WT/TPR/S/276 Trade Policy Review 
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  II. TRADE POLICY REGIME:  FRAMEWORK AND OBJECTIVES 
(1) TRADE POLICY OBJECTIVES  
1. Japan's overall trade policy objective has not changed since its last Review;  it is to ensure the 
long-term prosperity and growth of Japan through  the promotion of economic activities in Japan and 
abroad.  Japan grants at least MFN treatment to all countries and economies except Andorra, the 
Republic of Equatorial Guinea, Eritrea, Lebanon,  North Korea, Republic of South Sudan, and 
Timor-Leste.  From the available trade data, it would a ppear that the MFN rate is applied to more than 
80% of Japan's imports.1  However, data are not collected on the total value of imports subject to 
preferential duties. 
2. Japan considers that its regional and bilatera l trade agreements complement the multilateral 
system.  The authorities state that Japan makes ev ery effort to simplify the rules and procedures 
involved in adopting an economic pa rtnership agreement (EPA);  at the same time, they acknowledge 
that the level of complication increases with the entr y into force of the free-trade agreements (FTAs), 
since rules applied for specific goods are different among FTAs.2  In November 2010, Japan approved 
the Basic Policy on Comprehensive Economic Partners hips.  Under the policy, the Government is 
determined to "open up the country" and "pioneer a ne w future".  In this regard, Japan will take major 
steps to promote high-level economic partnerships with major trading partners.  In tandem, Japan 
plans to institute fundamental domestic reforms so  as to strengthen competitiveness.  Furthermore, 
according to the Basic Policy on Comprehensive Ec onomic Partnerships, all goods, including certain 
sensitive products, would be subject to negotiations ;  however, the sensitivity of trade in certain 
products would be taken into consideration. 
3. Currently Japan has 12 bilateral trade agreemen ts and one regional agre ement (with ASEAN).  
Japan is currently negotiating bilateral FTAs (EPA s) with the Gulf Cooperation Council (Bahrain, 
Kingdom of Saudi Arabia, Kuwait, Oman, Qatar, and the United Arab Emirates), Australia, and 
Mongolia.  Since June 2008, Japan has been holding working-level consultations to "consider and 
create a favourable environment for the resumption of negotiations" with the Republic of Korea.  
Japan also participates in the Asia-Pacific Econom ic Cooperation (APEC) forum and in other regional 
trade fora, such as the Asia-Europe meeting (ASEM ), the ASEAN+3, and the East Asian Summit.  
Japan officially encourages foreign direct investme nt (FDI).  However, in recent years, inward FDI 
into Japan has remained low (Chapter I). 
(i) Trade policy formulation and implementation 
4. Some laws and regulations governing Japan's trade-related framework have been amended 
during the period under review (Table II.1). 
5. Trade-related issues are the responsibility of a number of ministries and agencies, mainly the 
Ministry of Foreign Affairs (MOFA) and the Ministry of Economy, Trade, and Industry (METI), as specified under the various laws establishing relevant  ministries and agencies.  Other ministries and 
agencies with responsibility for sectoral issu es involved in trade policy formulation and 
implementation are the ministries of:  Agriculture, For estry and Fisheries;  Education, Culture, Sports, 
Science and Technology;  Environment;  Finance;  Health, Labour and Welfare;  Justice;  Land, 
Infrastructure and Transport;  and Internal Affa irs and Communications;  as well as the Cabinet 
                                                      
