WT/TPR/S/175/Rev.1 Trade Policy Review 
Page 30 
 
 
III. TRADE POLICIES AND PRACTICES BY MEASURE 
(1) INTRODUCTION  
1. Since its previous Trade Policy Review in 2005, Japan has introduced various measures 
aimed at further liberalizing its trade and investme nt regimes.  Progress has been made in improving 
the competitive environment, including in financia l services.  The authorities continue to promote 
regulatory reform and strengthen competition policy, which could, inter alia,  help create more 
opportunities for domestic and foreign businesses. 
2. The tariff is Japan's main trade policy instru ment.  Nonetheless, most imports enter Japan 
duty free or are subject to low tariff rates.  In fiscal year 20061, the simple average applied MFN tariff 
was 6.5%, up from 6.3% in FY 2004, reflecting increases in ad valorem  equivalents of non- ad 
valorem  duties.  Nearly 99% of tariff lines are bound and most applied MFN rates coincide with 
bound MFN rates, thereby imparting a high degree of pr edictability to Japan's tariff schedule.  At the 
same time, non- ad valorem  duties are an important feature of the tariff, particularly concerning 
agricultural products.  Such duties, which account for 6.7% of all tariff lines, are indicated clearly in 
Japan's tariff schedule;  they tend to involve high ad valorem  equivalents.  Preferential tariff rates are 
offered under the Generalized System of Preference s to 142 developing countries and 15 territories, 
including additional preferences for 50 least devel oped countries;  Japan also grants preferential 
access for imports from Singapore, Mexico, and Mala ysia under bilateral free-trade agreements with 
these countries.  The simple average tariff rate s under these preferential arrangements (GSP; LDCs; 
and FTAs with Singapore, Mexico, and Malays ia) are 5.3%, 3.3%, 4.4%, 4.2% and 3.7%, 
respectively. 
3. Japan has few non-tariff border measures.  T hose currently applied involve some import 
prohibitions and quantitative import re strictions (for example, on some fish).  In addition, imports of 
some goods are subject to licensing requirements to  ensure national security, safeguard consumer 
health and well-being, or preserve domestic plan t and animal life and the environment.  Japan 
abolished import quotas on textiles and clothing (i.e . those related to silk products from China) on 
1 January 2005. 
4. Since its previous Review, Japan has used two anti-dumping measures.  It introduced its first 
ever countervailing measure (against imports of  dynamic random access memory chips from the 
Republic of Korea) in January 2006.  Japan has not imposed any safeguards measures. 
5. Japan maintains certain export controls on groun ds of national security and public safety and 
to ensure adequate domestic supp lies of certain agricultural and other primary products.  Export 
finance, insurance, guarantees, and drawback schemes are available. 
6. No preferences are granted to domestic supplie rs with regard to government procurement 
covered by the Agreement on Govern ment Procurement.  The share of  foreign suppliers in the total 
value of government procurement was 3.7% in 2004, the latest year for which such data are available, 
(down from 4.2% in 2002).  The share of pr ocurement of overseas goods and services in total 
procurement, in terms of value, decreased from 13. 8% in 2002 to 9.7% in 2004.  The share of 
selective and single tendering rose to 1.7% and 44.1% , respectively, in 2004 (compared with 1.5% 
and 35.4% in 2002). 
7. About 93% of Japan Industrial Standards (J IS) (92% in 2004) were aligned to their 
international counterparts in 2005.   
                                                      
1 The fiscal year (FY) runs from April to March. Japan WT/TPR/S/175/Rev.1 
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8. Various laws on intellectual property rights ha ve been amended since Japan’s previous 
Review with a view to strengthening protection.  Efforts have been made to reduce the time required 
for patent registration.  Japan has continued to pa rticipate in multinational and regional discussions on 
agreements to promote internati onal harmonization of regimes prot ecting intellectual property rights 
(IPRs). 
9. In March 2006, Japan adopted a revised Thr ee-Year Programme for Promoting Regulatory 
Reform, which listed 1,349 measures envisaged to  contribute to creating new opportunities for 
domestic and foreign businesses.  Japan has continue d to implement regulatory reforms in selected 
regions under the scheme of special zones for structur al reform;  some of these measures have been 
applied nationwide. 
10. The Anti-monopoly Act (AMA), the main legisl ation on competition policy, as revised in 
2005 to, inter alia :  increase administrative surcharges a nd penalties;  introduce a leniency 
programme;  empower officials of the Japan Fair  Trade Commission (JFTC) to conduct compulsory 
criminal investigations in accordance with the AMA;  and expedite JFTC's hearing procedures. 
11. There is growing awareness that ineffective corporate governance has contributed to the 
misallocation and perhaps excessive use of capital and labour in the corporate sector.  This has 
prompted the Government to implement a number of policy measures, such as an amendment to the Commercial Code, which entered into force on 1 May 2006. 
(2) M
EASURES DIRECTLY AFFECTING IMPORTS  
(i) Customs clearance procedures  
12. Since its previous Review, customs clearance ti me in Japan has declined and fees associated 
with customs clearance have been reduced;  the late st available data indicated that the average time 
between arrival of goods and the granting of impor t permission declined by about 5% from 67.1 hours 
(2.8 days) in 2004 to 63.8 hours (2.7 days) in 2006 for sea cargo and by about 15% from 17.0 hours (0.7 days) to 14.4 hours (0.6 days) for air cargo,  and overtime charges were reduced from ¥7,800 per 
hour to ¥4,100 per hour in April 2005.   
13. With the amendment of the Customs Law in 2006, certain airplanes and ships, including 
foreign trading vessels or aircraft, must submit pa ssenger and cargo lists to Customs before their 
arrival;  according to the authorities, the amendmen t was introduced to prevent terrorist activities and 
transnational organized crime from taking place in Japan, while responding to a request to strike a balance between trade facilitation and security.  In  September 2005, Japan ratified the Convention on 
Facilitation of International Maritime Traffic.
2 
14. Under the Customs Law, all importers must file  a declaration with Customs.  For most goods, 
the declaration must be made after the goods have been taken into a Hozei area3 or other designated 
                                                      
2 This Convention was adopted in 1965 by the International Maritime Organization with the aim of 
facilitating maritime traffic and securing uniformity in fo rmalities and other procedures;  for example, it sets a 
limit on the number of declarations that may be required by authorities.  A revision of the Convention in 2002 
involved the adoption of a unified form for information to be reported to the Port Authorities on a ship’s 
arrival/departure. 
3 A Hozei area is an area specially designated by the Minister of Finance to store imported goods or 
goods to be exported.  Import and export procedures must be completed once the imported goods or goods 
destined for export are brought into the Hozei area.  Th ere are five types of Hozei area:  designated Hozei area, 
Hozei warehouse, Hozei manufacturing warehouse, Hozei display area, and integrated Hozei area. WT/TPR/S/175/Rev.1 Trade Policy Review 
Page 32 
 
 
place;  items requiring approval by the Director-General  of Customs must be declared before they are 
taken to the Hozei area.  The declaration must be accompanied by details of the quantity and value of 
the goods to be imported as well as a packing list, freight account, insurance certificate, and certificate 
of origin (for preferential rates of tariff), wher e applicable.  Additional documentation may be 
required, for example for goods requiring an import licence or health certificate.  Once the 
documentation is verified by Customs, an impor t permit is issued.  Under the "instant import 
permission system upon arrival", available since September 2003, import perm ission may be granted 
as soon as cargo entry is confirmed.  To be eligible for this system, importers must file a preliminary 
declaration on line (through the Nippon Automated Cargo Clearance System (NACCS));  Customs 
examines the documents and materials submitted befo re cargo entry, and provide the results of the 
examination. 
15. Imports are valued on the basis of their c.i.f. va lue (which is taken to be the transaction value 
of the imports).  Customs duty can be paid thro ugh a multi-payment network system, which connects 
teller institutions (government authorities) with fi nancial institutions.  No fee is charged by the 
Government for the use of this system4;  however, the financial institutions involved may collect 
variable fees.  The system is managed by  the Japan Multi-payment Network Management 
Organization (JAMMO), a non-profit organization established by major financial institutions in 
Japan;  only institutions that participate in the organization can use the system.5  Since July 2005, 
written advance valuation rulings have been issued  at the written request of importers and other 
parties concerned;  these rulings can be publishe d on the Customs website with the applicants' 
consent. 
16. Complaints against decisions taken by the Cust oms may be made to the Director-General of 
Customs within two months of the date of import.  Further appeals may be lodged with the Minister of 
Finance within one month of the decisi on by the Director-General of Customs.6  The number of 
complaints fell to 15 in 2005 from 28 in 2004;  seven  appeals were made in 2005 (six in 2004);  two 
law suits were filed in 2004 an d settled in 2004 and 2005.  In  2004, the Administrative Cases 
Litigation Law was revised to:  increase the number of courts that have competent jurisdiction;  
extend the time-period to file a suit;  and expa nd the scope of remedies for administrative cases.  
There have been no other changes to the complaint and appeal process for Japan's customs procedures 
since 2004. 
(ii) Tariffs  
(a) Bound tariff 
17. In FY 2006, Japan's tariff schedule consiste d of 8,914 lines at the HS-9 digit level.7  Japan has 
bound 98.8% of lines (106 lines are unbound) (Table III.1) ;  unbound lines relate mainly to fisheries 
(fish, crustaceans, seawee d), petroleum oils, and wood and articles thereof.  Ad valorem rates account 
for 8,240 lines (92.4%);  212 lines (2.4%) carry specific rates, 57 lines (0.6%) compound rates, and 
299 lines (3.4%) have alternate rates of duty.  In FY 2006, the average bound MFN tariff was 6.5%, 
identical to the average applied MFN tariff, sugges ting a high degree of predictability in the tariff.  
While bound and applied MFN rates coincide for most lines, bound rates exceed applied MFN rates 
for, inter alia,  live animals and animal products (HS Secti on 1), vegetables (HS Section 2), prepared 
                                                      
4 The existing customs clearance fees include:  an insp ection fee if inspection is at a place at place other 
than a designated area (¥5,000/hour), and an overtime charge (between 0:00 and 5:00:  ¥4,550/hour;  between 5:00 and 22:00:  ¥4,100/hour;  and between 22:00 and 24:00:  ¥4,550/hour).  
5 It would appear that no foreign banks have participated in this system to date (October 2006), 
according to JAMMO on line information.  Viewed at:  http://www.jam mo.org/index.html (in Japanese). 
6 A law suit may be filed against the Minister’s arbitration within three months. Japan WT/TPR/S/175/Rev.1 
 Page 33 
 
 
foods, beverages, and tobacco (HS Section 4), chemicals and products (Section 6), textiles and 
clothing (Section 11), and base metals (Section 15).  The average bound rate for agricultural products 
(WTO definition) is considerably higher, at 19. 1%, than for non-agricultural products, at 3.6%;  
without any further tariff reduction, this average for agricultural products is expected to remain 
unchanged until 2009, when Japan completes the implementation of its Uruguay Round 
commitments.8 
Table III.1 
Structure of the MFN tariff, FY 2003-06 
(Per cent) 
    FY 2003a FY 2004a FY 2005b FY 2006b 
 Bound tariffc     
1. Bound tariff lines (% of all tariff lines) 98.9 98.9 98.8 98.8 
2. Simple average bound rate 6.4 6.4 6.5 6.5 
 Agricultural products (HS01-24) 16.8 16.8 17.5 17.5 
 Industrial products (HS25-97) 3.9 3.9 3.8 3.7 
 WTO agricultural products 18.4 18.4 19.1 19.1 
 WTO non-agricultural products 3.8 3.7 3.7 3.6 
 Textiles and clothi ng 6.7 6.7 6.7 6.6 
3. Tariff quotas (% of bound tariff lines) 1.7 1.7 1.7 1.7 
4. Duty-free tariff lines (% of bound tariff lines) 40.8 40.9 40.8 40.9 
5. Non- ad valorem  tariffs (% of bound tariff lines) 6.4 6.3 6.4 6.4 
6. Non- ad valorem  tariffs with no AVEs (% of bound tariff lines) 1.6 1.5 1.6 1.6 
7. Nuisance bound rates (% of bound tariff lines)d 1.0 1.0 1.1 1.1 
 Applied tariff     
8. Simple average applied rate 6.3 6.3 6.4 6.5 
 Agricultural products (HS01-24) 16.1 16.1 17.1 17.1 
 Industrial products (HS25-97) 3.8 3.8 3.7 3.7 
 WTO agricultural products 17.7 17.8 18.8 18.8 
 WTO non-agricultural products 3.8 3.7 3.7 3.6 
 Textiles and clothi ng 6.7 6.7 6.7 6.6 
9. Domestic tariff "peaks" (% of all tariff lines)e 6.5 6.4 6.2 6.3 
10. International tariff "peaks" (% of all tariff lines)f 7.4 7.4 7.4 7.5 
11. Overall standard deviation of tariff rates 23.2 23.2 25.0 25.2 
12. Coefficient of variation of  tariff rates 3.7 3.7 3.9 3.9 
Table III.1 (cont'd) 
                                                                                                                                                                     
