WORLD TRADE  
ORGANIZATION  WT/TPR/M/175 
28 March 2007 
 (07-1299) 
Trade Policy Review Body 
31 January and 2 February 2007   
 
 
 
TRADE POLICY REVIEW 
 
JAPAN 
 
Minutes of Meeting  
 
Chairperson:  H.E. Mrs. Claudia Uribe (Colombia) 
 
   Page 
 
I.
 INTRODUCTORY REMARKS BY THE CHAIRPERSON 3  
II. OPENING STATEMENT BY THE REPRESENTATIVE OF JAPAN 4  
III. STATEMENT BY THE DISCUSSANT 7  
IV. STATEMENTS BY MEMBERS 9  
V. REPLIES BY THE REPRESENTATIVE OF JAPAN AND ADDITIONAL 
COMMENTS 18  
VI. CONCLUDING REMARKS BY THE CHAIRPERSON 24  
 
 
 
Note:   Advance written questions by WTO Me mbers and the replies provided by Japan are 
reproduced in document WT/TPR/M/175/Ad d.1 and will be available online at 
http://www.wto.org/english/tr atop_e/tpr_e/tp_rep_e.htm.  
   WT/TPR/M/175 
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  I. INTRODUCTORY REMARKS BY THE CHAIRPERSON 
1. The eighth Trade Policy Review of Japan was held on 31 January and 2 February 2007.  The 
Chairperson (H.E. Mrs. Claudia Uribe) we lcomed the delegation of Japan, led by 
H.E. Mr. Jun Yokota (Ambassador, Interna tional Trade and Economic Relations) and 
Ambassador Fujisaki, and the discussant  H.E. Mr . Guillermo Valles Galmés (Uruguay).  As usual, 
the discussant would speak in his personal capacity and not as representative of his country.  In 
accordance with the established proce dures, the discussant had made available, in advance, outlines of 
the main issues he intended to raise (document WT/TPR/D/151). 
2. The Chairperson recalled the purpose of the Trad e Policy Reviews and the main elements of 
the procedures for the meeting.  The report by Japan was contained in document WT/TPR/G/175 and 
that of the WTO Secretariat in WT/TPR/S/175.  As indicated in WT/TPR/6/Rev.1, the Member under 
review should provide written answers, by the be ginning of the review meeting, to questions 
submitted at least two weeks before the meeting.  Questions posed subsequently should be answered, 
to the extent possible, before the start of the second session of the meeting.  Questions left 
unanswered at the end of the second session should be  answered in writing no later than one month 
after the meeting.  Questions by the following de legations had been submitted in writing at least 
two weeks in advance of the meeting and had been transmitted to the delegation of Japan:  Singapore; 
Brazil;  Pakistan;  Switzerland;  Bolivia;  the Sepa rate Customs Territory of Taiwan, Penghu, Kinmen 
and Matsu (Chinese Taipei);  Chile;  Canada;  Austra lia;  New Zealand;  Turkey;  Thailand;  India;  
Hong Kong, China;  Norway;  the United States;  Ch ina;  and the European Communities.  Copies of 
these questions and of the answers provided by the de legation of Japan were available in the meeting 
room.  The Republic of Korea;  Indonesia;  Colomb ia;  the Philippines;  Ecuador;  and Argentina had 
submitted written questions after the two-week dead line.  These questions had also been transmitted 
to the delegation of Japan;  copies of these questions  and of the answers provided by the delegation of 
Japan were available in the meeting room.  Copi es of all advance questions, as well as the responses 
received from the delegation of Japan, are reproduced in WT/TPR/M/175/Add.1. 
3. The Chairperson was encouraged by the improve ment in Japan's economic situation since its 
previous Review in 2005.  This was due larg ely to the Government's own efforts involving 
macroeconomic policy measures and structural re forms.  Nevertheless, WTO Members had also 
played an important role in making such improve ment possible by keepin g their markets open to 
Japan's exports.  Exports had contributed positively to  growth during the period under review.  At the 
same time, while the economic growth had helped  Japan with its structural problems, including 
non-performing loans, the Government apparently rec ognized that further reforms were required.  The 
TPRB would encourage the Government to pursue, a nd perhaps even strengthen, its agenda in this 
regard.   
4. While Japan remained committed to the multilateral trading system and had strongly 
supported the Doha Development Agenda, it had also  intensified its pursuit of bilateral/regional 
free-trade agreements.  The Report by Japan explai ned that these agreements were intended to serve 
as building blocks to higher trade liberalization at the multilateral level;  the Chairperson believed that 
Members would be interested in learning more  about how Japan hoped to accomplish this goal. 
 WT/TPR/M/175 
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  II. OPENING STATEMENT BY THE REPRESENTATIVE OF JAPAN 
5. The H.E. Ambassador Ichiro Fujisaki of the Japanese Mission in Geneva stated that he 
learned a lot about Japan from the Secretariat's report.  As a resource-poor nation, Japan had 
developed its economy through trade;   he believed that trade was ke y to development and he fully 
supported the concept of "aid for trade".  As a country that had sometimes experienced bilateral 
restrictions by its trading partners, Japan had b ecome a firm believer of multilateralism.  The WTO 
was not one of the organizations for Japan;  it was the organization almost to be worshipped.  Thus, 
Japan was one of the last countries to have starte d free-trade agreements.  Japan was committed to the 
success of the Doha Development Agenda.  Thus Japan was happy that Ministers gathered  in Davos supported reactivating the negotiations in a full mode.   
6. The representative of Japan
, H.E. Mr. Jun Yokota, stated that the Japanese economy had 
come out of a long-term stagnation.  The current  economic recovery, which had begun in early 2002, 
had become one of the longest periods of economic expansion since World War II.  During the five-year period, the Government of Japan had carri ed out deregulation and ot her structural reforms 
including in the financial system, tax system and government expenditures.  The guiding principles of 
these reforms had been:  "no growth without reform ", "from public sector to private sector", and 
"from the central government to the local government".   Examples of Japan's achievements included:  
the stabilization of the financial system as a result of the Program for Financial Revival, aimed at accelerating the disposal of non-performing loans (the  NPL level had become normal);  elimination, 
by and large, of the corporat e sector's excesses in employment, equipment and debts, which had 
resulted in downward pressure on the economy;  impl ementation of over 1,500 elements of regulatory 
reform, and creation by September 2006 of over 900 special zones for structural reform, where new 
ideas were tested within a given geographical area;  expenditure reforms, through which the ratio of 
general government expenditure to nominal GD P had been declining;  implementation and 
completion of a reform package on subsidies, transf er of tax revenue resources, and local allocation 
tax;  execution of the plan to reorganize and ra tionalize public corporations, in which 136 out of 
163 public corporations had been abolished or privatized, or had undergone other forms of 
rationalization (including approval by the legislat ure of the bills to privatize Japan Post, in 
October 2005, under which it was to be privatized in  October 2007, and privatization in October 2005 
of the four highway-related public corporations).  The output gap ha d diminished.  The overcoming of 
deflation, which had begun in the late 1990s was w ithin view;  GDP growth was projected to be about 
2.0% in FY 2007.  As both corporate and hou sehold sectors would continue to improve, Japan 
expected to achieve autonomous and sustai ned economic growth under price stability.   
7. The Japanese economy had come out of the long t unnel leaner, and its future prospects looked 
brighter.  However, there remained challenges, bot h externally and internally, such as intensifying 
global competition and growth constraint brought on  by a declining population, and a severe fiscal 
situation.  In order to address these structural ch allenges and to put the Japanese economy on a path 
toward a new phase of medium- to long-term high growth, Prime Minister Abe who succeeded Mr. 
Koizumi in September 2006 had announced a comp rehensive economic policy guideline entitled the 
"Course and Strategy for the Japanese Economy".   
8. One of the priorities outlined in this guidelin e was fiscal consolidation.  Japan's primary 
deficit for the central and local government combin ed was estimated to decline to 0.6% in FY 2007 
(5.7% of GDP in FY 2002) due to the recent expend iture cuts and revenue increases.  However, the 
Japanese Government still faced a severe fiscal situ ation.  The government debt in FY 2007 was 
estimated at around 148.1% of GDP, the worst among major industrial countries.  To tackle this 
problem, Japan had set the target of achieving a pr imary balance surplus fo r the central and local 
governments by FY 2011, and of starting to reduce the debt-to-GDP ratio by the mid 2010s.  WT/TPR/M/175 
 Page 5 
 
