WT/REG309/2  
 
1 August 2013  
(13-4142)  Page: 1/5  
Committee on Regional Trade Agreements  Original: English  
 
 FREE TRADE AGREEMENT BETWEEN JAPAN AND PERU 
(GOODS AND SERVICES) 
QUESTIONS AND REPLIES 
 The following communication, dated 30 July 2013,  is being circulated at the request of the 
delegations of Japan and Peru. 
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 This document reproduces the questions addressed to the Parties and the responses 
submitted.  
 
Questions from the delegation of Australia 
 
General Comment 
 
 Tables 4.1 and 4.2 clearly indicate the significant improvements both Japan and 
Peru have been willing to make on servic es compared with both countries' GATS 
commitments. Australia supports ongoing lib eralization of services trade and the 
reduction in gaps between commitments on se rvices and actual restrictions imposed, 
and commends both Japan and Peru on their efforts. 
 
1.1.   Paragraph 3.38 – bilateral safeguard mechanisms: How is "substantial cause of 
serious injury" defined? Is the causation analys is, as required under Article 4.2(b) of the 
WTO Safeguards Agreement, undertaken? For example, are 'other factors' than the 
increased imports from the other Party taken into consideration? 
 There is no definition of substantial cause of serious injury in the Section on Safeguard 
Measures. The causation analysis under Article 4.2(b) of the WTO Safeguards Agreement is not 
incorporated into this Section, but similar provisions are included under Article 32 (Investigating Procedures), paragraph 4. Under such provision, it is provided that when factors other than the increased imports of the originating good are causing injury to the domestic industry at the same 
time, such injury shall not be attributed to the increased imports of the originating good.  
 1.2.   Paragraph 4.6 – Market Access: This  article does not include any reference to 
participation of foreign capital. Is this issue covered by the Japan-Peru bilateral 
investment Agreement (BIT)? 
 Yes. The issue of foreign capital, including any discriminatory measure with respect to it, is 
covered by the National Treatment obligation included under the BIT.  
 1.3.   Paragraph 4.16 – Performance Requir ements: Are Japan and Peru permitted to 
impose performance requirements on Mode 3 only  where a sector is listed in Annex 6, or 
only to the extent permitted by the BIT? 
 The latter is the case, because the provision of Performance Requirements is not applicable 
to the Chapter on Cross-Border Trade in Services. WT/REG309/2 
 
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  1.4.   Paragraph 4.17 – Senior managers an d board of directors (SMBD): Are Japan and 
Peru permitted to impose restrictions on SMBD  only where a sector is listed in Annex 6, 
or only to the extent permitted in the BIT? 
 The latter is the case.  Peru and Japan are permitted to impose SMBD to the extent 
permitted by the BIT, which is incorporated into the Peru-Japan EPA. This means that any 
commitment or limitation on SMBD in the BIT is included in the EPA.  
1.5.   Paragraph 4.23 – Japan MFN for freight forwarding: How does Japan's MFN 
exemption for freight forwarding relate to it s GATS commitments? Does this only cover 
preferential treatment on freight forwarding  in future preferential trade agreements 
covered by Article V of the GATS? 
 With regard to Japan's current commitments under the GATS on maritime transport 
services, Article II of the GATS and the Annex on Article II Exemptions will not enter into force 
until the time of the conclusion of the negotiations  in the WTO, by the effect of (1) the Annex on 
Negotiations on Maritime Transport Services and (2) the subsequent "Decision on maritime 
transport services" (adopted by the Council for Trade in Services on 28 June 1996). 
 1.6.   Paragraph 4.23 – Japan MFN for new services: Given discussions in the Committee 
on Specific Commitments (CSC) about interpre ting "new" service sectors using existing 
Central Product Classifications (CPCs), how does this MFN exemption work? Do both 
Peru and Japan have to agree that a sector is truly "new"? 
 There is no specific mechanism on this MFN. 
 