7 The Japanese tariff schedule has three distinct sets of rates:  statutory rates (which include both 
general and temporary rates), WTO bound rates, and pr eferential rates (those under the GSP, the JSEPA, 
JUMSEPA, and the JMEPA).  In the cas e of statutory rates, the "temporary" but apparently open-ended rate is 
normally used instead of the higher general rate;  the lower of the statutory and WTO bound rates are applied to 
WTO Members on an MFN basis, except when preferential ra tes are applied.  In inst ances where the temporary, 
general, or preferential rate is above the WTO bound ra te, the latter rate applies to WTO Members.  Currently, 
483 lines (including in-quota lines) or 289 lines (excluding in-quota lines not subject to state trading) at the 
HS 9-digit level are subject to temporary rates;  the eff ective period of these rates was extended until the end of 
FY 2006.  
8 Japan implemented its tariff reduction commitments for all but one industrial product by 
January 1999 and for agricultural products by January 2004.  Tariff reduction commitments are yet to be met for one remaining industrial product, menthol (HS 2906), expected by April 2009.  WT/TPR/S/175/Rev.1 Trade Policy Review 
Page 34 
 
 
    FY 2003a FY 2004a FY 2005b FY 2006b 
13. Tariff quotas (% of all tariff lines) 1.7 1.7 1.7 1.7 
14. Duty free tariff lines (% of all tariff lines) 41.6 41.6 41.5 41.7 
15. Non- ad valorem tariffs (% of all tariff lines) 6.6 6.6 6.7 6.7 
16. Non- ad valorem tariffs with no AVEs (% of all tariff lines) 1.4 1.4 1.6 1.5 
17. Nuisance applied rates (% of all tariff lines)d 1.1 1.1 1.2 1.1 
a Using 2003 AVEs, as available, pr ovided by the Japanese authorities.  In case of unavailability, the ad valorem  part of compound 
and alternate rates is used. 
b Using 2005 AVEs, as availa ble, provided by the Japa nese authorities.  In ca se of unavailability, the ad valorem  part of compound 
and alternate rates is used. 
c Calculations are based only on bound tariff lines.  UR rates we re implemented in 2004, except for one industrial product, to be 
implemented in 2009. 
d Nuisance rates are those greater than zero, but less than or equal to 2%. 
e Domestic tariff peaks are defined as those exceeding three ti mes the overall simple average applied rate (indicator 8). 
f International tariff peaks are defined as those exceeding 15%. 
Note: All tariff calculations exclude in-quota  lines (tariff lines subject to state tr ading are included).  AVEs have been adju sted 
accordingly (e.g. where a specific tariff lin e's MFN applied rate equals 100 yen/kg in  2001.  The given 2001 AVE equals 50%.  
For the same line the bound rate equals 150 yen/kg in 2001 and in  2002 its applied rate equals 75 yen/kg.  Their AVEs become 
75% and 37.5%, respectively). 
 All tariff schedules are based on HS02 nomenclature consisting of 9,103, 9,072, 9,067 and 8,914 tariff lines, respectively, fo r 
FY 2003 to FY 2006. 
Source:  WTO calculations, based on data provided by the Japanese authorities. 
(b) MFN applied tariff 
Structure 
18. Japan's current applied MFN tariff consists of  8,914 lines in the HS 9-digit nomenclature.9  Of 
these, 93.4% involve ad valorem  rates;  2.3% of all tariff lines are specific, 3.3% alternate, and 0.6% 
are compound rates;  0.4% of tariff lines have ot her rates (differential duties and sliding duties).10  The 
non-ad valorem  rates of duty (6.6% of all tariff lines) apply mainly to fats and oils, footwear, prepared 
foods, live animals and animal products, textiles and clothing, vegetables, and mineral products 
(Chart III.1);  ad valorem  equivalents were provided by the authorities for 457 lines, as a result of 
which, the tariff analysis is based on 99.1% of the 8,914 tariff lines.11  There are 150 tariff lines 
(1.7%) for which out-of-quota tariff rates curren tly apply;  38 of these lines are subject to ad valorem  
rates. 
19. In FY 2006, Japan unilaterally reduced app lied MFN tariffs on petroleum and petroleum 
products and industrial alcohol;  for example, th e applied MFN rates are zero (¥170/kilo litre or 
¥50/kilo litre in FY 2005) for crude oil, and 23 .8% (27.2% in FY 2005) for industrial alcohol. 
 
                                                      
9 Excluding in-quota lines (lines s ubject to state trading are included). 
10 An alternate duty involves either an ad valorem  or specific rate;  usually the higher of the two is 
applied.  A compound duty involves a combination of both ad valorem  and specific rates.  A differential duty 
involves a specific rate charged per kg. of imports with the rate varying directly w ith the differen ce between the 
standard import price, set by the authorities, and actual import price.  A sliding duty involves a specific tariff 
rate for imports valued up to a certain threshold;  th e rate declines as the value exceeds the threshold and 
becomes zero at a certain point. 
11 Ad valorem  equivalents were provided by the authorities for 457 out of 593 non- ad valorem  tariff 
lines.  For 32 lines that carry alternate rates of duty, and 27 lines with compound rates, the ad valorem  part of 
the line was used in the tariff analysis, which means that the levels of these alternate and compound rates are underestimated. Japan WT/TPR/S/175/Rev.1 
 Page 35 
 
 
(0) (0) (0) (0) (0)(29)(74)
(57)(36)
(123)
(20)
(4) (0) (0) (0) (0)(223)(25)
(593)
(0)(2)(0)
051015202530354045
Live animal & prod.
Vegetable products
Fats and oils
Prepared food, etc.
Mineral prod.
Chemicals & prod.
Plastic & rubber
Hides & skins
Wood & articles
Pulp, paper, etc.
Textiles & articles
Footwear
Articles of stone
Precious stones, etc.
Base metals & prod.
Machinery
Transport equipment
Precision instruments
Arms & ammunition
Misc. manufacturers
Works of art, etc.
TotalChart III.1
Share of non- ad valorem  duties, by HS section, FY 2006
Per cent
Note:
Source :Each bar in the chart depicts the percentage of tari ff lines out of the total within each HS section 
that are non- ad valorem  duties.  The figures in parentheses show the number of lines involving non-
ad valorem rates.  In-quota rates are not included ( lines subject to state trading are included).
WTO Secretariat estimates, based on data provided b y the Ja panese authorities.
 
 
20. Around 41.7% of Japan's tariff is at the zero rate;  around 23.6% is subject to rates greater 
than zero but less or equal to 5%, and 21.6% to rate s greater than 5% but less than or equal to 10%.  
Some 1.7% of all Japan's tariff lines are subject to tariff rate quotas.  While 100% of the in-quota rates 
are ad valorem , only 25.3% of out-of-quota rates are ad valorem .  There is also a significant 
difference between the average rate s:  the in-quota rates averag e 18.8%, while out-of-quota rates 
average 98.5%.  According to the authorities, the quota allocation method has not changed since 
Japan’s previous Review.  
Tariff averages 
21. In FY 2006, Japan's overall simple average a pplied MFN tariff was 6.5%, up slightly from 
FY 2004 (6.3%), reflecting increases in ad valorem  equivalents of non- ad valorem  duties, none of 
whose rates were increased.  Agricultural produc ts receive much higher protection than non-
agricultural products:  the simple average for agriculture (WTO defi nition) is 18.8% compared with 
3.6% for non-agricultural products.  Protection for f ootwear and headgear, prep ared foods, vegetables, 
live animals, hides and skins, arms and ammunition and textiles and clothing is also relatively high 
(Chart III.2).  WT/TPR/S/175/Rev.1 Trade Policy Review 
Page 36 
 
 
0510152025303540
Live animal & prod.
Vegetable products
Fats and oils
Prepared food, etc.
Mineral prod.
Chemicals & prod.
Plastic & rubber
Hides & skins
Wood & articles
Pulp, paper, etc.
Textiles & articles
Footwear, headgear
Articles of stone
Precious stones, etc.
Base metals & prod.
Machinery
Transport equipment
Precision instruments
Arms & ammunition
Misc. manufactures
Works of art, etc.
TotalChart III.2
Simple average applied MFN tariff rates, by HS section, FY 2004 and 2006
Per cent
Excluding in-quota rates (lines subject to state trading are included).  Including ad valorem  equivalents (AVEs) 
provided by the Japanese authorities, as available.   The ad valorem  part of compound and alternate rates are 
used where AVEs are not available.  
WTO Secretariat calculations, based on data provided by the Japanese authorities.Note:
Source :FY2004
FY2006
 
 
22. Ad valorem  equivalents (AVEs) for 2005 were provided by the authorities for approximately 
77.1% of the non- ad valorem  rates.12  The simple average rate for all the AVEs supplied is 41.8%, 
although the highest rate is 902.3%, for konnyaku tubers  (out-of-quota rate);  93 of the top 100 tariffs 
had non- ad valorem  rates.13  The overall average for the AVEs is also high compared with the overall 
simple average applied MFN tariff of 6.5%, and the simple average of the ad valorem  rates of 4.4%.  
23. The data on tariff escalation show no overall consis tent pattern other than that the high level 
of protection granted to agricultural products resu lts in higher overall tariff protection for primary 
products than for semi-processed products.  Tari ff escalation from semi-pro cessed to final goods is 
present in some sectors, notably textiles, petroleum refineries, and non-electrical machinery.  In other 
sectors, such as food products and manufacturing,  leather products, wood a nd paper products, other 
chemicals, non-metallic mineral products, and metal products, protection for fully processed goods is 
lower than for semi-processed products, while escalation from prim ary to semi-processed and final 
products is evident only for industrial chemicals and rubber (Table AIII.1). 
                                                      
12 According to the authorities, AVEs for the remaining non- ad valorem  tariff lines were not available 
due to lack of imports of an unspecified number of these items, which suggests that the tariffs involved may be 
prohibitive, or because th e unit for duty did not correspond to  that used for trade statistics. 
13 For FY 2004, the simple average of ad valorem  rates was 4.4% and the average of the AVEs 
supplied by the authorities, based on imports in 2003, was 39.2%. Japan WT/TPR/S/175/Rev.1 
 Page 37 
 
 
Tariff reduction and exemptions 
24. Customs duty reductions and exemptions fo r FY 2005 amounted to about ¥190.9 billion, 
accounting for around 21% of total tariffs collected. 
(c) Preferential rates 
25. Preferential rates of tariff are offered under the GSP to 142 developing countries and 
15 territories, including additional preferences for 50 least developed countries.  Japan has granted 
preferential access for imports from Singapore unde r the Japan-Singapore Economic Agreement for a 
New Age Partnership (JSEPA) since November 2002,  for Mexico under the Agreement between 
Japan and the United Mexican States for the St rengthening of the Economic Partnership (JUMSEPA) 
since April 2005, and for Malaysia under the Ag reement between Japan and Malaysia for an 
Economic Partnership (JMEPA) since July 2006.   
26. The simple average tariff rates under all pr eferential arrangements (GSP, LDC, JSEPA, 
JUMSEPA, and JMEPA) are lower than the simple  average applied MFN rates although there are 
wide variations from one product group to another.  In particular, while the overall simple average 
GSP, LDC, JSEPA, JUMSEPA, and JMEPA rates range fro m 3.3% to 5.3%;  agriculture is subject to 
rates from 16.3% to 18.8% (Table III.2).  Tariffs under these arrangements are also high for certain 
processed and industrial goods, such as leather, rubbe r, footwear and travel goods, and textiles and 
clothing imports;  items such as dairy products and some footwear and textiles and clothing are not 
included in the GSP scheme for developing countries and are therefore subject to MFN rates of duty. 
Table III.2 
Preferential tariff rates, FY 2006 
(Per cent) 
  MFN GSP LDC JSEPAa JUMSEPAb JMEPAc 
Ad valorem rates (% of all tariff lines)  93.3 93.7 96.7 96.2 94.3 96.5 
Overall simple average 6.5 5.3 3.3 4.4 4.2 3.7 
WTO agriculture 18.8 17.7 16.3 18.8 17.9 17.3 
Dairy products 88.0 88.0 88.0 88.0 88.0 88.0 
WTO non-agriculture 3.6 2.4 0.3 1.1 1.0 0.6 
Leather, rubber footwear, and trav el goods 16.0 14.7 1.7 15.9 15.1 7.5 
Textiles and clothing 6. 6 5.0 0.1 0. 1 0.6 0.1 
a Japan-Singapore Economic Agreement for a New Partnership. 
b Agreement between Japan and the Un ited Mexican States for the Strengthe ning of the Economic Partnership. 
c Japan-Malaysia Economic Partnership Agreement. 
Note: Calculations exclude in-quota rates and include AVEs as av ailable;  tariff lines subject to state trading are included. 
Source:  WTO calculations, based on data provided by the authorities. 
27. About 140 tariff lines, including certain meat, leat her and leather products, are subject to new 
tariff-rate quotas under the JUMSEPA (these lines are not subject to tariff-rate quotas under applied MFN rates);  the in-quota rat es are lower than the corresponding applied MFN rates.  Under the 
JMEPA, fresh bananas are subject to a new tariff quota, where the in-quota rate is zero. 
28. China remains the largest beneficiary of pr eferential access to the Japanese market;  it 
accounted for 59% of all imports granted preferenti al treatment by Japan under its GSP scheme in 
FY 2004, up from 56% in FY 2002 (Chapter II(4)(iv)).
14 
                                                      