 
  9. Another priority in this guideline was the enhanc ement of Japan's growth potential.  In this 
respect, there were two key words:  innovation a nd openness.  Innovation played a crucial role in 
enhancing productivity and competitiveness.  The Gove rnment would compile and put into effect a 
long-term strategic guideline, called "Innovation 25 ", which would cover the period to 2025, to 
achieve innovation that contributed to growth in  such sectors as medicine, engineering, and 
information technology.  Japan intended to make  maximum use of information and communication 
technology and raise efficiency in these sectors.  It would complete regulatory reforms in sectors such as medical care, child care, labour and education, in  which productivity had been low mainly due to 
excessive regulation.  Japan would open up govern ment-controlled markets to the private sector 
through a method called "market testing" as we ll as the fostering of a competitive economic 
environment.  The second keyword was openness,  which meant creating a smooth functioning 
interface between Japan and the global economy,  mainly through strengthening the multilateral 
trading system and promoting, as a complement, regional economic associations by means of EPA/FTAs.  Openness also meant further reform ing Japan’s domestic economy, enhancing the 
productivity of all sectors of its economy including ag riculture, fisheries and forestry and the services 
sector, and revitalizing local economies in order to enab le them to reap the benefits of globalization. 
10. Japan had already introduced refo rms in agriculture and would continue to do so.  Some had 
the impression that the Japanese economy was fairly closed to investment from outside of Japan.  
However, land prices in Niseko, one of the most famous ski resorts in Japan, increased by 80% in 
2006, thanks to investment from Australia:  that ma rked the sharpest increase in land prices in the 
whole of Japan for the year.  There was substantia l investment in the tourism sector, especially the 
hotel industry, where successive brand-name five-sta r hotels were springing up in Tokyo.  Research 
by the OECD showed that Japan was one of the least restrictive countries among the OECD Members 
with respect to FDI regulation.  In the guidelin e "Course and Strategy for the Japanese Economy", the 
Government of Japan had set the goal of accomplishi ng its transition to a new growth stage in about 
five years, while maintaining sound macroeconomic management. 
11. Openness was one of the keywords for Japan’s trade policy.  Japan looked to participate 
actively in the trade liberalization and rule-mak ing effort at a global level;  maintaining and 
strengthening the multilateral trading system under th e WTO.  As a complement to it, Japan would 
also improve and expand multi-laye red economic relations at regional and bilateral levels through the 
conclusion of free-trade agreements and economic partnership agreements (FTA/EPAs) as well as 
through looser regional frameworks such as the Asia-Pacific Economic Cooperation (APEC) forum. 
12. Since 1955, when Japan joined the GATT, it ha d enjoyed the benefits of the rule-based, 
non-discriminatory multilateral trade system of the GATT and the WTO.  Reforming, strengthening, and developing a stable, free-trade system remain ed indispensable for Japan, which was why it had 
been an active participant in the Doha Developmen t Agenda negotiations.  Du ring the Davos meeting, 
a new momentum was given at the informal WTO ministerial gathering.  Participants shared the view 
that the Doha negotiations should resume on a full- scale basis in Geneva, wh ile continuing bilateral 
and plurilateral consultations.  Building upon these positive signals, Members should intensify their 
work so that they could make the best use of th e "window of opportunity" to achieve a breakthrough 
and reach an early and successful conclusion of the DDA.  Japan was ready to commit its utmost 
effort to collaborate with other Members to ach ieve a well-balanced outcome across the board. 
13. Recognizing the importance of the DDA developm ent aspect, especially "aid for trade" for 
developing countries to reap the benefits of the multilateral trading system , Japan had launched the 
"Development Initiative for Trade" prior to the WTO Hong Kong Ministerial Conference.  The 
initiative was unique in that it cove red not only border measures but also each of the three stages that 
comprised trade:  produce, sell, and buy.  I mmediately after the announcement of the Initiative, 
Japanese embassies in developing countries had been instructed to identify promising projects to be 
supported under this initiative in consultation with th e respective governments.  Japan had also started WT/TPR/M/175 
Page 6  
 
  the "One Village, One Product Campaign" including the "African Fair" and other exhibits and fairs to 
promote products from developing countries in Japan, a nd had held various semina rs and conferences.  
The Government was about to submit a bill to the cu rrent Diet session to implement Japan's declared 
duty-free, quota-free treatment for products origin ating from LDCs.  Upon implementation, duty-free 
and quota-free market access was expected to be granted to 98% of imports originating from the 
LDCs, based on tariff line, or 99% based on import value. 
14. A number of negotiations on bilateral FTA/EPA s were ongoing.  However, as a strong and 
vocal defender of the multilateral trading system, Ja pan was being very careful about ensuring their 
WTO compatibility.  Through these agreements, Japa n was aiming to enhance its relationship not 
only in trade in goods and services but also in area s such as investment, movement of natural persons, 
intellectual property, and competiti on policy as well as cooperation.   
15. Japan would continue to implement structur al and regulatory reform aimed at economic 
growth, so that the second largest economy after the United States would be able to contribute further 
to the development of the world economy.    WT/TPR/M/175 
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  III. STATEMENT BY THE DISCUSSANT 
16. The discussant (H.E. Mr. Guillermo Valles Galmés) stated that the Trade Policy Review of 
the fourth largest exporter and importer had a syst emic impact on the WTO.  Trade Policy Reviews 
were one of the pillars of the WTO, conducting tran sparent examinations of Members' trade policies 
and related environment to provide a better idea of the reality, and detailed knowledge of policy 
trends and measures adopted.   
(i) Economic environment 
17. The discussant drew attention to the conclusi ons of the previous Trade Policy Review of 
Japan, in order to look at the past, the present and to try to project the future.  On the economic 
environment, the Basic Policies on Fiscal Manageme nt and Structural Reform 2004 had been adopted 
by the cabinet decision, and the two-year peri od between 2005 and 2006 had been determined as a 
"concentrated consolidation period;  the Govern ment of Japan had aimed to overcome deflation 
through its policy efforts together with the Ba nk of Japan.  The economic situation had clearly 
improved since then;  it seemed that Japan was co ming out of deflation, though this had not been 
formally recognized by the Government of Japan.  Th ere was 2.7% real growth in 2005 and a similar 
rate had been achieved in the first three quarters of 2006.  Growth had helped Japan to solve its 
structural problems, including particular problem s linked to non-performing loans.  In March 2006, 
the Bank of Japan had ended the "quantitative easing" monetary policy and had subsequently 
established an indicative short-term loan interest ra te at 0.25% compared with effectively zero since 
March 2001.  These low interest rates had promoted  foreign exchange trade operations as a function 
of the interest rates, thus enabling loans taken in  yen to be invested in higher performing foreign 
operations, contributing to major nominal depreciation of the Japanese currency.  At the same time, 
the Government aimed to have a surplus in the pr imary balance of the central and local governments 
by FY 2011.  In summary, for recovery to be sustai ned, structural reform would need to continue.  
The discussant asked whether the recovery was of cy clical or structural nature, and what type of 
measures the Government of Japan aimed to adopt, bearing in mind the aging population.  He also 
asked what tax measures the Government was pl anning, for example, whether any increases in 
consumer taxes were envisaged. 
18. Trade played a major role in Japan's ec onomy.  Foreign demand had made a positive 
contribution in the past few years due in part to  trade liberalization under the multilateral trading 
system.  The current account deficit in Japan had gone  down.  According to available statistics for the 
third quarter 2006, exports of goods and services acco unted for 1.4% of growth in GDP, and domestic 
demand -0.1%.  The discussant asked how the Govern ment intended to achieve stable and continued 
growth in domestic demand.   
(ii) Trade policy regime 
19. Since its last Review, Japan had not substan tially changed its trade policy regime.  Japan 
continued to emphasize it participation in the multilateral trading system, including the Doha 
Development Agenda.  In parallel to this, one of Jap an's major trade policy developments in the past 
decades, was that it might now be inclined towards bilateral and regional trade agreements with some 
of its major trading partners.  Many Members' a dvanced written questions on this topic showed that 
this was not only of interest in terms of their own trade relations with Japan but also in terms of the 
systemic effect on the multilateral trading system.  The discussant asked how Japan would ensure its 
bilateral and multilateral efforts c ould be mutually supportive.  Comp ared with other OECD countries, 
Japan had continued to receive relatively low levels  of foreign investment.  The discussant asked what 
measures the Government of Japan intended to use to promote FDI in the next few years.   WT/TPR/M/175 
Page 8  
 
