Japan WT/TPR/S/276 
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  IV. TRADE POLICIES BY SECTOR 
(1) AGRICULTURE  
(i) Structure 
1. The main crops grown in Japan are rice,  fruits, and vegetables.  Rice accounts for 
approximately 25% of agricultura l production and is mainly cultivated by part-time or weekend 
farmers.  Most other crops are grown on commercial farms by full-time farmers. 
2. The Basic Law on Food, Agriculture and Rural Ar eas continues to provide the framework and 
policy direction for agriculture;  implementation of  the Law is through the Basic Plan for Food, 
Agriculture and Rural Areas, which aims to, inter alia :  achieve a higher self-sufficiency ratio;  
encourage consolidation of production, processing, and distribution of agricultural produce with a 
view to increasing value-added;  improve food safet y;  encourage further Japan's participation in 
international standard-setting;  and establish inco me support regardless of the size of farms.  In 
addition, on 25 October 2011, a Basic Policy and Action Plan to Revitalize Food, Agriculture, 
Forestry and Fisheries was adopted. 
3. Under the Agricultural Land Law, "general co rporations" (including stock companies and 
other forms of corporations, profit or non-profit) ar e permitted to lease farmland.  According to data 
provided by the authorities, 838 general corporatio ns were newly involved in agriculture between 
December 2009 and March 2012;  the authorities st ate that there are no data detailing general 
corporations' share in agricultural production. 
4. The agriculture sector continues to receive substantial government support, comprising, 
inter alia,  a relatively higher average MFN applied rate compared with other sectors;  tariff quotas; 
income support;  and, in some subsectors, produc tion controls.  According to the OECD, "total 
support estimates" for agriculture for 2006-08 were comparable to 1.1% of GDP.1  Support is 
provided mainly through market price support;  in  addition, relatively high tariffs and production 
restrictions are in place, which lead to higher prices.2 
5. Consumer prices of agricultural products in Japan are considerably higher than the OECD 
average.  Total transfers to agriculture producer s for 2010, arising from Government policies (the 
PSE, or producer support estimate), and transfers from consumers (the C SE or consumer support 
estimate) were provisionally estimated by the OE CD at 50% and 42% of income from production.  
OECD averages were 18% and 8%, respectively.3  Furthermore, the producer nominal assistance 
coefficient (NAC) was 2.00 (i.e. gross farm receipts we re 2.00 times the level they would have been if 
generated at world prices without support), a nd the consumer NAC was 1.71 (i.e. consumers are 
                                                      
1 Total support estimates are defined as the annual monetary value of all gross transfers from taxpayers 
and consumers arising from policy measures that support agriculture, net of the asso ciated budgetary receipts, 
regardless of their objectives and impact on farm production and income or consumption of farm products. 
2 OECD (2011). 
3 OECD (2011).  Figures for 2010 are provisional.  PSEs are defined as the annual monetary value of 
gross transfers from consumers and taxpayers to agricu ltural producers, measured at the farm-gate level;  PSEs 
include market price support and budgetary payments.  CSEs  are the annual monetary va lue of gross transfers to 
(from) consumers of agricultural commodities, measured at the farm-gate level.  A producer NAC is the ratio 
between the value of gross farm receipt s, including support, and gross farm r eceipts valued at border prices.  As 
noted in WTO (2007), caution is necessary when interpreting PSEs, CSEs, and NACs, as changes in exchange 
rates or world prices may produce significant fluctuations, and border prices may be artificially reduced owing 
to the presence of export subsidies in international agriculture trade. WT/TPR/S/276 Trade Policy Review 
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  implicitly taxed, paying on average about 1.71 times as much as they would have paid without 
support) in 2010.  Both the producer and consum er NACs were significantly higher than OECD 
averages.4  In addition, the producer nominal protection coefficient (NPC) was 1.83 in 2010, implying 
that the farm-gate price received by producers was on average 1.83 times higher than the price at the 
border. 
6. In 2010, the Government implemented a new si ngle-year pilot direct-payment programme on 
rice.  The programme provides participating farmer s with income support to bridge the gap between 
the production cost and the "farm gate" price of rice, irrespective of the size of farm.  In FY2011, the 
Government started to implement this programme formally for rice.  The programme was also 
extended to other crops, such as wheat, barley, potatoes, buckwheat, rapeseed, sugar beet, and 
soybeans by reorganizing the existing payment schemes for these crops. 
7. In addition to the direct income support, the Government continues to maintain the production 
adjustment programme (see below). 
(ii) Border measures 
8. The average applied MFN tariff for agriculture (WTO definition) is 17.5% (FY2012)5, 
compared with an overall average of 6.3% (Chapter  III(2)(ii)).  The rate varies considerably from 
chapter to chapter and often from one product to anothe r within the same HS chapter.  Of the applied 
MFN tariffs on agricultural goods (WTO definition), 17.3% are non- ad valorem .  Agriculture 
subsectors that are protected by MFN tariffs relativ ely higher than the sectoral average include:  dairy 
products, edible vegetables, sugars, and cereals and pr oducts thereof (Table IV.1).  As estimates of 
AVEs for some specific duties (which tend to involve relatively high tariffs)6 were not made 
available, the average tariffs fo r the associated subsector may be underestimated.  Where AVEs were 
available, the simple average for non- ad valorem  tariff rates for agriculture (WTO definition) was 
70.0%, considerably higher than the simple average of purely ad valorem  tariff rates of 9.6%.7  Out of 
314 tariff lines that have a non- ad valorem  rate under "WTO Agriculture", AVEs were not available 
for 102 lines at the HS nine-digit level;  these include  milk and dairy products, live swine and meat of 
swine, rice and cereals, fruit juices, groundnuts and their oil, and prepared foods.  For example, the 
rate payable on imports of Bambara beans, cow peas,  and Pegin beans is among the highest in Japan's 
customs tariff, with an ad valorem  equivalent of 515.6% (out-of-quot a rate).  Tariffs tend to be 
particularly high and variable for vegetables,  cereals, and sugars a nd sugar confectionery. 
                                                      
4 Producer NAC and Consumer NAC for OECD averages were 1.22 and 1.08, respectively, in 2010. 
5 The average applied MFN tariff for agri culture (HS 1-24) in FY2012 is 15.3%. 
6 According to the authorities, the lack of estimates of AVEs may be due to low world production and 
international trade volume of certain products, and low demand for them in Japan. The absence of estimates 
because of no imports may suggest that tariffs  for the products concerned are prohibitive. 
7 The simple average of all (i.e. agricu ltural and non-agricultural products) non- ad valorem  tariff rates 
for which AVEs were available was 37.3%, approxima tely eight times the simp le average of purely ad valorem  
tariff rates, which was 4.4%. Japan WT/TPR/S/276 
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  Table IV.1 
Applied MFN tariff protection in agriculture, FY2012 
(%) 
HS Chapter/Description Simple 
average 
tariff Maximum 
tariff Tariff peaksa 
(% of lines) Non-
ad valorem 
tariff 
(% of lines) 
01 Live animals 3.2 45.4 8.1 12.9 
02 Meat and edible meat offal 10.8 67.8 15.7 18.2 
03 Fish and crustaceans, molluscs and othe r aquatic invertebra tes 5.9 15 0.0 0.0 
04 Dairy produce;  birds' eggs;  natural honey;  edible products of 
animal origin, not elsewhere specified or included 56.2 409.8 84.4 61.0 
05 Products of animal origin, not elsewh ere specified or included 0.3 3.5 0.0 0.0 
06 Live trees and other plants;  bulbs, roots and the like;  cut 
flowers and ornamental foliage 0.3 3.0 0.0 0.0 
07 Edible vegetables and certain roots and tubers 33.7 515.6 7.8 9.4 
08 Edible fruit and nuts;  peel of citrus fruit;  melons  7.8 24.0 6.7 0.0 
09 Coffee, tea, maté and spices 3.6 17.0 0.0 0.0 
10 Cereals 21.8 327.4 24.1 29.3 
11 Products of the milling industry;  malt;  starches;  inulin;  wheat 
gluten.   31.1 279.7 52.5 37.5 
12 Oil seeds and oleaginous fruits;  miscellaneous grains, seeds and 
fruit;  industrial or medicina l plants;  straw and fodder 6.2 298.8 2.5 7.6 
13 Lac;  gums, resins and other vege table saps and extracts 3.1 17.0 0.0 4.8 
14 Vegetable plaiting materials;  vegetable products not elsewhere 
specified or included 3.1 8.5 0.0 0.0 
15 Animal or vegetable fats and oils and their cleavage products;  
prepared edible fats;  animal or vegetable waxes 4.6 29.8     2.2 40.7 
16 Preparations of meat, of fish or  of crustaceans, molluscs or other  
aquatic invertebrates 12.7 50.0 25.0 2.5 
17 Sugars and sugar conf ectionery 41.7 218.6 69.4 59.2 
18 Cocoa and cocoa preparations 23.7 152.6 63.0 7.4 
19 Preparations of cereals, flour, starch or milk;  pastrycooks' 
products 26.4 246.9 63.6 26.5 
20 Preparations of vegetables, fruit, nuts or other parts of plants 16.9 46.8 38.9 6.9 
21 Miscellaneous edible preparations 25.5 321.1 50.0 16.0 
22 Beverages, spirits and vinegar 14.0 75.9 31.0 34.5 
23 Residues and waste from the f ood industries;  prepared animal 
fodder 0.9 12.8 0.0 9.5 
24 Tobacco and manufactured tob acco substitutes 7.2 29.8 16.7 0.0 
1-24 Agriculture 15.3 515.6 25.3 14.0 
a Three times the simple average of overall applied MFN rates. 
Note: The simple average applied MFN tariff rate in FY2012 is calculated by using 2010 AVEs, as available, provided by the Japa nese 
authorities.  When the AVEs are unavailable, the ad valorem  part is used for compound and alternate rates. 
Source:  WTO calculations, based on data provided by the Japanese authorities.  
9. Japan operates 18 tariff quotas covering 175 tariff lin es, mainly for dairy products and cereals 
(including rice), unchanged since 2011.8  The average fill ratio in 2010 was about 63.5% but varies 
from one quota to another, from a low of 10.6% for butter and butter oil to 99.3% for dairy products 
for general use (Table AIV.1).  There have been no  changes to the administration of TRQs since the 
                                                      
8 WTO document G/AG/N/JPN/174, 24 February 2012. WT/TPR/S/276 Trade Policy Review 
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  last Review of Japan.  The names of companies or  persons that are allocated quotas are posted online 
by the MAFF;  no information pertaining to quot a amounts allocated to firms or individuals was 
available.  In-quota imports of rice, wheat and barley, and certain milk products are handled mainly by state-trading entities;  certain amounts of these products may be imported by private entities.
9 
10. As part of Japan's tariff quota commitments , a certain amount of imported rice may be 
purchased and marketed directly under the simulta neous buy-and-sell (SBS) system.  During FY2011, 
a total of 100,000 tonnes were imported under the SBS system.   In addition, Japan provides rice as 
food aid.  Japan donated 167,823 tonnes of rice in 2009 and 135,955 tonnes in 2010 as direct transfers (it also donated significant quantities through local and triangular purchase arrangements).
10  Japan 
notified the Committee on Agriculture that it pr ovided US$108.47 million and US$218.39 million, in 
2008 and 2009, respectively, for the purchase of gr ains as food aid for LDCs and net-food-importing 
developing countries.11 
11. Japan took a number of special safeguard (SSG ) actions during fiscal years 2010, 2011, and 
2012.  Products affected included rice, starches, kidney beans, inulin, milk, yogurt, tubers of 
konnyaku, flour, and certain food preparations (Tab le IV.2).  Both price-based and volume-based 
SSGs were imposed on various products (not concu rrently);  the remedies apply to out-of-quota 
imports only. 
Table IV.2 
Special safeguards in agricul ture, FY2010 to FY2012, November 2012 
Description Type of action Date or period of application 
FY2010 
Yogurt;  frozen, preserved or contai ning added sugar or other sweetening 
matter, flavouring, fruits or nuts (excluding frozen yogurt) 
 Volume-based 1 July 2010 to 31 March 2011 
Tubers of konnyaku ( Amorphophalus ), whether or not cut, dried or 
powdered 
 Volume-based 1 July 2010 to 31 March 2011 
Maize (corn) starch Volume-based 1 August 2010 to 31 March 2011 
 
Milk and cream, not concentrated nor containing adde d sugar or other 
sweetening matter, of a fat content, by weight, exceeding 6%:  sterilized, frozen or preserved;  other cream of a fat content, by weight, of 13% or 
more (other than sterilized , frozen or preserved) 
 Volume-based 1 October 2010 to 31 March 2011 
Kidney beans, including white pea beans ( Phaseolus vulgaris ) 
 Price-based 12 April, 2010 
Rice (semi-milled or wholly milled rice,  whether or not polished or glazed) 
 Price-based 9 August 2010 
Rice flour Price-based 5 August 2010, 25 February 2011 
 
Table IV.2 (cont'd) 
                                                      
9 Rice, wheat, and barley are imported by the Ministry  of Agriculture, Forestry , and Fisheries;  leaf 
tobacco by Japan Tobacco Inc.;  and milk products by the Agriculture a nd Livestock Industries Corporation 
(WTO document G/STR/N/14/JPN, 6 July 2012).  
10 World Food Programme online information.  View ed at:  http://www.wfp.org/fais/reports/quantities-
delivered-two-dimensional-report/run/year/2010;2009/ code/RICE/cat/All/recipient/All/donor/Japan/mode/ 
Direct+Transfer/basis/0/order/0 [9.11.2012]. 
11 WTO documents G/AG/N/JPN/160 and 172, 1 December 2010 and 13 January 2012. Japan WT/TPR/S/276 
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  Description Type of action Date or period of application 
Other starches (excluding sago starch es) Price-based 8 September 2010, 21 
December 2010, 9 February 2011 
 
Inulin Price-based 8 April 2010, 14 December 2010 
 
Food preparations of flour, meal, or starch, containing groats, meal, pellets 
or starch of rice, wheat, triticale, barl ey, which total weight is more than 
85% of the articles; mostly containi ng starch (excluding containing wheat 
starch) 
 Price-based 21 April 2010, 4 June 2010, 12 July 
2010, 1 December 2010, 28 December 2010, 14 February 
2011 
Food preparations containing by wei ght not less than 30% natural milk 
constituents on the dry matter;  not more  than 30% by weight of milk fat 
 Price-based 25 February 2011 
FY2011 
Milk and cream, not concentrated nor containing adde d sugar or other 
sweetening matter, of a fat content, by weight, not exceeding 1%:  sterilized, frozen or treated appropriate to preserve 
 Volume-based 1 December 2011 to 31 March 2012 
Milk and cream, not concentrated nor containing adde d sugar or other 
sweetening matter; of a fat content, by weight, exceeding 1% but not 
exceeding 6%:  sterilized, frozen or preserved 
 Volume-based 1 December 2011 to 31 March 2012 
Milk and cream, not concentrated nor containing adde d sugar or other 
sweetening matter, of a fat content, by weight, exceeding 6%:  sterilized, 
frozen or preserved;  other cream of a fat content, by weight, of 13% or 
more (other than sterilized , frozen or preserved) 
 Volume-based 1 November 2011 to 31 
March 2012 
Milk powder, not containing added suga r or other sweetening matter; of a 
fat content, by weight, exceeding 5% but not exceeding 30%  Price-based 15 April 2011 
Condensed milk Volume-based 1 January 2012 to 31 March 2012 
 
Yogurt;  frozen, preserved or contai ning added sugar or other sweetening 
matter, flavouring, fruits, or nuts (excluding frozen yogurt) 
 Volume-based 1 July 2011 to 31 March 2012 
Buttermilk, curdled milk and cream, kephi r and other fermented or acidified 
milk and cream, sterilized, frozen, pres erved, concentrated or containing 
added sugar or other sweetening ma tter, flavouring, fruits or nuts 
 Volume-based 1 August 2011 to 31 March 2012 
Wheat or meslin flour Price-based 4 April 2011 (two cases of 
application), 2 May 2011  
Rice flour Price-based 29 September 2011 
 
Other starches (excluding Sago star ches) Price-based 13 February 2012 
 
Inulin Price-based 12 May 2011, 17 January 2012, 
15 February 2012 
 
Mostly containing wheat and triticale pr eparation Price-based 7 October 2011 
 
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 contai ners; containing not more than 30% 
milk fat by weight 
 Price-based 28 November 2011 
Food preparations of flour, meal, or starch, containing groats, meal, pellets 
or starch of rice, wheat, triticale, barl ey, which total weight is more than 
85% of the articles; mostly contai ning starch (excluding wheat starch) 
 Price-based 19 April 2011, 9 June 2011, 
10 November 2011, 5 January 2012 
Table IV.2 (cont'd)WT/TPR/S/276 Trade Policy Review 
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  Description Type of action Date or period of application 
FY2012 
Milk and cream, not concentrated nor containing adde d sugar or other 
sweetening matter, of a fat content, by weight, exceeding 6%;  sterilized, 
frozen or preserved;  other cream of a fat content, by weight, of 13% or 
more (other than sterilized , frozen or preserved) 
 Volume-based 1 June 2012 to 31 March 2013 
Buttermilk, curdled milk and cream, kephi r and other fermented or acidified 
milk and cream, sterilized, frozen, pres erved, concentrated or containing 
added sugar or other sweetening ma tter, flavouring, fruits or nuts 
 Volume-based 1 October 2012 to 31 March 2013 
Cereals, other than maize (corn), in grain form, pre-cooked or otherwise 
prepared, of wheat or triticale, n.e.s. 
 Price-based 16 October 2012 
Cereals other than maize (corn, in grain form pre-cooked or otherwise 
prepared, of rice, containing more than 30% by weight of rice, n.e.s. Price-based 16 October 2012 
 
