WT/TPR/S/175/Rev.1 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 energy and services.   
2. In agriculture, Japan is planning to move further away from price support towards income 
support.  However, the sector remains relatively protected from foreign competition.  The average 
applied MFN tariff for agriculture (WTO definition)  increased from 17.7% in FY 2004 to 18.8% in 
FY 2006 reflecting increases in ad valorem  equivalents of non- ad valorem  duties, none of whose rates 
were increased.  In 2004, Japan's total transfers to  agriculture amounted to 1.3% of GDP, which was 
almost equal to agriculture’s shar e in GDP (1.4%).  As a consequen ce, 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 this assistan ce, labour productivity has remained substantially 
lower than the national average.  Food self-suffici ency has been around 40% on a calories-basis since 
FY 1998;  Japan is one of the world’s largest importers of food. 
3. Japan’s trade policies related to manufactur ing have been largely unchanged since its 
previous Review;  however, Japan has placed more emphasis on the promotion of new industries and development of relatively backward regions of the country.  Japanese manufacturing has, by and 
large, been much more exposed to international competition than agriculture and certain services.  
Tariffs on industrial products are usually low (a veraging 3.6% in FY 2006), non-tariff barriers (e.g. 
import licensing requirements) are few, and the sector receives relatively little financial support from the Government.  Nonetheless, manufacturing has been the driving force behind Japan’s rapid 
development during the past 60 years.  The sector 's contribution to GDP increased slightly from 
20.9% in 2003 to 21.0% in 2004 (the latest year for which data are available);  the sector employed 
16.9% of Japan's total labour force in 2005 down from 17.4% in 2004.   
4. One of main objectives of Japan's energy policy h as been a stable energy supply reflecting the 
fact that about 82% of its primary energy was imported in 2004 (most rece nt data available).  
Nonetheless, electricity and gas prices in Japan re main relatively high by international standards.  
Since its previous Review, Japan has further liberaliz ed its electricity sector to promote competition.  
5. Regulatory reform in services has continued.  This is an important sector not just for 
consumers, but for all kinds of businesses for which services are essential inputs and therefore a significant determinant of their international comp etitiveness.  Reforms have progressed particularly 
in financial services, which are important for cha nnelling savings into profitable investments across 
various sectors of the economy.  Besides a substa ntial reduction of non-performing loans (NPLs) and 
restructuring of government-affiliated institutions, the Government has placed emphasis on improved 
transparency in the financial system.  Laws on th e privatization of Japan Post were adopted in 
October 2005.  The Government's policy framework  on telecommunications has remained largely 
unchanged since the previous Review .  In transport, entry regulations in port services have been 
relaxed, and four public corpora tions in highway services were privatized in October 2005.  In 
professional services, major reforms included enab ling foreign lawyers qualified under Japanese law 
to employ a Japanese lawyer.  
(2) A
GRICULTURE  
(i) Overview 
6. In the revised Basic Plan for Food, Agriculture and Rural Ar eas, the Government announced 
in May 2005 its intention to shift away from pri ce support to income support;  the Government aims Japan WT/TPR/S/175/Rev.1 
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to target "principal farmers" by facilitating the use of the existing "certified farmers" system, under 
which they are eligible for certain  measures, such as low-interest lo ans and accelerated depreciation.  
The new direct payment system, covering, inter alia,  rice, wheat, soy, and beet, is to be implemented 
from April 2007.  Agriculture has continued to r eceive substantial governme nt support;  provisional 
estimates by the OECD indicate that total transfers (total support estimate) to agriculture amounted to 
1.3% of GDP in 2004, a slight decline from 1.4% in 2002.1  The share of agriculture in GDP was 
1.4% in 2004;  agriculture (including forestry and fisheries) accounted for 5.3% of total employment 
in 2004 (5.4% in 2003).  This indicates agriculture’s very low labour productivity compared with the 
national average, perhaps owing to lower efficiency  against the background of relatively high border 
protection and support compared with other sectors.  In 2005, agricultural products amounted to about 
1.0% of the Japan’s total merchandise exports (large ly the same level as in 2004), and 12.8% of total 
imports (compared with 14.4% in 2004).   
7. A survey conducted by the MAFF indicates that average retail food prices in Tokyo remained 
higher than in other major cities of the world in November 2004.2  According to the authorities, the 
persistent high food prices in yen terms reflect high distribution costs, including transportation, costs 
associated with responding to consumers' buying be haviour, such as a "more-frequent, less-quantity" 
delivery system, and high land, personnel, and energy costs;  high tariffs also undoubtedly contribute 
to high food prices.  Japan's food self-sufficiency ratio on a calories basis was 40% in 2002;  despite 
the Government's objective of raising it to 45%, it has remained almost unchanged since FY 1998. 
8. The Basic Law on Food, Agriculture and Rural Are as, which entered into force in July 1999, 
continues to provide the framework and policy direc tion for agriculture in Japan;  the new Basic Plan 
for Food, Agriculture, and Rural Areas, adopted in March 2005, implements the Law.  The Plan, inter 
alia, aims to achieve a higher food self-sufficiency ra tio, ensure food safety, facilitate corporate entry 
into agriculture nationwide, target "principal farm ers" as the main beneficiaries of the Government's 
support, and shift away from price support to income support.3  The Plan also aims to develop 
collectivized farm management and consolidate fa rmland use.  Japan has notified the Committee on 
Agriculture of its direct payment programme for the fiscal years 2001 and 2002.4 
(ii) Policy developments  
9. The average applied MFN tariff for agriculture (WTO definition) is 18.8% (FY 2006)5, 
compared with an overall average of 6.5% (Chapter III(2)(ii));  17.4% of duties applied to agricultural 
goods are non- ad valorem .  Many agricultural subsectors, such as oil seeds, dairy products, sugar and 
sugar products, and products of the milling industry, benefit from relativ ely high levels of MFN tariff 
protection (Table IV.1);  several of these 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 subsectors may be underestimated, owing to th e lack of estimates for AVEs of some specific 
duties (which tend to conceal relatively high tariffs).   In the interests of transparency, the Japanese 
                                                      
1 Total support estimates are defined as the annual monetary value of all gross transfers from taxpayers 
and consumers arising from policy measures that support agriculture, net of the asso ciated budgetary receipts, 
regardless of their objectives and impact on farm production and income, or consumption of farm products.  It 
should be noted that total transfers are measured on a gross basis, while GDP is on a value-added basis. 
2 The survey involves some 29 common food items such as meat, milk, eggs and vegetables, and 
13 Japanese foods such as rice and soy sauce.  The pri ces for the common food items were higher in Tokyo than 
in the majority of other cities:  Geneva=129, Tokyo=100, Paris=93, New York=87, London=78 and 
Singapore=58.  Viewed at:  http://www.maff.go.jp/mud/601.html. 
3 The previous Plan was adopted in March 2000.  The new Plan contains a guideline to achieve a food 
self-sufficiency ratio (calorie based) of 45% by FY 2015. 
4 WTO document G/AG/N/JPN/108, 11 February 2005. 
 5 The average applied MFN tariff for agricu lture (HS 1-24) in FY 2006 is 17.1%. WT/TPR/S/175/Rev.1 Trade Policy Review 
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authorities have provided the Secretariat with AVE es timates, where available.  The simple average of 
non-ad valorem  tariff rates for agriculture (WTO defin ition) for which AVEs were available was 
80.4%, roughly eight times th e simple average of purely ad valorem  tariff rates for agriculture 
(9.7%).6  Non- ad valorem  tariffs for agriculture (WTO definition) for which AVEs were not available 
concerned 100 tariff lines at HS 9-digit level;  th ey included:  milk and dairy products, meat and 
offals, rice and cereals, fruit juices, and prepared food s.  For example, the rate payable on imports of 
beans is among the highest rates in  Japan's customs tariff with an ad valorem  equivalent of 810.7%. 
Table IV.1 
Applied MFN tariff protection in agriculture, FY 2006 
(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 28.9 3.8 11.3 
02 Meat and edible meat offal 10.6 50 17.0 19.6 
03 Fish and crustaceans, molluscs and othe r aquatic invertebra tes 5.5 15 0.0 0.0 
04 Dairy produce;  birds' eggs;  na tural honey;  edible products of 
animal origin, not elsewhere specified or included 77.4 544 87.5 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 
07 Edible vegetables and certain roots and tubers 28.2 810.7 5.4 8.0 
08 Edible fruit and nuts;  peel of citrus fruit;  mel ons 7.8 24 6.4 0.0 
09 Coffee, tea, maté and spices 3.5 17 0.0 0.0 
10 Cereals 36.7 384.1 24.4 31.7 
11 Products of the milling industry;  malt;  starches;  inulin;  wheat 
gluten 36.0 441.4 50.6 38 
12 Oil seeds and oleaginous fruits;  miscellaneous grains, seeds and 
fruit;  industrial or medicina l plants;  straw and fodder 15.9 902.3 4.2 5.6 
13 Lac;  gums, resins and other vege table saps and extracts 3.1 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 5.5 29.8 2.4 42.4 
16 Preparations of meat, of fish or  of crustaceans, molluscs or other  
aquatic invertebrates 13.4 50 31.0 3.0 
17 Sugars and sugar confec tionery 43.1 245.5 68.1 59.6 
18 Cocoa and cocoa preparations 20.2 59.3 63.0 7.4 
19 Preparations of cereals, flour, starch or milk;  pastrycooks' products 23.4 124.9 57.6 26.5 
20 Preparations of vegetables, fruit, nuts or other parts of plants 16.9 46.8 33.7 6.7 
21 Miscellaneous edible preparations 23.9 308.8 49.5 16.1 
22 Beverages, spirits, and vinegar 14.6 84.9 25.9 35.2 
23 Residues and waste from the food industries;   prepared animal fodder 1.3 22.2 2.4 9.5 
24 Tobacco and manufactured tob acco substitutes 5.1 29.8 9.1 0.0 
1-24 Agriculture 17.1 902.3 24.2 15.4 
a Three times the simple average of overall applied MFN rates. 
Note: The simple average applied MFN tariff rate in FY 2006 is calculated by using 2005 AVEs, as available, provided by the Jap anese 
authorities.  When the AVEs are unavailable, the ad valorem  part is used for compound and alternate rates. 
Source:  WTO calculations, based on data provided by the Japanese authorities.  
                                                      
