Japan WT/TPR/S/276/Rev.1 
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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 agricultural 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, a nd 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 corporati ons 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 hi gh 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 CSE 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 receipt s were 2.00 times the level they would have been 
if generated at world prices w ithout support), and 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/Rev.1 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 a nother 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 relatively higher than the sectoral average 
include:  dairy products, edible ve getables, 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 for the associated subsector may be underestimated.  Where 
AVEs were available, th e simple average for non- ad valorem  tariff rates for agriculture (WTO 
definition) was 70.0%, considerably highe r 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-dig it level;  these include milk and dairy products, 
live swine and meat of swine, rice and cereals, fru it 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-quota 
rate).  Tariffs tend to be partic ularly high and variable for vegeta bles, cereals, and sugars and 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/Rev.1 
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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/Rev.1 Trade Policy Review 
Page 76 
  
  last Review of Japan.  The names of companie s or persons that are allocated quotas are posted 
online by the MAFF;  no information pertaining to quota 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 simu ltaneous 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 quan tities through local and triangular purchase 
arrangements).10  Japan notified the Committee on Agricultu re that it provided US$108.47 million 
and US$218.39 million, in 2008 and 2009, respectively,  for the purchase of grains 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 produ cts (not concurrently);  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/Rev.1 
 Page 77 
 
 
  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/Rev.1 Trade Policy Review 
Page 78 
  
  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 tr illion by 2020.  The author ities state that this is 
to be achieved by:  requesting importing countries to set risk management measures regarding the 
Fukushima Daiichi Nuclear Power Plant accident ;  implementing 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 b eef 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 h ead basis if the calf price falls below the 
                                                      
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/Rev.1 
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  "guaranteed base price".  In FY2011, the guarant eed base price 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 ar e determined by tender.  According to the 
authorities, the supply-demand adjustment is in pl ace to keep domestic prices stable and raise the 
food self-sufficiency ratio.  The rice diversion programme pays farmers to use rice paddies for purposes other than growing rice for food.  Diversi on payments vary according to the crop actually 
sown or how the land is used by the farmer.  The payments are in addition to other subsidies 
received for crops other than rice.  The suppl y-demand adjustment continues to be conducted 
voluntarily by farmers and fa rmers' 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, has 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 world's sixth largest exclusive economic zone, at 
approximately 4 million square kilometres and more  than ten times 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 o ffshore 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/Rev.1 Trade Policy Review 
Page 80 
  
  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, a nd 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 capac ity and how many and which fishing ports 
will be rebuilt, or how many of the fishers displa ced by the disaster (the majority of whom are 
elderly) will return to fishing, and how many  newcomers might be attracted to the sector.  
Nevertheless, extensive re construction efforts are under way, and 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 year21, 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 accounts for roughly 40% of animal protein consumed in Japan.23  Even before 
the tsunami, the gross value of fisheries 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 aquatic 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 inland 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 minor 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 
                                                      
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, December 2012 update.  Vi ewed at:  http://www.maff.go.jp/e/tokei/kikaku/ monthly_e/pdf/gall.pdf.  
The figure excludes employment for Iwate, Miyagi and Fukushima Prefectures that were heavily damaged by the Great East Japan Earthquake of March 2011.  In 2010, total direct employment in the fisheries sector was 
200,000 or 0.3% of Japan's total workforce. 
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]. Japan WT/TPR/S/276/Rev.1 
 Page 81 
 
 
  of marine aquaculture, accounting for 3% of the world total by quantity and 10% by value28, 
reflecting 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 simila r percentage declines were registered for 
capture and aquaculture production volumes.  Howeve r, the total value of aquaculture production 
increased by 11% during this period, due to in creases 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 (Tab le 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.  Data  for prior years show a similar trade imbalance 
in fisheries products.  The main imports are fr esh, 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 
                                                      
28 FAO Fisheries and Aquaculture Department online database.  Viewed at:  http://www.fao.org/ 
fishery/statistics/en [July 2012]. 
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/Rev.1 Trade Policy Review 
Page 82 
  
  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. 
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 consid erable 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 Resources.  The Basic Law on Fisheries Policy has 
                                                      