Source: WTO notifications. 
12. Japan extended its provisions on emergency ta riff measures for import surges of beef and 
pork in April 2011 and April 2012, respectively, for one year12;  the measures involve unilateral 
increases of customs duties to the WTO bound level (50% in case of beef) from the level reduced by 
Japan beyond its commitments (38.5% on beef).  These measures are stipulated under the Temporary 
Customs Tariff Measures Law.13  During the period under review, Japan did not resort to emergency 
tariff measures for import surges of beef and pork.   
13. Japan notified to the WTO that no export subsidies were provided in the period 1 April 2010 
to 31 March 2012.14 
14. The Government has programmes to promote expor ts of food and agricultural, forestry, and 
fishery products.  It has targeted these to reach ¥1 trill ion by 2020.  The authorities state that this is to 
be achieved by:  requesting importing countries to  set risk management measures regarding the 
Fukushima Daiichi Nuclear Power Plant accident;  im plementing strategic marketing under the "Japan 
Brand";  and increasing the appeal of Japan's  food culture to the rest of the world. 
(iii) Domestic measures 
15. Since 2011, there has been no change in pr ice support schemes.  Price support through 
administered prices scheme continues to apply to be ef and pork.  Under the scheme, the Agriculture 
and Livestock Industries Corporation buys from the market when wholesale prices fall below the "lower stabilization price" and releasing stock onto the market when wholesale prices exceed the 
"upper stabilization price".  There has been no change in these prices.
15  In addition, the Government 
provides calf producers with subsidies on a per head b asis if the calf price falls below the "guaranteed 
                                                      
12 Japan Tariff Association online information.  Viewed at:  http://www.kan zei.or.jp/test/tariff02.htm. 
13 The Temporary Customs Tariff Measures Law provides for temporary exceptions to the Customs 
Tariff Law and the Customs Law, and adjustments to customs duty rates on certain goods.  This involves 
exemptions from customs duties, special emergency customs duty, reduction of customs duties, and other preferential duties (for example, under Japan FTA/EPAs).  For FY2012, 473 lines (including in-quota rates) at 
the HS nine-digit level are subject to temporary rates. 
14 WTO documents G/AG/N/JPN/164 and 176, 3 May 2011 and 1 May 2012.  However, Japan 
continues to provide food aid to LDCs and net-food importing developing countries (WTO document 
G/AG/N/JPN/173, 18 January 2012). 
15 In FY2011, the lower stabilization prices were ¥815/kg for beef and ¥400/kg for pork. Japan WT/TPR/S/276 
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  base price".  In FY2011, the guaranteed base pri ce was ¥310,000 per head for Japanese Black calf, 
unchanged since the second quarter of FY2008. 
16. The Government implements  "supply-demand adjustment" measures for rice, which, 
inter alia,  set a volume cap for production;  domestic distribution of rice is liberalized, and 
Government purchase and selling prices for rice are determined by tender.  According to the 
authorities, the supply-demand adjustment is in place to keep domestic prices stable and raise the food 
self-sufficiency ratio.  The rice diversion progra mme pays farmers to use rice paddies for purposes 
other than growing rice for food.  Diversion payments vary according to the crop actually sown or how the land is used by the farmer.  The payments ar e in addition to other subs idies received for crops 
other than rice.  The supply-demand adjustment con tinues to be conducted voluntarily by farmers and 
farmers' organizations.   
17. The Japan Dairy Council (a producer group) has been voluntarily restricting the overall 
production of raw milk since 1979, with a pr oduction cap of 7.4 million tonnes for FY2012. 
18. Subsidies for rice totalled ¥32.4 billion in FY2008 (t he latest year for which data were made 
available).
16  The Rice Farming Income Stabilization Pr ogramme, which offers direct payments for 
rice producers under a production-limiting programme, h as been in place since 1998;  the budget for 
the programme in 2009 was ¥21.8 billion.   
19. Payments for wheat, barley, and soybeans were replaced by the new payment scheme based 
on historical entitlement, introduced in 2007.  A s ubsidy programme for starch, introduced in 2007 
provides payments to farmers and starch industries.   Payments for fruit were made from funds that 
had already been raised;  there was no disbur sement of government support in FY2007, FY2008 or 
FY2009.  The subsidy for coc oons was abolished in 2008. 
(2) FISHERIES  
(i) Profile and recent developments 
20. The fisheries sector in Japan, although very sma ll in comparison with the rest of the economy, 
plays an important economic and social role, as illustrated by Japan's high per capita fish 
consumption.  In addition, globally, Japan consis tently has been a major fish producer, especially 
from marine wild capture activities.  With the wo rld's sixth largest exclusive economic zone, at 
approximately 4 million square k ilometres and more than ten time s its land area (377,000 square 
kilometres), Japan's coastal and offshore fisheries (including in neighbouring countries' EEZs) 
predominate in its capture fisheries activities.17  In 2009, for example, distant-water fishing yielded 
11% of Japan's total capture production, with offshore fisheries accounting for 58% and coastal 
fisheries for 31%.18 
21. The March 2011 tsunami has had a profound effect on Japan's fisheries sector, as the affected 
part of the coastline was one of Japan's most impor tant fishing areas.  The Government estimates the 
total value of the damage to the fishing sector at more than ¥12 trillion, in volving more than 28,000 
                                                      
16 WTO document G/SCM/N/220/JPN, 29 June 2011.  The Government purchases rice for food-
security purposes (public stockholding).  In addition, subsidies are provided for sugar, starch, milk and dairy 
products, bovine meat and pig meat, eggs, and vegetables. 
17 FAO Japan fisheries country profile.  Viewed at:  http://www.fao.org/fishery/countrysector/FI-
CP_JP/en [July 2012]. 
18 Japan Fisheries Agency (2012). WT/TPR/S/276 Trade Policy Review 
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  fishing vessels and 319 fishing ports19, as well as many aquaculture facilities and products.  At the 
time of writing, the Government has budgeted for and has started to implement disaster recovery in 
the fisheries sector, involving the reconstruction and consolidation of fishing vessels, fishing ports, 
and other infrastructure, fishery processing, an d distribution facilities, with an emphasis on 
coordination and cooperation at th e regional level.  These efforts are being implemented at the 
prefectural and municipal levels pursuant to  the Government's Master Plan for Fishery 
Reconstruction.20  It is not clear how much fishing capacity and how many and which fishing ports 
will be rebuilt, or how many of the fishers displaced by the disaster (the majority of whom are elderly) will return to fishing, and how many newcomers mi ght be attracted to the sector.  Nevertheless, 
extensive reconstruction efforts are under way, a nd fisheries production is estimated to have 
recovered to 60% of the pre-disaster output level. 
22. Japan's per capita consumption of fish and fish  products, at 56 kg per year, is the highest in 
the world
21, and far above the world average of around 18 kg per year.22  While on a declining trend 
as a component of the Japanese diet, fish account s for roughly 40% of protein consumed in Japan.23  
Even before the tsunami, the gross value of fish eries output accounted for only around 0.3% of total 
GDP (agriculture accounts for around 2.0% of GDP).24  Total direct employment in the fisheries 
sector in 2011 was approximately 160,000,  or 0.3% of Japan's total workforce.25  Fisheries 
employment is on a declining trend, in particular due to the aging workforce.  In 2008, 60% of Japan's total fishery workers (who numbered 222,000) were 55 years or older.
26   
23. Japan is currently the fourth largest producers of fisheries products (including capture and 
aquaculture production of marine and freshwater fi sh, shellfish, and aqua tic plants).  Capture 
production dominates in Japan, accounting for 78% of  total Japanese fisheries production in 2010, and 
marine capture accounts for virtually all of this.  In 2010, Japan, with an estimated 4.1 million tonnes 
marine capture production was ranked fifth in the world (Table IV.3).27 
24. In terms of aquaculture, the vast majority of  Japan's production is of marine species (fish, 
shellfish and various types of seaweed), with in land aquaculture accounting for less than 4% of 
Japan's total aquaculture production, and less than  1% of Japan's total fisheries production, by 
quantity.  In global terms, Japan is a relatively mi nor player in total aquaculture (accounting for 1.5% 
by quantity and 3.7% by value of the world total), but a much more significant player in terms of marine aquaculture, accounting for 3% of the world total by quantity and 10% by value
28, reflecting 
                                                      
19 Japan Fisheries Agency (2012). 
20 Japan Fisheries Agency (2012). 
21 Japan Fisheries Agency (2012). 
22 FAO (2011). 
23 Japan Fisheries Agency (2012). 
24 Calculated as the per cent shares of 2009 GDP (Ministry of Internal Affairs and Communications.  
Viewed at:  http://www.sta t.go.jp/english/data/handbook/c03cont. htm) accounted for by the respective 
production values of agriculture and fisheries (Ministry of Agriculture, Forestry and Fisheries, "Monthly 
Statistics of Agriculture, Forestry and Fisheries", 25 June 2012 update. 
25 Ministry of Agriculture, Forestry and Fisheries,  Monthly Statistics of Agriculture, Forestry and 
Fisheries, 25 June 2012 update.  Viewed at:  http://www.maff.go.jp/e/tokei/kikaku/ monthly_e/index.html July 
2012. 
26 2008 Fisheries Census.  Viewed at:  http://w ww.e-stat.go.jp/SG1/esta t/ListE.do?bid=000001029050 
&cycode=0 [July 2012]. 
27 FAO Fisheries and Aquaculture Department online database.  Viewed at:  http://www.fao.org/ 
fishery/statistics/en [July 2012]. 
28 FAO Fisheries and Aquaculture Department online database.  Viewed at:  http://www.fao.org/ 
fishery/statistics/en [July 2012]. Japan WT/TPR/S/276 
 Page 81 
 
 
  Japan's farming of high valued species (including laver ( nori), yesso scallops, oysters, yellowtail 
(Japanese amberjack) and red sea bream).29 
25. The volume of Japan's fisheries production, from all sources (capture plus aquaculture), was 
trending downward over the course of the 2000s, even before the tsunami.  Overall production 
declined by 13% between 2000 and 2010, and similar percentage declines were registered for capture 
and aquaculture production volumes.  However, the total value of aquaculture production increased by 
11% during this period, due to increases in the value of both inland and marine aquaculture production (no value data are available for capture production). 
Table IV.3 
Japan's fisheries production, 2001-10 
(Million tonnes and US$ million) 
  2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 % of 
world 
total in 
2010 
Total production (million tonnes) 6.1 5.9 6.1 5.7 5.7 5.7 5.7 5.6 5.4 5.3 3.1 
Aquaculture             
  Million tonnes 1.31 1.39 1.30 1.26 1.25 1.22 1. 28 1.19 1.24 1.15 1.5 
  US$ million 4.20 3.92 4.01 4.19 4. 16 4.05 4.00  4.30 4.85  4.67 3.7 
O f  w h i c h             
I n l a n d  w a t e r s             
  Million tonnes 0.06 0.05 0.05 0.05 0.04 0.04 0. 04 0.04 0.04 0.04 0.1 
  US$ million 0.37 0.36 0.41 0.43 0. 45 0.45 0.45  0.57 0.65  0.65 0.8 
Marine 
   Million tonnes            
1.26 1.33 1.25 1.21 1.21 1.18 1.24 1.15 1.20 1.11 3.0 
  US$ million 3.86 3.55 3.60 3.76 3. 71 3.60 3.55  3.73 4.20  4.01 10.0 
Capture 
  Million tonnes  
4.84  
4.50  
4.79  
4.45  
4.42  
4.44  
4.38  
4.41  
4.22  
4.14  
4.6 
Source: FAO Fisheries and Aquaculture Departme nt online database.  Viewed at:  h ttp://www.fao.org/fish ery/statistics/en 
 [July 2012]. 
Trade 
26. Japan is a significant net importer of fisheri es products, importing roughly 40% of what it 
consumes30, and exporting comparatively very little (Table IV.4).  In 2011, Japan imported more than 
US$20 billion worth of fisheries products31, and exported just under US$2 billion worth, for an 
US$18 billion trade deficit in fisheries products.  Da ta for prior years show a similar trade imbalance 
in fisheries products.  The main imports are fresh, chilled and frozen fish including fillets, and prepared or preserved fish, fish eggs and caviar. 
27. Japan's main sources of imported fish and fish  products in 2011 were China, Thailand, the 
United States, Chile, and Russia (Table IV.5).  These five exporting countries accounted for 
approximately 60% of Japan's total imports of th ese products in 2011.  The value of Japan's total 
imports of fish and fish products in 2011, in U.S. dollar terms, was 19% higher than in 2010. 
                                                      
29 FAO Japan fisheries country profile.  Viewed at:  http://www.fao.org/fishery/countrysector/FI-
CP_JP/en [July 2012]. 
30 Data provided by the authorities. 
31 The data on fisheries products re flect the sum of HS codes 03 (fi sh and crustaceans, molluscs and 
other aquatic invertebrates) and 16 (p reparations of meat of fish or crustaceans, molluscs or other aquatic 
invertebrates).  Trade data for seaweeds are not available separately.   WT/TPR/S/276 Trade Policy Review 
Page 82 
  
  Table IV.4 
Trade in fisheries products, 2006-11 
(US$ million) 
 2006 2007 2008 2009 2010 2011 
Total exports 1,393.6 1,649.7 1,629.2 1,576.2 1,938.7 1,857.0 
Of which:       
   Live fish 72.2 77.9 79.1 68.3 69.4 72.3 
   Fresh or  chilled, excl. fillets, other fish meat 139.9 151.9 122.9 106.5 109.6 90.5 
  Frozen, excl. fillets, other fish meat 480.9 548.8 518.1 477.4 611.8 467.9 
  Fillets, other fish meat, fresh or frozen 86.5 106.3 116.6 115.2 127.3 140.9 
  Dried, smoked, salted or in brine, meal, etc. 15.8 14.3 17.2 13.9 16.0 15.2 
  Prepared or preserved fish; fish eggs, caviar 98.7 116.4 127.2 126.0 138.5 129.8 
Crustaceans, molluscs and other aquatic 
invertebrates 290.8 360.7 337.7 359.7 498.0 499.4 
Total imports 15,543.7 14,762.1 16,157.3 15,184.0 16,882.2 20,052.1  
Of which:       
   Live fish 439.3 398.8 494.6 321.3 576.1 580.1 
   Fresh or  chilled, excl. fillets, other fish meat 709.1 619.1 640.7 686.5 654.6 668.0 
  Frozen, excl. fillets, other fish meat 3,323.0 3,127.5 3,689.6 3,434.9 3,740.9 4,246.3 
  Fillets, other fish meat, fresh or frozen 2,117.5 2,079.2 2,634.6 2,227.7 2,434.7 3,078.2 
  Dried, smoked, salted or in brine, meal, etc. 233.3 243.7 257.3 258.7 250.1 265.9 
  Prepared or preserved fish; fish eggs, caviar 1,430.4 1,382.1 1,232.5 1,205.5 1,417.8 1,708.1 
Crustaceans, molluscs and other aquatic 
invertebrates 540.2 497.2 469.4 474.6 548.2 703.1 
 
Source: UN Comtrade database. 
Table IV.5 
Imports of fish and fish produc ts, by principal source, 2010-11 
(US$ million)  
 2010 2011 
 Total fish and 
fish products Fish, crustaceans, 
molluscs, other 
aquatic 
invertebrates Preparations of meat 
of fish or of 
crustaceans, 
molluscs or other 
aquatic invertebrates Total fish 
and fish 
products Fish, 
crustaceans, 
molluscs, other 
aquatic 
invertebrates Preparations of 
meat of fish or 
of crustaceans, 
molluscs or 
other aquatic 
invertebrates 
Total, all sources 16,882.2 11,623.8 5,258.4 20,052.1 13,527.7 6,524.4 
China 3,626.1 1,108.5 2,517.6 4,420.2 1,279.0 3,141.2 
Thailand 2,210.2 691.2 1,519.0 2,665.9 787.7 1,878.2 
United States 1,603.7 1,200.4 403.3 1,833.7 1,336.5 497.2 
Chile 1,121.7 1,095.4 26.3 1,553.0 1,513.7 39.3 
Russia 1,172.4 1,167.1 5.3 1,425.7 1,421.5 4.2 
All other 7,1482.1 6,361.2 786.9 8,153.6 7,189.3 964.3 
 
Source: UN Comtrade database. 
Fisheries policy 
28. The Fisheries Agency of the Ministry of Ag riculture, Forestry and Fisheries (MAFF) 
administers Japan's fisheries policy;  a considerable amount of the responsibility devolves to prefectural governments and local Fisheries Cooperative Associations.
32  The main laws regulating 
fisheries are the Basic Law on Fisheries Policy,  the Fisheries Law, and the Law Regarding 
Conservation and Management of Marine Living R esources.  The Basic Law on Fisheries Policy has 
two main objectives:  to secure a stable suppl y of fishery products, and to ensure the sound 
development of the fishing industry by promoting the appropriate conserva tion and management of 
marine living resources.  It establishes the direc tion for management measures in pursuance of these 
                                                      
