the AMA 
was submitted to the Diet, to reform the leniency programme. The amendment allows the JFTC to 
reduce the amount of surcharges when enterprises submit information which contributes to the fact 
finding. It a lso abolishes the current limit on the number of leniency applicants. The bill was enacted 
                                                
164 Table 3.13  in WTO document WT/TPR/S/351/Rev.1 , 20 June 2017.  
165 JFTC, International  Agreements . Viewed at: 
https://www.jftc.go.jp/en/int_relations/agreements.html . 
166 Table 3.14 in WTO document WT/TPR/S/351/Rev.1 , 20 June 2017.  
167 JFTC, Implementing Agreement between the Government of Japan and the Government of Mongolia 
Pursuant to Article 1.12 of the Agreement between Japan and Mongolia for an Economic Partnership . Viewed 
at: https://www.jftc.go.jp/en/int_relations/agreements_files/EN_JMEPA_IA.pdf . 
168 Competition Policy. Viewed at: 
https://www.jftc.go.jp/en/int_relations/agreements_fil es/nichieuepaen.pdf . 
169 Competition Policy. Viewed at: https://www.jftc.go.jp/en/int_relations/agreements_files/TPP.pdf . WT/TPR/S/397 • Japan  
 
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and promulgated in June 2019. The amendment shall come into effect on the date specified by the 
Cabinet Order, and by no later than 25 December 2020.  
3.152.   Following an A MA amendment enacted on 26 June 2019 , the calculation period of the 
surcharge was increased from a maximum of three years to up to ten years before the start of an 
investigation . Criminal accusations may result in a fine of up to JPY 500 million for firms,  or 
imprisonment of up to five years and a fine of up to JPY 5 million for individuals. For many years 
now, civil administrative processes have largely remained the main method used for enforcement.  
During the review period, the number of investigated and processed cases, as well as the surcharge 
payment amounts, are described in Table 3.17.  
Table 3.17 Enforcement of competition policy, 2012 -18 
Details  Fiscal year  
2012  2013  2014  2015  2016  2017  2018  
(A) Cease -and-desist orders  
Number of cases  20 18 10 9 11 13 8 
Private monopolization  0 0 1 0 0 0 0 
Cartels  20 17 7 7 9 11 7 
Price-fixing  cartels  1 8 5 2 1 1 1 
Bid-rigging  19 9 2 5 8 10 6 
Unfair trade practices  0 1 2 0 2 1 1 
Commenced hearings  22 12 72 1 - - - 
(B) Surcharge payment orders  
Number of addressees  108 176 128 31 32 32 18 
Surcharge amount (JPY billion)  25.07  30.24  17.14  8.51 9.14 1.89 0.26 
Commenced hearings  25 13 70 0 - - - 
(C) Recently processed investigation cases  
Cases investigated         
Carry -overs from the previous 
fiscal year  9 13 10 11 15 21 25 
New cases begun during the 
current fiscal year  266 137 118 127 134 122 118 
Total  275 150 128 138 149 143 143 
Cases processed         
Legal measures         
Cease -and-desist orders  20 18 10 9 11 13 8 
Surcharge payment ordersa 0 0 0 0 0 0 0 
Sub-total 20 18 10 9 11 13 8 
Others         
Warnings  6 1 1 6 10 3 3 
Cautions  208 114 102 106 84 88 95 
Discontinued casesb 28 7 4 2 22 13 14 
Subtotalc 242 122 107 114 117 105 112 
Total  262 140 117 123 128 118 120 
Carry -overs to the next fiscal 
year 13 10 11 15 21 25 23 
Criminal accusations  1 1 0 1 0 1 0 
a Surcharge payment orders were made without a cease -and-desist order.  
b Discontinued due to lack of evidence of wrong -doing or a self-reported remedy by a business 
operator to be enough to remove competition concerns.  
c This subtotal includes the cases which the JFTC found to be in violation of the AMA but decided to 
close the investigation because the relevant violation had already ceased to exist.  
Source:  Information provided by the authorities.  
3.3.4.2   Price controls  
3.153.   According to the authorities , there are no controls  on the prices that can be charged for 
goods and servic es in Japan.   
3.154.   Japan maintains a price survey scheme on certain pharmaceutical products , based on a drug 
price standard. The reimbursement price of medicines used/dispensed under the National Health 
Insurance is defined by the MHLW  since 1950s.  The actual purchase prices paid by medical 
institutions and pharmacies (prevailing market price) are surveyed (drug price survey) , and th e 
prices specified in the drug price standard are revised periodically based on the results of the WT/TPR/S/397 • Japan  
 
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survey.170 All medicines covered by the National Health Insurance (approximately 20,000) are 
subject to the price survey.  To control healthcare costs (Section 3.3.7), the Government has been 
revising drug prices biennially , based on the actual purchasing price , leading to annual price cuts of 
5% to 7% since 2017.171 The latest pricing reform in April  2018 added pressure; for example, the 
scope of the price -maintenance premium (PMP), introduced in 2010 to delay biennial price cuts, was 
narrowed to drugs deemed truly innovative, which numbered 560 in 2018 as opposed to 823 in 
2016.172 From 2021, annual pri ce revisions will begin for drugs with a large yakkasa  (dispenser 
margin). However, the 2018 honebuto , or Basic Policy on Economic and Fiscal Management and 
Reform, call ed for price revisions of all products in 2019 , the year of the consumption tax rate hi ke 
(Sections 1.1 and 1.2) , that would bring forward the de facto  shift to annual revision that is planned 
as from the year 2021.173  
3.3.4.3   Corporate governance  
3.155.   According to the OECD, better corporate governance has the potential to improve the 
allocation of capita l and the monitoring of firm performance, leading to better use of Japan's high 
level of business R&D and human capital.174 It could also facilitate the downsizing or closing of low -
productivity activities and the shift of resources to high -productivity acti vities.  
3.156.   In line with t he 2017 New Economic Policy Package 's call for improving corporate 
governance , the main regulatory framework in this area was amended.175 The 2015 Corporate 
Governance Code, and the Corporate Governance System Guideline  were revised in 2018. In the 
Code, companies are now required to annually assess whether to maintain each individual cross -
shareholding and disclose the results of the assessment; this is expected to reduce cross -
shareholdings, which have been found to have a negative impact on productivity. The d iversity of 
corporate boards  is to be improved, as t he revised Guideline include s principles on the qualifications 
of outside directors , and states that the chair of the board should be a non -executive director.  Boards  
should appoint CEOs through objective, timely and transparent procedures. The establishment of 
independent advisory committees, such as those for nominations and remuneration,  was stated in  
the Code.176 All listed companies are expected to comply with the Code or explain reasons for not 
applying it ; as at December 2018, out of 3,621 (3,533 in 2017) companies , 2,621 (2,540 in 2017) 
listed on the First and Second Sections of the Tokyo Stock Exchange complied with , or provided 
explanation for  not complying with , all 78 principles of the Code  (73 prior to the 2018 Code 
amendment),  whereas another 1,000 (993 in 2017) complied with or provided explanation  for the 
                                                
170 MHLW, Update of Drug Pricing System in Japan . Viewed at: 
https://www.mhlw.go.jp/content/11123000/000335166.pdf . 
171 McKinsey & Company, Change in the Japanese pharmaceutical market: Cradle of innovation or grave 
of corporate profits? . Viewed  at: https://www.mckinsey.com/industries/pharmaceuticals -and-medical -
products/our -insights/change -in-the-japanese -pharmaceutical -market -cradle -of-innovation -or-grave -of-
corporate -profits  and https://www.reuters.com/article/us -japan -drugs/as -medical -costs-mount -japan -to-
weigh -cost-effectiveness -in-setting -drug-prices -idUSKCN1Q71ZG . 
172 The PMP, which rewards innovation and allows for pricing stability throughout the patent life of a 
medicine, significantly reduced the drug lag and accelerated patient access to innovative pharmaceutical 
products. However, in 2018, Japan made changes to its  reimbursement system that may reverse this trend. 
The number of products that can qualify for the PMP was reduced, and fewer companies received the full 
benefit of the PMP due to newly established requirements. Several factors taken into consideration in PMP 
calculations, such as the number of local clinical trials and product launches, appear to make it easier for 
Japanese companies to qualify for the premium . The authorities indicated that local and foreign companies are 
treated equally under the PMP. Re flecting the criticism that products which are not innovative were given the 
PMP, in 2018 , the eligibility criteria was revised to focus on the innovation and superiority of the efficacy.  
USTR, 2019 National Trade Estimate Report on Foreign Trade Barriers . Viewed at: 
https://ustr.gov/sites/default/files/2019_National_Trade_Estimate_Report.pdf . 
173 Reportedly, Japan 's plan to  move from the biennial price revision to an  annual price revision , and its 
implementation of a new Health Technology Assessment may seemingly create uncertainty about prices for 
advanced medical devices and innovative pharmaceuticals, undermining investment planning for capital -
intensive product de velopments in the country . USTR, 2019 National Trade Estimate Report on Foreign Trade 
Barriers . Viewed at: https://ustr.gov/sites/default/files/2019_National_Trade _Estimate_Report.pdf . 
174 OECD, OECD Economic Surveys: Japan 2019 . Viewed at: https://doi.org/10.1787/fd63f374 -en. 
175 OECD, OECD Economic Surveys: Japan 2019 . Viewed at: https://doi.org/10.1787/fd63f374 -en. 
176 Since 2002, listed Japanese companies have been  permitted to have three board committees  — 
audit, compensation and nominating. However, according to an  analysis of 3,8 03 such companies , only 22% 
had an audit committee and less than 1% had all three committees.  Harvard Business Review, Carlos Ghosn, 
Nissan, and the Need for Stronger Corporate Governance in Japan . Viewed at: https://hbr.org/2018/12/ghosn -
nissan -and-the-need-for-stronger -corporate -governance -in-japan . WT/TPR/S/397 • Japan  
 
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five General Principles only.177 As at December 2018 , 18% of companies had complied with all 
principles i n the Code, while another 67% complied with more than 90%. The share of companies 
with nomination committees increased from 32% in 2017 to 50% in 2019, while the share with 
remuneration committees rose from 35% to 52%.  
3.157.   The 2014 Stewardship Code, aimed at encouraging "institutional investors to fulfil 
stewardship responsibilities by improving and fostering their investee companies' corporate value 
and sustainable growth through constructive engagement ", was revised in 2017 to require asset 
managers to resol ve conflicts of interest and to promote effective monitoring of asset managers by 
asset owners (e.g. corporate pension funds). Institutional investors and asset owners are expect ed 
to assume a higher level of fiduciary responsibility, with the aim of enhan cing their investee 
companies ' return on equity (ROE) ; the authorities indicated that the C ode does not directly stipulate 
fiduciary duty , and changing investees ' ROE is not an ultimate goal of the Code. In 2018, Japanese 
companies ' ROE seemed to be  at aro und 9%, lagging behind that of the United States .178 As at 
August 2019 , 256 institutional investors had adopted the Code, of which nearly half were foreign. 
While almost all major asset managers and public pension funds have signed up, only 21 of the more 
than 10,000 corporate pension funds had joined, reflecting their lack of hu man resources for 
stewardship activities . By end -2016 (latest available data),  the implementation rate of each of the 
Code's seven principles was more than 90%.  
3.158.   According to the OECD, while Japan has established a corporate governance system in line 
with best practices, its full impact will only be seen gradually.179 According to Wellington 
Management, c orporate governance continues to improve slowly but steadily, as evidenced by rising 
shareholder returns, unwinding of cross -shareholdings, and increasing nu mbers of independent 
board members .180 According to the IMF, deeper corporate governance reform, including further 
strengthen ing across the banking and insurance sectors,  could help deploy cash reserves, and boost 
investment and productivity, including via m ore ambitious requirements for outside directors, 
explicit limits on cross -shareholdings, and enhanced transparency of beneficial ownership.181  
3.3.5   State trading, state -owned enterprises (SOEs) , and privatization  
3.159.   During the review period, state involvement in the economy remained relatively unchanged. 
State trading entities continued to engage in leaf tobacco, opium, rice, wheat, barley and milk 
products. Major commercial SOEs include those operating in energy, financial services, 
telecommunications and some tr ansport -related activities. The State continues to wholly or partially 
own several companies, including large ones ( Table 3.18),  in the delivery of goods and services that 
the authorities believe would not be adequately provided by the private sector alone . Ownership is 
maintained either directly or via Incorporated Administrative Agencies (IAAs) , which are public -
sector corporations with a separate legal personality; as at 1 April 2019 , there were 87 IAAs (88 in 
2017).182 As at 31 December 2016 (latest data available) , there was a total of 228 (234 in 2015) 
entities with government capitalization; the total amount of capitalization stood at JPY 76.0 trillion 
                                                
177 Tokyo Stock Exchange Inc. (2019), Status of Response to Revision of the Corporate Governance 
Code Flash Report (as at 31 December 2018), 21 February; and OECD, OECD Economic Surveys: Japan 2019 . 
Viewed at: https://doi.org/10.1787/fd63f374 -en. 
178 Nikko am, Where Are We With Corporate Governance In Japan ? Viewed at: 
https://en.nikkoam.com/articles/2018/06/where -are-we-with-corporate -governance -in-japan . 
179 OECD, OECD Economic Surveys: Japan 2019 . Viewed at: https://doi.org/10.1787/fd63f374 -en. 
180 Wellington Management. Viewed at: https://www.wellington.com/en/insights/japans -corporate -
governance -reforms -progress -report/?_c=fw3i0sx . 
181 IMF, Japan : 2018 Article IV Consultation  — Press Release; Staff Report; and Statement by the 
Executive Director for Japan . Viewed at: https://www.imf.org/en/Publications/CR/Issues/2018/11/27/Japan -
2018-Article -IV-Consultation -Press -Release -Staff-Report -and-Statement -by-the-Executive -46394 . 
182 They include: the Research Institute of Economy, Trade and Industry; the National Center for 
Industrial Property Information and Training; NEXI; the National Institute of Advanced Industrial Scien ce and 
Technology; the National Institute of Technology and Evaluation; the New Energy and Industrial Technology 
Development Organization; JETRO; the Institute of Developing Economies, JETRO (IDE -JETRO); the 
Information -technology Promotion Agency, Japan; the Japan Oil, Gas and Metals National Corporation; the 
Organization for Small & Medium Enterprises and Regional Innovation, Japan; Japan International Cooperation 
Agency; the Japan Aerospace Exploration Agency; the Japan Water Agency; the Environmental Re storation and 
Conservation Agency of Japan; the Japan Atomic Energy Agency; and the Japan Agency for Medical Research 
and Development. The authorities indicated that t hey do not keep track of company shareholdings owned by 
the IAAs. METI, Incorporated Admi nistrative Agencies . Viewed at : 
https://www.meti.go.jp/english/network/incorporatedad.html . WT/TPR/S/397 • Japan  
 
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(JPY 80.1 trillion as at 31 March 2015).183 Based on the OECD definition of SOEs, Japan identified 
1 majority-owned listed enterprise (Japan Post Holdings Co., Ltd, 218,312 employees, valued at 
USD 55.8 billion), 7 majority -owned non -listed enterprises (37,953 employees, valued at 
USD 26.5 billion), 2 minority SOEs (Japan Tobacco Inc.,63,968 employees (as at 31 December 
2018) and Nippon Telegraph and Telephone Corporation, 303,350 employees (as at 31 March 2019)) 
and no statutory corporations or quasi -corporations.184 In 2014, based on the OECD definition of 
SOEs, Japan had identified 26 SOEs: 2 minority -owned listed enterprises, 8 majority -owned non -
listed enterprises, and 16  statutory corporations or quasi -corporations.185 Market monopolies 
continue to be retained in domestic manufacturing of tobacco and the importation of leaf tobacco.  
Table 3.18 Large state enterprises, FY2017a 
Name/operation  Total 
asset 
value  
(JPY 
billion)  Total 
operating 
revenue  
(JPY billion)  Total 
operating 
profit 
before/after 
tax 
(JPY billion)  State/public 
authority 
shareholding  
New Kansai International Airport Company Ltd  
Established in 2012 for the operation of Kansai 
International Airport and Itami Airport  1,881  62 .. 100%  
Narita International Airport Corporation Ltd  
Established in 2004 for the operation of Narita 
International Airport  810  231  52/35  100%  
East Nippon Expressway Company Limited  1,851  1,056  -0.2 100%  
Central Nippon Expressway Company Limited  1,532  972 7 100%  
West Nippon Expressway Company Limited  1,171  1,621  5 100%  
Honshu -Shikoku Bridge Expressway Company 
Limited   61 79 1 66.63%  
Nippon Automated Cargo and Port Consolidated 
System, Inc.   20 n/a 1 50.01%  
Yokohama -Kawasaki International Port 
Corporation   8 8 0.04 50% 
Tokyo Metro Co. Ltd.  
Established in 2004 for the operati on and 
manag ement of  railway business in the Tokyo 
area 1,550  426  88/60  53.41% 
Government of 
Japan ; and 
46.6% Tokyo 
Metropolitan 
Government  
Japan Overseas Infrastructure Investment 
Corporation fo r Transport & Urban Development  41 0.07 n/a 87.2%  
Japan Environmental Storage & Safety 
Corporation  111 75 26 100%  
Nippon Telegraph and Telephone Corporation 
(NTT)  
Owns all the shares issued by NTT East and NTT 
West. Required to ensure proper and stable 
provision of telecommunications services by 
these companies throughout Japan, including 
remote rural areas, as well as to conduct 
research relating to telecommunications 
technologies  6,710  663 725/724  33.3%  
Japan Post Holdings Co. Ltd  
Owns all the shares issued by Japan Post Co. Ltd  290,640  .. 709/512  56.87%  
Fund Corporation for the Overseas Development 
of Japan's ICT and Postal Services Inc.  6 0.1 -1 73.37%  
Development Bank of Japan  16,740  267 120 100%  
Japan Bank for International Cooperation  15,992  n/a n/a 100%  
Nippon Export and Investment Insurance  1,709  n/a 61 100%  
Japan Finance Corporation  21,603  606  117 (excluded 
from tax)  100%  
                                                
183 WTO document WT/TPR/S/351/Rev.1 , 20 June 2017.  
184 The authorities did not consider the listed Tokyo Electric Power Company (TEPCO) an SOE for the 
purpose of the OECD exercise. Over 50% of TEPCO's shares are held by the Nuclear Damage Compensation 
and Decommissioning Facilitation Corporation, whose owners hip is shared between the Government and a 
number of energy companies. Furthermore, the 14 statutory and quasi -corporations previously included in the 
OECD dataset were excluded because they do not engage in economic activities. Two majority -owned non -
listed entities in the "other activities" category were excluded for the same reason ( Japan Energy Service 
Corporation and the Nippon Automated Cargo and Port Consolidated System ). OECD, The Size and Sectoral 
Distribution of State -Owned Enterprises . Viewed at:  http://dx.doi.org/10.1787/9789264280663 -en. 
185 WTO document WT/TPR/S/310/Rev.1, 6 May 2015.  WT/TPR/S/397 • Japan  
 
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Name/operation  Total 
asset 
value  
(JPY 
billion)  Total 
operating 
revenue  
(JPY billion)  Total 
operating 
profit 
before/after 
tax 
(JPY billion)  State/public 
authority 
shareholding  
Private Finance Initiative Promotion Corporation 
of Japan  39 0.9 0.5 50% 
Cool Japan Fund Inc.  52 0.8 -8 84.55%  
Innovation Network Corporation of Japan  771 22 -55 95.33%  
Japan Tobacco Inc.  
Mainly engaged in the manufacture and sale of 
tobacco products, prescription drugs and 
processed foods  556  168  215 33.4%  
Agriculture, Forestry and Fisheries Fund 
Corporation for Innovation, Value -chain and 
Expansion Japan  26 0.4 -2 94.03%  
n/a Not applicable.  
.. Not available.  
a Although not listed as "large" entities, companies such as Tokyo Metro Co. Ltd, Japan Petroleum 
Exploration Co. Ltd, INPEX Corporation (oil and gas exploration), and Japan Railway Construction, 
Transport and Technology Agenc y have operating revenues exceeding JPY  100 billion.  
Source:  Information provided by the authorities; and WTO document WT/TPR/S/351/Rev.1, 20 June 2017.  
3.160.   According to Japan's latest WTO notification  pursuant to the provisions of Article  XVII: 4(a) 
of the G ATT 1994 and paragraph 1 of the understanding on the interpretation of Article  XVII and 
covering the period 2015 -17, four state -trading enterprises remained operational ( Table 3.19).  
Table 3.19 State -trading e nterprises notified to the WTO under Article XVII, 2018  
Agency  Nature of exclusive rights  Features  
Japan 
Tobacco Inc.  
(JT) JT has a monopoly on domestic 
manufacturing of tobacco. Therefore, 
the importation of leaf tobacco for the 
manufacture of tobacco in Japan is 
dependent on purchase s by JT.  JT purchases all the leaf tobacco produced by 
domestic tobacco cultivators who enter into a 
contracted purchase agreement with it. JT imports 
and exports on the basis of commercial 
consideration.  
MHLW  The MHLW has an exclusive right to 
import and export opium. It 
determines the price for the purchase 
of the opium from opium poppy 
cultivators, after consulting with the 
Ministry of Finance, on the basis of 
factors such as the condition of 
production by opium  poppy 
cultivators, the import price of opium , 
and other economic conditions. The 
MHLW also purchases all opium 
gathered by opium poppy cultivators 
or research cultivators.  The MHLW  supplies opium for medical and 
scientific purposes, and to conduct necessa ry 
control over the cultivation of the opium poppy, 
and the transfer, receipt , possession , and other 
relevant activities of opium and poppy straw. The 
MHLW stopped importing opium in January 2018 . 
No opium exports are undertaken by the MHLW.  
MAFF  The MAFF can import rice, wheat and 
barley, and can export rice when a 
particular necessity exists, based on 
the Law for Stabilization of Supply -
Demand and Price of Staple Food. The 
Law does not restrict the importation 
or exportation of rice, wheat or barley 
by the private sector.  Mark-ups on imported rice, wheat and barley are 
used for their management costs , such as storage, 
buying and selling costs. Almost all imports of rice, 
wheat, and barley continued to be carried out by 
the MAFF (except  for barley imports in FY2016 and 
FY2017 , representing about 30% of its total 
imports ). The MAFF does not conduct any 
commercial export of rice, wheat, or barley. Most 
of the wheat and barley consumed in Japan is 
imported.  WT/TPR/S/397 • Japan  
 
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Agency  Nature of exclusive rights  Features  
Agriculture 
and Livestock 
Industries 
Corporatio n 
(ALIC)  The ALIC is authorized to take 
measures to stabilize supply/demand 
and prices for milk products (e.g. 
milk/buttermilk powder, condensed 
milk, whey and butter). Private 
traders can freely import these 
products by paying  the out -of-quota 
tariff rate .  The ALIC collects mark-ups of designated dairy 
products  within Japan's  scheduled rate ; its resale 
prices are determined by a tender. In the period 
FY2015 -17, average domestic sales prices were up 
to more than three times above the import price. 
During t he same period , the ALIC  ensured an 
average of about 82% of skimmed milk powder 
and skimmed milk solids imports , 95% of butter 
and butter oil imports , and around 32% of whey 
and modified whey imports. It did not export or 
purchase any domestic produce.  
Source:  WTO document s G/STR/N/17/JPN, 11 October 2018; and WT/TPR/S/351/Rev.1, 20 June 2017 . 
3.161.   During the review period, there was virtually a standstill in the privatization process ; some 
airport operation concession s were granted,  and a reduction of the government shareholding in 
Japan Post Holdings was underway during the review period (Sections 4.4. 1.1 and 4.4. 3).  
3.3.6   Government procurement  
3.162.   Japan's government procurement market is estimated  to more than USD  610 billion  (Euros 
550 billion)  annually .186 According to OECD data, it represent ed 16.1% of GDP in 201 7 (same as in 
2015) , well above the OECD average  (12.8%) .187 In 2017 procurement spending was mainly 
allocated to healthcare (44. 6%), economic affairs (14. 3%) and social protection (13. 8%), virtually 
unchanged compared to 2015 levels.188 According to the statistics notified to the WTO in 2017, the 
central Government awarded 7, 407 procurement contracts , with a total value of SDR 11.1 billion, 
which Japan had the obligation to open to international competition (see below).189 The Ministry of 
Land, Infrastructure, Transport and Tourism, the Ministry of Justice , the Ministry of Environment , 
and the MHLW  were the four entities that had the largest procurement value. Local government 
entities awarded 7,787 contracts worth JPY  1.62 trillion, virtually the same amount awarded by the 
central Government.  
3.163.   During the review period, the basic rules on government procu rement remain ed virtually 
unchanged. With regard to the procurement procedures, the central Government, local governments 
and public corporations follow their respective procedures established by different laws and 
regulations due to their autonomous statu s. For the central Government, the ma in laws and 
regulations include: the Accounts Law of 1947  (last amended i n 2017, to align some wordings in 
accordance with the revis ed Civil Code ); the Cabinet Order Concerning the Budget, Auditing and 
Accounting of 194 7 (amended to change some article numbers in 2017 in accordance with the 
revision of the Gas Business Act, and in 2018 in accordance with the revision of the Civil Code) ; the 
Special Provisions for the Cabinet Order concerning the Budget, Auditing and Acco unting of 1946; 
and the Regulations on the Management of Contract Administration (Ministry of Finance Ordinance 
No. 52 of 1962) . The legal framework f or local entities  includes : the Local Autonomy Law of 1947; 
and the Ordinance for Enforcement of the Local  Autonomy Law of 1947. Procurement procedures 
followed by public corporations are set out in their accounting or internal statu tes. Ministers who 
oversee public corporations are responsible for ensuring the consistency of their procurement 
activities with the rules. According to the authorities, t here are no differences among the procedures 
applying to different categories of entities.   
3.164.   As a party to the WTO Agreement on Government Procurement (GPA) , Japan  implements 
the GPA rules and other international agreements through: the Cabinet Order Stipulating Procedures 
for Government Procurement of Products or Specified Services; the Cabinet Order Stipulating 
Procedures for Government Procurement of Products or Specified Services in Local Governments 
                                                
186 Online data ( https://www.eu -japan.eu/government -procurement ). 
187 The authorities indicated that they do not have official data on government procurement. WTO 
document WT/TPR/S/351/Rev.1, 20 June 2017; OECD dat a (https://stats.oecd.org/ ); OECD, Government at a 
Glance 2017 – Country Fact Sheet: Japan.  Viewed  at: http://www.oecd.org/gov/gov -at-a-glance -2017-
japan.pdf ; OECD, Government at a Glance 2019 – Country Fact Sheet: Japan . Viewed at: 
www.oecd.org/gov/gov -at-a-glance -2019-japan.pdf . 
188 OECD (2019), Government at a Glance 2019 , OECD Publishing, Paris, Viewed at: 
https://doi.org/10.1787/8ccf5c38 -en. 
189 WTO document G PA/STAT(17)/JPN/1, 5 April 2019.  WT/TPR/S/397 • Japan  
 
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Entities;  and the Ministerial Ordinance Stipulating Special Procedures for Government Procurement 
of Products or Specified Services. To implement the Japan -EU EPA (Section 2.3.2  and below ), the 
Cabinet Order Stipulat ing Procedures for Government Procurement of Products or Specified Services 
was revised on 19 December 2018 (Cabinet Order No.  340 of 2018)  and the Cabinet Order 
Stipulating Procedures for Government Procurement of Products or Specified Services in Local 
Governments Entities on 21 and 27 December 2018 (Cabinet Order No.347 and No.353 of 2018) . 
On 6 November 2016, with the agreement of other parties to the GPA, Japan withdrew the Kyushu 
Railway Company from its GPA schedule as the result of the privatization  of the company.190  
3.165.   Many of the EPAs signed between Japan and its trade partners contain chapters on 
government procurement  (Section 2.3.2) .191 During the review period, two more agreements with 
government procurement chapters were sig ned and subsequently cam e into force, namely the CPTPP 
(or TPP11) and the Japan -EU EPA. Japan's government procurement commitments under the CPTPP  
are roughly the same as  its GPA commitments.192 While its undertakings  under the Japan -EU EPA 
are built on its GPA commitments, the cov erage of local government entities under this EPA is further 
expanded to local independent administrative agencies.193  
3.166.   In addition to the market access commitments undertaken under the GPA and various EPAs, 
Japan maintains various "voluntary measures", the outcome of bilateral negotiations with the United 
States in the past, to facilitate foreign suppliers' opportunities to access its government procurement 
markets . These access opportunities are applied at multilateral level. The y included the lowering of 
the thresholds of contract value above which the procurement would be open to international 
competition, the extension of the period for tenderers to submit their tenders, and an increase in 
the number of  procuring entities whose procurements are open to in ternational competition. 
However, due to the fact that the 2014 revised GPA has "caught up" with voluntary measures as 
compared to the GPA 1994, the benefits that can be drawn from these voluntary measures have 
become marginal. Details on the remaining val ue added of these voluntary measures is essentially 
of a procedural nature as indicated in  the previous TPR Report of Japan.194  
3.167.   Open tendering, selective tendering and single tendering re main the main procurement 
methods , and follow the GPA thresholds for contracts under its coverage . The condition s and 
threshold s for selective tendering and single tendering in the central Government outside of the 
coverage of GPA  is stipulated in Cabinet Order on Budgets, the Settlement of Accounts, and 
Accounting .195 The condition s and threshold s for single tendering for local government  procurement  
outside of the coverage of GPA is stipulated in the Ordinance for Enforcement of the Local Autonomy 
                                                
190 WTO document WT/Let/1210, 22 November 2016.  
191 WTO document WT/TPR/S/351/Rev.1 , 20 June 2017.  
192 MFAT. The government procurement commitment  of Japan under the CPTPP  is available at: 
https://mfat.govt.nz/assets/Trans -Pacific -Partnership/Annexes/15 -A.-Japan -Government -Procurement -
Annex.pdf . 
193 MOFA. The government proc urement chapter of the Japan -EU EPA is available at: 
https://www.mofa.go.jp/files/000382132.pdf . 
194 WTO document WT/TPR/S/351/Rev.1, 20 June 2017, Table s 3.23 and 3.24 . 
195 Chapter  VII (Contracts) Sec tion3 (Contracts Under Selective Tender) Article 94  of the Cabinet Order 
stipulates the following thresholds: when having construction or manufacturing done at a target price that does 
not exceed JPY 5 million; when purchasing assets at a target price that  does not exceed JPY 3 million; when 
borrowing an object at an annual or total target lease charge that does not exceed JPY 1.6 million; when 
selling off assets at a target price that does not exceed JPY 1 million; when lending out an object at an annual 
or total target lease charge that does not exceed JPY 500,000; and when the target price of a contract other 
than a work contract for construction or manufacturing, a sale and purchase contract for assets, or a contract 
to lend or borrow an object does not exceed JPY 2 million. Regarding single tendering, Chapter  VII (Contracts) 
Section4 (Discretionary Contracts) Article 99  of the Cabinet Order stipulates the following thresholds : when 
having construction or manufacturing done at a target price that does not  exceed JPY 2.5 million; when 
purchasing assets at a target price that does not exceed JPY 1.6 million; when borrowing an object at an 
annual or total target lease charge that does not exceed JPY 800,000; when selling off assets at a target price 
that does  not exceed JPY 500,000; when lending out an object at an annual or total lease charge that does not 
exceed JPY 300,000; and when the target price of a contract other than a work contract for construction or 
manufacturing, a sale and purchase contract for assets, or a contract to lend or borrow an object does not 
exceed JPY 1 million. Cabinet Order on Budgets, the Settlement of Accounts, and Accounting (unofficial 
translation). Viewed at: 
http://www.japaneselawtranslation.go.jp/law/detail/?re=01&kn%5b%5d=%E3%82%88&ky=%E6%A0%AA%E
5%BC%8F&page=2 . WT/TPR/S/397 • Japan  
 
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Law of 1947.196 During the review period , the threshold value s for each method  remained 
unchanged . Among the  different procurement methods , open tendering is the basic procedure , and 
represents most of the central government procurement contracts and value (Table 3.20). Under 
open tendering, qualified suppliers are invited , through tender notices published in the official 
gazette " Kanpo ", to participate in the tendering procedures. Under selective tendering, permanent 
lists of qualified suppliers are established by procuring entities. The procuring entity invites, fr om 
among the qualified suppliers, those considered capable of implement ing the contract to participate 
in the tendering procedures. Interested suppliers need to apply to the procuring entity concerned 
for qualification. Efforts to achieve unified qualifica tion across different central government entities 
have been made since 2001. In order to increase opportunities to participate in tender, suppliers 
are advised by the relevant a uthority to apply for qualification in advance.197 The single tendering 
correspon ds to "limited tendering" in the GPA , and constitutes the second most important 
procurement method in terms of number of contracts and procurement value ( Table 3. 20). In 2017, 
1,103 GPA-covered contracts , representing a value of more than SDR 2 billion , were awarded 
through single tendering, accounting for about one seventh of the contracts, or 18% of the total 
procurement value.198 The breakdown of contracts by procuring method at the central government 
and IAA (Section 3.3.5) level are contained in Table 3. 20. Japan maintains special procurement 
procedures for individual sectors , such as supercomputers  (since 16 July 1987 ), non-R&D satellites  
(since 14 June 1990 ), computer products and services  (since 20 January 1992 ), telecommunications 
products and services and medical technology products and services  (since 28 March 1994 ). The 
procedures are considered as voluntary measures to promote procurement base d on non -
discriminatory, transparent, fair and open competition. The use of overall -greatest -value m ethod in 
tender evaluation is encouraged or obligatory under these measures. The measures are contained 
in the Operational Guideline on Procedures for Government Procurement etc. (Understanding among 
related ministries and agencies concerned in procurement , 31 March 2014).199  
Table 3.20 Use of different procurement methods by the central Government and IAA 
entities, 2017  
 Number of contracts  Percentage of the total value  
All procurements  14,710  100.0  
Open tendering procedures  11,461  72.5% 
Selective tendering procedures  62 0.3%  
Single tendering procedures  3,187  27.2% 
Note:  The authorities indicated that the data of "voluntary measures" (see above and below) differ from 
those under the GPA coverage (i.e. excluding construction services, local government procurement 
and procurement under GPA Annex 2).  
Source:  Chapter II, Products and Services Covered by the Government Procurement Survey. Viewed at: 
http://japan.kantei.go.jp/procurement/2018/2FY2018ch2.pdf . 
3.168.   Japan has no restrictions on the place of origin of products or the nationality of suppliers in 
government procurement. The principle of non -discrimination is pursued in all pr ocurement 
activities. However , there has been concern over the apparently low share of foreign companies in 
public procurement ; it seems that this is partly due to non -regulatory barriers , the geographical 
distance from certain overseas markets, and a lack of knowledge of the local market.200 Foreign 
participation in government procurement is described in Tables 3.21 and 3.22 .  
                                                
196 If they stipulate a threshold, its value should not exceed the following levels: contract for 
construction or manufacturing either (i) JPY 2.5 million or (ii) JPY 1.3 million; purchase of assets either (i) JPY 
1.6 million or (ii) JPY 800,000; borrowing an object either (i) JPY 800,000 or (ii) JPY 400,000; selling off assets 
either (i) JPY 500,000 o r (ii) JPY 300,000; lending out an object JPY 300,000; and Other contracts either (i) 
JPY 1 million or (ii) JPY 500,000. (i) refers all prefectural governments entitled "To", "Do", "Fu" and "Ken", and 
all designated cities entitled "Shiteitoshi", while (ii ) refers to cities other than those under (i).  
197 MOFA, Suggestions for Accessing the Government Procurement Market of Japan . Viewed at:  
https://www.mofa.go.jp/files/000037391.pdf . 
198 WTO document GP A/STAT(17)/JPN/1, 5 April 2019.  
199 Prime Minister of Japan and His Cabinet, Japan's Government Procurement: Policy and Achievements 
Annual Report (FY2018 version) - Toward Government Procurement Open to the World . Viewed at: 
http://japan.kantei.go.jp/98_abe/documents/2019/_00002.html . 
200 EU-Japan Centre for Industrial Cooperation, Public Procurement in Japan: An Outline . Viewed at: 
https://www.eu -japan.eu/government -procurement/public -procurement -japan -outline . WT/TPR/S/397 • Japan  
 
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Table 3.21 Foreign participation in central government and IAA entity procurement  
(%) 
Year Relative foreign share of procurement value  Relative foreign share of number of 
contracts awarded   
2015 2.2%  3.2%  
2016 2.7%  2.1%  
2017 4.4%  2.8%  
Note:  The authorities indicated that the data of "voluntary measures " (see above and below) differ from 
those under the GPA coverage (i.e. excluding construction services, local government procurement 
and procurement under GPA Annex 2).  
Source:  Chapter II, Produ cts and Services Covered by the Government Procurement Survey. Viewed at: 
http://japan.kantei.go.jp/procurement/2018/2FY2018ch2.pdf . 
Table 3.22 Awards to foreign suppliers by origin, 2017  
 Number of contracts  Value  (JPY billion ) 
United States  132 43 
European Union  157 52 
Others  126 5 
Total  415 100 
Note:  The authorities indicated that the data of "voluntary measures " (see above and below) differ from 
those under the GPA coverage (i.e. excluding construction services, local government procurement 
and procurement under GPA Annex 2).  
Source:  Chapter II, Produ cts and Services Covered by the Government Procurement Survey. Viewed at : 
http://japan.kantei.go.jp/procurement/2018/2FY2018ch2.pdf . 
3.169.   Tables 3.23 and 3.24  detail foreign participation  in Japan's government procurement , in 
value terms , by type of product and service , in 2015 and 2016 (the latest year for which data were 
available) . Foreign participation shares were relatively high only in certain categories of goods, 
including m edical, dental, surgical and veterinary equipment , aircraft and associated equipment , 
scientific and controlling instruments and apparatus , minerals, and n on-ferrous metals and articles 
thereof .  
Table 3.23 Central government and IAA entity procurement, by product and by origin, 
2016 and 2017  
No. Products  2016  2017  
Total value  
(JPY 100 
million)  Foreign 
share  
(%) Total 
value  
(JPY 100 
million)  Foreign 
share  
(%) 
1 Products from agriculture, and from agricultural 
and food processing  26.6 35.0 21.4 14.8 
2 Mineral products  4,441.2  10.7 264.2 16.8 
3 Products of the chemical and allied industries  31.8 5.8 33.8 3.1 
4 Medicinal and pharmaceutical products  674.3  14.2 1,209.6 7.0 
5 Artificial resins; rubber, raw hides and skins; 
leather; and articles thereof  15.4 0 7.5 0 
6 Wood and articles of wood; paper -making 
material; paper and paperboard , and articles 
thereof  150.5  0 264.5 0 
7 Textiles and textile articles; thread for spinning 
and weaving; and articles thereof  77.7 2.9 94.5 1.4 
8 Articles of stone, of cement and of similar 
materials; ceramic products; glass and 
glassware; and articles thereof  4.2 0 15.5 0 
9 Iron and steel , and articles thereof  18.2 0 94.6 4.6 
10 Non-ferrous metals , and articles thereof  33.7 6.4 52.6 16.9 
11 Power -generating machinery and equipment  71.0 6.2 151.2 1.6 
12 Machinery specialized for particular industries  300.7  0 199.2 0 
13 General industrial machinery and equipment  70.5 3.1 107.7 1.0 
14 Office machines and automatic data processing 
equipment  1,769.4  6.9 2,173.7 8.5 
15 Telecommunications and sound recording and 
reproducing apparatus and  equipment  540.5  0.9 688.4 3.1 WT/TPR/S/397 • Japan  
 
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No. Products  2016  2017  
Total value  
(JPY 100 
million)  Foreign 
share  
(%) Total 
value  
(JPY 100 
million)  Foreign 
share  
(%) 
16 Electrical machinery, apparatus and appliances, 
and electrical parts thereof  867.2  2.3 304.5 3.1 
17 Road vehicles  362.9  2.6 440.9 2.2 
18 Railway vehicles and associated equipment  3.3 0 50.3 0.4 
19 Aircraft and associated equipment  64.9 27.0 77.6 20.2 
20 Ships, boats and floating structures  76.9 0 101.4  0 
21 Sanitary, plumbing, and heating equipment  5.2 0 7.1 0 
22 Medical, dental, surgical and veterinary 
equipment  724.8  17.5 641.2  34.4 
23 Furniture and parts thereof  27.1 0 45.7 0 
24 Scientific and controlling instruments and 
apparatus  484.3  22.6 628.4  26.9 
25 Photographic apparatus and equipment, optical 
goods, and clocks  32.1 12.5 32.8 3.6 
26 Miscellaneous articles  2,180.8  2 1,957.3  4.1 
  Total  9,055.1  6.9 9,665.8  8.9 
Note:  The authorities indicated that the data of "voluntary measures " (see above and below) differ from 
those under the GPA coverage (i.e. excluding construction services, local government procurement 
and procurement under GPA Annex 2).  
Source:  Chapter II, Products and Services Covered by the Government Procurement Survey. Viewed at : 
(2017) http://japan.kantei.go.jp/procurement/2018/2FY2018ch2.pdf ; and (2016) 
https://www. kantei.go.jp/jp/kanbou/29tyoutatu/dai2/dai2honbun.pdf . 
Table 3.24 Central government and IAA entity procurement, by type of service, 2016 and 
2017  
Type of service  2016  2017  
Total value  
(JPY 100 million)  Foreign 
share 
(%) Total value 
(JPY 100 
million)  Foreign 
share 
(%) 
Total  9,374,1  3.6 12,981.9  5.7 
Maintenance and repair of motor vehicles  25.8 0 20.7 0 
Maintenance and repair of motorcycles 
and snowmobiles  0 0 0 0 
Other land transport services (except 
mail transportation)  104.8  0 103.8  0 
Rental services of sea -going vessels with 
operator  8.0 0 7.9 0 
Rental services of non -sea-going vessels 
with operator  1.7 0 1.6 0 
Air transport (except mail transportation)  36.5 7.6 67.2 5.0 
Freight transport agencies  23.9 0 44.0 0 
Courier services  3.8 0 2.4 0 
Telecommunication services  128.9  5.5 180.1  9.5 
Computer and related services  6,359.2  3.7 8,360.9  8.6 
Market research and public opinion 
polling  47.1 3.4 34.3 4.4 
Advertising services  662.4  0 614.0  0 
Armoured car services  92.5 0 4.4 0 
Building cleaning services  347.7  0 772.0  0.2 
Publishing and printing services  188.1  0.2 180.9  0.1 
Repair services incidental to metal 
products, machinery and equipment  107.5  1.2 120.9  3.9 
Sewage and refuse disposal, sanitation 
and other environmental protection  1,016.9  0 2,348.5  0 
Repair services of personal and 
household goods  0 0 0 0 
Food serving services  0.6 0 1.1 0 
Beverage serving services  0 0 0 0 
Leasing or rental services concerning 
agricultural  machinery and equipment 
without operator  0 0 0 0 WT/TPR/S/397 • Japan  
 
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Type of service  2016  2017  
Total value  
(JPY 100 million)  Foreign 
share 
(%) Total value 
(JPY 100 
million)  Foreign 
share 
(%) 
Leasing or rental services concerning 
furniture and other  household appliances  0.2 0 0 0 
Leasing or rental services concerning 
pleasure and leisure  equipment  0 0 0.1 0 
Leasing or rental services concerning 
other personal or  household goods  0.2 0 0 0 
Management consulting services  0.5 0 0 0 
Services related to management 
consulting (except 86602  Arbitration and 
conciliation services)  0 0 0 0 
Packaging services  5.4 0 5.9 0 
Services incidental to forestry and 
logging, including forest  management , 
and publishing and printing services  0 0 4.8 0 
Primary education services  0 0 0 0 
Secondary education services  0 0 0 0 
Higher education services  0.3 0 0.3 100 
Adult education services  3.4 0 2.3 0 
Motion picture and video tape production 
and distribution  services  1.7 0 0.3 0 
Other  206.9  44.0 103.3  0.4 
Note:  The authorities indicated that the data of "voluntary measures" (see above and below) differ from 
those under the GPA coverage (i.e. excluding construction services, local government procurement 
and procurement under GPA Annex 2).  
Source:  Chapter II, Products and Services Covered by the Government Procurement Survey. Viewed at: 
(2017) http://japan.kantei.go.jp/procurement/2018/2FY2018ch2.pdf ; and (2016) 
https://www.kantei.go.jp/jp/kanbou/29tyoutatu/dai2/da i2honbun.pdf . 
3.170.   Japan maintains a government procurement policy to promote environmental protection. 
The relevant legislation includes the Act on Promotion of Procurement of Eco -Friendly Goods and 
Services by the State and Other Entities (Act No.100 of 200 0), the Act on P romoting Green 
Procurement , and the Act on Promotion of Contracts of the State and Other Entities, Which Show 
Consideration for Reduction of Emissions of Greenhouse Gases, etc. (Act No. 56 of 2007 , "Green 
Contract Act").201  
3.171.   Government procurement based on t he Act on Promoting Green Procurement is implemented 
through the Basic Policy for Promotion of Procurement of Eco -Friendly Goods and Services , decided  
by the Cabinet in February  2001; the Policy was last revised in February 2019 .202 It designates goods 
and s ervices, including those related to public construction works, which should be purchased and 
utilized by government entities and IAAs, etc . It also sets out evaluation criteria that procuring 
entities should use in bid assessment for purchasing designated products. The Policy provides that 
green procurement should not be an  unnecessary impediment to international trade , and should 
comply with the GPA rules. It is revised as necessary . Since 201 6, three revisions were made to it. 
These changes were notified to the WTO Committee on Government Procurement.203 After years of 
addition and adjustment, the current number of designated products has grown to 21 fields covering 
276 items, from stationery to electronic appliances and vehicles, and from building materials  to 
transportation and building cleaning services.  
3.172.   The government implementation rules of the Green Contract Act, namely the "Basic Policy 
for the Promotion of Contracts Considering Reduction of Emissions of Greenhouse Gases and Others 
by government entit ies and independent administrative agencies, etc. ", was decided  by the Cabinet 
                                                
201 The Act on Promoting Green Procurement is available at: 
http://www.japaneselawtranslation.go.jp/law/detail/?ft=2&re=01&dn=1&yo=&ia=03&kn[]=%E3%81%8F&_x=
17&_y=13&ky=&page=2 ; and the Green Contract Act  is available at:  
http://www.japaneselawtranslation.go.jp/law/detail/?ft=1&re=01&dn=1& co=02&ia=03&x=14&y=7&ky=%E5
%9B%BD%E7%AD%89%E3%81%AB%E3%81%8A%E3%81%91%E3%82%8B&page=2 . 
202 The latest version of the Basic Policy  is available at: 
http://www.env.go.jp/en/laws/policy/gree n/h31bp_en.pdf . 
203 WTO documents GPA/37/ Add.14, 3 April 201 7; GPA/37/ Add.15, 3 April 201 8; and GPA/LEGIS/JPN/1, 
18 April 2019. WT/TPR/S/397 • Japan  
 
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in December 2007 , and was subsequently revised to add contract categories , etc. During the review 
period, three additional revisions were made to this Policy.204 Currently, it cov ers contracts related 
to the supply of electricity, the purchase and lease of vehicles, the procurement of ships, industrial 
waste disposal, energy conservation improvement projects, and building design and operation 
maintenance.205 The Policy requires that the reduction of emissions of greenhouse and other  gases 
should be taken into account when relevant procurement entities conclude contracts.  
3.173.   The implementation of these two policies is mandatory for government entities and IAAs, 
etc. They should be implem ented in a manner that is compliant with the GPA , and should not impede 
international trade.  
3.174.   Japan also maintains  policies to promote the participation of SMEs in government 
procurement. The relevant guiding legislation is Act No.97 on Ensuring the Receip t of Orders from 
the Government and Other Public Agencies by Small and Medium Sized Enterprise Operators of 
1966, that remained unchanged during the review period.206 According to this Act, the central 
Government, IAAs and national university corporations set their own procurement target value from 
SMEs every fiscal year . The t arget amount for micro, small and medium -sized enterprises ( MSMEs ), 
set at 55.1% of the total budget of "public demand ", stood at JPY 3.8 trillio n in 2017 and JPY 4.0 
trillion in 2018.  Local governments follow the policies of the central Government on an "endeavour 
basis".  
3.175.   Japan's  Government Procurement Review Board (GPRB) continued to review complaints filed 
by suppliers. For government procureme nt of goods and services valued at not less than SDR 
100,000 and that of construction services not less than SDR 4.5 million , a supplier may file a 
complaint if he suspects a breach of any provision of the GPA, or other applicable measures 
designated by th e Head of the Council of Government Procurement Review (CGPR). Between 2017 
and September 2019 , a single complaint against the consistency of the tendering process of the 
National University Corporation Akita University under  Article 15 Paragraph 5 (b) of the revised 
Agreement  was filed  on 27 March 2018.   
3.3.7   Intellectual property rights (IPRs)  
3.3.7.1   Features and IP strategy  
3.176.   IP is of vital importance to the economy. The Japan Patent Office (JPO) found a correlation 
between patent rights and operating profits on sales for SMEs, which account for more than 99% of 
all businesses in Japan.207 Over the five -year period ending in December 2017, revenue from IP 
increased by over 74%, and exceeded JPY 50,000 billion in 2018.208 Chart 3.6 depicts the growth in 
IP revenue sinc e1996.  
                                                
204 WTO documents GPA/37/ Add.14, 3 April 201 7; GPA/37/ Add.15, 3 April 201 8; GPA/LEGIS/JPN/ 1, 
8 April 2019 ; GPA/99/Add.5, 3 April 201 7; GPA/99/ Add.6, 3 April 201 8; and GPA/LEGIS/JPN/2, 8 April 2019.  
205 The latest version of th is Basic Policy is available at: 
http://www.env.go.jp/en/laws/policy/green/ 20190208contract.pdf . 
206 The English translation of the Act is available at: 
http://www.japaneselawtranslation.go.jp/law/detail/?printID=&re=02&id=862&lvm =01&vm=02 . 
207 JPO, 2017 Basic Survey on IP Activities by Small and Medium Enterprises in Japan ; intervention by 
Japan, Meeting of the Council for TRIPS of 19 October 2017.  
208 Information provided by the authorities; and Cislo, C., Japan's Intellectual Property Revenue is 
Soaring , Bloomberg Businessweek, 16  January  2018.  WT/TPR/S/397 • Japan  
 
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Chart 3.6 IP revenue, 1996 -2018  
JPY billion  
 
Source:  Bank of Japan.  Viewed at: http://www.stat -search.boj.or.jp/index_en.html . 
3.177.   According to OECD i nternational trade statistics, Japan ranks third, behind the United  States 
and the European Union, regarding charges for the use of IP (i.e. royalties and licensing revenue). 
These charges constituted 22% of Japan's services exports in 2017. Accor ding to the Bank of Japan, 
Japan generated a trade surplus of JPY 2.6 trillion in charges for the use of IP in 2018.   
3.178.   Chart 3.7  presents the growth in charges for the use of IP since 1996. Although Japan does 
not parse its IP export statistics by sector, in 2017, motor vehicles and pharmaceuticals generated 
the largest amount of technology exports, with growth anticipated in robotics and medical care. The 
surplus was reportedly influenced by the flow of funds among subsidiaries partnerships with foreign 
corporations, and shifts in production abroad.209 
Chart 3.7 Charges for the use of IP, n.i.e., 1996 -2018  
JPY billion  
 
Source:  Bank of Japan.  Viewed at: http://www.stat -search.boj.or.jp/index_en.html . 
3.179.   Developing earnings from IP has been a key element of the Government's long -term growth 
strategy. "To secure our nation's position and enable it to  take the lead in international competition, 
                                                