14 Other major beneficiaries of Japan's GSP scheme are ASEAN countries, for example Thailand (7.9% 
of total imports under preferential tr eatment), Malaysia (7.2%), Indonesia  (6.3%), and the Philippines (5.5%). WT/TPR/S/175/Rev.1 Trade Policy Review 
Page 38 
 
 
(iii) Non-tariff border measures  
29. The Customs Law and the Customs Tari ff Law were amended in March 2006 to, inter alia,  
remove sections on import prohibition from the Cu stoms Tariff Law and add them to the Customs 
Law.15  Imports of narcotics, revolvers and pistols,  and articles infringing intellectual property rights 
may be prohibited or subject to import licensing in  order to ensure national security, safeguard 
consumer health and well-being, or to preserve dom estic plant and animal life and the environment.  
Some commodities, including certain fish, are subject to import quotas.   
(a) Import prohibitions 
30. Import prohibitions were introduced on:  certain chemicals, such as certain ethanol commonly 
known as Kelthane or Dicofol (in April 2005);  an d certain narcotics commonly known as AMT (in 
April 2005), and MBDB and 2C-T-7 (in April 2 006);  rough diamonds from Côte d'Ivoire (in 
January 2006) as per UN Security Council Resolution 1643(2005);  as well as germs likely to be used for bio-terrorism (in 2006). 
(b) Import licensing  
31. Changes in the list of items requiring impor t approval, since the previous Trade Policy 
Review of Japan in 2005, include:  the addition of s outhern bluefin tuna and t una farmed in Atlantic 
Ocean and the Mediterranean (fresh or chilled) fro m non-member countries of the Convention for the 
Conservation of Southern Bluefin Tunas and the International Convention for the Conservation of 
Atlantic Tunas in December 2004 and January 2006, respectively.  Import licensing restrictions were 
removed on textiles and clothing, such as silk yarn, gauze of silk, and woven fabric of silk shipped 
from China and the Republic of Korea (in connec tion with the phase-out of the WTO Agreement on 
Textiles and Clothing) in January 2005, and on blue fin tuna from Equatorial  Guinea and Sierra Leone, 
bigeye tuna from Cambodia, Equatorial Guinea, and Sierra Leone, and Atlantic  swordfish from Sierra 
Leone in February 2005. 
(c) Import quotas 
32. Import quotas are imposed on various items, incl uding certain fish products, certain organic 
chemicals, pharmaceuticals, explosives, nuclear g oods, animals and plants under the Convention on 
International Trade in Endangered Species of Wild Fauna and Flora (or the Washington Convention),  
controlled substances listed in the Montreal Protoc ol on Substances that Deplete the Ozone Layer, 
alcohol, and items containing asb estos, amosite, and crocidolite.
16  Since 1 January 2005, textiles and 
clothing products, such as silk yarn, gauze of silk, and woven fabric of silk shipped from China, have 
been removed from the list of items subject to impor t quotas.  According to the authorities, Japan has 
not introduced any industrial adjustment measures to compensate for the elimination of quotas. 
(d) Import surveillance  
33. Japan maintains a system of prior confirmation to  collect data concerning imports, to monitor, 
and confirm that imports are for specific uses, and to verify documentation and origin requirements.  
Prior confirmation is required from the Minister of  Economy, Trade and Industry, or other relevant 
                                                      
15 Prohibited imports are defined under Article 69-8 of the Customs Law.  Import licensing procedures 
are governed by the Foreign Exchange and Foreign Trade Law.  Approval from the Minister of Economy, Trade 
and Industry is required to import goods subject to Japan's international arrangements. 
16 WTO document G/LIC/N3/JPN/4, 1 November 2005;  and information provided by the Japanese 
authorities. Japan WT/TPR/S/175/Rev.1 
 Page 39 
 
 
ministers;  some items require confirmation at Customs (customs confirmation).  The system is used, 
inter alia , in cases where fraudulent declarations have b een found in the past or are deemed more 
likely.  Since 1 January 2005, silk yarn from the Re public of Korea has been removed from the list of 
items requiring customs confirmation.  
(iv) Contingency measures  
34. Japan's legal framework defining the use of  anti-dumping, countervailing, and safeguard 
measures has remained unchanged since its previous Review;  it is based on the Customs Tariff Law and the relevant Cabinet Orders , Regulations and Guidelines. 
35. Japan has in place two anti-dumping measures, which were imposed on certain polyester 
staple fibre from the Republic of Korea and th e Separate Customs Terr itory of Taiwan, Penghu, 
Kinmen and Matsu (Chinese Taipei) on 26 July 2002;  the level of applied duties is between 6% and 
13.5%.  Japan initiated an "expiry review " of this product on 31 August 2006.  
36. On 27 January 2006, Japan applied its first countervailing duty, on dynamic random access 
memories (DRAMs) imported from the Republic of Korea;  the level of the duty is 27.2%. 
37. Japan has not imposed any safeguard measures since 2004. 
(v) Government procurement 
38. Japan is a signatory to the WTO Agreement on Government Procurement (GPA).  Its GPA 
coverage encompasses all central government entities, all 47 prefectures, 12 designated cities (shitei 
toshi) , and certain public corporations.
17  Japan's thresholds for GPA coverage, expressed in yen, have 
decreased since its previous Trade Policy Review;  those expressed in Special Drawing Rights (SDRs) 
have remained unchanged.18  
39. In 2005, Japan notified the WTO Committee on Government Procurement of various 
organizational changes of procuring entities subj ect to the GPA;   the changes included the 
replacement of the Japan Highway Public Corporati on, Metropolitan Expressway  Public Corporation, 
Hanshin Expressway Public Corporation, and H onshu-Shikoku Bridge Authority with East Nippon 
Expressway Company Limited, Metropolitan Ex pressway Company Limited, Central Nippon 
Expressway Company Limited, West Nippon Expressway Company Limited, Hanshin Expressway 
Company Limited, Honshu-Shiko ku Bridge Expressway Company Limited, and Japan Expressway 
Holding and Debt Repayment Agency.19   
40. The Government carries out annual re views of its voluntary measures under, inter alia , the 
1994 Action Program on Government Proc urement Procedures, as amended.20  A voluntary review 
meeting under the Action Program is conducted every year to provide domestic and foreign suppliers 
                                                      
17 The twelve cities have populations over 500,000, and are designated by a relevant Cabinet Order.  
The Account Law and relevant ordinances specify the procurement procedures fo r the central government 
entities, while the Local Autonomy Law and relevant ordinances stipulate procurement procedures for local governments.  
18  WTO documents GPA/W/285/Add.5, 4 February 2004, and GPA/W/295/Add.4, 24 January 2006.   
19 WTO document GPA/MOD/JPN/21, 12 September 2005.  These changes reflect organizational 
changes due to the privatization of four public corpora tions on 1 October 2005.  Japan filed a further notification 
on organizational changes of procur ing entities subject to the GPA on 8 December 2005 (WTO document 
GPA/MOD/JPN/23). 
20 For details of these measures, s ee WTO (2001), Chapter III(2)(vii).  WT/TPR/S/175/Rev.1 Trade Policy Review 
Page 40 
 
 
with an opportunity to express their opinions on th e implementation of the voluntary measures, to 
ensure transparency, fairness and competitiveness in procurement procedures, and to facilitate market 
access for domestic and foreign suppliers.  At each annual meeting, an initiative is confirmed on 
future management of government procurement.  Th e authorities state that government procurement is 
conducted without restriction on supp liers' nationality or on the origin of products or services, based 
on the principle of non-discrimination, and that a ll relevant entities have thoroughly implemented the 
GPA;  no price or other preferences are granted to domestic suppliers in tenders covered by the GPA. 
41. For procurement above the threshold level of SDR 100,000 specified under the 1994 Action 
Program, open tendering accounted for 54.2% of the total procurement value of ¥1.1 trillion in 2004 
(the latest year for which such data are available), down from 63.1% in 2002.21  The share of 
procurement of overseas goods and services in total pr ocurement, in terms of value, decreased from 
13.8% in 2002 to 9.7% in 2004;  procurement of foreign goods amounted to 13.1% of the total (Table III.3).
22  The shares of selective and single tendering rose to 1.7% and 44.1%, respectively in 
2004, from 1.5% and 35.4% in 2002.23  Procurement from foreign suppliers, which has always been 
low, decreased in 2004, to 3.7% and 2% in value and contract terms, from 4.2% and 2.1%, 
respectively, in 2002.  The shares of foreign supp liers in contracts resulting from open, selective, and 
single tenders were 1.5%, zero, and 3.8% in 2004 (1.3%, zero, and 5.3% in 2002).24  According to the 
authorities, no data exist on shares of foreign suppli ers in public works contracts;  almost all public 
works projects valued at the WTO GPA threshold or above are subject to open and competitive bidding procedures.   
42. Data provided by the Japanese Fair Trade Commission (JFTC) show that most cases of 
proven infringement of Japan's Anti-Monopoly Act (AMA ) continue to involve bid-rigging related to 
public works (section (4)(vi)).  Various cases of bid -rigging involving government officials have been 
made known to the public in recent years.  On 24 February 2006, the Government held a Conference 
of Relevant Ministries and Agencies for Proper Pu blic Procurement and compiled measures aimed at 
improving tendering and contracting with a view to eliminating bid-rigging.  These measures include:  
expansion of open and competitive bidding procedures;  and expans ion of "overall greatest value 
methodology" for public works.  The Act for Prom oting Proper Tendering and Contracting for Public 
Works defines major policy instruments for preven ting bid-rigging and other improper actions, such 
as notification of improper actions to the JFTC.
25  Furthermore, the Act Concerning Elimination and 
Prevention of Involvement in Bid Rigging, which entered into force in January 2003, inter alia,  
authorizes the JFTC to formally demand that th e heads of ministries and agencies improve their 
administration measures on bidding and contracts to eliminate bid-rigging;  the heads must conduct an 
investigation if requested by the JFTC, take action to eliminate bid-rigging, if its existence becomes 
                                                      