1 Calculation by the WTO Secretariat, based on th e value of imports into Japan from its trading 
partners that have concluded bilateral/regional FTAs and the data on imports subject to Japan's GSP scheme. 
2 See for example, WTO document WT/TPR/M/211/Add.1, 22 May 2009, p. 155. Japan WT/TPR/S/276 
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  Office.  Overall coordination of trade policies, including ensuring policy coherence and consistency 
with the WTO Agreements, remains the final responsibility of the Cabi net.  Trade and trade-related 
policy issues may also be debated in various Co mmittees, including standing committees in the Diet.3  
The authorities state that each ministry and agency  receives inputs from the private sector concerning 
matters related to trade policies through, inter alia,  exchanging opinions with private entities and 
receiving petitions from them.  In addition, the Cabinet Office invites comments and opinions concerning regulations (including matters rela ted to trade policies) from the general public. 
Table II.1 
Major trade-related laws a nd regulations, October 2012  
 Most recent amendment 
Foreign trade and exchange restrictions  
Foreign Exchange and Foreign Trade Act (1949 Law No. 228)  2009 
Export and Import Transaction Act (1952 Law No. 299)  2008 
Foreign Exchange Order (1980 Order No. 260)  2011 
Export Trade Control Order (1949 Order No. 378)  2012 
Import Trade Control Order (1949 Order No. 414)  2009 
Customs- and tariff-related regulations  
Customs Law (1954 Law No. 61)  2012 
Customs Tariff Law (1910 Law No. 54)  2012 
Temporary Tariff Measures Law (1960 Law No. 36)  2012 
Cabinet Order Relating to Counterva iling Duties (1994 Order No. 415)  2009 
Cabinet Order Relating to Anti-Dump ing Duties (1994 Order No. 416)  2009 
Cabinet Order Relating to Emergency Duties (1994 Order No. 417)  2009 
Cabinet Order Relating to Retaliato ry Duties (1994 Order No. 418)  2000 
Cabinet Order on Tariff Quotas (1961 Order No. 153)  2011 
Trade promotion  
Trade and Investment Insurance Act (1950 Law No. 67)  2008 
Services and energy   
Construction Business Act (1949 Law No. 100) 2012 
Banking Law (1981 Law No. 59)  2011 
Insurance Business Law (1995 Law No. 105)  2011 
Financial Instruments and Exchange Law (1948 Law No. 25)  2011 
Telecommunications Business Law (1984 Law No. 86)  2011 
Law Concerning the Measures by Large-Scale Reta il Stores for Preservation of Living Environment 
(1998 Law No. 91)  2000 
Employee's Pension Insurance Law (1954 Law No. 115) 2011 
Civil Aeronautics Act (1952 Law No. 231)  2011 
Marine Transportation Law (1949 Law No. 187)  2012 
Act on Special Measures Concerning the Handling of Legal Services by Foreign Lawyers (1986 
Law No. 66)  2003 
Certified Public Accountants Act (1948 Law No. 103)  2011 
Certified Tax Accountant Law (1951 Law No. 237)  2007 
Law for Improvement of International Tourist Hotels (1949 Law No. 279)  2011 
Travel Agency Law (1952 Law No. 239)  2011 
Electricity Utilities Industry Act (1964 Law No. 170)  2012 
 Table II.1 (cont'd) 
                                                      
3 These include standing committees on:  Foreign Affairs, Economy, Trade and Industry;  Financial 
Affairs;  Forestry and Fisheries;  and Fundamental National Policies.  Each committee consists of 10 to 
50 members. WT/TPR/S/276 Trade Policy Review 
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   Most recent amendment 
Gas Utility Industry Law (1954 Law No. 51)  2012 
Petroleum Stockpiling Act (1975 Law No. 96) 2012 
Act on the Quality Control of Gasoline and Other Fuels (1976 Law No. 88)  2008 
Standards and technical regulations  
Industrial Standardization Act (1949 Law No. 185)  2005 
Law Concerning Standardization and Proper Labelling of Agricultural and Forestry Products (JAS Law) 
(1950 Law No. 175)  2009 
Pharmaceutical Affairs Law (1960 Law No. 145)  2011 
Food Sanitation Law (1947 Law No. 233)  2009 
Quarantine Law (1951 Law No. 201)  2008 
Plant Protection Law (1950 Law No. 151)  2012 
Act on Domestic Animal Infectious Diseases Control (1951 Law No. 166)  2012 
Building Standard Law (1950 Law No. 201)  2011 
Electrical Appliance and Material Safety Law (1961 Law No. 234)  2011 
Consumer Product Safety Law (1973 Law No. 31)  2011 
High Pressure Gas Safety Act (1951 Law No. 204)  2011 
Road Vehicle Law (1951 Law No. 185)  2009 
Act concerning the Rational Use of Energy (1979 Law No. 49)  2011 
Fire Service Law (1948 Law No.186) 2009 
Intellectual property rights  
Patent Act (1959 Law No. 121)  2011 
Customs Law (1954 Law No. 61)  2012 
Act Against Unjustifiable Premiums and Mislead ing Representations (1962 Law No. 134)  2009 
Unfair Competition Prevention Act (1993 Law No. 47)  2011 
Utility Model Act (1959 Law No. 123) 2011 
Design Act (1959 Law No. 125)  2011 
Trademark Act (1959 Law No. 127)  2011 
Copyright Law (1970 Law No. 48)  2012 
Civil Code (1896 Law No. 89)  2011 
Agriculture  
Basic Law on Food, Agriculture and Rural Areas (1999 Law No. 106) 2009 
Temporary Law for Compensation Price of Milk for Manufacturing Use (1965 Law No. 112)  2008 
Others  
Administrative Procedure Law (1993 Law No. 88)  2006 
Act Concerning Prohibition of Private Monopolizati on and Maintenance of Fa ir Trade (Anti-Monopoly 
Act) (1947 Law No. 54) 2009 
 
