RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/TPR/G/142 
17 December 2004 
 
 (04-5482) 
Trade Policy Review Body Original:  English 
 
 
 
 
 
 
 
TRADE POLICY REVIEW 
 
Report by 
 
JAPAN 
 
   
Pursuant to the Agreement Establishing the Trade Policy Review Mechanism 
(Annex 3 of the Marrakesh Agreemen t Establishing the World Trade 
Organization), the policy statement by Japan is attached. 
 
 
Note: This report is subject to restricted circ ulation and press embargo until the end of the first 
session of the meeting of the Trade Policy Review Body on Japan. Japan WT/TPR/G/142 
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CONTENTS 
    P a g e  
1. Overview of Japan's Economic Relationships 5 2. Japan in the Doha Development Agenda 5 
3. Japan's multilateral activities 7 
4. Japan's regional activities 8 5. Japan's bilateral activities 10 
6. Japan's Trade Related Assistance Schemes – TRTA - 15 
7. Japan's domestic policies 16 
Annex 1   21 
 Japan WT/TPR/G/142 
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1. Overview of Japan’s Economic Relationships 
1. Since the last trade policy review of Japan took place in 2002, there has not been any 
significant change on Japan’s basic trade policy. While Japan considers the highest priority on the 
multilateral trading system as the centerpiece of its trade policy, positive steps have been taken for the negotiations for economic partnership agreements with the countries of East Asia reflecting the 
integration of its economy to th at of East Asia. On the domestic  economic front,  the Japanese 
economy is recovering from the beginning of 2002 with a steady progress of the structural reform 
initiated by the Koizumi Cabinet (the Koizumi reforms). 
(1) The Multilateral Trade System 
2. As one of the largest trading economy in the wo rld, and as a firm supporter of free trade 
system for the growth of the world economy and the benefit of developing countries, Japan maintains 
its strong support of the non-discriminatory and rule based multilateral trading system under the 
WTO, and will continue its contri bution to the current Doha Deve lopment Agenda (DDA). The year 
2005 marks the 50
th anniversary of Japan’s accession to GATT. During these 50 years, Japan has 
joined others in lowering trade barriers, which has led to expanding world trade and has created 
opportunities for all countries to enjoy the fruits of  international trade. Japan strongly believes that 
success of the ongoing negotiations of the DDA wi ll allow members to once again reap economic 
benefits that the rule based, transparent and nondiscriminatory trade system offers. 
3. The goals set at Doha are an important part of Japan’s policies as can be seen through the 
emphasis placed on liberalizing trade in the Prime Ministers reform program. In "Basic Policies for 
Economic and Fiscal Policy Management and Struct ural Reform Summary 2004", the Prime Minister 
expresses his intent to push forward negotiations in the current round, and in his policy speech to the 
diet in January 2004, he outlined that he would ‘str ive to advance the negotiations of the new round at 
the WTO so as to maintain and strengthen the multilateral trading system’. 
4. Against this background, Japan proactively pa rticipates in a wide variety of the DDA 
initiatives, including agriculture, Non Agricultural Market Access (NAMA), se rvices, rules, trade 
facilitation, etc. Japan has been extending various ty pes of assistance to developing countries as well 
as LDCs to support the integration of these countries to the multilateral trading system. Japan 
welcomes and firmly believes that the decision of the General Council in July 2004 is the good basis 
for the well-balanced progress of the DDA. 
(2) Regional and Bilateral Trade Policy 
5. Japan is currently party to two free trade agr eements and at present is involved in several 
negotiations of free trade agreements and economic partnership agreements (FTA/EPAs). Japan 
believes that these agreements will also serves as a building block to higher trade liberalization at the 
multilateral level. Japan’s bilateral initiatives co ver areas such as investment, competition, and 
intellectual property rights. 
2. Japan in the Doha Development Agenda 
6. The Government of Japan welcomes the decision of the General Council in July 2004, in 
Geneva. This July package achieved many goals which were originally targeted to be agreed on in 
Cancun and brought the DDA back on track. The decisi on covers the important issues of not only 
Agriculture, but also the framework of the NAMA , the establishment of the negotiation of Trade 
Facilitation amongst others. It provides a good founda tion to achieve a well-balanced conclusion of 
the DDA. WT/TPR/G/142 Trade Policy Review 
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7. In the DDA negotiations, Government of Japan has the following views in the several issues: 
(i) NAMA negotiations 
8. Japan considers that the agreed framework fo r negotiations on NAMA contains the initial 
elements for the establishment of modalities and provides a basis for future negotiations. Japan 
continues to engage actively in  these negotiations for expanding  international trade through 
substantial improvement of market access for non- agricultural products to promote economic growth 
and the alleviation of poverty. 
(ii) Agriculture 
9. Japan will continue to constructively contribute to the well-balanced conclusion of the DDA.  
Japan regards the decision of the General Council in July 2004, as a base for achieving well-balanced 
result at the conclusion of the negotiations.  
(iii) Service 10. Japan regards trade in services negotiations as one of the main pillars of DDA. Same level of 
substantial liberalization is so ught as NAMA and agriculture. Ja pan submitted a comprehensive and 
highly liberalised initial offer in March 2003 and has also contribute d to negotiations through many 
proposals including those in the area of maritime, domestic regulations, and the MFN exemption 
review. 
(iv) Rules negotiation 
11. Japan has been actively participating in the negotiations on Rules. In Anti-Dumping 
negotiations, Japan, together with more than 10  members, as the group called "Friends of Anti-
Dumping Negotiations", has submitted several pr oposals such as "Prohibition of Zeroing", 
"Mandatory Lesser Duty Rule" at each meeting that has taken place. With regard to the negotiations in the field of fisheries subsidies, Japan has submitt ed a paper proposing the structure of discussion in 
June 2004, as well as a more detailed proposal in September with a view to contributing to organize 
the future negotiations in an objective manner. 
(v) Trade Facilitation 
12. The expansion of world trade more than ever necessitates a smooth, fair, transparent and 
efficient cross border procedure for movement of goods to strengthen the multilateral trading system. 
In this context, on the basis of modalities for negotiations as agreed in July 2004 General Council 
decision, Japan will constructively contribute to the negotiations for its successf ul conclusion and also 
to continue actively providing technical assistance fo r capacity building in this area in the belief that 
trade facilitation plays an important role in prom oting international trade,  thereby benefiting all 
trading parties, including the private and government sectors of developed and developing countries. 
