WT/TPR/S/211 Trade Policy Review 
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IV. TRADE POLICIES BY SECTOR 
(1) INTRODUCTION  
1. Since its previous Trade Policy Review, Japan h as continued to promote structural reforms, 
especially those pertaining to agriculture, energy, financial services, and air transport.   
2. In agriculture, Japan has introduced certain measures to move further away from price 
support towards income support.  However, the s ector remains relatively protected from foreign 
competition.  The average applied MFN tariff for agriculture (WTO definition) fell from 18.8% in 
FY2006 to 17.1% in FY2008 reflecting decreases in ad valorem  equivalents of non- ad valorem  
duties.  In 2007, Japan's total transfers to agri culture amounted to 0.9% of GDP compared with 
agriculture's 1.2% share in GDP (in 2006).  As a consequence, the overall level of government 
assistance for agriculture (as measur ed by producer and consumer s upport estimates, for example) is 
well above the OECD average.  Despite (or possibly because of) th is assistance, labour productivity 
has remained less than one quarter of the nationa l average.  Food self-sufficiency in FY2006 was 
around 39% on a calories basis, a decrease of one pe rcentage point from FY2005;  thus, Japan is one 
of the world's largest importers of food. 
3. During the review period, the authorities have placed emphasis on the promotion of selected 
industries;  for example, additional assistance was introduced for the production of aircraft.  
Nonetheless, Japanese manufacturing has, by and large,  been much more exposed to international 
competition than agriculture and certain services.   Tariffs on industrial products (HS 25-97) are 
usually low (averaging 3.6% in FY2008), non-tariff barriers (e.g. import licensing requirements) are 
few, and the sector, on average, receives relativ ely little financial support from the Government.  
Manufacturing has been the driving force behind Japan's  rapid development during the past 60 years.  
The sector's contribution to GDP decreased slightly from 21.5% in 2005 to 21.3% in 2006 (the latest year for which data are available);  manufacturing employed 17.4% of Japan's total labour force in 
2006, up from 17.3% in 2004, which means that labour  productivity in the sector is substantially 
higher than in the rest of the economy.   
4. One of the main objectives of Japan's energy  policy has been a st able energy supply, 
reflecting its heavy reliance on imported energy:  ab out 82.5% of its primary energy was imported in 
FY2005 (the latest year for which data are available) .  Electricity prices in Japan have declined and 
are not necessarily higher than those in other deve loped countries.  By contrast, gas prices for 
residential customers in Japan have remained relati vely high by international standards.  Since its 
previous Review, Japan has further liberalized its gas sector to promote competition.  In 2008, the 
Government recommended against an FDI project in electric utilities on the grounds of "national 
security, public order, and public safety".   
5. Regulatory reform has continued in services, wher e labour productivity is considerably lower 
than in manufacturing.  This is an important se ctor not just for consumers but for all kinds of 
businesses for which services are essential inputs a nd therefore a significant determinant of their 
international competitiveness.  Reforms have progressed  particularly in financial services, which are 
important for channelling savings into profitable in vestments across various sectors of the economy.  
Besides a substantial reduction of  non-performing loans (NPLs), and restructuring of government-
affiliated institutions, the Government has targeted  improved transparency in the financial system, 
through, for example, the adoption of the "no acti on letter" system.  Privatization of Japan Post 
commenced in October 2007, and the Japan Post Ba nk and Japan Post Insurance started operations.  
The Government's policy framework on telecommun ications has remained largely unchanged during Japan WT/TPR/S/211 
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the review period.  In transport, liberalization me asures have been introduced in bilateral air traffic 
with some of Japan's trading partners. 
(2) AGRICULTURE  
(i) Overview 
6. In accordance with the revised Basic Plan for Food, Agricultu re and Rural Areas, announced 
in May 2005, the Government introduced new di rect payment assistance to "core farmers" on 
1 April 2007 and eliminated some price support me asures.   Under the "direct payment to core 
farmers" scheme, the Government targets "certifie d farmers" and village-based farming collectives 
with a certain scale1, who are eligible for specific measures, such as low-interest loans and accelerated 
depreciation.  The certified farmers may receive  income support based on "historical reference 
amounts".2  The new direct payment system covers, inter alia,  rice, wheat, soya, and beet.   
7. Agriculture has continued to receive substan tial government support;  provisional estimates 
by the OECD indicate that total tr ansfers (total support estimate) to agriculture amounted to 1.1% of 
GDP in 2006 (from 1.2% in 2005).3  The share of agriculture in GDP was 1.2% in 2006 (unchanged 
from 2005) and 0.9% in 2007;  and, including forestry and fisheries, it accounted for 5.0% of total 
employment in 2006 (5.2% in 2005).  This indicates agriculture's very low labour productivity 
compared with the national average, perhaps ow ing to lower overall efficiency (total factor 
productivity), reflecting small farm  size and consequent lack of economies of scale, against the 
background of relatively high border protection and s upport compared with other sectors.  In 2007, 
agricultural products amounted to about 1.1% of th e Japan's total merchandise exports (up slightly 
from 1.0% in 2006), and 11.1% of total impor ts (down slightly from 11.3% in 2006).   
8. Japan's food self-sufficiency ratio on a calori es basis was 39% in FY2006;  despite the 
Government's objective of raising it to 45%, it has been on a declining trend (the ratio was 40% in 
FY2002).4  The authorities consider that the major factor  behind this declining trend is the change of 
diet:  decrease in the consumption of rice, where self-sufficiency is 100%, and increased consumption 
of livestock products and oils, necessitating imports of a large amount of feed grains and oil seeds. 
                                                      
1 Farmers that are certified by municipalities as "mo tivated and capable" are called "certified farmers".  
To be eligible for direct payments, farms must be 4 ha  or more for certified farmers and 20 ha or more for 
village-based farming collectives, with special treatment for those in "disadvantaged" areas, such as hilly and 
mountainous areas;  other eligibility crite ria include proper use of farmland.  These farmers must also abide by 
the "agricultural environmental code" defined by the Government. 
2 Historical reference amounts are de fined as the farmer's harvested ar ea and normal yield in the region 
concerned, during a specified base period. 
3 Total support estimates are defined as the annual monetary value of all gross transfers from taxpayers 
and consumers arising from policy measures that support agriculture, net of the asso ciated budgetary receipts, 
regardless of their objectives and impact on farm production and income or consumption of farm products.  
Total transfers are measured on a gross basi s, while GDP is on a value-added basis. 
4 According to a study entitled "Estimated Effects of Tariff Elimination on Domestic Agricultural 
Production", issued by the Government in February 2007, elimination of all the current border measures would reduce domestic production of agricultural goods, which have small quality edge and large price differentials 
compared with imports.  It is estimated that the elim ination would result in a decrease of the calorie-based 
self-sufficiency ratio to 12%.  The report states that ef forts to increase productivity, such as consolidating land 
and adding higher values to products, will not eliminat e the price differentials because the average size of 
cultivated land per Japanese farmer is one hundredth or thousandth of that of farmers in food exporting 
countries, such as the United Stat es and Australia (MAFF online informat ion (in Japanese).  Viewed at:  
http://www.maff.go.jp/topics/ epa_wg/4_02.pdf). WT/TPR/S/211 Trade Policy Review 
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9. The Basic Law on Food, Agriculture and Rural Ar eas continues to provide the framework and 
policy direction for agriculture in Japan;  the La w is implemented by the Basic Plan for Food, 
Agriculture, and Rural Areas, adopted in March 2005.  The Plan, inter alia,  aims to achieve a higher 
food self-sufficiency ratio, ensure food safety, facilita te corporate entry into agriculture nationwide, 
develop collectivized farm manageme nt and consolidate farmland use, target core farmers as the main 
beneficiaries of the Government's support, and shif t away from price support to income support.  The 
Plan also contains a guideline to achieve a food self-sufficiency ratio (calorie based) of 45% by FY2015.  Japan has notified the WTO Committee on Ag riculture of its domestic support programmes 
for fiscal year 2006.
5 
(ii) Policy developments  
10. The average applied MFN tariff for agriculture (WTO definition) is 17.1% (FY2008)6, 
compared with an overall average of 6.1% (Chapter III(2)(ii));  17.4% of duties applied to agricultural 
goods (WTO definition) are non- ad valorem .  Many agricultural subsectors, such as oil seeds, dairy 
products, edible vegetables, sugar and sugar products, and cereals and pr oducts thereof, benefit from 
relatively high levels of MFN tariff protection (Table  IV.1);  several agricultural subsectors are also 
subject to tariff peaks (defined here as tariff rates exceeding three times the simple applied MFN 
average).  Some of the average tariffs for the sub sector may be underestimated, owing to the lack of 
estimates of AVEs for some specific duties (which tend to conceal relatively high tariffs).7  In the 
interests of transparency, the Japanese authorities ha ve provided the Secretariat with AVE estimates, 
where available.  The simple average of non- ad valorem  tariff rates for agriculture (WTO definition) 
for which AVEs were available was 64.3%, r oughly 6.5 times the simple average of purely 
ad valorem  tariff rates for agriculture (9.8%).8  Non- ad valorem  tariffs for agriculture (WTO 
definition) for which AVEs were not available con cerned 93 tariff lines at HS 9-digit level;  they 
included milk and dairy products, live swine and meat  of swine, rice and cereals, fruit juices, and 
prepared foods.  For example, the rate payable on  imports of peas is among the highest in Japan's 
customs tariff with an ad valorem  equivalent of 578.6% (out-of-quota rate). 
11. Tariff rate quotas (TRQs), which cover 1.8% of all tariff lines, apply mainly to agricultural 
products, including rice, milk and da iry products (skim milk powder, whey, butter, butter oil, prepared 
edible fat), dried leguminous vegetables, wheat, barl ey, ground nuts, tubers of konnyaku, starches, 
and silk-worm cocoons and raw silk.9  The extent to which tariff quotas are filled varies by product 
(Table AIV.1).  Quota-fill rates are below 50% for skimmed milk powder, prepared whey for infant 
formula, butter and butter oil, mineral concentrated  whey, tubers of konnyaku, and silk-worm cocoons 
and raw silk.  The administration of TRQs has not changed since the previous Review.  Eligibility for 
quota allocations may require prior approval by the MAFF and tends to be intricate;  it may require, 
for example, various end-use restrictions and ma ny documents, such as accounts and business plans.  
The MAFF releases on the Internet the names of co mpanies or persons that are allocated the quotas10;  
                                                      
