JAPAN – IMPORT QUOTAS ON DRIED LAVER AND SEASONED LAVER
Document: Notification of Mutually Agreed Solution
Date: 27 January 2006
Document codes: WT/DS323/5; WT/DS323/1; G/L/724/Add.1; G/AG/GEN/67/Add.1; G/LIC/D/38/Add.1
Complainant: South Korea
Respondent: Japan
Third parties: China, EU, New Zealand, U.S.
Dispute stage: Mutually Agreed Solution
Agreements cited: Art. XI  GATT 1994Art. 4.2  AgricultureArt. X:3(a)  GATT 1994Art. 1.2, 1.6  Import Licensing

JAPAN – IMPORT QUOTAS ON DRIED LAVER AND SEASONED LAVER

Notification of Mutually Agreed Solution

 The following communication, dated 23 January 2006, from the delegation of Korea and the
delegation of Japan to the Chairman of the Dis pute Settlement Body, is circulated pursuant to
Article 3.6 of the DSU.

 Korea and Japan wish to notify the Dispute Se ttlement Body in accordance with Article 3.6 of
the DSU that they have reached a mutually agreed so lution, elements of which are attached hereto, to
the matter raised by Korea in document dated 3
 December 2004.

 We would ask you to circulate this notifica tion to the relevant C ouncils and Committees, as
well as to the Dispute Settlement Body.

 (signed) (signed)
 Mr CHOI Hyuck Mr Ichiro FUJISAKI
 Ambassador Ambassador
 Permanent Representative Perm anent Representative of Japan
 of the Republic of Korea

ATTACHMENT

1. Product Coverage

 The products covered by this mutually agreed solution are all the laver products (hereafter,
the "Laver Products") classified under the HS Cod es 1212 and 2106, as further described in Annex A
hereto.

2. Annual Import Quota Amounts

(a) An annual import quota will be allocated excl usively for Korean Laver Products in an amount
(hereafter, the "Annual Import Quota Amount") which will not be less than 340 million sheets
in 2006 and thereafter the Annual Import Quota Amount will be increased so that the Annual
Import Quota Amount allocated for 2015 will be no less than 1.2 billion sheets.

(b) Both sides will discuss to determine a conversi on formula with respect to Laver Products that
are not in sheet form pursuant to the consultation procedures in paragraph 9.

3. Sub-Quotas

(a) Japan's import quota system with respect to Korean Laver Products will comprise the sub-
quotas set forth in Annex B hereto.

(b) User Quota: In the User Quota Notification [Hacchugendo Naiji sho], the amount of the User
Quota exclusively allocated to applicable Korean Laver Products will be expressly stated.

(c) Trading Company A Quota (provisional name):

 A. In an annual import quota announcement, it will be expressly stated that all laver
imported under the Trading Company A Q uota must be exclusively applicable
Korean Laver Products.

 B. With respect to any past import reco rd requirement for the Trading Company A
Quota, no applicant will be disqualified excep t for those who have failed to achieve a
quota use ratio of 80% or more of the allo cated quota during the most recent two year
period.

(d) Other Laver Products (as defined in Annex A) of Korea may be imported under any of the
sub-quotas, including the First-Come-First-Served Quota from 2007, in accordance with the
arrangement based on the consultations pursuan t to paragraph 9. In 2006, Other Laver
Products of Korea may be imported under the First-Come-First-Served Quota.

(e) Necessary arrangements will be maintained so as not to impose any maximum quota volume
per applicant in allocating the Trading Company A Quota unless it is necessary due to excess
demand for quota allocation.

(f) With respect to the First-Come-First-Served Quota or in re-allocating any unutilized amounts
of the User Quota pursuant to paragraph 7, if any amount of the quota remains unallocated
due to the maximum quota volume per appli cant notwithstanding existing demand, such
maximum quota volume per applicant will be eith er increased or otherwise it will be ensured
that all quotas are allocated to the extent that demand exists for such quotas.
WT/DS323/5, G/L/724/Add.1,
 G/AG/GEN/67/Add.1, G/LIC/D/38/Add.1

4. Sub-Quota Allocations

 Unless otherwise decided pursuant to paragra ph 11(b), no more than 60% of the Annual
Import Quota Amount will be allocated to the User Quota and the remaining portion will be allocated
to the Trading Company A Quota.

5. Import Quota Announcement and Completion of Quota Allocation

 The import quota announcement for 2006 will be ma de in February 2006 and quota allocation
to applicants of the Trading Company A Quota will be completed within 2 months from the date of
announcement. The timing of the import quota announc ements from 2007 to 2015 will be decided by
no later than 31 October 2006, so that the import quot a announcements will be ma de earlier than that
in 2006.

6. Timing of the Auction of the User Quota

 Both sides will cooperate to promote an e fficient auction process for the products traded
under the User Quota for the laver products impor ted from Korea, through encouraging relevant
organization(s) to hold auctions once or more a y ear. Further details of the auction process will be
discussed by the relevant organizations of Korea and Japan.

7. Unutilized Amount of the User Quota for Korea

(a) If more than 5% of the Annual Import Quota Amount allocated to the User Quota pursuant to
Paragraph 4 above is not utilized, such unutilized portion will be re-allocated to any applicant
wishing to import applicable Korean Laver Produc ts as set forth in Annex C hereto in the
same annual period on the earliest date(s) that the non-utilization of such portion can be
determined.