209 OECD, Quarterly International Trade Statistics, Vol. 2018, Issue 3 . Viewed at: 
https://doi.org/10.1787/int_trade -v2018 -3-table95 -en; OECD, Figure 6: Composition of Japan's exports by 
destination and product category in 2017, in OECD Economic Surveys: Japan 2019, 15 April 2009, Version 2; 
JPO, Annual Report 2019  (in Japanese). Viewed at: 
https://www.jpo.go.jp/resources/report/nenji/2019/index.html#0100 ; Nikkei Asian Review, Japan's intellectual 
property gene rating revenue at record pace , 16 January  2018; and Nikkei Asian Review, Japan enjoys 30% 
jump in intellectual property trade surplus , 21 August 2018.  
010,00020,00030,00040,00050,00060,000
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018Chart 4.[JPN]   IP revenue, 1996 -2018
Source:  Bank of Japan online information .JPY billion
-1,500-1,000-50005001,0001,5002,0002,5003,0003,5004,000
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018Charges for the use of industrial property n.i.e.
Charges for the use of copyrights n.i.e.
Charges for the use of intellectual property n.i.e.Chart 4.[JPN]   Charges for the use of IP, n.i.e., 1996 -2018
Source:  Bank of Japan online information .JPY billionWT/TPR/S/397 • Japan  
 
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it is necessary to revamp systems for creating IP and for creating value from IP to make them faster 
and more flexible through a pro -innovation approach to IP strategy …".210 On 12 June 2018, the 
Intellectual Prop erty Strategy Headquarters issued its fourth Intellectual Property Strategy Vision 
(2018 IP Strategy Vision), a policy document issued every five years to offer a medium - to long -term 
perspective on the evolution of society and the IP system. The 2018 IP S trategy Vision foresees 
Japan in 2025 -30 as a "value design society", where innovation is driven by latent needs and wants 
rather than technology or markets. It identified the following steps towards achieving this goal: (i) 
fostering and accumulating huma n resources and organizations that generate values through 
innovation; (ii) establishing mechanisms that encourage the exchange and sharing of intellectual 
assets and expand values; and (iii) producing, disseminating, and developing values that will be 
shared globally.211 
3.180.   The IP Strategy Headquarters issues an annual strategic programme to realize the IP 
Strategy Vision. It establishes the Government's IP strategy for the year, across all relevant agencies 
and ministries. The 2018 IP Strategy Vision prioritiz ed (i) cultivating human resources and business 
to meet future needs; (ii) encouraging ambitious and creative activities; and (iii) designing 
structures for new fields. Included within these key priorities were (i) accelerating open innovation; 
(ii) suppor ting regional companies, SMEs and venture companies; (iii) establishing a sustainable 
content creation ecosystem; (iv) strengthening IP strategy relating to data, artificial intelligence, 
and other new data -related assets; and (v) encouraging innovation an d branding through design 
management.212  
3.181.   There is a clear link between the 2018 IP Strategic Programme and the modifications that 
were made to Japan's IP laws during the review period, including expansions in the scope and 
breadth of protection for designs,  new data protections, new flexible copyright restrictions that 
account for the rise of digitization and networking, and modifications to litigation procedures and 
damages calculations intended to facilitate the enforcement of IPRs. Japan's IP regime was a lso 
influenced by international commitments, particularly the entry into force of the CPTPP and the 
EU-Japan EPA. These agreements prompted some significant amendments, including an extension 
of the copyright term of protection from 50 to 70 years, and hig h-level protection for more than 200 
European geographical indications (GIs).  
3.3.7.2   Policies on promotion and commercialization of innovation  
3.182.   Japan seeks to be "the most innovation -friendly country in the world".213 The WEF's 2018 
Global Competitiveness Report ran ked it sixth in innovation capability, boosted by its R&D score, 
which was, in turn, influenced by its status as the country with the most patent families per capita 
filed in at least two of the five largest IP offices in the world (IP5).214 The Global Innov ation Index 
ranked Japan 15th overall, but third for innovation quality.215 
3.183.   Japan's total R&D expenditure is the third highest in the world, after the United States and 
China. Its gross expenditure on R&D reached its highest level ever in FY2017, at JPY  19.05 trillion, 
a 3.4% increase over FY2016 but similar to expenditures in FY2014 and FY2015. As a percentage of 
GDP, Japan's gross domestic expenditure on R&D drifted between 3.14% and 3.4% from 2012 to 
2017, and stood most recently at 3.2% in 2017. Governmen t-financed R&D as a percentage of GDP 
declined somewhat since 2013, and was 0.48% in 2017. Nearly 50% of government R&D funding is 
directed to public organizations, and 43% is allocated to universities and colleges. 
Government -financed expenditures have hi storically represented a lower percentage of Japan's total 
R&D than in other comparison countries (the European Union, the United  States, the Russian 
Federation, China, India, and the Republic of Korea).  
                                                
210 IP Strategy Headquarters, Intellectual Property Strategic Programme 2018, 12 June 2018, p. 4. 
(2018 IP Strategic Programme).  
211 IP Strategy Headquarters, Intellectual Property Strategy Vision – Towards a "Value Design Society", 
12 June 2018, pp. 49 -60. (2018 IP Strategy Vision).  
212 2018 IP Strategic Programme, pp. 8, 10 -13, 18 -22, and 29 -31. 
213 Council for Sci ence, Technology and Innovation,  Integrated Innovation Strategy,  2018. Viewed at: 
https://www8.cao.go.jp/cstp/english/doc/integrated_main.pdf .  
214 WEF, The Global Competitiveness Report 2018: Competitiveness Rankings . Viewed at: 
http://reports.weforum.org/global -competitiveness -report -2018/competitiveness -rankings /.  
215 Dutta, S., Lanvin, B. and Wunsch Vincent, S. eds., Global Innovation Index 2019: Creating Healthy 
Lives – The Future of Medical Innovation , 12th ed., Cornell University, INSEAD; and WIPO, 2019.  WT/TPR/S/397 • Japan  
 
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3.184.   Japan has the third highest number of researchers i n the world, again behind the United 
States and China. The number of new master's and doctoral degree recipients per million people, 
however, declined in Japan, while it has increased in all other comparison countries.216 The 2018 IP 
Strategy Vision expresse d concern that scientific research capacity to create new technologies is 
showing signs of decay217, and the Government noted decreases in basic research capacity.218 
3.185.   Compared with the United States, Japan has only recently initiated a legal framework for 
prom oting the commercialization of government -financed innovations and public -private 
collaboration. In 1998, Japan introduced technology licensing organizations (TLOs) at universities, 
to promote the transfer of technology to industry, followed one year later  by the Act on Special 
Measures Concerning Revitalization of Industry and Innovation in Industrial Activities (Japan's 
analogue to the 1980 US Bayh -Dole Act), which transferred rights associated with 
government -funded research results from the Government t o individual researchers. Then, in 2004, 
following the privatization of national universities, universities gained the right to own and license 
patents associated with the results of research generated by their professors.219  
3.186.   The University Network for Inno vation and Technology Transfer (UNITT) monitors the 
technology transfer system, and promotes partnerships between academia and industry. Its most 
recent annual survey of universities and TLOs reveals that total licensing revenue exceeded JPY 3 
billion in F Y2016, triple the amount generated in FY2005, but significantly less than the USD  3.14 
billion in revenue reported in 2017 by analogue institutions in the United  States. Universities and 
public research institutions in Japan have historically collaborated closely with large corporations, 
who jointly own inventions and may license them royalty -free. This may influence not only revenue, 
but also the frequency with which such innovations spur the creation of new businesses.220 The 
percentage of surveyed institut ions which launched a start -up in FY2016 was 26.5%, compared to 
79.6% in the United States.221  
3.187.   The JPO, in collaboration with other agencies and the National Center for Industrial Property 
Information and Training (INPIT), launched new support programmes sp ecifically designed to 
address the needs of universities, SMEs and start -ups. In 2017, the JPO and the INPIT opened a 
new INPIT -KANSAI office in Osaka, to provide improved support for universities, SMEs, and start -
ups located in the region. They can also b enefit from reduced patent fees, as described in Section 
3.3.7.4, face -to-face consultations with patent examiners, and accelerated examination in certain 
circumstances. SMEs and start -ups may take advantage of a JETRO Innovation Programme, which 
supports participation in overseas trade shows and business matching programmes.  
3.188.   SMEs may also avail themselves of comprehensive IP Support Service Counters in all 47 
prefectures, which provide free -of-charge assistance from experts on legal matters, branding, 
business development, agriculture, and GIs. An IP Finance Portal Site helps SMEs to evaluate the 
business potential of their IP, along with financing and management support from financial 
institutions. The Global IP Producers programme offers support for esta blishing and protecting IPRs 
                                                
216 Ministry of Education, Culture, Sports, Science and Te chnology (MEXT), Digest of Japanese Science 
and Technology Indicators 2018 , pp. 1 -2, 6, and 10. Viewed at: https://www.nistep.go.jp/wp/wp -
content/uploads/NISTEP -RM274 -SummaryE.pdf ; OECD, Table 2 – Gross domestic expenditure on R&D as a 
percentage of GDP and Table 12 – Governm ent-financed GERD as a percentage of GDP, in Main Science and 
Technology Indicators, Vol. 2018, Issue 2 , https://doi.org/10.1787/7ec29b83 -en; Statistics Bureau of Japan, 
Summary of Results (2018) . Viewed at: https://www.stat.go.jp/english/data/kagaku/1545.html ; and MEXT, 
Current status of S&T in Japan and other selected countries, R&D expenditures , 2016, pg. 8. Viewed at: 
http://www.mext.go.jp/component/b_menu/other/__icsFiles/afieldfile/2016/09/28/1377328_03.pdf . 
217 2018 IP Strategy Vision, pg. 7.  
218 Council for Science , Technology a nd Innovation , The 5th Science and Technology Basic Plan , 
22 January 2016. Viewed at: https://www8.cao.go.jp/cstp/english/basic/5thbasicplan.pdf . 
219 JPO, Looking Back on Japan's Indu stry-Academia Collaboration and Support on Startups . Viewed at: 
https://www.wipo.int/edocs/mdocs/aspac/en/wipo_ip_oka_18/wipo_ip_oka_18_p15.pdf .  
220 Tantiyaswasd ikul, K., Technology Transfer for Commercialization in Japanese University: A Review of 
the Literature . Viewed at: http://www.asia.tu.ac.th/journal/J_Studies30_1/70 -85.pdf . 
221 UNITT, Outline of University Technology Transfer Survey , 2017 Edition . Viewed at: 
https://unitt.jp/en/survey/patent/ ; and AUTM, 2017 Licensing Ac tivity Survey . Viewed at: 
https://autm.net/AUTM/media/SurveyReportsPDF/AUTM_2017_US_Licensing_Survey_no_appendix.pdf . WT/TPR/S/397 • Japan  
 
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overseas222, and JPO offers SMEs an insurance scheme, for which it pays half of the premium, which 
covers the cost of overseas IP litigation.223 
3.189.   In 2018, the JPO established the "IP acceleration programme for start -ups", which 
dispatches expert teams of venture capitalists, business consultants, and attorneys to provide 
hands -on support in the early stages of development to selected start -ups.224 The JPO also offers 
"super -accelerated examination" to start -ups, so they can obtain pate nt rights within one month for 
inventions that are already being worked.225 Most recently, the JPO launched IP Base, an online 
community providing essential information on IP strategies, JPO support, event information, and 
access to IP experts for start -ups.226 Start-ups can also expect to benefit from government 
procurement programmes, set forth in the 2018 IP Strategy Vision, to promote partnerships between 
start-ups and existing businesses.227  
3.190.   Japan is adapting its IP regime and associated processes to the de velopment of Big Data,  
artificial intelligence (AI) technologies, and the Internet of Things (IoT). Standard essential patents 
(SEPs), which are essential to implement standards in fields such as wireless communications, have 
become critical to the develop ment and implementation of new technologies, and licences are 
increasingly sought by companies in previously distinct industries with diverse sets of technical 
knowledge and corporate cultures. In response to increasing disputes over SEPs, Japan launched 
several initiatives during the review period.  
3.191.   First, the JPO published a non -binding Guide to Licensing Negotiations Involving Standard 
Essential Patents, in order to enhance transparency and predictability, facilitate negotiations, and 
help prevent or quickly resolve disputes. The Guide draws upon relevant court decisions  in various 
countries , and thus attempts to articulate global norms.228 Second, the JPO expanded its "Hantei"  
advisory opinion service on whether a patent claim reads on a product, to offer opinions on standard 
essentiality in April 2018. Although the opinions are non -binding, they are influential in licensing 
negotiations, and facilitate dispute resolution.229 Third, a new specialized IP International Arbitration 
Centre opened in Tokyo in 2018. Although it can handle a range of mat ters, it claims to be uniquely 
capable of resolving complex disputes involving SEPs.230 
3.192.   The JPO also established an IoT Committee and an IoT Examination Team to ensure high -
quality IoT patents. New case examples, including trained AI models, 3D printing, dat a structures, 
and others, were added to its Examination Handbook for Patents and Utility Models, in order to assist 
inventors with obtaining rights in these rapidly developing areas.231 The JPO also established new 
use-specific sub -classifications for IoT te chnologies, and proposed their adoption as international 
patent classifications.232  
3.193.   Japan's national scheme for scientific research and technology development is governed by 
the Science and Technology Basic Plan (Basic Plan), formulated by the Cabinet Offic e's Council for 
Science, Technology and Innovation every five years. Using the Basic Plan as a general guideline, 
comprehensive strategy plans are formulated annually, and are executed by various ministries and 
agencies, most notably the Ministry of Educat ion, Culture, Sports, Science and Technology (MEXT) 
and the METI. The Basic Plan for 2016 -20 (Fifth Basic Plan) aims to, inter alia , increase R&D 
investments to 4% of GDP (with government -financed R&D reaching 1% of GDP), foster the 
                                                
222 JPO Status Report 2019, pp. 1 02-104; and JPO Status Report 2018, pp. 80 -82. 
223 The Economist Intelligence Unit, Japan: Export insurance and credit, 1 September 2018.  
224 METI, Ten Startups Selected as the First Recipients of Support Measures under IPAS . Viewed at: 
https://www.meti.go.jp/english/press/2018/0830_003.html . 
225 JPO Status Report 2019, pg. 102.  
226 METI, JPO Opens Member Registration for "IP Base" Website . Viewed at: 
https://www.meti.go.jp/english/press/2019/0308_004.html . 
227 2018 IP Strategy Vision, pp. 51 -52. 
228 JPO, Announcement for release of "Guide to Licensing Negotiations involving Standard Essential 
Patents" . Viewed at: https://www.jpo.go.jp/e/system/laws/rule/guideline/patent/seps -tebiki.html . 
229 JPO, Manual of "Hantei" (Advisory Opinion) for Essentiality Check (Revised Version) and New 
Operatio n based on the Manual of "Hantei" (Advisory Opinion) for Essentiality Check (Revised Version) . Viewed 
at: https://www.jpo.go.jp/e/system/trial_appeal/hantei_hyojun.html .  
230 International Arbitration Center in Tokyo, IACT's Advantages . Viewed at: https://www.iactokyo.com/ .  
231 five IP offices, IP5 Statistics Report, 2017 Edition . Viewed at: 
https://www.fiveipoffices.org/wcm/connect/fiveipoffices/a622e09a -c52d-4ec1-894f-
1a215342a28c/IP5SR%2B2017%2B full.pdf?MOD=AJPERES&CVID .  
232 JPO Status Report 2018.  WT/TPR/S/397 • Japan  
 
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sustainable creation of  IP, promote the strategic use of IP by SMEs and universities, develop 
innovation systems that contribute to regional revitalization and the creation of SMEs and start -ups, 
and institute reforms to promote academic and basic research in tandem with reforms  of research 
funding.233  
3.194.   In 2018, the Cabinet adopted an Integrated Innovation Strategy, and established an 
Integrated Innovation Strategy Promotion Council. University reforms, technologically disruptive 
R&D programmes, supportive start -up ecosystems, and the promotion of science and technology for 
the achievement of SDGs are among the hallmarks of the Strategy, which is to be implemented 
horizontally across ministries and agencies.234  
3.195.   The Integrated Innovation Strategy prioritizes the following five fields for development: AI 
technology, biotechnology, environment and energy, safety and security, and agriculture.235 
Statistics regarding R&D expenditures by private  enterprises reflect Japan's traditional areas of 
economic and competitive strength, with most spe nt on transportation equipment (22.2%), followed 
by medicines (10.6%) and information and communication electronics equipment (9.7%).236 Among 
private researchers, over half specialize in either (i) mechanical engineering, shipbuilding and 
aeronautical engin eering; or (ii) electronical engineering and telecommunications engineering.237 
Patent applications originating from Japan reflect somewhat overlapping technological foci, with the 
greatest proportion falling into the category of "electrical machinery, appar atus, energy" (10.7%), 
followed by "optics" (6.4%), "computer technology" (6.3%), "semiconductors" (6.0%), and 
"transport" (5.6%).238  
3.196.   Japan has also sought to improve the commercialization of privately -held patents. The JPO 
estimated that just over half of Japanese corporations' patents are dormant239, which may reflect 
the relatively narrow scope of patent claims in Japan, a past emphasis on patent quantity over 
quality, defensive use of patents to prevent the use of the technology by competitors, a lack of 
interest in the patented technology, and/or a lack of awareness of its value. Japan launched 
programmes to assist enterprises with assessing the business value of their IP, and promoted open 
innovation through intermediary patent platforms, among other init iatives.240 
3.3.7.3   International cooperation and harmonization  
3.197.   Japan pursues enhanced standards of IP protection with its trading partners in various 
bilateral, regional, and multilateral fora, such as WIPO, UPOV241, the G20, APEC, and the OECD, in 
addition to the WT O.242 At WIPO, Japan financed and supported IP development activities in the 
Asia-Pacific region, Africa, and LDCs, through annual voluntary contributions exceeding CHF 5 million 
                                                
233 Council for Science, Technology and Innovation , The 5th Science and Technology Basic Plan . Viewed 
at: https://www8.cao.go.jp/ cstp/english/basic/5thbasicplan.pdf . 
234 Council for Science, Technology and Innovation , Integrated Innovation Strategy , 2018. Viewed at: 
https://www8.cao.go.jp/cstp/english/doc/inte grated_main.pdf .  
235 Council for Science, Technology and Innovation , Integrated Innovation Strategy , 2018. Viewed at: 
https://www8.cao.go.jp/cstp/english/doc/integrated_main.pdf . 
236 MEXT, Digest of Japanese Science and Technology Indicators 2018 , pp. 1 -2. Viewed at: 
https://www.nistep.go.jp/wp/wp -content/uploads/NISTEP -RM274 -SummaryE.pdf ; OECD, Ta ble 2 – Gross 
domestic expenditure on R&D as a percentage of GDP and Table 12 – Government -financed GERD as a 
percentage of GDP, in Main Science and Technology Indicators, Vol. 2018, Issue 2  (2019), 
https://doi.org/10.1787/7ec29b83 -en; Statistics Bureau of Japan, Summary of Results (2018) . Viewed at: 
https://www.stat.go.jp/english/data/kagaku/1545.html ; and MEXT, Current status of S&T in Japan and other 
selected countries, R&D expenditures,  2016, pg. 8. Viewed at: 
http://www.mext.go.jp/component/b_menu/other/__icsFiles/afieldfile/2016/09/28/1377328_03.pdf . 
237 MEXT, Digest of Japanese Science and Technology Indicators 2018 , pp. 6 and 10.  
238 WIPO, World Intellectual Property Indicators 2018 , p. 56. V iewed at: 
https://www.wipo.int/edocs/pubdocs/en/wipo_pub_941_2018 -chapter2.pdf . 
239 JPO, Annual Report 2019  (in Japanese). Viewed at: 
https://www.jpo.go.jp/resources/report/nenji/2019/index.html#0100 .  
240 2018 IP Strategic Programme, pp. 9 -10; and Swedish Agency for Growth Analysis, Japan's 
governmental intermediary patent platforms for open  innovation . Viewed at: 
https://www.tillvaxtanalys.se/download/18.a70b1491500264a2b244323/144342 3745819/Japan%27s+govern
mental+patent+platforms+for+open+innovation.pdf .  
241 International Union for the Protection of New Varieties of Plants.  
242 MOFA IP Affairs Division, MOFA's Initiatives to Promote Protection of Intellectual Property Rights . 
Viewed at: https://www.mofa.go.jp/files/000228532.pdf . WT/TPR/S/397 • Japan  
 
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to two Japan Funds -in-Trust programmes.243 It also facilitated the establishment and 
implementation of plant variety protection systems in Asia through UPOV.244 At the WTO, it is a 
dynamic participant in the TRIPS Council, where it has actively engaged in topics including IP and 
innovation, IP and the public interest, technology transfer  to LDCs, and access to medicines. It also 
adhered to the review function of the TRIPS Council by systematically notifying changes to its patent, 
design, trademark, GI, unfair competition, and copyright laws, as mandated by TRIPS Article  63.2245, 
and reporti ng on its implementation of Article  66.2 and technical and financial cooperation activities.  
3.198.   Japan identified a pressing need for emerging economies, such as those of ASEAN, with 
which it conducts 15% of its trade, to improve and strengthen their IP syste ms.246 The ASEAN -Japan 
EPA currently in force commits the parties to "explore and undertake economic cooperation 
activities" with respect to IP (among other fields).247 Reports suggest that Japan seeks higher levels 
of IP protection in the Regional Comprehensi ve Economic Partnership RTA, under negotiation with 
the ASEAN countries (as well as Australia, China, India, New Zealand, and the Republic of Korea).248 
Japan is also negotiating separate agreements with other trading partners, including India, China, 
and th e Republic of Korea, that may address IP. It also promotes IP harmonization and efforts to 
facilitate the establishment and protection of rights through high -level dialogues, partnerships, and 
consultations at bilateral, regional, and organizational levels .249 For example, an MoU with China 
provides for a Japan -China IP Working Group to hold annual meetings to discuss a range of IP issues, 
including enforcement, online infringement, counterfeit products, legal systems, trends, and future 
strategies.250  
3.199.   The JPO  seeks to harmonize IP systems and their operation through various collaborative 
efforts with like -minded foreign counterparts, including: the IP5251 and its sister fora, the ID5 
(designs) and TM5 (trademarks); the Patent Prosecution Highway (PPH)252; a US -Japan 
Collaborative Search Pilot Programme wherein examiners of each office share independently 
conducted prior art searches when a patent has been applied for in both countries; and an initiative 
with the USPTO on industrial design protection involving, inter alia , the creation of a US -Japan 
Common Classification System for industrial designs.253 
3.200.   The JPO also supports the development of IPRs and systems in emerging and developing 
countries in Asia, the Pacific, Africa, and the Middle East, by collaborating with  ASEAN, the African 
                                                
243 WIPO, Japan Funds -In-Trust for Industrial Property – Asia-Pacific . Viewed at: 
https://www.wipo.int/cooperation/en/funds_in_trust/japan_fitip_aspac/ ; and Japan Funds -In-Trust for 
Industrial Property – Africa & LDCs. Viewed at: 
https://www.wipo.int/cooperation/en/funds_in_trust/japan_fitip/ . 
244 WTO document IP/C/W/632, 14 Septembe r 2017.  
245 WTO documents IP/N/1/JPN/30 -IP/N/1/JPN/P/13, 6 August  2018; IP/N/1/JPN/34 -IP/N/1/JPN/P/14 , 
12 February 2019; IP/N/1/JPN/39 -IP/N/1/JPN/P/15, 24 May 2019 ; IP/N/1/JPN/40 -IP/N/1/JPN/P/16, 
24 May 2019; IP/N/1/JPN/32 -IP/N/1/JPN/D/8, 6 August 2018; IP/N/1/JPN/31 -IP/N/1/JPN/T/8, 6 August 2018 ; 
IP/N/1/JPN/33 - IP/N/1/JPN/T/9, 12 February 2019 ; IP/N/1/JPN/38 -IP/N/1/JPN/T/10, 10 April 2019 ; 
IP/N/1/JPN/29 -IP/N/1/JPN/G/3, 17 February 2017; IP/N/1/JPN/37 -IP/N/1/JPN/G/4, 5 April 2019; 
IP/N/1/JPN/35 -IP/N/1/JPN/U/2 , 12 February 2019 ; and IP/N/1/JPN/36 -IP/N/1/JPN/C/6, 7 March  2019.  
246 JPO Status Report 2019, pg. 84.  
247 ASEAN-Japan EPA, Article 53. Viewed at: 
https://www.mofa.go.jp/policy/economy/fta/asean/agreement.pdf . 
248 Yu, P.K., The RCEP and Intellectual Property Norm -setting in the Asia -Pacific,  Texas A&M School of 
Law Legal Studie s Research Paper Series No. 18 -20 (9 August 2018). Viewed at:  
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2810579 . 
249 Information provided by the authorities.  
250 METI, Summar y of the 2017 Annual Report from the Office of Intellectual Property Protection , 
23 June 2017.  
251 The IP5 is a forum of the five largest IP offices in the world, and is comprised of the European Patent 
Office, the JPO, the Korean Intellectual Property Offic e, the National Intellectual Property Administration of the 
People's Republic of China, and the US Patent and Trademark Office (USPTO).  
252 The PPH allows an application that is determined to be patentable by the office of first filing to 
undergo accelerated  examination and simplified procedures with the office of second filing. The JPO had 
established PPH relationships with 42 fellow IP offices as at December 2018. New arrangements were put in 
place with Turkey, Brazil, Argentina, New Zealand, Chile, and Per u during the review period, with a pilot PPH 
planned with India for 2019. JPO Status Report 2019, pg. 90; and METI, The JPO and the DIPP, MCI, India 
Agree in Principle to Start a Bilateral PPH . Viewed at: 
https://www.meti.go.jp/english/press/2018/0920_001.html . 
253 METI, The JPO Strengthens Its Cooperative Relationship with the USPTO on Industrial Designs . 
Viewed at: https://www.meti.go.jp/english/press/2018/0615_003.html .  WT/TPR/S/397 • Japan  
 
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Regional Intellectual Property Organization (ARIPO)254, the Gulf Cooperation Council (GCC)255, and 
member country IP offices both bilaterally and multilaterally. Its initiatives include providing training 
on examination practices, accepting  trainees from other countries, supporting efforts to accede to 
international application systems (e.g. Madrid Protocol and Hague Agreement) and regional IP 
systems (e.g. ARIPO and African Intellectual Property Organization (OAPI)256), cooperating in the 
revision and preparation of patent examination manuals and guidelines, and promoting the 
commercialization and awareness of IP and counterfeit products. The JPO coordinates particularly 
closely with ASEAN IP Offices, with which it executed a Memorandum of Cooperation in 2012.257  
3.201.   Similarly, the Japan Copyright Office supported overseas copyright systems and anti -piracy 
efforts through bilateral consultations, training programmes for government officials, copyright 
awareness campaigns, seminars and symposia.258 Japan also undertakes IP training initiatives in 
cooperation with WIPO and the Japan International Cooperation Agency, an incorporated 
administrative agency.259 
3.202.   The Office of Intellectual Property Protection, a cross -governmental consultation office 
organize d under the METI and established in 2004, coordinates the efforts of relevant ministries and 
agencies to protect Japanese IP. Companies and other entities experiencing infringement abroad 
may request consultation services and information, and may petition the Government to conduct an 
investigation.260 The number of consultation cases has been growing, and reached a record high in 
2017.261 
3.203.   Japanese companies and citizens overseas may request assistance from JETRO overseas 
offices and the MOFA's IP Officers, who have been appointed in each of the MOFA's diplomatic 
establishments since 2005 to serve as a central contact point on IP infringement matters.262  
3.3.7.4   General regulatory framework  
3.204.   Japan participates in many international conventions and treaties relating to IP, including 21 
treaties administered by WIPO.263 During the review period, it acceded to the WIPO Marrakesh 
Treaty to Facilitate Access to Published Works for Persons Who Are Blind, Visually Impaired or 
Otherwise Print Disabled  (Marrakesh Treaty), which entere d into force for Japan on 
1 January  2019.264 Since Japan had already accepted the Protocol Amending the TRIPS Agreement 
in 2007, its entry into force on 23 January 2017 applied to Japan, whereupon it took direct effect 
domestically, pursuant to the Japanese Constitution.  
                                                
254 The ARIPO is an intergovernmental organization that facilitates cooperation in IP matters among its 
19 mostly English -speaking member States.  
255 The GCC Patent Office grants patents under a unitary  system that are valid in all member States 
(Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates).  
256 The OAPI is an intergovernmental organization that facilitates cooperation in IP matters among its 17 
mostly French -speaking member St ates. 
257 JPO, Status Report 2019 , pg. 78. Viewed at: 
https://www.jpo.go.jp/e/resources/report/statusreport/2019/document/index/all.pdf ; METI, Japan -ASEAN IP 
Cooperation Programs Enhanced . Viewed at:  https://www.meti.go.jp/english/press/2 019/0807_001.html ; WTO 
document IP/C/W/632, 14  September 2017; and Intellectual Property Watch, ARIPO, Japan Government to 
Train 1,000 People in IP Systems in Africa . Viewed at: https://www.ip -watch.org/2017/09/29/aripo -japan -
government -train-1000-people -ip-systems -africa/ . 
258 ACA, Policy of Cultural Affairs in Japan, Fiscal Year 2017, pg. 56; ACA, Policy of Cultural Affairs in 
Japan, Fiscal Year 2 018, pg. 64. Viewed at: 
http://www.bunka.go.jp/english/report/annual/pdf/r1394357_01.pdf . 
259 WTO document IP/C/W/632, 14 September 2017.  
260 METI, Summary of the 2017 Annual Repo rt from the Office of Intellectual Property Protection . Viewed 
at: https://www.meti.go.jp/english/press/2017/pdf/0623_001a.pdf . 
261 METI, Release of Annual Report on the Office of In tellectual Property Protection (2018) . Viewed at: 
https://www.meti.go.jp/english/press/2018/0629_001.html . 
262 MOFA IP Affairs Division, MOFA's Initiatives to Promote Protection of Intellectual Property Rights . 
Viewed at: https://www.mofa.go.jp/files/000228532.pdf .  
263 WIPO, WIPO -Administered Treaties . Viewed at: 
https://www.wipo.int/treaties/en/ShowResults.jsp?country_id=87C .  
264 WIPO , WIPO -Administered Treaties . Viewed at: 
https://www.wipo.int/treat ies/en/ShowResults.jsp?lang=en&treaty_id=843 . WT/TPR/S/397 • Japan  
 
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3.205.   Japan has entered into a range of bilateral, regional, and multilateral instruments, including 
RTAs, investment treaties, framework agreements, MoUs  and memoranda of cooperation that 
address IP. All Japan's 17 RTAs in  force (Table 2.3)  contain IP provisions, and the majority contain 
high levels of IP content.265 Japan's RTAs with developed economies tend to include detailed 
mandates for IP protection. The EU -Japan EPA and the CPTPP, which entered into force during the 
review period, both contai n lengthy IP chapters and high levels of protection (notable IP provisions 
of each are set out in Table A3.3). 
3.206.   The institutional framework of the IP regime did not change during the review period. The 
2002 Basic Law on Intellectual Property (Basic Law) def ines the role of each institution. It established 
the Intellectual Property Headquarters, comprising the Prime Minister, Cabinet members, and key 
figures from the private sector. It develops measures to fulfil the mandates and coordinate the work 
of variou s governmental authorities responsible for the administration and enforcement of IPRs.266 
Table A3.4  summarizes the substantive laws addressing each main type of IPR. Several IP laws were 
modified during the review period (discussed in the relevant sections below). Japan notified certain 
amendments to the TRIPS Council as pertaining to the CPTPP267, although some related to CPTPP 
provisions that were suspended following the US withdrawal from the agreement, e.g. patent term 
extensions in the event of registrati on delays, and the extended copyright term.  
3.3.7.5   Patents  
3.207.   Several amendments were made to the Patent Act during the review period. The "grace 
period" for exceptions to the novelty requirement was extended from six months to one year268, to 
address the increased ri sk of involuntary disclosure associated with joint research and 
university -industry collaboration through open innovation.269 Another revision provided for patent 
term extensions in the event of delays in registration beyond five years after filing or three years 
after examination of requests, for applications filed after 10  March 2020.270 Finally, annual patent 
fees, examination fees, and fees for PCT international applications were cut by 50% -75% for SMEs, 
R&D organizations (including universities, TLOs, and R&D IAAs) and start -ups. Basic examination 
fees were increased by JPY  20,000 to make up revenue loss.271 
3.208.   These amendments were included in revised patent examination guidelines.272 Patent 
procedures remain otherwise unchanged since the previous Review.273 Japan does not provide for 
provisional patent applications, but an initial application need only satisfy formalities, such as the 
existence of a claim, and applications are not substantively reviewed until the request for 
examination, which must be filed within three years of the filing date. Subsequent applications may 
add embodiments, drawings, and claims, and claim domestic priority within one year from the filing 
date of the first application.  
3.209.   The JPO aims to provide the "world's fastest and utmost quality pa tent examinations", to 
respond to the accelerated cycle of creating, establishing, and utilizing IPRs and to facilitate 
acquisition and protection of rights abroad. The JPO seeks to reduce the average period from filing 
a request for examination to the est ablishment of right (total pendency) to 14 months or less, and 
the average period from filing a request for examination to issuing a first action (FA pendency) to 
10 months or less, by 2023.274 It already partly met this goal in FY2017, with total and FA pen dency 
                                                
265 See Valdés, R. and McCann, M., Intellectual Property Provisions in Regional Trade Agreements: 
Revision and Update , WTO Staff Working Paper ERSD -2014-14, 23 September 2014.  
266 WTO document WT/TPR/S/351/Rev.1, 2 0 June 2017, Chart. 3.4 Structure of IPR administration and 
enforcement.  
267 WTO documents IP/N/1/JPN/36 -IP/N/1/JPN/C/6, 7 Ma rch 2019; IP/N/1/JPN/33 -IP/N/1/JPN/T/9, 
12 February 2019; IP/N/1/JPN/34 -IP/N/1/JPN/P/14, 12 February 2019; IP/C/M/91/Add.1, 2 April 2 019, 
paras.  3-4; and IP/C/M/92/Add.1, 22  July 2019, para. 5.  
268 WTO document IP/N/1/JPN/30 -IP/N/1/JPN/P/13, 6 August  2018.  
269 JPO Status Report 2019, pg. 60.  
270 WTO document IP/N/1/JPN/34 -IP/N/1/JPN/P/14 , 12 February 2019.  
271 WTO documents IP/N/1/JPN/39 -IP/N/1/JPN/P/15, 24 May 2019 ; and IP/N/1/JPN/40 -
IP/N/1/JPN/P/16, 24 May 2019.  
272 JPO, Examination Guidelines for Patent and Utility Model in Japan . Viewed at: 
https://www.jpo.go.jp/e/system/laws/rule/guideline/patent/tukujitu_kijun/index.html . 
273 For a visual depiction of the examination, appeals, trials, and opposit ion process for patents, see JPO 
Status Report 2019 , pg. 118. Viewed at: https://www.jpo.go.jp/e/resources/report/statusreport/2019/ . 
274 Intellectual Property Strategy Headquarters,  Intellectual Property Strategic Programme 2017 , pg. 26. 
Viewed at: https://www.kantei.go.jp/jp/singi/titeki2/kettei/chizaikeikaku20170516_e.pdf . WT/TPR/S/397 • Japan  
 
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averaging 14.1 and 9.3 months, respectively275, now claimed as the "world's fastest patent 
examination".276 
3.210.   Accelerated and super -accelerated examination programmes reduced average FA pendency 
to 2.3 months and 0.7 months, respectively, for qualifying ap plications in 2018. Accelerated 
examination is available upon request for applications made by SMEs, applications that have been 
filed in more than one country, and applications for inventions that have already been put into 
practice. Accelerated examinati on for inventions involving environment -related technologies is under 
trial.277 A pilot super -accelerated examination may be requested for "highly important" applications, 
including inventions already put into practice by either a start -up or an applicant wh o has filed for 
patent protection abroad.278 The JPO outsources prior art searches279, plans to employ AI technology 
to improve speed and quality, and has introduced design -driven management principles to improve 
the quality of its services to users.280  
3.211.   During the review period, the number of patent applications filed annually worldwide 
continued to grow. Although the third highest in the world, the annual number of patent applications 
received by the JPO has continued a pattern of either negligible growth or de cline since 2005. 
According to the authorities, this reflects a shift in application strategy, from quantity to quality. 
Compared with most other top global IP offices, the proportion of domestic filings is high in Japan281, 
although the percentage of foreig n filings has gradually increased, with 19.1% of applications 
originating from abroad in 2018, compared to 15.3% in 2009 (Table 3.25). Most foreign applicants 
originate  from the United  States, the European Union, China, and the Republic of Korea, with 
applications from China overtaking those from the Republic of Korea for the first time during the 
review period.282  
Table 3.25 Patent applications and patents granted, 2009 -18 
 
2009  2010  2011  2012  2013  2014  2015  2016  2017  2018  
Patent applications to JPO by origin   
Japan  295,315  290,081  287,580  287,013  271,731  265,959  258,839  260,244  260,292  253,630 
Other  53,281  54,517  55,030  55,783  56,705  60,030  59,882  58,137  58,189  59,937  
Total 348,596  344,598  342,610  342,796  328,436  325,989  318,721  318,381  318,481  313,567  
% Other  15.3%  15.8%  16.1%  16.3%  17.3%  18.4%  18.8%  18.3%  18.3%  19.1%  
Patents granted by JPO by origin   
Japan  164,459  187,237  197,594  224,917  225,571  177,750  146,749  160,643  156,844  152,440  
Other  28,890  35,456  40,729  49,874  51,508  49,392  42,609  42,444  42,733  42,085  
Total 193,349  222,693  238,323  274,791  277,079  227,142  189,358  203,087  199,577  194,525 
% Other  14.9%  15.9%  17.1%  18.2%  18.6%  21.7%  22.5%  20.9%  21.4%  21.6%  
Patent applications originating from Japan to all patent offices   
Total 
applications 
of Japanese 
origin  462,666  467,249  473,715  487,360  470,615  464,274  456,305  454,973  459,406  .. 
 
.. Not available.  
Source:  Information provided by the authorities.  
3.212.   Although domestic patent applications have declined overall since 2007, applications in the 
fields of business methods, biotechnology, mechanical parts, and control/robotics experienced 
growth from 2013 to 2014 (latest available data).283 A 2019 JPO study also found that, although 
small in absolute terms, the number of domestic patent applications filed annually for AI -related 
inventions is growing rapidly, with a 65% increase between 2016 and 2017 alone.284 
                                                
275 JPO Status Repo rt 2019 , pg. 56. 
276 2018 IP Strategic Programme , pg. 1.  
277 JPO Status Report 2018 , pg. 39.  
278 JPO Status Report 2019 , pg. 58. 
279 JPO Status Report 2019 , pg. 56.  
280 JPO Status Report 2019 , pg. 114; and WIPO document WIPO/IP/ITAI/GE/18/P9. Viewed at: 
https://www.wipo.int/edocs/mdocs/globalinfra/en/wipo_ip_itai_ge_18/wipo_ip_itai_ge_18_p9.pdf . 
281 WIPO, World Intellectual Property Indicators 2018 , pg. 8.  
282 JPO Status Report 2019 , pp. 18-19; JPO Status Report 2016 , pp. 11 and 13.  
283 JPO, Annual Report 2019  (in Japanese), pg. 62. Viewed at: 
https://www.jpo.go.jp/resources/rep ort/nenji/2019/index.html#0100 . 
284 METI, Recent Trends in AI -related Inventions . Viewed at: 
https://www.meti.go.jp/english/press/2019/0701_002.html . WT/TPR/S/397 • Japan  
 
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3.213.   The top five fields of technology for patent applications filed with the JPO, as at 2016, were: 
"electronical machinery , electrical energy" ; "furniture, games"285; "computer technology"; "optics"; 
and "transport". Table 3.26 provides details regarding applications i n each of these subject areas, 
from 2009 to 2016. Applications declined overall in all five fields, except for "furniture, games". The 
share of applications from non -residents in each of these fields also declined, although the share of 
total applications from non -residents increased, indicating a divergence among the top fields in which 
domestic and non -resident inventors seek to obtain Japanese patents.  
Table 3.26 Patent applications to the JPO, by field of t echnology and origin, top five 
fields of technology in 2016  
 
2009  2010  2011  2012  2013  2014  2015  2016  
Electrical machinery, electrical energy  
Japan  32,843  34,153  35,643  34,900  33,031  32,035  29,692  26,647  
Other  6,944  7,184  7,733  7,453  7,474  7,113  5,466  2,151  
Total 39,787  41,337  43,376  42,353  40,505  39,148  35,158  28,798  
% Other  17.5%  17.4%  17.8%  17.6%  18.5%  18.2%  15.5%  7.5%  
Furniture, games  
Japan  13,510  12,731  12,324  13,372  13,136  13,503  14,918  19,897  
Other  1,445  1,483  1,454  1,458  1,499  1,514  1,169  413 
Total 14,955  14,214  13,778  14,830  14,635  15,017  16,087  20,310  
% Other  9.7%  10.4%  10.6%  9.8%  10.2%  10.1%  7.3%  2.0%  
Computer technology  
Japan  27,059  26,080  24,404  23,796  22,159  21,729  20,167  18,247  
Other  7,646  7,681  8,198  8,104  8,309  8,022  5,999  1,978  
Total 34,705  33,761  32,602  31,900  30,468  29,751  26,166  20,225  
% Other  22.0%  22.8%  25.1%  25.4%  27.3%  27.0%  22.9%  9.8%  
Optics  
Japan  30,171  27,953  26,552  24,254  22,825  21,387  20,987  18,849  
Other  3,574  3,565  3,399  3,398  3,628  3,519  2,916  916 
Total 33,745  31,518  29,951  27,652  26,453  24,906  23,903  19,765  
% Other  10.6%  11.3%  11.3%  12.3%  13.7%  14.1%  12.2%  4.6%  
Transport  
Japan  17,917  17,694  18,659  18,820  18,906  18,559  18,117  18,057  
Other  3,131  3,439  3,966  3,875  3,709  3,776  3,017  1,279  
Total 21,048  21,133  22,625  22,695  22,615  22,335  21,134  19,336  
% Other  14.9%  16.3%  17.5%  17.1%  16.4%  16.9%  14.3%  6.6%  
Note:  Figures are tentative.  
Source:  Information provided by the authorities.  
3.214.   Japan's grant rate continued to increase during the review period, and is considered high 
among top global IP offices.286 Patents were most frequently granted in the same five fields in which 
applications were most commonly received. Patent grants in the fields of semiconducto rs and optics 
declined, while those in the transport field grew. As shown in Table  3.25, the proportion of patents 
granted to applicants of foreign origin seemingly peaked in 2015, at 22.5%, and stood at 21.6% in 
2018. Most patents granted to non -residents  during the review period fell into the fields of "medical 
technology", "computer technology", "electronic machinery, apparatus, energy", "pharmaceuticals", 
and "digital communication".287 
3.215.   Japan also ranks third in the number of applications filed globally, by origin. Among patent 
applications originating from Japan, 43.5% are filed abroad, a figure that has remained stable over 
the past five years and reflects both the globalization of IP protection and a desire among Japanese 
right holders to commercialize technology abroad. Applicants from Japan account for over a third of 
non-resident applications filed in Germany, Indonesia, the Republic of Korea, and Thailand, and 
helped to drive record numbers of PCT international patent application filings in 2017.288 See 
Section  3.3.7.2 for the most popular fields of technology among Japanese patent applicants.  
3.216.   Japan's approach to parallel imports and compulsory licensing did not change during the 
review period.289 Japan maintains that parallel imports promote price compet ition, and submits that 
                                                
285 Games includes computer games.  
286 WIPO, World Intellectual Property Indicators 2018 , pp. 32 -33; JPO Status Report 2019 , pg. 18.  
287 WIPO, IP Statistics Data Center , December 2018. Viewed at: 
https://www3.wipo.int/ipstats/index.htm . 
288 WIPO, World Intellectual Property Indicators 2018 , pp. 8, 27 -28, and 32 -33. 
289 WTO document WT/TPR/S/351/Rev.1, 6 August 2018, para. 3.185.  WT/TPR/S/397 • Japan  
 
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the Anti -monopoly Act prohibits their obstruction in certain circumstances.290 Section  92 of the 
Patent  Act can permit compulsory licenses for the improvement of inventions, but its application has 
been limited by a bilateral agreemen t with the United States, in effect since 1995.291 No legislative 
or regulatory action was taken on the proposal in the Intellect ual Property Strategic Programme 
2017 for an alternative dispute resolution system for SEPs, which some viewed as introducing 
compulsory licences.292  
3.217.   The Intellectual Property High Court (IP High Court) and Supreme Court issued significant 
decisions in the "Maxacalcitol" patent case in 2016 and 2017, finding infringement of a process 
patent for the manufacture of a pha rmaceutical based upon the doctrine of equivalents; in so doing, 
it clarified certain criteria for infringement, and clarified that this doctrine may be applied to 
equivalent materials and arts in existence at the filing date of the patent at issue.293  
3.3.7.6   Utility models (UMs)  
3.218.   Except for an adjustment to the calculation of infringement damages, discussed in 
Section  3.3.7.12, there were no significant amendments to the Utility Model Act or the process for 
registering a UM, during the review period. Applications a nd registrations of UMs continued their 
decades -long decline. Almost all applications lead to grant (Table 3.27), and are registered faster 
than patents since there is no substantive examination.  
Table 3.27 UM applications and registrations, 2009 -18 
 
2009  2010  2011  2012  2013  2014  2015  2016  2017  2018  
UM applications to JPO, by origin   
Japan  7,799  6,889  6,305  6,292  5,965  5,429  5,213  4,928  4,578  3,810 
Other  1,708  1,790  1,679  1,820  1,657  1,666  1,647  1,552  1,528  1,578 
UM registrations granted by JPO, by origin   
Japan  7,361  6,756  5,998  6,221  5,738  5,322  5,098  4,756  4,526  3,796 
Other  1,658  1,816  1,597  1,833  1,625  1,695  1,597  1,541  1,498  1,507 
Source:  Information provided by the authorities.  
3.3.7.7   Designs  
3.219.   With the goals of protecting design innovations that use emerging technologies, and of 
expanding opportunities for brand development, significant revisions to the Design Act were 
submitted to the Diet in March 2019, and were promulgated in May 2019. The sc ope of protected 
designs will be expanded to include graphic images that are not recorded or displayed on articles 
(e.g. images displayed through the Internet or projected onto walls). The revised Act will also newly 
protect spatial designs, such as interi or and exterior building designs.  
3.220.   The term of protection for all design rights will be extended from 20 years from the 
registration date to 25 years from the filing date. Protection from "indirect infringement" will be 
expanded to include manufacturing or  importing products which have been broken up into parts for 
the purpose of circumventing IPRs on designs. In 2018, the grace period was extended to one 
year294, in parallel with a similar revision for patents (Section 3.3.7. 5). 
3.221.   The JPO took steps during the review period to improve the speed and quality of 
examination, including setting quantitative goals. In 2017, 2018 and 2019, the Examination 
Guidelines for Design were revised to simplify and clarify procedures for applicants.  Accelerated 
examinations are available on request in certain situations, including when counterfeit products are 
                                                
290 Information provided by the authorities.  
291 Bharadwaj, A. and Yoshioka -Kobayashi, T., Regulating Standard Essential Pat ents in Implementer -
Oriented Countries: Insights from India and Japan (2018), pg. 196. Viewed at: 
https://link.springer.com/content/pdf/10.1007%2F978 -981-13-1232-8_10. pdf. 
292 Intellectual Property Strategy Headquarters, Intellectual Property Strategic Programme 2017 , pp. 28 -
29. Viewed at: https://www.kantei.go.jp/jp/singi/titeki2/kettei/chizaikeikaku20170516_e.pdf . 
293 IP Court. Viewed at: http://www.ip.courts.go.jp/app/files/hanrei_en/003/002003.pdf ; and Supreme 
Court. Viewed at: http://www.courts.go.jp/app/hanrei_en/detail?id=1516 . 
294 WTO document IP/N/1/JPN/32 -IP/N/1/JPN/D/8, 6 August 2018.  WT/TPR/S/397 • Japan  
 
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on the market. Pendency periods declined slightly during the review period, to 6.2 months (FA 
pendency) and 7.0  months (total pendency) in FY2 018.295  
3.222.   In recent years, the total number of design applications and registrations stabilized 
somewhat, with applications from abroad accounting for a growing share ( Table 3. 28). This increase 
in foreign applications may be associated with Japan's 2015 acce ssion to the Hague Agreement, 
which permits an applicant to simultaneously file for design rights in multiple jurisdictions.  
Table 3.28 Design applications and registrations, 2009 -18 
 
2009  2010  2011  2012  2013  2014  2015  2016  2017  2018  
Design applications to JPO, by origin   
Japan  27,674  28,083  26,658  27,934  26,407  24,868  24,804  24,543  24,432  23,453  
Other  3,201  3,673  4,147  4,457  4,718  4,870  5,099  6,336  7,529  7,953  
Design registrations granted by JPO, by origin   
Japan  25,819  24,458  23,042  24,610  24,272  23,092  21,950  21,206  21,480  21,339  
Other  2,993  2,980  3,232  3,739  4,016  4,214  4,347  4,138  5,855  6,279  
Source:  Information provided by the authorities.  
3.3.7.8   Trademarks  
3.223.   The Trademark Act governs the registration and protection of trademarks. The Unfair 
Competition Prevention Act offers additional protection against unauthorized use of well -known 
marks, and imitation of the non -functional configuration of a good.  
3.224.   The Act was revised during the review period to limit claims of priority for divisional 
applications to those with paid parent application filing fees.296 Presumed statutory damages for 
trademark infringement were  revised to include the cost of obtaining and maintaining the trademark, 
a revision prompted by the CPTPP.297 Modifications to Japan's GI regime (see Section  3.3.7.9) also 
led to consequential amendments to the Act.298 A 2019 amendment permitted the owner of a  famous 
mark representing the nation, a local government or agency, or a public interest non -profit to grant 
non-exclusive licences. The revision was intended to facilitate the use of such marks by industries 
and businesses in collaboration with public or non-profit entities, such as universities.  
3.225.   The examination, appeal, trial, grant and opposition processes for a trademark did not 
change during the review period.299 The 2017 revision of the Examination Guidelines for Trademarks 
sought to enhance predictability and clarity for applicants, considering changes in the commercial 
environment, trends in user needs, and recent judicial precedents, among others.300  
3.226.   Although t he number of trademark applications submitted to the JPO decreased slightly in 
2018, the number of applications had been growing at annual rates from 6% -18% since 2014 (Table 
3.29). Non-traditional trademarks, including motions, holograms, colours, sounds,  and positions, 
have been registrable in Japan since 2015. As at December 2018, 433 non -traditional trademarks 
had been registered, from 1,746 applications (mostly combinations of colours and devices/words).301 
3.227.   Trademark applications originating from outside  of Japan continue to represent 18% -21% 
of all applications, with most coming from the European Union, the United States, China, and the 
Republic of Korea. Applications from China, which accounted for 9% of foreign applications in 2013, 
represented 28% of foreign applications in 2017.302  
                                                
