WT/TPR/S/142 Trade Policy Review 
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III. TRADE POLICIES AND PRACTICES BY MEASURE 
(1) INTRODUCTION  
1. Since its previous Trade Policy Review in late  2002, Japan has introduced various measures 
aimed at further liberalizing its trade and investme nt regimes.  Progress has been made in improving 
the competitive environment, including in telecomm unications and financial services;  however, the 
use of contingency measures is somewhat more evident than before, and potentially important 
distortions to competition remain in some sectors, particularly agricu lture.  The authorities attach high 
priority to regulatory reform and sound competition policy, which could, inter alia,  help create more 
opportunities for domestic and fo reign businesses, including those entailing inward FDI.  
2. The tariff is Japan's main trade policy instru ment.  Nonetheless, most imports enter Japan 
duty free or are subject to low tariff rates.  In fiscal year 20041, the simple average applied MFN tariff 
was 6.3%, down from 6.9% in FY 2002.  Nearly 99% of tariff lines are bound and most applied rates 
coincide with bound rates, thereby imparting a high de gree of predictability to Japan's tariff schedule.  
At the same time, non- ad valorem  duties are an important feature of the tariff, particularly in 
agriculture.  Such duties, which account for 6.6% of  all lines, are indicated clearly in Japan's tariff 
schedule;  they tend to involve high ad valorem  equivalents.  Preferential tariff rates are offered under 
the Generalized System of Preference (GSP) to 140 developing countries and 15 territories, including 
additional preferences for 47 least de veloped countries (LDCs);  Japan also grants preferential access 
for imports from Singapore under the Japan–Si ngapore Economic Agreement for a New Age 
Partnership (JSEPA).  The simple average tariff rates under these preferential arrangements (GSP, LDC, and JSEPA) are 5.1%, 3.1% and 4.2%, respectively. 
3. Japan has few non-tariff border measures.  Those currently applied involve some import 
prohibitions and quantitative import restrictions (for ex ample, on certain fish and silk).  In addition, 
imports of certain goods are subject to licensing requirements in order to ensure national security, 
safeguard consumer health and well-being, or preserve domestic plant and animal life and the 
environment.  Certain aspects of the import quota system can be intricate. 
4. Since its previous Review, Japan has used one anti-dumping measure (imposed on certain 
polyester staple fibre).  It has not imposed an y safeguards measures.  Recently, Japan began 
investigating the case for countervailing measures against imports of dynamic random access memory 
chips from the Republic of Korea.  
5. Japan maintains certain export controls on grounds of national security and public safety and 
to ensure adequate domestic supplies of certain ag ricultural and other primary products.  Japan has not 
notified any export subsidies to the WTO, indicating the absence of such subsidies as defined in the 
WTO Agreements.  Export finance, insurance, guarantees, and drawback schemes are available. 
6. Various forms of assistance are provided by ce ntral and local governments, particularly for 
agriculture.  The total value of assistance to ag riculture exceeds the sector's contribution to GDP;  
most of the assistance seems to consist of measures that distort production and trade. 
7. No preferences are granted to domestic suppliers with regard to government procurement 
covered by the Agreement on Government Procuremen t.  The share of foreign suppliers in the total 
value of government procurement was 4.2% in 2002 (down from 6.9% in 2000). 
                                                     
 
1 The fiscal year (FY) runs from April to March. Japan WT/TPR/S/142 
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8. About 92% of Japan Industrial Standards (JIS) (91% in 2003) were aligned to their 
international counterparts as of March 2004.  Japan has also taken further steps to ensure acceptance 
of foreign test data and conformity assessment , by, for example, concluding mutual recognition 
agreements. 
9. Japan has continued to participate in multinatio nal and regional discussions on agreements to 
promote international harmonization of regimes protecting intellectual pr operty rights (IPRs). 
10. In March 2004, Japan adopted the new Thre e-Year Program for Promoting Regulatory 
Reform (TPPRR), which listed 762 measures envi saged to contribute to creating new opportunities 
for domestic and foreign businesses.  The Council for the Promotion of Regulatory Reform (CPRR) was established in April 2004, to replace the Council for Regulatory Reform (CRR), whose mandate expired on 31 March 2004.  In April 2003, a sche me of special zones for structural reform was 
adopted;  exceptions to particular regulations are granted within approved special zones according to 
the zones' specific circumstances. 
11. Over the years, the growing importance of deregulation and compe tition in the Japanese 
economy has increased the status and size of the Japan Fair Trade Commission (JFTC).  Moreover, with a view to achieving a higher degree of independence for the JFTC, it was transferred from the 
Ministry of Public Management, Home Affairs, Posts and Telecommunications to the Cabinet Office 
in April 2003. 
12. There is growing awareness that ineffective corporate governance has contributed to the 
misallocation and perhaps excessive use of capital and labour in the corporate sector.  This has prompted the Government to implement a number of policy measures, such as an amendment to the Commercial Code and the revision of th e Certified Public Accountants Law. 
(2) M
EASURES DIRECTLY AFFECTING IMPORTS  
(i) Procedures and valuation 
13. All importers must file a declaration with Cu stoms under the Customs Law.  For most goods, 
the declaration must be made after the goods have been taken into a Hozei area2, or other specially 
designated place;  items requiring approval by the Director-General of Customs must be declared before they are taken to the Hozei area.  The declaration must be accompanied by details of the 
quantity and value of the goods to be imported as well as a packing list, freight account, insurance 
certificate, and certificate of origin (for preferential rates  of tariff), where applicable.  Additional 
documentation may be required, for example for goods requiring an import licence or health 
certificate.  Once the documentation is verifi ed by Customs, an import permit is issued.
3  A simplified 
procedure has been introduced since March 2001, to  facilitate passage through Customs;  it allows 
                                                      
2 The Hozei area comprises land, buildings or other facilities designated by the Minister of Finance (or 
approved by the Director-General of Customs) to store imported goods or goods to be exported;  Hozei areas 
may also be established where processing and exhibition of imported goods take place.  In principle, import and export procedures must be completed once the imported goods or goods destined for export are brought into the 
Hozei area.  There are five types of Hozei areas:  designated Hozei area, Hozei warehouse, Hozei manufacturing 
warehouse, Hozei display area, and integrated Hozei area. 
3 Customs examination is carried out before the permit is issued;  after the permit is issued, an 
"emphasized examination" may be carried out where there are doubts concerning duty assessment.  WT/TPR/S/142 Trade Policy Review 
Page 26 
 
 
release of goods routinely imported by the same importer on a regular basis (continuously imported 
goods) before customs tax declaration.4  Certain goods are not eligible for simplified declaration.5 
14. To streamline customs procedures, Japan introduced a single-window system in July 2003 to 
enable the completion of all necessary import and export and port procedures through a single submission by linking NACCS (Nippon Automated Cargo Clearance System) and the relevant ministries' and agencies' systems.  Overtime handling charges by Customs were also reduced by 50% 
in April 2003.  The latest availabl e data indicate that the average time between import declaration and 
import permission was 4.3 hours in 2004 for sea cargo (4.9 hours in 2001) and 0.4 hours for air cargo 
(0.6 hours in 2001).  The average time between cargo arrival and the granting of import permission 
was 2.8 days for sea cargo (3.1 days in 2001) and 0.7 days for air cargo (1.1 days in 2001). 
15. Imports are valued on the basis of their c.i.f. va lue (which is taken to be the transaction value 
of the imports).  Customs duty can be paid thro ugh a multi-payment network system introduced on 
22 March 2004, which connects teller institutions (government authorities) with financial institutions.  
This enables payment of customs duty through elect ronic channels such as personal computers, 
mobile telephones, and automated teller machines;  pa yments can be made 24 hours a day.  No fee is 
charged by the Government for the use of this system;  however, the financial institutions involved may collect variable fees.  The system is mana ged by the Japan Multi-payment Network Management 
Organization, a non-profit organizat ion established by major financial institutions in Japan;  only 
institutions that participate in the organization can use this system.  As at March 2004, no foreign 
banks participate in the system. 
16. Complaints against decisions taken by Custom s may be made to the Director-General of 
Customs, within two months of the date of importation.  Further appeals may be lodged with the 
Minister of Finance within one mont h of the Director-General of Custom's decision on the complaint.  
The number of such complaints fell to 11 in 2003 from 25 the previous year;  11 appeals were made 
in 2002, and only three in 2003.  There have been no changes to the complaint and appeal process for 
Japan's customs procedure since 2002. 
(ii) Tariffs 
(a) Bound tariff 
17. In FY 2004, Japan's bound tariff consisted of 9,075 lines at the HS-9 digit level.
6  Japan has 
bound 98.9% of lines (102 lines are unbound);  ther e are no partially bound rates (Table III.1).  The 
unbound lines relate mainly to fi sheries (fish, crustaceans, seaweed ), petroleum oils, and wood and 
articles thereof.  Some 8,405 lines (92.6%) have ad valorem  rates, 212 lines (2.5%) carry specific 
rates, 57 lines (0.7%) compound rates, and 299 lines (3.6%) have alternate rates of duty.  In FY 2004, 
the average tariff bound was 6.4%, only slightly higher than the current applied MFN tariff (see 
                                                      
4 Continuously imported goods are goods that the importer has imported 24 times or more during the 
past year for each category of goods (as classified under the 9-digit HS code).  Under the simplified procedure, 
the goods are not subject to inspection and examination for the purpose of calculating tax. 
5 These include goods requiring physical verification, such as goods subject to preferential duty, goods 
imported in cases of emergency, and goods being re-imported after assembly and qualifying for duty reductions. 
6 The Japanese tariff schedule has three distinct sets of rates:  statutory rates (which include both 
general and temporary rates), WTO bound rates, and preferential rates (those under the GSP and the Japan–Singapore New Age Economic Partnership Agreement).  In the case of statutory rates, the "temporary" but 
apparently open-ended rate is normally used instead of the higher general rate;  the lower of the statutory and 
WTO bound rates are applied to WTO Members on an MFN basis, except when preferential rates are applied.  In instances where the temporary, general, or preferential rate is above the WTO bound rate, the latter rate 
applies to WTO Members. Japan WT/TPR/S/142 
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below), suggesting a great deal of  predictability in the tariff.  Bound rates exceed MFN rates for, 
inter alia,  live animals and animal products (HS Sectio n 1), vegetables (HS Section 2), prepared 
foods, beverages and tobacco (HS Section 4), ch emicals and products (Section 6), textiles and 
clothing (Section 11), and base metals (Section 15 ).  The average bound rate for agriculture is 
considerably higher, at 18.4%, compared with 3.7% for non-agricultural products;  this average for agriculture is expected to remain unchanged in 200 9, when Japan completes the implementation of its 
Uruguay Round commitments.
7 
Table III.1 
Structure of MFN tariff in Japan, 2001-04 
(Per cent) 
    FY 2001a FY 2002a FY 2003b FY 2004b U.R.b,c 
 Bound tariffd      
1. Bound tariff lines (% of all tariff lines) 98.9 98.9 98.9 98.9 98.9 
2. Simple average bound rate 8.6 8.5 6.4 6.4 6.4 
  Agricultural products (HS01-24) 27.0 26.6 16.8 16.8 16.8 
  Industrial products (HS25-97) 4.1 4.1 3.9 3.9 3.9 
  WTO agricultural products 29.7 28.9 18.4 18.4 18.4 
  WTO non-agricultural products 4.0 3.9 3.8 3.7 3.7 
   Textiles and clothing 7.4 7.1 6.7 6.7 6.7 
3. Tariff quotas (% of tariff lines) 1.6 1.7 1.6 1.6 1.6 
4. Duty free tariff lines (% of tariff lines) 35.5 35.2 40.8 40.9 40.9 
5. Non- ad valorem  tariffs (% of tariff lines) 6.6 6.5 6.4 6.3 6.3 
6. Non- ad valorem  tariffs with no AVEs (% of tariff lines) 0.8 0.8 1.6 1.5 1.5 
7. Nuisance bound rates (% of tariff lines)e 6.5 6.7 1.0 1.0 1.0 
 Applied tariff      
8. Simple average applied rate 6.9 6.9 6.3 6.3 .. 
  Agricultural products (HS01-24) 18.8 18.6 16.1 16.1 .. 
  Industrial products (HS25-97) 4.0 3.9 3.8 3.8 .. 
  WTO agricultural products 20.4 20.0 17.7 17.7 .. 
  WTO non-agricultural products 3.9 3.9 3.8 3.7 .. 
   Textiles and clothing 7.3 7.0 6.7 6.7 .. 
9. Domestic tariff "peaks" (% of all tariff lines)f 5.8 6.0 6.5 6.4 .. 
10. International tariff "peaks" (% of all tariff lines)g 7.5 7.6 7.4 7.4 .. 
11. Overall standard deviation of tariff rates 33.0 32.5 23.2 23.2 .. 
12. Coefficient of variation of tariff rates 4.8 4.7 3.7 3.7 .. 
13. Tariff quotas (% of all tariff lines) 1.6 1.7 1.6 1.6 .. 
14. Duty free tariff lines (% of all tariff lines) 36.8 36.7 41.6 41.6 .. 
Table III.1 (cont'd) 
                                                      
7 Japan implemented its tariff reduction commitments for all but one industrial product by 
January 1999 and for agricultural products by January 2004.  Tariff reduction commitments are yet to be met for 
one remaining industrial product, menthol (HS 2906), expected by April 2009.  WT/TPR/S/142 Trade Policy Review 
Page 28 
 