5 WTO document G/AG/N/JPN/137, 1 July 2008. 
6 The average applied MFN tariff for agri culture (HS 1-24) in FY2008 is 15.7%. 
7 The absence of estimates of AVEs because of no imports may suggest that tariffs for the products 
concerned are prohibitive.  According to the authorities, the lack of estimates may be because world production 
and the international trade volume of certain products ar e very small, and that there is little demand for them in 
Japan. 
8 The simple average of all (i.e. agricu ltural and non-agricultural products) non- ad valorem  tariff rates 
for which AVEs were available was 34.6%, roughl y eight times the simple  average of purely ad valorem  tariff 
rates, which was 4.4%.  Non- ad valorem  tariffs for which AVEs were not available concerned 126 tariff lines at 
the HS nine-digit level. 
9 WTO document G/AG/N/JPN/134, 28 March 2008. 
10 MAFF online information.  Viewed at:  h ttp://www.maff.go.jp/sogo_shokuryo/data/12kokusai_ 
chousei/3seido/simei_kouhyo.htm. Japan WT/TPR/S/211 
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no information on the quota amounts allocated to fi rms or individuals was made available to the 
Secretariat.  In-quota imports of rice, wheat and barley, and certain milk products are handled mainly by state-trading entities;  however, certain amount s of these products may be imported by private 
entities.
11   
Table IV.1 
Applied MFN tariff protection in agriculture, FY2008 
(Per cent) 
HS Chapter/Description Simple 
average 
tariff Maximum 
tariff Tariff peaksa 
(% of lines) Non-
ad valorem 
tariff 
(% of lines) 
01 Live animals 1.9 35.4 3.8 11.5 
02 Meat and edible meat offal 10.4 50.0 15.0 19.5 
03 Fish and crustaceans, molluscs and othe r aquatic invertebra tes 5.3 15.0 0.0 0.0 
04 Dairy produce;  birds' eggs;  natural honey;  edible products of 
animal origin, not elsewhere specified or included 49.2 225.4 90.3 63.9 
05 Products of animal origin, not elsewher e specified or included 0.3 3.5 0.0 0.0 
06 Live trees and other plants;  bulbs, roots and the like;  cut 
flowers and ornamental foliage 0.4 3.0 0.0 0.0 
07 Edible vegetables and certain roots and tubers 28.8 578.6 6.1 7.9 
08 Edible fruit and nuts;  peel of citrus fruit;  melons  7.8 24.0 6.4 0.0 
09 Coffee, tea, maté and spices 3.4 17.0 0.0 0.0 
10 Cereals 23.6 290.7 22.2 31.7 
11 Products of the milling industry;  malt;  starches;  inulin;  
wheat gluten.   32.8 318.6 55.7 38.0 
12 Oil seeds and oleaginous fruits;  miscellaneous grains, seeds 
and fruit;  industrial or medici nal plants;  straw and fodder 17.7 543.3 5.6 5.6 
13 Lac;  gums, resins and other vege table saps and extracts 3.0 17 0.0 4.8 
14 Vegetable plaiting materials;  vegetable products not elsewhere 
specified or included 3.1 8.5 0.0 0.0 
15 Animal or vegetable fats and o ils and their cleavage products;  
prepared edible fats;  animal or vegetable waxes 4.6 29.8 2.3 41.9 
16 Preparations of meat, of fish or of crustaceans, molluscs or 
other  aquatic invertebrates 13.4 50.0 31.0 3.0 
17 Sugars and sugar confec tionery 39.7 217.6 68.8 58.3 
18 Cocoa and cocoa preparations 21.3 86.9 63.0 7.4 
19 Preparations of cereals, flour, starch or milk;  pastrycooks' 
products 23.1 130.8 62.1 26.5 
20 Preparations of vegetables, fruit, nuts or other parts of plants 16.8 46.8 37.8 6.7 
21 Miscellaneous edible preparations 24.8 290.1 50.0 16.0 
22 Beverages, spirits and vinegar 13.4 74.6 25.9 35.2 
23 Residues and waste from the food industries;  prepared animal 
fodder 1.0 12.8 0.0 9.5 
24 Tobacco and manufactured tob acco substitutes 5.1 29.8 9.1 0.0 
1-24 Agriculture 15.7 578.6 25.2 15.3 
a Three times the simple average of overall applied MFN rates. 
Note: The simple average applied MFN tariff rate in FY2008 is calculated by using 2007 AVEs, as available, provided by the Japa nese 
authorities.  When the AVEs are unavailable, the ad valorem  part of compound and alternate rates is used. 
Source:  WTO calculations, based on data provided by the Japanese authorities.  
                                                      
11 Rice, wheat, and barley are imported by the Minist ry of Agriculture, Forestry, and Fisheries;  and 
milk products and raw silk by the Agriculture and Livestock Industries Corporation (WTO document G/STR/N/11/JPN, 11 November 2006).   WT/TPR/S/211 Trade Policy Review 
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12. Rice, wheat and barley remain the most h eavily supported commodities;  total subsidies 
provided for wheat, barley, and rice amounted to  ¥182 billion in FY2002 and ¥185 billion in FY2003 
(the latest year for which data are available).12  Although rice apparently is the most important 
commodity, the amount of the subsidies provided for ri ce was not made available to the Secretariat.  
Imports of rice have been subject to TRQs since 1 April 1999:  the applied MFN out-of quota rate for 
FY2008 was set at ¥341 per kg (or 139.3%-290.7% in terms of AVE, where available);  the duty is the sum of a specific duty (temporary rate) of ¥49 per kg, and a levy of ¥292 per kg collected by Customs on behalf of the MAFF;  the collected levy  goes to the special accounts related to agriculture 
in the Central Government.  According to the most recent data available, imports of in-quota rice were 
679,252 tonnes in 2006 (compared with 679,511 tonnes in FY2005) and out-of-quota imports were 
120 tonnes (compared with 112 tonnes in FY2005).  The MAFF administers imports and exports of 
rice under the Law for Stabilization of Supply-Demand an d Price of Staple Food.  As part of Japan's 
minimum access commitments, a certain amount of rice can be purchased and marketed directly under the simultaneous buy-and-sell (SBS) system;  a to tal of 100,000 tonnes were imported under the SBS 
in FY2006 (same as in FY2005).  Some rice is exported as food aid.
13 
13. The Government implements "supply-demand adjustment" measures on rice by setting a 
volume cap for rice production.14  The production cap was 8.33 million tonnes in rice year 2006 
(November-October).  Nonetheless, in order to a ddress the decline in the retail prices of rice15, 
reflecting an oversupply of rice, on 29 October 2007, the Government announced an "emergency 
measure on rice", under which the Government purchased, by tender, 0.34 million tonnes of domestically produced rice in 2007 to increase the stoc k to one million tonnes, which had been set by 
the Government as an "appropriate level".
16  The authorities state that supply-demand adjustment is 
conducted voluntarily by farmers and farmers' orga nizations from rice year 2007, based on an annual 
demand estimate provided by the Government;  the estimate was 8.28 million tonnes for the rice year 2007.  The budget for these measures under th e "production adjustment programme in paddy 
fields", amounted to ¥165.7 billion in FY2006 and ¥157.8 billion in FY2007.  In FY2008, a ceiling of 
1.95 million tonnes (1.98 million tonnes in FY2007) was set for production of milk to be used 
specifically for manufacturing butter and skim milk powder  under the direct payments by the 
Government.
17  The Japan Dairy Council (a producer group) has been voluntarily restricting the 
overall production of raw milk since 1979, with a production cap of 7.9 million tonnes in 2008.  
14. Under the Agricultural Management Reinforcemen t Law, "general corporations" (including 
stock companies and non-profit organi zations) are allowed to lease farmland.18  Since early 2006, 
                                                      
12 WTO document G/SCM/N/155/JPN, 3 September 2007.  The Government purchases rice for food 
security purposes (public stockholding).  Other agricultural products receiving subsidies are soybean, sugar, 
milk and dairy products, bovine meat and pigmeat, eggs, vegetables, fruits, and cocoons. 
13 WTO document G/AG/N/JPN/125, 5 March 2007.  In the periods July 2003 to June 2004 and 
July 2004 to June 2005, the Government provided US$155.4 million and US$105.4 million, respectively, for the 
purchase of grains as food aid to LDCs and net-food-importing developing countries.  Data provided by the authorities indicate that the Government provided 2.2 million tonnes of rice imports as food aid. 
14 Based on the decision of the Principle and Outline of Rice Policy Reform in 2002 and the entry into 
force of the amendments to the Law for Stabilization of Supply-Demand and Price of Staple Food in 2004, 
domestic distribution of rice was liberalized, and G overnment purchase and selling prices for rice are 
determined by tender. 
15 In October 2007, domestic retail prices of rice had declined by about 7-8% year on year. 
16 MAFF online information (in Japanese).  Viewed  at:  http://www.maff.go.jp/j/soushoku/keikaku/ 
e_meeting/pdf/data.pdf [23.10.2008]. 
17 MAFF (2008). 
18 Before 1 September 2005, only "agricultural pr oduction legal persons" were allowed to lease 
farmland (with a few exceptions), and eligibility requirements had to be fulfilled:  corporations had to be in the form of agricultural cooperatives, partnerships or stock companies engaged mainly in agricultural activities and Japan WT/TPR/S/211 
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100 general corporations have ente red agriculture by leasing farmland;  these corporations totalled 
256 by end-September 2007.  The authorities maintain that the corporations contribute to productive 
use of farmland that would otherwise be abandoned.  In 2007, the average size of cultivated land per 
farm household was 1.83 ha, up slightly from 2006 (1. 79 ha).  The authorities consider that a number 
of factors impede the increase in farming scale.  These include instability of income for agricultural 
households and prices of products, dispersed farmland ownership, and farmland owners' inclination to 
hold the land as assets rather than for production. 
15. In 2006, 7,496 foreign trainees were accepted in  agriculture in Japan.  The foreign trainees 
system is intended to promote international coope ration through training for persons from developing 
countries.  
16. The Government is promoting exports of food (including agricultural products);  it aims to 
increase the value of Japanese food exports to ¥1 trilli on by 2013.  The authorities intend to achieve 
this in collaboration with the private sector, th rough various efforts including setting up Japanese 
pavilions at international exhibitions and promotion abroad of Japanese food.  
17. Special safeguard actions (SSGs) were taken in fiscal years 2006 to 2008 for a number of 
products, including rice, wheat or meslin flour, starches, inulin, milk, butter, yogurt, tubers of 
konnyaku, certain food preparations, beans, an d peas (Table IV.2).  Both price-based and 
volume-based SSGs have been imposed on various pr oducts (though not concurrently);  the remedies 
are applicable only to out-of-quota imports.   
18. Since its previous Trade Policy Review, Japan has not used emergency tariff measures for 
import surges of beef and pork, in accordance with the Temporary Customs Tariff Measures Law.19  
The measures allow increases of cu stoms duties to the WTO bound level (50% in case of beef) from 
the level reduced by Japan unilaterally beyo nd its commitments (38.5% on beef).   
19. Support received by farmers, as well as consumer prices of agricultural products in Japan 
remain well above the OECD average.  Japan's net producer support estim ates (PSE) and consumer 
support estimates (CSE) for 2007 have been provision ally estimated at 45% and 40%, against OECD 
averages of 23% and 12%, respectively.20  In the same year, the producer nominal assistance 
coefficient (NAC) was 1.83 (i.e. gross farm receipts we re 1.83 times the level they would have been if 
generated at world prices without support), a nd the consumer NAC was 1.67 (i.e. consumers are 
implicitly taxed, paying on average about 1.67 times as much as they would have paid without 
support).  The producer and consumer NACs were about 42% and 46% higher than respective OECD 
                                                                                                                                                                     