  (iii) Sectoral issues 
20. Japan's trade policies were characterized by a relatively low tariff average, and bound and 
applied tariffs mostly coincided.  Ab out 7% of tariffs were subject to non- ad valorem  duties, with 
average ad valorem  equivalents substantially higher than ove rall tariff averages.  Agriculture notably 
had a fairly high level of protection.  The di scussant asked about the obj ectives and measures Japan 
planned to adopt on border measures, both in trade negotiations and in the light of necessary structural 
reforms.  Foreign suppliers' share in government  procurement had decreased to 3.7% of overall 
procurement in 2004 (latest year for which data were  available);  the total value of foreign goods and 
services had also dropped.  The discussant asked  for the reasons behind these decreases and what 
measures the Government was adop ting to promote supply by forei gn sources.  In March 2006, the 
Government adopted a three-year programme to promote regulatory reform, which contained over 
1,300 measures to create new opportunities for comp anies both domestic and foreign.  The discussant 
asked about the priorities of the regulatory reform, and in particular, its impact on international trade.  
The Anti-Monopoly Act, Japan's major competition law, had been revised since its previous Review;  
the discussant asked how the revision had changed the competition environment in Japan, and how 
this law had been implemented in  order to achieve its objectives. 
21. In the agriculture sector, Japan intended to m ove away from price support to income support. 
The sector remained substantially protected against foreign competition.  Tota l transfers received by 
the sector were almost the same as its contributi on to GDP, a similar situation since the previous 
Review.  The overall level of state support for agricu lture was much higher than the average of other 
OECD countries.  Considering the magnitude of s upport, the discussant asked how Japan intended to 
shift from price support to income support, in par ticular, how Japan planned to increase productivity 
in the sector by this shift.  Japan clearly intended to develop new industries, with particular focus on 
manufacturing and areas of the country that were lagging behind.  The discussant asked what sectors and regions the Government had in mind in this contex t.  There had been reforms in services, not just 
in the financial sector;  the discussant asked how th e reform was being implemented compared with 
the original objectives and timetable, and whic h sectors and topics still challenged the overall 
structural reform process.  WT/TPR/M/175 
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  IV. STATEMENTS BY MEMBERS 
22. Members thanked the Japanese Government and the Secretariat for their reports.  They looked 
forward to receiving any outstanding replies to thei r advance written questions.  Members noted that 
Japan was the world's second largest economy and a ny reforms it undertook had a strong influence on 
other Members.  Many Members noted that their bi lateral trade and investment ties with Japan had 
been strengthened over the recent period. 
23. Members commended Japan's continued economic r ecovery since its previous Review, which 
had been supported by macroeconomic and structural  policies, particularly with respect to the 
financial sector.  They hoped that reform measure s would aid sustainable economic growth.  They 
recognized that the multilateral trading system ha d also contributed greatly, by keeping foreign 
markets open to Japan's exports.  They appreciated  Japan's active role at the WTO, including its 
strong support for the Doha Development Agenda .  Many Members commended the authorities for 
offering technical assistance and capacity building,  and providing preferential market access to 
developing and least developed countries, as well as financial assistance with respect to "aid for 
trade".  Members appreciated Japan's commitment to providing duty-free, quota-free access to LDCs 
exports, but wished to know the timing of introduc tion of these such measures.  Members urged Japan 
to open its market further for LDCs' products. 
24. Members noted Japan's in creased involvement with regional and bilateral trade agreements 
and urged WTO-compatibility in this regard.  They appreciated that many imports entered Japan either duty free or at low tariff rates.  Noneth eless, they commented on Japan's complex tariff 
structure, including significant ta riff peaks (often involving non- ad valorem  tariffs), tariff escalation 
for some products, especially food and agricultural products, textiles, clothing, and footwear, which 
were often of export interest to developing countries, as well as tariff quotas (particularly in agriculture).   
25. Many Members were concerned about the comp lexity of Japan's standards, technical 
regulations, and sanitary and phytosanitary measures, and urged Japan to bring its standards into line 
with international standards.  Many Members also expressed concern about the seeming lack of 
transparency in Japan's government procurement practices.   
26. Members pointed out the low level of inward FDI into Japan, and enquired about the reasons 
for this.  They appreciated Japan's progress in privatizing its public services, in particular the Japan 
Post. 
27. Members noted that the level of domestic support for agriculture seemed to exceed the 
sector's contribution to GDP, and the protection give n to the agriculture sector continued to be 
relatively high compared with other sectors.  While some Members acknowledged the non-trade 
concerns in agriculture, they urged Japan to addr ess these in a manner that would not unduly distort 
trade and production.  Many Members were interest ed in Japan's plans to move away from price 
support to income support. 
28. The representative of Brunei Darussalam on behalf of ASEAN countries
 noted that Japan held 
regular meetings with ASEAN under the ASEAN+ 3 framework.  Japan and ASEAN had signed a 
Framework for a Japan-ASEAN Comprehensive Ec onomic Partnership in October 2003, and the 
ASEAN-Japan CEP Committee had been established in  November 2003 to implement the work laid 
in partnership.  Japan was engage d in FTA negotiations with Brunei  Darussalam, Indonesia, and Viet 
Nam and had concluded various econom ic partnership and other bilate ral agreements with Malaysia 
and the Philippines;  it was also about to sign ag reements with Thailand.  These arrangements were 
solid building blocks for the multilateral trading system, and would fully complement the high 
ambition and successful outcome of the Doha Deve lopment Agenda.  Japan was a strong provider of WT/TPR/M/175 
Page 10  
 
  technical assistance to developing countries and had he ld many seminars, for example, in Cambodia, 
Malaysia, the Philippines, Thailand and Viet Nam, as well as training programmes within Japan for 
ASEAN members.  He hoped that Japan would play a positive and constructive  role in reducing high 
protection in the agriculture sector. 
29. The representative of Singapore
 noted Japan’s efforts in revi sing Japan Agricultural Standards 
Law in March 2006 with a view to ensuring the releva nce of its standards to public needs and to align 
them with international standards.  Nevertheless, he hoped to see greater transparency in the process 
as Singapore's agricultural exporters had experienced difficulties. 
30. The representative of Brazil  stated that Japan's recent econom ic recovery placed it again as 
one of the major engines of the international ec onomy.  While he appreciated Japan's announcement 
of agricultural reform, he was concerned that  their timing was not clear.  On sanitary and 
phytosanitary measures, he stated that it had take n thirty years of efforts to obtain approval from 
Japan for imports of Brazilian mangos (Tommy Atki ns variety).  The contentions issue had been 
resolved due mainly to the acceptance of a steriliz ation procedure developed in Brazil.  The same 
methodology should apply to other mango varieties. 
31. He understood that Japan shared its views on th e importance of fulfilling the Kyoto Protocol 
obligations on the reduction of green-house gas emissions.  This could be achieved through an 
increase in the ratio of bio-fuel energy consumed in relation to fossil fuel.  One way to do this was 
through an appropriate import tariff and internal tax st ructure.  In this context, he enquired about the 
rational behind Japan's unilateral reduction of MF N tariffs on petroleum products and industrial 
alcohol, which had brought tariff rates down to zero on crude oil, but fixed a 23.8% ad valorem  tariff 
on ethanol.  
32. He was also concerned about trade-related in tellectual property measures that affected the 
Brazilian community of Japanese descent presently liv ing in Japan, who wished to have access to 
typically Brazilian products.  Seve ral names of the Brazilian biodive rsity and generic Brazilian terms 
were being erroneously registered as trade marks in th e Japan Patent Office:  this created a barrier to 
the entry of Brazilian products rightfully carrying those denominations.  He also noted the negative 
impact of such practice on Brazilian exports in  third countries, where market access for goods 
originating in Brazil and exported under their generi c denominations might be hampered due to the 
erroneous registrations in Japan or elsewhere.  
33. The representative of Pakistan  stated that Japan was Pakistan's largest single donor of 
development assistance and technical cooperation.  On manufacturing, Japan's policy and regulatory 
framework continued to favour manufacturers ove r consumers.  Apart from the high tariffs on 
products of export interest to developing countries, some non-tariff barriers also tended to restrict or 
delay imports of goods.  Such measures included st andards unique to Japan, linguistic challenges to 
doing businesses, and extensive licensing powers in the hands of trade and in dustry associations that 
had limited membership, strong market influen ce, and the ability to control information. 
34. The representative of Switzerland  stated that the current recovery phase, which had started in 
February 2002, had surpassed the previous post-wa r record that lasted from November 1965 to 
July 1970 (the widely known "I zanagi" boom).  Furthermore, Japan had finally escaped from 
entrenched deflation after seven years of falling prices.  The opening of negotiations on a bilateral 
economic partnership agreement ha d been decided by the Heads of State two weeks previously;  
deepening of bilateral economic re lations would not mean an end to coordinated attempts at a 
successful conclusion of the Doha Development Agenda.    
35. The representative of Bolivia  welcomed the prospect for growth for the second most 
developed economy, which, inter alia,  had made it possible for Japan and Bolivia to sign a broad non- WT/TPR/M/175 
 Page 11 
 