Source:  Information provided by the Japanese authorities. 
6. Additionally, the Consumer Affairs Agency (CAA) and the Government Revitalization Unit 
(GRU) were established in 2009.  The CAA has responsibility for overseeing, inter alia , the JAS Law 
(on quality control) and the Food Sanitation Act (on labelling), while the GRU is responsible for 
regulatory reform.4  At the time of the last Review of Japan , the Cabinet had authorized a regulatory 
reform programme issued by the GRU, under which the authorities were to review and improve about 
60 regulations on, inter alia,  environment and energy, medical and elderly care services, and 
agriculture.  The GRU was to monitor the impl ementation of the programme.  A follow-up report 
regarding the implementation of the programme was published in June 2012.5  Furthermore, the 
authorities have taken six cabinet decisions, which include 436 items concerned with regulations and 
system reform. 
                                                      
4 The GRU has taken over the role of the Council for the Promotion of Regulatory Reform (CPRR). 
5 Cabinet Office online information (in Japanese).  Viewed at:  http://www.cao.go.jp/sasshin/kisei-
seido/meeting/2011/subcommittee/120629/agenda.html. Japan WT/TPR/S/276 
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  (ii) Transparency and policy evaluation 
7. Promoting transparency remains one of the G overnment's policy priorities.  All laws and 
regulations are published in the Government Gazette  and are made available on the internet.  In 
coordination with the Administrative Project Review  Section of the Cabinet Office, the Government 
makes available and clarifies the mission of each poli cy and undertakes policy ev aluations.  It has also 
promoted the release of information on policy eval uations to the public, including on special taxation 
measures.  On the other hand, the lack of cost-ben efit analyses of policies, particularly of existing 
policies, makes it difficult for consumers to assess th eir effectiveness and effectively undermines the 
Government's intention to promote transparency.6 
8. Under the Government Policy Evaluations Act (GPEA) and the Basic Guidelines for 
Implementing Policy Evaluation, the Cabinet Office a nd ministries are required to evaluate their own 
policies before and after implementation and to pub lish the results of these evaluations.  In certain 
cases, ministries and agencies are required to con duct ex-ante regulatory impact analyses, to be 
presented when soliciting "public comments" before  the Cabinet makes a decision to introduce, 
abolish or change regulations.  Since 2007, draft la ws or draft cabinet orders to enact, revise or 
abolish regulations must be evaluated by ex-ante regulatory impact analyses (RIAs), the results of 
which must be published.7  However, not all bills are subject to  ex-ante RIAs, for example an ex-ante 
RIA was not conducted on the draft b ill on the reform of the Japan Post  Office.  Additionally, existing 
regulations and measures that are not subject to am endment or abolition are not subject ex-ante RIAs.  
Thus, the costs and benefits of protection from vari ous tariffs and or other trade policy measures are 
not evaluated by the Government.  
9. Under the provisions of the GPEA, the Minist ry of Internal Affairs and Communications 
(MIC) is required to undertake independent asse ssments of the policies implemented by other 
ministries.  In addition, the Ministry of Fina nce conducts its own policy evaluation of selected 
expenditure programmes, which according to the aut horities are taken into consideration in the annual 
budget formulation.  A new policy evaluation body  was setup within the GRU in 2009, aimed at 
cutting the expenditure of a number of government projects.   In 2010, the GRU introduced the Public 
Project Review scheme, aimed at increasing the tr ansparency of the budget request process as well as 
reducing government expenditures.  Over 5,000 proj ects were reviewed;  the authorities state that 
reviews resulted in a reduction in initial budget approp riations of ¥1.3 trillion in 2010 and ¥450 billion 
in 2011.  
10. The authorities state that ex-post evaluations of  general policies are reflected in the budget 
requests and policies;  as such 176 out of 405 general policies in FY2010, and 153 out of 388 in 
FY2011 involved improvements and revisions. 
11. Ministries and agencies must publish draft regulations, including draft cabinet orders or 
ministerial orders, and allow 30 days for comments from the public.8  Ministries and agencies are 
required to consider and publish the public comments as well as the results of their consideration, and 
                                                      
6 Japan ranked 19th among 48 countries in the 2009 Opacity index, which measures the degree to which 
countries lack clear, accurate, easily discernible, an d widely accepted practices governing the relationships 
among governments, businesses, and investors.  See Milken Institute (2009). 
7 For further details regarding regulatory impact analysis please see WTO document 
WT/TPR/S/243/Rev.1 May 2011. 
8 If the authorities decide that comments are required w ithin less than 30 days of publication, they must 
publish the reason for this decision.  The authorities stat e that draft laws are not subject to the public comment 
requirements, as they are scrutinized in the Diet. WT/TPR/S/276 Trade Policy Review 
Page 14 
  
