WORLD TRADE
ORGANIZATIONWT/TPR/M/76/Add.1
13 février 2001
(01-0663)
Trade Policy Review Body
14 and 16 November 2000
TRADE POLICY REVIEW
JAPAN
Minutes of Meeting
Addendum
Chairperson: H.E. Dr. Iftekhar Ahmed Chowdhury (Bangladesh)
Page
ANNEX I ADVANCE WRITTEN QUESTIONS 3ANNEX II JAPAN'S RESPONSES TO QUESTIONS POSED AT ITS
WTO TRADE POLICY REVIEW 63WT/TPR/M/76/Add.1
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ANNEX I
ADVANCE WRITTEN QUESTIONS
ARGENTINA
1. During the period 1997-1999, Japan frequently applied special safeguard measures (SSG).
As the purpose of the SSG mechanism is to prevent a rapid increase in imports that distorts domestic
markets, could Japan please explain what conditions in the markets for products such as wheat flour
and milk made it necessary to apply the SSG?  Japan has also applied the SSG to specific products ina "basket of quotas".  Could Japan please explain how this measure complies with the provisions of
the Agreement on Agriculture?
2. Regarding the application of tariff quotas, please provide further information on the "own
capital" requirement to be met by importers in order to be able to obtain a share on fair terms.
3. In March 1999, the Dispute Settlement Body approved the conclusions of the Panel and the
Appellate Body on the dispute "Japan – Measures Affecting Agricultural Products".  Although Japan
announced in December last year that the testing requirement for plant varieties applicable to eight
products was abolished, it is still holding consultations with the United States on quarantine
methodology for these products.  In view of the time that has elapsed since these conclusions were
adopted by the DSB, we should like to know when Japan will notify full implementation?
4. In para. 123, the Secretariat indicates that Japan allows parallel imports of products subject to
intellectual property protection.  Could the Delegation of Japan confirm this statement?
CHILE
Report by the Secretariat
Section II:  Trade Policy Regime:  Framework and Objectives
1. Report indicates that free-trade agreements are attracting greater interest in Japan and that
study groups with various countries have been set up.  The press states that it has already beendecided to negotiate a free-trade agreement with Singapore.  We should like to know the reasons for
this change in Japan's policy, which we naturally endorse, and whether it is intended that future free-
trade agreements should be comprehensive.  We shoul d also like to know whether it has been decided
to negotiate free-trade agreements with other economies, particularly in the context of the APEC
commitment to liberalize trade in the region in 2010.
Section III:  Trade Policies and Practices by Measure
Although there is no special reference to the fisheries sector, Japan explained its position on fisheries
subsidies to the Committee on Trade and Environment (WT/CTE/W/173).  In this document, Japan
indicates that the over-exploitation of fisheries resources, the lack of adequate fishery management,
and illegal, unreported and unregulated (IUU) fishing activities, are due to several factors.  Chile,together with other countries, has stated that fi sheries subsidies contribute to over-capacity and
ultimately to over-exploitation of marine resources with harmful effects on the marine environment.
In this connection, we should like to know:
2. What form of government support, if any, and what amount is given to the long-distance
fishing industry, particularly the deep sea fishing fleet?WT/TPR/M/76/Add.1
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3. What measures does Japan apply to its deep sea fishing fleet for the management of fisheries
resources and conservation measures and what measures are applied to control IUU deep sea fishing,in addition to the administrative guidance letter on flag-of-convenience vessels mentioned in para. 49?
4. In para. 95, it is mentioned that the measures to promote investment include financing
measures at low interest rates granted by the Japanese Development Bank for eligible projects.  What
are the criteria for deciding which projects are eligible for these benefits?  Are they granted on the
basis of national treatment?
Section IV:  Trade Policies by Sector:  Agriculture
5. In para. 8, it is stated that a system of direct payment to farmers in hilly and mountain regions
has been implemented under the Basic Plan for Food, Agriculture and Rural Areas.  We should like to
have further information about this direct payment programme for farmers in hilly and mountain
regions, for example, the number of farmers benefiting from it, the features or size of the land in orderto be eligible for the benefits, the types of crops eligible, the annual amount involved and the purpose
and objective of this aid.
Section IV:  Trade Policies by Sector:  Services
6. Does Japan have any type of agreement with third countries on recognition of education,
experience, degrees or certificates for the supply of professional services?  If so, what are thecountries?
7. Are Japanese professional associations public or private bodies?  Is it mandatory for Japanese
professionals to belong to a professional association?  If so, what is the situation of foreign
professionals?
HONG KONG, CHINA
Services in General - (WT/TPR/S/76, p. xii, para. 23;  WT/TPR/G/76, pp. 17-18, paras 83-89)
1. Foreign entry to services sectors in Japan has been discouraged to a certain extent by
regulatory measures like licensing and restrictions in foreign investment.  It is noted that Japan has
launched "the Three-Year Program for Promoting Deregulation" during 1998-2000 to address the
issue.  Apart from deregulation arrangements concerning financial services which are well covered in
the TPR reports, would Japan give an account of major achievements in deregulation/streamlining of
regulatory procedures in other services sectors?  What has been the perceived impact on the level ofservices imports?  We would also be glad to hear from Japan any further plans for deregulation.
Free Trade Agreements - (WT/TPR/G/76, p. 10, para. 42;  WT/TPR/S/76, p. 24, para. 20)
2. We would like to know the latest progress of the study/examination on the possibility and
desirability of free trade agreements with Korea and Mexico.  Will formal negotiations begin soon?
Administrative Guidance - (W T/TPR/S/76, pp. 48-49, para. 49)
3. It is mentioned that the Japanese Government employs administrative guidance to implement
its trade policy.  The request to importers relating to tuna caught by vessels that do not abide by an
international treaty was cited as an example.
We would like to know if there is a list of all such administrative guidance and whether such
information is available to the public.  It is also mentioned that it is up to importers whether to abideWT/TPR/M/76/Add.1
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by the request.  We are interested to know if th e Japanese Government has any record of the importers
who did not abide by such requests.
State Trading - (WT/T PR/S/76, p. 53, para. 69)
4. We appreciate Japan's effort in abolishing the monopoly on production and distribution of
certain industrial alcohol by 1 April 2001.  We would like to know whether there is a schedule for
liberalizing the trading of other items that are still monopolised by the state trading enterprises.
Labelling - (WT/TPR/S/76, p. 57, para. 83)5. It is noted that the Genetically Modified Food Labelling Standard has been enforced since
June 2000 while mandatory labelling regarding GMOs for several products will be implemented in
April 2001.  We note that a number of SPS/TBT notifications have been made by Japan.  Could the
Japanese authorities share with us information, if available, as to the value of trade that may be
affected by the mandatory labelling scheme?  Will the list of products subject to the requirements beexpanded?
Foreign Investment Regime - (WT/TPR/S/76, p. 63, para. 98)
6. It is observed that inward investment in Japa n has traditionally been lower than its outward
investment.  However, we note that Japan has been stepping up efforts to improve its investment
climate.  Does this reflect that the Japanese go vernment is attaching more importance to attracting
inward investment? Among the measures undertaken by Japan, to what extent are the investment
incentives effective in attracting foreign investment?  If possible, we would like to have an estimate of
the total budgetary cost of Japan's investment promotion programs, including forgone tax revenues.
Competition Policy - (WT/T PR/S/76, pp. 80-81, paras 4-5)
7. It is mentioned that Japanese suppliers of services have been considerably protected from
foreign competition.  Concerns have also been raised about the adequacy and effectiveness of
competition policy in various service sectors as deregulation proceeds. Moreover, certain activities,notably maritime and air transport, are still exempted from the Anti-Monopoly Act.  In this regard, we
would like to know whether Japan has any plans to further enhance competition in its services sector;
and if yes, what these plans or measures are.
Financial Services - (WT/TPR/S/76, p. 98, para. 51)
8. Foreign banks are required to obtain separate licences for the establishment of branch, agency
or subsidiary.  Would Japan advise if the same requirement is applied to domestic banks and whether
Japan has any plan to streamline the requirement?
(WT/TPR/S/76, pp. 98-99, paras 52, 53 & 55)
9. Japan seems to have quite an active state participation in the banking and insurance sectors,
for instance, the establishment of Government Financial Institutions to implement policy-based
finance, the operation of the Postal Savings System as well as state-owned insurance schemes. Would
Japan consider trimming down the share of state involvement so as to encourage further a
participation by private sector suppliers?WT/TPR/M/76/Add.1
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Telecommunications Services - (WT/TPR/S/76, pp. 102-103, para. 73)
10. It is noted that Japan is considering whether to enhance competition in the mobile
telecommunications market through the reduction of share-holding in NTT Docomo by the NTT
Corporation.  We would be interested in knowing the latest progress and whether there is any concrete
implementation plan.
Cable TV - (WT/TPR/S/76, p. 104, para. 81)
11. It is noted that permission for the provision of cable TV services is subject to considerations
concerning, inter alia , the necessity and appropriateness of the installation of the facilities in light of
natural, social, and cultural conditions in the local area.  Would Japan elaborate on the relevant
natural, social and cultural conditions and advise whether there is any quantitative restriction or
restriction concerning foreign participation?
Maritime Transport Services - (WT/TPR/S/76, p. 108, para. 101)12. It is noted that Japan has replaced licensing requirement with permission for entry into port
transport business in nine major ports.  We woul d be interested in knowing whether Japan has any
plan to extend the relaxation arrangement to other ports as well.
Air Transport Services - (WT/TPR/S/76, p. 110, para. 117)
13. It is mentioned that provision of auxiliary services in airports operated by the government is
subject to approval by the Director of the Regional Civil Aviation Bureau.  We would be interested in
knowing the criteria for approval and whether foreign and domestic suppliers are subject to the same
set of criteria.
Legal Services - (WT/TPR/S/76, p. 111, para. 120)
14. We welcome the various relaxation measures concerning the handling of legal services by
foreign lawyers (GJB) which were introduced in 19 98 and would like to know if there are plans to
further liberalise the sector.
CANADA
WTO Secretariat Report (WT/TPR/S/76)
Section II:  Trade Policy Regime:  Framework and Objectives;  1) Introduction;  para. 2 and
Section III:  Trade Policies and Practices by Measure;  (5) Measures Affecting Production and
Trade:  (vi) Deregulation and regulatory reform
As the Secretariat points out, the Three-Year Programme for Promoting Deregulation has made great
strides thanks to the able direction of the Regulatory Reform Committee (RRC).  Please provide some
details on the new regulatory reform program Japan intends to implement when the current three-year
plan draws to a close on March 31, 2001 and what body will be created to succeed the RRC.
Many have criticized the incremental, item-by-item approach to Japan’s efforts in regulatory reform.
It has been suggested that Japan could give greater consideration to cross-cutting issues, such as the
problem in several sectors of a lack of independent regulatory authority.  Reform in areas such as
telecommunications (for example, rights of way) may be hampered by the fact that the Ministry of
Posts and Telecommunications has both regulatory and promotional functions.  Other sectors might
be aided by the establishment of an independent regulator, as is the case with MITI in electricity, orWT/TPR/M/76/Add.1
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the Japan Harbour Transport Authority for sea transport.  What are Japan’s intentions to address
cross-cutting issues, such as the independence of regulatory authorities, as part of its new regulatoryreform initiative?
Section II:  Trade Policy Regime:  Framework and Objectives;  (4) Trade Agreements and
Arrangements;  (i) WTO;  para. 22
According to the Report, Japan applies MFN tariffs to all except a few countries it lists.  Please clarify
if these few countries get preferential tariffs or non-MFN treatment.
Table II.2:  Principal notifications under WTO Agreements (as at 25 April 2000) includes the
notification to the WTO of the first phase of integration under the Agreement on Textiles and
Clothing.  However, no reference is made to the notification of the second phase, which was due on
31 December 1996 and which took effect on 1 January 1998.  Please explain.
Section III:  Trade Policies and Practices by Measure;  (2) Measures Directly Affecting Imports;
(iii) Tariffs
The Report notes some tariff adjustments initiated by the Ministry of Finance.  In the past Japan has
reported that tariff rates are reviewed every year on the basis of requests from foreign and domestic
entities.  Japan’s system of tariff classification distinguishes between the species and dimensions of
lumber, regardless of its end use.  As a consequence, Spruce-Pine-Fir (SPF) imports, key buildingcomponents, are subject to duties ranging from 4.8% to 6%, whereas hemlock imported for the same
purpose enters duty free.  Please provide some examples of tariff adjustment which may have arisen
as a result of requests from foreign entities.  Also, please clarify how one can point out such tariffs as
the SPF tariff or the tariff on cooking oil (currently between 20-25% when translated into an ad
valorem  basis).
Section III:  Trade Policies and Practices by Measure;  (2) Measures Directly Affecting Imports;
(vii) Government procurement;  para. 57
We refer to Japan’s proposal to withdraw certai n activities of NTT and its successor companies,
including NTT Communications, from coverage under the WTO Agreement on Government
Procurement.  Considering that Japan appears to retain effective influence and control over many  of
the NTT companies, please provide information on Japan’s plans for ensuring that its proposal meets
its commitments under the Agreement on Government Procurement.
Section III:  Trade Policies and Practices by Measure;  (2) Measures Directly Affecting Imports;
(ix) Standards and SPS measures;  (a) Sta ndards, testing and conformity assessments
Canada welcomes the move by Japan to further examine the application of performance-based
standards to the regulations within the Building Standards Law (BSL) relating to fire.  However,
many aspects of the BSL relating to fire remain prescriptive, thereby limiting wood construction andrendering wood-frame buildings more costly.  In order to provide safe and more affordable housing
for its citizens, will Japan consider explicit perfor mance-based standards within the BSL to recognize
new building designs, and fire prevention and fighting techniques?WT/TPR/M/76/Add.1
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Section III:  Trade Policies and Practices by Measure;  (3) Import and Inward Investment Promotion
Measures;  (iii) Investment regulation and promotion measures;  para. 91
The Report indicates that prior notification is, in principle, required for inward FDI for a number of
sectors including agriculture, forestry and fisheries, petroleum, leather and leather products,
investment trust management, air and maritime tran sport, as well as Type 1 telecommunications, radio
television and cable television, and broadcasting.  What is the purpose of these notification
requirements and what information must companies provide pursuant to these notifications?
Section III:  Trade Policies and Practices by Measure;  (3) Import and Inward Investment Promotion
Measures;  (iii) Investment regulation and promotion measures;  para 93
The Report states that although a notification of an FDI project may be rejected, this has never
happened.  Please clarify  whether any conditions have been placed on any of these investments as a
condition for approval.
Section III:  Trade Policies and Practices by Measure;  (5) Measures Affecting Production and
Trade;  (iii) State-owned companies and privatization
Para. 115 and the accompanying Table AIII.13 reference several major companies where the
government of Japan retains an ownership share.  We note that the government of Japan currently
holds 53% of stocks in Nippon Telegraph and Tele phone Corporation (NTT) and that the government
is required by law to hold at least one third of these stocks.  What is the rationale for the legal
requirement that the government retain one-third ownership share?  The government is slated to drop
its ownership to 46.7% in November.  What further plans does the government have to divest the
remaining ownership share in the corporation which would be allowable under the current law?
From para. 115 and Table AIII.13 we also note that the Government of Japan holds a 66.6%
ownership share in the Electric Power Development company and that the government is required by
law to hold at least one half of these stocks.  What is the rationale for the legal requirement that thegovernment retain a fifty per cent ownership share in the corporation?  What is the government’s plan
to divest the remaining ownership share which is allowable under the current law?
Section III:  Trade Policies and Practices by Measure;  (5) Measures Affecting Production and
Trade;  (vii) Competition policy and regulatory issues;  para. 134
The Report indicates that the May 2000 amendment to the Anti-Monopoly Act (AMA) will allow
private actions commencing 2001.  Please indicate Japan’s expectations with respect to the impact this
will have in terms of effective enforcement of th e AMA.  Will foreign parties be allowed to pursue
private remedy?  Will foreign law firms be allowe d to represent private parties in such actions?
Section III:  Trade Policies and Practices by Measure;  (5) Measures Affecting Production and
Trade;  (vii) Competition policy and regulatory issues;  para. 145
With respect to the distribution measures, Canada notes that the Large Scale Retail Store Law  was
abolished in June 2000 and replaced by the Law Concerning the Measures by Large Scale Retail
Stores for Preservation of Living Environment .  Please elaborate on how this new law will integrate
non-economic criteria, e.g., reduction of noise, with economic/business considerations?  Will the
Central Government's technical assistance or recommendations to the local governments be madepublic?  Does the Government of Japan expect an acceleration in the number of applications to open
large stores of Category II?  A number of studies have suggested that the old law contributed to aWT/TPR/M/76/Add.1
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small scale and fragmented distribution system.  What impact will the new law have on the Japanese
distribution system?
Section IV:  Trade Policies By Sector;  (2) Agriculture
The Report states that the support received by farmers in Japan and the costs to consumers of
agricultural products remain above the OECD average and have increased since 1997.  Moreover,
despite the progressive ongoing reforms in other areas of its economy, agriculture remains
unproductive as to actually constitute a drag on economic growth.  What assurances can Japanprovide that its targeted food self-sufficiency ratio of 45% will be primarily aimed at increasing
domestic productivity, and will not be achieved by discouraging competitive imports of food, fish,
and fish and food products that are now growing in response to consumer demand?
We remain concerned about the Japanese snapback safeguard measure on pork in the form of an
increased minimum import price.  As currently administered, this measure creates considerableuncertainty for suppliers and Japanese importers.  What steps will Japan consider to allow suppliers
and importers to operate with greater business certainty?
Section IV:  Trade Policies By Sector;  (3) Energy and Utilities;  (ii) Electricity
The Report notes that Japan has introduced wheeling rules; however, we note that these rules are
administered by MITI, rather than by an indepe ndent authority.  Given the market conditions which
have allowed for regional monopolization by vertically-integrated firms, how will Japan ensure that
wheeling rules and other deregulation measures are implemented so as to not place new entrants,
especially smaller firms, at a disadvantage?
Section IV:  Trade Policies By Sector;  (4) Manufacturing;  (ii) Sectoral developments;
(c) Pharmaceuticals
The Report points out that while foreign clinical test data is increasingly accepted by the Ministry of
Health and Welfare, in many cases, the unique nature of Japanese standards requires supplementarydocumentation and testing.  Will Japan continue to increase the range of foreign test data acceptable
by ensuring that domestic testing standards are in line with international standards where those exist?
Section IV:  Trade Policies By Sector;  (5) Services:  (iii) Telecommunications
According to the Report, the telecommunications sector is characterized by dominant market players;
for example, the two local NTT companies in th e local communications market.  What steps will
Japan take in order to ensure that an asymmetric regulatory system is established to deal with
dominant carriers?  For example, will new entrants be freed from some of the more onerous reporting
requirements that the Ministry of Posts and Telecommunications now sets out?
Will Japan establish rights-of-way regulations to ensure fair access to the land and facilities owned or
controlled by utilities and to adopt measures to facilitate construction and expansion of infrastructureover public land and facilities?WT/TPR/M/76/Add.1
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Section IV:  Trade Policies by Sector;  (5) Services;  (iii) Telecommunications;  (c) Regulatory
Framework;  Entry Regulations;  para. 72
The Report states that for Type-I and Special Type-II carriers to conclude, modify, or abolish
contracts with foreign governments, citizens, or co rporations, ministerial authorization is required.
Please outline what criteria are used in determining whether ministerial authorization is granted in
such a case.
Section IV:  Trade Policies by Sector;  (5) Services;  (iv) Transportation services;  (a) Maritime
transport;  Domestic water-borne trade;  para. 89
The Report states that generally cabotage is closed to foreign competition, except where non-Japanese
vessels obtain permission from the Minister of Transport.  Please detail under what circumstances
such permission is granted and what criteria are applied.  Also, please indicate how often is
permission granted by the Minister of Transport to operate in the coasting trade of Japan.  To whichflags is such permission granted?
Section IV:  Trade Policies by Sector;  (5) Services;  (iv) Transportation services;  (a) Maritime
Transport;  Domestic water-borne trade;  para. 91  and (b) Air transport;  International air transport
services;  para. 113
The Report states that under the Law for Ship Officers  a Japanese flag vessel must be manned by a
certain number of officers holding Japanese certificates.  A foreigner who holds a certificate issued by
foreign authorities may take the Japanese certificate examinations, with the approval of the Minister
of Transport.  Similar provisions apply to holders of foreign certificates for the operation of aircraft.
Please clarify when such Ministerial approval is granted for ship officers and aircraft operators.  Also,
with reference to the number or scope of examinations required, is there any recognition of foreign
certification granted to pilots and ship officers who hold foreign certificates?
Section IV:  Trade Policies By Sector;  (5) Services;  (iv) Transportation;  Air transportThe Report points out the problem of airport capacity constraints.  The WTO Secretariat notes that the
present airport slot allocation system is based upon IATA guidelines.  In accordance with those
guidelines, what additional efforts will Japan undert ake to ensure that the slot allocation system at
Narita is made more transparent, fair, and equitable?
Section IV:  Trade Policies By Sector;  (5) Services;  (v) Other services;  Legal servicesAccording to the Report, FDI levels are still low despite some recent efforts at attracting foreign direct
investment.  In assessing how the business environment can be improved, Japan has identified legal
reform as a prime component, and has taken some tentative steps to loosening the restrictions on
foreign lawyers operating in Japan.  However, many in the legal and business community have stated
that the remaining restrictions (for example, regarding partnerships with Japanese lawyers) are animpediment to the delivery of high quality transnational integrated legal services necessary to
encourage foreign direct investment.  What does Japan intend to do to further reform the area of legal
services, especially regarding restrictions on foreign lawyers?
Appendix Tables
This refers to Table AI.1:Exports by product groups, 1995-99.  Noting that the Yen lost value to the
U.S. Dollar from 1995 to August 1998, Japan’s level of textiles and clothing exports did not vary
substantially since the beginning of the Agreement on Textiles and Clothing.  However, according toWT/TPR/M/76/Add.1
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Table IV.6 on Employment in manufacturing, value added per employee and wages per employee in
Japan, 1992-98, employment in these sectors fell nearly one fifth over this period.  Is this resultattributable to the loss of the domestic market, or to the increased mechanization of the manufacturing
process used for these products?
Government Report (WT/TPR/G/76)
Trade Policy Development, 1998-2000;  (2) Relations with Other Countries and Regional Initiatives;
(b) Relations with Europe;  para. 33
Reference is made to cooperation with the EU on improving market access and facilitating
investment, "for the benefit of the whole world", including in telecommunications.  With respect to
this issue, Canada has encouraged Japan to take further measures to ensure fair access to land and
facilities, including rights of way, owned or controlled by utilities, and to adopt measures intended to
facilitate construction and expansion of such infrastructure.  In its report of September 2000, theJapanese "Study Group on Measures to Realize Effective Competition in Local Access Network
Markets" suggested measures which would address our concerns in this area.  What are Japan’s
intentions to adopt and implement the recommendations of this study group?
We also note, with interest, initiatives by Japan’s local service providers to offer billing services to
telecommunications service providers that provide long-distance services to end-users over the localservice providers’ facilities.  We encourage the Ministry of Posts and Telecommunications (MPT) to
ensure that Japan’s local service providers offer this service at a fair price and in a non-discriminatory
manner.  What steps has Japan taken to address concerns on this issue, which has a significant
practical impact on market access?
Trade Policy Development, 1998-2000;  (2) Relations With Other Countries and Regional Initiative;
(e) Regional Trade Agreements;  para. 42
The Government Report explains that Japan may possibly change its approach towards regional
free-trade agreements (FTAs) and that Japan may pursue an FTA with Singapore and perhaps other
trading partners.  Would it be the intention of the Japanese Government to seek significant
liberalization in the agricultural sector as part of potential FTA negotiations?
NEW ZEALAND
Deregulation
The Secretariat Report notes (p. ix, para. 5) that Japan remains committed to the promotion of
deregulation and improved transparency.  The Ministry of International Trade and Industry has taken
steps to evaluate the costs and benefits of trade and trade-related measures, including regulations.
1. Will these evaluations be published?
2. What further steps will be taken to promote deregulation and improve transparency?The Secretariat Report notes (p. ix, para. 2) the view that sustained economic recovery can only be
achieved through more aggressive structural reform which encourages competition.  There appears to
be a gap between this assessment and recent decisions by the government to defer certain reforms in
the finance and related sectors (Secretariat Report, p. xiv, para. 29).
3. Can Japan confirm that the government remains committed to a comprehensive regulatory
reform programme, including in the agriculture and services sectors?WT/TPR/M/76/Add.1
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4. If so, can Japan advise when the deferred reforms will be implemented?
Standards and ConformanceThe Secretariat notes (p. xi, para. 17) that Japan continues to bring its standards into line with
international standards, and has taken steps to ensure acceptance of foreign test data and conformity
assessments.
5. What further steps will be taken to bring existing non-conforming standards into line with
international norms and over what timeframe will this occur?
We note that no data was available on the percentage of standards or regulations under the Food
Sanitation Law, Building Standard Law, or rela ting to Japan Agricultural Standards, which
correspond to international standards (Secretariat Report, p. 54; table III.6).  These standards and
regulations have a significant effect on market access.
6. Will the Japanese authorities be able to complete this information, and if so when?7. If not, we would be grateful to know why this data is not available.
Competition Policy
We welcome steps taken by the Japanese Fair Trade Commission to increase competition
including the abolition of a number of exemptions from the Anti-Monopoly Act.  We note that some
exemptions still remain.
8. What steps are being taken to remove the remaining exemptions and over what timeframe
will this occur?
Services
The Secretariat's Report notes that recent regulatory changes in the legal sector have resulted in the
relaxation of some conditions for foreign lawyers practising in Japan but there continue to be
restrictions on the types of law that may be practised by foreign lawyers in Japan.
9. Has consideration been given to extending the scope of practise available to foreign lawyers
beyond aspects of foreign law?
The Secretariat's Report states that there is little foreign participation in services, including education
services.
10. Has Japan given consideration to expanding market access opportunities for foreign education
services providers as a means of providing the flexibility it seeks in the education sector?  Is Japan forexample looking to establish systems for formal recognition of degrees/qualifications earned by
Japanese students at "other schools" (kakushu gakko)?
11. Do professional bodies in Japan recognise qualifications gained overseas for the purposes of
registration, certification and licensing?
12. How does the Japanese Government encourage students to study overseas in order to have
access to a wider range of educational opportunities and develop new skills?WT/TPR/M/76/Add.1
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Tariffs
While most imports to Japan are either duty free or subject to low tariff rates the agriculture sector
remains highly protected from foreign competition.  The Secretariat Report notes (p. 83, para. 9) that
many agricultural subsectors, including dairy products, benefit from relatively high levels of MFN
tariff protection, and in addition are subject to a number of tariff peaks.  For example, 90% of the
tariff lines under HS Chapter 4 (which includes dairy products) are subject to tariff peaks and 60% are
subject to non- ad valorem  tariffs.
New Zealand continues to be concerned with the excessive use of specific duties in agriculture, which
lead to very high ad valorem  equivalent tariffs, up to 987.3% and often over 300%.
13. What consideration has Japan given to the impact of these high specific duties on end-users,
both processors and consumers?
14. How does Japan justify the disproportionate impact of specific duties on levels of protection
afforded to the agricultural sector?
Tariffs are generally low in the forestry sector, however the tariff structure discriminates in practice
against certain coniferous species (notably the 4.8% tariff on radiata pine and some other coniferous
woods) while other coniferous species (for example douglas fir) enjoy duty-free entry to Japan.
15. Can Japan explain the economic justification for this tariff differentiation, when it is prepared
to grant duty-free access to substantial quantities of woods from the other coniferous species (such as
douglas fir)?
SPS Measures
Japan's regulations for enforcing phytosanitary controls mean that, by default, action is taken against
pests on imported produce that do not meet the FAO definition of "quarantine pest", if the pests are
not included in a schedule, even if those pests ate present in Japan and not under an effective
mandatory official control programme.
16. Does Japan have any plans for reviewing its enforcement regulations to make them more
flexible, for example by listing pests against which action is taken rather than listing on the schedule
the 63 "non quarantine" pests against which no action is taken?
17. Can Japan confirm that any changes which may be introduced will be applied in a way which
is transparent and does not have the effect of discriminating arbitrarily among supplying countries?
18. Is Japan considering a change in its definition of "official control" in phytosanitary
regulations, to align with the new international definition that is likely be adopted by the Interim
Commission on Phytosanitary Measures in April 2001?
Agriculture
We welcome Japan's move away from market price support to direct payments in agriculture.
However, the sector continues to be heavily supported by government and highly protected at the
border.  The Secretariat notes (p. 86, para. 15) that "[t]he support received by farmers in Japan and the
costs to consumers of agricultural products remain above the OECD average and have increased since
1997", and that high costs have forced certain food processing businesses to relocate out of Japan
(p. 81, para. 6).WT/TPR/M/76/Add.1
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19. How does Japan ensure that end-users, both processors and consumers, have the opportunity
to purchase quality agricultural products at internationally competitive prices?
New Zealand is concerned at the consistently low quota fill rate for dairy products.  We note the
Secretariat's comment (p. 42, para. 28) that "[t]he quota allocation method tends to be intricate".  "In
the case of agricultural products, ... [s]ome qualification requirements for applicants are stipulated
taking into account the characteristics of the product and the market, with a view to ensuring that the
licensed goods are supplied to end users".
20. Can Japan explain the process it went through in "taking into account the characteristics of the
product and the market" in designing the qualification requirements for dairy product quota.
21. What steps is Japan taking to ensure that administration of the tariff quotas enables end-users
to be able to obtain the quantity and specification of imported dairy product that they require?
22. What further steps does Japan intend to take to improve the transparency of its tariff quota
administration in dairy and to facilitate quota fill?  For example, what steps is Japan proposing to take
to fill the quota for Skim Milk Powder for the School Lunch Programme?
The Secretariat Report notes (p. 82, para. 8) that under the new Basic Law on Food, Agriculture and
Rural Areas, the government plans (inter alia) to expand the scale of production and improve
agricultural infrastructure to raise the productivity of the sector, and develop and disseminatetechnology to improve the quality of products.  The Report also notes (p. ix, para. 2) that "the view is
taking hold that a sustained economic recovery can be achieved only through more aggressive
structural reform that enhances competition".
23. Does Japan also apply the notion of "enhancing competition" to the agricultural sector?  How
does Japan plan to raise productivity and improve technology in the agricultural sector in this regard?
State Trading
The Secretariat notes (p. 53, para. 69) that "[t]he stated aims of [state] trading include:  stabilising
supplies to consumers;  controlling imports to assist domestic producers; and protection of consumers'
interests."
24. What factors does the Agriculture and Livestock Improvement Corporation (ALIC) take into
account when choosing the type and quantity of products to import?  What weight is given to
considering consumer demand for a supply of quality, cost-effective products as opposed to assistingJapan's dairy producers?
25. How does ALIC ensure that consumers' interests in terms of price, quality and quantity are
met for dairy products?
26. How does Japan ensure that the stated aims for STEs, as noted in the Secretariat Report
(p. 53) are consistent with WTO provisions, in cluding Article XVII of the GATT which requires
non-discriminatory treatment and adequate opportunity of competition?
Fisheries
Tariffs on fish and fish products at the frontier can be seen to have a significant impact on prices
compared with those for domestic product.WT/TPR/M/76/Add.1
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27. Given Japan's strong reliance on imported seafood, what purpose is served by Japan
maintaining its comprehensive import tariff regime?
A clear description of Japan's import quota regime for certain fish and marine products is provided in
the Secretariat Report.
28. What is the basis in the WTO Agreements for a government to:
- place QRs on non-agricultural commodities;
- impose QRs in order to avoid effects of disorderly trade on domestic supply and
demand permits QRs to be imposed on the fish species identified in Japan's quota
system;  and
- avoid adverse effects of disorderly trade on stock status of the species identified?
Regional Trade Arrangements (RTAs)
New Zealand shares Japan's concern (Government of Japan report, p. 10, para. 40) that some RTAs
have raised barriers to trade with non-member countries, and effectively weakened the free,
non-discriminatory and open multilateral trading system under the WTO.  New Zealand also believes
that RTAs should contribute to trade liberalisation, rather than become stumbling blocks.  We note
that Japan and Singapore agreed in October to launch negotiations for a Economic Partnership
Agreement, including free trade in goods.
29. Can Japan confirm that it will eliminate tariffs and remove market access restrictions on
substantially all goods in any FTA it may negotiate with Singapore and that there will be no sectoral
exclusions?
REPUBLIC OF KOREA
I. Economic Environment
(4) Developments in trade and foreign direct investment
(iv) Foreign direct investment (FDI)1. According to para. 38 (p. 14), "despite recent re gulatory reforms and rising FDI, inflows are
still low by OECD countries' standards."  The Secretariat's Report cites regulatory barriers as a factor
behind the low level of FDI into Japan.  One exampl e is the regulatory criteria for issuing visas for
investment and business administration purposes.  The ordinance of the Ministry of Legal Affairs
stipulates that visas for investment and business ad ministration purposes may be issued for businesses
that hire at least two Japanese nationals or perman ent residents who live in Japan, in addition to the
manager.  This requirement makes it difficult for foreign investors to acquire a visa for investment
purposes.  Does Japan have any plan to abolish or relax this requirement?
II. Trade Policy Regime:  Framework and Objectives
(1) Introduction2. In relation to the U.S.-Japan bilateral arrangements (para. 4, p. 19), a recent report mentions
that Japan's Ministry of Foreign Affairs and Ministry of Industry and Trade are considering signing
the tentatively named "Economic Linkage Agreement" with the United States (Nihon KeizaiWT/TPR/M/76/Add.1
Page 16
Shimbun, front page, October 29).  Could the Japanese Government provide the details of this
proposed agreement, in particular its nature and coverage?
(4) Trade agreements and arrangements
(iv) Preferential arrangements
3. In relation to para. 37 (p. 30), Japan, along with Canada, the EU and the United States, has
proposed to implement tariff-free and quota-free treatment for essentially all products originating in
least-developed countries (Director-General's Report on Consultations, General Council,3 May 2000).  Please provide a specific schedule on the implementation of the proposal.
III. Trade Policies and Practices by Measure
(2) Measures Directly Affecting Imports
(iii) Tariffs
4. According to para. 29 (p. 42), Japan has maintained a low average applied MFN tariff rate of
6.5% in fiscal year 2000, which Korea appreciates and considers it as a sign of Japan's sustained
efforts to lower overall tariff rates.  However, Japan still maintains high tariff rates for some products,
such as petrochemicals (polypropylene, high-density polyethylene and polystyrene, etc.), leather
goods, textile goods, shoes, and food products, which are of particular interest to Korea. Does Japan
have any plan to lower the tariff rates for these products?
5. It is understood that the Japanese Government has decided to abolish the import tariffs on
whisky by 2002.  However, there seems to be no announced schedule for the abolishing or lowering
of the tariffs on So-ju which is substitutable for whisky.  Does the Japanese Government have an
intention to abolish or lower the tariffs on So-ju?
6. Japan maintains a very unique tariff system for certain products by imposing differential
duties. According to footnote 14 (p. 39), "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 a
priori by the authorities, and the actual import prices."  Technically speaking, this kind of duty may
meet Japan's WTO obligations based on specific bound rates.  However, this tariff regime seems to be
directly contradictory to the principle of a market-based economy, in that the differential duty can
adversely affect price competitiveness of imported goods, regardless of their original price level.
Does the Japanese Government have any plan to reform this regime towards a more market-orientedtariff system?
(v) Non-tariff border measures
7. As para. 41 (p. 45) indicates, Japan still maintains strict quotas on various items, including
14 fisheries products which are of particular interest to Korea.  It is noted that Japan has not increased
its import quotas on fisheries products for Korea since 1983, although it has increased them for othercountries.  Could Japan provide a detailed explanation of the rationale for maintaining this restrictive
regime?  Will the Japanese Government increase or abolish the import quotas on fisheries products?
8. As para. 43 (p. 47) states, a quota system is applied to the imports of dried laver and certain
edible seaweed from Korea.  In addition to this quantitative restriction, Japan is applying very high
tariff rates on laver in contrast with its average tariff rate of 4.1% on fisheries products.  Koreaappreciates the various measures the Japanese Government has taken since the last TPR of Japan to
address Korea's concerns on this matter, including the abolition of the requirement for import licensesWT/TPR/M/76/Add.1
Page 17
from the domestic producers association.  It is strongly hoped, however, that Japan will increase the
import quota and lower the tariff rates on laver, and eventually fully liberalize import of laver.  Arethere any initiative currently being considered that would go in that direction?
(vii) Government procurement
9. With regard to para. 57 (p. 49), Japan still excludes NTT Communications from the Lists of
the GPA Annexes.  In this regard, the relevant provision of the present Government Procurement
Agreement requires Members to consider compensatory  adjustment.  Some argue that the requirement
for compensatory adjustment may discourage the privatization of public corporations and movement
towards a more market-driven economy.  Could the Japanese Government comment on this point?
10. As para. 59 (p. 50) points out, government procurement in Japan is highly decentralized.  As a
result, local governments in Japan seem to require excessively strict qualifications, which is
incompatible with Japan's obligations under the WTO Government Procurement Agreement and oftenmakes foreign bidders' participation difficult.  Does Japan have any plan to redress this situation?  Is
Japan considering setting up a single inquiry point which would collect and provide information on
procurement in the decentralized Japanese procurement market?
11. According to para. 64 (p. 51), the percentage of foreign suppliers in Japan's government
procurement was 5.6% in terms of value in 1997.  Could the Japanese Government explain such lowpercentage?  What measures is Japan taking to encourage foreign participation in Japan's government
procurement?
(ix) Standards, sanitary and phytosanitary measures
12. Korea understands that Japan will implement a recycling system for home electronic
appliances (refrigerators, washing machines, air conditioners, television sets, etc.) in May 2001.
Korea fully understands the concern Japan has over the preservation of the environment.  Under this
system, however, foreign manufacturers bear higher costs than domestic producers, given that theyhave to entrust their recycling responsibilities to local recycling businesses which impose higher fees
on foreign manufactured goods.  Can we expect Japan to address this difficulty faced by foreign
manufactures?
13. In relation to para. 79 (p. 56), Japan conducts a strict toxic analysis test prior to the customs
clearance of imports of fresh shellfish, which results in a lengthy customs clearance process and highcosts for exporters.  Does Japan have any plan to address this situation and curtail the period of
analysis?
14. Japan applies strict quarantine measures to fresh vegetables and flowers imported from Korea.
Japanese authorities even request a fumigation of pests that are common in Japan.  This measure leads
to the reduction of product value and additional costs to exporters.  Could Japan improve itsquarantine process so that it will not pose as an impediment to trade?
(3) Import and Inward Investment Promotion Measures
(iv) Foreign access zones (FAZs)
15. According to para. 100 (p. 63), Japan had approved a total of 22 foreign access zones (FAZs)
by January 1999.  Can the Japanese Government provide information on the FAZs' contribution to theincrease of imports from Japan's major trade partners?  Are the Japanese authorities conducting
studies on the specific trade-creation effects of FAZs?  If so, please provide details.WT/TPR/M/76/Add.1
Page 18
(5) Measures Affecting Production and Trade
(vi) Deregulation and regulatory reform16. In relation to para. 124 (p. 71), the "Distance Standard Regarding the License for the Retail of
Alcoholic Beverages" was originally to be abolished by  September 2000, as part of the Three-Year
Program for Promoting Deregulation.  The abolition, however, has been postponed to next January.
Could the Japanese Government confirm that the distance standards will be abolished as of
January 1, 2001?  As a related matter, does the Japanese Government have any plan to simplify thedocumentation requirements for the licensing and approval of the retail of alcoholic beverages?
IV. Trade Policies by Sector
(5) Services
(ii) Financial services
17. As para. 47 (pp. 95-96) indicates, bank holding companies and banks' entry in other
businesses through subsidiaries have been allowed in the context of the "Big Bang" reform in 1998.
Are foreign banks also allowed to enter other businesses by establishing a bank holding company and
its subsidiaries?  The Japanese government has recently put off the implementation of the partial
deposit insurance system until March 2002, and, in addition, submitted a bill to fully insure liquid
deposits.  It seems possible that the postponement of the partial deposit insurance system would bringabout moral hazard in financial institutions, thereby impeding early financial reform.  We would
appreciate it if the Japanese government could comment on this matter.
18. According to para. 48 (p. 96), in Japan's GATS schedule of specific commitments, "the
deposit insurance system does not cover deposits received by branches of foreign banks."  Is there any
specific reason for excluding the deposits received by branches of foreign banks from the coverage of
the deposit insurance system?  Also, "commercial presence, as a juridical person established in Japan,
is required for investment trust management services."  Are branches or affiliates of a foreigninvestment trust management company not allowed to be established in Japan?
19. Restrictions on cross-border capital transactions have been removed by the revision of the
Foreign Exchange and Foreign Trade Law in April 1998.  Does the revision allow cross-border
transactions under Mode 1 and 2 in the GATS?  Are there restrictions on Japanese nationals'
investment in overseas securities?  If so, please specify them.  Does Japan intend to abolish them?
20. As footnote 43 under para. 51 (p. 98) points out, Japan has made no MFN exemption in its
GATS Schedule of Commitments. It seems problematic to include "reciprocity" provisions in the
Banking Law with regard to licensing a foreign bank without making the MFN exemption.  Is the
Japanese government considering abolishing the "reciprocity" provisions?
(iii) Telecommunications21. According to footnote 54 under para. 62 (p. 100 ), foreign ownership of the NTT Corporation
is restricted to less than one fifth of voting rights.  Footnote 54 also mentions that restrictions on the
nationality of board members and auditors, which had been applied to Kokusai Denshin Denwa
(KDD), were abolished as a result of the company's complete privatization. Does the Japanese
Government have any plan to liberalize the limitation on foreign ownership and abolish therestrictions on the nationality of board members and auditors of the NTT Corporation?WT/TPR/M/76/Add.1
Page 19
22. According to para. 70 (p. 102), the Ministry of Posts and Telecommunications (MPT) is to
become a part of the Ministry of General Affairs (MGA), "which is to be established as part of acomprehensive administrative reform scheduled to take place on January 1, 2001."  Will the
regulations for fair competition in the telecommunications sector be transferred to the Japan Fair
Trade Commission in that case?
23. As para. 73 (pp. 102-103) indicates, "the NTT Corporation must, at all times, hold all stocks
issued by the East and West NTT regional companies."  As a result, foreign investors can participatein the regional NTT Corporations only in the form of indirect investment. However, according to
Japan's Schedule of Specific Commitments, which was submitted to the WTO Basic
Telecommunications negotiations before the reorganization of the NTT, foreign direct investment in
the NTT regional companies should be allowed up to 20%.  Please provide Japanese Government's
comments on this.
24. Para. 75 (p. 103) states that "telecommunications business is not exempt from the application
of the Anti-Monopoly Act."  Does this mean that telecommunications business, with regard to fair
competition, is regulated by both the Telecommunications Business Law (TBL) and the Anti-
Monopoly Act?  Please explain how the two laws share the regulatory jurisdiction for
telecommunications business.
(v) Other services
25. As paras 119-120 (p. 111) indicate, according to the Special Measure Law Concerning the
Handling of Legal Business by Foreign Lawyers, it is not allowed for the
Gaigokuho-jimu-bengoshi(GJB - attorney in charge of foreign legal affairs) to employ Bengoshi.
Instead, GJBs are only allowed to establish joint enterprises with Bengoshis.  Is there any clear-cut
criteria for distinguishing employment of a Bengoshi from establishment of a joint enterprise with a
Bengoshi?  Could Japan clarify the legal nature of "joint enterprise", particularly in the context oftaxation and liabilities of the entity?
26. In relation to paras 119-120 (p. 111), what is the difference between the GJB and the "Foreign
legal consultancy" which is currently under discussion in the WTO Committee on Specific
Commitments?
27. According to para. 128 (p. 112), "formal education institutions must be non-profit
organizations, and their commercial activities are legally limited".  Para 128 also states that the
Ministry of Education(MOE) "has the discretion to define the scope of commercial activities."  Please
provide the general criteria which the MOE applies or specific cases to clarify the scope of
commercial activities.
MALAYSIA
1. Tariff escalation for a number of products remains discriminating against processed products
particularly in textiles, rubber and wood sectors.  Could Japan elaborate why this is necessary and
would there be a possibility of downw ard revision in the near future?
2. Weak domestic demand has contributed to the reduction in Japanese imports, coinciding with
the downturn in the Asian economies.  What measures has Japan taken or will take to ensurecontinued strong uptake of imports to further the Asian recovery process?WT/TPR/M/76/Add.1
Page 20
3. We note that Japan's simple average applied MFN rate has increased from 5.6% in FY1998 to
6.7% in FY1999 (Table 111.2, p. 38).  Could Japan provide an explanation why there was an increaseand in what sectors have tariffs increased?
4. Japan still maintains a large number of non- ad valorem  duties in several sectors such as
textiles (245 lines), processed food (123 lines) and vegetable products (60).  These affect mainly
processed manufactured goods that are of export interest to developing countries.  The report noted
that this practice does not lend itself to transparency and predictability and result in imports ofcheaper goods being taxed more heavily (Box III.I, p. 41).  Would Japan comment on whether they
envisage converting these rates to ad valorem  in the near future?
5. Secretariat's Report in p. 92 on pharmaceuticals, while highlighting certain concerns over
Japan's stringent rules, does not mention other difficulties such as the need to get local government
approval in addition to import licensing approvals.  The process involves some 26 documents.  CouldJapan explain why these cumbersome measures are necessary and whether there is a possibility of
simplifying the procedures through a single authority?
6. The section on sanitary and phytosanitary measures mentioned that there is no change in
Japan's Food Sanitation Law.  Does this mean that Japan's complex phytosanitary protocols
particularly on the import of tropical fruits will remain?  Only a few tropical fruits from Malaysia areallowed entry for which fumigation measures are required.  New varieties have to undergo additional
costly and time-consuming scientific testing before entry.
Exports of cut flowers to Japan also face difficultie s in entering the Japanese market, with stringent
quarantine procedures and inadequate airport facilities.  Has Japan adopted the FAO pest risk analysis
system which distinguished between quarantine and non-quarantine pests?
Would Japan clarify whether the above measures are applied only to the extent necessary to protect
human, plant and animal life or health and are based on scientific evidence and what steps will they betaking to ensure that these measures are not barriers  to trade.  Japan's elaboration of how they would
resolve these problems are also appreciated.
7. Could Japan provide a more detailed explanation why it is seeking to conclude
bilateral/regional agreements given its long-standing concerns over regional trading arrangements?
PERU
Report by the Secretariat (WT/TPR/S/76)
Summary Observations
1. Economic Environment
(P. ix, paras 2 and 3)
In paras 2 and 3, it is indicated that sustained economic recovery requires more aggressive
structural reform that enhances competition so as to reduce costs and prices to world levels and lessen
State intervention in the economy.  In this connection, has Japan obtained sufficiently beneficial
results to pursue deregulation?  Will the Government of Japan intensify the reform process in the
medium term?WT/TPR/M/76/Add.1
Page 21
III. Trade Policies and Practices by measure
1. Measures Directly Affecting Imports(P. 42, para. 31)
As mentioned in the Report by the Secretariat, there is clear escalation in the tariff structure which
discourages the export of products with high value added to the Japanese market.  Does the
Government of Japan have any medium-term plans to reduce this tariff escalation?
(P. 43, para. 33)
As indicated in the Report by the Secretariat, th ere are procedures for tariff revisions between the
Ministry of Finance and other ministries concerned.  Proposed changes are reviewed by the Customs
Tariff Council, after which the Ministry of Finance prepares legislation for Diet approval.
Peru would like to receive further information on participation by producers' associations and
associations of intermediate and final consumers in these decisions.  Are there any regulationsproviding for such consultations?  In this connection, at what stage of the procedure do they
participate?
IV. Trade Policies by Sector
(P. 86, para. 15)
Based on the information in the Report by the Secretariat, Japan is considering reducing domesticsupport to agriculture because it is prejudicial to the purchasing power and welfare of consumers and
the Japanese economy in general, as well as causing marked distortions in the allocation of resources.
Is the Government of Japan taking any measures in this regard?
(P. 87, para. 18)
Based on the information in the Report by the Secretariat, is it considered that these measures,
including a direct income support scheme in place of price support schemes, will be effective in
remedying the distortions and increasing competition?  Have any studies been carried out to quantifythe price reduction?
(Pp. 110 – 111, para. 118)
Peru would like detailed information concerning the criteria for access by foreign attorneys to the
official programme for legal apprenticeship.  Are there any exceptions based on reciprocity in the
context of a bilateral services agreement that can be supplied by foreign attorneys in theJapanese market?
EUROPEAN UNION
I. Economic Environment
1. Macroeconomic Policies
Given the problem of excess capital in various industrial sectors in Japan, coupled with the problem of
low returns on equity and the rising incidence of bankruptcies in the private sector, how does the
Japanese government explain the strong return to profitability by the corporate sector in recent
months, and the increase in private sector investment ?  Is the new investment only part of the "New
Economy" phenomenon, i.e. investment in information-technology?  Are these recent investment
trends sustainable?WT/TPR/M/76/Add.1
Page 22
How strong is Japan’s attachment to "lifetime employment"?  What measures have the Japanese
authorities undertaken to reduce inflexibilities in the labor market?
On 10th October, the Japanese Ministry of Finance published a report entitled "The Japanese
Government Balance Sheet".  This report showed that the Japanese government has negative net
worth to the tune of between 132.6 and 776.5 trillion yen.  Would the Japanese authorities care to
comment on these figures, within the context of the sustainability  of the Japanese national debt?
The national debt burden has been cited by commentators as one of the reasons why Japanese
household consumption is sluggish.  For example, Japanese citizens may increase their current saving,
and thus reduce current consumption, in anticipation of future increases in taxes that may be required
to service a large national debt burden.  Some commentators consider that the recently-announced
fiscal stimulus package aggravates the already poor st ate of Japan’s public finances.  Does Japan think
that the fiscal stimulus programme may actually negatively affect household consumption, thusstifling the fragile economic recovery?
The Japanese government says that it will embark upon fiscal structural reform once the economy is
"getting onto a path towards full recovery led by private demand" [quoted from para. 54 of the Report
by the Government].  How does the Japanese government define such a "full recovery"?  What are the
precise conditions which would convince the Japanese authorities to conclude that the time forcarrying out fiscal structural reform has come?
The examples of fiscal reform in other countries, such as Sweden, indicate that fiscal reform need not
negatively affect the economy, especially if the reforms improve the effectiveness of public
expenditure.  The expenditure multiplier of the Japanese fiscal stimulus programmes has been low,
and appears to be on a declining trend.  What measures has the Japanese government undertaken to
ensure that this year’s fiscal stimulus programme will have a bigger, longer-lasting impact than
previous programmes?
The small increase of interest rates to 0.25% which occurred once the Bank of Japan (BoJ) abandoned
its zero interest rate policy cannot really be called "fiscal tightening".  Does the Bank of Japan
nevertheless consider that it was sufficient to combat the moral hazard problem mentioned at para. 4
of the Secretariat’s Report?  Alternatively, even this small rate rise was criticised by opponents of the
BoJ.  Do the Japanese authorities consider that the interest rate hike was premature and that it mightharm the fragile recovery?
2. Structural Policies
In GoJ report III (3) – Domestic Policy Developments Affecting Trade Policy, regarding the question
of public comments procedure, we welcome the introduction of a public comments procedure in 1999,
allowing all interested parties to comment on administrative measures and draft regulations.  It is,however, important that enough time is left for well-substantiated comments to be taken into account
before finalisation of the legislative measure in question.
- What steps does Japan intend to take to ensure that this is the case?
3. Foreign Direct Investment
Despite recent increases in inward flows of FDI into Japan, in Japanese Fiscal Year 1999 outflows of
direct investment still exceeded inflows by a factor of 3.1.  The disparity in the accumulated stock of
direct investment also remains huge.  This imbalance points to structural factors which act as a
disincentive to inward investment and which make it more costly and time consuming to set up aWT/TPR/M/76/Add.1
Page 23
business or get new products or services approved than is the norm in other industrialised economies.
Japan’s business start-up ratio, at 4.6%, is the lowest amongst leading industrial nations.  Thisindicates that the current business environment is a hindrance to the rational allocation of investment,
be it domestic or foreign, within the economy.
- What concrete measures does the Government of Japan plan to take to create a more
attractive environment for investment?
- Recent large percentage increases in inward investment are mostly a result of a small
number of huge corporate deals.  What measures are proposed in order to ensure
(a) that the current increase in inward investment is sustained and (b) that the benefits
of greater inward investment are felt throughout all layers of the economy?  In this
context, are there initiatives to strengthen investment links between SME’s?
II. Trade Policy Regime:  Framework and Objectives4. Development and Administration of Trade Policy
Japan mentions in para. 103 of the GoJ report that a new round should also address "the issues of
global environment and the sustainable utilization of exhaustible natural resources".  What means
does Japan use to make its trade policy supportive of sustainable development?  To what extent does
Japan use, or is planning to use, instruments such as  sustainability impact assessments, as a tool in this
sphere?  In particular, what other mechanisms is Japan using to promote synergies between its trade
policy and its environmental policy?
What are the priorities of Japan in relation to consultations with domestic stakeholders?  How does
Japan consult with civil society (NGOs, business community, etc) on the formulation of its trade
policy?  What are Japan's views on improving WTO transparency?
5. Trade Agreements and Arrangements
The EC appreciates the clear presentation (in paras 40-42 of the GoJ Report) of the evolution in
Japan’s policy towards participation in preferential regional trade agreements.  The EC agrees that
compliance with relevant WTO rules is an important safeguard to ensure that any such regional
initiatives support and are complementary to the open multilateral trading system.  The report makes
reference to the Joint Study Group that has recently undertaken a feasibility study on a
Japan/Singapore FTA.  The report of this group includes the statement that "during the joint study, aconcern was expressed from the Japanese side on agricultural, forestry and fishery sectors.  A
statement was made from the Japanese side that it was not prepared for further tariff reduction in these
sectors in the framework of the JSEPA"
1.
- Notwithstanding the above recorded statement in the report of the Joint Study Group,
can the Government of Japan confirm that any future Free Trade Area between Japanand Singapore will nonetheless comply with the requirements of GATT
Article XXIV:8(b), in that it will cover substantially all trade and that no major sector
will be excluded?  Can Japan give the same commitment for any other future FTA it
may participate in (e.g. with Korea or Mexico)?  When does GoJ expect to take a
decision whether to pursue negotiations for preferential regional agreements withcountries other than Singapore and on the basis of which criteria?
                                                     
1 Section II, para. 9, p. 17 of the Report of the Joint Study Group, published on 28 September 2000.WT/TPR/M/76/Add.1
Page 24
- Has Japan's change in policy as regards preferential regional agreements had any
implications on its policy in the framework of APEC?  In particular what has Japan'sposition been in the discussions it has held with other participants in APEC on the
possibility of further liberalisations on an MFN basis within selected sectors?
- As indicated in the Report by the Secretariat (section II, para. 42 including table II.4,
and section IV, para. 33), measures introduced as a result of the 1995 Japan-U.S.
Autos and Auto Parts Consultation are to terminate by the end of 2000.  Could theGovernment of Japan indicate whether an extension of the measures is envisaged and,
if yes, what are the concrete modalities of such an extension?
- Para. 36:  Could Japan clarify what the position of Japan is and what stage Japan is in
as regards the possibility of granting duty and quota-free access for products from
LDCs?
III. Trade Policies and Practices by Measure
6. Tariffs
Could Japan please indicate whether it intends to bind the remaining 1-% of its tariff lines?
Non- ad valorem  duties:  Could Japan please identify the non-agricultural tariff lines subject to
non-ad valorem  duties that have (a) ad valorem  equivalents at international tariff peak levels (15% or
more) and (b) no trade (suggesting that the duties are prohibitive)?
The EC notes that the average tariff rate for non-agricultural products is low, at 1.7%.  However, high
tariffs are prevalent in certain sectors (e.g. footwear and headgear) and there is a considerable degree
of tariff escalation.  Could Japan please indicate whether and how it intends to reduce high tariffs and
tariff escalation?
The Japanese import regime on leather for years has been an unresolved problem in the bilateral
relations with the EU.  Further to the very lim ited volumes of the tariff quotas for leather, the
complexity of the management of the Japanese tariff quota system creates a wall of protection to the
benefit of the domestic leather industry, against more competitive imports from the EU, and restricts
market access.  The Japanese licensing system, which the EC has found not to be in compliance with
the WTO Agreement on Import Licensing Procedures, has negatively affected Community’s exports
within the tariff quota applied for leather, lead ing to a constant under utilisation of the quota.
- Will Japan make new proposals for a meaningful change of the existing quota system
and commitments to eliminate progressively import restrictions?
- Would Japan consider dismantling the current allocation system and its replacement
by an automatic allocation system in accordance with the WTO Agreement on Import
Licensing Procedures?
Japanese authorities used to provide data on imports of leather under tariff quotas until 1998.  Why
has Japan suspended provision of such data thereafter?  Can Japan provide the data on imports of
leather under tariff quotas since 1998?
P. 34, paras 47 (and previous headings):  Could Japan indicate the international agreements in place,
multilateral and bilateral, that provide for a co-operation between customs administrations or thatwould allow the exchange of information.WT/TPR/M/76/Add.1
Page 25
P. 37, para. 16:  Could Japan indicate how many times a year complaints against customs valuation
and other customs measure are filed and how long, in average, each of the procedural steps is likely totake.
P. 37, para. 17:  It appears that Japan has rules in place defining the non-preferential origin of goods.
Would it be possible to outline the general principles?  Furthermore, could Japan confirm that any
member of the WTO could be named as country of  origin in a customs declaration on an ordinary
MFN importation.
7. Standards and Technical Regulations
In relation to Standards  (pp. 54 and following of Secretariat report), para. 70 states that "Japan has
moved toward increased international harmonisation of its standards and technical regulations.  The
three-year Program for Promoting Deregulation (TYPPD), as amended for FY2000, re-emphasised
ministries and agencies endeavour to achieve greater international harmonisation of standards…"
- Could you please explain what are the on-going activities to further align national
standards, technical regulations and certification systems to international standards?
- Para. 72 emphasises the growing percentage of national standards being aligned to
international standards.  (62% in 1999).  Notwithstanding, a substantive number of
standards still deviate from international standards.
- Could you please develop the reasons for this remaining divergence?
- Para. 74 indicates that "approximately 7% of all Japan Industrial Standards (JIS) were
quoted in 1996 as mandatory technical regulations".
- Could the Japanese Authorities provide more updated figures and more detailed
information as regards the national standards that have been incorporated in the
national laws, or alternatively, that are being referred to by national laws and are
consequently ( de facto  or de jure ) of a mandatory nature.
The EU believes that the international harmonisation of automobile regulations is in the fundamental
interest of all producing nations.  The EU welcomes Japan’s accession to 1958 UN-ECE Agreement
and trusts that the Japanese side will sign up quickly to a significant number of the annexed
regulations as previously agreed.
- What schedule does Japan envisage for the adoption of the specific regulations
annexed to the UN-ECE Agreement in the near future?
In relation to conformity assessments , paras 73 and 75 mention the modification in the accreditation
system of certification bodies (Industrial Standardisation Law in 1997).
- Could you please provide more information about the situation as regards the
recognition of foreign conformity assessment bodies?  In this respect, we wouldappreciate information in relation to:
- The Japanese laws and regulations that open the possibility for foreign 
conformity assessment bodies to be recognised under these laws;
- the conformity assessment functions these bodies can fulfil in the context of 
these laws;WT/TPR/M/76/Add.1
Page 26
- the procedures that foreign manufacturers that would like to submit their 
production facilities or their products to assessment by these conformity assessment bodies must fulfil to have the results of conformity assessment 
be recognised by the relevant Japanese administration;
- the procedures for the recognition of these bodies;
- the conformity of these procedures with relevant international standards and 
guides (for instance ISO/IEC Guide 25 and 65) or, alternatively, if the standards are not aligned to international standard, the relevant national 
standard(s);
- the period of validity of the recognition and procedures for re-evaluation 
after expiry of the validity period;
- the costs involved for the recognition, the maintenance of the recognition 
and the re-evaluation;
- the time frame for the recognition;
- the role of accreditation in the process of recognition: can accreditation 
replace any of the procedural steps of the recognition procedure;
- the impact of the forthcoming Mutual Recognition Agreement on the 
recognition under the respective Japanese laws.
8. Measures Directly Affecting Export
Export Restrictions, Licensing and Cartels, in para. 102 of the Secretariat Report:  The report does not
comment on U.S. attempts to get Japanese steel producers to voluntarily limit steel exports to the US?
Could the GoJ please clarify the current situation as well as its position and responses in relation to
these attempts?
P. 64, para. 101:  Could Japan explain the procedures for exempting goods from consumption taxes
that are exported.  Is there also a refund available to tourists and other non resident visitors to Japan
that take goods which they have bought in Japan in their luggage out of the country.
9. Measures Affecting Production and Trade
P. 65, para. 109:  Could Japan explain the tax rates and the tax base for the application of the motor
vehicle tax.
P. 71, para. 123:  Article 69, 3
rd sentence of the TRIPS agreement calls on the members to promote
the exchange of information and cooperation between the customs authorities with regard to trade in
counterfeit trademark goods and pirated goods.  Could Japan explain the action undertaken for
implementing this obligation.
P. 10, para. 24 of Secretariat Report:  In hard core cartel cases the firms involved often succeed in
maintaining considerably higher price levels (sometimes considerably more than 20-30%).
- How does Japan intend to tackle the problem that a relatively modest overall level of
fines or a statutory cap on the amount of pecuniary fines makes it easy for firms to
calculate the cost of the highest fine possible if they were caught and factor this into
their budget plans?
The new civil remedy system which will come into force in 2001 as a result of the amendment of the
AMA in May 2000 is welcome.  However, both as regards core infringements by private firms as well
as administrative guidance which may encourage or to lerate such practices, civil litigation is in itself
not sufficient to replace a tough enforcement policy by relevant government agencies.WT/TPR/M/76/Add.1
Page 27
What measures does Japan intend to implement in order to advocate competition at all government
levels and to eliminate administrative guidance which has anticompetitive effects?
Criminal prosecutions under Japan’s Anti-Monopoly Act currently run at an average of one or none
per year.  This appears to indicate that the JFTC does not use the full potential of the legal powers at
its disposal.  What are the concrete steps envisaged by the Government of Japan to ensure more
vigorous and pro-active implementation of competition policy?
Why is the JFTC being merged into a General Af fairs Ministry (along, for instance, with core
regulatory functions of the Ministry of Posts and Telecommunications), and how is it intended to
maintain its independence?
Para. 130 of the Secretariat Report:  We note that attempts to increase the level of competition in the
Japanese economy constitute a major element in the regulatory reform process.  Could Japan indicate
how these efforts have affected outcomes, for example, via increased foreign penetration, prices,concentration ratios, or the  number of successfully prosecuted cases.
Para. 144 of the Secretariat Report:  We note that the Japanese Fair Trade Commission (JFTC) intends
to continue to monitor the six major corporate gr oupings and feels the need to continue to do so.
Could Japan clarify what the JFTC is looking for and the sort of action Japan might be envisaging?
It appears that there are plans to merge the three leading Japanese banks into one.  Can Japan confirm
this?  Could Japan inform of the part such a bank would have of the domestic market as well as other
relevant foreign markets?  Would such a concentration of market power be contrary to Japanese
merger control rules?
10. Regulatory Reform
Pp. 71-72 of the Secretariat Report:  The EC acknowledges that a number of measures and regulatory
changes have been introduced in the framework of the Regulatory Reform Programmes.  However, in
many cases, the industry is complaining that new regulations or new approaches do not deliver theexpected degree of progress, notably due to either procrastination by relevant authorities or bodies, or
to reference of unpublished administrative guidelines which put actual liberalisation in question.
- Since GoJ recognised in this exercise two years ago that "to make sure, administrative
guidance are not released in general" (see WT/TPR/M/32/Add.1, p. 4 - in that case
concerning JFTC), could Japan report whether this attitude (non publication) andpractice (to accompany regulatory changes, even when more liberal, by restrictive
administrative guidance) continues?  In case it does, how does this reconcile with the
intended drive toward a more positive and liberal regulatory framework?  How is it
possible to check whether steps or additional procedures to be implemented according
to administrative guidelines put or do not put foreign firms at a comparativedisadvantage compared to Japanese firms?  Or is it Japan's intention to reform this
practice or to make it completely transparent?
- More specifically, would Japan envisage to:
- Introduce a formal ruling process in cases where a company wishes to have 
written clarifications regarding a planned business situation or a particular regulatory situation?WT/TPR/M/76/Add.1
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- Publish regulatory decisions, including official guidance to individual 
companies, so as to provide a reliable body of administrative precedent?
In GoJ Report III (3) – Domestic Policy Developments Affecting Trade Policy, regarding
postponement of regulatory reforms, in a number of areas where essential reforms have been
announced, these have been delayed.  The reclassification of a number of quasi-drugs as cosmetics or
the introduction of a consolidated taxation system are cases in point.
- Can Japan provide an indication when the measures in question will be realised?- More generally, does Japan consider the introduction of a fixed timetable for
regulatory reform to ensure that the process stays on track and is not deflected by, for
example, vested interests?
In GoJ Report III (3) – Domestic Policy Developments Affecting Trade Policy, regarding
implementation of regulatory reform, we would like to underline that the assessment we are interestedin does not refer to the number of issues taken up in the Deregulation Programme, but should provide
information about actual change on the ground and concrete benefits of reform measures being felt by
economic operators.
- Could Japan provide its assessment of the real rate of implementation of regulatory
reforms?
- Which measures does Japan intend to take to ensure that regulations simplified in one
area are not replaced by new ones elsewhere, in particular at the local level?
The EU welcomes Japan’s announcement that it will launch a new Deregulation Programme from the
end of March 2001.  However, the means by which it is intended to continue to promote regulatory
reform across government remain unclear, especially in the context of the general reorganisation of
government ministries, which will come into effect in January 2001.
- What mechanisms are foreseen within government to continue to promote regulatory
reform, especially in view of the fact that the Management and Co-ordination
Agency, which is currently responsible for this task, will be subsumed within a new
General Affairs Ministry?
- Is it intended to enhance the role of th e Regulatory Reform Committee, in effect
currently an advisory body to the Prime Minister, for instance by giving it a broaderremit and legal powers under more direct prime ministerial authority?
- Is it intended to make greater use of cross-cutting policy approaches in the
formulation of future Deregulation Programmes, for instance along the lines of the
approaches currently being followed by the Regulatory Reform Committee to IT-
related issues and environmental regulations?WT/TPR/M/76/Add.1
Page 29
IV. Trade Policies by Sector
11. AgriculturePara. 72, p. 55 of the Secretariat Report:  We note that, "according to MITI, about half of JIS
[standards] were equivalent to international standards in FY1997".
- Could Japan indicate what proportion of JAS standards are considered to be
equivalent to international standards, and for what period of time this assessment is
made?
- If the above figure is less than 100%, could Japan indicate what measures it proposes
to take in FY2000 and FY2001 to bring JAS standards into line with international
standards?
Para. 79, p. 56 of the Secretariat Report:  Why does Japan continue to operate - contrary to the
practice of other OECD partners such as EU - a positive list system for quarantine pests, where allpests are considered harmful unless on the positive list?
Does Japan propose to change this system to a negative list system, where Pest Risk Analyses have
been performed for all designated quarantine organisms?
Often shipments of cut flowers, pot plants, fruit, and vegetables are refused permission for import or
are required to be fumigated, when they contain only organisms, which are not harmful and/or alreadycommonly present in Japan.  What measures will the Government of Japan take to overcome such
problems, which are created by the Plant Quarantine Law?
Para. 80, p. 56 of the Secretariat Report:  As far as Japan’s policy on "varietal testing" is concerned,
the WTO appellate body has found it to be inconsistent with the requirements of the SPS agreement
(19 March 1999).  Could Japan, then, explain why varietal testing is still being applied to EU produce,
in particular to Spanish oranges and French apples, 18 months after the adoption of the WTO Panel
and Appellate Body findings.
Para. 81, p. 57 of the Secretariat Report:  Could Japan give full details of all of the plant and animal
quarantine procedures whose operating hours have been extended since the previous Review.
Para. 2, p. 80 of the Secretariat Report: It is stated in the report that, "Japan is moving away from
price to income support."  What effect does Japan estimate that this will have on overall levels of
agricultural expenditure?
"Productivity in Japanese agriculture … remains low by national standards."  What specific measures
is Japan taking to improve agricultural productivity?  Are funds being specifically targeted for this
purpose, and are such funds being directed to particular sectors, or to agriculture as a whole?
Para. 6, p. 81 of the Secretariat report:  The report states, "Land scale per farmer in Japan has
remained roughly the same during 1997-99."  Given that the small scale of production is a major
contributor to inefficiency, as is recognised in the fist indent of para. 8, p. 82, is Japan implementing
any measures to encourage the consolidation of farm sizes?
Para. 7, p. 81 of the Secretariat Report:  Why is it that transport and distribution costs are considered
to be so high by the Japanese authorities, in a society, which is as, developed and modernised as is
Japan’s?WT/TPR/M/76/Add.1
Page 30
12. Manufacturing
In relation to pharmaceuticals:  The reasons why the Japanese market is predominately supplied by
Japanese firms remains unclear.  Why, in contrast to the EU and U.S. markets, is the Japanese market
predominately supplied by domestic firms?  What role does licencing by foreign companies play in
the market and does it disguise a more significant foreign presence in the Japanese market than is
suggested by the raw market share data?  What role does the Japanese system of pharmaceutical price
regulation play in limiting foreign presence in the market?
13. Overview of services
Para. 23 in the Secretariat Report "Summary observations":  Please provide examples of concrete
cases of where, inter alia, anti- competitive practices have helped shield Japanese service suppliers
from competition.  Please also give the GoJs assessment of to what extent the more aggressive
competition policy is tackling these practices.
Para. 38 of the Secretariat Report:  Could Japan indicate which share of GDP is generated by
commercially traded services (as opposed to the figures including public services)?  Could Japan also
indicate the share of services in Japanese foreign direct investment (on the side of Japanese investors
and foreign investment objects)?
Para. 39 of the Secretariat Report:  Is it official Japanese policy to allow increasing services imports
as a contribution to the intended enhancement of competition in the supply of services, and which
measures are taken to implement that policy?
14. Financial services
"Big bang" reform has brought about wide-ranging changes in Japan’s financial sector and has
considerably reduced the regulatory burden for operators.  However, concerns remain with regard to
(a) continued application of prior product and rate approval to many insurance products, especially
personal lines:  (b) excessively strict regulation regarding the separation of brokers and agents in theinsurance industry, hampering the ability of brokers to act independently to offer their clients the best
deal;  (c) the degree to which Investment Advisory Companies can have access to pension, mutual aid
association, postal savings and postal life insurance funds in order to offer both advice and
discretionary management services.
"Big Bang" reform appears also to include "opening the door to foreign institutions wishing to operate
in Japan".  Could Japan detail the progress made as regards the entry of foreign institutions?
What concrete measures are planned by the Government of Japan to ensure that the current
notification system for insurance products (so-called "file and use"), already applicable to some
commercial lines is extended to cover all personal and commercial lines? What action is planned to
reduce the processing period?
What action is planned in order to allow brokers to sell insurance products directly to consumers, to
collect premiums, and to submit their policies for approval directly to FSA?
Also, every single insurance product requires a license: what are the reasons  for not having class of
business license available at present.
P. 9, para. 19 of the Secretariat Report:  It is stated that "Provisioning standards [re banks] have also
been tightened".  How are foreign institutions affected in this respect?WT/TPR/M/76/Add.1
Page 31
P. 9, para. 20 of the Secretariat Report:  It is indicated that "life insurance companies are attracting
increased regulatory attention from the FSA".  What does this mean exactly, notably as regardsforeign companies?
What steps is the Government of Japan planning to ensure access to all pension, mutual aid
association, postal savings and postal life insurance funds for Investment Advisory Companies (both
advisory and discretionary)?
P. 98, Para. 51 of the Secretariat Report:  It is stated that "Foreign banks may enter the Japanese
market by establishing branches, agencies or subsidiaries; a license from the FRC is requires in each
case".  A footnote mentions that each branch or agency requires a separate license.  Why is it
necessary to do so?
15. Telecommunications
P. 20, para. 100 of the GoJ report mentions that "policy resources will be concentrated on IT related
matters such as further pro-competitive policies in the telecommunications sector…".  Which
pro-competitive policies will Japan implement for this purpose?
P. 101 para. 69:  According to the commitments made by Japan (reference paper), the regulatory
authority should be separate from, and not accountable to, any supplier of basic telecommunications
services.  How is this ensured taking into account that the Japanese Government owns a 53% majorityof the shares of Nippon Telegraph and Telephone Co.  (NTT holding company) and that the MPT
approves nominations of directors at NTT Holding?
Para. 69:  According to Japan’s additional commitments (para. 6 of the reference paper), "any
procedures for the allocation and use of scarce resources, including rights of way, will be carried out
in an objective, timely, transparent and non-discriminatory manner."  Could the Japanese government
provide those procedures?  Why is it necessary for the MPT to allow a company to negotiate a right of
way with a private landowner?
Is JFTC the competent competition authority for th e telecommunications sector?  If not, which is the
competent authority?
Para. 72: why is a Ministerial authorisation required in order for Type-I and Special Type-II carriers
to conclude, modify or abolish contracts with foreign corporations (what is the rationale)?
Para. 73:  which safeguards are put in place so that these four NTT companies do not behave, alone or
together, in an anti-competitive manner (including engaging in anti-competitive cross-subsidisation, or
using information obtained from competitors w ith anti-competitive results), as per Japan’s
commitments in the WTO?