32 FAO Japan Aquaculture Country Profile.  Viewed at:  http://www.fao.org/fis hery/countrysector/naso 
_japan/en July 2012.  Japan WT/TPR/S/276 
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  objectives.  The Fisheries Law establishes national and prefectural licensing systems, and a rights-
based management system, principally for coastal fisheries.  The Law Regarding Conservation of 
Marine Living Resources contains provisions on to tal allowable catch (TAC) and total allowable 
effort (TAE), along with a plan for managing resources within the EEZ.33  Seven species (saury, 
Alaska pollack, sardine, jack mackerel, common and spotted mackerel, common squid, and snow 
crab) are subject to the TAC.34  In addition, the fishing industry undertakes voluntary resource 
management efforts, including capacity and effort  reductions (seasonal and size restrictions, etc.)35  
29. The Government also promotes conservation and restoration of the Japanese marine 
environment (breeding and nursery areas) and of fi sheries resources (including through the large-scale 
release of juveniles/seedlings).36  Despite management and conservation efforts, 40% of Japan's 
fisheries resources (34 stocks) are at low levels, according to the 2010 stock assessment, and resource 
recovery plans have been developed for resources in urgent need of recovery (66 plans for 77 
species).37  Japan is acting against illegal, unregulated, and unreported (IUU) fishing in its EEZ, with 
both the Fisheries Agency and the Coast Guar d involved in the monitoring and enforcement 
measures.38 
30. Some of Japan's offshore fishing activity ta kes place under reciprocal fisheries access 
agreements with China, the Republic of Korea, a nd Russia.  In addition, Japan engages in distant 
water fishing activities, including under access agreem ents with Australia, Canada, France, Kiribati, 
Marshall Islands, Morocco, Solomon Is lands, Senegal, and Tuvalu.  No quota is currently allocated to 
Japanese vessels under the Australian or Canadian ag reements, and the French agreement relates to 
fishing access in the French territori es in the Pacific.  In additio n, the Japanese private sector has 
agreements with a range of mainly African and Pacific countries, principally concerning tuna 
fisheries.  
31. Japan is a member of the five regional fi sheries management organizations (RFMOs) 
regulating international tuna fishing (Indian Ocean  Tuna Commission – IOTC;  Western and Central 
Pacific Fisheries Commission – WCPFC;  Inter-American Tropical Tuna Commission – IATTC;  
International Commission for the Conservation of A tlantic Tuna – ICCAT;  and Commission for the 
Conservation of Southern Bluefin Tuna – CCSBT). 
Government support for the fisheries sector 
32. In the wake of the March 2011 earthquake and tsunami, the Government formulated a large-
scale disaster recovery programme, including extensiv e support for the relief and reconstruction of the 
affected fisheries activities and installations.  The Third Supplementary Budget of FY2011 provides 
for ¥11,733.5 billion in disaster relief expenditures (not  limited to fisheries).  This total includes 
                                                      
33 OECD online information, "Draft Country Note on Fisheries Management Systems – Japan".  
Viewed at:  http://www.oecd.org/dataoecd/10/46/34429748.pdf [July 2012]. 
34 FAO Japan Fisheries Country Profile.  Viewed at:  http://www.fao.org/fishery/countrysector/FI-
CP_JP/en [July 2012]. 
35 Japan Fisheries Agency (2012). 
36 FAO Japan fisheries country profile.  Viewed at:  http://www.fao.org/fishery/countrysector/FI-
CP_JP/en [July 2012]. 
37 Japan Fisheries Agency online information, "Fisheries of Japan – FY2010 (2010/2011) Fisheries 
Policy Outline for FY2011 (White Paper on Fisheries:  Summary)" .  Viewed at:  http://www.jfa.maff.go.jp/j/ 
kikaku/wpaper/ pdf/2010_haku_en6.pdf.  
38 Japan Fisheries Agency online information, "Fisheries of Japan – FY2010 (2010/2011) Fisheries 
Policy Outline for FY2011 (White Pa per on Fisheries:  Summary)" .  Viewed at:  http://www.jfa.maff.go.jp 
/j/kikaku/wpaper/ pdf/2010_haku_en6.pdf. WT/TPR/S/276 Trade Policy Review 
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  ¥836.6 billion for public works including fishery ha rbours;  ¥29.4 billion fo r improvement of ports 
and airports;  ¥18.6 billion for loan s for rebuilding businesses in the agriculture, forestry, and fisheries 
sectors;  ¥61.2 billion for flood control and improvement of coastal areas, ports, and airports;  ¥22.3 billion for public works for development of rural areas, and infrastructure development for 
fisheries;  and ¥157.6 billion for recovery and reconstr uction of fisheries.  In addition, the budget lists 
a range of programmes that do not specifically refer to fisheries.
39  Under the FY2011 supplementary 
budget and the FY2012 ordinary budget, a total of ¥8 ,183 billion was appropriated for the relief and 
recovery of the affected fisheries sectors and co mmunities, including for the rebuilding of capture 
fisheries and aquaculture activities, rebuilding fi sh processing and distribution, and reconstructing 
facilities and infrastructure of coastal fishing communities.   
33. Apart from disaster relief, the Government of Japan has historically provided a range of 
support to the fisheries sector.  The Japan Fisher ies Agency Budget for 2010 set out the following 
programmes:  ¥20,255 million as government contributi ons to the fishers insurance programmes and 
emergency support funds;  ¥12,002 million for impr ovement of domestic fishing grounds (e.g. 
measures to control harmful alga and jellyfish bl ooms, recovery of lost gear);  ¥5,045 million for 
improvement of marine fisheries through moderni zation of infrastructures such as hatcheries and 
processing facilities;  ¥4,246 million for surveys and stock assessment;  ¥1,955 million for fuel and 
aquaculture feed support;  ¥1,666 million for mark eting and price support;  ¥1,456 million for fisher 
recruitment programmes;  ¥1,376 million for suppor t of remote island economies;  ¥1,311 million in 
unsecured and low-interest loans to fishers;  ¥761 m illion for management of coastal reefs, including 
restocking and removal of invasive species;  a nd ¥170 million for the collection of economic data. 
34. In total, ¥97,551 million were allocated under the budget to fund various fisheries assistance 
and management programmes.  An additional ¥82,227 million was budgeted for construction and 
maintenance of fisheries-related infrastructure.   The 2010 budget is on par with the US$1.9 billion 
reported by the OECD (2009) for 2006.40 
35. In its 2011 subsidy notification to the WTO, Japan notified the Fisheries Modernization Fund 
Interest Subsidy (¥4.5 million in FY2009) for adva nced equipment and modernization of management 
of fisheries and related sectors;  and the Fund fo r the Measures to Supply Fishery Products Stably 
(¥3.0 billion in FY2009) for comprehensive programmes implemented by non-governmental 
organizations, for the promotion of sustainable mana gement of fishery resources, promotion of stock 
enhancement and aquaculture, restructuring of fish ing entities, conservation of coastal environments, 
recruitment of fishers, for promotion of distribu tion, processing, and consumption of fishery products, 
aimed at the stable, safe, and efficient supply of food.41 
(3) MANUFACTURING  
36. Manufacturing contributed nearly 19.5% of GDP and 17% of total employment in 2010 (the 
most recent year for which data are available).  Within manufacturing, the largest subsectors were 
electrical machinery, food products and beverages, and transport equipment. 
                                                      
39 Ministry of Finance, Outline of th e Third Supplementary Budget of FY2011 .  Viewed at:  
http://www.mof.go.jp/english/budg et/budget/fy2011/11sb03.pdf. 
40 OECD (2010b). 
41 WTO document G/SCM/N/220/JPN, 29 June 2011. Japan WT/TPR/S/276 
 Page 85 
 
 
  37. The sector remains open, with a simple average MFN tariff for industrial products (HS25-97) 
of 3.6% in FY2012, compared with 15.3% for agri cultural products (HS01-24), and an overall simple 
average MFN rate of 6.3%.  However, tariff rates for textiles and clothing and for leather products and 
footwear are significantly higher. 
38. The Enterprise Turnaround Initiative Corporati on of Japan (ETIC), established in 2009 under 
the Enterprise Turnaround Initiative Corporation Act, is authorized to provide financial support to 
companies and businesses that are deemed to have revitalization potential and are highly indebted, 
including those in manufacturing.  The Innovation Network Corporation of Japan (INCJ), also established in 2009, aims to provide financial, t echnological, and management support with a view to 
promoting the creation of "next-generation busin esses", including manufacturing, by providing fund 
and managerial and technological expertise from the public and private sectors. 
39. Sector-specific subsidies are provided to comp anies involved in the manufacture of civil 
aircraft.
42  In 2009, ¥95 million were provided as a gr ant to the Japan Aircraft Development 
Corporation (JADC) for the development of next-generation aircraft. 
40. There has been no change to the foreign dir ect investment regime with respect to the 
manufacturing sector.  FDI in certain manufacturing subsectors remains subject to approval (prior-
notification);  and investment (domestic or fo reign) in certain sectors requires permission or ex post  
reporting, as stipulated in various laws and relevant regulations (C hapter II(6)(i)).  For example, 
investors who intend to invest in aircraft manufact uring require approval by the Ministry of Economy, 
Trade and Industry, in accordance with the Law on Aircraft Manufacturing. 
(4) ENERGY AND UTILITIES  
41. In 2012, the Electricity Business Act and the G as Business Law were amended with a view to 
relaxing regulation on tariffs in order to, inter alia , incorporate a feed-in-tariff (FIT) system for 
certain renewable energy;  both amendments replac ed the approval requirement with a notification 
requirement on certain tariffs. 
42. Against the background of a severe accident at  a nuclear power plant in the north-eastern 
Japan in March 2011, the Government is reviewing whether to adopt regulatory reform, such as the 
establishment of an independent national grid co mpany and further liberalization of retail sales. 
43. Under the provisions of the Foreign Excha nge and Foreign Trade Law, foreign entities 
wishing to invest in electric and gas utilities must notify their intention to the competent authorities, 
including the METI.  The authorities state that pe rmission is denied only on grounds of national 
security.43  It would appear that there has been  little investment in energy and utilities.44 
                                                      
42 WTO document G/SCM/N/220/JPN, 29 June 2011. 
43 The Minister of Finance and the mi nister in charge of the industry involved may order the suspension 
of a proposed investment if they 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. 
44 WTO (2011). WT/TPR/S/276 Trade Policy Review 
Page 86 
  
  (5) SERVICES  
(i) Financial services 
44. The financial services sector is extremely important in Japan due notably to the high level of 
savings by OECD standards.  Banking companie s' assets account for 184.8% of nominal GDP and 
173.3% of real GDP, while insurance companies' assets represent 72.7% and 68.2%, respectively.  
The sector is relatively concentrated, with the top three banks holding 40.7% of the market share and 
the top five 52.6% (Table IV.6).  The same goes for insurance, with the top three life-insurance 
companies holding 55.6% of the market the top three non-life insurance companies holding 65.6%.  The top three securities companies hold 33.95% of the market.  The sector is still undergoing 
consolidation with four significant merger operati ons (one for banks, two for insurance and one for 
securities since January 2011). 
Table IV.6 
Japan's market and regulatory regime for financial services, 2012 
General overview  
Number of financial services providers  (end-December 2011), banks:  204, of which 107 regional banks;  insurance companies:  95, of 
which 45 life insurance, and 50 non-lif e;  securities companies:  320 
 
Significant players (cooperatives, mutual  institutions, and the postal system):   JP Bank and JP Insurance in the Japan Post Group and 
mutual institutions (with mostly a regional and an SME focus)  
 
Total bank and insurance companies assets, end-March 2011:  
- as % of the whole financial sector: banking companies: 49.5%, insurance companies: 19.5% 
- as % of nominal GDP:  banking companies: 184.8%;  insurance companies: 72.7% - as % of real GDP:  banking companies: 173.3%;  insurance companies: 68.2%  
 
Major consolidations since January 2011:  
Banks:  April 2011:  Sumitomo Mitsui Trust Holdings, Inc. – the result of a merger between Chuo Mitsui Trust Holdings, Inc. and the 
Sumitomo Trust and Banking Co., Ltd.) 
Securities : February 2012:  Aozora Securities Co., Lt d. – the result of a merger between  Ja pan Wealth Management Securities and 
Aozora Securities 
Life insurance : January 2012:  Gibraltar Life Insurance Co., Ltd. – the result of a merger between the Gibra ltar Life Insurance Co. Ltd., 
AIG Edison Life Insurance Co. Ltd., and Star Life Insurance Co. Ltd.) Non-life insurance : May 2011:  Aioi Nissay Dowa Insurance Co. Ltd – the resu lt of a merger between Aioi Nissay Dowa Insurance Co. 
Ltd and Adric Sompo.) 
 
Market share held by the top 3 and top 5 largest firms, end-March 2011: 
Banks (based on data for all banks across the country):  top 3:  40. 7%;  top 5: 52.6% (Bank of Tokyo-Mitsubishi UFJ Ltd – 18.2%; 
Sumitomo Mitsui Banking Corporation – 13.7%;  Mizuho Bank Ltd – 8. 7%;  Mizuho Corporate Bank Ltd. – 8.7%;  Risona Bank Ltd  –  
3.3% 
 
Life insurance:  top 3:  55.6%;  top 5: 71.6% (JP Insurance – 30.3%; Nippon Life Insurance Company – 15.6%;  The Dai-ichi Life 
Insurance Company – 9.7%;  Meiji Yasuda Insurance Company – 8.5%;  Sumitomo Life Insurance Company – 7.4%)  
Non-life insurance: top 3:  65.6%;  top 5: 85.7% (Tokio Marine and Nichido Fire Insurance Co. Ltd – 29.6%;  Mitsui Sumitomo 
Insurance Company Ltd – 9.7%;  Sompo Japan Insurance Inc. – 16.3%;  Aioi Nissay Dowa Insurance Co. Ltd – 11.6%;  Nipponkoa Insurance Co. Ltd – 8.5% 
Employees pensions funds ( by the financial statements for fiscal y ear 2009):  top 3:  11.8%;  top 5:  15.0% 
Mutual funds :  top 3:  46.5%;  top 5:  60.3% ( Nomura Asset Manageme nt Co. Ltd – 21.9%;  Daiwa Asset Management Co. Ltd –14.3%; 
Nikko Asset Management Co. Ltd – 10.2%;  Mitsubishi UFJ Asset Mana gement Co. Ltd – 7.0%;  Kokusai Asset Management Co. Ltd – 
6.8% 
Table IV.6 (cont'd) Japan WT/TPR/S/276 
 Page 87 
 
 
   
Securities companies:  top 3: 33.9%;  top 5:  51.5% (Mizuho Securities Co. Lt d – 11.7%;  Mitsubishi UFJ Morgan Stanley Securities Co. 
Ltd – 11.2%;  Daiwa Securities Capital Markets Co Ltd – 11.0%;  Nomura Securities Co. Ltd – 10.0%;  Nikko Cordial Securities In c. – 
7.5% – name changed to SMBC Nik ko Securities Inc. in April 2011) 
Credit rating agencies (end-January 2012 – based on number of rating analysts):  top 3: 70.4%;  top 5:  91.5% (Rating and Investment 
Information, Inc. – 27.2%;  Moody's Japan K.K. – 23.8%;  Japan Cr edit Rating Agency, Ltd. – 19.4%;  Standard & Poor’s Ratings J apan 
K.K: – 12.9%;  Moody’s SF Japan K.K. – 8.2%) 
Ownership by type of activity: 
Banks (excluding foreign bank branches and locally incorporated forei gn banks):  Fully state-owned: 5 (Japan Post, Development Bank 
of Japan, Japan Bank for Intern ational Co-operation, Japan Fina nce Corporation and Okinawa Deve lopment Finance Corporation; 
over 50% owned by a single foreign co mpany:  1 (Aozora Bank, Ltd.)  
Life insurance:  fully state-owned:  none;  fully domestically owned, private:  17;  foreign minority-owned:  4; majority foreign-owned:  
15;  mutual companies:  5;  branches of foreign companies:  4  
Non-life insurance:  fully state-owned:  none;  fully domestically owned, priv ate:  23, minority foreign-owned:  1; majority foreign-
owned:  4;  branches of foreign companies:  21;  licensed specified juridical persons:  1;  
Mutual funds:   domestic shareholders:  54;  forei gn shareholders:  31 (based on business re ports of each fund submitted in FY2011 and 
on the nationality of the largest shareholder) 
Securities companies:  Domestic shareholders:  229; foreign shareholders:  87 ( as of July 2010, based on the nationality of the largest 
shareholder) 
Credit rating agencies:   domestic shareholders:  5;  foreign shareholders:  2 (end January 2012, based on th e nationality of the largest 
shareholder) 
Specific taxes on financial transactions:  No financial transaction tax (FTT);  incomes from financial transactions are subject to tax;  – 
tax on individuals differs by type of income  
 
