WT/TPR/S/211 Trade Policy Review 
Page 32 
 
 
III. TRADE POLICIES AND PRACTICES BY MEASURE 
(1) INTRODUCTION  
1. Trade and trade-related policies continue to be key elements of Japan's ongoing structural 
reform;  the extent of progress in this regard w ill determine Japan's success in achieving its economic 
and social objectives.  Since its previous Trade Po licy Review in 2007, Japan has introduced measures 
aimed at further liberalizing its trade and investme nt regimes.  The authorities continue to promote 
regulatory reform and strengthen competition policy, which could, inter alia,  help open Japan's 
economy to more competition and thereby create mo re opportunities there for domestic and foreign 
businesses.   
2. The tariff is Japan's main trade policy instru ment.  Nonetheless, most imports enter Japan 
duty free or are subject to low tariff rates.  In fiscal year 20081, the simple average applied MFN tariff 
rate was 6.1%, down from 6.5% in FY2006, reflecting decreases in ad valorem  equivalents of 
non-ad valorem  duties.  Nearly 99% of tariff lines ar e bound and most applied MFN rates coincide 
with bound MFN rates, thereby imparting a high degree of  predictability to Japan's tariff schedule.  At 
the same time, non- ad valorem  duties are an important feature of the tariff, particularly for 
agricultural products.  These duties, which account fo r 6.7% of all tariff lines, and are indicated in 
Japan's tariff schedule, tend to involve high ad valorem  equivalents.  Preferential tariff rates are 
offered to 141 developing countries and 14 territori es under the Generalized System of Preferences 
(GSP), including additional preferences for 49 least de veloped countries (LDCs).  Whereas the simple 
average tariff rate under the GSP is 4.9%, that fo r LDCs is 0.5% (down from 3.3% in FY2006).  Japan 
also grants preferential access to imports from Singapore, Mexico, Malaysia, Chile, Thailand, 
Indonesia, and Brunei under bilateral free-trade agr eements with these countries.  The simple average 
tariff rates under these agreements range from 3.3% (Malaysia) to 3.9% (Brunei).   
3. Japan has few non-tariff border measures.  T hose currently applied involve some import 
prohibitions and quantitative import re strictions (for example, on some fish).  In addition, imports of 
some goods are subject to licensing requirements to  ensure national security, safeguard consumer 
health and well-being, or preserve domestic plant and animal life and the environment.  Some import 
prohibitions are in place in accordance with Un ited Nations Security Council resolutions.   
4. Since its previous Review, Japan has u sed two anti-dumping measures.  It has 
one countervailing measure in place;  the measure wa s brought to the Dispute Settlement Body and its 
countervailing duty rate was reduced from 27.2% to  9.1% as of 1 September 2008 in response to the 
DSB decisions.  Japan has not imposed any safeguard measures.   
5. Japan maintains certain export controls on nati onal security and public safety grounds and to 
ensure adequate domestic supplies of certain agricu ltural and other primary products.  Export finance, 
insurance, guarantees, and drawback schemes are available.  The Government has recently been 
promoting agricultural exports, mainly by providing information to consumers overseas. 
6. No preferences are granted to domestic suppliers  with regard to procurement covered by the 
Agreement on Government Procuremen t.  Nevertheless, the share of foreign suppliers in the total 
value of government procurement was 3.1% in 2006,  the latest year for which data are available,  
down from 3.7% in 2004.  The share of procurem ent of overseas goods and services, supplied by 
domestic or foreign suppliers, in total procurement declined to 8.7% in 2006 (from 9.7% in 2004) in 
terms of value.  The share of open tendering in to tal procurement rose to 65.9% of the total value, 
compared with 60.6% in 2005.  In March 2007, th e Government adopted The Basic Policy for Public 
Procurement of Information Systems, whose ma in objective is to increase transparency.  
                                                      
1 April to March. Japan WT/TPR/S/211 
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7. About 96% of Japanese Industrial Standards (J IS) were aligned to their international 
counterparts in 2008 (compared with 93% in 2005). 
8. Although Japan has relatively high statutory rates of both corporate and personal income 
taxes, the amount of taxes collected in relation to GDP is relatively low in comparison to other OECD 
countries.  This suggests a need to broaden the inco me tax base, which would allow cuts in tax rates, 
thereby rendering the income tax system more neutral. 
9. Various laws on intellectual property rights (IPRs ) have been amended since Japan's previous 
Review with a view to strengthening their protecti on (e.g. by increasing penalties for infringement).  
The authorities have continued their efforts to reduce the time required for patent registration.  Japan 
remains an active participant in multinational a nd regional discussions on ag reements to promote 
international harmonization of  regimes protecting IPRs. 
10. In June 2007, Japan adopted a new Three- Year Programme for Promoting Regulatory 
Reform, which was further revised in March 2008.  The programme aims to, inter alia,  strengthen 
Japan's international competitiveness and thereb y increase economic growth.  Japan has also 
continued to implement regulatory reforms in select ed regions under the schem e of special zones for 
structural reform. 
11. The authorities intend to continue to strengthen competition policy.  In this regard, a bill to 
amend the Anti-monopoly Act (AMA) has been su bmitted to the Diet.  The bill seeks to, inter alia,  
introduce a surcharge (fine) in respect of prac tices involving exclusionary types of private 
monopolization, and a 50% increase in the surcharge on businesses that have played a leading role in 
cartels and bid-rigging.  
12. Certain measures aimed at improving corporate governance, such as the implementation of 
internal control reporting systems and certificati on of annual reports by management, have become 
mandatory  since 1 April 2008. 
(2) MEASURES DIRECTLY AFFECTING IMPORTS  
(i) Customs clearance procedures  
13. The latest available data indicate that, in 2006,  the average time between arrival of goods and 
the granting of import permission was 63.8 hours (2 .7 days) for sea cargo and 14.4 hours (0.6 days) 
for air cargo (including time required under the "i mmediate import permission system upon arrival").2  
With the adoption of the amendment to the Cu stoms and Tariff Law on 31 March 2008, the overtime 
charge system was abolished. 
14. The Customs Law requires captains of foreign tr ading vessels and aircraft to file passenger 
and cargo manifests with Customs before their arrival;  all importers must file a declaration with Customs.  For most goods, the declaration must be  made after the goods have been taken into a hozei  
area
3 or other designated place;  items requiring approval by the Director-General of Customs can be 
declared before they are taken to the hozei  area.  The declaration must include details of the quantity 
                                                      
2 Under the "immediate import permission system upon arrival", import permission may be granted as 
soon as cargo entry is confirmed.  To be eligible for this system, importers must file a preliminary declaration 
online (through the Nippon Automate d Cargo Clearance System (NACCS));  Customs examines the documents 
and materials submitted before cargo entry, and provides the results of the examination. 
3 A hozei  area is an area specially designated by the Minister of Finance to store imported goods or 
goods to be exported.  Import and export procedures must be completed once the imported goods or goods 
destined for export are brought into the hozei (bonded) area.  There are five types of hozei area:  designated 
hozei  area, hozei  warehouse, hozei  manufacturing warehouse, hozei  display area, and integrated hozei  area. WT/TPR/S/211 Trade Policy Review 
Page 34 
 
 
and value of the goods to be imported as well as an  invoice, a packing list, freight account, insurance 
certificate, and certificate of origin (for, inter alia,  preferential rates of tariff), where applicable.  
Additional documentation may be required, for exam ple,  for goods requiring an import licence or 
health certificate.  Once the documentation is verifi ed by Customs, an import permit is issued.   
15. In October 2007, Japan's Authorized Economic  Operator (AEO) programme was extended to 
hozei  warehouse operators, and in April 2008 to customs brokers and logistics operators.4  
16. Imports are valued according to their c.i.f. value (which is taken to be the transaction value of 
the imports).  Customs duty can be paid thr ough a multi-payment network system, which connects 
teller institutions (government authorities) with fi nancial institutions.  No fee is charged by the 
Government for the use of this system5;  however, the financial institutions involved may collect 
variable fees.  The system is managed by  the Japan Multi-payment Network Management 
Organization (JAMMO), a non-profit organization established by major financial institutions in 
Japan;  only institutions that participate in the organization may use the system.6  Written advance 
rulings are issued at the written request of importers  and other parties concerned;  these rulings can be 
published on the Customs website with the applic ants' consent.  The authorities are planning to 
introduce the Common Portal for the Next Generation Single Window in October 2008.  The portal is intended to unify electronic application formalitie s among various agencies;  the authorities expect 
that it will increase efficiency by allowing data-sharing among the agencies concerned.  
17. Complaints against Customs' decisions may be  made to the Director-General of Customs 
within two months of the decision.  Further appeals may be lodged with the Minister of Finance 
within one month of the decision by the Director-General of Customs.
7  There were 13 complaints in 
2007 (14 in 2006);  five appeals were made in 2007 (s ix in 2006).  Three law suits were filed in 2006 
and three in 2007.  There have been no changes to the Administrative Cases Litigation Law or to the 
complaint and appeal process for Japan's customs procedures since 2007. 
(ii) Tariffs  
(a) Bound tariff 
18. In FY2008, Japan's tariff schedule comprised 8,841 lines at the HS nine-digit level.8  Japan 
has bound 98.8% of lines (108 lines are unbound) (Table III.1);  unbound lines relate mainly to 
                                                      
4 Under the AEO programme adopted by the Government in 2001, importers with a good compliance 
record are permitted to file the import declaration and customs duty declaration separately, enabling them to 
have their goods released prior to filing the customs duty declaration.  Since October 2007, these importers have 
been allowed to file import declarations before the cargo arrives. 
5 Customs clearance fees include:  an inspection fee if inspection is at a place other than a designated 
area (¥5,000/hour).  The overtime charge was abolished on 1 April 2008. 
6 One foreign bank (locally established) has participated in this system to date.  See JAMMO online 
information.  Viewed at:  http://www.jammo .org/index.html (in Japanese) [July 2008]. 
7 A law suit may be filed against the Minister's decision within three months. 
8 Excluding in-quota lines (in-quota lines subject to state trading are included in the calculations).  The 
Japanese tariff schedule has three distinct sets of rates:  statutory rates (which include both general and 
temporary rates);  WTO bound rates;  and preferentia l rates (under the GSP, the JSEPA, JUMSEPA, the 
JMEPA, JCEPA, JTEPA, JIEPA, and JBEPA).  In the cas e of statutory rates, the "temporary", but apparently 
open-ended, rate is normally used instead of the higher general rate;  the lower of the statutory and WTO bound 
rates are applied to WTO Members on an MFN basis, ex cept when preferential rates are applied.  Where the 
temporary, general, or preferential ra te is above the WTO bound rate, the la tter rate applies to WTO Members.  
Currently, 477 lines (including in-quota lines) or 286 lines (excluding in-quota lines not subject to state trading) 
at the HS nine-digit level are subject to temporary rates;   the effective period of these rates was extended until 
the end of FY 2008. Japan WT/TPR/S/211 
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fisheries (fish, crustaceans, seaweed), petroleum oils, and wood and articles thereof.  Ad valorem rates 
account for 8,172 bound lines (92.4%);  212 lines (2.4%) carry specific rates, 57 lines (0.6%) compound rates, and 292 lines (3.3%) have alternate rates of duty.  In FY2008, the average bound MFN tariff was 6.2%, which is very close to the av erage applied MFN tariff (6.1%), suggesting a high 
degree of predictability in the tariff.  While boun d and applied MFN rates coincide for most lines, 
bound rates exceed applied MFN rates for, inter alia,  live animals and animal products (HS 
Section 1), vegetables (Section 2), prepared foods, beverages, and tobacco (Section 4), chemicals and 
products (Section 6), plastics and rubber (Section 7), textiles and clothing (Section 11), and base 
metals (Section 15).  Gaps between bound and appl ied rates range from 0.3 percentage points to 
40 percentage points.  Japan has not used this gap to raise tariffs since its previous Review.  The 
average bound rate is considerably higher for agricult ural products (WTO definition), at 17.4%, than 
for non-agricultural products, at 3.6%;  without any further tariff reduction, this average for 
agricultural products is expected to remain  unchanged until 2009, when Japan completes the 
implementation of its Uruguay Round commitments.
9   
Table III.1 
Structure of the MFN tariff, 2006-08 
(Per cent)  
    FY2006a FY2007b FY2008b 
Bound tariffc    
1. Bound tariff lines (% of all tariff lines) 98.8 98.8 98.8 
2. Simple average bound rate 6.5 6.2 6.2 
 Agricultural products (HS01-24) 17.5 16.0 16.0 
 Industrial products (HS25-97) 3.7 3.6 3.6 
 WTO agricultural products 19.1 17.4 17.4 
 WTO non-agricultural products 3.6 3.6 3.6 
 Textiles and clot hing 6.6 6.6 6.6 
3. Tariff quotas (% of bound tariff lines) 1.7 1.7 1.8 
4. Duty free tariff lines (% of bound tariff lines) 40.9 40.6 40.6 
5. Non- ad valorem  tariffs (% of bound tariff lines) 6.4 6.4 6.4 
6. Non- ad valorem  tariffs with no AVEs (% of bound tariff lines) 1.6 1.5 1.5 
7. Nuisance bound rates (% of bound tariff lines)d 1.1 1.2 1.2 
Applied tariff    
8. Simple average applied rate 6.5 6.1 6.1 
 Agricultural products (HS01-24) 17.1 15.7 15.7 
 Industrial products (HS25-97) 3.7 3.6 3.6 
 WTO agricultural products 18.8 17.0 17.1 
 WTO non-agricultural products 3.6 3.5 3.5 
 Textiles and clot hing 6.6 6.6 6.7 
 ISIC 1 - Agriculture, hunting, fishing 6.9 5.0 5.0 
 ISIC 2 - Mining 0.1 0.1 0.1 
 ISIC 3 - Manufacturing 6.5 6.3 6.3 
 Manufacturing excluding food processing 3.8 3.7 3.7 
 First stage of processing 9.0 8.1 8.1 
 Semi-processed products 4.8 4.7 4.7 
 Fully processed products 7.0 6.6 6.6 
9. Domestic tariff "peaks" (% of all tariff lines)e 6.3 6.6 6.6 
10. International tariff "peaks" (% of all tariff lines)f 7.5 7.5 7.5 
Table III.1 (cont'd)  
                                                      