Para. 74:  what is the scope of the universal service?  How is it funded?  How is it ensured that it is
transparent and competitively neutral, as per Japan’s commitments in the WTO?
Para. 76:  why do Type-I carriers need to notify to MPT, charges and their modification?  What is the
rationale for MPT to order carriers to revise their charges in order to assure fair and reasonable end-
user charges:  is this part of the universal service?  More generally, it is the understanding of the EC
that all carriers’ tariffs, business plans (and changes in business plans or service offered), network
plans (and changes thereto), etc. require prior notification to and approval from the MPT:  is this thecase, and, if so, what is the rationale for such a burden on operators?WT/TPR/M/76/Add.1
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Para. 78:  the para. mentions only requirements for Type-I carriers to interconnect with Type-II
operators:  aren’t there any requirement for type I operators to interconnect with each other?  DoesNTT publish a reference interconnection offer or all its interconnection agreements, as per Japan’s
commitments in the WTO?  How is it ensured that NTT East & West interconnection terms (including
rates) are then no less favourable than those provided  for their own like services or for like services of
their subsidiaries or other affiliates, as per Japan’s commitments in the WTO?
Para. 79:  the EC understands that Number portability will be possible by December 31, could Japan
confirm?
Para. 80:  which safeguards are put in place so that NTT-DoCoMo does not behave, alone or with
other NTT companies, in an anti-competitive manner (including engaging in anti-competitive
cross-subsidisation, or using information obtained from competitors with an ti-competitive results), as
per Japan’s commitments in the WTO?
Para. 83:  what is the legal responsibility of a telecommunications operators for temporary storing
data (in terms of intellectual property or criminal offenses for instance)?  Are there any specific
requirements on e-commerce service providers (in terms of information to the seller, data
protection, …)?
16. Maritime transportPara. 95.  What are the shares of the total Japanese tonnage, and number of vessels, under the
International Ship Regime (most recent statistics)?
It appears that the Japan Harbour Transportation Association (JHTA) is imposing that shipping lines
consult with them before any operational changes can be implemented.  What is the rationale for that
and in particular for the fact that a shipping line cannot change its contractor unless the JHTA
specifically sanctions such a change"?
As regards the 80% decrease in the number of consultations mentioned in this paragraph, it appears to
the EC more appropriate to say "some 80% of such consultations have since 1997 been categorised as
so called 'minor matters' and are relatively quickly processed by the JHTA".  Also, the EC had been
told and would like confirmation that Stevedore charges will from 1
st November, 2000 merely need to
be filed with the Ministry of Transport.
Pp. 107-8, para. 99, Harbour services:  The revised Harbour Transportation Business Law entered into
force on 1 November 2000 and is aimed at liberalising the provision of harbour services at nine of
Japan’s most important ports.  The EC welcomes this development, but believes that the system by
which carriers must still consult with the Japan Harbour Transportation Association (JHTA) before
requesting changes in stevedore works (known as "prior consultation") represents an artificial
constraint on competition, reduces operational flexibility and raises the costs of doing business.Alternative arrangements concluded in 1997 with a view to improving the prior consultation system
remain have yet to be implemented.
- Can the government outline how far the implementation of the new (May 2000) Port
Transport Business Law has progressed, in terms of securing transparency and
certainty of operation, mainly concerning stevedoring services and in particular whatconcrete actions will the Government of Japan take to implement fully the
agreements on improving the prior consultation system and establishing a system
which is transparent, equitable and swift?WT/TPR/M/76/Add.1
Page 33
- What criteria for establishing whether “price dumping” have been adopted?
- What steps have been taken to communicate the rules following the new law to the
(foreign) operators and shipping lines and what auxiliary services are open to
foreigners and under which conditions can foreigners establish?
17. Air transport
Pp. 109-110 of Secretariat Report:  The number of slots available at Narita airport is severely limited,
and thus the allocation system is of the utmost importance to airlines which wish to fulfil theconsiderable demand generated in the Tokyo metropolitan area for international flights.  Although
there have been recent improvements in the transp arency of slot allocation, the slot co-ordinator’s
freedom to meet demand is still constrained by hourly, three-hourly and daily limits on slot numbers.
In addition, the criteria to which the slot co-ordinator works do not fully apply IATA guidelines.
- What measures does Japan intend to take in order to make its system of slot allocation
fully compatible with IATA guidelines?
- Para. 116:  What is the percentage of slots allocated to foreign airlines granted under
the last two (half-yearly) allocations.  What is the total share?
- Para. 116:  What measure does Japan intend to undertake in order to enable an
increase of the number of slots available from the existing single runway at NaritaAirport?
- Japan states that its slot allocation system is based on IATA guidelines.  However, the
system does not fully correspond to IATA guidelines.  Please clarify the allocation
criteria to which the slot allocator works and explain clearly the extent to which
IATA guidelines are not applied.  What are the reasons?
- Para. 117:  What auxiliary services are open to foreigners and under which conditions
can foreigners establish?  What is the market-share of foreign ground-handlingservices operators in the two main international airports (Narita, Kansai)?
18. Legal services
Regarding foreign lawyers, pp. 110-111.  Although the implementation of a so-called "joint enterprise
scheme", in place since 1995, allows joint work on specific cases between Japanese lawyers and
foreign lawyers licensed in Japan, partnership between Japanese and foreign lawyers and employmentof Japanese lawyers by foreign lawyers are prohibited.  This in effect prevents the creation in Japan of
integrated international law firms able to give  the advice clients require on deals with multi-
jurisdictional aspects such as initial public offerings and mergers/acquisitions.  As such it has
knock-on negative effects on investment in Japan and on the economy as a whole.
- What concrete action is planned by Japan in order to abolish restrictions on
partnership and employment between Japanese lawyers and foreign lawyers licensed
in Japan?
- Para. 120:  it says that there was an amendment to the Special Measures Law, which
"lifted the ban on a GJB undertaking legal business concerning third country law."
Does this mean that a Foreign Lawyer is now allowed to give legal advice on thirdcountry law?  Do the 'relaxed experience requirements', also mentioned in thatWT/TPR/M/76/Add.1
Page 34
paragraph, imply a shorter period of required prior practice than the currently
mandatory five-year-period?
ADDITIONAL QUESTIONS FROM THE EUROPEAN UNION
Regarding public procurement:  Secretariat Report p. 49, para. 56 onward:  The Secretariat Report
describes a number of action plans and initiatives taken by Japan to improve the "future management
of Government procurement" or to avoid bid-rigging and promote effective competition.  It also states
that Government practice in Japan is highly decentralised, with no coordinating agency, withprocurement entities maintaining their own list of "registered suppliers".
- In these circumstances, and beyond major procurement cases (big ticket items and
procurement by central authorities), how does Japan implement the action plans and
measures for more transparency and open competition including foreign suppliers?
- How does the Ministry of FA "seek to assure the consistency of procurement policies
and practices with the GPA" as stated in para. 59?
There are contentions that the Government sets a ratio for public works orders placed with smaller
firms.  This could entice public entities to splitt ing projects into small segments with the result of
bringing each single call for tenders or offers under the GPA thresholds, and making it in-economical
for foreign firms to get accredited and to bid.
- Does Japan confirm that such a policy and resulting practice exist and in the
affirmative, is there an annual review of the smaller firm ratio and the effectiveness of
such a policy?
- If such a policy exists what would be the additional cost to the public budget and to
Japan's modernisation due to inevitable higher prices and lesser technological
upgrade linked with such uncompetitive fragmentation and a de facto exclusion of
foreign bidders?
Two years ago the EC asked the following:  "Could Japan comment on footnote 89 of document
WT/TPR/S/32 that quasi governmental entities and joint ventures between the private sector and the
Japanese government, which are outside of the scope of Japan's commitments under the WTO
Procurement Code, are increasingly purchasing services and goods that formally were the
responsibility of national and local governments?"  We do not seem to have received a full answer wewould therefore want to address this question again to Japan.
Regarding standards, p. 54 and para. 70 of the Secretariat Report.  The report states that "Japan has
moved toward increased international harmonization of its standards and technical regulations … The
Three-Year Program for Promoting Deregulation (TYPPD), as amended for FY2000, re-emphasized
ministries and agencies endeavour to achieve greater international harmonization of standards …"
What are the reasons why Japan still has not brought its legislation regulating engine output for
fishing vessels in line with the relevant international standard ISO 3046 (equivalent to JIS B 8002),
i.e. measurement of actual real engine ou tput expressed in horsepower or Watts/H.WT/TPR/M/76/Add.1
Page 35
SWITZERLAND
WT/TPR/S/76
(2) Measures Directly Affecting Imports
(ix) Standards, sanitary and phytosanitary measures
1. In para. 72 (p. 55) you record that Japan is continuing to bring its standards in line with
international counterparts.  Could you specify which standards, other than the ones established by
Codex, have been of relevance for the establishment of the Japan Agricultural Standards for organicplant products and processed foods made from organic plant products?
2. Could you explain whether there are deviations to the Codex Standards and if yes, what they
are?
3. We understand that the JAS Organic Standards only apply for organic plant products and
processed foods made from organic plant produc ts.  On its last session (May 2000) the Codex
Committee on Food Labelling (CCFL) has agreed to advance the Draft Guidelines for the Production,
Processing, Labelling and Marketing of Organically Produced Foods (livestock production) to Step 8
(adoption as a Codex Standard).  In this regard could you provide us with the information on whether
Japan is considering to extend its standards to livestock production as well?  If yes, are there any
major deviations from the Codex Standard to be expected?  Please specify.
4. In para. 82 (p. 57) you mention that an inspection certification and a labelling system for
organic food has newly been introduced under the am endment of the JAS-Law.  Could you give us a
detailed description of this system with regard to the import of foreign products?
5. As we understand it will be necessary to obtain accreditation from an authorised accreditation
body in order to be allowed to label food "organic".  Which are the necessary qualifications for
Registered Foreign Certification Organisations and for Registered (domestic) Certification
Organisations?  Which normative documents are being used to assess these organisations (domesticand foreign)?  Will there be any differences in terms of requirements and assessment between RFCOs
and RCOs?  Are the qualifications of Certifications Organisations, accredited according to ISO
Guide 65 by the competent national authorities, considered equivalent?  If no, please specify
additional requirements not covered by this guide.
6. In Japan there is a marking system in place for voluntary standards covering about
700 products (both in the area of industrial and agricultural products).  In the Japan Industrial
Standards (JIS) marking system an accreditation system of private certification bodies was introduced
in 1997.  As of today no foreign certification bodies were accredited in Japan as JIS mark certification
bodies (p. 55 of the Report by the Secretariat).
- What is the rationale for such a marking scheme for voluntary JIS standards?
- What are the requirements for this kind of accreditation which need to be met by the
bodies applying and how will the competence of these bodies be assessed?
- What is the reason why no foreign body is accredited as JIS mark certification body
as of today?  Are domestic and foreign certification bodies subject to the same
requirements when applying for accreditation in this area?
7. Japan is about to take further steps to ensure acceptance of foreign test data and conformity
assessments.  So far, as indicated in the Report by the Secretariat on p. 56, this has been implemented
in the areas of telecommunications equipment (acceptance of foreign test results and foreignWT/TPR/M/76/Add.1
Page 36
certifications) and clinical data. In the area of medical devices foreign test results are only recognised
when there is a regulatory co-operation arrangement in place between Japan and the exporting countryin question (actually this is only the case for exports from the United States, the European Union and
Australia).
- What are the criteria for accepting test data in the areas mentioned above?  Are there
other product sectors where foreign test data is accepted? What further steps are
envisaged by Japan to ensure the acceptance of foreign test data in other productareas?
- Why are foreign test data in the area of medical devices only accepted upon the
conclusion regulatory co-operation arrangement?
- What are the conditions to enter into such a regulatory co-operation arrangement with
the Ministry of Health and Welfare which would allow the Japanese importer toconfirm the records of the testing of the medical device performed by the
manufacturer in the exporting country?
(5) Services
(ii) Financial services
1. From October 2000, banks have been allowed to provide insurance services through
subsidiaries.  Is it also possible for an insurance company to provide banking services through asubsidiary (para. 47, p. 96)?
2. The report indicates that it is possible to access the Japanese market by establishing a branch
or subsidiary (para. 51, p. 98).  Is it also possible for a foreign bank/insurance to acquire and control a
Japanese financial institution?
AUSTRALIA
Food/Agricultural products
1. The Three Year Program for Promoting Deregulation (as revised in April 2000) aims at
creating a "free & fair Japanese economy fully ope n to the international community".  Why is this
policy limited to certain sectors and in particular when will the agriculture sector experience such
reforms?
2. What benefits has the Three Year Program for Promoting Deregulation made to the Japanese
agricultural sector?  Will the extension to the Three Year Program for the Advancement of RegulatingReform have implications for the Japanese agricultural sector?
3. What future measures will Japan undertake to address issues such as exceptionally high tariff
peaks, given that they are of particular concern to developing countries, particularly for differing
forms of agricultural produce?
4. Is the Basic Law on Food, Agriculture and Rural areas inconsistent with Japan’s commitment
to deregulation and freer trade, especially Japan’s obligation to implement fundamental reform under
the WTO Agreement on Agriculture?  What measures has Japan undertaken since its last Trade Policy
Review to implement reform under the WTO Agreement on Agriculture?WT/TPR/M/76/Add.1
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5. If there is a long term change in Japanese food consumption patterns, shouldn’t this be
addressed (at least to some degree) by the market forces of international trade?
6. What is the current level of Japan’s food self-sufficiency?  What changes in trade policy will
be required for Japan to meet its 45% food self sufficiency target by 2010?
7. Despite government assistance, productivity in Japanese agriculture remains low by
international standards.  With problems such as an ageing agriculture sector population and the
extremely small average size of farms, isn’t it time to re-evaluate the considerable financial andresource costs in maintaining protection for the agriculture sector?  Can Japan provide data on the
productivity of rural sector over the past few years and explain the trend?  Can Japan additionally
provide figures on the actual costs, including to co nsumers, of providing protection to the agricultural
sector?
8. The high cost of agricultural inputs has been a factor in Japan’s food processing industries
considering offshore relocation.  How will this affect the food sufficiency targets contained in the
Basic Law?  Has Japan considered the option of increasing self-sufficiency by increasing agricultural
efficiency and competitiveness?
9. Given that Government support to agricult ure in Japan is higher than agriculture’s
contribution to Japanese GDP, that two thirds of farm income is derived from government support andthat consumers pay twice the cost of goods that woul d apply in the absence of such support, can Japan
provide information that demonstrates that the Government’s support to the agricultural sector is
achieving the objective of stabilising farm incomes?
Has the Government considered restricting farming to  efficient enterprises and paying farmers to take
inefficient farms out of production entirely?  This would end the inherent internal conflicts in the
policy of multifunctionality that have led to its failure.
10. We are interested in the relationship between new free trade agreement initiatives by Japan,
specifically with Singapore, and Article XXIV of the GATT.  We note that the Joint Study Group
report on the "Japan-Singapore Economic Agreement for a New Age Partnership" highlighted that
Japan was not prepared to liberalise tariffs in the agricultural, forestry and fishery sectors in the
framework for the Agreement.  In light of this how will Japan address these sectors and potential
trade-offs in its free trade agreement negotiations with Singapore and other potential free tradeagreement partners?  We are particularly interested in Japan’s views regarding comprehensive
coverage of all sectors in free trade agreements.
Telecommunications (p. 100 of Secretariat Report)
11. Australia welcomes moves by the Japanese Government to eliminate restrictions on foreign
ownership restrictions for Type I telecommunications services and cable TV service providers but wenote the exclusion of NTT to restrict foreign ownership to less than one fifth (20%).  Does Japan
envisage an easing of this restriction?
12. Deregulation of telecoms markets in Australia has led to new entrants and lower charges,
which has boosted national IT literacy rates.  In pursuing efforts to increase its own IT penetration
rates, has Japan considered addressing interconnection charges paid by Type II carriers to accessfacilities owned by Type I carriers?
13. We note under Entry Regulations (p. 102 of Secretariat Report) the distinction of Type I and
Type II carriers.  The distinction between the two carrier types artificially divides and restricts theWT/TPR/M/76/Add.1
Page 38
market from operating at its most efficient level by creating an economic and operational market entry
barrier.  To provide a combination of services  using its own and other networks, a company must
acquire both a Type I and Type II licence.  Australia understands that some relaxation of the existing
regulations on Type I and Type II carriers is planned.
Can Japan provide details of the current situation, and of the planned relaxation of these regulations.
14. The cumbersome current system of approvals and notifications administered by the Ministry
of Posts and Telecommunications (MPT) imposes heavy administrative burdens on wholesale and
retail telecommunications.  Why are these administrative requirements necessary?  Does Japan have
any plans to remove or streamline the current requi rements for interconnection, or to make the terms
and conditions of sales more clearly defined?
- For example, when a carrier interconnects with another carrier the interconnection
agreement is subject to approval by MPT (Telecommunications Business Law,Article 38-3), a process that can lead to unnecessary delays.
- On the retail side, under Article 31 of the Telecommunications Business Law, Type I
and Type II carriers are required to submit ‘Articles of Agreement’ to MPT detailing
services they are offering to customers and the terms and conditions of the customer
agreement.  The absence of clear guidelines as to what should be included in theArticles of Agreement can cause delays in processing licence applications.
- Article 10 of the Telecommunications Business Law requires that the business plan of
a Type I carrier must be "firmly based and rational".  The requirement for
interpretation of these terms by MPT, rather than through a clear definition, can lead
to delays in approval of licence applications.
These administrative processes are costly and time-consuming, and have the effect of creating a
restriction on entry into the Japanese market.  Does Japan have any plans to change these processes,and improve transparency in line with its WTO obligations?
15. Australia notes that users and carriers may file complaints and petitions with the MPT about
telecommunications issues (see p. 105 of Secretariat Report).  However, the MPT is also responsible
for the policy and regulatory functions for telecommunications.  Australia considers that the creation
of a fully independent regulatory entity would help to ensure that non-discriminatory and transparent
processes exist within the telecommunications market.
What are Japan's views on this subject, and are there any plans to create a fully independent
regulatory entity.
16. Para. 83 of the Secretariat Report notes that the Diet has approved the Law Concerning
Electronic Signatures and Certification Services as a means of advancing electronic commerce withinJapan.  The demands that electronic commerce will place on the regulatory environment of many
industries cannot be underestimated.  It is therefore essential for Japan, and other members, to ensure
that the practices of other sectors of the economy be regulated in such a way to ensure that goods
traded electronically do not face unnecessarily barriers.  What are Japan's views on this issue?
Legal Services (p. 110 of Secretariat Report)17. Japan ranks among the top five legal services market for Australia. Although Japan's
regulation of foreign is relatively restrictive, Australian lawyers and law firms have been able toWT/TPR/M/76/Add.1
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access Japan’s legal services market to service the needs of Australian, Japanese and international
clients - but generally do so other than as registered foreign lawyers.  (Gaikukokuho-Jimubengoshi
Jimusho (GJB))
Australia has a number of concerns relating to Japan’s approach to legal services.  These include:
(i) the long and usually bureaucratic process of seeking GJB status;
(ii) restrictions on most forms of commercial association between foreign and Japanese
lawyers and law firms;
(iii) a three year minimum period of professional experience (i.e. considerably more than
the one year’s supervised professional practice, in addition to articles or practical
legal training, for an Australian lawyer to be eligible for an unrestricted practising
certificate in Australia);
(iv) a minimum period of 180 days residence in Japan each year;  and
(v) discriminatory regulation concerning the practice of third country law (through the
additional requirement imposed on foreign lawyers in relation to the practice of
foreign law)
The 3-year minimum professional experience requirement (item iii above) works against newly
qualified Australian lawyers who wish to gain overseas experience early in their career.  Theadditional requirement concerning the practice of foreign law (item v above) imposes a cost only on
foreign lawyers and amounts to a differential and discriminatory standard.
What is Japan's approach towards the issues identified in (i) to (v) above, and what action, if any, is
Japan prepared to take in order to address the concerns specified?
18. The appropriate role of the Japanese professional/ regulatory bodies should be to establish
that a foreign lawyer has good standing with his or her home country professional/regulatory bodies.
These regulatory bodies should not specify additional experience or other professional requirementsconcerning practise of the law of another jurisdiction (i.e. the foreign lawyer's own jurisdiction or the
law of another jurisdiction).  This is a function that is best performed by the admitting and
professional/regulatory bodies in those other jurisdictions, as those bodies are in the best position to
properly determine competency and experience requirements - not Japanese bodies.
In Australia, the requirements for admission to practice and issue of an unrestricted practising
certificate have been developed to provide for a high standard of professional competence and
consumer protection.  No additional requirement, other than the maintenance of a high standard of
professional conduct and continuing legal education, is considered necessary by the competent
authorities in Australia.  In so far as the practice of the law of Australia in Japan is concerned, it is
unclear why the Japanese authorities might consider they are in a better position to determineadequate experience requirements for Australian lawyers or legal consultants.  Australia has no such
additional requirement for foreign lawyers practising home country law in Australia who are in good
standing with their home country professional or regulatory body - including foreign lawyers from
Japan.
Against this background, can Japan provide an explanation for its current approach concerning
regulation of foreign lawyers practicing home country law?WT/TPR/M/76/Add.1
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19. The Ministry of Justice also imposes more burdensome requirements for foreign lawyers
providing advice on third country law than for Japanese lawyers providing advice on third countrylaw (i.e. foreign lawyers are required to obtain a confirmatory letter from a lawyer in the third country
concerning the matter on which advice or an opinion is provided;  Japanese lawyers have no such
obligation imposed on them in regard to third country law.).
Once again, where advice by a lawyer or legal consultant on third country law is involved, the
admitting and professional/regulatory bodies of the third country are the proper bodies to determinecompetence and experience in that body of law, rather than a regulatory authority in the host country
where the advice is being given.  This is the position in many countries, including Australia.
Can Japan explain how these requirements meet its obligations under the GATS Agreement
concerning National Treatment?  Does Japan have any plans to change the current situation?
Financial Services20. Australian welcomes the Japanese Government’s progress in liberalising its financial sector in
particular the desegmentation of Japan’s financial markets through progressive removal of barriers
between different types of financial institutions .  New regulation, new competitors, new techniques
and approaches, and new technologies are empowering customers and allowing freer trade in financial
services.
We note the decision outlined on p. 98, para. 53 of the Secretariat's report that in April 2001, the
mandatory re-depositing of savings with the Fiscal Investment and Loan Program is to be terminated.
Are there any plans to make a similar change in relation to Postal Life Insurance?
21. There have been complaints that Japanese re gulatory authorities often make foreign entrants
comply with many administrative requirements for even the simplest of approvals.  Legal,
administrative and regulatory requirements are also seen as changing arbitrarily, and compliance with
one requirement may reveal a request for compliance with further requirements.
What measures has Japan undertaken to ensure the simplification and transparency of regulatory
requirements in the financial services sector?
22. Japanese companies often work in business groups - Keiretsu (supporting each other across
business processes), concentrating economic power in a small group of companies.  The market
power from this practice enables the companies to constrain fair competition, infringe the interests offoreign firms and tie up distribution channels.
What measures will the Japanese Government impl ement to prevent restrictive trade practices that
unreasonably restrict trade in the financial services sector?  Will the Japan Fair Trade Commission be
able to investigate such restrictive trade practices?WT/TPR/M/76/Add.1
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COLOMBIA
Report by the Government
In paras 90 to 98 Japan describes its agricultural policy reform, particularly the new Agricultural
Basic Law.  According to the report this new Law has four policy objectives:  a) securing of a stable
food supply;  b) fulfilment of the multifunctionality of agriculture;  c) sustainable agricultural
development and d) the development of rural areas.  From our perspective this new Law will increase
trade distorting domestic support of Japan considering the fact that it includes new price supportpolicies and will introduce blue box measures that Japan has not provided in the past.
Could the Japanese authorities explain why the multifunctional role of agriculture should be addressed
with trade and production distorting domestic support and not with green box measures?
Since the new Law was enacted this year, could the Japanese authorities explain what are the plans to
avoid surpassing the year 2000 commitments in the area of domestic support?  Is the idea to shiftdomestic support from amber box to blue box?
Taking into account the objectives of the ongoing negotiations in agriculture and the objectives of the
Agricultural Basic Law, could the Japanese author ities explain how they reconcile with each other?
Secretariat Report
III. Trade Policies and Practices by Measure(2) Measures directly affecting imports
(ii) Custom valuation
In para. 12, the Secretariat Report states that "Japan does not employ minimum import prices".
However in footnote 14 the Secretariat Report describes the differential duty as a specific rate charged
per kg. of imports with the rate varying directly with the difference between the standard import price
(precio oficial de importación  in the Spanish version of the Report), set by the authorities, and the
actual import price.
Could the Japanese delegation explain this policy against its commitments in the Custom Valuation
Agreement, particularly, Article 7.2 and in the Agreement on Agriculture, particularly, the footnote of
Article 4.2?
(iii) Tariffs
The Secretariat report acknowledges Japan’s liberalization of trade and investment regimes.
However, the complex tariff scheme has potential distorting effects to competition.  The presence of
non-ad valorem duties, compound duties, alternate duties, differential duties and sliding duties, all of
them include specific duties which generally are intended to provide consistent levels of protection to
domestic products facing fluctuations in import prices.
In the case of the alternate duty, which involves either ad valorem  or specific rates, the
custom authorities usually apply the higher of the two.  Chart AIII.1 listed the products that are
subject to the alternate duty as well as other goods subjected to the smaller duty.
Could the Japanese delegation provide more information regarding the decision-Making
process involved in the application of the alternate duty?WT/TPR/M/76/Add.1
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Are there any specific or fixed criteria in the application of the alternate duty in order to avoid
discretionary managing during the importation process?
What are the plans of the Japanese authorities to reduce the list of merchandises subjected to the
alternate duties?
In relation with Tariff Rate Quotas TRQ’s, Japan has applied a system of autonomous TRQ with the
aim to provide low-cost inputs for industrial purpos es.  Many of the TRQ’s with end-use provisions
(FY2000) were related with agriculture, while TRQ’s for leather were linked to regional and socialpolicies.
In the case of agricultural products, quota allocation is based upon historical imports and current and
future plans for imports.  Some specific requiremen ts need to be met by the applicants taking into
account the characteristics of the products and the market, with a view to ensuring that the licensed
goods are supplied to end-users.
Could the Japanese authorities explain how the objectives of the autonomous TRQ’s, the linkage of
the leather TRQ to regional and social policies and the end-use provisions are compatible with the
TRIMS Agreement?
IV. Trade Policies by Sector
(2) AgricultureParas 6 to 18
The Secretariat Report states that governmental transfers to the agricultural sector exceeded the
contribution of the agriculture in the Japanese GDP (Table IV.1).  In addition, the support received by
farmers and the costs to consumers of agricultural products remain above the OECD average and have
increased since 1997.  According to the producers nominal assistant coefficient NAC and consumers
NAC, the high levels of support provided by the Government have increased the costs to the
consumers and at the same time, have increased the income of farmers.
Could the Japanese delegation explain the rationale behind this domestic support policy in agriculture
that transfers the inefficiency costs of farmers to consumers and, by doing so, increases the retail
prices of food?
Despite the large agricultural trade imbalance of Japan, the high level of protectionism in this sector
persists.  It is very common to encounter the presence of tariff peaks, tariff escalation, complex tariffquota regimes, mixed duties and specific duties whose ad valorem  equivalents are prohibited in the
most cases.  These elements make the tariff regime in agriculture non-transparent and less predictable
and increase the cost of food in Japan.
Could the Japanese Government explain whether there is any plan towards the simplification of the
tariff regime?
Taking into account the high levels of protectionism in agriculture, what are the Japanese objectives
in the ongoing negotiations on agriculture in the area of market access?WT/TPR/M/76/Add.1
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URUGUAY
Report by the Government (WT/TPR/G/76, para. 34, p. 9)
1. Para. 34 of the Government Report express that, with respect to a cooperation agreement in
the area of competition policy, Japan and the EU have reached a mutual understanding on substantive
elements of the future agreement.  Could Japan mention what are these substantive elements?
Report by the Secretariat (WT/TPR/S/76)
Summary Observations, p. xii2. Para. 7 of the Government Report express that Japan has benefited to a great extent from
multilateral system of world trade.  Taking this into account, could Japan comment on para. 20 of the
Secretariat Report (Summary Observations) that notes that the agricultural sector remains relatively
well protected from foreign competition, the average tariff on imports of agricultural products remains
high, tariff quotas can be intrincate, and as a consequence, the overall level:  of government assistancefor apiculture is well above the OECD average, and appears to have risen since 1997?
Part I - Economic Environment, para. 23, p. 10
3. Could Japan comment on para. 23 which express that some sectors, particularly agriculture,
have been largely exempt from liberalization efforts and therefore competition, at considerable cost to
the economy, and not surprisingly, productivity in agriculture has lagged behind that inmanufacturing?
Part III - Trade Policies and Practices by Measure
Para. 2, p. 35
4. Could Japan comment on para. 2 that notes that non- ad valorem  duties are an important
feature of the tariff, particularly in agriculture and such duties which account for 6.9% of all lines can
result in high ad valorem  equivalents (AVE)?  Could you also comment on the same para. which
notes that these AVE estimates show that 90 of the top 100 tariffs entailed non- ad valorem  duties
whose AVEs ranged from 40.1% to 983.7%?
Para. 69, p. 53
5. Could Japan comment on para. 69 which express th at the stated aims of state trading include
stabilizing supplies to consumers, controlling imports to assist domestic producers and protection of
consumers' interests?
Part IV - Trade Polices by Sector
Agriculture
Para. 6, p. 81
6. Could Japan comment on para. 6 that express that agriculture accounts for a small and
declining share of GDP, about 1,3% in FY1998, and the OECD estimates indicate that the total
transfers to agriculture were higher than the sector's value-added during the period 1990-1998
(Table IV.1)?WT/TPR/M/76/Add.1
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Para. 9, p. 83
7. In relation to para. 9, could Japan explain why the average applied MFN tariff for agriculture
(WTO definition) was 18.2% in FY2000 compared with an overall average of 6.5%, and why some
16% of duties applied to agricultural goods were non- ad valorem ?
Rice
8. Could Japan comment on para. 12 that notes that "According to the authorities, an increase in
rice imports is unlikely"?
9. Could Japan comment on the press release dated October 20, 2000 (Kyodo News
International Inc), which express that, according to government sources, "Japan is considering a
proposal to shelve its promise to open its rice market gradually in order to protect Japanese rice
farmers from cheap imports"?
INDIA
1. Para. 20 of the Summary Observations in the report by the Secretariat notes the high
protection offered to the agricultural sector in Japan by maintaining high tariffs on imports, grant of
domestic support to a number of products and by ope ration of a complex tariff quota system.  It notes
that the overall level of government assistance for this sector is well above the OECD average. In
spite of the high protection, productivity in Japanese agriculture is low by national standards.  Para. 21
notes the enactment of a new Basic Law for Food, Agriculture and Rural Areas in July 1999 in order
to meet the current challenges and to lay out the future direction for Japanese agriculture.
Keeping in view the fact that agriculture is one of the most important sectors of great interest to a vast
majority of developing countries, we would like to know the details of the Basic Law.  Does Japan
have any plans to reduce the domestic support to the various agricultural commodities?  We would
like to know if Japan intends to carry out autonomous liberalisation of this sector without linking it
with the ongoing negotiations.
2. Para. 2 suggests that more aggressive structural reform that enhances competition would be
needed for a sustained economic recovery.  In para. 3, the Secretariat notes the fragility of the
financial system which is also seen as a threat to the economic recovery.
Will the delegation of Japan comment on these observations?
3. While para. 4 states that Japan's trade policy priorities include the strengthening of the
multilateral trading system, para. 7 notes the greater interest now being shown by Japan towards
regional free-trade agreements.  It further notes the possibility of forging free trade agreements with
Singapore and Korea.
We would like to know Japan's perspectives on regionalism.
4. Para. 10 notes that while nearly 99% of the tariff lines are bound and most applied rates
coincide with bound rates thereby allowing a predictable regime, non- ad valorem  duties, especially in
agriculture accounting for 6.9% of all tariff lines in financial year 2000 concealed a high ad valorem
equivalent rates.  Further, this para speaks of the complex nature of tariff quota allocation of about
200 agricultural items.  In addition, para. 11 notes that certain aspects of the import quota system can
also be complex like the tariff quota administration.WT/TPR/M/76/Add.1
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We would like to have the comments of the delegation of Japan on these observations.  Further, we
are interested to know if any plans are underw ay to simplify the tariff quota and import quota
administrations.
5. Para. 19 notes the introduction of a three-year programme for promoting deregulation as a
positive step in creating a free and fair Japane se economy fully open to the international community.
Further, it notes the strengthened role of the Japan Fair Trade Commission (JFTC).  However, it notes
that the operation of the JFTC is hampered by its lack of resources and expertise in pursuing complexcases.
The delegation of Japan may comment on these observations.
6. Para. 25 notes the fragility of the financial system in Japan and again states that this poses a
threat to the economic recovery.  It points out th at some life insurance companies face the threat of
bankruptcy and hence are attracting increased regulatory attention from the Financial ServicesAgency.
The delegation of Japan may like to comment on these observations.
7. We understand that Japan has imposed zero tolerance clause on insects, which poses market
access problems for flower imports into Japan.  We understand further that the insects in question,
namely, thrips and aphids, are present in Japan itself.  Further, it has been pointed out that the PlantQuarantine Authorities at the Japanese airports take a longer time in clearing the consignments
keeping in view the elaborate fumigation procedures.  This delay creates difficulties as flowers are
highly perishable.
We would request the Japanese authorities to look into this problem and take steps to remove the
market access barriers.
8. Another problem faced by flower exporters, especially from India, is that the Japanese auction
houses bring the Indian roses towards the end of the auction process after the entire domestic supplyand the supplies from other supplier countries are auctioned.
We would request the Japanese authorities to look into this matter and take steps to ensure that the
system of auctioning is in conformity with MFN and National Treatment obligations.
9. We are told of difficulties faced by exporters due to application of strict SPS standards and
delay in conducting tests and issuing certificates by the Japanese laboratories.
We would request the Japanese authorities to explai n their SPS system and also to take steps to speed
up their process of conducting tests and issuing certificates.
10. Para. 26 notes that even though measures aimed at promoting further deregulation in the
telecommunications sector have been taken, the sector still remains monopolistic and the prices of
some services, like the internet access charges are still high by developed country standards.  It hasbeen pointed out that this will have an adverse impact on the development of electronic commerce.
We would like to hear the response from the Japanese delegation on these observations.  Further, we
would like to know if Japan has any plans to ma ke some autonomous liberalisation in this sector,
without linking it to on-going services' negotiations.
11. While para. 28 begins by saying that there are signs of recovery, the subsequent observations
therein indicate a pessimism concerning the strength of such a recovery and its durability.  Para. 29WT/TPR/M/76/Add.1
Page 46
speaks of wavering in the Government resolve to cont inue in its pursuance of structural reforms.  It
also notes some signs of "reform fatigue".
We are interested to know the response from the delegation of Japan on these observations.
BRAZIL
1. According to the Report by the Secretariat, "although Japan has traditionally eschewed
regional free trade agreements on the grounds that they could lead to exclusive, discriminatory trading
blocs and thereby undermine the multilateral trad ing system, such agreements now seem to be
attracting greater interest to Japan" (p. 19, para. 4).
Could Japan clarify what kind of agreements are being negotiated with Singapore and Korea?
Is Japan negotiating agreements with other countries?
In view of this new scenario, what is the position of Japan in the Committee of Regional Agreements,
specially as regards the so called "systemic issues"?
2. According to the Report by the Secretariat, "Tariff escalation is evident in a number of
sectors, most notably processed food, textiles, chemicals and leather products" (p. 42, para. 31).
There are important export products from Brazil that are facing this trade barrier in having access to
the Japanese market as soybean oil, prepared coffee and cigarettes, and also footwear.  Could Japan
provide any explanation to the continuation of this kind of protection?
3. As indicated in the report of the Secretariat, Non- ad valorem  duties consist of compound
duties, alternate duties, differential duties and sliding duties, all of which include specific rates.  There
is a significant number of products from Brazil that is facing such type of specific duty as sugar,
ethylic alcohol, orange juice and footwear.
Since this type of duty provides a greater nominal protection as the price of the product is reduced, is
Japan planning to change the use of non ad valorem duties to ad valorem  duties in the future?
4. As mentioned in the Report by the Secretariat, "since 1998, no change has been made to the
Food Sanitation Law" (p. 56, para. 79).  Brazilian exporters of tropical fruits are facing increasing
barriers in terms of phytosanitary and quarantine measures to the following products: mangos,
oranges, papayas, melons, watermelon and tomatoes.  Brazil’s concerns are related to the practice of
limiting SPS protocols to specific varieties of fruits and the non acceptance of Brazilian methods of
treating fruits to control specific diseases.  Could Japan offer some kind of explanation about thispractice?
5. Other issues (electronic commerce) – p. 105, para. 83.  With regard to the Law Concerning
Electronic Signatures and Certification Servi ce, approved on 24 May 2000, the Secretariat Report
states that the "Law also introduces a system that enables mutual recognition of certification services
between Japanese and foreign accreditation systems, where a mutual recognition agreement existsbetween the two countries".  Has Japan signed any such agreements and if so with which WTO
Members?  Could Japan provide information on the system used for recognition and accreditation of
electronic signatures?
6. In Japan’s schedule of specific commitments with regard to "placement and supply services of
personnel (1.F.k) the limitation on market access in mode 3 states that "the number of licencesconferred to service suppliers may be limited".  Is this limit permanent or has it been subject to
modifications?  What are the criteria for the establishment of limits for the number of licences?WT/TPR/M/76/Add.1
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ADDITIONAL QUESTIONS FROM BRAZIL
7. Does the Government of Japan maintain any exceptions to the principles of MFN and NT
with regard to FDI?  If that is the case, what are the sectors/activities and are there any plans to reduce
or eliminate these exemptions?
8. Could Japan explain how its tariff quotas and autonomous tariff quotas are administrated?
9. With regard to state trading (Secretariat Report p. 53, para. 69) what are the plans of the
Japanese Government to reduce or eliminate these practices in the light of their trade distortiveeffects?  Can the Government of Japan confirm the abolition of the MITI's monopoly on import,
production and sale of industrial alcohol by 01 April, 2001 as stated in the Secretariat Report?
10. Could Japan provide more detailed informa tion about how ifs non-automatic import licencing
system works?  Please provide an updated list of the products/tariff lines subject to the system?
11. With regard to government procurement, the Secretariat Report mentions (p. 50, para. 58) that
"the authorities state that government procurement is conducted without any restrictions on suppliers'
nationality or on the origin of products and services, based on the principle non-discrimination".
Does this mean that suppliers from countries that are not members of the GPA are accorded the same
treatment given to suppliers from GPA member countries?
12. Could Japan explain the reasons for restricting the use of nicarbazine in poultry meat?13. We would like to know Japan's views on the recognition of disease or pest free areas in the
light of the mechanisms set out in Article 6 of the SPS Agreement to that effect.
NORWAY
1. Japan presented a study (AIE/60) in the AI E-process of the Committee on Agriculture, which
indicated the value of multifunctionality in Japan in terms of land and water resource conservation
provided by paddy fields.  Do you have any new or updated figures in this regard?  Have you
undertaken any other studies to identify the value of multifunctionality in Japan?
2. Norway is pleased to note that Japan has taken steps to open the foreign direct investment
regime and introduced measures to further deregulation in the telecommunications sector.  Does Japan
have any plans to allow greater competition with regard to local network access and thereby stimulate
broadband multimedia and high speed Internet access?
3. In paras 85 and 89 the cabotage prohibition is mentioned.  Under what conditions will the
Minister of Transport grant exemptions from this rule?  Do any of the bilateral agreements between
Japan and foreign countries contain provisions on reciprocal access to cabotage?  If so, with which
countries?
4. With reference to para. 90, would it be poss ible for foreign companies to obtain approval
from the Minister of Transport to conduct scheduled domestic services?  Are any foreign companiesengaged in such activities in Japan?
5. Do the conditions for obtaining Japanese certificates, as referred to in para. 91, differ from the
international standards as provided for in IMO regulations?
6. Have there been any recent changes to the prior consultation system mentioned in para. 99?
If so, could you please explain how the system now functions.WT/TPR/M/76/Add.1
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MAURITIUS
(i) At para. 24 of its report, Japan has indicated that it is proposing to implement tariff-free and
quota-free treatment, consistent with domestic requirements and international agreements,
under its preferential schemed, for essentially all products originating in LDCs.  Could Japan
indicate which products would be excluded from this scheme?
(ii) Could Japan provide more information on the reform of its price policy for sugar since 1998
(Para. 96(i) of Government Report)?
(iii) Could Japan provide a list of major export products from the Pacific islands to the Japanese
market and indicate the level (%) of such imports as part of total imports?
THAILAND
1. Para. 8, p. 82 of the Report by the Secretariat:  Concerning the Basic Plan for Food,
Agriculture and Rural Areas which was adopted by the Cabinet in March 2000, the Government ofJapan has indicated that the guideline under the Plan is to achieve a food self-sufficiency ratio of 45%
(on a calorie basis) by 2010.
Thailand would like to know the detailed products coverage to be included in the guideline,
particularly whether rice, rice products and fruits are covered under this guideline.
2. Para. 8, p. 82 of the Report by the Secretariat:  Concerning the Basic Law on Food,
Agriculture and Rural Areas, enacted on 16 July 1999, establishing four principles/goals, one of the
four is to fulfill agriculture’s multifunctional roles.
Thailand is interested to learn what, in practice, the Japanese Government intends to do in order to
achieve this policy objective?
Thailand hopes that measures to be put in place by the Government of Japan in order to achieve the
above-mentioned goals will be consistent with the Agreement on Agriculture and would not be used
in a way that would distort trade in agriculture.
3. Para. 12-13, p. 85 of the Report by the Secretariat:  Thailand maintains its view on the
importance of Japan’s market access for the imported rice.
In order to address the problem of quota administration and transparency in the allocation of rice
quotas, under the current new round of agriculture negotiations, Thailand wishes to underline the need
for a multilateral rule and discipline in this area so as to ensure that the quota administration is
transparent and non-discriminating.
In addition, the applied out-of-quota duty on rice wh ich is higher than 1000% is considered as a
prohibitive tariff which needs to be eliminated in this new round of agriculture negotiations.  Does
Japan has any plan to substantially reduce its import tariff on rice in the near future?
4. Para. 13, p. 85 of the Report by the Secretariat:  Concerning Japan’s implementation of
minimum access commitments for rice by sending a certain amount of rice imported to developing
countries in the form of economic assistance.  This practice affects Thailand’s rice exports in the
overseas market.
Would the Government of Japan consider using other means of implementing minimum access
commitments that would not affect or underm ine Thailand’s rice export in the future?WT/TPR/M/76/Add.1
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5. Para. 15, p. 86 of the Report by the Secretariat:  Domestic measures and support programs
Japan is considered to be one of the developed countries that highly subsidize their  agriculture sector.
Does the Japanese Government intend to reduce the level of subsidies given to agricultural sector in
the future?
6. The report did not touch on the problems confronted by foreign exporters of agriculture
products caused by Japanese SPS measures.
Does the Japanese Government ever receive any complaints from other agriculture exporting
countries regarding the Japanese SPS measures?  If so, could the Japanese Government provide us
some information as to the nature of  the complain and issues involved?
7. Para. 55, p. 99 of the Report by the Secretariat:  Thailand is interested in additional
information regarding the business model of "Postal Life Insurance" in Japan including the
administering government agency and legislation involved.  Who are the insured party?  What is thedifference between postal life insurance and life insurance in general?
UNITED STATES
Report by the Government of Japan
I. Japan in the Multilateral System
(1) Progress of Globalization and Japan’s Policy EffortsThe report notes that information technology is intensifying the pace of globalization.  The
United States and Japan share a strong interest in stimulating investment and growth in information
technology.  We both also support the G-8 Okinawa Charter on the Global Information Society, part
of which calls for facilitating cross border e-commerce by promoting further liberalization and
improvement in networks and related services and procedures in the context of a strong World Trade
Organization framework, continued work on e-commerce in the WTO and other international fora,
application of existing WTO trade disciplines to e-commerce and continuing the practice of notimposing customs duties on electronic transmissions.  What concrete steps is Japan taking to bring
these things about?
(2) Consolidation of the Multilateral System
The report notes that the mission of the WTO has been and will be achieved through dialogue and
negotiations within a rule-based multilateral trade system the enhancement of standards of living.What does Japan think should be done to further demonstrate the mutually reinforcing relationship
between labor standards and trade liberalization?
III. Trade Policy Development 1998-2000
(1) The Uruguay Round and Implementation
The report notes that Japan has proposed to implement tariff-free and quota-free treatment under its
preferential scheme for essentially all products originating in least developed countries.  What is the
status of this proposal?WT/TPR/M/76/Add.1
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Japan has completely eliminated customs tariffs on all information technology products covered in the
information technology agreement.  What sort of product expansion for further duty elimination doesJapan support?
(3) Domestic Policy Developments Affecting Trade Policy
(a) Reforms of the Economic Structure
We are very concerned with the lack of reference to any labor market policies in the GoJ submission.
In our view, barriers to labor mobility (i.e., the difficulty in re-allocating human resources from onefirm or industry to another) are among the largest impediments to structural change in the Japanese
economy.
(c) Competition Policy
What plans does the JFTC have to more vigilantly monitor potentially problematic business practices
in the photographic film and paper market, including various forms of retaliation and intimidation ofretailers that sell or use non-Fuji products?
In September 1998, the JFTC issued a warning to the Photosensitive Materials Manufacturers
Association and its members to cease their exchange of production, sales, and inventory data, which
the JFTC found to constitute a potential AMA violation.  What follow-up action will the JFTC take
regarding this warning?
(e) Current Progress in the Deregulation Process
The Regulatory Reform Committee and its predecessor, the Deregulation Committee, were
established by the Prime Minister’s "Administrative Reform Promotion Headquarters" – i.e., the RRC
does not have a legal foundation as did the original reform body, the Administrative Reform
Committee.  The recent political intervention delaying implementation of liquor licensing
deregulation suggests that until its role is supported by legislation, the Regulatory Reform Committee
will continue to be vulnerable to political interferen ce, thus weakening the deregulation program.  Is it
likely that under the new three-year deregulation initiative, the powers of the Regulatory Reform
Committee will be strengthened through legislation?
The GoJ recently established two additional groups, one named the "Industrial Rebirth Committee"
and the other called the "IT Panel", which we hope will foster healthy debate and innovative ideas that
can affect change in all segments of the Japanese economy.  What authority do these committees haveto ensure that their recommendations and suggestions are enacted?
What are the GoJ’s plans regarding deregulation for the next three years given that the "Three-Year
Program for Promoting Deregulation" is set to expire at the end of March 2001?  What is the GoJ
doing to ensure that the proposals included in the Three-Year Program are being implemented?
(f) Agricultural Policy ReformThe report notes that Japan has replaced the 1961 Agricultural Basic Law with the Basic Law on
Food, Agriculture and Rural Areas in July 1999 and some measures (e.g., new price policy for wheat
and payments to farmers in mountain regions) have already been implemented.
The GOI has established income stabilization measures for wheat, barley, rice, and soybeans.  The
stabilization measures, however, appear to continue to insulate domestic producers from marketsignals.  How does Japan intend to increase the productivity of its farming sector when its policiesWT/TPR/M/76/Add.1
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continue to isolate producers from the economic factors that yield increases in efficiency and
productivity?
What, if any, new agricultural policy measures does Japan envision in the coming year?  Will the
thrust of these measures be to reform price policies for other agricultural commodities, thereby
lowering the existing burden on Japanese consumers?  Are new income support programs for farmers
envisioned?  What steps is Japan taking to ensure that the programs will be consistent with the
provisions in Annex 2 of the WTO Agreement on Agriculture?
Could Japan provide estimates of the taxpayer costs associated with its new policy measures?  How
do the costs for the new measures compare with previous years’ taxpayer outlays for agriculture?
The report indicates that one goal of its new Plan  for Agriculture is to increase the food self-
sufficiency ratio by 2010.
What proportion of the inputs used in agricultural production (e.g., machinery, fertilizer, fuel) are
imported?  If domestic production of agricultural products were to increase, what would be the impact
on imported agricultural inputs?
Does this mean that Japan intends to maintain or raise its border protection or expand its domestic
production through additional domestic support measures in order to achieve this objective?
The report notes that consumer taste appears to be shifting away from rice to livestock products and
products with higher fat content and that the government intends to develop a campaign to encourage
consumers to review dietary patterns.  Does the government intend also implement new measures that
would restrict consumer choice of food products as part of this endeavor?
Japan characterizes a "decline in the food self-suffici ency ratio" as a problem, rather than just the
result of international trade along the lines of comparative advantage.  Does Japan advocate the return
to "self-sufficiency" by its trading partners for the industrial products that Japan exports?
What is the meaning of the statement in the repo rt concerning agriculture (para. 92), "... people’s
expectations for agriculture and rural areas have been on the rise"?  How are these expectations
measured?  Are there published measurements that show a change in expectations over recent years?
Similarly, what is the meaning of the statement that "there has been an increasing demand that the
agricultural sector should fulfil its multifunctional role"?  What evidence exists to document this?
What methodology was used to measure the “increasing demand"?
With respect to the Basic Plan adopted in March 2000, the statement is made that the plan calls for
"review of the price policies for major products in such a way as to make them properly reflect
supply/demand situations..."  Does this mean that there will be a major reform in the price policies
that affect domestic rice production and consumption?
The report states that Japan’s average applied MFN tariff for agriculture was 18.2% in FY2000
compared with an overall average of 6.5%.  Table IV.2 also demonstrates that Japan’s average tariffs
in many agricultural sectors are considerably above the average rate for agriculture with maximum
tariffs in these sectors exceeding 100%.  For example, vegetables, products of the milling industry,
dairy products, oilseeds have average rates of  32.1%, 33%, 68.1% and 26.4%, respectively, with
maximum tariffs for these sectors of 984%, 386%, 491% and 690% respectively.
- Do these figures account for the "mark-up" on the import price that Japan imposes in
sectors like cereals and dairy?  What is the cost to consumers of these "mark-ups"?WT/TPR/M/76/Add.1
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- Does Japan anticipate any changes in its border protection for agricultural products as
a result of its new Plan?  If so, please provide details.
Border protection is one reason that Japanese consumers paid, on average, more than twice as much
as they would have paid in the absence of Japan’s agricultural programs, and, according to the report,
this implicit tax on consumers may have risen in recent years.
- Does Japan anticipate any reduction in the implicit tax on consumers as a result of its
new Plan?  Please provide details.
IV. Future Policy Direction
(2) Seattle and After
The report notes that improvement in WTO transparency must be pursued expeditiously.  We would
be interested in Japan’s views on improving tran sparency beyond activities such as further de-
restriction of documents and more timely release of dispute panel reports, which Japan has supported.
Report by the Secretariat
Section I:  Economic Environment
(1) Main Economic Developments
What is the GoJ’s assessment of the prospects for economic growth in the coming year?  How does
the GoJ intend to respond if the economy slows as some analysts have projected?
(2) Macroeconomic Policies
The report says that some members of the Bank of Japan Policy Board believe that the low cost of
credit acts as an effective subsidy to companies, allowing them to waylay their problems and continue
operations.  Please provide more information about the types of low-cost credits that are provided.
Specifically, who is eligible for these credits?  Are these credits directed at specific industries?  Are
any of these low-cost credits contingent on companies’ export performance?
Footnote 12 of para. 10 states that it is expected the GoJ will have to inject further funds into various
corporations in order to grow the economy.  The Export-Import Bank of Japan (JEXIM) is mentioned
as one of the possible companies that would need such "subsidies".  Please explain the means through
which JEXIM would receive an injection of funds.  What companies or industries would be eligible
for funds from JEXIM?
(3) Structural Policies(i) Corporate restructuring
The Industrial Revitalization Law (IRL) was only briefly mentioned in this report.  Can the GoJ
please provide more details about the IRL and its implementation, as well as its effects on trade or its
expected effects on trade?  Which industries have received funding from the IRL?  Are there plans to
revise and/or build on this law?
We commend the efforts of Japan’s corporate sector to restructure and regain profitability.  What is
the GoJ doing to support and foster these efforts, particularly to encourage steps to trim excess
capacity in certain sectors, including steel, and boost low capacity utilization rates?WT/TPR/M/76/Add.1
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In 1999, the Development Bank of Japan (JDB) extended credit to several steel companies when
Japanese private commercial banks significantly reduced lending to industrial clients, includingintegrated steel producers.  Such lending raises concerns about government financing to mature
private industries.  Can you provide us with information about these loans and what role the JDB
continues to play in financing the steel industry and other mature industries?
(iv) Competition
The report states that with reference to cartels in Japan "...the number of exemptions under the AMA
(and other laws) dropped from 89 in 1996 to 22 in 2000".  In the footnote to this sentence, it says that
"cartels on exports by exporters and trade associations" are one of the remaining 22 exemptions".
Please provide details about how this sort of cartel operates.  Has the GoJ (or the Japan Fair Trade
Commission) written any studies on said cartels?
(v) Labor market policiesThe GoJ has traditionally supplied subsidies thro ugh the Employment Adjustment Subsidy program
(EAS), including "..financial subsidies to help companies overcome temporary demand shortfalls."
We are concerned by this program, as it does not stimulate either new employment creation nor
facilitate the movement of workers out of declining sector and into new industries.  Moreover, the
government assistance scheme for hiring by new start-ups in high unemployment areas appears verybureaucratic and cumbersome, resulting in the fact that most of the funds allocated/budgeted for this
program go unspent.
Can you please provide more information on these subsidies and give specific examples of when they
are used?  Is there a time frame under the EAS after which said subsidies will be suspended?
The report notes that measures have been taken concerning labor market polices.  Do these measures
include the ILO Convention 105 on forced labor and ILO Conventions 111 on discrimination?  If not,
when might they be ratified?
(vi) Public and private pension reform
In 1999, the GoJ announced plans to reform the public pension system, including increases in
contributions, reductions in benefits and an increase in the age eligibility.  Have these plans been
clearly articulated since then?  In particular, has the GoJ decided how to fund a revamped public
pension system that could include even more government subsidies?
We note that GoJ plans to introduce defined-contribution pension plans keep getting delayed.  In
addition, under the current draft bill, the limits on tax-advantaged contributions seem low,
administrative costs seem high, and there are no provisions for investor education.  What are the
prospects for passage of the bill?  Does the GoJ have any plans to consider additional revisions to the
system?
What are the GoJ’s plans related to the establishment of private pension funds?  Does the GoJ have
plans to allow kampo  and yucho  to offer their own defined-contribution pension products?  If so, how
does this fit in with the GoJ’s commitment to deregula tion and to stay out of services that the private
sector can provide?WT/TPR/M/76/Add.1
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Section II:  Trade Policy Regime:  Framework and Objectives
(1) IntroductionWe welcome GoJ efforts to pursue regional trade pacts in a manner that will strengthen, not
undermine, the WTO trading system.  As noted in its TPR report (para. 10), Japan believes it is
indispensable to ensure that regional trade agreem ents are complimentary to the multilateral system
and consistent with its rules.  However, we remain concerned that Japan’s policy of protecting
sensitive sectors will hamper its ability to form agreements that will encompass "substantially alltrade" between nations, as required by WTO rules.  How is Japan moving to liberalize trade in
currently protected sectors, and what liberalizing steps does Japan believe it will need to take in order
to encompass "substantially all trade" in such agr eements with trading partners?  Will Japan include
all agricultural products in future FTA pacts?  What transition periods are being considered?  What
other countries is Japan exploring FTAs with?
(2) Development and Administration of Trade Policy
(i) Main trade law and regulations
The use of administrative guidance makes the operation of significant parts of Japan's trade policy
non-transparent.  While the introduction of public comment procedures prior to the adoption of some
regulations has improved the transparency of some policy making, the system is still limited in both itapplicability and its effectiveness.  Can Japan outline its plans for expanding the public comment
procedures, making them more effective, and enacting such procedures into statute?
(ii) Trade policy formulat ion and implementation
How will Japan’s administrative reform plans, set to be implemented in January 2001, alter its trade
policy formulation and implementation procedures?  What will be the newly-created Cabinet Office’s
role in trade policymaking?
(iii) Evaluation of trade and trade-related policiesCould you clarify Japan’s intentions with regard to the introduction of "cost-benefit and regulatory
impact analyses" (RIA)?  We certainly support Japan’s adoption of an RIA and have called on Japan
to introduce such a system under the U.S.-Japan Enhanced Initiative.  We note that Japan is
introducing a Policy Evaluation System, which will become effective in January 2001.
(v) Bilateral agreementsWhen the USG and the GoJ established the U.S.-Japan Enhanced Initiative on Deregulation and
Competition Policy in 1997, the two governments agreed that "The progress under the Enhanced
Initiative will be reported to the leaders of the two countries since the strengthening of dialogue on
deregulation is based on the decision between the leaders of Japan and the United States, and the
promotion of deregulation and active implementation of competition policy are issues of majorimportance to the GoJ".  With the Enhanced Initiative in its fourth year, can we expect the GoJ to
fulfill this commitment by cooperating with us to write a Fourth Joint Status Report, as has been done
in all previous years under this initiative?WT/TPR/M/76/Add.1
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Section III:  Trade Policies and Practices by Measure
(2) Measures Directly Affecting Imports(i) Customs administration and clearance
The United States has urged Japan to improve its Customs recordation and information submission
procedures to make it easier for foreign rightholders to avail themselves of intellectual property rights
protection from Japan’s Customs authorities.  Further, concerns have been raised over the need to
aggressively enforce the interdiction of infringing articles.  Please provide additional information onJapan Customs’ border control efforts related to protection of IPR;  the number of cases resulting in
imprisonment since last year and the actual sentences; and the dollar amount of fines actually
imposed.
The U.S. has long been concerned about the time it takes to clear goods for entry into the Japanese
market.  Part of the delay is due to Customs procedures.  However, the principal factor is the " hozei"
system, whereby all goods must be subjected to a complete reconciliation or "match-up" against
documents before they can be released from the bonded area.  This involves a lot of double and even
triple handling.  Is there any prospect for modify ing this system in the interests of streamlining
clearance procedures (e.g., by allowing post  facto  reconciliation)?  How does Japan justify such
procedures in an era of multilateral commitment to  improve the trade facilitation environment to meet
the needs of today’s just-in-time global economy?
(iii) Tariffs
The U.S. notes that Japan still maintains a number of non- ad valorem duties, particularly on imports
of agricultural products, and that these translate into very high ad valorem  equivalents (AVE’s) where
such equivalents have been calculated.  Japanese authorities have not provided AVEs for about a third
of  non- ad valorem  duties, representing a serious transparency issue.  Does Japan plan to move away
from non- ad valorem  duties for agricultural products?  Does Japan intend to calculate AVEs for all
non ad-valorem  duties?
(vii) Government procurement
The report notes that each procuring entity maintains its own list of registered suppliers.  Does each
procuring entity establish its own requirements for suppliers to become registered?
Can you explain why the trend in foreign share of government procurement continues to fall?Regarding the history of complaint filings under the Office of Government Procurement Review and
the Board, does this figure include the most recent complaint which was filed in July of 2000?  Given
that only two complaints have been filed,  why does Japan believe that so few suppliers have utilized
the bid challenge process?
According to this report, the Complaint Review Boar d "acts as an intermediary" in the event that a
complaint exists between a supplier and a procuring entity, and that, as a result of the Board’s
involvement, "many complaints have been resolved through consultation".  Please indicate the
percentage of complaints that have been resolved in this manner, whether foreign suppliers have been
party to such consultations, and if so, whether complaints filed by foreign suppliers have been
resolved with the same success as those filed by domestic suppliers.WT/TPR/M/76/Add.1
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Regarding the statement that authorities of the Board encourage "consultation between a complainant
and procuring entity" prior to the filing of a complaint, please describe how Japan encourages partiesto engage in consultations in a timely manner.
Please indicate how long it takes to resolve a complaint through the consultation mechanism, and
what type of complaints are brought to the Board for consultations.  Have any complaints not been
resolved that have been brought for consultation to the Board?
The report states that "according to the authorities, the procuring entities of public works are required
to decide proper and clear criteria for, inter alia , the selection of construction works undertaken by
joint ventures and the organization of joint ventures by contractors".  Please indicate what "proper and
clear criteria" are used for the selection of works to be undertaken by joint ventures, and for the
organization of joint ventures by contractors.  Are these criteria made available, and if so, where?
How does Japan ensure that these criteria are not applied in a manner to disadvantage foreignsuppliers?
(ix) Standards, sanitary and phytosanitary measures
We welcome Japan’s statement that it is continuing to  bring its standards into line with international
standards.  What criteria does the GoJ use when it chooses not to adopt an international standard?
Japan cites that a new grading system for foreign products was introduced in June 2000.  Can you
please explain this new system and if it also a pplies to domestically produced products?  If not, why
not?
The U.S. notes with interest that no foreign inspection bodies have been designated by MITI for
testing based on the MITI standards and certification system.  Have any foreign inspection bodies
applied?  If so, what is the status?  If th ey were not approved, can you explain why not?
(4) Measures Directly Affecting Exports
(v) Trade-related intellectual property rightsConcerns have been raised by our industry regarding Japan's apparent failure to provide protection
against unauthorized temporary copying of work s or sound recordings.  The TRIPs Agreement
incorporates Article 9 of the Berne Convention, which states that rightholders "shall have the
exclusive right of authorizing the reproduction of [works and sound recordings], in any manner or
form".  Reproduction "in any manner or form" appears to include temporary reproduction.  Therefore,please confirm whether or not Japan provides pr otection against such reproduction if unauthorized.
We are concerned about Japan’s imposition of a single, rigid evidentiary requirement for joint
authorship.  This policy is particularly prejudicial to authors from the United States and other
countries where authorship statements on published sheet music have no legal effect and do not
conform to any prescribed set of rules.  This re quirement also appears to be a mere formality that
hampers the enjoyment and exercise of copyright rights, which is inconsistent with the TRIPs
agreement.  In light of Japan's international obligations and prevailing international practice, does
Japan plan to review its policy on joint authorship?
As indicated in the WTO Secretariat’s Report, Japan has taken important steps to improve the
protection of patents.  While we are pleased by these efforts, the U.S. remains concerned with severalaspects of Japan’s patent administration, including the relatively slow process of patent litigation inWT/TPR/M/76/Add.1
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Japanese courts, and the lack of adequate protection for confidential information produced relative to
discovery.  Please describe Japan’s actions to address these concerns.
According to the report, Japan’s copyright law was amended with a view to comply with the WIPO
Copyright Treaty.  Key provisions of the revised law include criminal penalties for producing and
distributing devices designed to circumvent copyrights.  We remain concerned that the penalties for
copyright circumvention devices will seldom be applied since the law covers only devices whose sole
purpose is circumvention.  Focusing only on device s whose sole purpose is circumvention will make
your anti-circumvention law too easy to evade if protection-defeating functions can safely be
packaged with other components that have innocent purposes. What steps is Japan taking to address
this concern?
(vii) Competition policy and regulatory issues
(a) Recent developmentsThe report notes that in January 2001, the JFTC will become part of the Ministry of General Affairs,
which also includes regulators of telecommunications services.  What actions does the GoJ plan to
take to ensure that the JFTC’s independence in antimonopoly enforcement and in the promotion of
competition policy will be preserved?
What is the JFTC doing to ensure that officials responsible for monitoring electricity and gas
deregulation and for enforcing the AMA in these sectors have sufficient expertise?
(c) Private remedies
According to the Report, in May 2000, the Antimonopoly Act was amended to permit private parties
to seek a court injunction against violators engaged in certain "unfair trade practices".  Please explain
why serious antimonopoly violations, such as monopoliz ation and price-fixing and market allocation
agreements, were not covered by these amendments and when the GoJ will seek to extend private
injunctive remedies to this serious conduct as well.
(e) Holding companies, and mergers and acquisitions (M&As)
The competitive analysis of mergers and acquisitions, including stock acquisitions, is often very
complex, and requires significant staff resources in order to conduct such an analysis fully and
expeditiously.  How can the JFTC analyze the transactions reported to it in a sound and expeditious
manner with a total staff in the responsible division of less than 20 people?
(g) Enforcement
In recent years the JFTC appears to have significantly increased its enforcement activities against
firms that engage in "unjust low pricing" in Japan, pa rticularly in the retail liquor, electric appliance
and gasoline markets.  Please describe how this policy promotes price competition and ensures that
pro-competitive pricing practices are not discouraged.
In order to deter anti-competitive practices, it is crucial that firms perceive that engaging in such
practices will be more costly than the potential profits.  Please explain how Japan's current system of
administrative surcharges and limited criminal enforc ement raises the costs of engaging in hard core
anti-competitive conduct to a sufficiently high level to deter violations of the Antimonopoly Act.
Agreements among distributors not to carry imported products, especially when supported by the
efforts of competing domestic suppliers, can restrict competition and distort international trade.  TheseWT/TPR/M/76/Add.1
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practices need to be deterred through active antimonopoly enforcement and heavy monetary
consequences.  Please explain the JFTC’s enforcement policy with regard to these activities, and thecircumstances in which surcharge orders will be imposed on the participants of such group boycotts.
Financial and other ties between producers and distributors in highly oligopolistic industries can, in
certain circumstances, have exclusionary effects on the ability of new entrants to successfully
compete in the market.  Please describe the actions  the JFTC plans to take to monitor and examine
such ties and to ensure that they are not foreclos ing competition from potential new entrants in the
Japanese market.
(i) Distribution measures
There is widespread belief in both the Japanese and foreign industry that the new Large-Scale Retail
Store Law leaves local authorities with too much power and too much latitude in dealing with new
store openers.  How does MITI plan to monitor local implementation of the new law, particularly ifimplementation is being frustrated locally by unwri tten administrative "guidance" and the imposition
of "voluntary" guidelines?
Section IV - Trade Policies by Sector
(1) Introduction
How does the GoJ reconcile the continued existence and possible expansion of the kampo  (postal
insurance) and yucho  (postal savings) systems, in light of deregulation in the financial services area?
(3) Energy and Utilities
(i) Overview
The report states that "more emphasis has been placed on economic efficiency in Japan’s energy
policy, as observed in various deregulation measur es implemented since its previous Trade Policy
Review".  Can the GoJ document greater economic efficiency achieved as a result of deregulatory
steps in the energy sector thus far?
The secretariat report mentions MITI’s regulatory ro le in the energy sector in para. 20.  No mention is
made, however, of MITI’s regulatory role after the GoJ reorganizes in January 2001.  The USG
understands that new regulatory bodies for electricity and gas will be established in MITI.  What is
the Ministry doing to ensure these bodies are fully independent of the policy and industry promotion
divisions of MITI?  What is MITI doing to ensure that the staff in these new bodies have sufficientexpertise and numbers to effectively regulate these industries?
This section implies that Japan’s electric and gas utilities are no longer full regional monopolies.
However, we are not aware that such a significant change has yet occurred.  What share of Japan’s
retail electricity and gas are provided by non-utility firms?   Given this, what evidence is there to date
of any meaningful deregulation in the small portion of the market (28%) actually deregulated?WT/TPR/M/76/Add.1
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(ii) Electricity
According to the report, Japan has promoted deregulation in the electricity sector to promote
competition.  By doing this, the GoJ "aims to realize internationally comparable cost levels in 2001".
Is this objective still within reach?  If not, does this suggest Japan must move more quickly to
deregulate this important sector?  Hasn’t liberalization of wholesale power generation been limited to
auctions?
Along with partially liberalizing the retail supply of electricity in Japan, MITI has committed to
implementing and enforcing rules on transmission rate calculations, fair, transparent and non-
discriminatory access to transmission lines and other terms and conditions that were established in
December 1999.  The USG, however, understands that rate calculations remain unnecessarily opaque
(and high by international standards), which is discouraging potential competitors from entering the
electricity market.  Does MITI plan to take additional steps to remedy this problem?
(iii) Gas
The report notes that Japan "aims to realize internationally comparable cost levels in the gas sector by
the year 2001".  Is this objective still within reach?  How can this objective be achieved without
establishing laws and regulations that would allow open and non-discriminatory access to both new
and existing Liquified Natural Gas (LNG) terminals, which are primarily owned by regionalelectricity companies?
(4) Manufacturing
(ii) Sectoral developments
(c) Pharmaceuticals
There is no mention of medical devices, which is an important sector for foreign suppliers in Japan.
What plans does the GoJ have to improve the consistency and speed of the approval process for
innovative medical devices?
We remain concerned that the liberalization of vitamins and minerals is a slow-moving process.  What
are the prospects for additional reform in this market?
(5) Services
(ii) Financial services – Insurance
Foreign companies continue to be concerned that they will be tapped yet again to contribute more to
the Policyholder Protection Fund to cover future failures of Japanese insurance firms.  How firm is the
GoJ’s commitment to inject public funds in the event that the fund is again depleted?
As referenced in para. 53, the Japanese postal system will become a public corporation in 2003.  What
specific steps will the Government of Japan (MPT) take to ensure that plans for this transition are
devised and implemented in as open and transparent a manner as possible?  Will public hearings beheld?  Will plans be subject to public comment procedures?  Will interested foreign entities be
afforded equal opportunities to participate in any study groups, etc., created to provide input to MPT
during the process?
The Financial Services Agency (FSA) has indicated that they support further transparency in and
deregulation of the insurance product and rate approval system.  What are FSA’s plans in this regard?WT/TPR/M/76/Add.1
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Regarding the statement that "life and non-life insu rance companies may enter each other’s markets
only by means of subsidiaries", we understand that as of July 1, 2001, FSA will allow “direct mutualentry” for sales of third sector insurance products.  Is this correct?  If so, how will the current
regulations be modified to allow this to occur?   What is FSA’s timeline for this?  Will foreign
companies be afforded equal opportunities to provide input into this process?
(iii) Telecommunications
(a) OverviewThe key fact emerging from this section is the remarkable fact that NTT, in 1999, still controls 87.5%
of Japan’s domestic telecom revenue–despite the fact that Japan’s market has ostensibly been fully
open to competition since 1985.  We suspect that no other industrialized country with a telecom
market ostensibly open to competition has such a degree of concentration.
If a competitive marketplace is a goal of the Japanese government, this result can only be attributed to
regulatory failure.
The overview notes the MPT’s dual role as promoter of the telecommunications sector as well as
regulator.  This is at the heart of our serious concern with Japan’s regulatory regime in this sector:
policies which are designed to promote telecommunicat ions in Japan (ISDN, 3G wireless, fiber to the
home, flat-rate Internet) appear to be designed to solidify NTT’s dominant position in the marketrather than promoting competition.
Since industrial promotion and regulatory impartiality are often incompatible, almost all major
telecommunications markets have established independent regulators.  This also helps shield the
regulator from political pressure exerted by the incumbent.
(c) Regulatory framework
Is Japan considering establishing an independent regulator?  If not, why not?  How does the GoJ
ensure that regulation is impartial?
Does the GoJ have a mechanism for settling disputes among carriers or responding to carriers’
problems regarding interconnection rules?
How does the GoJ ensure that the policy changes it is undertaking effectively promote competition, as
envisaged?
Is the Government of Japan concerned about the way  NTT exerts its political influence to advocate
its interests, and how that affects the regulator’s impartiality?
One indication of the ability of a regulator to regulate effectively is its willingness and ability to take
measures to address anti-competitive abuses of incumbents.  Has the MPT ever fined NTT for its anti-
competitive acts? Sanctioned NTT in any other way?  If not, why not?
Where a government owns a substantial stake in the telecom operator, there is a clear incentive not to
take action that could affect the business interests of this operator–which, in this case, include
maintenance of its market position.  Full privatization is the only clear way to remove that potential
conflict of interest.  What progress has Japan made toward privatizing NTT?  What plans does the
Government of Japan have to review the requiremen t that it maintain a 33 percent ownership in NTT?
What progress has Japan made in developing dominant carrier regulations to better discipline NTT?WT/TPR/M/76/Add.1
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What is the status of the Government of Japan’s review of the structure of NTT?
How has the GoJ followed up on the findings in the JFTC study group report that the enhanced
competition expected from the reorganization of NTT has not materialized?  What does the GoJ think
explains this conclusion?  In light of this conclusion, is the GoJ taking any additional steps to comply
with the competitive safeguards provision of the WTO telecommunications reference paper?
What percentage reductions in interconnection rates does Japan currently foresee introducing within
the next year?  Within the next two years?
Permitting all carriers to build, buy or lease facilities in any combination necessary to facilitate
business maximizes innovation and competition.  What steps has Japan taken to increase market
competition by liberalizing resale/unbundling and co-location restrictions?
Does the GoJ have any definite plans for pro-competitive policy reform aside from introducing LRIC-
based interconnection pricing and promoting network diversity?  If so, what are the policy changesthat you are considering?  How soon do you expect to implement these changes?
(iv) Transportation services
(a) Maritime transport
The description of the auxiliary services regime does not include continuing problems with
restrictions on port activities that the amendments to the Port Transport Business Law do not address.The prior consultation system practiced by the Ja pan Harbor Transportation Association (JHTA), an
association of stevedoring and terminal operating companies gives the group extensive control over
port operations that the GoJ is not willing to challenge.
How does the exemption from the Antimonopoly Act apply to liner shipping in Japan?
According to the report, "Japanese authorities claim that there are no discriminatory measures
affecting foreign participation in international maritime services".  In fact, the waterfront industry is
dominated by the JHTA which represents all licensed waterfront stevedores when dealing with thelabor unions and determines the working conditions under which the industry operates.  Japanese
carriers are members of the JHTA through their stevedoring subsidiaries, but foreign carriers have no
representation in it.  How can the GoJ reconcile these two points?