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/Rev.1 
 Page 83 
 
 
  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 
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 total allowable catch (TAC) and total allowable 
effort (TAE), along with a plan fo r managing resources within the EEZ.33  Seven species (saury, 
Alaska pollack, sardine, jack mackerel, common a nd 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 fisheries 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 lo w levels, according to the 2010 stock assessment, and 
resource recovery plans have been developed for re sources in urgent need of recovery (66 plans for 
77 species).37  Japan is acting against illegal, unregulat ed, and unreported (IUU) fishing in its EEZ, 
with both the Fisheries Agency and the Coast Gu ard 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, and Russia.  In addition, Japan engages in distant 
water fishing activities, including under access agreem ents with Australia, Canada, France, Kiribati, 
Marshall Islands, Morocco, Solomon Islands, Senegal, and Tuvalu.  No quota is currently allocated 
to Japanese vessels under the Australian or Canadian  agreements, and the French agreement relates 
to fishing access in the French terr itories 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-A merican Tropical Tuna Commission – IATTC;  
International Commission for the Conservation of At lantic Tuna – ICCAT;  and Commission for the 
Conservation of Southern Bluefin Tuna – CCSBT). 
                                                      
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/Rev.1 Trade Policy Review 
Page 84 
  
  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 extens ive 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 expend itures (not limited to fisheries).  This total 
includes ¥836.6 billion for public works including fishery harbours;  ¥29.4 billion for improvement 
of ports and airports;  ¥18.6 billion for loans fo r rebuilding businesses in the agriculture, forestry, 
and fisheries sectors;  ¥61.2 billion for flood contro l and improvement of coastal areas, ports, and 
airports;  ¥22.3 billion for public works for de velopment of rural areas, and infrastructure 
development for fisheries;  and ¥157.6 billion for recovery and reconstruction of fisheries.  In 
addition, the budget lists a range of programmes that do not specifically refer to fisheries.39  The 
authorities indicated that under the FY2011 suppl ementary budget and the FY2012 ordinary budget, 
a total of ¥818.3 billion was appropriated for the relief  and recovery of the affected fisheries sectors 
and communities, including for the rebuilding of capture fisheries and aquaculture activities, 
rebuilding fish processing and distribution, and rec onstructing 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 Fish eries Agency Budget for 2010 set out the following 
programmes:  ¥20,255 million as government contribu tions to the fishers insurance programmes and 
emergency support funds;  ¥12,002 million for improvement of dom estic fishing grounds (e.g. 
measures to control harmful alga and jellyfish bloo ms, recovery of lost gear);  ¥5,045 million for 
improvement of marine fisheries through moderniz ation 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 market ing and price support;  ¥1,456 million for fisher 
recruitment programmes;  ¥1,376 million for support of remote island economies;  ¥1,311 million in 
unsecured and low-interest loans to fishers;  ¥761 mi llion 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 advanced equipment and modernization of 
management of fisheries and related sectors;  and the Fund for 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 management of fishery resources, 
promotion of stock enhancement a nd aquaculture, restructuring of fishing entities, conservation of 
coastal environments, recruitment of fishers, for promotion of distribution, processing, and consumption of fishery products, aimed at th e stable, safe, and efficient supply of food.
41 
                                                      
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/Rev.1 
 Page 85 
 
 
  (3) MANUFACTURING  
36. Manufacturing contributed about 20% of GDP a nd 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. 
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 agricultural products (HS01-24), and an overall 
simple average MFN rate of 6.3%.  However, tari ff 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 provi de financial support to 
companies and businesses that are deemed to have revitalization potential and are highly indebted, 
including those in manufacturing.  The Innovati on Network Corporation of  Japan (INCJ), also 
established in 2009, aims to provide financial, technological, and management support with a view 
to promoting the creation of "next-generation businesses", 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 fore ign) in certain sectors requires permission or ex post  
reporting, as stipulated in various laws and releva nt regulations (Chapter II(6)(i)).  For example, 
investors who intend to invest in aircraft ma nufacturing 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 reviewi ng whether to adopt regulatory reform, such as the 
establishment of a new entity for securing nationwide transmission operations 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 permission is denied on grounds of, inter alia, public 
order.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 WT/TPR/S/276/Rev.1 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 companies'  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) 
                                                                                                                                                                     
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). Japan WT/TPR/S/276/Rev.1 
 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 subject to FSA supervision.  Operators of such 
transactions have been obliged to  use the clearing 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 mark ets segments.  The only regulatory change 
regarding those institutions during the review period  was the extension of the term of transitional 
measures on the amount of insurance that "Sma ll Amount and 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 depo sit savings and to subscribe to life insurance 
with this public or semi-public institution.  Japan Post Bank is the largest 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 approxi mately US$1,000 billion (¥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 privatization 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 Ho ldings of all of its shares in its two financial 
subsidiaries, foreseen by this law between 2007 a nd 2017, were frozen by a provisional law passed 
in 2009 (Act No. 100 of 2009).  Mainly because of th e need to finance the reconstruction after the 
great East Japan earthquake the revised Postal Se rvice 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 WT/TPR/S/276/Rev.1 Trade Policy Review 
Page 88 
  