295 JPO Status Report 2019 , pg. 64; JPO Status Report 2018 , pg. 47.  
296 WTO document IP/N/1/JPN/31 -IP/N/1/JPN/T/8, 6 August 2018.  
297 WTO document IP/N/1/JPN/33 - IP/N/1/JPN/T/9, 12 February 2019.  
298 WTO document IP/N/1/JPN/38 -IP/N/1/JPN/T/10, 10 April 2019.  
299 For a visual depiction of the examination, appeals, trials, and opposition process for trademarks, see 
JPO, Trademark Updates in Japan, 2019 . Viewed at: 
https://www.jpo.go.jp/e/system/trademark/gaiyo/document/index/panhu29.pdf . 
300 JPO Status Report 2018 , pg. 51.  
301 JPO Status Report 2019 , pg. 72.  
302 JPO, Trademark Updates in Japan , 2019. Viewed at: 
https://www.jpo.go.jp/e/system/trademark/gaiyo/document/index/panhu29.pdf . WT/TPR/S/397 • Japan  
 
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Table 3.29 Trademark applications and registrations, 2009 -18 
  2009  2010  2011  2012  2013  2014  2015  2016  2017  2018  
Trademark applications, by origin   
Japan  90,474  92,163  84,673  95,548  92,496  100,053  117,960  133,337  154,780  145,274  
Other  20,367  21,356  23,387  23,462  25,179  24,389  29,323  28,522  36,159  39,209 
Trademark registrations, by origin   
Japan  88,449  79,338  70,800  77,129  82,736  79,562  75,965  81,838  84,960  89,108  
Other  20,268  18,442  18,479  19,231  20,663  20,334  22,120  23,369  26,220  27,439  
Source:  Information provided by the authorities.  
3.228.   As the number of trademark applications grew, so did examination pendency periods. The 
average FA pendency and total pendency were 7.9 and 9.3 months, respectively, in FY2018, 
compared to 4.3 and 5.8 months in FY2015. The 2018 IP Strategic Programme expressly aimed to 
prevent longer examination periods.303 Accordingly, the JPO outsourced and computerized 
examination proces ses, and increased the number of assistants for examiners.304 It also launched a 
pilot "Fast Track examination" in October 2018, which aims to shorten FA pendency by two months 
for applications for traditional trademarks that (i) only designate goods and ser vices listed in the 
Nice Classification, the Examination Guidelines for Similar Goods and Services, or the Enforcement 
Regulation of the Trademark Act; and (ii) were not amended prior to examination. This initiative 
adds to the existing system of accelerat ed examination, which saw greater demand during the review 
period, with requests growing by 53% in 2018 alone. FA pendency for accelerated examination 
averaged 1.7 months in 2018.305  
3.229.   Japan's Regional Collective Trademark System (RCT), introduced in 2006 and  managed by 
the JPO, co -exists with the sui generis system of GI protection introduced in 2015 under the authority 
of the MAFF (Section 3.3.7.9).306 The JPO promotes the RCT through seminars, brochures, an annual 
Regional Collective Trademark System Guidebook, and a new RCT symbol mark which may be used 
by both the JPO and right holders. 645 regional collective trademarks from 1,224 applications had 
been registered by the end of 2018.307 
3.230.   Japanese courts issued several noteworthy decisions regarding trademarks, during the 
review period. The Supreme Court held, in 2017, that abuse of rights could be used as a defence to 
an infringement suit, even after the  expiration of the invalidation period of the registered trademark, 
so long as the infringer's mark is sufficiently well -known to invalidate the registered mark.308 
Concerning distinctiveness, the IP High Court allowed an appeal against the JPO's refusal to register 
plaintiff Daimler AG's "EQ" designation for "automobiles", and revoked the JPO trial decision. The IP 
Court determined that, while the trademark consisted solely of a very simple and common mark, it 
was used for a concentrated advertisement in ord er to give the impression to consumers interested 
in automobiles, including those who paid attention to an electric car released by the plaintiff and its 
brand name, that it is the plaintiff's new brand for an electric car. Moreover, the trademark was well -
known as the plaintiff's brand for an electric car among consumers who recognize a relationship 
between the trademark and the plaintiff, even though the length of the advertisement was relatively 
short and the number of automobiles sold using the trademar k as part of the product name was not 
high.309  
3.231.   Two other IP High Court decisions addressed confusion in connection with the goods or 
services pertaining to a business of another person. A 2017 ruling in the "Runbird" took into account 
actual trading practic es in connection with the designated good at issue in the course of finding a 
likelihood of confusion between the plaintiff's and the defendant's marks. A 2018 ruling found that 
the trademark "Guzzilla", designated for mining and construction machines and apparatuses, created 
the likelihood of confusion with the mark "Godzilla", which has been well -known since before the 
                                                
303 2018 IP Strategic Programme , pg. 27.  
304 JPO, Trademark Updates in Japan , 2019. Viewed at: 
https://www.jpo.go.jp/e/system/trademark/gaiyo/document/index/panhu29.pdf . 
305 JPO Status Report 2019 , pp. 68-70. 
306 WTO document WT/TPR/S/351/Rev.1, 20 June 2017, Table 3 .37 Major distinctions between MAFF's 
GI system and the JPO's Collective Trademark System.  
307 JPO Status Report 2019 , pg. 72; JPO Status Report 2018 , pg. 52.  
308 Japan IP Court. Viewed at: http://www.ip.courts.go.jp/app/files/hanrei_en/205/002205.pdf . 
309 Japan IP Court. Viewed at: http://www.ip.courts.go.jp/app/files/hanrei_jp/770/088770_hanrei.pdf . WT/TPR/S/397 • Japan  
 
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filing of the trademark registration as applied to toys, stationery, clothing, food, general 
merchandise, etc. associated with the popular  film.  
3.3.7.9   Geographical indications  
3.232.   The 2014 Act on Protection of the Names of Specific Agricultural, Forestry and Fishery 
Products and Foodstuffs introduced a sui generis system of protection for GIs of foods, beverages, 
and agricultural and marine products. It prohibits direct or indirect use of a GI on a non -originating 
product, and applies the level of protection required by Article 23 of the TRIPS Agreement to all 
registered GIs (not only wine and spirits). The Act was amended in 2016 and 2018 to conform with 
Japan's international commit ments.  
3.233.   The 2016 amendments provide for reciprocal GI protection for designated GIs of foreign 
States which offer equivalent GI protection for designated Japanese GIs. Designation, and therefore 
protection, is prohibited for names that (i) consist, in whol e or in part, of a protected GI; (ii) are 
generic terms; or (iii) are identical or similar to certain registered trademarks.310  
3.234.   The 2018 amendments were enacted in response to the EU -Japan EPA that entered into 
force on 1 February 2019. The amendments provi de for a transition period, during which prior good -
faith use of an identical or similar GI may be continued for up to seven years following the 
registration or designation of a GI. The amendments also provide for the co -existence of trademarks 
registered in good faith, prior to the date of registration or designation of a GI, as well as for 
homonymous GIs. Finally, the amendments expand the regulatory scope beyond products and 
packages, to include advertisements, price lists, and transaction documents.311  
3.235.   Applications for all GIs except those applied to alcoholic beverages are handled by the 
MAFF.312 Applications for GIs for alcoholic beverages are submitted to the Commissioner of the 
National Tax Agency, and designated in accordance with the Indicating Standa rds Concerning 
Geographical Indications for Liquor.313 As at September 2019, Japan had registered 86 GIs for 
agricultural products and 10 GIs for liquor.314 It also directly protects 211 European GIs through the 
EU-Japan EPA.315 
3.3.7.10   Undisclosed information and trade  secrets  
3.236.   The Unfair Competition Prevention Act (UCPA) protects trade secrets and prohibits unfair 
competition. A METI study group, tasked with identifying an IP system that is responsive and 
supportive of the Fourth Industrial Revolution, reported, in 2017 , that then -existing measures were 
insufficient to prevent the unfair use of data.316 Accordingly, 2018 amendments to the UCPA, which 
took effect on 1 July 2019, establish civil remedies for the wrongful acquisition, disclosure, and use 
of "data for limited provision" – information that is valuable to business and society but does not 
qualify as a trade secret or for copyright protection. This includes technical or business information 
accumulated in a reasonable amount, managed by electronic or magnetic mean s, and regularly 
provided to specific persons.317 The law is reportedly the first in the world to attempt to protect Big 
                                                
310 WTO document IP/N/1/JPN/29 -IP/N/1/JPN/G/3, 17 February 2017.  
311 WTO document IP/N/1/JPN/37 -IP/N/1/JPN/G/4, 5 April 2019.  
312 For a visual depiction of the application, opposition, and registration process for GIs, see MAFF, 
Geographical Indication (GI) Protection System in Japan, "How to Register" . Viewed at: 
http://www.maff.go.jp/e/japan_food/gi_act/pdf/gi_pamph.pdf . 
313 National Tax Agency, Notice on Establishing Indication Standards Concerning Geographical 
Indications for Liquor (National Tax Agency Notice No. 19) . Viewed at: 
https://www.nta.go.jp/english/taxes/liquor_administration/geographical/01.htm . 
314 MAFF, Information on Registered GIs . Viewed at: 
http://www.maff.go.jp/e/policies/intel/gi_act/register.html ; and National Tax Agency, Information on GIs 
protected in Japan . Viewed at: 
https://www .nta.go.jp/english/taxes/liquor_administration/geographical/02.htm .  
315 European Commission, EU-Japan EPA , Annex 14 -B. Viewed at: 
http://trade.ec.europa.eu/doclib/press/index.cfm?id=16 84. 
316 METI, The Intellectual Property System for the Fourth Industrial Revolution: Outline of the Study 
Group's Report , 19 April 2017, pg. 3. Viewed at: 
https://www.meti.go.jp/engl ish/press/2017/pdf/0419_001b.pdf .  
317 WTO document IP/N/1/JPN/42 -IP/N/1/JPN/U/3, 20 September 2019.  WT/TPR/S/397 • Japan  
 
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Data. The METI published new Guidelines on Protected Data on 23  January 2019, which offer 
practical guidance on the amendments, including  examples of targeted behaviours.318 
3.237.   The 2018 amendments also clarify protections for technological access restrictions that are 
designed to prevent unauthorized use or copying. They specify that providing codes and services 
that interfere with such restrict ions constitute acts of unfair competition and are subject to civil and 
criminal penalties. These amendments took effect on 29 November 2018.319 
3.3.7.11   Copyright  
3.238.   The Copyright Law underwent significant revisions in 2016 and 2018,  that took effect on 30 
December 201 8 and 1 January 2019, respectively. The first amendments were enacted in order to 
comply with Japan's obligations under the CPTPP, and the second were made to conform to the 
Marrakesh Treaty.320  
3.239.   The Copyright Act enumerates an exclusive list of circumstance s in which unauthorized use 
is permissible (rights restrictions provisions). New flexible limitations were introduced, to respond 
to digitization and networking. The provisions aim to promote information technology innovation and 
the development of AI tech nologies by permitting, inter alia , certain unauthorized uses that either 
do not impair or cause only minor harm to the copyright owner's interest and further a service or 
other function that uses Big Data. More specifically, the amendments permit the free  use of a 
copyrighted work when necessary to (i) test technology for the use of the copyright work; (ii) analyse 
information; or (iii) process information using a computer without human recognition. Unauthorized 
use is also now permitted, as required, to e nsure the smooth or efficient use of a copyrighted work 
in a computer. Minor use as part of a computer's information processing and provision of 
corresponding results also does not require authorization.  
3.240.   The revision also facilitates the use of copyrighte d materials in computerized education, 
promotes the use of copyrighted works in archives, and enhances opportunities for persons with 
disabilities to access information.321 Copyright term was extended from 50 years to 70 years after 
the author's death.  
3.241.   The B asic Act on the Promotion of Culture and the Arts was revised, and renamed the Basic 
Act on Culture and the Arts, in June 2017. Its revisions included supporting cooperation for overseas 
copyright systems, developing an environment for the appropriate dist ribution of copyrighted works, 
and promoting anti -piracy.322 As mandated by the Basic Act on Culture and the Arts, a Basic Plan on 
the Promotion of Culture and the Arts was adopted by the Cabinet in March 2018, and sets forth the 
Agency for Cultural Affairs ' vision and strategy for FY2018 -22.323  
3.242.   In 2017, the Japanese Society for Rights of Authors, Composers and Publishers (JASRAC) 
tried to revise royalty rules for the collection of usage fees for music performed in music classes. 
The arbitration by the Agency for Cultural Affairs (ACA) was initiated following a request from the 
representative of users, the result of which was a revision to the royalty rules, enforced from 2018. 
However, based on administrative advice from the ACA, the JASRAC collected the fees only from 
music classes that accepted the new royalty rules.  
3.243.   In FY2016, following a large number of requests by the National Diet Library, the ACA 
granted 47,699 compulsory licences for the legal use of works where the author is unknown; as 
explained by t he authorities, the reason for this high number is that mass applications are made in 
batches every few years. The ACA granted an additional 5,183 requests in FY2017. The 2018 IP 
                                                
318 METI, Unfair Competition Prevention Act . Viewed a t: 
https://www.meti.go.jp/english/policy/economy/chizai/chiteki/ . 
319 WTO document IP/N/1/JPN/35 -IP/N/1/JPN/U/2, 12 February 2019.  
320 WTO document IP/N/1/JPN/36 -IP/N/1/JPN/C/6, 7 March 2 019. 
321 ACA, Policy of Cultural Affairs in Japan , Fiscal Year  2018, pg. 61.  
322 ACA, Policy of Cultural Affairs in Japan , Fiscal Year  2018, pg. 5.  
323 ACA, Basic Plan on the Promotion of Culture and the Arts . Viewed at: 
http://www.bunka.go.jp/english/policy/foundations/basic_policy.html ; and Basic Plan on the Promotion of 
Culture and the Arts (in Japanese). Viewed at: 
http://www.bunka.go.jp/seisaku/bunka_gyosei/hoshin/pdf/r1389480_01.pdf . WT/TPR/S/397 • Japan  
 
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Strategic Programme suggested facilitating the use of the compulsory licensin g system for orphaned 
works324 and, as at April 2018, the fee was reduced by nearly half.325 
3.3.7.12   Enforcement  
3.244.   Counterfeiting and piracy continue to cause meaningful losses to the Japanese economy. A 
2018 fiscal year report commissioned by the JPO estimates JPY 111  billion  as the total profit lost by 
all industrial property right holders, based upon survey data.326 The METI reports recent signs of 
improvement. During the review period, the JPO continued to conduct annual surveys on losses 
suffered by Japanese enterpris es caused by counterfeiting and piracy. 24.1% of respondents 
reported losses in the 2018 report, an increase of 1.7% over the prior year.327 Online piracy, in 
particular, has been referred to as a "rampant problem" that could significantly impair the rights of 
copyright holders.328 The Content Overseas Distribution Association estimates that piracy costs 
Japanese publishers JPY  400 billion per year.329 
3.245.   Japan Customs is responsible for enforcing IPRs at the border, and seizes infringing goods. 
The majority of susp ension cases are brought by right holders, although Japan Customs is 
empowered to act ex officio when it suspects infringing goods. There were no changes to the 
Customs Law during the review period that materially impact the process, availability, or prote ctions 
associated with IPR enforcement at the border.  
3.246.   With respect to import seizures, Japan Customs statistics do not distinguish between seizures 
undertaken following complaint and ex officio . The number of total annual cases fluctuated in recent 
years. The number of articles seized annually had also been declining since 2014, before nearly 
doubling in 2018, following the seizure of a large shipment of pharmaceuticals (Chart  3.8). Most 
cases and articles relate to trademark infringement, although t he numbers related to patents and 
designs grew during the review period. Bags, apparel, and footwear accounted for more than half of 
import seizure cases, but pharmaceuticals, housewares, and appliances were seized in the greatest 
quantities. More than 80%  of the cases and articles were traced to China. Advances in cross -border 
e-commerce increased the rate of infringing goods imported by post.  
                                                
324 2018 IP Strategic Programme , pg. 32.  
325 ACA, Policy of Cultural Affairs in Japan, Fiscal Year 2018, pg. 63.  
326 The report is a questionnaire survey for a random sample of 4,663 Japanese companies out of 
165,627 companies who registered with JPO as industrial property right holders in FY2017. 2,370 companies 
responded. The report estimate total profit loss, based o n the profit loss of 37 companies who reported their 
profit loss in the survey. JPO (in Japanese). Viewed at: 
https//www.jpo.go.jp/resources/statistics/mohou_higai/index.html.  
327 METI, Annual Report on the Office of Intellectual Property Protection 2018 , Appendix (in Japanese). 
Viewed at: https://www.meti.go.jp/press/2018/06/20180629002/20180629002 -2.pdf. 
328 2018 IP Strategic Programme , pg. 23.  
329 Nikkei Asian Review, Kawa Saki, W. and Iwa Sawa, A., Pirate manga link site given harsh sentence in 
Japan , 18 January 2019.  WT/TPR/S/397 • Japan  
 
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Chart 3.8 Import seizure, 2014 -18 
 
Source:  Japan Customs, 2018 Se izure Statistics of IPR Border Enforcement . Viewed at: 
www.customs.go.jp/mizugiwa /chiteki/pages/statistics/statistics2018.pdf . 
3.247.   Seizures of exports remained marginal during the review period, with no cases in 2017. 
However, over 11,000 articles destined for China were seized in 2016, and 15 cases were brought 
in 2018 – both anomalous figures among statistics dating from 2011.330 Low rates of seizure at the 
border of infringing goods destined for export have been attributed to strong domestic enforcement. 
Statistics from the National Police Agency in Table 3.30 show the volume o f confiscated IPR -
infringing goods from 2013 to 2018, with few discernible trends.  
Table 3.30 Confiscated IPR -infringing goods, 2013 -18 
Type  2013  2014  2015  2016  2017  2018  
Fake brand -name products  104,776  118,464  84,411  385,273  58,459  129,248  
Videos/DVDs  576,075  290,659  82,770  8,561  199,333  596,346  
Computer software  3,278  1,592  448 27,209  125 1,473  
Music CDs/ tapes  5,837  16,127  181 88 1,203  1,412  
Products featuring characters  13,482  3,092  7,678  10,585  6,632  2,360  
Total  703,448  429,934  175,488  431,716  265,752  730,839  
Source:  National Police Agency (in Japanese). Viewed at: 
https://www.npa.go.jp/bureau/safetylife/keizai/niseburanndohinkaizokubannnokonnzetu.pdf . 
3.248.   The legal framework surrounding the judicial enforcement of IPRs remained stable during 
the review period. District courts continue to exercise jurisdiction over civil IP infringement disputes 
in the first instance, with Osaka District Court and Tokyo District Court retaining exclusive authority 
over patent -related disp utes. District court decisions may be appealed to the IP Court, which also 
hears in the first instance suits against JPO appeal/trial decisions. Judgements of the IP  Court may 
be appealed to the Supreme Court, which has final jurisdiction and limits its re view to the legal, 
rather than factual, findings of the IP Court.  
3.249.   The number of IP cases handled by domestic courts, and the number of individuals arrested 
for IP infringement declined during the review period, ending an upward trend that dated to 2009 -
10 (Chart 3.9 ). In 2018, 514 IP disputes were handled in the courts, compared to 606 in 2015, and 
626 individuals were arrested for IP -related offenses, compared to 868 in 2015. This amounts to a 
decline of 15% in the number of court cases, and of 28% in arre sts. The authorities reported that 
fewer instances of copyright infringement over the Internet were detected in recent years, which 
reduced the total number of IP cases and arrests. The number of individuals arrested for trademark 
                                                
330 Japan Customs, 2018 Seizure Statistics of IPR Border Enforcement . Viewed at: 
http://www.customs.go.jp/mizugiwa/chiteki/pages/statistics/statistics2018.pdf . 
01002003004005006007008009001,000
05,00010,00015,00020,00025,00030,00035,000
Number of cases
Number of articles ('000)Chart 3.8   Import seizure, 2014 -18
Source:  Japan Customs, 2018 Seizure Statistics of IPR Border Enforcement .   Viewed at:  
www.customs.go.jp/mizugiwa/chiteki/pages/statistics/statistics2018.pdfNumber of cases Number of articles ('000)
2014 2015 2016 2017 2018WT/TPR/S/397 • Japan  
 
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infringement also decline d, although the number of cases involving trademark violations remained 
stable.  
Chart 3.9 IP cases handled by courts, and individuals arrested for IP infringement, 
2009 -18 
 
Source:  National Policy Agency (in Japanese). Viewed at: 
http://www .npa.go.jp/bureau/safetylife/keizai/niseburanndohinkaizokubannnokonnzetu.pdf . 
3.250.   Japan has historically been a comparatively challenging litigation venue for enforcing patent 
rights, with patentees winning infringement suits at a 42.4% rate in Osaka and Tokyo  District Courts, 
compared to 70% in US trial courts.331 Japan has been considering how to improve IP litigation 
procedures, to facilitate the exercise of IPRs and deter infringement. A joint JPO/METI Industrial 
Structure Council report in February 2019 prop osed improved evidence collection procedures, 
damages calculations, court procedures, and litigation costs.332 Since then, "in -camera" rules for the 
examination of evidence by the courts have been clarified, and now include protections for trade 
secrets.333 A bill submitted to the Diet on 1  March 2019 aims to address some of these concerns in 
two ways. First, the bill allows courts handling patent infringement disputes to engage neutral 
technological experts who could conduct and report upon on -site inspections  of domestic plants and 
other suspected infringement sites, when necessary, considering the probability of infringement, the 
need for sufficient evidence, and the proportionality of the burden on the accused. Second, the bill 
allows patent, UM, design, and  trademark right holders to claim damages based on the total number 
of infringing products sold, regardless of the production capacity of the right holder, using a 
hypothetical licence issued to the infringer.334  
3.251.   The Government is also reportedly considerin g establishing an international division within 
the IP Court where cases could be heard in English, in order to make the country a more attractive 
venue for multinational IP disputes. In FY2016, 166 patent -related cases were heard in Japan, 
compared to 5,0 80 in the United States. It is believed that this measure may help Japanese 
businesses protect their IPRs more effectively, save time and costs on litigation abroad, and boost 
patent filings by foreign companies.335 
3.252.   Implementation of the CPTPP led to new pro visions for copyright enforcement, including 
measures to prevent the circumvention of access controls; ex officio  prosecution of certain criminal 
                                                
331 Tessensohn, J.A., Japan Patent Disputes: Patent Litigation and Settlement Trends , Managing 
Intellectual Property, September 2016, pp.  9-12. 
332 METI, Industrial Structure Council, Patent System Subcommittee, Designing a n Intellectual Property 
Dispute Settlement System for Effective Rights Protection , February 2019, pg. 5. Viewed at: 
https://www.jpo.go.jp/e/resources/shingikai/document/190215_tokkyo_houkoku/english.pdf . 
333 WTO documents IP/N/1/JPN/41 -IP/N/1/JPN/P/17, 19 September 2019; I P/N/1/JPN/43 -
IP/N/1/JPN/D/9, 20 September 2019; IP/N/1 /JPN/44 -IP/N/1/JPN/T/11, 26 September 2019; and 
IP/N/1/JPN/44 -IP/N/1/JPN/T/11, 26 September 2019.  
334 METI, Cabinet Decision on the Bill for the Act of Partial Revision of the Patent Act . Viewed at: 
https://www.meti.go.jp/english/press/2019/0301_003.html . 
335 Nikkei Asian Review, Eto, T., Japan considers allowing patent litigation in English . 
01002003004005006007008009001,000
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018Number of IP infringement cases
Number of persons arrested for IP infringementChart 4.[JPN]   IP cases handled by courts and individuals arrested for IP infringement , 2019 -2018
Source:  The National Policy Agency online information (in Japanese).  Viewed at:  
http://www.npa.go.jp/bureau/safetylife/keizai/niseburanndohinkaizokubannnokonnzetu.pdf.
.WT/TPR/S/397 • Japan  
 
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infringements; a royalty right for secondary use of sound recordings distributed over the Internet; 
and the ad dition of a new method using a collective management organization royalty rule to 
calculate compensatory damages.336 
3.253.   In February 2019, the Copyright Subdivision of the Council for Cultural Affairs reported on 
societal issues requiring a re-examination of the copyright system, such as "leech" sites, which 
provide links to infringing content and thereby facilitate and foster piracy, and the need for the 
creators of works to receive appropriate returns.337 It is not clear whether linking to pi rated content 
or operating a leech site violates the existing Copyright Law. However, certain leech site operators 
were arrested on suspicion of copyright violations338, and were criminally prosecuted during the 
review period. In 2018, the Government called for temporary "emergency measures", encouraging 
Internet service providers to voluntarily block infringing sites and considered, but ultimately 
postponed, legislation to legalize such blocking.339 In 2019, an ACA expert panel report proposed 
criminalizing op erating leech sites and knowingly providing links to pirated materials, as well as 
expanding the scope of illegal downloads, currently limited to music and videos, to include all 
copyrighted materials, including manga, computer games, books and other writi ngs.340 A planned 
amendment to the Copyright Law implementing the recommendations was, however, also 
postponed.341 
                                                
336 Information provided by the authorities.  
337 ACA, Policy of Cultural Affairs in Japan, Fiscal Year 2017, pp. 54 -55. 
338 The Japan Times, Murai, S., Internet piracy taking major bite out of Japan's famed manga culture . 
Viewed at: https://www.japantimes.co.jp/news/2018/04/10/reference/internet -piracy -taking -major -bite-
japans -famed -manga -culture/#.XUat7x0zbIV ; and Kyodo, Japanese man wanted for running il legal manga site 
detained in Philippines . Viewed at: https://www.japantimes.co.jp/news/2019/07/09/n ational/japanese -man-
wanted -running -illegal -manga -site-detained -philippines/#.XUa4_B0zbIU . 
339 Nikkei Asian Review, Kawa Saki, W. and Iwa Sawa, A., Pirate manga link site given harsh sentence in 
Japan . Viewed at: https://asia.nikkei.com/Politics/Pirate -manga -link-site-given -harsh -sentence -in-Japan . 
340 The Japan Times, Kyodo, Japan to make unauthorized downloads of all copyrighted work illegal . 
Viewed at: https://www.japantimes.co.jp/news/2019/02/14/national/japan -make -unauthorized -downloads -
copyrighted -work-illegal/ #.XUWbtOQ7buh . 
341 The Japan Times, Kyodo, Japan shelves bill on stricter copyright control after academics, manga 
artists and fans air concerns . Viewed at: https://www.japantimes.co.jp/news/2019/03/13/national/japan -
shelves -bill-stricter -copyright -control -academics -manga -artists -fans-air-concerns/#.XUW0dh0zbIU . WT/TPR/S/397 • Japan  
 
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4  TRADE POLICIES  BY SECTOR  
4.1  Agriculture , Forestry, and Fisheries  
4.1.1   Agriculture  
4.1.  Agriculture  In 2017 (latest year of available data), agriculture, forestry and fishing contributed 
around 1.2% to GDP, and 3.8% to total employment (Section 1, Table 1.2). Although agriculture 
remains a relatively small part of the economy and employment, it continue s to be considered 
important for food security as well as for historical and cultural reasons.  
4.2.  In 2018, there were nearly 1.2 million commercial farm households (defined as farms of at 
least 0.3 ha or with annual sales of at least JPY 500,000). Commercial farm households may be 
classified as: either part -time or full -time; or as a business, semi -business, or side -business 
(Table  4.1). Even commercial farm households are usually small in size; in 2018, the average size 
was 2.46 ha, compared with an average o f 2.2 ha in 2015. Nearly half of commercial farm households 
are mainly engaged in rice production, and well over half of cultivated land is under rice production. 
According to the OECD, impediments to consolidating farmland include the difficulty of locati ng 
landowners, and the high costs of leasing farmlands to full -time farmers.1 
Table 4.1 Farm households and average farm size, 2015 -18  
 
Unit 2015  2016  2017  2018  
Farm households  '000 2,155  .. .. .. 
Of which       
Commercial farm households  '000 1,330  1,263  1,200  1,164  
Of which       
Full-time '000 443 395 381 375 
Part-time '000 887 867 819 789 
Commercial farm households  '000 1,330  1,263  1,200  1,164  
Of which       
Business farms  '000 294 285 268 252 
Semi-business  '000 257 237 206 188 
Side-business  '000 779 741 727 725 
Ha cultivated land/household       
Commercial farm households  Ha 2.20 2.35 2.41 2.46 
Business farm households  Ha 5.57 5.93 6.16 6.45 
.. Not available (data on farm households are available only every five years).  
Note:  Definitions:  
 Farm household: a farm with cultivated land under management of at least 10 ares (0.1 hectares) or 
with sales of agricultural products of at least JPY 150,000 in the previous year.  
 Comme rcial farm household: a farm with cultivated land under management of at least 30 ares or 
with sales of agricultural products of at least JPY 500,000 in the previous year.  
 Full-time farm household: a commercial farm household with no household members eng aged in 
jobs other than farming.  
 Part-time farm household:  a commercial farm household with at least one household member 
engaged in a job other than farming.   
 Business farm household: a commercial farm household for which agricultural income exceeds 50%  
of the household income and has at least one household member (under 65 years old) engaged in 
own farming for at least 60 days per year.  
 Semi-business farm household: a commercial farm household for which non -agricultural income 
exceeds 50% of the househ old income, and with at least one household member (under 65 years 
old) engaged in own farming for at least 60 days per year.  
 Side-business farm household: a commercial farm household with no members (under 65 years old) 
engaged in own farming for more than 60  days per year.  
Source:  Information provided by the authorities.  
4.3.  Total agricultural output (the sum of the value of crops, livestock and processed agricultural 
products) has been on a growing trend since 2014. Rice remains the most important si ngle item, 
but its total output remains less than that of vegetables or livestock (Table  4.2).  
                                                
1 OECD Economic Survey Japan, April 2019. Viewed at: 
https://www.oecdilibrary.org/docserver/fd63f374en.pdf?expires=1569408615&id=id&accname=oci195767&ch
ecksum=81B51161847459D7F5629BAD30843747 . WT/TPR/S/397 • Japan  
 
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Table 4.2 Total agricultural production and production of selected products, 2014 -18  
 
Total 
agricultural 
output  Crops  Rice Vegetables  Wheat  Soya beans  
JPY bn  JPY bn  '000 
tonnes  JPY 
bn '000 
tonnes  JPY 
bn '000 
tonnes  JPY 
bn '000 
tonnes  
2014 8,364  5,363  1,434  8,439  2,242  13,764  .. 852 .. 232 
2015 8,798  5,625  1,499  7,989  2,392  13,654  .. 1,004  .. 243 
2016 9,203  5,980  1,655  8,044  2,557  13,180  .. 791 .. 238 
2017 9,274  5,961  1,736  7,824  2,451  13,344  .. 907 .. 253 
2018 .. .. .. 7,782  .. .. .. 765 .. 211 
 Livestock and its 
products  Beef 
cattle  Beef Raw milk  Pigs Pig 
meat  Hen eggs  
JPY bn  JYP bn  '000 
tonnes  JPY 
bn '000 
tonnes  JPY 
bn '000 
tonnes  JPY 
bn '000 
tonnes  
2014 2,945  594 502 697 7,334  633 1,264  511 2,502  
2015 3,118  689 481 731 7,379  621 1,254  547 2,521  
2016 3,163  739 464 739 7,394  612 1,279  515 2,562  
2017 3,252  731 469 740 7,277  649 1,272  528 2,601  
2018 .. .. 475 .. 7,289  .. 1,284  .. 2,628  
.. Not available.  
Source:  Information provided by the authorities.  
4.1.1.1   Trade  
4.4.  Japan has a deficit in trade in agricultural goods, with imports of over USD 59.9 billion and 
exports of USD 5.2 billion in 2018.2 While exports of agricultural products gradually increased over 
the period 2014 -18, imports fluctuated (Chart 4.1).  
Chart 4.1 Trade in agriculture, 2014 -18 
USD billion  
 
Note:  Data is based on WTO agriculture definition.  
Source:  WTO calculations, based on data taken from the UNSD Comtrade database.  
4.5.  Imports of agricultural products are widely spread across many different tariff lines, with the 
top ten products representing 41% of total a gricultural imports (Table 4.3).  
Table 4.3 Imports of agricultural products, 2014 -18 
HS subheading - description    2014  2015  2016  2017  2018  
Total agricultural imports  USD million  58,952.7  53,674.3  53,317.7  56,729.1  59,563.7         
0203 - Meat of swine, fresh, chilled 
or frozen  '000 tonnes  829.4  790.6  861.2  932.1  925.0  
USD million  4,314.6  3,513.2  4,166.2  4,378.5  4,404.9         
1005 - Maize  '000 tonnes  15,034.8  14,708.2  15,341.8  .. .. 
USD million  3,861.9  3,236.5  3,066.8  3,083.6  3,370.7         
'000 tonnes  620.4  604.7  619.3  700.5  741.2  
                                                
2 For the purposes of this Section of the Trade Policy Re view report , the definition of agricultural 
product s used i s that set out in Annex 1 of the Agreement on Agriculture , where fish and fish products are 
taken to include HS20 17 Headings 020840, 03, 051191, 1504, 1603, 1604, 1605, and 230120.  
0%1%2%3%4%5%6%7%8%9%10%
010203040506070
2014 2015 2016 2017 2018Exports of agricultural products (USD billion)
Imports of agricultural products (USD billion)
Exports of agricultural products as a % of total exports
Imports of agricultural products as a % of total importsChart 4.1 Trade in agriculture, 2014 -18
USDbillion
Source: WTO calculations, based on data taken from the UNSD Comtrade database.Note: Data is based on WTO agriculture definition.WT/TPR/S/397 • Japan  
 
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HS subheading - description    2014  2015  2016  2017  2018  
1602 - Other prepared or 
preserved meat, meat offal or 
blood  USD million  2,823.8  2,628.8  2,620.8  3,001.5  3,216.8  
       
2403 - Other manufactured 
tobacco and manufactured tobacco 
substitutes  '000 tonnes  8.3 7.9 12.6 25.7 33.7 
USD million  40.6 54.0 495.2  1,805.3  2,659.5  
       
2402 - Cigars, cheroots, cigarillos 
and cigarettes  '000 tonnes  73.5 75.5 .. 60.2 53.3 
USD million  3,364.3  3,078.1  3,249.7  2,634.9  2,456.4         
0201 - Meat of bovine animals, 
fresh or chilled  '000 tonnes  219.3  204.7  229.1  265.8  278.8  
USD million  1,596.7  1,506.9  1,656.3  1,927.3  2,103.5         
2204 - Wine of fresh grapes  '000 tonnes  279.4  289.1  276.4  283.9  266.8  
USD million  1,641.6  1,490.2  1,500.0  1,616.2  1,688.9         
1001 - Wheat and meslin  '000 tonnes  5,759.5  5,530.7  5,446.6  7,507.0  7,494.0  
USD million  1,971.1  1,652.5  1,361.7  1,528.9  1,638.7         
1201 - Soya beans  '000 tonnes  2,827.7  3,242.6  3,131.6  3,320.9  3,051.6  
USD million  1,832.8  1,704.2  1,527.7  1,546.3  1,538.9         
0202 - Meat of bovine animals, 
frozen  '000 tonnes  299.5  289.3  274.1  307.1  328.6  
USD million  1,295.5  1,277.0  993.4  1,191.5  1,370.5  
.. Not available.  
Source:  WTO calculations, based on data taken from the UNSD Comtrade database.  
4.6.  Agricultural exports tend to be processed products; in almost all top ten export categories, 
there was a steady increase in both volume and value terms over the perio d 2014 -18, with the 
notable exception of cigars, cheroots, cigarillos and cigarettes, which saw a marked decline 
(Table  4.4).  
Table 4.4 Exports of agricultural products, 2014 -18 
HS subheading - description    2014  2015  2016  2017  2018  
Total agricultural exports  USD million  3,414.4  3,706.3  4,285.7   4,497.2   5,179.4         
2106 - Food preparations, n.e.s.  '000 tonnes  25.7  28.9  29.1  31.4  34.5  
USD million  346.1  418.7  486.0  522.8  741.9         
2103 - Sauces and preparations  '000 tonnes  82.2  91.6  101.0  110.0  118.2  
USD million  290.3  293.1  341.8  358.0  397.5         
1905 - Bread, pastry, other 
bakers' wares  '000 tonnes  26.1  30.4  31.4  30.2  31.4  
USD million  251.6  280.7  330.2  313.0  333.1         
2202 - Waters with added sugar  '000 tonnes  72.1  81.4  86.9  105.0  109.6  
USD million  150.5  163.1  178.9  218.5  255.2         
2208 - Alcohol of strength less 
than 80% vol.  '000 tonnes  13.1  14.5  17.6  22.2  27.2  
USD million  100.9  130.1  157.9  192.1  231.4  
2206 - Other fermented 
beverages  '000 tonnes  17.7  20.1  22.5  29.4  31.3  
USD million  112.7  120.2  149.0  174.7  209.6         
2402 - Cigars, cheroots, 
cigarillos and cigarettes  '000 tonnes  10.0 11.3 8.7 3.3 3.5 
USD million  181.5  193.6  192.1  118.0  145.0         
0902 – Tea '000 tonnes  3.6 4.3 4.3 4.7 5.2 
USD million  75.2 85.9 108.9  129.9  142.4         
1902 - Pasta, noodles, lasagne, 
etc. '000 tonnes  28.2 31.9 36.5 39.3 42.6 
USD million  90.7 94.8 122.1  129.7  141.3         
1901 - Food preparations of 
flours, malt extract, etc.  '000 tonnes  16.0 15.4 17.2 18.1 20.0 
USD million  88.0 89.0 117.0  122.0  136.6  
Source:  WTO calculations, based on data taken from the UNSD Comtrade database.  
4.1.1.2   Agricultural policy  
4.7.  The overall goal for the sector is to make agriculture a growth industry, with greater private -
sector participation.3 The agricultural policy is set out in t he Food, Agriculture and Rural Areas Basic 
Plan, which is reviewed roughly every five years. The current Plan, adopted in March 2015, sets out 
                                                
3 OECD Economic Survey Japan, April 2019. Viewed at: 
https://www.oecdlibrary.org/docserver/fd63f374en.pdf?expires=1569408615&id=id&accname=ocid195767&ch
ecksum=81B51161847459D7F 5629BAD30843747 . WT/TPR/S/397 • Japan  
 
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the objectives of doubling incomes in agriculture and rural areas over the next ten years, by 
increasing domestic  and export demand, improving value chains, reducing costs, promoting 
structural reform, and improving productivity.4 In September 2019, the Ministry of Agriculture, 
Forestry and Fisheries (MAFF) launched the process of developing the next five -year plan, to be 
released in 2020.5 Agricultural policy continues to emphasize self -sufficiency, and the Plan sets 
self-sufficiency targets for FY2025 of 45% on a calorie basis and 73% on a production value basis, 
as well as a self -sufficiency target for feeds of 40%  for FY2025. In 2017, self -sufficiency on a calorie 
basis was as 37%, under target due to climate change affecting the production of main crops such 
as wheat and soybeans.6 Self-sufficiency rates for individual products vary year -on-year but are 
consistent ly high (at 70% and above) for: unshu, rice; eggs; sweet potato; fungi; vegetables and 
tubers (Table  A4.1). Agricultural policies are reviewed annually in the MAFF's Annual Report/White 
Papers on Food, Agriculture and Rural Areas in Japan.7 
4.8.  As reported in Japan's previous Review, in May 2016 , the MAFF developed the Strategy to 
Promote Exports of Agriculture, Forestry, Fisheries Products and Foods, under which governmental 
support includes: information to farmers on market trends; matching of producers and e xporters; 
and participation in food fairs. In June 2016, the Cabinet adopted the Japan Revitalization Strategy 
2016 (Section 2),  which sets the export target for major agriculture, forestry, and fisheries products 
and foods at more than JPY 1 trillion by 20198; according to the authorities, by end -2018, the value 
of exports of these products reached JPY 906.8 billion.  
4.9.  In 2017, Japan released a Policy Package for Enhancing the Competitiveness of Japan's 
Agriculture. It aims to increase farmer's  competitiveness through 13 actions, namely: reducing the 
price of farming inputs; structural reform of distribution and processing; manpower development; 
the development of a strategic export system; the indication of country of origin of ingredients; a 
study of the introduction of checkoff programmes9; the introduction of a revenue insurance system; 
a revision of the land improvement system; improvements to employment structures in farm 
villages; the promotion of feed rice; the reinforcement of the produc tion structure for beef cattle 
and dairy farming; ensuring steady management of the compound feed price stabilization system; 
and the reform of the raw milk distribution system.10  
4.10.   A Food Industry Strategy was issued in April 2018, which was developed by th e Government 
and various agricultural stakeholders. It identifies the challenges and issues/changing trends facing 
the food industry along the food chain, as well as its potential strengths. It incorporates proposals 
and an Action Plan.11  
4.11.   Key policy developments over the review period were the abolition of the Direct Payment for 
Rice and of the administrative allocation of rice production volume targets; the introduction of a new 
Revenue Insurance programme, applicable to almost all farm pr oducts; a review of the Agricultural 
Mutual Aid System; the abolition of administered prices for beef and pig meat; and increased support 
for domestic beef and pork producers (see below). In 2018, a new residency status was approved 
by the Diet, to grant a  new type of residency status to foreigners into sectors that need more 
                                                
4 The 2015 Basic Plan and related documents were viewed at: 
http://www.maff.go.jp/j/keikaku/k_aratana/h27_keikaku.html . 
5 MAFF, Basic Plan for Food, Agriculture and  Rural Areas . Viewed at: 
http://www.maff.go.jp/j/keikaku/k_aratana/index.html . 
6 Self-sufficiency data on a product -by-product basis may be viewed (in Japanese) at: 
http://www.maff.go.jp/j/zyukyu/zikyu_ritu/attach/pdf/012 -14.pdf . 
7 The Annual Reports/White Papers covering the period under review were viewed at:  
http://www.maff.go.jp/j/wpaper/index.html . 
8 Cabinet  of Japan . Viewed at: 
http://www.kantei.go.jp/jp/singi/keizaisaisei/pdf/2016saikou_torikumi.pdf ; the target year was changed from 
2020 to 2019.  
9 As indicated by the authorities, checkoff pr ogrammes include promotion activities based on producers' 
contributions.  
10 MAFF, The Policy Package for Enhancing Competitiveness of Japan's Agriculture (Outline). Viewed at:  
http://www.maff.go.jp/e/policies/law_plan/attach/pdf/index -4.pdf. 
11 MAFF. Viewed (in Japanese) at: http://www.maff.go.jp/j/press/shokusan/seizo/attach/pdf/180406 -
2.pdf. WT/TPR/S/397 • Japan  
 
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workers, the agricultural sector being one of these (Section 2.4.2); this policy was implemented in 
April 2019.12  
4.1.1.3   Institutional and legal framework  
4.12.   The MAFF is responsible for agricult ural policy. There were no changes to its responsibilities 
over the review period. It has several divisions which deal with all aspects of agriculture (as well as 
forestry and fishing), including trade policy and trade negotiations relating to agricultural  products, 
administering tariff quotas, statistics, domestic market supervision, agricultural insurance, SPS and 
TBT measures relating to agriculture, and overseeing and promoting R&D undertaken under the 
Agriculture, Forestry and Fisheries Research Counci l.13 The MAFF also has under its responsibility a 
public -private investment fund (A -FIVE) which invests in the agricultural sector.  
4.13.   The Prime Minister chairs the Headquarters on Creating Dynamism through Agriculture, 
Forestry and Fishery Industries and Loc al Communities; established in 2013, this brings together 
various government ministers. In 2019, a revised Plan for Creating Dynamism in Agriculture, 
Forestry and Fishery Industries and Local Communities was approved. This includes export 
opportunities; te chnology/smart agriculture; and farmland use.  
4.14.   The main general law governing the agricultural sector is the Basic Law on Food, Agriculture 
and Rural Areas (last amended in 1999), which obliges the Government to establish a basic plan for 
food, agriculture  and rural areas, setting out national policies and objectives.  
4.15.   The Act on the Support for Strengthening Agricultural Competitiveness entered into force in 
2017.14 Its stated purpose is to promote structural reforms and business entry to the agricultural 
production -related industries in Japan, so as to ensure the sustainable development of agricultural 
and agricultural production -related industries. Actions/policies to be taken by the Government are:  
• policies to realize the supply of high -quality and afforda ble agricultural materials, including: 
(i) a review of regulations on agricultural materials to make them, where relevant, 
reasonable based on the latest scientific knowledge; (ii) the setting of development targets 
for agricultural machines and other agri cultural materials, as well as the promotion of 
collaboration among R&D agencies, universities and private businesses; (iii) the promotion 
of aggregation of brands of agricultural materials where the proliferation of small brands 
accounts for low productiv ity; (iv) the promotion of technological development and 
production or supply of seeds and seedlings by private businesses, as well as the provision 
of knowledge of their production held by R&D agencies or prefectures; (v) the promotion of 
business restruc turing/entry into the agricultural material business; and (vi) the provision 
of information to farmers to assist in their procurement of agricultural materials;  
 
• policies to rationalize agricultural product distribution, including: (i) reviewing regulation s 
on agricultural product distribution; (ii) promoting business restructuring/entry for 
agricultural product wholesale and retail businesses and manufacturing and processing 
businesses; (iii) promoting direct sales from farmers/farmers bodies to consumers;  (iv) 
providing information for shipment of agricultural products to farmers; and (v) ensuring the 
quality, production or distribution methods, or any other characteristics of agricultural 
products are properly evaluated; and  
 
• measures to promote business restructuring or business entry, including the development 
of a framework through which enterprises wishing to restructure/enter the market may 
submit their business plans to the competent minister to be certified. The Act provides for 
financial support to  successfully certified enterprises through: the Organization for Small and 
Medium Enterprises and Regional Innovation, Japan; the Japan Finance Corporation; and 
the Agriculture, Forestry and Fisheries Fund Corporation for Innovation, Value -chain and 
                                                
12 OECD, Economic Survey Japan 2019 . Viewed at: https://www.oecd -ilibrary.org/docserver/fd63f374 -
en.pdf?expires=1569408615&id=id&accname=ocid195767&checksum=81B51161847459D7F5629BAD3084374
7. 
13 WTO document WT/TPR/S/351/Rev.1, 20 June 2017.  
14 The Agricultural Competitiveness Enhancement Support Act. Viewed at: 
http://www.japaneselawtranslation.go.jp/law/detail/?ft=1&re=02&dn=1&x=55&y=8&co=01&ia=03&ja=04&ky
=support+for+strengthening+a gricultural+competitiveness&page=7 . WT/TPR/S/397 • Japan  
 
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Expan sion Japan (A -FIVE). Based on the Act on Special Measures Concerning Taxation, 
special provisions for depreciation, the registration and licence tax, and refunds by carry -
back of loss are applied to certified enterprises carrying out business restructuring . 
 