The prior consultation system set up by the JHTA remains cumbersome and arbitrary.  How does the
Japanese Government intend to make the process transparent, equitable and timely?  Although priorconsultations by the JHTA have decreased, why are foreign carriers still required to get JHTA’s
permission when engaging in minor changes?
The amendments to the Port Transportation Law increase the required minimum number of people
employed by a stevedore by 150%, with the aim of encouraging economies of scale.  Doesn’t Japan
fear that the measure will instead increase labor costs and discourage efficient operation?  How willthe new minimum manning requirement affect new entrants?
Foreign carriers may now apply for licenses to operat e at terminals but labor unions have implied that
they will strike if they do.  How will the Transport Ministry address this issue and ensure reform in
the industry?
The revised Port Transportation Business Law changes the system of prior permission of fees to prior
notification of fees, but the GoJ reserves the right to "correct" fees as it sees fit.  In what circumstanceWT/TPR/M/76/Add.1
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would fees be corrected?  What standards will the GoJ use to regulate fees charged by port
companies?
(b) Air transport
How will the GoJ address the exorbitant landing fees charged at Japan’s airports?  What are the GoJ’s
plans for internationalization of Haneda airport and will the GoJ ask for foreign input to such plans?
(v) Other services
(a) Legal servicesImproving the delivery of international legal and other professional services is essential if Japan is to
develop as an international business and financial center.  It is important that Japan address the
aspects of its legal system that are limiting the abil ity of Japanese and foreign businesses to obtain in
Japan the high quality and fully integrated internat ional legal services that they find in London, Hong
Kong, New York and other major financial centers.
The Regulatory Reform Committee recommended in 1999 that the Ministry of Justice (MOJ) examine
the removal of the ban on partnerships between gaiben  and bengoshi .  When does the MOJ plan to
issue recommendations related to the removal of this ban?  The Regulatory Reform Committee also
expressed the concern that the ban on gaiben  employing bengoshi  does not have a rational basis.
What is the MOJ response on this issue?
Five years ago, Japan established the "specified joint enterprise" system rather than allow foreign
lawyers to enter into partnerships with or hire bengoshi .  This system has numerous deficiencies and
has not an adequate substitute for allowing partnerships.  As of August 2000, only ten specified joint
enterprises have been created, and the foreign law firms affiliated with these ten enterprises comprise
less than one-fourth of the foreign law firms with offices in Tokyo.  What plans does Japan have to
allow freedom of association between gaiben  and bengoshi ?
Japanese and foreign businesses in Japan have inadequate access to legal services because there are
too few lawyers to serve them – one-seventh the proportion in France, the next-lowest of the G-7
economies.  How does the GoJ plan to significantly increase the number of lawyers in Japan in order
to be commensurate with other major economies?WT/TPR/M/76/Add.1
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ANNEX II
JAPAN'S RESPONSES TO QUESTIONS POSED
AT ITS WTO TRADE POLICY REVIEW
(Consolidated version supplied by Japan on 23 January 2001)
ARGENTINA
Argentina Question 1
Japan appealed to the Special Safeguard provisions  (SSG) during 1997-99.  Remembering that the
mechanism of the SSG was created to prevent a rapid increase of imports which would have disrupted
the internal markets, could Japan comment the conditions that have been applied to the markets of
products such as wheat flour and milk of Japan, that carried to the necessity to apply the SSG?
In the same way, Japan applied the SSG to concrete products in a "basket of quotas". Could Japan
explain the compatibility of this measure with the provisions of the Agreement on Agriculture?
Response to Argentina Q. 1 regarding the special safeguard provisions
The Special Safeguard (SSG) was agreed as a package with tariffication implemented as a part of the
reform process at the UR negotiations. Japan has applied the SSG to some products which are
designed with the symbol “SSG” in its schedule in order to prevent the potential disruption of their
domestic markets. SSG is applied either when the volume of imports of products exceeds trigger levelor when the import price of the products falls below a trigger price. All the applications of SSG are
fully consistent with the provisions of Article 5 of the Agreement of Agriculture.
Argentina Question 2
With regard to the administration of tariff quotas, we would like to receive the information regarding
the request of "invested capital" that the import ers have to reach in order to participate in fair
conditions of offer.
Response to Argentina Q. 2 regarding tariff quotas
In the case of wheat, barley and rice imports, importers who want to participate in the Food Agency’s
competitive bidding are required to be capitalized at  more than 1 billion yen for an ordinary tender or
0.1 billion yen for the SBS tender system. These requirements are necessary to preserve credit under
contracts. The requirements for importers are publis hed by the Director-General of the Food Agency.
Certifications of loans issued by foreign exchange banks are also acceptable for participation in thebidding.
Argentina Question 3
In March 1999, the Dispute Settlement Body approved the conclusions of the Special Group and of
the Appellate Body on the dispute "Japan - Measures affecting agricultural products". If Japan
announced on December of that year the abolition of the requirements of evidence on plants varietiesthat were applied on eight products, it still has c onsultations with EU regarding the methodology of
quarantine for these products. Considering the time elapsed since the approval of the conclusions by
the DSB, we would like to know when J apan will notify the total implementation.WT/TPR/M/76/Add.1
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Response to Argentina Q. 3 regarding DSB
On 31 December, Japan abolished the varietal testing requirement as well as the Experimental Guide
that were in force until that date, in accordance with the rulings and recommendations adopted by the
DSB regarding the dispute "Japan - Measures Affecting Agricultural Products(DS76)".  Japan has
conducted consultations with the United States regarding a new methodology to replace the former
varietal testing requirement.  Japan expects that Japan and the United States will reach a mutually
satisfactory solution in the near future.
We would like to point out further, that the member country with which Japan is consulting regarding
the methodology of quarantine for these products is not the European Union. It is the United States
which is the party to this dispute.
Argentina Question 4
In paragraph 123, the Secretariat notes that Japan authorizes the parallel imports of products liable
to protection of intellectual property. Could Japan confirm this information?
Response to Argentina Q. 4 regarding the parallel  importation of products liable to intellectual
property protection
In July 1997, the Supreme Court made a judgment to permit the parallel import of German patented
products into Japan. The Supreme Court judged that, "when a patent holder in Japan or a person whohas the rights equivalent to those of a patent holder sells patented products outside the country, the
patent holder may not exercise its patent rights with respect to the products against a transferee, unless
the patent holder and the transferee agreed to exclude Japan from the territory of sale or use of the
products, and against the third party transferee who purchased the products from the first transferee or
any subsequent transferee, unless the patent holder and the transferee agreed to exclude Japan from
the territory of sale or use of the products and such an agreement is expressly indicated on the
products," because "in cases where a patent holder sells patented products outside the country, it isnaturally assumed that a transferee or a third party, a subsequent transferee, would import these
products to Japan for its business, use or sell these products to another party in Japan."
This judgment established that, given the international trade practices, a patent holder may not
suspend the parallel import, or claim compensation for damage caused by the parallel import based on
the infringement of the patent rights, in such ca ses stated in the judgment, even though the judgment
upheld that patent rights are not always immediately exhausted when a patent holder transfers his
products outside of the country.
AUSTRALIA
Australia Question 1
The Three Year Program for Promoting Deregulation (as revised in April 2000) aims at creating a
‘free & fair Japanese economy fully open to the inte rnational community’.  Wh y is this policy limited
to certain sectors and in particular when will the agriculture sector experience such reforms?
Response to Australia Q. 1 on whether or not the agriculture sector is covered by the Three
Year Program for Promoting Deregulation
The Three Year Program for Promoting Deregulation includes the agricultural sector.  It was revised
in March 2000.  The New Program for Promoting Deregulation (including the agricultural sector) will
be established in 2001.WT/TPR/M/76/Add.1
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Australia Question 2
What benefits has the Three Year Program fo r Promoting Deregulation made to the Japanese
agricultural sector?  Will the extension to the Three Year Program for the Advancement of Regulating
Reform have implications for the Japanese agricultural sector?
Response to Australia Q. 2 on benefits of th e Three Year Program for Promoting Deregulation
The Three Year Program for Promoting Deregulation aims at realizing a brisk Japanese economic
society, which includes the agricultural sector.
Australia Question 3
What future measures will Japan undertake to address issues such as exceptionally high tariff peaks,
given that they are of particular concern to developing countries, particularly for differing forms of
agricultural produce?
Response to Australia Q. 3 regarding high tariff peaks
Agricultural Products
Current tariff levels were established as a result of the several negotiations taking into account the
geographical and natural conditions of each  country and situation of each product.  Out of quota
duties of tariffied  roducts were established at the UR negotiations based on the price gap between
domestic and international markets.
Tariff levels should be set considering these situations and backgrounds, as well as the necessity to
maintain a certain level of agricultural production and its multifunctionality.
Australia Question 4
Is the Basic Law on Food, Agriculture and Rural areas inconsistent with Japan’s commitment to
deregulation and freer trade, especially Japan’s obligation to implement fundamental reform under
the WTO Agreement on Agriculture?  What measures has Japan undertaken since its last Trade
Policy Review to implement reform under the WTO Agreement on Agriculture?
Response to Australia Q. 4 regarding agricultural policy reform
1. After the last Trade Policy Review on Japan in January 1998, the Basic Law on Food,
Agriculture and Rural Areas was enacted in July 1999. Consequently, the Basic Plan for Food,
Agriculture and Rural Areas was adopted by the Cabinet to indicate concrete directions of the new
Basic Law. The basic directions demonstrated in the Basic Plan are the following: (1) improvement ofthe food self- sufficiency ratio, (2) establishment of a desirable agricultural structure, and
(3) development of hilly and mountainous areas. In line with these directions, Japan has been carrying
out agricultural policy reform.
2. Japan has been faithfully implementing its agricultural policy reform based on its UR
commitments and the agreements on agriculture as described in the report by the Secretariat: officialpurchase prices of major agricultural products have declined every year since FY 1997; and
substantial revisions have been made on price policies towards a number of agricultural products such
as rice, wheat and soybeans, with a view to facilitating the transition of consumers’ needs to
producers through market signals.WT/TPR/M/76/Add.1
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Australia Question 5
If there is a long term change in Japanese food consumption patterns, shouldn’t this be addressed (at
least to some degree) by the market forces of international trade?
Response to Australia Q. 5
In line with a long-term change in food consump tion, imports of a number of agricultural products
such as meat have increased, which has led to the decline in food sufficiency ratio to the recent figure
of around 40%.  In this way, market mechanism of international trade has responded to the changes infood consumption patterns.
In the other hand, domestic production so far has not sufficiently responded to the needs of
consumers, which made production of a number of pr oducts decline.  That is why the Government is
currently vigorously engaged in the agricultural policy reform, through the New Basic Law and other
measures, in order to establish domestic agriculture that can promptly respond to consumers' needs.
Australia Question 6
What is the current level of Japan’s food self-sufficiency?  What changes in trade policy will be
required for Japan to meet its 45 per cent food self sufficiency target by 2010?
Response to Australia Q. 6
The current level of Japan's food self-sufficiency (total food self-sufficiency ratio on a supplied
calorie basis) is 40% (FY 1998).
In determining the target for food self-sufficiency  ratio in FY 2010, changes in Japanese trade policy
are taken into account because the outcome of the WTO negotiations on agriculture is not clear at this
moment, but it goes without saying that Japanese trade policies should be in conformity with the
international rules and disciplines. The objective of agricultural policy is to establish the domestic
agricultural sector that can promptly respond to the needs of consumers.  The target of food
sufficiency ratio has been set as a guideline for various stakeholders in pursuing this objective.
Australia Question 7
Despite government assistance, productivity in Japanese agriculture remains low by international
standards. With problems such as an ageing agriculture sector population and the extremely small
average size of farms, isn’t it time to re-evaluate the considerable financial and resource costs in
maintaining protection for the agriculture sector?  Can Japan provide data on the productivity ofrural sector over the past few years and explain the trend?  Can Japan additionally provide figures on
the actual costs, including to consumers, of providing protection to the agricultural sector?
Response to Australia Q. 7
In 1996 and 1997, physical labor productivity in the agricultural industry increased, due to the
decrease in the farming population while agricultural production slightly declined in 1996, thenleveled off in 1997. In 1998, on the other hand, physical labor productivity decreased by 3.5%, due to
the decreased in agricultural production caused by factors such as cold weather and long period of
rain. (see attached table, page 235)
Japan’s AMS (total amount of domestic support subject to reduction commitment provided for in
WTO Agreement on Agriculture) in 1997 was 3,170.8 billion yen (2,967.9 billion yen for priceWT/TPR/M/76/Add.1
Page 67
support and 202.9 billion yen for direct payment to be reduced); The figure is below the scheduled
level of AMS for 1997.
Australia Question 8
The high cost of agricultural inputs has been a factor in Japan’s food processing industries
considering offshore relocation.  How will this affect the food sufficiency targets contained in the
Basic Law?  Has Japan considered the option of increasing self-sufficiency by increasing agricultural
efficiency and competitiveness?
Response to Australia Q. 8
The food self-sufficiency ratio will rise only if more consumers and food industry choose domestic
products.
Therefore, the target of self-sufficiency ratio has been determined through clarifying the issues such
as improvement of productivity and quality to attract consumers and food industry, and it has been setat a practical level that is achievable if all relevant issues are to be solved by the positive efforts by all
relevant parties including farmers.
Therefore, we take into account the efforts toward increasing agricultural productivity and
competitiveness when determining the target of self-sufficiency ratio.
Australia Question 9
Given that Government support to agriculture in Japan is higher than agriculture’s contribution to
Japanese GDP, that two thirds of farm income  is derived from government support and that
consumers pay twice the cost of goods that would apply in the absence of such support, can Japan
provide information that demonstrates that the Government’s support to the agricultural sector is
achieving the objective of stabilising farm incomes?
Has the Government considered restricting farming to  efficient enterprises and paying farmers to take
inefficient farms out of production entirely?  This would end the inherent internal conflicts in the
policy of multifunctionality that have led to its failure.
Response to Australia Q. 9
So far, the supporting measures for major farm produ cts such as rice have been playing certain roles
in promoting the stabilization of the farm income s, according to the actual situation of production,
distribution and consumption.
The government has considered policies focusing on and encouraging efficient agricultural
management, and has in fact taken such measures.  And the new basic law made another clear step
forward to that end.
However, questions arise from various reasons including the point of view of multi-functionality if we
are to neglect small-sized farmers because of their economic inefficiency.
The multi-functionality of agriculture is considered as function, which is closely related to, and cannot
be separated from, agricultural production activities that have generally been observed.  For example,
agriculture on paddy fields heavily depends on the irrigation system maintained and managed
collectively by the farmers of the region.  It needs substantial time and cost to let the small-sized
farmers leave the sector while maintaining the irrigation system.WT/TPR/M/76/Add.1
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Australia Question 10
We are interested in the relationship between new free trade agreement initiatives by Japan,
specifically with Singapore, and Article XXIV of the GATT.  We note that the Joint Study Group
report on the ‘Japan-Singapore Economic Agreement for a New Age Partnership’ highlighted that
Japan was not prepared to liberalise tariffs in the agricultural, forestry and fishery sectors in the
framework for the Agreement. In light of this how will Japan address these sectors and potential
trade-offs in its free trade agreement negotiations with Singapore and other potential free tradeagreement partners?  We are particularly interested in Japan’s views regarding comprehensive
coverage of all sectors in free trade agreements.
Response to Australia Q. 10 regarding FTA
Japan believes that the Economic Agreement for a New Age Partnership between Japan and
Singapore must be consistent with WTO rules.
As to the coverage of free trade agreements, Japan believes that an FTA must fulfill the requirements
stipulated in Article XXIV of GATT and Article V of GATS, as well as the other relevant parts of
WTO agreements.
Australia Question 11
Australia welcomes moves by the Japanese Government to eliminate restrictions on foreign
ownership restrictions for Type I telecommunications services and cable TV service providers but we
note the exclusion of NTT to restrict foreign ownership to less than one fifth (20 per cent).  Does
Japan envisage an easing of this restriction?
Response to Australia Q. 11 regarding foreign ownership in NTT
The status of NTT, including restrictions on foreign ownership on NTT, is now being discussed as
part of the broad considerations in the Telecommunications Council.
Australia Question 12
Deregulation of telecoms markets in Australia has led to new entrants and lower charges, which has
boosted national IT literacy rates.  In pursuing effo rts to increase its own IT penetration rates, has
Japan considered addressing interconnection charges paid by Type II carriers to access facilities
owned by Type I carriers?
Response to Australia Q. 12 regarding interconnection rates
As for the interconnection charges, steady reduction has been made so far. In addition, the
Telecommunications Business Law was amended in May 2000, and as a result, interconnection
chareges based on Long-Run Incremental Cost Methodology have already been introduced.
Therefore, further reduction of the charges will be expected in the future.
Australia Question 13
We note under Entry Regulations (Page 102 of Secretariat Report) the distinction of Type I and
Type II carriers. The distinction between the two carrier types artificially divides and restricts the
market from operating at its most efficient level by creating an economic and operational market
entry barrier.  To provide a combination of serv ices using its own and other networks, a companyWT/TPR/M/76/Add.1
Page 69
must acquire both a Type I and Type II licence.  Australia understands that some relaxation of the
existing regulations on Type I and Type II carriers is planned.
Can Japan provide details of the current situation, and of the planned relaxation of these regulations.
Response to Australia Q. 13 regarding planned relaxation of regulations on Type I and Type II
carriers
Given that Type I telecommunications carriers that install their own circuit facilities provide an
essential infrastructure that have fundamental functions for supporting the national economy andlivelihood of the people, Ministerial authorization is required to secure the stability and reliability of
such businesses.
As for Type II telecommunication carriers, simple regulation such as registration and notification are
applied that enable them to provide diverse telecommunications services through the interconnection
of both ends of leased circuits.
The distinction between Type I and Type II carriers was established in order to provide a clear
telecommunications framework and a competition rules. The Government of Japan considers it
appropriate to deal with demands for new services in accordance with this framework.
The regulation applied to companies intending to manage both Type I and Type II
telecommunications service was abolished in September 2000. In addition, resale of lines by Type Icarries will be possible. These examples indicate that  the flexibility to build networks is expected to
be enhanced even in the current framework of carrier categories.
Australia Question 14
The cumbersome current system of approvals and noti fications administered by the Ministry of Posts
and Telecommunications (MPT) imposes heavy administrative burdens on wholesale and retail
telecommunications.  Why are these administrative requirements necessary?  Does Japan have any
plans to remove or streamline the current requiremen ts for interconnection, or to make the terms and
conditions of sales more clearly defined?
- For example, when a carrier interconnects with another carrier the interconnection
agreement is subject to approval by MPT (Telecommunications Business Law, Article 38-3),
a process that can lead to unnecessary delays.
- On the retail side, under Article 31 of the Telecommunications Business Law, Type I and
Type II carriers are required to submit ‘Articles of Agreement’ to MPT detailing services they
are offering to customers and the terms and c onditions of the customer agreement.  The
absence of clear guidelines as to what should be included in the Articles of Agreement can
cause delays in processing licence applications.
- Article 10 of the Telecommunications Business Law requires that the business plan of a
Type I carrier must be “firmly based and rational”.  The requirement for interpretation of
these terms by MPT, rather than through a clear definition, can lead to delays in approval of
licence applications.
These administrative processes are costly and time-consuming, and have the effect of creating a
restriction on entry into the Japanese market.  Does Japan have any plans to change these processes,and improve transparency in line with its WTO obligations?WT/TPR/M/76/Add.1
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Response to Australia Q. 14 regarding authorization of interconnection agreement
Regarding interconnection agreement and articles of agreement, authorization is required for articles
to secure fair competition in the telecommunications market and consumers benefit.
The criteria for the authorization is defined clearly in the Regulation for Enforcement of the
Telecommunications Business Law. Examination fo r the authorization is taken without delay in
standard processing period.
Australia Question 15
Australia notes that users and carriers may file complaints and petitions with the MPT about
telecommunications issues (see Page 105 of Secretariat report).  However, the MPT is also
responsible for the policy and regulatory functions for telecommunications.  Australia considers that
the creation of a fully independent regulatory entity  would help to ensure that non-discriminatory and
transparent processes exist within the telecommunications market.
What are Japan's views on this subject, and are there any plans to create a fully independent
regulatory entity.
Response to Australia Q. 15 regarding independent regulators
As for an independent regulator in the telecommunications sector, the Reference Paper of the Fourth
Protocol to the GATS stipulates, “The regulatory  body is separate from, and not accountable to, any
supplier of basic telecommunications services.” and Japan has abided by the rule.
Australia Question 16
Paragraph 83 of the Secretariat Report notes that the Diet has approved the Law Concerning
Electronic Signatures and Certification Services as  a means of advancing electronic commerce within
Japan.  The demands that electronic commerce will place on the regulatory environment of many
industries cannot be underestimated.  It is therefore essential for Japan, and other members, to ensure
that the practices of other sectors of the economy be regulated in such a way to ensure that goodstraded electronically do not face unnecessarily barriers.  What are Japan's views on this issue?
Response to Australia Q. 16 regarding e-commerce
In order to promote electronic commerce, the IT  Strategy Council is now implementing an overall
examination and prompt review of factors hindering the IT revolution and preparing rules suited to the
specific requirements of electronic commerce and other information transactions.
For example, the Bill for the Comprehensive Amendments to the Laws that Require as Conditions the
Delivery of Documents is presently being discussed in the current session of the Diet in order to
enable the employment of electronic media.
Australia Question 17
Japan ranks among the top five legal services market for Australia. Although Japan's regulation of
foreign is relatively restrictive,  Australian lawyers and law firms have been able to access Japan’s
legal services market to service the needs of Australian, Japanese and international clients - but
generally do so other than as registered foreign lawyers. (Gaikukokuho-Jimubengoshi Jimusho
(GJB))WT/TPR/M/76/Add.1
Page 71
Australia has a number of concerns relating to Japan’s approach to legal services.  These include:
(i) the long and usually bureaucratic process of seeking GJB status;(ii) restrictions on most forms of commercial association between foreign and Japanese
lawyers and law firms;
(iii) a three year minimum period of professional experience (ie considerably more than
the one year’s supervised professional practice, in addition to articles or practical
legal training, for an Australian lawyer to be eligible for an unrestricted practisingcertificate in Australia);
(iv) a minimum period of 180 days residence in Japan each year; and
(v) discriminatory regulation concerning the practice of third country law (through the
additional requirement imposed on foreign lawyers in relation to the practice of
foreign law)
The 3 year minimum professional experience requirement (item iii above) works against newly
qualified Australian lawyers who wish to gain overseas experience early in their career.  The
additional requirement concerning the practice of foreign law (item v above) imposes a cost only on
foreign lawyers and amounts to a differential and discriminatory standard.
What is Japan's approach towards the issues identified in (i) to (v) above, and what action, if any, is
Japan prepared to take in order to address the concerns specified?
Australia Question 18
The appropriate role of the Japanese professional/ regulatory bodies should be to establish that a
foreign lawyer has good standing with his or her ho me country professional/regulatory bodies.  These
regulatory bodies should not specify additional experience or other professional requirements
concerning practise of the law of another jurisdiction (ie the foreign lawyer's own jurisdiction or the
law of another jurisdiction).  This is a function that is best performed by the admitting andprofessional/regulatory bodies in those other jurisdictions, as those bodies are in the best position to
properly determine competency and experience requirements - not Japanese bodies.
In Australia, the requirements for admission to practice and issue of an unrestricted practising
certificate have been developed to provide for a high standard of professional competence and
consumer protection.  No additional requirement, other than the maintenance of a high standard ofprofessional conduct and continuing legal education, is considered necessary by the competent
authorities in Australia.  In so far as the practice of the law of Australia in Japan is concerned, it is
unclear why the Japanese authorities might consider they are in a better position to determine
adequate experience requirements for Australian lawyers or legal consultants.  Australia has no such
additional requirement for foreign lawyers practisi ng home country law in Australia who are in good
standing with their home country professional or regulatory body - including foreign lawyers from
Japan.
Against this background, can Japan provide an explanation for its current approach concerning
regulation of foreign lawyers practicing home country law?WT/TPR/M/76/Add.1
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Australia Question 19
The Ministry of Justice also imposes more burdensome requirements for foreign lawyers providing
advice on third country law than for Japanese lawyers providing advice on third country law (ie
foreign lawyers are required to obtain a confirmatory letter from a lawyer in the third country
concerning the matter on which advice or an opinion is provided; Japanese lawyers have no such
obligation imposed on them in regard to third country law.).
Once again, where advice by a lawyer or legal consultant on third country law is involved, the
admitting and professional/regulatory bodies of the third country are the proper bodies to determine
competence and experience in that body of law, rather than a regulatory authority in the host country
where the advice is being given.  This is the position in many countries, including Australia.
Can Japan explain how these requirements meet  its obligations under the GATS Agreement
concerning National Treatment?  Does Japan have any plans to change the current situation?
Response to Australia Q. 17 – Q. 19 regarding GJB
Q. 17-(i)
It takes approximately two months for an applicatio n for approval to be approved after it has been
received by the MOJ, unless any extraordinary grounds exist. Therefore, the MOJ believes that this is
not too long.
Q. 17-(ii)
According to the final revision of the Three-Year  Program for Promoting Deregulation decided on by
the Cabinet on March 31, 2000, "From the viewpoint of providing an environment where citizens and
corporations can receive overall, comprehensive legal services concerning both Japanese and foreign
law, the Government of Japanese will give consideration to whether some measures, including the
review of regulations on the objectives of specific joint enterprises, are required so that fully
integrated legal services based on a comprehensive cooperation between Gaikokuho-Jimu-Bengoshiand Bengoshi may be provided in all cases".
Therefore, the Government of Japan is continuing examination of specific joint enterprises to assess
whether there are any points that may be improved.
Q. 17-(iii) and Q. 18
The system of Gaikokuho-Jimu-Bengoshi in Japan means that foreign lawyers are able to provide
legal services pertaining to their own country's laws without taking any special examinations,
provided that the foreign lawyers meet the requirem ent for approval of experience of practice in the
country of acquisition of qualification, for a period of three years or more in total.
This system is intended to ensure that the foreig n lawyers have sufficient  abilities and competence
and that there are no ethical problems.
Japan believes that the three years’ experience requirement for practising  foreign law is appropriate
from the viewpoint of protecting clients.
Therefore, no consideration is being given to removing the above-mentioned requirement.WT/TPR/M/76/Add.1
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Q. 17-(iv)
Gaikokuho-Jimu-Bengoshi in Japan should themselves be engaged in legal business concerning the
laws of the country of acquisition of qualification.
Therefore, Japan believes that a GJB should be required to stay in Japan not less than 180 days in a
year, from the viewpoint of protecting clients and to ensure that clerks or others do not engage in legal
business without a GJB.
Q. 17-(v) and Q. 19Ordinary, a Gaikokuho-Jimu-Bengoshi in Japan can only engage in legal business which is limited to
laws concerning the laws of the country of acquisition of qualification, and therefore when a GJB
handles legal services in third country law, the GJB must do so only after receiving written advice
from a lawyer in the third country.
On the other hand, Bengoshi can engage in legal business without any restrictions.This requirement
for GJB is necessary from the viewpoint of protecting clients, because GJB and Bengoshi are totally
different in concept.Clients will not be able to gather information and form decisions about foreign
lawyers' ability competence or ethics and there is the possibility that a client will incur irreversible
damage after legal services have been rendered.
Japan believes that the above-mentioned requirement is necessary from the viewpoint of protecting
the client.Therefore, no consideration is being given to removing  the above-mentioned
requirement.Further, the above-mentioned condition also applies to Japanese GJB, which means thiis
condition is not applied based on nationality. Therefor, Japan believes that there are no problems
under the GATS Agreement concerning National Treatment.
Australia Question 20
Australian welcomes the Japanese Government’s progress in liberalising its financial sector in
particular the desegmentation of Japan’s financial markets through progressive removal of barriersbetween different types of financial institutions.  New regulation, new competitors, new techniques
and approaches, and new technologies are empowering customers and allowing freer trade in
financial services.
We note the decision outlined on page 98, paragraph 53 of the Secretariat's report that in April 2001,
the mandatory re-depositing of savings with th e Fiscal Investment and Loan Program is to be
terminated.  Are there any plans to make a similar change in relation to Postal Life Insurance?
Response to Australia Q. 20 regarding the Postal Life Insurance Service (Kampo) Funds
The Postal Life Insurance Service (Kampo) Funds have been managed and invested directly by the
Minister of Posts and Telecommunications since their inception in 1919.  Therefore, FILP Reform
will not bring about a great change in the scheme of their management.
Regarding the management of Kampo Funds, after the FILP Reform, the direct loans to FILP
institutions, except for local governments, will be abolished, and the system in which bonds such as
FILP bonds and FILP Institution bonds, are purchased through the market will be adopted.WT/TPR/M/76/Add.1
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Australia Question 21
There have been complaints that Japanese regulatory authorities often make foreign entrants comply
with many administrative requirements for even the simplest of approvals.  Legal, administrative and
regulatory requirements are also seen as changing arbitrarily, and compliance with one requirement
may reveal a request for compliance with further requirements.
What measures has Japan undertaken to ensure the simplification and transparency of regulatory
requirements in the financial services sector?
Response to Australia Q. 21 regarding Financial Services
The Financial Supervisory Agency was established in June 1998 with the objective of conducting
financial supervision in a fair and transparent manner.  At the time of establishment, the FSA
abolished all administrative notifications that contained regulatory requirements and put them in
Cabinet Orders, ministerial ordinances and guidelines, which are open to the public and subject topubic comment when amended.  These regulations are applied in a non-discriminatory manner, and
do not impose unfair requirements on foreign entrants.
Australia Question 22
Japanese companies often work in business groups - Keiretsu (supporting each other across business
processes), concentrating economic power in a sm all group of companies.  The market power from
this practice enables the companies to constrain fa ir competition, infringe the interests of foreign
firms and tie up distribution channels.
What measures will the Japanese Government implement to prevent restrictive trade practices that
unreasonably restrict trade in the financial services sector?  Will the Japan Fair Trade Commission
be able to investigate such restrictive trade practices?
Response to Australia Q. 22 regarding Keiretsu
1. The Japan Fair Trade Commission has surveyed distribution and trade practices, including
those in the financial sector, and has pointed out problems, from the viewpoint of competition policy,
concerning trade practices which restrict fair and free competition.
BRAZIL
Brazil Question 1
According to the Report by the Secretariat, “although Japan has traditionally eschewed regional free
trade agreements on the grounds that they could lead to exclusive, discriminatory trading blocs and
thereby undermine the multilateral trading system , such agreements now seem to be attracting
greater interest to Japan” (page 19, para. 4).
Could Japan clarify what kind of agreements are being negotiated with Singapore and Korea?
Is Japan negotiating agreements with other countries ?In view of this new scenario, what is the position of Japan in the Committee of Regional Agreements,
specially as regards the so called “systemic issues” ?WT/TPR/M/76/Add.1
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Response to Brazil Question 1 regarding FTA
Negotiations with Singapore will begin in January 2001. "Japan-Singapore Economic Agreement for
New Age Partnership" will not be a traditional free trade agreement but a new type of economic
agreement which can strengthen the broad range of the economic ties. It will include new economic
fields, such as capital flows, harmonization of electronic commerce regulations, cooperation on
paperless trade, financial services and media/broadcasting, movement of professionals and
development of human resources. We believe that the future agreement between Japan and Singaporewill further liberalize trade and investment and institutionalize regulatory and other policy reforms in
both countries. It will also facilitate the smooth transborder flow of management resources, create a
larger market, provide greater opportunities and larger economies of scale and contribute to the
prosperity of the world economy in the 21st century. The partnership agreement will enhance the
creativity of the people of both nations as well as encourage innovation in the age of technologicalprogress, especially in the area of information and communication technologies.
Japan is not negotiating with Korea, nor with other countries. Please see the answer to the question
from Chile. We continue to place the highest pr iority on maintaining and strengthening the
multilateral trading system as enbodied in the WTO. The primacy of the multilateral trading system
was reaffirmed by the Prime Ministers of Japan and Singapore when deciding on the launch of thenegotiations. We believe that FTAs must be consistent with WTO rules and must be complementary
to the multilateral trading system. We continue to  contribute actively to the work of the CRTA,
including the work on so-called systemic issues.
Brazil Question 2
According to the Report by the Secretariat, “ Tariff escalation is evident in a number of sectors, most
notably processed food, textiles, chemicals and leather products” (page 42, para.31).  There are
important export products from Brazil that are faci ng this trade barrier in having access to the
Japanese market as soybean oil, prepared coffee and cigarettes, and also footwear.Could Japan
provide any explanation to the continuation of this kind of protection?
Response to Brazil Q. 2 regarding trade barrie rs to access to the Japanese market for soybean
oil, prepared coffee, cigarettes and footwear
(1) Soybean Oil and Prepared Coffee
The tariff rates of both products have been determined through the past trade negotiations, and were
based on various circumstances and are not high, compared with other products.
(2) Cigarettes
The temporary tariff rate of them is zero. As such it is not correct to describe cigarettes in this way.
(3) FootwearIt is very difficult to reduce tariffs further because most of the manufacturers’ scales are very small,
and they are less competitive in the global markets. Further reduction of their tariffs would cause
serious damage to the manufacturers.
However, Japan does not intend to exclude these products from industrial tariff negotiations of
comprehensive coverage in the WTO new round with a balanced and sufficiently broad-based agenda.WT/TPR/M/76/Add.1
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Brazil Question 3
As indicated in the Report of the Secretariat,  “Non ad valorem duties consist of compound duties,
alternate duties, differential duties and sliding duties, all of which include specific rates.There is a
significant number of products from Brazil that is facing such type of specific duty as sugar, ethylic
alcohol, orange juice and footwear.
Since this type of duty provides a greater nominal protection as the price of the product is reduced, is
Japan planning to change the use of non ad valorem duties to ad valorem duties in the future ?
Response to Brazil Q. 3 regarding specific duty
Japan does not have any plan to reform these regimes now. But it should be noted that the Japanese
government applies non ad-valoem duties restrictively and selectively for the items with large market-
price fluctuations and so on. Also, the tariff rates are set taking into consideration the domestic and
oversees price differentials and vulnerable situation of domestic industries regardless of types ofduties.
AVE estimates of non ad-valorem duties are high not because non ad-valorem duties are applied but
because the respective industries are vulnerable.This regime might be discussed in a WTO new round
of trade negotiations with a balanced and sufficiently broad-based agenda.
Brazil Question 4
As mentioned in the Report by the Secretariat, “since 1998, no change has been made to the Food
Sanitation Law” (page 56, para.79).Brazilian exporters of tropical fruits are facing increasing
barriers in terms of phytosanitary and quarantine measures to the following products: mangos,
oranges, papayas, melons, watermelon and tomatoes. Brazil’s concerns are related to the practice of
limiting SPS protocols to specific varieties of fruits and the non acceptance of Brazilian methods of
treating fruits to control specific diseases. Could Japan offer some kind of explanation about this
practice?
Response to Brazil Q. 4 regarding SPS
Under the Plant Protection Law (not the Food Sanitation Law), Japan prohibits the importation of
plants which serve as hosts for Mediterranean fruit fly (Medfly) and Tobacco blue mold which are not
present in Japan but have been found in Brazil, in order to prevent their introduction into Japan.
In detail, we prohibit the importation of mangoes, oranges, papaya, melons, watermelons as the host
plants of the Medfly, and tomatoes as the host plants of the Medfly as well as Tobacco blue
mold.Such a plant quarantine measure is based on scientific evidence and consistent with the
WTO/SPS Agreement.
On the other hand, Japan approves the importation of these prohibited plants on the condition that the
exporting country has developed an effective method to prevent the invasion of pests whose import isprohibited.
We are currently holding discussions with Brazil about the lifting of the import ban for mangoes from
a technical viewpoint, but we have not received any requests for the lifting of the import ban for other
fruits
If Brazil has a specific request for lifting an import ban, Japan is ready to discuss it from a technical
viewpoint.WT/TPR/M/76/Add.1
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Brazil Question 5
Other issues (electronic commerce) – page 105, par. 83. With regard to the Law Concerning
Electronic Signatures and Certification Service, approved on 24 May 2000, the Secretariat report
states that the “Law also introduces a system that enables mutual recognition of certification services
between Japanese and foreign accreditation systems,  where a mutual recognition agreement exists
between the two countries. Has Japan signed any  such agreements and if so with which WTO
Members? Could Japan provide information on the system used for recognition and accreditation ofelectronic signatures?
Response to Brazil Q. 5 regarding the Law Conc erning Electronic Signatures and Certification
Service
Japan has not signed any mutual recognition agreements concerning accreditation systems of
certification services yet. Reference can be made to the Law given in tentative English at the websiteas follows.
http:// www. mpt. go.jp/eng/Resources/Legialation/eSignLaw/eSignLaw.pdf
Brazil Question 6
In Japan’s schedule of specific commitments with regard to “placement and supply services of
personnel (1.F.k) the limitation on market access in mode 3 states that “the number of licencesconferred to service suppliers may be limited”. Is this limit permanent or has it been subject to
modifications? What are the criteria for the esta blishment of limits for the number of licences?
Response to Brazil Q. 6 regarding the labor supply and demand condition and the limitations on
service suppliers
Based on the revision of the Employment Security Law and the Law for Securing the Proper
Operation of Worker Dispatching Undertakings and Improved Working Conditions for Dispatched
Workers in 1999, the labor supply and demand adjustment condition was abolished. This condition isdescribed in the schedule of specific commitments as “the number of licenses conferred to service
suppliers may be limited.” Notification of the revision pursuant to Article III, Paragraph 3 of the
General Agreement on Trade in Services, has already been made (S/C/N/129 and S/C/N/130).
Brazil Question 7
Does the Government of Japan maintain any exceptions to the principles of MFN and NT with regard
to FDI? If that is the case, what are the sectors/activities and are there any plans to reduce or
eliminate these exemptions?
Answer to Question Q. 7 by Brazil regarding exemption from MFN in Japan
Japan has exemptions from MFN on fisheries, freigh t forwarding business and air transport industries
based on the Law Concerning the Exercise of Sovereign Rights Concerning Fisheries in ExclusiveEconomic Zones, Law for Regulation of Fishing Operation by Foreign Nations, Freight Forwarding
Business Law and Civil Aeronautics Law.
Besides the above-mentioned MFN exemption measures, Japan has exemptions from and limitations
to NT on agriculture, forestry, fisheries, water supply, transportation, warehousing related to oil
storage, vaccine manufacturing, leather and leather products manufacturing, aircraft manufacturing,defense products manufacturing, space, security, explosives, nuclear energy, oil, electric utility, gasWT/TPR/M/76/Add.1
Page 78
utility, heat supply, mining, telecommunications, broadcasting and financial services (deposit
insurance) industries based on the following laws:
- Foreign Exchange and Foreign Trade Law
- Seeds and Seedlings Law
- Mining Law
- Ship Law
- The Law Concerning Nippon Telegraph and Telephone Corporation, etc-R a d i o  L a w
-B r o a d c a s t  L a w
- Deposit Insurance Law
Concerning the industries which require prior notification for foreign direct investment, Japan is
promoting further liberalization so that regulations on access by foreign capital will be minimizedexcept those for security purposes, considering negotiations with and regulations in other countries
and social economic situations.
Brazil Question 8
Could Japan explain how its tariff quotas and autonomous tariff quotas are administrated?
Response to Brazil Q. 8 regarding tariff quota
The tariff quota volume, in principle, is determined by subtracting the domestic production volume
from the domestic demand volume in each product to which this scheme applies. Allocation for each
product category is administered by respective ministries. The administration methods of allocation
are selected taking into consideration the characteristics of demand and supply movements and other
market conditions respectively. They are made public from the related ministries. Japan thinks that it
has enough transparency. There is no difference between tariff quotas introduced under the WTO
Agreement on Agriculture and the autonomous ones.
Brazil Question 9
With regard to state trading (Secretariat report page 53, par. 69) what are the plans of the Japanese
Government to reduce or eliminate these practices in the light of their trade distortive effects? Can
the government of Japan confirm the abolition of  the MITI’s monopoly on import, production and sale
of industrial alcohol by 01 April, 2001 as stated in the Secretariat report?
Response to Brazil Q. 9 state trading
The Government of Japan confirms that MITI’s monopoly on the import, production and sale of
industrial alcohol shall be abolished by 01 April 2001, under the Alcohol Business Law which was
established in March 2000.WT/TPR/M/76/Add.1
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Brazil Question 10
Could Japan provide more detailed information abou t how its non-automatic import licencing system
works? Please provide an updated list of the products/tariff lines subject to the system?
Response to Brazil Q. 10 regarding the non-automatic import licensing system
The non-automatic import licensing system in Japan works with import quota and import approval.
The goods, and their countries of origin and/or shipment where applicable, that are subject to import
quota or import approval system are specified in a list and made public in the Official Gazettewhenever changes are made.
The updated list is attached.
Brazil Question 11
With regard to government procurement, the Secretariat report mentions (page 50, par. 58) that “the
authorities state that government procurement is conducted without any restrictions on suppliers’nationality or on the origin of products and serv ices, based on the principle non-discrimination”.
Does this mean that suppliers from countries that  are not members of the GPA are accorded the same
treatment given to suppliers from GPA member countries?
Response to Brazil Q. 11 regarding the treatmen t extended to those who are not parties to the
GPA
As a Party to the WTO Agreement on Government Procurement (GPA), Japan has conducted its
government procurement without any restrictions on suppliers’ nationality or the origin of products or
services, based on the principle of non-discrimination, to the extent it is required by the GPA.
Naturally, the GPA applies to those governments that have accepted the GPA and whose agreed
coverage is contained in Annexes 1 through 5 of Appendix I of the Agreement (cf. Article 24:1 of the
GPA). This means that, as a matter of course, only suppliers of parties to the GPA are able to enjoy
non-discriminatory treatment under the GPA. Therefore, it is outside of the scope of Japan’scommitments under the GPA to accord suppliers from countries that are not parties to the GPA the
same treatment given to suppliers from Parties to the GPA.
Brazil Question 12
Could Japan explain the reasons for restricti ng the use of nicarbazine in poultry meat?
Response to Brazil Q. 12 regarding poultry meat
The Ministry of Health and Welfare of Japan has established MRLs (Maximum Residue Limits) for
veterinary drugs at levels low enough to ensure that there is no adverse/undesireble effect on human
health, should people consume foods containing such drugs.
In June 2000, Japan established MRLs for nicarbazine in poultry meat. This standard will be effective
on 1 January 2001.
In the future, MHW will establish MRLs for veterinary drugs with all necessary documents required
for a safety evaluation, based on opinions of the Food Sanitation Investigation Council, and on
scientific grounds.WT/TPR/M/76/Add.1
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Brazil Question 13
We would like to know Japan’s views on the recogniti on of disease or pest free areas in the light of
the mechanisms set out in Article 6 of the SPS Agreement to that effect.
Response to Brazil Q. 13 regarding SPS
Japanese Government has already recognized free regions of countries, taking into account, inter alia ,
the level of prevalence of specific disease or pests, the existence of eradication or control programs,
and appropriate criteria or guidelines which may be developed by the relevant internationalorganizations according to the Article 6 of SPS Agreement.
CANADA
Canada Question 1
As the Secretariat points out, the Three-Year Programme for Promoting Deregulation has made great
strides thanks to the able direction of the Regulatory Reform Committee (RRC).  Please provide somedetails on the new regulatory reform program Japan intends to implement when the current
three-year plan draws to a close on March 31, 2001 and what body will be created to succeed the
RRC.
Response to Canada Q. 1 regarding Japan’s regulatory reform program
The Three-Year Program for Promoting Deregulation will expire at the end of March 2001. In order
to promote regulatory reform initiatives, the Government is to draft a new Three-Year Program.
However, details of the new program are yet to be decided.
The Regulatory Reform Committee was established without a fixed term of mandate, and the
establishment of another body to succeed it is uncertain.
Canada Question 2
Many have criticized the incremen tal, item-by-item approach to Japan’s efforts in regulatory reform.
It has been suggested that Japan could give greater consideration to cross-cutting issues, such as theproblem in several sectors of a lack of independent  regulatory authority.  Reform in areas such as
telecommunications (for example, rights of way) may be hampered by the fact that the Ministry of
Posts and Telecommunications has both regulatory  and promotional functions. Other sectors might
be aided by the establishment of an independent regulator, as is the case with MITI in electricity, or
the Japan Harbour Transport Authority for sea transport.  What are Japan’s intentions to addresscross-cutting issues, such as the independence of regulatory authorities, as part of its new regulatory
reform initiative?
Answer to Canada Q. 2 regarding cross-cutting issues
First of all, the Government of Japan does not currently address the issue of independence of
regulatory authorities as a cross-cutting issue.
As for an independent regulator in the telecommunications sector, the Reference paper of the Fourth
Protocol to the GATS stipulates, "The regulatory  body is separate from, and not accountable to, any
supplier of basic telecommunications services," and Japan has abided by this rule.  Apart from the rule
requested by WTO, it is each country that determ ines the institutional system, including its regulatory
body.WT/TPR/M/76/Add.1
Page 81
As for the independent regulator for electricity, policy-making and regulation are carried out
independently by two divisions in the Public Utilities Department, Agency of Natural Resources andEnergy (ANRE), MITI:  policy-making by the Pl anning Division, and regulation by the Electric
power Administration Division.  As a result of gove rnment structural reform to be started from
January 2001, the Policy Planning Division will ca rry out the policy-making and the Electricity
Market Division will carry out the regulation in  the Electricity and Gas Industry Department, ANRE,
MITI.
In response to the last point, Japan does not have a "Japanese Harbor Transport Authority."
Canada Question 3
According to the Report, Japan applies MFN tariffs to all except a few countries it lists.  Please
clarify if these few countries get preferential tariffs or non-MFN treatment.
Response to Canada Q. 3
Japan grants preferential treatment to Albania, Eritrea, Lebanon, Lithuania, Nepal, and the Republic
of Equatorial Guinea (II. TRADE POLICY REGIME: FRAMEWORK AND OBJECTIVES
(Box II.1)).  The MFN tariff rate is not applied to imported goods from Andorra and North Korea.
Canada Question 4
Table II.2: Principal notifications under WTO Agreements (as at 25 April 2000) includes the
notification to the WTO of the first phase of integration under the Agreement on Textiles and
Clothing.  However, no reference is made to the notification of the second phase, which was due on
31 December 1996 and which took effect on 1 January 1998.  Please explain.
Response to Canada Q. 4 regarding notification of the second phase of integration under the
Agreement on Textiles and Clothing
On 19 December 1996 Japan notified the TMB of the second phase of integration under Article 2,
paragraph 8 (a) and 11 of the Agreement on Textiles and Clothing. It is so stated in the document:G/TMB/N/215, 14 February 1997.
This refers to Table AI.1: Exports by product groups, 1995-99. Noting that the yen lost value to the
US Dollar from 1995 to August 1998, Japan's level of textiles and clothing exports did not vary
substantially since the beginning of the Agreement on Textiles and Clothing. However, according to
Table IV.6 on Employment in manufacturing, value added per employee and wages per employee inJapan, 1992-98, employment in these sectors fell nearly one fifth over this period. Is this result
attributable to the loss of the domestic market, or to the increased mechanization of the manufacturing
process used for these products?
Canada Question 5
The Report notes some tariff adjustments initiated by the Ministry of Finance.  In the past Japan has
reported that tariff rates are reviewed every year on the basis of requests from foreign and domestic
entities. Japan’s system of tariff classification distinguishes between the species and dimensions of
lumber, regardless of its end use.  As a consequence, Spruce-Pine-Fir (SPF) imports, key building
components, are subject to duties ranging from 4.8% to 6%, whereas hemlock imported for the same
purpose enters duty free. Please provide some examples of tariff adjustment which may have arisen asa result of requests from foreign entities.  Also, please clarify how one can point out such tariffs as theWT/TPR/M/76/Add.1
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SPF tariff or the tariff on cooking oil (currently between 20-25% when translated into an ad valorem
basis).
Response to Canada Q. 5 regarding tariff adjustment
Japan has been implementing tariff reductions taking into consideration requests from foreign entities.
For example, the request from Canada in relation to tariff revision of happoshu  in 1996 was
implemented in the following annual tariff revision, as were the requests from the Philippines in
relation to bananas, and from Peru in relation to camucamu in 1981 and 1997, respectively.
The customs tariff review process of Japan regarding requests from foreign entities are as follows:
The customs tariff review process of Japan
1. Specific requests on customs tariff review from foreign governments are to be received by the
Ministry of Foreign Affairs or other ministries in charge of industries concerned.  Requests
from domestic parties concerned (including foreign-affiliated parties in Japan) are to bereceived by each ministry in charge of industries concerned.
2. Requests received by the Ministry of Foreign Affairs are proceeded occasionally to ministries
in charge of industries concerned and discussed between the ministries if necessary.
3. Once those requests are received by ministries concerned, their reasonability and acceptability
are examined. If accepted, they are proceeded to the Ministry of Finance as requests forcustoms tariff review for the next financial year.
4. The Ministry of Finance begins discussions on the requests with the ministries concerned
usually in September to review the customs tariff in the next financial year.
5. The function of the Customs Tariff Council is to examine and consider a review of the
Customs Tariff Schedule annexed to the Customs Tariff Law and other important matters
pertaining to customs tariff rates. It begins deliberations responding to a reference from the
Finance Minister usually in September and submits a report to the minister usually in mid- orlate-December.
6. Attaching importance to the report submitted by the Customs Tariff Council, the Ministry of
Finance prepares bills to revise the Customs Tariff Law and Temporary Tariff Measure Law.
Approved by the Cabinet meeting, the bills are generally proclaimed in the end of March and
basically come into force on April 1.
7. Requests on customs tariff review from foreign governments have been negotiated mainly in
successive multilateral forums provided by GATT or WTO and are to be dealt with primarily
in negotiations under WTO forum.
In case that the bound rates are to be modified as the result of the negotiations in the
multilateral forums, the Ministry of Foreign Affairs takes charge of domestic procedures tomodify the “schedule XXXVI II-Japan” in the Diet, so that the result of the tariff negotiations
are reflected in the Schedule.WT/TPR/M/76/Add.1
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Response to Canada Q. 5 regarding oilseed tariffs
Japan imports a large amount of oilseeds in order to crush them into vegetable oil, of which soy bean
oil and rapeseed oil are dominant. This is the reason why relatively high tariffs are levied on these
types of oil (soybean and rapeseed).
On the other hand, the tariff rates of oils made from sunflower, cotton, corn, andsesame, which are
regarded as rather minor oils, are relatively low compared to those of soybean and rapeseed.
Furthermore, the tariff rates of tropical oils suchas palm oil, most of which have to be imported in theform of oil, are set at quite a low level, including a rate of zero in the case of developing countries.
As is mentioned above, the structure of Japanese vegetable oil tariff is subject tothe structure of the
supply of oil, and therefore tariff rates do not distinguished    based on their countries of origin.
(As for the valerom calculation which Canada presented at the end of this question, Japan would like
to point out that translation of a specific duty to an ad valorem duty differs greatly depending on thebasic data to be used for such a calculation and it is not appropriate to refer to such a calculation
without sufficient explanation thereof.)
Response to Canada Q. 5 on Spruce-Pine-Fir imports
The GATT panel on Japan's tariff on Spruce-Pine-F ir lumber has concluded that GATT left wide
discretion to the contracting parties in relation to the classification of goods and it was notinconsistent with the General Agreement to impose different tariffs on goods according to different
domestic circumstances they result from.
As for Japan's tariff on Spruce-Pine-Fir lumber, Japan imposes a certain level of tariff because
imported Spruce-Pine-Fir lumber strongly competes  with domestic Spruce-Pine-Fir lumber, of which
the price/cost ratio is extremely low.
Again, Japan's tariff on Spruce-Pine-Fir lumber does not discriminate against the products of any
specific country’s products.
Canada Question 6
We refer to Japan’s proposal to withdraw cert ain activities of NTT and its successor companies,
including NTT Communications, from covera ge under the WTO Agreement on Government
Procurement.  Considering that Japan appears to re tain effective influence and control over many  of
the NTT companies, please provide information on Japan’s plans for ensuring that its proposal meets
its commitments under the Agreement on Government Procurement.
Response to Canada Q. 6
NTT Communications Corporation is a private company established in accordance with the Japanese
Commercial Law, and as such is not regulated by the NTT Law at all. Thus, there is no effective
influence or control by the Government of Japan and it is considered that the proposal to withdrawNTT Communications from coverage under the Agreement on Government Procurement meets
Japan’s commitments under the Agreement.
Canada Question 7
Canada welcomes the move by Japan to further examine the application of performance-based
standards to the regulations within the Building Standards Law (BSL) relating to fire. However, manyWT/TPR/M/76/Add.1
Page 84
aspects of the BSL relating to fire remain prescriptive, thereby limiting wood construction and
rendering wood-frame buildings more costly.  In order to provide safe and more affordable housingfor its citizens, will Japan consider explicit performance-based standards within the BSL to recognize
new building designs, and fire prevention and fighting techniques?
Response to Canada Q. 7
In the 1998 amendment of the BSL, which came into effect as of June 1, 2000, Japan applied
performance-based standards to provisions in relation to wood-frame buildings, including thoseregarding fire-resistant structures, fireproof materials and fire prevention equipment. In addition,
Japan established technical standards for required performance levels.  The use of wood as a primary
component of buildings had normally been prohibited for tall buildings in excess of 13m in height (or
more than 9m in height up to their eaves) and buildings more than 3,000 m
2 in total surface area.
However, through the 1998 amendment Japan abolished the provisions of the BSL prohibiting the useof wooden structures and, instead, applied performance-based standards which require the
examination of the main structures of such tall or large-scale buildings to determine whether or not
they are sufficiently fire-resistant. Thus, explicit performance-based standards have already been
implemented in the BSL.
Canada Question 8
The Report indicates that prior notification is, in principle, required for inward FDI for a number of
sectors including agriculture, forestry and fisheries, petroleum, leather and leather products,
investment trust management, air and maritime tran sport, as well as Type 1 telecommunications,
radio television and cable television, and broadcasting.  What is the purpose of these notification
requirements and what information must companies provide pursuant to these notifications?
Canada Question 9
The Report states that although a notification of an FDI project may be rejected, this has never
happened.  Please clarify  whether any conditions have been placed on any of these investments as a
condition for approval.
Response to Canada Q. 8 and Q. 9
Prior notification is required for industries from national security’s and public order’spoints of view.
The regulations of these industries are recognized by the OECD. The purpose of these notificationrequirements in the Foreign Exchange and Foreign Trade Law is as follows: (1) A transaction should
not endanger national security, disturb the maintenance of public order, or hamper the protection of
public safety. (2) A transaction should not adversely and seriously affect the smooth management of
the Japanese economy.
As procedure, investors must provide the information concerning their business in which the
investment will be made, such as types (acquisition of stocks or shares, money lending, etc.), country,
industry and value in accordance with the Ministerial Ordinance. As for screening, it depends on each
case. (There is no general standard applying to all cases.)
As regards investment trust management companies are in charge of managing securities assets with
investors’ fund.  In order to secure that the asset management is conducted appropriately,authorization system (notification requirements) has been introduced to examine qualifications of the
company both from its property basis and personnel structure.  Whether a company’s head office is
located within or outside Japan does not affect the examination results of the authorization system.WT/TPR/M/76/Add.1
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There has not been any case filed with MITI which is recommended  modification or suspension of
proposed investment for the last 10 years.
Canada Question 10
Paragraph 115 and the accompanying Table AIII.13 reference several major companies where the
government of Japan retains an ownership share.  We note that the government of Japan currently
holds 53 per cent of stocks in Nippon Telegr aph and Telephone Corporation (NTT) and that the
government is required by law to hold at least one third of these stocks.  What is the rationale for thelegal requirement that the government retain one-thi rd ownership share? The government is slated to
drop its ownership to 46.7% in November.  What further plans does the government have to divest the
remaining ownership share in the corporation wh ich would be allowable under the current law?
Response to Canada Q. 10 regarding Japanese Government ownership share in NTT
The NTT Law obligates the Government of Japan to hold at least one third of the issued shares of the
NTT Holding Company, with the objective of ensu ring the public good by preventing the domination
of NTT management and the abuse of shareholders’ rights by any specific parties.
The obligation of the Government to hold the NTT shares is one of the issues concerning the status of
the NTT currently being discussed in the Telecommunications Council.
Canada Question 11
From paragraph 115 and Table AIII.13 we also note that the Government of Japan holds a 66.6 per
cent ownership share in the Electric Power Development company and that the government is
required by law to hold at least one half of these stocks.  What is the rationale for the legal
requirement that the government retain a fifty per cent ownership share in the corporation? What is
the government’s plan to divest the remaining ow nership share which is allowable under the current
law?
Response to Canada Q. 11 regarding Electric Power Development Promotion
The EPDC is regarded as a statutory company because the company’s basic role is to complement the
regional territoriality and the limitations of the private sector of the nine electric power companies in
view of the Government’s electric power and energy policy. For this reason, the Government is
requested to participate in the basic decision-making on EPDC management, as a shareholder
equipped with a special voting right.
The Government is scheduled to divest its ownership share in EPDC after it has amended the Electric
Power Development Promotion Law.
Canada Question 12
The Report indicates that the May 2000 amendment to the Anti-Monopoly Act (AMA) will allow
private actions commencing 2001.  Please indicate Japan’s expectations with respect to the impactthis will have in terms of effective enforcement of the AMA.  Will foreign parties be allowed to pursue
private remedy?  Will foreign law firms be allowed to represent private parties in such actions?
Response to Canada Q. 12
The Government of Japan submitted a bill to the Diet on 21 March 2000 to permit private parties to
seek and obtain injunction orders from the courts against parties engaged in activities that violateWT/TPR/M/76/Add.1
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unfair trade practices set forth in the AMA and to improve the damage compensation system against
AMA violations. The bill was enacted on 12 May 2000 and was promulgated on 19 May 2000.
The Fair Trade Commission hopes that victims of Anti-Monopoly Act violations will make full use of
the newly established injunction relief system and damage system so that they can be compensated for
losses. Furthermore, the use of newly established systems will help to deter such illegal practices.
If the party in question has suffered or is likely to suffer serious damages resulting from
Anti-Monopoly Act violations (relating to unfair trade practices ), it can file a lawsuit to demand aninjunction order against such practices without regard to its nationality.
Gaikokuho-Jimu-Bengoshi, are not allowed to engage in legal transactions by themselves in the
exercise of their functions regarding procedures before a court in Japan.
Canada Question 13
With respect to the distribution measures, Canada notes that the Large Scale Retail Store Law was
abolished in June 2000 and replaced by the Law Concerning the Measures by Large Scale Retail
Stores for Preservation of Living Environment.  Please elaborate on how this new law will integrate
non-economic criteria, e.g., reduction of noise, with economic/business considerations? Will the
Central Government's technical assistance or recommendations to the local governments be made
public?  Does the Government of Japan expect an acceleration in the number of applications to openlarge stores of Category II?  A number of studies have suggested that the old law contributed to a
small scale and fragmented distribution system.  W hat impact will the new law have on the Japanese
distribution system?
Response to Canada Q. 13
The Government of Japan introduced the  Daiten-Ricchi-Ho (Law Concerning the Measures by Large-
Scale Retail Stores for Preservation of Living Environment) from the viewpoint of abolishing the
supply/demand adjustment (as an economic needs test) concerning the opening and operation of large-scale retail stores and preserving the living environment surrounding such stores. The Large-Scale
Retail Store Law was abolished when the new Law came into effect on 1 June 2000.
1. MITI established a detailed Guideline as a national standard regulating entities
intending to establish a large-scale retail store with regard to the preservation of the
living environment (such as traffic and noise). The Law and the Guideline requirestore owners to take action to an appropriate and reasonable extent.
2. Store owners submit notification to local governments in accordance with the
procedures of the new Law. It is difficult to predict the number of the large-scale
stores that will be established, as it is dependent on various business environments.
3. MITI is observing local governments' implementation of the Law to ensure that the
purpose of the new Law is not impeded. MITI will take appropriate measures as
necessary, based on the Local Autonomy Law, including giving technical advice and
recommendations to local governments regarding the implementation of the Law.
MITI will also publish the information which is necessary for the implementation of
the Law.WT/TPR/M/76/Add.1
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Canada Question 14
The Report states that the support received by  farmers in Japan and the costs to consumers of
agricultural products remain above the OECD average and have increased since 1997.  Moreover,
despite the progressive ongoing reforms in other areas of its economy, agriculture remains
unproductive as to actually constitute a drag on economic growth.  What assurances can Japan
provide that its targeted food self-sufficiency ratio of 45% will be primarily aimed at increasing
domestic productivity, and will not be achieved by di scouraging competitive imports of food, fish, and
fish and food products that are now growing in response to consumer demand?
Response to Canada Q. 14
Based on Article 15 of the Basic Law on Food, Agricu lture and Rural Areas, the target for the food
self-sufficiency ratio was set in the Basic Plan for Food, Agriculture and Rural Areas determined by
the Cabinet, after hearing opinions from the Counc il of Food, Agriculture and Rural Area Policies.
The Basic Plan outlines challenges with which consumers and farmers must contend.  The target self-
sufficiency ratio in the Basic Plan is expected to be achieved in the event that those challenges are met
by the target year (FY2010).  Issues and precond itions described in the Basic Plan include the
following:
- "Desirable Food Consumption" will be accomplished if food consumption in FY2010 meets
the following conditions:
a. Regarding nutritional balance, the ratio of calories supplied by fat declines to the
appropriate level for public health.
b. Regarding the ratios of each commodity, consumption of glycolipids (carbohydrates)
is expected to increase with the steady consumption of grains, including rice, while
consumption of food containing fat is expected to decline.
c. Food waste and leftovers are expected to be reduced.
- "Agricultural production Targets" will be accomplished on the following assumptions:
a. The percentage of total food consumed supplied by domestic agricultural production
will only rise if more consumers and the food industry choose domestically produced
farm products.
b. Consequently, issues such as the improvement of productivity and quality that are
specified for respective commodities in the Ba sic Plan are expected to be improved in
order to attract consumers.
Improvement in the food self-sufficiency ratio is intended to be realized through the efforts of all the
people concerned, such as farmers, members of th e food industry, consumers, local governments and
the State.  Needless to say, the Japanese Government will implement
Canada Question 15
We remain concerned about the Japanese snapback safeguard measure on pork in the form of an
increased minimum import price. As currently administered, this measure creates considerable
uncertainty for suppliers and Japanese importers.  What steps will Japan consider to allow suppliers
and importers to operate with greater business certainty?WT/TPR/M/76/Add.1
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Response to Canada Q. 15
The pork import system of Japan is in accordance with the results of negotiations with relevant
countries in the Uruguay Round.  Moreover, as the emergency trade measures (so-called "snapback
safeguard measures") are in conformity with the WTO agreements, Japan has no intention to make
any change to these measures.
Canada Question 16
The Report notes that Japan has introduced wheeling rules; however, we note that these rules are
administered by MITI, rather than by an independent authority.  Given the market conditions which
have allowed for regional monopolization by vertica lly-integrated firms, how will Japan ensure that
wheeling rules and other deregulation measures are implemented so as to not place new entrants,
especially smaller firms, at a disadvantage?
Response to Canada Q. 16
A unified rule has been stipulated by a ministerial ordinance in order to ensure that the wheeling
charge is calculated on an equitable basis and thereby exclude lopsided competition between new
entrants and utility companies.  In this way, fair  charging is ensured by making the wheeling charge
for the new entrant comparable to the transmission cost incurred by the utility company.  Before
ordinances are established, wide-ranging public comments are collected in order to increase itstransparency. It is specified that the Minister can order a transmission rule to be modified if it is
deemed to disadvantage new entrants. Moreover, the Ministry has the authority to order electricity
companies to wheel electricity for new entrants in such a situation.
In collaboration with the Fair Trade Commission of Japan, MITI has established Guidelines for Fair
Trade of Electric Market in order to ensure a  fair and competitive market. MITI also published
Guidelines on Settlement of Dispute, which allow anyone to complain of unfair trade practices to
MITI, and the case reports will be published. The other Guidelines stipulate that all  necessaryinformation must be discussed to new entrants in order to ensure an environment for fair competition.
GOJ is making every effort to promote equitable competition through the appropriate operation of the
existing system.
Canada Question 17
The Report points out that while foreign clinical test data is increasingly accepted by the Ministry of
Health and Welfare, in many cases, the unique na ture of Japanese standards requires supplementary
documentation and testing.  Will Japan continue to increase the range of foreign test data acceptable
by ensuring that domestic testing standards are in line with international standards where those
exist?
Response to Canada Q. 17
We have obeyed the ICH E5 guideline regarding "ethni c factors in the acceptability of foreign clinical
data" since its adoption.  This guideline was adopted in Japan in august 1998 (PMSB/ELD
Notification No. 672, PMSB Notification No. 739).  In view of this guideline, we have handled
foreign and domestic clinical data without discrimination.  We have accepted foreign clinical data,
and will continue to do so, particularly when such data satisfies ICH guidelines.WT/TPR/M/76/Add.1
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Canada Question 18
According to the Report, the telecommunications sect or is characterized by dominant market players;
for example, the two local NTT companies in the local communications market.  What steps will
Japan take in order to ensure that an asymmetric regulatory system is established to deal with
dominant carriers?  For example, will new entrants be freed from some of the more onerous reporting
requirements that the Ministry of Posts and Telecommunications now sets out?
Response to Canada Q. 18 regarding domina nt carriers in the telecommunications market
As for the regulation of dominant carriers in the telecommunications sector, asymmetrical regulations
have already introduced, such as: i) an obligation for a Type I telecommunications carrier to install
designated telecommunications facilities (currently NTT East and NTT West) to keep accounts
related to the interconnection with designated telecommunications facilities in order and to establish
and disclose articles of interconnection agreement, and ii) a price-cap regulation on the particular typeof telecommunications services provided by the Ty pe I telecommunications carriers mentioned above.
The desirable pro-competitive policy in the telecommunications sector is being discussed from
various angles in the Telecommunications Council. The enhancement of asymmetrical regulations,
including that for dominant carriers, is one of  the main issues being deeply investigated.
Canada Question 19
Will Japan establish rights-of-way regulations to ensure fair access to the land and facilities owned
or controlled by utilities and to adopt measures to facilitate construction and expansion of
infrastructure over public land and facilities?
Canada Question 26
Reference is made to cooperation with the EU  on improving market access and facilitating
investment, “for the benefit of the whole world,”  including in telecommunications.  With respect to
this issue, Canada has encouraged Japan to take further measures to ensure fair access to land andfacilities, including rights of way, owned or controlled by utilities, and to adopt measures intended to
facilitate construction and expansion of such infrastructure.  In its report of September 2000, the
Japanese “Study Group on Measures to Realize Effective Competition in Local Access Network
Markets” suggested measures which would address our concerns in this area.  What are Japan’s
intentions to adopt and implement the recommendations of this study group?
Response to Canada Q. 19 and Q. 26 regarding regulations on rights of way
With regard to rights of way, the Government of Japan is implementing more opening telephone poles
and ducts and facilitating the laying of lines on public land and facilities such as roads in order to
promote to the establishment of optical fiber networks, which is essential to the development of
broadband internet.
As a concrete measure, the Government of Japan will set up and publish a set of indiscriminatory,
transparent, and fair supply guidelines, by the end of FY2000, which prescribe the opening of
telephone poles and ducts to telecommunication service suppliers as long as it does not hinder their
original purposes, such as telecommunication and electricity. The Government of Japan will also
endeavor to ensure prompt procedures in order to facilitate the construction of networks over publicland and facilities such as roads.WT/TPR/M/76/Add.1
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Canada Question 20
The Report states that for Type-I and Special Type-II carriers to conclude, modify, or abolish
contracts with foreign governments, citizens, or corporations, ministerial authorization is required.
Please outline what criteria are used in determining whether ministerial authorization is granted in
such a case.
Response to Canada Q. 20
The criteria used in determining whether ministerial authorization is granted are as follows:
1) It is considered appropriate to form a contract with a foreign corporation.
2) It is appropriate and there is no fear that the handling of international accounting rate
between contractors will hamper fair competition.
3) Conditions concerning responsibility between contractors are appropriately and
clearly defined.
4) The contract is made in a non-discriminatory manner in comparison with contracts
previously concluded by the contracting parties with other entities.
5) The security and reliability of communications are secured.
6) Contractors faithfully abide by duties imposed by international treaties, agreements or
arrangements.
7) There is no fear that the content of the contract will obstruct the increase in public
benefits or hamper fair competition in the telecommunications market.
Canada Question 21
The Report states that generally cabotage is closed to foreign competition, except where non-
Japanese vessels obtain permission from the Mini ster of Transport.  Please detail under what
circumstances such permission is granted and what criteria are applied. Also, please indicate how
often is permission granted by the Minister of Transport to operate in the coasting trade of Japan.  Towhich flags is such permission granted?
Response to Canada Q. 21 concerning the condit ions governing the granting of permission for
cabotage
Permission by the Minister of Transport is granted to cabotage service that does not pose any
particular concerns to the securing of the nation. Each year permission is granted to more than1,700 vessels from a great number of country.  Public notification of the names of those countries is
not made.
Canada Question 22
The Report states that under the Law for Ship Officers a Japanese flag vessel must be manned by a
certain number of officers holding Japanese certifica tes.  A foreigner who holds a certificate issued
by foreign authorities may take the Japanese certificate examinations, with the approval of the
Minister of Transport.  Similar provisions apply to holders of foreign certificates for the operation of
aircraft.  Please clarify when such Ministerial approval is granted for ship officers and aircraftWT/TPR/M/76/Add.1
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operators.  Also, with reference to the number or scope of examinations required, is there any
recognition of foreign certification granted to pilots and ship officers who hold foreign certificates?
Response to Canada Q. 22 regarding certification of officers operating ships and aircraft
(Answer 1.  Ship)
Article 14.2 of the Law for Ship Officers refers to the exemption of the requirement for sea-going
experience in order to take the examination. A fore igner who holds a certificate issued by foreign
authorities and receives an evaluation and approval of said certificate issued by a foreign authoritymay take the same examination as Japanese nationals even without the requisite sea-going experience.
This exemption is not limited to any certifications issued by specific foreign authorities.
Furthermore, Article 23-2 of the Law for Ship Officers, a foreigner who holds a certificate issued by
the authorities of a Party to the Standard for Training, Certification and Watching (STCW)
Convention may be recognized as a ship officer to board Japanese-registered ships, after havingpassed a medical fitness test and oral examinations conducted to evaluate whether or not he or she
possesses the knowledge and ability necessary for a ship officer.
(Answer 2.  Aircraft)
The approval to exempt the requirement to pass all or part of the examinations required for the
issuance of a Japanese license is granted in instances in which an applicant has a foreign licenseissued by a foreign state which is a contracting state of the Convention on International Civil Aviation
and when said license has been issued in accordance with the provisions of the annex to the
Convention on International Civil Aviation.  The range of exemption varies according to the kind of
license possessed by the applicant.  Applicants seeking an Airline Transport Pilot License or
Commercial Pilot License, will be required to pass written examinations relating to aeronautical law
and a portion of the practical examination.
Canada Question 23
The Report points out the problem of airport capacity constraints.  The WTO Secretariat notes that
the present airport slot allocation system is base d upon IATA guidelines.  In accordance with those
guidelines, what additional efforts will Japan undertake to ensure that the slot allocation system at
Narita is made more transparent, fair, and equitable?
Response to Canada Q. 23 regarding the slot allocation system at Narita
In order to make the slot allocation system more transparent, fair and equitable, Japan has already
made efforts by taking advantage of every opportunity to explain the procedures to any airline or
government which has sought for clarification. Such efforts will continue to be undertaken.
Canada Question 24
According to the Report, FDI levels are still low despite some recent efforts at attracting foreign
direct investment.  In assessing how the business environment can be improved, Japan has identified
legal reform as a prime component , and has taken some tentative steps to loosening the restrictions
on foreign lawyers operating in Japan. However, many in the legal and business community have
stated that the remaining restrictions (for exam ple, regarding partnerships with Japanese lawyers)
are an impediment to the delivery of high quality transnational integrated legal services necessary toencourage foreign direct investment.  What does Japan intend to do to further reform the area of legal
services, especially regarding restrictions on foreign lawyers?WT/TPR/M/76/Add.1
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Response to Canada Q. 24 concerning the further reform of the area of legal services
According to the final revision of the “Three-Year  Program for Promoting Deregulation” decided on
by the Cabinet on March 31, 2000, "From the viewpoin t of providing an environment where citizens
and corporations can receive overall, comprehensive legal services concerning both Japanese and
foreign law, the Japanese government will give consideration to whether some measures, including
the review of regulations on the objectives of specific joint enterprises, are required so that fully
integrated legal services based on a comprehensive cooperation between Gaikokuho-Jimu-Bengoshiand Bengoshi may be provided in all cases".
Therefore, the government of Japan is continuing examination of specific joint enterprises to assess
whether there are any points but may be improved.
Canada Question Q. 25
This refers to Table AI.1:  Exports by product groups, 1995-99.  Noting that the Yen lost value to the
US Dollar from 1995 to August 1998, Japan’s level of textiles and clothing exports did not vary
substantially since the beginning of the Agreement on Textiles and Clothing. However, according to
Table IV.6 on Employment in manufacturing, value added per employee and wages per employee in
Japan, 1992-98, employment in these sectors fell nearly one fifth over this period.  Is this result
attributable to the loss of the domestic market, or to the increased mechanization of themanufacturing process used for these products?
Response to Canada Q. 25 regarding growth in the Japanese textiles and clothing sectors and
related employment trends
In the textiles and clothing sector, although the domestic market has not expanded, the amount of
imports continues to increase. On the other hand, export volumes are unchanged. Due to this situation,
nearly all domestic manufacturers are facing a difficult situation and are forced to reduce their
production scale.  The decrease of employment in these sectors is due to closures and employmentadjustments caused by such reduction in production scale.
