RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/TPR/G/175 
19 December 2006  
 
(06-5955) 
Trade Policy Review Body Original:  English 
   
 
  
 
TRADE POLICY REVIEW 
 
Report by 
 
JAPAN 
 
  
 
Pursuant to the Agreement Establishi ng the Trade Policy Review Mechanism 
(Annex 3 of the Marrakesh Agreement Establishing the World Trade 
Organization), the policy statement by Japan is attached. 
 
 
Note: This report is subject to restricted circ ulation and press embargo until the end of the first 
session of the meeting of the Trade Policy Review Body on Japan. Japan WT/TPR/G/175 
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CONTENTS 
 
  Page 
 1. Overview of Japan's Economic Relationships 5 
2. Trade and Economic Policy Environment 5 
3. Japan in the Doha Development Agenda 7 4. Japan's Multilateral Activities 10 
5. Japan's Regional Activities 11 
6. Japan's Bilateral Activities 13 7. Japan's Trade Related Assistance Schemes – TRTA – 18 
8. Japan's Domestic Policies 19 
 
 Japan WT/TPR/G/175 
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1. Overview of Japan’s Economic Relationships 
1. Since the last trade policy review of Japan  took place in 2005, there has not been any 
significant change on Japan’s basic trade policy. Wh ile Japan considers the highest priority on the 
multilateral trading system as the centerpiece of its tr ade policy, positive steps have been taken for the 
negotiations for economic partners hip agreements. On the domestic  economic front, the Japanese 
economy continues to recover from the beginning of  2002 with a steady progress of the structural 
reform initiated by the Koizumi Cabinet (the Koiz umi reforms) and continued by the current Abe 
Cabinet. 
(1) The Multilateral Trade System 
2. As one of the largest trading economies in the world, and as a firm supporter of free trade 
system for the growth of the world economy and the benefit of developing countries, Japan maintains 
its strong support for the non-discriminatory and ru le based multilateral trading system under the 
WTO. Japan has joined others in lowering trade ba rriers, which has led to expanding world trade and 
has created opportunities for all countries to en joy the fruits of international trade.  
3. The suspension of the negotiations is an unfa vourable result not only for Japan but for all 
Members who support and reap the benefits of the mu ltilateral trading system. It is a serious blow for 
developing countries, considering the current  Round’s strong emphasis on development.  
4. Japan will provide its utmost actions towards the early resumption of negotiations, and is 
committed to setting the negotiations back on track to  realize the early conclusion of the Round. On 
the other hand, the significance of development through trade does not dwindle as a result of the 
suspension. Regardless of the stat e of the suspension, Japan will st eadily implement its Development 
Initiative for Trade that it announ ced on the occasion of the WTO Hong Kong Ministerial Conference 
in 2005.  
(2) Regional and Bilateral Trade Policy 
5. Japan is currently party to three economic pa rtnership agreements (EPAs) which include 
elements of free trade agreements and institution- building such as human resource development, and 
is now involved in several negotiations of free trad e agreements and economic partnership agreements 
(FTA/EPAs). Japan believes that these agreements will serve as bu ilding blocks to higher trade 
liberalization at the multilateral level. Institution-bu ilding aspects of Japan’s bilateral initiatives cover 
areas such as investment, competition, and intellectual property rights.   
2. Trade and Economic Policy Environment 
(1) Japan's Economic Environment 6. The current economic recovery, which began in early 2002, is now in its fifth year. The 
condition of the Japanese economy shows that the fo undation for economic recove ry is now firmly in 
place, with the corporate sector, the household sector  and the overseas sector having recovered in a 
balanced manner. With this background, the st ructural problem, namely the corporate sector’s 
excesses in employment, equipment and debts, that had been putting downward pressure on the 
economy, has been eliminated, and the economy is overcoming the defla tion that has started since late 
1990s. On the policy front, fiscal deficits have b een decreasing thanks to the spending reform, 
centered on fiscal structural reform, in addition to the economic recovery. As for monetary policy, the 
Bank of Japan, in March 2006, lifted the quantita tive easing policy that had been in place since 
March 2001, and in July 2006, brought the zer o interest rate environment to an end. WT/TPR/G/175 Trade Policy Review 
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(2) Trend in Foreign Trade  
7. Trade statistics show that Japan’s trade surp lus increased for three straight years from 2002 
and decreased in 2005. In 2004, Japan’s exports increased due to the world economic recovery and 
expansion pulled by the U.S. and Asia, whereas  imports increased due to domestic economic 
recovery, thus expanding the trade surplus to \11.95 trillion. In 2005, Japan’s exports increased due to 
the world economic recovery and expansion pulled by the U.S. and Asia, whereas imports greatly 
increased due to a rise in prices of crude oil. As a result, the total trade surplus decreased to  
\8.71 trillion (a decrease of \3.25 trillion from 2004). We thus have a decrease for the first time in 
four years in Japan’s total trade surplus. 
8. In 2005, the total value of exports from Japan  increased, mainly due to the world economic 
recovery and expansion pulled by the U.S. and Asia. 
- The total value of exports from Japan in 2005 amounted to \65.66 trillion (an increase of 
7.3 percent from 2004)  
Regional trends in total value of e xports in 2005 (compared to 2004): 
 -  C h i n a        u p  b y  1 0 . 5  p e r c e n t  
 - NIEs (inc. Korea, Singapore, Hong Kong and Taiwan) up by 5.7 percent  - European Union (EU)     up by 0.3 percent  - Association of South East Asian Nations   up by 5.7 percent  - Middle East      up by 16.5 percent 
 - United States      up by 7.8 percent 
9. The share of manufactured goods out of the total amount of exports decreased to 97.7 percent 
in 2005 (0.6 percent lower than in 1990). 
10. In 2005, the total value of imports to Japan larg ely increased, mainly due to rise in prices of 
crude oil. 
- The total value of imports to Japan in 2005 amounted to \56.95 trillion (an increase of 
15.7 percent from 2004) 
Regional trends in total value of im ports in 2005 (compared to 2004): 
 -  C h i n a        u p  b y  1 7 . 4  p e r c e n t  
- Middle East      up by 42.5 percent 
 - Association of South East Asian Nations   up by 9.8 percent  - European Union (EU)     up by 3.4 percent 
- NIEs (inc. Korea, Singapore, Hong Kong and Taiwan) up by 11.1 percent 
- United States      up by 4.6 percent Japan WT/TPR/G/175 
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11. The share of manufactured goods out of the total amount of imports increased to 58.5 percent 
in 2005 (8.1 percent higher than in 1990). 
(3) Trend in Foreign Direct Investment  
2004 Outward FDI  
12. According to a Ministry of Finance report, Japan ’s outflow of foreign direct investment(FDI) 
(Outward FDI) has decreased to \3,821.0 billion in FY2004,which repr esents a decrease of 6.3% from 
FY2003.The major characteristics of Japan’s  outward FDI in FY2004 were as follows: 
13. Industry  In FY2004, FDI in the manufacturing industry decreased to \1,478.0 billion, 
(i.e.19.5% less than in the previous fiscal year). Sector-wise, transport and metal sectors increased. On 
the other hand, electrical, chemical sectors decreased sharply. However, FDI in the non-
manufacturing industry increased to \2,258.3 billion (i.e. by 1.9%). Sector-wise, trade and real estate 
sections decreased while finance & insu rance and transportation increased. 
14. Region   In FY2004, the total FDI from Japan to  North America decreased sharply, to 
\519.8 billion (i.e. by 56.9%), whereas FDI from Japan to Asia increased to \1,009.1billion (i.e. by 
39.5%). 
2004 Inward FDI  
15. In FY2004, the FDI flow to Japan  (Inward FDI) has increased to \4026.5billion, which 
represents an increase of 90.3% from FY2003. Moreove r, it is the first time that the Inward FDI 
exceeded the Outward FDI. The major characteristi cs of inward FDI to Japan in FY2004 were as 
follows: 
16. Industry  In FY2004, Inward FDI in the manufacturing industry decreased sharply, to 
\102.3 billion (i.e. by 79.0%).Only petroleum a nd textile sectors increased, while other sectors 
decreased sharply. Inward FDI in the non- manufacturing industry increased sharply, to 
\3,924.2 billion (i.e. by 140.9%). Finance & insu rance which occupied th e largest share increased 
sharply which was also the case of telecommunication and transportation. But Trading and Real 
Estate decreased; on the whole, it increased. 
17. Region   In FY2004 the amount of inward FDI from North America and foreign-
owned companies in Japan increased sharply, on th e other hand, Latin America and Asia decreased.  
*Source:  Outward and Inward Foreign Direct Investment(FDI) 
*The value is calculated on ex post facto report or prior notice basis. 