9 Japan implemented its tariff reduction commitments for all but one industrial product by 
January 1999 and for agricultural products by January 2004.  Tariff reduction commitments for the one remaining industrial product, menthol (HS 2906), are expected to be met by April 2009. WT/TPR/S/211 Trade Policy Review 
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    FY2006a FY2007b FY2008b 
11. Overall standard deviati on of tariff rates 25.2 19.9 19.9 
12. Coefficient of variation of tariff rates 3.9 3.3 3.3 
13. Tariff quotas (% of all tariff lines) 1.7 1.7 1.8 
14. Duty free tariff lines (% of all tariff lines) 41.7 41.5 41.4 
15. Non- ad valorem  tariffs (% of all tariff lines) 6.7 6.6 6.6 
16. Non- ad valorem  tariffs with no AVEs (% of all tariff lines) 1.5 1.4 1.4 
17. Nuisance applied rates (% of all tariff lines)d 1.1 1.3 1.3 
.. Not available.  
a Using 2005 AVEs provide d by the Japanese authorities,  as available.  Where AVEs are not available, the ad valorem part of 
compound and alternate rates is used. 
b Using 2007 AVEs provide d by the Japanese authorities,  as available.  Where AVEs are not available, the ad valorem part of 
compound and alternate rates is used. 
c Calculations are only based on bound tariff lines.  The implem entation of the UR was reached in 2004, except for one industri al 
product to be implemented in 2009. 
d Nuisance rates are those greater than zero, but less than or equal to 2%. 
e Domestic tariff peaks are defined as those exceeding three ti mes the overall simple average applied rate (indicator 8). 
f International tariff peaks are defined as those exceeding 15%.  
Note: All tariff calculations exclude in-quota lines.  The FY2006 tariff schedule is based on HS 02 nomenclature, consisting of 
8,914 tariff lines;  FY2007 and FY2008 tariff sc hedules are based on HS07 nomenclature, consisting, respectively, of 8,848 and 
8,841 tariff lines. 
Source : WTO calculations, based on data provided by the Japanese authorities. 
(b) MFN applied tariff 
Structure 
19. Of the 8,841 tariff lines, 93.3% involve ad valorem  rates;  2.4% are specific, 3.3% alternate, 
and 0.6% are compound rates;  0.4% of tariff lines have other rates (differential duties and sliding 
duties).10  The non- ad valorem  rates of duty (6.7% of all tariff lines) apply mainly to fats and oils, 
footwear, prepared foods, live animals and animal  products, textiles and clothing, vegetables, and 
mineral products (Chart III.1);  ad valorem  equivalents were provided by the authorities for 462 lines, 
as a result of which, the tariff analysis is based on 99.2% of the 8,841 tariff lines.11  Currently, 
155 tariff lines (1.8%) are subject to tariff-rate quot as;  for 38 of these lines the out-of-quota rates are 
ad valorem .12 
20. In FY2008, Japan unilaterally reduced app lied MFN tariffs on petroleum products and 
industrial alcohol;  for example, the applied MFN rates are 16.9% (20.3% in FY2007) for industrial 
alcohol, and between ¥434 to ¥1,614 per kilolitre for petroleum products.13 
                                                      
10 An alternate duty involves either an ad valorem  or specific rate;  usually the higher of the two is 
applied (except in the case of HS2204.21-2 and HS2204.29-1).  A compound duty involves a combination of 
both ad valorem  and specific rates.  A differential duty involves a specific rate charged per kg of imports with 
the rate varying directly with the di fference between the standard import price, set by the authorities, and actual 
import price.  A sliding duty involves a specific tariff rate for imports valued up to a certain threshold;  the rate declines as the value exceeds the thres hold and becomes zero at a certain point. 
11 Ad valorem  equivalents were provided by the authorities for 462 out of 588 non- ad valorem  tariff 
lines.  For 29 lines that carry alternate rates of duty, and 26 lines with compound rates, the ad valorem  part of 
the line was used in the tariff analysis. 
12 Five new lines concerning raw silk were added  to the list of goods subject to tariff quotas effective 
April 2008. 
13 In FY2007, they ranged from ¥464 to ¥1,999 per kilolitre. Japan WT/TPR/S/211 
 Page 37 
 
 
(0) (0) (0) (0) (0)(29)(74)
(57)(36)
(123)
(20)
(3) (2)(0) (0) (0)(217)(25)
(588)
(0)(2)(0)
051015202530354045
Live animal & prod.
Vegetable products
Fats and oils
Prepared food, etc.
Mineral prod.
Chemicals & prod.
Plastic & rubber
Hides & skins
Wood & articles
Pulp, paper, etc.
Textiles & articles
Footwear
Articles of stone
Precious stones, etc.
Base metals & prod.
Machinery
Transport equipment
Precision instruments
Arms & ammunition
Misc. manufactures
Works of art, etc.
TotalChart III.1
Share of non- ad valorem  duties, by HS section, FY 2008
Per cent
Note:
Source :Each bar depicts the percentage of tariff li nes within each HS section that carry non- ad valorem 
duties;  the figures in parentheses show the corres ponding number of lines.  In-quota rates are not 
included (lines subject to state trading are included).
WTO Secretariat estimates, based on data provided b y the Ja panese authorities.
 
21. Around 41.4% of Japan's tariff is at the zero rate;  around 24.4% is subject to rates greater 
than zero but less or equal to 5%, and 21.3% to rate s greater than 5% but less than or equal to 10%.  
Some 1.8% of all Japan's tariff lines are subject to  tariff rate quotas (Chart III.2).  While all in-quota 
rates are ad valorem , only 24.5% of out-of-quota rates are ad valorem .  There is also a significant 
difference between the average rates:  in-quota ra tes average 18.3%, while out-of-quota rates average 
84.1%.  Since Japan's previous Review, there ha s been no change in the quota allocation method, 
which tends to be intricate.14 
Tariff averages 
22. In FY2008, Japan's overall simple average a pplied MFN tariff was 6.1%, down slightly from 
FY 2006 (6.5%), reflecting decreases in ad valorem  equivalents (AVEs) of non- ad valorem  duties, 
none of whose rates were reduced.  Agricultural products receive much higher protection than non-
agricultural products:  the simple average for agriculture (WTO defi nition) is 17.1% compared with 
3.5% for non-agricultural products.  Protection for f ootwear and headgear, prep ared foods, vegetables, 
                                                      
14 WTO (2001). WT/TPR/S/211 Trade Policy Review 
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live animals, hides and skins, arms and ammunition, and textiles and clothing is also relatively high 
(Chart III.3). 
Sourc e:     Information provided by the Japanese authorities.Note:         Cabinet Order No. 153 of May 31, 1961:  order for tariff quota system.Chart III.2
Tariff rate quotas (TRQs)
Goods subject to TRQsControl procedure Law
Public announcement 
of TRQsArticle 9-2 of Customs 
Tariff Law
Appended table of Order 
No. 153Article 2, 8-5 of Temporary 
Tariff Measures Law
TRQ application  Reception of TRQ application
 Delivery of certificate
Customs clearing Submission of certificate to customs
 Confirmation by customsArticle 3 of Order No. 153Article 2 of Order No. 153 TRQ notice
 TRQ instructions
 
23. Ad valorem  equivalents (AVEs) for 2007 were provided by the authorities for approximately 
78.6% of the non- ad valorem  rates.15  The simple average rate for all the AVEs supplied is 34.6%, 
although the highest rate is 578.6%, for peas (out -of-quota rate);  93 of the top 100 tariffs had 
non-ad valorem  rates.16  The overall average for the AVEs is also high compared with the overall 
simple average applied MFN tariff of 6.1%, and the simple average of ad valorem  rates of 4.4% 
(FY2008).   
24. Data on tariff escalation show no overall consis tent pattern other than higher overall tariff 
protection for primary agricultural products than for semi-processed products.  Tariff escalation from 
semi-processed to final goods is present in some sectors, notably textiles, petroleum refineries, and 
industrial chemicals.  In other sectors, including food products and manufacturing, leather products, 
wood and paper products, and other chemicals, protection for fully processed goods is lower than for 
semi-processed products, while esc alation from primary to semi-processed and final products is 
evident only for rubber and its products (Table AIII.1). 
                                                      
15 According to the authorities, AVEs for the remaining non- ad valorem  tariff lines were not available  
due to lack of imports of an unspecified number of these items, which suggests that the tariffs involved may be prohibitive, or because, accordi ng to the authorities, some products are no t internationally trad ed or there is little 
demand for the particular products in Japan.   
16 In comparison, for FY2006, the simple average of  the AVEs supplied by the authorities, based on 
imports in 2005, was 41.8%. Japan WT/TPR/S/211 
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05101520253035
Live animal & prod.
Vegetable products
Fats and oils
Prepared food, etc.
Mineral prod.
Chemicals & prod.
Plastic & rubber
Hides & skins
Wood & articles
Pulp, paper, etc.
Textiles & articles
Footwear, headgear
Articles of stone
Precious stones, etc.
Base metals & prod.
Machinery
Transport equipment
Precision instruments
Arms & ammunition
Misc. manufactures
Works of art, etc.
TotalChart III.3
Simple average applied MFN tariff rates, by HS section, FY 2006 and 2008
Per cent
Excluding in-quota rates (lines subject to state trading are included).  Including ad valorem  equivalents (AVEs) 
provided by the Japanese authorities, as available.   The ad valorem  part of compound and alternate rates are 
used where AVEs are not available.  
WTO Secretariat calculations, based on data provided by the Japanese authorities.Note:
Source :FY2006
FY2008
 
Tariff reduction and exemptions 
25. Customs duty reductions and exemptions fo r FY2007 amounted to about ¥222.2 billion, 
accounting for around 24% of total tariffs collected.  
(c) Preferential rates 
26. Preferential rates of tariff are offered under the GSP to 141 developing countries and 
14 territories, including additional preferences for 49 least developed countries.  In addition to the 
existing preferential access for imports from Singa pore, Mexico, and Malaysia, under free-trade 
agreements (or economic partnership agreements (E PAs)), Japan has granted preferential access for 
imports from:  Chile under the JCEPA, since September 2007;  Thailand under the JTEPA, since 
November 2007;  Indonesia under the JIEPA, since July 2008;  and Brunei under the JBEPA, also 
since July 2008 (Chapter II(4)(iii) (f) to (i)). 
27. The simple average tariff rates under all pr eferential arrangements (GSP, LDC, and the 
seven EPAs) are lower than the simp le average applied MFN rates, although there are wide variations 
from one product group to another.  In particular, while the overall simple average preferential rates 
range from 0.5% to 4.9%, agriculture is subject to  rates from 1.8% to 16.0% (Table III.2).  Tariffs 
under these arrangements are also high for certain pr ocessed and industrial goods, such as leather, WT/TPR/S/211 Trade Policy Review 
Page 40 
 
 
rubber, footwear and travel goods, and textiles and clothing imports (under GSP);  items such as dairy 
products, some footwear, and textiles and clothing ar e not included in the GSP scheme for developing 
countries and are therefore subject to applied MFN rates of duty. 
Table III.2 
Preferential tariff rates, FY2008 
(Per cent) 
 Ad valorem  
rates (% of 
all tariff 
lines) Overall 
simple 
average WTO 
agriculture Dairy 
products WTO non-
agriculture Fish and 
fishery 
products Leather, 
rubber 
footwear, and 
travel goods Textiles 
and 
clothing 
Applied MFN 93.3 6.1  17.1 54.9 3.5 5.7 14.9 6.6 
GSP 93.7 4.9  16.0 54.9 2.3 5.4 13.6 4.9 
LDCs 99.5 0.5  1.8 0.0 0.2 1.6 2.4 0.1 
JSEPA 96.2 3.8  15.7 54.9 1.0 5.1 14.8 0.1 
JUMSEPA 94.3 3.7  15.8 54.9 0.9 2.3 13.3 0.4 
JMEPA 96.4 3.3  15.1 54.9 0.6 4.7 6.6 0.0 
JCEPA 96.4 3.4  15.5 54.9 0.6 5.2 7.0 1.0 
JTEPA 96.5 3.5  15.8 54.9 0.6 4.8 7.0 0.1 
JIEPA 96.4 3.5  15.7 54.9 0.6 5.3 7.4 0.1 
JBEPA 96.2 3.9  16.0 54.9 1.0 5.3 14.9 0.1 
AJCEP 96.5 3.6  15.9 54.9 0.7 5.3 8.1 0.1 
JSEPA  Japan-Singapore Economic Ag reement for a New Partnership. 
JUMSEPA  Agreement between Japan and the United Mexican St ates for the Strengthening of the Economic Partnership. 
JMEPA  Japan-Malaysia Economic Partnership Agreement. JCEPA  Japan-Chile Economic Partnership Agreement. 
JTEPA  Japan-Thailand Economi c Partnership Agreement. 
JIEPA  Japan-Indonesia Economic Partnership Agreement. JBEPA  Japan-Brunei Economic Partnership Agreement. 
AJCEP  ASEAN-Japan Comprehensive Economic Partnership Agreement. 
Note:  Calculations exclude in-quota rates and include AVEs as available. 
Source :  WTO calculations, based on data  provided by the authorities. 
28. Nearly 150 tariff lines, including certain meat, le ather, and leather products, are subject to 
new tariff-rate quotas created especially under th e EPA between Japan and Mexico (JUMSEPA) 
(lines of agricultural products are not subject to tariff-rate quotas under applied MFN rates);  the 
in-quota rates are lower than the corresponding appl ied MFN rates.  Under the EPA with Malaysia 
(JMEPA), fresh bananas are subject to a new tariff quota, where the in-quota rate is zero.  The tariff 
quota on bananas is also applied under the JUM SEPA and JTEPA.  Furtherm ore, under the JCEPA, 
nearly 30 lines are subject to tariff quotas, these incl ude mainly meat and meat preparations.  Under 
the JTEPA, five lines involving fresh bananas, fresh  pineapples, two lines on meat preparations of 
swine, and modified starch, are subject to tariff quotas.  
29. China remains the largest beneficiary of pr eferential access to the Japanese market;  it 
accounted for 64% of all preferential imports unde r the GSP scheme in FY2006, up from 59% in 
FY2004 (Chapter II(4)(iv)).17 
                                                      
17 Other major beneficiaries of Japan's GSP scheme are ASEAN countries, for example Thailand (8.1% 
of total imports under preferential treatment),  Indonesia (6.1%), and the Philippines (5.3%). Japan WT/TPR/S/211 
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(iii) Non-tariff border measures  
30. Prohibited imports are defined under Article 69- 11 of the Customs Law.  Import licensing 
procedures are governed by the Fore ign Exchange and Foreign Trade Law (Chart III.4).  Imports of 
narcotics, certain weapons, and animals or plan ts listed in the appendices of the Convention on 
International Trade in Endangered Species of W ild Fauna and Flora (CI TES), among others, may be 
prohibited or subject to import licensing in order to ensure national security, safeguard consumer 
health and well-being, or to pr eserve domestic plant and animal life and the environment.  Some 
commodities, including certain fish, are subject to import quotas.   
Sourc e:   Information provided by the Japanese authorities.Note:        Act No. 228 of 1 December 1949 (Foreign Exchange and Foreign Trade Law);  Cabinet Order No. 414 of  29 December 19 49 
                  (Import Trade Control Order);  and Public Notice of the Ministry of International Trade and Industry No. 170 of 
                  30 April 1966 (notice on the items of goods subject to import quotas, the places of origin or places of shipm ent of goods 
                  requiring permission for import, and other necessary matters concerning import of goods).a                Mainly concerning the duties of Ministry of Economy, Trade and Industry (METI).Chart III.4
Import control systema
Scheme of import control (Foreign Exchange and Foreign Trade Act)
Items of goods subject to
 import quotas (IQ)Control procedure Letter of the law
Public announcement of IQItems of goods subject to 
import approvalArticle 52 of Act No. 228
Pulbic Notice No. 170Article 3 of Order No. 414
IQ applicationImport announcement
1. Reception of IQ application
2. Delivery of certificateArticle 9 of Order No. 414
Customs 
clearingImport 
approval application 1. Reception of import approval application
2. Delivery of certificate
Confirmation by customsArticle 70 of Customs LawArticle 4 of Order No. 414
Article 15 of Order No. 414Article 52 of Order No. 414
 
(a) Import prohibitions 
31. Under Government directives, import prohibi tions were introduced on:  all goods from 
North Korea (October 2006);  nuclear, missile and weapons related items from Iran (2007);  and WT/TPR/S/211 Trade Policy Review 
Page 42 
 