Source:  Information provided by the Japanese authorities. 
45. Some post-2008 financial crisis measures are still in force.  For example the prohibition of 
naked short selling, which was time bound (6 months),  was renewed 11 times and is still in force.  
Similarly, the Financial Instrument Act, whic h regulates over-the-counter transactions, has been 
revised so that all transactions on derivatives are s ubject to FSA supervision.  Operators of such 
transactions have been obliged to use the cleari ng system, so as to allow the FSA to trace their 
transactions.  The regulation on hedge funds has also been reinforced. 
46. Cooperatives and mutual institutions ( Kyosai ) are significant players in particular for the 
small and medium enterprises and regional markets segments.  The only regulatory change regarding 
those institutions during the review period was the ex tension of the term of transitional measures on 
the amount of insurance that "Small Amount a nd Short-Term Insurance Providers" involved in Kyosai  
business may underwrite.  Japan Post Insurance and Japan Post Bank are very significant financial 
services player.  Their network extends all over the territory and there is a long-standing tradition by 
the Japanese population to deposit savings and to subscrib e to life insurance with this public or semi-
public institution.  Japan Post Bank is the la rgest bank in the world, with approximately 
US$2,000 billion of deposits, i.e. 22.3% of banking de posits in Japan.  Japan Post Insurance is in the 
same position with approximately US$1,000 billio n (¥93 trillion, as of March 2012) of assets. 
47. Hence, the major regulatory change regarding financial services since the last TPR of Japan in 
2011 is the revised Postal Service Privatization Ac t, passed by the Diet in April 2012;  the Act 
significantly changes the conditions of privatizatio n of the Japan Post Group established by a 2005 
law.  The sale by the State of less than two thirds of  its shares in Japan Post Holdings, included in the 
privatization process, and the sale by Japan Post Hold ings of all of its shares in its two financial 
subsidiaries, foreseen by this law between 2007 an d 2017, were frozen by a provisional law passed in 
2009 (Act No. 100 of 2009).  Mainly because of the need to finance the reconstruction after the great 
East Japan earthquake the revised Postal Service Privatization Act (Act No. 30 of 2012) was passed 
by a very large majority in both Houses of the Diet .  This act amended the Act on Japan Post Holdings 
Co. Ltd., (Act No. 98 of 2005) for the Government  of Japan to dispose the shares in Japan Post WT/TPR/S/276 Trade Policy Review 
Page 88 
  
  Holdings as soon as possible, and repealed the Act for freezing the disposition of the shares of Japan 
Post Holdings, Japan Post Bank, and Japan  Post Insurance (Act No. 100 of 2009). 
48. The main provisions of the revised Postal Service Privatization Act are that:  the number of 
subsidiaries of Japan Post Holding will be reduced from  four to three by the integration of Japan Post 
Services and Japan Network;  Japan Post Group w ill have to provide, in a unified manner through its 
post office network, universal services for postal ser vices and fair access all over Japan to savings and 
insurance services45;  Japan Post Holdings will aim to dispose of all the shares of JP Bank and JP 
Insurance as soon as possible, while taking into  consideration the business conditions of both 
companies and the results of the implementation of the Act on the responsibility for ensuring basic 
postal services;  the minimum threshold of shares that  the Government must maintain at any time has 
not been revised and remains at one third;  subject  to the adoption of new regulations JP Bank and JP 
Insurance will be allowed to la unch new products (e.g. medical insu rance) under the same regulatory 
framework as their private-sector counterparts as s oon as the Government has sold half of its shares, 
and cross-ownership among Japan Post Ho ldings subsidiaries will be allowed. 
49. Comments were submitted by stakeholders, incl uding foreign providers and institutions, on 
the Postal Service Privatization Act has been critic ized by the private sector at home and abroad, and 
by foreign governments and institutions.  Some stakeholders (e.g. USTR and the EU Chamber of 
Commerce in Japan)46 alleged that the Act is a step backwards and expressed fears of an uneven 
playing field, as the maintenance of  a State share may imply public interference (e.g. for the purchase 
of government bonds) and an im plicit public guarantee of deposits and assets as well as the risk of 
cross-subsidization between the fina ncial branches and the postal branch. 
50. The Japanese authorities explained that the revi sed Postal Service Privatization Act had a 
provision to ensure equivalent conditions of co mpetition between the Japan Post Group and operators 
offering similar services, and that the Governme nt of Japan intended to continuously ensure 
consistency with the WTO Agreements  and other international agreemen ts.  They underlined that the 
regulatory framework imposed on financial subsidia ries of Japan Post Holdings by the revised Act 
remains stricter than the one applying to the privat e sector.  Specifically, one of the subsidiaries is 
subject to deposits and savings lim itation of ¥10 million.  In additi on to regulation under the Banking 
Act and the insurance business law, imposed on all financial institutions, these subsidiaries are 
required to gain FSA and the MIC approval for new pr oducts until JP Holdings dispose of half of the 
shares of its financial services subsidiaries.  Furthe rmore, the FSA and the MIC will hear the opinion 
of the Postal Services Privatization Co mmittee in advance of the approval.  
51. There are no state-owned bank or insurance co mpanies apart from Japan Post, Development 
Bank of Japan, Japan Bank for International Co-ope ration, Japan Finance Corporation and Okinawa 
Development Finance Corporation.  Foreign owne rship remains marginal in banking services;  only 
one bank has more than 50% foreign ownership (Aozora bank).  For life-insurance, there are 
15 majority foreign owned, 4 minority foreign ow ned, and 4 branches of foreign life insurance 
companies;  in addition, there are 23 minority foreign owned and 1 majority foreign owned, and 4 branches of foreign non-life insurance companies. 
                                                      
45 The law stipulates that postal services, simple sa vings, money transfers, debts and credit settlements 
and insurance services should be made available in post  offices integrally, equally and universally throughout 
the country in a simple and user-friendly manner. 
46 USTR online information, "2011 National Trade Estimate Report on Foreign Trade Barriers".  
Viewed at:  http://www.ustr.gov/webfm_send/2712;  E BC online information, "Going for Growth, the European 
Business Council Report of the Japanese Business Environment".  Viewed at:  http://www.ebc-
jp.com/whitepapers/2010english/viewbook.html. Japan WT/TPR/S/276 
 Page 89 
 
 
  52. Three other subsectors appear largely interna tionalized:  mutual funds, securities companies, 
and credit rating agencies (Table IV.7). 
53. The percentage of non-performing loans in th e total assets of the banking sector is 2.4%, 
similar to previous years.  The net operating pr ofit per employee has increased to ¥16.5 million and 
the net income per employee remains stable at ¥8.4 million. 
Table IV.7 
Japan's market and regulatory regime for banking 
Economic indicators 
Non-performing loans as a percentage of total bank assets:  2.4% (end-March 2011) 
Net operating profits per employee:  ¥16.5 million Net income per employee:  ¥8.4 million 
 
Regulatory framework 
Supervisory authorities: 
Ministry/agency responsible for defi ning banking sector policy:  the Financial Services Agency (FSA) 
Sector supervisor  (monitoring bank liquid ity, overseeing payment and settlement systems, etc):  FSA and  the Bank of Japan 
Responsibility for competition policy issues: the Japan Fair Trade Commission. 
 
Preferential and bilateral policies: 
Preferential arrangements affecting banking services:  none 
Bilateral agreements and MOUs (notably concer ning prudential regulation and supervision):  1 
Recognition of prudential measures of other countries th rough international agreements or unilaterally:  none 
 
Licensing: 
General criteria:  sufficient financial ba sis and proper expected income and expenditures in relation to the business (Banking Act, 
Article 4.2) Additional criteria for foreign banks:  reciprocity test - the tr eatment must substantially be the same in the country where th e foreign 
bank's major offices are located.  Where a foreign bank intends to receive a business licence, a nd where establishment of the f oreign bank 
requires permission from a foreign governme nt agency or must go through any other pr ocedures, the bank must present a written 
document to prove that the permission has been obtained. 
Licencing organ:  the FSA 
Validity of a licence:  a licence has no validity period  
Restrictions on banks selling or disposing of licences:  for ma intaining bank stocks, prior perm ission is required from the FSA  to 
become a holder of voting rights over the "major sharehol der threshold" (about 15-20%, depending on influence power) 
(Banking Act, Article 52(9)) Minimum capital requirements to obtain a licence (domestic and foreign banks):  ¥2 billion 
Recognition of home-country supervision:  subject to an examina tion of whether treatment is substantially similar to Japan's Ba nking Act 
and of supervision by the home-country financial supervisory au thorities.  Requirement applied to all countries without excepti on
 
(Banking Act, Article 4(3)). 
Other authorizations required: 
- approval from the Prime Minister for the acquisition of over 20% of the shares of a bank.  This measure is non-discriminatory  
- the establishment of a secondar y office is subject to a notification for Japanese  banks and to an authorization from the Prim e Minister 
for foreign banks.  According to the au thorities, this discrepancy between the two regimes is of a prudential nature 
- similarly, additional licences are not required for establishing a second or more branches although approvals are needed.  Th e authorities 
consider this measure as is of a prudential nature.  
Prudential regulations 
Administrative allocation of financial resources:  fi nancial resources are not allocated administratively 
Determination of interest rates and fees:  banks  may determine interest rates and fees freely  
 
Table IV.7 (cont'd) WT/TPR/S/276 Trade Policy Review 
Page 90 
  
   
Measures to ensure compliance with the Basel Committee' s Core Principles for Effective Banking Supervision: 
The FSA states in supervisory guidelines: "the FSA tries to refl ect principles and guidelines, with regard to bank supervision,  which the 
Basel Committee, etc. develops on their supervision".  The FSA  has revised the Banking Act, supervisory guidelines, and inspect ion 
manuals, based on the Basel Committee's Core Principles (BCP).  When the BCP itself is revised, the FSA will review the parts o f the 
guidelines that relate to the revised part s of the BCP, as necessary.  To ensure co mpliance with the BCP, the FSA implements in spections 
and supervision while taking into consideration the scale and comple xity of financial institutions. 
 
Specific provisions against money laundering : 
Financial institutions are working on identif ication and trade notifications which are obligations under "the Act of Preventing  Transfer of 
Illegal Profits".  The FSA is encouraging efforts in financial institutions, through ex amination and supervision.  Members of f inancial 
instruments exchanges must obey the following procedures:  deal ers of financial instruments (registration with the Prime Minist er is 
required);  permitted contractors for excha nge transaction's (permission from the Prime Minister);  and registered financial in stitutions 
(registration with the Prime Minister).  See Japan Financia l Intelligence Center Annual Repor t 2010 http://www.npa.go.jp/sosiki hanzai/ 
jafic/jaficenglishpa ge/jafic_2010e.pdf. 
 
Bank deposit insurance scheme 
The Government introduced the de posit insurance system to protect depositors in  failed financial institutions and to contribute  to the 
smooth settlement of funds.  Non-interest-b earing deposits, such as current deposits ar e protected in full.  The status of othe r deposits, 
such as time deposits and ordinary deposits: no more than ¥10 mi llion and interest / person / fi nancial institution;  protectio n, in excess of 
that amount: depends on the asset status  of the failing financial institution.  
 
Source: Information provided by the Japanese authorities. 
54. Insurance premiums in Japan are equivalent to  7.2% of GDP for life insurance and 1.8 % for 
non-life insurance. 
55. The main recent regulatory changes relate to the relaxation of the regulation of insurance 
solicitation by banks of small and medium enterpri ses (so called "bank sales channel").  Following a 
review in 2011 it was decided to move from a re gime of general prohibition of such sales to the 
authorization of some sales of low-value, low-risk , low-return products, savings-oriented rather than 
investment-oriented through qualitative threshold.  The FSA constituted a working group to review 
the issue of the domestication of foreign insurance op erations, i.e. of the regulatory conditions for the 
transformation of branches of foreign insurance co mpanies into subsidiaries.  As a result, the 
restriction forbidding the sale of insurance during the transformation of branches of foreign insurance 
companies into subsidiaries has been removed. 
56. Table IV.8 details the main economic indicat ors and the general re gulatory framework for 
insurance services in Japan. 
Table IV.8 
Japan's market and regulatory regime for insurance, 2012 
Penetration (premiums as share of GDP):  Life insurance: 7.2%;  non-life insurance: 1.8% 
Regulatory framework 
Recent legislative changes :  
Measures to prevent negative effects of in surance solicitation by banks, etc., were revised in several steps, including the eas ing of 
regulations and setting up measures necessary to ensure effectiveness 
 
Supervisory authorities:  
Ministry/agency responsible fo r defining insurance sector policy, and for supervision of the sector:  the FSA  
Responsibility for competition policy issues:  the Japan Fair Trade Commission  
Preferential and bilateral policies: 
Preferential arrangements affecting banking services: none 
Bilateral agreements and MOUs:  none 
Table IV.8 (cont'd)Japan WT/TPR/S/276 
 Page 91 
 
 
  Licensing: 
Criteria for assessing applications for insurance licence:  suffic ient financial and organizationa l base to conduct insurance u nderwriting; 
and whether the underwritten insu rance products are appropriate 
Incompatibility of life and/or non-life in surance licences:  insurance companies may conduct only one of these businesses 
Differential treatment for foreigners in the licensing process:  no distinction under the Act 
Prior approval of home-country supervisor: compatible home-country  regulation and other criteria applied exclusively to foreign ers:  a 
foreign insurer requires a certificate from an organization whose jurisdiction includes the home country, proving that the insu rer is 
lawfully conducting insurance business in its home country that is similar to the in surance business it intends to conduct in J apan 
Limitation on number of providers:   none  
 
Licencing authority:  the FSA, which is the single administra tive organ for the consideration of licence applications 
Maximum processing time for applications:  there is no provision under the Act for a ma ximum but the standard "to be attempted"  is 
within 120 days  
Period of validity of a licence:   without special conditions, a licence  has no specified period of validity  
Restrictions on selling or disposing of licences:   allocated licences may not be sold;  where insurance comp anies abandon their insurance 
business, their licences become void 
Other authorization required:  approval fr om the Prime Minister is required for the acquisition of over 20% of the shares of an  insurance 
company.  This measure is non-discriminatory 
Prudential regulations 
Specific obligations for banks providing securities services :  such banks must create joint-stock companies for securities  
Differences of treatment between state-owne d firms, other domestically owned firms, foreign-owned branches, and foreign-owned 
subsidiaries:  foreign-owned subsidiaries are required to hold in Japan the necessary assets in or der to secure an insurance po licy that 
provides for the company's potential colla pse (Insurance Business Act, Article 197)  
Also, foreign-owned subsidiaries are exempt fr om a consolidated solv ency margin standard. 
Recognition of home-country supervision of foreign insurance comp anies:  To obtain a licence, a foreign insurance company must be 
“carrying on Insurance Business in a forei gn state in accordance with the Acts and re gulations of the foreign state”: home-coun try 
supervision of the foreign insurance company is recognized (Insurance Business Act, Article 2(6), 185(1)) Minimum capital requirements to obtain a licence:  ¥1 billion.  Fo reign insurance companies are required to deposit  ¥100 milli on with 
the deposit office in Japan (Insura nce Business Act, Article 6: 190)  
Other prudential tests for licence applicants:  ¥1 billion minimum capital requirement.  In pro cessing licence applications, consideration is 
given to ensuring equity capita l in accordance with the contents  and scale of the business anticipated, and a sufficient financ ial base to 
conduct the business of an insurance company soundly and efficien tly, as well as to having good prospects for income and expend itures 
pertaining to the business (Insurance Business Act, Article 5(1)(i )).  In addition, the solvency margin ratio of each insurance  company 
must always be no less than 200%  
Administrative allocation of insurance services:  insurance services are a llocated administratively  
Approval required for life and non-life premiums and products:  the contents of insurance products, premium rates, etc., are su bject to 
review at the time of application for a licence.  Also, approval is required from the FSA to revi se the contents of insurance p roducts, 
insurance premiums, etc., (Insurance Business Ac t, Article 5(1)(iii)(iv), 123(1), 187(5), (207) 
 
Source:  Information provided by the Japanese authorities. 
57. The total market capitalization of securities services, companies listed on the first section of 
the Tokyo stock exchange represented 204.8% of nominal GDP December 2011 and 191.69% of real 
GDP, while the bond market capitalization represented 849.83% and 908.12%.  Table IV.9 details the 
main economic indicators and the general regulat ory framework of securities services in Japan. 
58. There are no recent regulatory changes with rega rd to pension funds and mutual funds, but a 
working group has been constituted to review re gulations for mutual funds.  The FSA is the 
supervisory authority for both activities, assisted by  the Minister for Health, Labour and Welfare for 
pension funds.  For management and sales of in vestment trust, licensing takes the form of a 
registration procedure.  Criteria taken into account ar e historical records of applicants, financial and 
organizational soundness, and minimum capital (¥50 million at least).  Foreign companies intending 
to exercise these activities must be exercising th e same activity in their home country under 
appropriate supervision and must have a branch or office in Japan.  Licences have no fixed duration 
and are not transferable.  There is no limitation on the number of providers.  Table IV.10 details the 
main economic indicators and the general regulatory framework of mutual funds and pensions fund 
services in Japan. WT/TPR/S/276 Trade Policy Review 
Page 92 
  
  Table IV.9 
Japan's market and regulatory regime for securities, 2012 
Securities services (including by banks) 
Economic indicators 
Total market capitalization of companies listed on  the first section of the Tokyo Stock Exchange (end of each quarter 2011): 
¥ million:  296,474,251 (March);  290,426,163 (June);  261,671,225 (September); 251,395,748 (December) 
% of nominal GDP:   257.01% (March);  253.16% (June);  226.32% (September);  December 204.8% (December) 
% of real GDP:   235.26% (March);  237.16% (June);  204.67% (September);  191.69% (December) 
 
Bond market capitalization  (total outstanding am ount of bond issues,  end of each quarter 2011, including Government Bonds, 
Fiscal Investment and Loan Program Bonds , Local Government Bonds, Government-backed Bonds, FILP Agency Bonds, etc. , Bank 
Debenture Bond, and Corporate Bonds) ¥100 million:   10,811,223 (March);  11,017,522 (June);  11,155,083 (September);  11,145,074 (December) 
% of nominal GDP:   857.89% (March);  899.67% (June);  872.50% (September); 849.83% (December) 
% of real GDP:   937.23% (March);  960.38% (June);  964.78% (September);  908.12% (December) 
 
Regulatory Framework 
Supervisory authority and licensing organ :  the FSA
Additional criteria for foreign firms:  for sales of investment trusts (Type I Fina ncial Instruments Business), registration re quires a 
corporation to be an entity that is carryi ng out business of the same sort in its ho me country in accordance with laws and regu lations of 
the corresponding foreign country 
 
Period of validity of a licence:   none 
Transferability of licences:  not transferable 
Limitation of the number of providers:   none 
Restrictions on foreigners buying and selling on the stock market:   A member of the Financial Instruments Exchange Market is 
limited to either (1) a Financial Instruments Business Operator (request for registration by the Prime Minister), (2) Authorize d 
Transaction-at-Exchange Operator (request for authorization by the Prime Minister ), or (3) Registered Financial Institutions (r equest for 
registration by the Prime Minister). 
 