  Holdings Co. Ltd., (Act No. 98 of 2005) for the Gove rnment of Japan to dispose the shares in Japan 
Post Holdings as soon as possible, and repealed th e 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 Post Network;  Japan Po st Group will have to provide, in a unified manner 
through its post office network, universal servi ces for postal services and fair access all over Japan 
to savings and insurance services;  Japan Post Hold ings 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 influence on the impl ementation of the Act on the responsibility for 
ensuring that postal services, simple savings, m oney transfers, debts and credit settlements and 
insurance services should be made available in po st offices integrally, equally, and universally 
throughout the country in a simple and user-friendl y manner;  the minimum threshold of shares that 
the Government must maintain at any time h as not been revised and remains at one third. 
49. Comments were submitted by stakeholders, incl uding foreign providers and institutions, on 
the Postal Service Privatization Act has been critici zed 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)45 alleged that the Act is a step backwards and expressed fears of an uneven 
playing field, as the maintenance of a State sh are may imply public interference (e.g. for the 
purchase of government bonds) and an implicit public  guarantee of deposits and assets as well as the 
risk of cross-subsidization between the financial 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 competition between the Japan Post Group and 
operators offering similar services, and that the Government of Japan intended to continuously 
ensure consistency with the WTO Agreements and other internationa l agreements.  They underlined 
that the regulatory framework imposed on financial subsidiaries of Japan Post Holdings by the 
revised Act remains stricter than the one applying to the private sector.  Specifically, one of the 
subsidiaries is subject to deposits and savings limit ation of ¥10 million.  In addition to regulation 
under the Banking Act and the insurance business la w, imposed on all financial institutions, these 
subsidiaries are required to gain FSA and the MIC approval for new products until JP Holdings 
dispose of half of the shares of its financial ser vices subsidiaries.  Furthermore, the FSA and the 
MIC will hear the opinion of the Postal Servic es Privatization Committee in advance of the 
approval.  
51. There are no state-owned banks or insurance companies 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 fo reign owned and 1 majority foreign owned, and 
4 branches of foreign non-life insurance companies. 
                                                      
45 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/Rev.1 
 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  
 WT/TPR/S/276/Rev.1 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. 
 
Table IV.7 (cont'd) 
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 regime  of general prohibition of such sales to the 
authorization of some sales of low-value, low-risk , low-return products, savi ngs-oriented rather than 
investment-oriented through qualitative threshold.  The FSA constituted a wo rking group to review 
the issue of the domestication of foreign insuran ce operations, i.e. of the regulatory conditions for 
the transformation of branches of foreign insurance companies into subsidiaries.  As a result, the 
restriction forbidding the sale of insurance dur ing the transformation of  branches of foreign 
insurance companies into subs idiaries 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  
Licensing: 
Criteria for assessing applications for insurance licence:  suffic ient financial and organizationa l base to conduct insurance u nderwriting; Japan WT/TPR/S/276/Rev.1 
 Page 91 
 
 
  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  
 
Table IV.8 (cont'd)
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 capitaliza tion represented 849.83% and 908.12%.  Table IV.9 
details the main economic indicators and the gene ral regulatory 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 regulator y framework of mutual funds and pensions fund 
services in Japan. WT/TPR/S/276/Rev.1 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/Rev.1 
 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 same 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/Rev.1 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 allo wed in Japan.  Japan's 
GATS commitments for mode 4 extend to personnel covered by the financia l understanding, to the 
extent they are not already covered by those horiz ontal commitments, which is the case for senior 
managerial staff possessing proprietary informa tion essential to the establishment, control and 
operation of the service supplier, and specialists in  the operation of the fina ncial service supplier.  
The categories benefiting from this extension, subj ect 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 applicati on 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 ar e committed under one of the following categories:  
intra-corporate transferees, investors, professiona l 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 commitme nts 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 information, financial data processing, and other 
auxiliary services.  The other sectors remain de void 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 treatment, the deposit insurance system does not 
cover deposits taken by branches of  foreign banks.  In addition, there are modal additional 
commitments (a rare feature) on the abolition of the distinction between new money and other assets 
for employee pension fund management.  In the pos itive listing FTAs (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 depos its taken by foreign banks.  In addition, the 
agreement with Singapore contains specifically negotiated additional commitments different from 
those contained in the GATS commitments (Table AI V.2).  There is an identical reservation in the 
investment chapter of some positive-listing agreemen ts (with India, Malaysia, 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 existing meas ures 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 reser vation for future measures on banking and other 
financial services other than (a) securities relate d transaction with financial institutions and other 
entities in Japan, (b) sales of a beneficiary certificat e of an investment trust and an investment 
security through securities firms in Japan, (c) provis ion and transfer of financial information and 
financial data processing and advisory and other a uxiliary services excluding intermediation.  These 
exclusions represent a commitment on cross-border trade of securities services, which has no Japan WT/TPR/S/276/Rev.1 
 Page 95 
 