  the reason for the results.  The Ministry of Inte rnal Affairs and Communications (MIC) conducts and 
publishes a comprehensive annual survey on the im plementation of the public comment procedure 
under the Administrative Procedure Act.  A report published in December 2010 states that comments 
submitted have been reflected in 136 (32.5%) out  of 418 cases.  Furthermore, the GRU introduced 
screening (jigyo-shiwake ) of government projects.  The screen ing is conducted by meetings of 
selected representatives from po liticians, academics, and private sectors;  it does not involve 
quantitative cost-benefit analysis.  Since 2009, 449 proj ects have been reviewed and scrutinized.  The 
authorities state that this has resulted in savings  of ¥1.35 trillion, while revenues have risen by 
¥2.4 trillion.  Additionally, a more focused re view was conducted in 2011, concerning projects in 
energy and social security, and proposals for reform were made. 
(2) TRADE AGREEMENTS AND ARRANGEMENTS  
(i) WTO 
(a) Participation in the WTO 
12. The authorities state that Japan remains committ ed to working actively towards a successful 
multilateral conclusion of the DDA and will continue to  make every effort toward reaching agreement 
in the negotiations and explore different negotiatin g approaches, as agreed at the WTO Ministerial 
Conference held in December 2011.  Japan has submitted comprehensive notifications under WTO 
Agreements (Table AII.1). 
(b) Disputes 
13. Since 2010, Japan has been involved in five cases as a complainant (Table AII.2).  In 
addition, Japan participated as a third party in ten dispute cases.9 
(ii) Regional trade agreements 
14. Japan has an ambitious programme for expandi ng its already relatively large network of 13 
RTAs.  The authorities note that Japan's policy on RTAs is to pursue high-level economic partnerships strategically and from several perspectives, with a wide range of countries, such as major 
trading partners.  According to the Basic Policy on Comprehensive Economic Partnerships, the Asia-
Pacific region is of particular importance for Jap an, politically, economically, and with regard to 
security.  Japan will increase its efforts to promot e and conclude ongoing b ilateral EPA negotiations, 
such as with Australia;  it will wo rk towards the realization of the China-Japan-Korea FTA, and the 
Regional Comprehensive Economic Partnership (RCEP) among othe rs.  Further afield, it will 
expedite talks with the EU to enter into negotiati ons and will work actively to strengthen its economic 
partnerships with other Asian economies, newl y emerging economies, and resource-rich countries.
10  
Japan has entered into consultations with the countries currently negotiating the Trans-Pacific 
Partnership (TPP) Agreement, following an announcem ent by the Prime Minister in November 2011.   
Japan has made early announcements to the WTO of  agreements under negotiation with Australia, the 
Gulf Co-operation Council, and Korea.  According to  the authorities Japan has also decided to launch 
EPA negotiations with Canada , Colombia, and Mongolia. 
                                                      
9 Cases in which requests for consultations were ma de and panels were established between June 2010 
and August 2012 (WTO documents  DS413, DS414, DS420, DS422, DS425, DS426, DS427, DS430, DS431 and DS432). 
10 Ministry of Foreign Affairs and Trade, Basic Policy on Comprehensive Economic Partnerships, 
6 November 2010.  [http://www.mofa.go.jp/policy/economy/fta/policy20101106.html]. Japan WT/TPR/S/276 
 Page 15 
 
 
  15. Since its last Trade Policy Review in 2011, Jap an has notified the entry into force of two 
EPAs, with India and Peru, in addition to  its 11 previous RTAs (Table AII.3).11  Except for its 
agreement with ASEAN, all of its RTAs include goods, services, and investment, frequently with a 
separate chapter on the temporary movement of na tural persons (mode 4), which provides improved 
temporary access to certain categories of natu ral persons.  Japan has negotiated broad-based 
agreements with most of its partners, taking in to consideration sensitivities in trade in certain 
products.  In certain agreements for which the WT O Secretariat has prepared factual presentations 
(with Mexico, Chile, Malaysia, Brunei, Indonesia, the Philippines), Japan's tariff liberalization has in 
general been less than that of its trading partners  by the end of the implementation of the agreement, 
with agricultural products tending to be excluded from liberalization or subject to restricted 
liberalization through tariff rate quotas.  Under its RTAs that entered into force during the review 
period, with India, Japan will liberalize 88.9% of it s tariffs (59.6% of agricultural products will be 
liberalized) corresponding to 97.5% of imports fro m India during 2008-10, over a period of 10 years;  
with Peru, Japan will liberalize 89.4% of its tariffs (6 1.6% of agricultural products will be liberalized), 
corresponding to 98.9% of its imports during 2009-11 after 16 years. 
(iii) Generalized System of Preferences and other preferential arrangements adopted 
 unilaterally by Japan 
16. Japan affords preferential tariff treatment un ilaterally to certain developing countries under 
the Generalized System of Preferences (GSP) scheme.12  The Government has the authority to 
unilaterally designate, withdraw, suspend, and lim it the beneficiaries or products that receive 
preferential treatment under the schem e.  A beneficiary country is removed (graduates) when it has 
been classified in the World Bank statistics as a hi gh-income country over the three preceding years.  
During the period under review, Kosovo entere d the scheme, while Barbados, Oman, British 
Anguilla, British Virgin Islands, Canary Islands, Gibraltar, Ceuta and Melilla, Turks and Caicos 
Islands, Falklands Islands and De pendencies, and Trinidad and T obago graduated from the scheme.  
The current GSP scheme is valid until 31 March 2021. 
17. In 2011, Japan abolished all ceiling-based schemes. 
18. The simple average GSP tariff rate is 5.3%, slightly lower than the overall applied MFN 
average tariff of 6.0% in FY2012.  Japan grants preferential tariff treatment under its GSP scheme to 
138 developing countries and 7 territories for 409 agricultural and fishery products, and 
3,147 industrial products at HS 9-digit level.13  Numerous agricultural pr oducts and some industrial 
products are excluded (e.g. rice and rice products, meat and meat products, fish, dairy products, 
pineapples, cereal products, textiles and clothing, l eather and leather products, and footwear).  Many 
of the excluded products are export items in which developing countries have a comparative 
advantage. 
19. According to the authorities a quantitative cost a nd benefit analysis on the effect of excluding 
products from the GSP scheme, has been undertaken , as a result of which the ceiling based scheme 
was abolished in 2011.  The authorities maintain that Japan's tariff rate is appropriately set by taking 
                                                      
