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DOCUMENTS "COM"
COM(82)67
Vol.1982/9007

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COM(82)67 final
Bruxelles,leFebruary1982
COMMISSION
DES
COMMUNAUTES EUROPEENNES
Secrétariat général
EC/JAPANRELATION^^^
(Communication fromtheCommissiontotheCouncil)
C0MC82)67final

EC/JAPAN RELATIONS
(oo-unication fro.th.Oo-.i..ion t.th.Council ) ^
INTROKICTION
Initslast coaaunication totheCouncil onEC/Japan relations of
2Deceaber 1981(C0M(8l )176final )theCoaaission desor <i^dthe
maindevelopments sincetheCouncil discussions inJu^jb^and July
ofthat year andmade certain reconunendations ; were that the
Coaaunity aust continue toemphasize totheJapanese authorities
theurgency and iaportance ofthe issues involved andtheneed that
theJapanese authorities adept aeasures tl^t areadequate todeal
withtheaf thattheCeaaissiea should^ntasent tothenewJapanese
Cabinet inDeceaber acoaprehensive^&bt oftheCoaaunity *srequests ;
andthattheCoaaission would theq^-eport totheFebruary 1982
Council inthe light oftheresponse oftheJapanese authorities to
ourrequests tobeascertained attheHigh Level Consultations atthe
endofJanuary 1982 * Counoil endorsed these proposals .
2.Thus this paper ref^rts entheresponse oftheJapanese authorities
given ontheoooasion oftheHigh Level Consultations held inTokyo
on29January andBakes certain recommendations .
BACKGRÇmD
3*On9December Vice President Haferkamp handed totheJapanese Ambassador
totheCommunity arequest list intheform approved bytheCouncil on
8December . AJapanese Ministerial meeting on16December announced
under certain broad headings efforts toopen theJapanese market to
imported goods . Afurther Japanese ministerial meeting of30January
agreed onanumber of -measures relating totheimprovement ofimport
testing procedures andformalities .

4.Takentogetherthesemeasuresmaybesummarised asfollows:
(a)Advanceimplementation on1April1982ofthetwotranches
duein1983-84/outofthe8-yearprogrammefortheimplementation
oftheTokyoRoundreductions.
«
(b)Areductioninthewhiskytariffofsome10.4percent.
(c)Apackageofimprovements inimporttestingprocedures^and
formalities .
(d)Theestablishment ofacomplaintsprocedurewithertheJapanese
administrationfordealingwithforeigngrieva&esrelatedto
theopennessoftheJapanesemarket.
(e)Asashorttermmeasure,foreigncurr^jcyloansatU.S.Treasury
Billinterestratesplus0.125per<£§ritperannumforthefinancing
ofemergencyimportsofaircraftjSfShips andotheritemsupto
USdollar500million.
(f)Thedespatchofimportmissionsandholdingofproductexhibitions .
(g)Informalassurance^&at,asregardsJapaneseexportstothe
Communityinserw^ivesectorsin1982,acarefulwatchwould
bekeptinor<$rtoavoidexcessiveincreases.In1982only
"moderate"growthwasexpected.
(h)Prom^jonofindustrialcooperationwiththeECcountries.
5.The^>measuresneedtobeviewedagainsttheRequest'Listwhichthe
CouncilagreeduponinDecember. *
JAPANESE IMP0RTS
A.OPENING UPOFTHEJAPANESE MARKET
Fivemeasuresinordertosimplifyandfacilitatecustomsformalities
havebeenannounced.Theseshouldmeansomeimprovement incustoms
clearance,buttheirfullimpactcanonlybeassessedoncetheyhave
beenputfullyintoeffect.