1.7.   Paragraph 4.26 – Peru's exception for su bsidies: How does this exception relate to 
the requirement in paragraph 4.62 to notify subsidies and respond positively to requests 
for consultations? 
 Subsidies are not excluded from the EPA. As mentioned in paragraph 4.62, the EPA included 
a transparency commitment with respect to subsidies and the possible future incorporation of any 
discipline developed under GATS. 
 As subsidies are not excluded from the EPA, Peru has included a specific reservation under 
Annex 6 with respect to subsidies or grants. This reservation applies to the National Treatment, Local Presence and MFN obligation; but it does not affect the transparency commitment on 
subsidies included in the main body of the chapter. 
1.8.   Paragraph 4.59 – Domestic Regulation: Both Japan and Peru have made significant 
improvements to their market access commitm ents over the GATS. Why then is this 
article limited only to where a Party has ma de GATS commitments, and not where it has 
made additional comments under this Agreement? 
 This is a result of the negotiations. 
 
1.9.   Why did Japan and Peru decide not to  include a chapter on electronic commerce? 
 This decision was part of the negotiation process. 
 
Questions from the delegation of Canada 
 
1.10.  Paragraph 3.1.3.2: At the end of th e first paragraph in Peru's liberalization 
programme section, it mentions that Peru  may maintain its Price Band System for 
products identified as eligible in its Schedu le. There is also a footnote attached to this 
phrase which lists the eligible products. Coul d Peru please confirm whether all the goods 
listed under footnote 15 are part of Peru's Price Band System? Are there any additional 
products not mentioned? 
  WT/REG309/2 
 
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   There is a mistake in footnote 15. Maize (corn) starch, potato starch, black tobacco and 
dextrins are not part of Peru's Price Band System. The products that are part of Peru's Price Band System are certain dairy products, certain types of rice, maize (corn), certain maize products and certain sugar products, listed in Peru's Supreme Decree N° 115-2001-EF.  
 
1.11.  Paragraph 4.2: Canada noted that Japa n introduced an article on subsidies in its 
Economic Partnership Agreement (EPA) with  Peru. Considering that Japan did not 
include such article in its past EPAs (e.g. Japan-Chile, Japan-Mexico), Canada would like 
to seek clarification for the rationale behind  the inclusion of an article on subsidies. 
 The Article was included because transparency on subsidies was a specific interest of Peru.  
 
1.12.  Paragraph 3.1: With regard to the rese rvations taken by Peru in Annex 2 of the 
agreement, is Japan's agreement with the rese rvations indicative of low export interests 
in those used goods? 
 No. The used goods are excluded from Peru's tariff commitment established in Article 21 of 
the Agreement. However, this is not indicative of Japan's low export interests in those used goods. 
 
1.13.  Paragraph 3.4.3: Please confirm th at recourse to the bilateral safeguard 
mechanism within the EPA would continue indefi nitely if the parties decided to maintain 
it after the 10 year review.  
 Under Article 36 of the Agreement, if necessar y, after ten years of the date of entry into 
force of the Agreement, the Parties shall review the provisions regarding safeguard measures, in 
particular, with a view to determining whether there is a need to maintain the bilateral safeguard mechanism. If, during that review, the Parties agre e that the mechanism is no longer needed, they 
can decide to eliminate it. Otherwise, the mechanism will be maintained, unless there is a decision 
of the Parties to eliminate it at a later stage through the function of the Commission (under Article 14, subparagraph 4(c)) to consider, recommend to the Parties and promote any 
amendment to the Agreement, subject to the fulfill ment of the internal legal procedures of each 
Party.   1.14.  Table 4.2 suggests that Peru has not taken any reservations against future 
measures restricting trade in Financial Servic es. However, in Annex 6, page 741, of the 
Japan-Peru FTA, Peru takes a National Tr eatment and Local Presence reservation on 
insurance. Specifically, Peru re serves the right to adopt or maintain measures restricting 
the acquisition of obligatory insurance from ou tside of Peru, or to require that obligatory 
insurance be purchased from suppliers inside of Peru.  
Is this an omission? If not, why is th is not considered a reservation against 
future measures?   
 There is a mistake in Table 4.2. Peru reserved the right to adopt or maintain measures that 
could restrict cross border trade on obligatory insurance.   
1.15.  Paragraph 5.8: Could Japan explain how a "reorganization" may or may not have 
implications for modification and/or a rectification, and when and whether a 
compensation is required to maintain the balance of coverage between the Parties? 
 A "reorganization" may have implications for rectification and/or modification. We consider a 
"reorganization" as one of possible factors for rectification or modification. Since reorganizations of 
government entities usually do not affect the level of mutually agreed coverage, therefore, Japan 
and Peru decided that compensation need not be proposed in the case of a "reorganization".  
a. Are "reorganizations" notified to the other Party? If so, what is the notification 
process in that case? 
 Yes. It will be the same process as a notification of rectification and/or modification. 
 WT/REG309/2 
 