4.16.   The Act on the Support for Strengthening Agricultural Competitiveness requires the 
Government to undertake a survey, approximately every five years, of the supply of agricultural 
materials and agricultural product distribution, both in Japan and abroad;  examine its policies; and 
establish implementing guidelines to promote business restructuring/business entry. Since 
implementation of the Act, 21 business restructuring plans and 1 business entry plan have been 
certified.   
4.17.   Over the review period, the Agri cultural Management Framework Reinforcement Act was 
amended in order to promote the utilization of farmland with unidentified owners, and thereby enable 
restructuring. Additionally, the Urban Farmland Lease Facilitation Act was amended in order to assist 
farmers who want to produce in an urban farmland.  
4.1.1.4   Trade policies and border measures  
4.18.   In 2017, the Japan Food Product Overseas Promotion Center was established within the Japan 
External Trade Organization (JETRO); it aims to raise awareness of Japanese produ cts globally, 
establish the "Japan brand", and seek further export opportunities for Japanese food products15 
(Section 3.2.4.4).  
4.19.   Export insurance from Nippon Export and Investment Insurance is available for agricultural 
products in the same way as for expo rts of other goods (Section 3.2.5).  
4.20.   The simple average tariff on agricultural products (WTO definition) increased to 17.9% in 
FY2019 from 16.3% in FY2016, due to changes in the unit prices leading to increases in ad valorem  
equivalents (AVEs) of non -ad val orem tariffs. In general, tariffs on agricultural products (17.9%) are 
higher than tariffs on non -agricultural products, with an average of 3.5%. Tariffs vary considerably 
among agricultural products, with just below one quarter duty -free, and a maximum ta riff (AVE, 
out-of-quota) of 499.7%. 17.5% of agricultural tariff lines are non -ad valorem .  
4.21.   The Government considers that, as a result of full implementation of the two new RTAs that 
entered into force over the review period (the CPTPP and the Japan -EU EPA  (Section 2), there will 
be price declines for certain agricultural, forestry and fisheries products. It estimates a total loss of 
JPY 112.5 billion for these products under the Japan -EU EPA, and of JPY 145.9 billion under the 
CPTPP. The agricultural produ cts projected to be hardest hit are beef and dairy products under the 
Japan -EU EPA, and beef, dairy products and pig meat under the CPTPP. However, the Government 
is of the view that, despite this, domestic production volumes and farmer's incomes will be 
maintained through government measures.16  
4.22.   Japan reserved the right to use special agricultural safeguards (SSGs) on 147 tariff lines based 
on the Consolidated Tariff Schedule (CTS) in HS2002.17 During FY 2018 and FY 2019, Japan applied 
either the volume - or price-based SSGs several times to out -of-quota imports of a variety of products 
(Table 4.5).  
                                                
15 MAFF, FY2018 Annual Report on Food, Agriculture and Rural Areas in Japan . Viewed at: 
http://www.maff.go.jp/j/wpaper/index.html . 
16 Official documents on the impact of the CPTPP and the Japan -EU EPA on food, agriculture and rural 
areas are available (in Japanese) at: http://www.maff.go.jp/j/kanbo/tpp/ . 
17 WTO document TN/AG/S/29/Rev.1,  11 January 2017. As reported in previous Reviews, Japan had the 
right to use the SSG on 121 tariff lines, as the CTS in this case was based on HS1996 (WTO document 
TN/AG/S/12, 20 December 2004). The number of lines increased to 147, due to the CTS now bei ng based on 
HS2002.  WT/TPR/S/397 • Japan  
 
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Table 4.5 SSGs, FY201 7/18 
HS Description  Type of 
SSG Date or period 
of application  
FY2017  
040120190  Milk and  cream, not concentrated or containing 
added sugar or other sweetening matter.  
- Of a fat content, by weight, exceeding 1% but 
not exceeding 6%: sterilized, frozen or 
preserved  Volume  01/06/2017 to  
31/03/2018  
040210129,040210212,  
040210217,040210229,  
040221119,040229119,  
040221129,040229129,  
040221212,040221217,  
040221229,040229291  Milk and  cream, concentrated or containing 
added sugar or other sweetening matter:  
in powder, granules or other solid forms, of a fat 
content, by weight , not exceeding 1.5%:  
in powder, granules or other solid forms, of a fat 
content, by weight, exceeding 1.5%  
Not containing added sugar or other sweetening 
matter:  
Other:  Volume  01/02/2018 to  
31/03/2018  
040291129  Milk and cream, concentrated, not containing 
added sugar or other sweetening matter  
- of a fat content, by weight, exceeding 7.5%  Price 07/08/2017  
040390113, 040390118,  
040390123, 040390128,  
040390133, 040390138  Buttermilk, curdled milk and cream, kephi r and 
other fermented or acidified milk and cream, 
sterilized, frozen, preserved, concentrated or 
containing added sugar or other sweetening 
matter, flavouring, fruits or nuts  Volume  01/03/2018 to  
31/03/2018  
071335299  Cow peas ( Vigna unguiculata ) Price 09/02/2018  
071360299  Other pigeon peas ( Cajanus cajan ) Price 20/12/2017  
100630090  Rice (semi -milled or wholly milled rice, whether 
or not polished or glazed)  Price 27/06/2017  
110819099  Other starches (excluding Sago starch)  Price 06/09/2017  
110820090  Inulin  Price 20/06/2017, 
22/06/2017,  
30/08/2017,  
25/09/2017,  
13/11/2017  
190190132  Food preparations of goods of heading 04.01 to 
04.04, containing not less than 30% natural milk 
constituents, of the articles in dry weight, 
excluding whipped cream in pressurized 
containers  
- containing not more that 30% milk fat by 
weight  Price  26/06/2017,  
22/12/2017  
210690119  Food preparations containing by weight not less 
than 30% natural milk constituents on the dry 
matter  
- not more than 30% by w eight of milk fat  Price 30/05/2017  
210690129  Food preparations containing by weight not less 
than 30% natural milk constituents on the dry 
matter  
- not more than 30% by weight of milk fat  Price 18/04/2017  
FY2018  
040120190  Milk and cream, not concentrated or containing 
added sugar or other sweetening matter  
- of a fat content, by weight, exceeding 1% but 
not exceeding 6%: sterilized, frozen or 
preserved  Volume  01/07/2018 to 
31/03/2019  
040390113, 040390118, 
040390123, 040390128, 
040390133, 040390138  Buttermilk, curdled milk and cream, kephir and 
other fermented or acidified milk and cream, 
sterilized, frozen, preserved, concentrated or 
containing added sugar or other sweetening 
matter, flavouring, fruits or nuts  Volume  01/06/2018 to 
31/03/2019  
071360299  Other pigeon peas ( Cajanus cajan ) Price 18/05/2018,  
23/07/2018,  
16/11/2018  
110100200  Wheat or meslin flour  Price 02/11/2018  
110812099  Maize (corn) starch  Volume  01/02/2019 to 
31/03/2019  
110819099  Other starches (excluding Sago starch)  Price 10/10/2018  WT/TPR/S/397 • Japan  
 
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HS Description  Type of 
SSG Date or period 
of application  
110820090  Inulin  Price 16/04/2018, 
10/07/2018, 
24/08/2018, 
04/09/2018, 
25/01/2019,  
29/01/2019,  
22/02/2019,  
28/02/2019,  
190120159, 190190179  Food preparations of flour, meal, or starch, 
which contain more than 85% by weight of flour, 
groats, meal and pellets of rice, wheat, triticale 
or barley, starch, or any combination thereof, 
excluding cake -mixes and the kind used as food 
suitable for infan ts or young children or for 
dietetic purposes  
- mostly containing starch (excluding wheat 
starch)  Volume  01/03/2019 to 
31/03/2019  
Source:  WTO documents G/AG/N/JPN/239, 15 May 2019; and G/AG/N/JPN/226, 23 May 2018.  
4.23.   According to its most recent notification on imports under tariff quotas (for FY2017/18) to the 
WTO Committee on Agriculture, Japan applies 18 tariff rate quotas (TRQs) covering 101 tariff lines 
at the HS  six-digit level.18 Fill rates varied considerably from one quota to another, rang ing from 
23.4% to 305.6% (Table 4.6). The authorities indicated that low fill rates for some TRQ products 
were mainly to decrease domestic demand.  
Table 4.6 TRQ fill ratio, FY2017/18  
Description of products  No. of tariff lines  Tariff 
quota 
quantity 
(MT)  In-quota 
imports  Fill rate  
% 
Skimmed milk powder (for 
school lunches)  040210, 040221  7,264  1,701  23.4 
Skimmed milk powder (for 
other purposes)  040210, 040221, 040229  74,973  28,817  38.4 
Evaporated milk  040291  1,500  1,445  96.3 
Whey and modified whey (for 
feeding purposes)  040410  45,000  36,675  81.5 
Prepared whey (for infant 
formula)  040410, 040490  25,000  7,507  30 
Butter and butteroil  040510, 040590  581 191 32.9 
Mineral concentrated whey  040410  14,000  10,104  72.2 
Prepared edible fat  210690  18,977  16,946  89.3 
Other dairy products for 
general use  040110, 040120, 040130, 
040291, 040310, 040390, 
040490, 180620, 180690, 
190110, 190120, 190190,  
210112, 210120, 210610, 210690  133,940  133,402  99.6 
Designated dairy products for 
general use  040210, 040221, 040229, 
040299, 040390, 040410, 
040510, 040520 , 040590  137,202  419,234  305.6  
Dried leguminous vegetables  071310, 071332, 071333, 
071339,  
071350, 071390  120,000  73,605  61.3 
Wheat, meslin, triticale and 
their processed products  100110, 100190, 100890, 
110100, 110290, 110311, 
110319, 110320, 110419, 
110429, 110811, 190120,  
190190, 190410, 190420, 
190430, 190490, 210690  5,740,000  5,761,674  100.4  
Barley and its processed 
products  100300, 110290, 110319, 
110320, 110419, 110429, 
190120, 190190, 190410, 
190420, 190490, 210690  1,369,000  349,350  25.5 
                                                
18 WTO document G/AG/N/JPN/ 238, 15 May 2019. WT/TPR/S/397 • Japan  
 
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Description of products  No. of tariff lines  Tariff 
quota 
quantity 
(MT)  In-quota 
imports  Fill rate  
% 
Rice and its worked and/or 
prepared products  100610, 100620, 100630, 
100640, 110230, 110319, 
110320, 110419, 110429, 
190120, 190190, 19 0410,  
190420, 190490, 210690  682,200  676,997  99.2 
Starches, inulin, and their 
preparations  110812, 110813, 110814, 
110819, 110820, 190120, 190190  157,000  157,825  100.5  
Ground -nuts  120210, 120220  75,000  36,946  49.3 
Tubers of konnyaku  121299  267 68 25.5 
Silk-worm cocoons and raw 
silk  500100, 500200  798 445 55.8 
Note:  Milk powder (tariff lines 040221 and 040299) was not included.  
Source:  WTO document G/AG/N/JPN/238, 15 May 2019.  
4.24.   The method of administering TRQs varies from one item to another, although the competent 
authority for administering for all but one quota is the MAFF (the exception being "designated dairy 
products for general use", where the competent authority is the Agriculture Live stock Industries 
Corporation, a state trading enterprise). One quota (prepared edible fat) is partially allocated to a 
supplying country. Under all methods, the applicant for an allocation must meet criteria, such as 
end-use requirements, record as an impo rter, or planned usage. There were no substantive changes 
to quota administration methods since 2009.19 Tariff quotas are applied for various other products 
(Table 4.7).  
Table 4.7 Other products for which tarif f quotas are applied, 2019  
Description  HS code  Out-of-quota rate  HS code  In-
quota 
rate - % 
Maize other than seed  100590099  50% or JPY 12/kg, 
whichever is the greater  100590091  0 
 
    100590092  0  
    100590095  0  
    100590096  3 
Malt 110710019  JPY 21.30/kg  110710011  0 
Malt 110710029  JPY 21.30/kg  110710021  0 
Malt 110720020  JPY 21.30/kg  110720010  0 
Chocolate preparations  180620290  21.30%  180620210  0 
Chocolate preparations  180620319  23.8% + JPY 679/kg  180620311  21 
Chocolate preparations  180690319  23.8% + JPY 679/kg  180690311  21 
Tomato puree  200290219  16% 200290211  0 
Tomato puree  200290229  16% 200290221  0 
Prepared pineapples  200820119  JPY 33/kg  200820111  0 
Prepared pineapples  200820219  JPY 33/kg  200820211  0 
Preparations with basis of coffee  210112232  29.8% + JPY 679/kg  210112231  25 
Preparations with basis of coffee  210112237  29.8% + JPY 1,159/kg  210112236  25 
Preparations with basis of tea or 
maté 210120232  29.8% + JPY 679/kg  210120231  25 
Preparations with basis of tea or 
maté 210120237  29.8% + JPY 1,159/kg  210120236  25 
Food preparation n.e.s  210610140  29.8% + JPY 1,155/kg  210610120  12.50     
210610130  25 
Raw hides and skins  410120212  30% 410120211  12 
Raw hides and skins  410150212  30% 410150211  12 
Raw hides and skins  410190212  30% 410190211  12 
Source:  Data based on Japanese 2019/20 tariff schedule.  
4.25.   A simultaneous buy and sell (SBS) system for rice and wheat remains in place. Its purpose is 
to meet specific needs, such as imports of small quantities of rice (maximum 100,000 tonnes) and 
wheat. Under this system, an importer and a domestic user make a j oint bid to the MAFF, submitting 
                                                
19 Footnote 11 of Section 4.1.2.2 of WTO document WT/TPR/S/310/Rev.1, 6 May 2015 lists the WTO 
notifications from Japan with respect to the administration of tariff quotas. The latest notificat ion was in 2009.  WT/TPR/S/397 • Japan  
 
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the government purchase price from the importer and the government sale price on the domestic 
Japanese market. The MAFF collects the difference in the prices. Since the previous Review, there 
have been no changes in SBS sys tem. The volume of imports for both products fluctuated 
(Table  4.8). The "ordinary tender system" is used for large -quantity imports.  
Table 4.8 Imports under the SBS system, FY2013 -17 
('000 tonnes)   
2013  2014  2015  2016  2017  
Rice 61 12 29 73 100 
Wheat  1,087  684 682 531 649 
Source:  Data provided by the authorities.  
4.26.   Japan did not reserve the right to use export subsidies on any agricultural products and, 
during the review period, it notified the WTO Committee on Agriculture that it did not use any in 
FY2016/17, FY2017/18 or FY2018/19.20  
4.27.   Japan's food assistance is provided under non -emergency programmes. It responds to 
requests from recipient countries or international organizations. Cash is provided f or the purchase 
of food from the open market.21 Over the review period, Japan notified volumes exported for FY2013 
to FY2016 (Table 4.9).  
Table 4.9 Food assistance FY2013 -FY2016  
FY Rice 
(tonnes)  Other agri-food productsa 
(tonnes)  Oil 
(litres)  
2013 72,501  48,989  0 
2014 90,045  46,463  2,364,000  
2015 89,157  31,587  967,773  
2016 69,508  16,791  792,660  
a Other agri -food products include processed food, maize, maize meal, sorghum/millet, pulses, wheat 
and wheat flour, depending on the year.  
Source:  WTO documents G/AG/N/JPN/230 -233. 
4.1.1.5   Domestic support  
4.1.1.5.1   General support programmes  
4.28.   Domestic support programmes apply at both the general and product levels. At the general 
level, support is provided for, inter ali a, infrastructure, through extension services, and for 
insurance/disaster relief programmes.  
4.29.   At the prefectural level, government -supported institutions are charged with promoting 
farmland consolidation. These prefectural institutions rent farmland, improv e infrastructure (if 
necessary), and lease the land to core farmers. They had a total budget of JPY 22 billion in 2019. 
Farmers that increase farm size continue to be eligible to receive payments of up to JPY 10,000 for 
each additional 0.1 ha; payments of up to JPY 700,000 per household are available for the purpose 
of leasing land to farmers.22  
4.30.   The Agricultural Disaster Compensation Act used to serve as the legal basis for the Agricultural 
Mutual Aid System (AMAS) that provides compensation from losses cau sed by natural disasters 
(including from extreme weather), diseases, and other events. In 2018, the Act was revised, and 
renamed the Agricultural Insurance Act. It introduces procedural efficiencies as well as a Revenue 
Insurance Program (RIP). The RIP, ef fective from 2019, operates in addition to the AMAS, and is 
applicable to all farm products and certain livestock products. It is a voluntary insurance system, 
designed to compensate farmers in the event of revenue decreases; farmers taking out insurance 
policies are paid back for 90% of the loss when the loss is more than 10%, based on five -year 
                                                
20 WTO documents G/AG/N/JPN/215, 3 May  2017; G/AG/N/JPN/224, 15 May 2018; and 
G/AG/N/JPN/240, 15 May 2019.  
21 WTO document G/AG/W/196, 12 April 2019.  
22 WTO document WT/TPR/S/310/Rev.1, 6 May 2015.  WT/TPR/S/397 • Japan  
 
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average farming income. The Government contributes 75% of the reserve fund and about 50% of 
the premiums (the insurance premium rate is 1.08%).23  
4.31.   Three direct paym ents programmes fall under the Act on Multi -Functionality of Agriculture24: 
(i) the direct payments for environmentally friendly agriculture, under which a total area of 79,465 
ha was estimated to receive an average payment of JPY 56,808 per ha in FY2019; (ii)  the direct 
payments for farmers in hilly and mountainous areas, under which payment rates depend on the 
slope of the land and production factors, ranging from JPY 21,000 per 0.1 ha for paddy fields in high -
inclination areas to JPY 300 per 0.1 ha for pasture on a mild slope. In FY 2018, the scheme covered 
664,315 ha and 604,920 participants, amounting to a total of JPY  53.1 billion; and (iii) direct 
payments to maintain and enhance multi -functionality, under which unit prices depend on the type 
of land use and activity, to conserve or improve local resources, including mowing of farmland slopes 
or simple repairing of channels. In FY2018, the scheme covered 2,292,522 ha and 28,348 
organizations, amounting to a total of JPY 93.6 billion.  
4.1.1.5.2   Support le vels 
4.1.1.5.2.1   WTO notifications  
4.32.   The most recent notification from Japan to the WTO Committee on Agriculture concerning 
domestic support covers FY2016.25 According to the notification, about 67% of all support for 
agriculture (support notified under the Green Box, Bl ue Box and Amber Box (including de minimis )) 
is under the Green Box, and 30.5% under the Amber Box (including de minimis ) (Chart 4.2)  
Chart 4.2 Support notified to the WTO Committee on Agriculture, FY2012 -16 
JPY billion  
 
Source:  WTO documents G/AG/N/JPN/191, 31 March 2014; JPN/219, 3 July 2017; JPN/235, 19 February 
2019; and JPN/236, 19 February 2019.  
Green Box  
 
4.33.   Total support notified under the Green Box decreased over the period FY2012 
(JPY 1,876.9  billion) to FY2014 (JPY 1,603.3 billion) and then steadily rose again, reaching 
JPY 1,904.5 billion in FY2016. The major items of spending were on infrastructural services; 
                                                
23 MAFF (in Japanese). Viewed at: http://www.maff.go.jp/j/keiei/nogyohoken/syu_kyosai.html ; FFTC -AP 
online information ; and Food and Fertilizer Technology Center for the Asian and Pacific Region, Overview of 
Japan's Rice Policy for the Last 30 Years: from Price Support to Direct Payments.  Viewed at:  
http://ap.fftc.agnet.org/ap_db.php?id=911 . 
24 There were no changes to the Act on Multi -Functionality of Agriculture over the review period. Further 
details on support provided under the Act are available (in Japanese) at: 
http://www.maff.go.jp/j/press/nousin/nihon/190628.html . 
25 WTO document G/AG/N/ JPN/236, 19 February 2019.  
02004006008001,0001,2001,4001,6001,8002,000
2012 2013 2014 2015 2016de minimis
Current Total AMS
Blue Box
Green BoxChart 4.2  Support notified to the WTO Committe on Agriculture, FY2012 -16
JPY billion
Source:  WTO documents: G/AG/N/JPN191, 31 March 2014;  JPN/219, 3 July 2017;  JPN/235, 19 February 2019;  
and JPN/236, 19 February 2019 .WT/TPR/S/397 • Japan  
 
- 136 - 
 
payments for conversion from rice production; personnel expenses for g overnment officials; farmers' 
pension programmes; and, in some years, disaster rehabilitation services and general services for 
the livestock industry, including extension and infrastructure.  
Blue Box  
 
4.34.   All spending notified under the Blue Box was for the r ice income stabilization programme. 
Over the period FY2012 -16, spending levels fluctuated, from a high of JPY 155.9 billion in 2013 to a 
low of JPY 70.8 billion in FY2016 ( Chart 4.2).  
Amber Box  
 
4.35.   Total support under the Amber Box since 2012 (including de mi nimis ) fluctuated over the 
period FY2012 -16, reaching a peak in FY2015 and dropping slightly in FY2016. The main products 
for which price support was provided were pig meat, and beef and veal; in both cases, support levels 
increased over the period 2014 -16 (Chart 4.3).  
Chart 4.3 Amber Box support, FY2012 -16 
JPY billion  
 
Note:  "Other product specific" includes eggs, fruit, starches and vegetables.  
Source:  WTO notifications.  
4.1.1.5.2.2   OECD indicators  
4.36.   The OECD has been publishing reviews of agricultural policies in Japan, other OECD countries, 
and some other economies for several years. In these publications, the value of transfers to 
agricultural producers is measured using the Producer Support Estimate (PSE) and associ ated 
indicators. The methodology for calculating these indicators is different from that used to calculate 
the Aggregate Measure of Support, and the two sets of data are neither compatible nor 
comparable.26 
                                                
26 The total PSE is "the annual mon etary value of gross transfers from consumers and taxpayers to 
agricultural producers, measured at the farm gate level, arising from policy measures that support agriculture, 
regardless of their nature, objectives or impacts on farm production or income. I t includes market prices 
support, budgetary payments and budget revenue foregone, i.e. gross transfers from consumers and taxpayers 
to agricultural producers arising from policy measures based on: current output, input use, area 
planted/animal numbers/rece ipts/incomes (current, non -current), and non -commodity criteria". Thus, the PSE 
includes estimates for the value of transfers provided by market access measures, such as tariffs and tariff 
quotas, as well as input subsidies, direct payments to producers th at are coupled to prices or production, and 
direct payments decoupled from prices and production. OECD, The Size and Sectoral Distribution of SOEs in  
OECD and Partner Countries , pg. 49. Viewed at: http://dx.doi.org/10.1787/9789264215610 -en. 
01002003004005006007008009001,000
2012 2013 2014 2015 2016Non product specific
Other product specific
Sugar
Milk
Beef and veal
Pig meat
Note: "Other product specific" includes eggs, fruit, starches and vegetables.Chart 4.3 Amber Box support, FY2012 -16
JPYbillion
Source: WTO notifications.JPYbillionWT/TPR/S/397 • Japan  
 
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4.37.   Over the period 2012 -18, movements in the value of production were largely reflected in 
similar fluctuations in levels of support to agriculture (Chart 4.4). As reported by the OECD, support 
to producers remains high, at 2.5 times higher than the OECD average. According to OECD 
calculations, marke t price support remains the main element of producer support, and is mainly 
sustained by border measures, for rice, pork and milk. It further notes that the termination of rice 
farm support led to a decrease in direct payments since 2018, and that budgetar y support to 
producers mostly focuses on area and income -based payments.27  
Chart 4.4 Value of production and support to agriculture, 2012 -18 
JPY billion  
 
Note:  TSE = Total support estimate; PSE = Producer support estimate; MPS = Market price support  
Source:  OECD  Stat. Viewed at: https://stats.oecd.org/Index.aspx . 
4.38.   As previously, single commodity transfers (SCTs) make up most of the support provided t o 
agriculture; rates of support vary from one product to another but accounted for just under half of 
gross farm receipts in 2018 (which includes the value of farm production plus non -market -price 
support payments). For most commodities, the SCT fluctuated  over the past seven years, showing 
no clear trends. The share of PSE in GDP fluctuated over the period 2012 -18, from a low of 0.75% 
in 2015 to a high of 1.01% in 2012 (Table 4.10).  
Table 4.10 Total PSE and SCT values for selected commodities, 2012 -18 
 2012  2013  2014  2015  2016  2017  2018  
PSE 
JPY billion  4,975  4,619  4,223  3,989  4,614  4,754  4,618  
% gross farm 
receipts  52.83  49.56  46.05  41.31  45.87  46.89  46.74  
% of GDP  1.01 0.92 0.82 0.75 0.86 0.87 0.84 
SCTss  
Total (JPY billion)  4,470  4,110  3,684  3,396  4,022  4,165  4,042  
Rice 
SCT (JPY billion)  1,592  1,551  1,171  839 1,191  1,399  1,211  
% of gross receipts  78 74 69 56 69 76 67 
Wheat  
SCT (JPY billion)  37 37 38 39 34 32 35 
% of gross receipts  44 49 49 46 46 43 48 
Barley  
SCT (JPY billion)  16 16 14 16 15 15 15 
% of gross receipts  70 66 63 68 72 68 69 
                                                
27 OECD, OECD Agriculture Policy Monitoring and Evaluation 2019 . Viewed at: 
https://www.oecd.org/agriculture/oecd -ag-policy -monitori ng-2019/ . 
01,0002,0003,0004,0005,0006,0007,0008,0009,00010,000
2012 2013 2014 2015 2016 2017 2018TSE total
PSE total
MPS total
Value of productionChart 4.4 Value of production and support to agriculture, 2012 -18
JPY billion
Source: OECD.Stat.  Viewed at:  https://stats.oecd.org/index.aspx.Note: TSE = Total support estimate;  PSE = Producer support estimate;  MPS = Market price support.WT/TPR/S/397 • Japan  
 
- 138 - 
 
 2012  2013  2014  2015  2016  2017  2018  
Soybeans  
SCT (JPY billion)  24 23 24 24 23 23 25 
% of gross receipts  50 52 38 38 40 41 56 
Milk 
SCT (JPY billion)  454 397 456 428 350 306 439 
% of gross receipts  64 45 50 59 63 54 61 
Beef and veal  
SCT (JPY billion)  196 202 194 177 169 153 174 
% of gross receipts  33 30 30 28 28 29 29 
Pork 
SCT (JPY billion)  356 327 328 363 379 388 392 
% of gross receipts  67 60 54 63 67 65 68 
Poultry meat  
SCT (JPY billion)  19 24 25 23 13 10 15 
% of gross receipts  7 8 8 7 4 3 5 
Eggs  
SCT (JPY billion)  56 67 65 65 54 52 59 
% of gross receipts  13 14 13 12 11 10 11 
Refined sugar  
SCT (JPY billion)  42 43 42 45 46 44 46 
% of gross receipts  56 58 57 57 58 56 59 
Note:  Figures on SCTs were rounded up/down.  
Source:  OECD Producer and Consumer Support Estimates Database. Viewed at: 
http://www.oecd.org/agriculture/topics/agricultural -policy -monitoring -and-evaluation/ . 
4.1.1.5.3   Specific products  
4.1.1.5.3.1   Rice 
4.39.   Over the review period, Japan applied price-based SSGs on rice (Table 4.5). Fifteen tariff lines 
(at the HS six -digit level) relating to rice and its worked and/or prepared products are subject to 
TRQs (Table 4.6).  
4.40.   The Government's policy on rice evolved over the review period, with the abolit ion of the 
Direct Payment for Rice and the administrative allocation of rice production volume targets, in 2018. 
The payments made to rice farmers were linked to rice production volume targets assigned to each 
prefecture and each individual farmer based on  MAFF estimates of supply and demand. As indicated 
by an external source, this policy change is expected to raise the competitiveness of the rice farm 
sector, by enabling farmers to plan their production, unrestricted by volume targets; the 
Government's ro le is now refocused on providing market information.28  
4.41.   The MAFF continues to provide direct payments to farmers who produce crops other than 
table rice in the paddy field, to optimize the use of paddy fields29; according to the authorities, this 
scheme aims  to maintain the favourable environment of paddy fields, and thus prevent floods or soil 
erosion, to cultivate water resources, and to preserve the natural environment through effective use 
of paddy field. The budgetary cost of payments was JPY 320.0 billi on in 2017 and JPY 305.9 billion 
in 2018.  
4.42.   In September 2017, the Government introduced the Rice Overseas Market Expansion Project, 
to mitigate the impact of decreasing domestic rice consumption on farmer's incomes. 30, A JPY 60 
billion target was set for ex ports of rice and rice products for calendar year 2019, to be achieved 
through enhanced links between three groups: (i) exporters working on the strategic expansion of 
rice exports ("strategic exporters"); (ii) businesses working on the stable production o f rice for 
export, which include rice producers and collecting organizations/groups ("strategic production areas 
for export"); and (iii) strategic exporters' target export destinations (China; Chinese Taipei; Hong 
Kong, China; Macau, China; Singapore; Thai land; Viet Nam; Malaysia; Mongolia; the United States; 
                                                
28 OECD, OECD Agricultural Policy Monitoring and Evaluation  2019. Viewed at: 
https://www.oecd.org/agriculture/oecd -ag-policy -monitoring -2019/ . 
29 This programme was introduced in 2010.  
30 According to official sources, Japan's rice consumption is decreasing by around 100,000 tonnes every 
year. MAFF (2019), Annual Report on Food, Agri culture and Rural Areas in Japan . Viewed at: 
http://www.maff.go.jp/j/wpaper/index.html . WT/TPR/S/397 • Japan  
 
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Canada; the European Union; Switzerland; Australia; the Russian Federation; the Middle East; and 
India). 31 Government assistance includes support to attend some international exhibitions to 
promote Jap anese rice products, and the organization of some matching events between producers 
and exporters.  
4.1.1.5.3.2   Other cereals, sugar beet, starch potatoes, buckwheat, and rapeseed  
4.43.   Wheat, meslin, triticale, barley and their processed products are subject to TRQs (30 tar iff 
lines at the HS six -digit level); fill rates are particularly low for barley (Table 4.6).  
4.44.   Under the Act on Farming Income Stabilization (Act No. 88, 2006)32, core farmers producing 
wheat, barley, soya beans, sugar beet, starch potatoes, buckwheat, and r apeseed are eligible for 
payments based on area planted in the current year, and on the quantity and quality of annual 
output. Since the previous Review, payment rates have increased for all products, except for soy 
beans and starch potatoes (for which pay ment rates have decreased). Area -based payments remain 
unchanged (Table 4.11).33  
Table 4.11 Payment rates for other cereals, sugar beet, starch potatoes, buckwheat, and 
rapeseed, 2016 and 2019  
(JPY per unit) 
Product  Payment rate 2019  
(payment rate in 2016)  Per unit  
Quantity -based payment    
Wheat  6,940 (6,320)  60 kg  
Two-row barley  5,490 (5,130)  50 kg  
Six-row barley  5,720 (5,490)  50 kg  
Naked barley  8,230 (7,380)  60 kg  
Soy beans  9,040 (11,660)  60 kg  
Sugar beet  7,390 (7,260)  tonne  
Starch potatoes  11,610 (12,840)  tonne  
Buckwheat  16,840 (13,030)  45 kg 
Rapeseed  9,920 (9,640)  60 kg  
Area -based payment  20,000 (20,000)  10 acres  
Note:  The area -based payment rate for buckwheat is JPY 13,000 per 10 acres.  
Source:  Data provided by the authorities.  
4.45.   The Act on Price Adjustment of Sugar and Starch (Act No. 109, 1965), last amended in 2018, 
aims to ensure a stable supply of domestic sugar and domestic potato starch, inter alia,  to provide 
a secure income for farmers of these products; to stabilize domes tic production; and to help the 
sound development of other related industries.34 The Agriculture and Livestock Industries 
Corporation (ALIC) purchases imports of sugar, starch and high -fructose corn syrup, which it sells 
to importers at a higher scheduled p rice. This levy (the difference between the import price and the 
scheduled price) is used to pay domestic producers. According to the authorities, the levy amounts 
to around JPY 60 billion per year.  
4.1.1.5.3.3   Fruits and vegetables  
4.46.   The Basic Policy for Fruit Industry  Promotion of 2010 was last revised in 2015. The next 
revision to it will be issued in 2020. The objectives of the Policy include an emphasis on increasing 
                                                
31 OECD, Innovation, Agricultural Productivity and Sustainability in Japan , OECD Food and Agricultural 
Reviews.  Viewed at: http://www.oecd.org/publications/innovation -agricultural -productivity -and-sustainability -
in-japan -92b8dff7 -en.htm . 
32 Act on Farming Income Stabilization. Viewed (in Japanese) at: 
http://www.maff.go.jp/j/kobetu_ninaite/n_seido/seido_suikei/law/pdf/law.pdf . There were no amendmen ts to 
this Act over the review period.  
33 They are also eligible for payments which compensate for up to 90% of any loss of income compared 
with the average annual income for the preceding five years, excluding the highest and lowest years. The 
income -related payments are provided from a fund to which the Government contributes 75% , and 
participating producers 25%.  
34 Act on Price Adjustment of Sugar and Starch. Viewed at: 
http://www.japaneselawtranslation.go.jp/law/detail/?ft=1&re=02&dn=1&co=01&ia=03&x=13&y=14&ky=farmi
ng+income+stabilization&page=2 . WT/TPR/S/397 • Japan  
 
- 140 - 
 
domestic production, consumption, and processing of domestically produced fruits.35 Under the 
revised  Policy, financial a ssistance is to be increased for converting production to more valuable 
fruits (defined as profitable fruits or highly valued varieties)  and for on -farm improvements. The 
budget allocated to this assistance was JPY 5.6 billion in FY2019 .36 Assistance to farmers that convert 
their production to more valuable fruits (e.g. from less valuable oranges to more valuable 
peaches/oranges/mangoes) remains JPY 230,000 per 10  are, while assistance to farmers that 
convert their production to more valu able deciduous fruit tree (e.g. apples) is JPY 170,000 per 10  are. 
Under the Policy, payments are made to support the planned fruits production programme, and 
processing of fresh fruits if the market price declines or is foreseen to decline. For vegetables , farmer 
price support payments are made based on the quantity of production of specific vegetables under 
contract, calculated as the difference between 90% of the average of wholesale market price of the 
past six years and the average of wholesale market prices for each vegetable season. Since the last 
Review, there was no change in the price control support scheme.  
4.47.   Targeted farmers are listed in a Fruits Production Restructuring Plan for each production area, 
based on the Plan of Fruit Industry Promotion of each prefecture. These farmers are also eligible for 
assistance for a four -year period after replanting, when incomes decline while the new fruit plants 
mature. According to the authorities, there is no budget for this measure. Between 2014 and 2018, 
5,799 ha under fruit production were converted to more valuable varieties, which is equivalent to 
11% of the total area of fruit farms.  
4.48.   No new policies/measures to support the fruit and vegetables sectors were introduced over 
the review period.  
4.1.1.5.3.4   Tobacco  
4.49.   The simple applied average tariff on tobacco was 7.2% in 2019. Tariffs range from zero to 
29.8%, with the highest duty rate corresponding to pipe tobacco and water pipe tobacco. There were 
no changes to tariff rates over the review period. As mentioned above, exports of tobacco products 
declined significantly over the review period (Table 4.4).  
4.50.   The state trading enterprise, Japan Tobacco, which is part -owned by the Government 
(Section  3.3.5), continues to be required  to enter into purchase contracts with tobacc o growers  
under the Tobacco Business Act. It has a monopoly on the domestic manufacturing of tobacco and 
imports of leaf tobacco.  Since the previous Review, there were no changes to the Tobacco Business 
Act.37 Contracts specify the area to be planted, the s pecific varieties of leaf tobacco, and the price 
by variety and grade. For 2019, the total area is set at 6,886 ha (down 4.8% from 2018) and grower 
prices are set at JPY 1,912.3  per kg (up 1.3% from 2018).38  
4.51.   Importers, wholesalers, and retailers of cigarettes are required to register with the Minister 
of Finance, who must approve final retail prices. Lower excise tax rates applied to some third -grade 
cigarettes produced by Japan Tobacco were raised, and are no w in line with rates applied to all other 
cigarettes (Section 3.3.1).  
4.1.1.5.3.5   Livestock and livestock products  
4.52.   Under the Act on Dairy and Beef Cattle Production Promotion, the Minister of Agriculture, 
Forestry and Fisheries is charged with developing a plan to fa cilitate the modernization of dairy and 
beef cattle production. This plan is reviewed about every five years, indicating the policy direction 
for the substantial development of dairy and beef cattle production and the stable supply of milk, 
milk products a nd beef.  
4.53.   Administered prices continue to apply to calves, with the ALIC implementing a deficiency 
payment system. The ALIC pays calf producers the difference between the guaranteed price and the 
actual average price, unless the actual average price falls b elow a threshold level, which is called 
                                                
35 MAFF (in Japanese). Viewed at: http://www.maff.go.jp/j/seisan/ryutu/fruits/pdf/point.pdf . 
36 MAFF (in Japanese). Viewed at: http://www.maff.go.jp/j/seisan/ryutu/frui ts/attach/pdf/index -61.pdf . 
37 Tobacco Business Act. Viewe d at:  
https://elaws.e -gov.go.jp/search/elawsSearch/elaws_search/lsg0500/detail?lawId=359AC0000000068 . 
38 Japan  Tobacco Inc. , About report of the 53rd Board of Tobacco . Viewed at : 
https://www.jti.co.jp/investors/library/press_releases/2018/1025_01.html . WT/TPR/S/397 • Japan  
 
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the target rationalized price. When the actual average price falls below the threshold, in addition to 
the ALIC payment, 90% of the fall will be paid by a collective fund from the ALIC, prefectural 
governments, and p roducers.  Administered prices for beef and pig meat were abolished in 2018  
Table 4.12 Administered prices for calves, FY2019 (JPY)  
Product  Guaranteed price  Target rationalization price  
Japanese black calves  531,000 per calf  421,000  
Japanese brown calves  489,000 per calf  388,000  
Dairy breeds  161,000 per calf  108,000  
Cross breeds  269,000 per calf  212,000  
Source:  Data provided by the authorities.  
4.54.   Coinciding with the entry into force of the CPTPP in 2018, Japan increased support for 
domestic pork producers by expanding the Hog Growers Business Stabilization Measure (also known 
as Marukin). The Marukin payment system for pork meat covers 90% of the cost gap. Pork producers 
pay 25% of the grant amount f rom the reserve fund (down from 50% prior to the expansion of the 
system).39  
4.55.   Under the Price Stabilization Fund for Eggs, payments are made to egg producers under 
contract, calculated as 90% of the difference between the baseline price (JPY 185/kg in FY201 9) and 
the average trading price, multiplied by the quantity of eggs sold.40 The Government and producers 
contribute to the fund. The budgetary cost for this measure was JPY 4.86 billion in 2017, 2018 and 
2019.  
4.56.   The Feed Price Stabilization Programme operat es to help to ease the influence of sudden 
surges in compound feed prices upon farmers. Farmers pay JPY 500 per tonne of compound feed 
into the fund operated by the compound feed industry. The fund is supplemented with the other 
funds provided by the Gover nment and the compound feed industry. Grains imported as raw material 
for feedstuffs qualify for a reduced tariff, subject to measures to ensure they are not diverted for 
human consumption. These measures include approval by the Government for import by th e 
processing plant, penalties for misuse of feed grains, and specified processing methods. The 
legislative basis for this measure is Article 13 of the Customs Tariff Law.  
4.57.   The MAFF purchases and sells imported feed (barley and wheat) to stabilize feed supp ly, 
demand and prices; this is done based on an annual Feed Supply and Demand Plan. This Plan is 
based on past records, supply and demand trends, trade perspectives, and other relevant factors. 
In 2019, it was used to purchase and sell 600,000 tonnes of fe ed barley and 480,000 tonnes of feed 
wheat. The private sector freely imports these products, regardless of the Plan.  
4.1.1.5.3.6   Dairy  
4.58.   Dairy producers benefit from several support programmes, in addition to the administered 
prices for dairy calves destined for beef p roduction (Table  4.12). Over the review period, various 
dairy products were the subject of SSGs (Table 4.5).  
4.59.   TRQs apply to various dairy products; fill rates in FY2017/18 were low for skimmed milk 
powder, prepared whey (for infant formula), and butter and  butter oil (Table 4.6). Tariff quotas for 
designated dairy products for general use are allocated to the ALIC (the ALIC does not import any 
out-of-quota products).  
4.60.   Since 2018, a modified support system for milk entered into force.41 Under this system, the 
MAFF decides the upper limit of the amount of raw milk for compensation payments; every producer 
of raw milk for processed products is eligible for this payment. To ensure the stable continuation of 
raw milk collection in disadvantaged areas, designated mi lk collection operators are eligible for 
                                                
39 MAFF. Viewed (in Japanese) at: http://www.maff.go.jp/j/kanbo/eu_epa/attach/pdf/index -11.pdf . 
40 Japan Poultry Association , Monthly standard transaction price and compensation price . Viewed at : 
http://www.jpa.or.jp/stability/monthly.html . 
41 For a description of the system previously in place, see WTO document WT/TPR/S/351/Rev.1, 20  June 
2017 WT/TPR/S/397 • Japan  
 
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adjustment payments. The compensation payment uniform unit price was JPY 8.23 per kg of milk in 
FY2018. The adjustment payment for raw milk collection in the same year was JPY 2.43 per kg of 
milk. Under this scheme,  JPY 33.6 billion was paid to dairy farmers in FY2018. Additionally, to 
cushion producers against sudden price fluctuations, producers and the Government contribute to 
the farm business stabilization fund (at rates which vary from one bloc to another but a t a ratio of 
1:3, respectively). The fund compensates producers of milk for processing whenever prices fall below 
the average for the previous three years.  
4.61.   In Japan, butter is imported by the ALIC and by private businesses. Private businesses can 
import bu tter subject to in -quota tariff rates, or by paying out -of-quota tariff rates. Imports by the 
ALIC accounted for 93% of the total amount of imports of butter and butter oil in FY2018.  
4.1.2   Fisheries  
4.1.2.1   Features  
4.62.   According to the Food and Agriculture Organization (FAO)42, Japan has a coastline of 29,751 
km, territorial waters of 377,801  km2, and an exclusive economic zone (200 nautical miles) of 3.64 
million km2, the sixth largest in the world. Fish is an essential part of the traditional diet, and an 
important economic sector for many coastal communities . In 2016, Japan was the seventh largest 
world producer of fish and fish products, and the second largest importer of these products. Its 
exports are of lesser importance.  
4.63.   Overall, the contribution of fisheries and aquaculture to GDP remained at less than 0.2%, and 
to total employment less than 0.3%, in 2017. During the period under review, fish production 
(capture + aquaculture) declined steadily, a trend that followed a peak of 11.2 mi llion tonnes in 
1989 to reach 3.9 million tonnes in 2016 and 3.8  million tonnes in 2017.43 In 2017, c apture fishing 
represented 76% of the production, and aquaculture, 24%.44 
4.64.   Chart 4.5 provides the value of production by category for FY2017. The decline in t he quantity 
captured is not fully reflected in value terms , as there was an upward trend in prices during the 
period under review .45 
Chart 4.5 Fisheries and aquaculture production, FY2017  
 
Source:  Data provided by the authorities.  
                                                
42 FAO, Fisher y and Aquaculture Country Profiles , Japan,  April 2019 . Viewed at : 
http://www.fao.org/fishery/facp/JPN/en . 
43 USDA, Foreign Agricultural Service, Gain Report No. JA9044, 4 September 2019 . Viewed at: 
https://gain.fas.usda.gov/Recent%20GAIN%20Publications/Japan%20Revises%20Fisheries%20Act%20 Seekin
g%20Global%20Competitiveness_Tokyo_Japan_4 -9-2019.pdf . 
44 MAFF, FY2017 Trends in Fisheries, FY2018 Fisheries Policy, White Paper on Fisheries: Summary. 
Viewed at: http://www.maff.go.jp/e/data/publish/attach/pdf/index -94.pdf . 
45 MAFF , FY2017 Trends in Fisheries, FY2018 Fisheries Policy, White Paper on Fisheries: Summary , 
pg. 12. Viewed at:  http://www.maff.go.jp/e/data/publish/attach/pdf/index -94.pdf . 
Chart 4.5   Fisheries and aquaculture production, FY2017
Total:
JPY 1,608 billion
Source:  Data provided by the authorities.Marine aquaculture
32.7%
Inland water aquaculture
6.2%Marine fishery
59.9%Inland water fishery  1.2%WT/TPR/S/397 • Japan  
 
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4.65.   Fish consumption followed a declining trend similar to that of production, falling from 40.2 kg 
per capita in 2004 to 27.3 kg in 2014 and to 24.6 kg46 in 2016. Self-sufficiency ratios slightly 
improved from 2016 to 2018 for fish  production as a whole (from 53% to 55%) and for fish 
production for human consumption (56% to 59%) but declined marginally for seaweed (from 69% 
to 68%) ( Table A4.1 ). 
4.66.   The number of full -time fishermen also declined, from 166,610 in 2015 to 153,490 in 2017 .47 
The average age increased, and about 60% of fishermen were 55 years old or older in 2017.48 
4.67.   Fishing vessels also aged during the period under review, with 59% of licensed vessels being 
older than 20 years in FY2017.49 
4.68.   Almost all fish processing companies are small and medium -sized businesses, with 300 
employees or fewer. Their number decreased during the period under review.50 
4.69.   The value of aquaculture production reached JPY 603.7 billion in 2017, an increase of 6% 
compared to 2016. The main products of mari ne aquaculture (as opposed to inland aquaculture) are 
Japanese amberjack, Nori seaweed, scallops, and red seabream. These aquaculture products are 
the main contributors to Japanese exports of fish and fish products.  
4.70.   Foreign investment in the fishery sector  in Japan is subject to a prior notification requirement 
(Section 2.4.1). Some locally fished and processed fish and fish products are protected by GIs.  
4.71.   Imports of fish and fish products are about five times greater than exports, as evidenced by 
Tables 4.1 3 and 4.14, which describe the value of imports and exports by main species, from 2014 
to 2018. Both imports and exports of fish and fish products have grown every year in value terms 
since 2015.  
4.72.   Exports of fish and fish products constitute just 0.3 % (a f igure that remained stable during 
the period under review) of total Japanese exports.  
Table 4.13 Exports of fish and fish products, 2014 -18 
   
2014  2015  2016  2017  2018  
Exportsa USD 
million  1,875.6  1,905.0  2,031.5  2,040.5  2,327.1  
 % of total exports   
0.3 0.3 0.3 0.3 0.3 
 Growth rate, %   
-5.4 1.6 6.6 0.4 14.0 
Top ten exports by HS 6 -digit:       
030799 - Molluscs, n.e.s. in heading 
0307, frozen, including flours, meals and 
pellets  '000 
tonnes  54.5  78.3  61.1  39.6  65.0  
USD 
million  404.9  464.5  488.4  369.8  350.8  
       
030354 - Mackerel frozen; excluding 
fillets, livers and roe  '000 
tonnes  105.1  185.3   210.6  232.0  248.8  
USD 
million  107.7  147.2   165.5  194.8  240.7  
       
160561 - Sea cucumbers, prepared or 
preserved  '000 
tonnes  0.7  0.7  0.6  0.7  0.6  
USD 
million  196.0  179.3  167.4  184.9  190.9  
       
                                                
46 USDA, Foreign Agricultural Services, Gain Report No. JA9044, 4 September 2019 . Viewed at: 
https://gain.fas.usda.gov/Recent%20GAIN%20Publications/Japan%20Revises%20Fisheries%20Act%20Seekin
g%20Global%20Competit iveness_Tokyo_Japan_4 -9-2019.pdf . 
47 USDA, Foreign Agricultural Services, Gain Report No. JA9044, 4 September 2019 . 
48 USDA, Foreign Agricultural Services, Gain Report No. JA9044, 4 September 2019 . 
49 MAFF , FY2017 Trends in Fisheries, FY2018 Fisheries Policy, White Paper on Fisheries: Summary , 
pg. 12. Viewed at: http://www.maff.go.jp/e/data/publish/attach/pdf/index -94.pdf . 
50 MAFF , FY2017 Trends in Fisheries, FY2018 Fi sheries Policy, White Paper on Fisheries: Summary , 
pg. 15. Viewed at:  http://www.maff.go.jp/e/data/publish/attach/pdf/index -94.pdf . WT/TPR/S/397 • Japan  
 
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2014  2015  2016  2017  2018  
160559 - Mollusc preparations; n.e.s. in 
heading 1605.5, prepared or preserved  '000 
tonnes  2.4  2.4  3.6  2.5  6.5  
USD 
million  30.4  31.0  84.8  77.1   125.3  
       
030489 - Fish fillets; frozen, of fish n.e.s. 
in heading 0304.8  '000 
tonnes  5.6  6.9  7.0  7.9  7.7  
USD 
million  78.4  97.7  106.8  118.7  121.6  
       
160420 - Fish preparations; fish minced, 
n.e.s. in heading 1604, prepared or 
preserved  '000 
tonnes  9.9  11.3  12.2  12.6  14.2  
USD 
million  81.7  85.3  106.0  105.3  119.4  
       
030389 - Fish; frozen, n.e.s. in heading 
0303, excluding fillets, livers, roe  '000 
tonnes  61.0  66.0  46.5  59.0  63.7  
USD 
million  93.4  105.7  85.7  108.5  107.7  
       
160552 - Scallops prepared or preserved  '000 
tonnes  2.5  2.4  2.1  1.1  1.4  
USD 
million  123.5  130.4  118.3  83.9  86.9  
       
030791 - Molluscs; n.e.s. in heading 
0307; live, fresh or chilled; incl. flours, 
meals, pellets   '000 
tonnes  8.3  9.6  7.5  7.9  19.5  
USD 
million  30.7  38.8  38.8  42.5  79.9  
       
030353 - Sardines, sardinella, brisling or 
sprats; frozen; excl. fillets, livers and roe  '000 
tonnes  13.8  33.9  39.1  61.9  99.3  
USD 
million  12.6  26.3  31.8  47.2  75.3  
a Including HS codes 020840, 03, 051191, 1504, 1603, 1604, 1605, and 230120.  
Note:  The ranking of the top ten fishery products is based on the value of 2018 exports using the HS12 
nomenclature.  
Source:  WTO calculations, based on the UNSD Comtrade database.  
Table 4.14 Imports of  fish and fish products, 2014 -18 
    2014  2015  2016  2017  2018  
Importsa USD 
million  14,981.5  13,524.6  13,965.0  15,079.6  15,455.3  
 % of total imports   
1.8 2.2 2.3 2.2 2.1 
 Growth rate, %   
-2.8 -9.7 3.3 8.0 2.5 
Top ten imports by HS 6 -digit:       
030617 - Shrimps, prawns, 
frozen  '000 
tonnes  146.8  138.9  149.2  156.8  142.5  
USD 
million  1,833.3  1,466.9  1,560.6  1,679.2  1,503.7  
030487 - Tuna, skipjack, stripe -
bellied bonito, frozen fillets  '000 
tonnes  36.5  41.4  41.8  47.4  52.5  
USD 
million  550.0  622.5  616.6  704.3  796.4  
       
160521 - Shrimp, prawns, 
prepared or preserved  '000 
tonnes  59.2  59.6  59.5  62.1  64.0  
USD 
million  719.9  643.8  628.9  658.3  679.5  
       
030312 - Pacific salmon, frozen; 
excluding fillets, livers and roe  '000 
tonnes  83.8  100.9  95.1  95.6  101.5  
USD 
million  511.8  477.9  475.1  605.1  647.9  
       WT/TPR/S/397 • Japan  
 
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    2014  2015  2016  2017  2018  
030749 - Molluscs; cuttle fish and 
squid - frozen, dried, salted or 
smoked  '000 
tonnes  26.8  23.9  22.2  125.3  102.7  
USD 
million  190.5  154.9  160.1  693.3  636.3  
       
030390 - Fish; frozen, livers and 
roe '000 
tonnes  54.6  54.7   47.7  57.7  59.0  
USD 
million  435.4  361.6  402.8  585.8  599.5  
       
030489 - Fish fillets; frozen, of 
fish n.e.s. in heading 0304.8  '000 
tonnes  100.4  101.8  103.9  107.4  106.6  
USD 
million  545.4  494.2  512.0  530.9  551.8  
       
030614 - Crustaceans; frozen, 
crabs, smoked, cooked or not 
before or during smoking  '000 
tonnes  34.7  33.7  34.3  27.9  25.6  
USD 
million  500.4  487.3  569.1  500.9  530.7  
       
030499 - Fish meat, excluding 
fillets; frozen, n.e.s. in heading 
0304.9  '000 
tonnes  148.7  145.7  139.2  131.9  132.9  
USD 
million  559.2  520.9  515.7  486.7  523.5  
       
160419 - Fish preparations, n.e.s 
in heading 1604  '000 
tonnes  90.7  90.3  88.0  87.6  93.0  
USD 
million  481.4  448.2  446.2  446.1  498.8  
a Including HS codes 020840, 03, 051191, 1504, 1603, 1604, 1605, and 230120.  
Note:  The ranking of the top ten fishery products is based on the value of 2018 import s using the HS12 
nomenclature.  
Source:  WTO calculations, based on the UNSD Comtrade database.  
4.73.   Chart 4.6 indicates the shares of the main partners for imports and exports for FY2017.  China, 
the United States, Chile and  the R ussian Federation  are the top partners for  imports , while Hong 
Kong, China  is by far the  main partner for exp orts, with a share of more than 30% . 
Chart 4.6 Trade of fish and fishery products, by main partners, 2017  
 
Source:  MAFF. Viewed at: http://www.maff.go.jp/e/data/publish/index.html#Annual . 
Chart 4.6   Trade of fish and fishery products, by main partners, 2017 
Chile
8.9%China
17.9%
Russian Federation
7.0%United States
9.3%
Source:  MAFF.  Viewed at:  http://www.maff.go.jp/e/data/publish/index.html#Annual.Total imports:  JPY 1,775.1 billion   China
13.6% Chinese Taipei
6.0%Korea, Rep. of
5.9%
United States
12.6% Thailand
6.1%Other
18.5% 
Viet Nam
6.3%Hong Kong, China
30.9%
Korea, Rep. 
of  5.1%Other
27.9%
Indonesia
5.1%
Norway
5.9%Thailand
6.2%Viet Nam
6.7%Imports Exports
Total exports:  JPY 274.9 billion   WT/TPR/S/397 • Japan  
 
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4.1.2.2   Policy and institutional issues  
4.74.   Japan's latest overall  strategy is defined by the New Basic Plan for Fisheries, which was 
formula ted in 2017 and sets a self -sufficiency ratio for FY2017 of 70%. The aim of the strategy is to 
enhance fisheries' sustainable resource management, to make fisheries a growing industry through 
increased productivity, and to maintain fisheries communities an d increase their revenues . Actions 
and programmes to that effect include export promotion initiatives to identify and help potential 
exporters; encouragement to local producers to make their own plans to find and exploit potentially 
available resources; in centives for resources management and sustainability; incentives for young 
fishermen; training and education programmes; research programmes; and relaxation of the 
conditions of employment of foreign workers in the sector.  
4.75.   Overall responsibility for natio nal fisheries policies lies with the Fisheries Agency in the MAFF, 
while prefectural governments are responsible for local issues, such as management of local fisheries 
resources. Regarding important policy decision -making, the Fisheries Policy Council ( at national 
level), the Regional Fisheries Coordination Committees (at regional level), and the Sea Area 
Coordination Committees (at prefectural level) are consulted for their opinions , depending on the 
nature of the issue.51  
4.1.2.3   Regulatory developments  
4.76.   The main laws concerning the fisheries sector include: the Fisheries Act (last amended in 
2018)52 (Section 4.1.2.3.1; the Basic Law on the Fisheries Policy of 2001 (last amended in 2014); 
the Fisheries Cooperative Association Law (last amended in 2016); the Law  to Ensure Sustainable 
Aquaculture Production of 1999 (last amended in 2014); the Act on the Exercise of the Sovereign 
Right for Fishery, etc. in the Exclusive Economic Zone of 1996 (last amended in 2014); the Act on 
Preservation and Control of Living Mari ne Resources of 1996 (last amended in 2007); the Act on the 
Protection of Fishery Resources of 1951 (last amended in 2015), the 2014 Inland Water Fishery 
Promotion Act, and the 8 December 2018 amendment of the 1949 Fisheries Act.  
4.1.2.4   Stock management  
4.77.   On 8 Dece mber 2018, the Government promulgated the first substantial revision of the 
Fisheries Act since its inception in 1949. The revised Act will enter into force at the latest on 
14 December 2020. The revision consists of three main elements:  
• firstly, new firms , in particular private -sector firms, will be allowed to enter the fishing 
industry and to obtain fishing rights when fishing waters are not fully utilized. The allocation 
procedure consists of the following steps: first, the prefectural governor has the o bligation, 
every five years, to consult and gather the opinions of all stakeholders, including potential 
new entrants, and to develop a new fishery rights plan if s/he considers it would increase 
the fishery production in the waters of the prefecture. The plan for the next five years is 
finalized and publicized after consultation with the Fisheries Adjustment Commission. The 
governor then grants a licence to qualified applicants, in order of priority and eligibility 
defined by the plan. All beneficiaries of  fishing rights are associated with voluntary resource 
management plans. Previously, the prefectural governments prioritized local fisheries 
operators and cooperatives, when granting these fishing rights;  
• secondly, a system of Individual Quotas (IQs) with in the Total Allowable Catch (TAC) was 
introduced. Conceptually, in the absence of such IQs, fishers are implicitly encouraged to 
fish as much as they can, as quickly as they can, which may lead to an overfishing. The IQs 
are not transferable, except from one vessel to another belonging to the same owner. In 
addition, the TAC system, which applied to only seven species, was extended to blue fin tuna 
in 2018, to ensure compliance with the relevant conservation management measure taken 
by the Western and Cent ral Pacific Fisheries Commission . The TAC system is expected to be 
extended to cover most catches ; and  
                                                