3. Japan in the Doha Development Agenda 
18. In the DDA negotiations, Government of Japan h as the following views in the several issues: 
(1) NAMA Negotiations 
19. The Doha Round's NAMA market access nego tiations need to deliver commercially 
meaningful market access gains fo r all Members for the sake of sound development of the developing WT/TPR/G/175 Trade Policy Review 
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countries. To achieve this objective, Japan will c ontinue to contribute actively to these negotiations 
and is engaged in providing its utmost acti ons toward the early resumption of the Round. 
(2) Agriculture 
20. Japan, as the world’s largest net importer of agricultural products, is committed to an 
ambitious and balanced outcome in the agricultural negotiations.  To achieve this, Japan considers it 
necessary that difference in tariff structures, multif unctionality of agriculture , and food security are 
taken into account. In particular, it regards e xport subsidies and domestic support for export bound 
products to be most trade distorting, and we lcomes abolishment and sharp reduction of such 
measures. Japan places great importance and has st rong sympathy for proposals of countries that it 
considers should be the true beneficiaries of the Development Round such as the market access 
proposal of the ACP and the food aid proposal of the African/LDC Group. 
(3) Service 
21. Japan remains strongly committed to liberalisa tion in trade in services and believes that its 
firm commitment to the DDA negotiations has been  demonstrated in various forms on a number of 
occasions.  Most notably, Japan played  a leading role in introducing the plurilateral approach which 
was subsequently adopted at the Hong Kong Minist erial Meeting in December 2005 and significantly 
accelerated the negotiation process.  In implementi ng this newly introduced approach, Japan has also 
chaired a couple of plurilateral meetings and par ticipated in all plurilateral meetings either as a 
requesting Member or a requested Member. 
22. As one of the major exporters of trade in ser vices, Japan regards the sectors with comparative 
advantage, i.e., telecommunications, distribution, construction, maritime, financial and computer 
related services sectors, to be of primary importance to its export interest due to their relevance to the 
establishment of the effective supply chain of the Japanese products and services as well as the 
smooth functioning thereof.  These sectors are also  highly relevant to Japanese overseas investment.  
Japan therefore targets further liberalisation of these sectors, particularly in Mode 3, in order to 
facilitate the commercial activities carried out by Japanese investors, service suppliers and 
manufacturers. 
23. The basic principle of Japan is that the achieve ment of comprehensive liberalisation in trade 
in services is of benefit to all the Members in cluding developing countries, by attracting further 
investment on the one hand and resulting in th eir increased competitiveness, production capacity, 
export and employment opportunity on the other hand.  Mindful of the fact that the scheduled 
commitments provide legal certainty and predictab ility, Japan continues to attach importance to the 
improvement to the level of, as well as the achievement of higher degree of transparency and clarity of, the scheduled commitments of the Members. 
24. Based on these principles, Japan: 
 - has submitted the first revised offer in June 2005, taking fully into account the 
interests of  the developing countries and without any a priori  exclusion of specific 
sectors or modes of supply.  In particul ar, Japan enhanced both liberalisation and 
comparability in its first revised offer of the scheduled commitments regarding the 
entry and temporary stay of the natural persons in Mode 4. 
 - has contributed, and continues to contribute, to the development of the text on the 
domestic regulations. Japan WT/TPR/G/175 
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(4) Rules Negotiation 
25. Japan has been actively participating in the negot iations on rules. In the negotiations on anti-
dumping, Japan, as a core member of the so-called "Friends of Anti-Dumping", has been contributing 
to discussions by submitting proposals on issues such as zeroing, lesser duty rule and review 
procedures. With regard to the negotiations on fi sheries subsidies, Japan, Korea and the Separate 
Customs Territory of Taiwan, Penghu, Kinmen an d Matsu submitted a joint proposal on the legal 
draft in April, and its revision in June, with a view to contributing to the resolution of the issue of over 
fishing capacity. 
(5) Trade Facilitation 
26. The expansion of world trade more than ever  necessitates a smooth, fair, transparent and 
efficient cross border procedure for movement of go ods to strengthen the multilateral trading system. 
In this regard, Japan had been vigorously engaged in negotiations by submitting many proposals to 
promote discussion and holding many seminars and workshops to enhance the understanding of rules 
discussed under trade facilitation negotiation. Japan will continue to constructively contribute to the 
negotiations for its successful conclusion and also co ntinue to actively provide technical assistance for 
capacity building in this area in the belief that tr ade facilitation plays an important role in promoting 
international trade, thereby benefiting all trading parties, including the private and government sectors 
of developed and de veloping countries. 
(6) TRIPS 
27. Japan has participated actively in the discussions of the TRIPS Council, recognizing the 
importance of the development dimension and the ro le of intellectual property protection. Japan 
believes that a global regime for the adequate and effective protection of intellectual property will 
benefit all countries by fostering an environmen t conducive to technological innovation. Regarding 
the negotiation of the establishment of a multilatera l system of notification and registration of 
geographical indications for wines and spirits, Jap an seeks the establishment of a multilateral system 
of notifications and registration of geographical indications for wines and spirits that would not 
impose excessive burdens upon Members. Japan will continue to engage in the discussion in a 
constructive way to establish a multilatera l system acceptable to all Members. 
(7) Environment 
28. With a view to enhancing the mutual supportiv eness of trade and environment, Japan has 
participated actively in the negotiations. In the ne gotiations in CTESS, Japan has been committed to 
revising Japan’s list of environmental goods.  
(8) DSU 
29. Japan continues to seek improvements and cl arifications of the DSU which will serve 
Members’ shared interests in enhancing complian ce with trade rules and ensuring the integrity and 
credibility of the rule-based trade system.  Japan  attaches importance to the achievement of a 
successful outcome of the DSU negotiations, and it h as actively contributed to the negotiations with a 
view to accomplishing such an outcome. 
(9) Development 
30. The DDA should contribute to facilitate developi ng countries' integration into the multilateral 
trading system by effectively responding to in terest and concerns of developing countries, inter alia,  WT/TPR/G/175 Trade Policy Review 
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paying special attention to LDCs. Recognizing that developing countries, especially LDCs, have been 
facing various difficulties in complying with WTO ru les as well as in participating in the DDA, Japan 
has been actively implementing TRTA (Trade re lated assistance schemes) through multilateral, 
bilateral and regional frameworks in order to en able them to further enjoy benefits from the 
multilateral trading syst em. Japan has contributed 4.88 million CHF to the DDA Global Trust Fund 
since its foundation in 2002. 
31. Furthermore, Japan believes that it is essentia l for the developing and the least-developed 
countries, as well as the economies in transition, to sh are the benefits of the results of the negotiations. 
In this regard, an early conclusion of the accession negotiations by such applicants, in accordance 
with the WTO rules, is important in order to faci litate their integration into the multilateral trading 
system.  Japan shall continue to play a leading role in supporting the accession process of such future 
members of the WTO. 
*See also para. 90-94 for Japanese "Development Initiatives for Trade". 
4. Japan’s Multilateral Activities 
(1) Generalized System of Preferences (GSP) 32. In order to improve market access for developi ng countries, Japan has granted preferential 
tariff treatment under the GSP scheme since the 1s t of August, 1971. The scheme has been vastly 
improved for the last several years, especially in 2001 and 2003. On  1 April 2006, 3 remaining LDCs 
which had yet to be covered under the scheme we re designated as beneficiaries. Consequently, 
142 developing countries and 15 territories, includi ng all LDCs, enjoy benefits of the scheme. 
33. Japan grants special prefer ential treatment to LDCs under the GSP scheme, including 
additional products for which preferences are grante d only to LDCs. On 1 April 2003, the number of 