(vi) TRIPS 
13. Japan seeks the establishment of  a multilateral system of notifications and registration of 
geographical indications for wines and spirits that would not impose excessive burdens upon Members. Japan will continue to engage in the discussion in a constructive way to establish a 
multilateral system acceptable to all Members. Japan WT/TPR/G/142 
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(vii) Environment 
14. Recognizing that members of the WTO must pa y attention to environmental concerns of 
international society, Japan has participated ac tively with a view to incorporate environmental 
concerns in negotiations and submitted proposals on this issue. In the nego tiations on environmental 
goods and services, Japan was the first member th at submitted a specific and comprehensive list on 
environmental goods, which encouraged other members to submit their specific lists. 
(viii) DSU 
15. Japan continues to seek improvements to the DS U that will serve Members' shared interests in 
enhancing compliance with trade rules and ensuring the integrity and credibility of the rules-based 
system. To this end, Japan attaches importan ce to achieve a successful outcome to the DSU 
negotiations and has been an active participant in the negotiations. 
(ix) Development 
16. The DDA should contribute to facilitate developi ng countries' integration into the multilateral 
trading system by effectively responding to interest  and concerns of developing countries, inter alia, 
paying special attention to LDC. Recognizing that developing countries, especially LDCs, have been 
facing various difficulties in comply ing with WTO rules as well as in participating in the DDA, Japan 
has been actively implementing TRTA (Trade re lated assistance scheme s) through multilateral, 
bilateral and regional frameworks in order to en able them to further en joy benefits from the 
multilateral trading system. Japan has contributed 2. 45 million CHF to the DDA Global Trust Fund 
since its foundation in 2002 and pledged one million CHF for 2004. 
17. Furthermore, Japan believes that it is essen tial for the developing and the least-developed 
countries, as well as the economies in transition, to share the benefits of the re sults of the negotiations. 
In this regard, an early conclusion of the accessi on negotiations by such applicants, in accordance 
with the WTO rules, is important in order to fac ilitate their integration into the multilateral trading 
system.  Japan shall continue to play a leading role  in supporting the accession process of such future 
members of the WTO. 
3. Japan’s multilateral activities 
(1) Generalized System of Preferences (GSP) 
18. In order to improve market access for developing countries, Japan has granted preferential 
tariff treatment under the GSP scheme since the 1st of August, 1971. In the third revision of the 
scheme which began in 2001, Japan has vastly improved it. 
19. First, when the current scheme started in the 1st of April, 2001, Japan extended the effective 
period of the scheme to the 31st of March, 2011, and introduced various measures, such as expanding 
the industrial product coverage of tariff-free and quota-free treatment for goods originating in the 
LDCs. As a result, all textile and clothing produ cts from LDCs are now duty-free and quota-free. 
20. Second, on the 1st of April, 2003, Japan added 118 agricultural products and one industrial 
product at the HS nine-digit le vel. Moreover, in accordance with the DDA, the coverage of 
agricultural and fishery products originating in the LDCs, which are applied duty-free and quota-free 
treatment, has been expanded from about 300 to 500 items. Consequently, treatment coverage is 
expected to rise from previous 83% to 93% in terms of total import value from LDCs. WT/TPR/G/142 Trade Policy Review 
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21. As of the 1st of August, 2004, 140 developing countries and 15 territories, including 47 LDCs 
which are granted special treatment, enjoy benefits  of the Japan’s trade preferences. Through above 
efforts, LDCs’ import value of qualified products in creased by roughly 25% in the last FY compared 
to the previous FY. 
(2) OECD 
22. Over the last few years, Japan has been playin g major roles in terms of both intellectual and 
organisational contributions to  various OECD activities. 
23. Intellectual input to each Committee is an important pillar of Japan’s proactive participation 
in the OECD. Recognising the significance of cro ss-border investment flows as a tool to solve 
economic imbalances in the global community, Japa n proposed in the Ministerial Council 2003 a new 
project on ‘investment for development’, which seeks ambitious outputs ranging from policy 
recommendations on the improvement of investment environments in developing economies, analyses on synergies between FDI and ODA, peer review among developing nations on the basis of 
‘framework’ produced by the OECD. The uniqueness of this project can be found in its pragmatic and 
down-to-earth approach, i.e. close involvement of  developing economies with collaboration with the 
NEPAD (New Partnership for Africa’s Developm ent). Japan strongly believes that OECD’s 
knowledge and know-how in investment will considerably contribute to the wealth-building in the developing world. Under the umbrella of this project, the OECD also launched in June 2004 a new 
initiative that specifically targets at MENA (Middle Ea st and North Africa), and in this initiative, too, 
Japan is regarded as an indispensable player.  
24. The Trade Committee is another forum where Japan is among the active participants 
submitting proposals on specific topics to the Secret ariat, and Japan’s research proposal regarding the 
impact of the emerging Chinese economy on the world trading system was broadly agreed by the 
other members of the Trade Committee. 
4. Japan’s regional activities 
25. As international economic relations have become increasingly complex due to globalization, 
there have been more cases in which countries with in a region come together to cooperate in a more 
in-depth way, in addition to re sponding through multilateral framew orks. Japan is currently taking 
part in several regional initiatives such as th e ASEAN+3 (Japan, China and the Republic of Korea), 
APEC, ASEM and cooperation among Japan, China and the Republic of Korea, in order to strengthen 
cooperation within the region. 
(1) Asia-Pacific Economic Cooperation (APEC) 
26. Japan believes that the promotion of co-opera tive economic relations among economies in the 
Asia-Pacific Region thro ugh APEC will enable the creation of an open economic community in the 
region and will stimulate world trade, thereby cont ributing to the development of the global economy. 
Japan shall continue to make its efforts towards re alising such visions by cooperating closely with 
other member economies. 
27. Japan remains actively engaged in the three main areas of APEC: trade and investment 
liberalization, facilitation (TILF) , and economic and technical co operation (ECOTECH). On trade 
facilitation, in particular, Japan has been engaged in  a wide range of related activities, aiming at the 
capacity building not only for the APEC developing member economies but also in the WTO context. Japan will hold two projects on trade facilitation as APEC contributions to the WTO negotiations: Japan WT/TPR/G/142 
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APEC Seminar on WTO Trade Facilitation held in November 2004 in Bangkok, Thailand and 
APEC/WTO Roundtable on Trade Facilitation in Geneva held in January 2005. 