51 Other relevant organizations include the Fish eries Cooperative Associations and the Fisheries 
Research Agency (WTO , 2015).  
52 For elements on the content of this latter amendment, see Section 4.1.4.1 . WT/TPR/S/397 • Japan  
 
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• finally, the revision tightens the control of poaching of marine resources, such as abalone, 
sea cucumbers and glass eel, by raising the maximum fine fr om JPY 2 million to JPY 30 
million.  
4.1.2.5   International agreements  
4.78.   Japan  has bilateral agreements with Australia, Canada, China, Chinese Taipei, France, Kiribati, 
the Republic of Korea, Marshall Islands, Morocco, the Russian Federation, Solomon Islands, Senegal, 
and Tuvalu. The agreements with Australia, Canada, and France do not provide for access by 
Japanese fishing vessels, and the agreements with China, the Republic of Korea, and the Russian 
Federation are mutual access agreements allowing reciprocal access to each country's EEZs. Under 
the agreements with China and the Rep ublic of Korea, the parties have not yet reached agreement 
about operational conditions for mutual fishing access.53  
4.79.   In addition , there are numerous private -sector -based agreements which provide for access 
to the waters of other countries and territories ( Cabo Verde, Côte d'Ivoire, Equatorial Guinea, Fiji, 
Gabon, The Gambia, Guinea, Guinea -Bissau, Madagascar, Mauritania, Mauritius, Micronesia, 
Mozambique, Nauru, Palau, Papua New Guinea, Saõ Tome and Principe, Seychelles, Sierra Leone, 
St. Helena, and Tanzan ia).  
4.80.   Japan is a member of the following Regional Fisheries Management Organizations  (RFMOs): 
Indian Ocean Tuna Commission; Western and Central Pacific Fisheries Commission; Inter -American 
Tropical Tuna Commission; International Commission for the Conserva tion of Atlantic Tuna; 
Commission for the Conservation of Southern Bluefin Tuna; General Fisheries Commission for the 
Mediterranean; South East Atlantic Fishery Organization; Convention on the Conservation and 
Management of Pollock Resources in the Central  Bering Sea; North Pacific Anadromous Fish 
Commission; Commission for the Conservation of Antarctic Marine Living Resources; Northwest 
Atlantic Fisheries Organization; South Indian Ocean Fisheries Agreement; North Pacific Fisheries 
Commission; and Commissi on for the Conservation of Antarctic Marine Living Resources.  
4.81.   Japan is also a member of the following fisheries and fisheries -related  agreements: Asia -
Pacific Fishery Commission, Fishery Committee for the Eastern Central Atlantic, Southeast Asian 
Fisherie s Development Centre, and North Pacific Marine Science Organization.  
4.82.   In December  2018, Japan announced its withdrawal from the International Convention for the 
Regulation of Whaling, and its intent to resume commercial whaling from July 2019. This withdra wal 
became effective on 30 June 2019.  
4.83.   In May 2017, Japan acceded to the Agreement on Port State Measures to Prevent, Deter and 
Eliminate Illegal, Unreported and Unregulated Fishing. Accordingly , it implements measures such as 
restricting port calls for fis hing vessels listed in the RFMOs illegal, unreported and unregulated (IUU) 
vessel list and the prohibition of landing of fish harvested by IUU fishing.  
4.1.2.6   Border and domestic support measures   
4.84.   During the review period, tariff protection to the fisheries sect or remained virtually 
unchanged. In FY2019, the average MFN tariff rate on the 528 lines (493 in FY2016) (at HS nine -
digit level) covering fish and fish products was 6.1% (6.2% in FY2016) and the range was between 
zero and 15% (same in FY2016). Of these li nes, 4.7% (4.3% in FY2016) are duty -free, and 0.2% 
(same in FY2016) are subject to non -ad valorem rates (Section 3.1.4.1). 66 tariff lines are fully 
unbound, and 19 partially bound. This represents around 12.5% of fish and fishery products under 
the WTO de finition. Japan applies import licensing procedures and quotas on certain species 
(Section  3.1.6.2).  
4.85.   Fish and fish products benefit from the Japanese systems of export support and promotion.  
                                                
53 MAFF, 2018 White Paper on Fisheries (summary), pg.  19. Viewed at: 
http://www.maff.go.jp/e/data/publish/attach/pdf/index -94.pdf . WT/TPR/S/397 • Japan  
 
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4.86.   Japan reshuffled the presentation of its subsidy schemes in its notification. In its previous 
WTO notification in 201754 (covering FY2014 and 2015), it notified only two national programmes: 
the Fisheries Modernization Fund Interest Subsidy and the Fund for the Measure to Recovery Fishery 
Resources. Table 4.15 contains the support programmes for fisheries as notified by Japan to WTO 
in July  2019.55 The total amount of subsidies rose significantly. It was JPY  73.2 billion for FY2016  
and JPY  68.7 billion for FY2017, compared with JPY 1.7 billion for FY2014 and JPY  1.3 billion for 
FY2015. According to the authorities, this increase can be explained by the fact that, for the sake of 
transparency in the ongoing negotiations on fisheries subsidies, Japan notified programmes which, 
in its view, may not constitute subsidies under Article 1 of the SCM Agreement or may not be 
"specific" under Article 2 of the same Agreement .  
Table 4.15 Fisheries subsidies notified in July 2019 for FY2016 and FY2017  
Name of the 
program me Level and form 
of the subsidy  Policy objective pursued  Beneficiaries  Duration and 
amount  
Programmes for 
development 
and adaptation 
of new 
technologies and 
conservation of 
fishing grounds  - National  
- Grants, etc.  To support fishermen and 
other organizations to 
develop and adapt new 
technologies related to 
fisheries , such as 
information and 
communication 
technology, to mitigate or 
prevent damage by 
harmful marine species 
and red -tide, and to 
remove marine wastes  Fishermen and 
associations 
thereof  
 FY2016 (April 
2016-March 2017):  
JPY 445 million ; 
FY2017 (April 
2017-March 2018):  
JPY 604 million  
 
Support for 
establishment of 
environmentally 
and 
economically 
sustainable 
fisheries  - National  
- Grants  and 
loans  To enable fishermen and 
other organizations to 
conduct sustainable fishing 
practices under the 
government's fisheries 
plans and resource 
management measures, 
thereby establishing 
environmentally and 
economically sustainable 
fisheries, and ensuring  a 
stable  supply of seafood to 
its nationals. Such 
supports include the 
mitigation of damages on 
fishermen by natural and 
economic disasters, and 
the promotion of structural 
reform of fisheries sectors  Fishermen and 
associations 
thereof  
 FY2016 (April 
2016-March 2 017):  
JPY 64 .9 billion; 
FY2017 (April 
2017-March 2018):  
JPY 580 billion 
 
Promotion for 
regional 
development 
through 
fisheries  - National  
- Grants and 
funds  To promote regional 
development by 
supporting fishermen and 
other organizations to 
conduct on -site fisheries -
related activities , such as 
clean-up and maintenance 
of the coastal marine 
ecosystem, national border 
surveillance, the 
revitalization of fishing 
communities in remote 
islands, and the 
recruitment and 
settlement of new 
fishermen  Fishermen and 
associations 
thereof  
 FY2016 (April 
2016-March 2017):  
JPY 6 .9 billion; 
FY2017 (April 
2017-March 2018):  
JPY 9 .0 billion 
 
Support for 
aquaculture, 
inland fisheries , - National  
- Grants, etc.  To support aquaculture 
and inland fisheries, and 
to promote fish stock 
enhancement  Fishermen and 
associations 
thereof  
 FY2016 (April 
2016-March 2017):  
JPY 922 million ; 
                                                
54 WTO document G/SCM/N/315/JPN, 9 June 2017.  
55 WTO document G/SCM/N/343/JPN, 19 July 2019.  WT/TPR/S/397 • Japan  
 
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Name of the 
program me Level and form 
of the subsidy  Policy objective pursued  Beneficiaries  Duration and 
amount  
and fish stock 
enhancement  FY2017 (April 
2017-March 2018):  
JPY 972 million  
Subsidy for 
inland water 
aquaculture  - Local 
(Miyazaki 
prefectural 
government)  Grant  Japan Caviar, Inc.  FY2016 (April 
2016-March 2017):  
JPY 5.7 million ; 
FY2017 (April2017 -
March 2018):  
JPY 4.5 million  
Source:  WTO document G/SCM/N/343/JPN, 19 July 2019.  
4.2  Mining  and Energy  
4.2.1   Mining  
4.87.   Mining represented 0.1% of GDP in Japan in 2016 and in 2017. This is due to the fact that 
the country has few mineral resources, most of which are already depleted and/or have become 
economically uncompetitive (e.g. coal). Some mining activities remain for  precious metals, and there 
could be some perspectives from rare earths that have not yet materialized. In 2017, the sector 
employed about 20,000 persons, i.e. 0.1% of total employment.  
4.88.   Table 4.16 provides an overview of the mining sector, in terms of num ber of establishments, 
number of persons employed, and value added by main type of products, for 2016, the last year for 
which this type of statistics were available. Table 4.17  describes the main mineral productions from 
2015 to 2018, and the share of the  mining sector in total GDP and total employment.  
Table 4.16 Basic indicators on mining, 2016  
  No. of 
establishments  No. of 
persons 
employed  Value of 
production 
(JPY 
billion)  Value 
added 
(JPY 
billion)  
Total mining  1,826  18,683  430.9  200.3  
Establishments engaged in administrative 
or ancillary economic activities  177 2,341    
Metal mining  6 213 35.7 30.7 
Coal and lignite mining  17 581 20.3 .. 
Stone quarrying, sand and gravel pits  1,389  11,956  250.6  104.9  
Ceramic mineral mining  194 3,265  120.2  52.8 
Other  43 327 4.0 .. 
.. Not available.  
Source:  Statistics Bureau of Japan, Statistical Yearbook 2019 . Viewed  at:  
https://www.stat.go.jp/english/data/nenkan/index.html . 
Table 4.17 Mining production, 2015 -18  
  2015  2016  2017  2018  
Gold (g)  7,698,924  6,455,414  6,369,413  6,453,023  
Silver (kg)  4,616  5,076  3,408  3,596  
Silica stone (t)  8,988,066  9,068,044  9,261,063  9,631,453  
Lime stone (t)  142,916,418  139,331,640  141,633,594  142,211,511  
Dolomite (t)  3,365,928  3,222,885  3,359,444  3,439,941  
Silica sand (t)  2,834,790  2,762,208  2,694,788  2,524,141  
Mining as % of GDP  0.1 0.1 0.1 .. 
Mining as % of total employment  0.1 0.1 0.1 .. 
.. Not available.  
Source:  Statistics Bureau of Japan, Statistical Yearbook 2019 . Viewed 
at:   https://www.stat.go.jp/english/data/nenkan/index.html . WT/TPR/S/397 • Japan  
 
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Japanese imports of mineral products (except energy products) represented 6.5% of total 
Japanese imports in 2018 (Tabl e 4.18 ). 
The average level of tariff protection for mining products (group ISIC 2) is 0.1%. All but four 
tariff lines56 are duty -free. 
Table 4.18 Major mining imports  
  
Import value, USD million   
Description  HS codes  2016  2017  2018  Main origina 
Copper ores and 
concentrates  2603 7,430.9  7,969.9  9,823.4  Chile (39.4%); Indonesia (16.0%); 
Australia (13.9%)  
Iron ores and 
concentrates  2601.11; 
2601.12  7,348.5  9,650.8  9,305.7  Australia (49.6%); Brazil (31.1%)  
Aluminium and 
alloys, unwrought  7601.10; 
7601.20  4,306.8  5,660.5  6,324.7  Russian Federation (18.9%); Australia 
(18.8%); United Arab Emirates 
(12.0%)  
a Based on 2018 import figures.  
Source:  WTO calculations, based on the UNSD Comtrade database.  
The State appears not to be involved in the ownership of mines, and does not provide specific 
subsidies or support to the mining sector. There are no programmes to help the reconversion of 
areas affected by the closure of mines.  
Policy and institutional developments  
Japan's policy objective is to secure a stable supply of natural resources. The law and 
regulations on mining are under the purview of the METI, which delegated this responsibility to the 
Agency for Natural Resources and Ener gy. Onshore permit requests must be made at local bureaux 
of the METI, while offshore permit requests must be made at the METI itself. The Japan Oil, Gas and 
Metals National Corp. (JOGMEC), which was formed in 2004 through the merger of the Japan 
National Oil Co. and the Metal Mining Agency of Japan, is charged with implementing the policies set 
by the METI. The JOGMEC, an incorporated administrative agency of the Government, contributes 
to a stable supply of metal resources which are indispensable for Japa nese industry, is responsible 
for a wide range of fields, including surveying, exploration, development, production, stockpiling, 
recycling, and environmental protection.57  
Regulatory and operational developments  
The main legislation regarding mining remains the Mining Act (Law No. 289 of 
20 December  1950), whose last significant amendments date back to 2012 and 2017.  Prior approval 
from the Minister of Economy, Trade and Industry is required for seismic exploration, 
electromagnetic exploration , and in tensive sampling exploration . Exploitation permits ("digging 
rights") are also subject to authorization by the METI.  
To apply for an exploration permit or a digging right permit, individuals must be of Japanese 
nationality and companies must be constituted  under Japanese law. However, these companies can 
be fully or majority foreign -owned.  
Prior to the 2012 amendments to the Mining Act, applicants were granted mining rights on a 
first-come -first-served basis. The amendments defined two classes of minerals:  specified minerals 
and non -specified minerals.  
The specified minerals designated under the Mining Act are:  
• oil and combustible natural gas;  
                                                
56 Namely, HS 271121 natural gas in gaseous state: 4.5%; HS2 50900 chalk: 1.4%; HS 2513190 
emery; natural corundum, natural garnet and other natural abrasives: 1.1%; and HS250100 salt and pure 
sodium chlorite: JPY 0.5/kg.  
57 JOGMEC, Metals. Viewed at: http://www.jogmec.go.jp/english/metal/index.html . WT/TPR/S/397 • Japan  
 
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• gold ore, silver ore, copper ore, lead ore, bismuth ore, tin ore, antimony ore, mercury ore, 
zinc ore, iron ore, ir on sulfide ore, manganese ore, tungsten ore, molybdenum ore, nickel 
ore, cobalt ore, uranium ore, thorium ore and barites, which constitute hydrothermal 
deposits located subsea or beneath the sea;  
 
• copper ore, lead ore, zinc ore, iron ore, manganese ore, t ungsten ore, molybdenum ore, 
nickel ore and cobalt ore, which constitute sedimentary deposits located subsea or beneath 
the sea; and  
 
• asphalt.  
Areas either containing or likely to contain specified minerals can be deemed a "specified 
area" by the METI. The  METI accepts applications from interested developers for specified areas for 
a period of no shorter than six months, after which time the METI selects what it deems to be the 
most suited developer for the area.  
Non-specified minerals include all minerals not listed as a specified mineral. A first -come -first-
served selection system still applies for them, provided the applicant can demonstrate financial 
solvency and the technical capability to carry out development of the site.  
For both types of minerals, exploration must start within six months, and the holder of a 
prospecting right can extend his right by two years twice. For the production/exploitation/digging 
right, a separate application must be made. The applicant must submit, to this effect, an expla natory 
document outlining the location, depth, thickness and any other information regarding the mineral 
deposit discovered under the prospecting right. Criteria used by the METI to grant or refuse the right 
are similar to those for exploration. Work must start within six months, and the permit can be 
withdrawn if the operations are interrupted for more than one year.  
To prevent environmental pollution caused by mining activities, support continues to be 
provided since 1973, with no expiry date, to cover a portion of the mine pollution control costs under 
a Loans for Mine Pollution Control scheme (FY2016 (settlement of accounts) JPY 189 million; FY2017 
(settlement of accounts) JPY 807 million).58  
Energy  
Japan has very few fossil fuel resources, and depends on imports for almost all its energy 
consumption except for nuclear -generated electricity and renewables energies . The energy self -
sufficiency ratio was 20% in FY2010 before the Fukushima accident, but fell to 8% in FY2016. Partial 
restoration of t he share of nuclear power, increased energy efficiency, and the development of 
renewable energies are the three avenues through which Japan plans to reduce its dependency on 
imported fossil fuels. The aim is to reach an energy self -sufficiency ratio of 24%  by FY2030.  
Chart 4.7 describes the energy mix of Japan in FY2017, and plans for FY2030.  
                                                
58 WTO document G/SCM/N/343/JPN, 19 July 2019.  WT/TPR/S/397 • Japan  
 
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Chart 4.7 Primary energy supply  
 
Source:  Data provided by the authorities.  
The 2030 energy mix factors in Japan's commi tments (Nationally Determined Contribution) 
for the reduction of greenhouse gases submitted to the United Nations Framework Convention on 
Climate Change under the Paris Agreement; these include a reduction by FY2030 of 26% of 
emissions compared to FY2013. This 2030 planned energy mix also includes an energy -saving 
target, through additional energy -efficiency measures, of about 30 million kl crude oil equivalent by 
2030, with 2013 as the benchmark, leading to a total consumption of 330 million kl, compared t o 
360 million kl in 2013 and 350 million kl in 2017.59 It also plans a zero -emissions ratio target (the 
proportion of the electricity mix that does not emit greenhouse gases, i.e. renewables and nuclear) 
of 44% (renewable 22% -24%; nuclear 22% -20%), up from 12% in 2013 (renewable 11%, nuclear 
1%), and from 19%  in 2017 (renewable 16%, nuclear 3%).  
As indicated above, the share of renewable energy (excluding nuclear) in the Total Primary 
Energy Supply is expected to grow from 11% in FY2017 to 13% -14% in 2030, according to the 2018 
Strategic Energy Plan. Chart 4. 8 provides the actual and planned relative shares of the various 
renewable energies in those totals.  
Chart 4.8 Relative shares of the various renewable energies for FY2017 and FY2030 
(planned)  
 
Source:  Data provided by the authorities.  
                                                
59 Government of Japan , 5th Strategic Energy Plan, July 2018 . Viewed at: 
https://www.meti.go.jp/english/press/2018/pdf/0703_002c.pdf . 
Chart 4.7  Primary energy supply
Natural gas
23%FY2030 FY2017
O il
39%Nuclear 
1%
Renewables
11%
Source:  Data provided by the authorities.C oal
25%
Renewables
13% -14%
Natural gas
23%O il
33%Nuclear
10% -11%C oal
25%
Chart 4.8  Relative shares of the various renewable energies for FY2017 and 
FY2030 (planned)
Wind
4%FY2030 FY2017
Geothermal
energy  1%Hydropower
49%
Solar
33%
Source:  Data provided by the authorities.Woody biomass 
13%
Solar
30%Wind
7%Hydropower
39%Woody biomass 
19%
Geothermal
energy
5%WT/TPR/S/397 • Japan  
 
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The main policy development during the period under review was the adoption, in July 2018, 
of a fifth Strategic Energy Plan (SEP), replacing the 2014 SEP issued in the aftermath of the great 
east-Japan earthquake and the nuclea r accident of Fukushima; stated objectives were the reduction 
of nuclear power and fossil fuel dependencies, and the expansion of renewable energies.  
While the new Plan confirms the basic principles of Japan's energy policy (Energy security, 
Economic effic iency, Environment sustainability and Safety (3E+S)), it revises the 2014 Plan in view 
of the four years of implementation experience, and sets objectives for 2050; the previous Plan had 
a 2030 horizon. The Plan comprises two elements: a long -term energy s upply and demand outlook 
for 2030 issued via a 2015 decision of the METI  ("energy mix"); and the design of scenarios for 2050 
with the aim of achieving energy transition and decarbonization through technological innovation.  
The New SEP sets as a goal for 2050 the realization of the "hydrogen society", hydrogen 
being an efficient energy source, with no greenhouse gas emissions. Japan, therefore, plans to 
pursue the research already undertaken in this area. The Ministerial Council on Renewable Energy, 
Hydrog en and Related Issues, a special coordination body, created in April 2017 to deal with 
renewable energy issues, adopted, in December 2017, the Basic Hydrogen Strategy to that effect 
(for more elements on the subsidy programme for fuel cell vehicles, see Se ction 3.3.1.3).  
Another significant development was the adoption by the Cabinet, in May  2018, of the Basic 
Plan on Ocean Policy, which contains a component on the development of offshore mineral energy 
and mineral resources. In this context, the Government  revised the Plan for the Development of 
Marine Energy and Marine Mineral Resources in February 2019. This Plan contains, inter alia,  support 
measures for resource mapping and technology development for better production of marine energy 
and deep -sea miner al resources, to an amount of JPY 37.89 billion for the duration of the Plan. This 
covers not only oil and natural gas but also methane hydrate gas . 
The 2018 SEP indicates that the Government will propose measures aimed at utilizing solar 
power for residen tial consumption and as a distributed power source to carry out local production 
for local consumption. The support measures taken since application of the SEP include an annual 
JPY 2.8 billion subsidy scheme to support the construction of net zero energy houses equipped with 
storage batteries or electric vehicle charging/discharging facilities,  and an annual JPY 2 billion 
subsidy scheme for companies constructing local micro grids i.e. energy systems which can be 
operated independently from large-scale electric power systems in case of blackout. The Government 
is also subsidizing the acquisition of storage batteries for residential and small factory use, based on 
a target/maximum eligible price system whose scales are described in Chart 4.9. Measures are also 
expected to be taken to ensure the proper recycling of used solar panels.  
Chart 4.9 Target costs of energy storage systems in households  
 
Source:  Data provided by the authorities.  
510152025
FY2016 FY2017 FY2018 FY2019 FY202010-year battery energy
storage system life time
15-year battery energy
storage system life timeChart 4.9 Target costs of energy storage systems in households
Source:  Data provided by the authorities.10,000
JPY/kWhWT/TPR/S/397 • Japan  
 
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For larger -scale solar production, the feed -in tariff (FIT), introduced in July 2012, contributed 
to the growth of solar generation capacity from 0.9 GW in 2012 to 34.4 GW in 2017. However, the 
fifth SEP, approved by the Cabinet on July 2018, states that the FIT has  become too financially 
burdensome60, and plans to replace it by an auction system and sales on the wholesale market 
(Section 4.2.2.2).  
Regarding wind energy, the SEP acknowledges the environmental constraints, the scarcity 
of suitable locations available onshore, the grid connection, and the high costs of production. It sets 
an ambitious cost objective of JPY 8 to JPY 9/kWh in 2030, and plans to develop this energy 
essentially offshore, and to introduce a bidding system to limit costs.  
Geothermal , hydropower and biomass are envisaged by the Plan as essentially local sources 
of energy produced by small -scale facilities. The Government is to provide assistance to these types 
of project and to the building of distribution systems combining small -scale energy renewable 
sources.  
The basic legislation on energy efficiency is the 1979 Act on the Rational Use of Energy 
(Energy Saving Act), last amended in 2013, which sets a non -binding target of a 1% per year 
improvement in energy efficiency, an objective  met during the last five years by the majority of 
energy -intensive businesses. While this legislation did not change during the period under review, 
numerous initiatives were taken regarding energy efficiency, in the form of additional secondary 
regulatio n, notably regarding the setting of efficiency norms for the various sectors, including 
construction, voluntary actions by private actors and government, and private -sector research 
programmes, e.g. on AI, IoT, and big data applied to energy; smart grids; smart meters; optimal 
design of electrical appliances; and insulation and construction materials. It is also expected that 
the structural reforms of the gas and electricity market (see below) will have an effect on energy 
efficiency and, in particular, on the management of electricity peak demand.  
The Government is in the process of adapting and expanding the efficiency monitoring 
process of the Energy Saving Act and its correlative schemes of sanctions and support mechanisms . 
A specific government effort i s directed towards medium and small enterprises in that regard, via 
local support offices. During the period under review, the benchmark programme, which sets targets 
for energy consumption per unit of productions, etc. was extended to 16 industrial sector s.  
The Agency for Natural Resources and Energy and its Advisory Committee for Natural 
Resources and Energy in the METI are responsible for energy policy, planning, and legislation, as 
well as regulation of the industry. The Nuclear Regulation Authority in  the Ministry of the 
Environment is responsible for the supervision of nuclear power plants.  
According to Japan's latest notification to the Committee on Subsidies and Countervailing 
Measures, during the review period, several schemes provided support, in  form of subsidized loans 
and/or grants, to energy -related activities aimed at implementing the country's energy policy 
objectives regarding supply, stockpiling, renewable energy, energy efficiency, and environmental 
protection (Table 4.19).61  
Table 4.19 Domestic support to energy -related projects, 2020  
Scheme  Budgetary outlays  Duration  
Loans for Purchasing Petroleum and 
Liquefied Petroleum Gas (LPG) for 
Stockpiling by Private Companies  FY2016 (settlement of accounts) JPY 517.9 billion; 
FY2017 (settlement of accounts) JPY 335.2 billion  Since 2004, no 
expiry date  
Provision of Equity Capital and Loans 
to Joint Stockpiling Companies  FY2016 (settlement of accounts) JPY 244 million; 
FY2017 (settlement of accounts) JPY 156 million  Since 2004, no 
expiry date  
Subsidy for loans to develop domestic 
oil and natural gas  FY2016 (settlement of accounts) JPY 168 million; 
FY2017 (settlement of accounts) JPY 138 million  Since 2008, no 
expiry date  
Subsidy for Loans to Purchase 
Petroleum and LPG to be Stored  None None  
Subsidy for projects concerning the 
stable supply of petroleum from oil -
producing countries  FY2016 (final results) JPY 3.7 billion; FY2017 (final 
results) JPY 3.8 billion  Since 2008, no 
expiry date;  
                                                
60 Government of Japan, 5th Strategic Energy Plan, July 2018 , pg. 52. Viewed at: 
https://www.meti.go.jp/english/press/2018/pdf/0703_002c.pdf . 
61 WTO document G/SCM/N/343/JPN, 19 July 2019.  WT/TPR/S/397 • Japan  
 
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Scheme  Budgetary outlays  Duration  
Subsidy for promoting business 
reorganization and resilience of 
petroleum industrial complexes  FY2015 supplementary budget (settlement of 
accounts) JPY 6.9 billion; FY2016 (settlement of 
accounts) JPY 10.1 billion; FY2017 (settlement of 
accoun ts) JPY 120 billion  February 2013 
to end -FY2019  
Subsidies for developing the local 
energy -supply bases  FY2016 (final results) JPY 3.0 billion; FY2017 (final 
results) JPY 2.4 billion  Since 2010, no 
expiry date  
Subsidies for Measures to Promote 
Conversion into Natural Gas Taken by 
Local City -gas Suppliers  FY2016 (final results) JPY 0.4 million; FY2017 (final 
results) JPY 0.3 million  Since 1985, no 
expiry date  
Subsidies for Small and Medium -scale 
Subsidies for Interest on Loans to 
Introduce Speci fic Facilities Suitable 
for Natural Gas  FY2016 (final results) JPY 875 million; FY2017 (final 
results) JPY 802 million  Since 1985, no 
expiry date  
Subsidy for demonstration project for 
high-efficiency gas turbine technology  FY2016 (settlement of accounts) JPY 2.6 billion; 
FY2017 (final results) JPY 2.1 billion  April 2012 -
March 2020  
Subsidy for R&D for practical 
application of the advanced ultra -
super critical technology for a thermal 
power plant  FY2016 (settlement of accounts) JPY 830 million  April 2008–
March 2017  
Hydropower Development  FY2016 (final results) JPY 262 million; FY2017 (final 
results) JPY 184 million  April 1986 –
March 2025  
Geothermal Energy Programme  FY2016 (final results) JPY 285 million  April 1986 –
March 2017;  
Grant for the Technical  Development 
of a Full -MOX ABWR Plant System  FY2015 (final results) JPY 100 million; FY2016 (final 
results) JPY 50 million  April 1996 -
March 2017  
New Energy and Industrial 
Technology Development 
Organization Project Activities  FY2016 (final results): Energy Systems (JPY 6.3 
billion); Energy Conservation and Environment (JPY 
4.9 billion); Industrial Technology (JPY 16.4 billion); 
New Industry Creation and Discovery of Technology 
Seeds (JPY 4.5 billion);  
FY2017 (final results): E nergy Systems (JPY 8.5 
billion); Energy Conservation and Environment (JPY 
5,.4 billion); Industrial Technology (JPY 13.9 billion); 
New Industry Creation and Discovery of Technology 
Seeds (JPY 4.4 billion, fixed completion date); Subsidy 
for "Ene -farm", etc . introduction support operating 
cost subsidy for expansion of use of fuel cell (FY2016 
(settlement of accounts) JPY 8.0 billion, FY2017 
(settlement of accounts) JPY 6.7 billion  April 2009 -
March 2021  
Subsidy for Major Oil Spill Response 
Programme  FY2016 ( final results) JPY 820 million; FY2017 (final 
results) JPY 659 million  Since 1990, no 
expiry date  
Source:  WTO document G/SCM/N/343/JPN, 19 July 2019.  
Hydrocarbons  
4.2.2.1.1   Coal 
Production of coal was 0.68 million tonnes of oil equivalent (MTOE) in 2017 (i.e. 0.16% of 
Japan's Total Primary Energy Supply (TPES)), while imports accounted for 114.78 MTOE. Imports of 
coal increased after the Fukushima nuclear accident (from 23% of the  primary energy supply in 
2010 to 25% in 2017, and from 28% of the power generation in 2010 to 32% in 2017). This was 
due to the fact that coal constitutes a relatively cheap source of energy for power generation. 
However , it emits a considerable amount of  greenhouse gases, which runs counter to the reduction 
objectives undertaken in the context of the Paris Convention. The Government intends to keep coal 
as a major source of energy, since it is expected to represent 25% of the total primary energy source 
in 2030 and 26% of electricity production, while encouraging the adoption of technologies reducing 
emissions, such as Integrated Gasification Combined Cycle, Ultra Super Critical pressure, and Carbon 
Capture Utilization and Storage.  
Coal and coal products (except for three product lines at rates of 2.5%, 3.2% and 3.9%) 
continue to enter Japan duty -free. The main sources of imports in 2018 were Australia, Indonesia 
and the Russian Federation.  
The JOGMEC contributes to the coal industry in various wa ys, including conducting geological 
surveys, developing technologies, and providing financial support and information, in order to secure WT/TPR/S/397 • Japan  
 
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a stable coal supply in Japan.62 The State also supports coal exploration through the JOGMEC, with 
a budget of JPY 890 million for FY2019.  
The State is not involved in coal mines or coal processing facilities ownership.  There are no 
domestic support schemes for coal mines, nor social programmes to help the reconversion of areas 
affected by the closure of coal mines.  
Japan' s regimes of importation and distribution of coal did not change since its previous 
Review . They are entirely in private hands, and are open to foreign capital and ownership. In 
practice, coal imports often come from mines developed abroad by Japanese comp anies (with mining 
rights), notably in Australia; such type of imports account for 70% of Japan's total coal imports. To 
help ensure coal supply, the Government is promoting the acquisition by Japanese companies of 
coal mines abroad, for example, in Indone sia. 
There are no preferential/subsidized tariffs/prices for coal purchase and sale in Japan  
4.2.2.1.2   Oil 
Production of crude oil was 0.44 MTOE in 2017 (i.e. 0.1% of Japan's TPES), while imports 
accounted for 158.45 MTOE. Local production of oil products was 164.1  MTOE (a figure in decline), 
while imports were 44 MTOE in 2017.  
The share of oil and oil products in the TPES was 43.0% in 2015, 41.5% in 2016, and 39.0% 
in 2017. It is planned to decrease this to 33% by 2030. Its share in power generation, which was 
9% in 2017, is also planned to be decreased, to 3% by 2030. These planned decreases are largely 
voluntary, and can be explained by the geopolitical uncertainties surrounding this source of energy 
and the subsequent wide price variations it registers, as well as the plan to switch to fewer or no 
greenhouses gas -emitting sources of energy.63 
Crude oil continues to enter Japan duty -free, and oil products remain subject to MFN tariff 
rates ranging from zero to 7.9% (a type of lubricating oil). The main sources of i mports in 2018 
were Saudi Arabia, the United Arab Emirates, and Qatar.   
Similar to metals (Section 4.2.1.1), to ensure stable supplies of oil and natural gas 
(Section  4.2.2.1.3), the state agency JOGMEC contributing in a wide variety of areas, including 
survey, research, development, production and stockpiling.64 It provides equity capital to Japanese 
companies for oil and natural gas exploration and production (E&P) projects, to mitigate the risks 
for them. Upon discovery of commercial oil or gas reserves, the JOGMEC also provides liability 
guarantees for oil and natural gas E&P projects conducted by Japanese companies, to support their 
finance. Support for certain oil and gas supply activities continues to be provided under certain 
subsidy schemes (see abov e). The State is not involved in the ownership of oil exploration, oil 
production, oil refining, or oil distribution companies.   
Japan's regimes of importation and distribution of crude oil and oil products did not change 
since its previous Review. They ar e entirely in private hands, and are open to foreign capital and 
ownership. The number of filling stations and refineries is declining. There is no maritime pipeline 
linking Japan to its neighbours; all oil (and gas) is entirely imported by sea.  
There are no preferential/subsidized tariffs/prices for oil in Japan . 
4.2.2.1.3   Gas 
Production of natural gas was 2.56 MTOE in 2017 (i.e. 0.6% of Japan's TPES), while imports 
accounted for 98.21 MTOE. The share of natural gas in Japan's TPES was 23.3% in 2015, 23.9% in 
2016, and 23.0% in 2017. It is expected to decrease to 18% by 2030. Its share in power generation, 
which was 40% in 2017, is also planned to decrease to 27% by 2030.However, its relative share in 
                                                
62 JOGMEC, Coal. Viewed at: http://www.jogmec.go.jp/english/coal/index.htm l. 
63 Government of Japan, 5th strategic Energy Plan, July 2018 , pp. 25 -26. Viewed at: 
https://www.meti.go.jp/english/press/2018/pdf/0703_002c.pdf . 
64 JOGMEC, Oil and Natural Gas. Viewed at: http://www.jogmec.go.jp/english/oil/index.html . WT/TPR/S/397 • Japan  
 
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fossil fuels will increase . Ongoing and future technological devel opments regarding gas include co -
generation systems, the use of natural gas as a source of hydrogen, and combined cycle thermal 
power generation using biogases.  
Liquefied gas continues to enter Japan duty -free but natural gas in gaseous state 
(HS 271121) r emains subject to a 4.5% import duty. The main sources of imports in 2018 were 
Australia, Malaysia, and Qatar.   
Similar to metals and oil, to ensure stable supplies of natural gas, the state agency JOGMEC 
contributes in many areas (Sections 4.2.1.1 and 4.2 .2.1.2). Several domestic support schemes for 
gas supply activities continue to be provided under certain subsidy schemes (see above) . The State 
does not appear to be involved in the ownership of gas exploration, production, liquefaction or 
distribution co mpanies. Local governments are involved in city -gas companies and own some 
liquefied natural gas (LNG) terminals.   
In 2017, 65% of natural gas was imported by seven electricity companies for power 
generation. City -gas companies  imported the remainder, with  one third of their sales to individual 
consumers and more than half to industry. The city -gas industry is fragmented into many vertically 
integrated regional companies, the four largest having a combined market share of 71%. Under the 
provisions of the Fo reign Exchange and Foreign Trade Act, foreign entities wishing to invest in gas 
utilities must notify their intention to the competent authorities, including the METI. The authorities 
state that permission may be denied on grounds of, inter alia, public or der.65 Foreign investments 
have effectively taken place in this sector.  
There are no preferential/subsidized tariffs/prices for gas in Japan.  
Following the amendment of the 1954 Gas Business Act in April 2017, the full deregulation 
of the gas retail marke t was enforced on 1 April 2017. As a consequence of this reform, the share 
of new entrants rose in volume, from 8% to 14% between April and July 2019 , the number of 
registered retail firms rose to 54 (as at April 2018), among which 18 directly served indiv idual 
households.  There are foreign operators among them. The number of consumers switching from one 
company to another rose from 60,000 in March 2017 to 840,000 in March 2018. The next stage of 
the reform, the legal separation of the pipelines business di vision from large gas suppliers, is 
scheduled for April  2022.  
Electricity  
By depriving Japan for several years of about 10% of its power -generation capacity, the 
Fukushima nuclear incident and the subsequent closure of all nuclear power plants for some years, 
disrupted, and continues to disrupt, the electricity sector. This is i llustrated in Chart  4.10, which 
shows, for 2016 and 2017, a repetition of the cycle of high prices experienced immediately after the 
nuclear accident and, hence, the persistence of a structural problem regarding the prices of power 
generation.  
The chart s hows a parallel evolution of crude oil prices and electricity prices. This explains 
why Japan is planning to reduce the share of oil in power generation from 9% to 3% . It also 
illustrates why the Government wants to restore the share of nuclear energy in t he power generation 
mix by 2030 to 22% -20%. So far, nine reactors have been authorized to restart, and six more are 
planned to be authorized in the coming months. This restored a 1% share of nuclear energy within 
Japan's total TPES for FY2017.  
                                                
65 The Minister of Finance and the minister in charge of the industry involved may order the suspension 
of a proposed investment if the y consider it may "endanger national security, disturb the maintenance of public 
order, or hamper the protection of public safety", or "adversely and seriously affect the smooth management of 
the Japanese economy". They may also recommend that the parties concerned alter their investment plans.  WT/TPR/S/397 • Japan  
 
- 158 - 
 
Chart 4.10 Electricity and oil prices trend  
 
Source:  Data provided by the authorities.  
Chart 4.11 describes the power -generation mix for FY2017, and the planned one for 2030.  
Chart 4.11 Power -generation mix  
 
Source:  Data provided by the authorities.  
During the period under review, Japan pursued the preparation of the third stage of the 
deregulation of the electricity market, initiated in 2013; the first two stages (the establishment of 
the Organization for Cross -regional Coordination of Transmission Operators in April 2015, and of the 
Electricity Market Surveillance Commission in September 2015 on the one hand, and the 
deregulation of the retail market in April 2016 on the other hand) were described in the previous 
report.  
As illustrated in Chart 4.12, the next step, the legal unbundling o f transmission and 
distribution of vertically integrated regional utilities, is scheduled for April 2020, and the preparation 
of this next reform and the follow -up of the first two stages of the reform are ongoing.  
010,00020,00030,00040,00050,00060,00070,00080,000
1214161820222426
FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017Average prices for households
Average prices for industry
Crude oil import priceChart 4.10   Electricity and oil prices trend
Source: Data provided by the authorities.(JPY/kWH) Crude oil import price (JPY/kl)
25% up
38% up
21% up16% up
Chart 4.11    Power -generation mix
FY2017 FY2030
Source:  Data provided by the authorities.C oal
32%
O il
3%
Liquefied natural gas
27%Renewables
22% -24%Nuclear
20% -22%
C oal
26%Geothermal 0.2%
Renewables
16%Nuclear
3%
Liquefied natural gas
40%O il
9%Biomass 2.1%Geothermal 1% -1.1%
Wind 0.6% Biomass 3.7% -4.6%
Solar PV 5.2%Wind 1.7%
Hydro 7.9%Solar PV 7%
Hydro 
8.8% -9.2%WT/TPR/S/397 • Japan  
 
- 159 - 
 
Chart 4.12 Electricity system reform  
 
Source:  Japan Electric Power Information Center (JEPIC), The Electric Power Industry in Japan 2019.  Viewed 
at: https://www.jepic.or.jp/en/data/epijpdf.html . 
Following the 2016 liberalization of the retail market, and up to May 2019, the share of new 
power producers and suppliers of electricity in total reta il sales rose from 5.0% to 14.2%. Entry into 
the retail market requires government approval. In addition, under the provisions of the Foreign 
Exchange and Foreign Trade Act, foreign entities wishing to invest in electric utilities (including retail 
operati ons) must notify their intention to the competent authorities, including the METI. The 
authorities state that permission may be denied on grounds of, inter alia, public order.  The number 
of new entrants rose considerably, from 109 operators registered in O ctober 2013 to 614 in 
September 2019.  New options for consumers have appeared, such as bundled packages with gas 
and other services, loyalty schemes, and the provision of CO 2-free electricity.  
A parallel evolution took place on the wholesale market, the J apan Electric Power Exchange, 
created in 2003, where the power traded on the spot market rose from 3% in 2016 to 15% in 2017. 
The METI envisages the creation of additional new markets to fluidify the adjustment of demand and 
supply, namely a baseload power  market, a capacity market, a balancing market, and a no -fossil-
value market but no decision has been taken yet in that regard.  
While consumers can now choose among a variety of services offered by the operator they 
selected, the prices for specific retai l services remain regulated for the time being, so long as 
competition has not fully produced its effects.  
Regarding pricing and support scheme issues, the METI announced, in August  2019, a major 
reform of the FIT system, adopted in 2012, to promote great er development of renewable energy. 
Under the 2012 system, solar and wind energy is purchased at predetermined prices. A large part 
of the purchase  costs incurred is passed on to final consumers (households or businesses) via their 
electricity bill. As sta ted by the fifth SEP, the cost of this system had become too burdensome; the 
cost of these preferential purchases reached JPY  3.6 trillion in FY2019, JPY 2.4 of which passed on 
Source:  Japan Electric Power Information C enter (JEPIC), The Electric Power Industry in Japan 2019.  V iewed at: 
https://www.jepic.or.jp/en/data/epijpdf.htmlChart 4.12    Electricity system reform
Full deregulation of 
retail sales
(liberalization of entry into 
retail electricity market)
Market monitoring
Preparation for system transitionEnsuring neutrality in transmission and 
distribution;  deregulation of electricity rates
Scheduled: April 2020Deregulation of entry into 
retail electricity market
Implementation: April 2016
Customer freedom to select electric utilities and supplier freedom to set electricity rates 
extended to small -customer sector (including households)1) Formulation of plans for cross -regional supply and demand
2) Formulation of plans for improvement of interconnected lines and cross -regional transmission lines
3) Cross -regional supply and demand/grid operation
4) Supply and demand adjustment in times of supply shortages
Realization of 
competitive market 
environmentMarket -based cross -regional supply and demand adjustment1) Obligation to secure supply capacity
2) Establishment of capacity market for future supply capacity transactions
3) System for power source procurement bidding in anticipation of future shortagesEstablishment of requisite systems for 
customer protection (last -resort service, 
universal services, etc.)Period of transitional
measures for eliminating 
rate regulationsElimination of rate 
regulations
(end of transitional measures)
1) Regulation of transmission and distribution (wheeling service feeds, conduct of business, etc.)
2) Wholesale/retail market transaction monitoring, competition condition review, and rule development
3) Operations related to stable electric power supply, including issuance of supply orders and implementation of
appropriate rolling blackouts in emergencies 
Creation of new system for
securing supply capacity
Creation of hour -ahead marketElimination of regulations
on wholesale market
Legal separation of 
transmission and 
distribution from the 
vertically integrated businessRegulation of transmission 
and distribution and 
monitoring of neutrality 
assurancesCreation of 
balancing marketFull-scale implementationReview of competition conditions
Review, development and issuance of rules as preconditions for 
improving neutrality in transmission and distribution operationsWT/TPR/S/397 • Japan  
 
- 160 - 
 
to final consumers. The new system will replace the predetermined price with a system of 
competitive bidding on the wholesale market, as prices will be referenced  based on market 
conditions. The reform is under consideration. The main idea is to move  power sources that are 
expected to be competitive to a new system, in view of their integration into the power market. For 
other power sources used, the basic framework of the FIT system will be maintained for the time 
being. In addition, the reform is aimed at optimizing the renewable energy sector, by ensuring safety 
and by disposing of  waste solar panels appropriately, and by developing a transmission network 
suitable for mainstreaming renewable energy.  
The exemption of 80% of the FIT for energy -intensive consuming industries is still in place; 
but it will be re -examined after the FIT tariff reform.  
4.3  Manufacturing  
4.145.   Manufacturing (20.8% of GDP in 2018) accounts for the majority of merchandise exports , 
and remains driven by transport equipment, machinery (general purpose, production and 
business -oriented), food product, chemical , and basic metal activities. The import  content of exports 
varies across manufacturing industries, indicating a degree of global value chain ( GVC) integration 
of certain industries. During the review period, certain manufacturing policy developments, including 
AI, robotics and related plans interlinked with services activities, were undertaken. Since the 
previous Review, the average MFN applied tariff for manufacturing products dropped , and TRQs 
continued to apply on 62  manufactured items; peak rates (AVEs) affect footwear (219.4%) and silk 
(97.9%). A few industrial items were subject to anti -dumping duties. Domesti c support continued 
under several non -industry -specific schemes , involving tax and non -tax incentives; activity -specific 
incentives were available , inter alia , to the bekko (tortoiseshell) and ivory crafts industries, the 
leather and leather goods industri es, the manufacture of traditional craft products, care robot 
equipment, sochu manufacture , and fuel-cell vehicles and connected industries.  
4.3.1   Features  
4.146.   Manufacturing's share of GDP increased from 19.9% in 2014 to 20.9% in 2015 , and then 
dropped slightly to 2 0.8% in 2016 and 2017 (Table 1.2); its share in employment dropped slightly 
from 15.5% in 2014 to 15.2% in 2017. Its employment share was much lower than its share in GDP, 
which implies that labour productivity in manufacturing remains much higher than in agriculture.66 
Furthermore, the productivity of SME s in manufacturing remains a concern to the authorities 
(Section s 1.2.1, 1.2.4.1 and 1.2.4.4). In 2016, there were more than 217,600  establishments (with 
four or more persons employed ) in the manufacturing sector. The major contributors to GDP and 
employment remain the transport equipment, machinery (general purpose, production and 
business -oriented), food product, chemical and basic metal activities.67 In 2018, Japan remained the 
world's third largest automo bile manufacturing country (after China and the United States), had the 
largest electronics goods industry, and is often ranked among the world's most innovative countries , 
leading several measures of global patent filings.68 Facing increasing competition f rom China and 
the Republic of Korea, manufacturing in Japan continues to focus primarily on high -tech and 
precision goods, such as optical instruments, hybrid vehicles, and robotics. During the review period, 
the share of manufacturing in total exports dec lined slightly; it accounted for 86.8% of total 
merchandise exports in 2018 (87.2% in 2015), mainly automotive products (21.5%), non -electrical 
machinery (15.1%) and chemicals (10.7%). The import content of exports varies across 
                                                
66 According to Japan Productivity Center estimates, the monthly labour productivity index  stood at 
98.1 (2015=100)  in February 2019, or 2.0 percentage points less than the same month the year before ; 
during the same period, the labo ur productivity growth rate went up in 6 out of the 21 industries in the survey.  
For example, fabricated metals (+1.5 percentage points ), and t ransport equipment (+1.2  percentage points ) 
were consistently positive for five months , mainly be cause auto exports to Europe w ere strong.  Japan 
Productivity Center, Productivity Statistics . Viewed at: https://www.jpc -net.jp/eng/stats/ . 
67 Statistics Bureau/Ministry of Internal Affairs and Communication s, Statistical Handbook of Japan 
2018, Table 6.1 . Viewed at: https://www.stat.go.jp/english/data/handbook/pdf/2018all.pdf#page=80 . 
68 World Atlas, Countries With The Most Diverse Economies . Viewed at: 
https://www.worlda tlas.com/articles/countries -with-the-most-diverse -economies.html ; and International 
Organization of Motor Vehicle Manufacturers , 2018 Production Statistics . Viewed at: 
http://www.oica.net/category/production -statistics/2018 -statistics/ . WT/TPR/S/397 • Japan  
 
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manufacturing industries, b ut is high for the top exporters, illustrating the role that imports plays in 
supporting exports , and indicating the degree of GVC integration of these industries.69  
4.3.2   Policy and institutional  developments  
4.147.   During the review period, the re have been  certain ma nufacturing policy developments, 
including futuristic plans interlinked with services activities. As a response to concerns, inter alia,  
relating to inadequate qualitative changes in human resources , quantitative labo ur shortages, 
awareness of transformati ons such as the digitalization of the economic society , and the recognition 
of a need for continuous reform, a 2017 White Paper explained the actions to be taken by the 
manufacturing industry , including: measures for the maintenance and enhancement of work place 
productivity ; the development and securing of digital human resources; and measures for improving 
value added , in response to new environmental changes.70  
4.148.   A 2017 New Industrial Structure Vision (Future Vision towards 2030s) is aimed at identifying 
and overcoming  systemic challenges to society by taking advantage of technological innovations, 
including the IoT, Big Data, AI, and robots, and directing such ach ievements toward economic 
growth.71 The Vision  considers Japan's advantages and disadvantages anew, designs mid - to long -
term approaches to gain global markets and strategies , and presents a compilation of breakthrough 
projects, forecasting specific reforms  of related systems. By accurately identifying the trends 
associated with these technological innovations and making bold changes to its economic and social 
systems, Japan considers  that it can play a leading role in ushering in this new interconnected fut ure, 
which the Government has dubbed Society 5.0 (Section 2.1).72 Under the 2017 Connected Industries  
policy initiative, which set a goal for Japanese industries to create new value through connecting 
things, people, technologies, organizations , and other s ocietal elements, the authorities are 
committed to efforts for achieving the Vision.73 Its specific strategies include a supply -chain ( smart 
supply chains, enhanced sophistication , and efficiency in manufacturing/production) strategy , which 
was integrated i nto the Connected Industries  initiative . Regarding manufacturing , per se , the METI 
is developing Connected Industries  in strategic fields , such as Automated Driving and Mobility 
Service s, Bio Technologies and Materials, Smart Life, Plant/ Infrastructure Saf ety Management, and 
Manufacturing and Robotics. Concerning food products, the MAFF developed the 2018 Strategy for 
Food Industries , which highlights challenges and specifi es the vision to be shared for the coming 
decade.  
4.149.   A 2017 Artificial Intelligence Technology Strategy, focused  on three priority areas of 
Society  5.0, namely health, mobility and productivity, foresees three phases: expanding use of data -
driven AI in each service domain; general use of AI and data across s ervices; and the formation of 
                                                