agricultural and fishery products originating from LDCs, which receive duty-free and quota-free 
preferential treatment, was increased from 298 to  496 items, and treatment coverage rose from 
previous 83% to 93% in terms of  total import value from LDCs. 
34. Moreover, in the comprehensive "Devel opment Initiative for Trade" launched in 
December 2005, Japan expressed its commitment to provide duty-free and quota-free market access 
for essentially all products originating from all LD Cs. The Government of Japan has already begun 
preparation necessary for the domestic procedures to start the improved duty-free and quota-free 
treatment in as early as 2007 Japanese Fiscal Year, wh ich ultimately needs approval of the Diet (the 
Japanese Parliament) and other consultative bodies. As  a part of the procedures, Japan provided the 
opportunity to hear the interests and needs of LD Cs through diplomatic channel in July, 2006.  
35. Japan is fully committed to implement the above  initiative, regardless of the progress of the 
Doha Round negotiations, and to comply with th e decision adopted in the Hong Kong Ministerial 
Declaration in order to achieve a real improvement  in market access and to support actions of the 
developing countries to expand their trade. 
(2) OECD 
36. Over the last few years, Japan has been playing major roles in terms of both intellectual and 
organisational contributions to various OECD activities. 
37. Intellectual input to each Committee is an importa nt pillar of Japan’s proactive participation 
in the OECD. Recognising the significance of cro ss-border investment flows as a tool to solve Japan WT/TPR/G/175 
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economic imbalances in the global community, Japan proposed in the Ministerial Council 2003 a new 
project on ‘Investment for Development’, which seeks ambitious outputs ranging from policy recommendations on the improvement of invest ment environments (Policy Framework for 
Investment : PFI), analyses on synergies between FDI and ODA, peer review among developing 
nations. Japan played a role as a co-chair of the Task Force responsible for making the PFI. After 
OECD Ministers have released the PFI on 24 May 2 006, Japan supported the OECD Tokyo Centre to 
organize seminars in Tokyo and Hoi An, Vietnam. 
5. Japan’s Regional Activities 
38. As East Asia has been enjoying rapid ec onomic growth and increasing interdependence, 
momentum has become ever stronger for countries in the region to advan ce cooperation in economic 
fields among themselves in addition to those conducte d in multilateral fora.  Japan is endeavouring for 
the development of all regional cooperative frameworks, including ASEAN Plus Three (China, Japan, 
Republic of Korea), ASEAN-Japan, China-Japan -Korea tripartite cooperation and the newly 
established East Asia Summit (EAS) along with wide r structures such as APEC and ASEM.  Japan has 
consistently called upon the states in the region to  reaffirm their commitment to universally 
recognized rules and global norms, including market economy principles and the WTO Agreement, in the course of advancing regional cooperation. 
(1) Asia-Pacific Economic Cooperation (APEC) 
39. Japan believes that the promotion of co-ope rative economic relations among economies in the 
Asia-Pacific Region through APEC will enable th e creation of an open economic community in the 
region and will stimulate world trade, thereby cont ributing to the development of the global economy. 
Japan shall continue to make its actions towards r ealizing such visions by cooperating closely with 
other member economies. 
40. Japan remains actively engaged in trade and inv estment liberalization and facilitation, one of 
main areas of APEC. In this regard, Japan w ill host APEC in 2010, the deadline for developed 
economies to achieve the Bogor Goals, which ai m at free and open trade and investment. While 
APEC drew up a roadmap towards the goals (Bus an Roadmap) in 2005, some members including 
Japan are now forging an action plan aimed at implementing the roadmap (Hanoi Action Plan). 
41. In recognizing the importance of trade fac ilitation, Japan, in cooperation with other 
economies, organized APEC-WTO Trade Facilitation Ro undtable in Geneva on Feb. 10, 2005, which 
provided an opportunity to share APEC’s trade facilitation expertise with non-APEC economies and 
helped spur the WTO negotiations. Moreover, In Mid-term Stocktake of Progress Towards the Bogor 
Goals, a report issued in November 2005, APEC  places high priority on behind-the-border issues. 
Japan makes a significant contribution in the field of  structural reform based on the recognition that it 
is important for the sustainable economic growth in the Asia-Pacific region. Japan proposed Leaders’ 
Agenda to Implement Structural Reform(LAISR) and LAISR towards 2010, in accordance with which 
APEC is supposed to promote structural reform . In 2007, Japan plans to hold a seminar on 
competition policy, which is specified as one of the five areas APEC will focus on in LAISR. 
(2) Asia-Europe Meeting (ASEM) 
42. Japan believes that the enhanced economic dialogue and cooperati on between Asia and 
Europe through ASEM will promote better mutual understandings between the two regions on various 
economic issues, which could lead to increased trad e and investment between Asia and Europe, as 
well as to better coordinate world economic issues of mutual concern such as WTO, RTA/FTA, IPR 
etc, thereby contributing to the development of global economy.  WT/TPR/G/175 Trade Policy Review 
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43. Japan attaches great importance to ASEM Trade Facilitation Action Plan (TFAP). 
44. Japan has been an Asian Facilitator of TFAP cust oms procedure working group. It also has a 
strong interest in the fields of standard and conformity assessment, customs procedures, e-commerce 
and intellectual property rights enforcement, and made  various contributions at the TFAP meetings in 
these areas. 
45. Japan hosted the Seventh ASEM Foreign Minist ers’ Meeting (FMM7) in May 2005. At the 
meeting, the importance of a successful conclusi on of the WTO Doha Development Agenda was 
emphasized. Japan also hosted the ASEM Seminar on Energy in January 2006 and ASEM Workshop on Community level Actions for Global Environm ental Agenda in February and March 2006. 
(3) ASEAN+3 
46. The Final Report of the East Asian Study Group, endorsed by the Leaders at the 6th ASEAN 
Plus Three Summit on 4 November 2002 with a vi ew to promoting and developing regional 
cooperation in East Asia, contains 17 short-te rm measures and 9 mid- and long-term measures, 
several of which recommend more liberalization of trad e and investment in East Asia.  Japan has been 
actively implementing some of these measures, which include the improvement of duty-free and 
quota-free treatment to LDCs and establishment of attractive investment e nvironment under bilateral 
investment or economic partnership agreements.  Please refer to the respective related sections for 
details. 
(4) East Asia Summit 
47. The inaugural EAS was held on 14 December 2005, where the Leaders of 16 East Asian 
countries discussed basic principles of regional cooperation and raised a number of areas for 
cooperation to be prioritized at this juncture for su stainable growth in the re gion.  Japan will continue 
to make contribution towards the consolidation of this newborn framework a nd its development into 
an open, transparent and inclusive forum fo r regional initiatives towards further growth. 
(5) Japan, China, Korea 
48. The heads of the government of Japan, the Pe ople’s Republic of China and the Republic of 
Korea reached an agreement to launch a join t research on economic cooperation among three 
countries at the ASEAN+3 Summit held in Manila, the Philippines in November 1999. Based on this 
agreement, the institutes representing the thre e countries, the National Institute for Research 
Advancement (NIRA) for Japan, the Development R esearch Centre of the State Council (DRC) for 
China and the Korean Inst itute for International Economic Policy (KIEP) for Korea, have undertaken 
the Trilateral Joint Research Project since 2001 to  provide policy recommendations to the three 
governments. 
49. Up to present, the three institutes have jointl y formulated five sets of policy recommendations 
concerning the promotion of trade and direct investment in the region. From 2001 to 2004, the 
recommendations were submitted to the heads of the governments of three countries at trilateral 
summit meetings held during ASEAN+3 summit me etings. In 2005, the policy recommendation was 
submitted to the heads of the governments through the institutes of each country. 
50. The heads of the three countries issued the "Joi nt Declaration on the Promotion of Tripartite 
Cooperation among Japan, the People’s Republic of  China and the Republic of Korea" in 
October 2003 and approved the "Action Strategy  on Trilateral Cooperation among Japan, the People’s 
Republic of China and the Republic of Korea" in November 2004. Japan WT/TPR/G/175 
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6. Japan’s Bilateral Activities 
(1) FTA/EPAs  
51. Maintaining and strengthening the multilateral trading system under the WTO has been the 