 
    FY 2001a FY 2002a FY 2003b FY 2004b U.R.b,c 
15. Non- ad valorem  tariffs (% of all tariff lines) 7.3 7.1 6.6 6.6 .. 
16. Non- ad valorem  tariffs with no AVEs (% of all tariff lines) 1.3 1.2 1.4 1.4 .. 
17. Nuisance applied rates (% of all tariff lines)e 5.9 6.1 1.1 1.1 .. 
.. Not available. 
a Using 2000 AVEs, as available, provided by the Japanese authorities;  where unavailable, the ad valorem  part is used for 
compound and alternate rates. 
b Using 2003 AVEs, as available, provided by the Japanese authorities;  where unavailable, the ad valorem  part is used for 
compound and alternate rates. 
c Based on FY 2004 tariff schedule. 
d Calculations are based only on bound tariff lines (98.9% of total lines). e Nuisance rates are those greater than zero, but less than or equal to 2%. f Domestic tariff peaks are defined as those exceeding three times the overall simple average applied rate (indicator 8). 
g International tariff peaks are defined as those exceeding 15%. 
Note: All tariff calculations exclude in-quota lines.  FY 2001 is based on HS96 nomenclature;  FY 2002, FY 2003 and FY 2004 are  
based on HS02 nomenclature.  AVEs have been adjusted accordingly (e.g. a specific tariff line's MFN applied rate equals 
100 yen/kg in 2001;  the given 2001 AVE equals 50%.  For the same line the bound rate equals 150 yen/kg in 2001 and in 2002 
its applied rate equals 75 yen/kg.  Their AVEs become 75% and 37.5%, respectively). 
Source:  WTO calculations, based on data provided by the Japanese authorities. 
(b) MFN tariff 
Structure 
18. Japan's current applied most-favoured-nation (MFN) tariff consists of 9,075 lines in the 
HS-9 digit nomenclature.  Some 93.4% involve ad valorem  rates, with 2.3% of all tariff lines being 
specific, 3.3% alternate, and 0.6% compound rates;  other rates (differential duties and sliding duties)  
involve 0.4% of MFN tariff lines.8  There are 147 tariff lines (1.6%) for which out-of-quota tariff rates 
currently apply;  35 of these lines are subject to ad valorem  rates of duty.  Around 6.6% (601 lines) of 
the tariff is subject to non- ad valorem  rates of duty;  these duties are found mainly in fats and oils, 
footwear, textiles and clothing, prepared foods, live animals and animal products, vegetables, and 
mineral products (Chart III.1);  ad valorem  equivalents were provided by the authorities for 469 lines 
as a result of which the tariff analysis is  based on 98.6% of all 9,075 tariff lines.9 
 
                                                      
8 An alternate duty involves either an ad valorem  or specific rate;  usually the higher of the two is 
applied.  A compound duty involves a combination of both ad valorem  and specific rates.  A differential duty 
involves a specific rate charged per kg. of imports with the rate varying directly with the difference between the 
standard import price, set by the authorities, and actual import price.  A sliding duty involves a specific tariff rate for imports valued up to a certain threshold;  the rate declines as the value exceeds the threshold and 
becomes zero at certain point.  For example, the applied rate on refined lead is ¥2.70/kg. when the value for 
customs duty does not exceed ¥172/kg., (¥180 minus the value for customs duty)/kg. when the value is more than ¥172/kg. but less than ¥180/kg., and zero when the value exceeds ¥180/kg. 
9 Ad valorem  equivalents were provided by the authorities for 469 out of 598 non- ad valorem  tariff 
lines.  For 22 lines that carry alternate rates of duty, and 29 lines with compound rates, the ad valorem  part of 
the line was used in the tariff analysis, which means that the levels of these alternate and compound rates are 
underestimated. Japan WT/TPR/S/142 
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(0) (0) (0) (0) (0)(29)(74)
(57)(36)
(121)
(27)
(4) (0) (0) (0) (0)(223)(25)
(601)
(0)(2)(0)
051015202530354045
Live animal & prod.
Vegetable products
Fats and oils
Prepared food, etc.
Mineral prod.
Chemicals & prod.
Plastic & rubber
Hides & skins
Wood & articles
Pulp, paper, etc.
Textiles & articles
Footwear
Articles of stone
Precious stones, etc.
Base metals & prod.
Machinery
Transport equipment
Precision instruments
Arms & ammunition
Misc. manufacturers
Works of art, etc.
TotalChart III.1
Share of non- ad valorem  duties, by HS section, FY2004
Per cent
Note:
Source :Each bar in the chart depicts the percentage of ta riff lines out of the total within each HS section 
that are non- ad valorem  duties.  The figures in parentheses show the number of lines involving non-
ad valorem rates.  In-quota rates are not included.
WTO Secretariat estimates , based on data provided b y Japanese authorities.
 
19. Around 41.6% of Japan's tariff is duty free;  ar ound 23.2% is subject to rates greater than zero 
and less or equal to 5%, and 22.1% to rates grea ter than 5% and less th an or equal to 10%, 
respectively.  Some 1.6% of all tariff lines in Japa n's tariff are subject to tariff rate quotas.  While 
100% of the in-quota rates are ad valorem , only 23.8% of out-of-quota rates are ad valorem .  There is 
also a significant difference between the average rate s;  the in-quota rate averages 18.9%, compared 
with 90.8% for the out-of-quota rates. 
Tariff averages 
20. In FY 2004, Japan's overall simple average app lied MFN tariff was 6.3% down from 6.9% in 
FY 2002.  Agriculture receives much higher protect ion than non-agricultural products, with the simple 
average for agriculture (Uruguay Round definition) averaging 17.7% compared with 3.7% for non-
agricultural products (Chart III.2).  Protection for footwear and headgear, prepared foods, vegetables, 
rice, live animals, hides and skins and tex tiles and clothing is also relatively high. 
 WT/TPR/S/142 Trade Policy Review 
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0510152025303540
Live animal & prod.
Vegetable products
Fats and oils
Prepared food, etc.
Mineral prod.
Chemicals & prod.
Plastic & rubber
Hides & skins
Wood & articles
Pulp, paper, etc.
Textiles & articles
Footwear, headgear
Articles of stone
Precious stones, etc.
Base metals & prod.
Machinery
Transport equipment
Precision instruments
Arms & ammunition
Misc. manufactures
Works of art, etc.
TotalChart III.2
Simple average applied MFN tariff rates, by HS section, FY2002 and 2004
Per cent
Excluding in-quota rates.  Including ad valorem  equivalents (AVEs) provided by the Japanese authorities, as 
available.   The ad valorem  part of compound and alternate rates a re taken into account where AVEs are not 
available.  
WTO Secretariat calculations, based on data provided by the Japanese authorities.Note:
Sourc e:FY2002
FY2004
 
21. Ad valorem  equivalents (AVEs) were provided  by the authorities (for 2003) for 
approximately 78.4% of the non- ad valorem  rates.10  The simple average rate for all the AVEs 
supplied is 39.2%, although the highest rate is 1,124.1%, for konnyaku tubers;  93 of the top 100 tariffs entailed non- ad valorem  rates.  The overall average for the AVEs is also high compared 
with the overall simple average tariff of 6.3%, and the simple average of the ad valorem  rates of 
4.4%.
11  
22. The data on tariff escalation show no overall cons istent pattern other than that the high level 
of protection granted to agricultural products resu lts in higher overall tariff protection for primary 
products than for semi-processed products.  Tari ff escalation from semi-processed to final goods is 
present in some sectors, notably leather products, an d textiles.  In other sectors, such as wood and 
wood products, other food products and animal feeds, and other chemicals, protection for fully 
processed goods is lower than for semi-processed products, while escalation from primary to semi-
processed and final products is evident only for food products, industrial chemicals, and rubber 
(Table AIII.1). 
                                                      
10 According to the authorities, AVEs for the remaining non- ad valorem  tariff lines were not available 
due to lack of imports of an unspecified number of these items, or because the unit for duty did not correspond 
to that used for trade statistics. 
11 For FY 2002, the simple average of ad valorem  rates was 4.5% and the average of the AVEs 
supplied by the authorities was 44.2%. Japan WT/TPR/S/142 
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Tariff reduction and exemptions 
23. Customs duty reductions and exemptions for FY 2003 amounted to about ¥193.4 billion, 
which accounted for about 23% of total tariffs collected. 
(c) Preferential rates 
24. Preferential rates of tariff are offered under the Generalized Sy stem of Preferences (GSP) to 
140 developing countries and 15 territories, including additional preferences for 47 least-developed 
countries (LDCs).12  Japan also grants preferential access for imports from Singapore under the Japan-
Singapore Economic Agreement for a New Age Partnership (JSEPA).  As of 1 April 2003, Japan has 
increased the number of agricultural and fishery products for which least-developed countries are 
granted duty-free and quota-free treatment.  GSP preferences for developing countries were also increased
13;  in addition, the preferential tariff  rates for 67 products were reduced.14  Senegal was 
added to the list of LDCs in April 2002;  and Slovenia was graduated out of the GSP on 1 April 2003 
(Chapter II(3)(iv)). 
25. The simple average tariff rates under all three preferential arrangements (GSP, LDC and 
JSEPA) are lower than the simple average MFN ra te although there are wi de variations from one 
product group to another.  In particular, while th e overall simple average GSP, LDC and JSEPA rates 
are, respectively, 5.1%, 3.1% and 4.2%, agriculture is  subject to much higher rates, at 16.7%, 15.3% 
and 17.7% (Table III.2).  Tariffs are also high for certain processed and industrial goods, such as 
leather, rubber, footwear and travel goods, and textiles and clothing imports under the GSP and the 
JSEPA;  items such as dairy products and some footwear and textiles and clothing items are not included in the GSP scheme for developing countries and are therefore subject to MFN rates of duty. 
Table III.2  
Preferential tariff rates, FY 2004 
 MFN GSP LDC JSEPA 
Per cent ad valorem  93.4 93.8 96.7 96.2 
Overall simple average 6.3 5.1 3.1 4.2 
Agriculture (WTO definition) 17.7 16.7 15.3 17.7 
Dairy products 79.6 79.6 79.6 79.6 
Leather, rubber footwear, and travel goods 17.2 15.9 1.7 17.2 
Textiles and clothing 6.7 5.0 0.0 0.1 
Note: Calculations exclude in-quota rates and include AVEs as available. 
Source: WTO calculations, based on data provided by the authorities. 
26. Data provided by the authorities show that the value of imports qualifying for preferential 
treatment from developing countries was ¥4.63 trillio n (11% of total imports) in FY 2002 compared 
with ¥4.54  trillion in FY 2001;  some 34%, or ¥1.57 tr illion (3.7% of total imports) was actually 
                                                      
12 Of the countries officially recognized by the United Nations as being least developed, the Comoros 
and Djibouti are not eligible for Japan's GSP programme.  
13 Industrial products excluded from the GSP include petroleum products, salt, gelatine, some articles 
of apparel and clothing, and footwear. 
14 The products for which GSP rates were reduced include:  some kinds of fruit, nuts, oats, prepared 
peas, red or preserved fruit, instant tea, silk yarn, and dolls (WTO document WT/COMTD/N/2/Add.12, 
12 May 2003). WT/TPR/S/142 Trade Policy Review 
Page 32 
 
 
granted preferential entry into Japan in FY 2002.15  Of this, around 22% of total imports entering 
under preferential treatment were agricultural produc ts.  Imports from LDCs entering Japan under 
preferential treatment in FY 2002 were valued at ¥31.43 billion (almost 0.1% of total imports in 
FY 2002), up from to ¥29.87 billion in FY 2001, of which 26% were agricultural products. 
27. China is the largest beneficiary of preferential access to the Japanese ma rket;  its share rose 
from almost 53% of imports entering under prefer ential treatment in FY 2000 to 56% in FY 2002 
(Chapter II(3)(iv)). 
(iii) Non-tariff border measures 
28. The non-tariff border measures (NTMs) currently applied by Japan involve import 
prohibitions, import licensing, and quantitative restrictions.16  The importation of certain goods, such 
as narcotics, revolvers and pistols,  and articles infringing patents or other intellectual property rights, 
may be prohibited or subject to import licensing in  order to ensure national security, safeguard 
consumer health and well-being, or to preserve do mestic plant and animal life and the environment. 
Some commodities, including certain fish, silk fabrics,  and silk yarn are subject to import quotas or 
restraints under bilateral trade agreements and arrangements with, for example, China and the 
Republic of Korea. 
29. Since the previous Trade Policy Review of Japan in 2002, there have been no changes in its 
list of prohibited imports.  Under the import licen sing procedures, change s in the list of items 
requiring import approval, in accor dance with Japan's international arrangements, include the addition 
of:  bluefin tuna, swordfish and their preparations fr om Sierra Leone;  bigeye tuna and its preparations 
from Bolivia, Cambodia, Sierra Leone, and Georgi a;  wood and articles of wood from Liberia; 
diamonds from Liberia and other countries (except for the countries under the Kimberley Process 
Certification Scheme)17;  controlled substances listed in Annex E and in Annex C, Group III of the 
Montreal Protocol on Substances that Deplete the Ozone Layer;  and cultural property illegally 
removed from Iraq.  Silk yarn from the Republic  of Korea, bluefin tuna, swordfish and their 
preparations from Honduras and Belize, bigeye tuna  from Belize and Saint Vincent, wood and articles 
of wood from Cambodia and all items from Iraq (except for cultural properties) were removed from 
the import approval list.  In addition, frozen  bigeye tuna, specified cultural property of Law 
Concerning Controls on the Illicit Export and Impo rt of Cultural Property, frozen swordfish, and 
rodents from specified countries of Africa have b een added to the list of items requiring prior 
ministerial approval.18 
                                                      