 
Class I specified chemicals substances (certain Phenol18, November 2007).19  Restrictions on wood 
items and diamonds from Liberia were lifted in February and September 2007 as per UN Security 
Council resolutions 1689 and 1753, respectively. 
(b) Import licensing  
32. Changes in the list of items requiring impor t approval, since the previous Trade Policy 
Review of Japan in 2007, include:  the addition of nuclear goods (nuclear mate rials, etc.), weapons 
(firearms, etc.), propellant powders, chemical pr oducts (PCB, asbestos, etc.), medicines (narcotic, 
etc.), and animals and plants listed in the A ppendices of the (CITES) on 1 April 2007;  these goods 
had previously been subject to import quotas.  Fr om June 2007, juridical persons, including natural 
persons and foreign companies and their branches, are required to obtain a licence from the Minister of Economy, Trade and Industry to engage in brokering trade transactions or if it is deemed that goods 
involved may be diverted to the design, manufactur e, development, or storage of weapons of mass 
destruction (WMD) and/or missiles;  the licen ce is also required to transship these goods.  
(c) Import quotas 
33. In April 2007, items containing asbestos, amosite and crocidolite were removed from the list 
of goods subject to import quotas;  they are now subject to import licensing requirements.  Import quotas are currently imposed on various items, in cluding certain fish products and controlled 
substances listed in the Montreal Protocol on Substances that Deplete the Ozone Layer.  
(d) Import surveillance  
34. Japan maintains a system of prior confirmation to collect data on certain imports, to ensure 
that they are for specific uses, and to verify documentation and origin requirements.  Prior 
confirmation is required from the Minister of Ec onomy, Trade and Industry, or other relevant 
ministers;  some items require confirmation at Customs (customs confirmation).  The system is used, 
inter alia , for goods where fraudulent declarations have b een found in the past or are deemed more 
likely.  These goods include:  vaccine of microbial or igin for experimental use;  antisera;  uranium 
catalysts;  specified foreign cultural property;  tuna ;  marlin;  whales;  Class III psychotropics;  poppy 
and hemp seeds;  certain substances listed in Anne x E of the Montreal Protocol;  radioisotopes;  
diamonds;  and various other chemicals and pharmaceutical products. 
(iv) Contingency measures  
35. Japan's legal framework defining the use of  anti-dumping, countervailing, and safeguard 
measures includes the Customs Tariff Law and the relevant Cabinet Orders, Regulations, and 
Guidelines.  Japan amended the Ca binet Order Relating to Anti-Dumping Duty and the Guidelines for 
Procedures Relating to Countervailing and Anti- Dumping Duties in 2007.  The amendments 
concerned determination of normal value and presentation of evidence related to anti-dumping 
investigations.
20 
36. Japan has in place two anti-dumping measures, which were imposed on certain polyester 
staple fibre from the Republic of Korea and th e Separate Customs Terr itory of Taiwan, Penghu, 
Kinmen and Matsu on 26 July 2002;  the level of applied duties is between 6% and 13.5%.  As a 
                                                      
18 Phenol, 2-(2H-benzotriazol-2-yl)-4, 6-bis(1,1-dimethylethyl) 
19 Prohibition based on UN Security Council resolu tions 1737 and 1747 in February and May 2007, 
respectively. 
20 WTO document G/ADP/N/1/JPN/2/Suppl.5 (G/SCM/N/1/JPN/2/Suppl.5), 7 June 2007. Japan WT/TPR/S/211 
 Page 43 
 
 
result of an "expiry review", conducted following a request by domestic industries to continue duties 
beyond the original date of expiry, the authorities de cided on 1 July 2007 to continue the application 
of these measures for five years (until 28 June 2012) without any change to the level of duties.21  On 
27 April 2007, anti-dumping investigations were  initiated on electrolytic manganese dioxide 
originating in the Republic of South Africa, Australia, China, and Spain. 
37. On 27 January 2006, Japan applied its first countervailing duty, on dynamic random access 
memories (DRAMs) imported from the Republic of Kor ea;  the level of the duty is 27.2%, and is 
imposed until 31 December 2010.  Korea took the issue to the DSB and requested a panel in May 2006.  The DSB adopted the Appellate Body a nd Panel Reports (as modified by the Appellate 
Body Report.  The Japanese Investigating Authorit ies initiated an investig ation in January 2008, 
pursuant to Japan's Customs Tariff Law and related regulations, to implement the DSB 
recommendations and rulings.  As the results, the JIA determined to exclude countervailing duties 
equal to 18.1 percentage points.  Consequently, Japan's countervailing duty rate was reduced from 
27.2 % to 9.1 % as of 1 September 2008. 
38. Japan has not imposed any safeguard measures since its previous Review. 
(v) Government procurement 
39. Japan is a signatory to the WTO Agreement on Government Procurement (GPA).  Its GPA 
coverage encompasses all central government entities, all 47 prefectures, 12 designated cities (shitei 
toshi) , and certain public corporations.
22  Japan's thresholds for GPA coverage, expressed in yen, have 
increased since its previous Trade Policy Review;  those expressed in Special Drawing Rights (SDRs) 
have remained unchanged.23  The authorities state that government procurement is conducted without 
restriction on suppliers' nationality or on the origin  of products or services, based on the principle of 
non-discrimination, and that all relevant entities ha ve thoroughly implemented the GPA;  no price or 
other preferences are granted to domestic supp liers in tenders covered by the GPA.  
40. Since 2006, Japan has notified the WTO Committe e on Government Proc urement of various 
organizational changes in procuring entities subject to the GPA.  In 2006, the National Agriculture 
and Bio-oriented Research Organization, the Nationa l Food Research Institute, the National Institute 
for Rural Engineering and the National Farmers Ac ademy were replaced by the National Agriculture 
and Food Research Organization;  the National Sa lmon Resources Centre was removed from the list, 
as it was merged into the Fisheri es Research Agency.  In 2007, Jap an's Defence Agency was replaced 
by a newly established Ministry of Defence;  th e Centre for Food Quality , Labelling and Consumer 
Services, Fertilizer and Feed Inspection Station, and Agricultural Chemicals Inspection Station were 
replaced by the Food and Agricultural Materials In spection Centre;  and the Forest Tree Breeding 
Centre was deleted from the list.  The Japan Keirin Association was replaced by the Keirin Promotion 
Association in December 2007.24 
                                                      
21 The review was initiated on 31 August 2006.  It concluded that the expiry of these duties would 
likely lead to continuation or recurrence of both dumping and material injury.    
22 The twelve cities have populations over 500,000 and are designated by a relevant Cabinet Order.  
The Account Law and relevant ordinances specify the procurement procedures fo r the central government 
entities, while the Local Autonomy Law and relevant ordinances stipulate the procedures for local governments. 
23 WTO documents GPA/W/295/Add.4, 24 January 2006, and GPA/W/299/Add.5, 8 February 2008.   
24 WTO documents GPA/MOD/JPN/24, 6 October 2006, GPA/MOD/JPN/26, 9 January 2007, 
GPA/MOD/JPN/28, 15 May 2007, and GPA/MOD/JPN/29, 9 November 2007.  In addition, Japan notified the 
deletion of ten entities and addition of five entities to th e procuring entities subject to the GPA (WTO document 
GPA/MOD/JPN/30, 10 June 2008).   WT/TPR/S/211 Trade Policy Review 
Page 44 
 
 
41. With a view to improving competitiveness and tr ansparency in procurement procedures, the 
Government adopted various measures in Novemb er 2007 including:  adopting competitive bidding 
methods25;  establishing a third-party body (in each cent ral-government entity) that monitors all the 
entity's procurement contracts;  and establishing a mon itoring system within the Ministry of Internal 
Affairs and Communications to oversee the activities of central government entities and their 
third-party monitoring bodies.  The authorities stat e that local governments' procurement procedures 
are basically the same as those of the central government, except for Japan's voluntary measures.26  
42. The Basic Guideline for Public Procuremen t of Information Systems was adopted in 
March 2007.  Procurement under the basic guidelines must be ¥500 million or less per contract;  any 
planned procurement exceeding this threshold mu st be separated or divided.  Government 
organizations are also required to formulate procurement plans.  The authorities expect these measures to improve transparency in Japan's procurement process.  
43. The total value of procurement above the th reshold level of SDR 100,000 specified under the 
1994 Action Program was about ¥1.28 trillion in 2006 (t he latest year for which such data are 
available), up from 21.2% in 2004.
27  Open tendering accounted for 65.9% of the total.  During the 
same period, the shares of selective and single tender ing, in terms of value, declined from 1.7% to 
1.4% and 44.1% to 32.7%, respectively.  Procur ement of overseas goods and services, supplied by 
either domestic or foreign suppliers decreased fro m 9.7% to 8.7%;  procurement of foreign goods 
amounted to 11.0% of the total (Table III.3).28  Procurement from foreign suppliers increased from 
2.0% in 2004 to 3.0% in contract terms, but decr eased from 3.7% to 3.1% in value terms during the 
same period.  The shares of foreign suppliers in contracts resulting from open and single tenders, 
respectively, were 1.6% and 4.3% in 2006 (1 .5% and 3.8% in 2004).  Firms that have 
central-government-wide unified qualification for participating in tendering contracts for 
manufacturing and sales of products total 59,629 ( as of 10 March 2008);  386 of these firms have 
capital wholly or partially owned by foreigners. 
44. Most cases of proven infringement of Japan's An ti-monopoly Act (AMA) c ontinue to involve 
bid-rigging related to public work s, and various cases of bid-rigging involving government officials 
have been made known to the public in recent year s (section (4)(vi)).  The Act for Promoting Proper 
Tendering and Contracting for Public Works defines major policy instruments for preventing bid-rigging and other improper actions, such as no tification of improper actions to the JFTC.  
Furthermore, the Act on Elimination and Prevention of Involvement in Bid Rigging, inter alia,  
authorizes the JFTC to formally demand that th e heads of ministries and agencies improve their 
administrative measures with regard to bidding and c ontracts to eliminate bid-rigging;  the heads must 
also conduct an investigation if requested by the J FTC, take action to eliminate bid-rigging, if its 
existence becomes evident, and publicize the results of the investigation and actions taken in response 
to the investigation.  An amendment to the Act on  Elimination and Prevention of Involvement in Bid 
                                                     
 
25 All central government agencies  reviewed single tendering contracts and have increasingly been 
introducing open tendering. 
26 With respect to government procurement, Japan's voluntary measures include improved market 
access and the Action Program on Government Procurement.  In add ition, there are voluntary measures 
pertaining to individual sectors, such as super comput ers, non-R&D satellites, computer products and services, 
telecommunication, and medical technology.   
27 Government of Japan (2007). 
28 The total value of goods procurement rose from ¥578.5 billion in 2005 to ¥786.5 billion in 2006, and 
the largest increase was in office machines and data processing equipment.  On the other hand, the number of 
contracts rose from 8,171 to 8,420 over the same period .  With respect to services , the number of services 
contracts increased from 3,377 in 2004 to 3,776 in 2006, and the value of such contracts rose from ¥334.5 billion to ¥496.0 billion. Japan WT/TPR/S/211 
 Page 45 
 
 
Rigging entered into force on 14 March 2007.  It re vised the name and the purpose of the Act in 
accordance with the introduction of the provision on punishment for actions that harm the fairness of 
the bidding;  enlarged the range of the specified cor porations subject to the Ac t;  and added actions for 
aiding bid rigging to "involvement in bid rigging", in addition to three types of actions already 
stipulated in the Act.  The amendment makes it manda tory to publicize the results of investigations 
that concern compensation claims by organizations against their own employees that are involved in 
bid-rigging;  and the amendment also introduced the provision of punishment for actions that hamper 
the fairness of bidding. 
Table III.3  
Procurement by product and by origin, 2005 and 2006 
(¥100 million and per cent)  
2005 2006 
No. Products 
Total value Foreign 
share Total value Foreign 
share 
1 Products from agriculture, and from agricultural and food 
processing  1.1 0.0 2.8 16.6 
2 Mineral products 232.2 64.6 325.8 61.4 
3 Products of the chemical and allied industries 23.1 8.0 89.2 6.3 
4 Medicinal and pharmaceutical  products 266.1 34.4 412.4 20.7 
5 Artificial resins; rubber, raw hides and skins; leather; and 
articles thereof 10.9 3.6 19.1 2.6 
6 Wood and articles of wood;  pa per making material; paper and 
paperboard and articles thereof 136.8 0.1 110.2 0.2 
7 Textiles and textile articles; th read for spinning and weaving; 
and articles thereof 53.8 4.9 33.9 0.0 
8 Articles of stone, of cement and similar materials; ceramic 
products; glass and glassware;  and articles thereof   1.2 0.0 5.3 0.0 
9 Iron and steel and articles thereof 124.6 1.6 154.4 1.3 
10 Non-ferrous metals and artic les thereof 43.0 2.1 55.8 4.3 
11 Power generating machinery and equipment 29.2 51.4 111.4 21.5 
12 Machinery specialized for partic ular industries 111.0 9.3 94.5 2.4 
13 General industrial machinery and equipment 56.9 20.7 36.2 10.4 
14 Office machines and automatic data pr ocessing equipment 1,895.3 5.6 3,504.1 1.9 
15 Telecommunications and sound recording and reproducing 
apparatus and equipment 582.6 2.0 476.6 1.0 
16 Electrical machinery, apparatus and appliances, and electrical 
parts thereof 198.8 6.7 225.4 4.4 
17 Road vehicles 252.2 0.0 243.5 3.3 
18 Railway vehicles and associat ed equipment 52.8 15.4 41.2 6.9 
19 Aircraft and associated equipment 68.8 82.9 63.7 77.7 
20 Ships, boats and floating structures 104.0 0.4 16.4 0.0 
21 Sanitary, plumbing, and hea ting equipment 3.4 0.0 2.7 24.7 
22 Medical, dental, surgical and vete rinary equipment 439.4 37.1 632.1 38.7 
23 Furniture and parts thereof 56.0 0.6 28.4 4.5 
24 Scientific and controlling instrume nts and apparatus 474.7 22.2 446.9 21.2 
25 Photographic apparatus and equipment, optical goods, and 
clocks 65.1 14.3 145.4 5.1 
26 Miscellaneous articles 502.6 4.3 587.6 8.6 
  Total 5,785.5 13.5 7,865.1 11.0 
Source:  Government of Japan (2007), Japan's Government Procurement:  Po licy and Achievements Annual Report , 
Toward Government Procurement Open to the World.   Viewed at:  http://www.kantei.go.jp/foreign/ 
procurement/2007/index.html. WT/TPR/S/211 Trade Policy Review 
Page 46 
 