6 The simple average of all non- ad valorem  tariff rates for which AVEs were available was 41.8%, 
roughly nine and a half times the simple average of purely ad valorem  tariff rates, which was 4.4%.  Non- ad 
valorem  tariffs for which AVEs were not available concer ned 136 tariff lines at the HS 9-digit level. Japan WT/TPR/S/175/Rev.1 
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10. Tariff rate quotas (TRQs) apply mainly to agri cultural products, including rice, milk and dairy 
products (whey, butter), prepared edible fat, drie d leguminous vegetables, wh eat, barley, ground nuts, 
tubers of konnyaku, starches, a nd silk-worm cocoons and raw silk.7  TRQs cover 1.7% of all tariff 
lines.  The extent to which tariff quotas are filled vari es by product (Table AIV.1).  Products with low 
quota-fill rates (lower than 50%) are skimmed milk pow der, 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 sin ce 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 many do cuments, such as accounts and business plans.  In-
quota imports of rice, wheat and barley, certain mi lk products, and raw silk are handled mainly by 
state-trading entities; however, certain amounts of these  products, except for raw silk, may be imported by private entities (for example, th e simultaneous buy-sell system for rice).
8   
11. Rice as well as wheat and barley remain the most heavily supported commodities;  although 
rice apparently is the most important commodity, the amount of the subsidies provided for rice was 
not available to the Secretariat.  Total subsidies provided for wheat, barley, and rice amounted to ¥183 billion in FY 2001 and ¥182 bi llion in FY 2002 (the latest year  for which data are available).
9  
Imports of rice have been subject to TRQs since 1 April 1999.  The applied MFN out-of quota rate on 
rice imports in FY 2006 was set at ¥341 per kg (or 113%-384% in terms of ad valorem  equivalent);  
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 678,885 tonnes in FY 2004 (compa red with 673,734 tonnes in FY 2003) and out-of-
quota imports were 112 tonnes (down from 217 tonnes in FY 2003).10  The MAFF administers 
imports and exports of rice (non-commercial) unde r the Law for Stabilization of Supply-Demand and 
Price of Staple Food.  As part of Japan’s mi nimum access commitments, a certain amount of rice can 
be purchased and marketed directly under the simu ltaneous buy-and-sell (SBS) system;  a total of 
93,988 tonnes were imported under the SBS in FY 2004, and 100,000 tonnes in FY 2003.  Rice is 
exported as food aid;  almost half of Japan's f ood aid provided to least  developed and net food-
importing developing countries was rice in 2002.11  Under Japan's minimum access commitment, rice 
imports amounted to about 7.2 million tonnes be tween April 1995 and March 2006;  about 28% of 
this imported rice has been exported as food aid.   
12. In addition, the Government sets a production target for certain agricultural commodities. 
Since FY 2004, it has set a volume cap for rice prod uction;  previous met hods controlled production 
area.12  The production cap was 8.57 million tonnes in rice year 2004 (November-October), 
                                                      
7 WTO document G/AG/N/JPN/114, 12 December 2005. 
8 Rice, wheat, and barley are imported by the Ministry of Agriculture, Forestry, and Fisheries;  and 
milk products and raw silk by the Agriculture and Livestock Industries Corporation (WTO document 
G/STR/N/10/JPN, 7 September 2004). 
9  WTO document G/SCM/N/123/JPN, 7 July 2005.  The Government purchases rice for food security 
purposes (public stockholding) (WTO document G/SCM/N/123/JPN, 7 July 2005).  Other agricultural products 
receiving subsidies are soybean, sugar,  milk and dairy products, bovine meat and pigmeat, eggs, vegetables, 
fruits, and cocoons. 
10 Out-of quota imports of rice in FY 2005 were 112 tonnes.  
11 WTO document G/AG/N/JPN/107, 18 January 2005.  In the period July 2002-June 2003, the 
Government provided US$91.3 million for the purchase of grains as food aid to LDCs and net-food importing 
developing countries. 
12 The policy reform in the rice s ector, introduced with the entry into  force in 2004 of the amendments 
to the Law for Stabilization of Supply -Demand and Price for Staple Food an d the review of the Principle and 
Outline of Rice Policy Reform, included changes in the supply and demand system:  domestic distribution of rice was liberalized, and Government purchase and selling prices for rice are determined by tender. WT/TPR/S/175/Rev.1 Trade Policy Review 
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8.51 million tonnes in rice year 2 005, and 8.25 million tonnes in rice year 2006.  The budget for these 
measures under the "production adjustment programme  in paddy fields", amounted to ¥158.8 billion 
in FY 2004, ¥168.4 billion in FY 2005, and ¥165 .7 billion in FY 2006.  In 2004, a ceiling of 
2.1 million tonnes was set for production of milk to be used specifically for manufacturing butter and 
skim milk powder  under the direct payments by the Gove rnment.  The Japan Dairy Council (a 
producer group) has been voluntarily restricting th e overall production of raw milk since 1979, with a 
production cap of 8.3 million tonnes in 2004. 
13. The revised Agricultural Management Rein forcement Law entered into force on 
1 September 2005 to allow, inter alia,  "general corporations" (including stock companies and non-
profit organizations) to lease farmland, effectiv ely expanding nationwide the relevant measures 
adopted under the Special Zones for Structural Reform.13 
14. The Government promotes competition among agri cultural cooperatives.  Measures adopted 
in this context include, inter alia :  provision of guidance to cooperatives to realize their  mergers  
efficiently14;  and the revision of  the Agricultural Cooperative Law, in April 2005, to improve mutual 
insurance business for agricultural c ooperatives, to meet the requirements of the Insurance Business 
Law.  Other recent developments in the agricu lture sector include:  the introduction of a beef 
traceability system in 200415;  introduction of a risk analysis method into food safety;  and 
reorganization of food safety institutions.16   
15. Special safeguard actions (SSGs) were taken in fiscal years 2004 to 2006 for a number of 
products, including starches, rice flour, wheat or meslin flour, inulin, beans, milk, certain food 
preparations, peas, and yogurt (Table IV.2).  Bo th price-based and volume-based SSGs have been 
imposed;  they are applicable only to out-of-quota  imports.  Japan has also made use of emergency 
safeguard measures (tariff and price increases) in  accordance with the Temporary Customs Tariff 
Measures Law.17  The Law provides for special emergency customs duty and emergency measures on 
beef and pork in case of a surge of imports of th e products concerned.  In recent years, emergency 
tariff measures were triggered in FY 2003 on beef  and FY 2001 to FY 2004 on pork.  The measures 
allow the increase of customs du ties to WTO bound level (50% in case of beef) from the level 
voluntarily reduced by Japan beyond its commitment (38.5% on beef). 
                                                      