main pillar of Japan’s external economic policy. At  the same time, Japan has recently come to place 
more emphasis than before on its regional and bilateral trade polici es, and particularly on economic 
partnership agreements including elements of fr ee trade agreements and institution-building, as a 
means of complementing the multilateral trading system. 
(i) Singapore 
52. The Japan-Singapore Agreement for a New Age Economic Partnership (JSEPA), which 
entered into force on November 30, 2002, aims at , not only further liberalizing and stimulating 
bilateral trade and investment, but also further strengthening bilateral economic ties between Japan 
and Singapore in the variety of fields. Since the JSEPA came into effect in 2002, the trade amount 
between Japan and Singapore has increased substan tially. The total amount increased by 5.7% from 
2004 to 2005. Especially beer from Japan to Singapore and petroleum from Singapore to Japan showed substantial increase. 
53. In April 2006, Japan and Singapore held the 2nd JSEPA Supervisory Committee and agreed 
to start negotiation for possible partial amendment of the agreement on the issues such as trade in 
goods (market access and rules of origin), fi nancial services, and customs procedures. 
(ii) Mexico 
54. The Agreement Between Japan and The United Mexican States for the Strengthening of the 
Economic Partnership which entered into force on April 1, 2005, aims to strengthen the economic 
relations between Japan and Mexico , through liberalizing and facilita ting trade in goods and services, 
increasing investment opportunities and strengthening protection for investments and investment activities, and establishing a framewo rk for further bilateral coopera tion and improvement of business 
environment. 
55. After the Agreement came into effect, th e amount of trade has increased by 38.4% and 
investments of Japanese companies for Mexico have also increased. In additi on, the Joint Committee 
and sub-committees for effective implementation and operation of the Agreement and the Committee 
for the improvement of the Business Environmen t have been held several times successfully. 
(iii) Malaysia 
56. The Agreement between the Government of Japan  and the Government of Malaysia for an 
Economic Partnership was signed by  the Prime Minister Koizumi of Japan and the Prime Minister 
Abdullah of Malaysia on 13 December 2005. The Agre ement entered into force on July 13, 2006 after 
the completion of the necessary legal pro cedures of the respective countries.   
57. The first meeting of the Joint Committee, held on the same day, made decisions necessary for 
the implementation of this Agreement, including the adoption of the Operational Procedures referred 
to in Chapter 3 (Rules of Origin) and the decisi on on the Implementation of Tariff Rate Quota. 
58. The Agreement will contribute toward enhanci ng the cross-border flow of goods, persons, 
investment and services between Japan and Malaysia , as well as bilateral cooperation in fields of 
mutual interest. WT/TPR/G/175 Trade Policy Review 
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(iv) The Philippines 
59. At the Japan-Philippines Summit Meeting in December 2003, held in Tokyo, the Leaders 
decided that they would begin the negotiations fo r the conclusion of the Japan-Philippines Economic 
Partnership Agreement in early 2004 aiming to conc lude it within a reasonable period of time. In 
September 2006, the Leaders of Japan and the Philippines signed JPEPA. 
(v) Thailand 
60. At the Japan-Thailand Summit Meeting in Se ptember 2005, the Leaders confirmed that 
agreement in principle had been reached on major elements of the Japan-Thailand Economic 
Partnership Agreement (JTEPA). 
61. The two sides have already completed the drafting of the text of the JTEPA. 
(vi) Indonesia 
62. At the Japan-Indonesia Summit Meeting in June 2005, held in Tokyo, the Leaders decided 
that they would begin the negotiations for the conclusions of the Japan-Indonesia Economic 
Partnership Agreement in July 2005, aiming to c onclude it within a reasonable period of time. The 
sixth round of the negotiations was held in October 2006, in Tokyo. 
(vii) Brunei 
63. At the Japan-Brunei Summit Meeting in Decemb er 2005, held in Kuala Lumpur, the leaders 
decided that they would begin scoping consultations  towards the launch of negotiations for bilateral 
Economic Partnership Agreement (EPA). After two rounds of consultations (February and 
April 2006), Foreign Ministers of both countries decided that they would formally start the EPA 
negotiations at their meeting in Doha in May 2 006. The first round of negotiations was held in 
June 2006, in Tokyo, the second ro und was held in August 2006, in Brunei Darussalam and the third 
round was held in October and November 2006 in Tokyo. 
(viii) ASEAN 
64. Following the agreement set by the Leaders at  the Japan-ASEAN Summit Meeting held in 
November 2004, Japan and ASEAN commenced the negotiation on the Japan-ASEAN 
Comprehensive Economic Partners hip Agreement (AJCEP) in April 2005. Since then, as of 
November 15, 2006, Japan and ASEAN have had five  rounds of negotiation ,and  Japan and ASEAN 
decided to adopt on the basic principles of "c ommon list, common schedule of concessions and 
common rules of origin." 
65. The main objectives of the AJCEP Agreemen t are to strengthen economic integration 
between Japan and ASEAN and to enhance the co mpetitiveness of Japan and ASEAN in the world 
market through strengthened partne rship and linkages. Therefore the AJCEP agreement focuses not 
only the liberalization of trade in goods but also en compasses other areas such as investment, services, 
facilitation and cooperation.  
66. The AJCEP Agreement will be legally consiste nt with and mutually complementary to 
bilateral EPAs between Japan and ASEAN countries. Japan WT/TPR/G/175 
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(ix) The Republic of Korea  
67. At the Japan-ROK Summit Meeting held in Bangkok  in October, 2003, the leaders decided to 
begin negotiations in 2003 for c oncluding a comprehensive FTA. 
(x) Chile 
68. At the Japan-Chile Summit Meeting in Nove mber 2005, the Leaders of both countries 
decided to begin the negotiations for the conc lusion of Japan – Chile Economic Partnership 
Agreement. The first round of the negotiation w as held in February 2006, in Tokyo.  In 
September 2006, the Leaders of Japan and Chile conf irmed that the agreement in principle had been 
reached on major elements of the Japan-C hile Economic Partnership Agreement. 
(xi) GCC 
69. Japan and the GCC states decided early this year to launch negotiations on an FTA covering 
trade in goods and services. After holding a prelimin ary meeting held in May 2006 in Riyadh, the first 
round of the negotiations was held  in September 2006 in Tokyo. 
(2) Japan’s Bilateral Activities besides FTAs 
70. Besides negotiations on FTAs, Japan is i nvolved in economic initiatives with several 
countries. Through such bilateral frameworks, Japan aims to deepen the understanding of each others 
trade and economic policies, to prepare a cha nnel which will help to remedy trade problems 
beforehand, to stimulate deregulation and liber alization both ways, and to create the political 
momentum to liberalize trade which will help in  complementing and reinforcing the multilateral 
trading system. 
(i) Relations with the United States 
71. Under the "Japan-U.S. Economic Partnership for Growth" (hereinafter "Partnership"), 
established by Prime Minister Koizumi and President  Bush in June 2001, Japan and the United States 
have been engaging in comprehens ive and constructive dialogues. The Partnership comprises of six 
fora: Subcabinet Economic Dialogue; Private S ector/Government Commission; Regulatory Reform 
and Competition Policy Initiative (hereinafter "Ref orm Initiative"); Financial Dialogue; Investment 
Initiative; and Trade Forum. Under these frameworks , a number of meetings have been convened to 
address a wide variety of issues that contribute to promoting sustainable growth of not only the two 
countries but also the entire world economy. 
72. Under the Reform Initiative, in particular, th e Governments of Japan and the United States 
have compiled and publicized five extensive reports  to the two leaders, the latest of which was 
submitted to the leaders on 29 June, 2006. The Reform Initiative covers telecommunications, 
information technology, medical devices and pharm aceuticals, financial services, energy, competition 
policy, transparency and other government practices,  legal system reform, commercial law revision, 
distribution, consular affairs, and trade and i nvestment-related measures. The Investment Initiative 
covers investment promotion, restriction measures a nd investment related measures such as education, 
medical services, labour system, visas, cargo security  etc. These reports are the most tangible results 
of Japan-U.S. bilateral economic c onsultations, which include a number of measures taken by the two 
governments that facilitate two-way trade and investment. 
73. During the 2004-2005 period, Japan and the Un ited States concluded two epoch-making 
bilateral agreements that further promote two- way investment by reducing costs incurred.  WT/TPR/G/175 Trade Policy Review 
Page 16 
 