with more than 50% of the sales from agriculture;  three-quarters of the members had to be farmers;  and the 
majority of directors had to be full-time farmers. 
19 Emergency tariff measures were triggered in FY2003 on beef and FY2001 to FY2004 on pork.  The 
Temporary Customs Tariff Measures Law provides for temporary exceptions to the Customs Tariff Law and the Customs Law, and adjustments to customs duty rates on certain goods.  This involves exemptions from customs 
duties, special emergency customs duty, reduction of customs duties, and other preferential duties (for example, 
under Japan FTA/EPAs).  For FY2008, 477 lines (including in-quota rates) at the HS nine-digit level are subject 
to temporary rates. 
20 OECD (2008a).  Figures for 2007 are provisional.  PSEs are defined as the annual monetary value of 
gross transfers from consumers and taxpayers to agricu ltural producers, measured at the farm-gate level;  PSEs 
include market price support and budgetary payments.  CSEs  are the annual monetary va lue of gross transfers to 
(from) consumers of agricultural commodities, measured at the farm-gate level.  A producer NAC is the ratio between the value of gross farm receipt s, including support, and gross farm r eceipts valued at border prices.  As 
noted in WTO (2007), caution is necessary when interpreting PSEs, CSEs, and NACs, as changes in exchange 
rates or world prices may produce significant fluctuations, and border prices may be artificially reduced owing to the presence of export subsidies in international agriculture trade. WT/TPR/S/211 Trade Policy Review 
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averages.  In addition, the producer nominal protection coefficient (NPC) was 1.74 in 2007 (i.e. the 
farm-gate price received by producers was on average 1.74 times higher than the price at the border).  The total AMS for agricultural products (measure d differently from the OECD's PSE) amounted to 
¥571.2 billion in FY2006, a decrease of 3.7% over the previous fiscal year
21;  this is a considerable 
decrease from the FY 1997 figure (¥3.2 trillion).   
20. In 2007, the price support schemes for wheat, swee t potatoes, white potatoes, sugar beets and 
sugar cane were transformed into a direct paym ent scheme (Table IV.3).   The Agriculture and 
Livestock Industries Corporation takes measures to he lp stabilize the price of beef and veal and meat 
of swine;  when wholesale prices exceed the "upper  stabilization price", the Corporation releases its 
stock of domestic beef and pork on the domestic market, and when wholesale prices fall below the 
stabilization price (the "lower price"), it purchases beef and pork from the domestic market.22  I n  
2007, the upper stabilization prices were ¥1, 010/kg for beef and ¥480/kg for pork. 
Table IV.2 
Special safeguards in agr iculture, FY2006 to 2008  
Description Type of action Date or period of application 
FY2006   
Milk and cream, not concentrated nor containing adde d sugar or other 
sweetening matter, of a fat content, by weight, exceeding 1% but not exceeding 6%, sterilized, frozen or preserved  Volume-based 1 October 2006 to 31 March 2007 
Milk powder not containing added su gar or other sweetening matter;  
of a fat content, by weight, exceeding 5% but not exceeding 30% Price-based 17 August 2006 
Yogurt;  frozen, preserved or c ontaining added sugar or other 
sweetening matter, flavouring, fruits or nuts (excluding frozen yogurt)  Volume-based 1 November 2006 to 31 March 2007 
Peas (Pisum sativum) Price-based 19 March 2007 
Kidney beans, including white pea beans ( Phaseolus vulgaris ) Price-based 19 March 2007 
Beans other than beans of the species Vigna mungo  (L.) Hepper or 
Vigna radiata  (L.) Wilczek, small red (Adzuki) beans and kidney beans Price-based 19 March 2007 
Broad beans ( Vicia faba var. major ) and horse beans ( Vicia faba var. 
equine, Vicia faba var. minor ) Price-based 6 June 2006 
Rice (semi-milled or wholly milled rice, whether or not polished or 
glazed) Price-based 22 May 2006, 17 August 2006, 
5 September 2006, 13 September 2006 
Wheat or meslin flour Price-based 13 June 2006, 3 July 2006, 
22 November 2006 
Other starches (excluding Sago starches) Price-based 18 April 2006, 19 April 2006, 
8 November 2006, 16 February 2007 
Inulin Price-based 7 March 2007 
Tubers of konnyaku ( Amorphophalus ), whether or not cut, dried or 
powdered Price-based 22 January 2007 
Food preparations, containing flour, gr oats, meal, pellets or starch of 
rice, wheat, triticale or barley, which total weight is more than 85% of 
the articles and mostly containing starch Price-based 13 July 2006 
Food preparations of goods of heading 04.01 to 04.04, containing not 
less than 30% natural milk constituen ts, of the articles in dry weight, 
excluding whipped cream in pressuri zed containers - containing not 
more than 30% milk fat by weight Price-based 26 July 2006 
Table IV.2 (cont'd) 
                                                      
21 WTO document G/AG/N/JPN/137, 1 July 2008. 
22 The Government also provides calf producers with s ubsidies per head if the calf price falls  below the 
"guaranteed base price".  In 2007, the guaranteed base  price was ¥304,000 per head;  average actual prices of 
calves were higher than the guaranteed base price. Japan WT/TPR/S/211 
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Description Type of action Date or period of application 
Food preparations, containing groats, meal, pellets or starch of rice, 
wheat, triticale, barley, which total weight is more than 85% of the 
articles and mostly containing starch Price-based 21 April 2006, 24 April 2006, 
10 May 2006, 16 May 2006, 30 June 2006, 
28 July 2006, 3 October 2006, 
30 November 2006, 4 December 2006, 18 December 2006, 25 December 2006, 26 January 2007, 8 March 2007, 16 March 2007, 20 March 2007, 
23 March 2007 
Prepared foods containing not less than 50% by weight of those obtained by merely swel ling or roasting of rice, wheat, triticale or 
barley, of rice Price-based 27 September 2006 
Food preparations containing by wei ght not less than 30% natural milk 
constituents on the dry matter - not mo re than 30% by weight of milk 
fat Price-based 15 May 2006, 16 October 2006 
Food preparations containing by weight not less than 30% natural milk 
constituents on the dry matter - other Price-based 23 March 2007, 28 March 2007 
FY2007   
Milk and cream, not concentrated nor containing adde d sugar or other 
sweetening matter, of a fat content, by weight, exceeding 1% but not 
exceeding 6%, sterilized, frozen or preserved Price-based 3 October 2007 
Butter and other fats and oils derive d from milk;  dairy spreads Volume-based 1 November 2007 to 31 March 2008 
Rice (semi-milled or wholly milled rice, whether or not polished or 
glazed) Price-based 2 August 2007 
Wheat or meslin flour Price-based 19 April 2007 
Wheat starch Price-based 17 May 2007 
Other starches (excluding Sago st arches) Price-based 29 October 2007 
Inulin Price-based 18 April 2007, 4 September 2007 
Tubers of konnyaku ( Amorphophalus ), whether or not cut, dried or 
powdered Price-based 15 May 2007, 7 August 2007 
Food preparations of goods of heading 04.01 to 04.04, containing not 
less than 30% natural milk constituen ts of the articles by dry weight, 
excluding whipped cream in pressuri zed containers - containing more 
than 30% milk fat by weight  Price-based  26 March 2008 
Food preparations, containing groats, meal, pellets or starch of rice, 
wheat, triticale, barley, which total weight is more than 85% of the 
articles and mostly containing starch Price-based 17 April 2007, 27 April 2007, 
17 May 2007, 29 May 2007, 28 June 2007, 28 August 2007, 
19 September 2007, 2 October 2007, 
23 October 2007, 13 November 2007, 12 December 2007, 17 December 2007, 7 January 2008, 21 January 2008, 24 March 2008 
Food preparations containing by wei ght not less than 30% natural milk 
constituents on the dry matter - more than 30% by weight of milk fat Price-based 4 Septembe r 2007, 18 September 2007, 
29 October 2007, 10 December 2007, 12 December 2007, 15 January 2008 
FY2008 (as of 1 September 2008)    
Milk powder containing added sugar or other sweetening matter, of a 
fat content, by weight, exceeding 5% but not exceeding 30% Price-based 26 May 2008 
Inulin Price-based 21 August 2008 
Tubers of konnyaku ( Amorphophalus ), whether or not cut, dried or 
powdered Price-based 29 July 2008 
Food preparations, containing groats, meal, pellets or starch of rice, 
wheat, triticale, barley, which total weight is more than 85% of the 
articles and mostly containing starch Price-based 7 April 2008, 15 April 2008 
Source: WTO notifications, and informati on provided by the authorities.  WT/TPR/S/211 Trade Policy Review 
Page 78 
 
 
21. Japan notified to the WTO that no export subsidies were provided in the period 1 April 2006 
to 31 March 2007.23  
Table IV.3 
Procurement prices for all major crop s subject to pricing and/or marketin g arrangements/price controls, 2003-08 
(¥) 
 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 
Rice, official purchase price (unpolished rice, 
60 kg)a 13,820 n.a. n.a. n.a. n.a. n.a. 
Wheat, official purchase price (60 kg)b  8,552 8,306 7,197 7,146 n.a. n.a. 
Sweet potatoes, trading guideline price 
(1 tonne) 31,160 31,120 31,090 31,030 n.a. n.a. 
White potatoes, raw material standard price 
(1 tonne) 13,690 13,650 13,640 13,580 n.a. n.a. 
Sugar beets, lowest producer price (1 tonne) 16,840 16,760 16,640 16,560 n.a. n.a. 
Sugar cane, lowest producer price (1 tonne) 20,300 20,230 20,130 20,110 n.a. n.a. 
Calves for beef (Japan ese black), guaranteed 
base price (per head) 304,000 304,000 304,000 304,000 304,000 305,000c 
310,000d 
Beef, standard stabilization price (1 kg) 780 780 780 780 780 790c 
815d 
Pork, standard stabilization price (1 kg) 365 365 365 365 365 380c 
400d 
n.a. Not applicable. 
a Changed to bidding price from the administra tive (or official purchase) price since 2004 crop. 
b The II ･1st grade until 2004 crop and 1st grade in 2005 crop.  Changed to bidding pri ce from administrative price since 2007  crop. 
c April-June. 
d July-March. 
Source: Information provided by the Japanese authorities. 
(3) MANUFACTURING  
22. In 2006, manufacturing accounted for 21.3% of Japan's GDP and 17.4% of employment 
(Table I.2), which implies that its labour productivity  was 28% higher than the level in the rest of the 
economy.  Electrical machinery was the largest subsector in terms of value added, followed by transport equipment.  In 2007, manufactured products accounted for 89.7% of Japan's total 
merchandise exports and 50.5% of its total mercha ndise imports.  Automotive products, non-electrical 
machinery, office machinery, and telecommunication equipment and chemicals are Japan's main export items;  Japan's main impor t items include office machines, telecommunications equipment, 
chemicals, and other electrical machinery. 
23. The simple average applied MFN tariff for impor ted industrial products (HS 25-97) is 3.6% 
(FY2008), compared with 15.7% for agricultural products (HS 01-24).
24  Simple average tariffs are 
considerably higher for footwear and headgear than for other manufactured goods.  
24. The Law on Special Measures for the Revitali zation of Industrial Dynamism (Industrial 
Revitalization Law (IRL)) was ame nded in June 2007.  In the amendm ent, various measures intended 
to promote restructuring and innovation, such as granting of tax reductions to acquisition plans 
                                                      