21 Based on the latest available data.  Vi ewed at:  http://www.ka ntei.go.jp/jp/kanbou/ 
17tyoutatu/index.html.  The data exclude procurement of public works. 
22 Prime Minister's Office (2005).  The services sect ors in which there is foreign participation are:  
telecommunications (21.3% of total subsector procurement), computer and related services (5.6% of the 
subsector), repairs to machinery and eq uipment (1.7% of the subsector), adve rtising (0.7% of the subsector), and 
other (1.9% of the subsector). 
23 Several factors could explain the lower share of open tendering in total procurement, both in terms of 
the number and the value of contracts, as well as the increase in the share of  single tendering.  These include:  an 
increase in the absence of  tenders received in response to  an open or selective tender;  and, to a lesser extent, an 
increase in the number of contracts requiring products and services that can be supplied only by a particular 
supplier (for works of art or for reasons connected with  protection of exclusive rights, such as patents and 
copyrights, or in the absence of competition for technical reasons). 
24 In order to participate in open or selective tende ring procedures, domestic and foreign suppliers are 
required to apply for qualification to each procuring entity  and be included in the list of registered suppliers. 
25 WTO document GPA/61, 18 October 2001. Japan WT/TPR/S/175/Rev.1 
 Page 41 
 
 
evident, and publicize the result of the invest igation and actions taken in response to the 
investigation.26 
Table III.3 
Procurement by product and by origin, 2002 and 2004 
(¥100 million and per cent) 
2002 2004 
No. Products Total 
value Foreign 
share Total 
value Foreign 
share 
1. Products from agriculture, and from agricultural and food processing 
industries 0.9 0 1.9 49.5 
2. Mineral products 185.9 69.4 177.7 65.7 
3. Products of the chemical and allied industries 31.2 29.5 67.3 38.4 
4. Medicinal and pharmaceuti cal products 288.5 30.7 315.2 31.1 
5. Artificial resins; rubber, raw hides and skins;  leather; and articles thereof 8.3 3.5 8.3 7.7 
6. Wood and articles of wood;  paper and pa perboard and articles thereof 178.2 0 915.8 0 
7. Textiles and textile articles, thread  for spinning and w eaving; and articles 
thereof 96.1 0 58.6 0.3 
8. Articles of stone, of cement and si milar materials; ceramic products; glass 
and glassware;  and articles thereof   2.4 0 1.6 0 
9. Iron and steel and articles thereof 139.1 0.2 108.1 0.4 
10. Non-ferrous metals and ar ticles thereof 34.4 1.1 49.5 6 
11. Power generating machinery and equipment 134.7 7.6 62.7 55.6 
12. Machinery specialized for par ticular industries 102.8 5.8 74.5 19.8 
13. General industrial machinery and equipment 54.4 9.7 31.7 20.1 
14. Office machines and automatic data processing equipment 2,206.2 12.3 1,900 5.6 
15. Telecommunications and sound r ecording and reproducing apparatus 
and equipment 630.3 5.3 402.7 2.2 
16. Electrical machinery, apparatus and appliances, and electrical parts 
thereof 197.6 12.8 152.3 4.5 
17. Road vehicles 325.2 0.8 279.2 0.3 
18. Railway vehicles and associ ated equipment 66.9 27.9 74.6 44.5 
19. Aircraft and associated equipment 26.4 62.1 57.1 94 
20. Ships, boats, and floating structures 75.2 1.3 17.4 3.5 
21. Sanitary, plumbing, and h eating equipment 6.6 38.2 2.8 0 
22. Medical, dental, surgical, and ve terinary equipment 536.5 42.4 333 41.1 
23. Furniture and parts thereof 58.3 1.8 44.7 0 
24. Scientific and controlling instrume nts and apparatus 1,114.1 26.2 609.6 19.4 
25. Photographic apparatus and equipment, optical goods, and clocks 120.5 11.2 70.9 17.2 
26. Miscellaneous articles 253.6 8.1 372.6 8.1 
 Total 6,874.1 17.1 6,189.9 13.1 
Source:  Information provided by the Japanese authorities. 
                                                      
26 For example, based on countermeasures formulat ed in July 2005 to prevent recurrence of bid-
rigging, the Ministry of Land, Infrastructure and Transport has taken measures including:  the expansion of open 
and competitive bidding procedure and the overall greatest value methodology;  and strengthening penalties for 
serious bid-rigging violations by, inter alia,  increasing the pre-established damages in construction service 
contracts from 10% to 15% of the contract price.  A bill to amend the Act Concerning Elimination and 
Prevention of Involvement in Bid Rigging is currently being discussed in the Diet;  the bill aims inter alia to 
introduce criminal penalties against civil servants involved in bid rigging.  According to 2006 Corruption Perceptions Index, which measures perceptions of corruption among public officials and politicians in 
163 countries/economies, Japan ranked 17
th with a score of 7.6 out of 10.  In 2005, it ranked 21st (out of 159) 
with a score of 7.3 out of 10, and in 2004, it ranked 24th (out of 146) with a score of 6.9 out of 10 (Transparency 
International online information.  Viewed at:  http://www.transparency.org). WT/TPR/S/175/Rev.1 Trade Policy Review 
Page 42 
 
 
43. The Office of Government Procurement Revi ew (OGPR), headed by the Chief Cabinet 
Secretary, processes complaints on procurement pr ocedures by the Central Government and public 
corporations.  The Government Procurement Review  Board (GPRB), an independent examining body, 
considers complaints.  The procuring entity is exp ected to follow the recommendations voluntarily.  
One complaint has been filed sin ce the previous Review of Japan.27  
(vi) State trading 
44. The statutory monopoly on alcohol trade of the New Energy and Industrial Technology 
Development Organization ended in April 2006;  curr ent state trading activities in Japan involve leaf 
tobacco, opium, rice, wheat and barley, milk products, and raw silk.28  The stated aims of such trading 
include: stabilizing supplies to consumers; contro lling imports to assist domestic producers; and 
protection of consumers' interests.  State-tradi ng activities are generally underpinned by legislated 
import rights and, in some cases, by specific monopoly rights over domestic production and 
distribution.   
(vii) Standards, and sanitary and phytosanitary measures 
(a) Standards, testing, and conformity assessment 
45. Japan has continued its efforts towards inte rnational harmonization of its standards and 
technical regulations.  Japan's voluntary standards,  mandatory technical regulations, and sanitary and 
phytosanitary (SPS) regulations are summarized in Table III.4. 
Table III.4 
Major standards and technical regulations in Japan, 2005 
(Per cent) 
 Number of 
standards/ 
regulations Corresponding 
to international 
standardsa Equivalent 
to 
international 
standards Acceptance 
of overseas 
certificationb Acceptance 
of overseas 
test datab 
A.  Mandatory technical regulations      
Pharmaceuticals Affairs Law 1,751 .. .. .. .. 
Food Sanitation Law 528 .. .. .. .. 
Electrical Appliance and Materials Safety 
Law 450 .. .. 
.. .. 
Consumer Product Safety Law 6 0 0 0  .. 
High Pressure Gas Safety Law 2 .. .. ..  100 
Building Standard Lawc .. .. .. .. .. 
Safety Regulations for Ro ad Vehicles 204 20 0 29 29 
Law concerning the Safety Assurance and 
Quality Improvement of Feed .. .. .. .. .. 
Table III.4 (cont'd) 
                                                      
27 The status of receipt and review of complaints is  released every quarter.  The "Review Procedures 
for Complaints concerning Governme nt Procurement" (a decision by  the OGPR on 14 December 1995), 
encourage consultations between a complainant and a procur ing entity before a complaint is filed:  since 2004, 
about 20 enquiries challenged breache s of the Agreement on Government Procurement;  however, almost all 
were resolved through consultations between suppliers and procuring entities.  A complaint was filed against 
procurement of company housing construction by East Japan Railway Company at Takinogawa.  The GPRB 
ruled that the procurement procedures by the East Ja pan Railway Company were admissible and the challenge 
was rejected.  
28 WTO document G/STR/N/11/JPN, 14 November 2006. Japan WT/TPR/S/175/Rev.1 
 Page 43 
 
 
 Number of 
standards/ 
regulations Corresponding 
to international 
standardsa Equivalent 
to 
international 
standards Acceptance 
of overseas 
certificationb Acceptance 
of overseas 
test datab 
Law concerning Examination and 
Regulation of Chemical Substances and 
Regulation of their Manufacture  5 .. .. .. 100 
Telecommunications Business Lawd .. .. .. .. .. 
Radio Lawe .. .. .. .. .. 
Fertilizer Control Law .. .. .. .. .. 
B.  Voluntary standards       
Japan Industrial Standards (JIS)  9,727 46 93 .. .. 
Japan Agricultural Standards (JAS)f 215 .. .. .. .. 
.. Not available.  
a Defined as "primary aspects sharing a common scope". 
b Where applicable. 
c Building Act Code. 
d According to the authorities, the number of mandatory technical regulations is not available because the scope and definition  of 
mandatory technical regulations is ambiguous ; technical conditions of terminal equipm ent in Japan generally comply with ITU-
T/ITU-R Recommendations and Radio Regulations, and in ternational harmonization is  given consideration. 
e According to the authorities, the number of mandatory technical  regulations is not available because the scope and definition  of 
mandatory technical regulations is ambiguous;  the technical conditio ns of radio stations in Japa n generally comply with ITU-R 
Recommendations and Radio Regulations, and international harmonization is given consid eration.  Regarding the system for the 
certification of radio equipment the Radio La w was amended to establish the system fo r accepting foreign test results and forei gn 
certification (promulgated in 1998 and went into effect in 1999). 
f The scope of international st andards differs from the JAS. 
Source:  Information provided by the Japanese authorities. 
Voluntary standards 
46. In 2005, voluntary standards comprised 9,727 Jap an Industrial Standards (JIS), and 215 Japan 
Agricultural Standards (JAS).  About 93% of JIS we re aligned with international standards in 2005, 
up from 92% in 2004.29  Between April 2005 and March 2006, 510 JIS items were revised, 
141 withdrawn, and 267 newly established;  between  April 2004 and March 2006, 34 JAS items were 
revised, 15 withdrawn, and five newly established. 
47. The JAS Law (the Law Concerning Standardiza tion and Proper Labelling of Agriculture and 
Forestry Products) was amended in 2005 and entere d into force in March 2006.  The amendment 
entitled third-party organizations to certify oper ators (e.g. manufacturers) to affix JAS marks.30  The  
Minister and Registered Certifying Bodies and Registered Overseas Certifying Bodies (RCBs and 
ROCBs) are responsible for monitoring and managing JAS marks.  At the same time, revisions were 
made to registration criteria and business operating rules and certification fees.31  The Minister of 
Agriculture, Forestry and Fisheries is authorized  to order certifying bodies to comply with the 
registration criteria and improve services.  The JA S Law, as amended in Ma rch 2006, incorporated 
ISO Guide 65 as registration criteria for certifying b odies.  The authorities cons ider that the adoption 
                                                      
29 In order to facilitate a more efficient harmonization of national standards with international ones, the 
JIS Committee adopted an Action Plan in June 2004.  The Plan identifies strategic fields in international 
harmonization and prescribes the roles of individual partic ipants (industries and the private sector) in detail.  
30 Prior to the revision, certifying bodies conducted their business on behalf of the Minister for 
Agriculture, Forestry and Fisheries. 
31 With the revision, registration criteria provided by ISO/IEC Guide 65 have been introduced;  the 
approval system of business operating rules and certification fees by the Minister for Agriculture, Forestry and Fisheries was replaced by a notifi cation system to the Minister.  WT/TPR/S/175/Rev.1 Trade Policy Review 
Page 44 
 
 
of ISO Guide 65 helps to make the registration sy stem under the JAS Law more transparent, which 
benefits domestic and fore ign applicants.  This revision abo lished the requirement that foreign 
organizations wishing to apply for ROCBs had to be  located in a country that had a JAS-equivalent 
system. 
48. About 12,000 domestic and about 500 foreign factories in 21 economies have been certified 
to affix JIS marks (as at 30 September 2006).  Th e new JIS mark scheme started on 1 October 2005, 
following a revision of the Industrial Standardizati on Law in June 2004;  its transitional period from 
the previous JIS mark scheme is to end on 30 September 2008.  The authorities maintain that 
domestic and foreign factories are treated in the same manner with regard to certification of the JIS 
marks.  Under the new scheme, ten Japanese organizations are accredited as JIS mark certification 
bodies by the Ministry of Economy, Trade and Industry (as at 30 September 2006).  Foreign producers or manufacturers certified by RCBs and ROCBs can conduct their own grading and affix 
the JAS marks to their products.
32  There are currently nine ROCBs:  five for organic products and 
four for forestry products.33  On 1 March 2006, the amended JAS Law entered into force to allow 
foreign enterprises exporting agricultural produc ts to Japan to be certified as ROCBs.   
Mandatory technical regulations 
49. According to the authorities, Japan's mandatory  technical regulations under the Electricity 
Utilities Industry Law and the Electrical Appliance and Material Safety Law are aligned with 
international standards.  Since the previous Re view, performance-based technical regulations have 
been adopted in the Consumer Product Safety Law, the High Pressure Gas Safety Law, the Electricity 
Utilities Industry Law and the Gas Utility Industry La w;  for example, the Consumer Product Safety 
Law stipulates technical regulations, such as stre ngth and durability, and the Gas Utility Industry Law 
stipulates, inter alia,  air-tightness and flammability.  Othe r changes to the mandatory technical 
regulations include the introduction of a risk-based  classification system and GLP (good laboratory 
practices) and GCP (good clinical practices) for medical devices under the Pharmaceutical Affairs 
Law, in April 2005.  In addition, a third-party cer tification system for low-risk medical devices for 
which corresponding certification standards are established was introduced in April 2005.  Japan has 
implemented ICH (International Conference of Harmonization) guidelines on pharmaceuticals for 
human use since 2004. 
50. Data provided by the authorities indicate that  in 2005 there were 204 regulations on road 
vehicle safety standards;  20% were aligned to international standards (compared with 24% of 
202 regulations in 2003, and 15% of 277 regulations in 2002). 
51. METI has designated 23 inspection bodies, six of which are foreign, for testing based on the 
major standards and certification sy stems under the METI's jurisdiction.34  In 2005, approximately 
20% of all JIS were designated in Japanese laws  and governments/ministerial ordinances as 
mandatory technical regulations. 
                                                      