69 Across many OECD countries, there is a strong correlation between higher import content of exports 
and a higher share of their domestic value -added being exported (export orientation) , illustrating the strong 
complementarity of imports and exports. In the case of Japanese manufacturing industries, this is less obvious, 
reflecting a greater role for domestic, rather than imported, supply of inputs.  OECD , International trade, 
foreign direct in vestment and global value chains, 2017 . Viewed at:  http://www.oecd.org/investment/JAPAN -
trade -investment -statistical -country -note.pdf . 
70 METI, FY 2017 Measures to Promote Manufacturing Technology (White Paper on Manufacturing 
Industries ). Viewed at: https://www.meti.go.jp/english/press/2018/0529_001.html . 
71 METI, A Final Report on the New Industrial Structure Vision was compiled . Viewed at:  
https://www.meti.go.jp/english/press/2017/0530_003.html ; and New Industrial Structure Vision. Viewed at: 
https://www.meti.go.jp/english/publications/pdf/vision_171222.pdf . 
72 Society 5.0 was proposed in the 5th Science and Technology Basic Plan  in 2016 as a future society 
that Japan should aspire to. It follows the hunting society (Society 1.0), the agricultural society (Society 2.0), 
the industrial society (Society 3.0), and the information society (Society 4.0).  It is considered a cent repiece of 
the Government's growth strategy , which means that science, technology and innovation policy has become a 
mainstream political agenda. Japan 's regular budget for science and technology, which had remained unstable 
over FY2002 to FY2017 at around JPY 3.6 trillion (US D 33 billion), rose to JPY 3.8 trillion (US D 35 billion) in 
2018 then to JPY 4.2 trillion (US D 38 billion) in 2019 , thus providing a boost to investment in the development 
and application of digital technologies . Japan aims to achieve Society 5.0 through the full utilization of 
technolo gical innovation , including IoT, AI and Big Data derived from the fourth  industrial revolution . Cabinet 
Office, Society 5.0 . Viewed at:  https://www8.cao.go.jp/cstp/english/society5_0 /index.html ; and UNESCO, 
Japan pushing ahead with Society 5.0 to overcome chronic social challenges. Viewed at: 
https://en.unesco.org/news/japan -pushing -ahead -society -50-overcome -chronic -social -challenges . 
73 Under th e Connected Industries  initiative, the authorities  would  identify priority fields and invest 
policy resources in those specific fields, promot e cross-sectoral policies, thereby allowing domestic industries to 
gain a foothold in the competitive global "real -data" markets.  METI, Connected Industries' Tokyo Initiative 
2017. Viewed at: https://www.meti.go.jp/english/press/2017/1002_004.html . WT/TPR/S/397 • Japan  
 
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ecosystems through a complex merger of these services.  The AI Strategy 2019 is aimed at specifying 
the environment and measures conducive to effective future utilization of AI for the purposes of 
contributing to the solution o f global issues through realization of Society 5.0 , and overcoming the 
issues facing Japanese society. This Strategy establishes an integrated policy package for AI that 
encompasses educational reform, R&D, and social implementation , in order to contribute  to the 
world, overcome challenges, and ultimately improve Japan's industrial competitiveness. The Ministry 
of Internal Affairs and Communications provided support to implement this Strategy through the 
Research and Development of Next -generation Artificia l Intelligence Technologies scheme, the 
Research and Development and Social Implementation of Multilingual Speech Translation System, 
and the Research, Development and Demonstration of Sophisticated Conversation Agent 
Technologies scheme (Section 4.3.4).  
4.150.   A Robot Strategy and its five -year action plan by sector ( manufacturing , services, nursing 
and medical fields ; infrastructure, disaster response, and construction fields ; agriculture, forestry, 
fishery ; and food industry) toward the realization of the Robot  Revolution has been in place since 
2015.74 It is based on three pillars: fundamental enhancement of robot -creation ability; utilization 
and dissemination of robots across the country; and development and dissemination around the 
world of the Robot Revoluti on. This Strategy provides support for R&D of robotics, international 
standardization and training system integrators of robotics, and assistance to each sector. The 
authorities indicated that  there is no aggregate budgetary cost for implementing this poli cy. 
4.151.   The METI remains, inter alia , responsible for policy development on industry and trade 
matters (Section 2.2). Upon consultation with the Minister  of Economy, Trade and Industry  and the 
Industrial Structure Council , an independent body outside of METI a nd composed, inter alia , of 
industry representatives and academics,  carries out investigations into, and deliberations on , 
important policy matters , particularly with regard to improving the economic strength of the private 
sector and promoting smooth inte rnational economic relations.75 The Artificial Intelligence Research 
Center (AIRC) , inaugurated in May 2015  under the National Institute of Advanced Industrial Science 
and Technology, and the Council for Artificial Intelligence Technology Strategy , set up in April 2016 , 
remain in place . The AIRC has mainly pursued social implementation  of the AI Strategy 2019 by 
focusing on bridging its practical application side to companies with superior AI technology . 
4.3.3   Border measures   
4.152.   The average MFN applied tariff for manufacturing  products dropped from 3.5% in FY2016 to 
3.3% in FY2019 (HS definition, Table 3.1). TRQs continu ed to apply on 62 manufactured items (HS 
basis) (Section 3.1.4.1) , of which 32 were under HS Chapter 41 (raw hides and skins,  and leather), 
5 were under HS Chapter 50 (silk) , and 25 were under HS Chapter 64 (footwear). Footwear , and 
raw hides and skins rem ain subject to TRQs , and thus benefit from the highest tariff protection, with 
average MFN applied tariffs of 27.3% and 10.5%, respectively , at HS  level; peak rates (AVEs) were 
on footwear (219.4%) and silk (97.9%). On leather footwear , in FY2017, FY2018 a nd FY2019 , the 
out-of-quota tariff rates were either 30% , or JPY 2,400 or JPY  4,300 per pair, whichever is higher; 
according to the authorities, in FY2017 and FY 2018, their TRQ utilization rate was 66%  and 71.7%, 
respectively . Regarding some raw hides and skins, and leather,  in-quota rates stood at 12% (bovine, 
equine) or 16% (sheep, goat) , and the out -of-quota  rate at 30%; according to the authorities, their 
average quota utilization rates were 35.8% in FY2017  and 32% in FY2018. In FY2018, the fill rate 
of silk-worm cocoons and raw silk , which are subject to a zero in -quota rate and out -of-quota rates 
of JPY 2,523/kg  and JPY 6,978/kg , respectively, stood at 55.8%.76 Compared to the previous TPR, 
as at end -2018, a few more industrial items, mainly chemicals (electrolytic manganese dioxide, 
toluene  diisocyanate, potassium hydroxide, polyethylene terephthalate, and carbon steel butt -
welding fittings), were subject to anti -dumping duties (Section 3.1.7.1).77  
                                                
74 METI, Japan's Robot Strategy was Compiled , January 2015. Viewed at: 
https://www.meti.go.jp/english/press/2018/0529_001 .html; and New Robot Strategy. Viewed at: 
https://www.meti.go.jp/english/press/2015/pdf/0123_01b.pdf . 
75 METI, Industrial Structure Council . Viewed at:  
https://www.meti.go.jp/english/policy/economy/industrial_council/index.html . 
76 WTO document G/AG/N/JPN/238, 15 May 2019.  
77 WTO document G/ADP/N/322/JPN, 4 February 2019.  WT/TPR/S/397 • Japan  
 
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4.3.4   Domestic  support measures   
4.153.   During the review period, domestic support continued under several programmes  
(Section  3.3.1). The sector's non -industry -specific schemes included measures under the Subsidy 
Program for Global Innovation Centers, tax incentives for strengthening local business facilities, 
incentives regarding special zones, incentives based on the 2013 Industrial Competitiveness 
Enhancement Act, incentives under the 2018 Act on Special Measures for Productivity Improvement, 
the tax incentive system based on the Act on Strengthening a Framework for Regional Growth and 
Development by Promoting Regional Economy Advancement Projects, tax incentives for R&D, the 
tax incentive for wage and productivity improvement, incentives related to disaster recovery, and 
incentives of local governments for foreign -affiliated companies (e.g. subsidization of rent expenses, 
and incorporation/registration and other fees).78 According to JETRO information, the sole activity -
specific incentive is the Connected Industries Taxation  System , involving special depreciation or tax 
deduction s for software, apparatuses, equipment, machinery , and devices.  Other activity -specific 
support includes that under the fuel-cell vehicles initiative  (Section 3.3.1.2). According to the 2017 
WTO notifi cation to the Committee on Subsidies and Countervailing Measures covering FY2015/16 , 
the activity -specific support schemes for manufacturing included the bekko (tortoiseshell) and ivory 
crafts industries, the leather and leather goods industries , and the m anufacture of traditional craft 
products.79 According to its latest WTO notification  covering the period 2016/17, activity -specific 
support schemes for manufacturing included  leather and leather goods , traditional craft products , 
R&D for care robot equipment , and sochu manufacture are in place either at central or local 
government level (Table 4.20).80  
4.154.   Under the AI Strategy 2019 (Section 4.3.2) , the Research and Development of Next -
generation Artificial Intelligence Technologies scheme (FY2017 -19), with a budget of JPY  408 million 
(FY2017) and JPY 200 million (FY2018) , aims to promot e R&D for the realization of next -generation 
AI technologies that can select, extract, classify and learn features and meanings in real time from 
small data and random dat a by imitating features of the brain. The Research and Development and 
Social Implementation of Multilingual Speech Translation System (FY2017 -19), with a budget of JPY 
1,257 million (FY2017) and JPY 700 million (FY2018) , aims to promot e R&D and social 
implementation of the Multilingual Speech Translation System developed by National Institute of 
Information and Communications Technology , to remove language barrier s, and to realize free and 
global communication. The Research, Development and Demonstration o f Sophisticated 
Conversation Agent Technologies scheme (FY2018) , with a budget of JPY 200 million (FY2018) , aims 
to encourag e the formation of a service development community , promoting the utilization and 
application of sophisticated conversation technolo gies, by developing conversation agent core 
technologies and making them broadly and commonly available. The METI assists companies to 
establish data -sharing platforms in order to utilize data in cooperative areas, and to develop 
internationally  competitiv e AI systems that leverage such shared data, to cultivat e connected 
industries , at an annual budgetary cost of JPY 3 billion.  
Table 4.20 Domestic support to some manufacturing -related projects  
Scheme  Budgetary outlays  Duration  
Subsidy for the Leather and 
Leather Goods Industries  
 FY2015 (settlement of accounts)  JPY 285 million 
(general budget) ; 
FY2016 (settlement of accounts) JPY 262 million ; 
FY2017 (settlement of accounts) JPY 261 million ; 
FY2018 (settlement of accounts) JPY 298 million  Since 1971, no 
expiry date  
Leather and leather goods 
industry  - "strengthening fund " 
subsidy  FY2015 supplementary budget (settlement of 
accounts) JPY 13.3 billion March 2016, no 
continuation  
Subsidy for Supporting the 
Manufacture of Traditional Craft 
Products  FY2015  (final results) JPY  286 million ; 
FY2016  (final results) JPY  298 million ;  
FY2017  (final results) JPY  310 million ;  
FY2018  (final results) JPY  295 million  No time -limit 
                                                
78 JETRO , Subsidy Program for Global Innovation Centers . Viewed at:  
https://www.jetro.go.jp/en/invest/incentive_programs/info.html . 
79 WTO document G/SCM/N/315/JPN, 9 June 2017.  
80 WTO document G/S CM/N/343/JPN, 19 July 2019.  WT/TPR/S/397 • Japan  
 
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Scheme  Budgetary outlays  Duration  
Subsidy for Promoting the 
Manufacture of Traditional Craft 
Products  FY2015  (final results)  JPY 699 million ;  
FY2016  (final results)  JPY 700 million ;  
FY2017  (final results)  JPY 700 million ;  
FY2018  (final results)  JPY 700 million  No time -limit 
Subsidy for Research and 
Development for Care Robot 
Equipment  FY2015 JPY 2.55 billion ; 
FY2016 JPY 2.0 billion ; 
FY2017 JPY 1.64 billion  April 2015 -March 
2018 
Finance Measures for Credit 
Guarantee of Sake 
Manufacturers  4/2016 -3/2017 (fund's running profit) JPY 9 
million ;  
4/2017 -3/2018 (fund's running profit) JPY 11 
million  No time -limit 
Finance Measures for Single 
Distilled Shochu Manufacturers 
(formally known  as Finance 
Measures for Shochu B 
Manufacturers)  4/2016 -3/2017 JPY 559 million ; 
4/2017 -3/2018 JPY 541 million  Since 2010, no 
expiry date  
Subsidy for Research and 
Development of Next -Generation 
Technology (local government)  FY2017 (settlement of accounts) JPY 381.8 
million ; 
FY2016  (settlement of accounts) JPY 420.5 million  No time -limit 
Subsidy for Promoting the 
Manufacture of Traditional Craft 
Product s (local government)  
 FY2016  (settlement of accounts)  JPY 43.3 million ; 
FY2017  (settlement of accounts)  JPY 47.4  million  
 • Akita 
prefecture: 
from FY2011 
to FY2017.  
• Fukui 
prefecture: 
from FY2011 
to FY2017.  
• Kagawa 
prefecture: 
from FY2016 
to FY2018.  
• Other 
prefectures: 
no time -limit  
Source:  WTO document G/SCM/N/343/JPN, 19 July 2019 ; and data provided by the authorities . 
4.4  Services  
4.4.1   Financial services  
4.155.   Japan is one of the main financial services markets in the world , and has a fully developed 
and mat ure financial services sector which represented 4.2% of its GDP in 2017 and 2.4% of total 
employment  in 2018. Its financial asset base is equivalent to 1,420% of its GDP81, and it is the 
largest creditor country , with net foreign assets amounting  to USD 3.1 trillion , i.e. the equivalent of 
62% of its GDP at the end of 2018 . Boxes 4.1 to 4.4 provide an overview of the main statistical 
indicators of the sector  and of its various subsectors .  
Box 4.1 Main economic indicators of the financial services sector, 2016 -18 
Share of financial services in GDP  
2016: 4.2%  
2017: 4.2%  
Share of financial services in total employment  
2016: 2.5%  
2018: 2.4%  
Financial services (except insurance and pension services) credit  
2018: JPY  1,272.6 billion  
Insurance and pension services credit  
2018: JPY  270.6 billion  
Financial services (except insurance and pension services) debit  
2018: JPY  905.6 billion  
                                                
81 Compared with 1 ,124%  in the U.S. Economist Intelligence Unit, Industry Report series, Financial 
Services Japan , second quarter 2019.  WT/TPR/S/397 • Japan  
 
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Insurance and pension services debit  
2018: JPY  788.6 billion  
Capital stock of financial services providers abroad : (March 2018)  
Total amount of capital stock of foreign -controlled banks  operating in Japan : JPY 20 .0 billion 
Total amount of capital stock insurance companies operating in Japan: JPY 32,283 billion  
Ratio of capital stock of foreign -controlled banks  to total amount of capital stock of banks operating in 
Japan:  0.1%a 
Ratio of capital stock of foreign -controlled ins urance companies  to total amount of capital stock of insurance 
companies operating in Japan:  8.5% 
Significance of the financial services arm of Japan Post  
− deposits in Japan Post Bank amounted to JPY  180.9 trillion , i.e. the equivalent of 33% of GDP . It is the 
largest pool of savings in the world. In  April 2019, the deposit cap was doubled , with a limit of 
JPY 13 million each for ordinary savings accounts and fixed -term deposit accounts  
− market share of J apan Post insurance:  20.2% as at end-March 2018  
a This figure only takes into account the capital of foreign banks operating as subsidiaries, whereas 
the dominant form of operation of foreign banks in Japan is the use of branches, which do not have 
capital , per se , only quasi -capital, parked in Japan, of at least JPY 2 billion per branch.  
Source:  Information provided by the authorities.  
Box 4.2 Main indicators of the banking sector, 2015 -18 
Banking services  
Number of banks  
End-March 2015: 195 banks (of which, foreign -controlled banks : 4; branches of foreign banks : 54) 
End-March 2018: 195 banks (of which, foreign -controlled banks : 3; branches of foreign banks : 56) 
 
Recent consolidation ( since 2016)  
May 2018: Kiraboshi Bank,  Ltd. (merger of Tokyo Tomin Bank, Ltd ., Yachiyo Bank, Ltd . and ShinGinko 
Tokyo, Ltd .) 
Concentration/share of the various types of banks in the total balance sheet for banks  
(JPY 100 million)  
End-March 2015 : total balance sheet : 10,165,870 (foreign -controlled banks : 56,041 ; branches of foreign 
banks : 471,876)  
End-March 2018 : total balance sheet : 12,658,092 (foreign -controlled banks : 7,699 ; branches of foreign 
banks : 509,923)  
Lending activities  (credit volumes)  
End-March 2018: JP Y 580,873.3 billion (foreign -controlled banks : 548; branches of foreign banks : 8,830)  
Securities activities : (securities holding in bank accounts)  
End-March 2018: JPY  27,004.6 billion (foreign -controlled banks : 22; branches of foreign banks : 919) 
Non-performing loans as a % of total bank assets : 1.1% (end -March 201 8) 
Source:  Information provided by the authorities.  
Box 4.3 Main indicators of the insurance sector, 2015 -18 
Insurance  
Number of insurance companies  
2015: 94 (life: 42 (of which branches of foreign insurance companies , 3); non-life: 52 (of which branches of 
foreign insurance companies , 22)) 
 
2018: 93 (life: 41 (of which branches of foreign insurance companies , 1); non-life: 52 (of which branches of 
foreign insurance companies , 22)) 
 
Recent consolidation ( since 2016)  
January  2018: AIG General Insurance Company, Ltd. (merger of AIU Insurance Company, Ltd. and Fuji Fire 
and Marine Insurance Co., Ltd.)  
Total balance sheet of the insurance sector  
End-March 2018: JPY 414,085 b illion (of which life insurance: 92.1% ; non-life: 7.9%)  
Concentration : (cumulative market share of the top five companies, end-March 2018)  
Life insurance (%):  WT/TPR/S/397 • Japan  
 
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Japan Post Insurance: 20.2  
Nippon Life Insurance Company: 17.4  
Meiji Yasuda Insurance Company: 10.1  
Dai-ichi Life Insurance Company: 9. 5 
Sumitomo Life Insurance Company : 8.3 
 
Non-life insurance (%):  
Tokio Marine & Nichido Fire Insurance Co. Ltd.: 29.5  
Sompo Japan Nipponkoa Insurance Inc .: 23.4  
Mitsui Sumitomo Insurance Company Ltd.: 21.6  
Aioi Nissay Dowa Insurance Co. Ltd .: 10.6  
AIG General Insurance Company, Lt d.: 2.9 
Penetration (premiums as share of GDP, end -March 2018)  
Life insurance: 5.9%; non -life insurance: 1. 9% 
Source:  Information provided by the authorities.  
Box 4.4 Main indicators of the pension fund and stock exchange and securities sectors  
Pensions funds  
Number of pension funds  
2016: 19,039  
2017: 19,223  
 
Total assets  
2016: JPY  94.4 trillion  
2017: JPY  96.2 trillion  
Stock exchange and securities:  
Capitalization of the companies listed   
2015: JPY  589,788,804 hundred million (111.00%  of nominal GDP ; 114.09% of real GDP)  
2018: JPY  582,670,408 hundred million (106.15% of nominal GDP ; 109.06% of real GDP)  
 
Gross value of public ly issued bonds  
2015: JPY  2,002,202 hundred million ( issued by non-Japanese residents in the Japanese domestic market 
payment basis) JPY 41,775 hundred million)  
2018: JPY  1,790,826 hundred million ( issued by non-Japanese residents in the Japanese domestic  market 
payment basis) JPY 25,701 hundred million)  
 
Securities turnover on the Stock Exchange (secondary market ) 
(JPY hundred million).  
2018: domestic shares : 795,524,801; foreign shares : 223,739; domestic bonds : 0; foreign bonds : 0; 
structured products and options : 3,218,020,844; investment funds : 67,914,443  
Source:  Information provided by the authorities.  
4.156.   The Financial Services A gency (FSA) remains the supervisory body of all financial services 
in Japan. It under went a structural reform in 2018/19. In November  2018, it published a document 
entitled "For Providing Better Financial Services in the Era of Transition"82, where it indicated its 
willingness to promot e the development of banks and other financial institutions . Its activities were 
reorganized in three  bureau x, namely the Strategy Development and Management bureau, the 
Policy and Markets bureau , and the Supervisory bureau , which absorbed most of the functions of 
the ex-Inspection Bureau. The intent of the superv isory approach is to put more emphasis on the 
business potential of borrowers rather than on their collateral or credit guarantees , and to prompt 
Japanese banks to utilize a "risk appetite framework" in light of the difficult environment born out 
of prolon ged negative interest rates, worldwide political and economic uncertainties , and the 
emergence of online banking, e -payments and fintech.  
4.157.   In May 2017, the FSA revised its 2014 Stewardship Code for Institutional Investors , aimed 
at enhancing corporate gover nance and improving investment returns . The main revision s were the 
strengthening of  asset managers ' governance , the management of conflicts  of interest , and the 
clarification of the roles of asset owners , including pension funds.  By subscribing to this voluntary 
                                                
82 FSA, For Providing Better Financial Services in the Era of Transition , September 2018. View ed at: 
https://www.fsa.go.jp/en/news/2018/20180926/Summary_Financial_Services_Policy2018.pdf . WT/TPR/S/397 • Japan  
 
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Code, investors commit,  in particular , to disclos ing how they exercise their stewardship activities . By 
August  2019, it had been adopted by 256 investors , among which 117 were foreign.  
4.158.   In a longer -term perspective, the FSA  set up a panel of experts  in November 2017 , i.e. the 
Study Group  on the Financial System , in charge of developing a new approach to regulation. 
Regulation is by financial function rather than by type of actor , since, for instance , banks are 
diversifying i n asset management and insurance, while fintech , including Internet and telecom 
companies , venture into e -payments and banking. This panel  identified four key functions that 
should be regulated , regardless of the type of actor involved in them, namely: payment and 
settlement, lending , investment , and risk transfers. The aim is to maintain consumer protection , and 
to encourage financial innovation.  
4.159.   The regulatory regime of financial services has been described in great detail in several 
recent TPR reports83, and did not see any major regulatory changes during the period under review.  
4.4.1.1   Regulatory evolutions in the banking sector  
4.160.   For banking services , there were no changes regarding preferential and bilateral policies, 
licensing procedures  and conditions, prude ntial regulation and the banking deposit insurance 
scheme, or the market access regime for foreign banks , as noted in  the annual OECD Services Trade 
Restrictiveness Index .84  
4.161.   The regulatory changes made  during the period under review include the following a reas: 
the privatization process of Japan Post Bank  (JPB) , regional bank consolidation, m easures to ensure 
compliance with the Basel Committee's Core Principles for Effective Banking Supervision, anti -money 
laundering, e -payments, fintech , and crypto -curren cies. The privatization process of JPB is 
dependant on that of the mother company , Japan Port Holdings (JPH).  In September  2017, the 
Government sold a 23.6% share of JPH, in addition to the 19.5% it had already sold in November 
and December 2015. This leaves the Government with a 56.9% share of JPH. A third sale , which 
would cover a maximum of 23.5% of the shares (since, by law, the Government must own at any 
time one thir d of JPH shares) has not been decided yet. All the proceeds of these sales were affected 
to reconstruction projects in areas affected by the 2011 earthquake and tsunam i. 
4.162.   JPH sold some of the shares of JPB in 2015, and currently holds 89% of its shares. 2% of 
JPB now  in private hands shares belong to foreign investors. JPH also sold some of the shares of 
Japan Post Insurance  Co Ltd. (JPI) in 2015 and 2019, and currently holds 64% of its shares . 2.3% 
of JPI now in private hands shares belong to foreign invest ors. When JPH will have sold 50% or more 
of the shares of J JPB, the new business implemented by J PB will no longer be subject to approval, 
but simply to the notification system. However,  it will remain possible for the authorities to order  
additional supervisory measures.  Regional banks are encouraged by the Government to diversify 
their business away from mortgage -lending activities (a segment of low profitability due to low 
interest rates and shrinking demand by an ageing population) , and to provide loans to regional 
revitali zation projects. The Government amended regulations  on the 5% cap on regional banks ' 
equity holding s in small companies . More specifically, t he revision deregulate d restrictions on the 
investment ratio ( the "5% rule ") in relation to regional revitalization , and to smooth business 
succession for local companies . In November  2018, the Prime Minister issued a directive to the 
Cabinet to facilitate , through legislative and regulatory improvements , mergers among regional 
banks , to conso lidate the sector.  
4.163.   Regarding measures to implement the Basel Committee's core principles, in December 2017 , 
the final Basel III (also commonly known as "Basel IV") standards were expanded to cover a wider 
range of capital requirements by 2022. A progress report issued by the Basel Committee in 
April 2019 indicated that Japan had adopted 14 of these standards , was in the process of adopting 
3 more, was late in adopting 2 of them , and was planning to adopt 9 more by 2022 . In addition, the 
draft rule of large exposure requirement was published in June 2019 , and will be adopted from April 
2020.  Japan also transposed , in 2018 , the Basel's Committee recommendations on the capital 
                                                
83 WTO documents WT/TPR/S/310, 19 January 2015; and WT/TPR/S/ 351, 18  January  2017.  
84 OECD, Access the Data. Viewed at: https://qdd.oecd.org/subject.aspx?Subject=STRI . WT/TPR/S/397 • Japan  
 
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treatment of Interest Rate Risk in the Banking Book. For more on these standards and their state of 
implementation , see Table A4.3.  
4.164.   The three largest Japanese banks  (Mitsubishi UFJ Financial G roup, Sumimoto -Mitsui Financial 
Group , and Mizuho Financial Group ) are subject to additional capital requirement s, since they are 
among the 29 world -wide systematically important financial institutions ; the latest list was published 
in November 2018 . The rule imposing that their total loss -absorbing capacities must amount to 16% 
of their risk -weighted average was published and implemented in March 2019, and this requirement 
will be raised to 18% in March 2022. The rule will also be applied to Nomura Holding s in March 2021 , 
and will be raised to 18% in March 2024.  
4.165.   Regarding anti-money laundering measures, in February 2018 , the FSA released Guidelines 
on Anti -Money Laundering and Combating the Financing of Terrorism (AML/CFT) and, in August 
2018, it released  a follow -up monitoring report to improve financial institution 's risk management in 
the AML/CFT area . It is prepa ring the Financial Action Task force review , and the report will be 
adopted in June 2020. In these documents , the FSA considers that e fforts could still  be made in this 
area.  
4.166.   Regarding e -payments, Japan has been relatively slow to switch  to cashless payments , and 
credits cards , for instance , are much less used than by other OECD countries. However, this is now 
changing very rapidly , due to e-payments  (notably by mobile phones) and more marginally to 
crypto -currencies . The Government set an objective of 40% of cashless payments by 2025.  
4.167.   Examples of smartphone -based e -payment apps using QR codes include Line Pay  by a 
messaging company, which launched its code payment service  in June 2018 ; J-Coin Pay , launched 
by Mizuho Bank in cooperation with 56 banks in March 2018 and which has a target of 6.5  million or 
more users in five years ; Rakuten Pay , developed by an Internet company ; and PayPay , a joint 
venture between a mobile operator, Softbank , and an Internet company , Yahoo!Japan . Some foreign 
operators, such as Paypal, have registered, and operate in Japan.  
4.168.   The Government is developing a regulatory framework for e-payment servic es, in order to 
protect consumers and boost  innovation. The Banking Act was amended on 26 May 2017 to add a 
new chapter  on electronic payment services ( Chapter VII -5). This Chapter create d a registration 
procedure office to operate such services. Foreign c orporation s and foreign individuals can register 
but must designate an agent in Japan. The definition of Electronic Settlement Intermediary Services 
Providers (ESISPs) encompasses both Payment Initiation Services Providers and Account 
Information Service P roviders , and include s provisions regulating their business conduct. In 
particular , if such a provider seeks to be connected with a banking IT system to start fund 
remittances or gain access to information related to deposit accounts, it must enter into an  
agreement with said bank regarding  matters such as security of information and th e allocation of 
responsibilities in case of damages regarding  the customer. Banks must publicly disclose to the 
ESISP s their standards of connectivity by March 2018 , and try to establish a  voluntary  open 
Application Programming Interface system by 2020  
4.169.   In order to develop fintech, the FSA eased , in May 2016, the restrictions on banks' ownership 
of finance -related IT companies . However , such acquisitions remain subject to FSA approval. In 
September 2017, the FSA established the FinTech Proof of Concept (PoC) Hub . The main aim of the 
Hub is to support innovative projects improving user convenience and/or productivity  of companies . 
For each selected PoC project, the FSA will set up a special  working team, in cooperation with 
relevant authorities  and/or industry associations , as necessary . A special working team will support 
a project , by giving advice on issues  related to compliance and super vision , etc., that participants 
of the PoC project would  like to clarify  The newly formed (July 2018) Strategic Development and 
Management bureau of the FSA is in charge of this programme.  
4.170.   In April 2017, the FSA implemented the revised Payment Services Ac t, which  introduced the 
registration system for exchange service providers of virtual currency for legal tender , and 
established the legal framework , such as security requirements and segregation rules  between the 
operators' assets and the users' assets. After the Coincheck site was illegally accessed in 
January  2018, the FSA conducted a number of on -site inspections and business improvement orders, 
to try to improve their internal management structure and AML capabilities.  WT/TPR/S/397 • Japan  
 
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4.171.   Following the crash of the bitcoi n value (from USD  20,000 in December 2017 to USD  4,000 
in December 2018) and two major thefts at virtual exchanges involving USD  500 million and USD  60 
million , the FSA announced , in December 2018 , its intention  to strengthen applicable rules and to 
ensure user protection . This act was passed by the Diet in May 2019, and will be implemented by 
June 2020 . The new Payment services actt  replaces the term "virtual currency" by "crypto -asset" , 
to underline its specula tive character, require s service providers to pre -notify the authority of plans 
to change a line of virtual currenc y products, and contains provisions forcing virtual currency 
exchanges to secure funds for repayments to customers in the case of theft or bu siness failure.  
4.172.   In a parallel move , in October 2018 , the FSA granted self -regulatory status to the Japan 
Virtual Currency Exchanges Association , to make this institution responsible for  safeguarding 
customers assets, issuing operational guidelines , and pre venting money laundering. Japan 
proactively contributed to the establishment of a Contact Group (CG) within Financial Action Task 
force, to promote AML measures of virtual assets; a first face -to-face meeting of the CG  was held in 
mid-June 2019.  
4.4.1.2   Regulatory  evolution in other financial  services sectors  
4.173.   There were no significant regulatory changes during the period under review for insurance 
and pension funds.  
4.174.   Regarding stock markets, on 31 May 2019, the Financial Instruments and Exchange Act was 
amended , to subject high -speed  trader s to a registration requirement , as of 31 May 2020.  Foreign 
high-speed  traders are also subject to this registration requirement. The conditions for registration 
do not in clude the establishment of an office in Japan but require the designation of a representative 
or an agent in Japan.  
4.175.   In January 2019, in the framework of c orporate governance reform, Japan adopted a new 
rule which require s companies to disclose the method used for the verification of cross -share holding , 
and which expand s the coverage of mandatory individual disclosure of cross -share holding  (from 60 
to 30 shares) , a provision applic able for financial reports covering periods ending March 2019 and 
after.  
4.176.   The commitments undertaken by Japan during the period under review regarding financial 
services in the CPTPP and in the EU -Japan  EPA include some elements which differ from those already 
undertaken in its previous FTAs . The CPTPP contains GATS plus commitments on insurance 
intermediation , such as brokerage and agency , on securities -related transactions with financial 
institutions and other entities in Japan , and on sales of a beneficiary certificate of an investment 
trust or an investment security, t hrough securities firms in Japan.  The EPA with EU contains specific 
definitions, exceptions and disciplines on new financial services, self -regulating organi zations, 
payment and clearing systems , transparency, and rules on insurance services provided by po stal 
entities.  
4.4.2   Telecommunication  services  
4.177.   Box 4.5 details the  main economic indicators of the telecommunications  sector . 
Box 4.5 Main economic indicators of the telecommunications sector  
Penetration rates (2018 ) 
Fixed -telephone subscriptions per 100 inhabitants : 49.9  
Mobile -cellular subscriptions per 100 inhabitants:  139.2  
Fixed (wired) -broadband subscriptions per 100 inhabitants:  32.1 
Mobile  broadband subscriptions per 100 inhabitants:  188.9  
Households with a computer per 100 inhabitants:  76.4 
Households with Internet access at home per 100 inhabitants:  98.5 
Individuals using the Internet per 100 inhabitants:  84.6 
Main actors  
Number of companies providing telecom services  (April 2019) : 
 
- 327 carriers (owning networks and circuits) are registered by the Ministr y of In ternal Affairs  and 
Communications (MIC)  WT/TPR/S/397 • Japan  
 
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- 19,491 carriers (without networks) have submitted notifications  
 
Compared to the situation at the beginning of the period under revi ew (March 2016), the net number of 
registered carriers increased by 20, and that of carriers subject to the notification regime increased by 2,323  
 
Names and market shares of the leading companies for fixed telecom services  (December 2018) :  
NTT East and N TT West (combined market share for fixed telecom service s, 23.2%); KDDI (1 7.9%); Optage  
(3.8% ); Softbank (2.9%); various wholesalers using NTT East and West networks (31.7%)  
 
Name and market shares of the leading companies for mobile telephones services  (December  2018) : 
NTT DoCoMo (38.1%) ; KDDI group (including Okinawa Cellular ) (27.5% ); SoftBank group (22.9%)  
 
Name and market share of broadband Internet services  (March 2018) : 
NTT group (e.g. OCN) (24.9%) ; KDDI group (e.g. Biglobe) (30. 7%); pure Internet service  providers (e.g. 
So-net, @nifty ) (13.1%)  
 
 
Foreign ownership participation in telecom companies : 
− Except for NTT, there are no restrictions for Japan's telecommunications carriers. For NTT, the limitation 
stands at less than one  third of foreign ownership  
− Foreign ownership shares of listed telecom companies are not available, except for NTT, where it stood 
at 28.1% , as at June 2019  
 
State ownership : NTT 35. 9% 
Establishment of new companies, mergers or closures since the last Review :  
"Rakuten Mobile " joined the telecommunication market as the fourth Mobile Network Operator in May 2018  
Source:  Information provided by the authorities ; and, for penetration figures , the ICT/EYE ITU database. , 
viewed at: https://www.itu.int/itu -d/apis/clients/res/pdf/country_profile/report_JPN.pdf . 
4.178.   The telecommunication regime has been described in several past TPR reports85, and did  not 
undergo any significant changes during the period under  review. In particular, there were no changes 
regarding the mobile interconnection regime, facility sharing , local loop unbundling , spectrum 
management , or accounting rates . 
4.179.   Regarding number porta bility, a major change occurred.  The enforcement , in May 2019 , of 
the "telecommunication Number Plan  (public notice No. 6 of the Ministry of Internal Affairs and 
Communications (2019) )" require d telecommunications operators to take the necessary measures 
to enable number portability among them by the end of January 2025.  
4.180.   Regarding the fixed interconnection regime, the leading companies (NTT West and NTT East) 
are now obliged to include their optical fibre lines , as well as their I nternet Protocol  core network 
"Next Generation Network" , as designated facilities into their interconnection offer . Regarding 
licensing, operators providing name conflict resolution mechanisms in the context of the attribution 
of first rank Internet domain names such as ".jp" are, since May 2016, subject to a n otification 
regime.  
4.181.   The universal service regime was updated through an amendment to the method of 
calculation of compensation; it must now take into account the transition from analogue fixed 
telephones to optical IP telephones . The amount of compensatio n received by the universal services 
providers (NTT East and NTT West) was JPY 6.8 billion in 2015, JPY 6.76 billion in 2016, 
JPY 6.92 billion in 2017 , and JPY 6.5 billion in 2018.  
4.182.   Apart from those minor technical amendments to the regime, and of the depl oyment of 5G -
LTE networks and of experimental programmes on the IoT and on AI, the government policy 
regarding telecommunications during the period under review was essentially focused on two issues: 
consumer protection, and the lowering of costs linked to  the use of mobile handsets.  
4.183.   Consumer protection  rules were enhanced and strengthened by an amendment of the 
Telecommunication Busines s Act, promulgated in May 2016. N ew obligations were introduced , such 
                                                
85 WTO documents WT/TPR/S/351, 18 January 2017, pp. 111 -113; WT/TPR/S/310, 19  January 2015, 
pp.101 -103; and WT/TPR/S/W/276, 15 January 2013, pp. 95 -98. WT/TPR/S/397 • Japan  
 
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as the issuing of documents after the signing of a contract, the initial contract cancellation system, 
the prohibition of mis -statement, the prohibition of continued solicitation, and the provision of 
guidance to agents.  The Ministry of Internal Affairs and Communications (MIC) has been actively 
monitoring  the implementation of these new rules , notably through regular meetings of the 
Consumer Protection Rules Monitoring Study Group , established under the aegis of the ICT Safety 
and Security Study Group.  
4.184.   Regarding SIM locking, the MIC revised its guidelines in January 2017 to shorten the time 
required for SIM unlock after the purchase of mobile terminals . In the case of instalment payment, 
the time was shortened to 100 days after the day of purchase; in the case of lump -sum payment, 
SIM unlock was made possib le on the day of purchase. In August 2018, the MIC further revised its 
guidelines to require operators to accept requests for the SIM unlocking of used terminals. This 
amendment was to  apply from 1 September 2019.  
4.185.   As evidenced by its ranking in Table 4.21, telecommunications prices in Japan remain 
relatively high by international standards, especially for data access via fixed and mobile broadband.  
Table 4.21 Telecommu nication prices, 2017  
Type of service  Japan's 
worldwide 
ranking  Unit Price expressed in 
USD in purchase 
power parity  
Mobile -cellular basket  45 ITU basket  28.22  
Mobile -cellular prices (on -net) 81 Per-minute local call  0.00a 
Mobile -cellular prices (off -net) 81 Per-minute local call  0.00a 
Mobile -cellular prices to fixed 
telephones 81 Per-minute local call  0.00b 
SMS 81 Local SMS  0.03b 
Fixed -broadband prices  80 Residential monthly 
subscription  33.2 
Mobile broadband basket, 
prepaid  93 Handset -based (500 MB)  49.39  
Mobile broadband basket post -
paid 77 Computer -based (1 GB)  49.39  
a NTT DOCOMO provides post -paid "Kake -hodai Plan" for basic monthly charge of JPY 2,700 /USD 25  
(for Smart phones) with free domestic c alls. 
b NTT D oCoMo provides a post-paid Kake -hodai Plan for a basic monthly charge of JPY 2,700 /USD 25 
(for smartphones) with free domestic call s. This i s the price of an SMS on the post -paid Kake -hodai 
Plan provided by NTT D oCoMo. 
Source:  ITU, Measuring the Information Society , Report 2018, Volume 1 , viewed at 
https:/ /www.itu.int/en/ITU -D/Statistics/Pages/publications/misr2018.aspx . 
4.186.   The Government is actively pursuing a policy aimed at lowering  the costs linked to the use 
of mobile handsets, and has taken, or is planning to take, several measures to that effect.  
4.187.   First, the Telecommunication Business Act was revised in May 2019 (" A law to amend part 
of Telecommunication  Business Act" Act No. 5, 2019),  to establish a prohibition on the discount of 
connection fees and mobile phone handsets when selling connection and hands ets as a set, from 
September 2019. The discount on mobile phone handsets when selling connection and handsets as 
a set, and that on mobile phone handsets for new customers, was to be limited to JPY 20,000 (this 
limitation is listed in the ministerial ordin ance delegated by the law that stipulates the specific 
amount of benefits offered if benefits are provided for customers). The law also stipulates that t he 
difference between the price plan with ti me constraint and the one  without time constraint  is limite d 
to JPY 170 per month. This rule applies to the three main mobile telephone operators (NTT DoCoMo 
Inc., SoftBank Corp., and KDDI Corp.) as well as to Rakuten, the e -commerce firm that entered the 
mobile telephone market. These measures are meant to comple tely separate the connection fee 
from the price of mobile phone handsets, and to ban excessive  customer capture.  
4.188.   The Government also plans to place a cap on benefits  that are offered by mobile phone 
companies to long -term subscribers, notably by  limiting the benefit offered per year for the extension 
of a contract to one free month of connection .  WT/TPR/S/397 • Japan  
 
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4.189.   In addition, the Government announced, in June 2019, that it will require mobile phone 
operators to drastically cut cancellation fees for users who quit in the m iddle of a two -year contract, 
so as to promote competition and lower the country's relatively high communication charges.  Under 
the plan approved by the communications ministry's panel, Japan's four main mobile phone 
operators and the Mobile Virtual Networ k Operators will be obliged to cut cancellation charges by 
90%, to JPY 1,000 (USD 9) or less, from the current JPY 9,500, enabling users to switch companies 
more easily.  To introduce this measure, in September 2019, the ministry revised the Regulations for  
the Enforcement of the Telecommunications Business Law .  
4.190.   Under the GATS, Japan made commitments on all telecommunication subsectors, be they 
basic or value added, subscribed to the GATS disciplines of the reference paper, and listed only 
two restrictions,  both for NTT and KDDI: a limitation on foreign ownership of 20%, and a nationality 
requirement for the majority of the board. This situation related to NTT and KDDI is echoed in the 
subsequent bilateral or regional agreements, but the foreign ownership li mitation was scheduled at 
a less restrictive, status quo level of one third, which correspond to the applied regime.  
4.4.3   Postal, courier and express services  
4.191.   The MIC is the regulatory authority for postal services, while the Ministry of Land, 
Infrastructure  and Transport  (MLIT) regulates express service activities under the Consigned Freight 
Forwarding Business Act.  There is no independent regulator for postal matters.  
4.192.   Since 2000, postal services providers have been reorganized, in three steps. First, the Postal 
Services Agency, which was an external agency of the Ministry  of Public Management, Home Affairs, 
Posts and Telecommunications, was replaced in April 20 03 by a new public corporation named Japan 
Post. This public corporation remained 100% government -owned, its staff retained civil servant 
status, and it continued to provide both postal and financial services including savings and insurance. 
In a second st age, in October 2007, postal services were privatized under the Postal Service 
Privatization Act (Law No. 97 of 2005), the Japan Post Group was established, and its employees 
lost their civil servant status. The Japan Post Group was composed of five entiti es, namely JPH; 
Japan Post Service ; Japan Post Network (i.e. the post offices) ; JPB; and Japan Post Insurance, two 
of which (Japan Post Service and Japan Post Network) deal t with postal services stricto sensu . In a 
third stage, in October 2012, the two lat ter entities merged under the name Japan Post Company 
Limited.  
4.193.   In 2018 , the Japan Post Company Limited employed over 193,000 persons, and had a 
network of 24,000 post offices , over 180,000 mailboxes, revenue  of JPY  3,887.4 billion , and a profit 
of JPY  85.4 billion. Japan Post Co. is the only sub -entity of the Japan Post Group that has not been 
the object of an initial public offering/listing , and it remains 100% JPH-owned . The other sub -entities 
were subject to an initial public off ering/listing of 10% of their capital in November 2015 . 
4.194.   Box 4.6 summarizes the somewhat complex domestic regime  of postal, courier and express 
services.  
Box 4.6 Postal, courier and express domestic regime  
1. Special correspondence  
Definition : one, or a combination , of the following mail 
items:  
• mail items that have dimensions (height + width 
+ thickness) totalling over 73  cm or a weight over 
4 kg; 
• mail items that  are to be delivered within three 
hours; and  
• mail items that have a delivery charge that 
exceeds the amount specified by a ministerial 
ordinance of the MIC (JPY 800). 
Legal status : liberalized  
Operator(s) : 538 private operators  4. Parcels  of more than 4 kg  
Definition : as in title  
 
Legal status : open to competition  
 
Operators : express and parcel operators 
(first-class and second -class freight 
forwarders)  WT/TPR/S/397 • Japan  
 
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2. General correspondence  
Definition : postal items whose height, width and thickness 
are, respectively , under 40  cm, 30  cm and 3  cm, and whose 
weight is under 250 g (usually letters) sent within Japan and 
which are to  be delivered within three daysa 
 
Legal status : liberalized  
 
Operators : Japan Post , since no private providers applied for 
a licen ce 
3. Correspondence postal items  
Definition : 
− second -class mail : postcards  (2-6 g) 
− first class mail : residual category ( other  than 2nd, 3th and 
4th classes including express mail services) within a limit 
of 4 kg 
 
Legal status : part of a reserved  area/universal  service of 
Japan Post 
 
Operator : Japan Post  5. Non-
correspondence 
postal items 
Definition : 
− third class mail : 
periodicals, 
magazines and 
newspapers 
within a limit of 
1 kg; 
− fourth class mail : 
items which 
require special 
consideration , 
e.g. for the blind  
 
Legal status : part of 
reserved  area/ 
universal  service of 
Japan Post 
 
Operator : Japan Post 6. Parcels of 
less than 4  kg 
Definition : as in 
title  
 
Legal status : open 
to competition  
 
Operators : Japan 
Post competes with 
express and parcel 
operators (first -
class and second -
class freight 
forwarders)  
a However, the minimal limit for special correspondence are dimensions totalling over 73 cm or 
weighing over 4 kg. Thus, items totalling less than those dimensions or weighing between 250 g and 
4 kg fall in to the general correspondence category . 
Note:   Jurisdiction of the MIC: 1+2+3+5  
  Jurisdiction of the MLIT: 4+6  
  Scope of the Correspondence Delivery Act: 1+2  
  Scope of the Postal Act: 3+5  
  Scope of the notion of correspondence: 1+2+3  
  Scope of non -correspondence: 4+5+6  
  Activities of Japan Post: 2+3+5 +6 
  Universal service/reserved area of Japan Post: 3+5  
  Activities of Japan Post in competition with the private sector: 6  
  Activities outside the universal service/reserved area where Japan Post is the sole provider: 2.  
Source:  Compiled by the Secretar iat. 
4.195.   The universal service, as defined by  the Postal Act No. 167 of 1947  and last amended in 
2002 (to change the approval of the rates by the MIC from a prior notification system to a post facto  
notification system), comprises the totality of postal items defined as such by the relevant 
international conventions, including Express Mail Services. There is no universal service fund.  
4.196.   The de jure  monopoly of the Japan Post Company Ltd. includes lett ers (when containing 
"correspondence", see below) and postcards  (between 2 and 6 g)  and the following postal items : 
smart letters  (i.e. up to A5 size and 1 kg throughout Japan at a fixed rate), letter packs (up to A4 
size and 4 kg throughout Japan at a fix ed rate ) and express mail services items.  
4.197.   As illustrated in Box 4.6, t he notion of "correspondence" determines the borderline with 
parcels, which are open to competition and are under the jurisdiction of the MLIT86. It is defined by 
Article  4, paragraph 2 o f the Postal Act (Law  No. 165 of 1947) as "any document expressing the will 
or intent of the sender to a specific recipient or informs such a recipient of factual information". 
                                                
86 Except for periodicals (3rd class mail) and material for the blind ( 4th class mail), which are not a for m 
of correspondence but are nevertheless part of the universal postal service and of the reserved area of Japan 
Post, and are under the jurisdiction of the MIC.  WT/TPR/S/397 • Japan  
 
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Hence, for instance a résumé sent to a company is a written correspondence, but  the same résumé 
sent back by the company is not . Article 76 of the Postal Act stipulates that the sender and the 
delivery company sending correspondence items could face up to three years ' imprisonment or a 
fine of up to JPY  3 million  for infringement .  
4.198.   The Act on Correspondence Delivery by Private Business Operators (Law No.  99 of 2002) 
liberalized , since 1 April 2003 , "correspondence delivery services" , and opened them de jure to 
private postal operators . Correspondence delivery services are divided into  two sub-categories , with 
different scopes, licensing procedures and licensing conditions: "general correspondence services" 
and "special correspondence services".  
4.199.   General correspondence services , or "basic services" , cover postal items whose height, width 
and thickness are, respectively , under 40  cm, 30  cm and 3  cm, and whose weight is under 250 g 
(usually letters) , sent within Japan , and which should be delivered within three days. The conditions 
for application requ ire complete territorial coverage, the  installation of "correspondence collection 
boxes" (i.e.  mailboxes) evenly throughout the country,  according to the populations  of 
municipalities , a six-days-a-week delivery frequency, the guarantee of secrecy of corre spondence , 
and an adequate business plan . There were no application s and hence no licence s delivered so far  
for the exercise of those services.  
4.200.   Special correspondence services , or "high -value services ", are defined as one , or a 
combination , of the followin g mail items:  
• mail items that have dimensions (height + width + thickness) totalling over 73  cm or a 
weight over 4 kg;  
• mail items that are to be delivered within three hours; and  
• mail items that have a delivery charge that exceeds the amount specified by a ministerial 
ordinance of the MIC (JPY 800). 
4.201.   The requirements for application for a licen ce are quality -based. The applicant company 
must guarantee the protection  of secrecy of correspondence , and present an adequate business 
plan. Needs are assessed on the basis of the estimate of business revenues. There are geographical 
limitations on delivery within three weeks . Permission to operate is given  by the MIC , and is 
perpetual . As at July 2019, 538 operators were licensed, none of them foreign . Their tot al sales 
amounted to JPY 19.3 billion  in FY2018 .  
4.202.   Japan did not ma ke any commitments regarding postal and express services  either  under 
the GATS or in the positive listing agreement with Singapore. However , it bound special 
correspondence services in most of its positive listing agreements with India, Brunei  Darussalam , 
Thailand, Malaysia, Viet Nam, Indonesia and the Philippines, with a standstill commitment in the 
latter five. In its negative listing agreements , Japan reserved future measures for postal se rvices , 
both for investment and cross -border trade in the services chapters for national treatment, senior 
management and boards of directors , and local presence.  
4.203.   Express carriers, including international express carriers such as Fedex, UPS, DHL and TNT , 
fall under another regulatory regime, the Consigned Freight Forwarding  Business Law" (Law No.  82 
of 1989) , applicable since 1990 and last amended in 2008. This Law is administered by the MLIT.  
4.204.   In its latest amendment, the Law distinguishes between two types of freight forwarders: 
first-class and second -class.  
4.205.   First-class freight forwarders are freight forwarders deploying transport intermediation 
activities within a single mode of transport (maritime, air, rail , or road) and which do not engage in 
the door-to-door collection and delivery of cargo. First -class freight forwarders are subject to a 
simple registration procedure for entry , and to an ex-post-facto reporting system for fares (charges 
and fees).  WT/TPR/S/397 • Japan  
 