23 WTO document G/AG/N/JPN/127, 17 April 2007.  However, food aid is provided to LDCs and 
net-food importing developing countries. 
24 The simple average applied MFN ta riff in FY 2008 is calculated by using 2007 AVEs, as available, 
provided by the Japanese authorities.  When the AVEs are unavailable, the ad valorem  part is used for 
compound and alternate rates. Japan WT/TPR/S/211 
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approved by competent Ministers as  innovation-enhancing, was adopted.25  By 14 February 2008, 
465 projects had been approved under the law. 
25. Other sector-specific support includes a governme nt grant to the International Aircraft 
Development Fund (IADF) of Japan.  This provides financial support to Japanese companies involved 
in international collaboration in the construction of  civil aircraft, such as a project between Boeing 
company and the Japan Aircraft Development Corporation (JADC).26  Japan also intends assist the 
development of manufacturing, including the aircraft  industry (e.g. the Mitsubishi Rear Jet project);  
the details of the policies were not made available to the Secretariat.27  The Government also intends 
to promote information technology (IT) and provid es tax incentives;  under the "special tax measures 
for strengthening information infrastructure", introduced in FY2006 (and reviewed in FY2008), 
companies acquiring certain IT-related facilities r eceive either a tax deduction of 7% of amounts 
invested in IT for the company's own use, or an accredited depreciation of 35% for assets acquired as 
certified IT facilities.28 
26. Foreign direct investment in certain manufacturing subsectors in Japan requires prior-
notification;  additionally, investment (domestic or  foreign) in certain sectors requires permission or 
ex post  reporting, as stipulated in various laws and relevant regulations (Chapter II(5)(i)).  For 
example, investors, domestic or foreign, who in tend to invest in aircraft manufacturing require 
approval by the Ministry of Economy, Trade and I ndustry, in accordance with  the Law on Aircraft 
Manufacturing.   
(4) ENERGY AND UTILITIES  
27. A stable energy supply has been one of the main objectives of Japan's energy policy, since 
about 82.5% of its primary energy (e.g. oil, coal, natural gas, nuclear, hydro, and geothermal energy) 
was imported in FY2005.29  Data provided by the authorities indicate that Japan's electricity prices 
have come down recently.  In nominal U.S. dolla r terms, electricity prices in Japanese households 
averaged US$0.176 per kWh in 2007 compared with US$0.213 per kWh in 1999, and those for 
industrial use averaged US$0.116 per kWh and US$0.143 per kWh, respectively.30  The authorities do 
not currently plan to liberalize further the retail market for electricity in Japan.  In the latest 
Three-Year Programme for Promoting Regulatory Reform, the Government intends to promote 
unbundling  of accounts in various subsectors of  electric utilities and encourage wholesale power 
exchange to improve energy efficiency and tack le environmental issues (Chapter III(4)(v)).  The 
authorities plan to review the liberalization of the elec tricity retail market in five years.  There are no 
                                                      
25 METI (2007a). 
26 WTO document G/SCM/N/155/JPN, 3 September 2007. 
27 Minister's statement (in Japanese), METI onlin e information.  Viewed at:  http://www.meti. 
go.jp/speeches/data_ed/ed0803 28aaj.html [ 19.10.2008]. 
28 METI online information (in Japanese).  Viewed at:  http://www.meti.go.jp/policy/it_policy/zeisei/ 
kibankyouka_panfu.pdf [15.07.2008]. 
29 Energy self-sufficiency ratios in some of Japan's trading partners in 2006 were, for example, 39% in 
Germany, 71% in the United States, 81% in the United Kingdom, and 153% in Canada (IEA, 2008). 
30 In 2007, electricity prices for households averaged US$0.111/kWh in the United States, 
US$0.217/kWh in the United Kingdom, US$0.158/kWh in France, US$0.222/kWh in Germany, and 
US$0.248/kWh in Italy;  electricity prices for industrial use averaged US $0.067 in the United States, US$0.124 
in the United Kingdom, US$0.056 in France, US$0.094 in Germany, and US$0.220 in Italy.  In 2006, gas prices in Japanese households averaged US$1,238/10
7 kcal, compared with US$532/107 kcal in the United States, 
US$644/107 kcal in the United Kingdom, and US$707/107 kcal in France;  gas prices for industrial use in Japan 
averaged US$435/107 kcal, compared with US$301/107 kcal in the United States, US$384/107 kcal in the 
United Kingdom, and US$412/107 kcal in France. WT/TPR/S/211 Trade Policy Review 
Page 80 
 
 
state-owned enterprises in the energy and utilities sector;  private regional monopolies characterize the 
electricity and gas (piped) sectors.  
28. Regulation of the electric utilities sector has re mained largely uncha nged during the review 
period.  Data provided by the authorities indicate that , in terms of total electricity demand, the share 
of the "liberalized market" was 63% in April 2005, up from 40% in 2004.31  Like in many other 
countries, electricity prices for indust rial use in Japan are substantially  lower than for household use.  
The authorities indicate that electricity charges have  declined by some 20% since reforms in electric 
utilities began in 1995;  consumers in the residentia l sector, which has not been liberalized, have also 
benefited from the reforms to some extent, as effi ciency-improving effects through competition in the 
liberalized sector have been reflected in electricity charges in the regulated sector. 
29. In April 2007, the retail gas market was further liberalized32;  since then, customers 
consuming 100,000 m³ or more per year based on a c ontract with a supplier ("large customers") have 
been allowed to buy from all gas supp liers including "general gas utilities"33 (this threshold was 
previously 500,000 m³ per year).  The authorities e xpect that the liberalization will affect more than 
7,000 consumers, including supermar kets and large-scale retail shops .  They indicate that between 
1995 and 2006, gas sales by general gas utilities incr eased 1.62 fold;  their sales to large customers 
increased 4.44 fold.  Since 1995, 28 utilities have  entered the gas retail market, and by end 
March 2007 the share of gas supplied by these new entries had increased to about 9.7% of total 
large-volume gas supplies (i.e. gas supplies of 100,000 m³ or more per year).  In October 2007, the 
Government began the evaluation and review  of the reforms already implemented. 
30. Foreign entities wishing to invest in electric and gas utilities must, under the provisions of the 
Foreign Exchange and Foreign Trade Law, notify their intention to the competent authorities, 
including the METI.  Permission for investment  is not denied, except on grounds of national 
security34;  in 2008, the authorities made recommendation against one request for such permission on 
grounds of "national security, pub lic order, and public safety" for the first time since 1945.    
(5) SERVICES  
(i) Overview 
31. The services sector remains the largest cont ributor to GDP and employment in Japan.  
Services accounted for 68.8% of GDP in 2006 (69.6%  in 2005), and 70.3% of total employment 
(70.2% in 2005).  Japan submitted its revised  conditional offer in services on 24 June 2005.35 
                                                      
31 "Liberalized market" means demand for "extra high voltage service" and "high voltage power 
service" by consumers consuming 500 kW or above (between March 2004 to March 2005);  or 50 kW or above 
(from March 2005);  provision of such services have been liberalized. 
32 Liberalization for customers consuming 2,000,000 m³ or more per year based on contracts took place 
in 1995.  The scope of liberalization was expanded to include those consuming 1,000,000 m³ or more per year in 
1999, and 500,000 m³ or more in 2004. 
33 Under the Gas Business Act, piped-gas providers that establish service areas and are obliged under 
the Act to supply customers with gas in its serv ice areas are defined as "general gas utilities". 
34 The Minister of Finance and the Minister in charge of the industry involved may order the 
suspension of a proposed investment if they consider that the investment may "endanger national security, 
disturb the maintenance of public order, or hamper the protection of public safety", or "adversely and seriously 
affect the smooth management of the Japanese economy";  they could also recommend that the parties concerned alter their investment plans.     
35 WTO document TN/S/O/JPN/Rev.1, 24 June 2005.  In the revised services offer with respect to 
maritime services, cabotage services, international freight forwarding, and international shipping services are 
subject to an MFN exemption. Japan WT/TPR/S/211 
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32. According to studies by the Government on productivity36, while labour productivity growth 
in services tends to be lower than that in manufac turing in most advanced countries, the productivity 
gap between services and manufacturing is particularly  large in Japan.  A study by the Cabinet Office 
shows that labour productivity in Japan is lagging behind that in the United States, particularly in 
wholesale and retail trade, transport and storage, hotels and restaurants, and business services.  A 
study by the Ministry of Internal Affairs and Communications indicates that the average annual growth rate of total factor productivity (TFP) in  information and communications sector was 2.42% 
between 1995 and 2005, while the corresponding aver age for "all sectors" was -0.07%.  The TFP 
growth in other sectors was:  -0.39% in transporta tion, -0.07% in retail, 0.04% in wholesale, -0.03% 
in construction, -0.41% in vehicle manufacturing, and 1.90% in electrical machinery.  In order to 
address horizontal issues in services, an organiza tion called Service Productivity and Innovation for 
Growth (SPRING) was established by the business sector in May 2007.
37 
(ii) Financial services  
33. Further reforms have been implemented in the financial services sector since Japan's previous 
Review.  Government-led financial restructur ing, involving reduction of non-performing loans 
(NPLs) and the restructuring of government financia l institutions, including the privatization of Japan 
Post (Chapter I(3)(ii)) and the establishment of the Housing Loan Finance Corporation38, has been 
aimed at strengthening Japan's financial system and improving the efficiency of the capital market so 
that savings are channelled into profitable invest ment;  an efficient capital market is essential to 
raising productivity in the economy as a whole.  Other reform measures adopted recently include:  
allowing banks to sell all insurance products over th e counter (22 December 2007), and lifting the ban 
on certain agent business by insura nce companies (March 2008).   
34. To improve transparency in the financial services sector, Japan, inter alia,  revised, in 
July 2007, its "no action letter" system, a mechanis m for enquiries on the interpretation of laws and 
regulations, with respect to financial services.39  As a result, enquiries can now be raised as regards 
laws and regulations imposing oblig ations on private companies or restricting their rights directly40;  
the FSA is obliged to respond to such enquiries if  they are deemed to follow the purposes of the no 
action letter system.  The revision also stipulates that the enquirer's name no longer needs to be disclosed to the public;  a centralized enquiry point was established in the FSA's Coordination Division in the Supervisory Bureau, and the FSA is obliged to make efforts to shorten the response 
time.
41  
35. Exports (credit) and imports (deb it) of financial services (except insurance) increased in 2007;  
exports increased from ¥716 billion (5.2% of total services exports) in 2006 to ¥731 billion (4.8%), 
and imports increased from ¥348 billion (2.2% of total services imports) to ¥425 billion (2.4%).  On the other hand, exports of insurance services decreased from ¥183 billion (1.3% of total services 
                                                     