32 Only products graded under the JA S system may carry JAS symbols. 
 33 Re-registration procedures under the revised JAS Law have started since September 2005;  a number 
of applications are under inspection.  According to the authorities, the number of ROCBs is expected to 
increase. 
34 List of Designated Inspection Bo dies.  Viewed at:  http://www.jisc.go.jp/eng/jis-mark/spe-insp-
body.html. Japan WT/TPR/S/175/Rev.1 
 Page 45 
 
 
Bilateral, regional, and multinational arrangements 
52. Since its previous Review, Japan has not c oncluded any mutual recognition agreements 
(MRAs) on conformity assessment procedures.  It currently has MRAs with the European 
Communities (since January 2002) and Singapore (since November 2002).  Agreements between 
Japan and Mexico for the Strengthening of th e Economic Partnership and between Japan and 
Malaysia for an Economic Partnership contain provisions on SPS regulations.35 
(b) Sanitary and phytosanitary measures  
53. Japan revised its maximum residue limits for agricultural chemicals (e .g. pesticides, feed 
additives, and veterinary drugs) un der a positive list system for chemicals in foods in May 2006.  In 
November 2004, Japan adopted new export and impor t quarantine regulations against rabies for dogs, 
cats, racoons, foxes, and skunks.  The list of non-qu arantine plant pests was amended in April 2005 
and July 2006 to add 46 and 34 pests, respectivel y.  In September 2005, the Enforcement Ordinance 
under the Domestic Animal Infections Diseases Cont rol Law was amended to designate ostriches and 
certain duck (birds classified in the Anseriform es order) and their products as animals subject to 
animal quarantine.  Import procedures for aquatic  animals under the Fisheries Resources Conservation 
Act were amended in October 2005.36 
54. The Food Safety Commission has been conductin g safety assessments of genetically modified 
foods (GM food) since 2003.37  The Commission developed standards for the safety assessment of 
GM foods and food additives produced by GM micro-organisms, and policies for the safety 
assessment of GM stack varieties, GM feed crops, and GM feed additives.   
55. Japan currently imposes import prohibitions on beef and poultry from various countries due to 
BSE and avian flu. 
56. The inspection of imported food in accord ance with the Food Sanitation Law may be 
exempted if a cargo is inspected by a public laborat ory in the exporting country and bears the result of 
the inspection. 
(c) Labelling and packaging requirements 
57. Food labelling in Japan is subject to the JAS La w and the Food Sanitation Law.  A total of 
63 technical regulations are in force based on the JAS Law.  These are:  the cross-category quality labelling standards for processed foods, fresh foods , and genetically modified foods;  individual 
quality labelling standards;  and the standards for organic agricultural products and organic processed 
foods. 
58. The cross-category quality labelling standards ar e provided for all foods  and beverages except 
alcohol and medical drugs.  Fresh foods must be labelled with the name and the place of origin.  
Processed foods must be labelled with the name, the lis t of ingredients, the net content, the date of 
                                                     
 
35 The agreement between Japan and Mexico entere d into force on 1 April 2005 and the agreement 
between Japan and Malaysia entered into force on 13 July 2006. 
36 Notifications by Japan to the WTO Committee on SPS. 
37 The Food Safety Commission was established under the Food Safety Basic Law in the Cabinet 
Office to perform risk assessments.  The Commission's primary goals comprise three main components:  
conducting risk assessments of food in a scientific, independent, and fair manner, and making recommendations 
to relevant ministries based upon the results;  implementing risk communication among stakeholders; and responding to food-borne accidents and emergencies. WT/TPR/S/175/Rev.1 Trade Policy Review 
Page 46 
 
 
minimum durability or use-by date, instructions  for storage, the name and address of the 
manufacturer, and the country of origin for impor ted products.  Specific labelling requirements are 
provided as quality labelling standards for indivi dual products depending on their characteristics.  
Any food containing additives must also be labell ed with the names of all additives included.  
Processed food imported from foreign countries are ex cluded from the mandatory labelling of place of 
origin of the ingredients (see below).  All or ganic agricultural products and organic agricultural 
processed foods to be sold in Japan must comply with the JAS organic standards and carry the JAS 
organic mark.  To label food as "organic", certifi cation is needed from a registered certifying body 
(RCB) or a registered overseas certifying body (ROCB) that the food meets certain JAS requirements. 
Only certified food is allowed to be distributed with a JAS organic mark. 
59. Any allergenic substances contained in pro cessed foods must be indicated on the labels 
according to the Food Sanitation Law.  Currently , 25 items are designated for inclusion in the 
description of ingredients:  five are obligatory (e ggs, milk, wheat, buckwheat, and peanuts) and 20 are 
recommended (abalone, squid, salmon roe, prawn, or anges, crab, kiwifruit, beef, walnuts, mackerel, 
salmon, gelatin, soybeans, chicken, pork, Matsutak e-mushroom, peach, yam, apple, and bananas).   
60. Mandatory labelling for genetically modified (GM) foods is regulated under the Food 
Sanitation Law and the JAS Law;  the list currently  comprises seven crops (soybeans, corn, rape 
seeds, potatoes, cotton seeds, alfalfa, and suga r beet) and some processed foods (32 kinds of 
designated processed food) mainly made of soybeans or corn.38  The Ministry of Health, Labour, and 
Welfare does not permit imports of GM foods th at do not meet its safety requirements.  The 
Agricultural Products Inspection Law requires mandatory inspections of rice, wheat, and barley as 
well as soybean. 
61. Since September 2004, places of origin of specific ingredients of 20 categories of processed 
foods have been added to the quality labelling standard.39  The Industrial Safety and Health Law was 
revised to adopt Globally Harmonized System of Classification and Labelling of Chemicals (GHS) in 
November 2005;  the amended law is to enter into force in December 2006.   
(viii) Import promotion measures 
62. It would appear that Japan has been placing less emphasis on measures related to import 
promotion.  It has not introduced any new import promotion measures since its previous Trade Policy 
Review, and the budget allocated for these measures h as been declining over the past few years.  
Current measures include import activities by the Japan External Trade Organization (JETRO) and a 
financing programme.40  The total budget for Japan's import promotion programmes was ¥380 million 
in FY 2005 (the latest year for which data are av ailable), a considerable decrease from ¥1,010 million 
in FY 2004.  
(ix) Foreign access zones (FAZs) 
63. As a result of the abolition of the Law on Extr aordinary Measures for Promotion of Imports 
and Facilitation of Foreign Direct Investment in  Japan in May 2006, FAZs  and certain measures 
associated under the law (e.g. tax me asures) have been abolished.  
                                                      
38 The list is subject to annual update. 
39 The revised standard became fully effective in Oc tober 2006.  Processed fo od subject to mandatory 
labelling includes:  pickled agricultural products, dried seaweed, salted seaweed, salted and dried fish products 
(horse mackerel and mackerel), salted fish products (mackerel), processed eel products, shavings of dried 
bonito, and frozen vegetable food.   
40 The Tax Incentive for Manufactured Impo rts was abolished at the end March 2002. Japan WT/TPR/S/175/Rev.1 
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(3) MEASURES DIRECTLY AFFECTING EXPORTS  
(i) Procedures  
64. Exporters must file a declaration with Cust oms under the Customs Law.  For most goods, the 
declaration must be made after the goods have b een taken to a Hozei area, or other specially 
designated place;  items requiring approval by the Di rector-General of Customs must be declared 
before they are taken to the Hozei area.  The decl aration must describe the quantity and value of the 
goods to be exported and be accompanied by invoices and other documents, if necessary, for example, 
permits, approvals, or licences in accordance w ith other laws and regulations.  Once the 
documentation is verified by Customs, an export permit is issued.41 
65. The Government introduced a "specific export declaration system" on 1 March 2006;  this 
allows exporters with respectable compliance record s (as defined in Article 67-4 of the Customs Law) 
to have their cargo cleared before it enters the customs area, instead of within the customs area 
(general export clearance procedure).  The authoriti es expect the introduction of this system to reduce 
lead time and congestion in container yards. 
(ii) Export taxes, charges, and levies 
66. Japan has no export taxes or levies.  
(iii) Export prohibitions, restrictions, and licensing  
67. Export controls implemented in Japan are define d in the Foreign Exchange and Foreign Trade 
Law and the Export Control Order.  Exports re quiring permission from the Minister of Economy, 
Trade and Industry include:  certain seeds, endangere d animals, and plants specified in international 
treaties;  narcotics;  designated art works;  counte rfeit currencies;  and other products associated with 
criminal offences in Japan.  Export controls (prior approval) are maintained to ensure national security 
and public safety and to ensure ad equate domestic supplies of certai n agricultural and other primary 
products.42  Exports of radioactive sources have  been controlled since January 2006.43   
(a) Voluntary export restraints 
68. The authorities are not aware of any voluntary ex port restraints implemented in Japan since 
its previous Trade Policy Review.  
(b) Export cartels 
69. There are no authorized export cartels in Japan .  However, 21 types of cartel are exempted 
from general prohibition of cartels  under Japan's Anti-Monopoly Act and various individual laws 
(section (4)(vi)).  According to the authorities, sh ipping cartels (e.g. liner conferences), which are 
exempt from the Anti-monopoly Act as provided in the Maritime Transportation Law, are not 
considered as export cartels.   
                                                      
41 For further details, see Japan Customs online info rmation.  Viewed at:  http://www.customs.go.jp/ 
asem/partners_db/d b_jp_export.htm. 
42 Article 48, Foreign Exchange and Foreign Trade Law.   
43 The control of exports of radioactive sources was enforced pursuant to the IAEA Code of Conduct 
on the Safety and Security of Radioactive Sources:  Guidance on the Import and Export of Radioactive Sources of 24 September 2004.   WT/TPR/S/175/Rev.1 Trade Policy Review 
Page 48 
 
 
(iv) Export promotion schemes 
(a) Subsidies, export finance, insurance, and guarantees 
70. In 2004 (the latest year for which data are av ailable), Japan provided about 6.1 billion SDRs 
(about ¥982.8 billion) as medium- and long-term export credits.44  Provision of such credits is handled 
by the Japan Bank for International Cooperation (JBI C) (a government-affiliate d financial institution), 
and Nippon Export and Investment Insurance (NEX I) (an independent administrative institution, 
operating insurance schemes to mitigate risks not c overed by existing private insurance institution), 
based on the terms and conditions of the OECD Arrangement on export credits.   
(b) Other export promotion schemes 
71. Export promotion schemes handled by the Japan External Trade Organization (JETRO) 
include provision of information, market and co mpany studies, and support for participation at 
international trade fairs.  JETRO has undertaken  several export promotion activities for small and 
medium-sized enterprises since 2004, including suppor t for participation in overseas exhibitions and 
trade fairs, market research, and advisory services. 
(4) MEASURES AFFECTING PRODUCTION AND TRADE  
(i) Taxation and tax-related assistance 
72. A consumption tax (value-added tax) of 5% is levied on goods and services transactions in 
Japan.45  Revenues from this and other indirect taxes,  including excise taxes applied mainly to liquor, 
tobacco, gasoline, and automobiles, accounted for 40.6% of total central government tax revenue in 
the FY 2006 Budget (39.7% in FY  2005 Budget (settlement account)).46  Revenue from personal 
income tax and corporate income tax accounted for 31.0% and 25.6% (31.9% and 25.4% in FY 2005 
(settlement account)), respectively (Table III.5).  Th e highest personal income tax rate, including local 
taxes, is 50% and the corporate tax rate (i ncluding local taxes) is 39.54% (FY 2006).  
Table III.5 
National government tax revenue, FY 2006 
(¥ billion) 
FY 2005 Budget (settlement) FY 2006 Budget 
Tax item 
Amount Percentage Amount Percentage 
Direct taxes 31,541 60.3  30,235 59.4 
Income tax 15,586 29.8  12,788 25.1 
Income tax (distributed to special accounts or local 
governments) 1,116 2.1 3,009 5.9 
Corporate tax 13,274 25.4  13,058 25.6 
Inheritance tax 1,566 3.0  1,380 2.7 
Table III.5 (cont'd) 
                                                      
44 OECD (2006), Statistics on Export  Credit Activities.  Viewed at:  http://www.oecd.org/dataoecd/ 
26/16/36461667.pdf 
45 The 5% consists of the national consumption tax (4%) and a local consumption tax (1%).  Exempted 
transactions include the sale and loan of land, rent for residential buildings, the sale of securities, registration 
and licensing fees paid to government agencies, money lending, foreign exchange businesses, medical care, 
welfare and certain educational services, and school textbooks. 
46 The consumption tax accounted for about half of indirect tax revenue. Japan WT/TPR/S/175/Rev.1 
 Page 49 
 