 
45. Complaints about procurement procedures by the Central Government and public 
corporations are processed by the Office of Govern ment Procurement Review (OGPR), headed by the 
Chief Cabinet Secretary and considered by the Government Procurement Review Board (GPRB), an independent examining body.  The procuring enti ty is expected to follow the recommendations 
voluntarily.  In FY2006 and FY2007, inquiries and re quests for clarification were resolved in talks 
between the suppliers and procuring entities concer ned;  no complaint was filed during the period 
under review. 
(vi) State trading 
46. On 11 April 2008, Japan abolished state trading of raw silk.  Current state-trading activities 
involve leaf tobacco, opium, rice, wheat and barley, and milk products.  The aims are to stabilize the 
supply and price of these commodities and protect consumer interests.
29  State-trading activities are 
generally underpinned by legislated import right s and, in some cases, by specific monopoly rights 
over domestic production and distribution.   
(vii) Standards, and sanitary and phytosanitary measures 
(a) Standards, testing, and conformity assessment 
47. Japan has continued its efforts towards inte rnational harmonization of its standards and 
technical regulations.  Since October 2007, regu latory impact assessments have been made 
compulsory for all regulations (as well as for changes to or abolition of existing ones).30  Japan's 
voluntary standards, mandatory technical regula tions, and sanitary and phytosanitary (SPS) 
regulations are summarized in Table III.4. 
Voluntary standards 
48. In 2008, voluntary standards comprised 10, 064 Japanese Industrial Standards (JIS) and 
216 Japan Agricultural Standards (JAS).  The authorities indicate that about 53% of JIS are comparable to international standards, and 96% of these were aligned with international standards in 
2008.  Between April 2006 and March 2008, 835 JIS items were revised, 289 withdrawn, and 
626 newly established.  Four new JAS items have be en established, while 14 have been revised since 
2006.  
49. Under the JAS Law (the Law Concerning Standardization and Proper Labelling of 
Agriculture and Forestry Products), third-party or ganizations are entitled to certify operators (e.g. 
manufacturers) to affix JAS marks.  The  Minister of Agriculture, Forestry and Fisheries as well as 
Registered Certifying Bodies and Registered Overseas Certifying Bodies (RCBs and ROCBs) are 
responsible for monitoring and managing JAS marks.  The Minister is authorized to order certifying 
bodies to comply with the registration criteria and improve services.  The JAS Law incorporates ISO Guide 65 as registration criteria for certifying bodies.    
50. About 8,000 domestic and 230 foreign factori es in 13 countries and economies have been 
certified to affix JIS marks.  The current JIS mark  scheme began on 1 Octobe r 2005;  transition from 
the previous scheme was completed on 30 Septembe r 2008.  The authorities maintain that domestic 
and foreign factories are treated in the same manner with regard to certification of the JIS marks.  
Currently, 25 Japanese organizations are accredited as JIS mark certification bodies by the Ministry of 
Economy, Trade and Industry.  Foreign producer s or manufacturers certified by RCBs and ROCBs 
                                                     
 
29 WTO document G/STR/N/11/JPN, 14 November 2006. 
30 WTO document G/TBT/W/287, 6 June 2008. Japan WT/TPR/S/211 
 Page 47 
 
 
can conduct their own grading and affix the JAS marks to their products.  There are currently 
20 ROCBs, 11 for organic products and 9 for forestry products.31  Under the JAS Law, foreign 
enterprises exporting agricultural products  to Japan may be certified as ROCBs. 
Table III.4 
Major standards and technical regulations, 2008 
(Per cent) 
 Number of 
standards/ 
regulations Corresponding 
to international 
standardsa Equivalent 
to 
international 
standards Acceptance 
of overseas 
certificationb Acceptance 
of overseas 
test datab 
A.  Mandatory technical regulations      
Pharmaceuticals Affairs Law 1,843 .. .. .. .. 
Food Sanitation Law 602 .. .. .. .. 
Electrical Appliance and Materials Safety 
Law 453 .. .. 
.. .. 
Consumer Product Safety Law 6 .. .. ..  .. 
High Pressure Gas Safety Law 2 .. .. ..  100 
Building Standard Lawc .. .. .. .. .. 
Safety Regulations for Ro ad Vehicles 237 27 3 11 33 
Law concerning the Safety Assurance and 
Quality Improvement of Feed .. .. .. .. .. 
Law concerning Examination and 
Regulation of Chemical Substances and 
Regulation of their Manufacture  7 .. .. .. 100 
Industrial Safety and Health Law 1     
Telecommunications Business Lawd .. .. .. .. .. 
Radio Lawe .. .. .. .. .. 
Fertilizer Control Law .. .. .. .. .. 
B.  Voluntary standards       
Japan Industrial Standards (JIS)  10,064 53 96 .. .. 
Japan Agricultural Standards (JAS)f 216 .. .. .. .. 
.. Not available.   
a Defined as "primary aspects sharing a common scope". 
b Where applicable. 
c Building Act Code. 
d According to the authorities, the number of mandatory technical regulations is not available because the scope and definition  of 
mandatory technical regulations is ambiguous;  technical conditi ons of terminal equipment in Japan generally comply with 
ITU-T/ITU-R Recommendations and Radio Regulations, and international harmonization is given consideration. 
e According to the authorities, the number of mandatory technical  regulations is not available because the scope and definition  of 
mandatory technical regulations is ambiguous;  the technical conditio ns of radio stations in Japa n generally comply with ITU-R 
Recommendations and Radio Regulations, and international harmonization is given consid eration.  Regarding the system for the 
certification of radio equipment the Radio La w was amended to establish the system fo r accepting foreign test results and forei gn 
certification (promulgated in 1998 and went into effect in 1999). 
f The scope of international st andards differs from the JAS. 
Source:  Information provided by the Japanese authorities. 
Mandatory technical regulations 
51. After a series of accidents caused by unvented-t ype gas instantaneous water heaters, paper 
shredders, and remote controlled electric heaters, several technical requirements for product safety 
                                                      
31 The authorities expect the number of ROCBs to increase since many organizations have expressed 
their interests in registration as ROCBs in accordance with the revised JAS Law. WT/TPR/S/211 Trade Policy Review 
Page 48 
 
 
were revised in 2006.32  Several energy-saving technical requirements under the Law Concerning the 
Rational Use of Energy have been revised since 2006 with a view to reducing CO 2 emissions and 
improving energy efficiency of designated machinery and equipment.33  The implementing 
regulations for the Industrial Safety and Health Act were revised to prohi bit the manufacture of 
asbestos and products containing asbestos34, while the scope of objects subject to material safety data 
sheets has been extended.  Other changes to the In dustrial Safety and Health Act included imposing 
necessary measures, such as installation of sealing systems in the manufacture or handling of the 
products covered, to ensure the health and safety of workers.35  The Poisonous and Deleterious 
Substances Designation Order was extended to Benzenesulfonyl chloride (HS:29), 
1,3-Dichloropropan-2-ol (HS:29), 2-Mercaptoethanol  (HS:29), Isobutyl nitrite (HS:29), Isopentyl 
nitrite (HS:29), 2-(Dimethylamino) ethyl methacr ylate (HS:29), and 1-Bromo-3-chloropropane 
(HS:29) in April 2008.36 
52. To ensure consistency with the applicable IE C standards, the Ordinance on Industrial Safety 
and Health and Construction Code  on Electrical Apparatus for Explosive Gas Atmospheres was 
amended in February 2008;  the amendment concerned, inter alia,  the classification of the area in 
which an explosive gas atmosphere is present and requires special precautions for the construction, 
installation and use of apparatus.  It also allows  the authorities to designate appropriate electrical 
apparatus to be used in areas deemed to have an explosive gas atmosphere.37  In addition, amendments 
to the Consumer Product Safety Law and the Ca binet Order under the Electrical Appliance and 
Material Safety Law have also been  notified to improve consumer safety.38 
53. Data provided by the authorities indicate that  there were 237 regulations on road vehicle 
safety standards in 2008, of which 27% corresponded to international standa rds (compared with 20% 
of 204 regulations in 2005).  The Law on the Quality Control of Gasoline and Other Fuels and the Announcement that Prescribes Details of Safety Re gulations for Road Vehicles were amended in 
2006 to improve vehicle safety and reduce pollution emanating from motor vehicles.
39 
54. METI has designated 26 inspection bodies, seven of which are foreign, for testing based on 
the major standards and certification systems unde r the METI's jurisdiction.  These include:  
nine designated inspection bodies under the Consum er Product Safety Law, thirteen under the 
Electrical Appliance and Material Safety Law, thr ee under the Law Concerning the Securing of Safety 
and Optimization of Transaction of Liquefied Petr oleum Gas, and one under the Gas Utility Industry 
Law.  In 2005, approximately 20% of all JIS were designated in Japanese laws and 
government/ministerial ordinances as mandatory techni cal regulations.  Based on the Industrial Safety 
and Health Law, the "designated foreign bodies for in spection" system allows persons who intend to 
import boilers, pressure vessels or electrical equipmen t for use in an explosive atmosphere to have 
                                                      
32 The revisions included:  requirements on marking;  requirement of a switch disconnecting power 
from the mains supply;  requirement of a test on hazar dous moving parts, with an accessibility probe;  and 
prohibition of control initiated by remote operation (except for certain h eaters, such as those mounted at a high 
level).  WTO document G/TBT/N/JPN/202, 29 May 2007. 
33 WTO documents G/TBT/N/JPN/214, 31 July 2007, and G/TBT/N/JPN/257, 6 June 2008. 
34 Products that are deemed difficult to find substitutes are excluded from prohibition.  WTO 
documents G/TBT/N/JPN/198, 27 March 2007, and G/TBT/N/JPN/261, 24 June 2008. 
35 The concerned measure was related to 1,3-butadiene, formaldehyde, diethyl sulfate and their 
preparations, as well as, arsenic and compounds of nick el (except nickel carbonyl) and arsenic (except arsenic 
trioxide, arsine and gallium  arsenide).  WTO documents G/TBT/N/JPN/205, 27 May 2007 and 
G/TBT/N/JPN/255, 2 June 2008. 
36 WTO document G/TBT/N/JPN/252, 18 April 2008. 
37 WTO document G/TBT/N/JPN/232, 3 December 2007. 
38 WTO documents G/TBT/N/JPN/220, 17 September 2007 and G/TBT/N/JPN/245, 13 February 2008. 
39 WTO documents G/TBT/N/JPN/180, 9 August 2006 and G/TBT/N/JPN/181, 18 August 2006. Japan WT/TPR/S/211 
 Page 49 
 
 
them inspected by foreign inspection bodies desi gnated by the Minister of Health, Labour and 
Welfare for compliance with Japanese standards;  the result of the inspection is submitted to 
competent Japanese authorities or inspection bodies for examination.  There were five designated 
foreign inspection bodies at the end of 2007.  Since the Third Party Certification System for medical 
devices was introduced in April 2005, 12 bodies have been registered. 
Bilateral, regional, and multinational arrangements 
55. Japan and the United States signed the Agreement on Mutual Recognition of Results of 
Conformity Assessment Procedures in February 2007.   The agreement, which entered into force in 
January 2008, covers mutual recognition of re sults of conformity assessment procedures for 
telecommunications terminal equipment and radio equipment.  Japan also has mutual recognition 
agreements (MRAs) on conformity assessment pro cedures with the European Communities (since 
January 2002) and Singapore (since November 2002).  Japan's bilateral free-trade agreements (EPAs) 
with Thailand and the Philippines include a chapte r on mutual recognition.  The Japan-Malaysia EPA, 
the Japan-Chile EPA, and the Japan-A SEAN EPA have a chapter on SPS.  
(b) Sanitary and phytosanitary measures  
56. Since 2006, there have been several revisions to Japan's food specifications and standards, 
which are established under its Food Sanitation Law;  the specifications and standards include residue 
standards set under the "positive list" system.  Cha nges include revisions to maximum residue limits 
for pesticides, feed additives, and veterinary dr ugs in various commodities.  The maximum residue 
limits for lead in metal, tin plating, and solder ing that comes into contact with food were also 
lowered.40  New food additives, such as modi fied starches, have been allowed41;  new specifications 
for non-synthetic food additives and a revision of ex isting standards and specifications were also 
notified.42  On the other hand, 42 food additives that were  determined to be no longer marketed were 
withdrawn from the list of permissible food additives.43 
57. Since 2006, Japan has notified 64 new or modi fied SPS measures, including one emergency 
action.  Changes to Japan's quarantine arra ngements since 2006 include:  an amendment on 
6 October 2006 to the Import Quarantine Regulation on wood packaging material to harmonize 
Japanese phytosanitary measures with in ternational standards (ISPM No. 15)44;  amendments to the 
list of non-quarantine plant pests in July 2006, March 2007, and September 2008 to add 
non-quarantine pests that are not subject to plant quara ntine measures and to update the lists of plants, 
areas, and quarantine pests that are subject to inspect ion at growing sites in exporting countries and to 
import prohibition45;  and adoption in April 2008 of the St andard Procedure for Approval for Import 
of Designated Items into Japan to be Quarantined.46  A new law was proposed that would set 
standards for pet foods and stipulat e manufacturing and import regulations47;  and a revision of the 
                                                      
40 WTO document G/SPS/N/JPN/204, 14 January 2008. 
41 WTO document G/SPS/N/JPN/210, 31 March 2008. 
42 WTO document G/SPS/N/JPN/172, 18 December 2006. 
43 WTO document G/SPS/N/JPN/174, 18 December 2006. 
44 WTO document G/SPS/GEN/739, 30 October 2006. 
45 WTO documents G/SPS/N/JPN/161, 16 May 2006, G/SPS/N/JPN/175, 11 January 2007, 
G/SPS/N/JPN/211, 20 May 2008, and G/SP S/N/JPN/211.Add.1, 4 September 2008. 
46 WTO document G/SPS/N/JPN/207, 29 January 2008. 
47 WTO document G/SPS/N/JPN/205, 15 January 2008. WT/TPR/S/211 Trade Policy Review 
Page 50 
 
 
permissible levels of cadmium and lead that migrate from glass, ceramic, and enamelled equipment, 
utensils, and containers used for food.48 
58. The Food Safety Commission has been conductin g safety assessments of genetically modified 
(GM) foods according to Codex guidelines since 2003.49   
59. Japan currently imposes import prohibitions on beef and poultry from various countries to 
prevent the spread of BSE and avian flu.50  
60. In accordance with the Food Sanitation Law, imported food may be exempted from 
inspection upon importation into Japan if a cargo is inspected by an official inspection organization in the exporting country and bears the result of the inspection.
51  Such inspection bodies must be 
registered with the Government of Japan, through th e government of the exporting country, in order to 
receive such exemption.52  In September 2008, 3,503 such laboratories were registered with the 
Government of Japan. 
(c) Labelling and packaging requirements 
61. The main changes to Japan's labelling requireme nts since 2006 include:  addition of packed or 
bottled green tea beverage and fried peanuts to the list of items subject to mandatory labelling 
requirements regarding the place of origin of in gredients under the quality labelling standard for 
processed foods;  addition of sugar beets, high ly sine corn and processed foods containing them as a 
main ingredient to the list of items subject to mandatory labelling under the quality labelling standard 
for genetically modified foods53;  addition of labelling requirements for quality of ingredients for 
processed foods and fresh foods traded among s uppliers.  Concerning imports, these labelling 
requirements are imposed on importers in Japan. 
62. Food labelling in Japan is subject to the JAS La w and the Food Sanitation Law.  A total of 
56 technical regulations are in force based on the JAS Law, comprising cross-category quality 
labelling standards for processed foods, fresh foods , and genetically modified foods;  individual 
quality labelling standards;  and standards for orga nic plants and organic processed foods (made of 
plants). 
63. The cross-category quality labelling standards are provided for all foods and beverages 
(except alcohol).  Fresh foods must be labelled with  their name and place of origin.  Processed foods 
must be labelled with the name, the list of ingredie nts, the net content, the date of minimum durability 
or use-by date, instructions for storage, the name  and address of the manufacturer, and the country of 
                                                      