 
36 METI (2007c);  and Cabinet Office (2007). 
37 SPRING online information (in Japanese).  Viewed at:  http://www.service-js.jp/cms/index.php 
[23.10.2008]. 
38 The Housing Loan Finance Corporation was restructured into Japan Housing Finance Agency in 
April 2007. 
39 The FSA introduced the no action letter system in  July 2001 in accordance with a decision by the 
Cabinet in March 2001. 
40 Previously, enquiries had to be on whether a new business or transaction needed authorization or 
filing, and whether such concrete activities were subject to unfavourable dispositions by the authorities (e.g. 
withdrawal of licences). 
41 FSA (2007). WT/TPR/S/211 Trade Policy Review 
Page 82 
 
 
exports) in 2006 to ¥159 billion (1.0%) in 2007, and imports decreased from ¥531 billion (3.4% of 
total services imports) to ¥486 billion (2.7%). 
(a) Banking 
36. At end-February 2008, there were 214 banks;  64 were foreign (Table IV.4), five fewer than 
at end-February 2006.  The deposits of the five largest ("city") banks accounted for 46.3% of total 
deposits and for 46.4% of total loans in March 2008.  The ratio of NPLs to total credit (lending) of all 
banks decreased to 2.5% in September 2007 (fro m 2.9% in March 2006).  As well as commercial 
banks, there are government-affilia ted financial institutions, wh ich include two non-commercial 
banks42 and the Japan Finance Corporation (establis hed on 1 October 2008) (see below).  Data 
provided by the authorities indicate that commercia l bank interest rate spreads remained almost 
unchanged between Marc h 2007 and March 2008.43 
Table IV.4 
Financial institutions, 2008 
1.   Banks Number of 
banks 
(end-Mar. 2008) Total assets 
(¥ trillion) 
(end-Sep. 2007) Related laws 
City banks 5 391.1 Banking Law 
Trust banks 20 65.5 Banking Law 
Law on Concurrent Operation of Trust 
Business by Financial Institutions 
Other banks 14 24.3 Banking Law 
Regional banks I 64 215 Banking Law 
Regional banks II 47 60 Banking Law 
Foreign banks 63 52.7 Banking Law 
2.   Cooperative financial institutions Number of 
organizations 
(end-Mar. 2008) Total assets 
(¥ trillion) 
(end-Mar. 2007) Related laws 
Shinkin Central Bank 1 25 Credit Association Law 
Shinkin banks (credit associations) 281 120 Credit Association Law 
Shinkumi Federation Bank 1 3 Small a nd Medium Business etc. Cooperatives 
Law 
Law on Financial Business by Cooperatives 
Credit cooperatives 164 17 Small and Medium Business etc. Cooperatives 
Law 
Law on Financial Business by Cooperatives 
Mutual Federation of Labour Credit Association 1 4 Labour Credit Association Law 
Labour Credit associations 13 15 Labour Credit Association Law 
Shoko-Chukin Bank 1 .. Shoko-Chukin Bank Law 
Norinchukin Bank 1 68 Norinchukin Bank Law 
Prefectural Credit Federation of Agricultural 
Cooperatives 38 54 Agricultural Cooperatives Law 
Agricultural Cooperatives 807 99 Agricultural Cooperatives Law 
Prefectural Credit Federation of Fishery 
Cooperatives 31 2 Fishing Cooperatives Law 
Fishery cooperatives (including fish 
processors cooperatives) 174 1 Fishing Cooperatives Law 
   Table IV.4 (cont'd) 
                                                      
42 The Development Bank of Japan and the Japan Bank for International Cooperation. 
43 Commercial bank interest rate spreads were 0.33% in March 2007, and 0.32% in March 2008. Japan WT/TPR/S/211 
 Page 83 
 
 
    
3.   Insurance companies  Number of 
companies 
(end-Mar. 2008)  Total assets 
(¥ trillion) 
(end-Mar. 2007)  Related laws 
Life insurance: Domestic 38 183 Insurance Business Law 
   Foreign 4 36 Insurance Business Law 
Non-life insurance: Domestic 30 32 Insurance Business Law 
   Foreign 22 0.7 Insurance Business Law 
Small amount short-term insurance 31 0.02 Insurance Business Law 
Mutual fire insurance cooperative 
associations 42 0.07 Small and Medium Business etc. Cooperatives 
Law 
4.   Non-banks and other  Number of 
registered 
companies 
(end-Mar. 2008) Number of 
reported 
companies 
(end-Mar. 2005) Related laws 
Loan companies  9,115 .. Money-Lending Law 
Housing loan companies .. .. Money-Lending Law 
Money market brokers .. 7 Money-Lendi ng Law and Former Investment Law 
Mortgage companies  4 .. Inve stment Advisory Service Law 
Prepaid voucher issuers  1,260 434 Law on Regulation of Prepaid Certificates 
Special purpose companies credit brokers  1,057 448 Business Asset Securitization Law 
Real-estate syndications 42 6 Real Esta te Designated Cooperative Projects Law 
5.  Financial Instruments Business 
 Operators Number of 
companies 
(end-Mar. 2008) Total assets 
(¥ trillion) 
(end-Jan. 2008)  
Type 1 financial instruments business 
(securities firms) 398 .. Financial Instruments and Exchange Law 
Type 2 financial instruments business 
(investment advisory and agency businesses, 
investment management businesses) 1,025 .. Financial Instruments and Exchange Law 
Investment advisory and agency business 989 .. Financial Instruments and Exchange Law 
Investment management business 223 .. Fi nancial Instruments and Exchange Law 
Registered financial institutions 1,179 .. Financial Instruments and Exchange Law 
Financial instruments introducing brokerage 
service providers 623 .. Financial Instruments and Exchange Law 
6.   Government's fi nancial institutions Total assets 
(¥ trillion) 
(end-Mar.2008) Related laws 
Development Bank of Japan  11.7 Development Bank of Japan Law 
Japan Bank for International Cooperation 18.7 Japan Bank for International Cooperation Law 
National Life Finance Corporation 7.9 National Life Finance Corporation Law 
Housing Loan Corporation 39 House Loan Corporation Law 
Agriculture, Forestry and Fisheries Finance 
Corporation 2.8 Agriculture, Forestry  and Fisheries Finance 
Corporation Law 
Japan Finance Corporation for Small and  Medium Enterprise 5.8 Japan Finance Corpora tion for Small and Medium 
Enterprise Law  
Japan Finance Corporation for Municipal Enterprise 23.6 Japan Finance Corporation for Municipal 
Enterprise Law  
Okinawa Development Finance Corporation 1 Ok inawa Development Finance Corporation Law 
7.   Other financial institutions    
Bank of Japan 0 Article 38 of the Bank of Japan Law 
Deposit Insurance Corporation 1.7 Deposit Insurance Law 
.. Not available. 
Source: Information provided by the Japanese authorities. 
37. The Financial Services Agency (FSA), attached  to the Cabinet Office (whose head is the 
Prime Minister), is the main authority regula ting the banking sector.  The centrepiece legislation WT/TPR/S/211 Trade Policy Review 
Page 84 
 
 
governing the operation of banks is the Banking Law;  the Law stipulates that a licence is required  to 
operate a bank in Japan.  After obtaining a licence,  foreign banks may enter the Japanese market by 
establishing branches or subsidiaries.44  Under the Banking Law, foreign banks with Japanese 
branches are subject to regulations no less favour able than those applied to domestic banks.45  The 
Bank of Japan is responsible for the smooth settle ment of transactions between banks and other 
financial institutions with a view to  contributing to the maintenance of  "an orderly financial system".  
38. With a view to implementing the "Basel II requirements", a new capital adequacy regulation 
was introduced at end-March 2007 (the  regulation for the "most advan ced approaches" for calculating 
capital adequacy ratio, as defined by the Basel Co mmittee on Banking Supervision has been in force 
since the end of March 2008).46  The authorities state that there have been no other changes in the 
primary prudential requirements or foreign entry requirements.  The authorities consider that 
prudential requirements are no more onerous for nati onally licensed subsidiaries of foreign banks than 
for domestic banks.  Banks have been allowed to offer an additional range  of financial products 
through their branches since December 2007.47  In the latest Three-Year Programme for Promoting 
Regulatory Reform, the Government intends to re view the firewall regulation between banking and 
securities (Chapter III(4)(v)).   
39. Main reform in Japan's banking sector since its previous Review include the privatization of 
Japan Post and inception of the Japan Post Bank unde r the Japan Post Holdings (Chapter I(3)(ii)).  
The Government has taken further initiatives to  restructure government-affiliated financial 
intermediaries:  in accordance with the System Planning for the Reform of Policy-based Finance, 
issued on 27 June 200648, the merger of a part of Japan Bank for International Cooperation with the 
JICA is scheduled in FY2008.  The National Life Finance Corporation, Agriculture, Forestry and 
Fisheries Finance Corporation, Japan Finance Cor poration for Small and Me dium Enterprise, and a 
part of the Japan Bank for Interna tional Cooperation were reformed a nd consolidated into a new state-
owned company named Japan Fina nce Corporation on 1 October 2008.   Privatization of the Shoko 
Chukin Bank and the Development Bank of Japan star ted in October 2008;  they are to be fully 
privatized within five to seven years.  In a ddition, the Japan Finance Corporation for Municipal 
Enterprise (JFM) was abolished in October 2008;  it is to be transformed into a new financial 
organization jointly established by local governments. 
                                                      
44 Banks licensed in Japan may establish agencies, w ith ministerial authorization.  A "bank agent" 
dealing with agency and brokerage businesses such as deposit, lending, and exchange transactions also requires 
a licence.  Bank agents are required to meet various oblig ations, such as segregated custody.  The bank to which 
bank agents belong must give them business advices or take measures to secure sound and appropriate business.  
Bank agents must submit their business report to the FSA.  The Government makes their reports publicly 
available;  it also conducts on-site inspections. 
45 Liquid deposits (the payment and settlement deposits) are fully protected in Japan by its official 
deposit insurance system.  For other kinds of deposits (such as time deposits), the guaranteed sum is up to 
¥10 million per depositor per financial institution and interest on the principal.  The deposit insurance does not 
apply to branches of foreign banks established under foreign laws 
46 The capital adequacy ratios decreased from 13.1% (major banks) and 12.2% (regional banks) in 
March 2007, to 10.4% and 10.3%, respectively, in March 2008. 
47 Since December 2007, banks have been allowed to  sell all insurance products over the counter. 
48 Policy-based finance by government financial institutions involves various incentives to induce 
private-sector activities;  the main incentive is the provis ion of long-term loans at fixed and low interest rates, 
directed to, for example, low profitability and high-risk areas.  The authorities maintain that the reform of 
policy-based finance is aimed at changing financial flows from the public sector to the private sector, in accordance with the Administra tive Reform Promotion Law. Japan WT/TPR/S/211 
 Page 85 
 
 
(b) Insurance 
40. Japan's insurance market compri ses three subsectors:  non-life, life, and the "third sector", 
which includes accident and health care insurance.  The authorities maintain that there are no state-
owned insurance companies in Japan.  The Ni ppon Export and Investment Insurance is an 
independent administrative institution that provides trad e insurance;  the author ities maintain that this 
is based on the terms and conditions of the OECD Arrangement on export credits to mitigate risks not 
covered by other private insurers.  The Japan Post Insurance Co. Ltd is fully owned by the Japan Post 
Holdings, a fully state-owned holding company.   
41. Japan's insurance sector has undergone further changes since 2007;  three life-insurance and 
four non-life insurance companies have been es tablished, partly through merger deals and 
privatization.  At the end of September 2007, th e top four life insurance companies accounted for 
60.6% of total life insurance company assets;  and the top eight non-life insurance companies held 90.3% of the non-life total.   
42. The Financial Services Agency is the main aut hority regulating insurance, in accordance with 
the Insurance Business Law (IBL), the main law governing the sector.  A licence from the Prime 
Minister is required to conduct insurance business in Japan;  approval is required for new insurance 
products, for modifications to exis ting products, and for premium rates.  Life and non-life insurance 
companies may enter each other's markets only by  means of subsidiaries.  Commercial presence, 
licensed by the Prime Minister, is normally require d in order to offer insurance services in Japan 
except, inter alia,  for certain reinsurance, commercial avia tion insurance, and international marine 
hull insurance.
49  The criteria for granting licences and the requirement of solvency margins are the 
same for Japanese and foreign insurance providers.  The Ministry of Finance and the Financial 
Services Agency are responsible, inter alia , for the management of the Deposit Insurance 
Corporation, and other public insura nce schemes for deposits and investment. 
43. For the purpose of broadening sales channels  of financial products and services, the 
Government of Japan:  lifted the ban on ba nk agent business by insurance companies50;  clarified that 
insurance companies are allowed to do "business matching"51, and to introduced clients to securities 
companies52;  permitted banks to sell all insurance products (amendment of Ordinance for 
Enforcement of Insurance business Law, in De cember 2007);  and lifted the ban on insurance 
companies engaging in agent business for trust c ontracts, investment advisory contracts, and 
discretionary investment management contracts.53  The amendment to the IBL to establish a 
regulatory framework for unregulated kyosai  entered into force fully on 1 April 2008, upon the expiry 
of a two-year transitional period.54  
44. As the result of corporatization of Japan Post, the Japan Post Life Insurance began operations 
in October 2007;  all shares in the new company are held by the Japan Post Holdings, whose shares 
                                                      