3.
The effectiveness ofthe complaints procedure within the Japanese
administration -fordealing with foreign grievances relating totheΛ
openness ofthe Japanese market ,remains tobeestablished .
Theimpact onCommunity exports ofthe USdollar 500million off<ri$ign
currency loans cannot beother than marginal .
B. TARIFFS ,FISCAL CHARGES AND QUOTAS
Theadvance implementation ofthe twotranches ofts^rf reductions due
X"!in1983-84 means onaverage anextra reduction of0.5 percentage points
inthe Japanese tariffd ). One example isareduction inthetariff
onsugared biscuits from 38.5% to36.3% .The reduction inthe whiskya®
 tariff willamount inpractice tosome^^8 onathree-quarter litrebottle ofsuperior-brand whisky sellftjQ*in Japan atbetween Yen5,000
and Yen 10,000 .This compares with our request fortariff reductions
ofasubstantial character going beyond what was agreed inthe Tokyo
Round and implemented atanearly date .
Fiscai charges :noiøérovements are under consideration .
Quotas :although these remain under examination bythe Japanese
authorities ,nosubstantial liberalisation appears tobeenvisaged .
C. STANDARDS£?YESTING AND ACCEPTANCE PROCEDURES
0nl]£^jptrt ofthemeasures announced areofinterest totheCommunity ,
ao^ofthese,somearenotentirely new.Asregards products which
the Community singled out inits Request List,inthe case ofpharmaceuticals ,
cosmetics and chemical products ,there isthe prospect ofconsiderable
improvement .Inthe case ofagro-chemicals ,improvement appears less
(DThe bilateral average (weighted by1976 bilateral trade from the ECto
Japan )Japanese applied tariff will move from 8.51% atthe end of1979
to6.36% atthe beginning of1987,i.e. anaverage linear reduction of
0.27% each year . •

substantial .Forelectrical andhouseholdappliances,whilean
adaptationofJapanesestandardstointernational standardsis
foreseen,theimpactforCommunityproductsofthesemeasureswill
dependupontheprecisemodalitiesofimplementation .
4* D.FINANCIAL SERVICES ANDINVESTMENT
Nofurtherdevelopments toreport. I
II.JAPANESE EXPORTS ;
Thestatements bytheJapaneseauthorities (para.4(g)roove)fallshort^ofourrequestforanassurancethattherewillbeacontinuedandeffective
moderationofJapaneseexportstotheCommunity asawholein1982incertain
sensitivesectors,sothatthereshouldbeno^rorseningofthesituation
intheCommunity.^
GENERAL ASSESSMENT
–– ■i■i im■■iii■w »
6.Ourgeneralassessmentoft4^foregoingisasfollows:
(a)ThereisnowapoliticalprisedeconscienceinJapanasregardsthe.
necessityforactiontodealwithexternaltradefrictions.
1*/K\DiifMA(b)Butno,^p>damentalorlastingshiftofpolicyisyetapparentwhich
wou^j^ermittheemergenceofamorebalancedtraderelationship
wj^theCommunity.
(c)Morespecifically,theannouncedtariffandnon-tariff measuresare
likelytohavelittleornomeasurable impactonECexportswithinthe
nexttwoorthreeyears,whilethestatements onJapaneseexports^incertainsensitivesectorsin1982arenotfullysatisfactory.

Despite the measures announced ,access tothe Japanese market for
European goods will continue toremain difficult owing toaseries ^
ofbarriers andinhibitions atvarying levels ;incertain secton ^^"
suchasprocessed foodstuffs ,alcoholic beverages andleather f<^-
wear and leather ,there are high tariffs and/orrestrictive import
quotas ;inrelation toawide range ofproducts ,there aretesting
andacceptance procedures which,while eased insome<^&s,still act
asaneffective brake onimports ;and beyond all and most
important asatradedisincentive istheclosek^fc^structure ofJapanese industry andanin-bred ,group-orientated tradition of
doing business ,which treat imports ofmanufactured products as
anexception ,tobeaccepted inthe case ofhigh quality consumer
items orwhen comparable Japanese gog^arenotavailable .The
result isthatJapanisnotinteg^^^d withitsmaintrading
partners sofarasimports of^jj^jfactured goodsisconcerned ,
and canmaintain the export competitivity ofitsindustry under
circumstances whereby the Japanese domestic market (the second
single largest econom^after the US)iseffectively preservedforJapanese indusfc$i
The question mcfy also beposed whether Japan isplaying anappropriate
part,commensurate with its economic strength ,insupporting the
Western system and taking its proper share ofresponsibilities and
.burte?^.Certain facts speak forthemselves :
"^Ca)in1980 imports ofmanufactures into the Community were 2176
billion (2675 per capita ),into the US2132 billion (2599 per
capita )and into Japan 230billion (2260 per capita ),about
the level ofimports ofmanufactures into Turkey ;
(b)Japanese defence expenditure in1980 asaproportion ofGNP was
N
0.9% ,compared with 5.2% inthe case ofthe US,4.9% inthe
case ofthe United Kingdom ,3.9% for France ,and 3.3% inthe
case ofthe Federal Republic ofGermany .