Canada Question 27
We also note, with interest, initiatives by Japan’s local service providers to offer billing services to
telecommunications service providers that provide long-distance services to end-users over the local
service providers’ facilities.  We encourage the Ministry of Posts and Telecommunications (MPT) toensure that Japan’s local service providers offer this service at a fair price and in a non-
discriminatory manner.  What steps has Japan taken to address concerns on this issue, which has a
significant practical impact on market access?
Response to Canada Q. 27 regarding billing service offered by local service providers
Billing and collection services offered to third part ies by NTT East and NTT West are stipulated by an
interconnection agreement authorized by the Ministry of Posts and Telecommunications, and price is
calculated based on cost. The service is offered not only to long-distance telecommunications carriers,
but to all carriers who wish to use it.
Canada Question 28
The Government Report explains that Japan may possibly change its approach towards regional free-
trade agreements (FTAs) and that Japan may pu rsue an FTA with Singapore and perhaps otherWT/TPR/M/76/Add.1
Page 93
trading partners.  Would it be the intention of the Japanese Government to seek significant
liberalization in the agricultural sector as part of potential FTA negotiations?
Response to Canada Q. 28
As to the intention of new developments in our policy, Japan has found that, recognizing the catalytic
role that regional trade agreements could play in accelerating liberalization and rule making in the
framework of the multilateral trading system, it may be meaningful to give consideration to regional
trade agreements as one of the means to complement the multilateral trading system and to revitalizeour economy and society. In this context, Japan decided to consider utilising RTAs, such as FTAs,
and to start negotiations towards establishing an Economic Partnership Agreement with Singapore.
CHILE
Chile Question 1
The report points out that the Free Trade Agreements draw more and more interests to Japan and
that groups of studies have been organized with different countries. In the same way, the press
informs that there should already be a decision to negotiate an ALC (?) with Singapore. In this sense,
we would like to know the reasons of this change of policy in Japan, which we obviously sustain, and
if it is considered that the Free Trade Agreements which will be approved in the future will be
comprehensive. In the same way, we would like to know if there is any decision to negotiate FreeTrade Agreements with other economies, especially within the commitment of APEC to liberalize
trade in that region in 2010.
Response to Chile Q. 1 regarding FTA
- The reasons for the new developments in our policy have been stated in our opening
statement. Please see the answer to Canada, question 28.
- Concerning the "comprehensiveness" of future FTAs, Japan's views are as follows.
In some cases, it may be appropriate to consider "traditional" FTAs whose scope is
limited to liberalization of trade in goods (and services). In other cases, it may be
appropriate to consider "new age" agreements which provide wide-ranging,
comprehensive arrangements for economic partnership,as reported by the Japan-
Singapore Free Trade Agreement Joint St udy Group. Furthermore, there may be a
case where it is appropriate to consider a framework to strengthen the economicrelationship through, for example, harmonization of economic regulations, without
including elements of traditional FTAs. These options should be examined by taking
well into account the characteristics of the partner countries and other factors.
- Regarding the decision on negotiations with other economies, only a decision to negotiate
with Singapore has been taken so far.
Chile Question 2
Even if there is no specific reference in the fishing sector, Japan presented its position in matter of
fishing subsidies (WT/CTE/W/173) in the Committe on  Trade and Environment. In the said document,
Japan points out that many factors engender the over exploitation of the fishing resources, such as the
lack of satisfactory system of administration of the fishing resources and the illegal, not announcedand not regulated activities(IUU). Chile, together with other countries, stated that the fishingWT/TPR/M/76/Add.1
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subsidies contribute to an over capacity of fish ing and to an over exploitation of marine resources
with prejudicial/disastrous effects on the marine environment.
In this sense, we would like to know:
Which type of governmental support, if there is one, and which amount are given to the industry of
afar fisheries, especially the one in high seas?
Response to Chile Q. 2 on Japanese government support extended to far seas fisheries
Although the definition of government support is not clear, the government support specific to far
seas fisheries amounted to an expenditure of more than 20 billion yen last year in order to reduce
long-distance tuna long-line fleets.  Based on the FAO International Plan of Action for the
Management of Fishing Capacity, Japan confiscated licenses of 132 fishing vessels and at the same
time scrapped those vessels.  This expenditure could be considered as a government support to ensure
that the remaining tuna long-liners can utilize tuna resources in a sustainable manner.
Chile Question 3
Which systems of administration of fishing resources and measures of preservation is Japan
demanding to its fishing boats that operate in high seas, and which measures is Japan applying in
order to control the IUU fishing in high seas, in addition of the administrative bulletin on ships with
(the complaisance pavilion), mentioned in paragraph 49?
Response to Chile Q. 3 on how Japan admini sters fishing resources and what measures of
preservation it takes
In Japan, fishing vessels which fish on the high seas must obtain a permit under government laws.
Under this scheme, fishery management is implem ented for high seas fishing by the government.
Also, for the purpose of resource conservation, regulatory measures, by which fishing vessels must
abide, are stipulated, together with penalties in case of violation.  Regulatory measures are introduced
by many regional fishery management organizations.  These measures are also implemented bygovernment laws.
Japan is gravely concerned about IUU (illegal, unre gulated and unreported) fishing on the high seas,
especially by FOC (flag-of-convenience) vessels.  It is of particular importance to eliminate FOC
fishing vessels in tuna long-line fisheries because Japan is the destination of their tuna products.
Accordingly, Japan is currently taking the following measures towards the elimination of FOC fishingvessels :
(1) Prohibition on import and port call
In accordance with ICCAT recommendations, import of Atlantic bluefin tuna and Atlantic swordfish
from certain countries is prohibited.  Also, tuna long-line fishing vessels which are registered in these
countries are prohibited to call at Japanese ports.
(2) Request regarding FOC products
In accordance with an ICCAT resolution, the Japanese Government requested related companies and
industries not to buy or transport tuna products caught by FOC fishing vessels, and not to sell, install
or repair equipment on FOC fishing vessels.WT/TPR/M/76/Add.1
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(3) Collection and dissemination of information on FOC fishing vessels
In order to monitor the actual circumstances of FOC fishing vessels, the Japanese Government
collects information on them from importers, and publicizes such information (names of vessels,
vessel registrations, importers, etc).
(4) Restriction on engagement of Japanese fishermen
When Japanese fishermen want to work for foreign tuna fishing vessels that catch tuna in the Atlantic
Ocean and the areas where southern bluefin tuna is caught, they must obtain permission of theMinister for Agriculture, Forestry and Fisheries in order to ensure that their engagement does not
support activities of FOC fishing vessels.
Chile Question 4
In paragraph 95, it is pointed out that the measures for the Promotion of Investments include
measures of financing with low interest rates au thorized by Japan Development Bank for chosen
projects. Under which criteria are defined those projects which benefits from these measures? Its
authorization is given on the basis of a national agreement?
Response to Chile Q. 4 regarding projects chosen by the Japan Development Bank
The eligible projects are:
- first significant investment,- exchange of technology and know-how,
- business alliances (e.g. business transfers) including M&A,
- other projects helping to expand and vitalize the Japanese economy,
- joint-use facilities for foreign-affiliated companies,
- basic facilities for the promotion of foreign direct investment in Japan.
These loan programs are based on the 1992 Law on Extraordinary Measures for the Promotion of
Imports and Facilitation of Foreign Direct Investment In Japan.
Chile Question 5
In paragraph 8 it is pointed out that a direct pa yment to farmers from m ountainous regions has been
implemented and that this would be  in the framework of a Basis Programme of Food, Agriculture and
Rural regions. In particular, we would like to know more details regarding the said programme of
direct payment to the farmers fr om mountainous regions, for example: the number of beneficiary
farmers, the characteristics or size of the properties to have the benefit, the types of culture that
benefit, the annual amounts implied and the objectives of this support.
Response to Chile Q. 5 regarding agriculture
This program was developed consistent with the terms and conditions stipulated in Paragraph 13
(payments under regional assistance programmes) of Annex 2 in the Agreement on Agriculture.WT/TPR/M/76/Add.1
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The ultimate goal of this program is to maintain multifunctionality of agricultural activities in hilly
and mountainous regions such as preservation of land and development of water resources. For thispurpose, the program aims to partially redress disadvantages of agricultural activities in disadvantaged
regions, based on Paragraph 13. The total budget is estimated to be approximately 70 billion yen.
All farmers in disadvantaged regions are eligible for the program regardless of the types of
production. This condition is stipulated in Paragraph 13.
The number of farmers applying for the program has yet to be determined, since application for this
program is still open. For reference, the average farm size in these regions is around 0.8 ha. Owners of
land with characteristics disadvantageous to agriculture, such as steepness, are eligible for payments.
Chile Question 6
Has Japan any type of agreement on the acknowledgement of education, experience, licenses,
certificates for the supplying of professional services with third countries? If it is the case, with whichcountries?
Response to Chile Q. 6 regarding licenses fo r professional services with third counties
No, Japan has not concluded such agreements with any countries.
Chile Question 7
Are the Japanese Professional Associations public or private bodies? In this regard, is it compulsory
for the Japanese professionals to belong to any Professional Association or Body? In this sense, what
is the situation with the foreign professionals?
Response to Chile Q. 7 regarding Japanese Professional Associations
The definition of the words “public” and “private” in Chile’s question is not clear, but in Japan
professional associations are considered “private,” even if some of them are established under special
laws. However, there are some types of professional employment which do not have an association. It
is compulsory for some professionals to belong to their respective associations, and in these cases,foreign professionals with qualifications which is acknowledged in Japan are also required to belong
to them.
COLUMBIA
Columbia Question 1
Could the Japanese authorities explain why the multifunctional role of agriculture should be
addressed with trade and production distorting domestic support and not with green box measures?
Response to Colombia Q. 1 regarding multifunctionality
As the multifunctionality of agriculture is considered to be a public good, a certain level of policy
intervention is required for the fulfillment of multifunctionality. On the other hand, the
multifunctionality of agriculture is closely related to, and cannot be separated from, agriculturalproduction. In this respect, policy intervention cannot be completely removed from production.
Therefore, with a view to ensuring multifunctionality, relevant policy measures should not be
confined to green box measures.WT/TPR/M/76/Add.1
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Columbia Question 2
Since the new Law was enacted this year, could the Japanese authorities explain what are the plans to
avoid surpassing the year 2000 commitments in the ar ea of domestic support? Is the idea to shift
domestic support from amber box to blue box?
Response to Columbia Q. 2 agriculture
Regarding the domestic support in Japan, it is scheduled that the total AMS of the base period
(5 trillion yen) shall be reduced by 20 %, to reach 4 trillion yen in 2000.  Japan has notified that itsAMS has already been reduced to 3,170.8 billion yen in 1997, which is already below the scheduled
level of the schedule of 2000 as well as that of 1997.
Under this circumstance, Japan does not expect that the level of AMS in 2000 will exceed the
scheduled level of AMS in 2000 because of the enactment of the new law.
Columbia Question 3
Taking into account the objectives of the ongoing negotiations in agriculture and the objectives of the
Agricultural Basic Law, could the Japanese authorities explain how they reconcile with each other?
Response to Colombia Q. 3
Japan considers that the objectives for the newly initiated agricultural negotiations are to establish a
set of rules and disciplines which allow a coexistence of the various types of agriculture amongmember countries. And  the following should be achieved in such rules and disciplines: 1. due
consideration to the importance of the multifunctionality of agriculture, 2. to redress the imbalance in
rights and obligations under the WTO rules between exporting and importing countries.
On the other hand, the Basic Law on Food, Agriculture and Rural Areas provides four basic
principles:  (1) securing of a stable food suply,(2) fulfilment of the multifunctionality of
agriculture,(3) sustainable agricultural development, and (4) the development of rural areas.
We consider that the objectives of the negotiations of agriculture is in consistent with the objectives of
the Basic Law on Food, Agriculture and Rural Areas.
Columbia Question 4
In paragraph 12, the Secretariat reports states that “Japan does not employ minimum import prices”.
However in footnote 14 the Secretariat report describes the differential duty as a “specific rate
charged per kg of imports with the rate varying directly with the difference between the standardimport price (precio oficial de importación  in the Spanish version of the Report), set by the
authorities, and the actual import price.
Could the Japanese delegation explain this policy ag ainst its commitments in the Custom Valuation
Agreement, particularly, Article 7.2 and in the Agreement on Agriculture, particularly, the footnote of
Article 4.2?
Response to Colombia Q. 4 regarding customs valuation
“The standard import price” has no relation to the cu stoms value. “The actual import value” stated in
footnote 14 is the customs value per kg. This customs value is calculated fully consistently with the
WTO Customs Valuation Agreement.WT/TPR/M/76/Add.1
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Columbia Question 5
Could the Japanese delegation provide more information regarding the decision-Making process
involved in the application of the alternate duty?
Columbia Question 6
Are there any specific or fixed criteria in the application of the alternate duty in order to avoid
discretionary managing during the importation process?
Response to Colombia Q. 5 - Q.6 regarding customs valuation and alternate duty
In Japan, the customs valuation is fully consistent with WTO agreement.
Relating to the goods subject to the alternate duty , the type of the duty is definitely determined
according to the customs value.
Columbia Question 7
What are the plans of the Japanese authorities to reduce the list of merchandises subjected to the
alternate duties?
Response to Colombia Q7 regarding alternate duty
Japan does not have any plan to reduce the list of merchandises subjected to the alternate duties now.
They might be discussed in the new round of negotiations with a balanced and sufficiently broad-
based agenda.
Columbia Question 8
Could the Japanese authorities explain how the obj ectives of the autonomous TRQ’s, the linkage of
the leather TRQ to regional and social policies and the end-use provisions are compatible with the
TRIMS Agreement?
Response to Colombia Q. 8
The Government of Japan has not notified WTO of any TRIMs, and there are no TRIMs in Japan. The
Government of Japan believes that our policy and measures are compatible with the TRIMsAgreement.
Columbia Question 9
Could the Japanese delegation explain the rationale behind this domestic support policy in
agriculture that transfers the inefficiency costs of  farmers to consumers and, by doing so, increases
the retail prices of food?
Response to Colombia Q. 9 regarding agriculture
In Japan, domestic support to agriculture has been provided from the viewpoint of ensuring stable
food supply to consumers.  This is based on the result of the public opinion poll that majority of
people prefer domestically produced food while recognising the need to reduce the production cost.WT/TPR/M/76/Add.1
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Moreover, one of the aims of domestic support is to fulfil the multifunctional role such as
conservation of national land and water resources through maintenance and development of domesticproduction.  The domestic support is thus provided not only for the re-distribution of resources, but
also for the externalities of agriculture.
In accordance with the basic thoughts of domestic support noted above, the Government has been
reducing the administered support prices for major agricultural products from a viewpoint of returning
benefits accrued from the improvement of productivity as much as possible to consumers.
In addition, based on “The Basic Law on Food, Agriculture and Rural Areas” enacted in July 1999,
the Government has been introducing more market-orientated price policy, in order that agricultural
product prices will appropriately reflect the supply / demand situations and the market evaluation of
the product quality, which in turn will promote the agricultural production which is responsive to the
needs of consumers.
Columbia Question 10
Could the Japanese Government explain whether ther e is any plan towards the simplification of the
tariff regime?
Response to Colombia Q. 10 regarding the simplification of the tariff regime
Japan is of the view that the issues on tariffs should be addressed in a new round of trade negotiations,
including the negotiations on agriculture that started this year.
Columbia Question 11
Taking into account the high levels of protectionism  in agriculture, what are the Japanese objectives
in the ongoing negotiations on agriculture in the area of market access?
Response to Colombia Q. 11 regarding market access
Japan has been faithfully implementing its UR commitm ents, and thus it is not appropriate to describe
Japan's agriculture as "the high levels of protectionism".
This basic philosophy of Japan toward the ongoing negotiations on agriculture is that we should
establish trade rules that will allow "the coexistance of various types of agriculture".
Tariffs are the only legitimate border measures to adjust differences in natural or economic conditions
regarding agricultural trade under the Agreement on Agriculture. In this respect, regarding border
measures, it is necessary to examine production conditions of each product, as well as to take intoconsideration of the necessity of maintaining a certain level of agricultural production and of fulfilling
its multifunctionality.
EUROPEAN UNION
EC Question 1
Given the problem of excess capital in various industrial sectors in Japan, coupled with the problem
of low returns on equity and the rising incidence of bankruptcies in the private sector, how does the
Japanese government explain the strong return to profitability by the corporate sector in recent
months, and the increase in private sector investment? Is the new investment only part of the ‘NewWT/TPR/M/76/Add.1
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Economy’ phenomenon, i.e. investment in information- technology? Are these recent investment trends
sustainable?
Response to EC Q. 1
As for the manufacturing sector, corporate profits continue to improve markedly by increasing the
amounts of sales and exports, in the course of controlling the labour cost by restructuring, mainly in
large firms. As for the non-manufacturing sector, a prominent recovery could not be seen in sales.
However, as a result of promoting efficiency in business, they are improving profits by cuttingvariable costs down and elevating the rate of ordinary profit to net sales.
Although the problems of excess debt still remain, cash flow of the corporate is increasing markedly
because of improving profits, and the corporate, main ly IT related companies such an those in electric
machinery and service industries, for which future demand is expected to increase, are increasing
investments actively in plants and equipment.
EC Question 2
How strong is Japan’s attachment to “lifetim e employment”? What measures have the Japanese
authorities undertaken to reduce inflexibilities in the labour market?
Response to EC Q. 2
Long-term employment has given both labor and mana gement the benefits of long-term security of
management and employment. On the other hand, recently, there has been a trend towards reviewing
long-term employment in light of the changing economy and society. A decision on what kind of
employment system would be desirable should be made through consultations between labor and
management.
EC Question 3
On 10
th October, the Japanese Ministry of Finance published a report entitled “The Japanese
Government Balance Sheet”. This report showed that the Japanese government has negative net
worth to the tune of between 132.6 and 776.5 trillion yen. Would the Japanese authorities care to
comment on these figures, within the context of the sustainability of the Japanese national debt?
Response to EC Q. 3
There is no particular reason for the difference between assets and liabilities being negative.
Moreover, there is no connection between the negative figures in the government balance sheet andthe actual state of the Japanese national debt.  Hence, it is difficult to comment on the figures
contained in the balance sheet within the context of the national debt.
EC Question 4
The national debt burden has been cited by commentators as one of the reasons why Japanese
household consumption is sluggish. For example, Japanese citizens may increase their current saving,and thus reduce current consumption, in anticipation of future increases in taxes that may be required
to service a large national debt burden. Some commentators consider that the recently-announced
fiscal stimulus package aggravates the already poor state of Japan’s public finances. Does Japan
think that the fiscal stimulus programme may actu ally negatively affect household consumption, thus
stifling the fragile economic recovery?WT/TPR/M/76/Add.1
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Response to EC Q. 4 regarding national debt
The Japanese economy continues to improve moderately and the performance in the corporate sector
has been particularly favorable toward a self-sustained recovery path.  Nevertheless, employment
conditions are still severe, personal consumption remains generally flat, and the number of business
failures has been somewhat high, with gross the debt of failed firms rising.  Therefore, the economy
has not been placed onto a self-sustained recovery path yet.
The Japanese Government compiled "A Policy Package for New Economic Development towards the
Rebirth of Japan" in October this year.  Our goal is to place the Japanese economy onto a self
sustained recovery path led by private-demand including personal consumption and to reform the
structure of the Japanese economy suitable for the 21st century.  The Government intends to actively
carry out the new package to accomplish this goal, (as we mentioned in the government report and in
the opening statement).
EC Question 5
The Japanese government says that it will embar k upon fiscal structural reform once the economy is
“getting onto a path towards full recovery led by private demand” [quoted from paragraph 4 of the
Report by the Government]. How does the Japanese government define such a “full recovery”? What
are the precise conditions which would convince the Japanese authorities to conclude that the timefor carrying out fiscal structural reform has come?
Response to EC Q. 5 regarding conditions for fiscal structural reform
We consider that a "full recovery" may be defined as a condition where a smooth shift from public to
private demand is realized; where private demand, such as personal consumption and private
investment, shows sustained and steady growth; and where autonomous economic growth has been
established for the future based on private demand.  However, it is difficult to concretely describe the
state in which this condition would occur.
EC Question 6
The examples of fiscal reform in other countries, such  as Sweden, indicate that fiscal reform need not
negatively affect the economy, especially if the reforms improve the effectiveness of public
expenditure. The expenditure multiplier of the Japanese fiscal stimulus programmes has been low,
and appears to be on a declining trend. What measures has the Japanese government undertaken toensure that this year’s fiscal stimulus programme will have a bigger, longer-lasting impact than
previous programmes?
Response to EC Q. 6 regarding fiscal reform
There may be some factors that weaken the effe ct of fiscal multiplier in 1990's, however, the
influence of the factors has not been strong so as to dampen the effect of the public expenditure.
The main thrust of economic and fiscal policy of the Japanese Government has been to sustain
domestic economy so as to establish an autonomous recovery path, and to make bold reforms of
economics structure for the 21
st century.  The Government, for this sake, has compiled "A Policy
Package for New Economic Development towards the Rebirth of Japan" on October 19th this year to
implement "The Plan for the Rebirth of Japan".  The government intends to carry out the new packageactively.WT/TPR/M/76/Add.1
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In the area of public works, the government has introduced a system including cost-benefit analysis
for evaluating newly adopted projects as well as the on-going projects.  The efficiency andtransparency of public works should be further improved through continuing effort to steadily carry
out and properly disclose information of the evaluation.
Note:
According to "Economic Survey of Japan (FY 2000)", historical transition of fiscal multiplier itself
has been largely influenced by the structure of macro models (by the theory of the model), andcomparison of multiplier of 80's and 90's with ex actly the same model specification shows that they
don't significantly differ.  Thus the multiplier effect has not necessarily decreased.
EC Question 7
The small increase of interest rates to 0.25 % which occurred once the Bank of Japan (BoJ)
abandoned its zero interest rate policy cannot really be called “fiscal tightening”. Does the Bank ofJapan nevertheless consider that it was sufficient to combat the moral hazard problem mentioned at
paragraph4 of the Secretariat’s report? Alternatively,  even this small rate rise was criticised by
opponents of the BoJ. Do the Japanese authorities consider that the interest rate hike was premature
and that it might harm the fragile recovery?
Response to EC Q. 7 regarding the abolition of the Bank of Japan’s zero interest rate policy,
When terminating the zero interest rate policy, the Bank of Japan stated in its press release that this
decision was made in line with the improvement of the Japanese economy.  Therefore, the ending of
the zero interest rate policy was not intended to address moral hazard problems.
With regard to the recovery of economic conditions, the Bank enunciates, in its report published at the
end of October, that  "Japan's economy will continue to trace a gradual recovery mainly led by private
demand during fiscal 2000 and 2001".
EC Question 8
In GoJ report III (3) – Domestic Policy Developmen ts Affecting Trade Policy, regarding the question
of public comments procedure, we welcome the in troduction of a public comments procedure in 1999,
allowing all interested parties to comment on administrative measures and draft regulations.  It is,
however, important that enough time is left for well-substantiated comments to be taken into account
before finalisation of the legislative measure in question.
What steps does Japan intend to take to ensure that this is the case?
Response to EC Q. 8 regarding a public comments procedure
The Public Comment Procedure for Formulating, Amending or Repealing a Regulation (Cabinet
decision) refers to “about one month” as a guide for the time period of receiving public comments.
On 21 July, the Government opened to the public the results of a survey on the application periods of
public comments procedures in FY1999. According to the results, in more than 70% of the cases it
was “over 22 days” (in more than 40% of the cases, “over one month”).
It would be essential that suitable periods are to be decided by each ministry after considering the
characteristics of each proposal, for example, importance, urgency, etc.WT/TPR/M/76/Add.1
Page 103
Reference
Results of research on the periods taken before formulating, amending or repealing regulation in
FY1999
Period Number of cases Percentage
From 1 day to 7 days 1 0.4
From 8 days to 14 days 23 9.0
From 15 days to 21 days 48 18.8
From 22 days to 1 month 77 30.1
From 1 month to 2 months 106 41.4
More than 2 months 1 0.4
EC Questions 9 and 10
Despite recent increases in inward flows of FDI into Japan, in Japanese Fiscal Year 1999 outflows of
direct investment still exceeded inflows by a factor  of 3.1. The disparity in the accumulated stock of
direct investment also remains huge. This imbal ance points to structural factors which act as a
disincentive to inward investment and which make it more costly and time consuming to set up a
business or get new products or services approved than is the norm in other industrialised economies.
Japan’s business start-up ratio, at 4.6%, is the lowest amongst leading industrial nations. Thisindicates that the current business environment is a hindrance to the rational allocation of investment,
be it domestic or foreign, within the economy.
EC Q.9  What concrete measures does the Government of Japan plan to take to create a more
attractive environment for investment?
EC Q.10  Recent large percentage increases in inward investment are mostly a result of a small
number of huge corporate deals. What measures are proposed in order to ensure (a) that the current
increase in inward investment is sustained and (b) that the benefits of greater inward investment arefelt throughout all layers of the economy? In this  context, are there initiatives to strengthen
investment links between SME’s?
Response to EC Q. 9, Q. 10 regarding foreign investment in Japan
The Japanese Government has held ministerial meetings called the “Japan Investment Council”,
chaired by the Prime Minister, and taken various measures such as favourable tax treatments and lowinterest loans offered by the Development Bank of Japan. As a result, the balance between outward
and inward investment has been improving stea dily from 10:1 in FY1994, when the Japan Investment
Council was established, to 3:1 in the last fiscal y ear (FY1999). However, inward investment in Japan
remains relatively low. To make Japan’s economy vigorous and open to the world for the 21st
century, it is still necessary to continue to endeavour to improve the investment environment.
The report of the Experts Committee of the Japan Investment Council in 1999 proposed the following
seven recommendations to further promote foreign investment in Japan:
1. Make further efforts to improve various systems relating to enterprise management
2. Make further efforts to promote deregulation
3. Facilitate the establishment and operation of international schoolsWT/TPR/M/76/Add.1
Page 104
4. Provide more extensive information on health and medical care for foreigners
5. Promote closer coordination between national and local governments through the Meetings on
Promoting Inward Direct Investment in Regional Areas
6. Establish a comprehensive system for providing information concerning inward direct
investment
7. Respond quickly to complaints and requests
In July this year, Japan opened a portal site home page, “Investment in Japan Information Center
(http://www.investment-japan.net/invest/index.asp)”, through which investors can access, using a
search function, various kinds of information regarding foreign investment in Japan. This home page
is aimed at establishing a comprehensive information-providing system related to investment in Japan.
This system is expected to help promote foreign investment in Japan.
Concerning SMEs, the Credit Guarantee Association guarantees loans for small and medium-sized
firms which have a certain degree of interaction with designated inward investors.
EC Question 11
Japan mentions in paragraph 103 of the GoJ report that a new round should also address "the issues
of global environment and the sustainable utilizati on of exhaustible natural resources". What means
does Japan use to make its trade policy supportive of sustainable development?  To what extent doesJapan use, or is planning to use, instruments such as sustainability impact assessments, as a tool in
this sphere?  In particular, what other mechanism s is Japan using to promote synergies between its
trade policy and its environmental policy?
Response to EC Q. 11 (Regarding the relationsh ip between Japan’s trade policy and sustainable
development)
To make its trade policy supportive of sustainable development, the GOJ believes that taking
environmental aspects more into consideration in trade policy is crucial. To achieve this objective,GOJ intends to promote further consultation with domestic stakeholders, through such measures as
holding briefing sessions for civil society and instituting a public comment process.  Environmental
impact assessments of trade policy could be a useful tool to promote mutual supportiveness between
trade and the environment. Concerned ministries and agencies are currently studying methodologies
for the assessment. To make synergies between trade policies and environmental policies, it is alsoimportant to respect activities in various international fora and agreements by the international
community.
EC Question 12
What are the priorities of Japan in relation to consultations with domestic stakeholders? How does
Japan consult with civil society (NGOs, business community, etc) on the formulation of its tradepolicy? What are Japan's views on improving WTO transparency?
Response to EC Q. 12 regarding consultations with domestic stakeholders
Regarding consultations with domestic stakeholders, the Government of Japan (GOJ) provides
information, keeps the process transparent, and exchanges views through conferences/symposia or
other media such as the Internet.WT/TPR/M/76/Add.1
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GOJ consults with civil society by holding conf erences/symposia where governmental officials
exchange views with other participants from va rious backgrounds, including business associations,
agricultural associations and non-governmental organizations.
Information is provided via the Internet on homepages of various ministries (Ministry of Foreign
Affaires, Ministry of Agriculture, Forestry and Fishery, Ministry of International Trade and Industry)
and members of civil society are invited to share their opinions and requests.
Japan's views on WTO transparency are as follows: Japan believes that improvement of internal and
external transparency is important. Regarding intern al transparency, it is important, for example, to
improve the preparatory process for the Ministerial Conference and negotiation process, through such
measures as coordination between the informal consultation process and open-ended meetings, and
clarification of the roles played by the Director-General and the Secretariat. Regarding external
transparency, it is important to promote a better public understanding of the WTO's activities throughsuch means as improvement in derestriction procedure of WTO documents and building constructive
relations with NGOs.
EC Questions 13 and 14
The EC appreciates the clear presentation (in paragr aphs 40-42 of the GoJ report) of the evolution in
Japan’s policy towards participation in preferential regional trade agreements.  The EC agrees thatcompliance with relevant WTO rules is an important safeguard to ensure that any such regional
initiatives support and are complementary to the open multilateral trading system.  The report makes
reference to the Joint Study Group that has recently undertaken a feasibility study on a
Japan/Singapore FTA.  The report of this group include s the statement that “during the joint study, a
concern was expressed from the Japanese side on agricultural, forestry and fishery sectors. A
statement was made from the Japanese side that it  was not prepared for further tariff reduction in
these sectors in the framework of the JSEPA”.
EC Q. 13  Notwithstanding the above recorded stat ement in the report of the Joint Study Group, can
the Government of Japan confirm that any future Free Trade Area between Japan and Singapore will
nonetheless comply with the requirements of GATT Article XXIV:8(b), in that it will cover
substantially all trade and that no major sector will be excluded?  Can Japan give the same
commitment for any other future FTA it may partic ipate in (e.g. with Korea or Mexico)? When does
GoJ expect to take a decision whether to pursue negotiations for preferential regional agreements
with countries other than Singapore and on the basis of which criteria?
EC Q. 14  Has Japan's change in policy as regards preferential regional agreements had any
implications on its policy in the framework of APEC? In particular what has Japan's position been in
the discussions it has held with other participants in APEC on the possibility of  furtherliberalisations on an MFN basis within selected sectors?
Response EC Q. 13 regarding FTA
Japan believes that the economic agreement for a new age partnership between Japan and Singapore
must be consistent with WTO rules.
As Japan recognizes that regional or bilateral trade agreements could play a complementary role to the
multilateral trading system on the condition that th ey are consistent with the WTO rules, any FTA
must comply with the requirements of relevant WTO rules.WT/TPR/M/76/Add.1
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There has not been any decision on entering into negotiations for the creation of RTAs with countries
other than Singapore. The criteria on which we make a decision as to whether or not to pursuenegotiations for RTAs varies according to the characteristics of the partner countries and other
factors.(Please see the answer to the corresponding question from Chile.)
Response to EC Q. 14 regarding RTA
The Government of Japan continues to place the hi ghest priority on maintaining and strengthening the
multilateral trading system. We believe that bilateral and regional economic cooperation has potentialto bring about great success as long as it is developed in a manner that complements and strengthens
the multilateral trading system and contributes to the development of the world economy.
EC Question 15
As indicated in the Report by the Secretariat (section II, paragraph 42 including table II.4, and
section IV, paragraph 33), measures introduced as a result of the 1995 Japan-US Autos and AutoParts Consultation are to terminate by the end of 2000. Could the Government of Japan indicate
whether an extension of the measures is envisaged and, if yes, what are the concrete modalities of
such an extension?'
Response to EC Q. 15 regarding Japan-US measures on auto parts
As indicated in the Report by the Secretariat (section II, paragraph 42 including table II.4 , and IV,
paragraph 33), measures introduced as a result of the 1995 Japan-US Auto and Auto parts
Consultation are to terminate by the end of 2000.  Could the Government of Japan indicate whether an
extension of the measures is envisaged and, if yes, what are the concrete modalities of such an
extension?
In the letter exchanged in 1995 between the Government of Japan and the Government of the U.S. on
the measures taken by both governments regarding autos and auto parts, it has stated that “each
Government is to take the respective measures beginning as of this letter and lasting until the end of2000, at which time the two Governments will decide whether it is necessary to continue the
measures.”
The Japanese Government considers that the two governments need to decide such measures on the
basis of the dramatic change of the structural environment surrounding the world automotive
industry/market which has occurred since 1995, as observed by the number of global and borderlesscapital/business alliances; for example seven out of eleven Japanese auto companies have pursued
business alliances with foreign manufactures.
EC Question 16
Paragraph 36: Could Japan clarify what the position of Japan is and what stage Japan is in as
regards the possibility of granting duty and quota-free access for products from LDCs?
Response to EC Q. 16 regarding reform of GSP
Japan is considering the reform of GSP including the implementation of tariff-free and quota-free
treatment for essentially all products originating in LDC.
EC Question 17
Could Japan please indicate whether it intends to bind the remaining 1-% of its tariff lines?WT/TPR/M/76/Add.1
Page 107
Response to EC Q. 17 regarding Japan’s intentions on its remaining tariff lines
The GOJ has bound all agricultural products since 1 Ap ril 1999. As for industrial tariffs, with the
exception of the forestry and fishery sectors, Japan made the following proposal (WT/GC/W/243). It
is crucially important to negotiate on industrial tariffs and to conclude negotiations under the principle
of improving bound rates on a line-by-line basis by binding all products, if possible.
EC Questions 18 and 19
Non ad valorem duties:  Could Japan please identify the non-agricultural tariff lines subject to non
ad valorem duties that have (a) ad valorem equivalents at international tariff peak levels (15% or
more) and (b) no trade (suggesting that the duties are prohibitive)?
The EC notes that the average tariff rate for non-agricultural products is low, at 1.7%. However, high
tariffs are prevalent in certain sectors (e.g. footwear and headgear) and there is a considerable
degree of tariff escalation. Could Japan please indicate whether and how it intends to reduce hightariffs and tariff escalation?
Response EC Q. 18
The number of non-agricultural tariff lines subject to non ad valorem duties that have ad valorem
equivalents of 15% or more is 39 (HS9-digit).
The number of non-agricultural tariff lines subject to non ad valorem duties that have no trade is
92(HS9-digit). It implies that there were lack of domestic demand for some items. In fact, similar
goods with nearly the same tariff rate have been imported.
Response to EC Q. 19 regarding further tariff reduction by Japan
As for the specific sectors contended by the EC, Japan has made significant efforts to reduce high
tariffs and tariff escalation. It is very difficult to further reduce tariffs on these goods since most of the
producers of these goods are small and less competitive internationally, and further reduction on these
goods could cause serious damage to them.
However, Japan does not intend to exclude these goods from industrial tariff negotiations of
comprehensive coverage under the a new round of the WTO with a balanced and sufficiently broad-
based agenda.
EC Questions 20 and 21
The Japanese import regime on leather for years has been an unresolved problem in the bilateral
relations with the EU. Further to the very limited  volumes of the tariff quotas for leather, the
complexity of the management of the Japanese tariff quota system creates a wall of protection to the
benefit of the domestic leather industry, against mo re competitive imports from the EU, and restricts
market access. The Japanese licensing system, which the EC has found not to be in compliance with
the WTO Agreement on Import Licensing Procedur es, has negatively affected Community’s exports
within the tariff quota applied for leather, leading to a constant under utilisation of the quota.
EC Q. 20  Will Japan make new proposals for a meaningful change of the existing quota system and
commitments to eliminate progressively import restrictions?WT/TPR/M/76/Add.1
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EC Q. 21  Would Japan consider dismantling the curre nt allocation system and its replacement by an
automatic allocation system in accordance wi th the WTO Agreement on Import Licensing
Procedures?
Response to EC Q. 20 regarding the leather sector
As for the leather sector, the issues of the existing quota system and commitment are matters that
could be dealt in the next round.  Japan does not intend to exclude leather from industrial tariff
negotiations of comprehensive coverage under the a new round of the WTO with a balanced andsufficiently broad-based agenda.
Response to EC Q. 21 regarding the allocati on system of Japan’s leather tariff quota
The allocation system of Japan’s leather tariff quota is in accordance with the WTO Agreement on
Import Licensing Procedures.
EC Question 22
Japanese authorities used to provide data on imports of leather under tariff quotas until 1998. Why
has Japan suspended provision of such data thereafter? Can Japan provide the data on imports of
leather under tariff quotas since 1998?
Response to EC Q. 22 on how Japan provides data on the import of leather
Japan provides data on the import of leather under tariff quotas throughits Internet site.
http://www.mof.go.jp/trade-st/tr-index.html ≠hinkuni
HS1996 code TQ imports (FY1999 base)
Bovine Leather (dyed colored etc.) 4104.10-311
4104.10-313
4104.31-211
4104.31-2134104.39-211
4104.39-213657,144 m
2
Bovine Leather (other) 4104.10-121
4104.10-321
4104.21-010
4104.22-0214104.29-021
4104.31-221
4104.39-211137,473 m
2
Sheep/Goat Skin Leather (dyed colored
etc.)4105.20-211
4106.20-211204,261 m2
EC Question 23
Page 34, paragraphs 47 (and previous headings): Could Japan indicate the international agreements
in place, multilateral and bilateral, that provid e for a co-operation betwee n customs administrations
or that would allow the exchange of information.WT/TPR/M/76/Add.1
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Response to EC Q. 23 on what agreements ex ist to provide co-operation among customs
administrations
In order to exchange information among Customs administrations, Customs Mutual Assistance
Agreements and Note Verbal (for furthering mutu al cooperation between the customs administrations)
are possible channels.
The Government of Japan has concluded “Agreement between the Government of Japan and the
Government of the United States of America regarding Mutual Assistance between CustomsAdministrations” with the US Government and has exchanged a Note Verbal with the Indonesian
Government.
EC Question 24
Page 37, paragraph 16: Could Japan indicate how m any times a year complaints against customs
valuation and other customs measure are filed and how long, in average, each of the procedural stepsis likely to take.
Response to EC Q. 24  regarding customs valuation
1997 1998 1999 Against/lodged with
Complaints 19 24 17 Director-General of Customs
Appeals 3 7 4 Minister of Finance
In most cases, decisions/rulings upon the complaints/appeals were given within 3 months.
EC Question 25
Page 37, paragraph 17: It appears that Japan has rules in place defining the non-preferential origin
of goods.  Would it be possible to outline the general principles?  Furthermore, could Japan confirm
that any member of the WTO coul d be named as country of origin in a customs declaration on an
ordinary MFN importation.
Response to EC Q.25 regarding MFN
For the purpose of the application of MFN rates, the country of origin of imported goods from WTO
Members need to be:  (a) the country where the goods are wholly obtained or produced;  or (b) in
cases where two or more countries are involved in the production of the goods, the country where the
last substantial transformation which confers a new character to the goods has been carried out.  Theabove- mentioned “last substantial transformation” basically consists of the transformation
accompanied by the change of HS headings (4-digit level).
EC Questions 26 -30
In relation to Standards (pages 54 and following of Secretariat report), Paragraph 70 states that
“Japan has moved toward increased international harmonisation of its standards and technical
regulations.  The three-year Program for Promo ting Deregulation (TYPPD), as amended for FY2000,
re-emphasised ministries and agencies endeavour to achieve greater international harmonisation ofstandards…”WT/TPR/M/76/Add.1
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EC Q. 26.  Could you please explain what are the on-going activities to further align national
standards, technical regulations and certification systems to international standards?
EC Q. 27.  Paragraph 72 emphasises the growing pe rcentage of national standards being aligned to
international standards. (62% in 1999). Notwithst anding, a substantive number of standards still
deviate from international standards.
EC Q. 28.  Could you please develop the reasons for this remaining divergence?
EC Q. 29.  Paragraph 74 indicates that “approximately 7% of all Japan Industrial Standards (JIS)
were quoted in 1996 as mandatory technical regulations”.
EC Q. 30.  Could the Japanese Authorities provide more updated figures and more detailed
information as regards the national standards that have been incorporated in the national laws, or
alternatively, that are being referred to by national laws and are consequently (de facto or de jure) of
a mandatory nature.
Response to EC Q. 26 regarding Standards
Regarding Food Sanitation Law, Japan is making constant efforts to ensure that it conforms to the
international standards outlined in Codex and elsewhere.  Regarding pharmaceutical products and
medical devices, Japan has adopted the ICH guidelines (for pharmaceuticals) and the GHTF
guidelines (for medical devices) in order to integrate international standards into the Japanese system.In terms of cosmetics, Japan participates in the CHIC meetings.  We are also currently promoting the
GMP and GLP mutual recognition system with the EU.
It has become mandatory to review Japan Agricultural Standards (JAS) every five years and consider
international standards in the establishment, revision and abolishment of JAS under the Law
Concerning Standardization and Proper Labelling of Agricultural and Forestry Products (the JAS
Law) which was revised in July 1999, and MAFF is currently engaged in reviewing JAS.
The MITI has been conducting harmonization with international standards for technical regulations
and certification systems based on the Three-Year Deregulation Promotion Plan. The adoption of
“performance-based standards” for technical regulations is currently underway.
Response to EC Q. 26.regarding food, Japan is making constant efforts to ensure that the Food
Sanitation Law conforms to the internationa l standards outlined in Codex and elsewhere.
Regarding pharmaceutical products and medical devices, Japan has adopted the ICH guidelines (for
pharmaceuticals) and the GHTF guidelines (for medical devices) in order to integrate international
standards into the Japanese system.  In terms of co smetics, Japan participates in the CHIC meetings.
We are also currently promoting the GMP and GLP mutual recognition system with the EU.
It has become mandatory to review Japan Agricultural Standards (JAS) every five years and consider
international standards in the establishment, revision and abolishment of JAS under the LawConcerning Standardization and Proper Labelling of Agricultural and Forestry Products (the JAS
Law) which was revised in July 1999. MAFF is currently engaged in reviewing JAS.
MITI has bees conducting harmonization with international standards for technical regulations and
certification systems based on the Three-Year Deregulation Promotion Plan.  The adoption of
“performance-based standards” for technical regulations is currently underway.WT/TPR/M/76/Add.1
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Response to EC Q.27, Q. 28, Q. 29 and Q. 30 regarding JIS
Currently, approximately 90% of JIS standards are aligned with international standards.  (The ratio of
aligned JIS standards is the sum of IDT and MOD according to the revised ISO/IEC Guide 21.)
It is anticipated that the rate of JIS standards used as technical regulations has not changed as
compared with the results of the survey in 1996, although the results have not been updated since
1996.
EC Question 31
The EU believes that the interna tional harmonisation of automobile regulations is in the fundamental
interest of all producing nations.  The EU welcom es Japan’s accession to 1958 UN-ECE Agreement
and trusts that the Japanese side will sign up qu ickly to a significant number of the annexed
regulations as previously agreed.
What schedule does Japan envisage for the adoption of the specific regulations annexed to the UN-
ECE Agreement in the near future?
Response to EC Q. 31 regarding UN-ECE
Japan has adopted 11 of the 110 regulations subject to the UN-ECE 1958 Agreement since its
accession to the agreement in November 1998.  Regarding the adoption of ECE regulations in the
future, Japan plans to adopt about 5 or 6 regulations every year in order to meet its goal of adoptingapproximately 30 regulations by the end of fiscal year 2003.
Regulations will be adopted on the precondition that they do not lower Japan’s safety and
environmental standards, and on a priority basis in light of considerations such as requests from both
inside and outside Japan, giving priority to items for which there are few disparities in regulations and
on items which permit rationalization of testing.
EC Question 32
In relation to conformity assessments, Paragraphs 73 and 75 mention the modification in the
accreditation system of certification bodies (Industrial Standardisation Law in 1997).
Could you please provide more information about th e situation as regards the recognition of foreign
conformity assessment bodies? In this respect, we would appreciate information in relation to:
− The Japanese laws and regulations that open the possibility for foreign conformity
assessment bodies to be recognised under these laws;
− the conformity assessment functions these bodies can fulfil in the context of these laws;
− the procedures that foreign manufacturers that would like to submit their production facilities
or their products to assessment by these conformity assessment bodies must fulfil to have the
results of conformity assessment be recognised by the relevant Japanese administration;
− the procedures for the recognition of these bodies;
− the conformity of these procedures with relevant international standards and guides (for
instance ISO/IEC Guide 25 and 65) or, alternatively, if the standards are not aligned to
international standard, the relevant national standard(s);WT/TPR/M/76/Add.1
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− the period of validity of the recognition and procedures for re-evaluation after expiry of the
validity period;
− the costs involved for the recognition, the maintenance of the recognition and the re-
evaluation;
− the time-frame for the recognition;
− the role of accreditation in the process of recognition: can accreditation replace any of the
procedural steps of the recognition procedure;  and
− the impact of the forthcoming Mutual Reco gnition Agreement on the recognition under the
respective Japanese laws.
Response to EC Q. 32 regarding conformity assesment
Some Japanese laws and regulations have already recognized foreign conformity assessment bodies
and accepted their test results or certificates.
The functions of conformity assessment bodies are to inspect the conformity of products which are
subjected to conformity inspection by a third-party conformity assessment body, and to certify that
they comply with technical regulations.
Foreign manufacturers are required to apply for conformity assessment according to the procedure
specified by the approved conformity assessment body, and to be certified.
The conformity assessment body is approved after the application is accepted and the necessary
assessment is conducted.
The assessment for approval is conducted based on the assessment criteria, which are in line with
International Guide.
Some laws and regulations specify the period of validity of the recognition, in which case the re-
assessment will be conducted in the same manners as  the initial assessment after the expiration of the
validity period.
Some of the laws and regulations require payment of the cost of the recognition, surveillance and re-
evaluation.
In general, the laws and regulations stipulate a standard processing period of recognition.The results of accreditation in other regulations or voluntary schemes are not accepted under most
laws and regulations.
In order to implement the Japan-EC MRA, the necessity of establishment as well as revision of related
domestic laws has been found. These laws that are necessary for the implementation of the Agreement
are currently under preparation.
(JAS)
THE NAME OF THE LAW
The Law Concerning Standardization and Proper Labe ling of Agricultural and Forestry Products (JAS
Law)WT/TPR/M/76/Add.1
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THE CONFORMITY ASSESSMENT FUNCTIONS & THEIR PROCEDURES
(1) A Registered Foreign Grading Organization (RFGO) carries out the grading of agriculturaland forestry products in a foreign country in accordance with Japanese Agricultural Standards.
(2) Foreign manufacturers of foreign production process managers (e.g. farmers) certified by a
Registered Foreign Certification Organization (RFCO) carry out the grading of agricultural and
forestry products in a foreign country in accordance the Japanese Agricultural Standards.
(3) RFGOs and RFCOs need to be registered by the Minister for Agriculture, Forestry and
Fisheries
PROCEDURE FOR RECOGNITION
A grading organization or a certification organization in a country which has a grading system
equivalent to the JAS system can apply to the Minister for Agriculture, Forestry and Fisheries for
registration as an RFGO or RFCO of the JAS system.
CONFORMITY OF THE PROCEDURE
The procedure for the recognition is based on the JAS Law.
PERIOD OF VALIDITY
RFGOs and RFCOs must renew their registration every 5 years. RFGOs and RFCOs need to apply to
the Minister of Agriculture, Forestry and Fisheries for renewal of their registration.
COST
(1) The fee for the registration of a RFGO (RFCO) is 39,900 (51,200) yen plus the equivalent of
the sum paid to two officials as traveling expenses in the case that they make business trips for the
examination of the registration.  If the applicant is engaging in grading (certification) business in
accordance with the grading system of the applicant’s home country, the fee is 55,900 (60,500) yen
only.
(2) The fee for the renewal of registration of a RFGO (RFCO) is 30,600 (37,200) yen plus the
equivalent of the sum paid to two officials as traveling expenses in the case that they make business
trips for the examination of the renewal registra tion.  If the applicant is engaging in grading
(certification) business in accordance with the grading system of the applicant’s home country, the fee
is 43,200 (45,500) yen only.
TIME FRAME
The decision to register a RFGO or RFCO will be made within a reasonable time frame.
ROLE OF ACCREDITATION
As mentioned under “COST”, if the applicant is accredited in accordance with the grading system of
the applicant’s home country, the equivalent of the sum paid to two officials as travelling expenses in
the case that they make business trips for the ex amination of the registration is deducted from the
registration fee, as there is no need for such business trips.
IMPACT OF MRA
JAS is beyoned the scope of the forthcoming Mutual Recognition Agreement
EC Question 33
Export Restrictions, Licensing and Cartels, in Paragraph 102 of the Secretariat report.  The report
does not comment on US attempts to get Japanese steel producers to voluntarily limit steel exports toWT/TPR/M/76/Add.1
Page 114
the US?  Could the GoJ please clarify the current situation as well as its position and responses in
relation to these attempts?
Response to EC Q. 33 regarding voluntar y limitations on Japanese steel exports
Japanese steel producers do not voluntarily limit their steel exports to the US.  Furthermore, the
Government of Japan has not received any request from the US Government to limit its steel exports
to the US.
On the other hand, due to the filing of anti-dumping and safeguard petitions by the US steel industry
and labor unions, Japanese steel exports to the US have been falling drastically since 1999.
EC Question 34
Page 64, paragraph 101:  Could Japan explain the procedures for exempting goods from
consumption taxes that are exported.  Is there also a refund available to tourists and other non
resident visitors to Japan that take goods which they have bought in Japan in their luggage out of thecountry.
Response to EC Q. 34 concerning exemptions from the consumption tax
The consumption tax on articles in Japan, like the VAT in European countries, is an indirect tax
imposed at each stage of manufacturing, wholesale and retail.
In accordance with international taxation rulings, exports from Japan are exempted subject to
possession of documents issued by customs authorities that prove the articles are for export purposes.
Consumption tax on articles which are purchased at specified “duty free” shops may be exempted on
the condition that the articles will be taken out of Japan.  There is no other special consumption tax
refund system for tourists or other non-resident visitors.
EC Question 35
Page 65, paragraph 109:  Could Japan explain the tax rates and the tax base for the application of
the motor vehicle tax.
Response to EC Q. 35 regarding the motor vehicle tax
Tax base:  Weight of motor vehicle
Tax rate:   Determined by type and weight of motor vehicle
(Example)
Class 1Motor vehicles with a three-year inspection certificate
1. Private passenger vehicles, excluding light motor vehicles
(1)  Vehicle weight of not more than half a ton: JPY 18,900
(2)  Vehicle weight in excess of half a ton: JPY 18,900 for each half-ton or fraction thereofWT/TPR/M/76/Add.1
Page 115
2. Light motor vehicles (private passenger vehicles): JPY 13,200
EC Question 36
Page 71, paragraph 123:  Article 69, 3rd sentence of the TRIPS agreement calls on the members to
promote the exchange of information and cooperation between the customs authorities with regard to
trade in counterfeit trademark goods and pirated goods.  Could Japan explain the action undertaken
for implementing this obligation.
Response to EC Q. 36 regarding cooperation among customs authorities
The Japanese customs administration has been providing data concerning the suspension of release in
Japan under the TRIPS Agreement to other customs authorities.
EC Question Q. 37
Page 10, paragraph 24 of secretariat report: In hard  core cartel cases the firms involved often
succeed in maintaining considerably higher price levels (sometimes considerably more than 20-30%).
How does Japan intend to tackle the problem that a relatively modest overall level of fines or a
statutory cap on the amount of pecuniary fines makes it easy for firms to calculate the cost of the
highest fine possible if they were caught and factor this into their budget plans?
Response to EC 37
In principle, 6% of the sales amount during the period of cartel shall be imposed as the amount of
surcharge, and this is by no means a low level.  In addition, the JFTC has received no information
indicating that firms had calculated the amount of surcharge before implementing price-fixing. The
highest amount of criminal fines, which will be imposed in criminal cases, are provided by the AMA;
however, such clear-cut and fixed amounts are requ ired by the Constitution from the viewpoint of
protecting the rights of the defendant.  On the ot her hand, the highest amount of surcharge will not be
provided as the fixed amount and, in this sense, there are no differences between the penalty provided
by EU competition law and the surcharge provided by the AMA.
EC Question 38
The new civil remedy system which will come into  force in 2001 as a result of the amendment of the
AMA in May 2000 is welcome.  However, both as regards core infringements by private firms as well
as administrative guidance  which may encourage or tolerate such practices, civil litigation is in itself
not sufficient to replace a tough enforcement policy by relevant government agencies.
Response to EC Q. 38 regarding administrative guidance
Basically, core infringements by private firms are handled by the JFTC, a specialized administrative
office.
On the other hand, under the ongoing deregulations, it is indispensable, from the viewpoint of
establishing the basic conditions for deregulation, to further enhance measures to remedy damagesfrom AMA violations.  Since the JFTC enforces AMA with a view to ensuring free and fair
competition, it is not always for the JFTC to take care of the remedies for loss or damages.
Accordingly, the injunction relief system was intr oduced to improve and fulfill the legal system by
which any person that is suffering or is likely to suffer damages may obtain the remedy by his ownWT/TPR/M/76/Add.1
Page 116
initiative.  As a result, the injunction system is not a system intended to replace a tough enforcement
policy by the JFTC.
Since administrative guidance itself does not violate the AMA, it will not be a subject of the
injunction system.  If the JFTC finds administrative guidance anti-competitive during its
investigations into Anti-monopoly Act violation cases, it will request relevant ministries and
government offices to take corrective measures.
EC Question Q. 39
What measures does Japan intend to implement in or der to advocate competition at all government
levels and to eliminate administrative guidance which has anticompetitive effects?
Response to EC 39 regarding administrative guidance
The Fair Trade Commission (FTC), following deregulation policies outlined in the revised new
program, continues to address Anti-Monopoly Act violations strictly and vigorously with a view topromoting fair and free competition in the Japanese market.  The FTC also continues its efforts to
ensure and promote fair and free competition in both public and private systems, including
regulations.
Relevant ministries and government offices, following the Guidelines concerning Administrative
Guidance under the Anti-monopoly Act, are required to hold prior consultations with the FTC toensure that deregulation does not give way to anti-competitive administrative guidance.
EC Question 40
Criminal prosecutions under Japan’s Anti-Monopoly Act currently run at an average of one or none
per year.  This appears to indicate that the JFTC does not use the full potential of the legal powers at
its disposal.  What are the concrete steps envisaged by the Government of Japan to ensure more
vigorous and pro-active implementation of competition policy?
Response to EC Q. 40 regarding fines
Whenever the Japan Fair Trade Commission (herei nafter “JFTC”) discovers violations of the
Antimonopoly Act (hereinafter “AMA”), the JFTC will issue cease and desist orders against such
violations.  Moreover, the JFTC will order the payment of surcharges imposed on any profits earned
by price cartels.  The JFTC has essentially been taking these administrative measures against
violations, and has adopted the policy of vigorously making criminal accusations to penalize suchvicious and serious violations as price-fixing  and bid-rigging, which are considered to have
widespread influence on people’s lives.  Accordingly, it is not appropriate to discuss enforcement
activities of the AMA based solely on the number of criminal accusations.
EC Question 41
Why is the JFTC being merged into a General Affairs Ministry (along, for instance, with core
regulatory functions of the Ministry of Posts and Telecommunications), and how is it intended to
maintain its independence?WT/TPR/M/76/Add.1
Page 117
Response to EC Q. 41 regarding the future of the IFTC
Both the Basic Law on the Administrative Reform of the Central Government (1998), based upon the
final report of the Administrative Reform Counc il, and the Establishment Law of Somusho (1999)
stipulates that the JFTC will be an external orga n of Somusho (the Ministry of General Affairs).
The AMA clearly secures the independence of the Chairman and Commissioners in enforcement or
policy decisions and guarantees their status.  The Act also provides that the Chairman and the
Commissioners are appointed by the Prime Minister and approved by the Diet.  Thus, the JFTC’sindependence and neutrality as an independent administrative commission will continue to be
guaranteed by the AMA after the government reorganization in 2001.
EC Question 42
Paragraphs 130 of the Secretariat report:  We note that attempts to increase the level of competition
in the Japanese economy constitute a major element in the regulatory reform process.  Could Japan
indicate how these efforts have affected outcomes, for example, via increased foreign penetration,
prices, concentration ratios, or the  number of successfully prosecuted cases?
Response to EC Q. 42
Please see paragraph 50 of the Government Report.
EC Question 43
Paragraph 144 of the Secretariat report:  We note that the Japanese Fair Trade Commission (JFTC)
intends to continue to monitor the six major corporate groupings and feels the need to continue to do
so.  Could Japan clarify what the JFTC is lo oking for and the sort of action Japan might be
envisaging?
Response to EC Q. 43 regarding JFTC’s monitoring of major corporate groups
The JFTC regularly conducts surveys on the six major corporate groups to monitor the ties within
those corporate groups, because if the ties are st rengthened among group members through capital and
personnel, business transactions could become closed, and if economic power is concentrated, it could
have negative effects on the Japanese economy.
The JFTC works to monitor that business transactions based on the background of Keiretsu
relationships do not restrain fair competition, and to enforce the AMA more aggressively in
addressing anti-competitive practices.
EC Question 44
It appears that there are plans to merge the 3 leading Japanese banks into one. Can Japan confirm
this?  Could Japan inform of the part such a bank would have of the domestic market as well as other
relevant foreign markets?  Would such a concentration of market power be contrary to Japanese
merger control rules?
Response to EC Q. 44 regarding bank mergers
Dai-ichi Kangyo Bank, Fuji Bank and the Indus trial Bank of Japan established a common holding
company to control the three banks at the end of September this year.WT/TPR/M/76/Add.1
Page 118
The combined market share of deposits, loans etc. of the three banks accounted for more than 20%.
However, the Fair Trade Commission concluded that the consolidation would not limit competition inthe financial market, considering that several other major banks existed as strong competitors and
progressive deregulation was accelerated in the financial sector, and so on.
EC Questions 45 and 46
Pages 71-72 of the Secretariat Report:  The EC  acknowledges that a number of measures and
regulatory changes have been introduced in the fr amework of the Regulatory Reform Programmes.
However, in many cases, the industry is complaining that new regulations or new approaches do not
deliver the expected degree of progress, notably due to either procrastination by relevant authorities
or bodies, or to reference of unpublished administrative guidelines which put actual liberalisation in
question.
Q. 45.  Since GOJ recognised in this exercise two years ago that "to make sure, administrative
guidance are not released in general" (see WT/TPR/M/32/Add.1, page 4 - in that case concerning
JFTC), could Japan report whether this attitude (non publication) and practice (to accompany
regulatory changes, even when more liberal, by restrictive administrative guidance) continues?  In
case it does, how does this reconcile with the intended drive toward a more positive and liberal
regulatory framework?  How is it possible to check whether steps or additional procedures to beimplemented according to administr ative guidelines put or do not put foreign firms at a comparative
disadvantage compared to Japanese firms?  Or is it Japan's intention to reform this practice or to
make it completely transparent?
Q. 46.  More specifically, would Japan envisage to:
Introduce a formal ruling process in cases where a company wishes to have written clarifications
regarding a planned business situation or a particular regulatory situation?
Publish regulatory decisions, including official guidan ce to individual companies, so as to provide a
reliable body of administrative precedent?
Response to EC Q. 45 regarding disclosure of administrative guidance
Based on the Administrative Procedures Law, “the person imposing the Administrative Guidance in
question shall, if so requested by the subject party, provide the matters stipulated in the preceding
paragraph in writing.”  Ministries and government offices concerned, following the “Guidelinesconcerning Administrative Guidance under the Antimonopoly Act,” are required to hold prior
consultations with the JFTC to ensure that deregulation does not give way to anti-competitive
administrative guidance.
Response to EU Q. 46 regarding disclosure of administrative guidance
Regarding the handling of individual issues involvin g regulations, the Government of Japan does not
currently require the regulatory authorities to provide a written explanation.  However, the relevant
ministries and agencies do provide explanations of the content and legal foundation of regulations
which fall under their respective jurisdiction.  Based on the Administrative Procedures Law, “the
person imposing the Administrative Guidance in ques tion shall, if so requested by the subject party,
provide the matters stipulated in the preceding paragraph in writing.”
Each of the central government ministries and agencies is responsible for the introduction of relevant
regulations involving individual corporations.  For example, the Fair Trade Commission makes publicWT/TPR/M/76/Add.1
Page 119
notification of responses issued in prior consultations with businesses and others based on various
guidelines, and publishes case studies of instances involving important consultations related to theAnti-Monopoly Act.
EC Questions 47 and 48
In GoJ report III (3) – Domestic Policy Developments Affecting Trade Policy, regarding
postponement of regulatory reforms, in a num ber of areas where essential reforms have been
announced, these have been delayed.  The reclassification of a number of quasi-drugs as cosmetics orthe introduction of a consolidated taxation system are cases in point.
Q. 47.  Can Japan provide an indication when the measures in question will be realised?
Q. 48.  More generally, does Japan consider the introduction of a fixed timetable for regulatory
reform to ensure that the process stays on track and is not deflected by, for example, vested interests?
Response to EC Q. 47 regarding the ti ming to realize two specific measures
Notification of the revision of the range of effectiveness that cosmetics may claim will be made by the
end of fiscal year 2000 and will come into force from fiscal year 2001.
In the corporate tax area, Japan is examining the possibility of introducing a system for consolidated
taxation and a system for corporate spin-offs and corporate splits.
Response to EC Q. 47 regarding the ti ming to realize two specific measures
Notification of the revision of the range of effectiveness that cosmetics may claim will be made by the
end of fiscal year 2000 and will come into force from fiscal year 2001.
In the corporate tax area, Japan is examining the possibility of introducing a system for consolidated
taxation and a system for corporate spin-offs and corporate splits.
Response to EC Q. 48 on the possibility of a fixed timetable for regulatory reform
Schedules are clearly stated in measures relevant to respective items of The Three-Year Program for
Promoting Deregulation.  By amending this program, schedules, content and processes ofderegulation are clarified and made concrete for each deregulatory measure, and measures are being
implemented surely.  The Government of Japan is to draft and adopt The Three-Year Program for the
Advancement of Regulatory Reform by the end of FY2000, and to conduct regulatory reform firmly.
EC Questions Q. 49 and Q. 50
In GoJ report III (3) – Domestic Policy Developments Affecting Trade Policy, regarding
implementation of regulatory reform, we would like to underline that the assessment we are interested
in does not refer to the number of issues taken up in the Deregulation Programme, but should provide
information about actual change on the ground and concre te benefits of reform measures being felt by
economic operators.
Q. 49.  Could Japan provide its assessment of the real rate of implementation of regulatory reforms?Q. 50.  Which measures does Japan intend to take to ensure that regulations simplified in one area
are not replaced by new ones elsewhere, in particular at the local level?WT/TPR/M/76/Add.1
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Response to EU Q. 49 on the rate of  implementation of regulatory reform
Japan believe that the program has been implemented properly.
The result of follow-up survey on measures relevant to respective items of The Three-Year Program
for Promoting Deregulation (up to 1 October 1999) shows that measures relevant to 734 items (about
80%) out of 917 items have been either completed or partly conducted.
Response to EC Q. 50 regarding regulatory reforms
It is essential that deregulation be promoted at the local level as well as at the national level; local
governments shall be expected to play active role s in promoting deregulation in accordance with the
purpose of the Program.  Where necessary, the national government shall study and review
regulations that are independently enforced by local governments as well as those based on national
laws and ordinances, while paying due respect to the principles of local autonomy and
decentralisation.
EC Questions 51, 52 and 53
The EU welcomes Japan’s announcemen t that it will launch a new Deregulation Programme from the
end of March 2001.  However, the means by which it  is intended to continue to promote regulatory
reform across government remain unclear, especially  in the context of the general reorganisation of
government ministries, which will come into effect in January 2001.
Q. 51.  What mechanisms are foreseen within govern ment to continue to promote regulatory reform,
especially in view of the fact that the Management and Co-ordination Agency, which is currently
responsible for this task, will be subsumed within a new General Affairs Ministry?
Q. 52.  Is it intended to enhance the role of the Regulatory Reform Committee, in effect currently an
advisory body to the Prime Minister, for instance by giving it a broader remit and legal powers under
more direct prime ministerial authority?
Q. 53.  Is it intended to make greater use of cross-cutting policy approaches in the formulation of
future Deregulation Programmes, for instance along the lines of the approaches currently being
followed by the Regulatory Reform Committee to IT-related issues and environmental regulations?
Response to EC Q. 51 regarding how regulatory reform will be promoted
The organisation, mandate, etc. of the body to promote regulatory reform after the restructuring of the
central government has completed is under consideration.  However, even after the Management andCoordination Agency is integrated into the Ministry  of Public Management, Home Affairs, Posts and
Telecommunications, the Government is to draft and adopt a new Three-Year Program for the
Advancement of Regulatory Reform, which will succeed The Three-Year Program for Promoting
Deregulation, in order to further ad vance regulatory reform initiatives.
Response to EC Q. 52 regarding the Regulatory Reform Committee
The organisation, mandate, etc. of the body to promote regulatory reform in the near future is under
consideration.WT/TPR/M/76/Add.1
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Response to EC Q. 53 regarding deregulation programs
The Government is to draft and adopt The Three-Year Program For the Advancement of Regulatory
Reform by the end of FY2000.  This program shall be drafted based upon a report of the Regulatory
Reform Committee expected by the end of this year.  Discussion or arguments of the IT Strategy
Council, etc., and details of the new program are to be considered.
EC Questions 54 and 55
Paragraph 72, page 55 of the Secretariat report:  We  note that, “according to MITI, about half of JIS
[standards] were equivalent to international standards in FY1997.
Q. 54.  Could Japan indicate what proportion of JAS standards are considered to be equivalent to
international standards, and for what period of time this assessment is made?
Q. 55.  If the above figure is less than 100%, could Japan indicate what measures it proposes to take
in FY2000 and FY2001 to bring JAS standards into line with international standards?
Response to EC Q. 54 and Q. 55 regarding JIS
The data on the percentage of all Japan Agricultural Standards including those for wood products that
are equivalent to international standards is not available as of today, because ongoing establishment
and review of ISO Standards on wood products will be completed in 3 to 5 years.
According to the latest survey in October 1998, the percentage of Japan Agricultural Standards (JAS)
on food items which correspond to Codex Standards is 38%, of which about 98% are considered to be
almost aligned, or aligned except for some modifications, to Codex Standards.
It has become mandatory to review JAS every five years and consider international standards in the
establishment, revision and abolishment of JAS under the Law Concerning Standardisation and
Proper Labelling of Agricultural and Forestry  Products (the JAS Law) which was revised in
July 1999, and MAFF is currently engaged in reviewing JAS.
Response to EC Q. 55
According to the final revision of the Three-Year Program for Promotion Deregulation decided on by
the Cabinet on March 31, 2000, “Concerning an increase to about 1,500 of successful applicants of
the Bar Examination, our Government continuously  researches and examines improvements of the
training program or methods as well as conditions for receiving those successful applicants as legal
apprentices, and will come to a conclusion and take necessary action, taking into consideration theconclusions reached by the Judicial Reform Counsel (JRC) which will take into account the various
opinions of the general public.”
In addition, at the JRC meeting held on this August 2000, a discussion was held on the numbers in the
legal profession and, as our target hereafter, have, for the most part, agreed on the point that we are
systematically and as early as possible going to secure approximately 3,000 new lawyers, paying dueattention to improvements in the new legal training system including the realization of Japanese-style
law schools now under consideration.
Our government will work on this matter appropriately and quickly taking into account the
deliberations of the JRC.WT/TPR/M/76/Add.1
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EC Question 56
Paragraph 79, page 56 of the Secretariat report:  Why does Japan continue to operate - contrary to
the practice of other OECD partners such as EU - a positive list system for quarantine pests, where
all pests are considered harmful unless on the positive list?
Response to EU Q. 56 regarding pests
There are an enormous amount of pests in the world (approximately 100,000  species) and sufficient
information for many species has not been obtained.  Under these circumstances, we consider that thecompletion of a positive list that includes all quarantine pests is, in fact, impossible.
On the other hand, a negative list system for quarantine pests covers all pests that are not listed,
including those which we are not able to judge due to the lack of sufficient information, and excluding
only those which do not pose risks to our domestic agriculture.  This system is appropriate in the
respect that pests for plant quarantine are clearly indicated.
In any case, as there are differences between the Japanese and European quarantine systems, it is not
appropriate for this discussion to involve only the creation of such a list.
EC Question 57
Does Japan propose to change this system to a negative list system, where Pest Risk Analyses have
been performed for all designated quarantine organisms?
Response to EC Q. 57 regarding pests
As we believe that the Japanese system for plant quarantine is currently functioning effectively, we
have no plans to change it at this time.
EC Question 58
Often shipments of cut flowers, pot plants, fruit, and vegetables are refused permission for import or
are required to be fumigated, when they contai n only organisms, which are not harmful and/or
already commonly present in Japan.  What measures  will the Government of Japan take to overcome
such problems, which are created by the Plant Quarantine Law?
Response to EC Q. 58 regarding pests
Japan will review the current list for non-quarantine pests whenever necessary, and thereby continue
to operate our plant quarantine system according to the degree of risk posed by the pests.
EC Question 59
Paragraph 80, page 56 of the Secretariat report: As far as Japan’s policy on “varietal testing” is
concerned, the WTO appellate body has found it to be inconsistent with the requirements of the SPS
agreement (19 March 1999).  Could Japan, then, explain why varietal testing is still being applied to
EU produce, in particular to Spanish oranges and French apples, 18 months after the adoption of the
WTO Panel and Appellate Body findings.WT/TPR/M/76/Add.1
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Response to EC Q. 59 regarding varietal testing requirement
On 31 December, Japan abolished the varietal testing requirement as well as the Experimental Guide
that were in force until that date, in accordance with the rulings and recommendations adopted by the
DSB regarding the dispute "Japan - Measures Affect ing Agricultural Products (DS76)."  Japan has
conducted consultations with the United States regarding a new methodology to replace the former
varietal testing requirement.
The abolished varietal testing requirement and the Experimental Guide covered eight products (apples,
cherry, nectarine, walnut, plums, pear, apricot and quince), which act as host plants of the codling
moth, for which fumigation using methyl bromide is or could be applied as a disinfecting treatment.
French apples are included in the eight products at issue, and if France requests the lifting of the
import ban for additional new varieties, we are prepared to discuss it with France from a scientific and
technical viewpoint.
Moreover, after the completion of consultations between Japan and the US on a new quarantine
methodology, if France wishes to have the same methodology applied, the methodology will be
adopted where appropriate as the result of scientific and technical consideration.
On the other hand, Spanish oranges are possible host plants of the Mediterranean fruit fly, of which
cold treatment applied to disinfect.  They are obviously not included in the eight products, nor are theydirectly related to the varietal testing requirement and the Experimental Guide which were abolished
in accordance with the rulings and recommendations adopted by the DSB.  In this regard, quarantine
measures for Spanish oranges must continue to be considered from a scientific and technical point of
view.
EC Question 60
Paragraph 81, page 57 of the Secretariat report:  C ould Japan give full details of all of the plant and
animal quarantine procedures whose operating hours have been extended since the previous Review.
Response to EC Q. 60 regarding the quarantine
Plant and animal quarantine stations, in principle, operate whenever freight is imported.
At airports, the opening hours of Plant Protection Stations and Animal Quarantine Services are set so
that the freight brought by the final flight of the da y is properly dealt with.  For example, the operating
hours of the Station at Narita International Airport is from 6:00 am to 2:00 am the next day, and thatfor Kansai International Airport, which is a 24 hour airport, is 24 hours.
At seaports, operating hours on weekdays, in principle, are during the time when harbor facilities are
operating, namely, from 8:30 am to 5:00 pm.  However, Plant Protection Stations and Animal
Quarantine Services will operate when necessary after closing hours, such as on weekends, national
holidays and at the end and the beginning of the year.
EC Question 61
Paragraph 2, page 80 of the Secretariat report: It is  stated in the report that, “Japan is moving away
from price to income support.”  What effect does Japan estimate that this will have on overall levels
of agricultural expenditure?WT/TPR/M/76/Add.1
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Response to EC Q. 61 regarding the shift from price to income support
A budget is being drawn up, taking into account various factors such as the scale of budget, financial
situation, overall economic policy and budget allocation among the ministries and agencies
concerned. Thus, it is difficult to estimate what effect the shift from price to income support will have
on the overall level of agricultural expenditures.
EC Question 62
“Productivity in Japanese agriculture … remains low by national standards.” What specific measures
has Japan taken to improve agricultural productivity?   Are funds being specifically targeted for this
purpose, and are such funds being directed to particular sectors, or to agriculture as a whole?
Response to EC Q. 62 regarding agriculture
As for improvement of productivity, the Basic Plan for Food, Agriculture and Rural Areas (adopted
by the Cabinet in March 2000) indicates the following measures to be taken, based on the new BasicLaw on Food, Agriculture and Rural Areas.  Although there is no specific fund to implement these
measures, we are considering to change the allocation of general budgets in accordance with the Basic
Plan.
(1) Establishment of desired agricultural structure and development of farm management
measures
(2) Securing and effectively utilizing farmland, and improvement of agricultural production
infrastructure
(3) Securing and fostering the workforce, by measures such as encouraging new recruits of
farmers to acquire knowledge of agricultural technologies and management skill
(4) Developing practical technologies to support fieldwork such as technologies to improve the
quality of wheat and innovative technologies such as genomic sequencing
(5) Formation of farm product prices appropriately reflecting the real supply/demand situation
and stabilization of farm management etc.