 
  refundable Financial Cooperation Agreement, the re sources of which would be used for projects to 
improve local road infrastructure.  On multilateral tr ade negotiations, she agreed with the statement in 
Japan's Report that export subsidies and domestic support for products intended for export were the 
measures that caused the greatest trade distortion.   
36. The representative of the Separate Customs Te rritory of Taiwan, Penghu, Kinmen and Matsu 
(Chinese Taipei ) welcomed the general direction in which Japan had been moving, towards 
stimulating competition through further liberalization of its trade and investme nt regime.  He urged 
Japan to continue efforts to implement an accommodative mix of monetary and fiscal policies 
together with structural reforms, including further trade liberalization and measures that made it more 
attractive to inward FDI.   
37. Regarding Japan's SPS regime, its non-quarantine pl ant pests list, instead of a regulated pests 
lists, had seriously impeded market access by other WTO Members due to the lack of definite descriptions and the uncertainty surrounding regulat ed pests, i.e. quarantine pests and regulated non-
quarantine pests.  He asked Japan to formulate its regulated pests list on the basis of appropriate risk 
assessments and to revise current requirements in order to adhere to the relevant international 
standards.  On regionalism, he urged Japan to adopt  measures and actions in support of the framework 
designated by APEC in response to the proliferation of FTAs and RTAs.    
38. The representative of Chile
 stated that Japan and Chile were concluding a very 
comprehensive and ambitious free-trade agreement.  When it entered into force in the next few 
months, some 70% of Chilean exports would enter Japan at zero tariff, and 90% of its agricultural 
exports would also enjoy a zero rate or a major ta riff preference.  As for Japanese exports, 90% would 
enter the Chilean market at zero rate and the rest would be liberalized within a reasonable period of 
time.  Chapters of the agreement on phytosanitary measures ensured, especially for Chile, that its food 
exports would not meet unnecessary trade barriers.  At the same time, the Government procurement chapter offered Chile national treatme nt within the Japanese economy.   
39. A major percentage of Japan's agriculture con tinued to be protected by prohibitive tariff 
peaks, special safeguards, and quotas that were ve ry difficult to administer, and there was domestic 
support at a level equivalent to agriculture's shar e in Japan's GDP.  The Doha Round offered a unique 
possibility for Japan to begin an agricultural reform  process.  Fisheries was an exception to the 
openness of Japan's economy:  there was major tariff protection in the fishery sector as well as State support.  Current WTO disciplines hindered Members from knowing the exact amount of this support.  The most recent notifications to WTO mentioned scarcely US$40 million as subsidies to the sector.  
He encouraged Japan to take advantage of the D oha Round to contribute effectively to the protection 
of marine resources, with strong disciplines prohib iting all subsidies.  Chile and Japan shared the 
interest of bringing discipline to anti-dumping me asures, and seeking to clarify the dispute settlement 
system.  He asked about the substance of the "e xpiry review" for the anti-dumping measure on certain 
polyester fibres (paragraph 34 of Section III of the Secretariat Report). 
40. The representative of Canada
 stated that Japan's and Canada 's economies were adjusting to 
the intensifying competition and the changes taking pl ace in the global economy.  Bilateral investment 
levels rivalled those of traditiona l trade, and the services sector had become the fastest growing 
bilateral trade segment.   She commend the Governme nt of Japan on the progress in the financial and 
corporate sectors including:  the disposal of N PLs;  the decision to privatize Japan Post;  the 
strengthening of competition policy;  and deregulat ion in the energy, financial services, and legal 
services sectors.   
41. The Canada-Japan Economic Fram ework was prominent among bilateral efforts;  the early 
outcomes of the Framework included the conclusion of  the Canada-Japan Social Security Agreement, 
enhanced cooperation in customs procedures, anti-competitive activities, and food safety.   WT/TPR/M/175 
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  42. In December 2005, trade resumed for certain Canadian beef, and she hoped that bilateral 
discussions would expand access to include all beef products deemed eligible for export in accordance 
with the science-based standards of the Worl d Organization for Animal Health (OIE). 
43. Tariff barriers continued to be a serious impedi ment to trade, especially those applied to 
vegetable oils (particularly canola), processed f oods, wooden building products, red meats, fish, 
certain seafood products like scallops and clams,  and leather footwear.  Japan's import duties on 
cooking oil, for example, were applied on a flat rate basis;  with fluctuating exchange rates and 
product prices, the ad valorem  equivalent had varied between 15%  and 30%, creating uncertainty for 
both Canadian exporters and Japanese importers.  In  addition, Canada believed that Japan's tariff 
classification system discriminated unfairly against Canadian Spruce-Pine-Fir (SPF) lumber compared 
with other duty-free lumber products.  The full e limination of tariff rates on these building products 
would also reduce Japanese housing costs.  With resp ect to building products, Canada urged Japan to 
move further towards performance-based evaluations  and to recognize internationally accepted test 
procedures, criteria, and results.  Canada also en couraged Japan to consider recognizing foreign 
organizations that already had designation pursuant to ISO certification. 
44. The representative of Australia
 stated that on 13 December 2006 the leaders of Japan and 
Australia announced the commencement of negotiations  on a free-trade agreement in early 2007.  He 
urged Japan to view trade reform in all sectors as an intrinsic part of its reform  agenda and to continue 
eliminating bureaucratic and informal barriers to foreign investment.  He welcomed the opportunities 
provided to trading partners to propose regulator y reforms through the Japanese Government’s annual 
Regulatory Reform Program. 
45. While Japan was the world's largest net food im porter, he was concerned with its high tariff 
and non-tariff barriers on a range of agricultural prod ucts, and by the high leve ls of support provided  
to its farmers (almost twice the OECD average).  This impeded trade and imposed significant costs on Japanese consumers.  Australia urge d Japan to agree to deeper cuts to tariffs and domestic support in 
the Doha Development Agenda ne gotiations, and hoped that Japan would play a crucial leadership 
role in the Doha Round as the world's second largest economy.   
46. The representative of New Zealand
 encouraged Japan to continue to bring an open and 
inclusive approach to its pursuit of bilateral trade arrangements and to remain mindful of the risks of 
trade and investment diversion for third parties in  preferential bilateral arrangements.  New Zealand 
would continue to follow Japan's re form in transport, financial, pos tal, professional and educational 
services.  It was also interested to know what plan s Japan might have to encourage inward FDI, and to 
reduce public debt.  He encouraged Japan to cons ider the potential for international cooperation and 
investment to help build a stronger agriculture sector in Japan.  Foreign involvement, including 
through sharing experiences in international marketin g, might also assist Japan to achieve its objective 
of developing its agricultural exports.  He welcomed Japan's progress towards deregulation, 
international harmonization of its standards and technical regulati ons and the adoption of mutual 
recognition arrangements, including the introducti on in 2006 of greater flexibility for foreign 
companies applying for Registered Overseas Certifyi ng Body status.  However, there was room for 
improvement, and New Zealand hoped to see improve ments in the acceptance levels by Japanese 
regulators of overseas test results and making the process less costly and less complex.   
47. He encouraged Japan to bring its quarantine systems and procedures more into line with 
international norms and practices;  in this regard, he welcomed Japan's recent revision of its non-
quarantine pest list, and hoped to see the remaining p ests of interests to New Zealand added to the list 
in the future.  On the new positive list system for re gulating agricultural chemical residues in food, he 
hoped that Japan would ensure that the new system was not operated in a way that would unfairly prejudice parties that were working in good faith to meet the new requirements.    WT/TPR/M/175 
 Page 13 
 
 
  48. The representative of Turkey  stated that Japan's recent economic recovery, complemented by 
the positive outcomes of fiscal structural reform  with stronger disciplines on expenditures, had 
contributed to Japan's international competitiveness .  She noted that Japan was optimistic about the 
sustainability of the economic recovery, and aime d to intensify the reforms that were being 
implemented across various sectors of the economy.  Turkey appreciated Japan's decisive approach to 
carry on structural, fiscal, and regulatory reforms that were crucial to its growth potential and 
responsiveness to increased competition in world ec onomics. She noted with satisfaction that the 
objectives and the principles of multilateral trading sy stem were being incorporated effectively into 
intensified bilateral and regiona l trade relations of Japan.   
49. The representative of India  stated that during a recent official visit of the Prime Minister of 
India, it had been decided to launch immediate nego tiations for the conclusion of a bilateral economic 
partnership agreement/comprehen sive economic partnership agre ement (EPA/CEPA) based on the 
recommendations of the India-Japan Joint Study Group.  In order to widen and deepen economic engagement, an India-Japan Special Economic Part nership Initiative (SEPI) had also been announced;  
this initiative would promote investment from Japan in India. 
50. India was concerned that its expor ts to Japan had been adversely affected by stringent sanitary 
and technical standards enforced by Japan.  Rul es governing imports of fruits and vegetables into 
Japan were excessively restrictive and at times stri cter than those applicable in other developed 
nations;  these concerned food a dditives and import quotas on fisheries.  He requested Japan to 
consider lifting them completely or su bstantially revising them upwards.    
51. The representative of Hong Kong, China
 stated that in the DDA negotiations, Japan and 
Hong Kong, China shared the goal of clarifyi ng and improving the WTO disciplines on rules, 
particularly anti-dumping.  In this connection, he appreciated Japan's constructive role in the 
Negotiating Group on Rules.  He commended Japan fo r its continuous efforts to further improve the 
competitive environment of certain infrastructural ser vices subsectors in recent years, notably reforms 
in financial services.  Hong Kong, China also a ppreciated Japan's contribution to the ongoing services 
negotiations.  While pleased to see the improveme nts offered by Japan in maritime services, 
Hong Kong, China was disappointed that Japan intended to inscribe new MFN exemptions for cabotage services, international freight forwarding, and international shipping services.  This move 
was not commensurate with Japan's leading and active role so far in pursuing further liberalization of 
trade in services in the DDA negotiations.  He urged Japan to consider removing these new MFN 
exemptions in its next offer. 
52. The representative of Norway
 stated that Norway enjoyed a close partnership with Japan in 
the G10 Group.  It supported the view expressed in Japan's report that in order to achieve an 
ambitions and balanced outcome in the agricultural negotiations, it was necessary to take into account 
differences in tariff structures, the multifunc tionality of agriculture, and food security. 
53. Japan imposed import quotas on various items, in cluding certain fish products.  The system 
used to administer these quotas was in principle applied globally and in a non-discriminatory manner, 
although only a few new licences were given to new traders and foreign importers.  Although Japan's 
policy objectives with regard to  vulnerable fishery-based comm unities were understandable, these 
types of quota-based protective measures gave rise to concern.   
54. Commending Japan's efforts to further impr ove the investment environment and more 
actively promote foreign direct investment, Norw ay hoped that a further improved investment 
environment would facilitate in Japan more estab lishments and further ec onomic integration.  
55. The representative of the United States  stated that Japan had undertaken additional structural 
and regulatory reforms since its last Review, in Janua ry 2005.  One such important step had been its  WT/TPR/M/175 
Page 14  
 