(c)official development aid ofJapan in1980 asaproportion
of GNP was 0.32% compared with an EEC average of0.49% .
&There are thus various indications ofthe way inwhich Japan is
failing toprovide ,adequate support fortheinternational liber^^
trading Western system and,bysodoing ,istransferring aheavier
share ofthe burden ontoits fellow members .This makes itall
themore necessary tofind some ways ofconcrete actio^ay the
Community which couldreinforce ourrequests ifwe^^toavoid,
inaworsening economic climate ,aradical deter^^tion inEC-Japan relations andgrowing pressures forthea&Jption ofindividual
protectionist measures .
OPENING 0FTHEJAPANESE MARKET ^
9.Inthelight oftheabove,pres^^e ontheJapanese authoritietoopentheir market must befflJj^sued ,particularly through thees
euse
ofthe appropriate procedures .
IntheCommissions viewthere isagoodcaseforconsidering
thatthebenefits^^cruingtotheCommunity bywayoftheGATT
concessions as^^gards theJapanese tariff .,forwhich theCommunity
haspaid through repeated tariff reductions ,are being impaired
ornullified byawhole series ofbarriers existing inJapan .
Artic^XXIII ofGATT could,therefore ,beinvoked totrytoredoes thesituation ,(ThetextofArticle XXIII isannexed ).
This would imply two procedural stages :
-The Community would hold abilateral consultation with Japan
inthe GATT framework inwhich itwould explain why our trade
access was being impaired .
-Ifthefirst stage fails toproduce results ,the Community
could askfor aGATT panel ,which isthe normal method in
GATT fordealing with dispute settlement .

ν Article XXIII isaform ofconcrete action fully compatible •
with the Community 'sinternational obligations .Inaddition ,it
would appear likely that anapproach onthese lines would be
supported byother trading countries which have experienced similar ^
difficulties inexporting toJapan . aX?*
EXPORT RESTRAINT BYJAPAN AND RESTRUCTURING OP ECINDUSTRY
Λ
10.There remains theproblem ofexport restraint "byJapan i^\eertainsensitive sectors inorder topermit abreathing epac^^or the
restructuring ofEuropean industry .TheJapanese^gp&horities have
clearly ruled outanyvoluntary arrangement onthese lines f0rauto­
mobiles and TVonaCommunity basis .Inthemeantime wearefaced with
asituation where : _
(a)inthecase ofautomobiles andtelevision sets andtubes ,
individual restrictions arei^jj^sed against Japanese
imports bycertain i-Member States .
(b)thus despite frequent urgings from theCouncil ofMinisters
onlines such as"ai^KSnimon strategy oftheCommunity isan
essential preremflpsite toaneffective dialogue with Japan .
Only inthis will the Community institutions beable to
speak with thenecessary authority andprecision ",there is
inpractice not yet afully effective common policy
towards Japan inthese sectors ;
(c)thidp&as three effects :
(i)itmeans that the Community cannot useits'barganing
power asaCommunity which isitsmajor strength in
international negotiation (cf.the European Council
declaration concerning Japan of30June 1981 "the
Community should make thefullest possible use of
itsbargaining power asaCommunity 4*);
I
(ii)individual national restrictions serve only anarrow short-
term interest ofthe Member States concerned .For res­
trictions onJapanese exports indefinitely toapply
will simply mean that the industry inthe Member
State concerned will soon beuncompetitive even
within the Community letalone onthird markets ;