EC Question 63
Paragraph 6, page 81 of the Secretariat Report:  The report states, “Land scale per farmer in Japan
has remained roughly the same during 1997-99.”  Gi ven that the small scale of production is a major
contributor to inefficiency, as is recognised in the first indent of paragraph 8, page 82, is Japanimplementing any measures to encourage  the consolidation of farm sizes?
Response to EC Q. 63 on consolidation of farms in Japan
The consolidation of farm sizes has been encouraged through the promotion of the intensive use of
farmlands by efficient and stable farm management.
Based upon the Agricultural Management Framework Reinforcement Law, an institution has been
established as a measure to facilitate such intensive use by efficient and stable farm management.
This institution can be summarized as the following:
(1) A municipality draws up an Agricultural Land Use Integration Plan (ASUIP) regarding
farmlands within its jurisdiction, which incorporates the names of all parties, lot numbers and rents
concerned with creation or transfer of farmland utilization rights.WT/TPR/M/76/Add.1
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(2) The ALUIP is publicized after the agricultural committee of the municipality has approved it.
Farmland-utilization rights are created on the part of or transferred to farmers having an intention touse farmlands, as a result of this publication.
EC Question 64
Paragraph 7, page 81 of the Secretariat report: Why is it that transport and distribution costs are
considered to be so high by the Japanese authorities, in a society, which is as, developed and
modernised as is Japan’s?
Response to EC Q. 64 regarding Japan’s hi gh transportation and distribution costs
Transportation and distribution costs are affected by many highway fees, truck, railroad and air cargo
freights fees.  According to a survey conducted by the Ministry of Agriculture, Forestry and Fisheries
of Japan, these are higher in price in Japan than in the US, France or Germany. In addition,
transportation and distribution costs often increase in response to various consumer buying behaviorssuch as a “more-frequent lower quantity” delivery system.  This is why the Ministry cited
transportation and distribution costs as one of the factors responsible for price discrepancies.
Reference
Table 1
Comparison of elements of transportation and distribution costs
The U.S. / Japan France / Japan
Highway fees (100 km) Almost free in the U.S. 2.6
(2.6 times higher in Japan than in France)
(almost free in Germany)
Truck freight (10t, 1000 km) 1.4 1.6
Railroad freight (container 20f, 400 km or 425 km ) 1.5 1.4
Air cargo freight (1t, 600 km) 1.5 1.1
Source: Survey on retail food prices in Tokyo and five major cities abroad (New York, London, Paris, Hamburg and
Geneva) released on 6 June 2000 by the Ministry of Agriculture, Forestry and Fisheries of Japan.
Table 2
Number of times consumers go shopping for groceries in a week
Consumers in Tokyo 5.30 times
Consumers in New York 1.76 times
Source: Survey on retail food prices in Tokyo and five major cities abroad (New York, London, Paris, Hamburg and
Geneva) released on 6 June 2000 by the Ministry of Agriculture, Forestry and Fisheries of Japan.
EC Question 65
In relation to pharmaceuticals:  The reasons why the Japanese market is predominately supplied by
Japanese firms remains unclear.  Why, in contrast to the EU and US markets, is the Japanese market
predominately supplied by domestic firms?  What ro le does licencing by foreign companies play in the
market and does it disguise a more significant foreign presence in the Japanese market than is
suggested by the raw market share data?  What role does the Japanese system of pharmaceuticalprice regulation play in limiting foreign presence in the market?WT/TPR/M/76/Add.1
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Response to EC Q. 65 regarding pharmaceuticals
As seen in the chart below, the share of the Japanese pharmaceutical market held by foreign
companies is increasing, due in part to the recent deregulation of the approval process.
There are quite a few products sold by Japanese companies under license from foreign companies,
although we do not have data precisely indicating their effect on the Japanese market.
There is no distinction made between Japanese and foreign firms in the Drug Reimbursement Pricing
System under the National Health Insurance Program.
(Unit:\100 million)
Year 1994 1995 1996 1997 1998
Sales of main foreign companies (A) 9,783 10,516 12,205 12,325 12,189
Drug expenses as a part of national medical expenses (B) 70,151 75,482 73,869 72,372 64,422
(A)/(B) 13.9% 13.9% 16.5% 17.0% 18.9%
EC Question 66
Paragraph 23 in the Secretariat report "Summary observations":  Please provide examples of
concrete cases of where, inter alia, anti- competitive practices have helped shield Japanese service
suppliers from competition.  Please also give the GoJs assessment of and to what extent the more
aggressive competition policy is tackling these practices.
Response to EU Q. 66 regarding how the Govern ment of Japan assesses the results of more
aggressive competition policy
The JFTC has not acknowledged any concrete cases in the service sector that violate the Anti-
Monopoly Act, such as would be the case if Japanese entrepreneurs in the service sector were
protected from competition with foreign entrepreneurs.  As a reference, there are several domestic
cases in service sector, for example, bid-rigging in medical work entrepreneurs (recommendationdecision issued in April 2000), Ishikawa Prefecture Barbers and Hairdressers Association Kanazawa
Branch restrained its members’ activities (recommendation decision issued in April 2000).  The JFTC
continues to address Anti-Monopoly Act violations strictly and vigorously.
The revision of the New Three Year Program for the Promotion of Deregulation shows that efforts
shall be made to strengthen the enforcement of the Anti-Monopoly Act, including such measures asreinforcing the structure of the Fair Trade Commission in terms of its investigative and other
resources.  In addition strict and vigorous measures shall be taken against Anti-Monopoly Act
violations.
EC Question 67
Paragraph 38 of the Secretariat report: Could Japan indicate which share of GDP is generated by
commercially traded services (as opposed to the figures including public services)?  Could Japan also
indicate the share of services in Japanese foreign direct investment (on the side of Japanese investorsand foreign investment objects)?WT/TPR/M/76/Add.1
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Response to EC Q. 67 on the share of commercially traded services in GDP
The share of commercially traded services to GDP (based on 93 SNA) is:  (i) 68.0% in 1995
(including public services);  (ii) 60.0% in 1995 (excluding public services);  (iii) 69.9% in 1998
(including public services);  and (iv) 61.4% in 1998 (excluding public services).
According to Japanese FDI statisti cs, in FY1999 the share of services in inward direct investment was
8.6%, and in outward direct investment it was 6.5% of the total value.
EC Question 68
Paragraph 39 of the Secretariat report:  Is it official Japanese policy to allow increasing services
imports as a contribution to the intended enhancem ent of competition in the supply of services, and
which measures are taken to implement that policy?
Response to EC Q. 68
Japan, being the net importer of trade in services, is of the view that the liberalisation of trade in
services and the expansion of such trade contribu tes to economic growth even in service importing
countries through the strengthening of the competitiveness of domestic service industries.  Based on
such assessment, the Government of Japan is actively participating in the WTO services negotiations.
EC Questions Q. 69 - Q. 76
“Big bang” reform has brought about wide-ranging changes in Japan’s financial sector and has
considerably reduced the regulatory burden for operators.  However, concerns remain with regard
to:  (a) continued application of prior product and rate approval to many insurance products,
especially personal lines;  (b) excessively strict regulation regarding the separation of brokers and
agents in the insurance industry, hampering the ability of brokers to act independently to offer their
clients the best deal; and (c) the degree to which Investment Advisory Companies can have access to
pension, mutual aid association, postal savings and postal life insurance funds in order to offer both
advice and discretionary management services.
Q. 69.  "Big Bang" reform appears also to include "o pening the door to foreign institutions wishing to
operate in Japan".  Could Japan detail the progress made as regards the entry of foreign institutions?
Q. 70.  What concrete measures are planned by the Government of Japan to ensure that the current
notification system for insurance products (so- called “file and use”), already applicable to some
commercial lines is extended to cover all personal and commercial lines?  What action is planned toreduce the processing period?
Q 71.  What action is planned in order to allow brokers to sell insurance products directly to
consumers, to collect premiums, and to submit their policies for approval directly to FSA?
Q. 72.  Also, every single insurance product requires a license:  what are the reasons  for not having
class of business license available at present.
Q. 73.  Page 9, Paragraph 19 of the Secretariat repo rt: It is stated that "Provisioning standards [re
banks] have also been tightened".  How are foreign institutions affected in this respect?
Q. 74.  Page 9, Paragraph 20 of the Secretariat repo rt:  It is indicated that "life insurance companies
are attracting increased regulatory attention from the FSA".  What does this mean exactly, notably as
regards foreign companies?WT/TPR/M/76/Add.1
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Q. 75.  What steps is the Government of Japan pl anning to ensure access to all pension, mutual aid
association, postal savings and postal life insurance funds for Investment Advisory Companies (bothadvisory and discretionary)?
Q. 76.  Page 98, Paragraph. 51 of the Secretariat report:  It is stated that "Foreign banks may enter
the Japanese market by establishing branches, agencies or subsidiaries; a license from the FRC is
requires in each case".  A footnote mentions that each branch or agency requires a separate license.
Why is it necessary to do so?
Response to EC Q. 69 regarding the entr y of foreign institutions into Japan
Based on the principle of market discipline and self-responsibility, the reform of the financial system
(the so-called “Big Bang”) is promoting the sweeping liberalization of products and services offered
by both Japanese and foreign banks, and a framework for management strategy (including
reorganizations) such as the use of holding companies, has been established for all financialinstitutions.
Between March 1997 and October 2000, 11 bank branches, 21 securities companies, and 11 insurance
companies entered the Japanese market for the first time.  At present, there are 122 foreign bank
branches, 54 foreign securities companies, and 42 foreign insurance companies in Japan.
Response to EC Q. 70 regarding the noti fication system for insurance products
As for the insurance products for corporations, a system based on the principle of notification was
introduced in August 1999.  On the other hand, as the notification system is applicable to only some
part of the insurance products for individuals.  FSA is considering further deregulation, taking into
account the protection of policyholders, among other things.
As far as the processing procedures, FSA has been striving to make it speedy by trying to enhance the
processing scheme within the Agency, as simplification of the administrative organizations is
requested.
Response to EC Q. 71 regarding insurance brokers
As brokers must be independent from insurance companies, the Insurance Business Law allows
brokers only to intermediate between consumers and insurance companies.  Brokers cannot
underwrite insurance policies or conduct insurance policy transactions with consumers on their own
accounts under the Law.
Consequently, brokers cannot be permitted “to sell insurance products directly to consumers” and “to
submit their policies for approval directly to FSA” due to the reason above.
The law prohibits the collection of premiums from customers because it can create in customers  the
misunderstanding that brokers are liable for insurance policies.
Response to EC Q. 72 regarding the necessity of licenses for insurance
Although it is not clear what is meant by the phrases “every single insurance product requires a
license” and “the reasons for not having class of business license,” in light of the complicated nature
of insurance products, we consider a certain degree of regulation such as authorization by the proper
regulatory authority with regard to the insurance products to be necessary to protect policyholders,
who might not have sufficient knowledge of insurance products, as well as to ensure the soundness ofthe insurance companies’ management.WT/TPR/M/76/Add.1
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Response to EC Q. 73 regarding provisions made by financial institutions
Although it is not clear what is meant by the phrase “Provisioning standards [re banks] have also
tightened,” generally speaking, financial institutions asseses their assets by their own independent
standards.  Based on the result of the assessment, they are to make appropriate provisions, taking into
account the estimated loss in case of the failure of debtors.  This practice is required of all financial
institutions engaged in banking activities in Japan.
Response to EC Q. 74 regarding regu lations of life insurance companies
Due to the low interest rates, the asset manageme nt environment for life insurance companies has
worsened, resulting in a so-called "negative spread".  It may take some time to resolve this problem.
Under these circumstances, insurance companies are restructuring management and reducing costs.
The FSA expects that each insurance company will build a sufficient management base by increasing
their capitalization and their management efficiency.
The FSA is striving toward properly grasping the financial and business conditions of each company
by conducting inspection and monitoring, as well as ensuring the soundness of life insurance
companies by taking prompt corrective  measures when deemed appropriate.
During the last Diet session, the Law on Special Measures for Reorganization of Financial Institutions
was amended from the viewpoint of expediting the resolution of failed life insurance companies at anearly stage as well as protecting policyholders.  These measures are expected to contribute to the
protection of policyholders and restrain the amount of funds disbursed from the Policyholder
Protection Corporation.
Response to EC Q. 75 regarding access to pension, mutual aid association, postal savings and
postal life insurance funds
1. Investment Advisory Companies can access Employees Pension Funds and National Pension
Funds without restriction.  They will also be ab le to access the Nenkin-shinkin-unyou-kikin, which
will succeed the Pension Welfare Service Public Corporation (Nempuku) in April 2001, without
restriction.
2. The operation of reserve funds from the public worker's mutual aid association is managed by
the Mutual Aid Association Joint Party, which is an independent entity from the national government.
Investment Advisory Companies can access the reserve funds operated by this joint party.
3. Investment Advisory Companies can access postal savings and postal life insurance funds as
potential users of their advisory services.  On the other hand, regarding access to discretionary
management of postal savings and postal life insurance funds by Investment Advisory Companies, the
Government of Japan is of the opinion that further examination will be needed to come to a
conclusion.
Response to EC Q. 76 regarding licensing of foreign banks
Under the Japanese Banking Law, a license can not be given directly to the head office of a foreign
bank if it is located abroad, whereas it can be given directly to a head office of a domestic bank which
is located in Japan.  This is why branches of foreign banks are treated as a separate legal entity,
resulting in the granting of a separate license to each branch.WT/TPR/M/76/Add.1
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EC Questions 77 and 78
Q. 77.  Page 20, paragraph 100 of the GoJ report  mentions that "policy resources will be
concentrated on IT related matters such as further pro-competitive policies in the telecommunications
sector…". Which pro-competitive policies will Japan implement for this purpose?
Q. 78.  Page 101 paragraph 69: According to the commitments made by Japan (reference paper), the
regulatory authority should be separate from, and not accountable to, any supplier of basic
telecommunications services.  How is this ensured taking into account that the Japanese Governmentowns a 53% majority of the shares of Ni ppon Telegraph and Telephone Co. (NTT holding company)
and that the MPT approves nominations of directors at NTT Holding?
Response to EC Q. 77 regarding deregulation measures taken in the telecommunications sector
The Ministry of Posts and Telecommunications has taken many deregulation measures that promote
competition as follows:  enhancement of rule to ensure fair competition such as the interconnectionrule between telecommunications carriers; eliminat ion of regulation of charges and elimination of
foreign ownership restrictions.
At present, the status of competition policy in the IT era is being discussed in the Telecommunications
Council, taking into account the environment concerning the telecommunications sector.
Response to EC Q. 78 regarding independence of regulating authorities from suppliers
The Ministry of Posts and Telecommunications, which is in charge of regulations in the
telecommunications sector, is independent of NTT.  Japan faithfully abides its obligations in the
Reference Paper.
The approval of nominations for directors at the NTT Holding Company is required because it plays
the public role of providing appropriate universal service and the promotion and dissemination of
R&D.
EC Question 79
Paragraph 69: According to Japan’s additional commitments (paragraph 6 of the reference paper),
“any procedures for the allocation and use of scarce resources, including rights of way, will be
carried out in an objective, timely, transparent and non-discriminatory manner.”  Could the Japanese
government provide those procedures?  Why is it necessary for the MPT to allow a company to
negotiate a right of way with a private landowner?
Response to EC Q. 79 regarding procedures for the allocation of scarce resources
The following is the procedure for assigning frequencies in Japan, which is carried out in an objective,
timely, transparent and non-discriminatory manner.
(1) Decision of national allocation
The national allocation in Japan is decided based on the results of the World Radiocommunication
Conferences of ITU subject to the demand for frequencies.  The national allocation is described in the
Frequency Assignment Pla n, which is published as a public notice and also available on the Internet.
In addition to the national allocation, the Frequency A ssignment Plan stipulates the purposes of radio
stations to which each frequency band is assignable and the conditions on the use of the frequency
band.  In case the Frequency Assignment Plan needs to be amended, the MPT will seek publicWT/TPR/M/76/Add.1
Page 131
comments beforehand and consult the Radio Regulatory Council, and via these procedures MPT
ensures objectivity, transparency and impartiality.
(2) Establishment of technical regulations
In Japan, only minimum technical regulations are established in the Ministerial Ordinances of the
Radio Law, etc. in order to avoid interference and enhance efficiency of spectrum usage.  These
conditions are discussed at the committees of the Telecommunications Technology Council in order
to ensure transparency and fairness.  Members of those committees include not only specialists ofJapanese companies but also those of companies ow ned totally by foreigners and representatives of
European and the U.S. industries.
When the MPT establishes the technical regulations as the Ministerial Ordinances, etc., the MPT
consults the Radio Regulatory Council beforehand to judge their appropriateness.
In addition, the MPT seeks public comments during the discussion of both Councils.(3) Establishment of license policy and examination criteria
In Japan, license policies and examination criteria are established before issuing licenses for new
systems including the Frequency Assignment Plan.  The MPT seeks public comments before the
establishment.  The policies and criteria are open to public.
(4) Issuance of licensesFollowing the license policies and the examination criteria mentioned above, applications for radio
stations are examined and licenses are issued by the MPT.  As for radio stations such as base and
mobile stations for cellular phone and communication satellites, the applications are accepted within a
term announced publicly and the licenses are issued through comparative examination based upon the
published criteria.
(5) Disclosure of assigned frequencies
Except for radio stations assigned to the organizations related to national security and maintenance of
order, all the frequencies assigned are available on the Internet or at the office of the MPT.
As for radio stations for telecommunications servic es, the regulations on foreign ownership restriction
were abolished in 1998, following the agreement of the Negotiations on Basic Telecommunication.
As a result, more and more foreign-affiliated firms have been entering the telecommunications service
market in Japan.  For example, two fully-foreign-affiliated firms have entered FWA services so far.
When a Type I telecommunications carrier uses another person’s land, for the establishment of lines
for the use of its Type I telecommunications business, the right to use the land, is ensured by a
contract between the Type I telecommunications carrier and a landowner.
However, in case a negotiation fails to come to an agreement and it is necessary and reasonable to use
land, the Type I telecommunications carrier may request the owner to negotiate the creation of a rightto use the land subject to the authorization of the Minister of Posts and Telecommunications.
EC Question 80
Is JFTC the competent competition authority for the telecommunications sector?  If not, which is the
competent authority?WT/TPR/M/76/Add.1
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Response to EC Q. 80
The JFTC possesses the authority to apply the Anti Monopoly Act not only to the telecommunication
sector but to all business sectors.
EC Question 81
Paragraph 72: why is a Ministerial authorisation required in order for Type-I and Special Type-II
carriers to conclude, modify or abolish contracts with foreign corporations (what is the rationale)?
Response to EC Q. 81 regarding the need for Ministerial authorization for Type-I and Special
Type-II carriers to conclude co ntracts with foreign corporations
Contracts with foreign corporations require a ministerial authorization because they could greatly
influence the interests of consumers.
EC Question 82
Paragraph 73:  which safeguards are put in place so that these four NTT companies do not behave,
alone or together, in an anti-competitive manner (including engaging in anti-competitive
cross-subsidisation, or using information obtained from competitors with anti-competitive results), as
per Japan’s commitments in the WTO?
Response to EC Q. 82 regarding safeguards to  ensure competition in the telecommunication
sector
In order to maintain fair competition, the Impl ementation Plan regarding the reorganization of NTT
authorized on 21 May 1999 stipulates concrete measures as firewalls such as: the prohibition on
serving as executives of the regional companies and the long-distance company at the same time; a
limit on the exchange of employees; and a requirement that the conditions of interconnections,
transactions, provision of customers’ information and disclosure of the results concerning R&D
between the regional companies and the long-distance company must be consistent with those
between the regional companies and other telecommunications carriers. Fair competition between theregional companies and the long-distance company is ensured through these measures.
EC Question 83
Paragraph 74: what is the scope of the universal service?  How is it funded?  How is it ensured that it
is transparent and competitively neutral, as per Japan’s commitments in the WTO?
Response to EC Q. 83 regarding universal service
The NTT Law obligates the NTT Holding Company, NTT East and NTT West to impartially provide
stable nationwide telephone services throughout Japan at appropriate conditions.  Telephone, public
telephone and emergency calls are defined as the scope of universal service.  The cost to provide
universal service is borne by NTT East and West.  Universal service, including its scope and the
funding of its cost is one of the issues being discussed in the Telecommunications Council as an issueto be considered taking account of technological innovation and competition policy.
The Government of Japan considers it essential that universal service be provided in a transparent,
non-discriminatory and competitively neutral manner in accordance with the Reference Paper of the
Fourth Protocol to the GATS.WT/TPR/M/76/Add.1
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EC Question 84
Paragraph 76:  why do Type-I carriers need to notify to MPT, charges and their modification?  What
is the rationale for MPT to order carriers to revise their charges in order to assure fair and
reasonable end-user charges: is this part of the universal service?  More generally, it is the
understanding of the EC that all carriers’ tariffs, business plans (and changes in business plans or
service offered), network plans (and changes thereto), etc. require prior notification to and approval
from the MPT:  is this the case, and, if so, w hat is the rationale for such a burden on operators?
Response to EC Q. 84 regarding the requirements for Type-I carriers to notify MPT of charges
From the viewpoint of ensuring the interests of users, the Minister of Posts and Telecommunications
may order a Type I carrier to change the charges, including any provision that unfairly discriminates
against any person, or which may give rise to unfair competition.  From this point of view,
notification is needed.
Article 31 of the Telecommunications Business Law stipulates issues concerning charges of Type I
Telecommunications carriers.
In order to ensure the benefit and convenience of users, business plans require prior notification to and
approval from the Ministry of Posts and Telecommunications in order to ensure the security and
reliability as a public business supplier.
EC Question 85
Paragraph 78:  the paragraph mentions only requirements for Type-I carriers to interconnect with
Type-II operators: aren’t there any requirement for type I operators to interconnect with each other?
Does NTT publish a reference interconnection offer or all its interconnection agreements, as per
Japan’s commitments in the WTO?  How is it ensured that NTT East & West interc onnection terms
(including rates) are then no less favourable than thos e provided for their own like services or for like
services of their subsidiaries or other affiliates, as per Japan’s commitments in the WTO?
Response to EC Q. 85 regarding interconnection rates in Japan
Although Chapter IV Paragraph 78 only mentions interconnection between Type I carriers and
Type II carriers, Article 38 of the Telecommunications Business Law stipulates that Type I carriers
shall agree to requests for interconnection of telecommunications facilities not only from Type II
carriers, but from Type I carriers in the same way as well.  Article 38-2 of the Law stipulates that theconditions of interconnection shall be no less favorable than those applicable when a Type I
telecommunications carrier installing designated telecommunications facilities accomplishes
interconnection between the designated telecommunications facilities and its own telecommunications
facilities.
EC Question 86
Paragraph 79: the EC understands that Number portability will be possible by 31 December could
Japan confirm?
Response to EC Q. 86 regarding number portability
Number portability is scheduled to be introduced in early 2001.WT/TPR/M/76/Add.1
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EC Question 87
Paragraph 80: which safeguards are put in place so that NTT-DoCoMo does not behave, alone or
with other NTT companies, in an anti-competitive manner (including engaging in anti-competitive
cross-subsidisation, or using information obtained from competitors with anti-competitive results), as
per Japan’s commitments in the WTO?
Response to EC Q. 87 regarding safeguards to prevent anti-competitive actions
Just as with other telecommunications carriers, the measures which ensure that there is no anti-
competitive behavior on the past of NTT DoCoMo are incorporated in the Telecommunications
Business Law, such as orders to change inappropriate charges or to improve business activities.
EC Question 88
Paragraph 83:  what is the legal responsibility of a telecommunications operators for temporary
storing data (in terms of intellectual property or criminal offenses for instance)?  Are there anyspecific requirements on e-commerce service providers (in terms of information to the seller, data
protection, …)?
Response to EC Q. 88 regarding temporary storing data
It is highly probable that telecommunications operators will not be presumed to be responsible for
temporary data if it is stored in automatic process and they do not treat it intentionally.  There are nospecific requirements on e-commerce service providers.
EC Question 89
Paragraph 95.  What are the shares of the total Japanese tonnage, and number of vessels, under the
International Ship Regime (most recent statistics)?
Response to EC Q. 89 regarding the International Ship Regime
The number of vessels subject to the International Ship Regime was 124, accounting for a total gross
tonnage of 9,950,000 tons (as of 1 July 1999).  Respectively, these figures account for 6.2% and14.8% of the Japanese merchant fleet.
EC Question 90
It appears that the Japan Harbour Transportation Association (JHTA) is imposing that shipping lines
consult with them before any operational changes ca n be implemented.  What is the rationale for that
and in particular for the fact that a shipping line cannot change its contractor unless the JHTAspecifically sanctions such a change"?
Response to EC Q. 90 regarding the JFTA
The prior consultation system is utilised when changes in carrier’s business plans may affect the
employment and working conditions of port labourers, based on an agreement among associations
related to port transport business including shipping lines, labour unions and companies.WT/TPR/M/76/Add.1
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EC Question 91
As regards the 80% decrease in the number of consultations mentioned in this paragraph, it appears
to the EC more appropriate to say "some 80% of su ch consultations have since 1997 been categorised
as so called 'minor matters' and are relatively quickly processed by the JHTA".  Also, the EC had
been told and would like confirmation that Stevedore charges will from 1 November 2000 merely need
to be filed with the Ministry of Transport.
Response to EC Q. 91 regarding the number of consultations
The prior consultation system has been vastly improved.  The number of consultations which are
disputed have virtually decreased by more than 80%.  (These improvements have been welcomed by
the EU).  Through the implementation of the amended Port Transportation Business Law, the fee
approval system was replaced by a filling system in the nine major ports where 95% of all container
cargo in Japan is handled.
EC Questions Q. 92 – Q. 94
Pages 107-8,  paragraph 99, Harbour services: The revised Harbour Transportation Business Law
entered into force on 1 November 2000 and is aimed at liberalising the provision of harbour services
at nine of Japan’s most important ports.  The EU welcomes this development, but believes that the
system by which carriers must still consult with the Japan Harbour Transportation Association(JHTA) before requesting changes in stevedore works (known as “prior consultation”) represents an
artificial constraint on competition, reduces operational flexibility and raises the costs of doing
business.  Alternative arrangements concluded in 1997 with a view to improving the prior
consultation system remain have yet to be implemented.
Q. 92.   Can the government outline how far the implementation of the new (May 2000) Port Transport
Business Law has progressed, in terms of securing transparency and certainty of operation, mainly
concerning stevedoring services and in particular what concrete actions will the Government ofJapan take to implement fully th e agreements on improving the prior consultation system and
establishing a system which is transparent, equitable and swift?
Q. 93.  What criteria for establishing whether “price dumping” have been adopted?
Q. 94.  What steps have been taken to communicate the rules following the new law to the (foreign)
operators and shipping lines and what auxiliary services are open to foreigners and under whichconditions can foreigners establish?
Response to EC Q. 92 regarding the Port Transportation Business Law
As the prior consultation system is not conducted based on the Port Transportation Business Law,
there is no relation between the implementation of the amended Port Transportation Business Law
and the improvement of the prior consultation system.
Response to EC Q. 93 regarding the criteria for “price dumping”
In the event that fees filed are lower than variable costs, including labour costs, and there is a concern
that this could result in unfair competition with other general port transporters in a deregulated port,
the Minister of Transport may deem that price dumping has occurred and issue an order to revise the
filed fee.WT/TPR/M/76/Add.1
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Response to EC Q. 94 regarding foreign operators/shipping lines
The Cabinet Order and the ministerial ordinance which describe the detailed procedures in the
implementation of the amended Port Transportation Business Law were proclaimed after inviting
comments from the public.  As the Port Transportation Business Law does not at all restrict foreigners
from entering the port transport business, the permission standard for foreigners to enter business is
the same as for Japanese nationals.
EC Questions Q. 95 – Q. 99
Pages 109-110 of the Secretariat Report: The number of slots available at Narita airport is severely
limited, and thus the allocation system is of the utmost  importance to airlines which wish to fulfil the
considerable demand generated in the Tokyo metropolitan area for international flights.  Although
there have been recent improvements in the transpar ency of slot allocation, the slot co-ordinator’s
freedom to meet demand is still constrained by hour ly, three-hourly and daily limits on slot numbers.
In addition, the criteria to which the slot co-ord inator works do not fully apply IATA guidelines.
Q. 95.  What measures does Japan intend to take in order to make its system of slot allocation fully
compatible with IATA guidelines?
Q. 96.  Paragraph 116:  What is the percentage of slots allocated to foreign airlines granted under
the last two (half-yearly) allocations.  What is the total share?
Q. 97.  Paragraph 116:  What measure does Japan intend to undertake in order to enable an increase
of the number of slots available from the existing single runway at Narita Airport?
Q. 98.  Japan states that its slot allocation system is based on IATA guidelines. However, the system
does not fully correspond to IATA guidelines.  Please clarify the allocation criteria to which the slot
allocator works and explain clearly the extent to which IATA guidelines are not applied.  What are
the reasons?
Q. 99.  Paragraph 117:  What auxiliary services are open to foreigners and under which conditions
can foreigners establish?  What is the market-share of foreign ground-handling services operators in
the two main international airports (Narita, Kansai)?
Response to EC Q. 95 regarding sl ot allocation and IATA guidelines
Slot allocation and coordination at Narita Airport is already fully compatible with IATA guidelines.
Response to EC Q. 96 regarding slot allocation to foreign airlines
Foreign airlines’ slots accounted for 63% of the existing slots for international scheduled services at
Narita Airport in the IATA 1999 Winter season.  The share was 63% in the IATA 2000 Summer
season, as well.
Response to EC Q. 97 regarding an inc rease in the number of slots at Narita
The Ministry of Transport of Japan has been making every effort to complete on-going construction
of the provisional second runway with a vi ew to increasing the airport’s capacity.WT/TPR/M/76/Add.1
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Response to EC Q. 98 regarding sl ot allocation and IATA guidelines
When the additional slots became available for new allocation at Narita Airport in 1998, the slot
coordinator applied all the relevant provisions of IATA guidelines, including precedence for year-
round operations as well as that for airlines with new-entrant status.  At that stage, because the
coordinator found that there were still additional slots even after applying all the relevant provisions
of IATA guidelines, he allocated them to the airlin es by applying the local rule.  According to the
local rule, when there are slots available for allocation even after application of all the provisions ofIATA guidelines, slots should be allocated in proportion to unused capacity entitlements held by the
countries to which the airlines belong.
Response to EC Q. 99 regarding auxiliary services at Japanese airport
All auxiliary services are open to foreigners and there are no conditions which apply only to
foreigners.
The market-share of foreign ground-handling services operators is 0% in Narita Airport and about
20% in Kansai Airport.
EC Questions Q. 100 and Q. 101
Regarding foreign lawyers, pages 110-111. Although the implementation of a so-called “joint
enterprise scheme”, in place since 1995, allows joint work on specific cases between Japaneselawyers and foreign lawyers licensed in Japan, partnership between Japanese and foreign lawyers
and employment of Japanese lawyers by foreign lawyers are prohibited.  This in effect prevents the
creation in Japan of integrated international law firms able to give the advice clients require on deals
with multi-jurisdictional aspects such as initial pu blic offerings and mergers/acquisitions. As such it
has knock-on negative effects on investment in Japan and on the economy as a whole.
Q. 100.  What concrete action is planned by Japan in order to abolish restrictions on partnership and
employment between Japanese lawyers and foreign lawyers licensed in Japan?
Q. 101.  Paragraph 120: it says that there was an amendment to the Special Measures Law, which
"lifted the ban on a GJB undertaking legal business concerning third country law."  Does this mean
that a Foreign Lawyer is now allowed to give le gal advice on third country law?  Do the 'relaxed
experience requirements', also mentioned in that paragraph, imply a shorter period of required prior
practice than the currently mandatory five-year-period?
Response to EC Q. 100 regarding restrictions on partnership and employment between
Japanese lawyers and foreign lawyers licensed in Japan
According to the final revision of the Three-Year  Program for Promoting Deregulation decided on by
the Cabinet on March 31, 2000, "From the viewpoint of providing an environment where citizens and
corporations can receive overall, comprehensive legal services concerning both Japanese and foreignlaw, the Government of Japan will give consideration to whether some measures, including the review
of regulations on the objectives of specific joint enterprises, are required so that fully integrated legal
services based on comprehensive cooperation between Gaikokuho-Jimu-Bengoshi and Bengoshi may
be provided in all cases."
Therefore, the Government of Japan is continuing examination of specific joint enterprises to assess
whether there are any points that may be improved.WT/TPR/M/76/Add.1
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Response to EC Q. 101 regarding the Special Measures Law concerning the Handling of Legal
Business by Foreign lawyers
The Special Measures Law Concerning the Handling of Legal Business by Foreign Lawyers has been
revised in August 1998 as follows:
(1) Lifting the ban on performing legal business regarding third country law
A gaikokuho-jimu-bengoshi is allowed to perform legal business regarding third country law
according to written advice on matters from competent persons prescribed in the aforementionedSpecial Measures Law (e.g., lawyers qualified in the third country and engaging in legal business
concerning the law of that country).
Previous system
Concerning legal services by gaikokuho-jimu-bengoshi in Japan, the handling of legal business
related to third country law other than the law of the country of primary qualification or designatedlaws was prohibited.
(2) Relaxation of the requirement for experience as a practising lawyer
Regarding the practical experience requirement for qualification, which is one of the standards for
approval as a gaikokuho-jimu-bengoshi (a foreign lawyer qualified by Japanese law), the necessary
period during which an applicant has to engage in practice as a foreign lawyer in the foreign countrywhere he/she acquired the qualification to become a lawyer of that country ("home country") has been
shortened to three years or more.
The period during which a foreign lawyer who, on the basis of qualifying as a foreign lawyer of
his/her "home country," engages in legal business concerning that country in a foreign country other
than his/her "home country" may be included in the above period.
Up to one year of the period during which a person, after qualifying as a lawyer of his/her "home
country," was employed by a bengoshi or a gaik okuho-jimu-bengoshi in Japan, during which, as an
employee, he/she rendered services regarding the law of the "home country" to a bengoshi or a
gaikokuho-jimu-bengoshi, may be included in the period of his/her having engaged in practice as a
lawyer in the "home country."
Previous system
The law previously required experience engaging in practice as a foreign lawyer for five years or
more in total after becoming a foreign lawyer.
Previously up to two years of the period of employment by a bengoshi or gaikokuho-jimu-bengoshi in
Japan could be counted towards the five-year experience requirement.
However, practical experience in a foreign country other than the "home country" could not be
included in the above period.
EC Questions Q. 102 and Q. 103
Regarding public procurement:  Secretariat report page 49, paragraph 56 onward): The Secretariat
Report describes a number of action plans and initiatives taken by Japan to improve the "future
management of Government procurement" or to av oid bid-rigging and promote effective competition.WT/TPR/M/76/Add.1
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It also states that Government practice in Japan is highly decentralised, with no coordinating agency,
with procurement entities maintaining their own list of "registered suppliers".
In these circumstances, and beyond major procurem ent cases (big ticket items and procurement by
central authorities), how does Japan implement th e action plans and measures for more transparency
and open competition including foreign suppliers?
How does the Ministry of FA "seek to assure the consistency of procurement policies and practices
with the GPA" as stated in para. 59?
Response to EC Q. 102 concerning how Japan im plements its action plans and measures for
transparency and open competition including foreign suppliers
Based on the Cabinet Decision of 13 August 1993, the Action Program Committee was established in
the Cabinet, with the Chief Cabinet Secretary as the Chairperson.  Each member of the Committee: all
Administrative Vice-Ministers, Commissioner-General of the National Police Agency andCommissioner of the Financial Services Agency, is responsible for the implementation of the adopted
voluntary measures.
Moreover, implementation of the measures has been reviewed in the annual voluntary review
meetings, using statistics, opinions of foreign and domestic suppliers and other relevant information.
The annual reviews have resulted in the Initiative on Future Management of GovernmentProcurement, which has been approved by the Action Program Committee.
Response to EC Q. 103
Based on the Ministry of Foreign Affairs Establishment Law and the Cabinet Order for the
Organization of the Ministry of Foreign Affairs, th e Ministry is authorized to implement multilateral
treaties and agreements including the WTO Agreement on Government Procurement.  Therefore, the
Ministry is able to take necessary steps to secure the consistency of procurement practices by the
covered entities with the GPA.
In addition, the GPA has been transposed into relevant national laws and regulations with regard to
central and sub-central government entities.  All of those laws and regulations are consistent with the
provisions of the GPA.  With regard to Annex 3 entities, the GPA also has been transposed into their
respective accounting or internal statutes whose consistency with the GPA is secured through
responsible ministers' control over the entities.
EC Questions Q. 104 and Q. 105
There are contentions that the Government sets a ratio for public works orders placed with smaller
firms.  This could entice public entities to splitting projects into small segments with the result of
bringing each single call for tenders or offers under the GPA thresholds, and making it in-economical
for foreign firms to get accredited and to bid.
Does Japan confirm that such a policy and resulting practice exist and in the affirmative, is there an
annual review of the smaller firm ratio and the effectiveness of such a policy?
If such a policy exists what would be the additional cost to the public budget and to Japan's
modernisation due to inevitable higher prices a nd lesser technological upgrade linked with such
uncompetitive fragmentation and a de facto exclusion of foreign bidders?"WT/TPR/M/76/Add.1
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Response to EC Q. 104 – Q. 105 regarding tendering procedures for procurement contracts
In Japan, entities covered by the WTO Agreement on Government Procurement do not select the
valuation method and do not divide any procurement contracts with the intention of avoiding the
application of the Agreement.  With regard to public works project, therefore, covered entities of the
GPA do not conduct unnecessary segmentation of the contract value of any project.  In case certain
entities have to divide one project into more than one contract or into contracts being awarded in
separate parts for some special reason, consistency with the provisions of Article 2 of the GPA is fullysecured.
Based on the Law on Securing the Receipt of Orders from the Government and Other Public Agencies
by Small and Medium Enterprises (Act No. 97, 1 966), the Government of Japan is implementing a
policy that contributes to development of small and medium enterprises through promotion of the
procurement of goods, services or construction by  the Central Government and public corporations.
This policy is implemented by the operational guideline (Cabinet decision) which ensures the
conformity with the GPA.
EC Question 106
"Two years ago the EC asked the following:" Could Japan comment on footnote 89 of document
WT/TPR/S/32 that quasi governmental entities and joint ventures between the private sector and theJapanese government, which are outside of the scope of Japan's commitments under the WTO
Procurement Code, are increasingly purchasing services and goods that formally were the
responsibility of national and local governments?"  We do not seem to have received a full answer we
would therefore want to address this question again to Japan.
Response to EC Q. 106
The WTO Agreement on Government Procurement applies to any law, regulation, procedure or
practice regarding any procurement by entities covered by this Agreement, as specified in itsAppendix I (Article 1 of the GPA).  Members of the GPA generally may, pursuant to negotiations,
decide which entities (and procurement covered by those entities) are included in their Appendices
and in which Annex they will be included.
Japan includes all central government entities (32 state organs, all their internal sub-divisions,
independent organs, attached organizations and other organizations and local branch offices providedfor in the National Government Organization Law)  in Annex 1, sub-central government entities
(47 prefectures and 12 cities designated by Cabine t Order) in Annex 2, and public corporations or
government-related corporations (70 corporations, as of October 1, 1999) in Annex 3 of Appendix I.
Within the meaning of Article 1 of the GPA, therefore, procurement conducted by the entities not
included in the Appendix is outside of the scope of Japan’s commitments under the GPA.
EC Question 107
Regarding standards, page 54 and paragraph 70 of the Secretariat report.  The report states that
"Japan has moved toward increased international harmonization of its standards and technical
regulations.  The Three-Year Program for Prom oting Deregulation (TYPPD), as amended for
FY2000, re-emphasized ministries and agencies endeavour to achieve greater internationalharmonization of standards…"WT/TPR/M/76/Add.1
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What are the reasons why Japan still has not brought its legislation regulating engine output for
fishing vessels in line with the relevant international standard ISO 3046 (equivalent to JIS B 8002),i.e. measurement of actual real engine output expressed in horsepower or Watts/H?
Response to EC Q. 107 regarding standards
The Study Group on the Evaluation of Engine Performance for the Control of Fishing Efforts was set
up in response to a request from the EU and the Regulatory Reform Committee of Japan in March,
and this Study Group made an evaluation of the engine performance of fishing vessels.  This Groupwas comprised of a broad range of members, including engine manufacturers such as Volvo Penta
Japan, academics and members of the fishing industry.
The Study Group’s report states that a performance evaluation in terms of actual engine power would
be desirable, but that it is not reasonable at present because enforcement officials or fishermen subject
to the regulations are unable to easily confirm actual engine power without special equipment.  On theother hand, the report points out that a performance evaluation in terms of displacement volume and
engine speed can be easily performed on the spot, and that these figures are considered to be an
appropriate index for the performance evaluation of  fishing vessels’ engine for controlling fishing
vessels.
In accordance with the Study Group’s report, we are now working to prepare new evaluation methods
and related rules on engine power control for fishing vessels.  We intend to provide information in
advance and continue talks with the EU (the cont act agency for this issue) as well as with the
Regulatory Reform Committee in Japan.
HONK KONG
Hong Kong Question 1
Foreign entry to services sectors in Japan has been discouraged to a certain extent by regulatory
measures like licensing and restrictions in foreign investment.  It is noted that Japan has launched"the Three-Year Program for Promoting Deregulati on" during 1998-2000 to address the issue.  Apart
from deregulation arrangements concerning financial services which are well covered in the TPR
reports, would Japan give an account of major achievements in deregulation/streamlining of
regulatory procedures in other services sectors?  What has been the perceived impact on the level of
services imports?  We would also be glad to he ar from Japan any further plans for deregulation.
Response to Hong Kong Q. 1 regar ding efforts towards deregulation
The Government of Japan is surely implementing and conducting The Three-Year Program for
Promoting Deregulation (further revised on 31 March 2000).  This program consists of wide-ranging
list in 16 areas (listed below) with 1268 items, including finance, securities and insurance, and the
Government is to promote regulatory reform actively based upon this program.
Also, the Government is to draft and adopt The Three-Year Program For the Advancement of
Regulatory Reform on March 2001, and to push forward with regulatory reform in wide-ranging areas
actively.
Areas in the Three-Year Program for Promoting Deregulation (further revised)
1. Competition and Consumer Policies2. Housing, Land Use, and Public WorksWT/TPR/M/76/Add.1
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3. Information and Telecommunications
4. Distribution5. Transportation and Traffic
6. Product Standards and Certification
7. Finance, Securities, and Insurance
8. Energy
9. Employment and Labour10. Pollution, Waste, and Environmental Preservation
11. Explosives and Combustibles, Disaster Prevention and Safety
12. Education
13. Medical Care and Welfare
14. Legal Affairs15. Public/Official Qualifications
16. Others
Hong Kong Question 2
We would like to know the latest progress of the study/examination on the possibility and desirability
of free trade agreements with Korea and Mexico.  Will formal negotiations begin soon?
Response to Hong Kong Q. 2 regarding FTA
Regarding the situation with Korea, in May 2000, the Institute of DevelopingEconomies (IDE) /
JETRO and the Korea Institute for International Economic Policy (KIEP), non-governmental
institutes of each country, concluded their joint study and presented a joint communique.  Two
symposiums on the issue were held in May and Sept ember.  In September, President Kim Dae Jung of
the Republic of Korea proposed to Prime Minister Yo shiro Mori of Japan that it would be beneficial
to set up a Japan-Republic of Korea FTA Business Forum. Preparations are currently underway forthe establishment of said forum.  Regarding the situation with Mexico, JETRO (a Japanese non-
governmental institute) and the Ministry of  Commerce and Industrial Development of Mexico
published their respective reports on the feasibility and desirability of a FTA in April 2000.  In May,
the "NEW JAPAN-MEXICO COMMISSION FOR THE 21st CENTURY", a committie established
after the talks between heads of Japan and Mexico,proposed the launch of a governmental study.
In each case, it is still premature to decide whether or not to enter into formal negotiations.
Hong Kong Question 3
It is mentioned that the Japanese Government em ploys administrative guidance to implement its trade
policy.  The request to importers relating to tuna caught by vessels that do not abide by anWT/TPR/M/76/Add.1
Page 143
international treaty was cited as an example.  We would like to know if there is a list of all such
administrative guidance and whether such information is available to the public.  It is also mentionedthat it is up to importers whether to abide by the request.  We are interested to know if the Japanese
Government has any record of the importers who did not abide by such requests.
Response to Hong Kong Q. 3 regarding administrative guidance
There is no list of administrative guidance.  There is also no record of the importers who did not abide
by such requests.
Hong Kong Question 4
We appreciate Japan's effort in abolishing the monopoly on production and distribution of certain
industrial alcohol by 1 April 2001.  We would like to know whether there is a schedule for liberalizing
the trading of other items that are still monopolised by the state trading enterprises.
Response to Hong Kong Q. 4 regarding a schedule for liberalizing state trading
At this moment, we do not have any specific plans to revise measures regarding agricultural products
that are handled by the state trading enterprises.
Hong Kong Question 5
It is noted that the Genetically Modified Food Labelling Standard has been enforced since June 2000
while mandatory labelling regarding GMOs for several products will be implemented in April 2001.We note that a number of SPS/TBT notifications have been made by Japan.  Could the Japanese
authorities share with us information, if available, as to the value of trade that may be affected by the
mandatory labelling scheme?  Will the list of products subject to the requirements be expanded?
Response to Hong Kong Q. 5 - Labelling
The mandatory labelling scheme may affect both producers and consumers in various ways, such as
consumers’ choice.  Therefore it is impossible to make a quantitative evaluation of what products may
be affected by the scheme.
At this moment, we are not considering expanding the list of products subject to the labelling
requirement.
Hong Kong Question 6
It is observed that inward investment in Japan has traditionally been lower than its outward
investment.  However, we note that Japan has been stepping up efforts to improve its investmentclimate.  Does this reflect that the Japanese go vernment is attaching more importance to attracting
inward investment?  Among the measures undertaken by Japan, to what extent are the investment
incentives effective in attracting foreign investment?  If possible, we would like to have an estimate of
the total budgetary cost of Japan's investment promotion programs, including forgone tax revenues.
Response to Hong Kong Q. 6 Regarding measu res to increase foreign investments in Japan
It is important to increase foreign investment in Japan in order to make the Japanese economy
vigorous and open to the world for the 21st century.  For this reason, Japan has taken several
measures to promote investment in Japan, such as  favourable tax treatments and low interest loans
offered by the Development Bank of Japan.WT/TPR/M/76/Add.1
Page 144
In July this year, Japan opened a portal site home page, “Investment in Japan Information Center
(http://www.investment-japan.net/invest/index.asp)”, through which investors can access and refer tovarious kinds of information regarding foreign investment in Japan.  The objective of this home page
is to establish a comprehensive information providing system related to investment in Japan.  This
system is expected to help foreign investment in Japan.
The balance between outward and inward investment has been improving steadily, from 10:1 in
FY1994, when the Japan Investment Council was established, to 3:1 in FY1999.  This is due to avariety of measures taken by Japan such as the holding of the Japan Investment Council.
The total budget for the measures to promote foreign investment in Japan is not available.
Hong Kong Question 7
It is mentioned that Japanese suppliers of services have been considerably protected from foreign
competition.  Concerns have also been raised about the adequacy and effectiveness of competitionpolicy in various service sectors as deregulation proceeds.  Moreover, certain activities, notably
maritime and air transport, are still exempted from the Anti-Monopoly Act.  In this regard, we would
like to know whether Japan has any plans to further enhance competition in its services sector; and if
yes, what these plans or measures are.
Response to Hong Kong Q. 7 regarding competition in the services sector
In various service sectors, including maritime and air transport, the Government has taken measures
towards deregulating market entry regulations that require balancing of supply and demand, and has
amended the Anti-Monopoly Act exemptions to limit their scope.  The Government has also taken
measures to keep competition in the exempted activities on those sectors, for example as stated in
paragraph 97 in the Secretariat Report.   In order to promote fair and free competition in deregulated
sectors, it will be important to strictly crack down on Anti-Monopoly Act violations.
Hong Kong Question 8
Foreign banks are required to obtain separate licences for the establishment of branch, agency or
subsidiary.  Would Japan advise if the same requirement is applied to domestic banks and whether
Japan has any plan to streamline the requirement?
Response to Hong Kong Q. 8 regarding banking
If a foreign bank wishes to engage in banking in Japan by establishing a branch or an agency in Japan,
it shall obtain, for each branch or agency, a banking license pursuant to Article 4, Paragraph 1 of the
Banking Law (Banking Law, Article 47, Paragraph 1).  If a domestic bank wishes to establish a
branch or agency in Japan, it shall obtain an authorization for each branch or agency.
If a foreign bank wishes to engage in banking in Japan by establishing a subsidiary in Japan, it shall
obtain a license for the subsidiary.  The same holds true for a domestic bank planning to establish asubsidiary in Japan (Banking Law, Article 4, Paragraph 1).
Japan has no specific plan to simplify the requirem ent regarding the establishment of foreign banks at
this time.WT/TPR/M/76/Add.1
Page 145
Hong Kong Question 9
Japan seems to have quite an active state participation in the banking and insurance sectors, for
instance, the establishment of Government Financial  Institutions to implement policy-based finance,
the operation of the Postal Savings System as we ll as state-owned insurance schemes.  Would Japan
consider trimming down the share of state involvement so as to encourage further participation by
private sector suppliers?
Response to Hong Kong Q. 9 regarding Japan's state participation in the banking and
insurance sectors
The Japanese postal savings system plays the public role of providing small-lot individual savers with
equitable basic financial services that are indispensable to people's lives.  This system is provided
throughout the country, including in areas where private financial institutions do not deem it
profitable to operate.
The current size and share of the postal savings system reflects the fact that it has gained customers'
confidence and popularity over the past 120 years.  We are of the opinion that the postal savings
system should continue to steadily fulfil its given mission.
The Postal Life Insurance (Kampo) system is operated in accordance with Article1 of the Postal Life
Insurance Law (This law aims to help stabilize the economic livelihood of people and secure theirwelfare by providing people living in Japan with easily accessible life insurance and annuities at the
lowest possible premiums, realized as result of efficient operation to the people of Japan.), and enjoys
vast support from the Japanese people.  The Government of Japan considers it important to fulfill all
duties to the people of Japan set out by law and to meet the expectations of the people.
Regarding Government Financial Institutions, the role of Government Financial Institutions (GFIs) is
to supplement market-based finance for the purpose of supplying public goods/quasi-public goods or
encouraging private sector to supply public goods /quasi-public goods through providing policy-based
finance.  Therefore, the fields of GFIs financ ing are limited to socially important programs and
projects which have low profitability, entail high risks, and/or extend over a long period of time.
The Japanese government and GFIs are constantly reviewing the targets and the priorities of the
policy-based finance in accordance with government policies.
Hong Kong Question 10
It is noted that Japan is considering whether to enhance competition in the mobile
telecommunications market through the reduction of share-holding in NTT Docomo by the NTT
Corporation.  We would be interested in knowing the latest progress and whether there is any
concrete implementation plan.
Response to Hong Kong Q. 10 regarding NTT
The Japanese Government is considering the issu e of the reduction of shares in NTT DoCoMo held
by NTT, in light of the situation of competition among mobile telecommunications carriers and
between NTT DoCoMo and NTT East and West.
In addition, desirable pro-competitive policy, including the status of NTT, is now being widely
discussed in the Telecommunications Council, which is  an advisory body to the Minister of Posts and
Telecommunications.WT/TPR/M/76/Add.1
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Hong Kong Question 11
It is noted that permission for the provision of cable TV services is subject to considerations
concerning, inter alia, the necessity and appropriateness of the installation of the facilities in light of
natural, social, and cultural conditions in the local area.  Would Japan elaborate on the relevant
natural, social and cultural conditions and advise whether there is any quantitative restriction or
restriction concerning foreign participation?
Response to Hong Kong Q. 11 regarding cable TV
Any person who intends to install cable television broadcasting facilities with 501 or more drop
terminals and to provide cable television broadcasting service through said facilities is required to
receive permission from the Minister of Posts and Telecommunications (Article 3 of the Cable
Television Broadcast Law).
(Filing of a notification to the Minister of Posts and Telecommunications is required for the
installation of cable television broadcasting facilities having 500 or fewer drop terminals.)
The conditions for such permission being granted are as follows:
1. The installation plan for the cable television broadcasting facilities shall be reasonable , and
its implementation shall be feasible.
2. The cable television broadcasting facilities shall conform to the technical conditions
stipulated in the applicable ordinance of the Ministry of Posts and Telecommunications.
3. The applicant shall possess the financial basis and technical capabilities sufficient to ensure
reliable installation and operation of such cable television broadcasting facilities.
4. In addition, installation of cable television broadcasting facilities shall be necessary and
suitable in light of the natural, social and cultural circumstances of the area in question (Article 4 of
the Cable Television Broadcast Law).
Concerning (4) the specific criteria that must be me t for permission to be granted are as follows:  The
installation of the facilities shall be deemed necessary and appropriate in  light of, among other things,
the geographical identity of the area involved, the extent of interference with television broadcasting,
the demand for a means of local communication, and the local lifestyle and cultural identity;  a person
who intends to establish cable television broadcasting facilities, such as a private broadcaster or local
public entity or some other entity controlled by th e preceding, shall be permitted to do so assuming,
there is no other potential provider of the facilities, or that there are strong demands from local
residents for installation of cable television broadcasting facilities.
The regulation on foreign ownership and on the executives who do not have Japanese nationalities is
abolished in June 1999.
Hong Kong Question 12
It is noted that Japan has replaced licensing requir ement with permission for entry into port transport
business in nine major ports.  We would be interested in knowing whether Japan has any plan to
extend the relaxation arrangement to other ports as well.WT/TPR/M/76/Add.1
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Response to Hong Kong Q. 12 regarding licensing
In light of the fact that 95% of container cargo shipment in Japan are handled in nine major ports
where the port transport business has been deregulated, we consider the deregulation of the port
transport business on container cargo in Japan to have been virtually achieved.  We will examine
whether or not to deregulate port transport business in other  ports on the basis of results in the nine
major ports where deregulation has already been implemented.
Hong Kong Question 13
It is mentioned that provision of auxiliary services in airports operated by the government is subject
to approval by the Director of the Regional Civil Aviation Bureau.  We would be interested in
knowing the criteria for approval and whether foreign and domestic suppliers are subject to the same
set of criteria.
Response to Hong Kong Q. 13 regarding auxiliary
The criteria for granting approval for auxiliary services are the degree to which they are necessary for
the management of airports and the reliability of their services.  Foreign and domestic suppliers are
subject to the same set of criteria.
Hong Kong Question 14
We welcome the various relaxation measures concerning the handling of legal services by foreign
lawyers (GJB) which were introduced in 1998 and woul d like to know if there are plans to further
liberalise the sector.
Response to Hong Kong Q. 14 regarding legal services
According to the final revision of the "Three-Year  Program for Promoting Deregulation"  decided on
by the Cabinet on 31 March 2000, "From the viewpoin t of providing an environment where citizens
and corporations can receive overall, comprehensive legal services concerning both Japanese and
foreign law, the Japanese government will give consideration to whether some measures, includingthe review of regulations on the objectives of specific joint enterprises, are required so that fully
integrated legal services based on a comprehensive cooperation between Gaikokuho-Jimu-Bengoshi
and Bengoshi may be provided in all cases".
Therefore, the Japanese government is continuing examination of specific joint enterprises to assess
whether there are any points to improve.
INDIA
India Question 1
Para 20 of the Summary Observations in the Report by the Secretariat notes the high protection
offered to the agricultural sector in Japan by maintaining high tariffs on imports, grant of domestic
support to a number of products and by operation of a complex tariff quota system. It notes that theoverall level of government assistance for this sector is well above the OECD average. In spite of the
high protection, productivity in Japanese agriculture is low by national standards. Para 21 notes the
enactment of a new Basic Law for Food, Agriculture and Rural Areas in July 1999 in order to meet
the current challenges and to lay out the future direction for Japanese agriculture.WT/TPR/M/76/Add.1
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Keeping in view the fact that agriculture is one of the most important sectors of great interest to a vast
majority of developing countries, we would like to know the details of the Basic Law. Does Japanhave any plans to reduce the domestic support to the various agricultural commodities? We would
like to know if Japan intends to carry out autonomous liberalisation of this sector without linking it
with the ongoing negotiations.
Response to India Q. 1 regarding aguriculture
The Basic Law on Food, Agriculture and Rural Areas provides four basic principles:  (1) securing of a
stable food suply, (2) fulfilment of the multifunctionality of agriculture, (3) sustainable agricultural
development, and (4) the development of rural areas.  In order to realise the objectives of the Basic
Law, the Basic Plan on Food, Agriculture and Rural Areas was made.
Regarding the domestic support provided in Japan, the total AMS of the base period(5 trilion yen) is
scheduled to be reduced by 20%, and reach 4 trilion yen in 2000.  Japan's notified AMS, however,already reached 3,170.8 billion yen,  below the level of the schedule for 2000 as well as that of 1997.
Japan has been faithfully implementing what was agreed to at the UR negotiations on agriculture.
Moreover, at the ongoing negotiations on agriculture, Japan's basic philosophy is to establish trade
rules that will allow "the coexistance of various types of agriculture".
India Question 2
Para 2 suggests that more aggressive structural reform that enhances competition would be needed
for a sustained economic recovery.  In para 3, the Secretariat notes the fragility of the financial
system which is also seen as a threat to the economic recovery.
Will the delegation of Japan comment on these observations?
Response to India Q. 2 regarding th e state of economic recovery in Japan
The financial system in Japan has become much more stabilized as compared to before.  This is
because the disposal of non-performing loans has progressed through the strict inspection andsupervision of financial institutions, the speedy resolution of failed financial institutions based on the
Financial Revitalization Law, and the injection of public capital based on the Financial Function Early
Strengthening Law.  Keeping in mind that the full protection of deposits through deposit insurance
ends in March 2002, the FSA will make maximum efforts to build a financial system that is firm and
reliable for depositors and markets.
Financial system reform is being implemented as scheduled.  What was planed to be accomplished by
2001 is either completed or close to completion.  The FSA is striving toward further implementation
of financial system reform, including the promotion of further deregulation.
India Question 3
While para 4 states that Japan’s trade policy priorities include the strengthening of the multilateral
trading system, para 7 notes the greater inte rest now being shown by Japan towards regional
free-trade agreements. It further notes the possibility of forging free trade agreements with Singapore
and Korea.
We would like to know Japan’s perspectives on regionalism.WT/TPR/M/76/Add.1
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Response to Q. 3 from India
- Our perspectives on regionalism have been shown in the governmental report as well as in the
answers to the questions from Chile and Canada on this matter.
- Japan has found that, recognizing the catalytic role that regional trade agreements could play
in accelerating liberalization and rule making in the framework of the multilateral trading system, it
may be meaningful to give consideration to regional trade agreements as one of the means to
complement the multilateral trading system and to revitalize our economy and society. In this context,Japan decided to consider utilising RTAs, such as FTAs, and to start negotiations towards establishing
an Economic Partnership Agreement with Singapore.
Regarding the form of regional integration, Japan's views are as follows. In some cases, it
may be appropriate to consider "traditional" FTAs whose scope is limited to liberalization of trade in
goods (and services). In other cases, it may be appropriate to consider "new age" agreements whichprovide wide-ranging, comprehensive arrangements for economic partnership,as reported by the Joint
Study Group on Japan-Singapore Ec onomic Agreement for A New Age Partnership. Furthermore,
there may be a case where it is appropriate to consider a framework to strengthen the economic
relationship through, for example, harmonization of economic regulations, without including elements
of traditional FTAs. These options should be examined by taking well into account the characteristicsof the partner countries and other factors.
- Regarding the decision on negotiations with other economies, only a decision to negotiate
with Singapore has been taken so far.
India Question 4
Para 10 notes that while nearly 99% of the tariff lines are bound and most applied rates coincide with
bound rates thereby allowing a predictable regime, non-ad valorem duties, especially in agriculture
accounting for 6.9% of all tariff lines in financial year 2000 concealed a high ad valorem equivalentrates. Further, this para speaks of the complex nature of tariff quota allocation of about
200 agricultural items.  In addition, para 11 notes that  certain aspects of the import quota system can
also be complex like the tariff quota administration.
We would like to have the comments of the delegation of Japan on these observations. Further, we are
interested to know if any plans are underway to simplify the tariff quota and import quota
administrations.
Response to India Q. 4 regarding tariff
Current tariff levels were established as a result of the several negotiations taking into account the
geographical and natural conditions of each country and situation of each product.  Out of quota
duties of tariffied  products  were established at the UR negotiations based on the price gap betweendomestic and international markets.
Tariff levels should be set considering these situations and backgrounds,as  well as the necessity to
maintain a certain level of agricultural production and its multifunctionality.
India Question 5
Para 19 notes the introduction of a three-year programme for promoting deregulation as a positive
step in creating a free and fair Japanese economy fu lly open to the international community.  Further,WT/TPR/M/76/Add.1
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it notes the strengthened role of the Japan Fair Trade Commission (JFTC).  However, it notes that the
operation of the JFTC is hampered by its lack of resources and expertise in pursuing complex  cases.
The delegation of Japan may comment on these observations.
Response to India Q. 5 regarding the role of the JFTC
The role of competition policy is more important than ever from the viewpoint of promoting fair and
free competition among Japanese and foreign businesses and protecting the benefit of consumers.
Therefore, the Basic Law on the Reform of Central Government Ministries and Agencies and theThree-Year Program of Deregulation (3
rd Version:  Cabinet Decision in March 2000) include efforts
to strengthen the JFTC’s investigation system and so on.
Recognizing these circumstances, the JFTC has been improving and strengthening its systems and
functions, mainly those of the investigation department.  In order to fulfill the role that it is expected
to play, the JFTC will continue to improve and strengthen the investigation system and so forth.
The Japanese Anti-Monopoly Act is one of the oldest competition laws in the world, and the JFTC is
a group of experts that has been addressing Anti-Monopoly Act violations for more than 50 years.
Therefore the JFTC can definitely address complex cases.  In addition, the JFTC has been vigorously
conducting training for officials to improve their specialized knowledge and skill.  In any case, when
the JFTC gets information of Anti-Monopoly Act violations in any sector, it initiates an investigationand strictly addresses the violations.
The number of officials of the JFTC
FY’1996 FY’1997 FY’1998 FY’1999 FY’2000
General Secretariat 534 545 552 558 564
The investigation department of the General
Secretariat236 248 254 260 263
India Question 6
Para 25 notes the fragility of the financial system in Japan and again states that this poses a threat to
the economic recovery.  It points out that some life insurance companies face the threat of bankruptcy
and hence are attracting increased regulatory attention from the Financial Services Agency.
The delegation of Japan may like to comment on these observations.
Response to India Q.6 regarding the re gulation of life insurance companies
Due to the low interest rates, the asset manageme nt environment for life insurance companies has
worsened, resulting in a so-called "negative spread".  It may take some time to resolve this problem.
Under these circumstances, insurance companies are restructuring management and reducing costs.
The FSA expects that each insurance company will build a sufficient management base by increasing
their capitalization and their management efficiency.
The FSA is striving toward properly grasping the financial and business conditions of each company
by conducting inspection and monitoring, as well as ensuring the soundness of life insurance
companies by taking prompt corrective  measures when deemed appropriate.WT/TPR/M/76/Add.1
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During the last Diet session, the Law on Special Measures for Reorganization of Financial Institutions
was amended from the viewpoint of expediting the resolution of failed life insurance companies at anearly stage as well as protecting policyholders.  These measures are expected to contribute to the
protection of policyholders and restrain the amount of funds disbursed from the Policyholder
Protection Corporation.
India Question 7
We understand that Japan has imposed zero tolerance clause on insects, which poses market access
problems for flower imports into Japan. We understa nd further that the insects in question, namely,
thrips and aphids, are present in Japan itself.  Further, it has been pointed out that the Plant
Quarantine Authorities at the Japanese airports take a longer time in clearing the consignments
keeping in view the elaborate fumigation procedures.  This delay creates difficulties as flowers are
highly perishable.
We would request the Japanese authorities to look into this problem and take steps to remove the
market access barriers.
Response to India Q. 7 regarding plant protection system
Under the Japanese plant protection system, "quarantine pests" are defined as those which are liable to
cause damage to economic plants should they spread, and which meet either of the followingconditions:
i) those that are not confirmed to exist in Japan.
ii) those that are already present in a part of Japan and for which official controls are being
undertaken.
The above definition is based on international standards provided by the International Plant Protection
Convention (IPPC).
The fumigation procedures for cut flowers normally require only approximately 30 minutes to
2 hours.  The delays in clearance, if any, are caused by the time for handling of consignments or
waiting time for the fumigation chamber.  These handlings are conducted purely by the private
sectors, and are beyond the control of the quarantine authorities.
Therefore, the comment made by India that plant quarantine measures create a market access barrier
is not appropriate.
India Question 8
Another problem faced by flower exporters, especial ly from India, is that the Japanese auction houses
bring the Indian roses towards the end of the auction process after the entire domestic supply and the
supplies from other supplier countries are auctioned.
We would request the Japanese authorities to look into this matter and  take steps  to  ensure that  the
system  of auctioning is in conformity with MFN and National Treatment obligations.WT/TPR/M/76/Add.1
Page 152
Response to India Q.8 regarding SPS
Prices of auctioned commodities are determined by the supply of and demand for each commodity,
not by the order of auction process of the Japanese auction houses.  (In some cases commodities
auctioned at a later time can be priced higher than those auctioned earlier).
There are no rules or regulations that require domestic flowers to be auctioned prior to imported
flowers. Flowers are usually sold on a first-come-first-serve basis at Japanese auction houses.
There are also no rules or regulations in the distribution process that require flowers to be auctioned at
the Japanese auction houses.
India Question 9
We are told of difficulties faced by exporters due to application of strict SPS standards and delay in
conducting tests and issuing certificates by the Japanese laboratories.
We would request the Japanese authorities to explai n their SPS system  and also to  take steps to
speed up  their process of conducting tests and  issuing certificates.
Response to India Q. 9 regarding SPS
Japanese SPS measures are applied only to the extent necessary to protect human, animal or plant life
or health in fully consistent manner with SPS Agreement based on scientific principles. Moreover, we
believe our system for plant and animal quarantine is currently functioning effectively.
Regarding the testing of foods, plants and animal s at their import, we conduct testing as the need
arises. We are making efforts to do it promptly.
India Question 10
Para 26 notes that even though measures aime d at promoting further de-regulation in the
telecommunications sector have been taken, the sector still  remains monopolistic and the prices of
some services, like the internet access charges are  still high by developed  country standards. It has
been pointed out that this will have an adverse impact on the development of electronic commerce.
We would like to hear the response from the Japanese delegation on these observations. Further, we
would like to know if Japan has any plans to make some autonomous liberalisation in this sector,
without linking it to on-going services’ negotiations.
Response to India Q. 10 regarding telecommunications charges in Japan
Japan recognizes that telecommunications charges in Japan have been by no means inferior to
international standards as a consequence of the enhancement of competition and deregulation.
However, Japan is promoting the improvement of the environment through the introduction of diverse
Internet access to further encourage wide use of the Internet.
India Question 11
While para 28 begins by saying that there are signs of recovery, the subsequent observations therein
indicate a pessimism concerning the strength of such a recovery and its durability. Para 29 speaks of
wavering in the Government resolve to continue in its pursuance of structural reforms. It also notes
some signs of ‘reform fatigue’.WT/TPR/M/76/Add.1
Page 153
We are interested to know the response from the delegation of Japan on these observations.
Response to India Q. 11 regarding the structural reforms
The Japanese economy continues to improve moderately and the performance in the corporate sector
has been particularly favorable toward a self-sustained recovery path. Nevertheless, employment
conditions are still severe, personal consumption remains generally flat, and the number of business
failures has been somewhat high, with the gross debt of failed firms rising. Therefore, the economy
has not been placed on a self-sustained recovery path yet.
The Japanese Government compiled A Policy Package for New Economic Development toward the
Rebirth of Japan in October. Our goal is to place the Japanese economy on a self-sustained recovery
path and to reform the structure of the Japanese economy in accordance with the demand of the
21st century. The Government intends to actively implement the new package actively to accomplish
this goal.
In the midst of rapid and fundamental changes in the economic environment such as the IT revolution,
globalization and global warming, structural reforms in our economy are inevitable. The Government
has been making, and will continue its best efforts to facilitate reforms for the purpose of establishing
a sound environment for vigorous business activities. Issues mentioned in Para. 29 are now under
intensive deliberations.
Prime Minister Mori has repeatedly stressed in his Diet statements the necessity for and his strong
intention to execute economic structure reforms. He has established the IT Strategy Council and the
Industrial Rebirth Council as vehicles for structural reforms, where ministers and business leaders
discuss various issues necessary to improve productivity and expand business opportunities. Based on
deliberations in these Councils, the Government will compile a new action plan on economic
structural reform by the end of this year.
KOREA
Korea Question 1
According to para 38 (page 14), "despite recent re gulatory reforms and rising FDI, inflows are still
low by OECD countries' standards." The Secretariat's Report cites regulatory barriers as a factor
behind the low level of FDI into Japan. One example is the regulatory criteria for issuing visas for
investment and business administration purposes. The ordinance of the Ministry of Legal Affairs
stipulates that visas for investment and business adm inistration purposes may be issued for businesses
that hire at least two Japanese nationals or permanent residents who live in Japan, in addition to the
manager. This requirement makes it difficult for foreign investors to acquire a visa for investment
purposes. Does Japan have any plan to abolish or relax this requirement?
Response to Korea Q. 1 regarding the investor/business manager Visa category
Foreign nationals who intend to engage in activit ies for investment and business administration are
permitted to enter and reside in Japan with the status of residence Investor/Business Manager, in
accordance with the Immigration Control and Refugee Recognition Act.
One of the criteria for Investor/Business Manager is that the investment concerned should be of a
scale to employ at least two full-time employees who are Japanese, Permanent residents, or others inJapan.WT/TPR/M/76/Add.1
Page 154
Although the Republic of Korea expresses its understanding that it is necessary to employ two local
nationals to obtain the status of Investor/Business Manager, in reality, applicants will be grantedpermission to land in Japan under the Investor/Business Manager status if it is acknowledged that the
business has invested in Japan in such a scale, regardless of whether the business actually employs
two local nationals.
Korea Question 2
In relation to the U.S.-Japan bilateral arrangements (para 4, page 19), a recent report mentions that
Japan's Ministry of Foreign Affairs and Ministry of Industry and Trade are considering signing the
tentatively named "Economic Linkage Agreement" with the United States (Nihon Keizai Shimbun,
front page, October 29).  Could the Japanese Government provide the details of this proposed
agreement, in particular its nature and coverage?
Response to Korea Q. 2 regarding FTA
This has been misreported.  There is no such fact.
Korea Question 3
In relation to para 37 (page 30), Japan, along with Canada, the EC and the United States, has
proposed to implement tariff-free and quota-free trea tment for essentially all products originating in
least-developed countries (Director-General's Report on Consultations, General Council,3 May 2000). Please provide a specific schedule on the implementation of the proposal.
Response to Korea Q. 3 regarding reform of GSP
Japan is considering the reform of GSP including the implementation of tariff-free and quota-free
treatment for essentially all products originating in LDC.
Korea Question 4
According to para 29 (page 42), Japan has maintained a low average applied MFN tariff rate of 6.5%
in fiscal year 2000, which Korea appreciates and considers it as a sign of Japan's sustained efforts tolower overall tariff rates. However, Japan still maintains high tariff rates for some products, such as
petrochemicals (polypropylene, high-density polyethylene and polystyrene, etc.), leather goods, textile
goods, shoes, and food products, which are of particular interest to Korea. Does Japan have any plan
to lower the tariff rates for these products?
Response to Korea Q. 4 regarding high tariff rate in Japan
As for food sector, current tariff standards were established as a result of the several negotia-tions
taking into account the geographical and national condition of each country and situation of each
product.  Out of quota duties of tariffied products at the UR negotiations were established based on
the price gap between domestic and international markets.
Tariff standards should be set considering this situation and background, maintaining certain level of
agricultural production and careful attention to the multifunctionality enhanced through this
maintaining.WT/TPR/M/76/Add.1
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Response to Korea Q4 regarding tariffs on leather goods, textiles and clothing and
petrochemicals
As for leather goods, shoes and so on, it is very difficult to further reduce the tariffs of these goods
since most of the producers of these goods are small and less competitive international, and further
reduction on these goods could cause serious damage to them.
As for textiles and clothing , compared to the low tariffs in Japan on other manufactured goods, tariffs
on textile and textile products may be relatively high, but even low compared to other countries. Japancommitted itself to substantial tariff reductions on the items indicated during the Uruguay Round
negotiations, and continues to steadily implement these commitments. The domestic textile industry
works from a weak management base due to the very small scale of the companies in this sector.
Since rising imports and sluggish consumption ar e aggravating the situation still further, tariff
reductions beyond Japan’s Uruguay Round commitments would be difficult in these very toughcircumstances.
As for petrochemicals, Japan has reduced the tariffs of these items with the other countries based upon
the Agreement of Chemical Harmonization at the Uruguay Round Negotiation since 1995, and
achieved substantial reduction of in this area.
However, Japan does not intend to exclude these goods from industrial tariff negotiations of
comprehensive coverage under the WTO new round   with a balanced and sufficiently broad-based
agenda.
Korea Question 5
It is understood that the Japanese Government has decided to abolish the import tariffs on whisky by
2002.  However, there seems to be no announced schedule for the abolishing or lowering of the tariffs
on So-ju which is substitutable for whisky.  Does the Japanese Government have an intention to
abolish or lower the tariffs on So-ju?
Response to Korea Q. 5 regarding tariffs on shouchu.
The Japanese Government has no schedule to lower the tariffs on “ Shouchu.” This matter could be
discussed in the next round of WTO negotiations.
Korea Question 6
Japan maintains a very unique tariff system for certain products by imposing differential duties.