 
74. One is the revised Japan-U.S. Tax Convention (n ew Tax Treaty), which mainly exempts from 
taxation (a) dividends paid by U.S./Japanese subsidia ries in which the Japanese/U.S. parent firm has a 
stake of more than 50 percent, (b) interest paid to  financial institutions, and (c) royalties, for all of 
which 10 percent tax was/is imposed. The new Tax Treaty was being applied to withhold tax from the 
1 July 2004, and the other taxes from the 1 January 2005. 
75. The second is Agreement between Japan and the United States of America on Social Security 
Agreement signed on 19 February 2004, which c overs the prevention of the double payment of 
pensions and health insurance premiums as well as  adding up the periods for which a person has paid 
social security contributions in both countries in orde r for the person to be enti tled to pensions in one 
or both countries.  The Agreement passed the Diet on 3 June 2004, and came into effect on 
1 October 2005. 
76. On 29 June 2006, Prime Minister Koizumi and Pr esident Bush together heralded a new Japan-
U.S. Alliance of Global Cooperation for the 21st Century. The two leaders agreed to explore ways to 
further deepen the mutually-beneficial bilate ral economic relationship as well as to enhance 
cooperation on regional and global economic issues. Such an expa nded partnership would include: 
promoting growth and economic reform; promoting and maintaining open markets; ensuring efficient 
movement of legitimate goods, services, people, and investments, while tackling threats from 
terrorism; strengthening intellectual property righ ts protection and enforcement; enhancing global 
energy security; and fostering transparent and favourable business climates in both countries.    
(ii) Europe 
77. With regard to the economic re lations between Japan and the EU, the 14th and 15th Japan-EU 
Summit Meetings were held respectively on 2 May 2005 and on 24 April 2006. At these Summit 
Meetings, Japan and the EU recognized the importa nce of continuing cooperation on investment, 
regulatory reform, better enforcement of intellectua l property rights in Asia, etc. At the 15th Summit 
Meeting, Japan and the EU welcomed the ag reement in substance on the Japan-EC Customs 
Cooperation Agreement which will facilitate mutual assistance in customs matters and trade. On 
various occasions including the annual Japan-EU Regulatory Reform Dialogues, with a view to 
improving business environment and promoting bila teral trade and investment, both sides conducted 
consultations on wide-ranging economic issues. The 41st Japan-EU High-level Consultations were 
held on 18 January 2006, to exch ange views on the progress of c ooperation and dialogue in wide-
ranging economic areas. Furthermore, based on the "Japan-EU Joint Initiative for the Enforcement of 
Intellectual Property Rights in Asia" (2004), Japan, the EU and China co-held a seminar on 
intellectual property rights in Beijing in October 2004. Japan and the EU have also been holding 
regular meetings of Japan-EU Dialogue on Intellectual Property since 2004 (most recently in 
February 2006). 
78. There has also been some development on th e bilateral economic front with individual 
European countries. Firstly, the Government of  Japan signed Agreement between Japan and the 
Kingdom of Belgium on Social Security and Agr eement between the government of Japan and the 
government of French Republic on Social Security respectively on 23 and 25 February 2005 to 
resolve the double payment of social security cont ributions and totalize the periods of coverage 
completed in both countries to establish entitlement to  pension benefits. Secondl y, the Government of 
Japan has entered into negotiations to conclude an ag reement on social security   with the Netherlands 
since October 2005.  The new Japan-UK tax tr eaty entered into force on 12 October 2006. 
Furthermore, the Government of Japan and the Gove rnment of French republic reached an  agreement 
in principal on the protocol for amending the ex isting tax treaty and it is announced on July 2006. 
Besides, the Government of Japan held bilateral economic and trade consulta tions with Finland in Japan WT/TPR/G/175 
 Page 17 
 