15 The difference between imports qualifying for preferential treatment and imports actually accorded 
such treatment may arise due to imports in excess of the "ceiling" levels, for which the preferential treatment 
was thus suspended. 
16 Prohibited imports are defined under Article 21 of  the Customs and Tariff Law.  Import licensing 
procedures are governed by the Foreign Exchange and Foreign Trade Law.  Approval from the Minister of Economy, Trade and Industry is required to import goods subject to Japan's international arrangements. 
17 The Kimberly Process certification scheme is a joint initiative by governments, international 
diamond industries, and civil society; it imposes extensive requirements on participants to certify that shipments of rough diamonds are free from "conflict diamonds" (i.e. those used by rebel movements to finance wars). 
18 Prior ministerial approval is based on Article 52 of the Foreign Exchange and Foreign Trade Law, 
which requires confirmation from the competent govern ment minister;  import approval concerns designated 
goods originating in or shipped from certain areas, and items controlled by international convention or 
agreement.  Japan WT/TPR/S/142 
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(a) Import quotas 
30. Japan has not changed its import quota system since 2002.  Import quotas are imposed on 
various items, including certain fi sh products, certain organic chem icals, pharmaceuticals, explosives, 
rubber adhesives, military equipmen t and firearms, silk yarn, gauze of  silk, and woven fabric of silk 
shipped from China.19  Since its previous Review, controll ed substances listed in the Montreal 
Protocol on Substances that Deplete the Ozone Layer have been removed from the list of items 
subject to import quotas, while hydroxybutyrate, methyl-4-methylthiophenetylamine, heptanoic acid, 
piperazine, benzylpiperrazine and substances lis ted on the Stockholm Convention on Persistent 
Organic Pollutants have been added to the list. 
(b) Import surveillance 
31. Japan maintains a system of prior confirmation to collect data concerning imports, monitor, 
and confirm that imports are for specific uses, and verify documentation and origin requirements.  
Prior confirmation is required from the Minister of Economy, Trade and Industry, or other relevant 
ministers;  some items require confirmation at Cust oms (customs confirmation).  Since 2002, silk yarn 
from the Republic of Korea, fresh or chilled swordfish, rough diamonds, and agricultural chemicals have been added to the list of customs confirma tion items, while unbleached woven fabrics of cotton 
have been removed from the list. 
(iv) Contingency measures 
(a) Anti-dumping, countervailing, and safeguard measures 
32. Japan's current use of anti-dump ing, countervailing, and safegu ard measures is based on the 
Customs Tariff Law and the relevant Cabinet Orde rs, Regulations and Guide lines.  In April 2002, 
amendments were made to the Cabinet Order Rela ting to Emergency Duties and the Regulations to 
Govern Emergency Measures to be taken in Response to an Increase in the Importation of Goods;  the 
amendments introduced a public hearing and an oppo rtunity for any interested persons to present or 
view the information and evidence.  Japan has not imposed any safeguard measures since 2002. 
33. In March 2004, amendments were made to Ar ticle 4 of the Cabinet Order Relating to Anti-
Dumping Duty and Article 2 of the Cabinet Order Relating to Countervailing Duty and the Guidelines for Procedures Relating to Count ervailing and Anti-dumping Duties.
20  The amendments concerned 
the definition of domestic in dustry eligible to file complaints against injury. 
34. Japan has in place one anti-dumping measure, which was imposed on certain polyester staple 
fibre from the Republic of Korea and the Separate Customs Territory of Taiwan, Penghu, Kinmen and 
Matsu (Chinese Taipei) on 26 July 2002.  No anti- dumping cases are currently being investigated. 
35. On 4 August 2004, Japan took its first countervailing action by initiating an investigation of 
dynamic random access memories (DRAMs) imported from the Republic of Korea. 
36. Under the Japan–Singapore Economic Agreement for a New Age Partnership (JSEPA), an 
emergency tariff increase on a duty-free item bound in the JSEPA is allowed as long as the resulting 
tariff rate does not exceed the lesser of:  the MFN applied rate in effect at the time the measure is 
                                                      
19 See WTO (2003), p. 82. 
20 See WTO document G/ADP/N/1/JPN/2/Suppl.4 and G/SCM/N/1/JPN/2/Suppl.4, 5 April 2004 for 
details. WT/TPR/S/142 Trade Policy Review 
Page 34 
 
 
taken, and the MFN applied rate in effect on th e day immediately preceding the date of entry into 
force of the JSEPA. 
(v) Government procurement 
37. Japan is a signatory to the WTO Agreement on  Government Procurement (GPA).  Its GPA 
coverage encompasses all central  government entities, all 47 prefectures, 12 designated cities (shitei 
toshi) , and certain public corporations.21  Japan's thresholds for GPA coverage, expressed in yen, have 
increased since its previous Trade Policy Review, perhaps reflecting the depreciation of the currency;  
those expressed in Special Drawing Rights (SDRs) have remained unchanged, except for those arising 
from the classification of Japan Post in Annex 3.22  
38. In 2003, Japan notified the WTO Committee on Government Procurement of a number of 
organizational changes of proc uring entities subject to the GPA;  the changes included the 
replacement of the Postal Life Insurance Welfare Co rporation with Japan Post;  the replacement of  
the Japan Railway Construction Public Corporation and the Corporation for Advanced Transport and 
Technology with the Japan Railway Constructi on, Transport and Technology Agency;  the  
replacement of Metal Mining Agency of Japan and the Japan National Oil Corporation with the Japan 
Oil, Gas and Metals National Corporation23;  and the elimination of the National Aerospace 
Laboratory of Japan.24 
39. In accordance with the memorandum of agreement among ministries, signed in March 2002 
(subsequently revised in April 2002 and March 2003), all ministries in Japan agreed to adopt 
measures to ensure non-discriminatory, transp arent and fair procurement of their computer 
information systems (both products and services ).  These key measures include publication on 
ministry web sites of information on bidding results .  In October 2002, the Ministry of Public 
Management, Home Affairs, Posts and Telecomm unications (MPHPT) launched an online bidding 
system for non-public-works procurement that enab led companies to submit bids via the internet;  
other ministries launched similar online bidding systems by the end of FY 2003. 
40. The Government carries out annual review s of its voluntary measures under, inter alia , the 
1994 Action Program on Government Pr ocurement Procedures, as amended.25  A vo lun tary review 
meeting under the Action Program is conducted every year to provide domestic and foreign suppliers 
an opportunity to raise opinions on the implementation of the voluntary measures, to ensure 
transparency, fairness and competitiveness in procur ement procedures, and to facilitate market access 
for domestic and foreign suppliers.  At each annual meeting, an initiative on future management of 
government procurement is confirmed.  The auth orities state that government procurement is 
conducted without restriction on suppliers' nationality  or on the origin of products or services, based 
on the principle of non-discrimination, and that all relevant entities have thoroughly implemented the 
                                                      
21 The designated cities are twelve cities with populations over 500,000, designated by a relevant 
Cabinet Order.  The Account Law and relevant ordinances specify the procurement procedures for the central 
government entities, while the Local Autonomy Law stipulates procurement procedures for local governments.  
22  WTO documents GPA/W/168/Add.4 and GPA/W/285/Add.5, 18 March 2002 and 4 February 2004. 
23 The Japan National Oil Corporation, which it is scheduled to be abolished at the end of March 2005, 
remains listed in Annex 3 for the time being.  See WTO document GPA/MOD/JPN/1, 4 February 2004. 
24 WTO documents GPA/W/255, GPA/W/275, and GPA/W/272/Rev.1, 4 March 2003, 
23 September 2003,  and 8 October 2003, and GPA/MOD/JPN/1, 4 February 2004.  Other changes in Japan's 
GPA coverage since the previous Review are noted in WTO documents GPA/W/19 6, 252, 253, 254, 272, 
272/Rev.1, 273, 274, 275, 276, 37/Add.1, and GPA/W/285/Add.5. 
25 For details of these measures, see WTO (2001), Chapter III(2)(vii).  Japan WT/TPR/S/142 
 Page 35 
 
 
GPA;  no price or other kind of preferences are gr anted to domestic suppliers in tenders covered by 
the GPA.26 
41. For procurement above the threshold level of SDR 100,000 specified under the 1994 Action 
Program, excluding procurement involving public work s, open tendering accounted for 63.1% of the 
total procurement value of ¥969 billion in 20 02;  procurement of overseas goods and services 
accounted for 13.8% (17.1% for goods only) of the total (Table III.3).27  The share of selective 
tendering fell to 1.5% in 2002, while that of single tendering rose to 35.4%, compared with 1.6% and 
30.8%, respectively, in 2000.  Procurement from fo reign suppliers, which has always been low, 
decrease in 2002, to 4.2 % and 2.1% in value and contract terms, compared with 6.9% and 2.7%, 
respectively, in 2000.  The shares of foreign supplie rs in contracts resulting from open, selective, and 
single tenders were 1.3%, zero, and 5.3 % in 2002 (the 2000 ratios were 1.7%, zero, and 3.2%).28  The 
share of foreign suppliers in the total number of  r e g i s t e r e d  s u p p l i e r s  w a s  0 . 3 %  i n  F Y  2 0 0 2 .   
According to the authorities, no data exist on shares of foreign suppliers in public works contracts;  
almost all public works projects valued at or above the WTO GPA threshold are subject to open 
competitive bidding. 
Table III.3 
Procurement composition by product and by origin, 2002 
(¥100 million and per cent) 
Share 
No. Products Total value 
Domestic Foreign 
1. Products from agriculture, and from agricultural and food processing industries 0.9 100 0 
2. Mineral products 185.9 30.6 69.4 
3. Products of the chemical and allied industries 31.2 70.5 29.5 
4. Medicinal and pharmaceutical products 288.5 69.3 30.7 
5. Artificial resins and plastic materials, cellulose esters and ethers, and articles thereof;  
rubber, synthetic rubber, factice, and articles thereof;  raw hides and skins, leather, 
furskins and articles thereof, other than articles of apparel and clothing accessories of 
leather, saddlery and harness, articles of animal gut 8.3 96.5 3.5 
6. Wood and articles of wood;  wood charcoal;  cork and articles of cork;  paper making 
material;  paper and paperboard and articles thereof;  manufactures of straw of esparto 
and of other planting materials, basketwork and wickerwork 178.2 100 0 
7. Textiles and textile articles, footwear, headgear, umbrellas;  sunshades;  walking sticks, 
whips, riding crops and parts thereof;  travel goods;  hand-bags and similar containers;  
articles of apparel and clothing accessories, of leather or composition leather 96.1 100 0 
8. Articles of stone, plaster, asbestos, mica and similar materials;  ceramic products, other 
than sanitary fixtures;  glass and glassware, other than illuminating and signalling 
glassware and optical elements of glass, not optically worked nor of optical glass 2.4 100 0 
9. Iron and steel and articles thereof, other than boilers and radiators for central heating, air 
heaters and hot air distributors not electronically heated 139.1 99.8 0.2 
10. Non-ferrous metals and articles, other than lamp and lighting fittings 34.4 98.9 1.1 
11. Power generating machinery and equipment 134.7 92.4 7.6 
12. Machinery specialized for particular industries 102.8 94.2 5.8 
13. General industrial machinery and equipment, and machine parts 54.4 90.3 9.7 
14. Office machines and automatic data processing equipment 2,206.2 87.7 12.3 
15. Telecommunications and sound recording and reproducing apparatus and equipment 630.3 94.7 5.3 
Table III.3 (cont'd) 
                                                      
26 WTO (2003), Chapter III(2)(vi). 
27 Prime Minister's Office (2003). 
28 In order to participate in open or selective tende ring procedures, domestic and foreign suppliers are 
required to apply for qualification to each procuring entity and be included in the list of registered suppliers. WT/TPR/S/142 Trade Policy Review 
Page 36 
 