 
  equivalent in other FTAs or in GATS;  and ( ii) a reservation on mode 2 for banking and other 
financial services other than those in the lis t of the financial annex of the agreement.46 
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 subject to a standstill obligation. 
(ii) Telecommunications 
66. Japan's legislation does not distinguish be tween basic telecommunication providers and 
value-added telecommunications providers, but si nce 2004, has distinguished between registered 
and notified carriers.  This replaced the distinction between type I and type II carriers, i.e. facilities-
based and non-facilities-based.  The new distinction,  triggered by technological developments, is 
between large- and small-scale facilities.  Carriers whose activities go beyond the boundaries of a single prefecture are considered as registered operators.  Registration formalities and procedures with the Ministry of Internal Affairs and Comm unication (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 notificati on, 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 participati on in NTT was 24.2% on 31 March 2012 according to 
the compulsory annual securities report for listed co mpanies.  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) 
                                                      
46 This list is identical to the list of sectors of the GATS financial services annex. WT/TPR/S/276/Rev.1 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 procedures for successions and mergers 
(22 registered telecommunications carriers,  162 notified telecommunications carriers;  1,116 carried out procedures for closure  
(3 registered telecommunications carriers, 1,113 no tified telecommunications 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/Rev.1 
 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" lis t 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 covers  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 in terconnected with facilities installed by NTT East 
or NTT West to provide universal service.  Provide rs whose annual sales are less than ¥1 billion are 
exempted.  Calculation of the amount of compensat ion varies with the type of service.  Funds are 
collected by the Telecommunications Carriers A ssociation, which has been designated as the 
universal service support institution.  In 2005, comme nts were submitted by st akeholders, including 
foreign carriers and institutions, on the scale of cost s, cost calculation mechanism, and specification 
of high-cost areas.  Some stakeholders (e.g. USTR and the EU Chamber of Commerce in Japan)47 
alleged that the mechanism had a cross-subsidy effect.  The Japanese Government states that the 
calculation mechanism was based on deliberations of a council composed of persons with the 
relevant knowledge and experience in the areas conc erned nominated by the MIC, with the purpose 
of  fairness and balance, following the procedure est ablished by the relevant ministerial ordinance.  
The amount of expenditure approved for this fund in 2011 was ¥11.1 billion.  Table 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 annex and in the model schedule on telecom, 
with the exception of the (outdated) telegraph services in the GATS commitments and in the EPAs 
                                                      
47 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/Rev.1 Trade Policy Review 
Page 98 
  
  with India and Viet Nam, and of "other tel ecom 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 applie d regime), and the Japanese nationality requirement 
for NTT's board members and auditors.  Two FTA s (with Brunei and Indonesia) contain a more 
generically drafted reservation to national treatme nt in their investment chapter on "existing 
measures on information and comm unications" covering the same NT T reservation 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 positiv e listing FTAs (with 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 discip lines, but in the case of Switzerland these "GATS 
+"obligations appear through a specific telecom chapter 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 commi tments are subject to a standstill obligation.  
The applied regime thus reflects the best FTA re gime 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 investors (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 sta tion and depot services, including inland container 
depot services) has been abolishe d in 2006 and replaced by a perm ission requirement system 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 ag reements containing standstill clauses (with Japan WT/TPR/S/276/Rev.1 
 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 Mariti me Commission discontinued its proceedings (1997 
docket 96-20) against Japanese ha rbour 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 mar itime antitrust exemption under the Marine 
Transportation Act would be maintained, with its  scope unchanged, and that Japan planned to 
review the maritime antitrust exemption in FY 2015.  The support policy was prolonged by the 
tonnage system and the renewal of the internationa l 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 receive export permits 
without placing cargo into customs areas. Japan do es not intend to adopt a 100% scanning policy for 
containers.  Table IV.13 describes these policies in more detail. WT/TPR/S/276/Rev.1 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 25,000 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/Rev.1 
 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 reserva tion services or selling and marketing of air 
transport, which are under generic competition a nd company laws.  The trade regime of these 
sectors is completely liberalized in terms of GATS commitments, FTA commitments, and the 
applied regime.  No detailed sta tistical 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 restrictions except for prior notification of 
foreign investment.  No statistical data are availabl e 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 regime s 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 avia tion mentions the possibility of establishing a 
concession regime and even privatization.48  A restructuration of the landing fees schedule is also 
envisaged, in order to give preference to small and 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) althoug h 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;  authorizati on is granted without limitations, except in cases of reciprocity 
problems.  Table IV.14 details the general regul atory framework and main economic 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, su bject 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 Kin gdom.  Since the Growth Strategy of MLIT was 
introduced in May 2010, Japan has concluded a rrangements with 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. 
                                                      