11 These are:  Japan-ASEAN;  Japan-Brunei Darussalam;  Japan-Chile;  Japan-Indonesia;  Japan-
Malaysia;  Japan-Mexico;  Japan-Philippines;  Japan-Singapore;  Japan-Switzerland;  Japan-Thailand;  and 
Japan-Vietnam. 
12 For details of the GSP scheme see MOFA online in formation.  Viewed at:  http://www.mofa.go.jp/ 
policy/economy/gsp/explain.html#6 [28.08.2012]. 
13 These figures take into account only tariff lines where the preferential rate is lower than the 
corresponding MFN applied rate. WT/TPR/S/276 Trade Policy Review 
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  into consideration the results of multilateral nego tiations, international requirements, the need to 
protect domestic industries, and price gaps between  domestic and overseas markets.  Under the GSP, 
duty-free tariff lines account for 58.1% of all lines, do wn from 61.2% at the time of the last Review.  
China continues to be the main benefi ciary of GSP treatment (Table II.2). 
Table II.2 
Ten largest GSP beneficiaries, FY2011 
Beneficiaries Import value of preferential 
treatment 
(¥ million) Share 
(%) 
World 1,015,186 100.0 
People's Republic of China 744,480 73.3 
The Union of Myanmar 41,564 4.1 
The People's Republic of Bangladesh 39,679  3.9 
Republic of South Africa 35,056 3.5 
Federative Republic of Brazil 27,474  2.7 
Kingdom of Cambodia 21,416  2.1 
India 19,404  1.9 
Islamic Republic of Mauritania 14,162  1.4 
Republic of Peru 6,919  0.7 
Democratic Socialist Republic of Sri Lanka 6,393  0.6 
 
Source: Information provided by the Japanese authorities. 
20. There has been no change to Japan's duty-fr ee and quota-free treatment for LDCs since its 
previous Review.  Currently, there are 48 LDC speci al beneficiaries;  the Maldives graduated during 
the review period.  The current coverage is about  98%, defined at the HS nine-digit level;  and the 
simple average applied rate for LDCs in FY2012 is 0.5%, the same as in FY2010.  For 209 tariff lines 
(2.2% of the total)14, the applied rates on imports from LDCs ar e the same as the applied MFN rates in 
FY2012.  Data provided by the authorities indicate that the value of imports from LDCs under the 
duty-free and quota-free treatment amounted to ¥85,851 million in FY2010 (up from ¥65,566 million 
in FY2008).  
(iv) Other bilateral/regio nal arrangements 
(a) Japan–U.S. bilateral relationship 
21. The Japan-U.S. Economic Harmonization Initiative (EHI), launched in November 2010, aims 
to facilitate trade, address the business climat e and individual issues, and advance coordination 
between Japan and the United States on regional issues of common interest.  Discussions under the 
initiative included:  exchanging information on the trade and economic-related policies of the two 
countries;  promoting further Japan-U.S. cooperati on in the economic field;  collaborating on common 
regional and global challenges;  and taking new steps to facilitate  trade and address the business 
climate.  A "Record of Discussion", published in Ja nuary 2012, summarizes the results of discussions 
between February 2011 and January 2012.15 
                                                      