 
Share 
No. Products Total value 
Domestic Foreign 
16. Electrical machinery, apparatus and appliances, and electrical parts thereof 197.6 87.2 12.8 
17. Road vehicles 325.2 99.2 0.8 
18. Railway vehicles and associated equipment 66.9 72.1 27.9 
19. Aircraft and associated equipment 26.4 37.9 62.1 
20. Ships, boats, and floating structures 75.2 98.7 1.3 
21. Sanitary, plumbing, and heating equipment 6.6 61.8 38.2 
22. Medical, dental, surgical, and veterinary equipment 536.5 57.6 42.4 
23. Furniture and parts thereof 58.3 98.2 1.8 
24. Professional, scientific and controllin g instruments and appa ratus 1,114.1 73.8 26.2 
25. Photographic apparatus, equipment and optional goods;  watches and clocks 120.5 88.8 11.2 
26. Miscellaneous articles 253.6 91.9 8.1 
 Total 6,874.1 82.9 17.1 
Source:  Information provided by the Japanese authorities. 
42. Data provided by the Japanese Fair Trade Commission (JFTC) show that most cases of 
proven infringement of Japan's Anti-Monopoly Act (AMA) continue to involve bid-rigging related to 
public works (section (5)(vi)).  The Act for Promo ting Proper Tendering and Contracting for Public 
Works defines major policy instruments for preventing bid-rigging and other improper actions, such 
as notification of improper actions to the JFTC.29  Furthermore, the Act Concerning Elimination and 
Prevention of Involvement in Bid Rigging, which entered into force in January 2003, inter alia,  
authorizes the JFTC to formally demand that the heads of ministries and agencies improve their 
administration measures on bidding and contracts to eliminate bid-rigging;  the heads must conduct 
necessary investigation if requested by the JFTC, ta ke action to eliminate bid-rigging, if its existence 
becomes evident, and publicize the result of the inve stigation and actions taken in response to the 
investigation.  According to the authorities, the Act "provides effe ctive means to prevent so-called 
'government involved bid rigging' incidents that have occurred in recent years."30  Since January 2003, 
there have been two cases in which the JFTC demanded the heads of ministries and agencies to take 
necessary measures on the administration of bi dding and contracts to eliminating bid-rigging.  
43. The Office of Government Procurement Review (OGPR) headed by the Chief Cabinet 
Secretary, processes complaints concerning procur ement procedures by the Central Government and 
public corporations.  The Government Procurement Review Board, an independent examining body, 
considers complaints.31  The procuring entity is expected to  follow the recommendations voluntarily. 
Since the previous Review of Japan, one complaint has been filed.32  
(vi) State trading 
44. There has been no change in Japan's state tr ading activities since 2002, except that state 
trading activities of the former Fo od Agency were taken over by the General Food Policy Bureau of 
                                                      
29 WTO document GPA/61, 18 October 2001. 
30 OECD (2003a). 
31 WTO (2003), Chapter III(2)(vi). 
32 The status of receipt and review of complaints is  released every quarter.  The "Review Procedures 
for Complaints concerning Government Procurement" (a decision by the OGBR on 14 December 1995), 
encourage consultations between a complainant and a procuring entity before a complaint is filed.  The complaint filed concerned a procurement of parking stru cture construction at the Tokyo International Airport 
site.  Japan WT/TPR/S/142 
 Page 37 
 
 
the Ministry of Agriculture, Forestry and Fisheries in July 2003 (Chapter IV(2)(ii)).  State trading 
activities in Japan involve leaf tobacco, opium, alco hol, rice, wheat and barley, milk products, and 
raw silk.  The stated aims of such trading incl ude: stabilizing supplies to consumers; controlling 
imports to assist domestic producers; and protectio n of consumers' interests.  State-trading activities 
are generally underpinned by legislated import rights  and, in some cases, by specific monopoly rights 
over domestic production and distribution.33 
(vii) Standards, and sanitary and phytosanitary measures 
(a) Standards, testing, and conformity assessment 
45. Japan has moved toward increased deregulati on and international harmonization of its 
standards and technical regulations and the adopti on of mutual recognition arrangements.  Japan's 
voluntary standards, mandatory technical regula tions, and sanitary and phytosanitary (SPS) 
regulations are summarized in Table III.4. 
Table III.4 
Major standards and technical regulations in Japan, 2003 
 Number of 
standards 
regulations Percentage 
corresponding 
to international 
standardsa Percentage 
equivalent to 
international 
standards Percentage 
acceptance 
of overseas 
certificationb Percentage 
acceptance of 
overseas test 
datab 
A.  Mandatory technical regulations      
Pharmaceuticals Affairs Law 3,598 .. .. .. .. 
Food Sanitation Law 515 .. .. .. .. 
Electrical Appliance and Materials Safety 
Law 452 .. .. .. .. 
Consumer Product Safety Law 6  0  0 0 .. 
High Pressure Gas Safety Law 2 .. ..  .. 100 
Building Standard Lawc .. .. .. .. .. 
Safety Regulations for Road Vehicles 202 24 0 28 28 
Law concerning the Safety Assurance and 
Quality Improvement of Feedd 157 .. .. .. 100 
Law concerning Examination and 
Regulation of Chemical Substances and 
Regulation of their Manufacture  5 .. ..  .. 100 
Telecommunications Business Law .. .. .. .. .. 
Radio Lawe .. .. .. .. .. 
Fertilizer Control Law .. .. .. .. .. 
B.  Voluntary standards       
Japan Industrial Standards (JIS) 9,293 50 92 .. .. 
Japan Agricultural Standards (JAS) 243 .. ..  .. .. 
Total  .. .. .. .. .. 
.. Not available  
a Defined as "primary aspects sharing a common scope". 
b Where applicable. c Building Act Code. 
d As of December 2003. 
e According to the authorities, the number of mandatory technical regulations is not available because the scope and definition  of 
mandatory technical regulations is ambiguous;  the technical conditions of radio stations in Japan generally comply with ITU-R Recommendations and Radio Regulations, and international harmonization is given consideration.  Regarding the system for the 
certification of radio equipment the Radio Law was amended to establish the system for accepting foreign test results and forei gn 
certification (promulgated in 1998 and went into effect in 1999). 
Source:  Information provided by the Japanese authorities. 
                                                      
33 WTO (2003), Chapter III (2)(vii). WT/TPR/S/142 Trade Policy Review 
Page 38 
 
 
Voluntary standards 
46. Voluntary standards in Japan comprise Japan Industrial Standards (JIS) and Japan 
Agricultural Standards (JAS), with 9,293 and 243 standa rds, respectively, in 2004.  Japan continues to 
bring its standards into line with their international counterparts.  About 92% of JIS were aligned with international standards in 2004, up from 91% in 2003 and about 50% in 1997.  From April 2003 to March 2004, 364 items of JIS were revised, 70 were  withdrawn, and 227 were newly established.  
Since the previous Trade Policy Review of Japan, 38 items of JAS have been revised,  26 have been 
withdrawn, and 4 have been newly established.   
47. About 12,500 domestic and about 450 foreign factories in 22 countries have received 
approval to affix JIS marks (as at 31 March 2004).  The JIS marking system covers about 532 products.
34  The authorities maintain that domestic and foreign factories are treated in the same 
manner with regard to approval of  affixing JIS marks.  Six Japane se organizations are accredited as 
JIS mark certification bodies, and three foreign bodies are accredited, by METI.  For the JAS system, 
foreign producers or manufacturer s certified by Registered Certif ication Organizations (RCOs) or 
Registered Foreign Certification Organizations (R FCOs) can conduct their own grading and append 
the JAS symbols to their products.35  Since 2002, 21 RFCOs in eleven countries have been recognized 
by the Ministry of Agriculture, Forestry, and Fisheries (MAFF).36 
Mandatory technical regulations 48. According to the authorities, Japan's mandatory technical regulations under the Electricity 
Utilities Industry Law and the Electrical Applianc e and Material Safety Law are aligned with 
international standards.
37  Since March 2004, the authorization or recognition system under the 
Consumer Product Safety Law, the Law concerning the Securing of Safety and the Optimization of 
Transaction of Liquefied Petroleum Gas, the Ga s Utility Law, and the Electrical Appliance and 
Material Safety Law, has shifted to a registration system;  correspondingly, the standard of the 
product certification bodies set by ISO/IEC has be en quoted as the standard of registration.  
49. Data provided by the authorities indicate that  there are currently 202 regulations regarding 
road vehicle safety standards;  24% are aligned to international standard s (compared with 21% of 
190 regulations in 2002, and 15% of 271 regulations in 2000).  
50. Seventeen inspection bodies, six of which are foreign, are designated by METI for testing 
based on the major standards and certification syst ems (Table III.4) under the jurisdiction of METI.38  
In 2004, approximately 21% of all JIS were designat ed in Japanese laws and governments/ministerial 
ordinances as mandatory technical regulations. 
                                                      
34 JISC, "Outline of JIS Mark".  Available at:  http://www.jisc.go.jp/jis-mark/index.html. 
35 Only the products graded under the JAS system may affix JAS symbols. 
36 The 21 newly registered organizations are based in 11 countries:  Australia, Netherlands, Germany, 
Italy, Austria, France, Belgium, Spain, the United States, Norway, and Indonesia. 
37 The authorities indicate that most technical regulations under the Electrical Appliance and Material 
Safety Law, and 28 technical regulations under the Electric Utilities Industry Law are aligned with international 
standards.  
38 List of Designated Inspection Bodies (Online).  Available at:  http://www.jisc.go.jp/eng/jis-mark/spe-
insp-body.html [23 April 2004]. Japan WT/TPR/S/142 
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Bilateral, regional, and multinational arrangement 
51. The Mutual Recognition Agreement (MRA) on c onformity assessment procedures between 
Japan and the European Community, which entered into force on 1 January 2002 as Japan's first 
bilateral MRA, covers telecomm unications terminal equipment and radio equipment, electrical 
products, good laboratory practice (GLP) for chemic als, and good manufacturing practice (GMP) for 
medicinal products.39  An MRA between Japan and Republic of Singapore on conformity assessment 
procedures under a New-Age Economic Partnership (JSEPA) entered into force in November 2002;  
the MRA covers telecommunications terminal equi pment and radio equipment, and electrical products 
specified in two sectoral annexes to the agreement.40 
52. Japan has been holding consultations with the United States with regard to MRAs on GMP 
and GCP (good clinical practice) fo r medical devices and pharmaceuticals, and with the United States, 
Canada, Australia, and New Zealand on building standa rds.  The United States and Japan have also 
been exchanging views and information on a possible MRA on telecommunications terminal 
equipment and radio equipment.  In addition, Japa n has been investigating the possibility of mutual 
recognition of GMP for phar maceuticals with Canada.  
(b) Sanitary and phytosanitary measures 
53. On 16 January 2004, revised regulations entered into force under the Food Sanitation Law.  
The revision introduced specifications and standards for food and food additives in order to prohibit 
the use of bovine vertebral column as an ingredie nt of processed foods if it is derived from cattle 
originating in a country or zone where BSE has occurred. 
54. The Food Safety Basic Law entere d into force in July 2003;  the law is aimed at protecting the 
health of the public.  Under the Law, the Food Safety Commission was established in the Cabinet 
Office to perform risk assessments.41  The Commission's primary goals consist of three main 
components:  conducting risk assessments of food in  a scientific, independent, and fair manner, and 
making recommendations to relevant ministries  based upon the results;  implementing risk 
communication among stakeholders; and responding  to food-borne accide nts and emergencies. 
55. In December 2003, Japan banned imports of beef from the United States due to the outbreak 
of bovine spongiform encephalopathy (BSE) disease there.  Japan has also banned poultry imports 
from Cambodia; China;  Indonesia;  Italy;  Lao Pe ople's Democratic Republic;  Malaysia;  Pakistan;  
South Africa;  Thailand;  Viet Nam;  Hong Kong, Ch ina;  Macao, China;  and from two states of the 
United States since January 2004 because of the outbreak of avian influenza. 
56. Other changes in Japans' SPS measures since its  previous Trade Policy Review include the 
entry into force of amendments to:  the Animal Quarantine Measures for BSE on 4 February 200242;  
                                                      
39 The GMP for medicinal products has become applicable since 29 May 2004.  The importing party 
exempts the importers of medicinal products manufactured in the exporting party from testing. MOFA 
Announcement on mutual recognition agreement.  Available at:  http://www.mofa.go.jp/announce/announce/ 
2004/4/0428.html. 
40 Further information available at:  http://www.apec-iap.org/document/JPN_2003_IAP.htm. 
41 Risk assessment involves an evaluation of the possible harmful effect resulting from human exposure 
to food-borne hazards.  The results of  risk assessments are provided to rele vant ministries for risk management.  
Food Safety Commission online info rmation.  Available at:  ht tp://www8.cao.go.jp/shokuhin. 
42 In the amendment, the Government lifted the import on suspension steamed hoof and horn meal used 
for the production of fire extinguishers, bone charcoal used for the production of sugar, and crushed bone to be used for the production of bone charcoal used for the production of sugar (WTO document G/SPS/N/JPN/81, 
22 February 2002). WT/TPR/S/142 Trade Policy Review 
Page 40 
 
 
the Pharmaceutical Affair Law on 30 July 200343;  the Law concerning Safety Assurance and Quality 
Improvement of Feed on 1 July 200344;  the Enforcement Ordinance of the Standards of Feed and 
Feed Additives on 1 July 2003 and 1 January 200445;  and the Agricultural Chemicals Regulation Law 
on 10 March 2003.46 
(c) Labelling and packaging requirements 
57. Under the Food Sanitation Law, food and food ad ditives must be labelled with name of the 
substance, date of minimum durability, ways of  storing, and manufacturer.  Any food containing 
additives must also be labelled with the names of all additives included.  Th e labelling of origin of 
ingredients is defined in Japan Agricultural Standards (JAS) Law;  such labelling is mandatory only for designated food processed in Japan.
47  Processed food imported from foreign countries are 
excluded from the mandatory labelling of place of origin of the ingredients. 
58. To label food as "organic", accred itation is needed from an authorized accreditation body that 
the food meets certain JAS requirements.  Only accredited food may carry an organic JAS mark.  
Mandatory labelling regarding genetically modified organisms (GMOs) is applied to soybeans, corn, 
potatoes, rapeseed, cotton seed, and some processed foods mainly made of soybeans or corn according to the Genetically Modified Food Labelli ng Standard.  The Ministry of Health, Labour, and 
Welfare does not permit the importation of GMOs that  do not meet its safety requirements.  Labelling 
requirements for rice were also reinforced by the JAS Law.  The Agricultural Products Inspection 
Law requires mandatory inspections of rice, wheat, and barley as well as soybean.
48 
(3) IMPORT AND INWARD INVESTMENT PROMOTION MEASURES  
(i) Import promotion 
59. Japan has not introduced any new import promot ion measures since its previous Trade Policy 
Review.  Current measures include import activ ities by the Japan Exte rnal Trade Organization 
(JETRO) and a financing programme.49  The total budget for Japan's import promotion programmes 
was ¥300 million in FY 2004, a considerable decrease from ¥900 million in FY 2003 and 
¥1,804 million in FY 2002 (Table III.5). 
                                                      