 
February 2005 and with Switzerland in July 2005, aiming at discussing the economic situations in the 
respective countries and bila teral economic relations. 
(iii) China 
79. At the summit meeting held between Japanese Prime Minister Koizumi and Chinese Premier 
Zhu Rongji on the occasion of the Boao Forum for As ia in April 2002, the two leaders agreed to 
establish the Japan-China Economic Partnership Cons ultation for the purpose of identifying possible 
economic disputes at an early stage and preventing disputes between the two countries, as well as further strengthening mutually comple mentary bilateral economic relations. 
80. The Japan-China Economic Partnership Consu ltation has been held until now as follows. 
High level (Deputy Minister) Meetings
 
 15 October 2002, 31 October 2003, 21 December 2004, 2 December 2005 
Official level (Deputy Director General) Meetings  
 11 March 2004, 28 June 2004,  20 D ecember 2004, 1 December 2005,  13 July 2006 
81. In these Consultations, Japan and China actively exchanged opinions regarding concerns such 
as the issues of intellectual property rights (inc luding damages resulting from counterfeit goods), 
China’s commitments under the WTO rules in the field of differe nt services (telecommunication, 
construction, financial service, le gal service, etc), trade-related issues, agriculture and quarantine. 
Japan-China co-operation in the internationa l economy was also discussed in the meetings. 
82. In recent Consultations, Japan and China confir med the importance and the effectiveness of 
the Partnership Consultation for the development of  economic relations between Japan and China and 
they agreed on the continuation of the Consultation in a constructive manner. 
(iv) Australia 
83. Japan and Australia enjoy one of the most su ccessful economic partne rships in the Asia-
Pacific region. A complementary trade relationship exists between the two countries, in which Japan 
exports industrial products and impor ts primary products such as mineral resources and agricultural 
products. 
84. Recognizing the economic relationship, the two governments conducted under the Australia-
Japan Trade and Economic Framework concluded in July 2003 a joint study which examined the costs 
and benefits of the liberalisation of trade in goods and services and investment.  The joint study 
finished in March 2005. 
85. In order to further develop and deepen the b ilateral economic partners hip between Australia 
and Japan, both counries started another joint study which is intended to study various policy options 
to enchance the economic relationship, including the f easibility or pros and cons of a bilateral FTA, as 
decided by Prime Minister Koizumi and Prime Minister Howard in April 2005.  
86. Japan has reached agreement with Australia in  principle in the negotiation on a security 
agreement in July 2006 and has been wo rking towards concluding the agreement. WT/TPR/G/175 Trade Policy Review 
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(v) Africa 
87. Japan has long been committed to promoting tr ade and investment in Africa through the 
Tokyo International Conference on African Devel opment (TICAD) process. Since the TICAD Asia-
Africa Trade and Investment Conference (AATIC) in  2004, "Team All Japan", comprised of Ministry 
of Foreign Affairs, Ministry of Finance, Minist ry of Economy, Trade and Industry and other public 
institutions, has implemented various measures as a follow-up to the AATIC under the concept of 
"poverty reduction through economic growth." 
88. In this context it is also noteworthy that Jap an is implementing a wi de range of cooperation 
for Africa under the "Development Initiative for Tr ade", announced by Prime Minister Koizumi on 
the occasion of the WTO Hong Kong Ministerial Conference in December 2005, including support for the "One Village One Product (OVOP)" movement (see para. 94). 
(vi) MERCOSUR 
89. In order to strengthen the Japan-MERCOSUR ec onomic relationship and also to ensure its 
future development, the 6th Japan-MERCOSUR Seni or Official Meeting was held in Japan in 
June 2004 and the 7th in Argentina in April 200 6. During these meetings, various views were 
exchanged on trade and investment promoti on, and economic and technical cooperation. 
7. Japan’s Trade Related Assistance Schemes - TRTA - 
90. In order for the developing countries including th e LDCs to reap further the benefits of the 
multilateral trading system, the trade liberalizati on alone is not enough. Supply side assistance is 
definitely indispensable. For many  years, Japan has been making an  important contribution in this 
area, providing technical and financial assistan ce in the production sector and the economic 
infrastructure & service sector.
1 
(1) Development Initiative for Trade 
91. As a response to the much di scussed issue of the "Aid fo r Trade", Japan launched the 
"Development Initiative for Trade," prior to th e WTO Ministerial Conference in Hong Kong 
December 2005. This initiative, based  on the Japan’s experience and knowledge in this field, intends 
to provide an effective assistance in a compre hensive manner, combining all the necessary and 
available measures.   
92. In this Initiative, Japan divides trade into three different stages: "Produce", "Sell" and "Buy". 
When we think about trade, first it is necessary to "Produce" goods.  Next, the goods need to be 
delivered to ports and markets. This is the "Se ll" stage.  Finally, the goods will be purchased by 
consumers in other countries. This is the "Buy" stag e.  In order to facilitate every one of these three 
                                                      