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4.206.   Second -class freight forwarders organize multimo dal activities , and ensure door -to-door 
services. They are subject to a permission regime , which implies the preliminary approval of the 
general business plans as well as the approval of the collection/delivery plans for cargo.  
4.207.   In terms of conditions of a ccess for foreign operators in these two classes, the Law creates 
three distinct regimes , depending on the type of transport activities undertaken : 
• for freight forwarding using air transportation between points within Japan, a nationality 
requirement is im posed on both natural and legal persons ( whether  constituted under 
foreign law or under Japanese law , and with less than two thirds of Japanese nationals on 
the board and with voting rights) ; 
• for freight forwarders using international air transportation, p ermission or registration 
(depending on the class concerned) is subject to a reciprocity test ; and 
• for freight forwarders using maritime transportation, permission or registration (depending 
on the class concerned) is also subject to a reciprocity test.  
4.208.   UPS, Fedex , DHL and TNT operate in Japan. To the extent that they are allowed to operate 
(i.e. except for freight forwarding using air transport between points within Japan , and once the 
reciprocity test is satisfied for the other two subsectors), foreign ex press operators enjoy full national 
treatment . 
4.209.   However, express carriers, domestic, foreign or Japan  Post Co Ltd, do not compete under 
exactly the same regulatory conditions, in terms of customs valuation methods and de minimis  
thresholds, location of customs clearance, traffic fines, loading and unloading of shipments, and 
advance cargo information87. According to the authorities, these differences in treatment are normal 
by international standards, can be explained by the different nature of the items shipped and their 
different transport chains, and do not constitute discrimination against express carriers .  
4.210.   Japan did not undertake any commitments on freight forwarding under the GATS. It reflected 
its applied regime  for freight forwarding in some of its FTAs. This is the case of seven positive listing 
agreements with India, Brunei  Darussalam , Thailand, Malaysia, Viet Nam, Indonesia and the 
Philippin es, with a standstill commitment in the latter five. As far as negative listing agreements are 
concerned, Japan bound its existing regime by lodging reservations for existing measures (hence , 
subject to standstill and ratchet) ; this is  reflect ed in its agr eements with Mongolia, Switzerland, 
Australia, Chile, the E uropean Union, Mexico, Peru, and the CPTPP partners.   
4.4.4   Transport services  
4.4.4.1   Maritime transport   
4.4.4.1.1   Market  overview   
4.211.   In 2017, Japan relied on maritime transport for 72.3% of its imports and for 70.2% of i ts 
export s, in value. In addition, coastal shipping, which is reserved for the national flag, is an important 
economic sector , with 2,500 companies employing 65,000 persons, among which 28,000 seafarers , 
and with business revenue of around USD  11 billion i n 2016.  
4.212.   The total Japanese fleet (i.e. the Japanese -flagged fleet88 and the foreign -flagged but 
Japanese -controlled fleet) remains the second largest in the world , after the Greek fleet. Nationally -
flagged vessels are , for the most part , deployed on cabotage traffic. The internationally deployed 
fleet (mostly composed of foreign -flagged , Japanese -controlled vessels) employed 2,000 Japanese 
seafarers and 56,000 foreign seafarers , and had business revenue of USD  39 billion in 2016. In 
                                                
87 Global Express Association, Overview of de minimis value regimes open to express shipments wo rld 
wide.  Viewed at : https://global -express.org/assets/files/Customs Committee/de -minimis/GEA overview on de 
minimis_28 March 2018.pdf ; the Customs Act (Law No. 61 of 1954, as amended) , Article 76 ; the Plant 
Protection Act (Law No. 151 of 1950, as amended) , Article s 6 and 8; the Act on Livestock  Infectious Diseases 
Control (Law No.  166 of 1951, as amended) , Article 38; the Road Traffic Act (Law No.  105 of 1960, as 
amended) , Article 4 ; and the Act on Postal Matter Shipping Consignment (Law No.  284 of 1949) , Article 16.  
88 Due to ownership restrictions, there are no Japanese -flagged vessels controlled by foreign interests.  WT/TPR/S/397 • Japan  
 
- 176 - 
 
2018, the Japanese fleet carried about 8.7% of the global seaborne trade , in volume . The share of 
Japan's fleet in the world total is higher for bulk traffic89 than for in -liner shipping , as the container -
carrying capacity of ONE, the new single operator born ou t of the merger in March  2018 of the three 
historical operators (Mitsui OSK; K -line; and NYK), accounted for only 7% of the capacity in 2018 , 
and ranked number six among liner shipping operators.  
4.213.   As at 1 January 2019, the total fleet was composed of 987 nationally -flagged vessels over 
1,000  gross registered tonnes (GRT) totalling 38.99  million dead weight tonnes (DWT) , i.e. 1.9% of 
world tonnage capacity, and of 2,844 foreign -flagged , Japanese -controlled vessels over 1,000  GRT 
and totalling 186.72  million DWT of capacity , i.e. 9.5% of world tonnage.  
4.214.   Ports in Japan essentially serve external trade . Although the volume of containers 
transhipped to foreign destinations in Japan declined significantly in recent years  (from 265,000 
twenty -foot equivalent units (TEU) in 2012 to 131,000 TEU in 2017), the total container handling 
volume was on the rise (from 21,226,000 TEU in 2012 to 22,822,000 TEU in 2017). In this 2017 
total, cabotage container handling represented a volume of 4,428,000 TEU, i.e. 19.3 %.  
4.215.   Table 4. 22 provides in more detail the main economic indicators of the maritime transport 
sector, in terms of fleet and traffic.  
Table 4.22 Maritime transport, main economic indicators  
Fleet (vessels over 1,000 G RT) 
as at 1 January 2019  Vessels (number)  Tonnage (D WT) 
(Million tonnes)  (% of world 
tonnage)  
National flag  987 38.99  1.9%  
 Of which foreign -controlled  0 0 0% 
Beneficially owned fleet under foreign flags  2,844  186.72  9.5%  
Merchandise trade  Volume ('000 tonnes, 
except for containers: 
'000 TEU), 2017  Value (JPY billion)  
2017  % of Japan's 
international 
trade (all  mode s 
of transport)  
FY2017  
Imports  Exports  Imports 
c.i.f. Exports 
f.o.b.  Imports  Exports  
International maritime freight trade 962,595  289,649  54,536  54,986  72.3 70.2 
 Of which containers  9,207  9,187  31,138  33,963  41.3 43.4 
 Of which transhipped  75 56 .. .. .. .. 
 Of which dry bulk  407,898  66,426  10,177  6,604  13.5 8.4 
 Of which liquid bulk  372,725  19,964  13,221  1,078  17.5 1.3 
.. Not available.  
Source:  Information provided by the authorities ; and UNCTAD.  
4.4.4.1.2   Regulatory developments  
4.216.   The Maritime Bureau  in the MLIT is responsible for maritime shipping policy and national 
legislation. It also represents Japan at the International Maritime Organization, which sets the 
worldwide standards for safety, security and environmental norms for maritime transport.  
4.217.   The main laws covering the maritime transport of goods are: the Basic Act on Maritime Policy 
of 2007; the Carriage of Goods by Sea Act of 1992; the International Carriage of Goods by Sea Act 
of 1957; the Maritime Traffic Safety Act of 1972; the Port and H arbour Act of 1950 (as amended); 
the Port Regulations Act of 1948; and the 1933 Ship Safety Act (as amended).  
4.218.   During the period under review, the main regulatory developments essentially concerned 
FTAs, ports, and the support regime of the Japanese fleet. The competition and applied market 
access regimes remained unchanged.  
4.219.   Regarding the support regime, in 2017 , the "roll -over relief"  system , i.e. the deferred 
taxation of capital  gains in the case of the sale of old vessels replaced by new vessels , was exte nded 
until the end of FY2019. In 2019 , the additional depreciation applicable to Japanese -flagged vessels 
                                                
89 This includes the carriage of crude oil and refined petroleum products ("liquid bulk") and of coal, iron 
ore, grain and phosphates ("dry bulk").  WT/TPR/S/397 • Japan  
 
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fulfilling certain conditions , notably of an environmental nature,  through either the declining -balance 
method or through the straight -line method , was raised from 18% to 20% .  
4.220.   In May 2018, the Cabinet adopted the third quinquennial Basic Plan on Ocean Policy90, which 
sets three objectives regarding the merchant fleet, corresponding to three different segments of 
maritime transport, namely international freight transport, domestic/coastal freight transport, and 
domestic passenger transport.  
4.221.   First, regarding the ocean -going fleet, the objective is to strengthen the international 
competitiveness of Japan's merchant fleet, and to secure maritime transport s ystems centred on 
Japanese -flagged ships (whose number should be multiplied by 1.2 by the end of the Plan in 2023) 
and Japanese crews (the objective being to multiply the number of seafarers by 1.5 by the end of 
the Plan in 2028). This objective is meant t o be achieved by prolonging, until March 2023, the 
tonnage tax system instituted in 2008.  
4.222.   While the rates of the tonnage tax remain unchanged91, its scope of application was 
expanded to include "deemed -Japanese -flagged vessels" i.e. a foreign -flagged -vesse l operated by a 
Japanese shipping firm and owned by an overseas subsidiary of a company established under 
Japanese law, which may change its flag to the Japanese one immediately in case of issuance of an 
"order of navigation"(e.g. in case of natural disast ers). In accordance with the Maritime Transport 
Act, the tonnage tax rates applicable to those vessels are 1.5 times higher than those applicable to 
Japanese -flagged vessels.  
4.223.   The Plan does not modify the existing International Ship Regime (ISR), whereby a  Japanese -
flagged vessel may receive a reduction of registration and licence taxes and property taxes, provided 
it fulfils certain conditions; namely, it must be of more than 2,000 GRT, be an ocean -going vessel 
whose non -Japanese seafarers hold a certifica te issued by the MLIT, or be of a roll -on/roll -off or LNG 
carrier type. Companies may apply for the ISR scheme if they are established under Japanese law, 
regardless of the nationality of their shareholders.  
4.224.   The second objective of the third Basic Plan on  Ocean Policy is to strengthen coastal shipping 
operators, to develop  advanced coastal ships, and to secure a sufficient number of national 
seafarers,  in line with the June 2017 MLIT Plan for the Future of Coastal Shipping. The Plan sets the 
target of incr easing the average coastal tonnage of cabotage vessels from 715 tonnes in FY2015 to 
858 tonnes in FY2025. The Coastal Shipping Tentative Measures Programme/Scrapping Incentives, 
instituted in FY199892 and the Coastal Shipping Joint Ownership Scheme under the Japan Railway 
Construction, Tran sport and Technology Agency (JRTT)93, instituted in 1957, remain unchanged. The 
Basic Plan on Ocean Policy also foresees the maintenance of the present cabotage regim e, i.e. the 
reservation of the national flag, save exceptions foreseen in the Friendship Commerce and 
Navigation treaties with Denmark, the United Kingdom and Norway, or under reciprocity conditions.  
4.225.   Regarding passenger transport, the Plan recognizes that  domestic passenger ships and 
ferries are an indispensable transportation infrastructure for regional communities , and they 
promote tourism in Japan. It foresees the continuation of the policy of subsidizing remote island sea 
routes. Of the 295 remote isla nd sea routes in service at the end of FY2018, 120 were subsidized. 
According to the authorities, the Government subsidizes the se projects to maintain regional public 
transport . The total value of subsidies in FY2018 was JPY 20 billion.  
4.226.   The competition reg ime remained the same during the period under review. The last review 
of the anti -trust immunity provided by the Marine Transportation Act was concluded, with no 
                                                
90 The Basic Plan on Ocean Policy. Viewed at: 
https://www8.cao.go.jp/ocean/english/plan/pdf/plan03_e.pdf . 
91 Namely, for vessels less than 1,000 net tonnes (NT), JPY 120/100 NT; for vessels  over 1,000 and up 
to 10,000 NT, JPY 90/100 NT; for vessels over 10,000 and up to 25,000 NT, JPY 60/100 NT; and for vessels 
over 25,000 NT, JPY 30/100 NT.  
92 The project of provisional measures for coastal shipping was introduced in May 1998 to revitalize t he 
coastal shipping business.  To deal with excessive tonnage, it adjust s the available tonnage by the scrap -and-
build method . 
93 Since 1959, the JRTT provides support to coastal shipping by sharing the cost and ownership of 
vessels, with JRTT taking 70% -90% of costs and ownership. The domestic shipping company pays a usage fee 
to the JRTT for the period of joint ownership, which is 7 -15 years.  WT/TPR/S/397 • Japan  
 
- 178 - 
 
changes , in 2015 . No further review is planned.  The scope of this immunity, defined in Article  28-4 
of the Act, provides immunity "to conclude an arrangement or agreement or to conduct a concerted 
act concerning the fares or charges and other transportation conditions, routes, allocation of ships 
as well as sharing of shipping between a ship operat or and other ship operators on routes between 
ports in Japan and a territory other than Japan". In practice, this immunity covers agreements such 
as conferences, discussion agreem ents, stabilization agreements, vessel -sharing agreements and 
consortia  (including alliances)  in liner shipping , and tramp pools in bulk shipping. The benefit of this 
immunity is conditioned by a filing requirement , as Article 29 -(2) of the Marine Transportation Act 
stipulates that " any ship operator shall, if he/she intends to eng age in the act provided for in Article 
28 item (4) or to alter the content thereof, notify beforehand the Minister of Land, Infrastructure, 
Transport and Tourism to that effect".  
4.227.   The applied market access regime remained unchanged. Japan does not discrimin ate against 
foreign participation  in international maritime services, and accords national treatment.  
4.228.   The applied regime was only partially bound.  Japan's commitments under the GATS are 
relatively limited (access to/use of port services, pushing and towing services, maritime agency 
services, salvaging, watering and fuelling services), due to the outcome of the 1995 -96 maritime 
transport negotiations.  Commitments undertaken in the context of FTAs vary widely; the more liberal 
commitments are in negative listing agreements (with Australia, Chile, the European Union, Mexico, 
Peru, Switzerland, and the CPTPP partners) and in recent positive listing agreem ents containing 
standstill clauses (with Indonesia, Malaysia, Mongolia, the Philippines, and Thailand); these 
commitments were described in detail in one of the previous reports.94 While Japan replicated its 
previous maritime commitments in negative listing  agreements signed since 2013 (namely with Peru 
in 2012, Australia in 2015, CPTTP partners in 2018, and the European Union in 2019), the only 
positive listing agreement signed since then (with Mongolia in 2016) contains a supplementary 
commitment binding a n autonomous liberalization of the applied regime, i.e. the suppression of the 
economic needs test for cargo handling and container depot station activities.  
4.229.   Regarding ports, there were significant regulatory developments during the period under 
review. First, the third Basic Plan on Ocean Policy adopted by the Cabinet in May 2018 includes a 
port component. The objective is to maintain and expand key maritime r outes, with port calls in 
Japan, with anti -seismic infrastructures adapted to large container ships, large bulk carriers and car 
transporters, through freight collection, freight creation, and enhanced port competitiveness. The 
Plan also foresees the devel opment of international logistics terminals, and of domestic terminals 
tailored to the transportation needs of key industries, such as automobile  recycling in ports; and the 
creation of specific bunkering facilities for LNG -fuelled ships will also be encou raged, including abroad 
(e.g. in Singapore).  
4.230.   During the period under review, Japan also actively pursued its policy of according 
concessions to an increasing number of container and bulk terminals. Privately managed container 
terminals are now present in nine harbours, compared to three mentioned in the previous report. 
Although this activity is opened to foreign investment, all operators selected so far are of Japanese 
nationality.  
4.231.   Table 4.23 provides  an overview of concessions accorded recently.  
Table 4.23 Overview of the ports' recently accorded terminal concessions  
Privately 
managed 
terminals  Type of 
cargo  Managing company(ies)/ nationality  Volume  
(TEU, 
2017)  Date & duration 
of contract  
Keihin (some)  Container  Yokohama -Kawasaki International Port 
Corporation/Japanese  3,055,994  04.03.2016  
Indefinite duration  
Kobe･Osaka 
(some)  Container  Kobe-Osaka International Port 
Corporation/Japanese  5,251,000  28.11.2014  
Indefinite duration  
Nagoya ･Yokkaichi 
(some)  Container  Nagoya -Yokkaichi International Port 
Corporation/Japanese  693,447  01.09.2017  
Indefinite duration  
Niigata (some)  Container  Niigata World Trade Terminal Company 
Limited /Japanese  169,002  
 07.03.2014  
Indefinite duration  
                                                
94 WTO document WT/TPR/S/276, 15 January 2013, Table A.IV.4, pp. 142 -148. WT/TPR/S/397 • Japan  
 
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Privately 
managed 
terminals  Type of 
cargo  Managing company(ies)/ nationality  Volume  
(TEU, 
2017)  Date & duration 
of contract  
Sakai Semboku 
(some)  Container  Sakai Semboku Wharf 
Corporation /Japanese  30,374  
 21.12.2015  
Indefinite duration  
Mizushima (some)  Container  Mizushima Port International Logistics 
Center Corporation /Japanese  167,036  
 20.01.2014  
Indefinite duration  
Hiroshima (some)  Container  Hiroshima Port & Harbor Administration 
Center Co., Ltd /Japanese  254,098  
 02.02.2017  
Indefinite duration  
Hakata (some)  Container  Hakata Port Terminal 
Corporation /Japanese  850,179   20.02.2014  
Indefinite duration  
Ibaraki Port 
Hitachinaka 
District (some)  Container  Ibaraki Port Authority 
Corporation/Japanese  29,827  08.06.2000 -
08.06.2020   
Source:  Information provided by the authorities .  
4.4.4.2   Air transport  
4.232.   Japan has a well -developed air transport sector, with approximately 100 million international 
passengers, 223 million domestic passengers95, and 1.4 billion tonnes of international cargo in 
2018.96 There are 114 airports in operation in the country, and the top five accounted for more than 
half of all traffic,  and the top two for over one third: Narita International Airport accounted for 33.7% 
of international passengers; and Tokyo International Airport (Haneda) for 30.3% of domestic 
passengers. Users of low -cost airlines (LCCs) have been increasing; 20% of inte rnational passengers 
were reported to be using LCCs in 2018.97 
4.233.   During the period under review, the regime of air transport  services remained largely 
unchanged, except for slots, airport concessions and bilateral air transport agreements.  
4.234.   As far as services  explicitly covered by the GATS are concerned , computer reservation 
services, and selling and marketing of air transport services are not regulated by any sector -specific 
legislation; they abide by general company law and the general legal framework for co mpetition. In 
both instances, there are no provisions limiting market access; these services were the object of 
extensive commitments under the GATS and in all of Japan's FTAs.  
4.235.   Aircraft repair and maintenance services, another type of air auxiliary servic e explicitly 
covered by the GATS, are regulated by the Aircraft Manufacturing Industry Act, which does not 
impose any obligation to repair nationally -flagged planes  locally. This act conditions establishment 
of new entrants to an economic needs test  whose  criteri on is that "the capability of manufacturing 
or repairing aircraft or specific equipment does not become notably excessive" . This criterion is 
formulated in a non -discriminatory manner. Several permissions were granted during the period 
under review. The number of US Federal Aviation Administration -(FAA)  and European Agency for 
Safety in Aviation (EASA) -certified repair station s (11 in both instances) remained unchanged during 
the period under review.  
4.236.   The commitments for aircraft repair and maintenance under the GATS and under the 
positively listed FTAs of Japan reflect the applied regime , i.e. the existence of an economic need s 
test. That situation is echoed in all of Japan 's negatively listed FTAs . 
4.237.   Regarding air transport services not explicitly covered by the GATS, the regime of ground 
handling services also remained u nchanged during the review period. Self -handling and mutua l 
handling are allowed at all airports , as is third -party handling . Differentiated situations may result 
from bilateral agreements , due to reciprocity considerations . The CPTPP and the Japan -EU EPA both 
include ground handling services in their scope  but, in both instances, these services are the object 
of Annex II type reservations, carving out future measures from MFN obligations.   
                                                
95 East Japan Civil Aviation Bureau, Usage status of jurisdiction airport. Viewed at: 
https://www.cab.mlit.go.jp/tcab/statistics/01.html ; and Osaka Airlines Bureau, Usage report . Viewed at: 
https://ocab.mlit.go.jp/about/total/report/ . 
96 Civil Aviation Bureau, Data. Viewed at: http://www.mlit.go.jp/koku/15_hf_000030.html . 
97 MLIT online information.  WT/TPR/S/397 • Japan  
 
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4.238.   Domestic air freight forwarding is reserved for Japanese nationals, while access to 
international freight forwarding activiti es is subject to approval based on a reciprocity test. Aerial 
work is reserved for national operators, and foreign investment in this sector is subject to a 
notification procedure, and is limited to one third of the voting rights.  
4.239.   Regarding commercial air  transport stricto sensu , charters are subject to authorization by 
the MLIT; the authorization is li berally granted except in cases of lack of reciprocity. There is no 
specific policy for all -cargo flights. Foreign participation in nationally established a irlines is limited to 
one third of the voting rights , including for holding companies. Domestic traffic is reserved for 
nationally established airlines.  
4.240.   Table 4. 24 provides an overview of Japanese airlines, in terms of fleet, turnover and 
shareholders , in 2018. 
Table 4.24 Overview of airlines, 2018  
Airline  Number of 
aircraft  Turnover  
(JPY bn)  Shareholders  
ANA Holdings  292 1,971.7  No shareholder with more than 5%  
JAL 231 1,383.2  Only one shareholder with more 
than 5%: the Master Trust Bank of 
Japan (Trust Accounts), Ltd : 5.37%  
Nippon Cargo Airlines  11 97.9 Owned 100% by Nippon Yusen  
Low-cost carriers  
Peach Aviation  20 54.7 ANA Holdings: 67.0%;  
First Eastern Investment Group: 
17.9%; INCJ: 15.1%  
Vanilla Air  14 32.9 ANA Holdings : 100%  
Jetstar Japan  21 57.0 JAL and Quantas: 33% each ; 
Mitsubishi, Century Tokyo Leasing: 
16.7% each  
Spring Airlines Japan  4 9.1 Spring Airlines: 33.0%;  
Others: 67.0%  
Air Asia Japan  2 .. Air Asia Investment: 33.0%;  
Others: 67.0%  
.. Not available.  
Source:  Information provided by the authorities.  
4.241.   The main regulatory changes adopted during the period under review concern three areas, 
namely: slots and congested airports, airports privatization/ concessions , and bilateral air transport 
agreements.  
4.242.   In anticipation of the Olympic Games in 2020, the number of slots available at Tokyo airports 
(Haneda  and Narita) were considerably increased, passing from 680,000  in 2015 (Haneda 410,000, 
Narita 270,000 ) to approximately 1,000,000  in 2020  (Haneda 490,000, Narita 500,000).  In addition, 
Fukuoka was added to the list of congested domestic airports (in  addition to Haneda, Narita, Itami 
and Kansai), where a notification from a domestic airline to the MLIT is needed before adding a 
frequency.  
4.243.   Regarding airport privatization/concession, Japan amplified considerably its policy, initiated 
in 2013, with the A ct on Operation of National Airports Utilizing Skills of the Private Sector, which is 
part of a wider Private Finance Initiative governed by annual plans. Table 4.25 provides an overview 
of this concession process.  WT/TPR/S/397 • Japan  
 
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Table 4.25 Overview of airport concession process  
Airport concerned  Date of concession (or 
stage of concession 
process)  Bidder selected  Duration of 
concession  Observations  
Osaka Airports 
(Kansai and Itami)  December 2015  Vinci Airports and Orix  45 years   
Sendai Airport  December 2015   Tokyo Group consortium  30 years   
Osaka's Kobe Airport  April 2018  Vinci Airports and Orix  42 years   
Fukuoka Airport  1 April 2019  Fukuoka Airport HD 
Corporation (Nishi Nippon 
Railway Corporation; 
Mitsubishi Corporation; 
Kyushu Electric Power 
Corporation ; and 
Singapore's Changi Airport 
International  30 years   
Takamatsu Airport  1 April 2018  Mitsubishi Estate  35 years   
Shirahama Airport   April 2019  Minchori Holdings -led 
consortium  10 years   
Shimojishima 
Airport   January 2018  Mitsubishi Estate  Permanent  Special 
purpose vehicle 
to develop and 
operate 
passenger 
terminal 
facilities  
Mount Fuji Shizuoka 
Airport  April 2019  Mitsubishi Estate and 
Tokyo Corporation  20 years   
Nagasaki Airport  Survey to determine the 
viability of privatization , 
was to be completed by 
March 2019  Not yet selected  Not decided   
One Hokkaido 
(seven airports)  January 2020 (New 
Chotose Airport)  
October 2020 (Asahikawa 
Airport)  
March 2021(Wakkanai 
Airport, Kushiro Airport, 
Hakodate Airport, Obihiro 
Airport, Memanbetsu 
Airport)  Hokkaido Airport Group  30 years   
Hiroshima Airport  − Guidelines for the 
tender published in May  
2019;  
− Selection of a  preferred 
negotiation rights 
holder in June 2020 - 
agreement in August 
2020;  
− Full-scale private 
operations to 
commence from Apr il 
2021  30 years   
Kumamoto Airport  April 2020   MSJA -Kumamoto 
Consortium  33 year s  
Source:  CAPA - Centre for Aviation, viewed  at https://centreforaviation.com/analysis/reports/japans -airport -
privatisation -picks-up-pace---and-interest -418151  and complementary information provided by the 
authorities  
4.244.   Regarding bilateral air transport agreements, during the period  under review, Japan 
concluded or amended four bilateral agreements, namely with India , Papua New Guinea, Cambodia , 
and Lao PDR. These agreements essent ially added new frequencies without liberalizing further other 
clauses . Table A4.2  details  the characteristics of all air services agreements in force for Japan, coded 
according to the WTO QUASAR methodology98, which provides an assessment of their degree of 
liberalness.  
                                                
98 For more elements on this methodology, see WTO document S/C/W/270/Add.1, 30 November 2006.  WT/TPR/S/397 • Japan  
 
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4.4.5   Environmental  services  
4.245.   Following standard practice for TPR reports, and fo r the purpose of this Section, 
environmental services should be understood as covering sewage services, refuse disposal services, 
sanitation services, cleaning services of exhaust gases , noise -abatement services, nature and 
landscape protection services, a nd other environmental protection services.99 Fresh water 
distribution services/water utilities are also covered in this Section, as this type of service is 
technically bundled with sewage services, and uses, at least partly, the same infrastructure as 
sewage services.  
4.246.   This list covers basically three types of services. The first group is constituted by services 
linked to the provision of basic public services, with natural monopoly characteristics (water 
utilities/distribution, sewage, consumer waste dispos al and sanitation services , such as snow - and 
ice-clearing services). These services are regulated by various acts, described below, which entrust 
municipalities , or grouping of municipalities , with the provision of these services to the general 
public . However, they  were modified in recent years , to allow the creation of PPPs,  whereby 
municipalities can delegate the management of those services to the private sector. A  second group 
is composed of services that are delivered mainly by private companies (ind ustrial waste 
management, cleaning services of exhaust gases , and noise -abatement services). These sectors are 
regulated at both national and local levels , essentially on questions of safety and norms. Finally, 
nature landscape and protection services cons titute the third group,  which is  regulated at both 
national and local level s; the bulk of the regulation consist s of environmental norms. The Ministry of 
the Environment is the main regulator of the environmental services sector. The MLIT is the main 
regulator of the sewage sector.  
4.4.5.1   Water distribution services and waste water treatment/sewage services  
4.247.   The main policy objective of Japan's water distribution and waste water treatment/sewage 
services is to ensure access to water for everyone (Box 4.7).  
Box 4.7 Market overview of water distribution and waste water treatment/sewage 
services  
Japan 's share of the global market (2010)  8%, or USD 247.6 billion  
Number of firms (2015)  2,123 
Revenue of private w ater compan ies (2015)  USD 21 billion  
Main private national companies  Kurita Water Industries, Organo Corporation, Hitachi Ltd.,  
METAWATER Co., Ltd.  
Level of regulation  National  
Main regulations  Water Supply Law ; Local Public Enterprise Act ; Sewage 
Water Act 
Main objectives of the regulations  Provision of access to water for everyone  
Source:  Development Bank of Japan,  Report (2015) . Viewed (in Japanese) at: 
https://www.dbj.jp/pdf/ investigate/etc/pdf/book1508_02.pdf ; and United States International Trade 
Commission (USITC), Environmental and Related Services (2013) . Viewed at: 
https://www.usitc.gov/publications/332/p ub4389.pdf . 
4.248.   From a regulatory point of view, water distribution services  and sewage services are not 
vertically integrated in Japan, and hence obey to two distinct legal regimes.  
4.249.   Water distribution  is regulated by the Water Supply Law Act No. 177 of 1957, which 
attributes to the municipalities the competence of providing wate r. Some smaller municipalities may 
                                                
99 The Services Classification List contained in document MTN/GNS/W/120, which was used by most 
Members to schedule their commitments under the GATS, covers the following subsectors: sewage services; 
refuse disposal services; sanitation and similar services;  and "other" environmental services, which includes 
the remaining elements listed in the provisional version of the UN CPC, namely: cleaning of exhaust gases 
(CPC 94040), noise -abatement services (CPC 94050), nature and landscape protection services (CPC 9 4060), 
and "other environmental protection services not elsewhere classified" (CPC 94090).  WT/TPR/S/397 • Japan  
 
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group together, in "bulk water supply businesses", to share the large -scale investments needed. 
This type of investment is subsidized at the national level, to an amount varying between one third 
and one half of the total  investment.  
4.250.   Municipalities and bulk water supply businesses can, in turn, delegate part or all of the 
operation and management of the water distribution system to private firms, under various 
contractual arrangements. About 65% of the municipalities use o ne of these contractual 
arrangements.100 
4.251.   Table 4.26 describes the various forms of delegation to the private sector of the management 
of water distribution.  
Table 4.26 Main characteristics of public -private contractual arrangements for the 
management and operation of water distribution  
Type of contract  Description  Typical duration and number 
of water distribution networks  
and private companies 
involved  
Subcontracting (limited or 
extensive)  Limited : subcontra cting one of the 
following functions : facilities 
design, water quality inspection, 
facility maintenance inspection, 
meter reading  
 
Extensive : subc ontracting sev eral 
or all of the functions li sted above  Usually 2 -5 years  
 
1,714 distribution  networks 
(involving 622 private companies)  
 
 
 
Technical subcontracting  Subcontracting technical duties , 
such as operational management 
of water purification plants  or 
water quality control  2-5 year s 
 
191 distribution  networks  
(involving 46 private companies)  
Design Build Operate (DBO)  Commissioning  to a private 
company the design, construction 
and operation of facilities,  
the funding of  the design  and of 
the construction rema in public  5-20 years  
 
6 distribution  networks  (involving 
7 private companies)  
Private Finance Initiative (PFI) The private contractor p rovides 
the fund ing for the design, 
construction, operation, 
maintenance and repair  of the 
facilities  20 years  
 
 
12 distribution  networks  
(involving 8 private companies)  
Concession  The administration of the facilities 
and their operation are entrusted 
to a private enterprise , while the 
local government remains  the 
owner of the facilities.  
The private partner collect s the 
fee from the customers  Up to 20 years  
 
No case so far , as this form  of 
contract was only  introduced in 
2018 (see below ) 
 
The Osaka municipality declared 
its intention to have recourse to 
this new legal instrument  
Source:  MHLW, Report , 2019. Viewed (in Japanese)  at: 
https://www.mhlw.go.jp/content/10900000/000490819.pdf . 
4.252.   The main recent regulatory development was an amendment of the 1957 Water Supply Law, 
Amendment  92/2018, dated 12 December 2018, allowing municipalities to grant, through a 
concession contract, the full management of water distribution to private companies  for a duration 
of up to 20 years. This amendment applies f the annual Public Private Partnership (PPP)/Private 
Finance Initiative (PFI) plan of 2018.101 
                                                
100 Japan Wa ter Works Association online information (J WWA ). JWWA Report on Current Issues in Water 
Business  (2015) . Viewed at: http://www.jwwa.or.jp/houkokusyo/pdf/suidoujigyou/report_01.pdf  (in 
Japanese) . 
101 PPP/PFI . Viewed (in Japanese) at: https://www8.cao.go.jp/pfi/actionplan/pdf/actionplan29_2.pdf . WT/TPR/S/397 • Japan  
 
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4.253.   There are no legal rules banning foreign companies from taking part in any of the contractual 
arrangemen ts listed in Table 4.26 .  
4.254.   Japan did not undertake any commitments regarding water distribution under the GATS nor 
in its positive  listing FTAs (i.e. Brunei Darussalam, India, Malaysia, Mongolia, the Philippines, 
Thailand, Singapore , and Viet  Nam). For nega tive listing FTAs, Japan systematically  listed an Annex 
1 reservation ( subject to standstill and ratchet obligations) for an existing measure on an a priori  
notification procedure for investments in the water supply and waterworks industry (sector classifi ed 
under JSIC 3611). This covers the agreements with Australia, Chile, Mexico, Peru, Switzerland, the 
European Union, and the CPTPP. In the case of the European Union and of the CPTPP, the text of 
the reservation is more developed that in other agreements.102  
4.255.   Waste water treatment/sewage services  are regulated by the Sewage Water Act No. 79 of 
1958, which attributes  the competence of providing sewage services to municipalities. Municipalities 
can, in turn, delegate part or all of the management of sewage systems and facilities to the private 
sector under various forms of contractual arrangements; no less than 90% of sewage treatment 
facilities operation are delegated to the private sector.103 
4.256.   Table 4.27 provides an overview of the vari ous forms of public -private contr actual 
arrangements  in use , ranked by decre asing number of mu nicipalities using them.  
Table 4.27 Main characteristics of public -private contractual arrangements for the 
management and operation of sewage treatment facilities  
Type of contract  Description  Number of 
municipalities 
involved  
Extensive  subcontracting  Subcontracting  works , such as patrol ling, inspection, 
survey, cleaning, repair of the facilities , chemical /fuel 
procurement , and repair , to the private sector   
252  
 
DBO  Subcontracting the  design, construction , operation and 
maintenance of the facilities/system; the funding of it 
remains public    
20  
PFI  The private contractor p rovides the fund ing for the 
design, construction, operation, maintenance and repair  
of the facilities   
7  
Concession  The administration of the facilities and their operation 
are entrusted to a private enterprise , while the local 
government remains the owner.  
The private partner collects the fee s from the consumers 
to recoup its investment and its operational costs   
2  
Source:  MLIT, PPP/PFI situation in the sewerage (as at April 2018). Viewed (in Japanese) at:  
http://www.mlit.go.jp/common/001300117.pdf . 
4.257.   There are no legal  provisions barring foreign companies to enter into such contractual 
arrangements . Japan has a full commitment for the relevant  mode of d elivery (mode 3) for sewage 
services under the GATS and in all its FTAs so far, be they positively or negatively  listed.  
4.4.5.2   Waste management  services  
4.258.   The main policy objective of waste management services is to limit the volume of waste 
disposal, reduce the consumption of natural resources, and promote the sustainable use of resources 
(Box 4.8).  
                                                
102 WTO RTA -IS data base. "1. The prior notification requirement and screening procedures under the 
Foreign Exchange and Foreign Trade Law apply to foreign investors who intend to make investments in water 
supply and waterworks industry in Japan.  2. The screening is conducted from the viewpoint of whether the 
investment is likely to cause a situation in which national securi ty is impaired, the maintenance of public order 
is disturbed, or the protection of public safety is hindered.  3. The investor may be required to alter the content 
of the investment or discontinue the investment process, depending on the screening result. "   
103 MLIT, PPP/PFI situation in the sewerage  (as at April 2018). Viewed (in Japanese)  at: 
http://www.mlit.go.jp/common/001300117.pdf . WT/TPR/S/397 • Japan  
 
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Box 4.8 Market overview of waste management services  
Market size of waste management 
services (2017)   JPY 14,296  billiona 
Turnover of the general/municipal waste 
management industry (2012)  USD 26 billion  
Turnover of the industrial waste 
management industry (2012)  USD 3 billion  
Number of firms (2011)  110,000 licensed firms  
Volume of waste produced (2016)  430.2  million tonnes  
Customer s Public sector and waste -generating private enterprises  
Assets and annual sales of the top Japan -
based waste management firms  Dowa Eco -System Co., Ltd, annual sales: JPY 99 billion  
Exports and imports  Export of w aste management and  recycling services: 
JPY 603 billion  
Import of waste management and recycling services:  
JPY 418 billion  
Main private companies  Solid waste:  Dowa Eco -system Co., Ltd, Daiseki Co., Ltd and 
JFE Kankyo Corporation  
Hazardous waste: Ebara Corp., Kubota  
Level of regulation  National law  
Main regulations  Basic Environmental Law; Basic Law for Establishing the 
Recycling -based Society; Waste Management and Public 
Cleansing Act;  Act on the Promotion of Effective Utilization of 
Resources; Law Concerning Special Measure Against 
Polychlorinated biphenyl  (PCB) Waste  
Main objectives of the regulations  Achieving a circular economy by limiting the volume of waste 
disposal; reducing the consumption of natural resources ; and 
promoting sustainable use of resources  
a JPY 14,296 billion is the total amount of the three categories in the report "Estimation of the Market 
Size of the Environme ntal Industry on a Commission Basis in Fiscal 2017" , published in 2019. The 
three categories are facilities for waste management and recycling, services for waste management 
and recycling , and production of recycled materials.  
Source:  Ministry of the Environment (2012). Viewed (in Japanese) at: 
https://www.env.go.jp/recycle/report/h24 -05.pdf ; and 
http://www.sanpainet.or.jp/serv ice/doc/144750_3.pdf ; and Ministry of the Environment Report, 
2011 Industrial Waste Disposal Business Survey Report . Viewed (in Japanese ) at: 
https://www.env.go.jp/press/y0310 -03/mat02.pdf ; 
https://www.env.go.jp/press/files/jp/109313.pdf ; and 
http://www.env.go.jp/recycle/waste_tech/ippan/h28/data/disposal.pdf . 
4.259.   Waste management is regulated by the Waste Management and Public Cleansing Act 
(Act No. 137 of 1970), which attributes the collection , treatment and recycling of "general waste" to 
municipalities, and the treatment of industrial waste to the industry that produced it. In both 
instances, municipalities and industries have recourse to private companies. Hazardous waste is 
subject to a spe cific legal regime, the Special Management Waste Regulations, involving recourse to 
licensed services providers abiding by strict qualification norms. In addition, companies using 
polychlorinated biphenyl  must use  one of  five chemical disposal sites manage d by the public Japan 
Energy Service Corporation  (JESCO ).  
4.260.   For municipalities, the forms of PPPs available are Design Build Operate; Build Transfer 
Operate , a scheme where the private partner operates the facility but transfers its ownership to the 
public partner immediately after construction; Build Operate Transfer, which is similar except that 
the transfer of property takes place after the end of the perio d of operations by the private partner; 
and Build Own Operate, where the private partner retains  ownership of the facility it has built and 
operated.  WT/TPR/S/397 • Japan  
 
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4.261.   Private providers entering into such arrangements must obtain a licence from the prefectural 
government . There are no legal provisions barring foreign firms to enter the waste and recycling  
market . Japan has full commitments for the relevant mode of delivery (mode 3) for waste 
management services under the GATS and in all its FTAs so far, be they positively or  negatively  
listed.104  
4.4.5.3   Air and noise pollution  abatement se rvices  
4.262.   Japan is one of Asia's largest producers and consumers of goods and services related to air 
and noise pollution abatement. The domestic  market is characterized by intense competition among 
indigenous firms . Large Japanese suppliers account for about 80% of the air pollution abatement 
market  
4.263.   The main policy objective of air and noise pollution abatement services is to protect citizens  
(Box 4.9).  
Box 4.9 Noise pollution abatement services  
Market size (201 3) Air pollution abatement services: USD 71.0 billion  
Noise pollution abatement service s: USD 8.2 billion  
Main private companies  Ebara, Hitachi Zosen, Horiba, Hotaka Engineering , and Mitsubishi 
Heavy Industries  
Level of regulation  National and local  
Main regulations  Air Pollution Control Law ; Law Concerning Special Measures Against 
Dioxins ; Pollution Release and Transfer Registry Law ; Basic 
Environment Law ; Noise Control and Vibration Control Law; Aircraft 
Noise Prevention Law  
Main objectives of the regulations  Protection of citizens  
Source:  USITC, Environmental and Related Services  (2013) . Viewed at: 
https://www.usitc.gov/publications/332/pub4389.pdf . 
4.264.   The n ational Government and prefecture s provide environmental  investment incentives 
through tax support, low interest loans,  subsidies, and grants .  
4.265.   Japan has a full commitment under mode 3 for air and noise pollution abatement services 
under the GATS and under  all its FTAs so far, be they positively or negatively listed.105 
4.4.5.4   Remediation, and nature  and landscape protection services  
4.266.   The landowner is responsible for remediation of the soil. Steel companies, as well as large 
construction and water treatment firms, have reportedly established themselves firmly in the soil  
remediation market. Japanese remediation firms have cultivated alliances with foreign firms in order 
to benefit from proven methods and technologies.106 
4.267.   The main policy objective of remediation , and nature and land protection  services is to 
protect the health of citizens by preventing pollution and by purifying the pollution that has already 
occurred (Box 4.10).  
                                                
104 Japan's commitments under mode 3 in GATS and other FTAs  cover CPC 9401 -9409. However, Japan 
inscribed a limitation in its GATS Schedule for refuse disposal services (CPC 9402) with respect to the number 
of licen ces that may be conferred to service suppliers of waste oil disposal at sea from vessels.  Furthermore, 
Japan inscribed a reservation under mode 3 in the horizontal section of its Schedule, with respect to R&D 
subsidies.   
105 Japan's commitments on nature and landscape protection services (CPC 9406) in its GATS Schedule 
with respect to national treatment do not e xtend to R&D subsidies.   
106 USITC, Air and Noise Pollution Abatement Services: An Examination of U.S. and Foreign Markets  
(2005),  Table 4.1, pp. 4 -20. Viewed at: https://www.usitc.gov/publications/332/pub3761.pdf . WT/TPR/S/397 • Japan  
 
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Box 4.10 Regulatory overview of remedia tion, and nature and landscape protection 
services  
Japan 's share of the global remediation and 
industrial services market (2010)  13% of USD 37.7 billion  
Revenue, number of firms , and employment in 
remediation and industrial services (2010)  Entire remediat ion services market were valued at USD 4 
billion, site assessment and soil remediation segments were 
valued at USD 600 million  
Main private companies  Kurita Water Industries, Ebara Corporation, Organo 
Corporation, Shimizu Corporation, Obayashi Corporation , 
Taisei Corporation  
Level of regulation  National Government  
Main regulations  Soil Contamination Countermeasure Law ; Basic 
Environmental Law ; Ambient Environmental Quality 
Standards ; Environmental Quality Standards for Soil  
Main objectives of the regulations  Protection of health of citizens by preventing pollution and 
the purification of pollution that has already occurred  
Source:  USITC, Environmental and Related Services  (2013).  Viewed at: 
https://www.usitc.gov/publications/332/pub4389.pdf . 
4.268.   Japan has a full commitment for remediation, and nature and landscape protection services 
under the GATS and under all its FTAs so far, be they positively or negatively listed.  
4.4.6   Distribution services  with a specific focus on e –commerce  
4.269.   With the advent of e -commerce, the distribution services107 sector is rapidly evolving, while 
its regulatory framework remains stable since 2000, at least regardi ng physical outlets. Distribution 
services is one of the largest service sectors in Japan, as the addition of wholesale and retail 
represented 14% of the GDP in 2017. In terms of employment,  in 2017, wholesale employed more 
than 3.9 million persons ( 5.6%  of total employment) and retail more than 7.6 million (11.6%).  
4.270.   The main foreign distributors present in Japan with fully owned  physical outlets are Walmart 
(United States, through its subsidiary Seyu, with 334 outlets), Metro (Germany, 10 wholesale 
outlets) , H and M (Sweden, 91 outlets), Costco (United States, 26 wholesale outlets), and Ikea 
(Sweden, 9  outlets).  
4.271.   The presence of many other foreign distributors is ensured through agency agreements 
rather than franchising agreements. The purpose of an agency agreement  is to set out the terms 
and conditions of the relationship between the business which wants to sell an item (the Principal) 
and the intermediary who agrees to sell it on their behalf (the Agent). When a sale is made by the 
Agent, the law deems tha t a contract is formed between the Principal and the end -customer. For 
example, Marubeni, the Japanese mega trading company, operates as a commercial Agency for 
Merrell, the Michigan -based footwear giant ; hence , Marubeni operates as the Agent, and Merrell as 
the Principal. Franchising remains significant in cert ain subsectors , e.g. grocery , where the foreign -
owned 7-eleven company has a network of 21,000 franchisees all over Japan.  
4.272.   E-commerce physical merchandise sales (as opposed to services sales and digital sales of 
films, games, software, etc) reached JPY 8,6 00.8 billion for B2C, and JPY 94 trillion for B2B. The 
penetration  of e-commerce is much stronger in the B2B segment (29.6% of wholesale sales in 2017, 
up 9.0% compared to 2016) than in B2C (5.8% of the sales in 2017, up from 5.4% in 2016 and 
4.7% in 2015) . However, for B2C, the situation varies from item to item: for home appliances, office 
supplies, books, DVDs and CDs, this proportion was over 25%, while, for food, beverages and 
automobiles, it was less than 5%.  
                                                
107 In this Section, distribution services is to be understood as the distribution of physical goods as 
defined in the GATS standard nomencla ture, the Central Product Classification (CPC) Provisional version, items 
611 to 6432, and WTO document MTN/GNS/W120, 10 July 1991, Section IV. It does not include Consumer to 
Consumer (C2C)  sales of physical goods via Internet platforms (e.g. Ebay).  WT/TPR/S/397 • Japan  
 
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4.273.   In 2017, Japan was the third largest B to  C e-commerce market in the world. The leading 
actors are Amazon, a foreign company (with a market share of 35% in 2016) followed by Rakuten, 
a domestic company (30%), and Yahoo! Shopping Lohaco, a joint venture between the Japanese 
company Softbank and th e US company Altaba (17%). 60% of purchases take place via a mobile 
application ("m -commerce", e.g. the Mercari app) but only 15% comes from abroad.108 Japanese e -
commerce providers are also trying to attract foreign customers, as exemplified by the recent 
acceptance of the Union Pay credit card by Amazon Japan, to attract Chinese  customers. 
E-commerce is frequently combined with physical outlets via delivery at conveniences stores 
("kombini"). Clothing items are the most popular items sold (with specific sit es such as Uniqlo and 
the market place Zozotown), followed by beverages and foods, books, computers and games, 
electronics, and cosmetics.  
4.274.   The regulatory framework of physical distribution services was described in great detail in a 
previous report (WT/TPR /S/276, pp. 106 -109) and did not undergo any substantial changes since 
then. Establishment of large -scale stores remain regulated by the 2000 "Act on the Measures by 
large-scale retail stores for the preservation of the living environment", which does not include  an 
economic needs test but foresees procedures to establish and operate large -scale stores so as to 
protect the living environment (e.g. noise impact assessment - notably for parking - traffic impact 
assessment, etc). In addition, since 2007, local  governments can decide on the location of large -
scale stores based on city planning considerations. Specific licensing procedures implying an 
economic test exist for liquor distributors, central wholesale markets, and the sale of pharmaceutical 
products. There are no other GATS -type restrictions in the applied regime for distribution services.  
4.275.   Similarly, there are no GATS -type restrictions on e -commerce. There is no specific general 
regulatory framework for e -commerce. The main relevant laws deal with cons umer protection and 
e-payments. The most significant among them is the Act on Special Provisions to the Civil Code on 
Electronic Consumer Contracts and Electronic Acceptance Notice (Act No. 95 of 29  June 2001). This 
Act provides special provisions to the C ivil Code (Act No. 89 of 1896) in cases where there are certain 
mistakes in the elements comprising an electronic consumer contract, or where an electronic 
acceptance notice is dispatched by a consumer under a contract made at a distance.109 The 
Consumer Con tracts Act (Act No. 61 of 12 May 2000) permits a consumer to rescind his/her intention 
to offer or accept a contract when s/he has misunderstood, or was distressed by, certain acts of the 
business operator. It also nullifies any clauses (in whole or in par t) that exempt business operators 
from liability for damages, or that otherwise unfairly harm the interests of consumers.  
4.276.   The Payment Services Act (Act No. 59 of 24 June 2009) regulates payment services, 
including prepaid payment instalments, fund transfer s, and exchange services  for virtual currency. 
It was amended in 2017 to subject e -payment providers to a registration procedure (Section 4.4.1). 
The METI issued the Interpretative Guidelines on Electronic Commerce and Information Property 
Trading in March  2002. The latest amendment was made in June 2017. The Guidelines were created 
with a view to enhancing predictability for concerned parties, and facilitating trade by clarifying how 
the Civil Code and other relevant laws are applied to various legal issue s relating to electronic 
commerce and information property trading.  
4.277.   The trade regime bound by Japan under GATS and its FTAs was described in great detail in 
a previous report.110 The GATS commitments do not cover the distribution of petroleum and 
petroleum products, rice, tobacco, salt, alcoholic beverages, or products  sold at public wholesale 
markets. Positive listing agreements echo these sectoral limitations, while negative lis ting 
agreements do not contain such restrictions for petroleum and petroleum products, rice, salt, and 
tobacco. Japan replicated its previous distribution commitments for negative listing agreements 
signed since (namely with Peru in 2012, Australia in 2015 , CPTTP partners in in 2018, and the 
European Union in 2019), and for the only positive listing agreement signed since, that with 
Mongolia, with a standstill obligation.  
                                                
108 Export.gov, Japan – eCommerce . Viewed at:  https://www.export.gov/article?id=Japan -E-Commerce . 
109 Thomson Reuters Practical Law, Digital business in Japan: overview. Viewed at: 
https://uk.practicallaw.thomsonreuters.com/5 -621-
1305?transitionType=Default&contextData=(sc.Default)&firstPage=true&bhcp=1 . 
110 WTO do cument WT/TPR/S/276, 15 January 2013, Table AIV.9.  WT/TPR/S/397 • Japan  
 
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4.4.7   Legal  services  
4.278.   Legal services accounted for around 0.1% of GDP in 2017. The re are over 36,000  lawyers 
(bengoshi ), employed mostly in small -scale firms . The Attorney Act of 1949 grant s them the 
exclusive right to provide legal services , unless explicitly stated otherwise.  However, their right to 
appear in court is shared under certain condit ions with some other legal professions, such as judicial 
scriveners.   
4.279.   There are also a number of other types of legal practitioners , namely:  
• judicial scriveners ( shihohoshi ), who handle , inter alia,  registration and deposit  in an 
official repository  with the legal affairs bureau of the Ministry of Justice , and who prepare 
documents to be submitted a court or public prosecutor office;  
• tax attorneys ( zeirishi ), who prepare tax returns, represent clients before the tax 
authority , and provide co nsultation services on tax matters;  
• patents attorneys ( benrishi ), who represent clients on all matters relating to patent  rights , 
utility model rights, design rights and trademark rights at the Japan Patent Office and 
before the METI;  
• maritime procedure a gents ( kaijidairishi ), who deal with maritime formalities;  
• administrative scriveners ( gyoseishoshi ), who handle documents to be lodged with 
administrative agencies; and  
• notaries.  
4.280.   Table 4.28 indicates the number of individuals and firms exercising these va rious legal 
professions.  
Table 4.28 Number of individuals and firms exercising legal professions  
Profession  Number of individuals  Number of firms  
Judicial scriveners ( shihohoshi ) 22,740 , of which 113 foreigners  706 employing 27  foreigners  
Tax attorneys ( zeirishi ), 78,028  3,963  
Patents attorneys ( benrishi ) 11,507  295 
Maritime procedure agents 
(kaijidairishi ) 2,130  .. 
Administrative scriveners 
(gyoseishoshi ) 47,901  .. 
Notaries  500 .. 
.. Not available.  
Source:  Information provided by the authorities.  
4.281.   The situation  varies regarding the exercise of those various legal professions by foreign 
individuals and foreign firms.  
4.282.   For lawyers/ bengoshi , there is no nationality requirement to be eligible to practice as a 
bengoshi . However, to do so , one must qualify through a six to seven -year cursus, pass the national 
bar exam , and undertake a  12-month apprenticeship sanctioned  by a final graduation exa mination 
apprenticeship. There is no obligation to have followed undergraduate studies in Japan, so long as 
the individual concerned has attended 16 years of official school, followed by 3 to 4 years of 
undergraduate studies. These conditions are common to  all graduate schools in Japan. However, law 
schools can impose additional conditions. An individual can also skip one or two years of law school, 
and present himself as a free candidate to the bar examination. This possibility is opened to both 
Japanese n ationals and foreigners.  
4.283.   There is no specific track or procedure for requalification  of foreign lawyers , already qualified 
abroad,  in Japanese law . The whole cursus must be followed. In addition, a commercial presence in 
Japan is required. That may explai n why foreign lawyers almost never  practice as bengoshi .  WT/TPR/S/397 • Japan  
 