 
FY 2005 Budget (settlement) FY 2006 Budget 
Tax item 
Amount Percentage Amount Percentage 
Indirect taxes  20,749 39.7  20,689 40.6 
Consumption tax 10,583 20.2  10,538 20.7 
Liquor tax 1,585 3.0  1,572 3.1 
Tobacco tax 887 1.7  940 1.8 
Gasoline tax 2,168 4.1  2,156 4.2 
Liquefied petroleum gas tax 14 0.0  14 0.0 
Aviation fuel tax 89 0.2  87 0.2 
Petroleum  and coal tax 493 0.9  476 0.9 
Motor vehicle tax 757 1.4  737 1.4 
Custom duty 886 1.7  906 1.8 
Tonnage tax 9 0.0  9 0.0 
Stamp tax 1,169 2.2  1,217 2.4 
Local road taxa, b  311 0.6  310 0.6 
Liquefied petroleum gas taxa, b  14 0.0  14 0.0 
Aviation fuel taxa, b  16 0.0  16 0.0 
Motor vehicle taxa, b  379 0.7  369 0.7 
Special tonnage taxa 11 0.0  11 0.0 
Customs duty on oila 45 0.1  1 0.0 
Promotion of power resources development taxa 359 0.7  354 0.7 
Gasoline taxa 741 1.4  739 1.5 
Special tobacco taxa 233 0.4  224 0.4 
Total 52,291 100.0  50,924 100 
a Revenues are distributed to special accounts. 
b Revenues are distributed to local governments. 
Source: Information provided by the Japanese authorities.  
Tax incentives 
73. Japan has a complex system of tax breaks aimed at achieving various policy objectives, 
including investment in certain equipment to a ddress environmental concerns or promote R&D.  
These are described in the Special  Taxation Measures Law, which has been amended annually.  As 
these measures are exceptions to Japan’s stated tax principles (equity, neutrality, and simplicity), the 
Government examines annually their objectives, effe cts and relevance as policy measures;  according 
to the authorities, it has been streamlining these me asures (e.g. where they are rarely used or policy 
objects have been accomplished), and implements only measures deemed truly effective.  The authorities estimate that forgone tax revenues will be ¥3,279 billion in FY  2006 (¥3,559 billion in 
FY 2003, ¥3,582 billion in FY 2004, and ¥3,797 billi on in FY 2005).  The decrease from FY 2005 to 
FY 2006 reflects mainly the abolition of tax measures to promote investment in information technology.  While the Japanese authorities pub lish tax expenditure acc ounts containing detailed 
information on tax revenue forgone as a result of va rious individual tax measures, no information was 
available on the cost-effectiveness (in terms of tax revenue forgone) of these measures in achieving 
their stated objectives. WT/TPR/S/175/Rev.1 Trade Policy Review 
Page 50 
 
 
(ii) Subsidies and other financial assistance 
74. Japan has notified various specific subsidy programm es to the WTO.  Its latest notification, in 
July 2005, indicated 92 subsidy schemes to assist indus try, finance, agriculture, forestry, and fisheries, 
and transport sectors.47  Energy and mining, agriculture, research, and small and medium-sized 
enterprises (SMEs) have accounted for the majority  of the subsidies notified by Japan since 1998. 
(iii) State-owned enterprises, corporatization, and privatization 
75. The State retains a stake in major compani es in several sectors, through which it could 
directly affect production and trade.  These companies include Nippon Telegraph and Telephone 
Corporation (NTT), Japan Tobacco Inc. (JT), and Ka nsai International Airport Co. Ltd.  As at 
August 2006, the Government held:  33.7% of the stoc k of NTT;  50.0% of JT;  and 66.4% of Kansai 
International Airport Co. Ltd.  All shares of Hokkaido Railway Company, Shikoku Railway 
Company, Kyushu Railway Company, and Japan Freight Railway Company are held by Japan 
Railway Construction, Transport and Technology Agen cy, a government-affiliated corporation.  The 
Government also holds shares of commercial banks, such as Resona Bank, a pparently for prudential 
reasons.  
76. Based on the Reorganization and Rationalization Pl an for Special Public Institutions, adopted 
on 18 December 2001, out of 163 public corporati ons subject to reform, 136 have already been 
reformed.  Sixteen were abolished, 36 were priva tized and 39 were transformed into "incorporated 
administrative agencies";  five of the remaining cor porations are to maintain their current status (e.g. 
NHK broadcasting), and 22 are to be reformed. 
(iv) Trade-related intellectual property rights 
(a) Recent developments 
77. The main laws pertaining to intellectual property rights are still in force;  a number of 
amendments have been introduced si nce the previous Trade Policy Review of Japan (Table III.6).  For 
example, in 2004 the Patent Law was amended to, inter alia,  allow the private sector to conduct prior 
art searches on behalf of the Japan Patent Office;  the Customs Tariff Law was amended to introduce 
a system whereby the right holders are notified of the name or address of the importer and consignor 
of the goods that are deemed to have the potential to infringe intellectual property rights;  the Trust 
Business Law was amended to include intellectua l property rights as "trust property";  and the 
Copyright Law was amended to prevent sound reco rdings published and intended to be distributed 
exclusively outside Japan (which have the same contents as those published and intended to be 
distributed within Japan) from being re-imported into  Japan with a view to taking advantage of price 
differentials.48  According to the authorities, the amended law effectively prohibits parallel imports to 
the extent that the parallel imports meet the afor ementioned criterion.  In 2005, the Trademark Law 
was amended to introduce a "regionally-based collec tive mark" to protect trade marks consisting of 
geographical names and product/services names, that have been used, inter alia,  by industrial business 
cooperative associations as well as corresponding fore ign legal entities;  the Customs Tariff Law was 
amended to allow inspection by right holders of goods that may be infringing intellectual property 
rights other than trade marks and copyright;  the Seeds and Seedlings Law was amended to extend the 
duration of plant breeders' rights (PBRs) by five years to 25 years from the date of variety registration, 
and extend the scope of PBRs to pr ocessed products made directly from selected harvested material 
                                                      
47 WTO document G/SCM/N/123/JPN, 7 July 2005. 
48 Sound recordings (e.g. music CDs) are subject to resale price maintenance in Japan, while this is not 
necessarily the case abroad.   Japan WT/TPR/S/175/Rev.1 
 Page 51 
 
 
(as well as seeds, seedlings and harvested materi als);  the Unfair Competition Prevention Law was 
amended to, inter alia,  strengthen the protection of trade secr ets and penalties against counterfeits.  
The standard in relation to geographical indicati on, which stipulates the protection of geographical 
indications (GIs) in Japan, was amended in 2005;  the amendment, inter alia , provides protection for 
GIs of origin of Japanese Sake.49 
Table III.6 
Legislation on intellectual property rights, 2006 
Specific intellectual property rights Relevant legislation Agencies responsible for the 
administration of law 
Copyright and related rights Copyright La w Agency for Cultural Affairs, MEXT 
Trade marks Trademark Law Japan Patent Office, METI 
Patents Patent Law – Utility Model Law Japan Patent Office, METI 
Plant variety rights Seeds & Seedling Act Ministry of Agriculture, Forestry & 
Fisheries 
 Patent Law Japan Patent Office, METI 
Designs Design Law Japan Patent Office, METI 
Geographical indications Trademark Law Japan Patent Office, METI 
 Unfair Competition Prevention Act METI 
 Law concerning Liquor Business Associations and 
Measures for Securing Revenue from Liquor Tax 
(wines and spirits) National Tax Agency 
Layout designs of integrated circuits Law concerning the Circuit Layout of 
Semiconductor Integrated Circuits METI 
Protection of undisclosed information Un fair Competition Prevention Act METI 
Control of anti-competitive practices Anti-Monopoly Act Fair Trade Commission 
 Unfair Competition Prevention Act METI 
Civil and administrative enforcement 
remedies Code of Civil Procedure – Law of Civil Execution Ministry of Justice 
 Patent Law – Utility Model Law Japan Patent Office, METI  
 Design Law Japan Patent Office, METI 
 Trademark Law Japan Patent Office, METI 
 Unfair Competition Prevention Act METI 
 Copyright Law Agency for Cultural Affairs, MEXT 
 Seeds & Seedling Act Ministry of Agriculture, Forestry & 
Fisheries 
 Law concerning the Circuit Layout of 
Semiconductor Integrated Circuits METI 
 Anti-Monopoly Act Fair Trade Commission 
Border measures Customs Law Ministry of Finance 
 Export & Import Trading Law METI 
Source:  Information provided by the Japanese authorities. 
78. In June 2006, the IP Headquarters issued th e Intellectual Property Strategic Program 2006.  
The programme stipulated, inter alia,  that Japan would speed up the examination of the patent 
applications through measures such as partial out sourcing of examination procedures and increasing 
the number of examiners;  promote international ha rmonization of the patent system;  work towards 
an international treaty on non-proliferation of coun terfeit and pirated goods;  and establish a system to 
identify infringement of IPRs (other than trade marks and copyright) at the border.50 
                                                      
49 The place of origin, domestic or  foreign, must be designated by the Commissioner of the National 
Tax Agency to receive protection.  To date, one region has been designated. 
50 Intellectual Property Strategy Headquarters (2006). WT/TPR/S/175/Rev.1 Trade Policy Review 
Page 52 
 
 
79. In 2005, there were 240,000 "first actions" (com pletion of first examinations of patent 
applications)51, and the average waiting period for the "first action" was about 27 months (25 months 
in 2003);  the number of requests for examinati on increased to 400,000 in 20 05 from 220,000 in 2003.  
Envisaging a continued increase in the number of requ ests, the Government aims to attain an average 
wait for the first action for patents to be within 30  months by 2008, and within 11 months by 2013.  
In December 2005, in order to deal with the ra pid increase in the number of requests for patent 
examination, the Government established the Hea dquarters for Expeditious and Efficient Patent 
Examinations, headed by the  Minister of Economy,  Trade and Industry;  the Headquarters issued an 
action plan for additional measures aimed at expediting patent examinations.  
(b) International harmoniza tion and cooperation 
80. Japan has continued to promote internati onal harmonization of IPR application and 
examination procedures.  For example, Japan has been  participating in the discussions in the Standing 
Committee on the Law of Patents (SCP), regarding the Substantive Patent Law Treaty, which aims to reduce applicants' cost of obtaining patents in mu ltiple countries and to improve the predictability of 
obtaining patents in each patent office.  Japan belie ves that substantive harmonization of patent laws 
is important in order to obtain the same results from each patent office and maximum exploitation of 
search and examination results performed by other offices. 
81. Japan has been involved in the mutual coopera tion of the Trilateral Offices (the Japanese 
Patent Office (JPO), the United States Patent and Trademark Office (USPTO), and the European Patent Office (EPO)) with a view to addressing co mmon problems in the area of patents.  Cooperation 
included the exchange of patent examiners, and developing a common structure for on-line dossier 
access system.  On trade marks, the JPO, the U SPTO, and the EC Office for Harmonization in the 
Internal Market (Trade Marks and Designs) (O HIM) have been carrying out the "Trilateral 
Identification Manual Project" to review English iden tifications of goods and services acceptable for 
the three offices, in order to decrease the burden of  applicants obtaining trade mark rights.  In 2004, 
the offices drew up a list of approximately 7,000 accep table English identifications  that had been 
agreed.  The offices subsequently agreed to add 3, 650 identifications, and there are currently around 
10,350 acceptable English identifications on  the list.  Japan also participates in the discussions in the 
Standing Committee on the Law of Trademarks, I ndustrial Designs and Ge ographical Indications, 
which concerns, inter alia,  the revision of the Trademark Law Treaty and the substantive 
harmonization of trademark law.  
(c) Enforcement 
82. On 1 April 2005, the Intellectual Property (IP) Hi gh Court was established within the Tokyo 
High Court as a special branch.  The IP High Court deals with appeals against trial/appeal decisions 
on patent actions and suits made by the Japan Patent Office (JPO).  It also deals with any other cases 
before the Tokyo High Court, that are related to in tellectual property.  At the same time, there were 
amendments to the Court Organization Act and the C ode of Civil Procedure to expand and clarify the 
authority of juridical research officials regardi ng intellectual property affairs;  the amendments 
enabled judicial research officials, with the pe rmission of judges, to ask questions during oral 
arguments or on other occasions in order to clarify the facts of the case.
52   
                                                      
51 Actions by the JPO in response to the request for patent examination. 
52 Article 92-8 of the Code of Civil Procedure. Japan WT/TPR/S/175/Rev.1 
 Page 53 
 