  decision to privatize Japan Post;  careful implementation remained necessary to eliminate previous 
distortions and ensure a level playing field with ex isting players in the market.  He encouraged Japan 
to further strengthen its regulatory and related transparency practices.    
56. Japan’s reforms to date had been largely lim ited to the energy and services sectors.  The 
United States welcomed Japan’s continued comm itment to reform and believed that a further 
acceleration of this process would contribute positively to Japan's growth, as well as to the 
international trading system.  In this respect, he  recognized Japan's recent progress in developing its 
broadband market and opening its mobile co mmunications market to new entrants.  
57. Reform of Japan's agriculture sector continued to be essential:  the sector remained protected 
from foreign competition through high tariffs and low quotas, and various non-risk-based sanitary and 
phytosanitary (SPS) measures.  Some of these me asures also raised national treatment concerns.  
Japan's use of non-science-based SPS m easures was of concern as they restricted imports of a range of 
agricultural products such as pork and beef, and pl aced unscientific barriers on production processes.   
As a global leader in trade and established stakehol der, Japan was expected to fulfill its obligations 
under the WTO SPS Agreement and employ the least tr ade-restrictive SPS measures.  He hoped to see 
Japan conform more closely to international practi ces and guidelines, such as those established by the 
World Organisation for Animal Health.   
58. Japan had one of the world's largest global fish ing fleets and was the most important market 
for many threatened species, including tuna.  In light of this pre-eminent role and the need to reform 
its domestic fishing industry, he encouraged Japan to take a positive leadership role in the Doha 
negotiations to discipline subsidies that c ontributed to overcapacity and over-fishing. 
59. In the Doha Development Agenda, Japan had an important role in the non-agriculture market 
access negotiations and the services negotiations.  Ne vertheless, it was crucial that Japan took a 
forward-looking stance, expanding market access on  agricultural imports, cutting trade-distorting 
subsidies to farmers, and implementing SPS measures in an appropriate and science-based manner.  A 
serious commitment by Japan to reform its agricu lture sector was essential to successfully concluding 
the DDA.   
60. The representative of China
 was concerned with Japan's use of SPS and TBT measures, as 
well as safeguard measures.  The Positive List Syst em, which had entered into  effect on 29 May 2006, 
was a recent example.  The system covered about 799 agri-chemicals for imported food and 
agricultural products subject to mandatory inspec tions.  However, fewer domestic products were 
subject to inspection.  Furthermore, while animal  monitoring and inspection plans, and information on 
conformity with the residue limit were publishe d for imported goods, there was no such practice for 
domestic products.  China was also concerned with:  the tightening of the residue tolerance in a very 
short time;  excessively stringent tolerance level;  and the discrepancy between residue tolerances for 
the same agri-chemical in different products.  Wh ile China respected Japan's right to protect human 
health through appropriate SPS measures, the Positiv e List System had gone too far beyond the extent 
necessary and in many cases lacked sufficient scientifi c evidence.  China was al so concerned that the 
number of TBT measures applied by Japan on other products was also increasing.  He urged Japan to 
address such concerns at an early date.  
61. The representative of the European Communities  noted the downward trend in Japan's FDI 
inflows:  an open and dynamic investment policy w as key to reverse this trend and foster inflows. 
Continued economic growth, strong domestic demand,  and increasing external demand, which hinged 
on progressive openness of the multilateral trading system, would lead to a sound economic and 
business environment.  Further structural reform s, including broad regulatory reforms, would be 
instrumental in sustaining growth in the face of a rapidly ageing population.  He was interested in 
Japan's views on steps taken or planned to furt her improve the investment climate and business  WT/TPR/M/175 
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  environment.  Trade policy should contribute to mo re sustainable production patterns rather than to 
lower standards and he asked whether Japan had de veloped any conceptual framework to promote the 
link between trade policies and measures and sustai nable development.  Fu rther improvements to 
Japan's policies and practices in a number of areas could be to the benefit of both Japan and other 
WTO Members.  
62. Japan still maintained a tariff quota system for leather and leather footwear, which was in 
stark contrast to the current international textil es scenario, Members' common ambitions in the DDA  
and Japan's obligations as an industrialized count ry to eliminate all tariff quotas on industrial 
products.  The quota had remained unchanged for over ten years.  He urged Japan to progressively 
dismantle these quotas.  There was also high tariff protection in ot her products including 
confectionary goods and ski boots.  
63. Japan prohibited imports of beef and poultry from various countries.  In addition, imports of 
many food additives were prohibited and the appr oval process was advancing slowly.  He sought 
clarification and detailed explan ations supported by scientific evidence on the imposition of these 
trade restrictions, and urged Japan to establish fair, non-discriminatory,  and transparent rules for meat 
imports. 
64. On government procurement, the revised Gu idelines on Promotion of Proper Tendering and 
Contracting for Public Works were certainly a step  forward; however, their non-binding nature could 
prevent foreign companies from taking full advantag e of these measures. Currently, the procurement 
scenario for foreign companies w as statistically not favourable;  making the revised Guidelines 
binding for both central and local authorities would be an important step.   
65. The representative of the Republic of Korea  stated that while the Japanese market was largely 
open, Korea encouraged Japan to further remove  non-tariff barriers to achieve meaningful and 
effective trade liberalization.  For example, Japan required many kinds of products, including road 
vehicles, electricity, gas and chemical products, to  undergo a time-consuming safety certification even 
though they met international safety standards.  These certification procedures were a heavy burden 
on foreign manufacturers and worked as a de facto  import barrier. He hoped that Japan would soon 
accept foreign certificates that met international st andards and apply such requirements in the least 
trade-restrictive manner possible.  
66. The representative of Colombia  believed that Japan's new strategy of entering into bilateral 
trade agreements was an important change in policy,  and one that would strengthen trade.  Colombia 
urged Japan to evaluate labour productivity in th e agriculture sector, whic h was below the national 
average.  
67. The representative of Ecuador  stated that the bilateral agreements Japan had engaged in 
sought not only market access but also trade f acilitation, increased investment, competition policy, 
and improvement of the business environment.  Su ch agreements could complement the multilateral 
trading system and were useful instruments for mark et liberalization and structural reform.  Japan was 
one of the world's main food importers and th e measures it adopted had consequences for small 
economies that depended on agricultural exports, for example, for Ecuador's exports to Japan, of 
bananas, shrimp, tuna, lobsters, co ffee and coffee-based products, fish m eal, cocoa, juices, and others.  
68. The representative of Argentina  noted that Japan's export competitiveness had increased 
through the constant reduction of unit labour costs.  In  this context, trade was a very important factor 
in the growth of the economy.  Though the pr oportion of exports and imports was around 13% and 
11% of GDP, respectively, external demand had ma de a positive contribution to economic growth in 
Japan. WT/TPR/M/175 
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  69. The representative of the Dominican Republic
 noted Japan's dynamic agenda of trade 
negotiations since its last Trade Policy Review.  It  had concluded trade agreements and investment 
agreements with several countries, and was curren tly negotiating others.  Similarly, it had signed 
social security and fiscal agreements with various trading partners.  All of these had given a great 
boost to the multilateral trading system and the ne gotiations under the current round.  She hoped that 
Japan would continue to show flexibility in th ese multilateral negotiations, which was necessary for 
developing countries, in particul ar for small and vulnerable economi es, as well as for least developed 
countries.  
70. The representative of Benin  commended the Japanese programme in favour of trade for 
development.  The "one village, one product" init iative showed the importance Japan attached to 
ensuring that the development objectives of th e DDA were achieved.  Implementing this new 
initiative rapidly would enable African countries, in particularly LDCs, to improve their participation 
in trade and to make the most of  their trading potential to aid development.  This initiative could 
develop supply capacities, promote exports, combat  poverty, and help to achieve the Millennium 
Development Goals.  Benin appreciated Japan's support in the discussions on cotton and hoped for 
Japan's support at the meeting to be held in Geneva  on the 7 and 8 March 2007.  He noted that Japan's 
trade practices and its sectoral regimes were followed with great interest by Members of the WTO, in particular the LDCs, who would be inspired by the positive experience of Japan's trade and economic 
policies. 
71. The representative of Zambia
 congratulated Japan on being the world's second largest 
economy.  Zambia supported Japan's efforts to st rengthen trade with developing countries and to 
contribute to trade capacity building for many LDCs so as to enable them integrate into the world 
trading system.  Interaction with Japan especially for LDCs, was not only important but was an imperative necessity. 
72. The representative of Morocco
 expressed particular appreciation for Japan's strong sympathy 
for the proposals of the African Group/LDC's on Food Aid and that of the ACP on market access, 
since these groups were the real beneficiaries of  the Development Round.  He appreciated Japan's 
commitment to the DDA, aiming to facilitate deve loping countries' integration into the multilateral 
trading system, as well as its recognition of the importance of the development dimension in the 
negotiation process.  Morocco commended Japan's  decision to support the "One Village, One 
Product" movement in developing countries and LDC's as part of the "Development Initiative for 
Trade" announced at the Hong Kong Ministeria l Conference in December 2005.  Through the 
campaign, which had started in February 2006, cu lturally representative and attractive products such 
as craftwork items, textiles and processed foods from  nations in Asia, Africa, Oceania and Central 
America would be introduced freel y to the Japanese market.  Japan al so provided substantial official 
development assistance tailored to the needs of Af rica.  Furthermore, Japan had launched in 1993 a 
Tokyo International Conference on African Developm ent (TICAD) Process for Africa, with the main 
objective of achieving sustainable economic developm ent by promoting trade and investment.  Japan 
would hold TICAD IV in 2008, which would focus on Africa's development and be mainly business 
oriented.   
73. The representative of Uruguay  stated that trade played a key role in Japan's economy;  even 
though exports and imports represented about 13% a nd 11% of GDP, respectively, external demand 
had contributed positively in the past few years due in part to the openness of the multilateral trading 
system.  This was encouraging for a developing coun try.  It was important to understand the possible 
positive impact of market opening;  this would be  the case if there was an improvement in market 
access opportunities for developing countries.  Th ere were serious market-access difficulties in 
agriculture, a sector of great importance to Uruguay;  Japan's direct agricultural support (state aid) 
was substantially higher than the OECD average.  These measures distorted production and  WT/TPR/M/175 
 Page 17 
 