13 Under the Law on Special Zones fo r Structural Reform, “general co rporations” are allowed to lease 
farmland in designated zones.  As of March 2005, there were 71 such zones operating in agriculture.  Before 
1 September 2005, only "agricultural production 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 ma inly in agricultural activities and with more than 50% 
of the sales from agriculture;  three-quarters of the memb ers had to be farmers;  and the majority of directors 
had to be full-time farmers. 
14 According to the authorities, decisions to merge cooperatives are voluntary.  
15 According to the Law for Special  Measures Concerning the Management and Relay of Information 
for Individual Identification of Cattle, an individual ID number must be displayed on all beef raised and retailed 
domestically so that the customers are able to track the breed and the history of breeding.   
16 A Food Safety Commission, responsible for risk assessment, was established within the Cabinet 
Office, and the MAFF was reorganized to be responsible for risk management.   
17 The 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 FY 2006, 483 lines (including in-quota rates) at the HS 9-digit level are subject to temporary rates. Japan WT/TPR/S/175/Rev.1 
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Table IV.2 
Special safeguards in agriculture, FY 2004 to 2006 
Description Type of action Date or period of application 
FY 2004   
Manioc (cassava) starch Price-based 6 April 2004, 29 November 2004, 
2 December 2004 
Rice flour Price-based 16 April 2004, 17 June 2004, 
22 October 2004, 19 November 2004, 2 December 2004 
Other starches (excluding Sago starches) Price-based 17 June 2004 
Inulin Volume-based 1 October 2004 - 31 March 2005 
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 28 October 2004 
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 November 2004 - 31 March 2005 
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 16 November 2004, 19 November 2004, 
13 December 2004, 17 December 2004, 12 January 2005, 18 February 2005, 
10 March 2005, 17 March 2005 
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 17 November 2004, 19 November 2004, 
2 December 2004,  28 December 2004 
Peas (Pisum sativum) Price-based 29 November 2004 
Maize (corn) starch Volume-based 1 December 2004 - 31 March 2005 
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 8  December 2004 
Food preparations containing by wei ght not less than 30% natural milk 
constituents on the dry matter Price-based 4 February 2005, 9 February 2005, 
16 March 2005, 28 March 2005 
Food preparations of flour, meal, or  starch, containing one or more of 
those groats, meal, pellets of rice, wheat, triticale, barley or starch, which total weight is more than 85% of the articles and mostly 
containing starch Volume-based 1 March 2005 - 31 March 2005 
FY 2005   
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 18 April 2005, 14 July 2005, 
13 October 2005, 14 October 2005, 20 October 2005, 21 October 2005, 
20 December 2005, 10 January 2006, 
20 January 2006 
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 22 April 2005 
Inulin Price-based 28 May 2005, 27 October 2005 
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 July 2005 - 31 March 2006 
Rice flour Price-based 5 October 2005 
Yogurt;  frozen, preserved or c ontaining added sugar or other 
sweetening matter, flavouring, fruits or nuts (excluding frozen yogurt)  Volume-based 1 February 2006 - 31 March 2006 
Food preparations of flour, meal, or  starch, containing one or more of 
those groats, meal, pellets of rice, wheat, triticale, barley or starch, which total weight is more than 85% of the articles and mostly containing starch Volume-based 1 February 2006 - 31 March 2006 
Food preparations containing by wei ght not less than 30% natural milk 
constituents on the dry matter Price-based 28 February 2006 
Wheat or meslin flour Price-based 6 March 2006 
FY 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 
Source: WTO notifications.  WT/TPR/S/175/Rev.1 Trade Policy Review 
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16. Support received by farmers, as well as consumer prices of agricultural products in Japan 
remain above the OECD average.  Japan’s net producer support estimates (PSE) and consumer 
support estimates (CSE) for 2004 have been provision ally estimated at 56% and 50%, against OECD 
averages of 30% and 20%, respectively.18  In the same year, the producer nominal assistance 
coefficient (NAC) was 2.3, indicating that gross fa rm receipts were 2.3 ti mes the level they would 
have been if generated at worl d prices without support.  Likewise the consumer NAC was 2.0, 
indicating that consumers continue to be implicitly taxed, paying on average about twice as much as 
they would have paid without support.  On av erage, the producer and consumer NACs were both 
1.6 times the respective OECD average.  In addi tion, the producer nominal protection coefficient 
(NPC) was 2.2 in 2004, meaning that the farm-g ate price received by pr oducers was on average 
2.2 times higher than the price at the border.  The total AMS for agricultural products amounted to 
¥730.0 billion in 2002, an increase of 9.5% over the previous year19;  this is a considerable decrease 
from the FY 1997 figure (¥3.0 trillion).  Current pri ce support schemes and their levels are tabulated 
in Table IV.3. 
Table IV.3 
Procurement prices for all major crop s subject to pricing and/or marketin g arrangements/price controls, 2000-05 
(¥) 
 2000 2001 2002 2003 2004 2005 
Rice, official purchase price (unpolished rice, 60 kg)a 15,104 14,708 14,295 13,820 .. .. 
Wheat, official purchase price (60 kg)b  8,824 8,693 8,693 8,552 8,306 7,197 
Soybeans, standard price (60 kg) .. .. .. .. .. .. 
Sweet potatoes, trading guideline pri ce (1 tonne) 31,430 31,430 31,310 31,160 31,120 31,090 
White potatoes, raw material standard price (1 tonne) 13,960 13,960 13,840 13,690 13,650 13,640 
Sugar beets, lowest producer price (1 tonne) 17,040 17,040 16,930 16,840 16,760 16,640 
Sugar cane, lowest producer price (1 tonne) 20,370 20,370 20,330 20,300 20,230 20,130 
Milk for processing, guaranteed price (1 kg) 72.13 .. .. .. .. .. 
Calves for beef, gu aranteed standard price (black cattle) 
(per head) 304,000 304,000 304,000 304,000 304,000 304,000 
Beef, stable standard price (1 kg) 785 780 780 780 780 780 
Pork, stable standard price (1 kg) 365 365 365 365 365 365 
Raw silk, stable standard price (1 kg) .. .. .. .. .. .. 
.. Not available. 
a Changed to bidding price from the administra tive (or official purchase) price since 2004 crop. 
b The II ･1st grade till 2004 crop and 1st grade in 2005 crop. 
Source: Information provided by the Japanese authorities. 
                                                      
18 OECD (2005a).  Figures for 2004 are provisional.  PSEs are defined as the annual monetary value of 
gross transfers from consumers and taxp ayers to agricultural producers, measur ed at the farm-gate level, arising 
from policy measures that support agriculture, regardless of their nature, objectives or impact on farm 
production or income;  PSEs include market price support and budgetary payments.  CSEs are defined as the 
annual monetary value of gross transfers to (from) consumers of agricultural commodities, measured at the 
farm-gate level, arising from policy m easures that support agriculture, regardless of their nature, objectives or 
impact on consumption of farm products.  A producer NAC is defined as the ratio between the value of gross 
farm receipts, including suppo rt, and gross farm r eceipts valued at border prices.  Details for the calculation of 
an AMS are specified in Annexes 3 an d 4 of the Agreement on Agriculture,  and  incorporated into Members' 
schedules (by way of references to Supporting Material).   As noted in WTO (2005), caution is necessary when 
interpreting PSEs, CSEs, and NACs, as changes in exchange rates or world prices may produce significant 
fluctuations in the three indicators, and border prices may be artificially reduced ow ing to the presence of export 
subsidies in international agriculture trade. 
19 WTO document G/AG/N/JPN/108, 11 February 2005. Japan WT/TPR/S/175/Rev.1 
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17. Japan notified to the WTO that no export subsidies were provided in the period 1 April 2004 
to 31 March 2005.20  
(3) MANUFACTURING  
18. In 2004, manufacturing accounted for 21% of Japan's GDP and 17.4% of employment 
(Table I.2).  Electrical machinery was the largest sub-sector in terms of value added, followed by 
transport equipment.  In 2005, manufactured products accounted for 91.8% of Japan's total 
merchandise exports and 53.6% of its total me rchandise imports.  Automotive products, office 
machinery, and telecommunication equipment are Japan's main export and import items. 
19. The simple average applied MFN tariff for impor ted industrial products (HS 25-97) is 3.7% 
(FY 2006), compared with 17.1% for agricultural products (HS01-24).21  Simple average tariffs are 
relatively higher for footwear and headgear, prepared  foods, hides and skins, and textiles and clothing 
than for other manufactured goods (Chart III.2).  
20. In accordance with the Law on Special Measu res for the Revitalization of Industrial 
Dynamism (Industrial Revitalizati on Law), as amended in 2003, various tax incentives are provided 
for IT and R&D related investments22;  low-interest loans by the Development Bank of Japan and 
other government-affiliated financia l institutions are also available and debt-equity swaps are being 
promoted.  By 21 July 2006, 426 projects had b een approved under the law, 222 of which were 
approved after the 2003 amendment. 
21. The Industrial Revitalization Corporation of  Japan (IRCJ), which was established in 
April 2003 jointly by the public and private se ctors ended the purchase of debts on 31 March 2005;  
upon the request of a company and its major cr editors, the IRCJ had purchased debt from the 
company's other creditors.23  The debt purchased by the IRCJ must , in principle, be sold within three 
years of purchase.  By end March 2005, the IRCJ had decided to support 41 companies;  at end August 2006, five companies remained under the IRCJ's support programmes.   
22. The Government aims to promote new i ndustries and businesses within the regional 
development context.  In July 2006, the Govern ment announced the New Economic Growth Strategy 
to further strengthen the competitiven ess of Japanese industri es in the face of an aging population and 
the intensifying competition Japan is facing from rapi dly growing economies in the region.  With the 
aim of improving productivity, particularly by pr omoting innovation, the strategy envisages such 
policies as:  further use of information technology;   stimulating the devel opment of core regional 
businesses
24;  improving productivity in the services sector;  and cross-sectoral policies in human 
                                                      