48 WTO document G/SPS/N/JPN/208, 20 February 2008. 
49 The Food Safety Commission was established under the Food Safety Basic Law in the Cabinet 
Office to perform risk assessments.  The Commission's prim ary goals comprise:  conducting risk assessments of 
food in a scientific, independent, and fair manner, and making recommendations to relevant ministries based 
upon the results;  implementing risk communication among stakeholders;  and responding to food-borne 
accidents and emergencies. 
50 At the end of October 2008, imports of beef were prohibited from Austria, Belgium, the Czech 
Republic, Denmark, Finland,  Germany, Greece, France, Ireland, Israel , Italy, Liechtenstein, Luxembourg, the 
Netherlands, Poland, Portugal, Slovakia, Slovenia, Sp ain, Sweden, Switzerland, and the United Kingdom and 
imports of poultry were prohibited from 56 countries/regions.    
51 However, inspection items whose results are subj ect to change during transportation (bacteria, 
mycotoxin, etc.) are excluded. 
52 Results of examinations based on the AOAC (Association of Analytical Communities) method, 
which are either endorsed or established by the exporting country, are accepted. 
53 These measures entered into force on 1 October 2007. Japan WT/TPR/S/211 
 Page 51 
 
 
origin (for imported products).  Specific labe lling requirements are provided as quality labelling 
standards for individual products de pending on their characteristics.  Any food containing additives 
must also be labelled with the names of all a dditives included.  Imported processed food is excluded 
from the mandatory labelling of place of origin of th e ingredients (see below).  All organic plants and 
organic processed foods to be sold in Japan must comply with the JAS organic standards and carry the 
JAS organic mark.  To label food as "organic", certif ication is needed from a registered certifying 
body or a registered overseas certifying body that the food meets certain JAS requirements.  Only 
certified food is allowed to be distributed with a JAS organic mark. 
64. Any allergenic substances contained in pro cessed foods must be indicated on the labels 
according to the Food Sanitation Law.  Currently , 25 items are designated for inclusion in the 
description of ingredients:  seven are obligatory (eggs, milk, wheat, buckwheat, peanuts, prawns, and 
crab) and 18 are recommended (abalone, squid, sal mon roe, oranges, kiwifruit, beef, walnuts, 
mackerel, salmon, gelatin, soybeans, chicken, por k, matsutake-mushrooms, peaches, yams, apples, 
and bananas).54 
65. Mandatory labelling for genetically modified (GM) foods is regulated under the Food 
Sanitation Law and the JAS Law;  the list comprises seven crops (soybeans, corn, rape seed, potatoes, 
cotton seed, alfalfa, and sugar beet) and 32 kinds of designated processed food mainly made of 
soybeans or corn as well as the newly added sugar beets, high lysine corn, and processed foods 
containing it as a main ingredient.  The Ministry  of Health, Labour, and Welfare does not permit 
imports of GM foods that do not meet its safety requirements.  The Agricultural Products Inspection 
Law requires mandatory inspections of rice, wheat, barley, and soybeans. 
(viii) Import promotion measures 
66. Japan appears to have been placing less emph asis on import promotion, which was one of the 
main objectives of its trade policies in the 1990s.  It has not introduced any new import promotion measures since its previous Trade Policy Review , and none are foreseen:  the budget allocated for 
these measures has been declining over the past few years.  Existing programmes were mainly 
implemented by the Manufactured Imports and Investment Promotion Organization (MIPRO), 
including:  free consultation regarding small-lot im ports;  providing reference materials such as 
wholesale catalogues, import guides, and impor t handbooks;  conducting seminars in Japan;  and 
business missions to international trade shows.
55 
(3) MEASURES DIRECTLY AFFECTING EXPORTS  
(i) Procedures  
67. Exporters or their proxy (customs brokers) must file a declaration with Customs in 
accordance with the Custom s Law.  For most goods, the declaration has to be made once the goods 
have been taken to a hozei  (bonded) area, or other specially designated place.  Declarations for goods 
requiring approval by the Director-General of Custom s must state the quantity and value of the goods 
to be exported and be accompanied by invoices a nd other documents deemed necessary, such as 
permits, approvals, or licences, in accordance w ith other laws and regulations.  After the 
documentation has been verified by Cu stoms, an export permit is issued.56  
                                                      
54 Prawn and crab have been added to the list of items subject to mandatory labelling since 3 June 2008. 
55 MIPRO online information.  Viewed at:  http://www.mipro.or.jp/english/about/import/ [30.10.2008]. 
56 For further details, see Japan Customs online info rmation.  Viewed at:  http://www.customs.go.jp/ 
English/summary/export.htm [13.06.2008]. WT/TPR/S/211 Trade Policy Review 
Page 52 
 
 
68. Under Article 19 of the Customs Tariff Law, tari ffs on raw materials used in the production of 
export goods by factories approved by Customs,  may be reduced, exempted or refunded (by a 
drawback scheme).  Exporters must file an applica tion to Customs to use the drawback scheme.  The 
authorities maintain that the objective of Article 19 is to simultaneously promote imports of raw 
materials and encourage exports, and that it is not  aimed at protecting any particular industry or 
goods.  There has been no change to the list of goods subject to tariff reduction, exemption, or refund 
since the previous Trade Policy Review of Japan.  While the Law itself does not restrict the scope of goods subject to tariff reduction, exemption or re fund, only selected goods as prescribed by the 
Implementing Regulations of the Law are subjec t to such treatment.  If imported goods are not 
consumed domestically and are re-e xported within a year, they are eligible for duty exemption.  
Consumption tax is refundable on exports (and their inputs).  In addition, domestic excises are 
refundable on exports and their inputs.
57  Goods that are exempt from customs duty are also exempt 
from domestic excises, including duty exempted re-exported goods and raw materials used in the 
manufacture of goods to be exported.58 
69. Since March 2006, the Authorised Economic Operator (AEO) programme (section (2)(i)) has 
been in operation for exporters.  The programme  allows exporters with a good compliance and 
security record to file export declara tions before transporting goods to the hozei  area.  Non-authorized 
exporters are also permitted to file export decl arations under the AEO programme if their goods are 
transported by authorized logistics operators a nd declared by authorized customs brokers.  The 
exporter's compliance record is also taken into acc ount for Customs examination and inspection.  The 
authorities expect that the AEO programme will reduce lead time and distribution costs.   
(ii) Export taxes, charges, and levies 
70. There are no export taxes or levies in operation in Japan.  The consumption tax is fully 
refundable on exports.  
(iii) Export prohibitions, restrictions, and licensing  
71. Export controls are set out in the Foreign Ex change and Foreign Trade Law and the Export 
Trade Control Order.  Exports requiring permission from the Minister of Economy, Trade and 
Industry include:  certain seeds, endangered animals, and plants specified in international treaties;  
narcotics;  designated art works;  counterfeit currenc ies;  and other products associated with criminal 
offences in Japan.  For certain ag ricultural products, including wheat bran, rice bran, oat bran, clams, 
mussels and eels, the Minister of Economy, Trade and Industry also needs the consent of the Minister 
of Agriculture, Forestry and Fisheries prior to granting export approval.  Export controls (prior 
approval) are maintained to ensure national secur ity and public safety and to ensure adequate 
domestic supplies of certain agricu ltural and other primary products.59  Exports of radioactive sources 
have been restricted since January 2006.60  From 1 June 2007, companies require a licence, from the 
Minister of Economy, Trade and Industry, to enga ge in brokering trade transactions for goods that 
could be used in/diverted towards the design, manuf acture, development, and storage of weapons of 
                                                      
57 Domestic excises on imports include liquor tax, tobacco tax, special tobacco surtax, gasoline tax, 
liquefied petroleum gas tax, and petroleum and coal tax. 
58 To be eligible for exemption, it is mandatory to provide certain information on the import and export 
declaration form.  If the exemption is granted, provided th at the goods are to be re-e xported, a cash security to 
the value of the duty exempted may be required. 
59 Article 48, Foreign Exchange and Foreign Trade Law.   
60 The control of exports of radioactive sources was enforced pursuant to the IAEA Code of Conduct 
on the Safety and Security of Radioactive Sources:  Guidance on the Import and Export of Radioactive Sources of 24 September 2004.   Japan WT/TPR/S/211 
 Page 53 
 
 
mass destruction and/or missiles;  the licence require ment also applies to th e transhipment of such 
goods  (as per UNSC resolution 1540 of April 2004). 
(iv) Export cartels 
72. There are no authorized export cartels in Japan .  However, 21 types of cartel are exempted 
from general prohibition of cartels  under Japan's Anti-Monopoly Act and various individual laws 
(section (4)(vi)).  According to the authorities, sh ipping cartels (e.g. liner conferences), which are 
exempt from the Anti-monopoly Act as provided in the Maritime Transportation Law, are not considered as export cartels.   According to the authorities, the Japan Fair Trade Commission (JFTC) 
has recently sent a request to the Ministry of Land , Infrastructure and Transport to review the cartel 
exemption for shipping, and is awaiting a response.  
(v) Export promotion schemes 
(a) Subsidies, export finance, insurance, and guarantees 
73. Japan provides medium- and long-term export credits.
61  These are administered by the Japan 
Bank for International Cooperation (JBIC) (a gove rnment-affiliated financia l institution), and Nippon 
Export and Investment Insurance (NEXI) (an independent  administrative instituti on, insuring risks not 
covered by existing private insurance institutions),  based on the terms and conditions of the OECD 
Arrangement on export credits.  Standard forms of export credit extended by JBIC include:  supplier 
credits, buyer credits, and bank-to-bank loans.  In 20 05 (the latest year for which data are available), 
Japan provided about 4.0 billion SDRs (about ¥6 45.6 billion) as medium- and long-term export 
credits, a significant decrease from 2004 (6.1 billion SDRs).62  
(b) Other export promotion schemes 
74. Export promotion schemes handled by the Japan External Trade Organization (JETRO) 
include provision of information, market and co mpany studies, and support for participation at 
international trade fairs.  JETRO has undertaken  several export promotion activities for small and 
medium-sized enterprises, including support for partic ipation in overseas exhibitions and trade fairs, 
market research, and advisory services.   
75. The Ministry of Agriculture, Forestry and Fish eries provides support to agricultural exporters 
through information-sharing on Japanese agricultura l products and foodstuff.  Support includes setting 
up Japanese pavilions at international exhibitions and promotion abroad of Japanese foods including 
agricultural products.  The budget for FY2008 for export promotion is ¥2.0 billion, down from 
¥2.2 billion in FY2007.  The decline in the budget fo llows reviews of existing projects and retaining 
only those considered to have a positive impact. 
(4) MEASURES AFFECTING PRODUCTION AND TRADE  
(i) Taxation and tax-related assistance 
76. Direct taxes, which include personal and corpor ate income taxes, accounted for about 62% of 
total tax revenue in FY2007 (c ompared with about 60% in FY 2005 Budget (settlement account)) 
(Table III.5).  Indirect taxes, which include consumption tax (VAT) and excise taxes (applied, 
                                                      
61 OECD (2007b). 
62 In FY2006, JBICs total commitments were ap proximately ¥75.7 billion, while the total amount 
insured by NEXI was ¥14.1 trillion. WT/TPR/S/211 Trade Policy Review 
Page 54 
 
 
inter alia, to liquor, tobacco, gasoline, and automobiles) , accounted for the remainder of total tax 
revenue in FY2007 (compared with about 40% in FY 2005 Budget (settlement account)).  The highest 
personal income tax rate, including local taxes, is  50% and the corporate tax rate (including local 
taxes) is 39.54% (FY2008).  All income earned  in Japan is taxable for both residents and 
non-residents and the corporate income tax rate is the same for foreign and domestic corporations.  
With regard to indirect taxes, consumption tax, whic h is levied at a rate of 5% on goods and services 
transactions, is the largest component, contributi ng nearly 19% of total tax revenue in FY2007.63 
Table III.5 
National government tax revenue, FY2006 and 2007 
(¥ billion and per cent)  
FY2006 Budget FY2007 Budget 
Tax item 
Amount Percentage Amount Percentage 
Direct taxes 30,235 59.4 34,407 62.4 
Personal income tax 12,788 25.1 16,545 30.0 
Income tax (distributed to special accounts or local 
governments) 3,009 5.9 n.a. n.a. 
Corporate income tax 13,058 25.6 16,359 29.7 
Inheritance tax 1,380 2.7 1,503 2.7 
Indirect taxes 20,689 40.6 20,688 37.6 
Customs duty 906 1.8 929 1.7 
Consumption tax 10,538 20.7 10,645 19.3 
Liquor tax 1,572 3.1 1,495 2.7 
Tobacco tax 940 1.8 926 1.7 
Gasoline tax 2,156 4.2 2,135 3.9 
Liquefied petroleum gas tax 14 0 14 0 
Aviation fuel tax 87 0.2 93 0.2 
Petroleum  and coal tax 476 0.9 533 1.0 
Promotion of power resources development tax n.a. n.a. 346 0.6 
Motor vehicle tax 737 1.4 716 1.3 
Tonnage tax 9 0 9 0 
Stamp tax 1,217 2.4 1,219 2.2 
Local road taxa, b 310 0.6 304 0.6 
Liquefied petroleum gas taxa, b 14 0 14 0 
Aviation fuel taxa, b 16 0 17 0 
Motor vehicle taxa, b 369 0.7 358 0.6 
Special tonnage taxa 11 0 11  0 
Customs duty on oila 1 0 n.a. n.a. 
Promotion of power resources development taxa 354 0.7 n.a. n.a. 
Gasoline taxa 739 1.5 710 1.3 
Special tobacco surtaxa 224 0.4 214 0.4 
Total 50,924 100 55,095 100 
n.a. Not applicable. 
a Revenues are distributed to special accounts. 
b Local Transfer Tax. 
Source: Information provided by the authorities. 
                                                      
63 The 5% consists of the national consumption tax (4%) and a local consumption tax (1%).  Exempted 
transactions include the sale and loan of land, rent for residential buildings, the sale of securities, registration 
and licensing fees paid to government agencies, money lending, foreign exchange businesses, medical care, welfare and certain educational services, and school textbooks.  Exports are exempt from consumption tax. Japan WT/TPR/S/211 
 Page 55 
 