According to footnote 14 (page 39), "a differential duty involves a specific rate charged per kg of
imports with the rate varying directly with the difference between the standard import price, set a
priori by the authorities, and the actual import prices." Technically speaking, this kind of duty may
meet Japan's WTO obligations based on specific bound ra tes. However, this tariff regime seems to be
directly contradictory to the principle of a market-based economy, in that the differential duty canadversely affect price competitiveness of imported goods, regardless of their original price level.
Does  the Japanese Government have any plan to reform this regime towards a more market-oriented
tariff system?
Response to Korea Q. 6 regarding the differential duty
The differential duty does meet Japan’s WTO obligatio ns. Japan does not have any plan to change this
regime now. This regime might be discussed in a new round of negotiations with a balanced and
sufficiently broad-based agenda.WT/TPR/M/76/Add.1
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Korea Question 7
As para 41 (page 45) indicates, Japan still maintains strict quotas on various items, including
14 fisheries products which are of particular interest to Korea. It is noted that Japan has not
increased its import quotas on fisheries products for Korea since 1983, although it has increased
them for other countries. Could Japan provide a detailed explanation of the rationale for maintaining
this restrictive regime? Will the Japanese Government increase or abolish the import quotas on
fisheries products?
Response to Korea Q. 7 regarding Japan’s import quotas on fisheries products
As Korea is situated adjacent to Japan, both countries use the same resources.  Under such
circumstances, Japan imposes on its fishermen conservation and management measures such as
restrictions on catch amount and fishing effort.  It is therefore necessary to have certain import
restrictions in order to conserve the same fishery resources on which Japan applies regulations onJapanese fishermen, as well as to avoid adverse effects on domestic demand and supply.
Also, we consider that it is essential to give consideration to objectives such as maintenance of rural
communities and the stable supply of fishery products to our people when fishery trade issues are
considered.
Korea Question 8
As para 43 (page 7) states, a quota system is applied to the imports of dried laver and certain edible
seaweed from Korea. In addition to this quantitative restriction, Japan is applying very high tariff
rates on laver in contrast with its average tariff rate of 4.1% on fisheries products. Korea appreciates
the various measures the Japanese Government has taken since the last TPR of Japan to address
Korea's concerns on this matter, including the abolition of the requirement for import licenses from
the domestic producers association. It is strongly hoped, however, that Japan will increase the import
quota and lower the tariff rates on laver, and eventually fully liberalize import of laver. Are there anyinitiative currently being considered that would go in that direction?
Response to Korea Q. 8 on the outlook for the import quota on dried laver and the tariff on
dried laver
The import quota for dried laver is decided, taking into account domestic supply and demand and
import trends.  The tariff on dried laver was decided based on the UR agreement.
Korea Question 9
With regard to para 57 (page 49), Japan still exc ludes NTT Communications from the Lists of the
GPA Annexes. In this regard, the relevant provision of the present Government Procurement
Agreement requires Members to consider compensatory adjustment. Some argue that the requirement
for compensatory adjustment may discourage the privatization of public corporations and movementtowards a more market-driven economy. Could the Japanese Government comment on this point?
Response to Korea Q. 9 regarding government procurement
The WTO Agreement on Government Procurement requires Parties to notify the Committee of the
proposed withdrawal of entities from Appendix I.  The first sentence of Article 24:6(b) of the GPA
stipulates a Party's right to withdraw an entity fr om Appendix I if governmental control or influence
over it has been effectively eliminated.WT/TPR/M/76/Add.1
Page 157
The exercise of this right, however, might be frustrated by the lack of clear guidance on what would
constitute effective elimination of governmental control or influence. Even if such a withdrawal isappropriate in light of the nature of the entity, the current text might give rise to some disagreement
between Parties regarding the extent to which the removal of government control or influence has
actually occurred and the privatized entity is being managed on the basis of market economy
principles.
The objective of privatization is to apply market economy principles in the daily conduct of business,
including in the application of procurement procedures.  The removal of government control or
influence makes it impossible to impose the discipline of the GPA on the entity in question. However,
market forces, rather than the discipline of the GPA, could be relied on to ensure market access.
The Government of Japan, therefore, proposed more transparent, operational and
privatization-friendly criteria for the withdrawal of privatized entities.  The privatization ofgovernment-influenced activities facilitates the market-oriented functioning of the entity and is in
itself a positive development in furthering the purpose of the GPA.
Such modifications would benefit the current GPA Parties, and will also facilitate  accession to the
GPA. The requirement on a compensatory adjustment might deter developing countries or economies
from acceding to the GPA if they expect to remove certain entities from government control orinfluence as a part of the process of rationalization of the government. Clarification of the notion of
"effective elimination of governmental control or influence" may help avoid possible difficult disputes
over which entities are considered to be already free from government control and influence.
Korea Question 10
As para 59 (page 50) points out, government procurement in Japan is highly decentralized. As a
result, local governments in Japan seem to require excessively strict qualifications, which is
incompatible with Japan's obligations under th e WTO Government Procurement Agreement and often
makes foreign bidders' participation difficult. Does Japan have any plan to redress this situation ? Is
Japan considering setting up a single inquiry point which would collect and provide information on
procurement in the decentralized Japanese procurement market?
Response to Korea Q. 10 concerning practices regarding government procurement by local
government
Those local government entities that procure in accordance with the WTO Agreement on Government
Procurement (hereinafter "the Agreement"), are implementing government procurement through fair,
open and transparent procedures.
These entities are governed by the Local Autonomy Law and relevant regulations. All of these law
and regulations are consistent with the provisions of the Agreement. The Local Autonomy Law andrelevant regulations, from a viewpoint of ensuring  fairness and strict neutrality and equal opportunity,
provide for procurement procedures in line w ith the national treatment and non-discrimination
commitments of the Agreement.
Each procuring entity has a contact point for the provision of information on particular government
procurements of that entity. Information on government procurement procedures in general is alsoavailable at the Ministry of Foreign Affairs.WT/TPR/M/76/Add.1
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Korea Question 11
According to para 64 (page 51), the percentage of foreign suppliers in Japan's government
procurement was 5.6% in terms of value in 1997. Could the Japanese Government explain such low
percentage? What measures is Japan taking to encourage foreign participation in Japan's
government procurement?
Response to Korea Q. 11 regarding the government procurement
The fiscal amount of government procurement from foreign suppliers accounted for 5.6% in terms of
value in 1998 (not 1997).  It has been steadily rising in recent years (1996: 4.1%, 1997: 4.7%).
In addition, as a voluntary measure to increase access opportunities for foreign suppliers to the
Japanese market with regard to the procurement of products and services by the entities subject to the
WTO Agreement on Government Procurement, since 1985, Japan has taken a series of Action
Programs to improve access to government procurement markets.  The voluntary measures include:lowering threshold of goods and services procurements from 130,000SDR to 100,000SDR, extending
the period for the receipt of tenders from 40 days to 50 days, disseminating relevant information at the
early stage of tenders, and so on.
Korea Question 12
Korea understands that Japan will implement a recycling system for home electronic appliances
(refrigerators, washing machines, air conditioners, television sets, etc.) in May 2001. Korea fully
understands the concern Japan has over the preser vation of the environment. Under this system,
however, foreign manufacturers bear higher costs than domestic producers, given that they have to
entrust their recycling responsibilities to local recycling businesses which impose higher fees on
foreign manufactured goods. Can we expect Japan to address this difficulty faced by foreign
manufactures?
Response to Korea Q 12
Japan’s Electronic Appliance Recycling Law, which was enacted in May 1998 and will be enforced
from 1 April 2001, obliges every manufacturer and importer to recycle these products without
discriminating between domestic and foreign companies.
During this three-year preparation period, manufacturers and importers have been preparing to meet
recycling obligations. In order to meet said obligations, the law allows manufacturers and importersthe choice either to develop their own infrastructure (for example, a recycling plant) or to commission
other companies to do so. Commissions are based on contracts between private companies.
Certain enterprises whose volume of products and/or imports is less than a specified level  (regardless
of nationality) are allowed to, if they wish, commission authorized entities to implement all
obligations imposed by law.
Based on the above, it is clear that Japan’s Electronic Appliance Recycling Law does not discriminate
between domestic and foreign companies. Moreover, the law accommodates every enterprise,
including foreign ones, by providing necessary measures to implement legal obligations in a
manageable way. In short, there are no discriminatory elements.WT/TPR/M/76/Add.1
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Korea Question 13
In relation to para 79 (page 56), Japan conducts a strict toxic analysis test prior to the customs
clearance of imports of fresh shellfish, which results in a lengthy customs clearance process and high
costs for exporters. Does Japan have any plan to address this situation and curtail the period of
analysis?
Response to Korea Q. 13
Due to the fact that there was an instance of shellfish poisoning in Korea and as a result of tests
conducted at the time of import indicating excessive levels of toxins, since May 1996 all shipments of
Korean bivalves have been subject to testing for paralytic shellfish poisoning (PSP), in accordance
with the provision of   Paragraph 3, Article 15 of the Food Sanitation Law.
However, based on a report subsequently issued by the Government of Korea describing the situation
of shellfish poisoning and the regime established to investigate the presence of toxins, a decision wastaken to exempt shipments of shellfish from such testing when said shipments are accompanied by a
certificate of origin issued by the Korean Fishery Inspection Authority attesting to the fact that such
shellfish was harvested in areas demonstrating free of toxins.
Korea Question 14
Japan applies strict quarantine measures to fresh vegetables and flowers imported from Korea.
Japanese authorities even request a fumigation of  pests that are common in Japan. This measure
leads to the reduction of product value and additional costs to exporters. Could Japan improve its
quarantine process so that it will not pose as an impediment to trade?
Response to Korea Q. 14 regarding SPS
Under the Japanese plant protection system, "quarantine pests" are defined as those which are liable to
cause damage to economic plants should they spread, and which meet either of the following
conditions:
i) those that are not confirmed to exist in Japan.
ii) those that are already present in a part of Japan and for which official controls are being
undertaken.
The above definition is based on international standards provided by the International Plant Protection
Convention (IPPC).
Therefore, there is no ground for the point made by Korea regarding the impediment to trade caused
by the quarantine process in Japan
Korea Question 15
According to para 100 (page 63), Japan had approved a total of 22 foreign access zones (FAZs) by
January 1999. Can the Japanese Government provide information on the FAZs' contribution to theincrease of imports from Japan's major trade partners? Are the Japanese authorities conducting
studies on the specific trade-creation effects of FAZs?  If so, please provide details.WT/TPR/M/76/Add.1
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Response to Korea Q. 15
Foreign Access Zones have contributed significantly to an increase in imports; between the inception
of the FAZ scheme in 1992, and 1999, the import value in Foreign Access Zones increased 31.5%,
compared to 19.4% nationwide. The number of internat ional container line services involving Foreign
Access Zones has increased since their approval as Foreign Access Zones, from 486 to 586, and many
newly established ones are with Asia, especially Korea and China.
Various import promotion projects supported by MITI have been conducted, in Foreign Access
Zones, including the Korean Food Fair in Yamaguchi Prefecture. Among other projects, import fairs
alone are estimated to have resulted in a total contract value of five billion yen in FY1999.
Kitakyushu City, Osaka Prefecture and Ehime Prefecture, with support from MITI, provide office
space to official trade promotion organizations and private companies from Korea, China and other
trade partners, continuously facilitating marketing and import promotion in Japan.
Korea Question 16
In relation to para 124 (page 71), the "Distance Standard Regarding the License for the Retail of
Alcoholic Beverages" was originally to be abolished by  September 2000, as part of the Three-Year
Program for Promoting Deregulation. The abolition, however, has been postponed to next January.
Could the Japanese Government confirm that th e distance standards will be abolished as of
January 1, 2001? As a related matter, does the Japanese Government have any plan to simplify the
documentation requirements for the licensing and approval of the retail of alcoholic beverages?
Response to Korea Q. 16 regarding licensing for the sale of alcohol
The Japanese Government policy of deregulating "the demand-supply balance standard regarding the
license for the retail of alcoholic beverages," including the distance standard, is to be preserved as
planned in  the "Three-Year Program for Promoting Deregulation" and the Cabinet Decision on
August 30, 2000.
The Japanese Government is promoting the digitalization of administrative procedures aimed at
realizing e-Government as a whole, which includes the revision to simplify the application for  liquor
licensing.
Korea Question 17
As para 47 (pages 95-96) indicates, bank holdi ng companies and banks' entry in other businesses
through subsidiaries have been allowed in the cont ext of the "Big Bang" reform in 1998. Are foreign
banks also allowed to enter other businesses by establishing a bank holding company and its
subsidiaries? The Japanese government has recently  put off the implementation of the partial deposit
insurance system until March 2002, and, in addition, submitted a bill to fully insure liquid deposits.  It
seems possible that the postponement of the part ial deposit insurance system would bring about moral
hazard in financial institutions, thereby impeding earl y financial reform. We would appreciate it if the
Japanese government could comment on this matter.
Response to Korea Q. 17 regarding deposit measure system
As is the case with Japanese banks, foreign banks, are allowed to enter other businesses by
establishing a bank holding company or a subsidiary of a bank based on the Japanese Banking Law.
The treatment of liquid deposits following the expiration of the special measure to fully insure
deposits has been one of the crucial points of discussion at the Financial Council of the FinancialWT/TPR/M/76/Add.1
Page 161
Services Agency.  Some supported full protection to prevent the settlement problem regarding
corporations and individuals, whereas some pointed out that it would increase the risk of moral hazardand that it is difficult to discriminate between liquid deposits and other deposites.  Others argued that
the settlement issue should be resolved by the speedy resolution of failed institutions and by
diversifying settlement services supplied by the private sector.
Ultimately, it was concluded that “ it could not be helped to take a temporary measure for liquid
deposits, until the speedy resolution of failure and diversification of settlement services in the privatesector are ensured, so that the financial system is not seriously affected by the difficulty in
settlement”. A period of two years was considered appropriate for the temporary measure.
This temporary measure was adopted based on the need for a transitional period until information
regarding deposits of financial institutions, which is necessary for the speedy resolution of failed
institutions, could be sufficiently prepared.
Korea Question 18
According to para 48 (page 96), in Japan's GATS schedule of specific commitments, "the deposit
insurance system does not cover deposits received  by branches of foreign banks."  Is there any
specific reason for excluding the deposits received by branches of foreign banks from the coverage of
the deposit insurance system? Also, "commercial presence, as a juridical person established in Japan,is required for investment trust management services." Are branches or affiliates of a foreign
investment trust management company no t allowed to be established in Japan?
Response to Korea Q. 18 regarding deposit measure system and subsidiaries of foreign
investment companies in Japan
The deposit insurance system does not cover deposits received by branches of foreign banks because
the issue of jurisdiction makes it difficult to dispose of the failures of institutions in a timely and
appropriate manner.
As pointed out by the report of the financial council, it is necessary to reach a conclusion on the issue
of deposit insurance for branches of foreign banks in Japan by comprehensively taking into account
comprehensively the regulations over those branches, the scheme of inspection and supervision, the
resolution of failed institutions, and the significance of branches of foreign banks in Japan's financial
system.
The establishment of a subsidiary of a foreign investment trust management company in Japan has
long been allowed, and entry into the Japanese market  in the form of a branch has been allowed since
December 1998.
Korea Question 19
Restrictions on cross-border capital transactions have been removed by the revision of the Foreign
Exchange and Foreign Trade Law in April 1998. Does the revision allow cross-border transactions
under Mode 1 and 2 in the GATS? Are there restrictions on Japanese nationals' investment in
overseas securities? If so, please specify them. Does Japan intend to abolish them?
Korea Q. 19 regarding restriction on cross-border transactions
Regarding market access in the financial sector, in the Fifth Protocol to the GATS, Japan made a
commitment to abolish all restrict ions of consumption abroad in accordance with the revision of the
Foreign Exchange and Foreign Trade Law in April 1998. Concerning cross-border transactions,WT/TPR/M/76/Add.1
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Japan has committed no limitations except for discretionary investment management services.
Therefore, at present, there are no restrictions on cross-border transactions under the ForeignExchange and Foreign Trade Law, and no restrictions are imposed on Japanese nationals' investment
in overseas securities.
Korea Question 20
As footnote 43 under para 51 (page 98) points out, Japan has made no MFN exemption in its GATS
Schedule of Commitments. It seems problematic to include "reciprocity" provisions in the BankingLaw with regard to licensing a foreign bank without making the MFN exemption. Is the Japanese
government considering abolishing the "reciprocity" provisions?
Response to Korea Q. 20 regarding banking in Japan
Although Paragraph 3, Article 4 of the Banking La w stipulates reciprocal screening procedures to
ensure reciprocity, it contains a proviso that the procedures are not applicable in cases where theywould hamper the performance of obligations under international agreements such as treaties.
(Article 2 of the Cabinet Order implementing the Banking Law)
The Korean Delegation seems to assert that the existence of the reciprocity provision per se is in
conflict with MFN under WTO.  However, given the fact that there are countries that are not members
of WTO, we believe that the reciprocity provision has not lost its significance.
Korea Question 21
According to footnote 54 under para 62 (page 100) , foreign ownership of the NTT Corporation is
restricted to less than one fifth of voting rights. Footnote 54 also mentions that restrictions on the
nationality of board members and auditors, which had been applied to Kokusai Denshin Denwa
(KDD), were abolished as a result of the company's complete privatization. Does the Japanese
Government have any plan to liberalize the limitation on foreign ownership and abolish the
restrictions on the nationality of board members and auditors of the NTT Corporation?
Response to Korea Q. 21 regarding limitations on foreign ownership in NTT
The status of NTT, including restrictions on foreign ownership on NTT, is now being discussed as
part of the broad considerations in the Telecommunications Council.
Korea Question 22
According to para 70 (page 102), the Ministry of Posts and Telecommunications (MPT) is to become
a part of the Ministry of General Affairs (MGA), "which is to be established as part of a
comprehensive administrative reform scheduled to take place on January 1, 2001."  Will the
regulations for fair competition in the telecommunications sector be transferred to the Japan Fair
Trade Commission in that case?
Response to Korea Q. 22 on who will be responsible after the reorganization of the GOJ
After administrative reform, the General Telecommunications Foundation Bureau of the Ministry of
Public Management, Home Affairs, Posts and Telecommunications will be responsible for regulations
to ensure fair competition in the telecommunications sector.WT/TPR/M/76/Add.1
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Korea Question 23
As para 73 (pages 102-103) indicates, "the NTT Corporation must, at all times, hold all stocks issued
by the East and West NTT regional companies."  As a result, foreign investors can participate in the
regional NTT Corporations only in the form of in direct investment. However, according to Japan's
Schedule of Specific Commitments, which was submitted to the WTO Basic Telecommunications
negotiations before the reorganization of the NTT,  foreign direct investment in the NTT regional
companies should be allowed up to 20%.  Please provide Japanese Government's comments on this.
Response to Korea Q. 23 regarding foreign direct investment in NTT
Japan states in its schedule of specific commitments that, "Foreign capital participation, direct and/or
indirect, in NTT must be less than one-fifth". That  is to say, Japan has committed that foreign capital
direct participation in the NTT Corporation must be  less than one-fifth and that foreign capital indirect
participation in NTT regional companies must be less than one-fifth. Therefore, para 73 in the Reportby the Secretariat is consistent with Japan's schedule of specific commitments under the GATS.
Response to Korea Q. 24
Condition of fair and effective competition in the telecommunications sector has been already
established under the Telecommunications Business  Law. Establishment of interconnection rule,
price-cap regulation for certain end-user charges, arbitration and complaint lodging are the examples.
On the other hand, the Anti-Monopoly Act stipulates the common competition rules applied to all
sector markets, and basically aims at removing the anti-competitive activities after the fact.
Korea Question 24
Para 75 (page 103) states that "telecommunications business is not exempt from the application of the
Anti-Monopoly Act." Does this mean that telecommunications business, with regard to fair
competition, is regulated by both the Telecommunications Business Law (TBL) and the Anti-
Monopoly Act?  Please explain how the two laws share the regulatory jurisdiction fortelecommunications business.
Response to Korea Q. 24
Condition of fair and effective competition in the telecommunications sector has been already
established under the Telecommunications Business  Law.  Establishment of interconnection rule,
price-cap regulation for certain end-user charges, arbitration and complaint lodging are the examples.
On the other hand, the Anti-Monopoly Act stipulates the common competition rules applied to all
sector markets, and basically aims at removing the anti-competitive activities after the fact.
Korea Question 25
As paras 119-120 (page 111) indicate, according to the Special Measure Law Concerning the
Handling of Legal Business by Foreign Lawyers, it is not allowed for the Gaigokuho-jimu-bengoshi(GJB - attorney in charge of foreign legal affairs) to employ Bengoshi. Instead, GJBs are
only allowed to establish joint enterprises with Bengoshis. Is there any clear-cut criteria for
distinguishing employment of a Bengoshi from esta blishment of a joint enterprise with a Bengoshi?
Could Japan clarify the legal nature of "joint enterprise", particularly in the context of taxation and
liabilities of the entity?WT/TPR/M/76/Add.1
Page 164
Response to Korea Q. 25 regarding joint enterprises between Bengoshi and GJB
Employment in legal terms means that the employee must obey the instructions or orders of  the
employer. The range of business for Gaikokuho-Jimu-Bengoshi is  limited to legal business other than
that regarding Japanese law. If such a Gaikokuho-Jimu-Bengoshi is to be allowed to employ a
Bengoshi, it becomes legally possible for a Gaikokuho-Jimu-Bengoshi who is not permitted to
practice Japanese law to decide the policies of business related to Japanese law dealt with by the
Bengoshi concerned and order him or her to carry out such business according to those policies. Sucha situation would cause serious problems in relation to our qualification system under which
unqualified persons are strictly prohibited from practicing law.
However, regarding the "specified jo int enterprise", no such problems arise with regards to the legal
system.
In addition, in the case of a Gaikokuho-Jimu-Bengoshi and a Bengoshi running a "specific joint
enterprise", a GJB is not allowed to perform legal buisiness which is not permitted to him or her, and
furthermore, a GJB is prohibited from inproper pa rticipation in the legal business of a Bengoshi.
The "specified joint enterprise" means that the Gaikokuho-Jimu-Bengoshi and Bengoshi run a joint
enterprise to conduct legal business based on a Kumiai contract.
Korea Question 26
In relation to paras 119-120 (page 111), what is the difference between the GJB and the "Foreign
legal consultancy" which is currently under discussion in the WTO Committee on Specific
Commitments?
Response to Korea Q. 26 regarding the differen ce between GJB and “foreign legal consultancy”
The "GJB" in legal terms refers to the title given to a person who is qualified as a foreign lawyer to
handle legal business concerning foreign law in Japan.
On the other hand, "foreign legal consultancy", which is currently under discussion in the WTO
Committee on Specific Commitments, refers to the legal business itself.
Therefore, the two are totally different in concept.
Korea Question 27
According to para 128 (page 112), "formal education institutions must be non-profit organizations,
and their commercial activities are legally limited".  Para 128 also states that the Ministry ofEducation(MOE) "has the discretion to define the scope of commercial activities." Please provide the
general criteria which the MOE applies or specific cases to clarify the scope of commercial activities.
Response to Korea Q. 27 regarding the genera l criteria applied by MOE for the scope of
commercial activities permitted to judicial school persons
The following is the list of the commercial activ ities permitted to judicial school persons who
establish universities authorized by the Education Minister. The Private School Law stipulates these
twelve activities from the Standard Industrial Classification for Japan, which is in accordance with the
International Standard Industrial Classification of All Economic Activities.WT/TPR/M/76/Add.1
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1. Agriculture
2. Forestry3. Fishing
4. Mining
5. Construction6. Manufacturing (Manufacture of weapons is excluded)7. Electricity, gas, heat supply and water supply
8. Transport and communication
9. Wholesale, retail trade and eating places (Bars, cabarets and night clubs are excluded)10. Insurance agents and brokers, insurance service institution
11. Real estate (Sales agents of buildings and houses and land subdividers and developers 
are excluded)
12. Service (Play scene is excluded)
MOE does not permit judicial school persons to engage in any commercial activities that are
considered inappropriate activities.
MALAYSIA
Malaysia Question 1
Tariff escalation remain for a number of products remain, discriminating against processed products
particularly in textiles, rubber and wood sectors.  Could Japan elaborate why this is necessary and
would there be a possibility of downward revision in the near future?
Response to Malaysia Q. 1 regarding textiles and clothing
As for textiles and clothing, Japan has made significant effort to reduce high tariff escalation. It is
very difficult to further reduce tariffs on these goods since most of the producers of these goods are
small and less competitive internationally, and further reduction on these goods could cause serious
damages to them.
However, Japan does not intend to exclude these goods from industrial tariff negotiations of
comprehensive coverage under the WTO new round with a balanced and sufficient.
Response to Malaysia Q. 1 regarding Wood sectors
As a result of UR negotiations, Japan implemented tariff reduction of 51% in terms of base rate and
tariff peak was reduced from 20% to 10%. Tariff escalation was also improved significantly. Asresults of such efforts, Japan has become one of the largest wood importing countries in the world. At
the same time, Japan's wood self sufficiency ratio dropped drastically to 21% in 1998 and Japan's
forestry and forest products industry are facing harsh situations. On the other hand, many wood
exporting countries restrict log exports and such measures exert pressures on Japan's wood industry.
Japan is deeply concerned about the fact that such unfair measures are distorting wood productsmarkets.WT/TPR/M/76/Add.1
Page 166
Malaysia Question 2
Weak domestic demand has contributed to the re duction in Japanese imports, coinciding with the
downturn in the Asian economies.  What measures has Japan taken or will take to ensure continued
strong uptake of imports to further the Asian recovery process?
Response to Malaysia Q. 2
To promote imports to Japan, we plan and implement import promotion measures such as tax
incentives and policy financing for foreign companies that establish sales bases in Japan.
Various measures are also conducted through JETRO, such as imported Goods Exhibitions.
Measures to be taken next fiscal year are currently under discussion.
Malaysia Question 3
We note that Japan's simple average applied MFN rate has increased from 5.6% in FY 1998 to 6.7%
in FY 1999 (Table lll.2 pg 38).  Could Japan provide an explanation why there was an increase and inwhat sectors have tariffs increased?
Response to Malaysia Q. 3 regarding simple average applied MFN rate
We are not aware how each figure was calculated by WTO secretariat. The main reason may be
because the applied MFN tariffs in FY1999 do not include AVEs while those of 1998 do and because
the AVEs of non-ad valorem duties are relatively very high.  (See footnote (a) on Table III.2 andparagraph 24).
Malaysia Question 4
Japan still maintains a large number of non ad valorem duties in several sectors such as textiles
(245 lines), processed food (123 lines)  and vegetable products (60).  These affect mainly processed
manufactured goods that are of export interest to developing countries.  The report noted that this
practice does not lend itself to transparency and predictability and result in imports of cheaper goods
being taxed more heavily (Box lll.1 pg 41).  Would Japan comment on whether they envisage
converting these rates to ad valorem in the near future?
Response to Malaysia Q. 4 regarding textile and clothing
As for textiles and clothing, the Government of Japan applies non advalorem duties restrictively and
selectively only for items with large market price fluctuations. Moreover, the tariff rates are set taking
into consideration the domestic and oversees price differentials and the vulnerable situation ofdomestic industries in determining whether or not non ad valorem duty is applied.
Using both ad valorem and non ad valorem duties on the part of textile does meet Japan’s WTO
obligations. Japan does not have any plan to reform this regime now.
However, Japan does not intend to exclude these goods from industrial tariff negotiations of
comprehensive coverage under a new round of the WTO with a balanced and sufficiently broad-basedagenda.WT/TPR/M/76/Add.1
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Response to Malaysia Q. 4 regarding processed food and vegetable products
Processed food and vegetable products
Instincally, ad valorem duties are proportionate to price (or value), while specific duties are
proportionate to quantity (or volume).  Ad valore m duties may amplify the effect of price fluctuations
but specific duty is more neutral against them.  Therefore, we do not think specific duties tend to be
less transparent and less predictable than ad valorem duties.  So we are not considering to convert
them to ad valorem.
Malaysia Question 5
Secretariat's report in page 92 on pharmaceuticals while highlighting certain concerns over Japan's
stringent rules, does not mention other difficulties such as the need to get local government approval
in addition to import licensing approvals.  The process involves some 26 documents.  Could Japan
explain why these cumbersome measures are necessary and whether there is a possibility ofsimplifying the procedures through a single authority?
Response to Malaysia Q. 5
In Japan, according to the Pharmaceutical Affairs Law, any party wishing to import (manufacture)
pharmaceuticals must obtain approval for each item and must also possess a  (importer’s)
manufacturer’s license for each import office (manufacturing plant) and for each item. Thepharmaceutical product’s efficacy and safety is confirmed by a process of review for approval, and
the import office’s (manufacturing plant’s) facility and the quality control system are checked out
during the licensing process. Importer’s (manufacturer’s) licenses, which were previously granted by
the Minister of Health and Welfare, have been granted by prefectural governors since 1995 with a
view to promoting the decentralization of power.
Malaysia Question 6
The section on sanitary and phytosanitary measures mentioned that there is no change in Japan's
Food Sanitation Law.  Does this mean that Japan's complex phytosanitary protocols particularly on
the import of tropical fruits will remain?  Only a few tropical fruits from Malaysia are allowed entry
for which fumigation measures are required.  New varieties have to undergo additional costly and
time-consuming scientific testing before entry.
Exports of cut flowers to Japan also face difficulties in entering the Japanese market, with stringent
quarantine procedures and inadequate airport facilities.  Has Japan adopted the FAO pest risk
analysis system which distinguished between quarantine and non-quarantine pests?
Would Japan clarify whether the above measures are applied only to the extent necessary to protect
human, plant and animal life or health and are based on scientific evidence and what steps will they
be taking to ensure that these measures are not barriers to trade.  Japan's elaboration of how theywould resolve these problems are also appreciated.
Response to Malaysia Q. 6
Under the Plant Protection Law, Japan prohibits the importation of plants which serve as hosts for fruit
flies (e.g. Bactrocera dorsalis species complex and B. cucurbitae) which are not present in Japan but
have been found in Malaysia, in order to prevent their introduction into Japan.WT/TPR/M/76/Add.1
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Such a plant quarantine measure is based on scientific evidence and consistent with the WTO/SPS
Agreement.
On the other hand, Japan approves the importation of these prohibited plants on the condition that the
exporting country has developed an effective method to prevent the invasion of pests whose import is
prohibited.
There is no precedent for Japan’s approval of the importation of tropical fruit from Malaysia assuming
fumigation treatment.  However, if Malaysia has any specific requests for lifting the import ban, Japanis ready to discuss it from a technical viewpoint.
In addition, Japan applies its plant quarantine system according to the degree of the risk for pests,
designating pests as quarantine and non-quarantine, based on the Guidelines for Pest Risk Analysis
provided by IPPC.
Malaysia Question 7
Could Japan provide a more detailed explanation why it is seeking to conclude bilateral/regional
agreements given its long-standing concerns over regional trading arrangements?
Response to Question Q. 7 from Malaysia
Please see the answer to the corresponding question from Canada.
MAURITIUS
Mauritius Question 1
At paragraph 24 of its report, Japan has indicated that it is proposing to implement tariff-free and
quota-free treatment, consistent with domestic requirements and international agreements, under its
preferential schemed, for essentially all products originating in LDCs.  Could Japan indicate which
products would be excluded from this scheme?
Response to Mauritius Q. 1 regarding reform of GSP
Japan is considering the reform of GSP including the implementation of tariff-free and quota-free
treatment for essentially all products originating in LDC.
Mauritius Question 2
Could Japan provide more information on the refo rm of its price policy for sugar since 1998
(Paragraph 96(i) of Government Report)?
Response to Mauritius Q. 2 regarding revision of sugar price policies in Japan
(major revised points)
1. Tariffs for raw sugar and refined sugar were reduced in 1998.
(15 yen/kg. →10 yen/kg., 32 yen/kg. →28.5 yen/kg.)
2. In addition, tariff for raw sugar was eliminated and tariff for refined sugar was further 
reduced in 2000.WT/TPR/M/76/Add.1
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(10 yen/kg. →0, 28.5 yen/kg. →21.5 yen/kg.)
3. The Law for Sugar Price was amended in order to reduce the domestic sugar price and
maintain and increase the demand for sugar in 2000.
Mauritius Question 3
Could Japan provide a list of major export products from the Pacific islands to the Japanese market
and indicate the level (%) of such imports as part of total imports?
Response to Mauritius Q. 3 regarding the list of major export products from the Pacific islands
Japanese major import products from Oceania (1999) are as follows: Coal (1.0%), Iron ore and
concentrates (0.5%), Petroleum gases (0.4%), Meat  and meat preparations  (0.4%), Aluminum and
aluminum alloys (0.3%).
1.  (%): the level of such imports as part of total imports
2.  Oceania: Australia, Papua New Guinea, Other Australian Territories, New Zealand, Cook
Islands (N.Z.), Tokelau Group (N.Z.), Niue (N.Z.) , Samoa, Republic Vanuatu, Fiji, Solomons, Tonga,
Kiribati, Pitcairn (U.K.), Republic of Nauru, New Ca ledonia (Fr.), French Polynesia, Guam (U.S.A),
American Samoa, American Oceania, Tuvalu, Mars hall Islands, Federated States of Micronesia,
Northern Mariana Islands (U.S.A), Palau.
NEW ZEALAND
New Zealand Questions 1 and 2
The Secretariat Report notes (page ix, para 5) that Japan remains committed to the promotion of
deregulation and improved transparency.  The Ministry of International Trade and Industry has taken
steps to evaluate the costs and benefits of trade and trade-related measures, including regulations.
1. Will these evaluations be published?
2. What further steps will be taken to promote deregulation and improve transparency?
Response to New Zealand Q. 1 regarding trancparency
The Ministry of International Trade and Industry (MITI) established “Policy Appraisal - Evaluation
Guide” in December 1999, which it began employing this year. This guide covers programs that
involve budgeting, policy financing and taxing, but does not include regulations. Based on this guide,
new programs are analyzed according to the n ecessity of administrative intervention; goals,
performance indicators and target deadlines are set; and comparisons with potential alternatives aremade (mainly qualitative analysis). From this information, MITI compiles its preliminary evaluations,
which are available on the MITI homepage (Japanese language only).
Response to New Zealand Q. 2 regarding ef forts towards deregulation and transparency
The Three-Year Program for Promoting Deregulation will expire at the end of March 2001. In order
to promote regulatory reform initiatives, the Government is to draft and adopt a new Three-YearProgram. Also, the Government is going to make  great effort to advance transparency in the
establishment of regulations, etc. through active promotion of the Public Comment Procedure forWT/TPR/M/76/Add.1
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Formulating, Amending or Repealing a Regulati on  (decided by the Cabinet on 23 March 1999),
which has been in effect since April 1999.
New Zealand Questions 3 and 4
The Secretariat Report notes (page ix, para 2) the view that sustained economic recovery can only be
achieved through more aggressive structural reform which encourages competition.  There appears to
be a gap between this assessment and recent decisions by the government to defer certain reforms in
the finance and related sectors (Secretariat Report, page xiv, para 29).
Can Japan confirm that the government remains committed to a comprehensive regulatory reform
programme, including in the agriculture and services sectors?
If so, can Japan advise when the deferred reforms will be implemented?
Response to New Zealand Q. 3 regarding regulatory reforms
Regulatory reform has great importance in promoting drastic structural adjustment of the socio-
economic situation in Japan. Therefore, the Government of Japan is surely implementing The Three-
Year Program for Promoting Deregulation (further revised on 31 March 2000). This program consists
of a wide-ranging list of deregulation plans in 16 areas as well as an introductory chapter that
describes basic principles of regulatory reform. The Government is also to compile a new Three-Year
Program for the Advancement of Regulatory Reform to advance the initiatives further.
Response to New Zealand Q. 4 regarding ongoing regulatory reforms being pursued by the
Government of Japan
The Government of Japan is currently pursuing regulatory reforms in various sectors.
As regards the deposit insurance, the Japanese Government decided to postpone the termination of
special measures to fully protect deposits by one year (until the end of March 2002) and also decided
that liquid deposits would be fully protected for another year (until the end of March 2003). This
decision was made because of the need to build a firm financial system by grasping the conditions ofsmall and medium sized financial institutions and ensuring that those conditions are improved until
the country’s economy is fully stabilized. As regards the entry of non-financial groups into the
banking business, FRC and the Financial Services Agency issued in August 2000 basic principles and
operational guidelines regarding the licensing and supervision of new types of banks, including
entrants and entries by non-financial entities, and is committed to promptly reviewing applicationswhen submitted.
A bill to perform the pension system was enacted in  March 2000. As the result of pension reform, the
Government believes that the premium rates of the Employee’s Pension Insurance in the future will be
restrained to approximately 20% of annual income and the system will be kept stable in the long run.
In the corporate tax area, introducing a system for consolidated taxation and a system for corporate
spin-offs and corporate splits are being examined.
New Zealand Question 5
The Secretariat notes (page xi, para 17) that Japan continues to bring its standards into line with
international standards, and has taken steps to ensure acceptance of foreign test data and conformity
assessments.WT/TPR/M/76/Add.1
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What further steps will be taken to bring existing non-conforming standards into line with
international norms and over what timeframe will this occur?
Response to New Zealand Q. 5 regarding SPS
Regarding Food Sanitation Law, Japan is making constant efforts to ensure that it conforms to the
international standards outlined in Codex and elsewhere.
Regarding pharmaceutical products and medical devices, Japan has adopted the ICH guidelines (for
pharmaceuticals) and the GHTF guidelines (for medical devices) in order to integrate internationalstandards into the Japanese system. In terms of co smetics, Japan participates in the CHIC meetings.
We are also currently promoting the GMP and GLP mutual recognition system with the EU.
It has become mandatory to review Japan Agricultural Standards (JAS) every five years and consider
international standards in the establishment, revision and abolishment of JAS under the Law
Concerning Standardization and Proper Labelling of Agricultural and Forestry Products (the JAS
Law) which was revised in July 1999, and MAFF is currently engaged in reviewing JAS.
The MITI has been conducting harmonization with international standards for technical regulations
and certification systems based on the Three-Year Deregulation Promotion Plan. The adoption of
“performance-based standards” for technical regulations is currently underway.
New Zealand Questions 6 and 7
We note that no data was available on the percentage of standards or regulations under the Food
Sanitation Law, Building Standard Law, or relating to Japan Agricultural Standards, which
correspond to international standards (Secretariat Report, page 54, table III.6).  These standards and
regulations have a significant effect on market access.
Q. 6. Will the Japanese authorities be able to complete this information, and if so when?
Q. 7. If not, we would be grateful to know why this data is not available.
Response to New Zealand Q. 6 and Q. 7 regarding Standards
(Japan Agricultural Standards)
According to the latest survey conducted in October 1998, the percentage of Japan Agricultural
Standards (JAS) on food items that corresponds to Codex Standards was about 38%. It has become
mandatory to review JAS every five years and to consider international standards in the establishment,
revision and abolishment of JAS under the Law Conc erning Standardization and Proper Labeling of
Agricultural and Forestry Products (the JAS La w) which was revised July 1999. MAFF is currently
engaged in reviewing JAS.
Ongoing establishment and review of ISO Standards on wood products will be completed in 3 to
5 years. Therefore, the data on the percentage of all Japan Agricultural Standards including wood
products which correspond to international st andards is not available as of today.
(Food Sanitation Law)
Unfortunately, we do not have data which shows to what degree the standards and regulations under
the Food Sanitation Law conform to corresponding standards of foreign countries. However, Japan isWT/TPR/M/76/Add.1
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a member of international organizations such as the WTO and Codex, and constantly strives to
harmonize its standards and regulations with relevant international standards.
(Building Standard Law)
Japan does not have data concerning harmonization of the Building Standard Law (BSL) with
international standards. Japan is, however, making efforts to harmonize the BSL with international
standards, taking such opportunities as the amendment of the BSL in 1998.
New Zealand Question 8
We welcome steps taken by the Japanese Fair Trade Commission to increase competition including
the abolition of a number of exemptions from the Anti-Monopoly Act.  We note that some  exemptions
still remain.
What steps are being taken to remove the remaining exemptions and over what timeframe will this
occur?
Response to New Zealand Q. 8 regarding FTC
In recent years, all of the anti-monopoly exemption systems have been reviewed based on series of
Cabinet Decisions, and were settled accordingly (except for the resale price maintenance system).
As a result, the number of anti-monopoly exemption systems has decreased from 89 systems under
30 laws in March 1996 to 22 systems under 16 laws in June 2000.
The JFTC is considering whether to abolish the resale price maintenance exemption system for
copyright works in order to reach a conclusion on the issue by the spring of 2001.
New Zealand Question 9
The Secretariat's Report notes that recent regulatory changes in the legal sector have resulted in the
relaxation of some conditions for foreign lawyers practising in Japan but there continue to be
restrictions on the types of law that may be practised by foreign lawyers in Japan.
Has consideration been given to extending the scope of practise available to foreign lawyers beyond
aspects of foreign law?
Response to New Zealand Q. 9 on the scope of practice available to foreign lawyers
No consideration is being given to extending the scope of practice available to foreign lawyers beyond
aspects of foreign law.
New Zealand Questions 10, 11 and 12
The Secretariat's Report states that there is little foreign participation in services, including education
services.
Q. 10. Has Japan given consideration to expanding market access opportunities for foreign
education services providers as a means of providing the flexibility it seeks in the education sector?
Is Japan for example looking to establish systems for formal recognition of degrees/qualificationsearned by Japanese students at "other schools" (kakushu gakko)?WT/TPR/M/76/Add.1
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Q. 11. Do professional bodies in Japan recognise qualifications gained overseas for the purposes of
registration, certification and licensing?
Q. 12. How does the Japanese Government encourage students to study overseas in order to have
access to a wider range of educational opportunities and develop new skills?
Response to New Zealand Q. 10 regarding expanding market access opportunities for foreign
education service providers
In order to provide formal university education in Japan, a party has to establish a school judicial
person authorized by the Ministry of Education, and then the judicial person has to establish a
university authorized by the Ministry of Education (MOE). This process is required for all parties,
regardless of  nationality.
MOE has simplified and given flexibility to the authorization procedure so that at any time
universities can take their own initiative in order to keep up with the progress of academic researchand the change in the needs of society. However, the authorization system itself is indispensable in
terms of assuring the quality of education and research in universities in Japan, and this system is
applied not only to foreign providers but also to all domestic providers under the principle of National
Treatment.
MOE is studying the possibility for Japanese universities to recognize credits and degrees acquired
through distance education given by foreign universities with the use of Internet or other
communication measures to cross national borders.
At present, branch schools of foreign universities in Japan do not have the authorization of MOE as
Japanese formal universities and therefore cannot confer degrees under the Japanese education
system. However, as to the eligibility to enter graduate schools in Japan, Japanese graduate schools
can admit graduates of those branch schools through the examination of their individual ability.
Furthermore, needless to say, those branch schools can, under their own initiative, seek authorization
of MOE by establishing school judicial persons and universities under the Japanese education system,
and, if authorized, are treated exactly the same as other Japanese universities.
Response to New Zealand Q. 11 regarding the legal services
For example, the Japan Federation of Bar Associations (Nichibenren) registers the qualifications of
Gaikokuho-Jimu-Bengoshi (GJB) and the Japan Federation of Certified Public Accountants registersthe qualifications of C.P.A. of other countries, However, in principle, professional bodies in Japan do
not have the right to register, certify and licence qualifications gained overseas.
Response to New Zealand Q. 12 on what measures the Government of Japan takes to encourage
students to study overseas
The Ministry of Education (MOE) has systems to dispatch students abroad such as the Student
Dispatch System to Asian Countries and the Short-term Student Exchange Promotion Program
(Outbound). In FY 2000, MOE started a new student ex change program, The Japanese Funds-in-Trust
for the Promoting of International Co-operation and Mutual Understanding.
Moreover, MOE is supporting students who wish to study abroad with scholarships from foreign
governments by cooperating with foreign embassies in Japan in the process of recruiting and selectingstudents.WT/TPR/M/76/Add.1
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New Zealand Questions 13 and 14
While most imports to Japan are either duty free or subject to low tariff rates the agriculture sector
remains highly protected from foreign competition.  The Secretariat Report notes (page 83, para 9)
that many agricultural subsectors, including dairy products, benefit from relatively high levels of
MFN tariff protection, and in addition are subject to  a number of tariff peaks.  For example, 90% of
the tariff lines under HS Chapter 4 (which includes dairy products) are subject to tariff peaks and
60% are subject to non-ad valorem tariffs.
New Zealand continues to be concerned with the excessive use of specific duties in agriculture, which
lead to very high ad valorem equivalent tariffs, up to 987.3% and often over 300%.
Q. 13. What consideration has Japan given to the impact of these high specific duties on end-users,
both processors and consumers?
Q. 14. How does Japan justify the disproportionate impact of specific duties on levels of protection
afforded to the agricultural sector?
Response to New Zealand Q. 13 regarding the impact of high specific duties on end-users
Specific duties are transparent and predictable for importers, because the amount of the tariff can be
calculated easily regardless of price fluctuations, which is especially so for products with large price
fluctuations, such as agricultural products.  Furthermore, we consider that end-users, both processorsand consumers, merit from these specific duties due to fewer price fluctuations.
Response to New Zealand Q. 14 regarding protection of the Japanese agricultural sector
Intrinsically, ad valorem duty is proportionate to price while specific duty is proportionate to quantity.
Ad valorem duty may amplify the effect of price fluctuations while specific duty is more neutral to
them.
Therefore, generally speaking, specific duties are suitable for those goods where prices tend to
fluctuate, such as agricultural products.
Ad valorem duty is one of the forms of duty, and the form of duty that is implemented on a certain
product is a decision to be taken by each government, which takes into account the characteristics of
that product.  Japan believes that there is no direct relation between the form of duty and the level of
protection.
New Zealand Question 15
Tariffs are generally low in the forestry sector, however the tariff structure discriminates in practice
against certain coniferous species (notably the 4.8% tariff on radiata pine and some other coniferous
woods) while other coniferous species (for example douglas fir) enjoy duty-free entry to Japan.
Can Japan explain the economic justif ication for this tariff differen tiation, when it is prepared to
grant duty-free access to substantial quantities of woods from the other coniferous species (such asdouglas fir)?
Response to New Zealand Q. 15 regarding tariffs on lumber
The GATT panel on Japan's tariff on Spruce-Pine-F ir lumber has concluded that GATT left wide
discretion to the Members in relation to the classification of goods and that it was not inconsistentWT/TPR/M/76/Add.1
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with the General Agreement to impose different tariffs on goods according to different domestic
circumstances.
As for Japan's tariff on Spruce-Pine-Fir lumber, Japan imposes a certain level of tariff because
imported Spruce-Pine-Fir lumber strongly competes  with domestic Spruce-Pine-Fir lumber, which has
an extremely low price/cost ratio.
Again, Japan's tariff on Spruce-Pine-Fir lumber does not discriminate against any particular countries'
products.
New Zealand Questions 16, 17 and 18
Japan’s regulations for enforcing phytosanitary controls mean that, by default, action is taken against
pests on imported produce that do not meet the FAO definition of ‘quarantine pest’, if the pests are
not included in a schedule, even if those pests are present in Japan and not under an effective
mandatory official control programme.
Q. 16 Does Japan have any plans for reviewing its enforcement regulations to make them more
flexible, for example by listing pests against which action is taken rather than listing on the schedule
the 63 ‘non quarantine’ pests against which no action is taken?
Q. 17 Can Japan confirm that any changes which may be introduced will be applied in a way which
is transparent and does not have the effect of discriminating arbitrarily among supplying countries?
Q. 18 Is Japan considering a change in its definition of ‘official control’ in phytosanitary
regulations, to align with the new international definition that is likely be adopted by the Interim
Commission on Phytosanitary Measures in April 2001?
Response to New Zealand Q. 16 – Q. 18 regarding SPS
(general remark)
1. Under the Japanese plant protection system, "quarantine pests" are defined as those which are
liable to cause damage to economic plants should they spread, and which meet either of the followingconditions:
i) those that are not confirmed to exist in Japan.
ii) those that are already present in a part of Japan and for which official controls are being
undertaken.
The above definition is based on international standards provided by the International Plant Protection
Convention (IPPC).
2. Therefore, there is no ground for the comment made by New Zealand that our phytosanitary
regulations do not meet the FAO definition.
Response to New Zealand Q. 16
As we believe that the Japanese system for plant quarantine is currently functioning effectively, we
have no plans to change it at this time.WT/TPR/M/76/Add.1
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Response to New Zealand Q. 17
We confirm that point.
Response to New Zealand Q. 18
The definition of “official control” is now under consideration in the IPPC. Japan, along with other
parties, is actively participating in the working process for its development, and will fully take
account the new definition of “official control” when it is clearly established in the IPPC.
New Zealand Question 19
We welcome Japan’s move away from market price support to direct payments in agriculture.
However, the sector continues to be heavily supported by government and highly protected at the
border.  The Secretariat notes (page 86, para 15) that “[t]he support received by farmers in Japan
and the costs to consumers of agricultural products remain above the OECD average and have
increased since 1997”, and that high costs have forced certain food processing businesses to relocateout of Japan (page 81, para 6).
How does Japan ensure that end-users, both processors and consumers, have the opportunity to
purchase quality agricultural products at internationally competitive prices?
Response to New Zealand Q. 19 regarding agriculture
According to an opinion poll conducted by the Prime Minister’s Office in July  2000, more than 80%
of the people in Japan think that even if the price of domestic food is higher than imported food, Japan
should produce as much food as possible and make efforts to reduce costs. This trend has risen
compared to the previous survey in November 1996.
The Basic Law on Food, Agriculture and Rural Areas was made based on such public opinions.
Therefore, in order to meet the expectations of the people, it is indispensable to form reasonable
prices for domestic agricultural products and to supply safe and high quality food in a stable manner
based on the Basic Law by implementing the following measures;
Creation of a pricing price policy which ensures price formation that appropriately reflects
supply/demand situations and market evaluation of quality.
Enhancing productivity by changing the agricultural structure.
New Zealand Questions 20, 21 and 22
New Zealand is concerned at the consistently low quota fill rate for dairy products. We note the
Secretariat’s comment (page 42, para 28) that “[t]he quota allocation method tends to be intricate”.
“In the case of agricultural products, …[s]ome qualification requirements for applicants are
stipulated taking into account the characteristics of the product and the market, with a view to
ensuring that the licensed goods are supplied to end users.”
Q. 20 Can Japan explain the process it went through in “taking into account the characteristics of
the product and the market” in designing the qualification requirements for dairy product quota.
Q. 21 What steps is Japan taking to ensure that administration of the tariff quotas enables end-users
to be able to obtain the quantity and specification of imported dairy product that they require?WT/TPR/M/76/Add.1
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Q. 22 What further steps does Japan intend to take to improve the transparency of its tariff quota
administration in dairy and to facilitate quota fill?  For example, what steps is Japan proposing totake to fill the quota  for Skim Milk Powder for the School Lunch Programme?
Response to New Zealand Q. 20 regarding tariff quotas on dairy products
Although qualification requirements for the dairy products quota differ by quota, in the case of
skimmed milk powder provided for school lunches, fo r example, the requirement is that the product is
truly intended for the consumption in school lunches.
Response to New Zealand Q. 21 regarding tariff quotas on dairy products
Japan applies tariff quotas on dairy products in a fair and transparent manner consistent with Japan’s
tariff schedule, and we think that the current administration adequately responds to the various
demands of end-users.
Response to New Zealand Q. 22 regarding tariff quotas on dairy products
The tariff quota administration in Japan is transparent enough to respond to domestic demand. The
principal reason for the relatively low rate of quota fill of Skim Milk Powder for the School Lunch
Program is the decline of demand due to the decrease in the number of children in recent years
compared with the base period in Japan.
New Zealand Question 23
The Secretariat Report notes (page 82, para 8) that under the new Basic Law on Food, Agriculture
and Rural Areas, the government plans (inter alia) to expand the scale of production and improve
agricultural infrastructure to raise the productivity of the sector, and develop and disseminate
technology to improve the quality of products.  The Report also notes (page ix, para 2) that “the view
is taking hold that a sustained economic recover y can be achieved only through more aggressive
structural reform that enhances competition”.
Q. 23 Does Japan also apply the notion of “enhancing competition” to the agricultural sector?
How does Japan plan to raise productivity and improve technology in the agricultural sector in this
regard?
Response to New Zealand Q. 23 regarding agriculture
Japan intends to apply the notion of “enhancing competition” to the agricultural sector in the
following context.
The Government of Japan is conducting agricultural policy reforms to establish new policies for the
21th century. One of the fundamental principles of the new basic law is to promote the sustainable
development of agriculture by measures such as establishing desired agricultural structure and
ensuring price formation which reflect appropriate market evaluation.    This approach is consistent
with structural reforms that enhance competition.
As for raising productivity and improving technology, relevant measures provided for in the Basic
Plan for Food, Agriculture and Rural Areas (adopted by the Cabinet in March 2000) include the
following:
(1) Establishing the desired agricultural structure and developing of farm management policiesWT/TPR/M/76/Add.1
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(2) Securing and effectively utilizing farmland, and improving infrastructure for agricultural
production
(3) Securing and fostering a workforce by measures such as encouraging new farmers to acquire
knowledge of agricultural technologies and management skills
(4) Developing practical technologies such as nourishing the quality of wheat, soybeans and feed
crops, and promoting research and development of innovative technologies such as genome
sequencing
(5) Setting appropriate prices for agricultural products reflecting supply/demand situations and
stabilizing farm management
New Zealand Questions 24, 25 and 26
The Secretariat notes (page 53, para 69) that “[t]he stated aims of [state] trading include: stabilising
supplies to consumers; controlling imports to assist domestic producers; and protection ofconsumers’ interests.”
Q. 24 What factors does the Agriculture and Live stock Improvement Corporation (ALIC) take into
account when choosing the type and quantity of products to import?  What weight is given to
considering consumer demand for a supply of quality, cost-effective products as opposed to assisting
Japan’s dairy producers?
Q. 25 How does ALIC ensure that consumers’ inte rests in terms of price, quality and quantity are
met for dairy products?
Q. 26 How does Japan ensure that the stated aims for STEs, as noted in the Secretariat Report
(page 53) are consistent with WTO provisions, including Article XVII of the GATT which requires
non-discriminatory treatment and adequate opportunity of competition?
Response to New Zealand Q. 24 regarding the ALIC
The Agriculture and Livestock Industry Corpor ation (ALIC) considers the demand and supply
situation in the Japanese market when choosing the type and quantity of products to import.
Specifically, factors such as domestic prices, level of stock, and seasonal consumption trends, as well
as the international market price, are taken into account.
Needless to say, the ALIC fully takes into account the consumers’ high appreciation for the quality of
domestic dairy products as well as industries’ demand for lower-priced products.
Response to New Zealand Q. 25 regarding the ALIC
The Agriculture and Livestock Industries Corporat ion (ALIC) duly responds to consumer demands by
selling imported products through an open bidding system, placing them in categories.
Response to New Zealand Q. 26 regarding state trading
The existence of the State Trading Enterprises (STE) is recognized by Article 17 of GATT. We ensure
that the activities of each State Trading Enterprise are consistent with WTO provisions by reporting
them to the working party on STEs, which reviews their consistency in respect to the relevant
provisions such as “in accordance with commercial considerations.”WT/TPR/M/76/Add.1
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New Zealand Questions 27 and 28
Tariffs on fish and fish products at the frontier can be seen to have a significant impact on prices
compared with those for domestic product.
Q. 27 Given Japan’s strong reliance on imported seafood, what purpose is served by Japan
maintaining its comprehensive import tariff regime?
A clear description of Japan’s import quota regime for certain fish and marine products is provided
in the Secretariat Report.
Q. 28 What is the basis in the WTO Agreements for a government to:place QRs on non-agricultural
commodities; impose QRs in order to avoid effe cts of disorderly trade on domestic supply and
demand permits QRs to be imposed on the fish species identified in Japan’s quota system; and avoid
adverse effects of disorderly trade on stock status of the species identified?
Response to New Zealand Q. 27 regarding Japan’s comprehensive import tariff regime
As a result of the Uruguay Round, Japan reduced tariffs on fishery products, resulting in the present
weighted average tariff rate being 4.1% on fishery products.
Japan is the world’s largest fish importing country and imports about 30% of the world fishery trade
in value.  At the same time, Japan is one of the largest fishing countries and produced about 7 million
metric tons of fish in 1998.
In order for Japan to supply fish and fish products to our people in a stable manner in the future, it is
necessary for us to maintain domestic production.  Fo r this reason, we need to maintain certain border
measure.
Response to New Zealand Q. 28 on the basis in the WTO Agreements for governments to take
actions regarding QRs
The basis is GATT Article 11(2)(c) and Article 20(g).
New Zealand Question 29
Can Japan confirm that it will eliminate tariffs and remove market access restrictions on
substantially all goods in any FTA it may negotiate with Singapore and that there will be no sectoral
exclusions?
Response to New Zealand Q. 29 regarding FTA
Japan believes that the economic agreement for a new age partnership between Japan and Singapore
must be consistent with WTO rules.
NORWAY
Norway Question 1
Japan presented a study (AIE/60) in the AIE-process of the Committee on Agriculture, which
indicated the value of multifunctionality in Japan in terms of land and water resource conservationprovided by paddy fields.  Do you have any new or updated figures in this regard?  Have you
undertaken any other studies to identify the value of multifunctionality in Japan?WT/TPR/M/76/Add.1
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Response to Norway Q. 1 regarding multifunctionality of agriculture
We have not updated figures regarding the value of the multifunctional role played by paddy fields in
terms of land conservation and water resource conservation.
We have not yet undertaken any other studies to identify the numerical value of multifunctionality.
Norway Question 2
Norway is pleased to note that Japan has taken steps to open the foreign direct investment regime and
introduced measures to further deregulation in the telecommunications sector.  Does Japan have anyplans to allow greater competition with regar d to local network access and thereby stimulate
broadband multimedia and high speed internet access?
Response to Norway Q. 2 regarding local network access
In order to promote competition in regional tele communications markets, the Ministry of Posts and
Telecommunications promotes measures such as 1)  promotion of the unbundling of the subscribers
network that is owned monopolistically by NTT, a nd 2) promotion of the introduction of diverse
network access such as DSL and FWA.
Norway Question 3
In paragraphs 85 and 89 the cabotage prohibition is mentioned.  Under what conditions will the
Minister of Transport grant exemptions from this rule?  Do any of the bilateral agreements between
Japan and foreign countries contain provisions on reciprocal access to cabotage?  If so, with which
countries?
Response to Norway Q. 3 regarding cabotage services
Permission from the Minister of Transport is granted to a cabotage service that raises no concerns
mainly from the viewpoint of national security.  No bilateral treaty contains a provision to permit
cabotage services without such permission.
Norway Question Q. 4
With reference to paragraph 90, would it be possible for foreign companies to obtain approval from
the Minister of Transport to conduct scheduled domestic services?  Are any foreign companies
engaged in such activities in Japan?
Response to Norway Q. 4 regarding approval for scheduled domestic services
It is possible for foreign companies to obtain ap proval; however, no foreign company has applied for
it.  As for the third sentence in paragraph 90 of the report, while an economic needs tests requirement
was previously contained not in the Coastal Shippi ng Law but in the Marine Transportation Law, the
requirement was abolished on 1 October 2000.
Norway Question 5
Do the conditions for obtaining Japanese certificates, as referred to in paragraph 91, differ from the
international standards as provided for in IMO regulations?WT/TPR/M/76/Add.1
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Response to Norway Q. 5 regarding cond itions for obtaining Japanese certificates
Japan ratified the STCW Convention amended in 1995, which prescribes the requirements for
certification for seafarers.  In Japan's Law for Ship Officers, the provision for issuing a certificate of
competency is based on the standards of the Convention.
Norway Question 6
Have there been any recent changes to the prior consultation system mentioned in paragraph 99?  If
so, could you please explain how the system now functions.
Response to Norway Q. 6 regarding the prior consultation system
The categories of subjects of the prior consultation system have been reviewed and procedures have
been simplified based on the agreement reached among associations related to port transport business
including shipping lines, labour unions and companies in 1997.  At present, the system is working
smoothly.
PERU
Peru Question 1
In paragraphs 2 and 3 it is mentioned that to obtain a sustained economic adjustment, a more
aggressive structural reform is needed, which w ould intensify the competition and thus reach a
reduction of costs and prices at international levels and in addition, would reduce the intervention ofthe government in the econom y. In this sense, has Japan obtained sufficiently profitable results so as
to continue with the deregulation? Will the Governm ent of Japan continue in deepening the reforms in
middle term?
Response to Peru Q. 1 regarding tariff escalation
Japan has made significant effort to reduce high tariff escalation. Japan does not intend to exclude this
matter from the WTO new round with a balanced and sufficiently broad-based agenda.
Response to Peru Q. 1 regarding the Customs Tariff Council
The Customs Tariff Council consists of various parties including producers, intermediaries and
consumers. The related ministries also consult with interested parties when they submit the request of
changes to the Ministry of Finance.  (There is no formal regulation on the issue.)
Peru Question 2
As it is mentioned in the Secretariat report, there is clear tariff rates escalation which discourage the
exports of products with a major gathered value into the Japanese market. Are there middle term
programs in Japan's Government in order to reduce the tariff escalation?
Response to Peru Q. 2 regarding tariff escalation
Japan has made significant effort to reduce tariff escalation.  Japan does not intend to exclude this
matter from the WTO new round with a balanced and sufficiently broad-based agenda.WT/TPR/M/76/Add.1
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Peru Question 3
As it is mentioned in the Secretariat report, there are procedures for tariff adjustments between the
Ministry of Finance and other interested ministries. The offered changes are investigated by the Tariff
Council, and after that the Ministry of Finance prepares the legislation to be approved by the Diet.
Peru would like to have explanations regarding the participation of the producer's corporations and
the associations of intermediate and final consumers in these decisions. Is there any regulation, which
gives the possibility to organize consultations? In this sense, in which part of the process are theyparticipating?
Response to Peru Q. 3 regarding the Customs Tariff Council
The Customs Tariff Council consists of various parties including producers, intermediaries and
consumers.  The related ministries also consult with interested parties when they submit the request of
changes to the Ministry of Finance.  (There is no formal regulation on the issue.)
Peru Question 4
On the basis of the information presented in the S ecretariat report, Japan is considering to reduce the
internal support to agriculture as it decreases the purchasing capacity (power) and the well-being of
the consumers and of the Japanese economy in general, and in addition it causes strong distortions
for the resources allowance. Is the Government of Japan taking any measures with this respect?
Response to Peru Q. 4 regarding agriculture
In Japan, domestic support to agriculture is provided from the viewpoint of ensuring stable food
supply to consumers. This is based on the result of the public opinion poll that the majority of people
prefer domestically produced food while recognizing the need to reduce the production costs.
Moreover, one of the aims of domestic support is to fulfill the multifunctional role such as
conservation of national land and water resources through maintenance and development of domestic
production. The domestic support is thus provided not only for the re-distribution of resources, butalso for the externalities that farmers create.
In accordance with the basic thoughts of domestic support noted above, the Government has been
reducing the administered support prices for major agricultural products with a view to returning
benefits accrued from the improvement in productivity as much as possible to consumers. As a result,
“Amber” measures which are subject to reduction commitment decreased by 4.8% from3,329.7 billion yen in 1996 to 3,170.8 billion yen in 1997.
In addition, based on “The Basic Law on Food, Agriculture and Rural Areas” enacted in July 1999,
the Government is introducing more market-orientated price policy, in order that agricultural prices
will appropriately reflect he supply/demand situations and the quality of the product, which in turn
will promote the agricultural production that will respond to the needs of consumers.
Finally, along with the review of price policies , the Government is introducing the management
stabilization programmes in order to mitigate the effects that price fluctuations impose on farm
management.WT/TPR/M/76/Add.1
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Peru Question 5
On the basis of the information presented in the Secretariat report, is it considered that these
measures, among them, a program of support for dire ct income instead of programs of support for
prices, will be effective/efficient to redress the distortions and increase the competition? Could Japan
indicate if any studies for quantifying the price reduction have been already made?
Response to Peru Q. 5 regarding price policy changes
Japan has been implementing reviews of the price policies for main agricultural products such as rice,
wheat and soybeans, so that prices appropriately reflect the real supply/demand situation and market
evaluation of quality from the viewpoint of prom oting agricultural production that meets consumer
demands.
In addition Japan has introduced a safety net for farm management (in other words, direct income
support), to mitigate the adverse effects of price fluctuation.
These policy changes have been made in order to introduce market mechanisms into the pricing of
agricultural products. Japan thinks the combination of these policies is more effective than a price
support policy from the viewpoint of “redressing the distortion” and “increasing the competition.”
Such changes of policy are based on the Basic Law on Food, Agriculture and Rural Areas, which was
enacted as recently as 1999. The data requested by this question is not available yet.
Peru Question 6
Peru would like to have specific information on the conditions of accession to the official program of
training for foreign lawyers. In the same way, could Japan explain if there is any extension based on
the reciprocity within the framework of a bila teral agreement for the services, which could be
supplied by foreign lawyers in international market?
Response to Peru Question 6 regarding the situ ation for training of foreign lawyers in Japan
There are no official programs for legal training of foreign lawyers in Japan.*
There are no bilateral agreements for legal services in Japan.
SWITZERLAND
Switzerland Questions 1 and 2
Q. 1 In paragraph 72 (page 55) you record that Japan is continuing to bring its standards in line
with international counterparts. Could you specify which standards, other than the ones establishedby Codex, have been of relevance for the est ablishment of the Japan Agricultural Standards for
organic plant products and processed foods made from organic plant products?
Q. 2 Could you explain whether there are deviations to the Codex Standards and if yes, what they
are?
                                                     
* Note:  Page 110, paragraph 118, the "official programs for a legal apprentice" refers to an official
legal programme for a person who passed the Japanese bar examination.WT/TPR/M/76/Add.1
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Response to Switzerland Q. 1, Q. 2 regarding Standards
Japanese Agricultural Standards of Organic Agricultural Products and Organic Agricultural Product
Processed Foods have been established based on Codex Guidelines for the Production, Processing,
Labeling and Marketing of Organically Produced Foods.
Switzerland Question 3
We understand that the JAS Organic Standards only apply for organic plant products and processed
foods made from organic plant products. On its last session (May 2000) the Codex Committee onFood Labelling (CCFL) has agreed to advance the Draft Guidelines for the Production, Processing,
Labelling and Marketing of Organically Produced Foods (livestock production) to Step 8 (adoption
as a Codex Standard). In this regard could you provide us with the information on whether Japan is
considering to extend its standards to livestock production as well? If yes, are there any major
deviations from the Codex Standard to be expected? Please specify.
Response to Switzerland Q. 3 regarding the JAS
Japan would like to consider the necessity of standardization for organically produced livestock
products based on the opinions from relevant groups,  including producers, distributors and consumers.
If standardization is deemed necessary, the JAS standard for organically produced livestock products
will be developed based on the Codex guideline.
Switzerland Question 4
In paragraph 82 (page 57) you mention that an inspection certification and a labelling system for
organic food has newly been introduced under the am endment of the JAS-Law. Could you give us a
detailed description of this system with regard to the import of foreign products?
Response to Switzerland Q. 4 regarding JAS
The way to attach organic JAS Mark labels to imported organic foods in Japan is as follows:
(1) The importers certified by a Registered Certification Organization attach the organic JAS
Mark labels to organic agricultural products and organic agricultural product processed foods, graded
under the grading system recognized, on the Ministerial Ordinance, to be equivalent to the JAS
system and accompanied by a certificate of grading i ssued by the governmental organizations or those
designated quasi-governmental organizations of the country concerned.
(2) The foreign producers or manufacturers certified by a Registered Foreign Certification
Organization (limited to organizations whose office is located in a country recognized, on the
Ministerial Ordinance, to have a grading system equivalent to JAS system) carry out grading in
accordance with the JAS standards and attach the organic JAS Mark labels to their products.
(3) The foreign producers or manufacturers certified by a Registered Certification Organization
in Japan carry out grading in accordance with the JAS standards and attach the organic JAS Marklabels to their products. (In this case, data of inspection and certification prepared by a foreign
organization which fulfills certain requirements can be used for certification of the producers or
manufacturers.)WT/TPR/M/76/Add.1
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Switzerland Question 5
As we understand it will be necessary to obtain accreditation from an authorised accreditation body
in order to be allowed to label food "organic". Which are the necessary qualifications for Registered
Foreign Certification Organisations and for Registered (domestic) Certification Organisations?
Which normative documents are being used to assess these organisations (domestic and foreign)?
Will there be any differences in terms of requirements and assessment between RFCOs and RCOs?
Are the qualifications of Certifications Organisations, accredited according to ISO Guide 65 by thecompetent national authorities, considered equivalent? If no, please specify additional requirements
not covered by this guide.
Response to Switzerland Q. 5 regarding certification
Necessary qualifications for Registered Foreign Certification Organization (RFCO) and for
Registered Certification Organization (RCO), Differences in terms of requirements and assessmentbetween RFCO and RCO
The requirements and assessment between RFCO and RCO in Japan are the same.
The necessary qualifications for RFCO/RCO are as follows:
1) The qualification and number of those who are to be engaged in certification work and the
matters concerning the management of certification work must conform to the criteria provided by theMinister of Agriculture, Forestry and Fisheries;
2) The party who has made the application must be a legal person which has enough financial
foundation to carry out appropriately and smoothly the certification of the agricultural and forest
covered by the application;
3) The members or the composition of personnel by the Ministerial Ordinance of Agriculture,
Forestry and Fisheries as to the kind of the officers and legal person are not likely to impede the fair
execution of the certification;
4) If any business other than the certification business is being done, the execution of such
business must not be likely to make the certification unfair.
Normative documents to assess organizations
The normative documents are a follows:
1. Application form for the registration of RFCO /RCO (the following items are included; name
and address, location of the place of business, classification of agricultural and forest products to be
covered by the certification, area where it intends to implement the certification, number of
employees with qualifications, matters relating to the management of certification business, past
violations against JAS law and past cancellations of the registration, other business than the
certification business and its relationship with organic food) with documents mentioned below (Theserequirements are the same for RFCO and RCO in Japan.):
1. Personal histories of the personnel who are engaged in such certification must
conform to the criteria provided by the Minister of Agriculture, Forestry and FisheriesWT/TPR/M/76/Add.1
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2. The articles of incorporation or the articles of association of incorporated foundations
and a certified copy of its commercial register (or equivalent if the applicant is a legalperson established under foreign legislation)
3. Document carrying the names and addresses of the directors
4. The latest general inventory and balance sheet
5. Documents concerning the business planning and the budgeted revenue and expenses
for the fiscal year to which the date of application belongs and the next fiscal year
6. Names or trade names of the members stipulated in the corresponding item according
to the type of legal person
7. If there are any members engaging in a business among those provided in the
preceding item, outline of said business and the relationship between said business
and the agricultural and forest products to be covered by the certification.
2. Application form for authorization of the fees pertaining to the certification (following items
are included; the amounts of fees, the basis for their calculation, the method for the calculation) (This
requirement is the same for RFCO and RCO in Japan.)
3. Application form for authorization of the certification business rules (with the certification
business rules) (This requirement is the same for RFCO and RCO in Japan.)
Are the qualifications of the Certifications Organizations accredited according to ISO guide 65
considered equivalent?
Satisfying ISO Guide 65 alone is not regarded as sufficient to meet the requirements for registration
under the JAS Law. For example, while ISO Guide 65 requires “a sufficient number of personnel” as
the number of personnel of an organization. JAS has a more specific requirement, that is, two or more
persons for inspection and one or more persons for judgement of certification.
Switzerland Question 6
In Japan there is a marking system in place for voluntary standards covering about 700 products
(both in the area of industrial and agricultural products). In the Japan Industrial Standards (JIS)
marking system an accreditation system of private certification bodies was introduced in 1997. As of
today no foreign certification bodies were accred ited in Japan as JIS mark certification bodies
(page 55 of the Report by the Secretariat).
What is the rationale for such a marking scheme for voluntary JIS standards?
What are the requirements for this kind of accreditation which need to be met by the bodies applying
and how will the competence of these bodies be assessed?
Response to Switzerland Q. 6
The main purpose of the certification scheme is to provide the market with credible proof that a
product bearing the certification mark complies with th e relevant standard(s). The specific nature of
the JIS mark scheme is that it is based on a manufacturing process control in authorized factories,
rather that being based on an inspection of the products concerned.WT/TPR/M/76/Add.1
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Switzerland Question 7
Japan is about to take further steps to ensure acceptance of foreign test data and conformity
assessments. So far, as indicated in the Report by the Secretariat on page 56, this has been
implemented in the areas of telecommunications equipment (acceptance of foreign test results and
foreign certifications) and clinical data. In the area of medical devices foreign test results are only
recognised when there is a regulatory co-ope ration arrangement in place between Japan and the
exporting country in question (actually this is only the case for exports from the United States, theEuropean Union and Australia).
What are the criteria for accepting test data in the areas mentioned above? Are there other product
sectors where foreign test data is accepted? What further steps are envisaged by Japan to ensure the
acceptance of foreign test data in other product areas?
Why are foreign test data in the area of medical devices only accepted upon the conclusion regulatory
co-operation arrangement?
What are the conditions to enter into such a regulatory co-operation arrangement with the Ministry of
Health and Welfare which would allow the Japanese importer to confirm the records of the testing of
the medical device performed by the manufacturer in the exporting country?
Response to Switzerland Q. 7 regarding ISO
Japan uses the ISO/IEC Guides as a basis for the accreditation system of JIS mark certification bodies,
including the assessment of the competence of applicant bodies.
Switzerland Question 8
What is the reason why no foreign body is accredited as JIS mark certification body as of today? Are
domestic and foreign certification bodies subject to the same requirements when applying for
accreditation in this area?