 
  international trade, to the detriment of producing co untries.  In the DDA, liberalization and reform of 
agriculture was a necessary and irreversible fact. 
74. The representative of El Salvador  noted that Japan had provided support in building important 
infrastructure, such El Salvador's international ai rport as well as the Port of the Union, which was 
expected to be completed in 2008.  El Salva dor commended Japan's trade development initiative, 
including its technical assistance.  It also commended Japan's economic progress since 2005;  the 
current economic situation appeared to show that  the recovery was set on solid bases.  She noted 
various amendments in Japan's IP R-related laws to strengthen IPR protection, and Japan's moves to 
facilitate international harmoni zation in its IPR regime.   
75. The representative of Nigeria  commended Japan for its initiative to promote trade and 
investment in Africa, through several channels such  as the Tokyo International Conference on African 
Development (TICAD) and Africa-Asia Business Foru m (AABF).  Nigeria and Japan had agreed to 
create the Nigeria-Japan Special Partnership Foru m to discuss issues that would strengthen the 
existing bilateral relationship cove ring:  trade, investment, and de velopment cooperation, information 
and communication technology, human resources devel opment, environment, oil and gas cooperation, 
and democracy and good government.  To underscore  this cooperation, Nigeria was planning to 
establish a trade and investment centre in Japan.  Nigeria's economic relations were gradually shifting from the West to Asia.  There had been high level visits between Nigeria and Japan recently, most of 
which had culminated in the signing of  mutually beneficial agreements. 
76. The representative of Djibouti
 stated that Japan's support to Djibouti had increased each year 
and in all sectors, particularly health, education, information, and infrastructure.  Djibouti commended 
Japan's concrete commitment to supporting Africa and its LDCs.  On Aid for Trade, Japan had 
undertaken important commitments, such as technical a ssistance at bilateral, regional, and multilateral 
levels.  Japan's efforts in assisting Africa were well known and visible.  WT/TPR/M/175 
Page 18  
 
  V. REPLIES BY THE REPRESENTATIVE OF JAPAN AND ADDITIONAL 
COMMENTS 
77. The representative of Japan
 appreciated delegations' warm welcome and the many positive 
comments by Members.  He was convinced of the importance of the TPRM in enhancing global free 
trade.   
(i) Economic environment  
78. On the question raised by the discussant whet her the current recovery of the Japanese 
economy was cyclical or structural, the current recove ry was largely due to the structural reforms that 
had been implemented.  The objective of the re forms under the Koizumi administration had mainly 
been to address the negative effects of the "bur sting of the bubble economy" such as non-performing 
loans.  However, with these negative effects mos tly overcome, the Abe administration reforms sought 
to explore new frontiers for the Japanese economy , with the main purpose of enhancing Japan's 
growth potential in the face of a declining and aging population.  To this end, Japan would also strengthen the international competitiveness of th e information and communications technology 
industry.  Japan would put together a produc tivity enhancement acceleration programme around 
April 2007, aimed at reforming remaining regulatio ns in promising sectors.  Japan would promote 
greater efficiency in business through full utilization of information technology.   
79. On the issue of the contribution of external de mand to Japan's economic growth, raised by the 
discussant, the current recovery had been suppor ted mainly by domestic demand.  During the 
first three quarters of 2006, while the annuali zed contribution of domestic demand had been 
0.9 percentage points, that of net exports had been  0.5 percentage points;  the contribution of net 
exports had been around 0% in the first two quarters.   Third quarter figures seemed to be exceptional, 
due to temporary factors.  As for short-term pr ospects, the economic recovery was expected to 
continue, supported by domestic private demand, as hi gh corporate profits were expected to feed into 
the household sector.  
80. On the need to raise consumption tax in order to  achieve fiscal consolidation, the Government 
would continue to pursue the integrated reform of expenditures and revenues to meet the stated fiscal 
targets.  While the Government had implemented thorough expenditure cuts in the FY 2007 budget, it 
would continue to work on a thorough spending refo rm.  At the same time, in order to cover the 
incremental budgetary costs that could not be off set by these cuts, the Gove rnment was aware of the 
need to secure stable revenue sources to prevent shifting the burden to future generations.  The 
Government would make every effort to achieve a fundamental reform of the tax system by roughly 
the end of FY 2007, taking into account the forecast of  costs associated with the increase in social 
security benefit payments and measures to address th e falling birth rate, as well as the need for wide 
and equitable burden sharing. 
81. The privatization of Japan Post was one of the main achievements of the Koizumi 
administration reforms. Now the process of priva tization of postal services was on track in accordance 
with relevant laws and regulations.  The need to  ensure a level playing field for existing market 
participants would always be respected, as this re form was carried out according to one of the three 
principles that had guided Koizumi reforms, namely "from public sector to private sector".  To ensure 
fair conditions for competition, the Postal Savings  Bank and the Postal Insurance Company would be 
supervised by the Financial Services Agency, b ased on the Banking Law and Insurance Business 
Law, and subject, in principle, to the same accountin g and disclosure standards, and tax obligations as 
other private financial institutions from the beginning of privatization, 1 October 2007. 
82. Japan wanted more foreign direct investment though it had not been very successful.  There 
might be various reasons for the low level of inwa rd FDI:  according to a survey conducted by the  WT/TPR/M/175 
 Page 19 
 
 
  Government, the main problem pointed out by foreig n affiliates had been the high cost of developing 
business activities in Japan.  Personnel expenses ha d been cited as being very high in the 
manufacturing sector;  another problem had been the meticulous demands of Japanese customers in terms of product quality.  Japan had been maki ng efforts to promote both inward and outward 
investment.  The Japan Investment Council had set up  in June 2006 a programme for the acceleration 
of foreign direct investment in Japan, which fo cused on three key issues:  regional centres for 
economic growth and improved quality of life;  improvement of the investment environment to make 
it capable of overcoming global competition;  an d domestic and internatio nal public information 
activities.  The programme aimed to double the ratio of inward FDI stock to GDP by 2010, raising it 
to around 5%. 
83. On the question of how Japan could make bilateral and multilateral approaches mutually 
supportive, meeting all the WTO legal requirements w as the first step.  In addition, Japan aimed to 
create new trade flows by providing a simple, predic table, and transparent business environment.  The 
EPA between Japan and Mexico had increased trade by 38.4% year on year, and that between Japan 
and Singapore had increased trade by 12% year on y ear.  The increase had been mainly in items on 
which tariffs had been eliminated.   
84. On the proliferation of FTAs/EPAs in the Asia-Pacific region, APEC endorsed the Busan 
Roadmap for the Bogor Goals, which stated that APEC would continue to contribute to trade and 
investment liberalization through the pursuit of hi gh quality RTAs/FTAs.  It also said, to help 
maximize the contribution of these agreements to APEC-wide progress towards the Bogor goals, 
APEC should develop a more comprehensive wo rk plan on RTAs/FTAs, including work in 
developing model measures. 
85. On the linkage between trade policy and sustai nable development, Japan's efforts at saving 
energy, producing renewable energy, and protecting the environment were well known.  For example, 
Japan had been the first to move into large-scale pr oduction of hybrid cars, and produced roughly half 
of the world's photovoltaic cells.  Japan had also b een an active participant in the Committee on Trade 
and Environment.   
86. On the Generalized System of Preferences, Jap an planned to submit a bill to implement the 
duty-free, quota-free treatment for LDCs very shor tly.  Subject to the approval of the Diet, the 
expansion of duty-free quota-free market access to LDCs would enter into force in FY2007.  Its 
coverage, would be 98.1% on the tariff-lin e basis and 99% on trade-volume basis.  
(ii) Trade policy by measure 
87. Brazil had pointed out that though the tariff on petroleum was 0% in Japan, the tariff on 
ethanol was 23.8%. The Secretariat report only stat ed that Japan unilaterally reduced applied MFN 
tariffs on industrial alcohol to 23.8% in FY 2006. However, Japan had already decided to further 
reduce the applied MFN tariff on industrial alc ohol by more than half, to 10% by 2010.  
88. Japan had made continuous efforts to harmoni ze its standards and technical regulations to 
international ones.  More than 90% of JIS ( Japan Industrial Standards) were aligned with 
corresponding international standards. Furthermor e, for the benefit of overseas users, Japan had 
permitted several foreign bodies to  operate conformity assessment services and accreditation services 
under the Industrial Standardization Act and the El ectrical Appliance and Material Safety Law.  
89. With regard to government procurement, th e representative described Japan's system to 
prevent bid rigging.   The Act for Promoting Proper Tendering and Contracting for Public Works 
provided that central and local government entities should endeavour to take  measures to promote 
proper tendering and contracting for public work s in accordance with the "Guiding Principles WT/TPR/M/175 
Page 20  
 