 
77. The amount of taxes collected is relatively low in comparison with other OECD countries, 
although Japan has high statutory rates of both corporat e and personal income taxes;  Japan has one of 
the lowest tax to GDP ratios and the highest (40%) statutory corporate tax rate within the OECD.  
Furthermore, less than half the personal income is  taxed, compared with an OECD average of over 
80%.  These suggest a need to broaden the income  tax base.  There is also scope to improve 
transparency, especially with regard  to taxes;  for example, the local tax system comprises 23 different 
taxes and could be made less complicated and thus more transparent. 
Tax incentives 
78. The system of tax incentives in Japan remains complex.  The focus is on achieving various 
policy objectives, including investment in certain equipment to address environmental concerns or 
promote R&D.  The incentives are set out in th e Special Taxation Measures Law, which has been 
amended annually.64  The Government examines annually the objectives, effects, and relevance of 
these tax (and non-tax) measures;  according to the authorities, it has been streamlining these 
measures (e.g. where they are rarely used or wh ere policy objectives have been accomplished), and 
implements only measures deemed truly effective.  The authorities estimate that forgone tax revenues 
will be ¥5,172 billion in FY2008 (¥5,174 in FY 2007).  The authorities publish detailed tax 
expenditure accounts containing information on revenu e forgone as a result of various tax measures;  
however, it would appear that they do not involve rigorous cost-benefit analysis of these measures. 
Recent reforms 
79. Tax reforms undertaken in FY2007 included, inter alia :  a change in the depreciation method 
by allowing assets to depreciate to ¥1 instead of th e previous 95% limit;  granting tax exemptions on 
retained earnings of family corporations;  an in crease in the tax exemption threshold for single-owner 
corporations (to ¥16 million, up from ¥8 million);  a nd an extension for one year of the tax rate 
reduction for dividend and capital gains on listed stoc ks.  In April 2007, new rules were announced on 
cross-border triangular mergers;  under the rules, a foreign firm acquiring a publicly traded firm through a triangular merger is required to register  its shares in Japan, and if the target firm has 
shareholders in a third country, it must file a re gistration statement and follow the disclosure rules of 
that country.  Capital gains tax deferral is permitted in certain qua lified triangular mergers
65;  
however, tax deferrals are not permitted where the merger vehicle is a newly established foreign 
"shell" entity.66 
80. Tax reforms in FY2008 include changes in the R& D tax credit, which is now applicable to 
either incremental R&D or on R&D spending in excess of 10% of sales value (previously the tax 
credit could include both).  In both cases, the limit on the tax credit is 10% of the amount of corporation tax.  Investors in specified SMEs can now claim an income tax deduction of up to 
¥10 million.  Tax credits have also been introdu ced for energy-saving home improvements.  In 
addition, tax treatment of interest received by n on-residents was changed;  and the portion of the 
                                                     
 
64 For example, tax incentives are offered for broadband subscriber network dissemination, and 
promotion of the next generation broadband network infrastructures.  These incentives have been in place since April 2008 and are set to expire on 31 March 2010.  It would appear that only one firm (NTT) is in a position to 
take advantage of these incentives. 
65 To be eligible for the tax deferral, the Japanese subsidiary would need to own or lease a fixed facility 
in Japan, have employees in Japan, and engage in sales,  advertising, marketing research, or apply for or hold 
government permits or intellectual property rights needed for doing business in Japan. 
66 A foreign "shell" entity is a corporation that is in corporated in a country where the corporate income 
tax rate is less than 25%, and has no assets or operations in that country. WT/TPR/S/211 Trade Policy Review 
Page 56 
 
 
interest income on bonds issued by a foreign co mpany, which attributes to a business conducted in 
Japan, is now treated as a domestic source income and taxed as such.67   
(ii) Subsidies and other financial assistance 
81. Japan has notified various specific subsidy programm es to the WTO.  In its latest notification, 
in September 2007, Japan indicated 86 subsidy schem es to assist agriculture, forestry, and fisheries, 
industry, finance, and transport sectors.68   
(iii) State-owned enterprises, corporatization, and privatization 
82. The State retains a stake in major compani es in several sectors, through which it could 
directly affect production and trade;  it al so influences various semi-governmental bodies.69  These 
companies include Nippon Telegraph and Telephone  Corporation (NTT), Japan Tobacco Inc. (JT), 
Narita International Airport Corporation, and Ka nsai International Airport Co. Ltd.  As of 
March 2008, the Government held:  33.8% of the st ock of NTT;  50.0% of JT;  66.7% of Kansai 
International Airport Co. Ltd;  100% of Narita In ternational Airport Corporation;  29.3% of INPEX 
Corporation;  and 34.0% of Japan Petroleum Expl oration Co. Ltd.  All shares of Hokkaido Railway 
Company, Shikoku Railway Company, Kyushu Railway Company, and Japan Freight Railway 
Company are held by Japan Railway Construction, Transport and Technology Agency, a 
government-affiliated corporation.  The Government also holds shares of commercial banks, such as 
Resona Bank, apparently for prude ntial reasons.  The Deposit Insura nce Cooperation of Japan (DICJ), 
a semi-governmental corporation partially finan ced by the Government, holds shares of certain 
commercial banks.70  
83. Based on the Reorganization and Rationalization Plan for Public Corporations, adopted on 
18 December 2001, 148 public corporations (out of 163 subject to reform) had already been reformed 
by 9 January 2008.71  Seventeen were abolished, four we re merged into new entities, 43 were 
privatized, and 39 were transformed into "incorporated  administrative agencies";  six of the remaining 
corporations are to maintain their current stat us (e.g. NHK broadcasting), and nine (including the 
Kansai International Airport and NTT) are to be reformed.  
84. On 24 December 2007, the Government adopt ed a plan to reorganize/rationalize 
101 incorporated administrative agencies.  Under the pl an, the number of agenci es is to be reduced to 
85 by end-March 2011 by abolishing and merging agencies.  
                                                      
67 Previously such interest was treated as foreign source income. 
68 WTO document G/SCM/N/155/JPN, 3 September 2007. 
69 List of such entities was not made available in En glish to the Secretariat.  The authorities find it 
difficult to prepare such a list because of the vast number of such entities. 
70 DICJ online information (in Japanese).  Viewed at:  http://www.dic.go.jp/katsudou/katsudou3-1.html 
[31.10.2008]. 
71 In April 2006, the Government Pension Investment Fund was reorganized into an incorporated 
administrative agency.  Furthermore, in April 2007, the Housing Loan Corporation was dissolved and its 
business was taken over by the Japan Housing Financ e Agency (the Japan Housing Finance Agency was 
established in April 2007 as an in corporated administrative agency). Japan WT/TPR/S/211 
 Page 57 
 
 
(iv) Intellectual property rights 
(a) Recent developments 
85. A number of amendments to the main laws on intellectual property rights protection have 
been introduced since the previous  Trade Policy Review of Japan (Table III.6).  In 2006, the industrial 
property acts (i.e. Design Act, Patent Act, Utility  Model Act, and Trademark Act) and the Unfair 
Competition Prevention Act were amended;  the amende d Acts entered into force by April 2007.  The 
amended Design Act increased the maximum term of protection for designs from 15 to 20 years from the date of registration, and increased protection of  certain computer-related graphic images.  Under 
the Patent Act, if an application for a patent cont ains more than one invention, it is permissible to 
extract more than one application from the original application within a specified time period.  The 
amendment to the Patent Act eased the time limit (up to 30 days) during which a multiple patent application can be submitted.  The Trademark Act was amended to allow a mark that is used for retail 
or wholesale services to be registered as a "service ma rk".  With regard to all the industrial property 
acts, "exporting" was added to the definition of "worki ng" or "use" of industrial property rights (i.e. 
patent rights, utility model rights, design right a nd trade mark rights);  exporting counterfeit products 
now constitutes an infringement of industrial property rights.   
86. Infringement of intellectual property rights by an individual results in imprisonment of up to 
ten years (compared with five years previously ) and/or maximum fines of up to ¥10 million 
(previously ¥5 million);  infringement by corpora tions of these rights results in fines not exceeding 
¥300 million (previously ¥150 million) .  Penalties for infringement of utility model rights, design 
rights, and trade mark rights were also increased.  For example, the maximum term of imprisonment 
for infringement of utility model rights, indirect in fringement of industrial property rights, and for 
assigning goods that imitate the configuration of a nother person's goods is now five years, and the 
maximum fine is ¥5 million.  The concurrent imposition of a custodial sentence and a fine has also been introduced, and the joint punishment provisions fo r corporations have been raised to a standard 
maximum of ¥300 million across the four industrial property rights acts.  Under the Unfair 
Competition Prevention Act, the maximum term of im prisonment and fine for infringement of trade 
secrets have been raised to ten years and ¥10 million, respectively.  
87. Amendments to the Customs Law and Customs Tariff Law were also made in 2006, 2007, 
and 2008;  prevention of the transit of goods infringing IPRs is now enforced ex officio  by Customs.  
In addition, procedures have been  established for Customs to consu lt with appointed IPR experts, 
such as IP lawyers.  On 11 May 2007, the Amen dment of the Act on Special Measures for Industrial 
Revitalization was promulgated;  the amended Act stipulates that once a non-exclusive licence 
granted by "comprehensive licence agreement" has been registered in JPO, the licensee may assert the 
licence against anyone subsequently acquiring these patent rights or utility model rights. 
88. The amended Patent Attorneys Act partia lly entered into force on 1 January 2008
72;  the 
amended Act stipulates that taking practical training courses is obligatory to become a patent attorney, 
and registered patent attorneys are now required to participate in periodic training on the latest laws 
and technological trends.  In addition, disciplinar y rules for patent attorneys were changed;  for 
example, "name-lending" was prohibited.73 
 
                                                      
72 Some provisions of the Act entered into force in stages, on 1 April 2008 and 1 October 2008. 
73 Name lending is when a patent attorney (who has au thorization to practice before the Patent Office) 
allows his/her name to be used by a firm or individual that does not have authorization to practice as a patent attorney.   WT/TPR/S/211 Trade Policy Review 
Page 58 
 
 
Table III.6 
Legislation on intellectual property rights, 2008 
Specific intellectual property 
rights Relevant legislation Agencies responsible for the 
administration of law 
Copyright and related rights Copyright Law 
 
 
 Act on the Prevention of Unauthorized Recording of Movies in Theatres Agency for Cultural Affairs, Ministry of 
Education, Culture, Sport, Science and 
Technology (MEXT) 
 
Agency for Cultural Affairs, MEXT, METI 
Trade marks Trademark Law Japan Patent Office, METI 
Patents Patent Law – Utility Model Law Japan Patent Office, METI 
Breeder's right  Plant Variety  Protection and S eed Act   Ministry of Agriculture, Forestry & 
Fisheries 
 Patent Law Japan Patent Office, METI 
Designs Design Law Japan Patent Office, METI 
Geographical indications Trademark Law Japan Patent Office, METI 
 Unfair Competition Prevention Act METI 
 Law concerning Liquor Business Associations 
and Measures for Securing Revenue from Liquor Tax (wines and spirits) National Tax Agency 
Layout designs of integrated circuits Law concerning the Circuit Layout of 
Semiconductor Integrated Circuits METI 
Protection of undisclosed 
information Unfair Competition Prevention Act METI 
Control of anti-competitive practices Anti-Monopoly Act Fair Trade Commission 
 Unfair Competition Prevention Act METI 
Civil and administrative 
enforcement remedies Code of Civil Procedure – Civil Ex ecution Act Ministry of Justice 
 Patent Law – Utility Model Law Japan Patent Office, METI  
 Design Law Japan Patent Office, METI 
 Trademark Law Japan Patent Office, METI 
 Unfair Competition Prevention Act METI 
 Copyright Law Agency for Cultural Affairs, MEXT 
 Plant Variety  Protection and Seed Act   Ministry of Agriculture, Forestry & 
Fisheries 
 Law concerning the Circuit Layout of 
Semiconductor Integrated Circuits METI 
 Anti-Monopoly Act Fair Trade Commission 
Border measures Customs Law Ministry of Finance 
 Export & Import Trading Law METI 
Source:  Information provided by the Japanese authorities. 
89. A revised Plant Variety Protection and Seed Ac t entered into force on 1 December 2007;  the 
revised law allows the calculation of damage compensation based on the right holders' profits,  
increases penalties against infringement of plant breed ers' rights, encourages placement of the "mark 
of protected variety";  and prohibits false marking.   
90. Under the Act on the Prevention of Unauthorized  Recording of Movies in Theatres, adopted 
in May 2007, recording movies screened in movie th eatres without permission is subject to maximum 
imprisonment of ten years or fines of up to ¥10 million.  
91. The Act to Partially Amend the Patent Act a nd Other IP-Related Acts was promulgated on 
18 April 2008;  the amended Acts are to enter into force within a year from promulgation.  Under the 
Act, changes to the patent system include an increas e of the time limit for filing an appeal against an 
examiner's refusal, from the current "within 30 da ys" to "within three months" from the date of Japan WT/TPR/S/211 
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transmission of the certified copy of the decision.  With regard to the design system and the trademark 
system, the time limits for filing an appeal agai nst a refusal and a ruling dismissing an amendment 
have also been extended to three months, from th e current "within 30 days" from the date of the 
certified copy of the examiner's decision. 
92. The Intellectual Property Strategic Progra mme (IPSP) 2007 was adopted by the IP 
Headquarters on 31 May 2007.  It stipulated,  inter alia , that Japan would:  formulate "strategic 
programmes" for the protection of  IPRs in individual fields (e .g. life sciences, information and 
communications technology, environment, and nano -technology/materials);  promote international 
harmonization of the patent system through measures such as standardization of patent application 
format among the Trilateral Offices (the Japanese Patent Office (JPO), the United States Patent and 
Trademark Office (USPTO), and the European Patent  Office (EPO));  and strengthen IPR-related law 
enforcement and border measures by Customs.  On  18 June 2008, the IP Headquarters issued the 
IPSP 2008, which is to review the intellectual prope rty strategy from an international perspective.  
The review is to focus on:  strengthening Japan's  international competitiveness in the prioritized 
strategic areas;  encouraging international business e xpansion;  and exercising leadership in coping 
with common global issues, particularly issues facing Asian countries. 
93. Between April 2007 and March 2008, there were  320,000 "first actions" (completion of 
first examinations of patent applications)74, compared with 296,000 in FY2006 and the average 
waiting period for "first action" was about 27 m onths (same as in FY2006);  the number of requests 
for examination decreased to 370,000 in 2007 from 380, 000 in 2006.  The Government aims to attain 
an average wait for the first action for patents to be within 30 months by 2008, and within 11 months 
by 2013.75  The number of patent examiners increased to  1,680 in FY2008 comp ared with 1,468 in 
FY2006.   
94. Parallel imports are allowed in Japan in acco rdance with the principle of "international 
exhaustion".76 
95. Under articles 83, 92, and 93 of the Patent Ac t, compulsory licences may be granted after at 
least three consecutive years if a patent is not work ed, if it is thought to be necessary for the public 
welfare, or if the patent is needed to work anothe r patent and its owner is unwilling to allow use of it.  
As of September 2008, Japan had neve r granted any compulsory licences. 
(b) International harmoniza tion and cooperation 
96. Japan has continued to promote internati onal harmonization of IPR application and 
examination procedures.  For example, it has be en participating in the Standing Committee on the 
Law of Patents (SCP) for the Substantive Patent Law Treaty, which aims to reduce applicants' costs of 
obtaining patents in multiple countries and to improve the predictability of obtaining patents in patent 
offices in these countries.   
                                                      