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4.284.   Based on the Act on Special Measures concerning the Handling of Legal Services by Foreign 
Lawyers  (Law No.66 of 1986), foreign lawyers  may engage in legal services in relation to home -
country law an d international law , if they register with the  Japan Federation of Bars Association . 
They can do so if they meet the following requirements: be qu alified as a lawyer in their home 
country , and hav e practiced three years in their home country or abroad (this delay is reduced to 
two years for pure advice activities ). In addition, Registered Foreign Lawyer s may establish a 
Registered Foreign Lawyer Corporation.  
4.285.   Foreign firms can also associate themselves with Japanese law firms. When an individual 
bengoshi  associates himself with a Foreign Law Joint Enterprise, s/he may engage in bengoshi  
activities , even if Registered Foreign Lawyers hold a majority in the association/joint venture. 
Registered Foreign Lawyer s and Registered Foreign Lawyer Corporation s may employ bengoshi  and, 
as at end-2019, 15 for eign firms employ ed a total of 62 bengoshis . 
4.286.   In view of these small figures, Registered Foreign Lawyers and Registered Foreign Lawyer 
Corporations' activity is , therefore, concentrated on consultancy regarding  their home -country law, 
third-country  law, and international law. About 50 foreign law firms operat e in Japan, originating 
from Australia, China, France, Ireland, Italy, the Netherlands, Switzerland, the United Kingdom, and 
the United States.   
4.287.   Legal advisory services are defined negatively , and do not include:  
• legal representational services for juridical procedures in courts and other government 
agencies , and the  preparation of legal documents for such procedur es; 
• the expression of legal opinions concerning laws other than laws of the jurisdiction where 
the service supplier is qualified as a lawyer (hereinafter referred to as "the jurisdiction");  
• legal representational services for  the preparation of notarial deeds; and  
• activities concerning a legal case whose primary objective is the acquisition , loss or change 
of rights concerning real property in Japan , or of industrial property rights, mining rights 
or other rights arising upon registration thereof  with government agencies in Japan.  
4.288.   Registered Foreign Lawyers and Registered Foreign Lawyer Corporations  can also practice 
international law , provided that the international law is in force in their jurisdiction.  Association with , 
and employment of , a bengoshi  is permitted. Representation in arbitration is permitted.  
4.289.   Foreign law firms can establish under two different legal forms, namely: stand -alone foreign 
law firm  or Registered Foreign Lawyer Corporation. Each of these may form a joint enterprise with 
an individual bengoshi  or a Japanese law firm . Only Registered Foreign Corporations  can have 
branches .  
4.290.   The use of a foreign firm name is unrestricted , provided that it is followed by a reference to 
"Gaikoku -Ho-Jimu-Bengoshi -Jimusho"  (Office of Registered F oreign Lawyer) . 
4.291.   For administrative scriveners ( gyoseishoshi ), the exercise of the profession is limited to 
natural persons , and is not tied to a nationality requirement. However, a full qualification cursus 
must be undertaken in Japan , and a commercial pre sence is required.111 
4.292.   For maritime procedure agents ( kaijidairishi ), the exercise is also limited to natural persons , 
and is not tied to a nationality requirement, but a commercial presence is not required.  
4.293.   Judicial scrivener ( shihohoshi ), patent attorney ( benrishi ), and tax attorney ( zeirishi ) 
activities can be undertaken by both natural persons and legal ones. An individual want ing to 
exercise these activities must be fully qualified in Japan , and there are no nationality requirements. 
A commercial presence must, however, be established in the district where this person will exercise  
                                                
111 Administrative Scrivener Law (Law No. 4 of 1951) . WT/TPR/S/397 • Japan  
 
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(except benrishi ). Firms willing to exercise t his activity are required to establish a corporation under 
the laws and regulations of Japan ( "Shiho -Shoshi -Hojin", etc).112  
4.294.   Only individual s can be appointed as notaries by the Ministry of Justice , and the y must be 
of Japanese nationality. This profession is therefore closed to foreign individuals.113 
4.295.   The GATS commitments for Japan limit the exercise of legal professions ( bengoshi , zeirishi , 
benrishi , kaijidairishi ) to natural persons, except for legal advisory  services , and require a 
commercial presence. Negative listing agreements, including those  recently signed with CPTPP 
partners and with the European Union, basically bind the applied regime described above, including 
exercise by firms , when allowed , and in all legal professions except notaries. Positive listing 
agreement commitments vary but are somewhat larger than the GATS , as they include , in certain 
instances , standstill obligations and additional commitments regarding the allowance of arbitration, 
the unlimited use of brand name, and the employment of partnership with bengoshi . 
                                                
112 Judicial Scrivener Law (Law No. 197 of 1950) (Chapters 3, 4, 5 and 7) ; Patent Attorney Law 
(Law No. 49 of 2000) (Chapters 6 and 8) ; Certified Public Ta x Accountant Law (Law No. 237 of 1951) 
(Chapters 3, 4, 5 -2, 6 and 7) ; and Enforcement Regulation on Certified Public Tax Accountant Law (Ministerial 
Ordinance of the Ministry of Finance No. 55 of 1951) . 
113 Notary Law (Law No. 53 of 1908) (Chapters 2 and 3) . WT/TPR/S/397 • Japan  
 
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5  APPENDIX TABLES  
Table A1. 1 Merchandise exports by group of products, 2014 -18 
  2014  2015  2016  2017  2018  
Total exports (USD billion)  690.2  624.9  644.9  698.1  738.2   
(% of total)  
Total primary products  6.5 6.0 5.4 5.6 6.0 
Agriculture  1.5 1.7 1.6 1.6 1.6 
Food 0.7 0.8 0.9 0.9 0.9 
Agricultural raw material s 0.9 0.8 0.7 0.7 0.7 
Mining  5.0 4.3 3.8 4.1 4.3 
Ores and other minerals  0.8 0.7 0.6 0.7 0.7 
Non-ferrous metals  1.9 1.8 1.7 1.7 1.8 
Fuels 2.3 1.8 1.5 1.6 1.8 
334 - Petroleum oils, other than crude  1.9 1.5 1.2 1.3 1.4 
Manufactures  87.6 87.2 87.3 86.6 86.8 
Iron and steel  5.4 4.9 4.1 4.2 4.2 
6732 - Flat-rolled products of iron or non-alloy steel, 
not clad, plated or coated, not further worked than 
hot-rolled (other than those of subgroup 673.1)  0.4 0.4 0.3 1.1 1.1 
Chemicals  10.4 10.1 10.0 10.2 10.7 
5112 - Cyclic hydrocarbons  1.0 0.9 0.7 0.7 0.8 
5822 - Other plates, sheets, film, foil and strip, of 
plastics, non -cellular and not reinforced, laminated, 
supported or similarly combined with other materials  0.9 0.8 0.8 0.8 0.8 
Other semi -manufactures  4.7 4.7 4.6 4.4 4.4 
Machinery and transport equipment  58.0 58.7 59.8 58.8 58.7 
Power generating machines  1.8 1.8 1.8 1.8 1.7 
Other non -electrical machinery  14.0 13.8 14.3 14.9 15.1 
7284 - Machinery and mechanical appliances 
specialized for particular industries, n.e.s.  2.7 2.8 3.4 1.5 1.4 
7232 - Mechanical shovels, excavators and shovel -
loaders, self -propelled  1.1 1.0 1.1 1.2 1.3 
Agricultural machinery and tractors  0.3 0.3 0.3 0.3 0.3 
Office machines and telecommunication equipment  9.5 9.6 9.3 9.4 8.9 
7599 - Parts and accessories (other than covers, 
carrying cases and the like) suitable for use solely or 
principally with the machines of subgroups 751.1, 
751.2, 751.9 and group 752  0.3 0.3 0.2 1.4 1.3 
7763 - Diodes, transistors and similar semiconductor 
devices; photosensitive semiconductor devices 
(including photovoltaic cells, whether or not 
assembled in modules or made up into panels); light -
emitting diodes  1.0 1.0 1.0 0.9 0.9 
Other electrical machines  6.4 6.5 6.7 6.4 6.5 
7725 - Electrical apparatus for switching or 
protecting electrical circuits, or for making 
connections to or in electrical circuits (e.g. switches, 
relays, fuses, surge suppressors, plugs, sockets, 
lamp-holders, junction boxes) for a voltage not 
exceeding 1,000  1.1 1.1 1.2 1.2 1.1 
7786 - Electrical capacitors, fixed, variable or 
adjustable (pre -set) 0.6 0.7 0.7 0.7 0.8 
7781 - Batteries and electric accumulators, and parts 
thereof  0.6 0.6 0.7 0.7 0.7 
Automotive products  21.0 21.9 22.5 21.5 21.5 
7812 - Motor vehicles for the transport of persons, 
n.e.s.  12.8 13.8 14.2 13.4 13.4 
7843 - Other parts and accessories of the motor 
vehicles of groups 722, 781, 782 and 783  4.7 4.6 4.9 2.4 2.3 
7821 - Motor vehicles for the transport of goods  1.5 1.5 1.4 1.3 1.2 
7132 - Internal combustion piston engines for 
propelling vehicles of division 78, group 722 and 
headings 744.14, 744.15 and 891.11  0.6 0.7 0.7 0.7 0.7 
7783 - Electrical equipment, n.e.s., for internal 
combustion engines and vehicles; parts thereof  0.7 0.7 0.7 0.7 0.7 WT/TPR/S/397 • Japan  
 
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  2014  2015  2016  2017  2018  
Other transport equipment  5.2 5.1 5.3 4.9 4.9 
7932 - Ships, boats and other vessels (other than 
pleasure craft, tugs, pusher craft, special -purpose 
vessels and vessels for breaking up)  1.8 1.8 2.0 1.7 1.7 
7139 - Parts, n.e.s, for the internal combustion 
piston engines of subgroups 713.2, 713.3 and 713.8  1.0 0.9 0.9 0.9 0.9 
Textiles  1.0 1.0 1.0 0.9 0.9 
Clothing  0.1 0.1 0.1 0.1 0.1 
Other consumer goods  8.0 7.9 7.9 7.9 7.8 
8746 - Automatic regulating or controlling 
instruments and apparatus  0.7 0.7 0.7 0.7 0.8 
Other  5.9 6.8 7.3 7.8 7.2 
9710 - Gold, non -monetary (excluding gold ores and 
concentrates)  0.7 0.9 1.3 1.5 1.0 
Source : UNSD, Comtrade database (SITC Rev.3).  
  WT/TPR/S/397 • Japan  
 
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Table A1. 2 Merchandise imports by group of products, 2014 -18 
  2014  2015  2016  2017  2018  
Total imports (USD billion)  812.2  625.6  606.9  671.5  748.2   
(% of total)  
Total primary products  48.8 38.7 36.3 39.2 40.9 
Agriculture  10.1 11.9 12.2 11.8 11.1 
Food 8.5 10.1 10.4 10.1 9.5 
Agricultural raw material s 1.6 1.8 1.8 1.7 1.6 
Mining  38.7 26.8 24.1 27.4 29.8 
Ores and other minerals  4.5 4.2 3.8 4.1 4.1 
2831 - Copper ores and concentrates  1.2 1.2 1.2 1.2 1.3 
2815 - Iron ore and concentrates, not agglomerated  1.7 1.3 1.0 1.2 1.0 
Non-ferrous metals  1.9 2.2 2.0 2.2 2.4 
6841 - Aluminium and aluminium alloys, unwrought  0.8 0.8 0.7 0.8 0.8 
Fuels 32.3 20.5 18.3 21.1 23.3 
3330 - Petroleum oils and oils obtained from 
bituminous minerals, crude  16.1 7.2 8.4 9.5 10.8 
3431 - Natural gas, liquefied  9.1 7.3 5.0 5.2 5.7 
3212 - Other coal  2.3 2.5 2.4 3.3 3.3 
334 - Petroleum oils, other than crude  3.1 2.3 1.5 1.9 2.4 
3421 - Propane, liquefied  1.0 0.7 0.5 0.7 0.7 
Manufactures  49.8 59.5 61.9 59.1 57.4 
Iron and steel  1.1 1.1 1.1 1.2 1.2 
Chemicals  7.9 10.2 10.7 10.0 10.2 
5429 - Medicaments, n.e.s.  1.4 2.4 2.4 1.9 1.9 
5157 - Other heterocyclic compounds; nucleic acids  0.5 0.7 0.7 0.6 0.6 
Other semi-manufactures  3.7 4.3 4.4 4.0 3.9 
Machinery and transport equipment  24.0 28.2 29.5 28.8 27.7 
Power generating machines  1.0 1.3 1.5 1.5 1.6 
7149 - Parts of the engines and motors of heading 
714.41 and subgroup 714.8  0.4 0.5 0.6 0.7 0.7 
Other non-electrical machinery  3.6 4.5 4.5 4.7 4.9 
Agricultural machinery and tractors  0.1 0.1 0.1 0.1 0.1 
Office machines and telecommunication equipment  11.3 12.8 13.0 13.0 12.0 
7643 - Transmission apparatus for radio -telephony, 
radio-telegraphy, radio -broadcasting or television  2.0 2.3 2.5 3.5 3.2 
7522 - Digital automatic data -processing machines, 
containing in the same housing at least a central 
processing unit and an input and output unit  1.1 1.1 1.0 1.0 0.9 
7599 - Parts and accessories (other than covers, 
carrying cases and the like) suitable for use solely or 
principally with the machines of subgroups 751.1, 
751.2, 751.9 and group 752  0.4 0.4 0.4 0.7 0.7 
7763 - Diodes, transistors and similar semiconductor 
devices; photosensitive semiconductor devices; light -
emitting diodes  1.2 1.1 0.9 0.7 0.6 
Other electrical machines  3.9 4.7 4.9 4.5 4.2 
7731 - Insulated (including enamelled or anodized) 
wire, cable (including co -axial cable) and other 
insulated electric conductors ; optical fibre cables 
made up of individually sheathed fibres  0.8 1.0 1.0 1.0 1.0 
Automotive products  2.6 3.1 3.5 3.4 3.3 
7812 - Motor vehicles for the transport of persons, 
n.e.s.  1.3 1.4 1.7 1.7 1.6 
7843 - Other parts and accessories of the motor 
vehicles of groups 722, 781, 782 and 783  0.9 1.2 1.3 1.0 1.0 
Other transport equipment  1.5 1.8 2.0 1.6 1.6 
Textiles  1.1 1.3 1.3 1.2 1.2 
Clothing  3.8 4.6 4.6 4.2 4.0 
8453 - Jerseys, pullovers, cardigans, waistcoats and 
similar articles, knitted or crocheted  0.6 0.7 0.7 0.6 0.6 WT/TPR/S/397 • Japan  
 
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  2014  2015  2016  2017  2018  
Other consumer goods  8.1 9.8 10.3 9.6 9.1 
8722 - Instruments and appliances used in medical, 
surgical or veterinary sciences (including sight -
testing instruments but excluding electro -diagnostic 
and radiological instruments and apparatus)  0.5 0.7 0.7 0.7 0.7 
Other  1.4 1.8 1.8 1.7 1.7 
Source : UNSD, Comtrade database (SITC Rev.3).  
  WT/TPR/S/397 • Japan  
 
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Table A1. 3 Merchandise exports by destination, 2014 -18 
  2014  2015  2016  2017  2018  
Total exports (USD billion)  690.2  624.9  644.9  698.1  738.2   
(% of total)  
Americas  24.7 25.8 25.7 24.7 24.4 
United States  18.9 20.2 20.2 19.3 19.1 
Other America  5.8 5.6 5.5 5.4 5.3 
Mexico  1.5 1.7 1.7 1.6 1.6 
Canada  1.2 1.2 1.3 1.4 1.3 
Europe  11.3 11.5 12.5 12.4 12.4 
EU-28 10.4 10.6 11.5 11.1 11.4 
Germany  2.8 2.6 2.7 2.7 2.8 
United Kingdom  1.6 1.7 2.1 2.0 1.9 
Netherlands  1.9 1.9 1.8 1.8 1.7 
France  0.9 0.8 1.0 0.9 1.0 
Belgium  0.8 0.8 0.9 0.8 0.9 
EFTA 0.6 0.6 0.6 0.9 0.6 
Other Europe  0.3 0.4 0.4 0.5 0.4 
Commonwealth of independent states  1.6 1.0 1.0 1.0 1.2 
Russian Federation  1.3 0.8 0.8 0.9 1.0 
Africa  1.5 1.4 1.2 1.1 1.1 
Middle East  4.1 4.2 3.7 3.0 3.0 
United Arab Emirates  1.4 1.4 1.2 1.0 1.1 
Asia 56.7 56.1 55.9 57.8 57.9 
China  18.3 17.5 17.6 19.0 19.5 
Other Asia  38.4 38.6 38.2 38.7 38.3 
Republic of Korea  7.5 7.0 7.2 7.6 7.1 
Chinese Taipei  5.8 5.9 6.1 5.8 5.7 
Hong Kong, China  5.5 5.6 5.2 5.1 4.7 
Thailand  4.5 4.5 4.2 4.2 4.4 
Singapore  3.0 3.2 3.1 3.2 3.2 
Australia  2.1 2.1 2.2 2.3 2.3 
Viet Nam  1.7 2.0 2.0 2.2 2.2 
Indonesia  2.1 1.8 1.8 1.9 2.1 
Malaysia  2.0 1.9 1.9 1.8 1.9 
Philippines  1.4 1.5 1.6 1.6 1.5 
India 1.2 1.3 1.3 1.3 1.5 
Memorandum:       
APEC 77.8 77.8 77.6 78.8 78.3 
Source:  UNSD Comtrade database.  
  WT/TPR/S/397 • Japan  
 
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Table A1. 4 Merchandise imports by origin, 2014 -18 
  2014  2015  2016  2017  2018  
Total imports (USD billion)  812.2  625.6  606.9  671.5  748.2   
(% of total)  
Americas  13.9 16.2 16.7 16.5 16.4 
United States  9.0 10.9 11.4 11.0 11.2 
Other America  4.9 5.3 5.3 5.5 5.2 
Canada  1.4 1.5 1.5 1.6 1.6 
Chile 1.0 1.0 0.9 0.9 1.0 
Europe  10.8 13.0 14.1 13.2 13.2 
EU-28 9.5 11.4 12.4 11.6 11.7 
Germany  3.0 3.2 3.6 3.5 3.5 
Italy 1.1 1.2 1.4 1.5 1.5 
France  1.4 1.5 1.7 1.5 1.5 
United Kingdom  0.8 1.0 1.1 1.1 1.1 
EFTA 1.2 1.5 1.6 1.5 1.3 
Switzerland  0.9 1.2 1.3 1.2 1.0 
Other Europe  0.1 0.1 0.1 0.1 0.2 
Commonwealth of independent states  3.2 2.8 2.1 2.4 2.4 
Russian Federation  3.0 2.5 1.9 2.1 2.1 
Africa  2.1 1.8 1.2 1.2 1.2 
Middle East  18.4 9.1 9.9 10.9 12.5 
Saudi Arabia, Kingdom of  5.8 0.4 3.2 4.1 4.5 
United Arab Emirates  5.1 3.8 2.9 3.1 3.7 
Qatar  4.1 2.6 1.8 1.6 2.0 
Asia 51.6 57.1 56.1 55.7 54.2 
China  22.3 25.7 25.8 24.5 23.2 
Other Asia  29.3 31.5 30.3 31.2 31.0 
Australia  5.9 5.6 5.0 5.8 6.1 
Republic of Korea  4.1 4.3 4.1 4.2 4.3 
Chinese Taipei  3.0 3.7 3.8 3.8 3.6 
Thailand  2.7 3.3 3.3 3.4 3.3 
Indonesia  3.2 3.2 3.0 3.0 2.9 
Viet Nam  1.9 2.4 2.7 2.8 2.8 
Malaysia  3.6 3.4 2.9 2.9 2.5 
Philippines  1.3 1.4 1.5 1.4 1.4 
Singapore  1.0 1.3 1.2 1.3 1.3 
Memorandum:       
APEC 65.4 72.5 71.4 71.0 69.7 
Source : UNSD Comtrade database.  
  WT/TPR/S/397 • Japan  
 
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Table A3. 1 Taxation rates, November 2019  
Tax  Rates (JPY)  
NATIONAL TAXES  
Income tax  Progressive rates up to a maximum of 45%  
Corporation tax  23.2%  
Inheritance tax/gift tax  Applied on properties and gifts, with progressive rates up to a 
maximum of 55%  
Consumption tax  10%  
Liquor tax  JPY 20,000/kl –JPY 370,000/kl. In some cases, there is a JPY 10,000 -
11,000 additional amount of tax per 1% of alcohol  
Tobacco taxesa JPY 6,622/1,000 cigarettes  
Gasoline tax and loc al gasoline 
tax JPY 53,800/kl  
Liquefied petroleum gas tax  JPY 17.50/kl  
Aviation fuel tax  JPY 18,000/kl  
Petroleum and coal tax  Crude petroleum or petroleum products, JPY 2,800/kl;  
natural gas or petroleum gas, JPY 1,860/tonne;  
coal, JPY 1,370/tonne  
Promotion of power -resources 
development tax  JPY 375 per 1,000 kWh of electric power sold  
Motor vehicle tonnage tax  Applied to passenger cars less than 13 years old. JPY 2,600/year –JPY 
4,100/year for every half tonne  
International tourist tax  JPY 1,000/departure overseas  
Registration and licence tax  Sale of real property – 2% of value  
Acquisition of pledge/mortgage for real property – 0.4% of loan amount  
Incorporation of stock company – 0.7% of capital amount (applied to 
values over JPY 150,000)  
Registration of capital increase regarding stock companies – 0.7% 
(applied to values over JPY 30,000)  
New licence registration for bank businesses and financial instrument 
business opera tors – JPY 150,000/licence  
New licence registration for lawyers, doctors and licensed tax 
accountants – JPY 60,000/licence  
Stamp tax  JPY 200 –JPY 480,000. Applies to: deeds of content concerning transfer 
of real property; deeds of contracts concerning cont racting work; 
promissory notes and bills of exchange; and share certificates, bond 
certificates, etc.  
PREFECTURAL TAXES  
Inhabitant tax on corporations  Per capita rate: JPY 20,000 –JPY 800,000 (according to the amount of 
capital). Corporation tax rate: 1% of the amount of the corporation tax 
liabilities  
Inhabitant tax on individuals  Per capita rate: JPY 1,500; income rate 4% of the total sum of ordinary 
income in the previous calendar year; interest rate 5% on the interest 
amount; stock dividend rate: 5% o f specified dividends received; 
capital gains rate: 5% of amount of capital gains from special stocks  
Local enterprise tax  Enterprise (with capital of JPY 100 million or less): 7% of net income  
Enterprise (with capital exceeding JPY 100 million): 1% of net income  
1.2% of value -added; 0.5% of the capital amount  
Electricity, gas supply and insurance companies: 1% of gross receipts  
Local consumption tax  17/63% of the amount of national consumption tax (8% as at 
September 2019)  
Real property acquisition t ax 4% of the assessed value of the acquired real estate (3% for residence 
and land)  
Prefectural tobacco tax  JPY 930 per 1,000 cigarettes  
Golf links tax  JPY 800 per person per day  
Automobile acquisition tax  2%-3% of the acquisition value of automobiles or light motor vehicles  
Delivered Diesel Oil Tax  JPY 32,100/kl  
Automobile tax  Rates vary according to category and cylinder volume  
Mine Lot Tax  Mine lot with mining right not for placer mining: JPY 200 -JPY 
400/ha/year. Mine lot with mining right for placer mining: riverbed, JPY 
600/1,000 m2 of extension/year; non -riverbed, JPY 200/ha/year 
Hunting Tax  JPY 5,500 -JPY 16,500  
Water Utility and Land Profit Tax  Voluntary tax rate, based on price or area of land or house ("voluntary" 
refers to the fact that the tax rate is established according to the 
ordinance of each relevant municipality)  
MUNICIPAL TAXES  
Inhabitant tax on individuals  Per capita rate (JPY 3,500); income rate: 6% of the total sum of 
ordinary income in the previous calendar year  
Fixed property tax  1.4% of the assessed value registered in the fixed property tax ledger  WT/TPR/S/397 • Japan  
 
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Tax  Rates (JPY)  
Light motor vehicle tax  Rates vary according to category and cylinder volume  
Municipal tobacco tax  JPY 5,692/1,000 cigarettes  
Mine product ion tax  1% of mineral price  
Special land possession tax  3% of the land acquisition price on acquisition; 1.4% of the land 
acquisition price on possession.  
Bathing tax  JPY 150 per person per day  
Establishment tax  JPY 600/m2 
City planning tax  0.3% of the assessed value registered in the fixed property tax ledger  
Water Utility and Land Profit Tax  Voluntary tax rate, based on the price or area of the land or house  
Common Facilities Tax  Voluntary tax rate that the municipality establishes through regul ations, 
taking into consideration the profit situation of common facilities  
Residential Land Development 
Tax Voluntary tax rate, based on the area of the residential land  
National Health Insurance Tax  Voluntary tax rate  
a Comprises a tobacco tax and a  special tobacco tax.  
Source:  Information provided by the authorities; Ministry of Finance, Learning More About Taxes (June, 
2018) . Viewed at: https://www.mof.go.jp/engli sh/tax_policy/publication/tax008/index.htm . 
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Table A3. 2 Tax credit for R&D expenses  
Category  Before amendments  After amendments  
Gross R&D 
cost base  A credit against national corporate tax is 
allowed.  
 
Credit amount: 8% to 10% of the gross R&D 
cost (excluding special R&D costs).  
 
Limitation of credit: 25% of corporate tax 
before credit.  FY2017 Tax Reform  
Credit amount: 6% -14% according to the 
increase  or decrease in R&D costs.  
Limitation of credit: 25% of corporate tax 
before credit.  
*When R&D costs account for more than 
10% of the average sales, additional 0% -
10% tax credit is to be applied.  
FY2019 Tax Reform  
Credit amount: if the R&D costs exceed 
10% of the average sales amount, the 
credit amount is increased by "(ratio of R&D 
costs - 10%)*0.5".  
Limitation of credit: 40% for a certain scope 
of start -ups conducting R&D.  
Special 
R&D cost -
based 
credit  Credit amount:  
30% of the gross special R& D cost for joint 
R&D with a university or public research  
20% of the gross special R&D cost for the 
joint R&D with other non -public corporations  
 
A credit against local inhabitant's tax is also 
allowed for SMEs.  
 
Limitation of credit: 5% of corporate tax 
before credit (separately from other gross 
R&D cost credit).  FY2019 Tax Reform  
Scope of special R&D cost: certain types of 
research commissioned to private 
companies and R&D start -ups have been 
added.  
 
Credit amount: 25% for certain types of 
research conducted jointly with, or on 
commission by, R&D start -ups (20% for 
certain types of research commissioned by 
private companies).  
 
Limitation of credit: 10% of corporate tax 
before credit (increased from 5%) . 
Gross R&D 
cost-based 
credit for 
SMEs  A credit against national corporate tax and 
local inhabitant's tax is allowed.  
Credit amount: 12% of the gross R&D cost  
(excluding special R&D costs).  
 
Limitation of credit: 25% of corporate tax 
before credit.  FY2017 Tax Reform  
Credit amount:  12%-17% of the gross R&D 
cost. 
 
Limitation of credit: 25% of corporate tax 
before credit.  
*Additional 10% tax credit is to be applied 
(when the increase rate is more than 
5%). 
Increment
al R&D 
cost base 
and high 
R&D 
intensity 
base Credit amount: a credit against national 
corporate tax is allowed for the higher of (i) 
and (ii) but subject to the limitation of 10% of 
tax liability before the credit.  
(i) 5% to 30% of incremental R&D costs; or 
(ii) R&D costs in excess of  10% of the 
average sales, times the "tax credit ratio" 
(ratio is a mechanical calculation depending 
upon the relationship between the amount of 
R&D costs and average annual sales).  
 
Limitation of credit: 10% of corporate tax 
before credit.  FY2017 Tax Re form  
(i): abolished.  
(ii): applicable period was extended for 
2 years.  
 
FY2019 Tax Reform  
(ii): abolished.  
Source:  Information provided by the authorities.  
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Table A3. 3 Provisions of the IP chapters of the CPTPP and EU -Japan EPAa 
 CPTPPb EU-Japan EPA  
Patents  • Definition of "inventive step"  
• One-year grace period for public 
disclosure of inventions  
• Revocation/cancellation/nullification 
permitted only on grounds that 
would have justified patent grant 
refusal  • Extension of patent protection for 
pharmaceutical and agricultural chemical 
products to compensate for non -working 
while awaiting marketing approval  
Industrial 
designs  • Protection to be available for parts 
of artic les, or at least particular 
regard given to parts of articles  • Protection to be made available for parts of 
a product  
• Protection to be provided by registration  
• Exclusive right to make, sell, import, or 
export articles bearing identical or similar  
design  
• Minimum term of protection of 20 years  
Product 
appearance   • Exclusive use of the unregistered 
appearance of a product for a minimum 
term of 3 years  
Trademarks  • Minimum term of protection for 
registered trademarks of 10 years  
• Protection must be available for 
sound marks, and visual 
perceptibility may not be a 
precondition of registration  
• Trademarks include collective and 
certification marks  
• GIs to be capable of protection 
under the trademark system  
• Enhanced protection for well -known 
marks  
• Remedie s for bad faith registration 
of a domain name identical or 
confusingly similar to a trademark  • Manufacture, importation, and presentation 
of labels or packaging bearing an identical 
or similar sign to a registered trademark is 
deemed infringement  
Geographical 
indications 
(GIs) • Administrative procedures for 
protection or recognition of GIs  
• Grounds for opposition and 
cancellation  
• Guidelines for determining whether 
a term is the term customary in the 
common language  
• The protection or recognition of GI s 
through international agreements  • Mandatory establishment of a system for 
the registration and protection of GIs  
• Mutual recognition and protection of 
designated GIs  
• Extension of higher -level protection in 
TRIPS Article 23.1 for wine and spirit GIs to 
all registered/designated GIs  
Trade secrets 
and data 
protection  • Minimum 10 years protection for 
undisclosed data submitted to 
regulatory authorities, in order to 
secure marketing approval for 
agricultural chemical products  • Protection of undisclosed data submitted for 
marketing approval for a certain period, for 
pharmaceutical products utilizing new 
active ingredients  
• Protection of undisclosed data submitted for 
marketing approval, for a minimum of 10 
years for agricultural chemical products 
utilizing new chemical entities  
Copyright and 
related rights  • Exclusive right of authors to 
communicate works to the public 
by wired and wireless means, 
including making works available 
on demand  
• Exclusive distribution right to 
authors, performers, and producers 
of phonograms of their works, 
performances fixed in phonograms, 
and phonograms, respectively  
• Exclusive right of performers to 
authorize/prohibit the 
broadcast/communication to the 
public of unfixed performances  • Minimum term of pro tection for literary and 
artistic works = author's life + 70 years  
• Minimum term of protection for producers 
of phonograms = 70 years after publication  
• Minimum term of protection for broadcasts 
= 50 years after first transmission  
• Exclusive fixation and repr oduction rights 
for performers of their performances, not 
limited to sound recordings  
• Exclusive distribution rights for authors, 
performers, and producers of phonograms 
of their works, performances fixed in 
phonograms, and phonograms, respectively  
• Exclusiv e rights of authors, performers, and 
producers of phonograms to communicate 
works, fixations of performances, and 
phonograms to the public by wired and WT/TPR/S/397 • Japan  
 
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 CPTPPb EU-Japan EPA  
wireless means, including making works 
available on demand  
• Exclusive right of performers to 
authorize/pr ohibit 
broadcasting/communication to public of 
unfixed or non -broadcast performances  
Enforcement  • Substantively examined patents 
and trademarks entitled to 
presumption of validity  
• Copyright presumed to be held by 
an individual whose name appears 
in the usual manner on a work  
• Authorities empowered to act ex 
officio to initiate border measures 
against suspected counterfeit 
trademarked and pirated 
copyrighted goods that are 
imported, in transit, or destined for 
export  
• Criminal procedures and penalties 
for unauthorized copying of films 
that causes significant harm to the 
rights owner  
• Civil and criminal measures for 
unauthorized and wilful access, 
misappropriation, and disclosure of 
a trade secret  
• Provisions for damages upon 
infringement  • Officials to be empowered to enforce GI 
protections ex officio  
• Copyright presumed to be held by an 
individual whose name appears in the usual 
manner on a work  
• Appropriate remedies for bad faith 
registra tion or holding of a domain name 
identical to, or confusingly similar to, a 
trademark  
• Appropriate civil procedures and remedies 
for the acquisition, use, or disclosure of a 
trade secret, and protections for trade 
secrets subject to civil judicial procedure s 
• Suspension of the release of imported or 
exported goods suspected of infringement, 
upon request by a right holder; authorities 
also empowered to act ex officio  
a This Table does not represent a legal analysis of the agreements, and is offered for backgr ound 
reference only.  
b Certain provisions of the CPTPP were suspended, following the US departure from the agreement, 
when it was known as the Trans -Pacific Partnership. Suspended provisions are not included in this 
Table.  
Source:  New Zealand Foreign Affairs & Trade, CPTPP . Viewed at: https://www.mfat.govt.nz/en/trade/free -
trade -agreements/free -trade-agreements -in-force/cptpp/comprehensive -and-progressive -
agreement -for-trans-pacific -partnership -text-and-resources/ ; and European Commission, EU -Japan 
EPA. Viewed at: http://trade.ec.europa.eu/doclib/press/index.cfm?id=1684 . 
  WT/TPR/S/397 • Japan  
 
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Table A3. 4 Summary of laws protecting IPRs, 2019  
Form  Main legislation  Coverage  Duration  
Patents  Patent Act  
(Last amended: 2019)  Any invention of a 
product/method that is 
industrially applicable, novel 
compared with the prior art 
base, and characterized by the 
highly advanced creation of 
technical ideas utilizing the laws 
of nature  20 years from the filing date 
of the patent application 
(extendable to a maximum of 
25 years upon request)  
New plant 
varieties  Plant Variety Protection 
and Seed Act  
(Last amended: 2015)  Any agricultural, forestry or 
aquatic plant, meeting the 
following requirements:  
(i) the variety is  clearly 
distinguishable from any other 
variety ;  
(ii) all the plants of the variety 
at the same propagation stage 
are sufficiently similar ; and 
(iii) all the expressions of the 
characteristics of the variety 
remain unchanged after 
repeated pr opagation  Duration of breeder's rights 
of plants (except perennial 
plants) is 25  years, while that 
of perennial plants is 
30 years from the date of 
variety registration  
Utility models  Utility Model Act  
(Last amended: 2019)  Any creation of a device that is 
related to the shape or 
structure of an article or 
combination of articles, and is 
industrially applicable  10 years from the filing date 
of the application  
Industrial 
designs  Design Act  
(Last amended: 2019)  Any design that is industrially 
applicab le; shapes, patterns, 
colours, or any combination of 
an article (including a part of an 
article), which creates an 
aesthetic impression; functional 
or aesthetic graphic images; 
spatial designsa 20 years from the date of 
registration (25 years as of 
2020)  
Trademarks  Trademark Act  
(Last amended: 2019)  Any character, figure, sign, 
three -dimensional shape, 
sound, colour, or any 
combination of them, used by a 
business entity in connection 
with its goods or services  10 years from the date of 
registration  
Geographical 
indications  Act on Protection of the 
Names of Specific 
Agricultural, Forestry 
and Fishery Products 
and Foodstuffs  
(Last amended: 2018)  Agriculture, forestry and 
fisheries products and 
foodstuffs, meeting the 
following requirements: (i) 
products produced in a specific 
place, region or country; and 
(ii) products for which quality, 
reputation or other given 
characteristic is essentially 
attributable to the place of 
production  Indefinite (registrations of 
GIs are effective as long as 
the prescribed requirements 
are met)  
Trade secrets  Unfair Competition 
Prevention Act  
(Last amended: 2018)  A trade secret: a production 
method, sales method, or any 
other technical or operational 
information useful for business 
activities that is controlled as a 
secret and is not publicly 
known.  
Data for limited provision: 
technical or business 
information accumulated in a 
reasonable amount, managed 
by electronic or magnetic 
means, and provided to specific 
persons on a regular basis   WT/TPR/S/397 • Japan  
 
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Form  Main legislation  Coverage  Duration  
Copyright and 
related rights  Copyright Law  
(Last amended: 2018)  Any work: a production in the 
literary, academic, artistic or 
musical domain, in which 
thoughts or sentiments are 
creatively expressed.  
Any performance: acting 
dramatically, dancing, giving a 
musical performance, singing, 
giving a speech, giving a 
recitation, or by any other 
means for acting of a work.  
Any phonogram: the fixation of 
sounds on a material object, 
such as a phonograph disc or 
recording tape.  
Any broadcasting/cablecasting: 
the tr ansmission to the public of 
wireless/wired communications, 
with the objective of allowing 
the public to simultaneously 
receive transmissions of the 
same content  A work: author's life plus 70 
years from the beginning of 
the calendar year after the 
year in w hich the author dies  
A performance: 70 years 
from the beginning of the 
calendar year after the year 
in which the performance 
takes place  
A phonogram: 70 years from 
the beginning of the calendar 
year after the year in which 
the phonogram is published  
A broa dcasting/cablecasting: 
70 years from the beginning 
of the calendar year after the 
year in which the 
broadcasting/cablecasting 
takes place  
An anonymous or 
pseudonymous work: 
70 years after the work is 
made public  
A work whose authorship is 
attributed to a c orporation or 
other organization: 70 years 
after the work is made public  
A cinematographic work: 70 
years after the work is made 
public  
Circuit layout 
of 
semiconductor 
integrated 
circuits  Act on the Circuit 
Layout of 
Semiconductor 
Integrated Circuits 
(Last amended: 2014)  Any layout design of circuitry 
elements and the lead wires 
connecting such elements in 
semiconductor integrated 
circuits  10 years from the date of 
registration  
a Protection for spatial designs, graphic images that are aesthetic rather than functional, and graphic 
images that are not recorded or displayed on an article, will become available in 2020.  
Source:  WTO document WT/TPR/S/351/Rev.1, 20 June 2017, Table 3.31; and information provided by the 
authorities.  
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Table A4. 1 Self-sufficiency at the product -specific level on a volume basis, 2014 -2018  
(%) 
 2014  2015  2016  2017  2018  
Rice 97 98 97 96 97 
Wheat  13 15 12 14 12 
Barley  9 9 9 9 9 
Tuber  78 76 74 74 73 
Sweet potatoes  94 94 94 94 95 
Potatoes  73 71 69 69 67 
Pulses  10 9 8 9 7 
Soybeans  7 7 7 7 6 
Vegetables  79 80 80 79 77 
Fruit 42 41 41 40 38 
Unshu  104 100 100 100 100 
Apples  56 59 60 57 60 
Meat 55 (9)  54 (9)  53 (8)  52 (8)  51 (7)  
Beef 42 (12)  40 (12)  38 (11)  36 (10)  36 (10)  
Pork 51 (7)  51 (7)  50 (7)  49 (6)  48 (6)  
Poultry  67 (9)  66 (9)  65 (9)  64 (8)  64 (8)  
Eggs 95 (13)  96 (13)  97 (13)  96 (12)  96 (12)  
Milk, milk products  63 (27)  62 (27)  62 (27)  60 (26)  59 (25)  
Fish  55 55 53 52 55 
Fish for food  60 59 56 56 59 
Seaweed  67 70 69 69 68 
Sugar  31 33 28 32 34 
Oils/fats  13 12 12 13 13 
Fungi  88 88 88 88 88 
      
All grains (incl. for feed)  29 29 28 28 28 
Grains for food  60 61 59 59 59 
Calorie base  39 39 38 38 37 
Production -value base  64 66 68 66 66 
Feed 27 28 27 26 25 
Notes:  2018 data are estimates.  
 Figures in parentheses are those adjusted with feed sufficiency.  
Source:  Information provided by the authorities.  
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Table A4. 2 Bilateral air transport agreements, 2019  Partner  
Date 
5th 
7th 
Cabotage 
Coop 
Designationa 
Withholdingb 
Pricingc 
Capacityd 
Stat 
ALIe 
Egypt  10.05.62  Y N N Y S SOEC  DA OR Y 11 
Iraq 20.03.78  Y N N N M SOEC  DA B1 Y 14 
Brazil  14.12.56  Y N N N M SOEC  DA B1 Y 14 
Bangladesh  12.02.80  Y N N N S SOEC  DA PD Y 6 
Fiji 10.03.80  Y N N N M SOEC  DA PD Y 10 
India 26.11.55  Y N N N M SOEC  DA OLf Y 16 
Greece  12.01.73  Y N N N S SOEC  DA OR Y 8 
Hong Kong, 
China  28.02.97  Y N N Y M SOEC  ZP FD Y 26.5 
Belgium  20.06.59  Y N N N M SOEC  DA B1 Y 14 
Italy 31.01.62  Y N N N S SOEC  DA B1 Y 10 
France  17.01.56  Y N N N M SOEC  DA B1 N 15 
Austria  07.03.89  N N N N M SOEC  DA PD Y 4 
Australia  19.01.56  Y N N Y M SOEC  ZP FD Y 26.5 
Israel  23.04.99  N N N N S SOEC  DA PD Y 0 
Ethiopia  25.03.96  Y N N N M SOEC  DA PD Y 10 
Sri Lanka  22.02.84  Y N N N M SOEC  DA PD Y 10 
Chinese Taipei  09.07.75  Y N N Y M SOEC  ZP FD N 27.5 
Canada  12.01.55  Y N N Y M SOEC  ZP FD Y 8 
Finland  23.12.80  Y N N N M SOEC  DA PD Y 10 
Hungary  23.02.94  N N N N M SOEC  DA PD Y 4 
Indonesia  23.01.62  Y N N Y M SOEC  ZP FD Y 26.5 
Bahrain, 
Kingdom of  04.03.98  Y N N N M SOEC  DA PD Y 10 
Brunei 
Darussalam  29.11.93  Y N N Y M SOEC  ZP FD Y 26.5 
Denmark  26.02.53  Y N N N M SOEC  DA B1 Y 14 
Myanmar  01.02.72  Y N N N S SOEC  DA B1 Y 10 
Germany  18.01.61  Y N N N S SOEC  DA B1 Y 10 
Jordan  13.04.94  Y N N N M SOEC  DA OR Y 12 
Korea, Republic 
of 16.05.67  Y N N Y M SOEC  ZP FD Y 26.5 
Kuwait, State of  06.10.62  Y N N N M SOEC  DA PD Y 10 
Lebanon 02.06.67  Y N N N M SOEC  DA B1 Y 14 
Macao, China  10.02.10  Y N N Y M SOEC  ZP FD Y 26.5 
Malaysia  11.02.65  Y N N Y M SOEC  ZP FD Y 26.5 
Mexico  10.03.72  N N N Y M SOEC  DA PD N 9 
Mongolia  25.11.93  N N N N M SOEC  DA PD Y 4 
Nepal  17.02.93  Y N N N M SOEC  DA PD Y 10 
Netherlands  17.02.53  Y N N N M SOEC  DA B1 Y 14 
New Zealand  18.01.80  Y N N N M SOEC  DA B1 Y 14 
Norway  23.02.53  Y N N N M SOEC  DA B1 Y 14 
Oman  24.02.98  Y N N N M SOEC  DA PD Y 10 
Pakistan  17.10.61  N N N N S SOEC  DA PD Y 0 
Papua New 
Guinea  30.03.97  N N N N M SOEC  DA FD Y 12 
Philippines  20.01.70  Y N N N M SOEC  DA B1 Y 14 
Poland  07.12.94  Y N N N M SOEC  DA PD Y 10 
Qatar  04.03.98  N N N N M SOEC  DA PD Y 4 
Russian 
Federation  21.01.66  Y N N N S SOEC  DA PD Y 4 
Saudi Arabia, 
Kingdom of  18.08.08  N N N N M SOEC  DA PD Y 4 
Singapore  14.02.67  Y N N Y M SOEC  ZP FD Y 26.5 
South Africa  08.03.94  Y N N N M SOEC  DA PD Y 10 
Spain  18.03.80  Y N N N M SOEC  DA PD Y 10 
Sweden  20.02.53  Y N N N M SOEC  DA B1 Y 14 
Switzerland  24.05.56  Y N N N S SOEC  DA OR Y 8 
Thailand  10.06.53  Y N N N M SOEC  DA B1 N 15 
Turkey  08.03.89  Y N N N M SOEC  DA PD Y 10 
United Arab 
Emirates  03.03.98  N N N N M SOEC  DA PD Y 4 
United Kingdom  29.12.52  Y N N N M SOEC  DA B1 Y 14 
United States  11.08.52  Y N N Y M SOEC  ZP FD N 29 
Uzbekistan  22.12.03  N N N N M SOEC  DA PD Y 4 WT/TPR/S/397 • Japan  
 
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 Partner  
Date 
5th 
7th 
Cabotage 
Coop 
Designationa 
Withholdingb 
Pricingc 
Capacityd 
Stat 
ALIe 
Viet Nam  09.06.11  Y N N Y M SOEC  ZP FD Y 26.5 
China  20.04.74  Y N N Y M SOEC  DA PD N 10 
Cambodia  14.01.15  Y N N Y S SOEC  DA FD Y 17 
Lao People's 
Democratic 
Republic  16.01.15  Y N N Y S SOEC  DA FD Y 17 
a "S"= Single; "M"=Multiple.  
b "SOEC"=Substantial Ownership and Effective Control.  
c "DA"=Double Approval; "ZP"=Zone Pricing.  
d "PD"=Pre -Determination; "B1"= Bermuda 1 i.e. post facto  Determination; "OR"=Country of Origin;  
OL: Other Liberal,  "FD"=Free Determination.  
e "ALI"=Air Liberalization Index (0=no liberalization at all; 50=full libe ralization).  
f Japan side: the limitation of frequency to/from all airports in Japan excluding Haneda Airport has 
been removed.  
 India side: the limitation of frequency to/from Mumbai, Delhi, Kolkata, Chennai, Bengal and 
Hyderabad has been removed . 
Source:  WTO Secretariat; and information provided by the authorities.  
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Table A4. 3 State of implementation of the Basel regulatory framework  
 Basel standards  Basel Committee 
on Banking 
Supervision 
(BCBS ) deadline  Status  Remarks  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Capital  Countercyclical 
capital buffer (CCyB)  Jan. 2016  
 4 
Adoption 
completed  Final rule on Countercyclical 
buffer was implemented in 
March 2016  
Margin requirements 
for non -centrally 
cleared derivatives  Sep. 2016  4 
Adoption 
completed  Final rule published in March 
2016 and in force from 
September 2016  
Capital requirements 
for Central 
CounterParties 
(CCPs)  Jan. 2017  4 
Adoption 
completed  Final rule was implemented in 
March 2018  
Capital requirements 
for equity 
investments in funds  Jan. 2017  4 
Adoption 
completed  Final rule was implemented in 
March 2019  
Standardized 
Approach for 
Measuring 
Counterparty Credit 
Risk ( SA-CCR) Jan. 2017  4 
Adoption 
completed  Final rule was implemented in 
March 2018  
Securitization 
framework  Jan. 2018  4 
Adoption 
completed  Final rule was implemented in 
March 2019  
Total Loss -Absorbing 
Capacity ( TLAC) 
holdings  Jan. 2019  4 
Adoption 
completed  Final rule was implemented in 
March 2019  
Revised standardized 
approach for credit 
risk  Jan. 2022  1  
Revised Internal 
Ratings Based ( IRB) 
approach for credit 
risk  Jan. 2022  1  
Revised Credit 
Valuation Adjustment  
(CVA) framework  Jan. 2022  1  
Revised minimum 
requirements for 
market risk  Jan. 2022  1  
Revised operational 
risk framework  Jan. 2022  1  
Output floor  Jan. 2022  1  
     
 
 
 
 
Leverage  Existing (2014) 
exposure definition  Jan. 2018 4 
Adoption 
completed  Final rule on the disclosure 
requirements of leverage ratio 
was implemented in March 
2015. Final rule on the 
minimum level of leverage 
ratio was implemented in 
March 2019  
Revised (2017) 
exposure definition  Jan. 2022  1  
     
 
 
System ically 
Important Banks  
(SIB) 
 Global -Systemically 
Important Banks ( G-
SIB) requirements  Jan. 2016 4 
Adoption 
completed  Final rule requiring public 
disclosure of 12 indicators for 
assessing G -SIBs was 
implemented in March 2014  
Final rule on higher loss 
absorbency requirements for 
G-SIBs was implemented in 
March 2016  
Domestic -
Systemically 
Important Banks ( D-
SIB) requirements  Jan. 2016  4 
Adoption 
completed  Final rule on identifying D -
SIBs and covering higher loss 
absorbency requirements for 
D-SIBs were implemented in 
March 2016  
Leverage ratio buffer  Jan. 2022  1  WT/TPR/S/397 • Japan  
 
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 Basel standards  Basel Committee 
on Banking 
Supervision 
(BCBS ) deadline  Status  Remarks  
Interest Rate 
Risk in the 
Banking Book  
(IRRBB ) Interest rate risk in 
the banking book  2018  4 Final rule published in 
December 2017 and in force 
from March 2018  
 
 
Liquidity  Monitoring tools for 
intraday liquidity 
management  Jan. 2015  1 
Adoption not 
started  
(draft 
regulation not 
published)   
Net Stable Funding 
Ratio (NSFR)  Jan. 2018  2 
Adoption in 
process (draft 
regulation 
published)  Draft rule published in June 
2018 
 
     
Large  
exposure  Supervisory 
framework for 
measuring and 
controlling large 
exposures  Jan. 2019  1 
Adoption not 
started  
(draft 
regulation not 
published)  Draft rule published in the 
form of administrative 
guideline in March 2019, pilot 
operation scheduled beginning 
on 31 Ma rch 2019  
Guideline will be replaced with 
enforceable final rule after the 
pilot operation  
     
 
 
 
 
 
 
 
 
 
 
 
 
Disclosure  Revised Pillar 3 
requirements 
(published 2015)  Dec. 2016  4 
Adoption 
completed  Final rule published in 
December 2017 and in force 
from March 2018  
CounterCyclical 
Capital Buffer 
(CCyB ), Liquidity, 
Remuneration, 
Leverage ratio 
(revised)  Dec. 2017  4 
Adoption 
completed  Final rule on disclosure of 
Liquidity Coverage Ratio 
(LCR) published in February 
2015 and in force from June 
2015 
Final rule on disclosure of 
remuneration was 
implemented in March 2018  
Final rule on disclosure of 
CCyB and Leverage ratio was 
implemented in March 2019  
Key metrics, IRRBB, 
NSFR  Jan. 2018  4,2 
Adoption in 
process (draft 
regulation 
published)  Final rule on disclosure of key 
metrics was implemented in 
March 2018. Final rule on 
disclosure of IRRBB published 
in December 2017 and in 
force from March 2018  
Draft rule on disclosure of 
NSFR published in June  2018 
Composition of 
capital, Risk 
Weighted Assets 
(RWA) overview, 
Prudent valuation 
adjustments, G -SIB 
indicators  Dec. 2018  4,1 
Adoption in 
process (draft 
regulation 
published)  Final rule on disclosure of 
Composition of capital, RWA 
overview and G-SIB indicators 
was implemented in 
March2019  
TLAC  Jan. 2019  4 
Adoption 
completed  Final rule was implemented in 
March 2019  
Market risk  Jan. 2022  1  
Note:  Number code: 1 = draft regulation not published; 2 = draft regulation published; 3 = final rule 
published (not yet implemented by banks); 4 = final rule in force (published and implemented by 
banks).  
Source:  Basel Committee on Banking Supervision, Sixteenth progress report on adoption of the Basel 
regulatory framework, May 2019.  
 
 
 
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