20 WTO document G/AG/N/JPN/110, 19 May 2005.  However, food aid is provided to LDCs and net-
food importing developing countries. 
 21 The simple average applied MFN ta riff in FY 2006 is calculated by using 2005 AVEs, as available, 
provided by the Japanese authorities.  When the AVEs are unavailable, the ad valorem  part is used for 
compound and alternate rates. 
22 These include the extension of th e loss-carry-forward period to seven years (from five years) for 
projects approved under the law.   
23 According to the authorities, there is no nationality restriction on companies to be supported by the 
IRCJ;  the IRCJ does not disclose names of credito rs, except for "major cred itors", which include, inter alia,  
Japanese banks.   
24 For example, the New Economic Growth Strategy adopted the promotion of, inter alia,  
seven "strategic" areas that the New Industry Promotion Strategy (adopted by the Ministry of Economy, Trade 
and Industry in May 2004 and revised in June 2005) aims  to promote.  These areas are:  fuel cells;  home 
information appliances;  robots;  contents (facilitati ng international development);  healthcare, welfare 
appliances and service;  environment,  energy appliances and services;  and business support se rvice.  According WT/TPR/S/175/Rev.1 Trade Policy Review 
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resources, capital, knowledge, and skills.  New tax incentives for reinforcing the information 
infrastructure for industrial competitiveness and for encouraging investment by SMEs (IT Investment 
Promotion Tax Incentive) have been applied since FY 2006. 
23. 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 De velopment Corporation (JADC).   
24. Investment in certain manufacturing subsectors in Japan requires prior-notification;  
additionally, investment in certain sectors requires permission or ex post  reporting, as stipulated in 
various laws and relevant regulati ons (Chapter II(5)(i)).  For example, investors, domestic or foreign, 
who intend to invest in aircraft manufacturing requi re approval by the Ministry of Economy, Trade 
and Industry, in accordance with the Law on Aircraft Manufacturing. 
(4) ENERGY AND UTILITIES  
25. A stable energy supply has been one of the main objectives of Japan's energy policy, since 
about 82% of its primary energy (e.g. oil, coal, na tural gas, nuclear, hydro, and geothermal energy) 
was imported in 2004.25  Nonetheless, electricity and gas prices in Japan remain relatively high by 
international standards.26  According to the authorities, this is due, inter alia , to Japan's geographical 
location, its high labour and land costs, and high cost for importing fuels from other countries.  
Against this background, the authorities have con tinued to deregulate the sector;  nonetheless, the 
authorities appear to have placed more emphasis on seeking "the right balance" of various policy 
objectives, including a stable energy supply, ec onomic efficiency, and environmental concerns. 
26. Partial liberalization of the retail electricity market continued in 2005 in accordance with the 
Electric Utility Industry Law, as amended in June 2003 .  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 2004.27  In April 2005, the retail electricity market was further liberalized to allow 
consumers consuming 50 kW or above to buy from sources other than incumbent regional electric 
utility companies.  Other measures adopted in  2005 to promote competition included  the 
                                                                                                                                                                     
to the authorities, the seven areas have been selected, based on the views of various specialists and business 
people, because they are considered as  areas:  (1) with significant importance for the future of the Japanese 
economy;  (2) with strong domestic need that will contribute to demand-led growth of the economy;  (3) that 
have a broad base (from final products to raw material s, from large corporations to small and medium-sized 
enterprises, and from large urban areas to regions), which can take advantage of the strengths of industrial concentration;  (4) where the market mechanism al one cannot ensure the development, and thus a 
comprehensive policy package is necessary , with joint efforts from public and private sectors.  The Strategy also 
identifies four industrial clusters for regional rev italization:  advanced high-tech;  new businesses in 
manufacturing;  regional services;  and high value-added food industry. 
25 Energy self-sufficiency ratios in some of Japan's trading partners in 2002 were, for example, 27% in 
Germany, 64% in the United States, 104% in the United Kingdom, and 146% in Canada (METI, 2005). 
26 According to METI (2006) in the third quarter of  2005, electricity prices in Japanese households 
averaged US$0.196/kWh, co mpared with US$0.089/kWh in the United States, US$0.138/kWh in the 
United Kingdom, US$0.141/kWh in France, and US$0.176/kWh in Germany.  During the same period, gas 
prices in Japanese households averaged US$1,271.5/107 kcal, compared w ith US$412.4/107 kcal in the 
United States, US$423.1/107 kcal in the United Kingdom, US$544.3/107 kcal in France, and US$373.4/107 kcal 
in Germany. 
27 "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 50kW or above (from March 2005);  provision of such services have been liberalized. Japan WT/TPR/S/175/Rev.1 
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establishment of Wholesale Power Exchange28 and a Neutral System Organization (NSO)29;  the latter 
is responsible for formulating rules relating to the system operation and monitoring their 
implementation.  Like in many other countries, el ectricity prices for industrial use in Japan are 
substantially lower than for household use. 
27. The June 2003 amendments to the Gas Utility La w, which entered into force in April 2004, 
stipulate that from April 2007, customers consumin g over 100,000 cubic meters per year are to be 
allowed to buy from sources other than incumbent regional piped-gas suppliers (currently, this 
threshold is at 500,000 cubic meters per year).  
28. 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 
security30;  according to the authorities, there has been no denial of permission.   
(5) SERVICES  
(i) Overview 
29. The services sector remains the largest cont ributor to GDP and employment in Japan.  
Services accounted for 69.6% of GDP in 2004, (70. 2% in 2003), and 69.8% of total employment 
(69.2% in 2003).  Japan submitted its revised conditional offer in ser vices on 24 June 2005;  its initial 
offer was made on 7 April 2003.31  In its revised services offer with respect to maritime services 
cabotage services, international freight forwarding, and international shipping services are subject to 
an MFN exemption. 
(ii) Financial services  
30. The financial services sector has continued to  undergo significant changes since Japan’s 
previous Review.  Mergers and acquisitions across different types of financial intermediaries have 
taken place with a view, inter alia , to realizing economies of scale.  Government-led financial 
restructuring, involving reduction of non-performi ng loans (NPLs) and privatization of government 
financial institutions, particularly Japan Post (Cha pter I(3)(ii)), has been aimed at strengthening 
Japan's financial system and improving the efficien cy of the capital market so that savings are 
channelled into profitable investment;  an efficient capital market is an essential factor in raising 
productivity in the economy as a whole.  Other reform  measures adopted recently included:  allowing 
banks to act as sales agents for securities comp anies (from December 2004), and further expanding 
the scope of insurance products that banks are allowed to sell (from December 2005);  creating a 
regulatory framework for "unregulated kyosai " in April 200632;  introducing "dematerialization" of 
stock certificates (i.e. there is no need to issue stoc k certificates in paper form) in October 2004;  and 
                                                      
28 The Wholesale Power Exchange (WPE) was estab lished as a voluntary trading marketplace, where 
bilateral power contracts may be signed.   
29 The NSO consists of incumbent utilities, new entr ants, other network users and academic experts. 
30 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 the parties concerned to 
alter their investment plans.  According to the authorities, no such recommendations or orders have been made.   
31 WTO documents TN/S/O/JPN  and TN/S/O/JPN/Rev.1. 
32 "Kyosai" is a business undertaking a limited scal e of insurance for a specific group of persons. WT/TPR/S/175/Rev.1 Trade Policy Review 
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allowing foreign-owned companies to submit disclosure-related docum ents in English from 
December 2005. 
31. To improve transparency in the financial ser vices sector, a number of supervision guidelines 
(e.g. for banks, insurance, securities, trusts and fu tures) have been amended to include a provision on 
transparency regarding administrative guidance.33  In addition, a mechanism for inquiries on the 
interpretation of laws and regulations was es tablished in April 2005 in accordance with the 
Programme for Further Financial Reform.   
32. Exports (credit) and imports (deb it) of financial services (except insurance) increased in 2005;  
exports increased from ¥477 billion (4.5% of total services exports) in 2004 to ¥559 billion (4.6%), 
and imports increased from ¥287 billion (2.0% of total services imports) to ¥298 billion (2.0%).  On 
the other hand, exports of insurance services decreased from ¥116 billion (1.1% of total services 
exports) in 2004 to ¥96 billion (0.8%) in 2005, a nd imports decreased from ¥372 billion (2.6% of total 
services imports) to ¥213 billion (1.4%). 
(a) Banking 
33. Since Japan's previous Review,  reorganization of the banking sector h as continued;  recent 
changes consolidated Japan's largest banks into four major groups.34  The ratio of NPLs to total 
lending of all banks decreased to 3.5% (¥15.9 tr illion) in September 2005 (from 5.8% in March 2004).  
As at end-February 2006, there were 215 banks , among which 69 were foreign (Table IV.4), a 
decrease by three foreign banks compared with e nd-March 2004.  The deposits of the five largest 
"city" banks accounted for 43.1% of total deposits a nd for 41.0% of total loans in September 2005.  
As well as commercial banks, there are government -affiliated financial institutions, which include 
Japan Post, two non-commercial banks35, and six finance corporations.  Data provided by the 
authorities indicate that commercial bank interest rate spreads remained almost unchanged between 
March 2004 and March 2006.36   
34. 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 
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.37  Under the Banking Law, foreign banks with Japanese 
branches are subject to regulations no less favourable  than those applied to domestic banks.  The Bank 
of Japan is responsible for the smooth settlement of transactions between banks and other financial 
institutions with a view to contributing to the maintenance of "an orderly financial system". 
35. The regulatory environment of the banking sect or has remained largely unchanged since 
Japan's previous Review;  there have been no ch anges in the primary prudential requirements or 
foreign entrance requirements.  However, a new capital adequacy regulation, with a view to 
implementing the “Basel II requirements” is currently  scheduled for the end of March in 2007 (the 
                                                      