28. To sustain economic growth in the Asia-Pacific  region, structural reform is one of the 
important tasks for all APEC member economie s and APEC itself and Japan has put a special 
emphasis on this issue. "Behind-the-border" reform s are necessarily to support "at the border" trade 
and investment liberalization a nd facilitation initiatives. Pursuant to the proposal put forward by 
Japan’s Prime Minister Junichiro Koizumi in Bangko k in 2003 regarding the importance of structural 
reform in the APEC region, APEC  Leaders have demonstrated a strong political commitment to 
accelerate structural reform. Japan proposed the AP EC Structural Reform Action Plan at the 2003 
Ministerial Meeting as a guiding program for steady  promotion of structural reform, in which the 
ministers adopted. Japan also hos ted the APEC High Level Conference on Structural Reform in 
September 2004, in Tokyo, as a concrete measure to implement the Plan.  
(2) Asia-Europe Meeting (ASEM) 
29. Japan believes that the enhanced economic dialogue and cooperation between Asia and 
Europe through ASEM will promote better mutual understandings between the two regions on various 
economic issues, which could lead to increased tr ade and investment between Asia and Europe, as 
well as to better coordinate world economic issues  of mutual concern such as WTO, RTA/FTA, IPR, 
etc, thereby contributing to the development of global economy. 
30. Japan attached great importance to ASEM Trade Facilitation Action Plan (TFAP) and 
Investment Promotion Action Plan (IPAP). Japan has been an Asian Facilitator of TFAP customs 
procedure working group and an Asian IPAP Shepherd. It also has a strong interest in the fields of standard and conformity assessment, customs procedures, e-commerce and intellectual property rights 
enforcement, and made various contributions at the TFAP meetings in these areas.  
31. Japan hosted the "ASEM Symposium on Multilateral and Regional Economic Relations" in 
March 2003 and "ASEM Public Private Partnership Seminar" in May 2004 in Tokyo. It also 
expressed a strong interest in enhancing dialogue and co-operation in and between Asia and Europe 
on WTO/DDA negotiations and sent senior-level  representatives to the ASEM WTO Experts 
Meetings in January and June 2003. Involvement of the business community in ASEM is another key 
area where Japan actively dealt with over the past two years. 
(3) ASEAN+3 
32. The 17 short-term measures and 9 mid and long-term measures in the Final Report of the East 
Asia Study Group (EASG), endorsed by the Leaders at the ASEAN+3 Summit in 2002 with a view to 
promoting and developing regional cooperation in East Asia, has been implemented in the ASEAN+3 
framework. Japan has implemented one of the EASG measures, "Establish GSP status and 
preferential treatment for the least developed c ountries", and extended duty-free and quota-free 
treatment to 47 LDC countries. 
33. With regard to another EASG measure "Foste r an attractive investment environment for 
increased foreign direct investment", Japan has c oncluded investment agreements with the Republic 
of Korea and Vietnam, and has been consulting with  some ASEAN countries on investment as one of 
the main areas of liberalization in its EPA ne gotiations. The Japan-Singapore Economic Agreement 
for a New Age Partnership (JSEPA) also aims at lifting regulations on investment. WT/TPR/G/142 Trade Policy Review 
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(4) Japan, China, Korea 
(i) Tripartite Cooperation among Japan, the People’s Republic of China and the Republic 
of Korea 
34. The heads of the government of Japan, the Peopl e’s Republic of China and the Republic of 
Korea reached an agreement to launch the joint research on economic cooperation among three countries at the ASEAN+3 Summit held in Manila , the Philippines in November 1999. Based on this 
agreement, the institutes representing the thre e countries, the National Institute for Research 
Advancement (NIRA) for Japan, the Development Research Centre of the State Council (DRC) for 
China and the Korea Institute for International Economic Policy (KIEP) for Korea, have undertaken 
the Trilateral Joint Research Project since 2001 to  provide policy recommendations to the three 
governments. 
35. Up to present, the three institutes have jointly formulated three sets of policy 
recommendations concerning the promotion of trade an d direct investment in the region. They were 
submitted to the heads of the government of the three countries at the meetings held during the ASEAN+3 Summit in Bandar Seri Begawan, Brunei in November 2001, Phnom Penh, Cambodia in November 2002 and Bali, Indonesia in October 2003. 
36. The heads of the three countries issued the "J oint Declaration on the Promotion of Tripartite 
Cooperation among Japan, the People’s Republic of China and the Republic of Korea" in 
October 2003.  
(ii) Trilateral investment arrangement 
37. As part of Tripartite Cooperation betwee n the three countries, the heads of the 
Government/State of Japan, the People’s Republic of China, and Republic of Korea agreed in 
October 2003, in Bali, Indonesia, to launch an informal joint study group on the possible modality of 
trilateral investment arrangements, composed of representatives from the government, business, and 
academie arena. Its role was to intensively discuss a wide range of issues encompassing (1) the 
current situation of FDI and its future, (2) enhancem ent of relevant rules and their implementation , 
and (3) improvement of business environments with the intention to take further steps to promote 
inward foreign direct investment (IFDI) for the growth of each domestic economy. 
38. The Joint Study Group reaffirmed the importance  of IFDI for the growth of each domestic 
economy and the need to take further steps to increase trilateral investment by improving the business 
environment and strengthening the relevant invest ment arrangements in regard to domestic and 
international rules. 
39. The Joint Study Group also recognized the importance of taking immediate actions to 
improve the business environment and establish a mechanism to follow up on the implementation of 
measures and to produce additional measures fo r the improvement of business environment with 
inputs from the business sector. They also reached a consensus that a legal framework concerning 
investment among the three countries should be explored in a timely manner. 
5. Japan’s bilateral activities 
(1) FTA/EPAs  
40. Maintaining and strengthening the multilateral trading system under the WTO has been the 
main pillar of Japan’s external ec onomic policy. At the same time, Japan has recently come to place Japan WT/TPR/G/142 
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more emphasis than before on its regional and bilateral trade policies pa rticularly with economic 
partnership agreements including elements of free trade agreements, as a means of complementing the 
multilateral trading system. 