Other authorization required:   obligation to register branch offices for brokers.  This measure is non-discriminatory. 
 
Operating conditions: 
Requirements to use international a ccounting and disclosure standards:   A company may prepare its consolidated financial 
statements in accordance with  the International Financial Reporting Standards (IFRS) if:
(a)  all of the following requirements are met: (1) The shares to  be issued are listed on the Financial Instruments Exchange, ( 2) The 
Annual Securities Report contains a descripti on of the special approach taken to ensu re the appropriateness of the consolidated  financial 
statements, (3) Board members and employees who have sufficient  knowledge about designated in ternational accounting standards a re 
assigned, and the system in which the cons olidated financial statements can be prep ared, based on the designated international accounting 
standard, is maintained. 
 
(b) One of the following requirements must also  be met:  The company, its parent company, and other affiliated companies as wel l as the 
parent company of the affiliated companies:  (1) are disclosing documents regarding th eir corporate affairs and other related ma tters, based 
on international accounting standards, during a period stipulated by the Act and regul ations, and based on the Act and regulati ons of the 
foreign country, (2) are disclosing documents regarding their co rporate affairs and other relate d matters, based on internation al accounting 
standards, during a period stipulated by th e rules, based on the rules of foreign fina ncial instruments market, (3) own a subsi diary with 
more than ¥2 billion in capital in the foreign country. 
 
On 12 December 2008, in agreement with the European Union, the Japanese GAAPs (Generally Accep ted Accounting Principles) were 
evaluated to be equivalent to Interna tional Financial Reporting Standards (IFRS) as adopted by the European Union (EU) .  (Since January 
2009, Japanese companies that are listed on ma rkets within the EU have b een able to use the Japanese GAAPs when making disclosu res 
in Europe.) 
 
Table IV .9 (cont'd) Japan WT/TPR/S/276 
 Page 93 
 
 
  Provisions on shareholders' rights in companies listed on stock exchanges: 
The Financial Instruments and Exchange Ac t does not provide any special regulations on shareholders’ rights for companies liste d on the 
financial instruments exchange. 
Provisions on companies' disclosure obligations:    
-  for companies listed on financial instruments exchange:  disc losure of company information in accordance with securities lis ting 
regulations; to protecting shareholders' rights, rule s are described in the "Corporate Code of Conduct" 
-  for general companies:  (a)  Disclosure  of issuance:  for securities to be recr uited and/or sold in excess of ¥100 million, the issuer must 
submit a notification of securities to the Prime Minister before a public offering or  public selling (Financial Instruments and  Exchange 
Act, Article4(1));  also, the issuer must document and deliver a prospectus to investors before (or at the same time as) delive ring the 
securities (Article 15(2));   (b) Constant disclosure:  an i ssuer of listed securities on the fi nancial instruments exchange or  of a public 
offering or sale of a security, is obligated to submit its secu rity report after completion of each business year (within 3 mon ths) to the 
Prime Minister (Financial Instruments and Exchange Act, Article 24(1));  a quarterly report must be submitted to the Prime Mini ster 
within 45 days of completion of every fis cal quarter (Article24-7(1)); and  when ma king a public offering or sale of a security  in a foreign 
country, these issuers must submit the extraordinary repor t to the Prime Minister wit hout delay (Article 24-5(4)).  
 
Source: Information provided by the Japanese authorities. 
Table IV.10 
Japan's market and regulatory regime fo r pension funds and mutual funds, 2012 
Recent changes:  no major changes in market access policies, ownershi p rules, or other regulations since previous TPR. 
 
Supervisory authorities: 
FSA registration required to carry out mana gement and sales for investment trust. 
 
Responsibility for pension fund regulation and supervis ion:  Minister for Health Labour and Welfare. 
 
Licensing criteria:   Registration with the FSA.  Conditions to be considered ar e:  historical records of vi olations, appropriateness, and 
sufficiency of human resources organization;  a board of directors, corporate auditors or a committee must be established;  and  capital 
must be more than ¥50 million.  
Additional licensing conditions for foreign companies: 
The corporation must be handling the same sort of business in its  home country in accordance with law and regulations of that c ountry, 
and must have a branch or office in Japan. 
 
Period of validity of a licence:  none 
Transferability of licences:  licences are not transferable 
Limitation on the number of providers:   none  
Source:  Information provided by the Japanese authorities. 
59. The sectoral coverage of financial services a ppear identical in Japan's GATS commitments 
and its EPAs commitments, following the coverage  of the GATS understanding on financial services 
for positive listing agreements or introducing the sa me sectoral limitations through reservations for 
the negative listing agreement with Switzerland (Tab le AIV.2).  The EPA with Mexico refers to 
GATS commitments in its financial services chapter. 
60. Since GATS commitments and all but one FTAs have the same sectoral coverage as the 
GATS financial services understanding, the coverage  of modes 1 and 2 for insurance services is 
limited to two subsectors:  transport and transit insurance ("MAT") and reinsurance.  For MAT the 
restrictions are identical in all the agreements :  commercial presence is required, including for 
intermediation services.  For reinsurance services there is a compulsory retrocession of 60% for 
compulsory automobile third-party liability insu rance, and suppliers not licensed in Japan are 
prohibited from providing reinsurance service in the GATS commitments.  The retrocession 
requirement disappears from the FTAs except with Singapore, where it is the subject of a complex 
phase-out.  All FTAs echo the GATS prohibition of m odes 1 and 2 provision of reinsurance services 
by suppliers not licensed in Japan. WT/TPR/S/276 Trade Policy Review 
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  61. Mode 3 is devoid of restrictions under both the GATS and the EPAs except for one limitation: 
insurance intermediation may only be supplied for insurance contracts allowed in Japan.  Japan's 
GATS commitments for mode 4 extend to personnel covered by the financial understanding, to the 
extent they are not already covered by those horiz ontal commitments, which is the case for senior 
managerial staff possessing proprietary information essential to the establishment, control and 
operation of the service supplier, and specialists in the operation of the financial service supplier.  The 
categories benefiting from this extension, subject to the availability of personnel in Japan, are: 
specialists in computer services, telecommuni cation services, and accounts of financial services 
suppliers and actuarial and legal specialists.  In  all positive-listing EPAs, mode 4 remains totally 
unbound, which implies by default the application of GATS mode 4 commitments.  For negative 
listing agreements, the chapter on movement of na tural persons applies for mode 4 in financial 
services.  Therefore entry and temporary stays of personnel engaged in financial services including certified public accountants or tax accountants are committed under one of the following categories:  
intra-corporate transferees, investors, professional services, and contractual services suppliers.  The 
commitments undertaken in the Japan-Philippines ag reement are subject to a standstill obligation.  
The GATS commitments contain additional commitment s on automobile insurance, commercial fire 
insurance, and medical insurance, which are echoed only in the Japan-Singapore FTA. 
62. For banking services the sectoral coverage is  the same as the GATS financial understanding 
either through a direct reference for GATS and positive listing agreements, or through equivalent 
reservations in the case of negative listing agreements.  Therefore the coverage of mode 1 is limited to 
the provision and transfer of financial services in formation, financial data processing, and other 
auxiliary services.  The other sectors remain devo id of commitments.  For the sectors covered, 
commercial presence is required for discretionary investment services. 
63. Under mode 2 and its equivale nt in negative listing agreements, "purchase of financial 
services by public entities" is unrestricted and this  extends to all banking sectors in all FTAs and the 
GATS.  Mode 3 regimes are more complex.  The GATS commitments contain two restrictions:  for 
market access, commercial presence for investment trust management services must be juridical 
persons established in Japan;  and for national treat ment, the deposit insurance system does not cover 
deposits taken by branches of fore ign banks.  In addition, there ar e modal additional commitments (a 
rare feature) on the abolition of the distincti on between new money and other assets for employee 
pension fund management.  In the positive listing FTA s (with Brunei, India, Indonesia, Malaysia, the 
Philippines, Singapore, Thailand and Viet Nam) there are no other restrictions than the non-coverage 
by the deposit insurance system of deposits taken by  foreign banks.  In addition, the agreement with 
Singapore contains specifically negotiated additiona l commitments different from those contained in 
the GATS commitments (Table AIV.2).  There is an id entical reservation in the investment chapter of 
some positive-listing agreements (with India, Malays ia, the Philippines, and Singapore) and in the 
negative-listing agreement with Switzerland.  For Brunei and Indonesia the reservation in the 
investment chapter is wider:  covering all exis ting measures in banking services that do not conform 
to national treatment. 
64. The agreement with Switzerland contains two r eservations that have no  equivalent in the 
GATS commitments or in other EPAs:  (i) a r eservation for future measures on banking and other 
financial services other than (a) securities related transaction with financial institutions and other 
entities in Japan, (b) sales of a beneficiary certificate of  an investment trust and an investment security 
through securities firms in Japan, (c) provision and tran sfer of financial information and financial data 
processing and advisory and other auxiliary servi ces excluding intermediation.  These exclusions 
represent a commitment on cross-border trade of secur ities services, which has no equivalent in other Japan WT/TPR/S/276 
 Page 95 
 
 
  FTAs or in GATS;  and (ii) a reservation on mode  2 for banking and other financial services other 
than those in the list of the financial annex of the agreement.47 
65. With regard to mode 4, the trade regimes fo r banking services are identical to those described 
for insurance services.  The commitments undertaken for modes 1, 2, and 3 for banking services in the 
Japan-Philippines agreement are s ubject to a standstill obligation. 
(ii) Telecommunications 
66. Japan's legislation does not distinguish be tween basic telecommunication providers and 
value-added telecommunications providers, but since 2004, has distinguished between registered and 
notified carriers.  This replaced the distinction betw een type I and type II carriers, i.e. facilities-based 
and non-facilities-based.  The new distinction, tri ggered by technological developments, is between 
large- and small-scale facilities.  Carriers w hose activities go beyond the boundaries of a single 
prefecture are considered as regist ered operators.  Registration fo rmalities and procedures with the 
Ministry of Internal Affairs and Communication (MIC) are minimal;  and the notification regime 
requires no investigation or authorization. 
67. During the review period, 29 carriers subject to  registration procedure have been created, 
while 22 merged with other companies and 3 closed, leaving a total of 330 companies as of 1 January 
2012.  For carriers subject to notification, the figures were 2,010 creations, 162 mergers and 1,113 
closures, leaving a total of 15,482 carriers. 
68. By law, the Government shall hold a share of 33. 3% in NTT.  This is the only case of public 
ownership in the sector.  Foreign participation in NTT was 24.2% on 31 March 2012 according to the 
compulsory annual securities report for listed compani es.  Table IV.11 details the regulatory regime 
of telecommunications in Japan and its main economic indicators. 
Table IV.11 
Market structure and regulatory framework of Japan's telecommunications sector, 2012 
Economic data 
Main actors: 
Companies providing value-added telecom services:  330 carriers ar e registered with the Minister;  and 15,482 carriers have sub mitted 
notifications (up to 1 January 2012).  
Market leaders for  fixed telecom services:  NTT East and N TT West (combined market share for fixed telecom service 79.2% 
(March 2012)) 
Market leaders for mobile services:  NTT DOCOMO (45.3%), KDDI (including Okinawa Cellular, 26.4% ), Soft Bank Mobile (21.8 %), 
(March 2012). 
Main Internet access providers (incl. ADSL, fibre-to-home pr oviders, and cable-based access): non-NTT group ( 31.7%), NTT group  
(30.2%), vendor group (26.0%), (March 2012).  
Foreign ownership participation:  Except for the Nippon Telegra ph and Telephone Corporation, ther e are no restrictions in Japan 's 
telecommunications carriers.  Foreign ownership shares of listed telecom companies are not available. 
State ownership:  Nippon Telegraph and Telephone Corporation - 33.3% 
Tariffs:  (evolution since Japan's last TPR (2011)) 
Local services:  no changes on basic monthly charges or local  call rate (subscriber lines) of NTT East and NTT West. 
International services:  no changes on international calls of KDDI (3 minutes for ¥27), NTT Communications (3 minutes for ¥27),  
Softbank Telecom (3 minutes for ¥7.99). 
Mobile services: NTT DoCoMo, Type S Value has not changed:  basic monthly service rate – ¥3, 000;  call rate – ¥108 per 3 minute s 
(excluding tax).  Basic monthly service rate include s a communications allowan ce of ¥2,000 (excluding tax). 
Internet services:  Ministry of Internal Affairs and Communicat ions does not regulate the internet connection fee.  No changes.  
Interconnection rates: (monthly charge per line)  for optical fibre significantly lowered to: 
 
Table IV.11 (cont'd) 
                                                      
47 This list is identical to the list of sectors of the GATS financial services annex. WT/TPR/S/276 Trade Policy Review 
Page 96 
  
   
-Dry copper local loop:  NTT Eas t:  ¥1,298 NTT;  West: 1,354 (2012) 
-Line sharing local loop:  NTT East: ¥88, NTT West: ¥89 
-Single star optical fibre:  NTT East : ¥3,403, NTT West: ¥4,357 
-Shared-access optical fibre:  NTT East: ¥3,013, NTT West : ¥3,846 (2012) 
-Mobile phone interconnection rates:  signi ficantly lowered, e.g. NTT DoCoMo: ¥24.3/3 min. (in 2009), ¥12.24/3 min. (in 2011) 
 
Establishment  of new companies, mergers or closures since Japan's TPR:   
Under Telecommunication Business Act Artic les 17 and 18, 184 companies carried out pr ocedures for successions and mergers (22 
registered telecommunications carriers, 162 notified telecommunica tions carriers;  1,116 carried out procedures for closure (3 registered 
telecommunications carriers, 1,113 notified te lecommunications carriers) (1 January 2012) 
 
Regulatory framework  
Interconnection: 
Recent or planned changes:  none 
Complaints filed or resolutions effected for interconnection disputes among operators:   one request for the Minister of Internal Affairs 
and Communications to start negotiations si nce 2010; and 4 mediations by the Telecommunications Dispute Settlement Commission 
since Japan's TPR in 2011 (Article 35, Article 154, Telecommunication Business Act; for the Telecommunications Dispute Settleme nt 
Commission (see:  http://www.soumu.go.jp/ main_sos iki/hunso/ english/activities/processing.html). 
 
Competition policy: 
Results of the "competition review in the telecom business field (2010) ": 
Fixed telephone and dedicated service markets:  a single operato r has strong market power and the possibility of using its posi tion to 
exercise market power; MIC estimated that regulations in the ma rket are sufficient and WAN service has strong competitive press ures in 
the dedicated service market. 
Toll bypass telephony, cellular phone (includi ng PHS, broadband, FTTH, and ADSL market, a single operator is in a position to e xercise 
its market power, or multiple carriers are in a position to exercise  their market power in an alliance under an oligopoly;  MIC  estimates 
that the existence of regulations and competitive pressures from the other service are sufficient.  
050- IP telephony and WAN service market:  multiple operators are in a position to exercise their market power in an alliance u nder an 
oligopoly; MIC estimates that the market reduction in 050-IP te lephony and the existence of re gulations and competitive pressur e in 
WAN service markets are sufficient. 
Cable TV internet and ISP market:  MIC estima tes that no operator can use market power.   
Japan Fair Trade Commission regulations and actions: 
The JFTC establishes Guidelines Concerning the Interpretation of "Specific Business Fiel d" as defined in the Provisions of "Mon opolistic 
Situation" in the Antimonopoly Act”:  fixed telecom and mobile telecom have been s hown in the annex since 2004, and broadband 
services since 2010.  The JFTC monitors trends of production,  sale, price, manufacturing cost s, and technical innovations, and profit 
ratios Ministry of Internal Affairs and Communications  promotes competition in the telecom market. 
Dominant suppliers:
 NTT East and NTT West (subscriber lines) NTT DoCoMo (mobile phones)  
 
Other regulatory aspects: 
Regulatory supervision:  For carriers installing Category I de signated telecommunications fac ilities – functional separation of  the facility 
department and the sales department introduced  to ensure appropriate supervision of s ubsidiaries and appropriate management of 
information obtained through the business activities of interconnection (Telecommunicati ons Business Act, Article 31, the Ordin ance for 
Enforcement of Telecommunications Business Act Article 22) 
Facility sharing: no changes Local loop unbundling:  no changes 
Number portability:  system introduced by Article 4 of Rule of Interconnection, no changes since 2011 
Spectrum management:  Licence required from the Minister of Inte rnal Affairs and Communications to operate a radio station.  Ho wever, 
if a radio station meets a specific requirement it may be operated only by regist ration (without a licence). 
Mobile interconnection:  amendment to th e Telecommunications Business Act in December, 2010:  rules for interconnection account ing 
introduced for the telecom carri ers with Category II designated telecommuni cations facilities in March 2011 (Telecommunications  Act as 
amended, Article 34).  
Mobile roaming rates (wholes ale and retail):  no changes 
Accounting rates:  no changes Licensing: Operators of telecommunications businesses with larg e-scale telecommunications circuit facilities must be registered  by the 
Minister of Internal Affairs and Communi cations; operators with small-scale teleco mmunications circuit facilities or without 
telecommunications circuit facilities must submit a notification to the Minister.  
 