(b) The Japanese side will make its best efforts to ensure that th e re-allocation pursuant to this
paragraph is effective in facilitating quota use.

8. Effective Implementation

(a) Both sides will take all necessary steps to full y and effectively implement the matters in this
mutually agreed solution. No new measures that adversely affect, directly or indirectly, the
market access for any of the Laver Products in Japan will be taken. Both sides will not take
any action which has the direct or indirect purpose or effect of undermining or offsetting the
basis of this mutually agreed solution.

(b) Prior to the introduction of any formal or informal measures that affect, directly or indirectly,
the market access for any of the Laver Products , both sides confirm that they will provide
information, in a timely manner, on such measures.

9. Consultations

 Both sides will hold consultations regular ly once a year and will hold additional
consultations, at the request of either side, to discuss matters relating to the implementation of the
matters in this mutually agreed solution and other matters relating to improving the market access for
the Laver Products. Such consultatio ns will begin at the earliest possible date, but no later than 30
days from the date of the receipt of a request fo r consultations pursuant to this paragraph, unless
otherwise decided.
WT/DS323/5, G/L/724/Add.1,
G/AG/GEN/67/Add.1, G/LIC/D/38/Add.1

10. Implementing Agency

 As to the Japanese side, the matters in this mutually agreed solution will be implemented by
the Fisheries Agency, the Ministry of Agriculture, Forestry and Fisheries of Japan.

11. Other Matters

(a) This mutually agreed solution is without prej udice to the rights or obligations of either Korea
or Japan including, without limitation, under the Agreement Establishing the World Trade
Organization.

(b) The matters in this mutually agreed soluti on may be rearranged, when necessary, by mutual
consent based on the consultations set forth in paragraph 9.

(c) Both sides will implement the matters in th is mutually agreed solution, together with
Annexes A, B and C hereto, upon notice to the DSB.
WT/DS323/5, G/L/724/Add.1,
 G/AG/GEN/67/Add.1, G/LIC/D/38/Add.1

Annex A

Product Coverage

 For purposes of this mutually agreed solution, Laver Products, as define d in paragraph 1, are
categorized as follows:

• Dried Laver: All dried laver (hoshi nori) classified under 1212.20-1.

• Seasoned Laver Not Containing Sugar: All seasoned laver classified under
2106.90-2-(2)-E-(b).

• Other Laver Products: All Lave r Products other than Dried Laver, Seasoned Laver Not
Containing Sugar.
WT/DS323/5, G/L/724/Add.1,
G/AG/GEN/67/Add.1, G/LIC/D/38/Add.1

Annex B

Sub-Quotas under Japan's Import Quota System for Korean Laver Products

Trading Company A Quota (this naming is provisional, and can be renamed during the process of
import quota announcement)

• Qualified importers: An applicant that has b een allocated trading company quota under past
laver Import Announcements, and that meets all of the following requirements:

(i) has a record of clearing laver impor ts through customs from Korea during the
preceding one year period,

 (ii) and has a record (quota use ratio) of clearing 80% or more of the allocated laver
import quota through customs during the most recent two year period on an average
basis, if allocated a trading company quota in the year before the last.

• All of the laver products listed in Annex A may be imported under the Trading Company A
Quota from 2007.

User Quota

• The User Quota is allocated to applicants th at receive purchase orders from customers that
have received a notification of the maximum amount of orders ("User Quota Notification").

• All of the laver products listed in Annex A may be imported under the User Quota from 2007.
WT/DS323/5, G/L/724/Add.1,
 G/AG/GEN/67/Add.1, G/LIC/D/38/Add.1

Annex C

Timetable for Reallocation of Unutilized Amount of the User Quota

Around February:

 Annual Import Quota Announcement

Around March:

 The Fisheries Agency is to issue the User Quota Notification (Hacchugendo Naiji sho) and to
make it clear that "if purchase orders has not b een placed until the specific date (as early as
practicable within 6 months after the User Quota Notification), the unused amount of the
Notification expires".

Around May:

 The User Quota organization is to hold an auction of laver. The organization places the
purchase orders of the laver, which are successf ully bidden at the auction. Ministry of
Economy, Trade and Industry (METI) is to provide import license according to the amount of
the bidden laver. Actual customs clearance happens after June.

Around September or earlier:

 Pursuant to Paragraph 7 of this mutually ag reed solution, the Fisheries Agency will announce
the reallocation as well as its application schedule and qualifications for the applicants.

Around October or earlier:

 Application for the reallocation is open for and accepted from any applicants who meet the
qualifications.

Around November or earlier:

 The Fisheries Agency can reissue the User Quota Notification (Hac chugendo Naiji sho) to
any applicants wishing to import applicable Korean Laver Products until the unused amount
is fully used and METI will provide the import license. Once the import license is issued, the
import of laver using the reissued User Quota Notification can begin.

 With respect to the terms of validity for the import quota certificates and the import licenses
granted on the basis of the certificates in this case, such terms will be the same terms as for
the Trading Company A Quota or the First-Come-First-Served Quota.

The above schedule may be rearranged from 2007, wh en necessary, by mutual consent based on
consultations set forth in Paragraph 9 of this mutually agreed solution.