74 Actions by the JPO in response to the request for patent examination. 
75 The Headquarters for Expeditious and Efficient Patent Examinations, headed by the Minister of 
Economy, Trade and Industry, issued the Action Plan for Expeditious and Efficient Patent Examination in 
January 2006. 
76 Under international exhaustion, the right of the patent holder relating to the patented product is 
exhausted by putting the patented product on any market anywhere in the world.  Concerning parallel imports of 
patented goods, the Supreme Court decided in 1997 (BBS Case) that parallel imports of goods manufactured 
under the foreign patent did not infringe a corresponding Japanese patent, if there was no mutual agreement between the patent holder and transferees of patented goods that excluded Japan from the sales territory. WT/TPR/S/211 Trade Policy Review 
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97. Japan has been involved in the mutual cooperati on of the Trilateral Offi ces with a view to 
addressing common problems in the area of patents.   The recent focus of discussions has been on 
cooperation in examination through mutual exploita tion, efforts to reduce the procedural burden on 
applicants, and efforts to harmonize systems a nd operations.  Cooperation included exchanges of 
patent examiners, and development of a common structure for online dossier access system.  
Furthermore, in May 2007, the JPO, the USPTO, the EPO, the Korean Intellectual Property Office 
(KIPO), and China's State Intellectual Property Offi ce (SIPO) held a first commissioners meeting to 
discuss issues of mutual interest, such as the necessity for cooperation among these patent offices to 
respond to the increasing number of pa tent applications.  On trade marks, the JPO, the USPTO, and 
the EC Office for Harmonization in the Internal  Market (Trade Marks and Designs) (OHIM) have 
been meeting regularly to discuss issues including the Trilateral Identification Manual Project to 
review English identifications of goods and servi ces acceptable by the three offices, and cooperation 
with China.77  Japan also participates in the discussions  in the WIPO Standing Committee on the Law 
of Trademarks, Industrial Designs and Geographical Indications, which concerns, inter alia,  the 
revision of the Trademark Law Treaty and the subs tantive harmonization of trade mark laws.   
98. The JPO and USPTO launched the Pa tent Prosecution Highway (PPH)78, with a pilot 
programme in July 2006, and full-time implementa tion in January 2008.  As of 4 September 2008, 
349 requests for participation in the PPH pilot programme had been filed with the JPO and 
627 requests with the USPTO.  On average, the first action for applications is made in two months 
from the request.  To promoting a move towards a gl obal network of bilateral PPHs that interconnects 
many countries across the world, the JPO started a PPH programme with the KIPO in April 2007 and 
a PPH pilot programme with the UK-IPO in July 20 07.  The JPO and the German Patent Trademark 
Office (GPTO) launched a pilot pr ogramme in March 2008, and a pilo t project was launched with the 
Danish Patent and Trademark Office (DKPTO) in July 2008. 
(c) Enforcement 
99. The Intellectual Property (IP) High Court, established on 1 April 2005 as a special branch 
within the Tokyo High Court, deals with appeals against trial/appeal decisions made by the JPO on 
patent actions and suits.  It also deals with all ot her cases related to intellectua l property brought to the 
Tokyo High Court.79  Data provided by the authorities indicate that 566 suits were filed in 2006 and 
591 cases were decided;  in addition, 96 decisions we re appealed, while 90 appeals were disposed of. 
100. Cases of IPR violations at the border incr eased from 13,467 in 2005 to 22,661 in 2007 
(Table III.7).80  Japan intends to make its border measures more efficient and transparent.  After 
suspending IPR infringing imports, Customs make s a judgment whether the suspended goods are 
                                                      
77 Strategic working group meetings were held in March and September 2008, while a meeting of 
deputies of patent offices was held in May 2008.  The latter focused on a framework for future cooperation 
initiatives including work sharing. 
78 The PPH is intended to enable the Office of  Second Filing (OSF) to undertake an accelerated 
examination with a simple procedure upon request of an applicant.  The PPH aims to facilitate applicants' early 
acquisition of rights overseas, as well as to promote the mu tual exploitation of prior art search and examination 
results carried out by the Office of First Filing (OFF), so  as to improve the quality of examination and reduce 
the workload of each patent office. 
79 At the same time, there were amendments to the Court Organization Act and the Code of Civil 
Procedure to expand and clarify the authority of juridical research officials regarding intellectual property 
affairs;  the amendments enabled judi cial research officials, with the pe rmission of judges, to ask questions 
during oral arguments or on other occas ions in order to clarify the facts of the case (Article 92-8 of the Code of 
Civil Procedure). 
80 Details of Japan's judicial measures regardi ng IPR enforcement are prov ided in WTO document 
IP/N/6/JPN/1, 18 February 1997 (the latest available notification). Japan WT/TPR/S/211 
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infringing goods or not.  The authorities state that Customs has tried to make appropriate judgments as 
promptly as possible.  At the same time, Custom s has assured due process and has given importers the 
opportunity to check the suspended cargo and submit their opinion and evidence to Customs during the identification procedures.   
Table III.7 
Suspension of imports likely to infrin ge intellectual property rights, 2005-07 
Category   Main items 2005 2006 2007 
Products concerned ('000 units)  
Bags Handbags, purses 253 283 259 
Clothing equipment Zipper,  lace-up parts 79 77 102 
Medicine Medicine 0 4 97 
Clothing T-shirts, sweatshirts, raincoats, scarves 177 172 81 
Toys Stuffed dolls  70 22 77 
Shoes Sports shoes (tennis shoes, sneakers) 26 23 48 
Accessory Necklaces 51 47 37 
Key Case Key cases, key holders 34 49 36 
Bag equipments Grommets, adjusters 20 18 26 
Hats Hats caps 8 46 23 
Others Watches, stationery, lanyards for cell phones 380 238 253 
Total  1,097 979 1,039 
Types of violation (Number of cases)  
Patent rights  66 26 15 
Utility rights  2 1 0 
Design rights  42 54 54 
Trade mark rights  13,228 19,363 22,447 
Copyright (related rights)  175 199 214 
Plant breeders' rights  - 0 0 
Unfair competition  0 0 0 
Total  13,467 19,591 22,661 
Source:  Information provided by the Japanese authorities.  
101. Infringement of IPRs, such as patents, utility models, designs, or trade marks may result in 
criminal penalties of either imprisonment or a fine.  Since 2003, the number of cases has increased 
faster than the number of suspended articles;  thus, the average number of articles per case has been decreasing.  The authorities consider that this decline indicates a significant increase of small-lot 
shipments involving IPR infringement;  a large amount  of counterfeits are sold via the Internet and 
imported by international couriers. 
102. In 2007, 441 cases were filed under intellect ual property rights law and 756 people were 
arrested (493 cases and 783 arrests in 2006).
81 
                                                      
81 Of the 441 cases, 276 were violations of the Trademark Law, 137 of Copyright Law, and 28 were on 
account of other IPR related laws.  Sim ilarly, 472, 210, and 74 persons were  arrested for infringement of these 
laws, respectively. WT/TPR/S/211 Trade Policy Review 
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(v) Regulatory reform 
103. Since its previous Trade Policy Review, Japan  has continued to pursue reforms of its 
regulatory system, particularly in the area of comp etition policy and the extens ion of the special zones 
initiative until 2012 (see below).  Nonetheless, it would appear that reform fatigue has set in and the 
pace of reforms has slowed, especially  in sensitive areas, such as education and medical services.  In 
June 2007, the Government adopted a new three- year regulatory reform programme, which was 
revised on 25 March 2008.  The programme's main objectives include accelerated growth by 
strengthening the competitiveness of Japanese product s and services in the international market, and 
creating a free and fair socio-economic system "f ully open to the international community".   
104. Under the current Three-Year Programme for Promoting Regulatory Reform, trade-related 
measures to be implemented include ;  improving procedures for exports  and imports, such as studying 
the feasibility of allowing business operators to f ile export reports electronically without the goods 
entering a bonded area;  a review of whether to abolish the applications procedures required for 
temporary office opening for customs clearance outside of normal hours;  establishing a system of self-certification
82, to facilitate trade with EPA/FTA partners;  reducing lead times and charges at 
ports through the Super Central Harbour Developmen t Project, which is to be implemented between 
2008 and 2010.  Other measures include:  encourag ing the effective use of the Regulatory Impact 
Analysis and No-Action Letter sche mes with a view to making regula tions more efficient (Chapter 
IV(5)(ii));  upgrading the operation of independent public corporations (section (4)(iii) above);  and 
unbundling accounts in various subsectors of el ectric utilities, and encouraging wholesale power 
exchange to improve energy efficien cy and tackle environmental issues.83 
105. The Council for the Promotion of Regulatory Refo rm (CPRR), an advisory body to the Prime 
Minister, is the central body for promoting regulatory reform.84  The CPPR was reorganized in 
January 2007, when the three-year term of the previous CPRR expired.85  The CPRR cooperates with 
the Cabinet's Headquarters for the Promotion of Regulatory Reform, an or ganization of Cabinet 
Ministers;  19 task forces have been establishe d in seven broad areas, for the deliberation of 
programmes of regulatory reform (Table III.8). 
106. Under the Special Zone for Structural Reform Act, approved "special zones" are exempted 
from certain regulations according to the zone's spec ific circumstances.  In order to obtain approval, 
draft plans must be submitted by municipal bodi es.  At end 2006, 581 reform measures had been 
accepted, of which 211 were implemented in 963 special zones, and 370 were introduced on a 
nationwide basis.  The zones have been granted exemptions from regulati ons governing education, 
urban renewal, distribution, agriculture, medical care, industry-academic cooperation, environment, 
                                                      
82 System of "self certification" means "a declaration of origin" made by an exporter on the invoice or 
other commercial documents, declaring the products specified are originating products.  At present, a certificate 
of origin issued by an authorized body is required.  However, the authorities maintain that many Japanese 
companies find the current system  cumbersome and inefficient. 
83 Japan Electric Power Exchange, which started operations in April 2005, has a spot day-ahead market 
to trade the electricity that will be delivered on the follo wing day.  The exchange also has a forward fixed-form 
market to trade the electricity that will be delivered af ter a certain period, as well as a forward bulletin board 
market. 
84 The CPRR coordinates closely with the Council on Economic and Fiscal Policy and with the 
Headquarters for the Promotion of  the Special Zones for Structural  Reform.  The CPRR monitors the 
implementation of the new Three-Year Programme and, when it deems necessary, may require the heads of 
relevant governmental organizations to submit materials, provide explanations, and extend cooperation to the 
CPRR. 
85 The reorganization also involved absorbing the functions of th e Market Access Ombudsman Council.   Japan WT/TPR/S/211 
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and other areas.  Some proposals have been opposed  by central government ministries responsible for 
the existing regulations. 
Table III.8 
Three-Year Regulatory Reform Programme 2007-10  
Section  Task Force 
Healthcare 
Welfare, Childcare, Care Social Security and Countermeasures to the declining Birth Rate Group 
Employment 
Agriculture, Forestry and Fisheries Agriculture and Regions Group  
Area Vitalization 
Basis of Living 
Antitrust  Policy Consumer Affairs and Basis of Living Group 
Environment 
Foreign Personnel 
Trading 
Transportation 
Network Industries Strengthening Competitiveness in the International Market 
Group 
Finance 
Housing, Estate 
Labour Social Infrastructure Group 
Basic Rules 
Education, Research Education and Qualification Reforms Group 
Legal Affairs, Qualification 
Reduction of the State's Expenditure and Assets Public Sector Reform 
Source:  Information provided by the Japanese authorities. 
(vi) Competition policy 
(a) Recent developments 
107. Over the years, the growing importance of competition in the Japanese economy has led to an 
increase in the size of the Japan Fair Trade Commission (JFTC).86  The budget allocated to the JFTC 
in FY2008 amounted to about ¥8.7 billion (¥8.4 b illion in FY2007 and ¥8.3 billion in FY2006), and 
the number of JFTC personnel rose to 7 95 (from 765 in FY2007 an d 737 in FY2006). 
108. The 2006 amendment to the Anti-monopoly Act (AMA ):  raised administrative surcharges 
(fines) against cartels, and penalties for contraventio n of elimination orders by the JFTC;  introduced 
a leniency programme;  allowed JFTC officials to  inspect, search, and seize, based on court-issued 
warrants;  and expedited JFTC's hearing procedures.   The authorities consider that the amendment, 
particularly the leniency programme, has been enforc ed smoothly:  at end-February 2008, the leniency 
programme had been applied to 14 cases;  the author ities believe that it makes the detection of cartels 
easier.  The JFTC expects the leniency programme to  help promote a "corporate compliance system".  
109. In accordance with the Act on Elimination and Prevention of Involvement in Bid Rigging, 
etc., which entered into force in January 2003, the JFTC requested in March 2007 that the Minister of 
Land, Infrastructure and Transport file a report on improved measures to address bid-rigging.  In 
                                                      
86 The authorities maintain that the independence of the JFTC is sufficiently protected by the AMA, 
which provides for the JFTC to be administratively att ached to the Prime Minister ;  the chairman and the 
commissioners perform their duties independently and they may not be removed against their will, during their term of office. WT/TPR/S/211 Trade Policy Review 
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June 2007, the MLIT adopted a report outlining measu res to be implemented, including:  ensuring 
compliance with relevant rules;  enhancing the c overage of open and compe titive bidding procedures;  
increasing the penalties for improper activities, incl uding bid rigging, by ex tending the period of 
suspension from bidding and construction business opera tion;  and extending the self-enforced rules 
of re-employment to cover re-employment with co mpanies found to have participated in the bid 
rigging or found in the future to have engaged in bid rigging on an y MLIT public works projects.  The 
report was provided to the JFTC. 
110. In 2008, a bill to further amend the AMA was submitted to the Diet, but has not yet been 
adopted.  The bill seeks to introduce a surcharge on, inter alia , exclusionary types of private 
monopolization, abuse of dominant bargaining position,  discriminatory pricing, concerted refusal to 
trade, resale price restriction, and to increase by  50% the surcharge on businesses that have played a 
leading role in cartels and bid-rigging.  The b ill seeks to extend the maximum period between the 
dates of termination of infringement and issuance of an administrative order from three to five years.  
Changes have also been proposed with respect to regulations on business combinations;  these include 
the introduction of a prior notification system for share acquisitions, and upward revision of minimum 
thresholds for notification of share acquisitions and mergers.87 
(b) Exemptions from the AMA prohibition of cartels 
111. Since the previous Trade Policy Review of Japan, no changes have been made to the 
Anti-monopoly Act exemptions.  In December 2006 and December 2007, the JFTC published its 
position that the rationale for the exemption from the AMA of shipping cartels and agreements by 
international airlines, respectively, was no longer valid.  As a result, the JFTC requested MLIT to 
review the exemption.  On 25 March 2008, the G overnment decided that the MLIT would begin a 
review of the AMA exemption on agreements by ai r carriers in the international aviation sector during 
2008;  the MLIT set up an expert study group to review this exemption on 28 August 2008.  The 
AMA contains provisions exempting from the enforcement of intellectual property rights, activities of cooperatives, and resale price maintenance contracts of copyrighted work.  In addition, provisions 
authorizing certain cartels are incorporated into other laws, including the Insurance Business Law and 
the Export-Import Trading Law.  As of April 2008, 21 practices under 15 laws are exempt under these 
provisions (Table III.9).   
(c) AMA exemption on resale price maintenance  
112. The resale price maintenance (RPM) system c ontinues to be exempted from the AMA for 
copyrighted works (books, magazines, newspapers , and music cassettes, records, and CDs).  The 
authorities consider that the RPM exemption shoul d be abolished from the viewpoint of competition 
policy;  however, there is a lack of national c onsensus, as many argue that such abolition might 
adversely affect cultural values and/or the "public aspect" of copyrighted works.   
                                                     
 
87 In addition, the bill intends to exempt notifica tion of mergers and acquisitions within a corporate 
group (i.e. a number of enterprises that are operationally independent, but are coordinated by a central body, such as conglomerates).  A review of the leniency programme has also been proposed, to allow for joint 
application by violating entrepreneurs and the expansion of the number of leniency applicants from three to five.  
The JFTC rules would be amended to allow for the provision of the JFTC's warning system and to ensure fairness and transparency of hearing procedures. Japan WT/TPR/S/211 
 Page 65 
 