Universal service  
Beneficiaries:   Telecommunications carriers that provide universal telecom services and are designated by the Ministry of Internal 
Affairs and Communications (MIC) as carriers meeting the requireme nts (eligible telecommunications carriers:  NTT East and NTT 
West) 
Table IV.11 (cont'd)Japan WT/TPR/S/276 
 Page 97 
 
 
  Contributors:   Telecommunications carriers that have connections to subscr iber lines of NTT East and NTT West (limited to carriers 
with sales of ¥1 billion or more) Services covered :  (1) subscriber telephones (subscriber access lines) or op tical IP telephone equivalent  with subscriber telephones 
(included in universal services from Ap ril, 2011);  (2) Category I public telephone se rvice;  (3) emergency calls (dial 110, 11 8,119).  
 
Expenditure  (approved in 2011):  total compensation fo r NTT East and NTT West – ¥11.1 billion 
Method of calculation:  
- for subscriber access lines:  benchmark method for the top 4.9%  of the high-cost regions;  wh en the cost per line exceeds the  national 
average cost + double standard deviations, part of the cost will be covered by the universal service fund 
- category I public telephone service:  can cel-out cost-revenue calculation method 
- emergency calls: costs of emergency lines that correspond to the top 4.9% high cost lines out of all subscriber lines are com pensated 
- optical-IP telephones equivalent to subscr iber telephone:  excluded from compensation 
Management :  Telecommunications Carriers Association (universal teleco mmunications service support institution) is responsible for 
collecting contributions from carriers and providing the subsidies.  The institution must obtain permission from the MIC regard ing the 
annual subsidies and contributions Specific tax incentives regime for the telecommunication sector:   no changes 
 
Source:  Information provided by the Japanese authorities. 
69. There was no change in the interconnection polic y during the review period.  Five cases have 
been dealt with under the interconnection disput e settlement mechanism since Japan's last TPR. 
70. The Anti-Monopoly Act (AMA) applies to the telecommunications sector;  and the JFTC 
"Guidelines Concerning the Interpretation of Specific Business Field as Defined in the Provisions of 
Monopolistic Situation in the Anti-Monopoly Act" list fixed and mobile telephone services in the 
respective annexes. 
71. NTT East and NTT West are officially designated as the dominant suppliers for subscriber 
lines, and NTT DOCOMO for mobile telephony, with  the obligations attached to that status. 
72. NTT East and NTT West have been designated as eligible telecommunications carriers to 
ensure universal service.  Universal service cove rs subscriber telephone services and, since April 
2011, optical IP services equivalent to subscriber services, in addition to public telephone services and 
emergency calls.  Contributors are providers interc onnected with facilities installed by NTT East or 
NTT West to provide universal service.  Providers whose annual sales are less than ¥1 billion are 
exempted.  Calculation of the amount of compensa tion varies with the type of service.  Funds are 
collected by the Telecommunications Carriers Association, which has been designated as the 
universal service support institution.  In 2005, co mments were submitted by stakeholders, including 
foreign carriers and institutions, on the scale of costs,  cost calculation mechanism, and specification of 
high-cost areas.  Some stakeholders (e.g. USTR and the EU Chamber of Commerce in Japan)48 
alleged that the mechanism had a cross-subsidy ef fect.  The Japanese Government states that the 
calculation mechanism was based on deliberations of a council composed of pers ons with the relevant 
knowledge and experience in the areas concerned nomina ted by the MIC, with the purpose of  fairness 
and balance, following the procedure established by the relevant ministerial ordinance.  The amount 
of expenditure approved for this fund in 2011 was ¥11.1 billion.  Tabl e AIV.3 details the trade regime 
of telecommunications in Japan. 
73. Japan's telecommunication services trade regim es are generally quite open.  GATS and EPAs 
commitments cover all services listed in the W120 an nex and in the model schedule on telecom, with 
the exception of the (outdated) telegraph services  in the GATS commitments and in the EPAs with 
                                                      
48 USTR online information, "2011 National Trade Estimate Report on Foreign Trade Barriers", p. 201.  
Viewed at:  http://www.ustr.gov/webfm_send/2712;  EBC online information, “Going  for Growth, the  
European Business Council Report  of the Japanese Busi ness Environment”, p. 42.  Viewed at:  http://www.ebc-
jp.com/whitepapers/2010english/viewbook.html. WT/TPR/S/276 Trade Policy Review 
Page 98 
  
  India and Viet Nam, and of "other telecom services" in the GATS commitments and in the agreement 
with Singapore.  The only reservations in the GATS and FTAs commitments are the limitation of 
foreign ownership in NTT (1/5 under the GATS, 1/3 under the FTAs, and via the standstill applying 
to some FTAs, in the applied regime), and th e Japanese nationality requirement for NTT's board 
members and auditors.  Two FTAs (with Brunei and Indonesia) contain a more generically drafted 
reservation to national treatment in their investme nt chapter on "existing measures on information and 
communications" covering the same NTT reservati on as well as the Foreign Exchange and Foreign 
Trade Law reservation.  
74. The GATS commitments incorporate the discip lines of the telecom reference paper via 
additional commitments.  Six positive listing FTAs (w ith Brunei, Indonesia, Malaysia, Thailand, and 
Viet Nam) contain enhanced disciplines on safeguards, anti-competitive practices, and 
interconnection (line sharing and co-location).  Two positive listing agreements (with India and 
Singapore) and all three negative listing agreements (with Chile, Mexico, and Switzerland) contain no 
reference to enhanced interconnection disciplin es, but in the case of Switzerland these "GATS 
+"obligations appear through a specific telecom ch apter containing those enhanced disciplines as 
rules. 
75. In four positive listing agreements (with Indon esia, Malaysia, the Philippines, and Thailand) 
and all three negative listing agreements these commitm ents are subject to a standstill obligation.  The 
applied regime thus reflects the best FTA regime  subsector by subsector in these agreements.  
(iii) Transport 
(a) Maritime transport 
76. Japan relies heavily on maritime transport, whic h carried 88.1% of its imports, by value, in 
2012 and 71% of its exports.  Container traffic acc ount for the largest part (39.9% of imports and 
43.9% of exports). 
77. While no detailed figures are available, the Japane se controlled fleet is essentially deployed to 
serve bilateral trade. The national flag fleet ( 724 vessels, totalling 18.94 million DWT, 1.58% of 
world fleet) is much smaller than the beneficially owned fleet (3,071 vessels, 178.29 million DWT, 
12.94% of world fleet).  Altogether the Japanese fleet  ranks second in the world, after Greece.  Private 
management of port terminals is allowed, and open to foreign i nvestors (e.g. Port of Singapore 
authority in Hibiki harbour).  In major ports, managing companies now handle between 60% and 70% 
of the containers.  The economic needs test in force for harbour transportation (maritime cargo 
handling services, container station and depot servi ces, including inland container depot services) has 
been abolished in 2006 and replaced by a licencing sy stem based on technical and financial abilities.  
Table IV.12 describes in more detail these three aspects of maritime transport:  maritime trade, 
maritime fleet, and harbour management. 
78. Japan's international obligations regarding mar itime transport vary by the trading partner. 
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 
unsatisfactory outcome of the 1995-96 maritime  transport negotiations .  However Japan has 
formulated a very extensive offer in terms of sector al coverage and obligations, in the context of the 
DDA, based on the very liberal applied regime.  Commitments undertaken in the context of FTAs 
vary widely;  the more liberal commitments are in negative listing agreements (with Chile, Mexico, 
and Switzerland) and in recent positive listing agreements containing standstill clauses (with Japan WT/TPR/S/276 
 Page 99 
 
 
  Indonesia, Malaysia, the Philippines and Thailand).  Under treaties of friendship, commerce, and 
navigation with Denmark, the U.K. and Norway, Japan allows ships to access cabotage services on a 
reciprocal basis, and the U.S. Federal Maritime Commission discontinued its proceedings (1997 docket 96-20) against Japanese harbour practices on 26 January 2011.  Table AIV.4 provides an 
extensive and systematic description of these trade regimes. 
Table IV.12 
Maritime transport, main economic indicators, March 2012 
Fleet Vessels Tonnage (DWT) Geographical 
deployment (%) 
Number % of world 
fleet Million 
tonnes % of world 
fleet Bilateral 
trade Cross 
trade 
National flag 724 1,58% 18.94 1.37% .. .. 
Of which foreign controlled 0 0% 0 0% .. .. 
Beneficially owned fleet under foreign flags 3,071 6.72% 178.29 12.94 % .. .. 
Merchandise trade Volume (tonnes, except 
for containers: TEU ) Value (¥'000) % of Japan's 
international 
trade (all mode 
of transport) 
FY2009 
Imports Exports Imports c.i.f.  Exports f.o.b. Imp. Exp. 
International maritime freight trade 847,092,342 244,692,452 53,653,610,428 47,964,883,819 88.1 71.0 
Of which containers 7,398,869 7,345,734 24,337,738,563 29,644,513,991 39.9 43.9 
Of which transhipped 218,940 211,418 .. .. .. .. 
Of which dry bulk 365,932,032 83,176,360 9,300,926,685 7,613,192,933 15.3 11.3 
Of which liquid bulk 352,900,519 19,198,052 19,273,782,173 1,151,794,309 31.6 1.7 
Domestic maritime freight trade 760,357,722 783,616,379 .. .. .. .. 
Of which conducted under a waiver regime .. .. .. .. .. .. 
Privately managed terminals  Type of 
cargo Managing company(ies)/ 
Nationality Volume Date & 
duration 
of the 
contract 
Tokyo (some) Container Tokyo Port Terminal Corporation / 
Japanese 4,294,475TEU 
(Volume 2011) 01.04.2008 
Hakata (some) Container Haka ta port terminal Co., Ltd / 
Japanese 655,330TEU 
(Volume 2010) 01.04.2004
For 10 
years 
Ibaraki Port Hitachinaka District (some) C ontainer Ibaraki Port Authority Corporation /
Japanese 3,717TEU 
(Volume 2011) 06.2000 
.. Not available. 
Source: Information provided by the Japanese authorities;  UNCTAD, Maritime Transport Review 2011 . 
79. The most significant changes in trade-related policies in the maritime transport sector are:  
Japan announced in June 2011 that the maritime an titrust exemption under the Marine Transportation 
Act would be maintained, with its  scope unchanged, and that Japan planned to review the maritime 
antitrust exemption in FY2015.  The support policy was prolonged by the tonnage system and the 
renewal of the international ship regime, due to  expire on 31 March 2012.  The Authorized Economic 
Operator (AEO) program was amended in October 2011 so that the cargo declared by AEO customs 
brokers or produced by AEO manufacturers may r eceive export permits without placing cargo into 
customs areas. Japan does not intend to adopt a 100%  scanning policy for containers.  Table IV.13 
describes these policies in more detail. WT/TPR/S/276 Trade Policy Review 
Page 100 
  
  Table IV.13 
Trade related maritime transport policies 
Competition policy 
Scope of the anti-trust immunity: 
Marine Transportation Law, Article 28 item (4) Immunity "to conclude an arrangement or agreement or to conduct concerted act concerning th e fares or charges and other 
transportation conditions, routes, allocation of ships as well as sharing of shipping between a ship operator and other ship op erators on 
routes between ports in Japan and a territo ry other than Japan", i.e. conferences, ag reements, discussion agreements, stabiliza tion 
agreements and vessel sharing agreemen ts and consortia  in liner shippi ng and tramp pools  in bulk shipping  
 
Filing requirements: 
Marine Transportation Law Article 29-(2) "Any ship operator shall, if he /she intends to engage in the act provided for in Article 28 item (4) or to alter the content th ereof, notify 
beforehand Minister of Land, Infrastructure , Transport and Tourism to that effect". 
 Marine Transportation Law Article 50 
"Any person to whom any of the following ite ms applies shall be liable to a fine of not more than one million yen, item (24) An yone 
who has taken action under item 4 of Article  28, or has altered the content of such  action, without submitting notification und er the 
provisions of Article 29-(2), Paragraph 1, or who ha s made a false notification under the same provisions". 
 
Last review concluded:  FY 2010, by the MLIT  in consultation with JFTC, no changes   
Next planned review:  FY 2015 
 
Support policy 
Tonnage tax:  regime introduced in 2008 until the end of FY20 13 (i.e. March 2014);  characteris tics unchanged corporate tax sca le:  net 
profit per day less than 1,000 tonnes: ¥120/100 tonnes;  over 1,000 up to 10,000 tonn es: ¥90/100 tonnes;  over 10,000 up to 25, 000 
tonnes:  ¥60/100 tonnes;  ove r 2,500 tonnes ¥30/100 tonnes 
Foreign-invested companies must fulfil the sa me requirements in order to be eligible to  the tonnage tax scheme as long as they are 
established under Japanese law, re gardless of their shareholders 
Other support measures applicable the ordinary Japanese register: 
- Additional depreciation of 18% can be applied to Japanese-fla gged vessels;  may opt for either declining-balance method or th e 
straight-line method 
- "roll over relief" i.e. deferred taxation of capital gains in case of sale of old vessels replaced by new vessels;  system ex tended in 2010 
until the end of FY2013 
- Coastal Shipping Tentative Measures Program:  scrapping incen tives FY2011: 3 cargo vessels:  ¥0.2 billion repayment;  and 2 s pecial 
cargo ships ¥0.1 billion repayment. 
International ship regime (ISR): Ship registration tax under the ISR re gime and the Japanese ordinary register (for a 85,000 GT bulker) 
(1) ISR vessels – ¥29.8 million 
(2) non-ISR vessels – ¥34.1 million 
In order to receive tax relief, an ISR vessel must meet at least one of the following requirements: 
(1) the vessel must board non-Japanese seafarers with a certificate issued by the Minister of Land, Infrastructure, Transport a nd 
Tourism; (2) the vessel must be more than 2,000GT; 
(3) the vessel must navigate in the ocean-going sea areas; 
(4) the vessel must be LNG or RO-RO type Companies may apply for the ISR scheme as long as they are esta blished under Japanese law, re gardless of their shareholders 
 
Security policy 
National regime: Since 1 October 2011, AEO (Authorized Ec onomic Operator) Customs Brokers and AEO Manufacturers can receive export permits 
without placing cargoes into customs areas.  The captain of a fore ign trading vessel is obliged to file a cargo manifest with t he Customs 
before the vessel enters an open port in Japan.  The Customs can  require detailed information a bout the cargo manifest from the  
consignee.  
 