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  b. Have any reorganizations occurred under the Japan-Peru FTA? Could Japan give 
examples? 
 No. 
 
1.16.  Paragraph 5.9: Where do the Parties maintain information regarding with which 
non-Party transactions are prohibited or co untries with whom dipl omatic relations are 
suspended? 
 There is no particular office which maintains such information under this Article. 
 1.17.  Paragraph 5.9: Has Japan or Peru ev er denied a benefit to the other Party? 
 No. 
 
1.18.  Paragraph 5.12: Does Japan have a single electronic portal which publishes 
procurement opportunities for all levels of  covered procurement (e.g. central, sub 
central, local governments)? If yes, coul d Japan provide information or a web-link? 
 Japan publishes information about procurement of central and local governments as well as 
other entities on the following Websites in English. 
 
 http://information1.gov-procurement.go.jp  
 http://www.jetro.go.jp/en/database/procurement/  
 
1.19.  Paragraph 5.13: Could Japan expl ain its government procurement review 
mechanism? 
 The government procurement review mechanism, which was authorized in a cabinet decision 
of 1 December 1995, receives and processes specific complaints concerning government 
procurement of goods and services (including construction services), to ensure greater 
transparency, fairness, and competitiveness in the government procurement system, under the 
principle of non-discrimination of foreign and domestic sources. 
  The government's system for reviewing complaints regarding procurement, which is called "Office of Government Procurement Challenge System (CHANS)", consists of the Office of 
Government Procurement Review and the Government Procurement Review Board. The office of 
Government Procurement Review establishes review procedures, headed by the administrative vice-ministers of Cabinet Office and with administrative vice-ministers or directors from all 
ministries and agencies as its members. The Government Procurement Review Board, composed of 
experts on procurement, receives and reviews the actual complaints.  
 Each sub-central government (prefectures an d ordinance-designated cities) has equivalent 
procedure to CHANS.  1.20.  Paragraph 5.13: How does Japan en sure the independent nature of its bid 
challenge procedures? 
 "Public Announcement of the Complaints filed into the Government Procurement Review 
Board (1 December 1995, Cabinet Decision)" specifies that the Government Procurement Review 
Board reviews complaints filed with respect to procurement by the central government entities and 
other central government-related entities. The Government Procurement Review Board reviews complaints impartially and independently with reference to the procurement procedures set forth 
by the Agreement and the applicable measures design ated separately by the Head of the Office of 
Government Procurement Review as well as in compliance with the complaint review procedures 
adopted by the Office of Government Proc urement Review. Therefore, the Government 
Procurement Review Board is an impartial and inde pendent review body with no interest in the 
outcome of the procurement. 
  
 
 WT/REG309/2 
 
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   Could Japan explain how it ensures decisions are enforced? 
 
 Designation of Applicable Measures Concerning Government Procurement (Decision by the 
Office of Government Procurement Review ) specifies  that "The Procuring Entity shall, in principle, 
and as its own decision, duly follow the recommendations of the Government Procurement Review 
Board on any complaints brought appropriately before the Board." 
 
1.21.  Paragraph 5.15: Has Article 165 been us ed to date in order to expand market 
access commitments the Parties have with each other? 
 No.  
 1.22.  Paragraph 5.16: Could Japan please  explain if the Sub-Committee has been 
established?  
 The Sub-Committee on Government Procurement was established upon the entry into force 
of the Agreement.  
 How often does the Committee meet? Is  there a formal meeting schedule? 
  The Sub-Committee on Government Procurement has not convened yet. There is not a 
formal meeting schedule, but will hold meetings at  such times and venues or by means, as may be 
agreed by the Parties. 
 
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