43 This amendment was to limit manufacturers and/or importers of veterinary drugs to licensees 
approved by the Ministry of Agriculture, Forestry, and Fisheries under the Pharmaceutical Affairs Law. 
44 The amendment established the GMP system on specific feeds and feed additives, such as 
antibiotics, and prohibited the manufacture, import or use by farmers of feeds and feed additives that contained 
harmful materials.  It also designated the Independent Administrative Institution Fertilizer and Feed Inspection 
Station as the only organization to conduct official examinations (WTO document G/SPS/N/JPN/93, 27 January 2003). 
45 WTO document G/SPS/N/JPN/97, 20 March 2003. 
46 The amendment was to prevent distribution of unregistered agricultural chemicals.  No persons are 
allowed to produce, process or import any agricultural ch emicals prior to its registration at the Ministry of 
Agriculture, Forestry, and Fisheries (WTO document G/SPS/N/JPN/87, 27 November 2002). 
47 Processed food subject to mandatory labelling include:  pickled agricultural products, dried seaweed, 
salted seaweed, salted and dried fish products (horse mackerel and mackerel), salted fish products (mackerel), processed eel products, shavings of dried bonito, and frozen vegetable food.  On September 2004, Japan adopted 
mandatory labelling requirements for the origin of ingredients in 20 food items, including seasoned meat and 
dried vegetables. 
48 See WTO (2003), Chapter III(2)(vii)(c). 
49 The Tax Incentive for Manufactured Imports was abolished at the end March 2002. Japan WT/TPR/S/142 
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Table III.5 
Total budget for Japan's import promotion programmes 
(¥100 million )  
Budget Item FY 2002 FY 2003 FY 2004 
FAZ related budget 2.8 1.6 1.3 
MIPRO related budget 4.3 3.4 1.7 
JETRO import related budget 11.3 4.0 0 
Total 18.4 9.0 3.0 
Source: Information provided by the Japanese authorities. 
(ii) Investment regulation and promotion measures 
60. In FY 2002, foreign affiliated firms accounted for 2.0% of total sales in Japan (compared with 
1.9% in FY 2001), and 0.7% of employment (0.8% in FY 2001).50  The value of inward direct 
investment in Japan increased slightly, by 0.45% in FY 2002, to ¥2.19 trillion, which is about one half 
of Japan's outward FDI (up from in FY 1997).  In  FY 2003, inward FDI in Japan decreased by 3.2%, 
to ¥2.12 trillion.51  Inward FDI remains relatively low.52  Thus, Japan has decided to take measures to 
make it an attractive investment destination for fore ign firms, with a view to doubling the cumulative 
amount of inward FDI within the next five years.53 
61. Since Japan's previous Trade Policy Review, there has been no change in the regulatory 
regime concerning inward and outward FDI, which is governed mainly by the Foreign Exchange and 
Foreign Trade Law, together  with relevant cabinet a nd ministerial ordinances.54  Inward FDI generally 
requires ex post facto  reporting to the Minister of Finance and the Minister in charge of the industry 
involved within 15 days of executing a foreign investment in Japan.  Prior notification is required, in 
principle, for inward FDI in industries recognized  in the OECD Code of Liberalization of Capital 
Movements, such as agriculture, forestry and fi sheries, petroleum, leather and leather products, 
investment trust management, and air and maritime tr ansport.  In addition, some other sectors require 
prior notification on the grounds of public order and national security.55  Besides the notification 
requirements, various other laws stipulate specific re strictions on inward FDI in certain sector, such as 
real estate, fisheries, financial serv ices, telecommunications, and transport.56  The provisions of 
                                                      
50 METI "Survey of Trends in Business Activities of Foreign Affiliates (FY 2002)" (the latest available 
data). 
51 Ministry of Finance, "Foreign Direct Investment".  Available at www.mof.go.jp/English/e1c008.htm 
52 According to UNCTAD (2004), FDI inflows into Japan in 2003 amounted to US$6.3 billion, while 
those into the United Stat es, the European Union, and China we re US$29.8 billion, US$295.2 billion and 
US$53.5 billion, respectively.  
53 Prime Minister Koizumi's statement, of 31 January 2003, showed Japan's recognition of the 
significance of inward FDI, and demonstrated Japan's firm intention to increase inward FDI, as follows:  
"Foreign direct investment in Japa n will bring new technology and innov ative management methods, and will 
also lead to greater employment opportunities.  Rather than seeing foreign investment as a threat, we will take measures to present Japan as an attractive destination for foreign firms in the aim of doubling the cumulative 
amount of investment in five years." 
54 Among the most important ordinances are the Foreign Exchange Order and the Order of Inward 
Foreign Direct Investment. 
55 These include aircraft, arms, explosives, nuclear power, space, electric utilities, gas utilities, water, 
heat generation, rail transport, passenger transport, vaccine, security guard services, radio, telecommunications (accompanying certain network facilities), television and cable television, and broadcasting sectors. 
56 See WTO (2001) for details of the specific restrictions. WT/TPR/S/142 Trade Policy Review 
Page 42 
 
 
bilateral investment treaties (BITs) also regulate in vestment policy.  Since the previous Trade Policy 
Review, Japan has concluded one additional BIT, wi th Republic of Korea, bringing its total of ten.57 
62. The framework of Japan's promotion measures for inward FDI has remained generally the 
same since its previous Trade Policy Review.  The 1992 Law on Extraordinary Measures for 
Promotion of Imports and Facilitati on of Foreign Direct Investment in Japan, valid until 2006, its 
related ordinances, and other rele vant legislation, outline measures for investment promotion that 
mainly comprise financial support such as low-interest loans and loan guarantees, and technical 
support (Table III.6).  According to the authoriti es, these measures apply equally to domestic and 
foreign companies registered in Japan. 
Table III.6 
Measures to promote foreign direct investment into Japan, FY 2004  
I. Loan guarantees through the Industrial Structural Improvement Fund (ISIF)  
  (a) Relaxation of conditions for obtaining certification as a Designated Inward Investor:  A company that has been operating fo r less 
than eight years (currently five years) is eligible for certification.  
  (b) Relaxation of conditions for obtaining loan guarantees from ISIF:  currently, in order to obtain loan guarantees, as a rule , ISIF 
requires the backing of a capitalized enterprise and a legal representative of the borrower as a backer of guarantees.  The con dition of 
requiring a guarantee backer is abolished when the backing of a capitalized enterprise can be obtained.  
II. Provision of low-interest financing from the Development Bank of Japan, etc.  
  (a) Expanding eligible projects  
  Former limitation that required establishment in one of six industrial high-tech fields has been eliminated.  Projects establis hing 
facilities (including land) for lease by foreign companies and foreign affiliates with one third foreign ownership or more, or any 
company establishing office buildings in which the main tenants are non-Japanese businesses are eligible.  
  (b) Creating new loan programmes  
  Loan programme for promoting market entry of foreign-affiliated firms:  in addition to the capital investment finance, the new 
programme will finance related working capital needs (e.g. rent for facilities, property tax, insurance premium).  
  Loan programme for facilitating international cooperation between enterprises:  if the foreign share in the company exceeds 1/3  of 
total equity as a result of M&A, the company can obtain JDB loans for capital investment afterward.  Corporate alliances involv ing 
transfer of operations are also eligible for this loan programme.  
 Loan programme for supporting environment-friendly management systems:  if the foreign companies pass the bank's evaluating 
process, they can obtain a low-interest loan and the bank guarantees the company's bonds in order to support the projects.  
III. Import promotion measures  
  (a) Tax reductions, applied to national and local taxes, for foreign access zone (FAZ) related businesses.  Businesses undertak ing 
activities to promote distribution of imported cargo (wholesalers, manufacturers, transporters or retailers dealing with import ed 
goods) within specified zones for congregation in FAZ areas designated by the local governments of approved FAZ areas can make 
use of following tax reduction measures:  
  Reduction of national taxes (Tax Incentives for the Promotion of Business Congregation within the FAZ Areas):  special depreciation with regard to certain machinery, facilities, buildings, etc. acquired for their business use.  (The rate of speci al 
depreciation is:  22% for machinery and facilities;  10% for buildings.) 
  Reduction of local taxes:  exemption from special landholding tax on the land for the facilities.  Also eligible for a reductio n or 
exemption from the real estate acquisition tax and fixed assets tax.  
  (b) Loan guarantees and exceptional measures provided by the Small Business Credit Insurance for FAZ-related businesses:  businesses undertaking activities to promote distribution of imported cargo (wholesalers, manufacturers, transporters or retail ers 
dealing with imported goods) within specified zones for congregation in FAZ areas designated by the local governments of approv ed 
FAZ areas can make use of following loan guarantees and exceptional measures related to credit insurance: 
  Loan guarantees through the (ISIF):  loan guarantees are provided by the Industrial Structure Improvement Fund to aid in borrow ing 
necessary funds, including operation funds.  
  Exceptional measures provided by Small Business Credit Insurance:  Exceptional measures are provided by Small Business Credit 
Insurance to small and medium-sized companies.  
Table III.6 (cont'd) 
 
                                                      
57 Japan also has BITs with Bangla desh;  China;  Egypt;  Hong Kong, China;  Russia;  Sri Lanka;  
Turkey;  Mongolia;  and Pakistan. Japan WT/TPR/S/142 
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  (c) Special financing measures for FAZ-related businesses:  with regard to the DBJ financing programme for import facilities 
enhancement and the low-interest loans provided by the Japan Finance Corporation for Small Business to facilitate import sales,  
import-related businesses within the FAZ areas are able to receive loans with special conditions:  
  DBJ (Financing Programme for Import Facilities Enhancement).  Comp anies are eligible for this programme regardless of the share  
of imported goods among their handling.  Also, manufacturers and others are able to receive loans not only when they invest in Japan 
for the first time, but even for second and subsequent investments.  
  Japan Finance Corporation for Small Business (Loans to Facilitate Import Sales).  Wholesalers or retailers selling imported goo ds 
through their own offices in the FAZ facilities or contacts with businesses in the FAZ facilities are able to receive up to ¥40 0 million.
IV. Measures for small and medium-sized enterprises  
  Training for administrative managers of foreign-affiliated firms:  Institute of the Japan Small Business Corporation offers tra ining 
programmes on personnel management and business practices in Japan, etc. for administrative managers etc;  of small and medium-
sized foreign-affiliated firms.  The participants are subsidized on two thirds of the training fee.  
V. Venture support measures  
  (a) Loan guarantees for loans using collateral of intellectual property rights for venture enterprises:  the ISIF provides loan  
guarantees for up to 80% (usually 70%) of business funds, and does not require a guarantee backer of a capitalized enterprise i f the 
collateral of the loan is intellectual property rights.  
  (b) Investment for venture enterprises:  in addition to a company that has been operating or has submitted an application for a  patent 
less than five years earlier (currently three years), a company that establishes know-how in five years is able to take investm ents 
from the New Business Investment Company Limited.  
  (c) Introducing a stock option system:  the Government of Japan expands the term of exercise for the company's executives or 
employees to accept new stock shares of the company at lower price than others, based on the resolution of a general meeting of  
stockholders, from six months to within ten years.  
Source: Information provided by the Japanese authorities.  
63. Based on a Japan Investment Council Expert  Committee report and the programme for the 
promotion of foreign direct investment into Japan, adopted and announced by the Japan Investment 
Council in 2003, the Government has decided to implement 74 measures under five categories to 
promote foreign direct investment and eliminate impediments to inward FDI.58  The five categories 
are:  disseminating information on investment opp ortunities in Japan;  reviewing administration 
procedures with a view to making them clearer, simpler, and faster by, for example, creating a one-
stop service for investment-related information;  creating favourable employment and living 
environment (e.g. improving immigration procedures);  improving business environment by, for 
example, improving corporate governance and access to  legal and other services that support FDI in 
Japan, facilitating cross- border mergers and acquisitions, facilitating new business start-ups by, inter 
alia, providing tax incentives for investment in information technology and research and 
development59;  and assisting local governments in attr acting foreign investment by, for example, 
facilitating the use of the special zones for structural reform. 
64. The Japan External Trade Organi zation established the Invest Ja pan Business Support Center  
in May 2003;  this is a one-stop service centre that provides information to foreign investors.  Information desks have also been established in various ministries as centres for investment 
information and support for navigating administrative procedures. 
(iii) Foreign access zones (FAZs) 
65. Foreign access zones (FAZs) are a major component of Japan's import and investment 
promotion schemes, and serve as centralized locat ions for import-related operations, as well as for 
streamlining the internal distribution of imported cargos.  Companies located in FAZs may benefit 
                                                     