Response to Switzerland Q. 8 regarding JIS
The reason that no foreign bodies are accredited as JIS mark certification bodies is that, until recently,
none had applied for accreditation.
At present, a number of bodies are undergoing the accreditation process.
Domestic and foreign certification bodies are subject to the same requirements when applying for
accreditation in this area.
Switzerland Questions 9-11
Japan is about to take further steps to ensure acceptance of foreign test data and conformity
assessments. So far, as indicated in the Report by the Secretariat on page 56, this has been
implemented in the areas of telecommunications equipment (acceptance of foreign test results and
foreign certifications) and clinical data. In the area of medical devices foreign test results are onlyrecognised when there is a regulatory co-ope ration arrangement in place between Japan and the
exporting country in question (actually this is only the case for exports from the United States, the
European Union and Australia).WT/TPR/M/76/Add.1
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Q. 9 What are the criteria for accepting test data in the areas mentioned above? Are there other
product sectors where foreign test data is accepted? What further steps are envisaged by Japan toensure the acceptance of foreign test data in other product areas?
Q. 10 Why are foreign test data in the area of medical devices only accepted upon the conclusion
regulatory co-operation arrangement?
Q. 11 What are the conditions to enter into such a regulatory co-operation arrangement with the
Ministry of Health and Welfare which would allow the Japanese importer to confirm the records ofthe testing of the medical device performed by the manufacturer in the exporting country?
Response to Switzerland Q. 9-11 regarding foreign test data
(1) Telecommunications
In March 1999, amendment to the Telecommunications Business Law (TBL) and Radio Law (RL)
with regards to conformity assessment systems in the field of telecommunications went into effect,
and the Attested Foreign Examiners/Attested Foreign Inspectors system as well as the Recognized
Approval Bodies/Recognized Certification Bodies system were introduced to accept the results of
tests conducted by foreign testing laboratories and the results of conformity assessments performed by
foreign certification bodies, respectively.
The Ministry of Posts and Telecommunications (MPT) has recognized two foreign testing laboratories
as Attested Foreign Examiners/Attested Foreign Inspectors. Certification of Attested Foreign
Examiners/Attested Foreign Inspectors is performed in accordance with the provisions of Article 50.3
of the TBL/Article 24.9 of the RL.
Recognized Approval Bodies/Recognized Certification Bodies are recognized in accordance with the
provisions of Article 72.3 of the TBL/Article 38.17 of the RL.
The provision of criteria for the recognition of domestic Examiners/Inspectors and criteria for
designating Approval Bodies/Certification Bodies are applied to the provisions above mutatis
mutandis .  Therefore, the criteria for the recognition of foreign testing laboratories and the criteria for
recognizing foreign certification bodies are almost same as the criteria for domestic Attested
Examiners/Attested Inspectors and the criteria for Designated Approval Bodies/Designated
Certification Bodies.
For a provisional English translation of these laws, please refer to the MPT official website at
www.mpt.go.jp/eng/Resources/. (However, the official text is in Japanese.)
(2) Medical devices
Results of tests performed by manufacturers in the exporting country will be accepted based on
Article 6 Paragraph 1 of the Regulations for imported Medical Devices Management and Quality
Control (MHW Ordinance, No. 63), when standard s for manufacturing and quality control as well as
procedures for conformity assessment are recognized to be equivalent. The importer may confirm the
records of the testing of the medical device performed by the manufacturer in the exporting country
instead of performing testing; this special provision for quality control applies only when the device
was manufactured in a country recognized by Japan under international governmental negotiations.WT/TPR/M/76/Add.1
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Switzerland Questions 12 and 13
Q. 12 From October 2000, banks have been allowed to provide insurance services through
subsidiaries. Is it also possible for an insurance company to provide banking services through a
subsidiary (§47, page 96)?
Q. 13 The report indicates that it is possible to access the Japanese market by establishing a branch
or subsidiary (§51, page 98). Is it also possible for a foreign bank/insurance to acquire and control a
Japanese financial institution?
Response to Switzerland Q. 12 regarding banks and insurance companies
An insurance company may possess a bank as a subsidiary, and is allowed to provide banking services
through the subsidiary.
Response to Switzerland Q. 13 regarding possibility of a foreign bank/insurance institution
owing a Japanese financial institution
It is possible for a foreign bank/insurance to own and control a Japanese financial institution.
THAILAND
Thailand Question 1
1) Para. 8, page 82 of the Report by the Secretariat: Concerning the Basic Plan for Food,
Agriculture and Rural Areas which was adopted by the Cabinet in March 2000, the Government ofJapan has indicated that the guideline under the Plan is to achieve a food self-sufficiency ratio of
45% (on a calorie basis) by 2010.
Question/Comment
- Thailand would like to know the detailed products coverage to be included in the guideline,
particularly whether rice, rice products and fruits are covered under this guideline.
Response to Thailand Q. 1 regarding  the food self-sufficiency ratio
Under the Basic Plan, food product targets for the total food self-sufficiency ratio were established,
including rice, rice products and fruits.
Product-specific targets, for the food self-sufficiency ratio were set up for rice, wheat, barley/rye,
sweet potatoes, soybeans, vegetables, fruits, milk/dairy products, meats, eggs, sugar, tea, fish and
shellfish, seaweed and mushrooms.
Thailand Question 2
Para. 8, page 82 of the Report by the Secretariat: Concerning the Basic Law on Food, Agriculture
and Rural Areas, enacted on 16 July 1999, establishing four principles/goals, one of the four is to
fulfill agriculture’s multifunctional roles.
Questions/Comments
- Thailand is interested to learn what, in practice, the Japanese Government intends to do in
order to achieve this policy objective?WT/TPR/M/76/Add.1
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- Thailand hopes that measures to be put in place by the Government of Japan in order to
achieve the above-mentioned goals will be consistent with the Agreement on Agriculture and wouldnot be used in a way that would distort trade in agriculture.
Response to Thailand Q. 2 regarding multifunctionality of agriculture
Agriculture’s multifunctional role, such as national land preservation, natural environmental
conservation, and formation of good landscapes, is fulfilled through stable agricultural production
activities in rural areas.
Therefore, the Government of Japan is promoting the development of agriculture and the development
of rural areas as the base of agricultural production so as to bring such functions of agriculture into
full play.
The following specific measures will be taken:
To promote sustainable development of agriculture:
Measures necessary for strengthening the base of farm management through the promotion of
the integrated use of farmland, improvement of agricultural production infrastructure giving
consideration to the harmony with the environment, and so on
Measures for maintaining and improving the natural cyclical functions inherent in agricultural
activities
To achieve the development of rural areas:
Measures for creating pleasant and resident-friendly rural areas with beautiful landscapes
through the comprehensive improvement of rura l living infrastructure in line with better
agricultural production infrastructure
Measures for preventing the further abandonment of cultivated land and ensuring the
multifunctional roles of agriculture in hilly and mountainous
Thailand Question 3
Para. 12-13, page 85 of the Report by the Secretaria t: Thailand maintains its view on the importance
of Japan’s market access for the imported rice
Questions/Comments
- In order to address the problem of quota administration and transparency in the allocation of
rice quotas, under the current new round of agriculture negotiations, Thailand wishes to underlinethe need for a multilateral rule and discipline in this area so as to ensure that the quota
administration is transparent and non-discriminating.
- In addition, the applied out-of-quota duty on rice which is higher than 1000% is considered
as a prohibitive tariff which needs to be eliminated in this new round of agriculture negotiations.
Does Japan has any plan to substantially reduce its import tariff on rice in the near future?WT/TPR/M/76/Add.1
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Response to Thailand Q. 3 regarding quota
Japan properly allocates its rice quota under the minimum access commitments based on domestic
demand. We believe that transparency is assured and there is no discriminately treatment of any
exporting countries. Japan's out-of-quota tariff on rice is calculated faithfully based on the difference
between internal and external prices in accordance with the WTO Agreement on Agriculture;
therefore, it is not appropriate to see it as prohibitive.
The issue of market access, including tariff quota administration and import tariffs, will be discussed
during the current agricultural negotiations. Howeve r, considering the importance of rice and rice
farming in Japan, as it is necessary to stabilize the supply/demand situation and the price of rice by
ensuring food security and to exibit multifunctionality by maintaining a rice farming, Japan has no
plans to reduce tariffs on rice.
Thailand Question 4
Para.13, page 85 of the Report by the Secretaria t: Concerning Japan’s implementation of minimum
access commitments for rice by sending a certain amount of rice imported to developing countries in
the form of economic assistance. This practice affects Thailand’s rice exports in the overseas market.
Question:
- Would the Government of Japan consider using other means of implementing minimum
access commitments that would not affect or undermine Thailand’s rice export in the future?
Response to Thailand Q. 4 regarding MA
Food aid is important contribution made by Japan for those countries in need of food.
Japan has been conducting food aid in conformity with the WTO Agreement and other international
disciplines; responding to requests from recipient countries and international organizations. To be
specific, the procedures of the FAO Principle of Surplus Disposal, such as advance notification or
consultation, are followed to avoid having food aid displace normal commercial imports anddiscourage agricultural production in the recipient countries. Also, when using rice imported under the
minimum access commitment for food aid, attention is paid to ensure consistency with the relevant
parts of the WTO Agreements including those on market access opportunity and national treatment.
Therefore, Japan believes that its food aid practices do not affect commercial rice exports from
Thailand.
Thailand Question 5
Para 15, page 86 of the Report by the Secretariat: Domestic measures and support programs
Question/Comment
- Japan is considered to be one of the developed countries that highly subsidize their
agriculture sector.  Does the Japanese Government intend to reduce the level of subsidies given toagricultural sector in the future?
Response to Thailand Q. 5
Japan has already substantially reduced the level of subsidies given to agricultural sector through
faithful implementation of the UR agreements.WT/TPR/M/76/Add.1
Page 192
According to the UR agreements concerning the domestic support, the total AMS of the base period
should be reduced by 20% during the implementation period from 1995 to 2000. As is notified to theWTO Secretariat, however, Japan’s total AMS, which was 5 trillion yen during the base period, was
already reduced to 3170.8 billion yen in the FY1997, which is considerably below the scheduled level
of 2000.
Thailand Question 6
The report did not touch on the problems confronted by foreign exporters of agriculture products
caused by Japanese SPS measures.
Does the Japanese Government ever receive any complaints from other agriculture exporting
countries regarding the Japanese SPS measures? If so, could the Japanese Government provide us
some information as to the nature of the complain and issues involved?
Response to Thailand Q. 6 regarding SPS
Government of Japan notifies other members of WTO through the Secretariat, of introduction of SPS
regulations in order to ensure their transparency. Except for the case where urgent problems arise,
GOJ studies comments of the other agriculture expo rting countries on request and takes the result of
the study into account, when adopting the regulation.
For example, in the case of sanitary measures, GOJ respects the Article 6 of SPS Agreement and has
recognized disease or pest free regions of countries, based upon international criteria or guidelines
developed by relevant international organizations. As for the phytosanitary measures, the last
September, GOJ has established standard procedures to lift import bans and published the status of
each case, in order to deal with the complaints ar isen from some exporting countries against the lack
in transparency regarding procedures and status of the lifting of the import ban.
GOJ will appropriately handle requests from other countries.
Thailand Question 7
Para. 55, page 99 of the Report by the Secretariat:  Thailand is interested in additional information
regarding the business model of “Postal Life In surance” in Japan including the administering
government agency and legislation involved. Who are the insured party?  What is the difference
between postal life insurance and life insurance in general?
Response to Thailand Q. 7 regardi ng the postal insurance system
The Postal Life Insurance (Kampo) system is operated by the Government of Japan based on the
objectives of Article 1 of the Postal Life Insurance Law (to stabilize the economic livelihood of
people and to secure their welfare by providing them with easily accessible life insurance and
annuities at the lowest possible premium through efficient operation).
URUGUAY
Uruguay Question 1
Paragraph 34 of the Government Report express that, with respect to a cooperation agreement in the
area of competition policy, Japan and the EU have reached a mutual understanding on substantive
elements of the future agreemen t. Could Japan mention  what are these substantive elements?WT/TPR/M/76/Add.1
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Response to Uruguay Q. 1
At present, we are in the process of preparing to sign a cooperation agreement and we should refrain
from mentioning the detailed substance of it. What we can explain at this junction is that the future
cooperation agreement will possibly include “notification”, “cooperation”, “coordination”, “positive
comity”, “traditional comity” and other elements.
Uruguay Question 2
Paragraph 7 of the Government Report express that Japan has benefited to a great extent from
multilateral system of world trade. Taking this into account, could Japan comment on paragraph 20
of the Secretariat Report (Summary Observations) that notes that the agricultural sector remains
relatively well protected from foreign competition, the average tariff on imports of agricultural
products remains high, tariff quotas can be intrincate, and as a consequence, the overall level of
government assistance for agriculture is well above the OECD average, and appears to have risensince 1997?
Response to Uruguay Q. 2 on protection of the Japanese agriculture sector
Japan has been faithfully implementing its UR commitments, and thus it is not appropriate to describe
Japan’s agriculture as having “high levels of protectionism.”
It is not appropriate to conclude that the protection level of agriculture in Japan is high judging only
from the OECD figures on domestic support, because OECD figures are just one of the indicators of
transfer rising from agricultural policies.
Furthermore, Japan would like to point out that there is a number of other OECD Member countries
which maintain higher tariffs compared to those of Japan.
Uruguay Question 3
Could Japan comment on paragraph 23 which express that some sectors, particularly agriculture,
have been largely exempt from liberalization efforts and therefore competition, at considerable cost tothe economy, and not surprisingly, productivity in agriculture has lagged behind that in
manufacturing?
Response to Uruguay Q. 3 regarding whether or not agriculture has been exempt from
liberalization
Japan has been faithfully implementing its UR commitments, and thus it is not appropriate to describe
Japan as not having made any effort toward liberalization and increased competition in agriculture.
Regarding productivity, the Basic Law on Food, Agriculture and Rural Area stipulates that necessary
measures must be taken to improve the productivity of agriculture.
Uruguay Question 4
Could Japan comment on paragraph 1 that notes that non-ad valorem duties are an important feature
of the tariff, particularly in agriculture and such duties which account for 6.9% of all lines can result
in high ad valorem equivalents (AVE)?  Could you also comment on the same paragraph which notes
that these AVE estimates show that 90 of the top 100 tariffs entailed non-ad valorem duties whose
AVEs ranged from 40.1% to 983.7%?WT/TPR/M/76/Add.1
Page 194
Response to Uruguay Q. 4 regarding AVE
Figures of the report by the secretariat are based on facts.
But it should be noted that the Japanese government applies non ad-valorem duties restrictively and
selecticely for the items with large market-price fluctuations and so on. Also, the tariff rates are set
taking into consideration the domestic and oversees price differentials and vulnerable situation of
domestic industries regardless of types of duties.
AVE estimates of non ad-valorem duties are high not because non ad-valorem duties are applied but
because the respective industries are vulnerable.
Uruguay Question 5
Could Japan comment on paragraph 69 which express t hat the stated aims of state trading include
stabilizing supplies to consumers, controlling imports to assist domestic producers and protection of
consumers’ interests?
Response to Uruguay Q. 5
The existence of the State Trading Enterprises (STE) is recognized by Article 17 of GATT. We ensure
that the activities of each State Trading Enterprise are consistent with WTO provisions by reporting
them to the working party on STEs, which reviews their consistency in respect to the relevant
provisions such as “in accordance with commercial considerations”.
Uruguay Question 6
Could Japan comment on paragraph 6 that express that agriculture accounts for a small and
declining share of GDP, about 1.3% in FY1998, and the OECD estimates indicate that the total
transfers to agriculture were higher than the sector’s value-added during the period 1990-1998
(Table IV.1)?
Response to Uruguay Q. 6 regarding the importance of agriculture
Japan believes that the importance of agriculture cannot be evaluated simply by its share in GDP.
Uruguay Question 7
In relation to paragraph 9, could Japan explain why the average applied MFN tariff for agriculture
(WTO definition) was 18.2% in FY2000 compared with an overall average of 6.5%, and why some
16% of duties applied to agricultural goods were non-ad valorem?
Response to Uruguay Q. 7
The current tariff level was determined through trade negotiations in the past bearing in mind
individual country’s geographic and natural conditi on as well as various situations of each product.
The out-of-quota tariff level of products, which were tariffied as a result of Uruguay Round, was set
on the basis of the difference between domestic and external price of each product.
In considering the tariff level of products, it is n ecessary to give full consideration to the importance
of maintaining agricultural production at a certain level and the multifunctional role of agriculture as
well as the past trade negotiating history.WT/TPR/M/76/Add.1
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Uruguay Question 8
Could Japan comment on paragraph 12 that notes that “According to the authorities, an increase in
rice imports is unlikely?
Uruguay Question 9
Could Japan comment on the press release dated Oc tober 20, 2000 (Kyodo News  International Inc),
which express that, according to government sources, “Japan is considering a proposal to shelve its
promise to open its rice market gradually in orde r to protect Japanese rice farmers from cheap
imports”?
Response to Uruguay Q. 8
The Secretariat Report quoted the MAFF online information which stated that “the tariff equivalents
are calculated based on the difference between internal and external prices, therefore, a large increase
in rice imports doesn’t seem to happen.”
MAFF online information explained the view that whereas Japan has set the applied out-of-quota duty
on rice as 351.17.yen/kg from April 1999 faithfully in accordance with the Agreement on Agriculture,
the tariffication doesn’t seem to cause a large increase of imports, since this tariff based on price
difference will be added to the external price when import rice enters the domestic market.
UNITED STATES
U.S. Question 1
What is the GOJ’s assessment of the prospects for economic growth in the coming year?  How does
the GOJ intend to respond if the economy slows as some analysts have projected?
Response to U.S. Q. 1
The Japanese government compiled A Policy Package for New Economic Development toward the
Rebirth of Japan in October this year. Our goal  is to place the Japanese economy on a self-sustained
recovery path and to reform the structure of the Japanese economy suitable for the 21st century. TheGovernment intends to actively implement the new package to accomplish this goal.
As for the Economic Outlook for FY 2001, we will be engaged in its estimation toward the end of this
year, and therefore, we are not in a position to present specific figures at this moment.
U.S. Question 2
The report says that some members of the Bank of  Japan Policy Board believe that low-cost of credit
acts as effective subsidies to companies, allo wing them to waylay their problems and continue
operations.  Please provide more information about the types of low-cost credits that are provided.
Specifically, who is eligible for these credits?  Are these credits directed at specific industries?  Are
any of these low-cost credits contingent on companies’ export performance?
Response to U.S. Q. 2 regarding Japan’s monetary policy
In previous Monetary Policy Meeting held by the Ban of Japan, some members have pointed out that
the zero-interest rate policy might reduce corporate incentives to promote structural adjustment, as
mentioned in the U.S. question.WT/TPR/M/76/Add.1
Page 196
However, the Bank of Japan has never discussed the relationship between the corporate structural
adjustments and the “low-cost credit system”, the meaning of which is not clear to us.
The Bank of Japan conducts monetary policy with the primary attention being given to the economic
conditions as a whole.
U.S. Question 3
Footnote 12 of paragraph 10 states that it is expected the GOJ will have to inject further funds into
various corporations in order to grow the econom y.  The Export-Import Bank of Japan (JEXIM) is
mentioned as one of the possible companies that wo uld need such “subsidies.”  Please explain the
means through which JEXIM would receive an inject ion of funds.  What companies or industries
would be eligible for funds from JEXIM?
Response to U.S. Q. 3
The question states that the GOJ will have to inject additional funds into public entities "in order to
grow the economy."  We are afraid that this statem ent is induced by an inaccurate footnote mentioned
in the secretariat report.  The JEXIM, or its successor, the Japan Bank for International Cooperation
(JBIC), has never received such injection of additional funds in the context of the ¥5 trillion subsidies
for state-run infrastructure not for any other project announced by the GOJ in 1999.  Furthermore, the
JBIC will not receive such funds in the near future.  Therefore, no industries or companies benefitfrom such funds from the JEXIM or the JBIC.
U.S. Question 4
The Industrial Revitalization Law (IRL) was only briefly mentioned in this report.  Can the GOJ
please provide more details about the IRL and its im plementation, as well as its effects on trade or its
expected effects on trade?  Which industries have received funding from the IRL?  Are there plans to
revise and/or build on this law?
Response to U.S. Q. 4 regarding the Japanese IRL
The Industrial Revitalization Law (IRL) facilitates the efforts by the firm to re-allocate and re-utilize
management resources, through such measures as reducing procedural and tax burdens on corporate
restructuring. The following measures are available to any firm, regardless of its business sector, as
long as its business-restructuring plan meets the conditions clearly stipulated by the IRL.
- Exemptions of Commercial Law requirements in regard to administrative procedures
associated with divestiture and goodwill transferring
- Simplification of inspection requirements  in the case of investment in-kind
- Introduction of the system for transferring debt in a package
- Raising the upper limit to the amount of preferred stock in the case of debt for equity swaps
- Support for management buy-outs and employee buy-outs by facilitating stock purchases by
managers or employees
- Tax measures such as providing a longer period to carry forward loss (increase from 5 years
to 7 years), reducing the Registration and License Tax, accelerating depreciation allowances
(18%-30%),and deferring the transfer tax.WT/TPR/M/76/Add.1
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The IRL includes no measures on imports or exports. Although the IRL is expected to contribute to
overall productivity growth, we expect that it will have no effect on trade.
As of Nov. 14, 2000, the IRL as been applied to 57 business restructuring plans. As the IRL is not a
sector-specific law, applicant firms belong to various business sectors: manufacturers (including steel,
machinery, textile and food processing) and services (including banking, transportation and
broadcasting)
There is no plan to revise and /or build on this law.
U.S. Question 5
We commend the efforts of Japan’s corporate sector to restructure and regain profitability.  What is
the GOJ doing to support and foster these efforts,  particularly to encourage steps to trim excess
capital in certain sectors, including steel, and boost low capacity utilization rates?
Response to U.S. Q. 5 regarding what efforts are being made by the Government of Japan to
support corporate restructuring
The Japanese Government has been facilitating corporate restructuring through the Industrial
Revitalization Law and through such measures as removing the ban on holding companies and
revising the corporate law. These measures are not sector-specific. (Firms in the sectors mentioned
above can apply for these measures.)
U.S. Question 6
In 1999 the Development Bank of Japan (JDB) ext ended credit to several steel companies when
Japanese private commercial banks significantly reduced lending to industrial clients, including
integrated steel producers.  Such lending raises concerns about government financing to mature
private industries.  Can you provide us with info rmation about these loans and what role the JDB
continues to play in financing the steel industry and other mature industries?
Response to U.S. Q. 6
In 1999 the Development Bank of Japan (DBJ) loaned 29 billion yen to the steel industry. However,
this represents a significant reduction compared to 1998.
The role of the DBJ is to supplement market-based finance for the purpose of supplying public
goods/quasi-public goods or encouraging the private sector to supply public goods/quasi-public goods
through providing policy-based finance and it is not a main concern for the DBJ loan programs whichsector the debtor belongs.
U.S. Question 7
The report states that with reference to cartels in Japan “...the number of exemptions under the AMA
(and other laws) dropped from 89 in 1996 to 22 in 2000."  In the footnote to this sentence, it says that
“cartels on exports by exporters and trade associat ions” are one of the remaining 22 exemptions.”
Please provide details about how this sort of cartel operates, including which exporting industries are
exempt.  Has the GOJ (or the Japan Fair Trade Commission) written any studies on said cartels?WT/TPR/M/76/Add.1
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Response to U.S. Q. 7 regarding export cartel
Export cartels under the Export and Import Transact ion Law are exempted from application of the
Anti-Monopoly Act in cases where exporters and exporters’ trade associations need to organize export
cartels in order to make export transactions methodical.
There have been no export cartels under the Export and Import Transaction Law since Jan 1999.
U.S. Question 8
The GOJ has traditionally supplied subsidies for th e Employment Adjustment  Subsidy program (EAS)
under which subsidies are for “...financial subsidie s to help companies overcome temporary demand
shortfalls.”  We are concerned by this program, as it does not stimulate either new employment
creation nor facilitate the movement of workers out of declining sector and into new industries.
Moreover, the government assistance scheme for hiring by new start-ups in high unemployment areas
is very bureaucratic and cumbersome, resulting in th e fact that most of the funds allocated/budged for
this program go unspent.
U.S. Question 9
Can you please provide more information on these subsidies and give specific examples of when they
are used?  Is there a time frame under the EAS after which said subsidies will be suspended?
Response to U.S. Q. 9 regarding the Employment Adjustment Subsidy
The Employment Adjustment Subsidy is a subsidy of part of workers’ wages paid to employers who
try to secure employment of their workers. Recently, admidst socio-economic changes, sectors whose
business situations have worsened over a long-term period due to structural factors are excluded from
the Employment Adjustment Subsidy. This exclusion is performed in line with the policy that it is
important not only to maintain employment but also to promote labor mobility. This subsidy is being
discussed in relevant deliberative councils in the review of the direction of employment policy in
response to changes in economic and industrial structures.
U.S. Question 10
In 1999, the GOJ announced plans to reform the public pension system, including increases in
contribution, reductions in benefits and an increase in the age eligibility.  Have these plans been
clearly articulated since then?  In particular, has the GOJ decided how to fund a revamped public
pension system that could include even more government subsidies?
Response to U.S. Q. 10 regarding pension reform
A bill to reform the pension system was enacted in March 2000. As a result of pension reform, the
Government believes that the contribution rate of the Employee's. Pension Insurance in the future will
be restrained to approximately 20% of annual income and the system will be kept stable over the long
term. The Government thinks that raising the shar e of government outlays to the basic pension from
one third to 50% has to be considered together with the measures to find stable financial sources,
because an enormous amount of financial resources will constantly be needed under the severe
financial conditions.WT/TPR/M/76/Add.1
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U.S. Question 11
We note that GOJ plans to introduce defined-contribution pension plans keep getting delayed.  In
addition, under the current draft bill, the limits on tax-advantaged contributions seem low,
administrative costs seem high, and there are no provisions for investor education.  What are the
prospects for passage of the bill?  Does the GOJ have any plans to consider additional revisions to
the system?
Response to U.S. Q. 11 regarding defined contribution pension plans
The bill to introduce Defined-Contribution Pension Plans was approved by the Cabinet and submitted
to the Diet on 14 November 2000. The Government will continue to make efforts to introduce the
scheme as soon as possible. It took more than two years to draft this bill after deliberation including
hearing opinions from the industrial sector, fina ncial sector and elsewhere. Thus, the Government
considers that the scheme to be introduced is the best one at this moment.
U.S. Question 12
What are the GOJ’s plans related to the establishment of private pension funds?  Does the GOJ have
plans to allow kampo and yucho to offer their own defined-contribution pension products?  If so, how
does this fit in with the GOJ’s commitment to deregu lation and to stay out of services that the private
sector can provide?
Response to U.S. Q. 12 regarding private pension funds
The Government regards private pension funds as a supplement to the public pension, and will
continue to make efforts to promote them.
In the Defined-Contribution Pension scheme, all ki nds of financial products, including kampo and
yucho, will be treated as a defined-contribution pension product. Insured persons will benefit from
competition among many financial products in the scheme.
U.S. Question 13
We welcome GOJ efforts to pursue regional trade pacts in a manner that will strengthen, not
undermine, the WTO trading system.  As noted in th eir own TPR report (para 10), Japan believes it is
indispensable to ensure that regional trade agreements are complimentary to the multilateral system
and consistent with its rules.  However, we remain concerned that Japan’s policy of protecting
sensitive sectors will hamper its ability to form agreements that will encompass substantially all tradebetween nations, as required by WTO rules.  How is Japan moving to liberalize trade in currently
protected sectors, and what liberalizing steps does Japan believe it will need to take in order to
encompass “substantially all trade” in such agreem ents with trading partners?  Will Japan include
all agricultural products in future FTA pacts?  What transition periods are being considered?  What
other countries is Japan exploring FTAs with?
Response to U.S. Q. 13 regarding FTA
- Regarding an agreement with Singapore, such matters as steps to be taken in order to
encompass "substantially all the trade" and transition periods would be decided in future negotiations,
which are to commence next January, ensuring consistency with WTO rules.WT/TPR/M/76/Add.1
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- As to agreements with other countries, only a decision to negotiate with Singapore has been
taken so far. As has been said in our governmental report, the possibility and desirability of free tradeagreements are being examined by non-governmental sectors in the case of Korea and Mexico.
U.S. Question 14
The use of administrative guidance makes the operation of significant parts of Japan's trade policy
non-transparent.  While the introduction of public comment procedures prior to the adoption of some
regulations has improved the transparency of some policy making, the system is still limited in both itsapplicability and its effectiveness.  Can Japan outline its plans for expanding the public comment
procedures, making it more effective, and enacting it into statute?
Response to U.S. Q. 14 on how Japan will expand its public comment procedures
It is quite essential to understand that the Government of Japan makes great effort to improve
transparency of administrative guidance based upon Administrative Procedure Law.
However, the reasons have to be clarified, if the U.S. Government insists that, “the system (public
comment procedures) is still limited in both  its applicability and its effectiveness.”
Japan continues to conduct public comment procedures for formulating, amending and repealing
regulations, and problems in the system are expect ed to be clarified in accordance with a survey on
application of the system. Therefore, no enlargement of areas or legislation of public commentprocedures are not being considered.
U.S. Question 15
How will Japan’s administrative reform plans, set to be implemented in January 2001, alter its trade
policy formulation and implementation procedures?  What will be the newly-created Cabinet Office’s
role in trade policymaking?
Response to U.S. Q. 15
Reorganization of national administrative organs will take effect in January, 2001. For example, the
Ministry of Posts and Telecommunications and the Japan Fair Trade Commission will become the
Ministry of Public Management, Home Affairs, Posts and Telecommunications, Ministry of Health
and Welfare – Ministry of Health, Labour and Welfare, Ministry of International Trade and Industry –
Ministry of Economy, Trade and Industry, Ministry of Construction and Ministry of Transport –
Ministry of Land, Infrastructure and Transport. However, the trade policy formulation andimplementation procedures will basically remain unchanged.
Generally speaking, the Cabinet Office assists the Cabinet on its important policy  matters.
U.S. Question 16
Could you clarify Japan’s intentions with regard to the introduction of “cost-benefit and regulatory
impact analyses” (RIA)?  We certainly support Japan’s adoption of an RIA and have called on Japanto introduce such a system under the U.S.-J apan Enhanced Initiative.  We note that Japan is
introducing a Policy Evaluation System, which will become effective in January 2001.
Response to Question 16 on Japan’s intentions with regard to the introduction of cost-benefit and
regulatory analysis.WT/TPR/M/76/Add.1
Page 201
In formulating regulations, based upon the prin ciple of minimum regulation, the Government of
Japan believes that the relevant ministry and administrative organisation in charge of legislative,budgeting or administrative system should examine such regulations.
The necessity, benefit and burden placed on the people by regulations have to be considered and
clarified in examination. These considerations must be conducted properly.
Japan continues to collect information and data to evaluate regulations and implement those
evaluations that are feasible.
Furthermore, basically, public comment proced ures are applied to formulating, amending and
repealing regulations and Japan promotes appropriate implementation of this system.
U.S. Question 17
When the USG and the GOJ established the U.S.-Japan Enhanced Initiative on Deregulation and
Competition Policy in 1997, the two governments agreed that “The progress under the EnhancedInitiative will be reported to the leaders of the two countries since the strengthening of dialogue on
deregulation is based on the decision between the leaders of Japan and the United States, and the
promotion of deregulation and active implementati on of competition policy are issues of major
importance to the GOJ.”  With the Enhanced Initia tive in its fourth year, can we expect the GOJ to
fulfill this commitment by cooperating with us to write a Fourth Joint Status Report, as has been donein all previous years under this initiative?
Response to U.S. Q. 17 regarding Fourth Joint Status Report
The issue of writing a Fourth Joint Status Report will be discussed between the Government of Japan
and the US Government in due course.
U.S. Question 18
The United States has urged Japan to improve it s Customs recordation and information submission
procedures to make it easier for foreign rightholde rs to avail themselves of protection from Japan’s
Customs authorities.  Further, concerns have been raised over the need to aggressively enforce the
interdiction of infringing articles.  Please provide additional information on Japan Customs’ border
control efforts; the number of cases resulting in  imprisonment since last year and the actual
sentences; and the dollar amount of fines actually imposed.
Response to U.S. Q. 18 regarding IPR enforcement
Japan’s recording and information submission procedures are fully compatible with the TRIPS
Agreement and do not burden rightsholders with any additional procedures.  Japan’s customs
authorities are duly enforcing laws and regulations aiming at the interdiction of infringing articles.
One additional example of our efforts in border control is that we sometimes invite people in charge
of IPR matters from rightsholders as lecturers and hold training sessions for customs officials,supplying a sufficiently detailed description of infringing articles to make them readily recognizable
to customs officials.
Japanese customs disposed of 103 cases regarding the infringement of intellectual property rights
during the period from January 1999 to June 2000, three of which were prosecuted for violations of
the Customs Law.WT/TPR/M/76/Add.1
Page 202
A guilty verdict was returned on all three cases, and the defendants were punished with a 2 1/2-year
imprisonment on probation; 1.3 million yen in fines; and a 10-month imprisonment on probation witha fine of 400 thousand yen, respectively.
U.S. Question 19
The U.S. has long been concerned at the time it takes to clear goods for entry into the Japanese
markets.  Part of the delay is due to Customs procedures.  However, the principal factor is the
“hozei” system whereby all goods must be subjec ted to a complete reconciliation or “match-up”
against documents before they can be released from the bonded area.  This involves a lot of double
and even triple handling.  Is there any prospect for modifying this system in the interests of
streamlining clearance procedures (e.g., by allowing post facto reconciliation)?
Response to Q. 19 regarding border control
The reconciliation or “match-up” is required to ensure appropriate clearance.
It should be, however, part of normal business operations that an agent managing goods in its
warehouse (designated as a hozei area ) checks accuracy of handling the goods.
Since the above reconciliation requirement is within the scope of such checking operations, Japan
does not believe that the requirement itself causes an additional delay.
The Japanese Customs has been addressing trade facilitation through various measures including
simplification of customs procedures.  As the result, according to the survey conducted in 1998, the
average clearance time was 0.2 days for maritime cargoes and 0.7 hours for air-cargoes respectively.
In addition, Simplified Declaration Procedures are introduced in March 2001 as referred to in the
Secretariat Report.
U.S. Question 20
The Secretariat’s report states that complaints regarding valuation or other customs measures must
be filed within two months of importation.  In th e United States, importers have three months after
Customs makes its final decision regarding the value and duty status of an article (called
“liquidation”) to file a protest.  This final de cision by Customs may take place more than two months
after importation.  In regard to the description of  Japanese customs practice in this regard, does
Japanese Customs always make its decision (value or  otherwise) within two months of importation?
If not, does the importer have the right to file a complaint more than two months after importation inthose instances?
U.S. Question 21
Japan states that it is continuing to bring its standards into line with international counterparts.
Various industries in our country still find it difficult to identify when a standard is proposed in Japan
and do not understand the Japanese process.  Can you explain the process which Japan undertakes toadopt these international standards?  Does it incl ude a public comment period?  If so, where are
these changes notified?
Response to U.S. Q. 21
Public announcement is made to provide for a comment submission period (at least 60 days) before
establishment and revision of JIS, based on Article 4.1 and Annex 3 of the WTO/TBT Agreement.WT/TPR/M/76/Add.1
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Information is addressed to domestic and foreign readers of Standardization Journal (monthly
magazine) issued by the Japanese Standards Association.
U.S. Question 22
Also, Japan states that “some international standards are not appropriate to be adopted as JIS
because of technological progress and regional characteristics.”  The United States supports
adoption of international standards which meet the needs of an industry or government, but it is
unclear what Japan is referring to in this statemen t.  Can you please explain this statement further,
including the reference to “regional characteristics”?
Response to U.S. Q. 22
Japan is merely referring to the “flexibility” existing in Article 2.4, 5.4, and Annex 3 F of the TBT
Agreement, such as the clause “…except when such international standards or relevant parts would be
an ineffective or inappropriate means for the fulfillment of the legitimate objectives pursued, forinstance because of fundamental climatic or geographical factors or fundamental technological
problems“ as in Article 2.4. In the recent TBT Committee, as evidence of the widely shared view on
this flexibility, WTO Members, including the United States, agreed to adopt the Second Triennial
Review report, which includes a paragraph (paragraph 21), saying that “…In this regard, the
Committee recognized that Articles 2.4 , 5.4 and paragraph F of Annex 3 provided Members with theflexibility to avoid having to use inappropriate or ineffective international standards as the basis for
their technical regulations, standards and conformity assessment.”
U.S. Question 23
Japan cites that a new grading system for foreign products was introduced in June 2000.  Can you
please explain this new system and if it also applies to domestically produced products?  If not, why
not?
Response to U.S. Q. 23
Under the Japanese Agricultural Standard system, the way to attach JAS Mark labels to imported
agricultural products in Japan is as follows, and it also applies to domestically produced products:
A Registered Grading Organization in Japan or a Registered Foreign Grading Organization
(limited to the organization whose office is located in the country recognized, on the
Ministerial Ordinance, to have a grading system equivalent to the JAS system) carries outgrading in accordance with the JAS standards and attaches the JAS Mark labels to the
products;
The foreign producers or manufactures certified by a Registered Certification Organization in
Japan or a Registered Foreign Certification Organization (limited to the organization whose
office is located in the country recognized, on the Ministerial Ordinance, to have a gradingsystem equivalent to the JAS system) carry out grading in accordance with the JAS standards
and attach the JAS Mark labels to their products.
U.S. Question 24
The U.S. notes with interest that no foreign inspection bodies have been designated by MITI for
testing based on the MITI standards and certification system.  Have any foreign inspection bodiesapplied?  If so, what is the status?  If th ey were not approved, can you explain why not?WT/TPR/M/76/Add.1
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Response to U.S. Q. 24
Some of the standards and certification systems of MITI have already designated 50 foreign
conformity assessment bodies and have accepted test data or certificates since 1984.
U.S. Question 25
How does the GOJ reconcile the continued existence and possible expansion of the kampo (postal
insurance) and yucho (postal savings) systems, in light of deregulation in the financial services area?
We would also note that the report neglects to point out that these institutions are exempt from
Japan’s Antimonopoly Act and other government oversight to which private insurers are subject.
Response to U.S. Question 25 regarding  the postal insurance/saving system
The postal savings system holds around 20% of household financial assets, and this ratio has
remained stable in recent years.  Given recent growth in financial product diversity at private financial
institutions and an expansion in the scope of invest ment opportunities for depositers, it is unlikely that
there will be a sizeable increase in the outstanding balance of the postal savings system.
The Japanese postal savings system plays the public role of providing small-lot individual savers with
equitable basic financial services that are indispensable to people's lives.  They are made available all
across the country, including in unprofitable areas where private financial institutions do not operate.
Therefore, the Government of Japan is of the opini on that the postal savings system should continue
to carry out its given mission.
The Postal Life Insurance (Kampo) system operates based on the objectives of Article 1 of the Postal
Life Insurance Law (to stabilize the economic livelihood of people and to secure their welfare by
providing them with easily accessible life insurance and annuities at the lowest possible premium
through efficient operation) and enjoys vast support from the Japanese people.
The Government of Japan considers it important to fulfill the duties assigned to it by the Japanese
people, and to meet their expectations.
U.S. Question 26
The report states that “more emphasis has been placed on economic efficiency in Japan’s energy
policy, as observed in various deregulation measures implemented since its previous Trade Policy
Review.”  Can the GOJ document greater economic ef ficiency achieved as a result of deregulatory
steps in the energy sector thus far?
Response to U.S. Q. 26 regarding the liberalizing of electricity supply
On March 2000, the revised Electric Utility Industry Law was enforced, and  partial liberalization of
electricity supply at the retail level was introduced in Japan’s electricity market. Since June 2000,
three new entrants filed notifications as specific-scale electric enterprises. Furthermore there are some
companies that are considering entry this business. There will be an active trend of new entrants  inthe near future. Some public agencies enforced  public tenders for purchasing electric power.
DIAMOND POWER CO. LTD., a new entrant, made a successful bid on MITI’s public tender. The
electricity cost of public agencies that enforced public tenders compared 4 to 9% down with
electricity cost before public tender. We are now investigating the electricity cost through partial
liberalization of electricity.  Additionally, the regulated retail charge was cut 5.42% on ten electricpower companies’average. Also transmission fees were cut 7.3% on ten electric powerWT/TPR/M/76/Add.1
Page 205
companies’average. On the basis of these facts, we believe that the new system is effective for making
Japan’s electric industry more efficient.
General gas suppliers can supply gas to large-volume customers beyond their service area by
obtaining prior permission from MITI .
Other gas suppliers (other than general gas suppliers ) can also supply gas to  large-volume customers
by obtaining prior permission from MITI (in the case of entering service areas of general gas
suppliers) or prior notification to MITI (in the case of entering non-service areas).
The share of the liberalized area of the total volume of gas consumption provided by general gas
suppliers is increasing:
1995 1999
28% 33%
The above facts indicate the economic efficiency has been achieved as a results of deregulatory steps
in the gas sector.
U.S. Question 27
The Secretariat report mentions MITI’s regulatory role in the energy sector in paragraph 20.  No
mention is made, however, of MITI’s regulatory role after the GOJ reorganizes in January 2001.  The
USG understands that new regulatory bodies for electricity and gas, respectively, will be establishedin MITI.  What is the Ministry doing to ensure these bodies are fully independent of the policy and
industry promotion divisions of MITI?  What is MITI doing to ensure that the staff in these new bodies
have sufficient expertise and numbers to effectively regulate these industries?
Response to U.S. Q. 27 regarding MITI’s regulatory role
From January 2001, the Policy Planni ng Division will carry out the function of policy, the Electricity
Market Division will carry out the function of electricity regulation andthe Gas Market Division
will carry out the function of gas regulation. The Electricity Market Division andthe Gas MarketDivision will  focus exclusively on the function of regulation.  The total number of staff of these
divisions will be increased and these divisions’ expertise will be improved.  Additionally, the Agency
of Natural Resources and Energy has a certain degree of independence, so a considerable number of
this division’s staff will acquire a career in the energy sector.  These divisions will be clearly
independent in terms of funding, and the Electricity Market Division and the Gas Market Divisionwill be clearly independent from Japan’s electricity and gas market participants.
U.S. Question 28
This section implies that Japan’s electric and gas utilities are no longer full regional monopolies.
However, we are not aware that such a significant change has yet occurred.  What share of Japan’s
retail electricity and gas are provided by non-utility firms?    Given this, what evidence is there todate of any meaningful deregulation in the small portion of the market (27 percent) actually
deregulated?
Response to U.S. Q. 28 regarding the deregulation of electric and gas utilities
Since the enforcement of the revised Electric Utility Industry Law on March 2000, it has been
possible to supply electricity for special high voltage users by new entrants.  The share of theWT/TPR/M/76/Add.1
Page 206
electricity supply for the special high voltage users is about 30% of total electricity usage in Japan.
Since June 2000, three new entrants have filed notifications with MITI as specific-scale electricenterprises.  Currently, two of these three new entrants have started to operate electricity businesses,
with total generating capacity of these two new entrants at 87,200kW.
Regulations on entry and rate setting of gas suppliers for large volume customers have been partially
liberalized.
Large-volume customers can freely negotiate their gas prices with their suppliers (1995).The range of a large-volume customer (a customer whose annual contract volume exceeds a certain
level) has been expanded:
Two million cubic meters (1995)
One million cubic meters (1999)
General gas suppliers can supply gas to large-volume customers beyond their service area by
obtaining prior permission from MITI (1995).
Other gas suppliers (other than general gas suppliers ) can also supply gas to  large-volume customers
by obtaining prior permission from MITI (in the case of entering service areas of general gas
suppliers) or prior notification to MITI (in the case of entering non-service areas)(1995).
The share of the liberalized area of the total volume of gas consumption provided by general gas
suppliers is 33%(1999).
The share of the liberalized area of the total volume of gas consumption provided by other gas
suppliers (other than general gas suppliers) is 2.51%(1999).
The number of other gas suppliers (other than general gas suppliers) of large-volume gas suppliers is
5 companies, and the total volume is 189,390,000m3/46MJ.
U.S. Question 29
According to the report, Japan has promoted dere gulation in the electricity sector to promote
competition.  By doing this, the GOJ “aims to realiz e internationally comparable cost levels in 2001.”
Is this objective still within reach?  If not, does this suggest Japan must move more quickly to
deregulate this important sector?  Hasn’t liberali zation of wholesale power generation been limited to
auctions?
Response to U.S. Q. 29 regarding d eregulation in the electricity sector
MITI recognizes that structural reform, which aims to lower the cost of electricity supply through the
introduction of competition, is still incomplete and has the intention of accelerating appropriate
competition in the electricity market.
After the enforcement of the revised Electric Utility Industry Law in 1995,  Wholesale Power
Generation Auction System was introduced.  After the enforcement of the revised Electric UtilityIndustry Law in March 2000, the Overall Thermal Power Generation Auction System was introduced.
In principal, under this new system even new therma l power stations can be built by both utilities and
EPDC (Electric Power Development Company), and these projects should be tendered.WT/TPR/M/76/Add.1
Page 207
U.S. Question 30
Along with partially liberalizing the retail supply of electricity in Japan, MITI has committed to
implementing and enforcing rules on transmissi on rate calculations, fair, transparent and non-
discriminatory access to transmission lines and other terms and conditions that were established in
December 1999.  The USG, however, understands that rate calculations remain unnecessarily opaque
(and high by international standards), which is discouraging potential competitors from entering the
electricity market.  Does MITI plan to take additional steps to remedy this problem?
Response to U.S. Q. 30 regarding the electricity market
A unified rule has been stipulated by a ministerial ordinance in order to ensure that the wheeling
charge is calculated on an equitable basis and thereby exclude lopsided competition between new
entrants and utility companies.  In this way, fair  charging is ensured by making the wheeling charge
for the new entrant comparable to the transmission cost incurred by the utility company.  Before
ordinances are established, wide-ranging public comments are collected in order to increase its
transparency. It is specified that the Minister can order a transmission rule to be modified if it is
deemed to disadvantage new entrants. Moreover, the Ministry has the authority to order electricity
companies to wheel electricity for new entrants in such a situation.
In collaboration with the Fair Trade Commission of Japan, MITI has established Guidelines for Fair
Trade of Electric Market in order to ensure a  fair and competitive market. MITI also published
Guidelines on Settlement of Dispute, which allow anyone to complain of unfair trade practices to
MITI, and the case reports will be published. The other Guidelines stipulate that all  necessary
information must be discussed to new entrants in order to ensure an environment for fair competition.
GOJ is making every effort to promote equitable competition through the appropriate operation of the
existing system.
U.S. Question 31
The report notes that Japan “aims to realize internationally comparable cost levels in the gas sector
by the year 2001.”  Is this objective still within reach?  How can this objective be achieved without
establishing laws and regulations that would allow open and non-discriminatory access to both new
and existing Liquified Natural Gas (LNG) termin als, which are primarily owned by regional
electricity companies?
Response to U.S. Q. 31 regarding deregulation of the Gas Market
Structural reform of the gas market is underway w ith a view to realizing internationally comparable
cost levels in the gas sector by the year 2001. MITI is currently giving consideration to what policy
measures must be promoted to further advance this process.
Electric and gas utility laws do not regulate LNG terminals in Japan. Third party access to LNG
terminals can be secured through agreement negotiated by private enterprises.
U.S. Question 32
Foreign companies continue to be concerned that they will be tapped yet again to contribute more to
the Policyholder Protection Fund to cover future failures of Japanese insurance firms.  How firm is
the GOJ’s commitment to inject public funds in the event that the fund is again depleted?WT/TPR/M/76/Add.1
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Response to U.S. Q. 32 regarding the Policyholder Protection Fund
The Government intends to inject public funds into the Policyholder Protection Corporation, namely,
the successor of the Policyholder Protection Fund, in  the event that the costs for the protection of
policyholders with policies belonging to bankrupt insurance companies exceeds the burden of the
private sector (560 billion yen).  The budget, incl uding injections of such public fund, must be
approved by the Diet, but the GOJ will make the utmost effort to realize this.
U.S. Question 33
As referenced in paragraph 53, the Japanese postal system will become a public corporation in 2003.
What specific steps will the Government of Japan (MPT) take to ensure that plans for this transition
are devised and implemented in as open and transparent a manner as possible?  Will public hearings
be held?  Will plans be subject to public comment procedures?  Will interested foreign entities be
afforded equal opportunities to participate in any st udy groups, etc., created to provide input to MPT
during the process?
Response to U.S. Question 33 regarding the transi tion of the Japanese postal system to a public
corporation
The Postal Life Insurance (Kampo) system operates based on the objectives of Article 1 of the Postal
Life Insurance Law (to stabilize the economic livelihood of people and to secure their welfare byproviding them with easily accessible life insura nce and annuities at the lowest possible premium
through efficient operation). New legislation for the establishment of a public corporation will be
determined based on discussion in the Diet, which reflects various public opinion, in much the same
way as Postal Life Insurance products are developed and improved.
U.S. Question 34
The Financial Services Agency (FSA) has indicated that they support further transparency in and
deregulation of the insurance product and rate approval system.  What are FSA’s plans in thisregard?  Regarding the statement that “life and non-life insurance companies may enter each other’s
markets only by means of subsidiaries,” we unders tand that as of July 1, 2001, FSA will allow “direct
mutual entry” for sales of third sector insurance pr oducts.  Is this correct?  If so, how will the current
regulations be modified to allow this to occur?   What is FSA’s timeline for this?  Will foreign
companies be afforded equal opportunities to provide input into this process?
Response to U.S. Q. 34 regarding transpar ency and the entry into the third sector
As for the insurance products for corporations, the notification system was introduced in principle in
August 1999.  On the other hand, the notification system is applicable to a part of the insurance
products for individuals. FSA is considering further deregulation, taking into account the protection of
policyholders.  The processing standards are clearly stated in the Insurance Business Law and therelevant Cabinet Orders so that the highly transparent processing is conducted based on the laws.
With regard to the entry into the third sector by life and non-life insurance companies, a restriction
contained in a bilateral agreement on insurance with the U.S. (so-called “a measure to avoid radical
change”) and in the additional commitments in the fi nancial sector under the GATS is to be lifted in
January 2001.  FSA expects the insurance market in Japan to be revitalized by the new entrants intothe third sector.  “Direct mutual entry” is to be allowed from July 1, 2001, as pointed out by US.  It is
necessary for interests of policyholders to be prot ected in accordance with the nature of the thirdWT/TPR/M/76/Add.1
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sector, and FSA is planning to prepare necessary rules applicable to insurance products in third sector
by that time.
When new rules are introduced, we need to go through the public comment procedures and the
hearing in the Financial System Council. FSA is considering hearing opinions from various people,
especially the policyholders and would-be policyholders in the third sector, by following the routine
procedures with regard to the rules-making in the this sector.
U.S. Question 35
The key fact emerging from the overvi ew in this section is the remark able fact that NTT, in 1999, still
controls 87.5% of Japan’s domestic telecom revenue–despite the fact that Japan’s market has
ostensibly been fully open to competition since 1985.  We suspect that no other industrialized country
with a market open to competition has such a degree of monopolization.
U.S. Question 36
If a competitive marketplace is a goal of the Japanese government, this result would appear to
indicate regulatory failure.
U.S. Question 37
The overview notes the MPT’s dual role as promot er of the telecommunications sector as well as
regulator.  This is at the heart of our serious conc ern with Japan’s regulatory regime in this sector:
policies which are designed to promote telecommunica tions in Japan (ISDN, 3G wireless, fiber to the
home, flat-rate Internet) appear to be designed to  solidify NTT’s monopoly position in the market
rather than promoting competition.
U.S. Question 38
Since industrial promotion and regulatory impartia lity are often incompatible, almost all major
telecommunications markets have established independent regulators.  This also helps shield the
regulator from political pressure exerted by the incumbent.
Regulatory Framework
U.S. Question 39
Is Japan considering establishing an independent regulator?  If not, why not?  How does the GOJ
ensure that regulation is impartial?
Response to U.S. Q. 39 regarding independent regulators
As for an independent regulator in the telecommunications sector, the Reference Paper of the Fourth
Protocol to the GATS stipulates, "The regulatory  body is separate from, and not accountable to, any
supplier of basic telecommunications services." and Japan has abided by this rule.
U.S. Question 40
Does the GOJ have a mechanism for settling disputes among carriers or responding to carriers’
problems regarding interconnection rules?WT/TPR/M/76/Add.1
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Response to U.S. Q. 40 regarding a mechanism for settling disputes of interconnection rules
Article 39 of the Telecommunications Business Law stipulates that a telecommunication carrier may
apply to the Minister of Posts and Telecommunications for opening negotiation or arbitration in case
negotiations regarding interconnection between telecommunications carriers fails to come to an
agreement.
U.S. Question 41
How does the GOJ ensure that the policy changes it is undertaking effectively promote competition,
as envisaged?
Response to U.S. Q. 41 regarding the competit ion principle in the telecommunications sector
The competition principle was introduced in 1985 in the telecommunications sector. Since then, 8500
telecommunications operators have entered the market. Competition among carriers has been
promoted through the introduction of diverse access networks and arrangement of the interconnectionrule and deregulation of foreign ownership restrictions and market entry.
U.S. Question 42
Is the Government of Japan concerned about the way  NTT exerts its political influence to advocate
its interests, and how that affects the regulator’s impartiality?
Response to U.S. Q. 42 regarding NTT's political influence
Consistent with the Agreement on Basic Telecommunications of WTO, the regulatory body in Japan
(Ministry of Posts and Telecommunications) is separate from, and independent of the supplier (NTT).
The decisions of and the procedures used by the Ministry of Posts and Telecommunications are
impartial with respect to all market participants.
U.S. Question 43
One indication of the ability of a regulator to regulate effectively is its willingness and ability to take
measures to address anti-competitive abuses of incumbents.  Has the MPT ever fined NTT for anti-competitive acts?  Has it sanctioned NTT in any other way? If not, why not?
Response to U.S. Q. 43 regarding MPT regulation of NTT
The NTT Law and the Telecommunications Business Law stipulate that a penalty shall be imposed if
an entity violates a directive to change anti-compe titive rates, to improve its business, and violations
against approval and authorization.  NTT has neither violated the law nor received any administrativedisposition from the Minister of Posts and Telecommunications.
U.S. Question 44
Where a government owns a substantial stake in the telecom operator, there is a clear incentive not to
take action that could affect the business interests of this operator–which, in this case, include
maintenance of its monopoly.  Full privatization is the only clear way to remove that potential conflictof interest.  What progress has Japan made toward privatizing NTT?  What plans does the
Government of Japan have to review the requirem ent that it maintain a 33% ownership in NTT?WT/TPR/M/76/Add.1
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U.S. Question 46
What is the status of the Government of Japan’s review of the structure of NTT?
Response to U.S. Q . 44 and Q. 46 regarding the policy of the GOJ toward privatization of NTT
1. The NTT Law obligates the Government of Japan to hold a certain share of the NTT Holding
Company in order to prevent domination of manageme nt of NTT and abuse of shareholders’ rights by
any specific parties, in light of the fact that NTT was established with the public objective of ensuring
the provision of universal service and promoting research and development.
2. Active discussions involving various views are under way in the Telecommunications
Council in order to determine the most desirable pro-competitive policy and the best organization for
NTT.
U.S. Question 45
What progress has Japan made in developing dominant  carrier regulations to better discipline NTT?
Response to U.S. Q. 45 regarding dominant carrier regulations in Japan
Active discussions involving various views are under way in the Telecommunications Council in
order to determine what is the most desirable pro-competition policy in the telecommunication sector.
In these discussions, various opinions have been expressed from interested domestic and foreign
entities that a fair competitive environment should be established and competition should be promotedby introducing dominant carrier regulation.
The Ministry of Posts and Telecommunications recognizes that the introduction of dominant carrier
regulation is an important issue in light of competition policy. The Ministry of Posts and
Telecommunications is going to deal with this issue based on the first Telecommunications Council
report, to be issued at the end of this year.
U.S. Question 47
How has the GOJ followed up on the findings in the JFTC study group report that the enhanced
competition expected from the reorganization of NTT has not materialized?  What does the GOJ think
explains this conclusion?
U.S. Question 48
In light of this conclusion, is the GOJ taking any additional steps to comply with the competitive
safeguards provision of the WTO telecommunications reference paper?
Response to U.S. Q. 47 and Q. 48 regarding the JFTC study group report
The Government of Japan would like to refrain from giving any comments on the report from JFTC
since it is authorized by the Government of Japan.
U.S. Question 49
What percentage reductions in interconnection ra tes does Japan currently foresee introducing within
the next year?  Within the next two years?WT/TPR/M/76/Add.1
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Response to U.S. Q. 49 regarding reductions in interconnection rates
The Third Joint Status Report on the U.S.-Japan Enhanced Initiative on Deregulation and Competition
Policy states that GC interconnection charges will be reduced by 22.5% and ZC interconnection
charges will be reduced by 60.1% in 3 years gradually. Regarding the percentage reductions, it is
considered that alternation of interconnection agreement by NTT East and NTT West will be applied
in December 2000 in accordance with the related law and ordinances enforced on
November 18, 2000.
U.S. Question 50
Permitting all carriers to build, buy or lease facilities in any combination necessary to facilitate
business maximizes innovation and competition.  What steps has Japan taken to increase market
competition by liberalizing resale/unbundling and co-location restrictions?
Response to U.S. Q. 50 regarding liberalization resale/unbundling and co-location restrictions
The rule regarding the unbundling of the subscriber lines (announced publicly and implemented on
12 September 2000), and regarding the collocation (announced publicly on 13 September, and
implemented on 1 October 2000) was established by the amendments of the Ministerial Ordinance of
MPT.  Then, NTT East and NTT West applied for th e authorization on the alternation of the articles
of their interconnection agreements to the MPT on 20 October 2000.
U.S. Question 51
Does the GOJ have any definite plans for pro-comp etitive policy reform aside from introducing LRIC-
based interconnection pricing and promoting network diversity?  If so, what are the policy changes
that you are considering?  How soon do you expect to implement these changes?
Response to U.S. Q. 51 regarding pl ans for pro-competitive policy reform
As one of the pro-competitive policies, the Government of Japan is opening telephone poles and ducts
and facilitating the laying of lines on public land and facilities such as roads.
U.S. Question 52
Improving the delivery of international legal and other professional services is essential if Japan is to
develop as an international business and financial center.   It is important that Japan address the
aspects of its legal system that are limiting the ability of Japanese and foreign businesses to obtain in
Japan the high quality and fully integrated international legal services that they find in London, HongKong, New York and other major financial centers.
U.S. Question 53
The Regulatory Reform Committee recommended in 1999 that the Ministry of Justice examine the
removal of the ban on partnerships between gaiben and bengoshi.  When does the Ministry of Justice
(MOJ) plan to issue recommendations  related to the removal of this ban?  The Regulatory Reform
Committee also expressed the concern that the ban on gaiben employing bengoshi does not have a
rational basis.  What is the MOJ response on this issue?WT/TPR/M/76/Add.1
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U.S. Question 54
Five years ago, Japan established the “specified joint enterprise” system rather than allow foreign
lawyers to enter into partnerships with or hire bengoshi.  This system has numerous deficiencies and
does not have an adequate substitute for allowing partnerships.  As of August 2000, only ten specified
joint enterprises have been created, and the foreign law firms affiliated with these ten enterprises
comprise less than one-fourth of the foreign law firms with offices in Tokyo.  What plans does Japan
have to allow freedom of association between gaiben and bengoshi?
Response to U.S. Q. 53, Q. 54
According to the final revision of the Three-Year  Program for Promoting Deregulation decided on by
the Cabinet on March 31, 2000, "From the viewpoint of providing an environment where citizens and
corporations can receive overall, comprehensive legal services concerning both Japanese and foreign
law, the Japanese government will give consideration to whether some measures, including the reviewof regulations on the objectives of specific joint enterprises, are required so that fully integrated legal
services based on a comprehensive cooperation between Gaikokuho-Jimu-Bengoshi and Bengoshi
may be provided in all cases".
Therefore, the government of Japan is continuing examination of specific joint enterprises to assess
whether there are any points that may be improved.
The Regulatory Reform Committee is totally differen t from the government authorities in concept.  It
is a type of council those opinions are given from various viewpoints and as reference by the
government and not as an ultimate decision.
Therefore, the recommendation of the Regulatory Reform Committee are not the direct opinion of the
government.
The MOJ believes that it cannot permit Gaikokuho-Jimu-Bengoshi to employ a Bengoshi since this
would cause serious problems for our qualification system.
U.S. Question 55
Japanese and foreign businesses in Japan have inadequate access to legal services because there are
too few lawyers to serve them – one-seventh the proportion in France, the next-lowest of the G-7
economies.  We understand that plans are underway  to increase the number of lawyers in Japan
significantly.  How quickly will Japan increase the proportion to be commensurate with other majoreconomies?
Response to U.S. Q. 55
According to the final revision of the Three-Year Program for Promotion Deregulation decided on by
the Cabinet on March 31, 2000, “Concerning an increase to about 1,500 of successful applicants of
the Bar Examination, our Government continuously researches and examines improvements of thetraining program or methods as well as conditions for receiving those successful applicants as legal
apprentices, and will come to a conclusion and take necessary action, taking into consideration the
conclusions reached by the Judicial Reform Counsel (JRC) which will take into account the various
opinions of the general public.”
In addition, at the JRC meeting held on this August 2000, a discussion was held on the numbers in the
legal profession and, as our target hereafter, have, for the most part, agreed on the point that we are
systematically and as early as possible going to secure approximately 3,000 new lawyers, paying dueWT/TPR/M/76/Add.1
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attention to improvements in the new legal training system including the realization of Japanese-style
law schools now under consideration.
Our government will work on this matter appropriately and quickly taking into account the
deliberations of the JRC.
U.S. Question 56
The report notes that information technology is intensifying the pace of globalization.  The United
States and Japan share a strong interest in s timulating investment and growth in information
technology.  We both also support the G-8 Oki nawa Charter on the Global Information Society, part
of which calls for facilitating cross border e-commerce by promoting further liberalization and
improvement in networks and rela ted services and procedures in the context of a strong World Trade
Organization framework, continued work on e-comme rce in the WTO and other international fora,
application of existing WTO trade disciplines to  e-commerce and continuing the practice of not
imposing customs duties on electronic transmissions.  What concrete steps is Japan taking to bring
these things about?
Response to U.S. Q. 56 regarding electronic commerce
Electronic commerce is a new and powerful medium  which will enhance the benefit of global trade.
To maximize the benefit of global e-commerce, it is important to establish an e-commerce friendlyand reliable policy environment on a global scale. To this end, the WTO should play a central role in
facilitating cross border e-commerce. However, e-commerce has an impact on many issues, such as
trade in goods, services, trade-related intellectual property rights and developmental aspects.
Therefore, it is important to discuss these things in a balanced and coherent manner. In light of this,
we believe that it is appropriate to establish a horizontal task force (“HTF”) in the WTO to analyze
how this new medium would affect all WTO disciplines. In this context, we appreciate the fact that
APEC members have agreed on the establishment of an ad hoc  analytical taskforce in the WTO that
would examine how WTO rules are relevant to the evolution of electronic commerce.
U.S. Question 57
The report notes that the mission of the WTO has been and will be achieved through dialogue and
negotiations within a rule-based multilateral trade system the enhancement of standards of living.
What does Japan think should be done to further demonstrate the mutually reinforcing relationshipbetween labor standards and trade liberalization?
Response to U.S. Q. 57
While Japan fully recognizes the importance of proper labour standards, Japan believes that the issue
on the relationship between labour standards and trade should not be used for disguised protectionism
or for denying comparative advantage of developing countries. Japan also believes that we shoulddeal with this issue, properly taking account  the position of developing countries.
U.S. Question 58
The report notes that Japan has proposed to implement tariff-free and quota-free treatment under its
preferential scheme for essentially all products originating in least developed countries.  What is the
status of this proposal?WT/TPR/M/76/Add.1
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Response to U.S. Q. 58 regarding reform of GSP
Japan is considering the reform of GSP including the implementation of tariff-free and quota-free
treatment for essentially all products originating in LDC.
U.S. Question 59
Japan has completely eliminated customs tariffs on all information technology products covered in
the information technology agreement.  What sort  of product expansion for further duty elimination
does Japan support?
Response to U.S. Q. 59 regarding further duty elimination by Japan
Japan implemented the following tariff elimination initiatives as a result of the UR:  Pharmaceuticals,
Construction Equipment, Medical Equipment, Steel, Beer, Furniture, Agricultural Equipment,
Distilled Spirits, Chemicals (Harmonization) ,Toys.
Japan also eliminated customs tariffs on products covered by the Agreement on Trade in Civil
Aircraft
U.S. Question 60
We are very concerned with the lack of reference to any labor market policies in the GOJ submission.
In our view, barriers to labor mobility (i.e., the di fficulty in re-allocating human resources from one
firm or industry to another) are among the largest impediments to structural change in the Japaneseeconomy.
Response to U.S. Q. 60 regarding trends in the Japanese Labor Market
The Law for Securing the Proper Operation of Worker Dispatch Undertakings and Improved Working
Conditions for Dispatched Workers and the Employment Security Law were amended in 1999, and
Japanese authorities have carried out deregulation in private employment placement projects and
worker dispatching undertakings with special attention to protection of workers’ rights.
Japanese authorities also endeavor to support reemployment of middle-aged and older workers
through, for example requesting employers and organizations of employers to be more flexible
regarding age requirements for job vacancies, because of the important need to realize a society where
workers who have the will and ability can work, regardless of their age.
Concerning restriction on the dismissal of workers, in the Labour Standards Law there is no basic
stipulation which limits the reasons for dismissal, but established judicial precedents do function as alimitation on dismissal. We consider that new legislation for dismissal is not appropriate, since
dismissal, whose reasons and circumstances are various, is a subject discussed by labour and
management in response to specific circumstances in consideration of judicial precedents.
U.S. Question 61
What plans does the JFTC have to more vigilantly  monitor potentially problematic business practices
in the photographic film and paper market, including various forms of retaliation and intimidation of
retailers that sell or use non-Fuji products?WT/TPR/M/76/Add.1
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Response to U.S. Q. 61
The JFTC has been making efforts to grasp the actual conditions of the photographic film and paper
markets, and will continue to watch business practices in these business fields. The JFTC  will
vigorously apply the laws when violat ions of the Antimonopoly Act are detected.
U.S. Question 62
In September 1998, the JFTC issued a warning to the Photosensitive Materials Manufacturers
Association and its members to cease their exchange of production, sales, and inventory data, whichthe JFTC found to constitute a potential AMA vi olation.  What follow-up action will the JFTC take
regarding this warning?
Response to U.S. Q. 62
The photosensitive materials markets have been monitored under Section 8-4 of the AMA concerning
measures against a monopolistic situation and unde r Section 18-2 of the AMA concerning measures
against a parallel price increases . The JFTC has been watching the business practices and will
continue to monitor them.
U.S. Question 63
The Regulatory Reform Committee and its predecessor, the Deregulation Committee, were
established by the Prime Minister 's "Administrative Re form Promotion Headquarters" -- i.e., the RRC
does not have a legal foundation as did the original reform body, the Administrative Reform
Committee.  The recent political intervention delaying implementation of liquor licensing
deregulation suggests that until its role is supported by legislation, the Regulatory Reform Committee
will continue to be vulnerable to political inte rference, thus weakening the deregulation program.  Is
it likely that under the new three-year deregulation initiative, the powers of the Regulatory Reform
Committee will be strengthened through legislation?
Response to U.S. Q. 63 on the likelihood that the RRC will be made more powerful
The organisation, mandate. etc. of the body to promote regulatory reform in the near future is under
consideration.
U.S. Question 64
The GOJ recently established two additional groups , one named the "Industrial Rebirth Committee"
and the other called the "IT Panel," which we hope will foster healthy debate and innovative ideasthat can affect change in all segments of the Japanese economy.  What authority do these committees
have to ensure that their recommendations and suggestions are enacted?
Response to U.S. Q. 64 on the authority of the “Industrial Rebirth Committee” and the “IT
Panel”
Both the “Industrial Rebirth Council” and the “IT Strategy Council” were established and have been
held by the Prime Minister.  Their outcomes will be submitted directly to the Prime Minister, who will
decide what measures are appropriate to be taken by the Government of Japan.WT/TPR/M/76/Add.1
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U.S. Question 65
What are the GOJ's plans regarding deregulation for the next three years given that the "Three-Year
Program for Promoting Deregulation" is set to expire at the end of March 2001?  What is the GOJ
doing to ensure that the proposals included in  the Three-Year Program are being implemented?
Response to U.S. Q. 65 on the steps to be taken by the Government of Japan to ensure that
proposals in the three-year program are implemented
The Government is to draft and adopt The Three-Year Program For the Advancement of Regulatory
Reform by the end of FY 2000.
This program shall be drafted based upon such things as a report of the Regulatory Reform
Committee expected by the end of this year, and the details of the new program are to be considered.
Also, firm implementation of the program is secured, because the schedule of respective items is
clearly stated and a follow-up survey on measures relevant to respective items shall be conducted.
U.S. Question 66
The GOI has established income stabilization meas ures for wheat, barley, rice, and soybeans.  The
stabilization measures, however, appear to contin ue to insulate domestic producers from market
signals.  How does Japan intend to increase the productivity of its farming sector when its policies
continue to isolate producers from the economic factors that yield increases in efficiency andproductivity?
Response to U.S. Q. 66 regarding price policy changes
Japan has been implementing reviews of the price policies for main agricultural products such as rice,
wheat and soybeans, so that prices appropriately reflect the real supply/demand situation and market
evaluation of quality from the viewpoint of prom oting agricultural production that meets consumer
demands.
In addition Japan has introduced a safety net for farm management (in other words, direct income
support), to mitigate the adverse effects of price fluctuation.
These policy changes have been made in order to introduce market mechanisms into the pricing of
agricultural products. Japan thinks these changes will promote agricultural production responding to
countries’ needs, and also encourage producers to make further efforts to improve the quality of their
production and the productivity.
U.S. Question 67
What, if any, new agricultural policy measures does Japan envision in the coming year?  Will the
thrust of these measures be to reform price policies for other agricultural commodities, thereby
lowering the existing burden on Japanese consumers?  Are new income support programs for farmers
envisioned?  What steps is Japan taking to ensure  that the programs will be consistent with the
provisions in Annex 2 of the WTO Agreement on Agriculture?WT/TPR/M/76/Add.1
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Response to U.S. Q. 67
For example, the new Basic Law, in its article 30,while directing price policy reform to allow prices
to reflect supply/demand situation and quality evaluation, describes the necessity of  "taking measures
for mitigating the adverse effects of significant price changes of farm products on farm management".
These possible new measures will  be in any way consistent with the commitment of Japan under the
WTO rules and disciplines.
U.S. Question 68
Could Japan provide estimates of the taxpayer costs associated with its new policy measures?  How
do the costs for the new measures compare with previous years' taxpayer outlays for agriculture?
Response to U.S. Q. 68
The expenditure associated with the new policy measures cannot be estimated since total budget for
agricultural policy was reviewed so as to implement the new Law.
U.S. Question 69
The report indicates that one goal of its new Plan for Agriculture is to increase the food self-
sufficiency ratio by 2010.
What proportion of the inputs used in agricultur al production (e.g., machinery, fertilizer, fuel) are
imported?  If domestic production of agricultural products were to increase, what would be the
impact on imported agricultural inputs?
Response to U.S. Q. 69
Proportion of imported inputs domestic supply (A) imported (B) B/A
Machinery (99 calendar year) 480 (billion yen) 23 5%
Fertilizer (99/00 fertilizer year) 1,442 (1000 N, P205, K20 ton) 874 61%
The use of agricultural inputs will naturally be increased If domestic agricultural production increase.
However, it’s not predictable whether the share of imported inputs will increase.
U.S. Question 70
Does this mean that Japan intends to maintain or raise its border protection or expand its domestic
production through additional domestic support measures in order to achieve this objective?
Response to U.S. Q. 70
Based on Article 15 of the Basic Law on Food, Agricu lture and Rural Areas, the target for the food
self-sufficiency ratio was set in the Basic Plan for Food, Agriculture and Rural Areas determined by
the Cabinet, after hearing opinions from the Counc il of Food, Agriculture and Rural Area Policies.
The Basic Plan outlines challenges with which consumers and farmers must contend.  The target self-
sufficiency ratio in the Basic Plan is expected to be achieved in the event that those challenges are metWT/TPR/M/76/Add.1
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by the target year (FY2010).  Issues and precond itions described in the Basic Plan include the
following:
- Desirable Food Consumption" will be accomplished if food consumption in FY2010 meets
the following conditions:
a. Regarding nutritional balance, the ratio of calories supplied by fat declines to the
appropriate level for public health.
b. Regarding the ratios of each commodity, consumption of glycolipids (carbohydrates)
is expected to increase with the steady consumption of grains, including rice, while
consumption of food containing fat is expected to decline.
c. Food waste and leftovers are expected to be reduced.
- "Agricultural production Targets" will be accomplished on the following assumptions:
a. The percentage of total food consumed supplied by domestic agricultural production
will only rise if more consumers and the food industry choose domestically produced
farm products.
b. Consequently, issues such as the improvement of productivity and quality that are
specified for respective commodities in the Ba sic Plan are expected to be improved in
order to attract consumers.
Improvement in the food self-sufficiency ratio is intended to be realized through the efforts of all the
people concerned, such as farmers, members of th e food industry, consumers, local governments and
the State.  Needless to say, the Japanese Government will implement
U.S. Question 71
The report notes that consumer taste appears to be shifting away from rice to livestock products and
products with higher fat content and that the government intends to develop a campaign to encourage
consumers to review dietary patterns.  Does the government intend also implement new measures that
would restrict consumer choice of food  products as part of this endeavor?