33 For example, supervision guidelines for, inter alia,  regional banks containing such provisions are 
available online at:  http://www.fsa.go.jp/news/newsj/ 15/ginkou/f-20040531-5/honpen.pdf (in Japanese). 
34 These are Mizuho Financial Group, Sumitomo Mitsui Financial Group, Resona Holdings, and 
Mitsubishi UFJ Financial Group, as a result of the merger between Mitsubishi Tokyo Financial Group and UFJ 
Holdings in October 2005. 
35 The Development Bank of Japan and the Japan Bank for International Cooperation. 
36 Commercial bank interest rate spreads were 0.39% in March 2004 and March 2005, and 0.40% in 
March 2006. 
37 Banks licensed in Japan may establish ag encies, with ministerial authorization. Japan WT/TPR/S/175/Rev.1 
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adoption of the "most advanced approaches" for cal culating capital adequacy ratio, as defined by the 
Bank of International Settlements, is to  take place by the end of March 2008).38  Concerning the 
protection of bank deposits, the definition of liqui d deposits eligible for protection was narrowed in 
April 2005, thus reducing the scope of protection.39  The authorities consider that prudential 
requirements are no more onerous for nationally li censed subsidiaries of foreign banks than for 
domestic banks.  Banks have been allowed to offer an additional ra nge of financial products through 
their branches since 2006.40 
Table IV.4 
Financial institutions in Japan, 2006 
1.   Banks Number of 
banks 
(end-Feb. 2006) Total assets 
(¥ trillion) 
(end-Sep. 2005) Related laws 
City banks 6 412.4 Banking Law 
Long-term credit banks 2 11.8 Long-Term Credit Bank Law 
Trust banks 23 64.3 Banking Law 
Law on Concurrent Operation of Trust 
Business by Financial Institutions 
Internet banks 4 1.8 Banking Law 
Regional banks I 64 215 Banking Law 
Regional banks II 47 60 Banking Law 
Foreign banks 69 46.0 Banking Law 
2.   Cooperative financial institutions Number of 
organizations 
(end-Mar. 2005) Total assets 
(¥ trillion) 
(end-Mar. 2005) Related laws 
Shinkin Central Bank 1 26 Credit Association Law 
Shinkin banks (credit associations) 298 116 Credit Association Law 
Shinkumi Federation Bank 1 3 Small a nd Medium Business etc. Cooperatives 
Law 
Law on Financial Business by Cooperatives 
Credit cooperatives 175 16 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 9.6 .. Shoko-Chukin Bank Law 
Norinchukin Bank 1 61 Norinchukin Bank Law 
Prefectural Credit Federation of Agricultural 
Cooperatives 46 52 Agricultural Cooperatives Law 
Agricultural Cooperatives 929 95 Agricultural Cooperatives Law 
Prefectural Credit Federation of Fishery 
Cooperatives 34 2 Fishing Cooperatives Law 
Fishery cooperatives (including fish 
processors cooperatives 345 2 Fishing Cooperatives Law 
   Table IV.4 (cont'd) 
                                                      
38 Actual capital adequacy ratios for major banks and for regional banks have been increasing.  
According to the Bank of Japan, at the end of FY 2005, the average capital adequacy ra tio rose to 11.7% for 
major banks (11.4% at the end of FY 2004) and to 10.1% for regional banks (9.6% at the end of FY 2004).  
39 Liquid deposits are fully protected in Japan.  For other kinds of deposits (such as time deposits), the 
guaranteed sum is up to ¥10 million per depositors for one financial institution and the interest on principal.  
40 These include:  single premium whole life insura nce;  single premium endowment life insurance;  
insurance for individuals except for automobile insu rance (excluding insurance for institutional entities and 
groups);  and savings-type accident insurance.   WT/TPR/S/175/Rev.1 Trade Policy Review 
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3.   Insurance companies  Number of 
companies 
(end-Feb. 2006)  Total assets 
(¥ trillion) 
(end-Mar. 2005)  Related laws 
Life insurance: Domestic 23 163 Insurance Business Law 
   Foreign 15 28 Insurance Business Law 
Non-life insurance: Domestic 22 32 Insurance Business Law 
   Foreign 26 0.4 Insurance Business Law 
Mutual fire insurance cooperative 
associations 45 0.07 Small and Medium Business etc. Cooperatives 
Law 
Ship owner's mutual insurance associations 1 0.02 Small and Medium Business etc. Cooperatives 
Law 
4.   Non-banks and other  Number of 
registered 
companies 
(end-Mar. 2005) Number of 
reported 
companies 
(end-Mar. 2005) Related laws 
Loan companies  18,005 .. Money-Lending Law 
Housing loan companies 0 .. Money-Lending Law 
Money market brokers .. 7 Money-Lendi ng Law and Former Investment Law 
Mortgage companies  11 .. Inve stment Advisory Service Law 
Prepaid voucher issuers  1,420 434 Law on Regulation of Prepaid Certificates 
Commodity investment brokers  106 .. Law on Regulation of Comm odity Investment 
Business 
Special purpose companies credit brokers  20 448 Business Asset Securitization Law 
Real-estate syndications 96 6 Real Esta te Designated Cooperative Projects Law 
Financial futures brokers 52 .. Financial Futures Trading Law 
5.   Government's fi nancial institutions Aggregated balance of loans 
(¥ trillion) Related laws 
Development Bank of Japan 14.0 Development Bank of Japan Law 
Japan Bank for International Cooperation 19.8 Japan Bank for International Cooperation Law 
National Life Finance Corporation 9.6 National Life Finance Corporation Law 
Housing Loan Corporation 55.1 House Loan Corporation Law 
Agriculture, Forestry and Fisheries Finance 
Corporation 3.3 Agriculture, Forestry  and Fisheries Finance 
Corporation Law 
Japan Finance Corporation for Small and  Medium Enterprise 7.5 Japan Finance Corpora tion for Small and Medium 
Enterprise Law  
Japan Finance Corporation for Municipal Enterprise 25.0 Japan Finance Corporation for Municipal 
Enterprise Law  
Okinawa Development Finance Corporation 1.4 Okinawa Development Finance Corporation Law 
6.   Other financial institutions    
Bank of Japan 0 Article 38 of the Bank of Japan Law 
Deposit Insurance Corporation .. Deposit Insurance Law 
.. Not available. 
Source: Information provided by the Japanese authorities.  
36. The Government has taken initiatives to r estructure government-affiliated financial 
intermediaries, including the adop tion of laws to restructure the Housing Loan Finance Corporation 
and Japan Post in July 2005 and October 2005, respectively.41  The Council on Economic and Fiscal 
Policy (CEFP) announced the Basic Policy on the Reform of Policy-based Finance on 
29 November 2005.  The Basic Policy provides guida nce for the reform of policy-based finance by 
government financial institutions (GFIs);  the policy aims, inter alia,  to reduce the scope of the 
                                                      