49 For other insurance contracts, prior approval is required for foreign insurers without commercial 
presence in Japan. 
50 Based on an amendment to the Ordinance for Enforcement of Insurance Business Law (April 2007). 
51 Business matching in this context relates to an insurance company's provision of information 
concerning expertise of its clients to other client s, for the purpose of creating business opportunities. 
52 Based on an amendment to the "Guideline of overall supervision for insurance companies" 
(June 2007).  Viewed at:  http://www.f sa.go.jp/common/law/index.html.   
53 Based on an amendment of the Ordinance for Enforcement of Insurance Business Law 
(March 2008).  In 2006, Japan lifted the ban on agent business by insurance companies for trust contracts. 
54 The scope of the law was widened to cover busine sses that underwrite in surance for a specified 
group of persons;  registration requirements were imposed on businesses of a limited scale that underwrite small 
amounts of short-term insurance.  Wher e the authorities consider appropriate, the regulatory framework is set to 
be reviewed five years after its implementation. WT/TPR/S/211 Trade Policy Review 
Page 86 
 
 
are all held by the Government.  The Japan Post Life Insurance provides lif e insurance services under 
the same regulations applied to other private in surance companies under the Insurance Business Act, 
except that it faces various constraints, such as limited insurance amount per policy holder, limited 
product variety, and restrictions on inv estment during the transition period (2007-17) 
(Chapter I(3)(ii)).  The Japan Post Insurance is s ubject to the same corporate taxes as other insurance 
companies. 
(c) Securities 
45. The Financial Services Agency is the main aut hority regulating the securities industry.  Only 
registered joint-stock corporations may engage in  securities business in Japan.  Under the Financial 
Instruments and Exchange Act, the main office in Ja pan of a foreign securities firm must be registered 
to operate securities business in Japan.55  Investment trust companies require registration.  There are 
no foreign ownership restrictions in the securiti es subsector;  subsidiaries and branches of foreign 
securities firms are registered in the same manner as domestic securities firms.  
46. The Financial Instruments and Exchange Act (FIEA), which essentially replaced the 
Securities and Exchange Law in September 2007, governs financial and investment services in 
general and stipulates various regulations  to strengthen protection for investors.56  The aims of the 
FIEA include to:  establish rules for user protecti on and improve user convenience;  ensure fairness 
and transparency in the market;  and enhance the attractiveness of the Japanese market as an 
international financial market.  The Act clarified that foreign securities firms are allowed to conduct 
certain securities-related businesses through agencies or  intermediary of securities firms within Japan 
on condition that the foreign firms make no solicitation.   The Act also defined interests in collective 
investment schemes as securities, for which sel f-offering will be subject to regulation, and 
self-management will be subject to regulation,  except for certain products.  The Act stipulates 
regulations on advertisements;  for example, matters that are deemed to affect decisions of investors 
must be "clearly presented".  Disclosure in Eng lish is newly permitted to ease disclosure of foreign 
investment trusts.  In trading with "qualified institutional investors"57, certain disclosure obligations 
are exempted.  The Act strengthened disclosure re quirements by, for example, reviewing the tender 
offer system or the reporting system for large shareholdings and  introducing the statutory quarterly reporting system, or stipulating internal control requirements concerning financial reporting.  The 
FIEA stipulates that foreign business operators may make transactions with domestic securities 
companies without registration in Japan, as stipulated  in the Securities Exchange Law.  It has also 
strengthened penalties for fraud in di sclosure, failure to file disclosur e documents with the authorities, 
and illegal transactions.
58  Additionally, the law provides for the establishment of a self-regulatory 
system, inter alia,  within stock exchanges.59 
                                                      
55 The Financial Instruments and Exchange Act eliminated the requirement for registration of a foreign 
securities firm, specified under the Law on Foreign Se curities Firms.  Under the Law, registration was not 
accepted unless a foreign firm had been engaged in th e same type of business abroad for no less than 
three years. 
56 FSA online information.  Viewed at:  http://www .fsa.go.jp/en/policy/fiel/index.html [15.07.2008]. 
57 A "qualified institutional investor" is an investor that has expertise and experience in investment in 
securities, as defined in the implementing regulations of  the FIEA (information viewed  at:  http://www.fsa.go.jp/ 
common/law/tekikaku/index.html. [20.10.2008]). 
58 The maximum criminal penalties have been increase d, for example, from five years of imprisonment 
to ten.  Fines have also been increased, from ¥5 million to ¥10 million for individuals, and ¥500 million to ¥700 for corporations. 
59 As a result of the adoption of this law, the following laws have been abolished:  the Financial Futures 
Trading Law, the Law Concerning Foreign Securities Firm s, the Law Concerning the Regulation of Investment 
Advisory Service Relating to Securities, and the La w Concerning the Regulation of Mortgage Business. Japan WT/TPR/S/211 
 Page 87 
 
 
47. A revised Financial Instruments and Exchange  Act was promulgated in June 2008 with a 
view to implementing recommendations in the "Pla n for Strengthening the Competitiveness of Japan's 
Financial and Capital Markets", pub lished in December 2007.  The revi sed Act is intended to provide 
opportunities for investment and fund-raising by, fo r example:  the creation of markets that limit 
participants to professional investors (specified inv estors) and diversification of investment trusts, 
including introduction of certain exchange-traded fu nds (ETFs);  eliminating the ban on an individual 
assuming concurrent posts among securities firms, banks, and insurance firms, while requiring them to establish systems for managing conflicts of inte rest;  allowing banking and/or insurance groups to 
engage in spot commodity transactions, investment advisory businesses, and emission trading;  and a 
review of penalties.  
48. The entry into force of the Financial Instrume nts and Exchange Act and revised Trust Law, 
on 30 September 2007, established a legal framework  to introduce Japan Depository Receipts (JDR, 
transferable securities representing shares issued by  a foreign listed company).  Subsequently, the 
Government approved a revised re gulation regarding JDR listings on the Tokyo Stock Exchange (the 
regulation entered into force on 1 November 2007).  The authorities consider th at the JDR will enable 
certain companies to raise funds in  the Japanese market;  such compan ies include foreign corporations 
that are restricted in their home country to list their stocks directly in foreign markets, and those that 
are subject to quantitative restrictions on shareholding by foreign investors. 
49. The authorities have been reviewing disclosure requirements in Japan's securities businesses.  
For the purpose of protecting investor and public inte rests, when offering or selling abroad securities 
of a corporation that must submit financial statemen t reports, the corporation is required to submit to 
the Prime Minister, without delay, extra reports d escribing the content of the offering or selling.  
Since 1 April 2008, a quarterly reporting requirement  has been introduced for "securities of high 
liquidity" (i.e. listed securities) in addition to  existing requirements concerning the "financial 
statement reports" for listed companies, as a result of the introduction of a quarterly reporting system.  
The previous semi-annual reporting system was repl aced by the quarterly reporting system.  These 
reports must be submitted through the EDINET system  and are to be made available immediately to 
investors through the Internet.  An "internal control reports system", obliging listed companies to evaluate and audit internal cont rols regarding financial reporti ng, was introduced on 1 April 2008, 
based on the Financial Instruments and Exchange Law.  In addition, listed companies are now 
required to submit to the Prime Minister "certificati on" by management stating that the contents of 
annual and quarterly reports are fairly stated in accordance with the Fi nancial Instruments and 
Exchange Act.   
50. In 2007, the Certified Public Accountant Act was revised with the intention of, inter alia :  
enhancing quality control, governance and disclosure of  audit firms;  reinforcing the independence of 
auditors;  and strengthening oversight of audit fi rms and introducing limited liability for audit firms.
60  
Under the revised Act, foreign audit corporations operating in Japan under the Financial Instruments 
and Exchange Act are subject to a notification requi rement equivalent to dom estic audit corporations. 
51. The authorities maintain that Japan's accoun ting standards are in the process of being 
integrated further into the global accounting standard .  For example, in August 2007, the Accounting 
Standards Board of Japan (ASBJ) and the In ternational Accounting Standards Board (IASB) 
published a joint statement61 that:  by 2008, the ASBJ will diminish major differences that the 
Committee of European Securities Regulators identif ied with the International Financial Reporting 
Standards;  other current differences will be addr essed by the ASBJ by June 2011;  and for other 
                                                      
60 FSA online information (in Japanese).  Viewed at:  http://www.fsa.go.jp/common/diet/166/ 
index.html [16.07.2008]. 
61 ASBJ online information, "Tokyo Agreement".  Viewed at:  http://www.asb.or.jp/html_e/asbj/ 
pressrelease/pressrel ease_20070808_e.pdf. WT/TPR/S/211 Trade Policy Review 
Page 88 
 
 
issues (e.g. ongoing projects between the IASB a nd the Financial Accounting Standards Board), the 
ASBJ will hold discussions with the IASB.   
(iii) Telecommunications 
52. The communications sector accounted for 2.0% of Japan's GDP in 2006 (2.1% in 2005).  
With regard to cross-border trade, exports of telecom services increased from ¥50.6 billion in 2006 to 
¥65.2 billion in 2007, and imports increased from ¥85.1 billion to ¥121.0 billion.  Between 
August 2006 and February 2008, there was a net increase of 518 telecommunications carriers in the 
market, to 14,441 carriers.  However, in terms of sales and traffic, the pa rtially state-owned Nippon 
Telegraph and Telephone (NTT) Co rporation continues to dominate the telecommunications market62, 
except for traffic in long-distance telephone services.63  Local fixed-line call charges and charges for 
mobile phone services in Japan have fallen to leve ls comparable with those in other developed 
countries;  however, international comm unication charges remain relatively high.64  The higher TFP 
growth in the "information and communications" sector  may be attributed to the recent liberalization 
of Japan's telecom sector, which intensified compe tition.  Nonetheless, the JFTC maintains that the 
Japanese market for fixed and mobile telecom servi ces is characterized by "monopolistic situations" 
(oligopolistic) as defined in paragraph 7, Article 2 of the Anti-monopoly Act (AMA).65  
53. The Ministry of Internal Affairs and Communica tions (MIC) is the main regulating authority 
for telecommunications, and the Telecommunications Business Law (TBL) is the basis for the main 
regulatory framework.  Since Japan's previous Revi ew, no major amendments have been made to the 
main laws and regulations governing the sector. 
54. The Universal Service Fund System (USFS), in operation since April 200666, is aimed at 
assisting telecoms carriers that provide universal services in subscriber telephone services (subscriber 
                                                      