Bilateral agreements: 
Mutual recognitions agreement on AEO with the EU, 4 June 2010;  with New Zealand, 14 May 2008;  with the United States, 26 June  
2009;  with Canada, 25 June 2010;  with the Republic of Korea, 20 May 2011;  with Singapore, 25 June 2011.   
Source: Information provided by the Japanese authorities;  and Customs online information.  Viewed at: 
 http://www.customs.go.jp/engl ish/aeo/pamphlet .pdf;  and viewed at:  http://www.customs.go.jp/english/procedures 
 /advance 2_e/summa ry.htmJapanese Japan WT/TPR/S/276 
 Page 101 
 
 
  (b) Air transport 
80. Japan is a major air transport market both dom estically and internationally.  Japan has no 
specific regulation concerning computer reservation services or selling and marketing of air transport, which are under generic competition and company la ws.  The trade regime of these sectors is 
completely liberalized in terms of GATS commitments, FTA commitments, and the applied regime.  
No detailed statistical data are available.  
81. Establishment in the third sector covered by th e GATS, aircraft repair and maintenance, is 
subject to a non-discriminatory economic needs test , which has been scheduled in both the GATS and 
the EPA commitments.  Otherwise there are no restri ctions except for prior notification of foreign 
investment.  No statistical data are available except for the number of repair stations certified by the 
U.S. Federal Aviation Administration (10) and the European Agency for Safety in Aviation (6).  
Table AIV.5 details the various trade regimes of the three air auxiliary services covered by the GATS 
air transport annex. 
82. Airports are all publicly owned and publicly  managed, but a recently published document 
defining the medium-long term strategy for aviation mentions the possibility of establishing a 
concession regime and even privatization.
49  A restructuration of the landing fees schedule is also 
envisaged, in order to give preference to small a nd medium-size aircraft, promote the development of 
low-cost carriers, and advance the open sky policy. 
83. Japan has no specific policy for all-cargo services (e.g. laxer ownership criteria, and on the 
granting of fifth and seventh freedom rights) althou gh elimination of the restrictions on change of 
gauge is envisaged in order to boost freight cargo traffic to and from Japan.  The charter policy is 
relatively liberal;  authorization is granted without  limitations, except in cases of reciprocity problems.  
Table IV.14 details the general regulatory framework and main ec onomic characteristics of these 
aviation subsectors. 
84. Japan's policy on international air transport h as moved significantly towards liberalization and 
open skies, which now are stated policy goals, s ubject to qualification regarding reciprocity and 
congestion.  While the dispersion of the air libera lization indexes (ALI) of all bilateral air services 
agreements in force in 2005 was between 0 and 18 (maximum potential score of 50 for a fully 
liberalized agreement), and the 2005 average weight ed by traffic was 14.8, all of Japan's recent 
agreements, except for one have an ALI superior to  26.5, with a maximum score of 32 for the recently 
amended arrangement with the United Kingdom.  Sin ce the Growth Strategy of MLIT was introduced 
in May 2010, Japan has concluded arrangements w ith 15 countries or economies (the United States; 
the Republic of Korea;  Singapore;  Malaysia;  Hong Kong, China;  Viet Nam;  Macau, China; 
Indonesia; Canada;  Australia;  Brunei;  Chinese Taipei;  the United Kingdom;  New Zealand;  and 
Sri Lanka).  Table IV.15 describes in more detail the content of these agreements following the WTO 
QUASAR methodology. 
                                                      
49 MLIT online information, "The Growth Strategy of MLIT", 17 May 2010, pp. 3-35.  Viewed at:  
http://www.mlit.go.jp/common/ 000136525.pdf. WT/TPR/S/276 Trade Policy Review 
Page 102 
  
  Table IV.14 
Japan's market and regulatory regim e for air transport subsectors, 2012  
Computer reservation services
General regulatory framework: no specific ma rket regulations, hence no monopoly granted or compulsory use of a specific system.   The 
sector is subject to the generic legislation, the Antimonopoly act (see http://www.jftc.go.jp/dk /lawdk.html).   No recent regul atory 
changes 
Economic characteristics: all global players (Sabre, Galileo, Wo rldSpan, Amadeus) present on the market, two national providers : Axess  
(JAL) and Infini (Abacus-ANA).  No detailed statistical data available. 
Selling and marketing of air transport services 
General regulatory framework:  no specific regulations on the sale by foreign airlin es of their tickets, no recent regulatory changes  
Aircraft repair and maintenance 
General regulatory framework:  the Aircra ft Manufacturing Industry Act does not impose any requirement s on repair or maintenanc e of 
domestic planes;  establishment is conditional on a non-discrimi natory economic needs test.  No recent regulatory changes. 
Economic characteristics: 10 FAA-certified and 6 EASA-certified  repair stations. No detailed statistical data available. 
 
Ground handling services 
General regulatory framework:  self-handling and mutual handli ng are allowed (Aeronautics Law Article 102,104, 113-2, 15 July 1 952;  
Civil Aeronautics Regulations Japan Article  211, 212,214, 222, 14 August 1952);  third-party ha ndling allowed with no quantitat ive 
threshold or limitation to nominatively desi gnated airports.  Differentiated situation w ith some bilateral partners (e.g. with Russia and 
with Uzbekistan).  No recent regulatory changes.  
Economic characteristics:  foreign third-party handlers are present in Japan, e.g. at Na rita Airport, Kansai Airport, Centrair Airport.  No 
detailed statistics data available. 
Airport management services 
General regulatory framework:   All airports  are for public use;  there are some airports managed by private corporations in Ja pan. 
Economic characteristics:  98 airports 
Air freight forwarding 
General regulatory framework:  Ai r freight forwarding in Japan reserved for Japa nese nationals;  international air freight forw arding 
subject to approval base d on reciprocity test 
Non-transport activities/aerial work 
General regulatory framework: reserved to national operators within Japan, prior notif ication procedure for foreign investment,  foreign 
investment limited to 1/3 of the shares. 
Commercial aviation 
General regulatory framework: 
National establishment rules: the Civil Aeronautics Act limits  foreign capital to less than 1/3 of national air carriers. 
Bilateral agreements:  see Table IV.15 All cargo: no specific market-access policy, new security regime, the "shipper/regulated agent re gime" introduced in October 20 05  
Charter:  foreign operators of passenger charter flights require permission from the Minister of Land, Infrastructure, Transpor t and 
Tourism.  MLIT generally permits passenger charter flights by  foreign airlines, except in case of reciprocity problems. 
Domestic traffic: reserved to national carriers. 
 New entrants are not restricted.  Air carrier s may decide freely on routes, capacities, and 
prices after notifying the MLIT, except fo r routes and capacities to/from congested ai rports like Haneda, Narita, Itami, and Ka nsai 
Slot allocation: according to IATA rules, planned expansion of number of (mostly inte rnational) slots at Haneda (+57,000 by FY2 013 at 
the earliest;  current total 390,000) and Narita (+50, 000 by FY2014 at the earliest;  current total 250,000) 
Economic characteristics 
3 main national airlines, ANA (222 aircra ft, operating revenues ¥1,411. 5 billion for FY2011, owned by :  Nagoya Railroad (2,85%) , Japan 
Trustee Services Bank (2.51%), Master Trust bank of Japan (1.9 %), and the general public (over 85%);  JAL (209 aircraft, operat ing 
revenues ¥1,204.8 billion for FY2011;  recently  restructured and relisted;  and Nippon Cargo Airlines (8 aircraft, turnover ¥87 .2 billion in 
FY2010, owned 100% by Nippon Yusen Kaisha).  JAL has recently undergone a restructur ing process and has been re-listed.  In tot al 
¥350 billion of public funds in the form of equity, loans, and guarantees were inject ed during the restructuring process.   
4 low-cost carriers:  Skymark (founded 1996, 27 aircraft);  P each Aviation (2011, ANA-first East ern Investment group); Air Asia  Japan 
(2011, ANA 67%, Air Asia 33%); and Jetstar Ja pan ( JAL, Qantas, Mitsubishi, 33% each) 
Source:  Information provided by the Japanese authorities. 
85. From a technical point of view, this liberali zation has taken the form of the relaxation of 
pricing clauses (evolving towards free pricing) , and capacity clauses (evolving towards free 
determination), and the addition of  modern cooperation/code share cl auses.  The lack of available 
slots at Haneda and Narita has hampered these effo rts but there are plans to increase available slots 
following the completion of a new runway in 2010 at  Haneda and substantial investments in airport 
facilities at Narita. Japan WT/TPR/S/276 
 Page 103 
 
 
  Table IV.15 
Japan's air transport agreements, 2012 
Partner (date) 5th 7th Cab. Coop. Desig. With- 
holding Pricing Cap. Stat. ALI STD 
2012 2005 
United States 
(25.10.2010)  Yes No No Yes M SOE DD/ZP  
FD (except for 
HND) No 29 18 
Korea Rep. 
(22.12.2010) Yes No No Yes M SOE CoO/ZP  
FD (except for 
HND) Yes 26.5 14 
Singapore (19.1.2011) Yes No No Yes M SOE CoO/ZP  
FD (except for 
HND) Yes 26.5 14 
Malaysia (24.2 2011) Yes No No Yes M SOE CoO/ZP  
FD (except for HND) Yes 26.5 14 
Hong Kong, China 
(19.5 2011) Yes No No Yes M SOE CoO/ZP  
FD (except for HND) Yes 26.5 18 
Viet Nam (9.6.2011) Yes No No Yes M SOE CoO/ZP  
FD (except for 
HND) Yes 26.5 10 
Macau, China 
(14.7.2011) Yes No No Yes M SOE CoO/ZP  
FD (except for 
HND) Yes 26.5  
Indonesia (11.8.2011) Yes No No Yes M SOE CoO/ZP  
FD (except for HND) Yes 26.5 10 
Canada (14.9.2011) Yes No No Yes M SOE DD/ZP  
FD (except for HND) Yes 28 14 
Australia (29.9.2011) Yes No No Yes M SOE CoO/ZP  
FD (except for 
HND) Yes 26.5 13 
Brunei (28.10.2011) Yes No No Yes M SOE CoO/ZP  
FD (except for 
HND) Yes 26.5 10 
Chinese Taipei 
(10.11.2011) Yes No No Yes M SOE CoO/ZP  
FD (except for 
HND) No 27.5  
U.K. (20.1.2012) Yes No No Yes M COI DD/ZP  
FD (except for HND) Yes 32 14 
New Zealand 
(16.2.2012) Yes No No Yes M SOE CoO/ZP  
FD (except for HND) Yes 26.5 14 
Sri Lanka (23.3.2012) Yes No No Yes M SOE CoO/ZP  
FD (except for 
HND) Yes 26.5 10 
 
Note: "5th" = fifth freedom rights;  "7th" = seventh freedom rights;  "ALI" = Air Libera lization Index;  "CoO" = country of origin;  
"Coop" = cooperation clauses;  "DD" = dual disapproval;  "FD"  for free determination;  Haneda Airport; "PD" = pre-
determination;  "SOE" = substantial ownership and effective control; and "Stat" = statistics. 
 
Source:  Information provided by the Japanese authorities;  ALI computed by the WTO Secretariat. 
86. Other elements of this new liberal policy are th e relaxation of charter rules (forwarder charter 
and split charter are more easily approved) and fares regulations  (upper limit authorization system for 
international fares), mutual recognition agreemen ts regarding foreign licences, and relaxation of 
technical regulations covering the employment of foreign flight crew and flight crew licences. 
(c) Rail transport 
87. Due to its geographical configuration and its st rong degree of urbanization, Japan has a dense 
railway network.  There is no clear regulatory or commercial separation between inter-urban and 
urban railway transportation, which are under separat e regimes in most other countries.  Table IV.16 
describes the main economic and technical ch aracteristics of the Japanese railway system. WT/TPR/S/276 Trade Policy Review 
Page 104 
  
  88. Whereas most railway companies in Japan are private or privatized and operate urban, 
suburban, and inter-urban routes, some urban transport and networks are publicly owned and 
managed. 
Table IV.16 
Railway transport in Japan, 2012 
Interurban 
network Total length Electrified Doubl e tracked Gauge (mm) Traffic 
Total railway 
network (all 
companies)  19,987.0 km 12,242 km 
(Fiscal Year 2010) 8,153 km 
(Fiscal Year 2010) 1,067 or 1,435 Passengers: 
8,840,512,000 
(passenger-km: 
250,414,403,000  
Freight companies 8,342.8 km Unknown Unknown 1,067 Tons:  31,059,000  
ton-km 20,349,095,000 
 
Source: Ministry for Land, Infrastructu re, Transport, and Tourism. 
89. Most infrastructure including in urban zones is privately owned.  There is no vertical 
separation but a multiplicity of rail transport provid ers owning the network on which they operate.  
Foreign investment is allowed but subject to prio r notification.  Table IV.17 details further the 
regulatory framework for railway transport. 
90. The rail transport trade regimes are quite ope n.  GATS commitments cover only maintenance 
and repair of rail transport equipment and rent al services of railway transport equipment with 
operators, without any restrictions.  FTA commitmen ts also cover freight and passenger transport, 
pushing and towing services, and support services for rail transport services;  the only restriction is the 
prior notification regime for investment.  Sin ce these commitments are subject to a standstill 
obligation for Indonesia, Malaysia, and the Philippines the applied regime appears identical to the one 
bound in the FTA.  Table AIV.6 detail these trade agreements by subsectors. 
Table IV.17 
Regulatory framework for railway transport in Japan, 2012 
Investment regime Prior notification regime for inward foreign di rect investment:  a foreign investor must notify in advance th e 
Minister of Finance and the minister with jurisdiction over the business to:  (1) obtain more than 10% of the 
stock of public-listed companies, or (2) obt ain the stock of non-public-listed companies. 
When "national security is impaired, the maintenance of public order is di sturbed, or the protection of public 
safety is hindered", the notifier may be ordered to change the content pertaining to the inward direct 
investment, or to discontinue the investment  (Foreign Exchange and Foreign Trade Act). 
 
Right to operate Railway transport operators must submit an app lication to the Minister of Land, Infrastructure, Transport and 
Tourism, takes an examination, and obtai n a licence in a non-discriminatory manner. 
 
Infrastructures ownership Railway transport network owners must submit an applica tion to the Minister of Land, Infrastructure, Transport 
and Tourism, takes an examination and obtai n a licence in a non-discriminatory manner. 
 
Liberalization of freight transport  No specific regulations, except Forei gn Exchange and Foreign Trade Act. 
Liberalization of 
passenger transport  No specific regulations, except Foreign Exchange and Foreign Trade Act.  
 
Note: The meaning of "Railway Transport" in this context includes railway, underground railway, tramway, monorail, guide-rail 
 system railway, etc. (Article 3, paragraph (3) of the Order on Inward Direct Investment). 
 
Source:  Information provided by the Japanese authorities. Japan WT/TPR/S/276 
 Page 105 
 
 
  (d) Pipeline transport 
91. Pipeline transport remains very marginal in Jap an.  There is no oil pipeline linking Japan to 
the continent.  All crude oil is imported by tankers and transformed by refineries located at the main ports;  it is redistributed by sea, trucks, and trains.  There is no crude oil pipeline inside Japan;  there 
is a 47 km pipeline, owned by Narita airport, tr ansporting kerosene from the port of Shiba to the 
airport. 
92. Similarly, for gas, there is no link, with the continent;  all gas imports are carried by LNG 
ships and then re-gasified in stations located in por ts.  This feeds directly the local gas distribution 
network without going through a main pipeline ne twork.  All major regions benefit from such 
facilities, so there are few pipeline grids linking the regions. 
93. However, the great earthquake a nd its consequences triggered ne w reflections on the need to 
interconnect regions so as to ensure a stable s upply of gas.  The new energy policy will contain 
provisions designed to foster the development of a pipeline grid.  
94. The trade regimes for pipelines services are quite open.  The GATS commitments are limited 
to pipeline transport for goods other than fuel (e thylene, coal slurry, other chemicals) with no 
restrictions.  EPAs cover the totality of pipeline tr ansport and create two regimes, one for gas and one 
for oil.  For gas, under positive listing agreements  mode 1 is unbound and m ode 3 is subject to a 
possibility of limiting the number of licences granted and to a prior notification regime for foreign investment.  Through its generic energy reservations, Japan reserves the right to adopt or maintain any 
measure relating to the supply of services in pipeline transportation services of natural gas, on a fee or 
contract basis, for negative listing agreements with Mexico, Chile, and Switzerland.  For oil there are 
no restrictions in the positive listing EPAs, excep t under the agreement with Singapore where 
permission is needed, and with India and Viet Na m where there are no EPA commitments.  Japan has 
no commitments for pipeline transportation of petr oleum on a fee or contract basis in its negative 
listing agreements with Mexico, Chile, Switzerland , and Chile.  For transportation of oil and goods 
other than fuels, commitments are subject to a standstill obligation in the positive listing agreements 
with Indonesia, Malaysia, and the Philippines.  The applied regime corresponds to the best FTA 
regime.  Table AIV.7 details these trade regimes subsector by subsector. 
(iv) Construction 
95. Construction services is an important se ctor in Japan's economy, but its share  in GDP, public 
spending, and employment has been declining steadily due to the maturity of the economy and 
infrastructures, and to the prolonged effects of the post-bubble overall economic downturn.  
Reconstruction activities generated by the devasta tion of the great 2011 earthquake may temporarily 
halt this evolution. 
96. Large Japanese construction companies are ac tive outside Japan, but there are no detailed 
statistical data available on their activities.  While the sector is essentially domestic in nature, where 
technical norms and regulations have  an important role, a relatively large number of foreign affiliates 
are licenced in Japan (117).  Table IV.18  describes the main economic indicators of the sector as well 
as its relatively complex, non-discriminat ory licensing and qualification regime. WT/TPR/S/276 Trade Policy Review 
Page 106 
  
  Table IV.18 
Construction market and regulatory regime in Japan, 2012 
Main economic data 
Share in GDP(%): 7% (2009), 5.5% (2010)  
Employment (number and share in total employment ):  5,371,000, 8.4% (2009);  5,201,000, 8.1% (2010) 
Spending on public construc tion projects:  ¥16.7 trillion (FY2008), ¥17.9 tr illion (FY2009) 
Japanese construction firms intern ationally active:  48 members of the Overseas C onstruction Association of Japan, Inc. (OCAJI) .  Many 
companies are not members of OCAJI and their number could not be determined. 
Licenced foreign affiliates (more than 50% foreign owned):  119 
 
Regulatory framework 
Licencing, authorization or registration re quirements and procedures (including pre- qualifications standards and qualification rating 
systems): 
(i) construction companies require:  a Construction Business Li cence except for those intending to undertake contracts for “sim ple 
construction work”. - Licence requirements include: appointment of:  a Person Responsible  for Management and Operation", "a full-time engineer atta ched to 
each office" and "financial foundations".  
(ii) Approval from the MLIT Mi nister or the prefectural gover nor in accordance with the locati on of the business office, and a license for 
"Ordinary Construction Business" or "Speci fic Construction Business" according to the value of work to be subcontracted.  
-a License is issued based on the category of construction work;  there are 28 kinds of work (2 general construction and 26 spe cialty 
construction work).  -the term of validity of a License is five years. Li cense holders must renew their licence every five years 
-the licence is not an economic needs tests a nd the licensing process is non-discriminatory  
 
Professional qualification requirements and procedure: 
Appointment of a full-time director with five years or more experience as a "person responsible for management and operations" and of a 
full-time engineer at each office who has passed examinations for technical certificates. A constructor must appoint an engineer who manages the technical aspects of the work at the construction site. The engineer mus t have 
certain qualifications or experience with re gard to the category of construction work.  A relevant foreign diploma is admitted,  provided 
the Japanese authorities can check its equivalence.  
Restrictions on the cross-border use of equipment and material :  none 
Mode 4 restrictions on foreign companies established in Japan wi shing to offer their services  while providing their own worker s:  
The applied regime corresponds to the GATS horizontal commitment s i.e. "unbound except for measures concerning the entry and 
temporary stay of a natural person who falls under one of the following categories: intra-corporate transferees, independent pr ofessionals, 
business visitors, or contractual service suppliers".  
Competition policy 
The "Guidelines Concerning the Activities of Fi rms and Trade Associations with Regard to  Public Bids" issued on 5 July 1994 by the 
Japan Fair Trade Commission (the JFTC) and its subsequent revisions, describe various  violations cases and clarify what kind of  
activities by firms and trade associations may raise problems under the AMA.  Since th e AMA applies to the construction sector as well 
as other many sectors, the JFTC enforces strict  regulations on bid-rigging cases in the sector. 
 