 
58 The Japan Investment Council is a ministerial level council established in July 1994. 
59 Half of the capital gains obtained by the sale of stocks of qualified ventures are to be taxed.  The 
amount of investment in qualified ventures is deductible from the amount of capital gains of stocks in the same taxable year.  The Government is also studying ways to revise tax treatment of mergers and acquisitions, and 
plans to submit a bill to the Diet in 2005. WT/TPR/S/142 Trade Policy Review 
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from incentives including loan guarantees, tax breaks , low-interest financing, and credit insurances.  
In 2002, Japan's imports and exports through FAZs accounted for 32% and 37% of its total imports 
and exports (compared with 33% and 40% in 1997).  Japan has not approved any new zones since 
2002;  a total of 22 FAZs have been approved.60  Major businesses located in FAZs are 
manufacturers, wholesalers, retailers, and transport companies. 
(4) MEASURES DIRECTLY AFFECTING EXPORTS  
(i) Export taxes, charges, and levies 
66. Japan has no export taxes or levies. 
(ii) Export prohibitions, restrictions, and licensing  
67. Export controls implemented in Japan are defined in the Foreign Exchange and Foreign Trade 
Law and the Export Control Order.  Exports requi ring permission from the Minister of Economy, 
Trade and Industry include:  certain seeds, endanger ed animals, and plants specified in international 
treaties;  narcotics;  designated ar t works;  counterfeit currencies;  and other products associated with 
criminal offences in Japan.  Export controls (prior approval) are maintained to ensure national security 
and public safety and to ensure adequate domestic supplies of certa in agricultural and other primary 
products.61 
68. Since its previous Trade Policy Review, chan ges to the list of items requiring export 
permission include the addition of certain equipment and chemical mixtures for the decontamination 
of objects contaminated with biological agents and radioactive materials, and digital instrumentation 
data recorders using magnetic disk storage technique.  Changes to the list of items requiring export 
approval, under Article 48 of the Foreign Exchange and Foreign Trad e Law, include:  the addition of 
important tangible folk cultural properties, speci al natural monuments and natural monuments, rough 
diamonds,  radioactive wastes,  controlled subs tances listed in Annex C, Groups I and III, and 
Annex E of the Montreal Protocol on Substances of Deplete the Ozone Layer,  and items that infringe 
intellectual property rights;  and the deletion of all items exported to Iraq, and machinery and vehicles 
exported to Angola. 
(a) Voluntary export restraints 
69. The authorities are not aware of any voluntary export restraints that have been implemented 
in Japan since its previous Trade Policy Review. 
(b) Export cartels 
70. There are no authorized export cartels in Japa n.  However, 21 types of cartel are exempted 
from general prohibition of cartels under Japan's Anti-Monopoly Act (section (5)(vii)). 
                                                      
60 Japan External Trade Organization online information.  Available at http://www.jetro.go.jp/ 
ov/e/faz/merit.html.  FAZs are organized by "third sector" companies, which, with public and private funds, 
establish facilities for distribution, processing, wholesale, business support exhibitions and conventions.  FAZs 
are also intended to facilitate customs clearance of imports.  Companies located in FAZs may benefit from incentives including tax breaks and low-interest loans. 
61 According to Article 48 of the Foreign Exchange and Foreign Trade Law. Japan WT/TPR/S/142 
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(iii) Export promotion schemes 
(a) Subsidies, tax concessions, export finance, insurance, and guarantees 
71. Japan has not notified any expo rt subsidies to the WTO, indicating the absence of such 
subsidies as defined in the WTO Agreements. 
(b) Other export promotion schemes 
72. Export promotion schemes handled by the Ja pan External Trade Organization (JETRO) 
include the provision of information, market and company studies, and support for participation at 
international trade fairs.  Since FY 2002, JETR O has undertaken several export promotion activities 
for small and medium-sized enterprises (SMEs);  these include support for SMEs participation in 
overseas exhibitions and trade fairs, market research, and advisory services. 
(5) MEASURES  AFFECTING  PRODUCTION AND  TRADE  
(i) Taxation and tax-related assistance 
73. A consumption tax (value-added tax) of 5% is levied on goods and services transactions in 
Japan.62  Revenues from this and other indirect taxes, including excise taxes applied mainly to liquor, 
tobacco, gasoline, and automobiles, accounted for 44. 1% of total central gove rnment tax revenue in 
the FY 2004 Budget (43.9% in FY 2002).63  Revenue from personal income tax and corporate income 
tax accounted for 32.1% and 21.3% (30.7% and 22.3%  in FY 2003), respectively (Table III.7).  In 
FY 2004, the highest personal income tax rate, includi ng local taxes, is 50% and the corporate tax rate 
(including local taxes) 39.54%.64 
Table III.7 
National government tax revenue, FY 2004 
(¥ billion) 
FY 2004 Budget Tax Item 
Amount Per cent of total 
Direct taxes 24,285 55.9 
Income tax 13,778 32.1 
Corporate tax 9,407 21.3 
Inheritance tax 1,100 2.5 
Land value tax 0 0.0 
Indirect taxes  17,462 39.5 
Consumption tax 9,563 21.6 
Liquor tax 1,588 3.6 
Tobacco tax 898 2.0 
Gasoline tax 2,129 4.8 
Liquefied petroleum gas tax 14 0.0 
Table III.7 (cont'd) 
                                                      
62 The 5% consists of the national consumption tax (4%) and a local consumption tax (1%).  Exempted 
transactions include the sale and loan of land, rent for residential buildings, the sale of securities, registration 
and licensing fees paid to government agencies, money lending, foreign exchange businesses, medical care, 
welfare and certain educational services, and school textbooks. 
63 The consumption tax accounted for about half of the indirect tax revenue. 
64 See MOF (2004). WT/TPR/S/142 Trade Policy Review 
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FY 2004 Budget Tax Item 
Amount Per cent of total 
Aviation fuel tax 90 0.2 
Petroleum tax 477 1.1 
Motor vehicle tax 751 1.7 
Custom duty 795 1.8 
Tonnage duty 9 0.0 
Other 0 0.0 
Stamp tax 1,148 2.6 
Special taxes 2,061 4.5 
Local road taxa, b 304 0.7 
Liquified petroleum gas taxa, b 14 0.0 
Aviation fuel taxa, b 16 0.0 
Motor vehicle tonnage taxa, b 376 0.8 
Special tonnage taxa 11 0.0 
Customs duty on oila 38 0.1 
Promotion of power resources development taxa 359 0.8 
Gasoline taxa 707 1.6 
Special tobacco taxa 236 0.5 
Total 44,233 100 
a Taxes whose revenues are distributed to special accounts. 
b Taxes whose revenues are distributed to local governments. 
Source: Information provided by the Japanese authorities. 
(a) Tax incentives 
74. In order to achieve various policy objectives, including investment in certain equipment to 
address environmental concerns and stimulate demand, Japan has a complex system of tax breaks.  
These are described in the Special Taxation Measures Law, which has been amended annually.  The 
authorities estimate that forgone tax revenues increased to ¥3,117 billion in FY 2003 from 
¥1,327 billion in FY 2002;  the increase is attributed to the introduction of R&D-related tax cuts in FY 2003.  In FY 2004, Japan extended the period fo r loss carried-forward from  five years (currently) 
to seven years. 
(b) Bilateral tax treaties 75. Japan has not signed any tax treaties with additional countries since its previous Review.
65  
On 6 November 2003, Japan and the United States signed a revised treaty for the avoidance of double taxation and the prevention of fiscal evasion with  respect to taxes on income;  the revised treaty 
entered into force on 30 March 2004 (Chapter II(iii)(a)). 
                                                     
 
65 Japan has tax treaties with Armenia, Australia, Bangladesh, Belarus, Belgium, Brazil, Bulgaria, 
Canada, China, Czech Republic, Denmark, Egypt, Fiji, Finland, France, Georgia, Germany, Hungary, India, 
Indonesia, Ireland, Israel, Italy, Republic of Korea, Kyrgyz, Luxembourg, Malaysia, Mexico, Moldova, 
Netherlands, New Zealand, Norway, Pakistan, Philippines, Poland, Romania, Russia, Singapore, Slovak Republic, South Africa, Spain, Sri Lanka, Sweden, Switzerland, Tajikistan, Thailand, Turkey, Turkmenistan, 
Ukraine, the United Kingdom, the United States, Uzbekistan, Viet Nam, and Zambia. Japan WT/TPR/S/142 
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(ii) Subsidies and other financial assistance 
76. Japan has notified several direct support programm es to the WTO.  Its latest notification, of 
September 2003, indicated there were 97 subsidy schemes to assist industry, finance, agriculture, 
forestry, and fisheries, and transport sectors.  En ergy and mining, agriculture, research, and small and 
medium-sized enterprises (SMEs) have accounted fo r the majority of the subsidies notified by Japan 
since 1998. 
(iii) State-owned enterprises, corporatization, and privatization 
77. The State retains a stake in major companies in several sectors through which it could directly 
affect production and trade.  These companies are Nippon Telegraph and Telephone Corporation (NTT), Japan Tobacco Inc (JT), Kansai International Airport Co. Ltd, Hokkaido Railway Company, Shikoku Railway Company, Kyushu Railway Company, and Japan Freight Railway Company 
(Table III.8).  The Government also holds shar es of commercial banks, such as Resona Bank, 
apparently for prudential reasons. 
Table III.8 
Stockholding by the Government of Japan, as at October 2004 
Companies Shares of stocks held by the 
Government (stocks) Share of stocks held by the 
Government (%) 
Nippon Telegraph and Telephone Corporation (NTT) 7,227,043 45.9 
Japan Tobacco Inc. (JT) 1,000,000 50 
Kansai International Airport Co. Ltd 13,788,000 100 
Hokkaido Railway Company 180,000 100 
Shikoku Railway Company 70,000 100 
Kyushu Railway Company 320,000 100 
Japan Freight Railway Company 380,000 100 
Source : Information provided by the Japanese authorities. 
78. On 18 December 2001, Japan adopted the Re organization and Ration alization Plan for 
Special Public Institutions, with a view to structural ly reforming 163 public corporations in activities 
including highways, housing loans, urban development, and petroleum development.  Among them, 
17 institutions were to be abolished or merged with  other entities, 45 privatized, and 38 reformed into 
36 incorporated administrative agencies.  To date, reforms have been completed in regard to 
133 institutions, for example West and Central Japan Railway Companies.  In September 2004, the 
Council on Economic and Fiscal Policy and subsequently the Cabinet decided the Basic Policy on the 
Privatization of the Japan Post, which indicated th at privatization would begin by April 2007 and be 
completed by 2017. 
(iv) Trade-related intellectual property rights 
(a) Scope of IPRs and ex amination procedures 
79. The legal framework pertaining to intellectual property rights in Japan has generally remained 
unchanged since its previous Trade Policy Review  (Table III.9).  Regulatory changes in Japan 
regarding intellectual property rights since 2002 main ly concern amendments to existing laws, for 
example, the amendment in May 2004 to the Patent  Law and other intellectual property laws, which, 
inter alia,  allowed outsourcing of prior art searches to the private sector, applicants performing their 
own prior art research are accorded reduced ap plication fees.  Furthermore, the Basic Law on 
Intellectual Property was enacted in December 2002;  the law stipulated, inter alia,  the establishment WT/TPR/S/142 Trade Policy Review 
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of the IP Strategy Headquarters.66  In July 2003, the Headquarters issued a Strategic Program for the 
Creation, Protection and Exploitation of Intellectua l Property;  the programme stipulated that Japan 
would speed up the examination of submissions through measures such as expanding outsourcing and 
increasing the number of examiners.  In 2003, the average period for the "first action" or the completion of the first examination was 25 months for patents;  seven months for designs; and nine months for trademarks. 
Table III.9 
Legislation regarding protection of intellectual property rights in Japan 
Specific intellectual property rights Relevant legislation Agencies responsible for the 
administration of law 
Copyright and related rights Copyright Law Agency for Cultural Affairs, MEXT 
Trade marks Trademark Law Japanese Patent Office, METI 
Patents Patent Law – Utility Model Law Japanese Patent Office, METI 
Plant variety rights Seeds & Seedling Law Ministry of Agriculture, Forestry & 
Fisheries 
 Patent Law Japanese Patent Office, METI 
Designs Design Law Japanese Patent Office, METI 
Geographical indications (Wines and spirits) 
Law concerning Liquor Business Associations and 
Measures for Securing Revenue from Liquor Tax National Tax Administration 
Layout designs of integrated circuits Law concerning the Circuit Layout of 
Semiconductor Integrated Circuits Japanese Patent Office, METI 
Protection of undisclosed information Unfair Competition Prevention Law METI 
Control of anti-competitive practices Anti-Monopoly Act Fair Trade Commission 
 Unfair Competition Prevention Law METI 
Civil and administrative enforcement 
remedies Code of Civil Procedure – Law of Civil Execution Ministry of Justice 
 Patent Law – Utility Model Law Japanese Patent Office 
 Design Law Japanese Patent Office 
 Trademark Law Japanese Patent Office 
 Law concerning the Circuit Layout of 
Semiconductor Integrated Circuits METI 
 Anti-Monopoly Act Fair Trade Commission 
Border measures Customs Tariff Law Ministry of Finance 
 Export & Import Trading Law METI 
Source:  Information provided by the Japanese authorities. 
80. In addition, with regard to infringement of copyright on the Internet, the Law on Restrictions 
on the Liability for Damages of Specified Telecomm unications Service Providers and the Right to 
Demand Disclosure of Identity Information of the Se nder, entered into force in May 2002.  This aims 
to counter copyright infringement on the Internet, a nd to clarify the scope of the liability of internet 
service providers (ISPs), which may or may not delete the infringing information.67  In February 2004, 
                                                      