62 According to Article 6 of the Law Concerning Nippon Telegraph and Telephone Corporation (NTT 
Law), foreign ownership is limited so that the aggregate of the ratios of the voting rights must be less than 
one third.  According to Article 4 of the NTT Law, the Government must hold at least one third of the shares in 
the NTT Corporation.  At end-September 2007, the Government held 33.7% of  the shares of the NTT 
Corporation.  The authorities maintain that the Government holds the share for public interest and safety 
reasons. 
63 In terms of sales, at end-March 2007, the NTT East and West accounted for 91.3% of the local 
telephone service market, NTT Communications for 51.5% of the long-distance call service market, and NTT 
DoCoMo for 52.3% of the mobile phone market;  in terms of traffic, at end-March 2006, the NTT Group 
accounted for 73.9% of the local teleph one service market, and 48.3% of th e long-distance call service market, 
and NTT DoCoMo accounted for 61.1% of the mobile phone market.  In terms of subscribers, the NTT East and 
West accounted for 37.4% of the DSL servic e market at the end of September 2007.   The remainder is shared by 
the new common carriers (NCCs), those other than NTT (domestic) and KDD (international). 
64 The average call charge for a single business call (excluding VAT) was US$2.75 in Japan, US$1.13 
in the United Kingdom, US$0.27 in Germany, US$0.5 6 in the United States, and US$0.54 in France in 
August 2006.  In terms of U.S. dollars adjusted by purchasing power parity, the average call charge for a single business call (excluding VAT) in Japan was US$(PPP)2.19 , compared with an OECD average of US$(PPP)1.06 
(OECD, 2007a). 
65 The JFTC publishes a list of business sectors that are deemed to be in "monopolistic situations" 
when, inter alia,  sectors have a total domestic supply valued over ¥95 billion and the market share of the top 
company exceeds 45% (or the total market share of the top two companies exceeds 70%), based on a survey it 
carries out.  The details of the defi nition are specified in a guideline concer ning the interpretation of "specific 
business fields" as defined in Article 2 of the AMA.  Viewed at:  
http://www.jftc.go.jp/pressrelease/08.september/08092601.p df. [30.10.2008].  JFTC makes the results of the 
recent surveys availabl e online.  Viewed at:  http://www.jftc.go.j p/katudo/ruiseki/ ruis ekisyukka08.xls (in 
Japanese) [30.10.2008]. 
66 The USFS is managed by the Universal Serv ice Administrative Agency under the MIC.  
Contributions to the USFS are made by telecom carriers with revenues exceeding ¥1 billion.   Japan WT/TPR/S/211 
 Page 89 
 
 
line access, calls to remote islands under speci fic tariff conditions, emergency calls) and public 
telephone services (local calls, calls to remote is lands under specific tariff conditions, emergency 
calls).67  Telecoms service providers with an annual revenue over ¥1 b illion benefiting from 
operations involving interconnection with NTT regional companies must contribute, pro rata  to the 
number of phone lines allocated to them, to the U SFS in order to cover the costs of providing of 
universal services.  Connecting telecommunications providers totalled 53 at end-August 2007.  The 
authorities have adopted a "benchmark method" to calculate the reimbursement  for local loop access, 
which covers part of the difference between the re al cost per line and the "benchmark" calculated 
from the national average cost;  this targets high-co st areas, covering the top 4.9% of all areas.   
55. Interconnection rates for carriers installi ng Category I-designated telecommunications 
facilities are authorized following public comment procedures;  carriers installing Category I or II 
telecommunications facilities must  disclose interconnection rates.68  Interconnection rates for fixed 
networks and for mobile phone networks of NTT DoCoMo both declined slightly in FY2007.69  
Calculations of interconnection rates have been  based upon the long-run incremental cost (LRIC) 
method, forward-looking cost method70, and historical cost method.71 
56. Between November 2001 and March 2008, th e Telecommunications Business Dispute 
Settlement Commission, established under the MIC in 2001, settled 57 cases.  It settled 14 cases in 
FY2006 and 3 in FY2007, mainly on interconnection issues.72  
57. On 23 October 2007, the authorities revised the New Competition Promotion Programme 
2010, under which the MIC is undertaking various pr ogrammes including:  adoption of the "Guideline 
for the Management of the Competition Safeguard  System" in response to the New Competition 
Promotion Programme 2010, which, inter alia,  stipulates the operation of the competition safeguard 
system from FY 2007.  The programme calls for regular review of the state of competition, 
particularly in the areas of designated telecommunication facilities and the NTT groups.73 
58. In FY2008, the Government reviewed the use of tax measures to promote investment aimed at 
raising the level of security in informati on systems and strengthening the international 
                                                      
67 The criteria for eligibility include provision of universal service to all households in the area where 
the designated carriers are li censed to provide service. 
68 These facilities concern certain facilities held by dominant carriers (i.e. carriers whose subscriber 
lines account for 50% or more of  the total number of subscr iber lines), as designated by the Minister of Internal 
Affairs and Communications.  Category I designated facilities concern fixed line telecom services and Category II designated facilities concern mobile teleco m services.  In addition, mobile carriers with 
"comparatively large amounts of mobile network facilities"  (i.e. carriers whose subscr iber lines acc ount for 25% 
or more of the total number of subscriber lines in the domestic market) must notify and publicize the 
interconnection tariff;  the companies with such f acilities are currently NTT DoCoMo, KDDI, and Okinawa 
Cellular Telephone Company. 
69 Fixed interconnection rates for three-minute calls in Japan were ¥6.41 for tandem switch 
interconnection in FY2008 (compared with ¥6.55 in FY2007) and ¥4.53 for local switch interconnection 
(¥4.69 in FY2007);  respective averages for FY2002 to 2006 were ¥6.12 for tandem switch interconnection and 
¥4.96 for local switch interconnection.  The interconnection rate for mobile phone networks of NTT DoCoMo 
was ¥0.18 per second in April 2007, compared with ¥0.1 88 per second in April 2005.  The rates are applicable 
when the point of interface and receiver ar e in the same NTT DoCoMo service area. 
70 The "forward-looking" cost calculation is based on the predicted demand and cost. 
71 The previous "posterior accounting system" has been eliminated since 1 April 2008.   
72 Telecommunications Business Dispute Settlement Commission online information (in Japanese).  
Viewed at:  http://www.soumu.go.jp/ hunso/case/number.html [23.06.2008]. 
73 The authorities have undertaken analyses and evaluations of competition in the telecommunication 
market since FY2003;  they intend to make use of these when reviewing the list of designated telecommunication facilities and the competition situation su rrounding the NTT groups on a regular basis.   WT/TPR/S/211 Trade Policy Review 
Page 90 
 
 
competitiveness of Japanese companie s.  The measure involves a tax credit or a special depreciation 
allowance for acquisition/lease (or production) of specific IT facilities between 1 April 2006 and 
31 March 2010.    
(iv) Transport 
(a) Maritime transport 
59. The volume of Japan's seaborne cargo increased by 0.9% in 2006,  accounting for 13.7% of 
the world's total;  the value of this cargo increased by 17.8%.74  Almost all of Japan's internationally 
traded goods are shipped by maritime transport.   
60. The Maritime Bureau and the Ports and Ha rbour Bureau of the Ministry of Land, 
Infrastructure, Transport and Tourism  (MLIT) are the main authorities regulating Japan's maritime transport. The principal legislation governing the sector includes the Ship Law, the Maritime 
Transportation Law, and the Coastal Shipping Law.   Cabotage restrictions generally allow only 
Japanese-flag carriers to carry cargo and passenge rs between Japanese ports;  Japan accords limited 
access to maritime cabotage service fo r ships flying certain flags, on a reciprocal basis, pursuant to 
treaties of friendship, commerce,  and navigation.  The authorities maintain that there are no 
discriminatory measures affecting foreign participa tion in international maritime services and that 
Japan's bilateral agreements on passenger or cargo shi pping provide national treatment to partners on 
a reciprocal basis.   
61. Entry into port transport in all ports currently  requires permission, and port transport charges 
are subject to prior notification requirements.  Si mplified port-related procedures are available, based 
on the Convention on Facilitation of International Maritime Traffic, which Japan concluded in 
November 2005, and online application systems under UN/EDIFACT (Electronic Data Interchange 
for Administration, Commerce and Transport) and NACCS (Nippon Automated Cargo Clearance 
System).
75  Under the latest Three-Year Progra mme for Promoting Regulatory Reform, the 
Government intends to reduce lead time and charges at ports by adopting concrete measures to realize 
cost-reduction targets under the Super-Hub Port Project.76  
62. In order to mitigate the decrease in the numbe r of Japanese-flag carriers, the Government 
provides support for Japanese-flag carrie rs (the International Ship Regime).77  The Government has 
been providing such support measures, including tax breaks in respect of ship registration tax and 
local property tax, to increase th e competitiveness of Japanese vessels vis-à-vis  those of other 
countries that provide preferential tax treatment for their registered ships;  the current preferential 
registration tax rate under the International Ship Re gime is 0.25% (compared with 0.4% charged to 
                                                      
74 MLIT online information (in Japanese).  Viewed  at:  http://www.mlit.go.jp/hakusyo/kaijireport/ 
kairepo07/kairepo07_2.pdf. 
75 Japan is implementing an experimental programme that aims to reduce port-related costs by 30% and 
lead time to one day.  The programme expands terminal systems and increases the use of IT.  Hanshin, Keihin, 
and Isewan ports were selected in July 2004 as th e super core ports under the programme.  The authorities 
estimate that, as of 2006, port-related costs were reduced by 13% compared with those in 2002, and lead time 
was about 1.1 days on weekdays compared with about 2.1 days in 2002.   
76 The Project aims to reduce port-r elated charges by about 30%, to the level of Busan and Kaohsiung 
ports by FY2010;  it also aims to reduce lead time (i.e. time between the arrival of ships and release of 
shipments from a container terminal) to 24 hours or less, by FY2010.   
77 To qualify for a national flag, registration under the Ship Law is required.  The vessel must be 
owned, inter alia,  by:  the Government;  a Japanese national;  a company established under Japanese law (whose 
representatives are all Japanese nationals, and Japanese nationals account for at least two thirds of its board 
members);  or juridical persons established under Japanese law (other than a company established under Japanese law) all of whose representatives are Japanese nationals. Japan WT/TPR/S/211 
 Page 91 
 
 
ordinary vessels).78  According to the authorities, no exclusive rights or subsidies are given to 
Japanese flag-carriers;  there are no discriminatory  measures preventing foreign participation in the 
supply of auxiliary services, except for Modes 1 and 3 of maritime freight forwarding services. 
63. The amended Marine Transportation Law entere d into force on 17 July 2008, introducing, 
inter alia,  "tonnage tax" in international maritime tran sport.  Under the revised law, a shipping 
company operating vessels in international trade can make a plan for ensuring "stable" international 
maritime transport and obtain approval of the Minister of Land, Infrastructure, Transport and 
Tourism.  The new tax is applied to a company th at has obtained approval to calculate its corporate 
tax upon the assumed profit per net tonnage of vessels carrying the Japanese flag.  The tonnage tax is 
intended, inter alia , to bring the tax regime for maritime trans port into line with that of other countries 
that have already introduced sim ilar tax measures;  the tonnage tax is to enable Japanese shipping 
companies to compete with foreig n companies on a level playing field in the international shipping 
market.   
64. Agreements between domestic a nd foreign operators on freight rates or other conditions of 
transport (e.g. routes) are exempt from the Anti-monopoly Act, provided they do not involve "unfair transactions" or "adversely affect competition";  agreements are exempt from the Anti-monopoly Act 
only if they are filed and allowed to become eff ective by the Minister of Land, Infrastructure and 
Transport and Tourism.
79  Between February 2007 and A ugust 2008, seven agreements were 
concluded.  The Minister may order operators to m odify or cancel agreements if they are deemed to 
harm consumer interests.  In addition, the MLIT must notify the Japan Fair Trade Commission (JFTC) 
of the agreements filed with it;  if the JFTC finds  that the agreements do not comply with criteria set 
forth in the Marine Transportation Law, it may request  the MLIT to order the operators to modify or 
cancel the agreements.  
65. In Japan's revised services offer, maritime ca botage services, international freight forwarding, 
and international shipping services are subject to MFN exemption.80   
(b) Air transport 
66. In FY2006, Japanese airlines accounted for 33. 7% of Japan's scheduled international 
passenger market (37.1% in FY200 2) and 39.1% of its international freight market (42.7% in 
FY2002), in terms of passenger numbers and tonnes of freight.  Exports of air transport services 
increased from ¥1.16 trillion in 2006 to ¥1.19 trillion in  2007;  imports remained largely unchanged at 
about ¥1.67 trillion.81  There are no state-owned enterprises among Japanese providers of air transport 
services. 
67. Japan's market is regulated mainly by th e Civil Aeronautics Law (CAL) and numerous 
bilateral agreements.  The Civil Aviation Bureau of the MLIT administers airline entry, pricing, and 
routes, as well as safety regulations.  As in most ot her countries, the provision of domestic air services 
is restricted to Japanese carriers (cabotage restrictio ns).  An ownership restriction prohibits foreign 
investors from holding more than one third of voting rights in domestic airlines.   
                                                      