8.
(iii)yetincircumstances ofgrowing unemployment and
protectionist pressures theexistence ofindividual
restrictions incertain Member States will bea
constant encouragement forothers tofollow the ^
same road*thus endangering notonly theCommunity *s
cohesion indealing withthird countries butalso ^
ultimately theinternal mechanisms of.theCommon
Market itself ,aslaid down intheTreaties .
11.TheCommission hasalready proposed totheCouncil >001*1(80)444 final
of15July 1980 )thephasing outoftheexisting national restrictions
onJapanese imports into theCommunity ,inexchange ,insome exceptional
cases ,fortemporary restraint onJapanes^^xports while European
industry restructured .IntheCommissions view adecision needs
tobetaken bytheCouncil onthese^p°posals inthenextfewmonths .
INDUSTRIAL ANDSANDTCOOPERATION _
Animportant element interms ofoverall relations with Japan concerns
cooperation intheindustri^t^and scientific andtechnological sphere .
Inthecourse ofrecent^§^s therehavebeenanintensive series of
exploratory talks betUS^n Commission representatives andvarious Japanese
agencies inTokyo .Itemerges that there issome interest ontheJapanese
side indeveloping cooperation with theCommunity incertain ofthese
fields .The promising areas seem tobe:
. . *-remofr^ysensing from space ,
-automatic translation oflanguages .
^Other areas which could usefully beexplored inthecoming months include
-fast breeder safety andadvanced fuels ,
-nuclear waste disposal ,
-thecompilation ofreliability data for light water reactors ,
-radio protection and radio ecology .
Inthelonger term itmayprove possible todevelop bilateral cooperation
with Japan concerning :

9.
-alternative energy sources (including solar energy ),
-nuclear fusion .
Bothsides agreed toremain closely intouch with aviewtoidentifying ^
precise projects forcooperation' inthemore promising oftheforegoing
areas . . >
SUMMARY OF PROPOSALS^
13.The Commission accordingly proposes tothe Council :
1.that itdecides that consultations should beheld
with Japan inthe GATT framework under jAfticle XXIII /asset
out inparagraph 9. .cSy
2.thatitendorses the recommendfljRons inparagraph 11 'that the
Council decides during the next few months onthe package
proposed bythe Commission in1980 involving the phasing out of
theexisting nationaK^strictions onimports from Japan,inrreturn for
aperiod ofrestr^frc inJapanese exports inordertofacilitate
therestructures ^ofEuropean industries .
that itapproves the Commission 'ssuggestions inparagraph 12that
thefj^6ibi lities ofindustrial andscientific andtechnological
c^o^f-ation withJapan should beactively pursued .

ANNEX
Art cleXXIII
Nullification orImpairment
1.Ifanycontracting party should consider that any benefit accruing
toitdirectly orindirectly under thisAgreement isbeing nullified orimpaired
orthattheattainment ofanyobjective oftheAgreement isbeing impeded
3stheresult of
(a)thefailure ofanother contracting party tocarry outitsobligations
under thisAgreement ,or
(,b)theapplication byanother contracting party ofany measure ,
whether ornot itconflicts withtheprovisions ofthisAgreement ,or ^(c)theexistence ofanyother situation , jjiN_ * !/
thecontracting party may ,with aview tothesatisfactory adjustment of
thematter ,make written representations orproposals to (.heother con­
tracting party orparties which itconsiders tobeconcerned .Any con­
tracting party thusapproached shall givesympathetic c*>£iidcration tothe
representations orproposals made toi|t.
2.Ifnosatisfactory adjustment isefiectecL^$hveen thecontracting
parties concerned within areasonable time , thedifficulty isofthe
type described inparagraph 1(c)ofthisArticle ,thematter may bereferred
totheCONTRACTING PARTIES .The CONTRACTING PARTIES shall promptly
investigate any matter soreferred tothem and shall make appropriate
recommendations tothecontracting parties which they consider tobe
concerned ,orgivearuling onthep£§ter ,asappropriate .TheCONTRACTING
PARTIES mayconsult withcontwripfng parties ,with theEconomic andSocial
Council oftheUnited Natiog^fod withanyappropriate inter-governmental
organization incases whensfiircy consider suchconsultation necessary .Ifthe ,
CONIRACIING PARTIES D^VSIDER thatthecircumstances areserious enough
tojustify s,uch action ,they may authorize acontracting party orparties
tosuspend theapplication toany other contracting party orparties of
such concessions orother obligations under thisAgreement asthey deter­
mine tobeappropriate inthecircumstances .Iftheapplication toany
contractiq^Qwrty ofanyconcession orother obligation isinfactsuspended ,
thatco^Wtting party shallthenbefree,notlaterthansixtydaysaftersuchactions taken ,togivewritten notice totheExecutive Secretary 1totheCtfs|h <ACTINT ;PARTIES ofitsintention towithdraw from thisAgrccm§nt
a>a such withdrawal shall take effect upon thesixtieth dayfollowing the
dayonwhich such notice isreceived byhim.