48 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/Rev.1 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 clauses.  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/Rev.1 
 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 agreem ents 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/Rev.1 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 tr ansport 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 provide rs 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 rental  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.  Since these commitments are subject to a standstill 
obligation for Indonesia, Malaysia, and the Philippi nes 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/Rev.1 
 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 tanker s 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, transporting 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 transport and create two regimes, one for gas and 
one for oil.  For gas, under positive listing agreemen ts 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 pi peline transportation services of natural gas, on a 
fee or contract basis, for negative listing agreemen ts with Mexico, Chile, and Switzerland.  For oil 
there are no restrictions in the positive listing EPAs, except under the agreement with Singapore 
where permission is needed, and with India and Viet Nam where there are no EPA commitments.  Japan has no commitments for pipeline transportation of petroleum on a fee or contract basis in its 
negative listing agreements with Mexico, Chile, Sw itzerland, and Chile.  For transportation of oil 
and goods other than fuels, commitments are subj ect to a standstill obliga tion in the positive listing 
agreements with Indonesia, Malaysia, and the Phili ppines.  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 importa nt 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-discr iminatory licensing and qualification regime. WT/TPR/S/276/Rev.1 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 subsectors 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 constructi on equipment, and constr uction work related to 
mining, with no restrictions under modes 2 and 3.  FTA commitments cover other construction Japan WT/TPR/S/276/Rev.1 
 Page 107 
 
 
  services and, in certain instances, construction servi ces related to mining but in the latter case with a 
nationality or establishment requirement.  Since th e commitments of two of these agreements (with 
Malaysia and Indonesia) are subject to a standstill obligation the 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)  and in terms of employment (17.3%, of which 
5.8% for wholesale and 11.5 % for retail).  The sect or has the modern characteristics of a mature 
market, such as clear domination of chain stor es (supermarkets or convenience stores) over 
individually owned shops (585,732 ou tlets in total of which 93.3% belonging to chain stores), a high 
density of grocery stores per million inhabitant s (2,292), with 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 busin ess 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 establishment 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 allega tion denied by the Japanese authorities.  There is 
no specific regime for franchising and no discr imination towards foreign franchisors and 
franchisees.  There have been no major regulat ory changes since 2008.  The generic competition 
legislation, i.e. the Anti-Monopoly Act (AMA) app lies 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/Rev.1 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 Article 10.  An applicant may be subject to the limitation on the 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 distribution 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, a nd products 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 agreemen ts with Mexico and Chile, where no such 
reservation has been listed.
49  Livestock trading is subject to a licensing and residency requirement 
under the GATS and all EPAs (including positive lis ting agreements).  Petroleum and petroleum 
products are subject to a prior notification requi rement for investment only in positive listing 
agreements.  There is no such reservation in nega tive listing agreements.  Licences for products sold 
in public wholesale markets are subject to a lim itation in the positive listing agreements.  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 
(2010 data in both instances).  Domestic tourism is  highly developed.  The interest by national 
public authorities in promoting tourism in Japan is relatively 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 tour ism 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 
                                                      
49 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/Rev.1 
 Page 109 
 
 
  through tour companies, and media invitations in  order to recover 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 case s 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 fo r registration.  Travel agencies are obliged to 
hold certain assets, and to hire employees with nati onal qualifications on travel consumer affairs.  
These requirements are non-discriminatory.  There are 3 classes 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: 10th(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 superior ba rgaining position by hotels companies forcing their suppliers to buy  coupons) 
and 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: - 
 
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) 
 
Table IV.20 (cont'd)WT/TPR/S/276/Rev.1 Trade Policy Review 
Page 110 
  
  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/Rev.1 
 Page 111 
 
 
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