78 The property tax on ships subject to the International Ship Regime is equal to two fifths of the tax 
charged to ordinary vessels. 
79 In January 2005, the Japan Fair Trade Commission (JFTC) began examining the status of 
competition in the international shipping market, and in December 2006, it published its position that the 
rationale for maintaining the AMA exemption was no longer valid.  The JFTC has requested the MLIT to review the AMA exemption for shipping cartels.   
80 WTO document TN/S/O/JPN/Rev.1, 24 June 2005. 
81 In 2006, Japan's international airports (Narita, Kansai, and Chubu) carried 59.7 million passengers 
and 3.3 million tonnes of freight.    WT/TPR/S/211 Trade Policy Review 
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68. Since its previous Trade Policy Review, Japan has introduced various reform measures.  It 
has been promoting liberalization policies as describ ed in the "Asian Gateway Initiative" adopted by 
the Government in May 2007.  These policies relate to reciprocal removal of restrictions on entry 
points, routes, and frequency of flights related to the third and the fourth freedoms of traffic (i.e. 
freedom to disembark traffic in an other country that was embarked in the home country, and vice 
versa). 
69. All air fares are subject to approval.  Approval from the Government is required with regard 
to "inclusive tour" (IT) fares applied to air tickets so ld by airlines to travel agents;  the fare must not 
be higher than the IT fares set by IATA.82  On 1 April 2008, Japan removed restrictions on the 
minimum floor for PEX (special excursion) fares app lied to air tickets sold directly by airlines to 
individual customers.   
70. Japan has signed bilateral air services agreements with 56 trading partners.83  These 
agreements concern traffic rights, as well as code  sharing;  the Japanese Anti-monopoly Act does not 
apply to these international agreements.84  Agreements between airline companies for improving user 
convenience on international routes from/to Japan are exempt from the Anti-monopoly Act, provided 
they do not involve "unfair transactions" or adversely affect competition.85   
71. Since 2007, landing fees for Narita Internationa l Airport have remained unchanged.  Landing 
fees at Japan's three major international airports, Narita, Kansai, and Chubu, are higher than those at 
major airports in other countries.86  The authorities do not consider user fees at these Japanese 
airports, including facility charges, to be high.87   
72. The authorities state that there have been no ch anges in the system of slot allocation for 
international civil aviation during the review period;   the allocation system is based upon guidelines 
issued by the IATA.  A newly established organiza tion coordinates slot allocation at Narita and 
Kansai international airports.88  The allocation of slots takes place twice annually. 
                                                      
82 If IATA IT fares are not established, approval is granted only if the fares are not higher than IATA 
PEX fares.  These regulations are based on the MLIT's instructions, dated 28 January 2008 (Ref. Koku-ku-koku 
2803-2, koko-ku-ji 718). 
83 These are (unchanged sin ce 2007):  Australia;  Austria;  Bahrain;  Bangladesh;  Belgium;  Brazil;  
Brunei;  Canada;  China;  Denmark;  Egypt;  Ethiopia;  Fiji;  Finland;  France;  Germany;  Greece;  Hong Kong, 
China;  Hungary;  India;  Indonesia;  Iraq;  Israel;  Italy;  Jordan;  Kuwait;  Lebanon;  Malaysia;  Mexico;  
Mongolia;  Myanmar;  Nepal;  the Netherlands;  New Zeal and;  Norway;  Oman;  Pakistan;  Papua New Guinea;  
the Philippines;  Poland;  Qatar;  the Republic of Korea;  the Russian Federation;  Singapore;  South Africa;  
Spain;  Sri Lanka;  Sweden;  Switzerland;  Thailand;  Turkey;  the United Arab Emirates; the United States;  the 
United Kingdom;  Uzbekistan;  and Viet Nam. 
84 On 25 March 2008, the Government decided that the MLIT would start reviewing the AMA 
exemption of agreements by air car riers in international aviation. 
85 Article 110 of the Civil Aeronautics Law. 
86 Data provided by the authorities indicate that, in October 2008, the landing charge for a Boeing 
747-400 aircraft was about ¥770,000 at Narita;  ¥826,000 at Kansai;  ¥656,000 at Chubu;  ¥365,000 at Chep Lap Kok (Hong Kong, China);  ¥512,000 at JFK (New York);  ¥392,000 at Charles de Gaulle (Paris);  and ¥254,000 
at Singapore airports. 
87 Data provided by the authorities indicate that, in October 2008, fees paid by a passenger (e.g. facility 
charges, airport tax, and security char ges) were about ¥5,130 at Narita;  ¥5,840 at Kansai;  ¥5,260 at Chubu;  
¥3,790 at Chep Lap Kok;  ¥7,800 at JFK;  ¥7,690 at Charles de Gaulle;  and ¥2,500 at Singapore airports. 
88 The NRT/KIX Schedule Coordination was established and appointed as the successor to the previous 
coordinator (Japanese airlines) on 1 January 2008  with a view to reinforcing impartiality.   Japan WT/TPR/S/211 
 Page 93 
 
 
(c) Railways and highways 
73. The seven Japan Railway (JR) companies own and operate about 60% of Japan's railway 
network (based on operating kilometres)89;  the JR companies carry about 40% of total railway 
passengers in Japan.  According to the Act on Passenger Railway Companies and Japan Freight 
Railway Company, the Government oversees the management of JR Hokkaido, JR Shikoku, 
JR Kyushu, and JR Freight.90  JR companies are not exempt from the Anti-monopoly Act.  The setting 
and revision of ceilings for fares and transport rates by JR companies are subject to approval, as in the 
case of private railway companies in Japan.  
74. Expressways in Japan were constructed and maintained by six companies, in which the 
Government holds shares.91  The six expressway companies are not exempt from the Anti-monopoly 
Act;  toll rates are subject to approval.   
(v) Professional services  
75. In addition to obtaining relevant licences, membership of a professional association is 
compulsory for:  certified public accountants, administ rative scriveners, lawyers,  judicial scriveners, 
land and house surveyors, licensed tax accountants, pub lic consultants on social and labour insurance, 
and patent attorneys.  No professional service is exempt from the Anti-monopoly Act;  nonetheless, questions may arise concerning the relationship betw een the Act and the activities of associations of 
qualified professionals, which may re quire mandatory membership, and compliance with their rules.
92   
(a) Legal services 
76. There have been no changes regarding market ac cess for foreign patent lawyers in Japan since 
its previous Trade Policy Review;  regardless of nationality, a person must be qualified as a patent 
attorney ( benrishi ) to practice Japanese law related to industrial property.93  Foreign patent attorneys 
account for 0.25% of Japan's patent attorneys (March 2008). 
77. The Ministry of Justice is the regulatory author ity for legal services in Japan;  there is also 
self-regulation of legal services by the Japan Federation of Bar Associations, as prescribed in the Practising Attorney Law.  Foreign participation in the sector is regulated by this law, and the Act on 
Special Measures concerning the Handling of Legal Se rvices by Foreign Lawyers.  Under the law, a 
                                                     
 
89 The Japan Railways (JR) groups, which succeeded the Japanese National Railways, were established 
in 1987 as private corporations fully owned by the Japan National Railways.  The JR is made up of six regional 
passenger railway companies (JR Hokkaido, JR East, JR Central, JR West, JR Shikoku, and JR Kyushu) and 
one nationwide freight railway company (JR Freight).  JR East, JR Central, and JR West were fully privatized 
on 1 December 2001. 
90 The Government does not hold dir ect shares in these four JR compan ies.  The shares are fully held 
by the Japan Railway Construction, Transport and Technology Agency (JRTT), a government agency. 
91 The six companies are:  East Nippon Expressway Companies Limited, Central Nippon Expressway 
Company Limited, West Nippon Expressway Company Limited, Metropolitan Expressway Company Limited, 
Hanshin Expressway Company Limited, and Honshu-Shikoku Bridge Expressway Company Limited.  There has been no change in the percenta ges of shares of these companies held by the Government since Japan's 
previous Trade Policy Review. 
92 With a view to responding to such questions, the JFTC published "Principles concerning the 
activities of associations of qualified professionals under the Anti-monopoly Act" in October 2001.  Viewed at:  
http://www.jftc.go.jp/e-page/legisla tion/ama/qualify.pdf [26.06.2008]. 
93 A Benrishi  is legally authorized to practice Japanese industrial property law and to act on behalf of 
clients of any nationality in dealing with matters related to the procedures required by the Japan Patent Office.  
The qualification for benrishi can be obtained by passing the patent attorney examination, regardless of the 
applicant's nationality or educational background. WT/TPR/S/211 Trade Policy Review 
Page 94 
 
 
"registered foreign lawyer" (a foreign lawyer qualified under Japanese law) can employ a Bengoshi  (a 
lawyer qualified under Japanese law), and a joint enterprise involving the two is allowed.  There were 
587 "registered foreign lawyers" at the end of 2007 (551 at end 2006). 
(b) Accounting services 
78. As a result of amendments to the Certified P ublic Accountant (CPA) Act in 2007, eligibility  
qualifications for partners of a udit firms have been extended to non-CPA qualification holders under 
certain conditions.  While accountants must pass the national examination to qualify as a certified 
public accountant in Japan, a fore ign accountant not qualified as a CPA in Japan may provide auditing 
services specified in Article 2-2 of the CPA Act under certain conditions.  
(vi) Other services 
79. Foreign nationals who have passed foreign ex aminations or obtained qualifications on 
information processing skills, which are mutually r ecognized by Japanese IT-related examinations or 
qualifications and are designated by the Minister of Justice, may enter Japan under the residence 
status of "engineer".94  With a view to facilitating the movement  of natural persons, Japan has a list of 
eight trading partners (China, Chinese Taipei, th e Republic of Korea, Malaysia, Myanmar, the 
Philippines, Singapore, and Viet Nam) whose examin ations or qualifications of IT engineers are 
recognized by the Japanese Immigration as eligibilit y criteria to obtain the residence status of 
"engineer". 
80. Since Japan's previous Trade Policy Review, no substantial trade-related liberalization 
measures have been adopted in the areas of education and medical services. 
  
                                                     
 
94 Otherwise, to obtain the status of "engineer" in relation to landing permission, candidates must have 
graduated or completed a course at a collage or acquired equivalent education, or had at least ten years of work 
experience. Japan WT/TPR/S/211 
 Page 95 
 
 
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