41 The Housing Loan Finance Corporation is to be restructured into an independent administrative 
organization in April 2007. Japan WT/TPR/S/175/Rev.1 
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policy-based finance42, and to reduce the ratio of lending outstanding to GDP by 50% by FA 2008.43  
To this end, the Basic Policy entails organiza tional reform of the eight government financial 
institutions (Table IV.4).  Some institutions (the Development Bank of Japan, the Shoko Chukin 
Bank, and Japan Finance Corpora tion for Municipal Enterprises) ar e to be abolished or fully 
privatized;  others are to be merged and consolid ated into a corporation by FY 2008.  In order to 
prepare for complete re-organization, the Govern ment established the Headquarters for the Promotion 
of the Reform of Policy-based Finance, head ed by the Prime Minister, in December 2005. 
(b) Insurance 
37. Japan's insurance market compri ses three subsectors:  non-life, life, and the "third" sector, 
which includes accident and health care insurance.  There are no state-owned insurance companies in 
Japan, other than the trade and investment insura nce operated by the "Nippon Export and Investment 
Insurance" and the postal life insurance, operated by Japan Post.  Japan's  insurance sector has 
undergone further changes since 2004;  three merger  deals have been concluded among life insurance 
companies and three among non-life insurance comp anies have been concluded, and five non-life 
insurance companies have been cl osed.  At the end of September 2005, the top five life insurance 
companies accounted for 67.2% of the total assets of all life insurance companies;  and the top five 
non-life insurance companies held 81.8% of the relevant total. 
38. The Financial Services Agency is the main au thority regulating the insurance sector, in 
accordance with the Insu rance Business Law (IBL), the main law governing the sector.  A licence 
from the Prime Minister is required to conduct insura nce business in Japan;  approval is required for 
new insurance products, for modifications to existin g 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  required in order to offer insurance services in 
Japan, except for cross-border contracts for rein surance, commercial aviation insurance, and 
international marine hull insurance.44  The criteria for granting licences and the requirement of 
solvency margins are the same for Japanese and forei gn insurance providers.  The Ministry of Finance 
is responsible, inter alia , for the management of the Deposit In surance Corporation, and other public 
insurance schemes for deposits and investment. 
39. Reform measures introduced since 2004 include:  the lifting of the ban on securities 
intermediary services by insurance companies, and th e broadening of the scope of insurance products 
that banks are allowed to sell (section (a)  above). 
40. Additionally, the amendment to the IBL, which entered into force in April 2006, concerned 
the creation of a regulatory framework for unregulated kyosai .  For this purpose, the scope of the law 
was widened to cover businesses that underwrite insurance for a specified group of persons;  
registration requirements were imposed on busin esses of a limited scale that underwrite small 
amounts of short-term insurance.  For these unregul ated entities, a two-year transitional period is 
                                                      
42 Policy-based finance by government financial institutions involved various incentives to induce 
private-sector activities;  the main incentive was the provisi on of long-term loans, at fixed and low interest rates, 
directed to, for example, low profitability and high-risk ar eas.  Compared with the large variety of functions of 
the policy-based finance, the reform limits the functions essentially to three:  assistance to small and medium-
sized enterprises;  financing to secure Japan's resources abroad essential for its national policies;  and yen loans for development assistance.  
43 The aggregated balance of loans provided through the GFIs was ¥135.6 trillion in FY 2005. 
44 For other insurance contracts, prior approval is required for foreign insurers without commercial 
presence in Japan. WT/TPR/S/175/Rev.1 Trade Policy Review 
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provided to start implementing the law;  the regulatory  framework is set to be reviewed in five years 
after its implementation. 
41. The authorities maintain that the Postal Life Insurance ( kampo ) provides basic life insurance 
services to private policyholders with insurance prem iums that are as inexpensive as possible, at post 
offices established throughout the co untry.  According to the authorities, while the Postal Life 
Insurance is exempted from corporate taxes a nd deposit insurance premiums, it faces various 
constraints, such as limited insurance amount per policy holder, limited product variety, and 
restrictions on investment of funds.  The current Po stal Life Insurance policies can be purchased until 
October 2007;  thereafter, the management of existing policies is to be taken over by the Incorporated 
Administrative Agency Management Organization for Postal Savings and Postal Life Insurance, and 
the current Postal Life Insurance is to be abo lished.  From October 2007, the Postal Insurance 
Company is to provide life insurance services under the same regulations applied to other private 
insurance companies under the Insuran ce Act, except that they are to f ace various constraints, such as 
limited insurance amount per policy holder, limited product variety, and restrictions on investment 
funds during the transition period (2007-2017).  It  remains to be seen how the Government will 
achieve a level-playing field in the insurance sector.   
(c) Securities 
42. 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 Law on 
Foreign Securities Firms, the main office in Japan of  a foreign securities firm must be registered to 
operate securities business in Japan;  registration is not accepted unless a firm has engaged in the 
same type of business for no less than three years.  Investment trust companies require ministerial authorization.  There are no foreign ownership rest riction in the securities subsector;  subsidiaries and 
branches of foreign securities firms are registered in the same manner as domestic securities firms.  
43. In February 2005, with a view to improving its  international exchange operations, the Tokyo 
Stock Exchange  (TSE) abolished its  Foreign Section, which traded foreign listed stocks;  since then, 
foreign listed stocks have been traded in the same markets as domestic stocks (e.g. TSE's First 
Section, which lists stocks of major Japanese cor porations), and the same listing regulations and 
standards have been applied to  domestic and foreign stocks.
45   
44. The Securities and Exchange Law was amende d in 2005 and 2006.  The 2005 amendments, 
which entered into force on 1 December 2005, incl uded:  the imposition of disclosure requirements 
for companies possessing more than half the voting rights of a listed company;  allowing foreign 
companies to submit disclosure-relate d documents in English, provided,  inter alia,  that a summary in 
Japanese is attached;  and the introduction of a system  of administrative fines to combat unfair trading 
practices and fraud in meeting initial and periodic disclosure requirements.46  At the same time, the 
Diet adopted an amendment to the Financial Futu res Trading Law, which stipulated registration 
requirements for companies dealing with foreign exch ange trading on margin.  In 2006, the Securities 
and Exchange Law was further amended to establish the Investment Services Law (or the Financial 
Instruments and Exchange Law), which essentially is to replace the Securities and Exchange Law 
                                                      
 45 Previously, the minimum number of units to be listed was 4,000 for domestic stocks and 20,000 units 
for foreign stocks;  the minimum number of shareholders in Japan was 800 for domestic stocks and 2,000 for 
foreign stocks (if the stock was "well-traded" in foreign markets, the number could be reduced to 1,000).  In addition, the number of units to be de-listed had to be less than 4,000 for domestic stocks and less than 
10,000 units for foreign stocks. 
46 Under the Securities and Exchange Law, unfair trad ing practices comprise market manipulation (e.g. 
manipulation in terms of price) and insider trading.   Japan WT/TPR/S/175/Rev.1 
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in 2007.  The new law will govern financial and i nvestment services in general and strengthen the 
protection of investors.  It also strengthens penalti es for fraud in disclosure, failure to file disclosure 
documents with the authorities, and illegal transactions.47  Additionally, the law provides for the 
establishment of a self-regulatory system, inter alia,  within stock exchanges.48   
(iii) Telecommunications 
45. The communications sector accounted for 2.3% of Japan's GDP in 2004 (2.4% in 2003).  
With regard to cross-border trade, exports of telecom services fell fro m ¥77 billion in 2003 to 
¥49 billion in 2004, and imports fell from ¥93 b illion to ¥67 billion.  Between April 2003 and 
August 2006, there was a net increase of 3,019 telecomm unications carriers in the market, to a total of 
13,923 carriers.  However, both in terms of sal es and traffic, the Nippon Telegraph and Telephone 
(NTT) Corporation continues to dominate the telecommunications market49, except for traffic in 
long-distance telephone services.50  Local fixed-line call charges and charges for mobile phone 
services in Japan have fallen to le vels comparable with those in ot her developed countries;  however, 
international communication charges remain relatively high.51  Data provided by the authorities 
indicate that the average annual growth rate of to tal factor productivity (TFP) in telecommunications 
was 3.7% between 2000 and 2004, while the corresponding national average was 0.1%.52  The higher 
TFP growth in telecommunications may be attributed  to the recent liberalization of Japan’s telecom 
sector, which intensified competition.  Nonetheless, the JFTC maintains that the Japanese market for 
fixed and mobile telecom services is oligopolistic. 
46. 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. 
                                                      