(i) Singapore 
41. The Japan-Singapore Agreement for a New Age Economic Partnership (JSEPA), which 
entered into force on November 30, 2002, aims at , not only further liberalizing and stimulating 
bilateral trade and investment, but also further st rengthening bilateral econ omic ties between Japan 
and Singapore in the variety of fields. After the JSEPA came into effect on November 30, 2002, the 
amount of trade in several goods for which tariff ba rriers have been removed under the agreement, i.e. 
beer from Japan to Singapore and medicines and plas tics from Singapore to Japan have also increased 
substantially. In addition, the Joint Committees u nder the JSEPA were held in 12 fields to date 
covering customs procedures, mutual recogniti on, trade and investment promotion, etc. 
42. Based on the progress above, the Joint Statemen t adopted at the JSEPA Ministerial Review 
Meeting in December 2003 confirmed that the JSEPA has contributed to further strengthening 
economic relations between Japan and Singapore since its conclusion. 
(ii) Mexico 
43. The "Agreement Between Japan and The United Me xican States for the Strengthening of the 
Economic Partnership" was signed by Prime Minister  Koizumi of Japan and President Fox of Mexico 
on the 17th of September, 2004.  
44. The essence of this Agreement is summarized as  follows; (i) to strengthen an economic 
partnership between two countries by enhancing fr ee cross-border trade of goods, services, capital and 
business persons, and investment liberalization, (ii) to promote a comprehensive economic partnership 
including such areas as competition policy, impr ovement of the business environment, human 
resources development and support for small and medi um enterprises, and (iii) to make the most of 
the economic complementarities of the two par ties and to further strengthen their economic 
relationship. With this Agreement, custom duties on goods representing 96% of total bilateral trade 
will be eliminated. 
(iii) The Republic of Korea 
45. At the Japan-ROK Summit Meeting in March 2002, the two countries decided to establish an 
industry-government-academia linked research group (the Japan-Korea FTA Joint Study Group). 
From the following July to October 2003, the group met eight times and compiled a report, which said 
that Japan and the ROK recognized the Japan-ROK FTA would be mutually beneficial and 
recommended that both governments launch negotiations  at an early date with a view to concluding a 
comprehensive FTA. 
46. At the Japan-ROK Summit Meeting held in Bangkok on the 20th of October, 2003, Japan and 
the ROK decided to begin negotiations in 2003 for concluding a FTA, aiming at its conclusion in 
substance in 2005. The framework of negotiations was agreed at the first round of negotiations held in 
Seoul on the 22nd of December, 2003. When Prime Minister Koizumi of Japan held a summit meeting 
with President Roh Moo Hyun of the ROK in July 2004, both leaders reaffirmed that they would aim 
at concluding the agreement in substance in the year of 2005. WT/TPR/G/142 Trade Policy Review 
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(iv) Malaysia 
47. The Leaders of both countries decided, at the Japan-Malaysia Summit Meeting in 
December 2003, that they would begin the negotia tions for the conclusion of the Japan-Malaysia 
Economic Partnership Agreement in early 2004, aiming to conclude it within a reasonable period of 
time. In the following month, the two countr ies held their first round of negotiations. 
(v) The Philippines 
48. At the Japan-Philippines Summit Meeting in December 2003, held in Tokyo, the Leaders 
decided that they would begin the negotiations fo r the conclusion of the Japan-Philippines Economic 
Partnership Agreement in early 2004 aiming to co nclude it within a reasonable period of time. The 
first round of the negotiations was held in February 2004. 
(vi) Thailand 
49. At the meeting between prime ministers of Japan and Thailand in December 2003, the 
Leaders decided that they would begin the negotiations for the conclusion of the Japan-Thailand 
Economic Partnership Agreement in early 2004 aiming to conclude it within a reasonable period of 
time. The first round of the negotiations was held in February 2004, in Bangkok. 
(vii) ASEAN 
50. In January 2002, Prime Minister Koizum i proposed an "Initiative for Japan-ASEAN 
Comprehensive Economic Partnership" and extensive discussions and considerations were made in 
various meetings such as the Japan-ASEAN Forum with respect to materialization of this initiative. At 
the Japan-ASEAN Summit Meeting held in October 2003, the Leaders signed the "Framework for 
Comprehensive Economic Partnership (CEP) between Japan and the Association of South East Asian 
Nations", where Japan and ASEAN decided to st art the consultations on the Japan-ASEAN CEP on 
the liberalization of trade in goods, trade in servi ces, and investment, from the beginning of 2004. In 
the Framework, Japan and ASEAN also decided to make maximum efforts to commence the 
negotiation on the CEP Agreement between Japan and ASEAN as a whole from the beginning of 
2005, taking into account the achievements of bilateral negotiations between Japan and each ASEAN 
Member State, and the further progress of the AS EAN integration process. Following the continuous 
intergovernmental consultations between Japan a nd ASEAN under the Framework, the Minister of 
Economy, Trade and Industry of Japan and the ASEAN Economic Ministers agreed, in September 
2004, to recommend to the Leaders that Japan an d ASEAN should commence the negotiation on the 
Japan-ASEAN CEP Agreement in April 2005. 
(2) Japan’s bilateral activities besides FTAs 51. Besides negotiations on FTAs, Japan is invo lved in economic initiatives with several 
countries. Through such bilateral frameworks, Japan aims to deepen the understanding of each others 
trade and economic policies, to prepare a channe l which will help to remedy trade problems 
beforehand, to stimulate deregulation and liberal ization both ways, and to create the political 
momentum to liberalize trade which will help in  complementing and reinforcing the multilateral 
trading system. 
(i) Relations with the United States 
52. Under the "Japan-U.S. Economic Partnership for Growth" (hereinafter "Partnership"), 
established by Prime Minister Koizumi and Presiden t Bush in June 2001, Japan and the United States Japan WT/TPR/G/142 
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have been engaging in comprehensive and constructi ve dialogues. The Partnership comprises of six 
fora: Sub cabinet Economic Dialogue; Private Sector/Government Commission; Regulatory Reform and Competition Policy Initiative (hereinafter "Reform Initiative"); Financial Dialogue; Investment Initiative; and Trade Forum. Under these frameworks, a number of meetings have been convened to 
address a wide variety of issues that contribute to  promoting sustainable growth of not only the two 
countries but also the entire world economy. 