Response to U.S. Q. 71
The government never intends to implement new measures that would restrict consumers’ choice of
food products.
However, in order to realize the coming aging soci ety with healthy and active people, it is necessary
to maintain a well-balanced diet with appropriate intake of fat. It is also important to reduce food
waste and leftovers to make effective use of food and avoid adverse effect on the environment.
To this end, the government will be engaged in the following activities:
- prepare and disseminate a guideline for healthy dietary patterns,
- establish a comprehensive plan that specifies health improvement goals and relevant
policies, on which national campaign to promote public health will be based,
- promote activities of relevant organizations relating to healthy dietary patterns, andWT/TPR/M/76/Add.1
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- provide the general public with information on the situation of food consumption and
the supply of farm products, and/or the relationship between food consumption anddietary patterns.
U.S. Question 72
Japan characterizes a "decline in the food self-sufficiency ratio" as a problem, rather than just the
result of international trade along the lines of comparative advantage.  Does Japan advocate the
return to "self-sufficiency" by its trading partners for the industrial products that Japan exports?
Response to U.S Q. 72
Japan supports the idea of improving self-sufficiency ratio on food, based on several reasons. First, it
is essential to note the different characteristics of agricultural products compared to industrial goods.
As agricultural goods are vital for human life and subject to irregular change of climate, the
maintenance of food security is of great importance to every country. It is, therefore, necessary tomaintain a certain level of food self-sufficiency ratio for each country: based on such understanding,
Japan has set forth its own self-sufficiency ratio for agricultural products.
Second, the past negotiating history of agricultural goods in the multilateral trade negotiations should
be duly considered. The importance of food security is explicitly stipulated in the WTO Agreement on
Agriculture (see its preamble). Having taken into account the above-mentioned difference incharacteristics between agricultural and industrial goods, a set of rules, namely the WTO Agreement
on Agriculture, was established, separate from normal GATT rules.
As for specific policy measures to improve food self-sufficiency level, the ratio of food self-
sufficiency could rise only if consumers and the food industry prefer to choose domestically produced
farm products. An appropriate level of domestic agricultural production that corresponds to the self-
sufficiency ratio target is expected to be achieved if all relevant issues, such as improvement of
productivity and quality to attract consumers and the food industry, are solved through the efforts ofrelevant parties including farmers.
In order to determine a target for food self-sufficiency ratio, Japan does not intend to change its trade
policies. Its primary focus will be set on improving various elements including improvement in
productivity and quality of food. It is needless to mention that the government will ensure its policies’
consistency with international rules in implementing relevant measures to improve self-sufficiency onfood.
U.S. Question 73
What is the meaning of the statement in the report concerning agriculture (para. 92), ... people's
expectations for agriculture and rural areas have been on the rise"?  How are these expectations
measured?  Are there published measurements that show a change in expectations over recent years?
Response to U.S. Q. 73
According to the opinion poll by the Prime Minister's ffice in July of 2000, about 80% of the people
in Japan feel anxious about the food supply in Japan, and more than 80% of the people in Japan think
that even if the price of domestic food is higher than imported food, Japan should produce food as
much as possible while making efforts to reduce their costs.  This tendency has been on the rise everytime the survey was conducted.  (1987:  71.2%  →  1996:  83.4%  →  2000:  84.2%)WT/TPR/M/76/Add.1
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U.S. Question 74
Similarly, what is the meaning of the statement that "there has been an increasing demand that the
agricultural sector should fulfil its multifunctional role?"  What evidence exists to document this?
What methodology was used to me asure the "increasing demand?"
Response to U.S. Q. 74
According to the opinion poll by the Prime Minister's Office in July of 2000, majority of people in
Japan think agriculture play various roles besides production and supply of food.  Multifunctionalityof agriculture such as preservation of the natural environment, land conservation, fostering of water
resource and food security shares high percentage as such roles.
And also according to this opinion pole, large num ber of people, more than 90% of the people in
Japan think that agriculture with its multifunctionality should be maintained toward the future.
Furthermore almost 90% of the people in Japan agree with the idea that maintenance and fulfilment ofthe multifunctionality of agriculture is necessary.
U.S. Question 75
With respect to the Basic Plan adopted in March 2000, the statement is made that the plan calls for
review of the price policies for major products in such a way as to make them properly reflect
supply/demand situations.  Does this mean that there will be a major reform in the price policies thataffect domestic rice production and consumption?
Response to U.S. Q. 75
With UR Agriculture Agreement as a turning point, Japanese government abolished the Food Control
Law and enacted the Staple Food Law in 1996 and implemented the New Rice Policy in 1998.
As a result of that, the rice distribution, which had been under the control of government for more
than half a century, has been drastically change d into market-oriented system where voluntarily
marketed rice has become the main route of distribution without restriction on price formation.  Withabolishment of support policy, the Rice Farming Income Stabilization Program has been introduced,
which the government assists to the loss compensation program by private sector which makes a fund
for price decline of voluntarily marketed rice.
The Basic Plan reaffirmed the necessity to ensure that the price should be determined by supply-
demand situation and quality evaluation, in order to make production respond to consumers demandproperly.  In line with the Basic Plan, the Action Program describes specific measures to be promoted
in the near future for rice;  1) enhancement of price formation reflected supply-demand situation for
voluntarily marketed rice;  2) promotion of the Rice Farming Stabilization Program.
U.S. Question 76
Do these figures account for the "mark-up" on th e import price that Japan imposes in sectors like
cereals and dairy?  What is the cost to consumers of these "mark-ups"?
Response to U.S. Q. 76
It seems that figures are averaged applied tariff rates to out-of-quota imports, therefore a mark-up
which is collected by state trading enterprises (STEs) for sales of in-quota imports may not be
accounted for.WT/TPR/M/76/Add.1
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While mark-up level differs from variety, quality and market condition, selling prices of STEs are set
properly reflecting quality deference between domestic and imported products and market conditions,within the upper limit of mark-up which Japan committed in its Schedule.
U.S. Question 77
Does Japan anticipate any changes in its border protection for agricultural products as a result of its
new Plan?  If so, please provide details.
Response to U.S. Q 77
Japan has been faithfully implementing its UR commitments. Although the Basic Plan does not
envisage any changes in border measures, all the measures Japan takes is consistent with international
rules including its UR commitments.
U.S. Question 78
Does Japan anticipate any reduction in the implicit tax on consumer as a result of its new Plan?
Please provide details.
Response to U.S. Q. 78
Border protection is one reason that Japanese consumers paid, on average, more than twice as much
as they would have paid in the absence of Japan’s agricultural programmes, and, according to the
report, this implicit tax on consumers may have risen in recent years.
Does Japan anticipate any reduction in the implicit tax on consumers as a result of its new Plan?
Please provide details.
All the measures Japan takes is consistent with international rules including its UR commitment.
U.S. Question 79
The report notes that improvement in WTO transpar ency must be pursued expeditiously.  We would
be interested in Japan's views on improving transparency beyond activities such as further de-
restriction of documents, and more timely re lease of dispute panel reports, which Japan has
supported.
Response to U.S. Q. 79 regarding transparency
Japan’s views on WTO transparency are as follows: Japan believes that improvement of internal and
external transparency is important. Regarding intern al transparency, it is important, for example, to
improve the preparatory process for the Ministerial Conference and negotiation process, through suchmeasures as coordination between the informal consultation process and open-ended meetings, and
clarification of the roles played by the Director-General and the Secretariat. Regarding external
transparency, it is important to promote a better understanding of the WTO’s activities through such
means as improvement in de-restriction procedure of WTO documents and building constructive
relations with NGOs.WT/TPR/M/76/Add.1
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U.S. Question 80
The report notes that measures have been taken concerning labor market polices.  Do these measures
include the ILO Convention 105 on forced labor and ILO Conventions III on discrimination?  If not,
when might they be ratified?
Response to U.S. Q. 80 regarding core labor standards
In light of the fact that at the first WTO Ministerial Meeting held in Singapore in 1996, it was
reaffirmed that the International Labour 0rganization is the competent body to set and deal with corelabour standards, Japan believes that this is a matter that should be discussed at the ILO.
Regarding the Abolition of Forced Labour Convention (No. 105) and the Discrimination Convention
(No.111), Japan intends to continue to consider this matter.
U.S. Question 81
The U.S. notes that Japan still maintains a number of  non-ad valorem duties, particularly on imports
of agricultural products, and that these translate into very high ad valorem equivalents (AVE's) where
such equivalents have been calculated, Japanese authorities have not provided AVEs for about a third
of non-ad valorem duties, representing a serious transparency issue.  Does Japan plan to move away
from non-ado valorem duties for agricultural product s?  Does Japan intend to calculate AVEs for all
non ad-valorem duties?
Response to U.S. Q. 81
There are no calculated AVEs for about a third of non-ad valorem duties because of the lack of import
records.
Instincally, ad valorem duties are proportionate to price (or value), while specific duties are
proportionate to quantity (or volume).  Ad valore m duties may amplify the effect of price fluctuations
but specific duty is more neutral against them.  We do not think specific duties tend to be less
transparent and less predictable than ad valorem dutie s.  So we are not considering to convert specific
duties to ad valorem.
U.S. Question 82
The report notes that each procuring entity maintains its own list of registered suppliers.  Does each
procuring entity establish its own requirements for suppliers to become registered?
Response to U.S. Q. 82 regarding the requirements on suppliers imposed by procuring entities
At present, each procuring entity establishes its own requirements for suppliers to register. However,
unified qualification for registered suppliers and a list of such suppliers are scheduled to be introduced
on April 1, 2001 regarding procurement of goods and services by central government entities, except
for public works.
U.S. Question 83
Can you explain why the trend in foreign share of government procurement continues to fall?WT/TPR/M/76/Add.1
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Response to U.S. Q. 83 regarding the foreign share of Japanese government procurement
The trend in the foreign share of government procurem ent in terms of the contract value is not falling;
rather it has been rising in recent years.
As the report by the Secretariat (WT/TPR/S/76) clearly indicates, the ratio of foreign suppliers in
Japan’s government procurement was 5.6% in terms of value in 1998, compared with 4.7% in 1997
and 4.1% in 1996.
U.S. Question 84
Regarding the history of complaint fillings under the Office of Government Procurement Review and
the Board, does this figure include the most recent complaint which was field in July of 2000? Given
that only two complaints have been field, why does Japan believe that so few suppliers have utilized
the bid challenge process?
Response to U.S. Q. 84 regarding the low number of complaints filed under the Office of
Government Procurement Review
Since the establishment of the Office of Government Procurement Review and the Government
Procurement Review Board, two complaints have been filed to the Board, which includes the recent
complaint filed in July 2000.  Pursuant to Article 20 of the WTO Agreement on Government
Procurement, the Board encourages consultations between a complainant and a procuring entitybefore a complaint is filed.  Therefore, it is quite reasonable to assume that complaints, if any, have
been settled through such consultations.  Together with the natural consequence of the effort to ensure
transparent, fair and non-discriminatory tendering procedures by the Government of Japan, this is also
the reason why only two complaints have been filed to the Board since the establishment of the
challenge procedure under the GPA.
U.S. Question 85
According to this report, the Complaint Review Board "acts as an intermediary" in the event that a
complaint exists between a supplier and a procuring entity, and that, as a result of the Board's
involvement, "many complaints have been resolved through consultation."  Please indicate the
percentage of complaints that have been resolved in this manner, whether foreign suppliers have been
party to such consultations, and if so, whether complaints field by foreign suppliers have been
resolved with the same success as those filed by domestic suppliers.
Response to U.S. Q. 85 regarding the Japanese Complaint Review Board
The Government of Japan does not have any statistical figures regarding the percentage of complaints
that have been resolved through consultations.
Regardless of whether or not foreign suppliers are party to certain consultations, all complainants are
able to enjoy impartial treatment under Japan's ch allenge system, whose consistency with the GPA is
fully ensured.
U.S. Question 86
Regarding the statement that authorities of the Board encourage "consultation between a complainant
and procuring entity" prior to the filing of a complaint, please describe how Japan encourages parties
to engage in consultations in a timely manner.WT/TPR/M/76/Add.1
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Response to U.S. Q. 86 regarding the manner in which Japan encourages timely consultations
among the parties to a complaint
Pursuant to Article 20 of the WTO Agreement on Government Procurement, the Board encourages
any supplier who has a complaint on Government Procurement to seek resolution through
consultation with the procuring entity.  The Board also encourages the procuring entities to accord
impartial and timely consideration to any such complaint, in a manner that is not prejudicial to
obtaining corrective measures under the challenge system.
U.S. Question 87
Please indicate how long it takes to resolve a complaint through the consultation mechanism, and
what type of complaints are brought to the Board for consultations.  Have any complaints not been
resolved that have been brought for consultation to the Board?
Response to U.S. Q. 87 regarding the time needed to resolve complaints and the outcome of
complaints brought to the Board in the past
It is outside of the scope of Japan's commitments under the GPA to establish such consultation
mechanism.  Therefore, there are no particular rules that the supplier should report the result of the
consultation with the procuring entities to the Government Procurement Review Board.  Thus the
Government of Japan is not able to predict how long it takes to resolve a complaint through theconsultation.  Japan's challenge system, whose cons istency with the GPA is fully ensured, guarantees
non-discriminatory, timely, transparent and effective procedures.  Under this system, any suppliers
can challenge alleged breaches of the GPA arising in the context of procurement in which they have,
or have had, an interest.  Since the establishment of the current system, two complaints have been
filed, and both cases have been closed.
U.S. Question 88
The report states that "according to the authori ties, the procuring entitles of public works are
required to decide proper and clear criteria for, inter alia, the selection of construction works
undertaken by joint ventures and the organization of joint ventures by contractors."  Please indicate
what "proper and clear criteria" are used for the selection of works to be undertaken by joint
ventures, and for the organization of joint ventures by contractors.  Are these criteria made available
and if so, where?  How does Japan ensure that these criteria are not applied in a manner todisadvantage foreign suppliers?
Response to U.S. Q. 88 concerning criteria for the utilization of joint ventures by procuring
entities
Each procuring entity of public works, based on the recommendation of the Central Council for
Construction Contracting Business, decides criteria for the utilization of joint ventures on its ownresponsibility.
The above-mentioned recommendation provides that these criteria should include rules such as the
following: contractors should organize joint ventures of their own free will, and construction works
executed by joint ventures should be large-scale and have technological difficulty.
With regard to public works to which the WTO Agreement on Government Procurement applies, each
procuring entity conducts procurement based on the principle of non-discrimination, including theWT/TPR/M/76/Add.1
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selection of construction works undertaken by joint ventures and the organization of joint ventures by
contractors.
U.S. Question 89
Concerns have been raised by our industry regarding Japan's apparent failure to provide protection
against unauthorized temporary copying of work s of sound recordings.  The TRIPs Agreement
incorporates Article 9 of the Berne Convention, which states that rightholders 'shall have the
exclusive right of authorizing the reproduction of [works and sound recordings], in any manner orform.'  reproduction 'in any manner or form' appears to include temporary reproduction.  Therefore,
please confirm whether or not Japan provides protection against such reproduction if unauthorized.
Response to U.S. Q. 89 concerning protection against unauthorized temporary copying of works
or sound recordings
Article 21 of the Copyright Law of Japan grants to authors the exclusive right to reproduce their
works in a manner consistent with Article 9 of the Berne Convention.  Japan, therefore, fully complies
with obligations under the TRIPS Agreement.
U.S. Question 90
We are concerned about Japan's imposition of a single, rigid evidentiary requirement for joint
authorship.  This policy is particularly prejudicial to authors from the United States and othercountries where authorship statements on published sheet music have no legal effect and do not
conform to any prescribed set of rules.  This requirement also appears to be a mere formality that
hampers the enjoyment and exercise of copyright ri ghts, which is inconsistent with the TRIPs
agreement.  In light of Japan's international obligations and prevailing international practice, does
Japan plan to review its policy on joint authorship?
Response to U.S. Q. 90 concerning Japan's policy on joint authorship
Japan protects copyrights appropriately in accordance with international rules in the field of
copyrights.
U.S. Question 91
As indicated in the WTO Secretariat's Report, Japan has taken important steps to improve the
protection of patents.  While we are pleased by these efforts, the U.S. remains concerned with several
aspects of Japan's patent administration, including the relatively slow process of patent litigation inJapanese courts, and the lack of adequate protection for confidential information produced relative to
discovery.  Please describe Japan's actions to address these concerns.
Response to U.S. Q. 91
In order to deal with cases concerning intellectual property rights properly and promptly, the judiciary
has taken measures such as establishing sections specializing in this field at the Tokyo District Courtand the Osaka District Court, increasing the number of judges and court officials belonging to these
sections and introducing a specialized mediation system in which experts participate.  The judiciary
will continuously take necessary actions in order to resolve these cases more properly and promptly.
The Judicial Reform Council which was established under the Cabinet has taken up the matter of
“coping with the cases requiring expert knowledg e” and has also agreed, for the most part, on theWT/TPR/M/76/Add.1
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point that it is necessary to reinforce the specializ ed sections and let experts participate in actions
concerning intellectual property rights.
Japan has a system under which an order to produce documents can be issued in the Code of Civil
Procedures as means of producing evidence.  However, the holder of a document in which technical
secrets are written may refuse the production of that document.  Thus, confidential information is
adequately protected in Japan.
U.S. Question 92
According to the report, Japan's copyright law was amended with a view to comply with the WIPO
Copyright Treaty.  Key provisions of the revised law include criminal penalties for producing and
distributing devices designed to circumvent copyrights.  We remain concerned that the penalties for
copyright circumvention devices will seldom be applied since the law covers only devices whose sole
purpose is circumvention.  Focusing only on devices whose sole purpose is circumvention will make
your anti-circumvention law too easy to evade if protection-defeating functions can safely be
packaged with other components that have innocent purposes.  What steps is Japan taking to address
this concern?
Response to U.S. Q. 92 concerning regulation of copyright circumvention devices Japan
appropriately amended the Copyright Law in 1999, in order to comply with the WIPO Copyright
Treaty.  The revised Law regulates a device having a principal function for the circumvention of
technological protection measures etc., as does the US legislation.
U.S. Question 93
The report notes that in January 2001, the JFTC will  become part of the Ministry of General Affairs,
which also includes regulators of telecommunications services.  What actions does the GOJ plan to
take to ensure that the JFTC's independence in  antimonopoly enforcement and in the promotion of
competition policy will be preserved?
Response to U.S. Q. 93 regarding how the Government of Japan will ensure the independence of
the JFTC
The AMA clearly secures the independence of the Chairman and Commissioners in enforcement or
policy decisions and guarantees their status in order to ensure the JFTC’s independence and neutrality
after the government reorganization .The Act also provides that the Chairman and Commissioners areappointed by the Prime Minister and approved by the Diet, as is the current situation. Thus the
independence and neutrality of the JFTC are guaranteed.
We do not think any action is needed to preserve the independence and neutrality of the Chairman and
Commissioners in enforcement or policy decisions because the AMA clearly provides for their
independence and neutrality.
U.S. Question 94
What is the JFTC doing to ensure that officials responsible for monitoring electricity and gas
deregulation and for enforcing the AMA in these sectors have sufficient expertise?WT/TPR/M/76/Add.1
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Response to U.S. 94
JFTC has actively conducted survey and submitted proposals for deregulation in the electricity and
gas sector.  JFTC continues to conduct survey and submit proposals like that.
U.S. Question 95
According to the Report, in May 2000, the Antim onopoly Act was amended to permit private parties
to seek a court injunction against violators engaged in certain "unfair trade practices."  Please
explain why serious antimonopoly violations, such as monopolization and price-fixing and marketallocation agreements, were not covered by these amendments and when the GOJ will seek to extend
private injunctive remedies to this serious conduct as well.
Response to U.S. Q. 95
In view of the newly established injunctive relief system, it is important chiefly for that system to be
introduced smoothly and to function. For that purpose, it  is appropriate that the subject of that system
must be acts which best correspond to civil litigation and whose existence is easily proven.
Unfair trade practices easily correspond to civil litigation because they are related with daily trade. As
such the victims can easily recognize the parties enga ged in those activities and their damage is likely
to appear on specific individuals.
Moreover, there are likely to be many cases in which the victims can easily prove the existence of
illegal acts ( unfair trade practices ) since it is often the case that the person concerned is familiar with
the fact in detail and the case in which the person concerned can easily get evidence.
On the other hand, monopolization and cartel practices such as price-fixing and market allocation
often do damage to many members of the general public. Hence, it is unlikely that civil litigation by
specific victims will be brought. Furthermore, cartels are usually conducted with secrecy. That is why
it is very hard for an individual to prove the existence of illegal acts such as cartels.
From the reasons stated above, it is best that the initial subject of the injunctive relief system be unfair
trade practices.
At last, we might consider adding serious anti monopoly violations, such as monopolization and price-
fixing, to the target of the injunctive relief system in the future if it is needed as a result of change of
economic situation.
U.S. Question 96
The competitive analysis of mergers and acquisitions, including stock acquisitions, is often very
complex, and requires significant staff resources in order to conduct such an analysis fully and
expeditiously.  How can the JFTC analyze the transactions reported to it in a sound and expeditions
manner with a total staff in the responsible division of less than 20 people?
Response to U.S. 96 regarding the workings of the JFTC
To respond to the increasing number of M&A cases, from the viewpoint of ensuring more efficient
and flexible enforcement, the Anti-Monopoly Act was amended to reduce the scope of reporting and
notification requirements regarding mergers and stockholding.  At the same time, the JFTC, in an
effort to enhance the predictability of its interpretation of laws regarding corporate mergers, madeWT/TPR/M/76/Add.1
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public its position on stockholding and mergers cases th at restrict competition in a particular field of
trade.
In 2000, the JFTC increased the number of staff in the Mergers and Acquisitions Division from 19
to 22.  Furthermore, more than 10 staff members in local offices engages in enforcement of the
regulations on mergers and acquisitions.
U.S. Question 97
In recent years the JFTC appears to have significan tly increased its enforcement activities against
firms that engage in "unjust low pricing" in Japan, particularly in the retail liquor, electric appliance
and gasoline markets.  Please describe how this policy promotes price competition and ensures that
pro-competitive pricing practices are not discouraged.
Response to U.S. Q. 97 regarding price competition and price policy
In 1984 the JFTC made the Guidelines Concerning Unjust Low Price Sales, and the JFTC’s
enforcement of the unjust low pricing regulation is based on it. In these Guidelines the JFTC made
clear the purpose of regulations as follows:
The objectives of regulations concerning unjust low price sales
The purpose of the Antimonopoly Act is to maintain and promote fair and free competition, and to
help entrepreneurs devise creative means to provide high-quality, inexpensive products . In this sense,low prices are not considered inherently improper, of course , but on the other hand ,neither are they
always looked upon favorably. There is nothing wrong with efficient operations allowing a business
to offer inexpensive products, but if a firm cuts prices without any regard for profitability in order to
attract customers , such behavior runs counter to the objectives of the Antimonopoly Act and, thus,
regulation is required, because when a firm seeks to win away the customers of a competitor by
selling a product at below cost - in other words , if it sells a product at a price which could not be
maintained indefinitely unless the losses thereby incurred were not compensated for by profits from
the sale of other products, or by other sources  of funds - that firm is using unfair means of
competition. Thus, the purpose of regulations concerning unfair price cutting is to maintain a fair
competitive environment, not to protect inefficient businesses which are incapable of providing high-
quality, inexpensive products.
U.S. Question 98
In order to deter anti-competitive practices, it is crucial that firms perceive that engaging in such
practices will be more costly than the potential profits.  Please explain how Japan's current system of
administrative surcharges and limited criminal enforc ement raises the costs of engaging in hard core
anti-competitive conduct to a sufficiently high level to deter violations of the Antimonopoly Act.
Response to U.S. Q. 98
In order to deter anti-competitive practices, it is crucial that firms perceive that engaging in such
practices will be more costly than the potential profits.  Please explain how Japan's current system of
administrative surcharges and limited criminal enforc ement raises the costs of engaging in hard core
anti-competitive conduct to a sufficiently high level to deter violations of the Antimonopoly Act.WT/TPR/M/76/Add.1
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U.S. Question 99
Agreements among distributors not to carry importe d products, especially when supported by the
efforts of competing domestic suppliers, can restrict competition and distort international trade.
These practices need to be deterred through active antimonopoly enforcement and heavy monetary
consequences.  Please explain the JFTC's enforcem ent policy with regard to these activities, and the
circumstances in which surcharge orders will be imposed on the participants of such group boycotts.
Response to U.S. Q. 99
Agreements among distributors not to carry imported products, especially when supported by the
efforts of competing domestic suppliers, can restrict competition and distort international trade.  These
practices need to be deterred through active antimonopoly enforcement and heavy monetary
consequences.  Please explain the JFTC's enforcement policy with regard to these activities, and the
circumstances in which surcharge orders will be imposed on the participants of such group boycotts.
U.S. Question 100
Financial and other ties between producers and distributors in highly oligopolistic industries can, in
certain circumstances, have exclusionary effects on the ability of new entrants to successfully
compete in the market.  Please describe the actions  the JFTC plans to take to monitor and examine
such ties and to ensure that they are not foreclos ing competition from potential new entrants in the
Japanese market.
Response to U.S. Q .100 regarding measures take n by the JFTC to monitor highly oligopolistic
industries
In order to ensure that fair competition is not re strained the JFTC regularly conducts surveys (e.g.
surveys on the six major corporate groups) in order to ensure that business transactions based on
capital and personnel ties are not exclusive.
The JFTC continues to conduct surveys and strives to enforce the AMA more aggressively in
addressing anti-competitive practices.
U.S. Question 101
There is widespread belief in both the Japanese and foreign industry that the new Large-Scale Retail
Store Law leaves local authorities with too much power and too much latitude in dealing with new
store openers.  How does MITI plan to monitor loca l implementation of the new law, particularly if
implementation is being frustrated locally by unw ritten administrative "guidance" and the imposition
of "voluntary" guidelines?
Response to U.S. Q. 101 regarding the New Large-Scale Retail Store Law
MITI has explained to the relevant local governments the purpose and content of the Daiten-Ricchi
Ho (the Law) by holding several meetings with prefectures and ordinance-designated (the 12 largest)cities, and has provided officials of such local governments with technical training.
MITI is observing local governments' implementation of the Law to ensure that the purpose of the
new Law is not impeded.WT/TPR/M/76/Add.1
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Therefore, official contact points (Daiten-Ricchi Ho Contact Points) established within the MITI in
Tokyo, and at its eight regional bureaus, are receiving and facilitating resolution of complaints from,and also give advice to, any interested party regarding the application of the new Law.
Under such circumstances, MITI will take appropriate measures, if necessary, based on the Local
Autonomy Law, including giving technical advice and recommendations to local governments
regarding the implementation of the Law.
U.S. Question 102
There is no mention of medical devices, which is an important sector for foreign suppliers in Japan.
What plans does the GOJ have to improve the consistency and speed of the approval process for
innovative medical devices?
U.S. Question 103
We remain concerned that the liberalization of vitamins and minerals is a slow-moving process.
What are the prospects for additional reform in this markets?
Response to U.S. Q. 102, Q. 103
The Government of Japan re-categorized the previous categories for device applications into three
categories in April 2000: "new medical devices;" "improved devices;" and "me-too devices."  The
Government of Japan has thereby exempted the applications for "new medical devices" and"improved devices" from the equivalence review conducted by the Japan Association for the
Advancement of Medical Equipment (JAAME) and requires them to only be reviewed at the
Pharmaceutical and Medical Devices Evaluation Center (PMDEC).  The MHW makes an effort to
conduct examinations in a prompt and consistent manner.
Response to U.S. 103
1. The MHW virtually lifted the regulation concerning the dosage form of products taken orally,
including vitamins and minerals, under the condition that such products are labeled as "food."(April 5, 2000)
2. Also, the MHW is working to prepare a guideline for the legal status of dietary supplements
and a safety evaluation of their ingredients, including food additives, based on the conclusion reached
at the joint session on toxicity and food additives under the Food Sanitation Council held in
March 2000.
3. This guideline is intended exclusively for dietary supplements in forms different from
ordinary ones, such as capsule-form and tablet-form. The guideline generally follows the concept of
the current guideline for designation of food additives. However, for additives having been used in
pharmaceuticals, some documents required by the current guideline of food additives would be
exempted if these substances have a history of safe use as pharmaceuticals in Japan and if toxicitydata used in evaluating these pharmaceuticals is determined to be appropriate based on sound science.
4. The MHW announced the draft guideline to the public, giving them the opportunity to submit
comments by 15 November. The MHW also explained the guideline to each embassy in Tokyo,
including the US Embassy, on 8 November 2000.WT/TPR/M/76/Add.1
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5. The MHW has also announced its future schedule to the public. The MHW will report the
new guideline to the WTO in late November, revise the related regulations by the end of this fiscal
year, and enforce them starting on the first day of the next fiscal year.
In addition, the MHW has announced that many vitamins and minerals have already been permitted
for use as food additives in Japan.
U.S. Question 104
The description of the auxiliary services regi me does not include continuing problems with
restrictions on port activities that the amendments to the Port Transport Business Law do not address.
The prior consultation system practiced by the Japan Harbor Transportation Association (JHTA), an
association of stevedoring and terminal operating companies gives the group extensive control over
port operations that the GOJ is not willing to challenge.
Response to U.S. Q. 104 regarding maritime transport
1. The prior consultation system is not conducted based on the Port Transportation Business
Law, but conducted based on the agreement reached among associations related to port transport
business including shipping lines, labour unions and companies.  Since it is conducted in the private
sector, the Government does not intervene in this  matter. However, if illegal actions are committed,
the Government takes action against them based on laws.
2. In the field of international maritime transport, conferences and other agreements among
shipping lines have been exempted from the Anti-Monopoly Act in Japan as they have been in other
nations. In order to further promote fair and free competition among carriers as well as to secure a
stable supply of oceangoing shipping services, Japan reviewed the previous exemption system and
amended the Marine Transportation Law to introduce a new system last year. The United States is
invited to refer to the details of the amendment on the website of the Japanese Ministry of Transport.
(http://www.motnet.go.jp/KOHO99/KAIUN.htm)
U.S. Question 105
According to the report, "Japanese authorities claim that there are no discriminatory measures
affecting foreign participation in international maritime services."  In fact, the waterfront industry is
dominated by the JHTA which represents all license d waterfront stevedores when dealing with the
labor unions and determines the working conditions under which the industry operates.  Japanesecarriers are members of the JHTA through their stevedoring subsidiaries, but foreign carriers have
no representation in it.  How can the GOJ reconcile these two points?
Response to U.S. Q. 105 regarding foreign subsidiaries
Each carrier should determine whether or not to ha ve subsidiaries.  Each subsidiary should determine
whether or not to belong to JHTA.  We are in no position to comment on this question.
U.S. Question 106
The prior consultation system set up by the JHTA remains cumbersome and arbitrary.  How does the
Japanese Government intend to make the process transparent, equitable and timely?  Although prior
consultations by the JHTA have decreased, why ar e foreign carriers still required to get JHTA's
permission when engaging in minor changes?WT/TPR/M/76/Add.1
Page 233
Response to U.S. Q. 106 regarding the prior consultation system
The prior consultation system is being conducted in a transparent, equitable and timely manner based
on the agreement reached among associations related to port transport business including shipping
lines and companies in 1997. Subjects of prior consultation were agreed on by shipping lines at that
time.
U.S. Question 107
The amendments to the Port Transportation Law increase the required minimum number of people
employed by a stevedore by 150 percent, with the aim of encouraging economies of scale.  Doesn't
Japan fear that the measure will instead increase labor costs and discourage efficient operation?
How will the new minimum manning requirement affect new entrants?
Response to U.S. Q. 107 regarding the new minimum manning requirement
The hike in the minimum standard for regular workers employed is necessary to prevent access to port
transport business by illegal and detrimental operators.  This hike does not impose an excessive
burden on new entrants.
U.S. Question 108
Foreign carriers may now apply for licenses to operate at terminals but labor unions have implied
that they will strike if they do.  How will the Transport Ministry address this issue and ensure reformin the industry?
Response to U.S. Q. 108 regarding licensing of foreign carriers
The Japanese Government does not have any information on this matter.
U.S. Question 109
The revised Port Transportation Business Law changes th e system of prior permission of fees to prior
notification of fees, but the GOJ reserves the right to "correct" fees as it sees fit.  In what
circumstance would fees be corrected?  What standards will the GOJ use to regulate fees charged byport companies?
Response to U.S. Q. 109 regarding the correction of fees
The Minister of Transport can order a change in the fees in cases where they are used to unfairly
discriminate against specific users or in cases where they are likely to cause unfair competition among
other port transporters.
U.S. Question 110
How will the GOJ address the exorbitant landing fees charged at Japan's airports?   What are the
GOJ's plans for internationalization of Haneda airport and will the GOJ ask for foreign input to such
plans?
Response to U.S. Q. 110 regarding landing fees
As the New Tokyo International Ai rport Authority (NAA) is an inde pendent corporation, it obliged to
make a profit on its own income. At present, NAA is in the red, so we think it would be very difficultWT/TPR/M/76/Add.1
Page 234
to reduce landing charges. NAA and IATA, acting as representatives of users, have agreed on the
landing charges at Narita Airport through negotiations. The NAA has not raised  landing chargessince April 1984. The situation concerning the landing charges is well-known to airlines.
Kansai International Airport is constructed 5 km offshore in order to provide the expected level of
international and domestic air transport service wi thout raising noise problem on the local community.
Consequently, the cost to construct a man-made island on the sea was very high. In order to recover
these costs, as all other available measures, such as capital investment from central and localgovernments and the private sector, have been taken, there was no alternative but to introduce the
beneficiary payment principle.
Regarding the internationalization of Haneda Airport, the Japanese Government does not intend to
open Haneda to international scheduled flights; those flights will continue to be serviced by Narita
airport. However, it is examining a way to utilize Haneda Airport for only international passengercharter flights and business aviation during midnight and early-morning hours when Narita Airport is
not available.WT/TPR/M/76/Add.1
Page 235
Table
Changes in physical labor productivity in the agricultural and manufacturing industries
(FY1995 = 100)
Production index Working population index Physical labor productivity index
Agricultural
industryManufacturing
industryAgricultural
industryManufacturing
industryAgricultural
industryManufacturing
industry
1995 100.0 100.0 100.0 100.0 100.0 100.0
1996 98.0 102.3 97.3 99.2 100.7 103.1
1997 98.4 106.0 95.5 99.0 103.0 107.1
1998 92.5 98.5 93.1 94.9 99.4 103.8
Rates of increase and decrease compared to the same period in the previous year
1995-96 -2.0 2.3 -2.7 -0.8 0.7 3.1
1996-97 0.4 3.6 -1.8 -0.2 2.3 3.9
1997-98 -6.0 -7.1 -2.5 -4.2 -3.5 -3.1
Note:  Physical labor productivity = Production index/Working population index X 100WT/TPR/M/76/Add.1
Page 236
IMPORT NOTICE (As of 17 December 1999)
(translation, authentic in Japanese only)
[final amendment by MITI Notification No. 688, December 15, 1999]
MINISTRY OF INTERNATIONAL TRADE AND INDUSTRY NOTIFICATION No. 170 OF 1966
In accordance with the provision of article 3 of the Import Trade Control Order (Cabinet Order No. 414 of 1949), items of goods which are
required to obtain import quota, areas of origin or shipment which are required to obtain import approval and other necessary m atters
concerning import of goods shall be noticed as follows.  The notice shall apply as from 1 May 1966 and the MITI Notification No . 203 of
1964 shall be abolished.
I. The items for which import quotas are to be obtained which are required to obtain import quota are those listed in
Item  1 of the table below (here in after referred to as "Non-liberalized items") and in Item 2 of the said table.
[Note:  Import quota is required under the provision of paragraph 1, article 9 of Import Trade Control Order.]1. Non-liberalized items
Heading No. of the
Customs Tariff ScheduleDescription of Goods
ex0301.99-2 Nishin ( Clupea spp. ), Tar ( Gadus spp., Theragra spp.  and Merluccius spp. ), Buri ( Seriola spp. ), Saba
(Scomber spp. ).  Iwashi ( Etrumeus spp., Sardinops spp.  and Engraulis spp. ), Aji ( Trachurs spp.  and
Decapterus spp. ) and Sanma ( Cololabis spp. ), live.
ex03.02 Nishin ( Clupea spp.), Tara ( Gadus spp., Theragra spp.  and Merluccius spp. ), and its roes, Buri ( Seriola
spp.), Saba ( Scomber spp. ), Iwashi ( Etrumeus spp., Sardinops spp.  and Engraulis spp. ), Aji ( Trachurus
spp. and Decapterus spp. ) and Sanma ( Cololabis spp. ), fresh or chilled.
ex03.03 Nishin ( Clupea spp. ), Tara ( Gadus spp., Theragra spp.  and Merluccius spp. ) and its roes, Buri ( Seriola
spp.), Saba ( Scomber spp. ), Iwashi ( Etrumeus spp., Sardinops spp.  and Engraulis spp. ), Aji ( Trachurus
spp. and Decapterus spp. ) and Sanma ( Cololabis spp. ), frozen.
ex03.04 Fish fillets and other fish meat (whether or not minced) of Nishin ( Clupea spp. ), Tara (Gadus spp.,
Theragra spp. and Merluccius spp. ), Buri ( Seriola spp. ), Saba ( Scomber spp. ), Iwashi ( Etrumeus spp.,
Sardinops spp.  and Engraulis spp. ), Aji ( Trachurus spp.  and Decapterus spp. ) and Sanma ( Cololabis
spp.), fresh, chilled or frozen.
ex 03.05 Nishin ( Clupea spp. ), Tara ( Gadus spp., Theragra spp.  and Merluccius spp. ), Buri ( Seriola spp. ), Saba
(Scomber spp. ), Iwashi ( Etrumeus spp ., Sardinops spp. and Engraulis spp. ), Aji ( Trachurus spp.  and
Decapterus spp. ) and Sanma ( Cololabis spp. ), dried, salted or in brine;  fish-meal fit of those fish, roes
of Tara ( Gadus spp., Theragra spp.  and Merluccius spp. ), "Niboshi" (small boiled and dried fish for
seasoning use).
ex 03.07 Scallops;  adductors of shellfish, cuttle fish and squid (excluding "Mongo ika").
ex1211.90-1 Coca leaves.
ex1212.20-1-(1) Edible seaweeds, fresh or dried, formed into rectangular (including square) papery sheets not more than
430 square centimeters per piece.
1212.20-1-(2) Edible Porphyra spp.  and other seaweeds mixed with Porphyra, spp.  other than those specifed in
No. 1212.20-1-(1) of the Customs Tariff Schedule.
ex1212.20-1-(3) Other edible seaweeds (genus Enteromorpha , genus Monostroma , genus Kjellmanila  and genus
Laminaria ).
ex1301. 90 Cannabis resins.
1302.11 Opium.
1302.19-2-(2) Extracts or tincture of cannabis and crude cocaine.
ex2106.90-2-(2)-E Food preparations of seaweeds (genus Porphyra , genus Enteromorpha , genus Monostroma , genus
Kjellmanilla  and genus Laminaria ).
ex25.24 Amosite and crocidolite.
26.12 Uranium or thorium ores and concentrates.
ex2844.10 Natural uranium and its compounds; alloys (other than ferro-uranium), dispersions (including cermets),
ceramic products and mixtures containing natural uranium or natural uranium compounds.
(Cont'd)WT/TPR/M/76/Add.1
Page 237
Heading No. of the
Customs Tariff ScheduleDescription of Goods
ex2844.20 Uranium enriched in U 235 and its compounds:  plutonium and its compounds;  alloys (other than
ferro-uranium), dispersions (including cermets), ceramic products and mixtures containing uranium
enriched in U 235, plutonium or compounds of these products.
ex2844.30 Uranium depleted in from U 235 and its compounds;  thorium and its compounds;  alloys (other than
ferro-uranium), dispersions (including cermets), ceramic products and mixtures containing uranium
depleted in U 235, thorium or compounds of these products.
ex 2844.30 Compounds of fissile isotopes or alloys, dispersions (including cermets), ceramic products and mixtures
containing these compounds.
2844.50 Spent (irradiated) fuel elements (cartridges) of nuclear reactors.
ex2903.59 1, 2, 4, 5, 6, 7, 8, 8-octachloro-2, 3, 3a, 4, 7, 7a-hexahydro-4, 7-methano-1H-indene;  1, 4, 5, 6, 7, 8,
8-heptachloro-3a, 4, 7, 7a-tetrahydro-4, 7-methano-1H-indene;  and these mixture of analogous
compounds (chlordane or heptachlor, here in after referred to as "chlordanes") and 1, 2, 3, 4, 10, 10-hexachloro-1, 4, 4a, 5, 8, 8a-hexahydro -exo-1, 4-endo-5, 8-dimet hanonaphthalene (aldrin. here in after
referred to as "aldrin") (excluding those used for testing and research purposes).
ex2903.62 Hexachlorobenzene and 1, 1, 1-trichloro-2, 2-bis (4-chlorophenyl) ethane (DDT, here in after referred
to as "DDT") (excluding those used for testing and research purposes).
ex2903-69 Polychlorobiphenyl, polychloronaphthalene (more than 3 chlorines) (excluding those used for testing
and research purposes).
ex2904.20 4-Nitrodiphenyl and its salts.
ex2909.19 Bis (chloromethyl) ether.
ex2910.90 1, 2, 3, 4, 10, 10-Hexachloro-6, 7-epoxy-1, 4, 4a, 5, 6, 7, 8, 8a-octahydro –exo-1, 4-endo-5,
8-dimethanonaphthalene (dieldrin, here in after referred to as "dieldrin") and 1, 2, 3, 4, 10, 10-Hexachloro-6, 7-epoxy-1, 4, 4a, 5, 6, 7, 8, 8a-octahydro-endo-1, 4-endo-5, 8-dimethanonaphthalene
(endrin, here in after referred to as "endrin") (excluding those used for testing and research purposes).
2914.31 1-phenyl-2-propanone (phenylacetone).
ex2921.45 β-naphthylamine and its salts.
ex2921.49 4-aminodiphenyl, N-ethyl-1-phenycyclohexylamine (Eticyclidine), Phenyaminopropane, and these
salts.
ex2921.59 Benzidine and its salts.
ex2922.19 3-acetoxy-6-dimethylamino-4, 4-diphenylheptane (acetylmethadol), a-3-acetoxy-6-dimethylamino-4 .
4-diphenylheptane (alphacetylmethadol), β-3-acetoxy-6-dimethylamino-4 . 4-diphenylheptane
(beta-acetylmethadol), a-3-acetoxy-6-methylamino-4, 4-diphenylheptane (noracymethadol),
6-dimethylamino-4, 4-diphenyl-3-heptanol (dimepheptanol), a-6-dimethylamino-4, 4-diphenyl-
3-heptanol (alphamethadol), β-6-dimethylamino-4, 4-diphenyl-3-heptanol (betamethadol),
4-dimethylamino-3-methyl-1, 2-diphenyl-2- (propionyloxy) butan (propoxyphen), and these salts.
ex2922.29 4-ethyl-2, 5-dimethoxy-a-dimethylphenethylamine (DOET), 2, 5-dimethoxy-4,
a-dimethylphenetylamine (DOM), 2, 5-dimethoxy-4-, a-methylphenethylamine (DMA), 3, 4, 5-trimethoxyphenethylamine (mescaline), 3, 4, 5-trimethoxy-a-methylphenethylamine (TMA), 4-bromo-
2, 5-demethoxyphenethylamine 4-bromo-2, 5-dimethoxy-a-methylphenethylamine (Brolamfetamine),
4-methoxy-a- methylphenethylamine (PMA), and these salts.
ex2922-30 6-dimethylamino-4, 4-diphenyl-3-hexanone (normethadone), 6-dimethylamino-4, 4-diphenyl-3-
heptanone (methadone), 6-dimethylamino-5-methyl-4, 4-diphenyl-3-hexanone (isomethadone), 2-
aminopropiophenon 2-(methylamino)-1-phenylpropan-1-one (methcathinone) and these salts.
ex2922.49 Trans-2-dimethylamino-1-phenyl-3-cyclohexene-1-carboxylic acid ethyl ester (tilidine) and its salts.
ex2922.50 (2-dimethylamino) ethyl-1-ethoxy-1, 1-diphenylacetate (dimenoxythadol) and its salts.
ex2924.29 N- (2- (methylphenethylamino) propyl) propionanilide(diampromide) and its salts.
ex2926.90 4-cyano-2-dimethylamino-4, 4-diphenylbutane (methadone-intermediate) and its salts.
ex29.31 Bis (tributyl tin) = oxide (excludig those used for testing and research purposes).
ex2932.99 N-ethyl-a-methyl-3, 4-(methylenedioxy) phenethylamine (N-ethyl MDA), 3- (1, 2-dimethylheptyl)–7,
8, 9, 10-tetrahydro-6, 6, 9-trimethyl -6H- dibenzo (b, d) pyran-1-ol (DMHP), N –dimethyl-3, 4-(methylenedioxy) phenethylamine (MDMA), 6a, 7, 8, 9-tetrahydro-6, 6, 9-trimethyl-3-pentyl-6H-
dibenzo (b,d) pyran-1-d(Delta 10 tetrahydrocannabinols), 6a, 7, 8, 10a –tetrahydro-6, 6, 9-trimethyl-3-
pentyl-6 H-dibenzo (b, d) pyran-1-d (Delta 9 tetrahydrocannabinols) (only substances derived from the
occurrence of the chemical reactions other than decomposition reactions, except for these chemical
(Cont'd)WT/TPR/M/76/Add.1
Page 238
Heading No. of the
Customs Tariff ScheduleDescription of Goods
reactions necessary for the refining of cannabis plants which are defined in the law under article 1 of
the Cannabis Controle Law (Law No. 124 of 1948 and for the refining of 6a, 7, 8, 10a-tetrahydro-6, 6,
9-trimethyl-3pentyl-6 H-dibenzo (b, d) pyran-1-d included in the above-mentioned cannabis plantsproducts), 6a, 7, 8, 10a-tetrahydro-6, 6 . 9-trimethyl-3-pentyl-6H-dibenzo (b, d) pyran-1-d (Delta 8
tetrahydrocannabinols) (only substances derived from the occurrence of the chemical reactions other
than resolved reactions, exceptions to these chemical reactions necessary for the refining of cannabis
plants and the substances are necessary to manufacture 6a, 7, 10, 10a-tetrahydro-6.6 9-trimethyl-3-
pentyl-6H-dibenzo (b, d) pyran-1-d included in the above-mentioned cannabis plants), 6a, 9, 10,10a-tetrahydro-6, 6, 9-trimethyl-3-pentyl-6 H-dibenzo (b, d) pyran-1-d (Delta 7 tetrahydrocannabinols),
7, 8, 9, 10-tetrahydro-6, 6, 9-trimethyl-3-pentyl -6H-dibenzo (b, d) pyran-1-d (Delta 6a (10a)
tetrahydrocannabinols), 8, 9, 10, 10a-tetrahydro-6, 6, 9-trimethyl-3-pentyl-6H-dibenzo (b, d) pyran-1-d(Delta 6a (7) tetrahydrocannabinols), 6a, 7, 8, 9, 10, 10a-hexahydro-6, 6-dimethyl-9-methylene-3-
pentyl-6H-dibenzo (b, d) pyran-1-d (Delta 9 (11) tetrahydrocannabinols), 3-hexyl-7, 8, 9, 10-
tetrahydro-6, 6, 9-trimethyl-6H-dibenzo (b, d) pyran-1-d (parahexyl), a-methyl-3, 4- (methylenedioxy)phenethylamine (MDA), N- (a-methyl-3, 4- (methylenedioxy) phenethyl) hydroxyamine (N-
hydroxyMDA), 3-methoxy-a-methyl-4, 5- (methylenedioxy) phenethylamine (MMDA), and these salts.
ex 2933.39 1- (2- (4-aminophenyl) ethyl) –4-phenylpiperidine-4-carvone acid ethylester (anileridine), 3-allyl-
1-methyl-4-phenyl-4- (propionyloxy) piperidine (allylprodine), a-3-ethyl-1-methyl-4-phenyl-4-
(propionyloxy) piperidine (alphameprodine), β-3-ethyl-1-methyl-4-phenyl-4- (propionyloxy) piperidine
(betameprodine), 1- (3-cyano-3, 3-diphenylplopyl) –4-phenylpiperidine-4-carvoxylic acid ethyl ester
(diphenoxylate), 4-cyano-1-methyl-4-phenylpiperidine (pethidine-intermediate-A), 4, 4-diphenyl-
6-piperidino-3-heptanone (dipipanone), a-1, 3-dimethyl-4-phenyl-4- (proprionyloxy) piperidine
(alphaprodine), β-1 . 3-dimethyl-4-phenyl –4-4 (propionyloxy) piperidine (Betaprodine), 1, 2, 5-
trimethyl-4-phenyl-4- (propionyloxy) piperidine (trimeperidine), 1- (2- (2-hydroxyethoxy) ethyl)
-4-phenylpiperidine-4-carvoxylic acid ethyl ester (ethoxeridine), 1- (3-hydroxy-3-phenylpropyl) -4-
phenylpiperidine-4-carvoxylic acid ethylester (phenoperidine), 4- (3-hydroxyphenyl)-1-methyl-4-piperidilethylketone (ketobemidone), 4- (3-hydroxyphenyl) –1-methylpiperidine-4-
carvoxylic acid ethyl ester (hydroxyperydine), 4-phenylpiperidine-4-carvoxylic acid ethyl ester
(pethidine-intermediate-B), 4-phenyl-1- (3-phenylaminopropyl) piperidine-4-carvoxylic acid ester,(piminodine), 1-(2- benzyloxy) ethyl) –4-phenylpiperidine-4-carvoxylic acid ester (benzethidine), N-
(1-methyl-2-piperidinoethyl) propionanilide (phenampromido), 1-methyl-4-phenylpiperidine-4-
carvoxylic acid ethyl ester, 1- (3-cyano-3, 3-diphenylplopyl)-4- (2-oxo-3-propionyl-1-benzimidazolinyl) piperidine (Bezitoramide), 1- (3-cyano-3, 3-diphenylplopyl) –4- (1-piperidino)
piperdine-4-carvoxylic acid amide (piritramide), 1- (3-cyano-3, 3-diphenylplopyl) –4-phenylpiperidine-
4-carvoxylic acid (difenoxin), 4, 4-diphenyl-6-piperidino-3-hexanone (norpipanone), N-
(1-propioneanilide (Beta-hydroxyphentanyl), N- (1- ( β-hydroxyphenethyl) –3-methyl-4-piperidyl)
propioneanilide (Beta-hydroxy-3-methylphentanyl), 1- (1-phenylcyclohexyl), piperidine
(phencycridine), N- (1-phenethyl-4-piperidyl) propioneanilide (fentanyl), 1-phenethyl-4-phenyl-piperidinol acetate ester (PEPAP), 4-fluoro-N- (1-phenethyl-4-piperidyl) propionanilide (para-
fluorofentanyl), N- (1-methyl-2- (piperidinoethyl)) –N-2-pyridylpropionamide (propiram), 1-methyl-4-
phenylpiperidine-4-carvoxylic acid (pethidine-intermediate-C), N- (3-methyl-1-phenethyl-4-pyridyl)propionanilide (3-methylphentanyl), 1-methyl-4-phenyl-4-piperidinol propionate ester (MPPP), N-
(1-(a-methylphenethyl) – 4-piperidyl) acetanilide (acetyl-alpha-methylphentanyl), N- (1-
(a-methylphenethyl) –4-piperidyl) propionanilide (alpha-methylphentanyl), 1- (2-methoxycarbonylethyl) –4- (phenylpropionylamino) –piperidine-4-carboxylic acid methyl ester
(remifentanil) 2-phenyl-2- (2-piperidyl) methylester acetate (methylphenidate), and these salts.
ex2933.51 5-allyl-5- (1-methylbutyl) barbitutric acid (secobarbital) and its salts.
ex2933.59 a- (a-methoxybenzyl) –4- ( β-methoxyphenethyl) –1-piperazinethanol (zipepral) and these salts.
ex2933.90 2- (4-chlorobenzyl) -1- (diethylamino) ethyl-5-nitrobenzimidazole (clonitazene), 1- (diethylamino)
ethyl-2- (4-ethoxybenzyl) –5-nitrobenzimidazol (etonitazene), 1, 3-dimethyl-4-phenyl-4-(propionyloxy) azacycloheptane (probeptazine) 3-hydroxy-N-phenacyl morphinane (excluding
dextrorotatory), 3-hydroxy-N-phenethylmorphinane (phenonorphane), 3-hydroxy-N-methylmorphinane
(excluding destrorotatory), 3-hydroxymorphinane (excluding dextrorotatory), 1, 2, 3, 4, 5, 6, -hexahydro-8-hydroxy-6, 11-dimethyl-3-phenethyl-2, 6-methyno-3-(phenazocine), 1 . 2, 3, 4, 5, 6-
hexahydro-8-hydroxy-3, 6, 11-trimethyl-2, 6-methano-3-benzocine (metazocine), 3-metoxy-N-methyl
morphinane (excluding dextrorotatory) 3-2-aminoburtyl) indole (etryptamine), N-(1- 2- (4-ethyl-5-oxyo-2-tetrazoline-1-yl) ethyl) –4- metoxymethyl) –4-piperidil) propioneaniride (alphentanil), 3- (2-
(diethylamino) ethyl) indole (DET), 3- (2- (dimethylamino) ethyl) indole (DMT), 3- ((2-
dimethylamino) ethyl) –indole-4-yl dihydrogen phosphate (psilocybine), 3- (2- (dimethylamino) ethyl)–indole-4-d (psilocine), 1- (1-phenylcyclohexyl) pyrrolidine (rolicyclidine)3- (2-chlorophenyl) –2-
methyl-4(3H) –quinazolinone (mecloqualone), 3, 7-dihydro-1, 3-dimethyl-7- (2- ((a-methylphenethyl)
amino) ethyl)-1H-purine-2, 6-dione (phenethyline), 2-methyl-3- (2-totyl)-4 (3H) –quinazolinone
(methaqualone), and these salts.
(Cont'd)WT/TPR/M/76/Add.1
Page 239
Heading No. of the
Customs Tariff ScheduleDescription of Goods
ex2934.90 3- (N-ethyl-N-methylamino) –1, 1-di-(2-thienyl) –1-butene (ethylmethylthianbutene), 3-diethylamino-
1, 1-di- (2-thienyl) –1-butene (diethylthianbutene), 3-dimethylamino-1, 1-di-(2-thienyl) –1-butene
(Dimethylthiambutene), 4-phenyl-1- (2- (tetrahydrofuryloxy) ethyl) piperidine-4-carvoxylic acid ethylester (Furethidine), ((3-methyl-4-morpholino-2; 2-diphenyl) butyryl) pyrrolidine, 2-methyl-3-
morpholino-1, 1-diphenylpropane carboxylic acid (moramido-Intermediate), 1- (2-monopholinoethyl) –
4-phenylpiperidine-4-carvoxcylic acid ethyl ester (morpheridine), 6-morpholino-4, 4-diphenyl 3-
heptanone (phenedoxone), 4-morpholino-2, 2-diphenyl propane carboxylic acid ethyl ester (dioxaphetyl
butyrate), Cis-2-amino-4-metyl-5-phenyl-2-oxazoline (4-methylaminorex) N-(1-(2-(2-thienyl ethyl)-4-piperidil) propionanilide (thiofentanyl), 1-(1- (2-thienyl) cyclohexyl) piperidine (tenocyclidine), N-(1-
(1-methyl-2- 2-thienyl) ethyl) –4-piperidil) propionanilide (alphamethylthiofentanyl), N- (3-methyl-1-
(2- (2-thienyl) ethyl) –4-piperidil) propionanilide (3-methylthiofentanyl), N- 4-(methoxymethyl) –1- (2-(2-thienyl) ethyl) –4-piperidil) propionanilide (sufentanil), 3-methyl-2-pherrylmolpholine
(Phenmetrazine), and these salts.
ex2939.10 The following and these salts (derivatives in case of s):
a N-allylnormorphine (nalorphine) and its ethersb Codeine, ethylmorphine and other ethers of morphine
c Diacethylmorphine (heroine) and other esters of morphine
d Dihydrocodeinone (hydrocodone) and its esters
e Dihydrocodeine and its esters
f Dihydrodeaxymorphine (desomorphine) and its estersg Dihydrohydroxy (oxycadone) and its esters
h Dihydrohydroxymorphinone (oxymorphonone)
I Dihydromorphine and its estersj Dihydromorphinone (hydromorphone) and its esters
k Thebine
l 6-nicotinylcodeine (nicocodine)m Normorphine (dimethylmorphine) and its ethers
n 14-hydroxydihydromorphine (hydromorphinol)
o 6-methyldihydromorphine (methyldidydromorphine)p Methyldihydromorphinone (metopone) and its esters
q6 - m e t h y l - ∆-6-deoxymorphine (methyldesorphine)
r Morphines Morphine-N-oxide and other pentavalent nitrogen molphines
t 3-0-acethyl-7, 8-dihydro-7 a – (1(R) –hydroxy-1-methylbutyl –6-0-methyl-6, 14-endo-
ethenomorphine (acetorphine)
u Dihydrocodeinone-6-(corboxymethyl) oxime (codoxime)
v 7, 8-dihydro-7-a-[1 – (R) –hydroxy-1-methylbutyl]-6,14-endo-ethanoter ahydrooripavine 
(dihydrootorphine)
w 7, 8-dihydro-7a- (1 (R) –hydroxy-1-methylbutyl) –6-0-methyl-6, 14-en-do-ethe nomorphine 
(etorphine)
x 3, 4-dimethoxy-17-methylmorphinan-6 β, 14-diol (drotebanol)
2939.41 1-phenyl-2-methylaminopropanol-1 (ephedrine) and its salts
2939.42 1-phenyl-2-methylaminopropanol-1 (pseudoephedrine) and its salts
ex2939.49 1-phenyl-2-dimethylaminopropanol-1, and its salts
ex2939.63 Lysergic acid diethylamido (lysergide) and its salts
ex2939.90 Ecgonine, cocaine and other esters of ecgonine, phenylmethylaminopropane, 1-phenyl-1-chloro-2-
methylaminopropane, 1-phenyl-1-choro-2-dimethylaminopropane, 1-phenyl-2-dimethylaminopropane,
and these salts.
ex3002.10 Antisera for humans (excluding those for experimental use and investigational reagents for anrigen-
antibody reaction).
ex3002.20 Vaccines for humans (excluding those for experimental use and yellow fever vaccine).
ex3002.30 Vaccine against foot and mouth disease (excluding those for experimental use)
ex30.03 Preparations containing goods of subheading Nos. 1211.90-1, 2921.49, 2922.19 to 2926.90 and 2932.90
to 2939.90 (excluding 4-aminodiphenyl and its salts), excluding the following:
a preparations containing less than 1% by the weight of codeine, dihydrocodeinde or these salts, but 
not goods other than articles (excluding codeine, dihydrocodeine, 4-aminodiphenyl and its salts)
b plants (including their parts) specified in 1, 2, 3 or 4 other than these for materials  of narcotic 
drugs
c goods containing less than 10% by the weight of 1-phenyl-2-methylaminopropanol-1
d goods containing less than 10% by the weight of 1-phenyl-2-dimethylaminopropanol-1
(Cont'd)WT/TPR/M/76/Add.1
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Heading No. of the
Customs Tariff ScheduleDescription of Goods
ex30.04 Preparations containing goods of subheading Nos. 1211.90-1, 2921.49, 2922.19 to 2926.90 and 2932.90
to 2939.90 (other than 4-aminodiphenyl and its salts), excluding the following:
a preparations containing less than 1% by the weight of Codeine, Dihydrocodeine or these salts, but 
not containing goods other than articles (excluding Codeine, Dihydrocodeine, 4-aminodiphenyl 
and its salts)
b plants (including their parts) other than those for materials of narcotic drugs
c goods containing less than 10% by the weight of 1-phenyl-2-methylaminopropanol-1
d goods containing less than 10% by the weight of 1-phenyl-2-dimethylaminopropanol-1
ex3404.90 Polychlorobiphenyl and polychloronaphthalene excluding those used for testing and research purposes.
ex3506.91 Rubber adhesives, containing more than 5% of benzene by volume of its solvent (including diluent)
used therein.
36.01 Propellent powders.
36.02 Prepared explosives, other than propellent powders.
ex36.03 Safety fuses, detonating fuses, percussion and detonating caps, igniters (excluding the igniters that use
0.1 gram or less, of the black gun powder and ignited by electric current) and detonators.
ex36.05 Yellow phosphor matches.
ex38.22 Preparations and other products containing more than 1% by weight of 4-nitrodiphenyl or its salts, bis
(chloromethyl) ether, benzidine or its salts, 4-aminodiphenyl or its salts or β–naphthylamine or its salts.
ex3824.90 Preparations and other products containing more than 1% by weight of 4-nitrodiphenyl or its salts, bis
(chloromethyl) ether, benzidine or its salts, 4-aminodiphenyl or its salts or β–naphthylamine or its salts;
polychlorobiphenyl and polychloronaphthalene (excluding those used for testing and research
purposes).
ex4005.20 Rubber adhesives, containing more than 5% of benzine by volume of its solvent (including diluent)
used therein.
ex4016.99 Rubber adhesives, containing more than 5% of benzine by volume of its solvent (including diluent)
used therein.
ex5007.20 refer to III 24-(8) Woven fabrics of silk (excluding fabrics of noil and of silk and other fiber mixture)
ex5803.90 refer to III.24-(3) Gouze of silk
ex68.11 Preparations and other products containing more than 1% by weight of Amosite and crocidelite.
ex68.12 Preparations and other products containing more than 1% by weight of Amosite and crocidelite.
ex68.13 Preparations and other products containing more than 1% by weight of Amosite and crocidelite.
ex8109.90 Tubes of zirconium.
8401.10 Nuclear reactors.
8401.30 Fuel elements (cartridges), non-irradiated.
8401.40 Parts of nuclear reactors.
ex84.11 Engines and motors for military aircraft (excluding those parts).
ex8412.10 Engines and motors for military aircraft.
ex8412.39 Engines and motors for military aircraft.
ex8412.80 Engines and motors for military aircraft.
87.10 Tanks and other armoured fighting vehicles, motorized, whether or not fitted with weapons, and parts
of such vehicles.
ex88.02 Military aircraft other than those of subheading No. 8802.60 of the Customs tariff Schedule.
ex89.06 Warships.
ex903.10 Instruments and apparatus containing nuclear fuel materials, for measuring or detecting ionising
radiations.
ex9030.90 Parts and accessories containing nuclear fuel materials, of instruments and apparatus for measuring or
detecting ionising radiations.
93.01 Military weapons
93.02 Revolvers and pistols.
93.03 Other firearms and similar devices which operate by the firing of an explosive charge.
93.04 Other arms.
(Cont'd)WT/TPR/M/76/Add.1
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Heading No. of the
Customs Tariff ScheduleDescription of Goods
ex93.05 Parts and accessories of articles of headings Nos. 93.01 to 93.04 of the Customs Tariff Schedule,
excluding those of plastic, rubber, leather, composition leather or textile materials specified in
subdivision [2] of subheading No. 9305.90.
93.06 Bombs, grenades, torpedoes, mines, missiles, and similar munitions of war and parts thereof;  cartridges
and other ammunition and projectiles and parts thereof, including shot and cartridge wads.
93.07 Swords, cutlasses bayonets, lances and similar arms and parts scabbards and sheaths thereof.
2. Animals and plants, and their derivatives of the Washington Convention and Controlled substances listed in the Montreal
Protocol
1. Animals (excluding spermwhale, baird's baked whale, minke whale, seiwhale bryde's whale and finwhale) and plants
included in Appendix I of the Convention on International Trade in Endangered Species of Wild Fauna and Flora
(hereafter referred to as "Washington Convention") and their parts.
2. Eggs, seeds, bulbs, fruits (including the peel), stuffed or processed products (hereafter referred to as "derivatives") of
animals and plants subject to the Washington Convention.
3. Controlled substances listed in Annex A, Group I (excluding those used as raw materials for producing other
substances and those used for laboratory and analytical), Annex A, Group II (excluding those used as raw materials
for producing other substances), Annex B, (excluding those used as raw materials for producing other substances and
those used for laboratory and analytical), and Annex C (excluding those used as row materials for producing othersubstances) of the Montreal Protocol on Substances that Deplete the Ozone Layer (hereafter referred to as "Montreal
Protocol"), or controlled substances listed in Annex E (excluding those used as raw material for producing other
substances and those used for quarantine of export or import of cargo).
II. Import approval is required for goods mentioned in paragraphs 1 and 2 of the table below under the provision of Item 2,
paragraph 1, Article 4 of the Import Trade Control Order (here-after referred to as "Item 2 approval")
1. Goods mentioned in the right column of the table below having originated in or been shipped from the areas mentioned in the l eft
column.
Goods
Area
Item No. Heading No. of the Customs Tariff
ScheduleDescription of goods
The countries or the areas
excluding the countries listed
in Item 25 of paragraph III01.06;  0208.90;  0210.90;  1504.30;
1521.90;  16.01;  1602.10;  1602.20;
1602.31;  1602.39;  1602.49;  1602.50;
1602.90;  2301.10;  2309.10;  2309.90Whales and their preparations, excluding
those shipped from the sea outside of the
territorial waters of Japan (excluding
those shipped from inside of harbours offoreign countries) and those listed in
Item 2 of the table of paragraph I
Belize, Honduras and Panama
(only shipped from those
countries)0301.10-2;  0301.99-1;  0301.99-2-(2);
0302.39;  0302.70-2;  0303.49;  0303.80-
3;  0304.10-1-(2);  0304.10-2-(2);
0304.20-2;  0304.90-2;  0305.10;0305.20-4;  0305.30-2;  0305.49;
0305.59-2;  0305.69-2;  1604.14;
1604.20-1-(2);  1604.20-2;  2301.20;
2309.10;  2309.90Bluefin tuna and their preparations
People's Republic of China,
North Korea and Taiwan0301.91-2;  0301.99-2;  0302.11;
0302.12;  0302.19;  0302.70;  0303.10;
0303.21;  0303.22;  0303.29;  0303.80;03.04;  0305.10;  0305.20;  0305.30;
0305.41;  0305.49;  0305.59;  0305.69;
1604.11;  1604.19;  1604.20Salmon and (salmon) trout and
preparations made of the same
(Cont'd)WT/TPR/M/76/Add.1
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Goods Area
Item No. Heading No. of the Customs Tariff
ScheduleDescription of goods
The sea outside of the
territorial waters of Japan (incase of shipment only)
(excluding the case of
shipment from harbors offoreign countries ad the case
of import by fishing boats
having left Japanese territoryexcept when the goods were
trans-shipped from fishing
boats having left places other
than Japanese territory)1 01.06;  0208.90;  0210.90;  1504.30;
1521.90;  16.01;  1602.10;  1602.20;1602.31;  1602.39;  1602.49;  1602.50;
1602.90;  2301.10;  23.09Marine animals and preparations made of
the same
2 0208.90;  0210.90;  03.01;  03.02;  03.03;
03.04;  03.05;  03.06;  03.07;  1504.10;1504.20;  15.06;  16.04;  16.05;  2106.90;
2301.20;  23.09Fish, crustaceans, other aquatic and
preparations made of the same
3 05.04;  05.06;  05.07;  05.08;  05.09;
0511.91;  0511.99Products of animal origin (marine animal,
fish, crustaceans and mollusk)
4 1212.20;  2106.90 Seaweeds and preparations made of the
same
Brazil, Bulgaria, France(including French Guiana),
Greece, Hong Kong, India,Italy, North Korea, People's
Republic of China, Republic
of Korea, Rumania, Taiwan,United Kingdom and
Vietnam5007.20;  5007.90;  51.11; 51.12;  52.08;
52.09;  52.10 (excluding having either the
warp or the weft of flax, ramie, syntheticfibers or acetate fibers);  52.11 (excluding
having either the warp or the weft of flax,
ramie, synthetic fibers or acetate fibers);52.12 (excluding having either the warp or
the weft of flax, ramie, synthetic fibers or
acetate fibers);  53.09;  53.10;  53.11;54.01;  54.02 (containing more than 10%
by weight of silk);  54.03 (containing more
than 10% by weight of silk);  54.06;54.07;  54.08;  55.12;  55.13;  55.14,
55.15,  55.16;  56.03;  56.07;  58.01
5802.11 (excluding having either the warpor the weft of synthetic fibers or acetate
fibers);  5802.19 (excluding having either
the warp or the weft of synthetic fibers oracetate fibers);  5802.20 (excluding
impregnated, coated, covered or laminated
with plastics, rubber or other substances);
5802.30;  5803.90;  5804.30-2;  58.06;
58.09;  59.02;  59.11 (excluding endlessfelts for paper-making); 6002.10-2;
6002.20-2;  6002.30-2;  6002.99Yarn of man-made fibers (continuous),
fabrics of silk and other fiber mixtures
(excluding textured fabrics and scouredfabrics), woven pile fabrics, cordage
(including twine, ropes and cables),
bonded fiber fabrics and knitted orcrocheted fabrics and warp knit fabrics)
using raw silk, and also that will be used
as raw silk by unsewing
People's Republic of Chinaand Republic of Korea50.04;  5006.00-1;  5007.20;  5007.90;
51.11;  51.12;  52.08;  52.09;  52.10(excluding having either the warp or the
weft of flax, ramie, synthetic fibers or
acetate fibers);  52.11 (excluding havingeither the warp or the weft of flax, ramie,
synthetic fibers or acetate fibers;  52.12
(excluding having either the warp or theweft of flax, ramie, synthetic fibers or
acetate fibers);  53.09;  53.10;  53.11;
54.01;  54.02 (containing more than 10%by weight of silk);  54.03 (containing more
than 10% by weight of silk);  54.06;
54.07;  54.08;  55.12;  55.13;  55.14;
55.15;  55.16;  56.03;  56.07;  58.01;Silk yarn, excluding yarn spun from noil
and other waste silk, but including thosedefined in Item 26 of paragraph III which
will be used as silk yarn by unsewing
(Cont'd)WT/TPR/M/76/Add.1
Page 243
Goods Area
Item No. Heading No. of the Customs Tariff
ScheduleDescription of goods
5802.11 (excluding having either the warp
or the weft of synthetic fibers or acetatefibers);  5802.19 (excluding having either
the warp or the weft of synthetic fibers or
acetate fibers);  5802.20 (excludingimpregnated, coated, covered or laminated
with plastics, rubber or other substances);
5802.30;  5803.90;  5804.30-2;  58.06;58.09;  59.02;  59.11 (excluding endless
felts for paper-making);  6002.10-2;
6002.20-2;  6002.30-2;  6002.99-2
People's Republic of China,
Japan, Republic of Korea and
Taiwan (in case of originonly (including the case of
being woven in People's
Republic of China or Japanand then being dyed, resined,
embossed or processed by
other similar methods outsideor People's Republic of
China))5007.20 Woven fabrics of silk (excluding fabrics
of noil silk and of silk and other fiber
mixture) (excluding the case of shipmentfrom China, Republic of Korea or
Taiwan)
People's Republic of China,
Japan, Republic of Korea andTaiwan (in case of origin
only (including the case of
being woven in People'sRepublic of China or Japan
and then being dyed, resined,
embossed or processed byother similar methods outside
or People's Republic of
China))5803.90 Gauze of silk (excluding the case of
shipment from People's Republic of
China)
People's Republic of China
and Japan (in case of origin
only (including the case of
being woven in People'sRepublic of China or Japan
and then being sewing or
processed for other silkmanufacture outside of
People's Republic of Chinaand Japan))63.01;  6302.29-2;  6302.39-2;  6302.59-2;
6302.99;  6303.99-2;  6304.19-3;
6304.99-2;  6305.90;  6306.19;  6306.29;
6306.39;  6306.49;  6306.99;  63.07Lape robe, bedlinen, table linen, curtain,
bag for packing, tarpaulin and other
products used woven fabrics of silk
(excluding fabrics of noil silk and of silkand other fiber mixture) and will be used
as woven fabrics of silk
Iraq Al cargo
Cambodia 44.03 Raw lumber, whether or not peeled,
stiripped or roughly processed
Angola (only shipped from its
country)7102.10
7102.217102.31Diamonds
2. Animals and plants, and their derivatives of the Washington Convention, belonging products listed in Annex D of the Montreal
Protocol, Other Wastes and specified substances mentioned of Law on the Prohibition of chemical weapons and Regulation.
1. Animals and plants originating in or shipped from countries and regions not mentioned in (1) and (2) of Item 28,
paragraph III, and belonging to species listed in Appendix II of the Washington Convention (excluding animals
originating in or shipped from countries and regions mentioned in Item 25 of paragraph III), plus their parts and
derivatives (for plants, only those parts and derivatives Specified in Appendix II).
In addition, animals and plants belonging to species in Appendix III of the Washington Convention, and parts and
derivatives specified in Appendix III shipped from regions and countries not mentioned in (1) and (2) of Item  28,paragraph III and moreover, originating in countries and regions mentioned in Appendix III.WT/TPR/M/76/Add.1
Page 244
2. Products shipped from countries and regions not mentioned in Item 29, paragraph III and listed in Annex D of the said
Protocol.
3. All nations or territories shipping goods to Japan are subject to the conditions specified in Item 1 of Section 2 of the
Law for the Control of the Export and Import of Specified Hazardous Wastes and Other Wastes, as well as subject to
the regulations appearing in Item 1 of Section 2 of the Waste Management & Public Cleansing Law.
4. All nations or territories shipping specified substances to Japan are subject to the conditions specified in Item 3 of 
Section 2 of Law on the Prohibition of Chemical Weapons and Reglation.
__________