47 The maximum criminal penalties were increased, for example, from the current five years of 
imprisonment up to ten.  Fines were also increased from the current ¥5 million to ¥10 million for individuals, 
and ¥500 million to ¥700 for corporations.  
48 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 Secur ities, and the Law Concerning the Re gulation of Mortgage Business.  
49 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 and the Government holds at least one third of the shares in the NTT Corporation.  At end-
November 2005, the Government held 33.7% of the shar es of the NTT Corporation.  The authorities maintain 
that the Government holds the share for public interest and safety reasons.  
50 In terms of sales, at end 2003, the NTT East and West accounted for 89.8% of the local telephone 
service market, NTT Communications for 58.2% of th e long-distance call service market, and NTT DoCoMo 
for 61% of the mobile phone market;  in terms of tr affic, the NTT Group accounte d for 72.8% of the local 
telephone service market, and 49.3% of the long-distan ce call service market, and NTT DoCoMo accounted for 
62.2% of the mobile phone market.  In terms of subscrib ers, the NTT East and West accounted for 37.5% of the 
DSL service market.   The remainder is shared by the new comm on carriers (NCCs), those other than NTT 
(domestic) and KDD (international). 
51 The average call charge for a single business call (excluding VAT) was US$2.85 in Japan, US$1.65 
in the United Kingdom, US$0.57 in Germany, US$0.55 in  the United States, and US$0 .53 in France.  In terms 
of U.S. dollars adjusted by purchasing power parity, the average call charge for a single business call (excluding 
VAT) in Japan was US$(PPP)1.99, compared with an OECD average of US$(PPP)1.06 (OECD, 2005b).   
52 The TFP growth in other industries was -3.4% in  steel, 2.9% in electri cal machinery, 0.4% in 
wholesale, -0.5% in carrying machiner y, 0.0% in construction, 0.1% in retail, and -0.8% in transportation 
(MIC, 2006).  WT/TPR/S/175/Rev.1 Trade Policy Review 
Page 78 
 
 
47. The Radio Law and Broadcast Law were am ended in October 2005.  The amendment 
tightened the foreign ownership restriction of 20% of voting shares in terrestrial broadcasting radio 
station by including indirect voting shares.   
48. The MIC also introduced a new Universal Service Fund System (USFS) in April 2006.53 The 
USFS is aimed at assisting telecommunications carriers that provide universal services in subscriber telephone services (subscriber line access, calls to re mote islands under specific tariff conditions, 
emergency calls) and public telephone services (local ca lls, calls to remote islands under specific tariff 
conditions, emergency calls).
54  Under the new system, non-traffic-sensitive costs would be 
transferred from interconnection rates to basic charge.55  Number portability in mobile telephone 
services was introduced on 24 October 2006. 
49. Fixed-line traffic volume has been declining by around 15% each year since its peak in 
FY 2000 (around 5.5 billion hours).  Interconne ction rates for carriers installing Category 1 
telecommunications facilities are authorized following public comment procedures;  there is an obligation on carriers installing Category 1 or 2 telecommunications facilities to disclose interconnection rates.
56  Interconnection rates for fixed netw orks remained largely unchanged from 
FY 2005 to FY 2006.57 
50. Between November 2001 and June 2004, the Telecommunications Business Dispute 
Settlement Commission, established under the MIC in 2001, settled a total of 35 cases.  Six cases 
were settled by the Commission in FY 2004 and th ree cases in FY 2005;  these cases concerned 
mainly interconnection issues. 
51. The Strategic Headquarters for the Promo tion of an Advanced Information and 
Telecommunications Network Society (the IT Stra tegic Headquarters) adopted a New IT Reform 
Strategy in January 2006.58  The Strategy aims to implement measures to widen the use of IT;  the 
measures include:  halving the le vel of paper processing and using online applications and filings 
                                                      
53 The USFS was initially introduced in  June 2002 but has never been us ed (March 2006).  In the face 
of the growing penetration of mobile phones and IP  telephony relative to fixed telephones, the USFS was 
revised in April 2006.  In the new USFS, local subscrib er telephone service is ex cluded from the scope of 
universal service because, according to  the authorities, competition in local  telephony has been introduced by 
the adoption of the "carrier pre-selection" system, which began in May 2001;  moreover, the methodology for 
cost calculation was changed from a "revenue-cost methodology", based on the cost of service provision in 
unprofitable areas, to a "benchmark methodology", based on the difference between cost in the area and the average national cost.  The USFS is managed by the Univ ersal Service Administrative Agency under the MIC.  
Contributions to the USFS are made by telecom carriers with revenues exceeding ¥1 billion.  By 
September 2005, the number of mobile phone subscribers had increased to 93.6 million (66.8 million in 2000) and IP telephony subscriber had reach ed 9.8 million (5.3 million in 2003). 
54 The criteria for eligibility include provision of universal service to all households in the area where 
designated carriers are licen sed to provide service.  
55 The transfer will be implemented gradually through the deduction of ¥60 billion of non-
traffic-sensitive cost each year.  
56 These facilities concern certain facilities held by domi nant carriers, as designated by the Minister of 
Internal Affairs and Communications.  Category 1 designated facilities concern fixed line telecom services and 
Category 2 designated facilities concern mobile telecom services. 
57 In FY 2006, fixed interconnection rates for three-minute calls in Japan were ¥6.84 for tandem switch 
interconnection and ¥5.05 for local switch interconnection;   respective averages for FY 2001 to 2005 were 
¥5.9 for tandem switch interconnection a nd ¥4.87 for local switch interconnection. 
58 The new strategy, which follows the e-Japan Strategy and e-Japan Strategy II, contains sets of 
policies to be implemented by 2010.  While the previous strategies focused on infrastructure and applications, 
the new strategy aims to tackle problems such as the aging population,  and economic growth through the 
development of IT. Japan WT/TPR/S/175/Rev.1 
 Page 79 
 
 
through the "e-government";  promoting the use of IT in business management;  and promoting 
research and development in IT.  These objectives are to be achieved by FY 2010.  In FY 2006, the 
Government introduced new tax measures to promote investment aimed at raising the level of security in information systems and strengthening the intern ational competitiveness of Japan’s IT sector;  the 
measure involves a tax credit or a special depreciation for acquisition/lease (or production) of specific 
IT facilities between 1 April 2006 and 31 March 2008.   The previous IT Investment Promotion Tax 
Incentive, introduced in FY 2003, has been abolished.
59  
(iv) Transport 
(a) Maritime transport 
52. The volume of Japan's seaborne cargo increased by 0.9% in terms of volume and by 13.8% in 
terms of value in 2005, accounting for 14% of the worl d's total.  Almost all of Japan's internationally 
traded goods are shipped by maritime transport.   
53. The Maritime Bureau and the Ports and Ha rbour Bureau of the Ministry of Land, 
Infrastructure and Transport (MLIT) are the main au thorities regulating Japan’s maritime transport.  
Cabotage restrictions generally allow only Japan ese-flag carriers to carry cargo and passengers 
between Japanese ports;  Japan accords limited access to maritime cabotage service for ships flying 
certain flags, on a reciprocal basis, pursuant to tr eaties of friendship, commerce, and navigation.  The 
authorities maintain that there are no discriminat ory measures affecting foreign participation in 
international maritime services and that Japan’s bilateral agreements on passenger or cargo shipping 
provide national treatment to partners on a reciprocal basis.   
54. In port transport, the licensing requirement for an "economic needs test " for entry into port 
transport and the permission requirement for establis hing (or changing) charges were removed for all 
ports on 15 May 2006 (12 major container ports were already free of such rest rictions).  Entry into 
port transport in all ports currently requires permissi on, and port transport charges are subject to prior 
notification requirement.60 
55. Japan has introduced simplified port-relate d procedures based on the Convention on 
Facilitation of International Maritime Traffic (t he FAL convention), which Japan concluded in 
November 2005, and developed on-line applica tion systems:  UN/EDIF ACT (Electronic Data 
Interchange for Administration, Commerce and Tr ansport) and NACCS (Nippon Automated Cargo 
Clearance System).61 
56. In order to mitigate the decrease in the numbe r of Japanese-flag carriers, the Government 
provides support for Japanese-flag carriers (the so-called International Ship Regime).  The 
Government has been providing such support meas ures, including tax breaks in respect of ship 
registration tax and local property tax, to incr ease the competitiveness of Japanese vessels vis-à-vis 
those of other countries that provide preferential tax treatment for their register ed ships;  in the tax 
reform of FY 2006, the preferential registration ta x rate under the International Ship Regime was 
                                                      
59 Under the system, companies were a llowed to receive either a 10% tax credit of acquired assets as IT 
investment, or depreciation corresponding to 50% of the value of these assets. 
60 These measures were introduced as a result of re visions of the Port Transportation Business Law, 
which entered into force in May 2006.  In designated por ts, new entry to (and withdr awal from) port transport 
services was restricted by a licensi ng system with a view to maintain ing "order on port transport".   
61 Japan implements 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 the super core ports under the programme. WT/TPR/S/175/Rev.1 Trade Policy Review 
Page 80 
 
 
raised to 2.5% from 2.0% previously (compa red with 4.0% charged to ordinary vessels).62  According 
to the authorities, no exclusive rights or subsidi es are given to Japanese flag-carriers;  there are no 
discriminatory measures preventing foreign partic ipation in the supply of auxiliary services. 
57. 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.
63  Between April 2004 and April 2006,  15 agreements were concluded. 
58. In Japan's revised services offer, maritime ca botage services, international freight forwarding, 
and international shipping servi ces are subject to MFN exemption.64  According to the authorities, 
Japan wishes to exempt these services from MFN for historical reasons, as in the case of maritime 
cabotage;  it would allow the other two services on reciprocal basis.65 
(b) Air transport 
59. In FY 2005, Japanese airlines accounted for 33.8% of Japan's scheduled international 
passenger market (37.1% in FY 20 02) and 38.7% of its internati onal freight market (42.7% in 
FY 2002), in terms of passenger numbers and tonnes of freight.  Exports of air transport services 
increased from ¥0.92 trillion in 2001 to ¥0.98 tri llion in 2002, while imports fell slightly to 
¥1.4 trillion.66  
60. There have been no changes in Japan's interna tional air transport regulations since 2004.  
Japan's market is regulated mainly by the Civ il 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 other count ries, the provision of domestic air services is 
restricted to Japanese carriers (cabotage restricti ons).  An ownership restriction prohibits foreign 
investors from holding more than one third of voting rights in domestic airlines. 
61. Japan has signed bilateral air services agreem ents with 56 trading partners (April 2006).67  
These agreements concern traffic rights, as well as code sharing;  the Anti-Monopoly Act does not 
apply to these agreement.   Agreements between airline companies for improving user convenience on 
                                                      