53. Under the Reform Initiative, in particular, th e Governments of Japan and the United States 
have concluded and publicized three extensive repo rts to the two leaders, the latest of which was 
submitted to the leaders on the 8
th of June, 2004. The Reform In itiative cover telecommunications, 
information technology, medical devices and pharma ceuticals, financial services, energy, competition 
policy, transparency and other government practi ces, legal system reform, commercial law revision, 
distribution, consular affairs, and trade and invest ment-related measures. These reports are the most 
tangible results of Japan-U.S. b ilateral economic consultations, whic h include a number of measures 
taken by the two governments that facilitate two-way trade and investment. 
54. Japan and the United States recently concluded or signed two epoch-making bilateral 
agreements that further promote two-way investment by reducing costs incurred. 
55. One is the revised Japan-U.S. Tax Convention (new Tax Treaty), which was signed on the 6th 
of November, 2003, and entered into force on the 30th of March, 2004. The new Tax Treaty exempts 
from taxation (a) dividends earned by U.S./Japanese subsidiaries in which the Japanese/U.S. parent 
firm has a stake of more than 50 percent, (b) intere st paid to financial ins titutions, and (c) royalties, 
for all of which 10 percent tax was/is imposed. Ja pan will model this treaty in negotiating new tax 
treaties or revising existing ones with other countries. The new Tax Treaty began to be applied to withhold tax on the 1
st of July, 2004, and will be applied to th e other taxes as regards income for any 
taxable year beginning on or after the 1st of January, 2005. 
56. The second is the Japan-U.S. Social Security Agreement, signed on the 19th of February, 
2004, which covers the prevention of the double payment of pensions and health insurance premiums as well as adding up the periods for which a person has paid social security contributions in both 
countries in order for the person to be entitled to pensions in one or both country(ies).  The Agreement 
passed the Diet on the 3
rd of June, 2004, and is now under the process required to give effect to it in 
the U.S. A rough estimate calculates that the Ag reement, once coming into force, will reduce the 
amount of insurance premiums paid by workers of the respective countries residing in the other 
country by JPY 65 billion (approximately USD 590 million) in total per year. 
(ii) Europe 
57. The EU has recently become one of the bigges t investors to Japan. In pursuit of further 
strengthening of its economic relations including trade and investment, the Government of Japan has been working on the following effort s with the EU as well as with individual European countries at 
the bilateral level. 
58. With regard to the economic relations betwee n Japan and the EU, the leaders from both sides 
issued "Cooperation Framework for Promotion of Japan-EU Two-Way Investment" at the Japan-EU 
Summit held in June 2004, aiming at the dialogue and cooperation between regulatory authorities, improvement of the investment environment on both sides, and cooperation on investment promotion. 
At the same venue, both sides addressed emerging  agendas in the field of IPR and ICT, issuing 
"Japan-EU Joint Initiative for the Enforcement of Intellectual Property Rights in Asia" and "Joint 
Statement on Cooperation on Information and Communication Technology" to promote further 
cooperation between them. On various occasions including the annual Japan-EU Regulatory Reform WT/TPR/G/142 Trade Policy Review 
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Dialogues, both sides conducted wide-ranging consultations on issues of their interest, such as 
regulatory transparency, financial services, competition policy, environmental regulation, ICT, work and residence permits. In terms of the competition policy, the agreement between Japan and the EC 
on cooperation on anti-competitive activities was co ncluded in July 2003, and came into force in 
August, 2003. 
59. On the bilateral economic front with individual European countries, the Government of Japan 
has been engaged in negotiations for the conclusion of agreements on social security with France 
since September 2002, and with Belgium since October 2003, in order to resolve the double payment 
of social security contributions. Furthermore, sinc e June 2004, the Government of Japan has entered 
into the negotiations with the Netherlands to review their tax convention responding to the changes of 
their economic circumstances. Besides, the Govern ment of Japan held bila teral economic and trade 
consultations with Switzerland and Ireland in June 2003, and Finlan d and Sweden in November 2003, 
aiming at discussing the international economic de velopments and bilateral economic issues between 
them. 
(iii) China 60. At the summit meeting held between Japanese Prime Minister Koizumi and Chinese Premier 
Zhu Rongji on the occasion of the Boao Forum for Asia in April 2002, the two leaders agreed to 
establish the Japan-China Economic Partnership Consultation for the purpose of identifying possible 
economic disputes at an early stage and preventing  disputes between the two countries, as well as 
further strengthening mutually comple mentary bilateral economic relations.  
61. Japan and China held the first meeting of the Japan-China Economic Partnership 
Consultation, at deputy minister ial level, in Beijing on the 15
th of October, 2002, and the second 
meeting in Tokyo on the 31st of October, 2003. Also, its follow-up meeting was held at Deputy 
Director General level, in Beijing on the 11th of March, 2004, and in Tokyo on the 28th of June, 2004. 
Related ministries and agencies also participated in these meetings. 
62. In the Consultation, Japan and China actively exchanged opinions regarding concerns such as 
the issues of intellectual property rights (inc luding damages resulting from counterfeit goods), 
difficulties related to investment in China, anti-du mping measures adopted by China, and pesticide 
residue on agricultural products from China. Japan-China co-operation in the international economy was also discussed in the meetings. 
(iv) Australia 
63. Japan and Australia enjoy one of the most successful economic partnerships in the Asia-
Pacific region. The economic relationship of both countries has developed on the basis of 
complementary interests and cooperation in a wide range of areas. 
64. On the 16
th of July, 2003, Prime Minister Junichir o Koizumi of Japan and Prime Minister 
John Howard of Australia signed the Australia-Japan Trade and Economic Framework (TEF) in 
Tokyo. In the TEF, both countries committed to  work towards the liberalisation of trade and 
investment between two countries on a balanced and comprehensive basis through various avenues. 
The TEF was the product of the bilateral consultations which has been conducted since May 2002, to explore all options for deeper economic linkages between two countries.  