 66 The IP Strategy Headquarters, comprising all ministers and ten experts from academic and industrial 
sectors, was established in March 2003.  Three task forces , i.e. task forces on IP en forcement, patentability of 
medical treatment invention, and media content business, have been established within the Headquarters. 
67 A consortium consisting of ISPs and copyright associations has formulated guidelines related to 
copyright.  These guidelines establish the scheme by which a copyright holder can request ISPs to delete 
information infringing his/her copyright through the Credibility Confirmation Organization (CCO), which has expertise on copyright and has the competence to conclude whether information on the net is infringing the 
copyright of right holders. Japan WT/TPR/S/142 
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the National Tax Agency announced, in its Labelling Standard Concerning Geographical Indications, 
that its Commissioner designated "Iki", "Kuma", and "Ryukyu" as geographical indications of wines 
and spirits to be protected in th e territory of members of the WTO.68  In January 2003, a revision to 
the Unfair Competition Law entered into force;  th e revision introduced criminal penalties for misuse 
and illicit acquisition of trade secrets.   The penalty is either imprisonment not exceeding three years or 
fines not exceeding ¥ 3 million. 
(b) International harmonization and cooperation 
81. Japan has continued to promote international harmonization of application and examination 
procedures related to IPRs.  For example, Japan ha s participated in the discussions in the Standing 
Committee on the Law of Patents (SCP), regarding the Substantive Patent La w Treaty, which aim to 
reduce applicants' cost of obtaining patents in multiple countries and improve predictability of 
obtaining patents in each patent office.  Japan believes that substantive harmonization of patent laws 
aiming to obtain the same results from each patent  office and maximum exploitation of search and 
examination results performed by another patent office are important. 
82. In May 2003, Japan hosted a meeting in Toky o with a view to enhancing the mutual 
cooperation of the Trilateral Office s (the Japanese Patent Office (J PO), the United States Patent and 
Trademark Office (USPTO), and the Office for Harmonization in the Internal Market of the European 
Community (OHIM));  topics discussed included the establishment of a Tradem ark Trilateral Website.  
Japan has also continued bilateral and trilate ral cooperation through programmes involving the 
exchange of patent examiners and developing the common structure for on-line dossier access system 
with the USPTO and the European Patent Office (EPO ) with a view to addressing common problems.  
(c) Enforcement 
83. Statistics detailing Japan's efforts to combat viol ations of intellectual property rights at the 
border are provided in Table III.10.69  Infringement of IPRs, such as patents, exclusive licences, or 
trade marks or designs may result in either imprison ment or a fine.  The penalty for infringement of 
patent rights, exclusive licensing, or trade mark righ ts is either imprisonment not exceeding five years 
or fines not exceeding ¥5 million or both;  infringeme nt by corporations of these rights results in fines 
not exceeding ¥150 million.  Infringement of design rights is penalized either by imprisonment not 
exceeding three years or fines not exceeding ¥3  million;  penalties against false marking by 
corporations result in fines not exceeding ¥100 million.  
Table III.10 
Suspension of imports likely to infringe intellectual property rights, 2000-04 
Category Main items 2000 2001 2002 2003 2004 
(1/1 to 30/6)
(A)  Products concerned (1,000 units) 
Shoes Sports shoes (tennis shoes, sneakers) 0.1 8 4  11  11 
Bags Handbags, purses 44 84 161 142 89 
Clothing T-shirts, sweatshirts, raincoats, scarfs 414 135 219  260 107 
Sports equipment Golf equipment, ski equipment 0 0 0  0   0 
Watches Wristwatches, pocket watches 52 48 55 30 29 
Table III.10 (cont'd) 
                                                      
68 This announcement is based on the 1953 Law Concerning Liquor Business Associations and 
Measures for Securing Revenue from Liquor Tax, as amended. 
69 Details of Japan's judicial measures regarding IPR enforcement are provided in WTO document 
IP/N/P/JPN/1, 18 February 1997 (the latest available notification).  WT/TPR/S/142 Trade Policy Review 
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Category Main items 2000 2001 2002 2003 2004 
(1/1 to 30/6)
Smoking equipment Lighters 0.1 2 3 2 3 
Toys Stuffed animals, mini-cars 274 23 230 43 9 
Others Household goods, key holders, cosmetics 315 709 320 283 335 
Total  1,099 1,010 993 771  583 
(No. of cases)  (1,873) (3,685) (9,889) (10,324) (  ) 
(B)  Types of violation (Number of cases) 
Patent rights  2 1 7 1 33 
Utility rights  0 0 0 1 0 
Design rights  15 14 13 12 26 
Trade mark rights  6,478 2,727 6,859 7,332 4,302 
Copyright  108 76 108 80 54 
Total  1,603 2,818 6,987 7,426 4,415 
.. Not available. 
Source:  Information provided by the Japanese authorities.  
(v) Regulatory reform 
84. Since its previous Trade Policy Re view, Japan has continued to purs ue initiatives to reform its 
regulatory system, mainly through the Three-Ye ar Program for Promoting Regulatory Reform 
(TPPRR), adopted on March 2001, and revised twice,  in March 2002, and March 2003.  The revisions 
were conducted in the light of opinions and reques ts from domestic and foreign entities, as well as 
opinions of the Council for Regulatory Reform.  Th e TPPRR envisages the creation of a free and fair 
socio-economic system fully open to the international community. 
85. In March 2004, the Government adopted the new TPPRR comprising 762 measures.  
According to the authorities, the new TPPRR is a compilation of measures to further accelerate 
structural reform of the Japanese economy and soci ety, and contains specific regulatory reform steps 
that have been identified as the issues to be addressed between FY 2004 and FY 2006.  The new measures are aimed at:  reducing the Central Govern ment's involvement in sectors of economy that 
are deemed to function more effectively without government involvement;  revitalizing the Japanese 
economy by spurring new business, increasing demand, and expanding employment;  and creating 
new opportunities for domestic and foreign businesses to build markets in Japan.
70  The main sectors 
and issues covered include medical services , education services, agriculture, housing and 
construction, employment, movement of natural persons, customs clearance, promotion of FDI, 
information technology, competition policy, legal system, financial serv ices, energy, and transport.  In 
April, 2004, Japan established the Council for the Promotion of Regulatory Reform (CPRR) to 
replace the Council for Regulatory Reform ( CRR), whose mandate expired on 31 March 2004.71  
                                                      
70 The authorities are of the view that measures significantly affecting trade and FDI include:  
promotion of 24-hour operation of main ports;  easing of rules on mergers;  and initiation of new investment 
schemes such as the Japanese version of limited partnership and limited liability constitutions. 
71 The CPRR is a central body that aims to promote regulatory reform, including the opening of 
governmental sectors to private sector participation.  Four of the CPRR members attend meetings of the 
Headquarters for the Promotion of Regulatory Reform within the Cabinet, and thus have opportunities to 
interact directly with the Cabinet to discuss the CPRR's views and recommendations.  The CPRR also coordinates closely with the Council on Economic and Fiscal Policy and with the Headquarters for the 
Promotion of the Special Zones for Structural Reform.  The CPRR monitors the implementation of the new Japan WT/TPR/S/142 
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86. In April 2003, the Special Zone for Structural Reform Act entered into force.  Under the Act, 
exceptions to particular regulations are granted within approved "special zones" according to the 
zone's specific circumstances.  In order to obtain approval, voluntary plans must be proposed both by 
municipal bodies and private sector enterprises.  To date, 324 special zones have been approved;  the zones have been granted exemptions from regu lations governing educa tion, urban renewal, 
distribution, agriculture, medical care, industry-ac ademic cooperation, and other areas.  For example, 
an international distribution zone has been approved for one major port area, where customs clearance 
is to operate 24 hours a day, 365-days a year, and private companies are to operate a public container 
terminal and a bonded area.  Not all proposals have been approved;  some have been opposed by local 
authorities and the private sector (presumably dome stic firms), who apparently are in favour of 
existing regulations. 
(vi) Competition policy 
(a) Recent developments 
87. Over the years the growing importance of de regulation and competition in the Japanese 
economy has apparently raised the status and size of the JFTC;  it was transferred from the Ministry 
of Public Management, Home Affairs, Posts a nd Telecommunications to  the Cabinet Office in 
April 2003 with a view to ensuring a higher degree of its independence.
72  The JFTC has also 
established a Competition Policy Research Centre (CPRC) within its secretariat to improve its 
interaction with external intellectual resources , such as academics and the business community. 
88. Since 2002, there have been various legisla tive changes, including an amendment to the 
Anti-monopoly Act (AMA) in May 2002 to, inter alia , regulate excessive concentration of economic 
power, to increase maximum penalties against juridical persons, and to extend the scope of violations 
against which the JFTC can take action even after the violations have ceased.73  In addition, several 
measures were taken to strengthen enforcement of the AMA by the JFTC, the Act Concerning 
Elimination and Prevention of Involvement in  Bid Rigging entered into force January 2003, 
authorizing the JFTC to demand improvements by ministries to eliminate any complicity in bid-rigging activities. 
89. In response to criticisms about the effectivene ss of competition policy, the JFTC  established 
a Study Group on Reviewing the Anti-monopoly Act in October 2002;  the main subjects examined 
by the Study Group included the current system of administrative and criminal penalties for violating 
the AMA (which are not thought to be high enough to  constitute an effective deterrent), as well as a 
review of current measures against monopolies and cartels.  In October 2003, the Study Group issued a report containing its recommendations for an amendment to the AMA;  based on the 
recommendations, the Government adopted a bill to revise the AMA on 5 October 2004.  The bill 
                                                                                                                                                                    
 
Three-Year Program and has the mandate to require, when it deems necessary, the heads of relevant 
governmental organizations to submit materials, provide explanations, and extend cooperation to the CPRR. 
72 The annual budget of the JFTC increased by 28% in FY 2003;  it decreased by 0.4% in FY 2004.  
The number of employees of the JFTC rose from 607 in FY 2002 to 672 in FY 2004. 
73 The increase of maximum penalties against juridical persons entered into force on 29 May 2002 and 
regulation of excessive concentration of economic power on 28 November 2002.  Japan's main legislation 
dealing with competition issues is the Anti-monopoly Act (Act Concerning Prohibition of Private 
Monopolization and Maintenance of Fair Trade) enacted in 1947 and amended most recently in 2002.  The Act, which prohibits three types of business practices (unreasonable restraint of trade, private monopolies and unfair 
trade practices), is administered by the Japan Fair Trad e Commission (JFTC).  Other legislation administered by 
the JFTC includes the Act Against Unjustifiable Premiums and Misleading Representations, the Act Against Delays in Payment of Subcontract Proceeds etc. to Subc ontractors, and the Act concerning the Elimination and 
Prevention of Involvement in Bid Rigging. WT/TPR/S/142 Trade Policy Review 
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proposes, inter alia,  to increase the surcharge rate from 6% to 10% of sales for large companies and 
3% to 4% for small and medium-sized firms.  It  also aims to introduce a "leniency programme", 
which provides immunity from surcharge payment order against entrepreneurs that have reported 
illegal cartels they are involved in. 
(b) Exemptions from the AMA prohibition of cartels 
90. The AMA contains provisions exempting from the enforcement of intellectual property rights, 
activities of cooperatives, and resale  price maintenance contracts of copyrighted work.  In addition, 
provisions authorizing certain cartels are incor porated into other laws, including the Insurance 
Business Law and the Export-import Trading Law.  As of March 2004, 21 systems, under 15 laws, are exempt under these provisions (Table III.11). 
Table III.11 
Exemptions from the Anti-monopoly Act, 2003 
Relevant ministries and agencies  Legislation  System  
1.   Exemptions under the AMA (3 systems)   
Japan Fair Trade Commission Section 21 Acts under intellectual property rights 
 Section 22 Acts of cooperatives 
 Section 23 Resale price maintenance contracts 
2.   Exemptions under various individual laws (14 laws, 18 systems)  
Financial Services Agency Insurance Business Law Insurance cartels 
 Law Concerning Non-Life Insurance Rating 
Organizations Exemptions concerning compulsory 
automobile insurance and earthquake 
insurance 
Ministry of Justice Corporation Reorganization Law Acquisition of shares of companies 
under reorganization 
Ministry of Finance Law Concerning Liquor Business Associations 
and Measures for Securing Revenue from Liquor 
Tax Rationalization cartels 
Ministry of Education, Culture, 
Sports, Science and Technology Copyright Law Cartels on fees for commercial usage of 
music records 
Ministry of Health, Labour, Welfare Law Concerning Coordination and Improvement 
of Hygienically Regulated Business Cartels to prevent excessive competition 
Ministry of Agriculture, Forestry and 
Fisheries of Japan Agricultural Cooperative Association Law Federation of agricultural co-operatives 
  Agricultural Association corporation 
Ministry of Economy, Trade and 
Industry Export-import Trading Law Cartels on export 
 Law on the Cooperative Association of Small 
and Medium Enterprises Federation of small business 
associations 
 Law on Cooperatives of Small and Medium-
Sized Enterprises Joint economic undertakings 
Ministry of Land, Infrastructure and 
Transport Marine Transportation Law Maritime transportation cartels 
(international) 
  Maritime transportation cartels (coastal 
service) 
 Road Transportation Law Transportation cartels 
 Civil Aeronautics Law Aviation cartels (international) 
  Aviation cartels (domestic) 
 Coastal Shipping Association Law Maritime transportation cartels (coastal 
service) 
  Joint shipping businesses 
Source:  Information provided by the Japanese authorities.  Japan WT/TPR/S/142 
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(c) Resale price maintenance system 
91. Since its previous Trade Policy Review, Japan has not changed the AMA exemption for the 
resale price maintenance (RPM) system.  In 2001 , as a result of a review, the JFTC decided to 
maintain the RPM on copyrighted works (books, magazines, newspapers, records, music cassettes, and CDs) for the present;  according to the authoriti es, many people were against the abolition of the 
RPM for these works, given their cultural value. 
(d) Holding companies, and mergers and acquisitions 
92. Chapter 4 of the AMA prohibits mergers and acquisitions if they lead to a substantial restraint 
on competition.
74  All planned mergers and acquisitions that  exceed specified thresholds must be 
notified to the JFTC 30 days before the merger and acquisition takes place.  The thresholds for 
mergers are:  ¥10 billion for the sum of the total assets of one company in the transaction concerned;  
and ¥1 billion for the sum of total assets of any other party to the transaction concerned.75  In case of 
mergers involving foreign companies, tota l assets refers to "sales in Japan".76  For acquisitions, the 
thresholds are, inter alia :  ¥10 billion for the sum of total assets  of an acquiring company;  ¥1 billion 
for the total assets of an acqui red business (from a company in Ja pan); and ¥1 billion for sales in 
Japan for an entire or substantial part of business from a foreign company.  The JFTC notes that in 
approximately 10% of proposed merger cases, the pa rties have voluntarily held prior consultations 
with the JFTC.  With a view to ensuring transpar ency of such consultations, the JFTC published its 
"Policies dealing with Prior Consultations re garding Enterprise Combination Plans" in 
December 2002. 
93. Excessive concentration of power through, for example a holding company, is also restricted 
by the AMA, although holding companies not deemed  to constitute an "excessive concentration of 
economic power" are permitted.  Between 1999 and 2003, the number of holding companies notified 
to the JFTC in accordance with the AMA increased from 1 to 19.  The AMA was also amended in 
2002, to deal with "excessive concentration of economic power"77, which could result from mergers 
and acquisitions other than from the creation of a holding company.78  In the amendment, Article 11 
restricting shareholding of financial institutions was also revised;  now only banks and insurance 
companies are prohibited from controlling more than  5% (10% for insurance companies) of voting 
                                                      
