International Trade: Implementation and Monitoring of the U.S.-Japan Insurance Agreements
Published: 1999-09-24T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Pursuant to a congressional request, GAO provided information on the implementation and monitoring of the U.S.-Japan insurance agreements, focusing on: (1) the views of U.S. insurance companies operating in Japan regarding the agreements' implementation and impact on their ability to compete in the Japanese market; (2) the roles and efforts of the Office of the U.S. Trade Representative (USTR) and the Departments of Commerce, State, and the Treasury in monitoring and enforcing the agreements, and U.S. government views on whether Japan has met its commitments under the agreements; and (3) U.S. insurance industry views on U.S. government monitoring and enforcement efforts.
section_title: What GAO Found
paragraphs: GAO noted that: (1) GAO's 1999 survey of the 13 U.S. insurance companies and 3 brokers in Japan revealed that all but 2 think that Japan has made moderate or better progress overall in implementing the 1994 and 1996 insurance agreements; (2) GAO's analysis of survey results shows that Japan has met most of its transparency (openness), procedural protection, and deregulation commitments; (3) overall, most U.S. companies reported that the agreements have had a positive effect on their ability to compete in Japan; (4) nevertheless, almost half the companies expressed concerns over Japan's implementation of key commitments such as expediting approval of insurance products and rates and limiting the activities of large Japanese companies in the specialized third sector; (5) USTR is the principal agency responsible for monitoring and enforcing the insurance agreements, with assistance primarily from the U.S. embassy in Tokyo; (6) USTR also receives assistance from Commerce and State, with a lesser level of assistance by the Departments of the Treasury and Justice; (7) USTR and U.S. embassy monitoring efforts include obtaining information on the agreements' implementation from industry groups and individual U.S. insurance companies, as well as consulting with the Japanese government; (8) in conducting their monitoring and enforcement work, U.S. government officials have noted Japanese progress in implementing the agreements; (9) however, they have also identified a few issues, which are similar to those cited by some U.S. companies, where they believe Japan has not fully met its commitments; (10) Japan, on the other hand, believes that it has fully implemented both agreements; (11) more U.S. insurance companies expressed favorable views of U.S. government actions to monitor the insurance agreements than reported favorable views of enforcement efforts; (12) about half (7 of 13) of all U.S. insurers and 2 of the 3 brokers GAO surveyed reported that U.S. government efforts to monitor agreements have been effective; (13) with regard to enforcement, about one-third of the companies and no brokers reported that U.S. government efforts have been effective; (14) around one-third of the companies reported that U.S. government monitoring and enforcement efforts have been as effective as ineffective; and (15) three major U.S. insurers expressed concerns over U.S. government monitoring and enforcement efforts concerning the protection of various U.S. company interests in the third sector.

section_title: Letter
paragraphs: The Japanese insurance market is the world's second largest after the  United States, with $334 billion in annual premiums in Japanese fiscal year  1997. The foreign share of this market in Japan is 3.7 percent, compared to  a foreign share of the U.S. insurance market of 10.7 percent in 1996. In  order to improve foreign access to the Japanese insurance market, the  United States and Japan have signed two bilateral insurance agreements, in  1994 and 1996. The United States had two key objectives in negotiating  these agreements: (1) to ensure that Japan deregulated its primary  insurance market, comprised of life and non-life (property/casualty)  insurance and (2) to ensure that Japan provides U.S. companies with a  reasonable period of time to compete in a deregulated primary sector  before opening the “third” sector to increased Japanese competition where  U.S. firms have a substantial presence. The third sector is comprised of  specialized life and non-life products such as cancer, hospitalization, and  personal accident insurance.
In light of concerns that have been raised with your Subcommittee about  the agreements' implementation and the executive branch's actions related  to enforcement of the agreements, you asked us to examine (1) the views  of U.S. insurance companies operating in Japan regarding the agreements'  implementation and impact on their ability to compete in the Japanese  market; (2) the roles and efforts of the Office of the U.S. Trade  Representative and the Departments of Commerce, State, and the Treasury  in monitoring and enforcing the agreements, and U.S. government views on  whether Japan has met its commitments under the agreements; and (3) U.S. insurance industry views on U.S. government monitoring and  enforcement efforts. As you requested, we are also providing you with  information on U.S. government actions related to one U.S. insurer and its  Japanese partner, including the creation of a limited exception to the 1996  agreement and our views on certain aspects of this exception. (See app.  IV).