14 These cover, for example, fish, products of the milling industry, sugar, and articles of leather and 
footwear. 
15 Japan-U.S. Economic Harmonization Initiative (EHI ), "Record of Discussion".  Viewed at:  
http://www.mofa.go.jp/mofaj/press/release/24/1/pdfs/0127_01_3.pdf. Japan WT/TPR/S/276 
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  (b) Japan–EU bilateral relationship 
22. During the period under review, annual Japan-E U Summits took place in April 2010 and May 
2011.  At the 2010 summit, the leaders reviewed an d welcomed the progress made regarding "a few 
specific non-tariff issues" under paragraph 34 of the Joint Press Statement of the EU-Japan Summit of 
2009.  At the summit held in May 2011, the lead ers agreed to start the negotiating process for a 
comprehensive Economic Partnershi p Agreement (EPA)/Free Trade Agreement (FTA), and started a 
"scoping exercise", which would define the scope and level of the EPA.  The scoping exercise was 
completed in July 2012.  According to the Jap anese authorities, the European Commission submitted 
draft negotiation directives to the Council, a nd negotiations are expected to commence once the 
Commission receives a negotiating mandate.  Additionally, the Japan-EU Business Round Table 
(BRT) issued recommendations for starting negotia tions on a balanced and mutually beneficial 
bilateral agreement. 
(c) APEC (Asia-Pacific Economic Cooperation) 
23. In 2011, 65.2% of Japan's merc handise imports were from APEC members, and 76.1% of its 
merchandise exports were to APEC.16  In keeping with its policy of supporting multilateral trade and 
investment liberalization, Japan is a strong supporte r of APEC's "open regiona lism" goals.  Like other 
members, Japan submits an annual Individual Acti on Plan (IAP), which provides a roadmap of its 
intended actions in various policy areas with a vi ew to realizing APEC's liberalization goals.17  Since 
the Eighteenth APEC Economic Leaders' Meeting, held in Yokohama, Japan, in November 2010, 
Japan has contributed actively to the process of raising consensus among the APEC Leaders on:  
promoting effective, non-discriminatory, and market-driven innovation policy;  increased 
participation in global production chains by small and medium-sized enterprises;  promoting trade and 
investment in environmental goods and services18;  reinforcing the implementation of good regulatory 
practices;  enhancing supply-chain connectivity by establishing a baseline de minimis  value of 
US$100 on exports by the end of 2012;  address barrie rs to trade faced by SMEs in the region;  and 
facilitate trade in remanufactured goods.  In the 2012 Ministerial Meeting in Vladivostok, Japan 
reiterated its commitment towards, inter alia :  strengthening the multilateral trading system;  
advancing trade and investment liberalization;  addressing next-generation trade and investment 
issues;  liberalizing and facilitating trade in service s;  facilitating investment;  promoting trade in 
environmental goods;  ensuring f ood security and sustainable agriculture;  and establishing reliable 
supply chains.  Furthermore, Japan contributed actively to the development of the APEC List of 
Environmental Goods (54 items), which was endorsed in Vladivostok in 2012. 
(d) ASEM (Asia-Europe Meeting) 
24. At the eighth ASEM Summit held in Brussels in  October 2010, the Leaders "reiterated their 
resolve to conclude the WTO Doha Developm ent Agenda promptly with an ambitious, 
comprehensive and balanced outcome consistent with its mandate and based on progress already 
made, as this would represent a single most important contribution to the objective.  Leaders further 
agreed that all forms of trade protectionism should be rejected and that existing tariff and non-tariff 
                                                      
16 UN Comtrade database. 
17 The latest available IAP for Japan was issued in 2009.  See APEC online info rmation.  Viewed at:  
http://www.apec-iap.org/do cument/JPN_2009_IAP.htm. 
18 APEC Leaders agreed to develop an APEC list of environmental goods that contribute to their green 
growth and sustainable development objectives, on which they would reduce their applied tariff rates to 5% or 
less by 2015.  The list and subsequent  reduction in tariff would take in to account APEC economies' economic 
circumstances, without prejudice to APEC  economies' positions in the WTO. WT/TPR/S/276 Trade Policy Review 
Page 18 
  