62 The property tax on ships subject to the International Ship Regime equals two fifths of the tax 
charged to ordinary vessels. 
63 With a view to reviewing such exemptions, the Japan Fair Trade Commission (JFTC) began research 
on the international shipping market in January 2005;  the research involved, for example, interviews with 
carriers and shippers, and questionnaires.  Based on this research, the Study Group on Regulations and Competition Policy issued a fact-finding report regarding in ternational shipping cartels.  In addition, the JFTC 
requested "public comment" on the exemption system of international shipping cartels during a three-month 
period from June 2006.   
64 WTO document TN/S/O/JPN/Rev.1, 24 June 2005. 
65 The authorities state that the right of maritime ca botage has been established internationally as the 
sovereignty of individual countries.   
66 In 2005, Japan's three international airports (Narita, Kansai, and Chubu) carried 50.9 million 
passengers and 2.7 million tonnes of freight.   
 67 These are:  Australia;  Austria;  Bahrain;  Banglad esh;  Belgium;  Brazil;  Brunei;  Canada;  China;  
Denmark;  Egypt;  Ethiopia;  Fiji;  Fi nland;  France;  Germany;  Greece;  H ong Kong, China;  Hu ngary;  India;  
Indonesia;  Iraq;  Israel;  Italy;  Jordan;  Kuwait;  Lebanon;  Malaysia;  Mexico;  Mongolia;  Myanmar;  Nepal;  the Netherlands;  New Zealand;  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. Japan WT/TPR/S/175/Rev.1 
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international routes from/to Japan are exempt from the Anti-Monopoly Act, provided they do not 
involve "unfair transactions" or adversely affect competition.68   
62. In October 2005, landing fees for Narita Intern ational Airport were reduced on average by 
22%.  Nonetheless, landing fees at Japan's three ma jor international airports, Narita, Kansai, and 
Chubu, are higher than those at major airports in other countries.69   
63. According to the authorities, there have been no changes in the system of slot allocation for 
international civil aviation since Japan’s previous  Review;  the allocation system is based upon 
guidelines issued by the IATA.  According to th e authorities, Japanese airlines coordinate slot 
allocation at Narita and Kansai international ai rports.  The allocation of slots takes place twice 
annually. 
(c) Railways and highways 
64. The seven Japan Railway (JR) companies own and operate about 70% of Japan's railway 
network (based on the operating kilometres)70;  the JR companies carry about 40% of total railway 
passengers in Japan.  According to the Law C oncerning Passenger Railway Companies and Japan 
Freight Railway Company, the Government overse es the management of JR Hokkaido, JR Shikoku, 
JR Kyushu, and JR Freight;  however, it does not hold direct shares in these four JR companies.  The shares are fully held by the Japan Railway Constr uction, Transport and Technology Agency (JRTT), a 
government agency.
71  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.  
65. Highways in Japan were constructed and main tained by four public corporations with 
October 2005, when these corporations were restru ctured into six new companies, in which the 
Government holds shares.72  The six highway companies are not exempt from the Anti-Monopoly 
Act;  toll rates are subject to approval.   
                                                      
68 Article 110 of the Civil Aeronautics Law. 
69 The landing fee for a Boeing 777 aircraft is around ¥460,000 (compared with ¥662,000 before 
October 2005) at Narita, ¥580,000 at Kansai, ¥460,000 at Chubu, ¥280,000 at Chep Lap Kok (Hong Kong, 
China), ¥370,000 at JFK (New York), ¥260,000 at Charles de Gaulle (Paris), and ¥160,000 at Singapore airports.  The authorities consider that landing charge s in Narita, Kansai, and Ch ubu airports reflect costs 
associated with environmental protection.  
70 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. 
71 JRTT was founded on 1 October 2003 through the integration of Japan Railway Construction Public 
Corporation and the Corporation fo r Advanced Transport and Technology , in accordance with the Act on 
General Rules for Incorporated Administrative Agency and the Law Concerning Japan Railway Construction, 
Transport and Technology Agency. 
72 The new companies are:  East Nippon Expressway Companies Limited, Central Nippon Expressway 
Company Limited, West Nippon Expressway Compan y Limited, and Metropolitan Expressway Company 
Limited, Hanshin Expressway Company Limited, and Honshu-Shikoku Bridge Expressway Company Limited.  The Government retains all shares in the East, Central, and West Expressway companie s, 50% of the shares of 
the Metropolitan and Hanshin Expressway companies (the remainder is held by the local authorities), and about 
66.6% of the shares of Honshu-Shikoku Bridge Expressway Company (the remainder is held by the local authorities).   WT/TPR/S/175/Rev.1 Trade Policy Review 
Page 82 
 
 
(v) Professional services  
66. 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.73   
(a) Legal services 
67. 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 th e sector is regulated by this law, and the Special 
Measures Law Concerning the Handling of Legal Bu sinesses by Foreign Lawyers, which was last 
amended in 2003.  The amendment, which en tered into force on 1 April 2005, enabled a Gaikokuho-
Jimu-Bengoshi  (a foreign lawyer qualified under Japanese law) to employ a Bengoshi  (a lawer 
qualified under Japanese law), and a joint enterprise  involving the two.  The cumulative number of 
foreign lawyers registered in Jap an as at the end of 2005 was 517 (compared to 475 as at the end of 
2004). 
68. According to the authorities, there have been no changes regarding market access for foreign 
patent lawyers since 2002;  regardless of nationality,  a person must be qualified as a patent attorney 
(benrishi ) to practice Japanese law related to industrial property.  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 backgroun d.  Foreign patent attorneys acc ount for 0.2% of Japan's patent 
attorneys (March 2006). 
(b) Accounting services 
69. Accountants must pass the national examina tion to qualify as a certified public accountant 
(CPA) in Japan;  at least two years of practical training experience is also required.  A foreign 
accountant not qualified as a CPA in Japan may prov ide certain accounting-related services other than 
the provision of audit services supplied by a CPA qua lified in Japan.  No major amendments that may 
affect trade have been made to the CPA Law. 
(vi) Other services 
70. Since December 2004, the Ministry of Educa tion, Culture, Sports, Science and Technology 
(MEXT) has begun to recognize qualifications gran ted by MEXT-designated foreign universities' 
branches in Japan.
74  The MEXT recognizes such qualifications in the event of students’ admission to 
Japanese graduate schools or to Jap anese universities as transfer stude nts (and the transfer of their 
credits to Japanese universities).  While Japanese uni versities (excluding those established by stock 
companies in certain Special Zones for Structural Reform) receive favourable treatment with regard to 
corporate tax, branches of foreign universities do not receive such treatment. 
                                                      
73 With a view to responding to such questions, the JFTC published "guidelines concerning the 
activities of associations of qualified professi onals under the Anti-Monopoly Act" in 2001.  
74 According to the authorities, there have been no limitations on the establishment of foreign 
university branches in Japan.  Such branches may be designated by the MEXT Minister to be eligible for the recognition.  As of 1 October 2006, th ere are six branches of foreign univers ities designated by the Minister.   Japan WT/TPR/S/175/Rev.1 
 Page 83 
 
 
71. In medical services, according to the amendmen t to the Special Zones for Structural Reform 
Act, effective 1 October 2004, stock companies may establish medical facilities for medical treatment.  
Within the framework of revised Three-Year Progr am for Promoting Regulatory Reform (adopted in 
March 2005) the Government removed restricti ons on foreign doctors and nurses with Japanese 
medical licences working in medical services in Japan on  30 March 2006.  This concerns relaxation of 
limitations on the length and location of services:  for example, foreign nurses are permitted to work 
for up to seven years after gainin g their licence (previously four years after completing training).  At 
the end of 2004, 117 registered foreign nationals had the resident status of "Medical Services". Japan WT/TPR/S/175/Rev.1 
 Page 85 
 
 
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