65. Under the TEF, both countries committed to unde rtake a joint study to examine the costs and 
benefits of the liberalization of trade in goods  and services and invest ment between Japan and 
Australia. At its second meeting on the 9
th of September, the Joint Consultative Committee on Trade Japan WT/TPR/G/142 
 Page 15 
 
 
and Investment (JCC) confirmed the progress on the joint study and followed up the implementation 
of the TEF. Another element of the TEF was the fo rmation of the JCC. This  senior-official-level 
committee is charged with overseeing the implementation of the TEF, including the joint study. At its first meeting on the 1
st of December, 2003 in Tokyo, the JCC agreed on the outline for the joint study 
and the formation of the Joint Study Working Grou p to oversee its drafting. The Joint Study Group 
meetings were held three times by September 2004 , in an effort to conclude the joint study by 
July 2005. 
(v) Africa  
66. Japan has been making various efforts to foster  trade and investment between Asia and Africa 
through the Tokyo International Conference on Af rican Development (TICAD) process. In this 
context, Japan hosted the TICAD Asia-Africa Trade and Investment Conference (AATIC) as a sector-focused TICAD conference from the 1
st and 2nd November, 2004, in Tokyo. AATIC aimed at 
contributing to sustainable and self-reliant developm ent of Africa through the promotion of trade and 
investment between Asia and Afri ca. The participants shared the basic idea on poverty reduction 
through economic growth, confirmed the possibility to promote trade and investment between Asia and Africa, identified the issues surrounding trade and investment, etc. At the closing session of 
AATIC, the document "TICAD-NEPAD Joint Policy Framework for the Promotion of Trade and 
Investment between Africa and Asia" wa s approved between TICAD and NEPAD. 
(vi) MERCOSUR 
67. In order to strengthen the Japan-MERCOSUR ec onomic relationship and also to ensure its 
future development, the 5
th Japan-MERCOSUR Senior Official Mee ting was held in Brazil in October 
2002 and the 6th in Japan in June 2004. During these meetings, various views were exchanged on 
trade and investment promotion, and economic and technical cooperation.  
68. With regard to a bilateral agreement at th e economic sphere, a tax treaty was concluded 
between Japan and Brazil in 1967. No new agre ement has been made from 2002 through 2004. 
6. Japan’s Trade Related Assistance Schemes - TRTA - 
69. Japan provides technical assistance to develo ping countries in the field of trade policy 
development through various channels. Among them, JICA (Japan International Cooperation Agency) 
is one of major implementing agencies in this area. 
70. With its ultimate goal of economic growth in developing countries, trade related cooperation 
toward these countries is a typical form of growth -oriented cooperation. It is important that such 
cooperation builds the capacity of the developing countri es to establish their trade related policies and 
institutions and to implement them on their own. 
71. For effective capacity building, the following points are important: 
Comprehensive approach  
72. It is now widely recognized that cooperation should be designed in a comprehensive manner, 
paying attention to not only "at- the-border issues" but "behind-the-border issues". Japan, in 
implementing technical cooperation, is more concer ned with helping developing countries build their 
domestic policies and institutions consistent with international rules as represented by the various 
agreements under the WTO. In other words, instea d of holding trade and investment promotion itself 
as an objective, it is important to consider th ese economic activities as tools for development. WT/TPR/G/142 Trade Policy Review 
Page 16 
 
 
Ownership and process-oriented approach  
73. Not only involving various stakeholders in both public and private sectors, but also their vital 
participation and ownership are indispensable. Form ulating consensus among them is also a necessary 
step. 
Needs-based approach  
74. The needs for trade related assistance varies with each country’s conditions such as its stage 
of development and its economic structure. It is ke y that the cooperation is tailored to each developing 
country’s needs in order to ensure developing country’s ownership and obtain good results. 
75. Example of technical assistance through JICA is shown in annex 1. 
7. Japan’s domestic policies 
(1) Koizumi reforms – no gains without reforms – 
76. Japan has proactively been reforming its economic structure with the aim of moving toward 
self-sustained economic recovery. After a series of measures on economic structural reform, which 
are elaborated in the previous Government Report prepared for Japan’s Trade Policy Review in 2002, 
were initiated by the Council on Economic and Fiscal policy, the government took the initiative to position the period between FY2002 and FY2004 as a concentrated adjustment period. During this period, the government has aimed to proactively execute reforms as well as to solve the issue of non-
performing loans, and has been tackling reforms aimed at overcoming deflation and bringing about 
sustainable economic growth led by private demand. As a result, the structural reform implemented 
thus far such as the steady progress in disposal of non-performing loans, br oad range of efforts for 
regulatory reform, reorganization and revitalization of  corporations, promotion of expenditure and tax 
reform and others have together combined to achie ve comprehensive results in eliminating the factors 
that have suppressed the Japanese economy since the burst of the bubble economy. 
77. Against this background, the "Basic Policies for Economic and Fiscal Management and 
Structural Reform 2004" has been adopted by the Cabinet decision and the two year period between 
FY2005 and FY2006 is determined to be the "conc entrated consolidation period". The Government 
aims to overcome deflation through its policy efforts together with the Bank of Japan, and to focus on 
consolidating the fundamentals for new growth. 
78. The major tasks of the "concentrated consolidati on period" are as follows: the first task is to 
implement thoroughly the principle of "from public sector to private sector" and "from the state to the 
regions", the second is to implement a full-fledged budgetary system reform of the government sector 
("public sector reform"), the third is to conduct reform to boost growth potential in the private sector ("private sector reform"), the forth is to make efforts for fundamental enhancement of "human 
resources", and the fifth is to ensure "sustainable safety and reassurance". 
(2) Regulatory reform 
79. In FY2003, Council for Regulatory Reform made "Action plan for the promotion of 
regulatory reform’’ and tackled the regulatory problems intensively. As a result, reforms have 
progressed on some important issues such as "Sale of pharmaceutical products in regular retail stores". Japan WT/TPR/G/142 
 Page 17 
 
 
80. To further promote regulatory reform, the Council for the Promotion of Regulatory Reform 
(CPRR) was established in April 2004, for formation of a private-sector body of experts in this area. 
In May 2004, the Headquarters for the Promotion of Regulatory Reform with Prime Minister as the 
head of the body was established to give a politi cal impetus to reform. The Headquarters and the 
Council will keep the close relationship and become so -called "the inseparable wheels of a vehicle" as 
to roll and promote the regulatory reform. 