  barriers should be rolled back without delay.  In order to promote economic growth and development, 
leaders also reaffirmed the need  for a fair and rule-based multilateral trading system under the 
WTO."19 
25. At the tenth ASEM Foreign Ministers Mee ting in Hungary in June 2011, Ministers 
"underlined the importance of maintaining a functi oning open, equitable, rules based international 
trading system.  They acknowledged the instrume ntal role played by the WTO in mitigating 
protectionist pressures particularly at the time of the economic crisis.  Its existing framework of rules and its consultative mechanisms have been critical  in contributing to the beginnings of global 
economic recovery. Ministers stressed that in the current still fragile state of the world economy it is 
all the more important to refrain from introducing or raising barriers to trade and investment in order 
to keep markets open and sustain growth."
20 
26. Japan participated in the Informal ASEM Senior  Officials' Meeting for Trade and Investment, 
the 9th ASEM Customs Directors General/Commissioners Meeting and the 6th Meeting of the ASEM 
Working Group on Customs Matters. 
(e) Other bilateral/regional arrangements 
27. Japan participates in the Asia Pacific Metrology Programme and the Asia Pacific Legal 
Metrology Forum, as well as the Asia Pacific La boratory Accreditation Cooperation (APLAC), which 
aims to facilitate cooperation in the harm onization of laboratory accreditation practices. 
28. The Joint Study Committee for an FTA between  China, Japan, and Korea was launched in 
May 2010.  The Committee completed its work at its 7th meeting, in December 2011.  At the 5th 
Trilateral Summit Meeting in May 2012, consensus was reached to launch FTA negotiations within 
the year.  Since then three working group meetings ha ve been held as part of the preparatory work for 
the launch of the FTA negotiations. 
29. With regard to the Trans-Pacific Partnership Agreement, the Japanese Prime Minister 
announced in November 2011 that Japan would enter into consultations towards participating in the 
TPP negotiations. 
30. During the period under review, amendments were made to Japan's bilateral tax treaties with 
Singapore (amendment entered into force in Ju ly 2010), Malaysia (De cember 2010), Luxembourg 
(December 2011), Switzerland (December 2011) and Belgium (amendment signed in January 2010, 
but not yet in force).  Japan also signed new bilatera l tax treaties with Bermuda (entered into force in 
August 2010), Netherlands (December 2011) , Hong Kong (August 2011), Saudi Arabia 
(September 2011), Bahamas (August 2011), Cayman  Islands (November 2011), the Isle of Man 
(September 2011).  New treaties have also been signed with Kuwait, Jersey, Guernsey, and Portugal 
but these have not yet entered into force. None of the tax treaties Japan has signed contains MFN 
provisions.  
                                                      
19 Eighth Europe Asia Meeting, "Chair's Statemen t".  Viewed at:  http://www.mofa.go.jp/policy/ 
economy/asem/asem8/pdfs/chair_state.pdf. 
20 Tenth ASEM Foreign Ministers' Meeting, "Chair's  Statement".  Viewed at:  http://www.mofa.go.jp/ 
policy/economy/asem/asem10/chair1106_withannex.pdf. Japan WT/TPR/S/276 
 Page 19 
 
 
  31. Japan currently has bilateral investment treati es in force with 16 trading partners, and has 
signed new treaties with Papua New Guinea and Colo mbia, which have not entered into force yet 
(section 3(i)).21 
(3) FOREIGN INVESTMENT REGIME  
32. Inward FDI in Japan continues to  be much lower than outward FDI, and is also relatively low 
compared with that in other large OECD econo mies.  The continued low level of FDI may be 
attributed to factors such as the appreciating excha nge rate, high costs of doing business in Japan, and 
regulatory barriers.22  The authorities consider that the main reasons include the difficulty involved in 
hiring qualified employees;  high business costs in Japan23;  and high customer expectations.  On the 
other hand, Japan's trading partners indicated  in the past that it may be attributed, inter alia,  to 
impediments to mergers and acquisitions;  insuffici ent regulatory reform and financial transparency 
and flexibility;  and lack of flexibility in the labour market.  Japan ranks 20th out of 183 countries in 
the World Bank's Doing Business 2012  index24;  however, it ranks 120th with respect to paying taxes 
and 107th with regard to starting a business. 
33. In December 2011, the Government approved th e "Program for Promoting Japan as an Asian 
Business Center and Direct Investment into Japan".   Location subsidies, tax incentives, and reduced 
patent fees for R&D sites would be offered under th e programme.  Although the total cost of Japan's 
investment promotion programme is not estimat ed, the authorities stated that ¥2 billion and 
¥500 million were spent in FY2010 and FY2011, r espectively, on subsidy programmes promoting 
Asian Site Location. 
(i) Regulatory regime 
34. There have been no changes to laws, regula tions, and rules concerning inward FDI since 
2010. FDI (both inward and outward) is governed by  the Foreign Exchange and Foreign Trade Act;  
in addition, relevant cabinet and ministerial ordina nces, such as the Foreign Exchange Order and the 
Order of Inward Foreign Direct Investment apply.25  Inward FDI generally requires ex post facto  
reporting to the Minister of Finance and the Minist er in charge of the sector involved, by the 15th day 
of the month following the investment.  Prior notification needs to be officially approved for inward 
FDI in industries where the authorities feel there would be "significant adverse effect on the smooth 
management of the national economy."  These include:  agriculture, forestry and fisheries, crude oil, 
leather and leather products, and air and maritime tran sport.  Approval is also required in some other 
sectors on the grounds of public order,  public safety, and national security.26  The authorities state that 
only one request for approval has been denied.27  Besides the approval (prior notification) 
requirements under the Foreign Exchange and Foreign Trade Act, various other laws stipulate specific 
                                                      
