WORLD TRADE  
ORGANIZATION   
G/STR/Q1/JPN/15 
17 October 2011 
 (11-5110) 
Working Party on 
State Trading Enterprises Original:   English 
 
 
 
STATE TRADING 
 
Questions Posed by AUSTRALIA Concerning the New and 
Full Article XVII Notifications of JAPAN1 
   The following communication, dated 10 October 2011, is being circulated at the request of the delegation of Australia.    
_______________ 
 
 
Rice, Wheat and Barley 
 
Reason and Purpose (Section 2(a), p.5) 
 
Japan has stated that the rationale for the Rice, Wheat and Barley STEs in the promotion of 
national life and the economy.  Australia notes that the Japanese Cabinet Office, recently reported 
recently that (Second Report on Regulatory and St ructural Reform (21 July 2011, p.11)):  
"Competition between businesses which are trying to purchase quality products at low prices is 
obstructed by the low level of liberalisation evid enced in state trading, through which private 
companies purchase wheat, barley, dairy products ...  By allowing private companies to give greater 
scope to their originality and ingenuity, competition between these companies will be enhanced, 
which in turn will benefit Japanese consumers … [F urther,] the elimination or simplification of 
Japan's state trading system would contribute to gr eater administrative efficiency".  Does Japan have 
any plans to implement changes to its STE program  in line with the Cabinet Office report?   
 
Description of the Functioning of the State Trading Enterprise (Section 3(a), p.5) 
 
Could Japan explain how the STE collects part of the out-of-quota- tariff on out-of-quota 
imports of rice, wheat and barley?  How much of  the over-quota tariff (and/or non-tariff duty) accrues 
to the STE and how is this calculated?  Coul d Japan detail how it considers the factors in 
Article XVII (b) of the GATT when collecting these mark-ups?    How Export Prices are determined (Section 3(e), p.6) 
 
Could Japan explain how Japanese companies can  be exempted from paying mark-ups on 
imported wheat if they export the same volume of wheat overseas?  Does this (re)exported wheat need 
to be the same imported product, or can it be dom estic product?  Can it also include processed wheat 
products (such as noodles)?  If so, how are these grains  versus processed volumes calculated and what 
conversion factors are used?    
                                                      
1 G/STR/N/13/JPN.   G/STR/Q1/JPN/15 
Page 2  
 
  Brief Description of Market Structure (Section 3(h), p.6) 
 
Could Japan explain the government's connec tion to the National Rice, Wheat and Barley 
Improvement Association?  Why are tenders of domes tically produced wheat transacted to within plus 
or minus seven per cent of a "standard" or  fixed price set by the Association?  
 
Supporting Table I (p.13) 
 
The marks-ups for imported wheat and barley are listed in this table as 17 yen/kg and 
7 yen/kg, respectively.  Are these actual applied mark-ups for all tenders?  Or monthly or quarterly 
"target" mark-ups for individual tenders under the General Import?  
 
Australia understands that the STE was not able to extract mark-ups from import wheat under 
the General Import during the period September 2007 to April 2008.  Could Japan explain why this 
fact is not reflected in the table, which lists  mark-ups throughout that period as 17 yen/kg? 
 
Since all state-traded barley is traded th rough Simultaneous Buy Se ll (SBS) tenders, where 
the purchase and resell price fluctuate with global prices, how can the mark-up remain at a constant 7 yen/ kg as depicted in the table?  Is this a "target" or minimum mark-up figure?    
Milk Products 
 
Description of the Functioning of the State Trading Enterprise (Section 3(a), p.8) 
 
ALIC appears to accrue rent on both in-quota and out-of-quota imports.  Could Japan clarify 
the process through which ALIC collects part of the tariff (and/or non-tariff duty) on over-quota 
imports of designated dairy products?  If ALIC's rent on out-of-quota  imports is automatically fixed at 
the bound rate, does this imply that ALIC generates more rent per kilogram from out-of-quota than in-
quota trade?    How the Resale Prices of Imported Produc ts are determined (Section 3(f), p.8) 
 
Could Japan explain why SBS tenders have been  introduced for whey for stock feed use, 
dairy spreads and butter oil, but not for other desi gnated dairy products such as milk powders?  Why 
have SBS tenders for butter only been introduced on an  ad hoc or "emergency" basis?  What is the 
rationale for this application?  
Brief Description of Market Structure (Section 3(h), p.8) 
 
In light of recent increased butter imports  by the STE, could Japan explain why the 
government prevented the activation of the volume safeguard for butter (through issuing Government 
Ordinance No.306, 30 September 2011)?  In the past , when the butter volume safeguard was similarly 
triggered by the STEs own imports, the government did not prevent the activation of the safeguard, 
even in the fact of domestic supply shortages.  Why does the Government allow the activation of the 
safeguard in certain situations but not in others?  
 
Supporting Table I (p.17) 
 
Could Japan explain why no mark-ups are listed fo r any of the dairy products in Table I?  
Could Japan provide the mark-ups as applied for this STE?     G/STR/Q1/JPN/15 
 Page 3 
 
 
Other 
 
Could Japan clarify the procedure through wh ich importers of "designated sugar" (for 
example, raw sugar with a polarimetric reading of below 98.5 degrees) are required, under Article 5(1) of the Sugar and Starch Price Adjustment Law (2007)
2, to sell their imports to ALIC?   
 
Could Japan also clarify the procedure through which ALIC then resells the same designated 
sugar back to the same importer under Article 8(1) and (2) of the Sugar and Starch Price Adjustment 
Law (2007).  This latter section stipulates, "T o conduct the resell, when ALIC purchases the 
designated sugar as stipulated in Article 5(1), it  may attach the condition that the seller must 
repurchase the designated sugar".   
 
Could Japan clarify why this particular arrangement for sugar (which requires certain 
importers to sell and then repurchase their products  to and from ALIC at different prices) is not 
notified? 
 
__________  
                                                      
2 "Those who make an import declaration … of raw sugar, other types of sugar or mixed sucrose 
containing glucose or other sucrose, as stipulated in the Cabinet Ordinance ("designated sugar" hereafter) shall 
sell the imported designated sugar to ALIC in th e event that the average import price of the import 
declaration … is below the Rationalisation Target Price."  Sugar and Starch Price Adjustment Law  (2007), 
Article 1, section 5. Article 3(2) of the same law define s the "Rationalisation Target Price", which is set by the 
Minister of Agriculture, Forestry and Fisheries, as an "imported sugar price below which the promotion of sugar 
resource production and the sound development of domestic sugar refinery industry could be adversely affected, and thus the impact of which needs to be buffered".