 
Table III.9 
Exemptions from the Anti-monopoly Act, October 2008 
Relevant ministries and agencies  Legislation  System  
1.   Exemptions under the AMA (1 law, 3 systems)   
Japan Fair Trade Commission Section 21 Acts under intellectual property rights 
 Section 22 Acts of cooperatives 
 Section 23 Resale pric e maintenance contracts 
2.   Exemptions under various i ndividual laws (14 laws, 18 systems)  
Financial Services Agency Insura nce Business Law Insurance cartels 
 Law Concerning Non-Life Insurance Rating 
Organizations Exemptions concerning compulsory 
automobile insurance and earthquake insurance 
Ministry of Justice Corporation Reorganization Law Acquisition of shares of companies under 
reorganization 
Ministry of Finance Law Concerning Liquor Business Associations 
and Measures for Securing Revenue from Liquor 
Tax Rationalization cartels 
Ministry of Education, Culture, 
Sports, Science and Technology Copyright Law Cartels on fees for commercial usage of 
music records 
Ministry of Health, Labour, Welfare Law Concerning Coordination and Improvement 
of Hygienically Regulated Business Cartels to prevent excessive competition 
Ministry of Agriculture, Forestry and 
Fisheries of Japan Agricultural Cooperative Association Law Fe deration of agricultural cooperatives;  
Agricultural Association corporation 
Ministry of Economy, Trade and 
Industry Export-import Trading Law Cartels on export 
 Law on the Cooperative Association of Small 
and Medium Enterprises Federation of small business associations 
 Law on Cooperatives of Small and Medium-
Sized Enterprises Joint economic undertakings 
Ministry of Land, Infrastructure and 
Transport Marine Transportation Law Mar itime transportation cartels 
(international);  Maritime transportation 
cartels (coastal service) 
 Road Transportation Law Transportation cartels 
 Civil Aeronautics Law Aviation car tels (international);  Aviation 
cartels (domestic) 
 Coastal Shipping Association Law Mar itime transportation cartels (coastal 
service);  Joint shipping businesses 
Source:  Information provided by the Japanese authorities. 
(d) Holding companies, and mergers and acquisitions 
113. Chapter 4 of the AMA prohibits mergers and acquis itions if they lead to a substantial restraint 
on competition.88  All planned mergers and acquisitions that exceed specified thresholds must be 
notified to the JFTC 30 days before the merger/ac quisition takes place.  The thresholds for mergers 
are:  ¥10 billion for the sum of the total assets of  one company in the transaction concerned;  and 
¥1 billion for the sum of total assets of any other party to the transaction concerned.  The AMA 
amendment bill submitted to the Diet in 2008 proposes raising these thresholds to ¥20 billion and 
¥2 billion, respectively.89   
                                                      
88 "Substantial restraint" on competition is when a ma rket structure changes as a result of a merger and 
specific companies can control the market by influenc ing variables such as price, quality, and quantity. 
89 The "sum of total assets" means the sum of the tota l assets of the company concerned and its "related 
companies". WT/TPR/S/211 Trade Policy Review 
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114. In case of mergers involving foreign companies, the thresholds are, inter alia :  ¥10 billion for 
the sum of total assets of an acquiring company90;  ¥1 billion for the total assets of an acquired 
business (from a domestic company);  and ¥1 billion fo r an entire or substantial part of business (from 
a foreign company).  As in the case of mergers, the AMA amendment bill proposes that the thresholds 
for acquisitions also be raised to ¥20 billion, ¥2 billion, and ¥2 billion (regarding the size of "sales in 
Japan"), respectively. 
115. The JFTC revised the Guidelines to the App lication of the AMA concerning Review of 
Business Combinations, in March 2007, with a view to improving predictability and transparency, and 
to speed up its merger review for enterprises.  U nder the revised guidelines, the "relevant market" is 
defined primarily on the basis of substitutability of  demand and, if appropriate, on the substitutability 
of supply;  the geographic range of the relevant ma rket can be defined beyond the territorial border.  
The guideline also introduced the Herfindahl-Hirshma n Index (HHI) and increments of HHI as "safe 
harbours" (i.e. criteria where it is normally considered that the effect may not be to restrain 
competition substantially), and clarified the factor s and the period to be considered in evaluating 
"import/entry pressures".91  
116. Excessive concentration of power, not only thr ough a holding company, but through mergers 
and acquisitions other than from the creation of a hold ing company, is also restricted by the AMA;  
holding companies not deemed to constitute an "excessive concentration of economic power" are 
permitted.92  A company must submit a business report to the JFTC within three months of the end of 
each business year if the total assets of the company and its subsidiaries exceed specified thresholds:  
¥600 billion for a holding company, ¥8 trillion for a financial company, and ¥2 trillion for other 
companies.93  In FY2007, 93 business reports were  submitted under Section 9 of the AMA 
(29 holding companies), compared with 87 (29 holding companies) in FY2006.  In FY2007, 
two holding companies notified their establishment, the same as in FY2006. 
(e) International arrangements 
117. Japan is an active participant in OECD co mmittees and working gr oups established to 
increase cooperation in competition policy.  Most of the free-trade agreements Japan has signed 
contain provisions on competition po licy;  they provide for each party under the FTA to take 
appropriate measures against anti-competitive activiti es in accordance with its  laws and regulations, 
as well as to cooperate in controlling anti-competitive activities, such as notification to the other party 
regarding enforcement activities, cooperation, coordi nation, requests for enforcement activities, and 
consideration of the other party's interests.94  Furthermore, Japan has th ree other bilateral cooperation 
                                                      
90 Total assets refer to "sales in Japan", which are calculated by adding:  (1) the sales of the foreign 
company's business offices in Japan;  and (2) the sa les of companies in which the foreign company holds 
majority voting rights. 
91 "Import pressure" is competitive pressure from suppliers outside of the relevant geographic market.  
"Entry pressure" is competitive pressu re from new entrants in the market;  it appears when parties planning a 
merger raise prices.  When these pressures are sufficien t, they will inhibit the merging parties from controlling 
the price. 
92 "Excessive concentration of economic power" is  defined in Article 9 of the AMA as a situation 
where significant effects on the national economy and impediments to the promotion of free and fair 
competition are observed due to:  (1) the overall scale of business of a company, its subsidiaries, and other companies in Japan controlled by the company by means of holding of stock;  (2) large influence of these 
companies on other enterprises due to transactions relating to finance;  or (3) the occupancy by these companies 
of influential positions over a significant number of fields of business.   
93 A newly established company that corresponds to any of these thresholds must submit a notification 
to the JFTC within 30 days of establishment.   
94 Chapter 11 of the EPA with Indonesia;  Chapter 12 of the EPA with Thailand;  Chapter 14 of the 
EPA with Chile;  Chapter 12 of the EPA with the Philippines;  Chapter 10 of the EPA with Malaysia;  Japan WT/TPR/S/211 
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agreements on anti-competitive activities:  with Ca nada (in force since October 2005);  with the 
European Communities (since August 2003);  and with the United States (since October 1999).  
(f) Enforcement 
118. An investigation into possible violations of the AMA may be initiated as a result of:  a report 
from the general public, detection by the JFTC itself, notification by the Small and Medium 
Enterprise Agency, or a report by leniency applican ts.  The AMA provides three types of measures to 
penalize and thereby deter violations of the Act:  administrative measures,  such as surcharges and 
orders to take "elimination measures" (ceas e and desist orders);  criminal penalties95, and private 
damages actions.  With the entry into force of  the amendment to the AMA in January 2006, 
administrative surcharges and penalties have been increased for, inter alia,  interference with 
inspection. 
119. In FY2007, the JFTC took legal measures against 193 entrepreneurs in 24 cases.96  I n  
addition, it received 74 leniency applications (a pplications filed between  January 2006 and May 2008 
totalled 179).  It took an average of approximately nine months for the JFTC to process cases where 
legal measures were taken.  With  regard to surcharge payment or ders, 20 orders were issued and 
¥11.3 billion were collected in FY2007 (Table III.10).97  There was one criminal accusation 
concerning bid-rigging over geological survey and location survey planning business concerning main 
forest road projects ordered by the Japan Green  Resources Agency in FY2007.  Under Section 8 −4 of 
the AMA, the JFTC continues to monitor highly oligopolistic markets, and may order measures to 
restore competition in the event of a "monopolistic situation".98  Currently (as at September 2008), 
27 industries are subject to monitoring.99 
                                                                                                                                                                     
Chapter 12 of the EPA with Mexico;  and Chapter 12 of the EPA with Singapore.  All agreements viewed at:  
http://www.mofa.go.jp and http://www.jftc.go.j p/e-page/internationalrelations/index.html. 
95 Criminal penalties currently include imprisonment of up to three years or a fine of up to ¥5 million 
for private monopolies and unreasonable restraint of trade, and imprisonment of up to two years or a fine of up to ¥3 million for international agreements constituting unr easonable restraint of trade and unfair trade practices, 
restrictions of the number of members of trade associations, and violations of final decisions by the JFTC.  
Criminal proceedings may be initiated only after an accusa tion is filed by the JFTC with the Public Prosecutor 
General.  Appeals are available with the High Courts and eventually the Supreme Court.   
96 These included 14 cases of bid-rigging, 6 cases of  price fixing cartels, 3 cases of unfair trade 
practices and a case regarding unjustly restricting the activities of constituent entrepreneurs by the trade association. 
97 FFTC online information, "Enforcement Status of the Antimonopoly Act in FY2007 (Summary)".  
Viewed at:  http://www.jftc.go.jp/e-page/pressreleases/2008/May/080521.pdf. 
98 Monopolistic situation in a par ticular industry (where the tota l output of the industry exceeds 
¥100 billion) is defined as circumstances in which all of the following market structures and "undesirable 
market performances" exist:  (1) where the share of a single entrep reneur exceeds 50% (or 75% for 
two entrepreneurs combined in a particular field of bu siness;  (2) where there exist conditions that make it 
extremely difficult for any other entrepreneurs to be newly engaged in the particular field of business;  and (3) 
where, for a considerable period of tim e (i) the increase in the price has been  remarkable or the decrease in the 
price has been slight in the light of the changes that occurred in, inter alia , the supply and demand, and 
(ii) profit or expenditure (e.g. on advertising and marketing)  is far in excess of standard levels in the industry.  
"Undesirable market performa nce" includes such factors as barriers to  entry, extraordinar y price increases and 
extremely high profit rates. 
99 The 27 industries are:  chewing gum;  beer;  whisky;  cigarettes;  polypropylene;  plastic bottles for 
beverages;  gypsum board and its products;  pig gold;   vending machines for beverages;  electric lighting 
fixtures for automobiles;  central processing units;  radiators;  shock absorbers;  air-conditioners for 
transportation machines;  contact lenses;  household TV game players;  portable ga me players;  cassettes for 
games;  fixed telecommunications services;  mobile telecommunications services;  operating software;  railway WT/TPR/S/211 Trade Policy Review 
Page 68 
 
 
Table III.10 
Enforcement of competition policy, 2004-07 
Fiscal year Details 
2004 2005 2006 2007 
A.  Cases in which legal measures were taken agai nst acts prohibited by the Anti-monopoly Act  
Number of legal measures 35 19 13 24 
Private monopolization 2 0 0 0 
Cartels 24 17 9 20 
Price cartels 2 4 3 6 
Collusive tendering 22 13 6 14 
Other types of cartela 0 0 0 0 
Unfair trading practices 8 2 4 3 
Others 1 0 0 1 
 (¥ billion) 
B.  Surcharge payment orders     
Payment order     
Number of cases 26 20 13 20 
Number of enterprise operators 200 399 119 165 
Surcharge amount (in ¥ b illion) 11.15 18. 87 9.26 11.29 
Decisions to initiate hearings 8 8 3 1 
C.  Recently processed investigation cases     
Cases investigated     
Carry-over from the previous fiscal year 38 19 18 28 
New cases begun during the current fiscal year 101 88 141 132 
Total 139 107 159 160 
Cases processed     
Legal measures     
Recommendations 35 17 n.a. n.a. 
Decision to commence hearingb (16) (3) n.a. n.a. 
Cease and desist order n.a. 2 12 22 
Surcharge payment orderc 0 0 1 2 
Sub-total 35 19 13 24 
Others     
Warnings 9 7 9 10 
Cautions 60 47 74 88 
Discontinued casesd 16 16 35 20 
Sub-total 85 70 118 118 
Total 120 89 131 142 
Carry-over to the next fiscal year 19 18 28 18 
Criminal accusations 0 2 2 1 
n.a. Not applicable. 
a Other types of cartel include restrictions on sa les volume and restrictions on business clients. 
b Figures in parenthesis are the numbers of cases where th e decision to commence hearing procedures was based on a 
recommendation. 
c Cases in which surcharge payment or ders were issued without a recommendation or cease and desist order. 
d These were discontinued due to lack of evidence of wrong-doing. 
Source:  Information provided by the Japanese authorities. 
                                                                                                                                                                     
freight;  scheduled domestic passenger flights;  wholesale of books and journals;  dust control;  medical office 
work services;  and administration of music copyright.   Japan WT/TPR/S/211 
 Page 69 
 
 
(g) Distribution measures 
120. Since its previous Trade Policy Review, Japan has made no major changes in its regulations 
on distribution.  The opening and expansion of la rge-scale retail stores is regulated by the Law 
Concerning Measures by Large Scale Retail Stores for the Preservation of the Living Environment.  The implementing guidelines for the law encourage operators to take into  consideration factors 
concerning facilities and business operations, such as adequate parking spaces and to cooperation with 
the local communities on anti-crime measures. 
121. An amendment to the City Planning Law and th e Building Standard Law, which entered into 
force on 30 November 2007, effectively decreased th e number of zones where large-scale retail stores 
(exceeding 10,000 m
2) may be established.100 
(vii) Corporate governance 
122. Under the Corporate Code (Companies Act), which entered into force on 1 May 2006, the 
boards of large companies101 (or the directors in the case of corporations without a board), must 
decide on a basic framework for their internal contro l systems and disclose a summary of this decision 
to their shareholders in their business reports;  the obligation for an internal control reporting system 
is applicable for the fiscal year of the company starting on or after 1 April 2008.  The authorities 
intend to review these measures continuously.   
123. Under the Financial Instruments and Excha nge Law, promulgated in June 2006, the 
management of listed companies must implement assessments of internal controls over financial reporting, and these assessments must be audited by certified public accountants (Internal Control 
Report System).  Furthermore, listed companies must submit annual reports certified the management (Certification Report System).  The obligations ar e applicable for the fiscal year of the company 
starting on or after 1 April 2008.   
124. Since 2006, under their listing rules, stock exch anges in Japan require listed companies to 
publish reports (on the stock exchange's website) describing their corporate governance structure, 
including:  the reasons for adopting an in-house auditor or committee-style governance structure;  
whether they have outside directors;  and whethe r they adopt any measures to prevent takeovers.   
125. The authorities maintain that Japan's Genera lly Accepted Accounting Practices (GAAP) are, 
taken as a whole, equivalent to the Internati onal Accounting Standards (IAS), while acknowledging 
limited differences in certain areas.  The authoriti es state that Japan's accounting standards are in the 
process of being integrated further into the global accounting standard (Chapter IV(5)(ii)). 
                                                     
 
100 Under the amended law, large-scale retail stores  are allowed in only three categories of zones 
(neighbourhood commercial, commercial, and quasi-industrial), compared with seven (residential, quasi-residential, neighbourhood commercial, commercial, quasi -industrial, industrial, and non-designated) prior to 
the amendment. 
101 Corporations with ¥500 million or more of capital or ¥20 billion or more of liabilities on their most 
recently audited and approved balance sheets are considered to be large companies.