 
83. Statistics on Japan's efforts to combat IPR violations at the border are provided in 
Table III.7.53  Infringement of IPRs, such as patents, utility models, designs, or trade marks may result 
in criminal penalties of either imprisonment or a fine.  In 2006, some IP laws were amended to 
increase penalties.  As a result, for example, the pe nalty for infringement of patent rights is either 
imprisonment not exceeding ten years (up from five years) or fines not exceeding ¥10 million (up 
from ¥5 million) or both;  infringement by corporations of these rights results in fines not exceeding ¥300 million (previously ¥150 million);  penalties fo r infringement of utility model rights, design 
rights, and trade mark rights were also increased. 
Table III.7 
Suspension of imports likely to infrin ge intellectual property rights, 2003-05 
Category   Main items 2003 2004 2005 
 (1,000 units) 
Products concerned   
Shoes Sports shoes (tennis shoes, sneakers) 11 29 26 
Bags Handbags, purses 142 165 253 
Clothing T-shirts, sweatshirts, raincoats, scarfs 260 211 177 
Sports equipment Golf equipment, ski equipment 0 0 0 
Watches Wristwatches, pocket watches 30 53 34 
Smoking equipment Lighters 2 4 6 
Toys Stuffed animals, mini-cars 43 15 70 
Others Household goods, ke y holders, cosmetics 283 560 531 
Total  771 1,037 1,097 
(Number of cases)  (10,324) (12,799) (13,467) 
  (Number of cases) 
Types of violation    
Patent rights  1 80 66 
Utility rights  1 1 2 
Design rights  12 39 42 
Trade mark rights  7,332 8,922 13,228 
Copyright (related rights)  80 119 175 
Plant breaders' rights  0 1 0 
Total  7,426 9,143 13,467 
Source:  Information provided by the Japanese authorities.  
(v) Regulatory reform 
84. Since its previous Trade Policy Review, Japan h as continued to pursue initiatives to reform its 
regulatory system, mainly through the Three-Year Programme for Promoting Regulatory Reform (TPPRR), adopted in March 2004, and revised in March 2005 and March 2006.  The revisions were 
conducted in the light of opinions and requests fro m domestic and foreign entities (including from the 
Council for the Promotion of Regulatory Reform).   One of the TPPRR's main objectives is the 
creation of a free and fair socio-economic syst em fully open to the international community. 
85. The March 2006 revised TPPRR comprises 1,349 measures.  According to the authorities, it 
is a compilation of measures to further accelerate structural reform of the Japanese economy and 
                                                     
 
53 Details of Japan's judicial measures regardi ng IPR enforcement are prov ided in WTO document 
IP/N/6/JPN/1, 18 February 1997 (the latest available notification).  WT/TPR/S/175/Rev.1 Trade Policy Review 
Page 54 
 
 
society, and contains specific steps for regulat ory reform between FY 2004 and FY 2006.  The new 
measures are aimed at:  reducing the Central Gove rnment's involvement in sectors of economy that 
are deemed to function more effectively without government involvement;  revitalizing the Japanese 
economy by spurring new business, increasing demand, and expanding employment;  and creating 
new opportunities for domestic and foreign businesses to build markets in Japan.  The authorities 
consider that the new Corporation Code will facilita te inward FDI by allowing merger and acquisition 
through the use of equities of a parent compan y (including foreign business) from May 2007, when 
the relevant provisions of the Code is to enter into  force.  The main sectors and issues covered include 
medical services, education services, agriculture, housing and construction,  employment, movement 
of natural persons, customs clearance, promotion of  FDI, information technology, competition policy, 
legal system, financial services, energy, and transport.   
86. The Council for the Promotion of Regulatory Reform (CPRR) is the central body for 
promoting regulatory reform.54  
87. The Special Zone for Structural Reform Act fully  entered into force in April 2003.  Under the 
Act, approved "special zones" are exempted from ce rtain regulations according to the zone's specific 
circumstances.  In order to obtain approval, draf t plans must be submitted by municipal bodies.  To 
date, 878 special zones have been approved;  the zones have been granted exemptions from 
regulations governing education, urban renewal, distribution, agriculture, medical care, industry-
academic cooperation, environment, and other areas.  For example, an international distribution zone 
has been approved for one major port area, where customs clearance is to operate 24 hours a day, 
365-days a year, and private companies are to operate  a public container terminal and a bonded area.  
Not all proposals have been approved:  some have been opposed by central government’s ministries  
under whose jurisdictions the existing regulations fa ll.  Some of the measures adopted have been 
allowed nationwide;  these include participation in farming by "general corporations" (including stock 
companies).  
(vi) Competition policy 
(a) Recent developments 
88. Over the years, the growing importance of deregulation and competition in the Japanese 
economy has apparently led to an increase in the si ze of the Japan Fair Trade Commission (JFTC).  
The budget allocated to the JFTC in FY 2006 amounted to about ¥8.3 billion (compared with 
¥8.1 billion in FY 2005 and ¥7.8 b illion in FY 2004), and the numbe r of JFTC personnel rose to 737, 
from 706 in FY 2005 and 672 in FY 2004.  According to the authorities, the independence of the 
JFTC is sufficiently protected by the AMA, wh ich provides for the JFTC to be administratively 
attached to the Prime Minister;  the chairm an and the commissioners perform their duties 
independently and they may not be removed agai nst their will, during their term of office. 
89. Since Japan’s previous Review, there have b een various legislative changes, such as an 
amendment to the Anti-monopoly Act (AMA), which entered into force on 4 January 2006.  This, 
inter alia :  increased administrative surcharges against cartels and penalties agai nst contravention of 
                                                      
54 Four of the CPRR members attend meetings of the Headquarters for the Promotion of Regulatory 
Reform within the Cabinet, and thus have opportunities to interact directly with the Cabinet to discuss the 
CPRR's views and recommendations.  The CPRR also coordinates closely with the Council on Economic and Fiscal Policy and with the Headquarters for the Promo tion of the Special Zones for Structural Reform.  The 
CPRR monitors the implementation of the new Three-Year Program and has the mandate to require, when it 
deems necessary, the heads of relevant governmental organizations to submit materials, provide explanations, and extend cooperation to the CPRR. Japan WT/TPR/S/175/Rev.1 
 Page 55 
 
 
elimination orders by the JFTC;  introduced a leni ency programme; allowed JFTC officials to inspect, 
search, and seize, based upon court-issued warrants;  and expedited JFTC’s hearing procedures.  In 
accordance with the Act Concerning Elimination and Prevention of Involvement in Bid Rigging, etc., which entered into force in January 2003, the JFTC has demanded relevant parties in three bid-rigging 
cases to file reports on measures to improve bidding procedures.   
Amendment to the AMA 
90. The amendment introduced five main changes to  the AMA.  Firstly, the surcharge rate has 
been raised to 10% of sales (from 6%) for larg e companies and to 4% (from 3%) for small and 
medium-sized firms.
55  Secondly, with a view to giving an incentive to withdraw from cartels, a 
leniency programme was introduced;  under the programme, the JFTC applies immunity or a 
reduction in surcharge payments for enterprises that m eet certain conditions.  Thirdly, with a view to 
enhancing the JFTC’s ability to collect evidence and to assure due process, compulsory criminal 
investigations by the JFTC have been introduced.56  Fourthly, the previous "recommendation system" 
was abolished and replaced by a new system in which the JFTC issues elimination orders for 
measures after having provided the respondent with  a preliminary opportunity to submit its opinion.57  
Fifthly, penalties against corporations that are in contravention of e limination orders were 
strengthened (a fine of not mo re than ¥300 million, compared with ¥3 million previously) and 
penalties against interference with the JFTC’s activ ities, including inspection, were strengthened to 
either imprisonment of up to one year or a fine of up to ¥3 million (previously a fine of up to ¥200,000). 
(b) Exemptions from the AMA prohibition of cartels 
91. No changes have been made to the Anti-Monop oly Act exemptions since the previous Trade 
Policy Review of Japan.  The AMA contains provisions exempting from the enforcement of 
intellectual property rights, activities of cooperativ es, and resale price main tenance contracts of 
copyrighted work.  In addition, provisions authorizi ng certain cartels are incorporated into other laws, 
including the Insurance Business Law and the E xport-import Trading Law.  As of March 2004, 
21 systems under 15 laws are exempt under these provisions (Table III.8). 
(c) Resale price maintenance system 
92. The AMA exemption for the resale price maintena nce (RPM) system remains unchanged.  In 
2001, as a result of a review, the JFTC decided to  maintain the RPM on copyrighted works (books, 
magazines, newspapers, records,  music cassettes, and CDs);  according to the authorities, many 
people were against the abolition of the RPM for these works, given their cultural value. 
                                                     
 
55 The surcharge rate is increased by 50% for those repeating violations within ten years;  it is reduced 
by 20% for those that cease unlawful co nduct more than one month before the JFTC initiates an investigation (if 
the violation was committed for less than two years).  The amendment also expanded the scope of conduct 
subject to administrative surcharge. 
56 The first such investigation was conducted on 25 April 2006 concerning a bid-rigging case by local 
governments.  
57 In the previous "recommendation system", the JFTC issued a recommendation (e.g. to stop bid-
rigging) to a company deemed to be violating th e AMA.  If the company concerned did not accept the 
recommendation, the JFTC could initiate administrative hearings. WT/TPR/S/175/Rev.1 Trade Policy Review 
Page 56 
 
 
Table III.8 
Exemptions from the Anti-monopoly Act, 2006 
Relevant ministries and agencies  Legislation  System  
1.   Exemptions under the AMA (1 law, 3 systems)   
Japan Fair Trade Commission Section 21 Acts under intellectual property rights 
 Section 22 Acts of cooperatives 
 Section 23 Resale pric e maintenance contracts 
2.   Exemptions under various i ndividual laws (14 laws, 18 systems)  
Financial Services Agency Insura nce Business Law Insurance cartels 
 Law Concerning Non-Life Insurance Rating 
Organizations Exemptions concerning compulsory 
automobile insurance and earthquake insurance 
Ministry of Justice Corporation Reorganization Law Acquisition of shares of companies under 
reorganization 
Ministry of Finance Law Concerning Liquor Business Associations 
and Measures for Securing Revenue from Liquor 
Tax Rationalization cartels 
Ministry of Education, Culture, 
Sports, Science and Technology Copyright Law Cartels on fees for commercial usage of 
music records 
Ministry of Health, Labour, Welfare Law Concerning Coordination and Improvement 
of Hygienically Regulated Business Cartels to prevent excessive competition 
Ministry of Agriculture, Forestry and 
Fisheries of Japan Agricultural Cooperative Association Law Federation of agricultural cooperatives 
  Agricultural Association corporation 
Ministry of Economy, Trade and 
Industry Export-import Trading Law Cartels on export 
 Law on the Cooperative Association of Small 
and Medium Enterprises Federation of small business associations 
 Law on Cooperatives of Small and Medium-
Sized Enterprises Joint economic undertakings 
Ministry of Land, Infrastructure and 
Transport Marine Transportation Law Mar itime transportation cartels 
(international) 
  Maritime transportation cartels (coastal 
service) 
 Road Transportation Law Transportation cartels 
 Civil Aeronautics Law Avia tion cartels (international) 
  Aviation cartels (domestic) 
 Coastal Shipping Association Law Mar itime transportation cartels (coastal 
service) 
  Joint shipping businesses 
Source:  Information provided by the Japanese authorities.  
(d) Holding companies, and mergers and acquisitions 
93. Chapter 4 of the AMA prohibits mergers and acquis itions if they lead to a substantial restraint 
on competition.58  All planned mergers and acquisitions that exceed specified thresholds must be 
notified to the JFTC 30 days before the merger/ac quisition takes place.  The thresholds for mergers 
are:  ¥10 billion for the sum of the total assets of  one company in the transaction concerned;  and 
¥1 billion for the sum of total assets of an y other party to the transaction concerned.59  In case of 
                                                      