 1 Japanese Cooperation in the Trade related sectors (OECD/DAC data base) 
According to the OECD/DAC ODA data base by sectors (Table 5), Japan has been the first among the DAC 
member countries in the amount of aid in the production sector (Sector III) and the economic infrastructure & 
service sector (Sector II). Japan alone provided almost half (47%) of the total amount of the aid given by the DAC countries in these sectors between 1990 and 2004 . In the agriculture, fishery and forestry sector 
(Sector III.1), Japan also contributed  almost 40% of the total ODA provided by the DAC member countries. As 
for the share of these sectors in the total ODA of each country, Japan, with  more than 60%, outnumbers by far 
other member countries, whose shares range from 20 to 30%. Although not all of the cooperation in these 
sectors can be regarded as trade related, this  data reflect s the fact that the trade related sectors have been  taken 
into account considerably ("mainstreamed") in the Japanese  assistance policy, especially as a part of the poverty 
reduction strategy through economic growth.  Japan WT/TPR/G/175 
 Page 19 
 
 
stages, Japan provides assistance through every available meas ures, namely "knowledge and 
technology", "people", "financial assistance" a nd "system", so that the chain of commerce can 
function well in developing countries. 
93. Japan is implementing this initiative, regardl ess of the progress of the round negotiation. We 
have instructed our overseas offices in developing countries to search and identify promising products 
and suitable projects to be developed under this initiative, and we are receiving good responses from 
many countries. We have also initiated internal  procedures to implement duty-free and quota free 
treatment for LDCs (see page 10).  
(2) Assistance to the One Village One Product Movement 
94. The One Village One Product (OVOP) is one of  the typical approaches under the Initiative. 
The OVOP is a movement which intends to promote local economy through the development, 
improvement and promotion of local  products with participation of the local people. This movement 
was first initiated in a southern prefecture in Japan in the late 70’s and spread to the other prefectures 
later on. It has been introduced and has contribut ed to the development of local economy in other 
Asian countries. Now the government of Japan is supporting these movements not only in Asia but 
also other regions including Africa, through th e different measures such as technical cooperation 
including dispatch of experts and training programs for the improvement of product quality, productivity and packaging, as well as exhibits, trade fa irs and OVOP markets in the major airports in 
Japan. 
8. Japan’s Domestic Policies 
(1) Koizumi Reforms – No Gains Without Reforms - 95. The Government of Japan has carried out stru ctural reforms in various fields, such as 
regulation, financial system, tax system, government  expenditures, under the principles of "No growth 
without reforms," "From public sector to private sector," and "From the state to the regions". 
96. Through these actions toward structural re form, the non-performing loan problem among 
major banks had been normalized by the end of  FY2004, and three excesses(employment, capital 
stock and debt) in the corporate sector had been eliminated, and supply and demand had returned in 
equilibrium by the late FY2005. Re garding the public finance aggregate, the deficit in the primary 
balance of the central and local governments combined deteriorated to the level a little less than 6% of 
GDP in FY2002, but it has decreased by half and is expected to fall below 3% in FY2006. 
97. Based on these accomplishments, the "Basic Po licies for Economic and Fiscal Management 
and Structural Reform 2006" (Cabinet Decision July 7,  2006), decided to address three priority issues, 
i.e., "Enhancing the growth pot ential and international comp etitiveness", "Advancing fiscal 
consolidation", "Achieving a safe, secure, flexible  and accommodating society," in order to pass on an 
affluent and secure Japan to the future generati on . The Government of Japan will make further 
actions to promote structural reform in line with the "Basic policy 2006". 
(2) Regulatory Reform 
98. To enhance regulatory reform further, the C ouncil for the Promotion of Regulatory Reform 
(CPRR), which was established in April 2004 as a fo rmation with an initiative by private-sector, took 
requests and opinions from the public into considerati on and issued the reports to Prime Minister from 
2004 to 2006 under the close relationship with th e Headquarters for the Promotion of Regulatory 
Reform (Head of Headquarters: Prime Minister). The Government of Japan (GOJ) respected for the WT/TPR/G/175 Trade Policy Review 
Page 20 
 
 
report, revised the "Three-year Plan for the Promotion of Regulatory Reform" at respective year-end, 
and exercised relevant reforms based on the plan. 
99. In FY2005, CPRR made public the "Second Repor t on the Promotion of Regulatory Reform 
and the Opening Up of Government-driven Mark ets for Entry into the Private Sector’’ in 
December 21, 2005, which included immediate, full-scal e introduction of market testing, establishing 
regulatory review criteria such as Regulatory Impact  Analysis (RIA) and so on. Subsequently, the 
"Three-year Plan for the Promotion of Regulatory Reform (Further Revised Version)" was decided by the Cabinet on March 31, 2006 to reflect the requ ests and opinions from the public (including from 
abroad) as well as the results of the Second Report. 
100. In July 31, 2006, CPRR compiled "Interim Report on issues intensively to be considered for 
the Promotion of Regulatory Reform and the Open ing Up of Government-driven Markets for Entry 
into the Private Sector".  The report recommended the promotion of regulatory reform in the six areas of broadcasting & communication, education, chil dcare service, immigration control, financial 
services, regulatory review criteria. In December, 2006,  the final report includin g various things other 
than the six areas is going to be issued. 
101. Since FY2006 is statutorily the final year for CPRR, sunset clause based organization, GOJ 
will consider a succeeding promotion system for ov erall regulatory reform and compile a definitive 
plan by the end of the financial year. 
(3) FDI into Japan 
102. Japan’s ratio of inward Foreign Direct Investment (FDI) stock to nominal GDP is at a lower 
level than those of US and European countries. A ccording to IMF statistics, the ratio in 2004 was only 
2.0% in Japan, while it was 13.0% in the US, 33.0% in the UK, and 22.4% in Germany.  
103. In the General Policy Speech of January 2003, Pr ime Minister Junichiro Koizumi outlined the 
Government of Japan’s plan to increase inward FDI. In March 2003, the Japan Investment Council 
(JIC), which is chaired by the Prime Minister, a nnounced "the Program for the Promotion of Foreign 
Direct Investment into Japan".  The effective im plementation of the Program  has resulted in a solid 
increase in FDI to Japan; the inward s FDI stock rose to JPY 11.9 trillion at the end of 2005, 1.8 times 
the 2001 level.  
104. Drawing on this positive trend, Prime Minister  Koizumi emphasized in his General Policy 
Speech of January 2006 that the current plan to doubl e the amount of foreign investment to Japan by 
2006 is being steadily advanced, and also announced  that "The Government intends to promote 
further investment with even grander targets." 
105. Following up on the above statement, in March 2006, the Japan Investment Council (JIC), 
reaffirmed the importance of inwards FDI and set a new goal to double the ratio of inwards FDI stock 
to GDP by 2010, namely to raise it to a level of ar ound 5%. To achieve this new target, in June 2006, 
the JIC launched a new program called the "Progr am for the Acceleration of Foreign Direct 
Investment in Japan" which focuses on 3 key issues:  (1) Regional centers for economic growth and 
improved quality of life; (2) Improvement of an investment environment capable of overcoming 
global competition; (3) Domestic and inte rnational public information activities. 
(4) Intellectual Property Right (IPR) 
106. On 4 February 2002, Prime Minister Koizumi expressed his determination to establish IP 
strategy in his general policy speech at the Diet . Based on this initiative, the Strategic Council on Japan WT/TPR/G/175 
 Page 21 
 