In conducting our work, we prepared a survey that builds upon a similar  survey we created in 1996 for all U.S. insurance providers operating in  Japan. (See app. I). For this report, we surveyed the 13 U.S. majority-owned  insurance companies operating in Japan. In addition, we surveyed the three  U.S. brokers recently licensed in Japan. Detailed company and broker  survey results are discussed in appendix II. We also met with senior U.S.  and Japanese government and industry officials in Japan and the United  States.
subsections: section_title: Background
paragraphs: The first U.S.-Japan insurance agreement was signed on October 11, 1994,  and was concluded under the United States-Japan Framework Agreement.  In negotiating the insurance agreement, the U.S. government sought to  establish that deregulation of the large primary sector of the Japanese  insurance market, where U.S. firms had experienced only limited success,  would be required before deregulation of the smaller third sector, where  foreign companies have a substantial presence, would occur. According to  the Office of the U.S. Trade Representative (USTR), while the third sector  accounted for roughly 5 percent of the total Japanese insurance market in  Japanese fiscal year 1997, foreign market share for this sector was over 40  percent—much higher than in the traditional, primary insurance market.  U.S. government and industry officials believed that the lack of U.S.  company success in the larger primary sector was the result of a heavily  regulated environment that did not allow for new market entry, product  innovation, or price competition.
In the 1994 agreement, the United States met its negotiating objective of  establishing that primary sector deregulation would be required before  third sector deregulation would occur. Under the agreement, Japan agreed  to avoid “radical change” in the third sector until foreign insurance  companies were granted a “reasonable period” to compete in a significantly  deregulated primary sector market, although the terms “radical change”  and “reasonable period” were not defined in the agreement. The agreement  recognized that Japan was in the process of reforming its insurance sector,  noting that the reform would be based on promoting competition and  enhancing efficiency through deregulation and liberalization. Consistent  with this reform initiative, the agreement included specific commitments  by Japan to deregulate the primary sector. For example, the agreement  provided that insurance companies would be afforded greater flexibility in  establishing the price (rate) they would charge to customers for certain  product lines. In addition, the agreement stated that Japan would expedite  and simplify the application review process for the approval of insurance  products and rates by gradually introducing expedited approval systems  for certain products. Japan also agreed to make its regulatory process more  transparent by, for example, publishing and making publicly available the  standards that insurance regulators will apply in reviewing applications for  approval of new insurance products.
During subsequent negotiations in 1996, the two governments reached an  interim understanding in September, in which Japan agreed to allow direct  sales of automobile insurance to consumers by mail or telephone and  established restrictions on sales by subsidiaries of large Japanese insurers  of some third sector insurance products. The commitment to allow direct  sales of automobile insurance is referred to in the final December 1996  agreement (discussed below), while third sector commitments were largely  superseded by measures contained in the December 1996 agreement.
The second agreement was signed on December 24, 1996. This agreement  was negotiated in response to U.S. insurance company concerns that the  Japanese government was preparing to allow large Japanese insurers  increased access to the third sector through their subsidiaries in violation  of the 1994 agreement. The 1996 agreement further defined restrictions on  third sector entry by Japanese companies, and it clarified when these  restrictions would be lifted by more explicitly linking them to substantial  deregulation of Japan's larger, primary sector. Specifically, the agreement  listed five deregulation criteria for the primary sector that would have to be  met by July 1, 1998, in order to start a 2.5-year countdown toward opening  the third sector no later than 2001. These criteria reflected specific  deregulation commitments in the agreement, such as allowing for greater  pricing flexibility for automobile insurance and applying a system to  expedite marketing of additional products. The two governments  recognized that if, on July 1, 1998, there were disagreement about whether  the criteria had been met, each side would be able to act in accordance  with its own view of whether the criteria had been met. The U.S.  government has stated that, in the case of disagreement over  implementation, it can invoke various trade remedies.
On July 1, 1998, USTR announced that, in its view, Japan had not fully  implemented key agreement commitments including two of the five  primary sector deregulation criteria. As a result, USTR did not (and still  does not) support initiation of the 2.5-year countdown to open the third  sector to increased competition in 2001. The Japanese government stated  that it believed it had fully implemented all commitments, including the five  primary sector deregulation criteria. Thus, in its view the 2.5-year “clock”  began on July 1, 1998, and restrictions on the ability of large Japanese  insurance companies to operate in the third sector will be lifted on January 1, 2001.
The agreement also contains a commitment by Japan to take steps to  increase the number of staff responsible for processing insurance  applications.
In 1998, Japan enacted legal and regulatory changes that affected the  insurance industry:
Japan reorganized its financial regulatory system and created the  Financial Supervisory Agency (FSA). Responsibility for licensing,  application processing, surveillance, and inspection of the insurance  industry was shifted from the Ministry of Finance (MOF) to FSA in June.