21 An Investment Agreement signed with India, as part of the EPA, entered into force in August 2011. 
22 WTO (2001). 
23 The recent appreciation of the yen may have helped increase the net outflow of FDI in Japan. 
24 World Bank online information.  Viewed at:  http://doingbusiness.org/rankings. 
25 For an English translation for the Foreign Exchange and Foreign Trade Act, see Cabinet Secretariat 
online information.  Viewed at:  http://www. cas.go.jp/jp/seisaku/hourei/data/FTA_2.pdf.  
26 These include aircraft, arms, explosives, nuclear power, electric utilities, gas utilities, water, heat 
generation, rail transport, passenger transport, tel ecommunications (accompanying certain network facilities), 
television and cable television, and broadcasting sectors. 
27 This concerned a particular FDI proposal in el ectric utilities in 2008 (see WTO (2009), p. 30). WT/TPR/S/276 Trade Policy Review 
Page 20 
  
  restrictions on inward FDI in certain sectors, in cluding the acquisition of land, mining, oil industry, 
telecommunications, and transport.28 
35. The examination period for approval of a foreign investment is about two weeks.  As a result 
of reform adopted in April 2009, investment advisors  are allowed to make prior notifications without 
attaching clients' individual information, and investor s are allowed to file prior notifications within six 
months before the date of the investment.  The authorities consider that these changes have reduced 
the burden on foreign investors, as the approval process for most investments takes less than five business days.  The number of prior notificati ons decreased from 641 in 2008 to 248 in 2011.
29 
36. Cross-border mergers and acquisitions are subject to the Anti-Monopoly Act.  During the 
review period, no merger or acquisition was rej ected by the Japan Fair Trade Commission under the 
provisions of the Act. 
37. Japan currently has bilateral investment treaties (BITs) with Bangladesh;  Cambodia;  China;  
Egypt;  Hong Kong, China;  the Republic of Korea;  Lao PDR;  Russia;  Sri Lanka;  Turkey;  Mongolia;  Pakistan;  Viet Nam;  Uzbekistan;  and Peru.
30  In addition, Japan has signed BITs with 
Papua New Guinea;  Kuwait;  Iraq;  and Colombia as well as a trilateral investment treaty with China 
and the Republic of Korea;  these have not yet entered into force. 
38. Japan's bilateral EPAs/FTAs with Singapore, Me xico, Malaysia, Chile, Thailand, Indonesia, 
Brunei, the Philippines, Switzerland, and India cont ain provisions on investment whereby preferential 
treatment is provided to investment from the EPA pa rties over other foreign investors.  The provisions 
are similar to the provisions of Japan's BITs.  These provisions are applied to investors and 
investments as defined in the agreements, with reserva tions specified in the texts and annexes.  Japan's 
FTAs with Viet Nam and Peru do not contain provisi ons on investment, as separate BITs have been 
signed with these countries and have been incorporated into the EPAs. 
(ii) Investment promotion measures 
39. As mentioned, in December 2011 Japan launche d the "Program for Promoting Japan as an 
Asian Business Center and Direct Investment into  Japan".  The Programme's  five central initiatives 
are: 
 to boost profitability to promote investment, which would include measures such as the Asian 
Business Promotion Project; 
 to utilize the special zone system to attract investment. Measures under this initiative would 
include the Special Zone for Reconstruction and the Comprehensive Special Zone System, 
where firms would be exempt from regulati ons and be provided fiscal and financial 
incentives; 
                                                      
28 For details regarding the restrictions, see WTO document WT/TPR/S/243/Rev.1 May 2011 
29 There were 361 prior notifications in 2009 and 325 in 2010. 
30 These BITs stipulate investment protection and liberalization by, for example:  providing, in 
principle, national treatment and MFN treatment with respect to the "pre-establishment phase of investments";  
obliging the contracting parties to abide by their contra cts with investors;  and prohibiting, in principle, 
performance requirements that might hinder investment. Japan WT/TPR/S/276 
 Page 21 
 
 
   to improve the investment environment a nd create structure for investment support; 
 to make the living environment more comfortable at investment sites;  and 
 the initiative to enrich the dissemination of information welcoming investment. 
40. Under the programme, the authorities have set  out targets to be achieved by 2020.  These 
include:  increasing the number of high value sites by 30 each year;  doubling the number of employees of foreign enterprises to 2,000,000;  a nd doubling the volume of direct investment into 
Japan.
31 
                                                      
31 Program for Promoting Japan as an Asian Business Center and Direct Investment into Japan.  
Viewed at:  http://www.invest-japan.go.jp/program/en_index.html.