 
Intellectual Property was inaugurated in March 2002. In July 2002, it adopted the Intellectual Property 
Policy Outline in which the basic principles and po licies were articulated including a recommendation 
for a new legislation focused on IP.  
107. The Basic Law on Intellectual Property, based  on the Intellectual Property Policy Outline, 
was enacted in November 2002. Under this law, th e Intellectual Property Strategy Headquarters was 
established in the Cabinet in March 2003. The Hea dquarters decided on the strategic Program for the 
Creation, Protection and Exploitation of Intellectual Property in July 2003, which consists of about 
270 items of measures to be implemented by mini stries and agencies concerned under the idea of 
promptly creating an internationally viable system. 
108. In 2004, 2005 and 2006, the Headquarters est ablished the "Intellectual Property Strategic 
Program" which added new measures and challeng es to the previous program. These Programs 
include such as Amendment of the Customs Tariff Law to strengthen measures against Counterfeits 
and Pirated Copies, Amendment of the Unfair Co mpetition Prevention Law to protect Trade Secret 
criminally, the Law for Establishment of Intellect ual Property High Court to handle IP-related cases 
specially and Amendment of the Patent Law for th e Promotion of Expeditious Patent Examination. 
(5) Financial Reform 
109. In the insurance sector, Japan has implemente d regulatory reform measures to promote sound 
competition and to create new business opportunities th rough the broadening of sales channels. These 
measures include the removal of the ban on securiti es intermediary services by insurance companies, 
and the broadening of the scope of insuran ce products that banks are allowed to sell. 
110. In the banking sector, Japan had set a target  in the Program for Financial Revival 
(October 2002) for the major banks to reduce th eir non-performing loan (NPL) ratio, which had 
reached a peak of 8.4% of total credit in March 2002,  by about half by March 2005. The ratio fell to 
1.8% in March 2006. Moreover, in accordance wi th the Program for Further Financial Reform 
(December 2004), Japan promotes competition in th e financial system, as well as encourages 
improvements in risk management and core profitability at banks. 
111. In the securities sector, Japan continues to promot e structural reform of the capital markets. 
The Financial Instruments and Exchange Law, passed  in the Diet in June 2006, enhances investor 
protection, financial innovation, and market func tion to improve reliance on the market system, and 
responds to globalization of financial and capital markets. The legislation provides measures to 
establish cross-sectoral framework for a wide range of financial instruments and services, improve disclosure of listed companies, increases penalties ag ainst various market fra uds, and strengthens the 
independence of self-regulatory functions of financial instruments exchanges. 
(6) Agricultural Reform 
112. To advance the structural reform in the agri cultural sector in response to changes in the 
situation surrounding food, agriculture and rura l areas in Japan, a new Basic Plan for Food, 
Agriculture and Rural Areas was decided by th e Cabinet in March 2005. The new Basic Plan 
identifies key issues as a policy guideline to im plement specific measures over the coming decade, 
notably: 1) To raise the self-sufficiency rate; 2) To ensure food safety a nd security, and to gain 
consumer confidence; 3) To concentrate government’s  support on principal farmers; i.e., to introduce 
the farm management stabilization programs targ eted on principal farmers and focused on their 
overall farm management, and to pr omote the consolidation of farm land use to principal farmers; 
4) To develop policies from a more "aggressive" view point such as to promote exports of high-quality WT/TPR/G/175 Trade Policy Review 
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Japanese agricultural products. The Ministry of Agri culture, Forestry and Fisheries (MAFF) clarifies 
the process towards achievement of the Basic Plan and reviews its progress regularly. 
113. In April 2006, the Headquarters on the Promoti on of Policies for Food, Agriculture and Rural 
Areas headed by the Prime Minister Junichiro Koiz umi adopted a goal-oriented policy package with a 
view to materializing the Basic Pl an in a timely manner. Corresponding to the direction articulated in 
the Basic Plan, the package lists concrete acti ons and measures that s hould be implemented by 
priority and intensively, with clear goals, mostly numerical. Not only MAFF but also the Government 
of Japan as a whole strongly promotes following initiatives so that it ensures sustainable development of agriculture and a stable supply of food: 
1) International strategies: to actively part icipate in WTO agricultural negotiations in 
order to establish balanced trade rules, as  well as in EPA negotiations with east Asian 
and other countries; to cultivate forei gn markets for high-quality Japanese agricultural 
food and products; to better protect and utilize intellectual property etc. 
2) Domestic strategies to invigorate Japan ese agriculture: to acceler ate policies focused 
on principal farmers; to encourage new entr y including companies in this sector; to 
reduce costs in the entire food system etc. 
 3) As the common backbone to enhance the effect of the above-mentioned strategies: to 
promote education on food; to make more use of new technologies, IPRs and biomass 
resources for new possibilities of agriculture etc. 
(7) Competition Policy 
114. Amendment of the Antimonopoly Act (AMA) passed the Diet on 20 April 2005 and went into 
effect on 4 January, 2006. The amended AMA includes revision of the system such as increase in the 
rate of surcharge, introduction of a leniency  program, introduction of compulsory measures for 
criminal investigations and revision of hearing procedures. With the amendment of the AMA, the 
relevant Cabinet Orders and Fair Tr ade Commission Rules were developed. 
115. The JFTC has been taking rigorous legal actions  against violations of the AMA. The number 
of legal cases regarding such violations was 36 in  2004 and 20 in 2005. Details of these cases can be 
found below. 
 2004 2005 
Private Monopolization 1 1 
Bid-rigging 23 11 
Cartels (excluding bid-rigging) 2 4 
Unfair Trade Practices 9 4 
Others 1 0 
Total Cases 36 20 
116. The amount of the surcharge payment orders issu ed by the JFTC has been estimated at a total 
amount of around ¥10,490.45 million in 2005 and ¥7, 751.34 million in 2004. Of that amount, some 
cases, totalling ¥495.06 million in 2005 and ¥4,310.65 million in 2004, were nullified due to the 
initiation of hearing procedures. Japan WT/TPR/G/175 
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117. The JFTC has adopted an active policy on f iling criminal accusation to seek criminal 
penalties against violation of the AMA. In 200 5, the JFTC filed accusations in two cases. 
118. In order to reinforce the JFTC’s role as a gua rdian of the market, the number of personnel in 
the JFTC has increased to 706 in 2005, being assi gned mainly to the investigation section.  
119. With regard to international cooperation ac tivities, the Government of Japan and the 
Government of Canada signed the "Agreement  between the Government of Japan and the 
Government of Canada Concerning Cooperati on on Anticompetitive Activities" on 6 September 2005 
and the agreement came into effect on 6 Octobe r 2005. It prescribes notification, cooperation, 
coordination, request for enforcement activities and c onsideration of important interests of the other 
party as the contents of cooperation on enforcem ent activities between the competition authorities. 
__________