  Concerning Measures to Promote Proper Tendering and Contracting for Public Works".  The Minister 
of Land, Infrastructure and Transport, the Minister  of Internal Affairs and Communications, and the 
Minister of Finance receive reports from those entities on measures taken in accordance with the 
Guiding Principles.  The three Ministers had to publis h a summary of the reports every fiscal year.  In 
addition, they might request those entities to take measures deemed particularly necessary in the light 
of the Guiding Principles. 
90. On the objectives and effect of  the Antimonopol y Act amendment, its aim was to depart from 
bid rigging and collusive practices and to est ablish competition policy appropriate for the 21
st century.  
The leniency programme was judged to have made  it easier to detect cartels, and encouraged 
businesses to conduct compliance activities.   
(iii) Sectoral issues 
91. The representative noted that the large number of  comments related to agriculture reflected 
Members' interest in Japan as a market for thei r agricultural products.  The common perception was 
that Japan was highly protective in agriculture, ye t Japan was the world's largest net food importing 
country.   
92. One quarter of Japan's agricultural tariff lines we re at zero, and for others not zero overall 
tariffs had been reduced as a result of successive  trade negotiations.  The current average tariff on 
agricultural products, about 18% as shown in the Secretariat's report, was relatively low compared with figures in TPRs of some Members, even some belonging to the Cairns Group.  Imports of agricultural products to Japan had increased since th e UR Agreement, when import restrictions had 
been replaced by the TRQ system.  Imports of ag ricultural products had increased by about 20% from 
1994 to 2005.  In the Framework ag reement, Japan had already committed itself to the principle of  
higher tariffs being cut more.  Any further details  should await the outcome of the DDA negotiations. 
93. Figures in the Secretariat's report did not correctly reflect the level of expenditures nor the 
agricultural reform that the Japanese Government ha d implemented.  In 1998, Japan had introduced a 
fundamental reform of its rice policy, moving aw ay from price support to a market-driven price 
system.  Government purchases of domestic rice ha d been limited to the minimum necessary to 
maintain stocks for food security purposes, and the price had been determined through a tender 
mechanism at market price.  These and other reforms were behind the decrease of Japan's AMS to 18% of its commitment level.  Another major shif t was to try to encourage large-scale efficient 
farmers to become more efficient through a new dir ect payment system, rather than trying to help 
everybody equally.  The new system also reflected a shift to a decoupled support system in the major 
crop sector, from production-linked payments.  This wa s scheduled to be implemented in April 2007.  
With regard to the agriculture negotiations in  the DDA, Japan was willing to make further 
contributions, but Japan's right to seek a balance in the outcome of the negotiations could not be 
denied.  As a large net importing country trying to maintain a sustainable level of farming activity for 
food security and other purposes, Japan had difficulty  finding ways to compensate for the efforts it 
was being asked to make in market access.  Having experienced a sudden cut-o ff in the supply of soy 
bean, Japan had real food security concerns.  He invited Members to imagine themselves in this 
situation and to try to work out how to achieve balance in the agriculture sector. 
94. On the issues related to SPS measures, Japan 's policy was to take these measures in 
accordance with the WTO/SPS Agreemen t, based on the scientific evidence, and taking into account 
relevant international standards.   
95. In terms of market access for fisheries products, he noted that Japan was the largest fisheries 
products importing country in the world.  Japan a pplied IQs on several fisheries products for purposes 
of conservation and management of fisheries resources,  and in a manner that was fully consistent with  WT/TPR/M/175 
 Page 21 
 
 
  the WTO Agreements.  Fisheries subsidies that undermined conservation and resources management 
should be subject to a new discipline:  the numb er of Japanese fishing vessels had decreased by 
approximately 15% in the last decade.  Th e size of fishing vessels was not increasing. 
96. The current system of tariff rate quotas on leather and leather footwear was part of the 
Uruguay Round Agreement and Japan had reduced the ta riff rates in compliance with the Agreement.  
Due to historical and social difficulties in this sector, however, Japan had no further plans to modify 
the existing TRQs on these products. 
97. In September 2006, Japan had announced "New  competition Promotion Program 2010" for 
telecoms.  Based on changes in the market environm ent, caused by the transition to IP-based networks 
and "broadbandization", this programme covered wide-ranging issues including interconnection rules 
concerning the next-generation network and compe tition promotion in the mobile communications 
market.  The comprehensive pro-competitive policies were to be implemented by the early 2010's.  
Details were being finalized, includ ing an implementation schedule.   
98. The representative of the United States  raised questions on regional trading agreements, SPS, 
food labelling, and TRIPS, which the United Stat es had submitted as additi onal written questions.  
99. The representative of th e European Communities  asked what products or product lines would 
be excluded upon implementation of the duty-free, quota-free treatment, and whether these products 
would be phased in at a later stage.  She asked for further clarification of the faster approval procedure 
by the Diet (EC's question 7), and whether the admini stration had plans to adopt a faster procedure for 
EPAs approval by the Diet by this year.  On th e EC's Question 11, she acknowledged that Japan had 
adopted non-discriminatory treatment for the require ments to allow tax-deferral in domestic as well as 
cross-border mergers.  Japan allowed for tax-deferra l, in principle, except for 'paper companies'.  
However, unlike national companies, foreign compani es could not engage in a direct merger using a 
share swap, and consequently, had to set up a so-ca lled special purpose vehicle, which was de facto a 
'paper company'.  This meant that, even though th e foreign company itself was not a 'paper company', 
unless it already had a well-established subsidiary in Japan, it could not enjoy tax-deferral in a 
triangular merger.  In this context, she asked wh ether Japan was planning to address this problem.  
100. During his introductory statement, the representa tive of Japan referred to an OECD research 
paper that stated Japan was "one of the least restrictive countries among the OECD Members with 
respect to FDI regulation".  She pointed out the conclusions in OECD Economics Department 
Working Paper No. 526, of December 2006, whic h recommended Japan to adopt comprehensive 
measures to improve the climate for inflows of FD I, given that Japan had the lowest level among 
OECD countries of import penetration, stock of in ward FDI relative to GDP, and foreign workers as a 
share of employment.  In that regard, she encouraged  Japan to take further steps to implement an open 
and dynamic FDI policy with a view to overc oming remaining barriers to FDI inflows.  
101. As regards the reply to the EC's Question 10, she hoped Japan would elaborate further on the 
specific measures included in the Program for the Acce leration of Foreign Direct Investment in Japan, 
adopted in June 2006.  As regards Question 31, she asked for clarification whether it was necessary to 
register a foreign geographical indication in Jap an in order to receive protection according to 
Article 23 of the TRIPS Agreement.  She also asked whether Japan automatically protected any 
geographical indication for wine or spirit as s oon as this GI was recognized in its home country. 
102. Regarding Japan's reply to the EC's Question 40  relating to the Pharmaceutical Affairs Law, 
she asked whether there was a list of the forei gn 'Good Clinical Practices' that were deemed 
equivalent or superior to the Japanese GCP.  She also asked whether the foreign system needed prior 
approval by Japanese authorities or was on a case-by-case basis. WT/TPR/M/175 
Page 22  
 