"Green" public procurement rules 
The Law Concerning the Promotion of Contracts Considering Reductio n of Emissions of Greenhouse Gases and Others by the State an d 
Others Entities, obliges the national government and other entities to promote environmentally fr iendly contracts and to publis h and to 
notify the results of such contract s to the Minister of the Environment.  Five c ontract types are subject to this law, 2 of whi ch relate to 
construction services. 
 
Recently adopted measures to foster comp etition including by foreign companies 
Regarding construction work procured by the Government, two central government entitie s initiated measures to lower the thresho ld of 
open and competitive bidding from FY2009 to FY2010.  As a result the percentage of open and comp etitive bidding out of the over all 
bidding tendered by local government, increased by 63.3% in FY2009 to 68.9% in FY2010. 
 
 
Source:  Information provided by the Japanese authorities;  ESRI, Cabinet Office online information.  Viewed at:  
 http://www.esri.cao.go.jp/en/sna/me nu.html;  Estimate of C onstruction Investment;  Ministry of Land, 
 Infrastructure, Transport and Tourism (MLIT);  viewed  at:  http://www.mlit.go.jp /toukeijouhou/chojou/stat-e.htm;  
 Construction Business Act, Article 3, 7 and 15, and Cons truction Business Act, Article  7, 15 and 26;  and MLIT 
 online information.  Viewed at:  h ttp://www.mlit.go.jp/report/press/sogo 13_hh_000098.html. 
97. The trade regimes for construction services are quite open (Table AIV.8).  The GATS 
commitments encompass all construction subsector s except "other construction services" i.e. pre-
erection work at construction site, special trade construction work (e.g. foundation work, concrete 
work, roofing, masonry), renting of construction e quipment, and construction work related to mining, 
with no restrictions under modes 2 and 3.  FTA commitments cover other construction services and, Japan WT/TPR/S/276 
 Page 107 
 
 
  in certain instances, construction services related to mining but in the latter case with a nationality or 
establishment requirement.  Since the commitments of  two of these agreements (with Malaysia and 
Indonesia) are subject to a standstill obligation th e applied regime corresponds to the best FTAs 
regimes. 
(v) Distribution 
98. Distribution is a very important service sector in  Japan both in terms of share in GDP (13.4% 
of which 5.9% for wholesale and 7.5 % for retail) an d in terms of employment (17.3%, of which 5.8% 
for wholesale and 11.5 % for retail).  The sector has the modern characteristics of a mature market, such as clear domination of chain stores (superm arkets or convenience stores) over individually 
owned shops (585,732 outlets in to tal of which 93.3% belonging to chain stores), a high density of 
grocery stores per million inhabitants (2,292), w ith a high share of these sales for supermarkets 
(57,6%).  There is a high share of e-commerce for business to business trade (23%), but this is still 
relatively marginal for business to consumer (2. 55%), although both segments show growth of over 
100% year on year (Table IV.19). 
99. Several major foreign distributors are present in Japan (e.g. Wal-Mart, Metro, H and M). 
There are no economic needs tests for the establish ment of supermarkets, but there is zoning 
legislation at both national and local levels.  Fo reign distributors have, in certain instances, 
complained that the implementation of those lo cal regulations was not always consistent and 
transparent towards foreign distributors, an allegati on denied by the Japanese authorities.  There is no 
specific regime for franchising and no discriminat ion towards foreign franchisors and franchisees.  
There have been no major regulatory changes since 2008.   The generic competition legislation, i.e. the 
Anti-Monopoly Act (AMA) applies to the sector, but  guidelines related to the sector have been 
devised by the Japan Fair Trade commission. 
Table IV.19 
Japan's market and regulatory framework for distribution services, 2012 
Economic data 
Main economic indicators  
Turnover:  Wholesale: 413.5 trillion ye n, Retail: ¥134.7 trillion, E -commerce:  B to B (including EDI): ¥256  trillion (up 125% from the 
previous year, E-commerce ratio 23.7%), B to B (excluding EDI):   ¥169 trillion (up 129% from the previous year, E-commerce rati o 
15.6%), B to C: ¥7.8 trillion (up 116% from the previous year, E-commerce ratio 2.5%) 
 
Number of employees:  wholesale: 3,150,000, retail: 6,260,000
Share in total GDP:  wholesale: 5.9%, retail: 7.5%  
Concentration in the supermarket se ctor. Top 3: 13.9% , top 5: 18.9% 
 
Traditional versus modern retail sector:   552,127 traditional retail shops (i ndividual proprietors excluding  convenience stores) with 
market share about 6.7%;   585,732 modern retail shops (com panies and convenience stores) market share about 93.3% 
Density of grocery outlets:   about 2,292 grocery store outlets per m illion inhabitants;   share of superm arkets in grocery retailers sales 
about 57.6% 
Franchising:  no specific regimes and no discrimina tion against foreign franchisors and franchisees 
 
Main foreign distributors present on the Japanese market : Wal-Mart (USA through its subsidiary Seyu, 367 outlets).  Metro 
(Germany, 9 outlets), H&M (Sweden, 15 outlets), Co stco (USA, 13 outlets), IKEA (Sweden, 7 outlets) . 
 
Regulatory framework 
Main legislation:  Foreign Exchange and Foreign Trade Act (http://www.ja paneselawtranslation.go.jp/law/detail_main?vm=&id=21), 
Liquor Tax Law, Wholesale Market Law, Livestock Dealer  Law.  No significant legislative reforms since 2008 
 
Legislation on the establishment of large-scale stores:   2000 Act on the Measures by Large-Scale Re tail Stores for Preservation of the 
Living Environment”.  No economic needs test (article 13) desi gned in order to protect the living environment surrounding large -scale 
stores by defining the pro cedures to establish and operate them.  In addition,  since 2007 local governments judge a location of large-scale 
commercial facilities from a city planning standpoint. 
 
Table IV.19 (cont'd) WT/TPR/S/276 Trade Policy Review 
Page 108 
  
   
Legislation on exclusive rights or on  limitations of number of suppliers: 
The Liquor Tax Law establishes a licence system for liquor distri butors;  a licence applicant must meet the supply-demand adjus tment 
clauses under Articles 9 and 10.  An appli cant may be subject to the limitation on th e number of distributors, depending on the  liquor type 
and the geographic area where it applies 
 
The Wholesale Market Law introduces a licence system wholesale trade service suppliers;  there are  some conditions for the app lication 
of licences (Articles 15, 17 and 33).  The number of licences for suppliers at Central Wholesale Markets may be limited (Articl e 17). 
 
Competition legislation 
The "Guidelines Concerning Distribution Systems and Business Pr actices under the Antimonopoly Act” issued by the JFTC in 1991 
specifically describe the types of conduct which may impede fr ee and fair competition and violate the Anti-monopoly Act.  The J FTC  
"Guidelines Concerning Abuse of Superior Bargaining Position unde r the Antimonopoly Act" of 2010 include examples of "abuse of 
superior bargaining position" in the retail sector.  
 
Zoning/urbanism legislation 
Since 2007, local governments make judgements regarding a location of large-scale commercial facilities from a city planning st andpoint 
 
Authorization procedure and thresholds applic able to the opening of new supermarkets 
A licence is not required for the store opening itself; however, Japan’s laws specify separately the cases where a licence is r equired in 
order to sell food or pharmaceuticals 
 
Source:  Information provided by the Japanese authorities. 
100. The trade regime for distribution services is b asically open and devoid of restrictions, except 
for a series of products or types of distributi on for which licences may be limited and investment 
subject to notification depending on the agreem ent concerned (GATS and various FTAs).  The GATS 
commitments are unbound whatever the subsector of distribution for petroleum, petroleum products, rice, tobacco salt, alcoholic beverages, and pr oducts supplied at public wholesale markets.  For 
pharmaceutical and firearms, which are often excepted from GATS distribution commitments are not 
part of these exceptions.  
101. With regard to EPAs, the number of licences fo r alcoholic beverage ma y be limited in any 
distribution subsector, except under the agreements with Mexico and Chile, where no such reservation 
has been listed.
50  Livestock trading is subject to a li censing and residency requirement in three 
negative listing agreements (Chile, Mexico, and Switzerland) and via the generic reservation on 
public wholesale markets in all positive listing agr eements.  Petroleum and petroleum products are 
subject to a prior notification requirement for inv estment only in positive listing agreements.  There is 
no such reservation in negative listing agreements.  Licences for products sold in public wholesale 
markets are subject to a limitation in the positive lis ting agreements.  There are no reservations for 
rice, salt, and tobacco in the FTAs as there is unde r the GATS, except to the extent where they are 
sold at public wholesale markets.  Since these comm itments are subject to a standstill obligation for 
four positive listing agreements (with Indonesia, Mala ysia, the Philippines, and Thailand) and in three 
negative listing agreements (with Chile, Mexico, an d Switzerland) the applied regime corresponds to 
the best FTA treatment granted product by product.   Table AIV.9 details these various trade regimes. 
(vi) Tourism 
102. Outbound tourism worldwide, Japan ranks 10th by the number of tourists (2009 data) and 
seventh by expenditure (2010 data).  However,  for inbound tourism, a relatively expensive 
destination, it ranks only 30th in terms of the number of tourists  and 19th in terms of expenditure 
                                                      
50 According to the authorities, Japan's EPAs w ith Mexico and Chile do not provide market access 
obligations, and therefore such reservations (limitations on the number of service suppliers) have not been listed.  
In this case, Japan's GATS commitments on market access exclude services related to alcoholic beverages, and 
those commitments apply to Mexico and Chile as WTO Members. Japan WT/TPR/S/276 
 Page 109 
 
 
  (2010 data in both instances).  Domestic tourism is highly developed.  The interest by national public 
authorities in promoting tourism in Japan is relativ ely recent, as the founding legislation, the Tourism 
Nation Promotion Basic Law dates form 2007 and the creation of the Japan Tourism Agency from 2008 (Table IV.20).  Demand for tourism has fallen as a result of the great East Japan earthquake and 
the nuclear power plant disaster of 2011.  The Government consequently disbursed ¥2,600 million 
and launched a promotional campaign for domestic tours, information dissemination through tour 
companies, and media invitations in order to recove r the numbers of visitors from abroad.  The stated 
aims of the tourism policy are the promotion of both domestic and inbound tourism, the enhancement 
of Japan’s competitiveness as an international tourism destination,  and the promotion of vacation-
taking. 
103. The generic legislation on competition, the Anti monopoly Act, applies to the sector;  no 
sector-specific guidelines have been designed.  Two cases have resulted in sanctions in the last eight 
years. 
104. No statistical data are available on foreign presence in Japan's hotel sector, but foreign 
presence, tends to be in international hotels and in large cities. 
105. No data on foreign presence are available on restaurants, an essentially domestic activity 
where foreign presence tends to be marginal and limited to large cities.  The sector is highly 
developed in Japan, even compared  with similar mature economies. 
106. Foreign ownership of registered travel agenci es and tour operators is not known, as disclosure 
of the nationality of ownership is not a condition for registration.  Travel agencies are obliged to hold 
certain assets, and to hire employees with national qualifications on travel consumer affairs.  These requirements are non-discriminatory.  There are 3 cl asses of travel agencies:  class 1 with assets of 
¥30 million or more, class 2 with assets of ¥7 million or more, and class 3 with assets of ¥3 million or more. 
Table IV.20 
Japan's market and regulatory framework for tourism 
Economic data 
Inbound tourists:  – 2010:  8,611,000; world ranking:30th; evolution: + 26.8%; – 2011: 6,219;000, evolution:-27.8% 
Inbound tourism expenditure:  – 2010:  ¥1,158,600 million, world ranking: 19th, evolution: + 20.2%;  – 2011:  ¥864,700 million, 
evolution:  – 25.4% Outbound tourists:  – 2010: 16,637,000, world ranking: 10
th(2009), evolution: +7.7%;  – 2011: 16,994,000, evolution:+2.1% 
Outbound tourism expenditure: – 2010:  ¥2,446,100 million, world ranking:7th, evolution: + 4.0%;  – 2011:  ¥2,201,600 million, 
evolution: – 10.0%  
Regulatory framework 
Level of regulation:  essentially at national level.  Touris m Nation Promotion Basic Law January 2007, and the Tourism Nation 
Promotion Basic Plan, decided at Cabinet level in June 2007.  Th e Japan Tourism Agency founded on 1 October 2008. 
Special subsidies and incentives (post-earthquake):  to revive t ourism after the earthquake, an emergency plan to attract forei gn visitors, 
and a broader-based plan for cooperation in tourism revival measur es have been decided.  Foreign companies are eligible (and ca ndidates) 
for these financial incentives 
 
Competition policy:  the Antimonopoly Act (AMA) applies to the t ourism industry, including travel agencies and tour operators;  two 
cases have been investigated  in 2004 (abuse of bargaining power  by hotels companies forcing their suppliers to buy coupons) an d 2009 
(cartel on the prices of charter buses, hotels, etc.) 
 
Hotels 
Economic data  
Total number of hotels:  81,006, of whic h international style hotels:  9,629; inns  ("ryokans"):  46,906;  lodging house (e.g. y outh hostel 
etc):  23,719; boarding house (i.e. ac commodation for one month or longer) 752 
Foreign owned hotels: - 
Number of nights: - 
 
Table IV.20 (cont'd) WT/TPR/S/276 Trade Policy Review 
Page 110 
  
   
Regulatory framework 
Basic legislation: Inns and Hotels Act, Article 3 (http://www.mhlw.go.jp/bunya/kenko u/seikatsu-eisei04/03.html) 
 
Restaurants  
Economic data  
Number of restaurants: 760,560 (FY2010) 
 
Regulatory framework 
Basic legislation:  Food Sanitation Act,  Article 52 (http://www.japaneselawtransla tion.go.jp/law/detail/?id=12&vm=04&re=01) 
 
Travel agencies and tour operators 
Economic data 
Number of travel agencies and tour operators: 10,240 (April 2011), travel agencies registered unde r the Travel Agency Act; JTA has no 
information on the number of tour operators who arrange local  trips; the tour operators are not required to register) 
 
Regulatory framework 
Basic legislation:  Travel Agency Act (http:// www.mlit.go.jp/kankocho/en/shisaku/sangyou/ryokogyoho.html) 
 
Tourist guides services 
Economic data  
Number of licensed tourist guides: 15,371 people (1 April, 2011);  a person with licences for more than two languages is record ed once 
for each language 
 
Regulatory framework 
Basic legislation:  the Licensed Guide Act 
 
Source:  Information provided by the Japanese authorities. 
107. Under the Licensed Guide Interpreters Act licensed guides must pass an examination  in 
Japanese  and a foreign  language.  Foreigners are eligib le to take the examination. 
108. The trade regimes of the tourism sector vary among subsectors.  For hotels and restaurants, 
there are no restrictions for modes 2 and 3 in the GATS commitments and in the FTA commitments mode 1, which is technically unfeasible for hotels, has no restrictions in GATS commitments and FTA commitments.  Since these commitments are subject to a standstill obligation for 3 positive listing agreements (Indonesia, Malaysia, and the Philippines) and 3 negative listing agreements 
(Chile, Mexico, and Switzerland), the applied regime  also has no restrictions.  The same goes for 
travel agencies and tour operators services. 
109. The trade regimes are equally lib eral for travel guides, with no restrictions under modes 2 and 
3, and mode 1 deemed to be technically unfeasible both for GATS and FTAs commitments.  
Table AIV.10 details those trade regimes subsector by subsector.  Japan WT/TPR/S/276 
 Page 111 
 
 
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