58 Substantial restraint on competition is when a mark et structure changes as a result of a merger and 
specific companies can control the market by influenc ing variables such as price, quality, and quantity. 
59 The "sum of total assets" means the sum of the tota l assets of the company concerned and its "related 
companies". Japan WT/TPR/S/175/Rev.1 
 Page 57 
 
 
mergers involving foreign companies, to tal assets refer to  "sales in Japan".60  For acquisitions, the 
thresholds are, inter alia :  ¥10 billion for the sum of total assets of an acquiring company;  ¥1 billion 
for the total assets of an acquired business (from a domestic company); and ¥1 billion for sales in 
Japan for an entire or substantial part of bus iness (from a foreign company).  According to the 
authorities, for around 5% to 7% of proposed merg er cases, the parties concerned have voluntarily 
held prior consultations in recent years. 
94. Excessive concentration of power, not only thr ough a holding company, but through mergers 
and acquisitions other than from the creation of a hold ing company, is also restricted by the AMA;  
holding companies not deemed to constitute an "excessive concentration of economic power" are 
permitted.61  A company must submit a business report to the JFTC within three months of the end of 
each business year if the total assets of the company and its subsidiaries exceed specified thresholds 
(¥600 billion for a holding company, ¥8 trillion for a financial company, and ¥2 trillion for other companies).
62  In FY 2004, 79 business reports were s ubmitted under Section 9 of the Antimonopoly 
Act (including 23 holding companies), compared with 76 (including 21 holding companies) in FY 2003.  In FY 2004, one holding company notified its establishment, compared with four in 
FY 2003. 
(e) International arrangements 
95. Japan is an active participant in OECD co mmittees and working gr oups established to 
increase cooperation in competition policy.  The Governments of Japan and Canada signed an 
agreement on Anticompetitive Activities on 6 Septem ber 2005 in Ottawa;  the agreement, which 
entered into force on 6 October 2005, prescribes obligations by the two parties concerning, inter alia :  
notification, cooperation, coordination, request for en forcement, and consideration of the other party’s 
important interests regarding enforcement activities between the competition authorities.
63  Japan's 
free-trade agreements with Singapore, Mexico, and Malaysia also contain provisions on competition 
policy;  they provide for each party under the FTA  concerned to take appr opriate measures against 
anti-competitive activities in accordance with its la ws and regulations, as well as to cooperate in 
controlling anti-competitive activities, such as notifi cation to the other party regarding enforcement 
activities, cooperation, coordination, requests for en forcement activities and c onsideration of the other 
party’s interests. 64   
                                                      
60 "Sales in Japan" are calculated by adding:  (1) th e sales of the foreign company's business offices in 
Japan;  and (2) the sales of companies in which the foreign company holds majority voting rights. 
61 "Excessive concentration of economic power" is  defined in Article 9 of the AMA as a situation 
where significant effects on the national economy and impediments to the promotion of free and fair competition are observed due to:  (1) the overall scale of business of a company, its subsidiaries, and other 
companies in Japan controlled by the company by means of holding of stock;  (2) large influence of these 
companies on other enterprises due to transactions relating to finance;  or (3) the occupancy by these companies 
of influential positions over a significant number of fields of business.   
62 A newly established company that corresponds to any of these thresholds must submit a notification 
to the JFTC within 30 days of establishment.   
63 Japan has two other bilateral cooperation agreements on anticompetitive activities:  with the United 
States (in force since October 1999);  and the European Communities (in force since August 2003). 
64 Chapter 12 of the agreement between Japan and the Republic of Singapore for a New Age Economic 
Partnership;  Chapter 12 of the Agreement between Ja pan and the United Mexican States for the Strengthening 
of the Economic Partnership;  and Chapter 10 of the Agreement between the Government of Malaysia and the Government of Japan for an Economic Partnership.  Agreements viewed at: http://www.mofa.go.jp. WT/TPR/S/175/Rev.1 Trade Policy Review 
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(f) Enforcement 
96. An investigation into possible violations of the AMA may be initiated as a result of:  a report 
from the general public, detection by the JFTC itself, notification by the Small and Medium 
Enterprise Agency, or a report by leniency applican ts.  The AMA provides three types of measure to 
penalize and thereby deter violations of the Act:  administrative measures,  such as surcharges and 
orders to take  "elimination measures" (cease and desist orders) on price cartels;  criminal penalties65, 
and private damages actions.  With the entry into force of the amendment to the AMA in 
January 2006, administrative surcharges and penalties have been increased against, inter alia,  
interference with inspection. 
97. Of the 89 cases processed by the JFTC in FY  2005, legal measures were taken in 19;  
399 enterprises were ordered to pay surcharges to a total value of ¥18.9 billion (Table III.9).  There 
were two criminal cases in FY 2005.66   
Table III.9 
Enforcement of competition policy, 2003-06 
Fiscal year Details 
2003 2004 2005 2006 
(A)  Cases in which legal measures were taken against acts prohibited by the Anti-monopoly Act  
Number of legal measures 25 35 19 5 
Private monopolization 1 2 0 0 
Cartels 17 24 17 3 
Price cartels 3 2 4 3 
Collusive tendering 14 22 11 0 
Other types of cartela 0 0 0 0 
Unfair trading practices 7 8 2 2 
Others 0 1 0 0 
 (¥ billion) 
(B)  Surcharge payment orders     
Payment order     
Number of cases 24 26 20 6 
Number of enterprise operators 507 200 399 65 
Surcharge amount (in ¥ b illion) 3.87 11. 15 18.87 3.29 
Decisions to initiate hearings 8 8 8 2 
(C)  Recently processed investigation cases     
Cases investigated     
Carry-over from the previous fiscal year 40 38 19 18 
New cases begun during the current fiscal year 121 101 88 11 
Total 161 139 107 29 
Table III.9 (cont'd) 
                                                      
65 Criminal penalties currently include imprisonment of up to three years or a fine of up to ¥5 million 
for private monopolies and unreasonable restraint of trade, and imprisonment of up to two years or a fine of up 
to ¥3 million for international agreements constituting unr easonable restraint of trade and unfair trade practices, 
restrictions of the number of members of trade associations, and violations of final decisions by the JFTC.  Criminal proceedings may be initiated only after an accusa tion is filed by the JFTC with the Public Prosecutor 
General.  Appeals are available with the High Courts and eventually the Supreme Court.   
66 The JFTC investigated bid-rigging cases concerning steel bridge construction projects ordered by the 
Ministry of Land, Infrastructure and Transport and by the Japan Highway Public Corporation. Japan WT/TPR/S/175/Rev.1 
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Fiscal year Details 
2003 2004 2005 2006 
Cases processed     
Legal measures     
Recommendations 25 35 17 n.a. 
Cease and desist order n.a. n.a. 1 5 
(Decision to commence hearing)b (9) (16) (3) (0) 
Surcharge payment orderc 0 0 0 0 
Sub-total 25 35 19 5 
Others     
Warnings 13 9 7 7 
Cautions 75 60 47 24 
Discontinued casesd 10 16 16 14 
Sub-total 98 85 70 45 
Total 123 120 89 50 
Carry-over to the next fiscal year 38 19 18 .. 
Criminal accusations 1 0 2 1 
n.a. Not applicable. 
.. Not available. 
a Other types of cartel include restrictions on sa les volume and restrictions on business clients. 
b Figures in parenthesis are the number s of cases where the decision to commen ce hearing procedures was made from 
 recommendations. 
c Cases in which surcharge payment orders were give n without a recommendation or cease and desist order. 
d These were discontinued due to lack of evidence of wrong-doing. 
Note: Figures for FY 2006 represent data on 31 August 2006. 
Source:  Information provided by the Japanese authorities. 
98. Under Section 8 −4 of the AMA, the JFTC continues to monitor highly oligopolistic markets, 
and may order measures to restore competition in the event of "monopolistic situation".67  Currently 
(September 2006), 29 industries are subject to monitoring.68   
                                                      
67 A monopolistic situation in a particular industry  (where the total output of the industry exceeds 
¥100 billion) is defined as circumstances in which all of the following market structures and "undesirable market performances" exist:  (1) where the share of a single entrep reneur exceeds 50% (or 75% for two 
entrepreneurs combined in a particular  field of business;  (2) where there exist conditions that make it extremely 
difficult for any other entrepreneurs to be newly engaged in the particular field of business;  and (3) where, for a considerable period of time (i) the in crease in the price has been remarkable or the decrease in the price has been 
slight in the light of the changes that occurred in, inter alia , the supply and demand, and (ii) profit or 
expenditure (e.g. on advertising and marketing) is far in excess of standard levels in the industry.  "Undesirable 
market performance" includes such f actors as barriers to entry, extraordin ary price increases or extremely high 
profit rates.  
68 The 29 industries are:  chewing gum;  beer;  whisky;  cigarettes;  polypropylene;  plastic bottles for 
beverages;  gypsum board and its products;  pig gold;  boilers;  vending machines for beverages;  incandescent 
lamp fixture for automobiles;  electric lighting fixtures;  lead storage batteries;  central processing units;  ink-jet printers;  finance terminal units;  radiators;  shock ab sorbers;  air-conditioners for transportation machines;  
cassettes for games;  fixed telecommunications services;  mobile telecommunications services;  operating 
software;  railway freight;  scheduled domestic passenger flights;  wholesale of books and journals;  dust control;  medical office work services;  and administration of music copyright. WT/TPR/S/175/Rev.1 Trade Policy Review 
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(g) Distribution measures 
99. The opening and expansion of large-scale reta il stores are regulated by the Law Concerning 
Measures by Large Scale Retail Stores for the Preservation of the Living Environment.  Between June 2000 and August 2006, 3,809 notif ications regarding the establishm ent of large-scale retail stores 
in accordance with the law were filed.  The Mini stry of Economy, Trade and Industry revised its 
implementing guideline for the law in March 2005 ( it entered into force in October 2005).  The 
guideline prescribes factors that operators should ta ke into consideration concerning facilities and 
business operations, such as necessary parking spaces and calls for large-scale stores to cooperate 
with the local communities on anti-crime measures (e.g. setting up of lighting facilities for parking 
lots and patrols by guards).   
100. An amendment of the City Planning Law and the Building Standard Law was promulgated on 
31 May 2006.  The amendment, inter alia,  changes zoning categories for city planning that allow land 
use for buildings, such as large scale retail stores (t hose exceeding 10,000 square metres in gross floor 
area);  thus, the amendment effectively decreased th e number of zones where large-scale retail stores 
may be established.
69  According to the authorities, these am endments are intended to change the 
regulation of city planni ng only;  the current level of libera lization of retailing services is to be 
maintained, and numerical limitations including economic needs tests and discrimination between 
domestic and foreign service supp liers will not be introduced. 
(vii) Corporate governance 
101. A growing awareness that ineffective co rporate governance has contributed to the 
misallocation and perhaps excessive use of capital and labour in the corporate sector has prompted the 
Government to implement a number of policy m easures since its previous Trade Policy Review.70  
These include the adoption of the Corporate C ode, which was promulgated on 26 July 2005 and 
entered into force on 1 May 2006.  The Code stipulates, inter alia,  that the boards of large companies 
(i.e. corporations with ¥500 million or more of capital or ¥20 billion or more of liabilities on their 
most recently audited a nd approved balance sheets)  or the directors in the case of corporations without 
a board, must decide on a basic framework for thei r internal control systems and disclose a summary 
of this decision to their shareholders in their bus iness reports.  The Code al so strengthened the rights 
of shareholders;  for example, unless otherwise provided in the articles of incorporation, shareholders are empowered to dismiss board members at a share holders' meeting by simple majority vote rather 
than the two-thirds majority required under the pr evious Commercial Code.  The Corporate Code also 
improved the rules of shareholders' derivative ac tions.  Information disclosure provisions were 
strengthened in the interests of shareholders by,  for example, requiring more information with respect 
to outside directors.  The minimum capital requirement for establishing a company was also eliminated.
71  The Corporate Code also allows corporati ons to appoint an accounting auditor and/or an 
"accounting counsellor" if its articles of incorpor ation so provide.  In addition, the Financial 
Instruments and Exchange Law, adopted by the Diet in June 2006, requ ires managers to assess 
internal controls over financial reports. 
                                                      
69 Under the amended law, large-scale retail stores  are only allowed in three categories of zones 
(neighbourhood commercial, commercial, and quasi-industrial), compared with seven (residential, quasi-
residential, neighbourhood commercial, commercial, quasi -industrial, industrial, and non-designated) prior to 
the amendment. 
70 See WTO (2003), pp. 52-53, for some traditiona l features of Japan's corporate governance. 
71 Under the Commercial Law, minimum prescribed  capital amounts were ¥10 million for business 
corporations and ¥3 million for private companies at the time of incorporation.  Under the new law, businesses may start with a minimum capital of one yen. Japan WT/TPR/S/175/Rev.1 
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102. The Tokyo Stock Exchange (TSE) adopted a rule , effective March 2006, to require its listed 
companies to publish reports on the TSE website describing their corporate governance structure, 
including information on:  the reasons for adopting an in-house auditor or co mmittee-style governance 
structure;  whether they have outside directors;   and whether they adopt any measures to prevent 
takeovers.   
103. The authorities maintain that Japan’s Genera lly Accepted Accounting Practices (GAAP) are, 
taken as a whole, equivalent to the Internati onal Accounting Standards (IAS), while acknowledging 
limited differences in certain areas.  However, they believe that a further effort to promote  international convergence in accounting standards will c ontribute to the protection of investors in the 
Japanese market, and strongly support such efforts.  On the other hand, they do not plan to adopt 
international accounting standards in their entirety.