81. FY2004’s top priority task is the "opening of  government-driven markets to the private 
sector". On the 3rd of August, 2004, the Interim Summary ("Realization of a Private Sector-led 
Economic Society" through the Opening of Government-driven Markets for Entry into the Private 
Sector) was published. 
82. Prime Minister Koizumi also established the Headquarters for Special Zones for Structural 
Reform in July 2002, declaring that the zones would be a central pillar of his regulatory reform 
agenda. Prime Minister and his Administration make the Special Zones for Structural Reform a 
priority component of Japan’s economic revitalizatio n plan. In the zone process, domestic and foreign 
companies alike have equal opportunity to submit zone proposals, to have those proposals approved, and to operate in the zones. The Government of Japan is taking necessary steps to ensure that successful zones have the largest economic impact  on the greater Japanese economy, including the 
application of successful regulatory exemptions  in the Special Zones on a national basis as 
expeditiously as possible. 
83. Japan’s efforts for regulatory reform are highly  evaluated at multilateral economic fora.  For 
example "OECD Reviews of Regulatory Reform: Ja pan’s Progress in Implementing Regulatory 
Reform (July 2004)" positively mentions a number of regulatory reform measures that have been 
accomplished through strong political leadership.  
(3) FDI into Japan 
84. Japan’s ratio of inward FDI stock to nominal GDP is lower than those of US and European 
countries. According to IMF statistics, the ratio in  2002 was only 2.0% in Japan, while it was 19.3% 
in the US, 37.8% in the UK, and 26.3% in Germany. To  attend to this situation, in the General Policy 
Speech of the 31st of January, 2003, Prime Minister Junich iro Koizumi outlined the Government of 
Japan’s plan to increase inward FDI in the cont ext of "Japanese Economic Rebirth and Investment 
Appeal": 
"Foreign direct investment in Japan will bring new technology and renovative management 
methods, and will also lead to greater employ ment opportunities. Rather than seeing foreign 
investment as a threat, we will take measures to  present Japan as an attractive destination for 
foreign firms in the aim of doubling the cumulative amount of investment in five years." 
85. In March 2003, the Japan Investment Council announced "the Program for the Promotion of 
Foreign Direct Investment into Japan." The Prog ram includes 74 measures to reduce impediments to 
inward FDI under the following five categories: (i ) Provide information on investment opportunities 
in Japan, (ii) Improve the business environment,  (iii) Create favorable employment and living 
environments, (iv) Review administrative procedures, and (v) Enlarge the role of local governments in 
attracting FDI. Based on this Program, the Government  has taken such steps as establishing the single 
contact and information offices of "Invest Japan" and improving investment environment through the 
Special Zone. WT/TPR/G/142 Trade Policy Review 
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(4) Intellectual Property Right (IPR) 
86. On the 4th of February, 2002, Prime Minister Ko izumi expressed his determination to 
establish IP strategy in his general policy speech at  the Diet. Based on this initiative, the Strategic 
Council on Intellectual Property was inaugurated in March 2002. In July 2002, it adopted the 
Intellectual Property Policy Outline in which the ba sic principles and policies were articulated 
including a recommendation for a new legislation focused on IP.  
87. The Basic Law on Intellectual Property, based on the Intellectual Property Policy Outline, 
was enacted in November 2002. Under this law, the Intellectual Property Policy Headquarters was 
established in the Cabinet Secret ariat in March 2003. The Headquarters decided on the strategic 
Program for the Creation, Protection and Exploitati on of Intellectual Property in July 2003, which 
consists of about 270 items of measures to be implemented by ministries and agencies concerned 
under the idea of promptly creating an internationally viable system. 
88. In May 2004 the Headquarters established "Intellectual Property Strategic Program 2004" 
which added new measures and challenges to the previous program. These Programs include such as Amendment of the Customs Tariff Law to strengt hen measures against Counterfeits and Pirated 
Copies, Amendment of the Unfair Competition Preven tion Law to protect Trade Secret criminally, IP 
High Court Law to handle IP-related cases specially and Amendment of the Patent Law for the 
Promotion of Expeditious Patent Examination. 
(5) Financial Reform 
89. Japan is committed to improving open and sound insurance markets. Insurance Business Law 
was amended in 2001 and 2003, to enable insurance companies to engage in broader lines of business 
through subsidiaries and to act as an agent for those in other financial businesses. Japan is equally 
committed to promoting transparency in its regulato ry regime. In 2002, Ordi nance of the Insurance 
Business Law and the Guideline for Supervision of  Insurance Companies were amended to approve 
simple and standardized insurance products w ithin 60 days after application or filing.   
90. In the banking sector, "Program for Financial Re vival (PFR)" was established in 2002 to end 
the non-performing loan (NPL) problem by lowering the NPL ratio of the major banks to a 4% level 
by the end-March 2005. Various measures were introduced to achieve the goal of the PFR. The NPL 
ratio of the major banks has decreased from 8.4% as of end-March 2002 to 5.2% as of end-
March 2004.  
91. In addition, "Program for Promoting Securitie s Markets Reform" in 2002 was introduced to 
enable the securities markets to play a central role in the Japanese financial system. Various measures 
such as the introduction of common space sharin g between banks and securities companies and the 
expansion of securities sales channels by intr oducing sales agent business for brokerage houses 
(Shoken-Chukaigyo) were implemented. 
(6) Telecommunications policy 
92. In telecommunications sector, Japan has continuously carried out various regulation reforms 
and the measures to promote fair competition, including the amendment of Telecommunications 
Business Law, since 2002. As a result, many more new telecommunications carriers have entered the 
telecommunications market and consumers’ benefit ha s been improved (such as sharp rate reduction, 
diversification and deve lopment of services) through the competition among telecommunications 
carriers. Japan WT/TPR/G/142 
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(7) Agricultural reform 
93. In January 2004, the Council on Food, Agriculture and Rural Areas, comprised of members 
from academics, producer cooperatives, food industry as well as consumers and journalists, started the 
discussion on a new Basic Plan on Food, Agriculture and Rural Areas, which is to be decided by the Cabinet in March 2005. 