  103. The representative of China
 stated that some major issues had not been answered 
satisfactorily, and the responses could not be sufficiently justified based on relevant WTO 
Agreements;  one issue related to the implementati on of the Positive List System for residue limit 
levels for agri-chemicals.  While protection of human health was a legitimate objective for any 
Member, the WTO SPS Agreement required Members to  use the least trade-distorting and least trade-
restricting means for achieving this objective.  The Positive List System could be regarded as the most 
trade-distorting and most trade-restrictive means re lated to Japan's agricultural imports.  While the 
SPS Agreement also required Members to base its SPS measures on available scientific evidence and 
risk analyses, many aspects of these residue limit le vels and their implementation were arbitrary and 
discretionary.  The scientific basis and internationa l standards were not sufficient to tighten residue 
levels drastically on such a wide range of products in  such a short time period. He urged Japan to take 
concrete steps to ensure consistency of  its SPS measures with the SPS Agreement. 
104. The representative of Japan  replied that he understood the U.S. comment on balance, as Japan 
should try to compensate for whatever it lost in agri culture by whatever it gained in other areas.  This 
might be difficult in developed countries, where the share of services in GDP was overwhelming.  
Thus, whatever was gained in these sectors would eas ily outweigh whatever w as lost in agriculture.  
Nonetheless, since the question was of political na ture, balance was needed in each sector;  all 
Members were facing this problem.  On food security and the need to diversify suppliers, the example 
mentioned was caused by over-reliance on one supplier;  perhaps Japan needed to diversify its sources 
of food supply.  On RTAs, especially with regard to the Japan-ASEAN CEP, the negotiation was at an 
early stage talking about modalities, which was not yet agreed.  The time limit was about two months 
away;  he hoped for as much progress as possible in  the coming negotiations.  There was no faster 
approval procedure by the Diet with regard to any t ype of international agreement.  Certain types of 
international agreement needed to be submitted to  the Diet for approval;  among those submitted there 
was no difference in approval procedure.  The cove rage of duty-free, quota-free treatment for LDCs' 
products was yet to be made official;  the Government was finalizing its policy based upon 
recommendations by an advisory committee.  Geog raphical indications for wines and spirits were 
protected in accordance with Article 23 of the TRIPS Agreement.   
105. The definition of Wagyu was made at DNA level, therefore there was no nationality 
requirement.  Japan currently planned to establish the name of "kurobuta";  any species of Berkshire 
species could be called kurobuta, without any natio nality requirement.  On the EC's Question 11 
related to triangular merger, this topic was subject to debate in Japan and the conclusion, which was 
expected to reflect global standards, should be reached by May 2007.  The maximum residue limits 
that were provisionally established in the process of  introducing the Positive List System were based 
on:  (1) the CODEX standards;  (2) registration withholding limits under the Agricultural Chemicals Regulation Law, limits of determin ations for veterinary drugs at the time they were authorized under 
the Pharmaceutical Affairs Law, or limits of determ inations for feed additives at the time they were 
authorized under the Law for Safety Assuranc e and Quality Improvement of Animal Feed;  
(3) standards established by other countries where MR Ls were assumed to be  established based on 
toxicity study data equivalent in  quality to those used in scientific  evaluations by the Joint FAO/WHO 
Meeting on Pesticide Residues (JMPR) and th e Joint FAO/WHO Experts Committee on Food 
Additives (JECFA).  These countries were Aust ralia, Canada, the European Communities, 
New Zealand, and the United States.  When two or  more of these countries had their own standards 
for chemicals in a product, the average was adopted for that product.  Japan would conduct risk 
evaluation systematically for chemicals for which MRLs had been established provisionally at the 
introduction of the new system, and would review the MRLs as needed.  
106. The discussant
 stated that the sustainability of Japan's economic growth would be of interest 
to all Members;  he hoped that structural reforms w ould be pushed further.  He thanked Japan for the 
information provided on fiscal reforms, the social security system, and measures to facilitate foreign 
direct investment.  The causes of the relatively low level of FDI compared with other OECD countries  WT/TPR/M/175 
 Page 23 
 
 
  remained of great interest to Japan and its tr ading partners;  the cause might be the way Japan 
integrated with the world economy.  On FTAs in  relation to GATT Article 24 and GATS Article 5, 
many Members were concerned how Japan would in tegrate into a "spaghetti bowl" of bilateral and 
regional agreements;  because of its  economic weight, Japan was an important trading nation and its 
involvement in these agreements, particularly the le vel of product coverage, ha d considerable effects 
on the trading system.  Unilateral reduction of tariffs  on ethanol was of importance in respect to trade 
and environment.  In addition to the aspect of co rruption related to Japan's government procurement, 
it would be important to follow up on the lower participation in the government procurement by 
foreign suppliers.  Japan's SPS measures and market  access for agricultural and fisheries products, for 
which Members showed a high level of interest, woul d merit a follow-up;  it was important to assure 
the same level of transparency for all Members on these matters.  Issues raised on some chemical 
products showed Japan's importance as a food importer ;  he urged Japan to continue to take into 
account Members' concerns on tariffs and non-tariff measures.  
107. The representative of the United States  stated that he had learned a great deal during this 
Trade Policy Review about the current state of Japa n's trade policy, and hoped to see the pace of 
Japan's reforms accelerated and th eir scope deepened.  As the world's second largest economy and a 
major beneficiary of an open global trading system, Ja pan needed to take an active and leading role in 
trade liberalization in all sectors, including agricu lture.  Japan's use of SPS measures impeded market 
access and raised national treatment concerns.  A serious commitment by Japan to reform its agriculture sector was essential to  successfully concluding the DDA.  He believed that a further 
acceleration of this process would contribute positively to Japan's growth, as well as to the 
international trading system.  The United States  encouraged Japan to continue reforming its 
telecommunications market;  it would continue to m onitor Japan's reforms to Japan Post to ensure 
equal conditions of competition be tween the new Japan Post companies and the private sector in 
banking, insurance, and express delivery. 
108. The representative of China
 stated that he was not very convinced by the reply provided by 
Japan, and wished to continue bilateral talks.   
 WT/TPR/M/175 
Page 24  
 
  VI. CONCLUDING REMARKS BY THE CHAIRPERSON 
109. The eighth Trade Policy Review of Japan has been informative and open, thus contributing to 
a much enhanced understanding of Japan's trade and related policies.  Our discussions have greatly 
benefited from the active engagement of the Japan ese delegation led by Ambassador Yokota, from the 
insightful contributions by the discussant, Ambassador Valles Galmés, and from thoughtful 
interventions made by a large number of WTO Members.   
110. Members were encouraged by the continued gr owth of Japan's economy (the second largest in 
the world), which is important for the prosperity of the world economy and the expansion of trade.  
Members recognized that the multilateral trading syst em, by keeping foreign markets open to Japan's 
exports, contributed greatly to its economic gr owth.  However, they enquired whether the 
sustainability of Japan's recovery might be underm ined by, for example, the combination of high 
public debt and a rapidly aging population.  Members encouraged Japan to con tinue its reform process 
and improve its market access, particularly in agriculture.  
111. Members welcomed Japan's active role in the multilateral trading system, particularly its 
strong support for the Doha Development Agenda.  In this respect, Members commended Japan for 
providing trade-related technical assistance and cap acity-building initiatives to developing and least 
developed countries, as well as financial assistance with  respect to "aid for trade".  Members also 
expressed their appreciation for the preferential market access provided by Japan to developing 
countries and LDCs, and its commitment to prov ide duty-free and quota-free market access for 
products from LDCs;  they encouraged Japan to ope n further its market in respect of exports from 
these countries.  Members also not ed Japan's increasing involvement in bilateral/regional trading 
arrangements;  they urged Japan to ensure that  these arrangements are fully compatible with the 
multilateral system.  
112. Members expressed their appreciation for steps taken by Japan to liberalize further its trade 
regime.  Many imports enter Japan duty-free or at low tariff rates and most applied rates coincide with 
the bound rates, imparting a high degree of predicta bility to the tariff.  However, Japan's tariff 
structure remains complex, involving significant tariff peaks (often involving non- ad valorem  rates) 
and, for some products, tariff quotas.  These mainly  involve agricultural a nd food products, textiles 
and clothing, and leather and leather products.  Me mbers expressed their concern about the recent 
decrease in the share of overseas goods and ser vices in Japan's government procurement and 
encouraged Japan to promote foreign participati on in its government procurement.  Steps to 
strengthen intellectual property rules and to expe dite registration procedures for patents were 
welcomed.    
113. While appreciating Japan's moves to harmonize its  standards and technical regulations with 
international norms, and further accepting foreign test results, many Members expressed concern over 
the level of complexity and transparency in Jap an's sanitary and phytosanitary (SPS) measures, 
technical regulations, and standards.  Some Memb ers raised questions on national treatment with 
regard to the application of SPS measures.  They encouraged Japan to empl oy these measures in the 
least trade-restrictive manner. 
114. Members welcomed Japan's recent strengtheni ng of competition policy.  Members also 
appreciated continued enhancement of transparen cy and progress in regulatory reforms, as provided 
for in the Government's three-year programme a nd the Special Zones for regulatory reform.  In 
addition, Members enquired about factors discouraging inward foreign direct investment (FDI), which 
remains relatively low.  Members appreciated the progress in privatizing public services, particularly 
Japan Post;  they encouraged Japan  to ensure a level playing field in the markets concerned (e.g. 
banking, insurance).  WT/TPR/M/175 
 Page 25 
 
 
  115. On agriculture, Members were in terested in Japan's plan to move away from price support to 
income support;  at the same time, they were concerned that the level of domestic support for 
agriculture was apparently as large as the sector 's contribution to GDP.  Many Members were 
concerned about Japan's use of import quotas on fish .  On manufacturing, Members were interested in 
Japan's plans to promote particular sectors.  Memb ers appreciated reforms in the energy and services 
sectors, particularly, in financial services, telecommunications, and legal services. Members expressed 
their belief that reforms should continue with a vi ew to enhancing competition not only in these 
services, but also in transport, medical, and educational services. 
116. In closing, I would like to thank the Japanese delegation for the oral and written responses 
provided during the meeting;  we all look forwar d to receiving answers on out standing questions.  The 
keen interest shown by Members in this review, with the large number of advance written questions, 
numerous interventions and high attendance, reflect s the importance that Members attach to Japan's 
role in the multilateral trading system.  It also de monstrates the value of the TPRM even for Members 
that, like Japan, maintain relatively open and transparent trade and investment regimes.  This review 
has highlighted a number of possible improvements to  Japan's trade regime, many of which could be 
brought about as part of the DDA negotiations.  In th is regard, I am encouraged by the statement by 
Japan that its long-run economic interests have b een very well served by its commitment to the 
multilateral trading system.  I also hope that Japan  will take to heart the concerns expressed by 
Members, particularly with regard to its po licies on agriculture, tariff and non-tariff measures, 
sanitary and phytosanitary measures, gove rnment procurement, and FDI.    
 
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