74 Substantial restraint in competition indicates when a market structure changes as a result of a merger 
and specific companies can control the market by influencing variables such as price, quality, and quantity. 
75 The "sum of total assets" means the sum of the tota l assets of the company concerned and its "related 
companies". 
76 "Sales in Japan" are calculated by adding the sales of the foreign company's business offices in Japan 
and sales of other companies in Japan with more than half of their voting rights held by the foreign company. 
77 "Excessive concentration of economic power" is defined in Article 9 of the AMA as a situation 
where significant effects on the national economy and impediments to the promotion of free and fair competition are observed due to:  (1) the overall scale of business of a company, its subsidiaries, and other 
companies in Japan controlled by the company by means of holding of stock;  (2) large influence of these 
companies on other enterprises due to transactions relating to finance;  or (3) the occupancy by these companies of influential positions over a significant number of fields of business. 
78 Under the classification of (1) holding companies, (2) financial companies (excluding those 
classified in (1)), and (3) general business companies (excluding those classified in (1) and (2)),  thresholds are 
established, based on the total amount of assets including the company's subsidiaries. Any company that satisfies the thresholds is subject to mandatory  ex post facto  submission of its business report or notification of 
new establishment of the company. WT/TPR/S/142 Trade Policy Review 
Page 54 
 
 
rights of other companies (unless authorization is gr anted by the JFTC while previously all financial 
institutions were prohibited).79  The amended AMA entered into force on 28 November 2002. 
(e) International arrangement 
94. In international fora, Japan is an active participant in the WTO Working Group on the 
Interaction between Trade and Co mpetition Policy, and in OECD committees and working groups 
established to increase co operation in competition policy.  On 10  July 2003, Japan and the European 
Communities signed the Agreement between the Go vernment of Japan and the European Community 
Concerning Cooperation on Anti-Competitive Activitie s.  The agreement includes notification of 
enforcement activities in relation to competition laws that may affect important interests of the other 
party, assistance and coordination of enforcem ent activities, and "positive and negative comity"80.  In 
addition, under Japan's bilateral FTAs with Singapore and Mexico, the parties agreed to take 
appropriate measures against an ti-competitive activities and cooperate  to control anti-competitive 
activities.81 
(f) Enforcement 
95. An investigation into possible violations of th e AMA may be initiated as a result of a report 
from the general public, detection by the JFTC itself, or notification by the public prosecutor general.  
The AMA provides three types of measures to penaliz e and thereby deter violations of the Act:    
administrative measures, such as mandatory surcharges, fines, and injunctions on price cartels;  
criminal penalties82, and private damages actions.  Administra tive penalties are the main sanction;  
however, questions have been raised whether mandato ry surcharges or administrative fines (imposed 
for non-compliance with JFTC orders or court in junctions) constitute effe ctive deterrents to AMA 
violations. 
96. Responding to criticism that Japan's enforcemen t remains weak, several changes have been 
made in enforcement measures since Japan’s previo us Review.  These include an amendment to the 
AMA to raise the upper limit on penalties in mono poly cases to ¥500 million (the provision entered 
into force on 29 June 2002);  an amendment in June 2003 to the Subcontract Act, which extended its 
coverage to services as well as manufacturing, and raised the upper limit on penalties;  and an 
amendment to the Act Against Unju stifiable Premiums and Misleading Representations in May 2003, 
which, inter alia,  enables the JFTC to regulate unjustified representations claiming superiority of 
goods or services without sufficient evidence to support these claims. 
                                                      
79 According to the JFTC, it is considered that a financial company other than a bank and insurance 
company does not have the funds and financial power to influence other companies or the market.  
80 "Negative comity" requires that either country consider the important interests of the other country 
throughout its enforcement activities.  "Positive comity" is an idea that either country may request the other to 
initiate enforcement activities concerning conduct that has occurred in the territory of the other and affects the 
important interests of the requesting country. 
81 Chapter 12 of the agreement between Japan and the Republic of Singapore for a New Age Economic 
Partnership, and Chapter 132 of the Agreement between Japan and the United Mexican States for the 
Strengthening of the Economic Partnership. 
82 Criminal penalties currently include imprisonment of up to three years or a fine of up to ¥5 million 
for private monopolies and unreasonable restraint of trade, and imprisonment of up to two years or a fine of up 
to ¥3 million for international agreements constituting unreasonable restraint of trade and unfair trade practices, 
restrictions of the number of members of trade associations, and violations of final decisions by the JFTC.  Criminal proceedings may be initiated only after an accus ation is filed by the JFTC with the Public Prosecutor 
General.  Appeals are available with the High Courts and eventually the Supreme Court. Japan WT/TPR/S/142 
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97. Of the 123 cases processed by the JFTC in FY 2003, legal measures were  taken in 25 cases, 
most of which concerned cartels, followed by collusive tendering (bid-rigging);  surcharge payments 
of a total value of ¥3.87 billion were ordered in 24  cases (Table III.12).  There was one criminal 
accusation in FY 2003.83 
Table III.12 
Enforcement of competition policy, 2000-03 
Fiscal year Details 
2000 2001 2002 2003 
Cases in which legal measures were taken against acts prohibited by the Anti-monopoly Act  
(A)  Legal measures     
Private monopolization 0 0 0 1 
Cartels 12 36 33 16 
Price cartels 1 3 2 3 
Collusive tendering 10 33 30 14 
Other types of cartela 1 0 1 0 
Unfair trading practices 6 2 3 7 
Others 0 0 1 0 
Total 18 38 37 25 
 (¥ billion) 
(B)  Surcharge payment orders     
Number of cases 16 15 37 2 
Number of enterprise operators 708 284 592 507 
Surcharge amount (in ¥ billion) 8.52 2.20 4.33 3.87 
Decisions to initiate hearings 3 4 6 8 
(C)  Recently processed investigation cases     
Cases investigated     
Carry-over from the previous fiscal year 39 34 37 40 
New cases begun during the current fiscal year 69 90 111 121 
Total 108 124 148 161 
Cases processed     
Legal measures     
Recommendations 18 37 37 25 
(Decision to commence hearing)b (1) (3) (8) (9) 
Surcharge payment orderc 0 1 0 0 
Sub-total 18 38 37 25 
Others     
Warnings 17 15 17 13 
Cautions 36 26 49 75 
Discontinued casesd 3 8 5 10 
Table III.12 (cont'd) 
                                                      
83 The JFTC investigated a bid rigging case concerning water meters purchased by the Tokyo 
Metropolitan Government. WT/TPR/S/142 Trade Policy Review 
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Fiscal year Details 
2000 2001 2002 2003 
Sub-total 56 49 71 98 
Total 74 87 108 123 
Carry-over to the next fiscal year 34 37 40 38 
Criminal accusations 0 0 0 1 
.. Not available. 
a Other types of cartel include restrictions on sales volume and restrictions on business clients. 
b Figures in parenthesis are the numbers of cases where the decision to commence hearing procedures was made from  recommendations. c Cases in which surcharge payment orders were given without a recommendation. 
d These were discontinued due to lack of evidence of wrongdoing. 
Note: Figures in FY 2003 represent data as of 1 January 2004. 
Source:  Information provided by the Japanese authorities.  
98. Under Section 8 −4 of the AMA concerning measures ag ainst a monopolistic situation, the 
JFTC continues to monitor highly oligopolistic markets, and may order measures to restore 
competition in the event of "und esirable market performance".84  In 2003, 22 industries were subject 
to such monitoring.85 
(g) Distribution measures 
99. There has been no change in the legal fram ework pertaining to the distribution sector, 
including on the opening and expansion of large-scale retail stores.  Since the entry into force in 
June 2000 of the Law Concerning Measures by Large Scale Retail Stores for the Preservation of the 
Living Environment, about 2,260 entities have notified their intention to establish large-scale retail 
stores, in accordance with the law, as at July 200 4.  In September 2003, the limitation on the number 
of liquor retail licences based on the population of th e particular local area was abolished.  Currently 
the issuance of liquor retail licence is restricted onl y in "temporary adjustment districts", based on the 
Temporary Adjustment Law for the Improvement of Business Conditions of Liquor Retailers, which 
entered into force in July 2003, but will expire in August 2005.86 
(vii) Corporate governance 
100. A growing awareness that ineffective corporate governance has contributed to the 
misallocation and perhaps excessive use of capital and labour in the corporate sector has prompted the 
                                                      
84 A monopolistic situation is defined as where the market share of a single enterprise exceeds 50% (or 
75% for two enterprises combined in a particular field of business), and where the annual total output of the 
business exceeds ¥100 billion;  new entry into the market is conspicuously difficult and for a considerable period of time,  (a) the price structure in the market is rigid or inflexible, and (b) profit or expenditure (e.g. on 
advertising and marketing) is far in excess of standard levels in the industry.  "Undesirable market performance" 
includes such factors as barriers to entry, extraordin ary price increases or extremely high profit rates. 
85 The 22 industries were:  beer;  whisky;  brandy;  tobacco;  photographic colour film;  plastic bottles 
for beverages;  sheet glass;  tiles;  plaster boards;  shutters;  vending machines for beverages;  incandescent light 
features for automobiles;  digital transmission;  carrier devices (other than digital transmission);  motorcycles;  
shock absorbers;  air-conditioners for transportation machines;  TV game devices for family use, railway freight;  scheduled domestic passenger flights;  domestic basic telecommunications;  international basic 
telecommunications;  dust control;  and medical office work service. 
86 Temporary adjustment districts are designated by District Directors of Tax Offices as districts 
satisfying certain requirements specified in this law.  The issuance of new licences was suspended for one year 
under the law. Japan WT/TPR/S/142 
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Government to implement a number of policy me asures since its previous Trade Policy Review.87  
These include an amendment to the Commercial Code, which, inter alia,  involved the introduction of 
a new corporate governance structure88;  and the revision of the Certified Public Accountants Law, 
which introduced a revised structure for overs eeing auditors, and provisions to enhance the 
independence of auditors from private companies un der audit, to ensure th e reliability of financial 
information provided by the auditing and accounting profession (the revision entered into force in 
April 2004).89  
101. The authorities maintain that Japan’s Genera lly Accepted Accounting Practices (GAAP) are 
equivalent to the International Accounting Standards (IAS) in most areas, such as consolidated 
accounting, financial instrument accounting,  and retirement benefit accounting.   
102. The bribing of Japanese official is not allowed under the Criminal Code.  Senior officials of 
the Government must report to their heads of minist ries or agencies any gift or hospitality (whose 
value is beyond ¥5,000) from the private sector.  Japan does not allow companies to deduct, for tax 
purposes, bribes paid to foreign officials. 
                                                      
87 See WTO (2003), pp. 52-53, for some traditiona l features of Japan's corporate governance. 
88 Corporations can now establish three committees (n omination, compensation, and audit) within the 
board of directors;  a majority of members of each committee must be composed of outside directors;  a 
company adopting the new system may not have statutory auditors.  The amendment concerning these changes 
entered into force on 1 April 2003. 
89 Information available online at http://www.moj.go.jp/English/CIAB/jc101-2.html, and 
http://www.fsa.go.jp/refer//data/crcl.pdf