94. The interim report by the Council, published in the 10
th of August, 2004, reiterates the 
importance of targeted approach, i.e., that the government’s support should be concentrated on core 
farmers in order to accelerate the structural reform in the agricultural sector. The report proposed that the current farm management stabilisation programs on various products should be reviewed to target 
farmers more and that the farmland legislations should be reviewed in order to facilitate the 
enlargement of those farm managements. It also  recommended that all the agricultural production 
should be made more environmentally-friendly by  incorporating environmental requirements in 
various government programs, and that the measures should be introduced, beginning with 
demonstration programs, to encourage community-based management activities for the improvement of rural natural resources.   
95. The Council is to continue the discussion on the issues mentioned above and other issues 
including food safety and new technology, befo re submitting a final report in March 2005. 
(8) Competition Policy 
96. The implementation of structural reforms to ac hieve an economy based on market principles 
is urgent in Japan. Thus, the Fair Trade Commission (FTC) is considering amending the Anti-
monopoly act (AMA), which is a comprehensive review of its enforcement system. The draft by the 
FTC includes review on the surcharge system, introduction of a leniency program into the surcharge 
system, introduction of compulsory measures for criminal investigations, upgrade of penal regulations 
and review on hearing procedures. This bill was su bmitted to the extraordinary Diet session in 2004. 
97. In order to reinforce the FTC role to serve as  the guardian of the market and to establish 
competition policies appropriate for the 21st century, the number of personnel in the FTC has 
increased, being assigned mainly to the investigation section. In this context, the FTC established the 
competition policy research center which is not only  effective for practicing policies as a short term, 
but also for strengthening the basic ideas on implementing the AMA, planning, evaluating the 
competition policies as a mid-long term. This is a ccomplished by the collaboration between outside 
researchers and the FTC staffs, thus it aims to create the functional an d continuous collaborative 
platform. 
98. The FTC has been taking rigorous legal actions for the violations of the AMA. The number of 
legal cases regarding such violations was 37 in 2002 and 25 in 2003. Details of these cases can be 
found below. WT/TPR/G/142 Trade Policy Review 
Page 20 
 
 
 2002 2003 
Private Monopolization 0 1 
Bid-rigging 30 14 
Cartels (excluding bid-rigging) 3 3 
Unfair Trade Practices 3 7 
Others 1 0 
Total Cases 37 25 
99. The amount of the surcharge payment orders over the last two years has been estimated at a 
total amount of around ¥10.9 billion (equivalent to about US$120 million). Of that amount, some 
cases, totalling approximately ¥2.7 billion (about US $30 million), were nullified due to the initiation 
of hearing procedures. Japan WT/TPR/G/142 
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Annex 1 
(1) WTO Seminar (in-country)  
For WTO Members 
 Country Period 
1. India 2000.4 – 1week 
2. Egypt 2001.3 – 2 weeks 
3. 2002.12 – 2 weeks 
4. Philippines 
2003.12 – 2 weeks 
5. Malaysia 2000.11 – 1 week 
6. 1999.3 – 1 week 
7. Mongolia 
2000.3 – 1 week 
8. Latvia 1999.9 – 2 weeks 
9. China 2003.4 – 2004.7 
For Observers and interested countries 
 Country Period 
1. 2001.12 – 1 week 
2. 2002.12 – 1 week 
3. Cambodia 
2003.9 - 1 week 
4. 1999.8 – 2 weeks 
5. 2003.3 – 2 weeks 
6. Kazakhstan 
2003.4 – 1 week 
7. 1997.4 – 3 weeks 
8. 1999.3 – 2 weeks 
9. 2002.3 – 1 week 
10. 2001.12 – 1 week 
11. 2003.3 – 1 week 
12. 2002.11 – 1 week 
13. 2003.9 – 1 week 
14. 2003.11 – 1 week 
15. Viet Nam 
2004.6 – 1 week 
16. 1999.4 – 1 week 
17. Saudi Arabia 
1999.11 – 1 week 
18. Iran 2004.8 – 1 week 
 WT/TPR/G/142 Trade Policy Review 
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(2) Training Programs in Japan 
For APEC Region 
Participating countries:  Indonesia, Thailand, Philippines, Malaysia, Viet Nam, Lao PDR, Cambodia, Myanmar, Peru 
 Year Topic 
1. 2002 – (2004) Trade Remedy Laws 
2. 2002 – (2004) TBT 
3. 2002 – (2004) Agriculture/SPS 
For China 
 Year Topic 
1. 2000 Insurance 
2. 2000 Agriculture 
3. 2001 Culture, Audio-visual, Publishing 
4. 2001 Accounting, Legal sector 
5. 2002 Transport 
6. 2002 Merchandize 
7. 2002 Certification 
For WTO Members 
 Invited countries Year Topic 
1. 2000 Implementation of agreements, DSU 
2. 2001  
3. 2002  
4. General 
2003  
5. Jamaica 2002 Implementation of agreements, DSU 
6. Lithuania 2002 Implementation of agreements, DSU 
7. 2002 Valuation agreement, Post clearance audit 
8. Philippines 
2003  
Table (cont'd) 
 Japan WT/TPR/G/142 
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For Observers 
 Invited countries Year 
1. Cambodia 2001 
2. Kazakhstan 2001 
3. Kazakhstan, Azerbaijan 2003 
4. 1999 
5. 2000 
6. Viet Nam 
2001 
7. Saudi Arabia 2000 
8. 1998 
9. 1999 
10. Georgia (then observer) 
2000 
11. Ukraine (2004) 
(3) Training Programs (out of Japan) 
Joint seminar with WTO Secretariat 
 Invited Countries Period at Topic 
1. 21 African countries 
 (in English) 2002.11 Geneva  
2. 14 African countries 
 (in French) 2003.6 Geneva  
3. All Africa 2003.5 Kenya  
Joint Seminar with Government of Egypt 
 Invited Countries Period at Topic 
1. All Africa 2003.2 Egypt Investment, Competition 
(4) Integrated Capacity Build ing project in APEC region 
 - Period:   2001.8-2004.3  - Target countries: Thailand, Indonesia, Malaysia, Philippines 
 - Coverage 
Topic Thailand Indonesia Malaysia Philippines 
Information Sharing System o o – o 
Agriculture, SPS – – o o 
DSU/CVD o o o o 
GATS o o – o 
TRIPS o o o – 
TBT o o o o 
__________