Japan agreed to include most of the commitments contained in the 1996  agreement as part of its obligations in the World Trade Organization  (WTO) financial services agreement. The WTO can therefore be a forum  for resolving disputes related to these commitments. The commitments,  which were codified in Japanese legislation that took effect on July 1,  1998, included deregulating the primary sector and restricting sales of  certain third sector products by Japanese insurers.
section_title: Companies Reported Most Commitments Met and Believe Agreements Improve Their Ability to Compete, but Some Concerns Remain
paragraphs: In our January 1999 survey, almost all of the U.S. companies (12 of 13) and  brokers (2 of 3) operating in Japan reported that overall, the Japanese  government had implemented the 1994 and 1996 agreements to a moderate  or greater extent. Our analysis of company responses to our survey  indicates that the Japanese government has implemented most of its  commitments to improve transparency and procedural protections and  deregulate the insurance market. Most of the companies (10 of 13) and  brokers (2 of 3) reported that both agreements had enhanced their ability  to compete in Japan, and a few companies attributed increased sales and  market share to actions taken by Japan under the agreements. Companies,  however, reported that a few of the agreements' commitments in the areas  of transparency, deregulation, and third sector protections had not been  fully implemented.
subsections: section_title: Most Transparency and Procedural Protections Commitments Met
paragraphs: The 1994 agreement included specific commitments by the Japanese  government to provide greater regulatory transparency and improve  application processing procedures. Our analysis of company responses to  our survey indicates that most of these commitments have been  implemented. For example, most companies (10 of 13) reported that they  have been given meaningful access to insurance regulators. Further, 10  companies reported that they had received equal treatment in insurance  industry groups. Ten companies also reported that they were not required  to coordinate their applications with other insurance providers (which may  be potential competitors) and that acceptance of their applications had not  been conditioned or delayed based upon whether they consulted with other  insurance providers, which had been experienced by some U.S. companies  in the past.
section_title: Most Deregulation Commitments Met
paragraphs: Our analysis of company responses to our survey indicates that Japan has  implemented most of its deregulation commitments in the 1994 and 1996  agreements. Moreover, companies reported that several specific  commitments had been fully implemented.
As part of the 1996 agreement, the Japanese government agreed to meet  five deregulation criteria: (1) processing applications for differentiated  types of automobile insurance within a 90-day period, (2) further  liberalizing commercial fire insurance, (3) expanding the “notification  system,” (4) removing the requirement to use insurance rates calculated by  rating organizations, and (5) processing applications within a 90-day period  for differentiated products or rates. The first four criteria apply only to non-life insurers, while the fifth criterion applies to both life and non-life  insurers. According to the agreement, once all of these criteria are met, the  2.5-year countdown toward opening the third sector to increased  competition will begin.
In our January 1999 survey, companies reported that the Japanese  government had largely met the five primary sector deregulatory criteria.  All but one of the U.S. non-life companies expressing an opinion reported  that Japan had met the four criteria that apply only to non-life products  (processing of differentiated auto insurance within 90 days, further  liberalization of commercial fire insurance, expansion of the notification  system, and removal of the requirement to use rating organization rates).  This one company reported that expansion of the notification system was  incomplete.
Regarding the fifth criterion that requires approval of applications for  differentiated products or rates within a standard 90-day processing period  and applies to all insurance companies, over half of the companies (7 of  13), representing almost 60 percent of U.S. premiums in Japan, reported  that the Japanese government had met this commitment. This view is  consistent with our survey data on application processing, which showed  that of all approved applications submitted by U.S. insurance companies  since completion of the 1996 agreement, 95 percent were approved within  90 days of submission, while 5 percent took more than 90 days to receive  approval (though this information is insufficient for determining whether  these last cases constitute violations of the agreement).
In addition, the 1994 and 1996 agreements included commitments by the  Japanese government to improve the distribution of insurance products  through the approval of a direct response system (for example, marketing  over the telephone) for automobile insurance and the licensing of brokers.  We found that the Japanese government implemented these commitments.
section_title: Japan's Deregulatory Actions Promote Opportunities for Some U.S. Firms
paragraphs: Most companies reported that the overall deregulatory actions taken by  Japan to implement both the 1994 and 1996 agreements had a generally  positive effect on their ability to compete in Japan, and several cited  specific examples of being able to introduce new products or rates that  they viewed as beneficial. For instance, one non-life insurer reported that  obtaining approval to offer a differentiated type of automobile insurance  had a very positive effect on its ability to compete in Japan. Also, two  companies viewed the increased liberalization of commercial fire  insurance and the expanded notification system as positive.
Concerning Japan's actions to improve distribution channels for insurance,  of the three non-life insurers who had received approval to offer  automobile insurance through the direct response system, one reported  that this method of distributing insurance products had a very positive  effect on its ability to compete in Japan. In addition, two of the three  brokers reported that the Japanese government's decision to recognize  brokers had a very positive effect on their ability to compete in Japan,  though about half of the insurance companies reported that this event had  no effect. However, all brokers told us that they continued to face certain  obstacles in Japan, including a lack of price and product differentiation,  restrictions on the types of products they can offer, and restrictions on the  structure of their business operations.
section_title: A Few Key Transparency and Deregulation Commitments Not Fully Met
paragraphs: Several companies reported concerns regarding Japan's implementation of  a few commitments in key areas. Concerning one transparency  commitment, almost half of the companies (6 of 13) reported that the  Japanese government had done little to publish and/or make publicly  available licensing, product, and rate approval standards. Regarding  Japan's deregulation commitments, five companies expressed a belief that  Japan had not fully implemented its commitment to process applications  for differentiated products within 90 days. Three companies reported cases  where applications that were for new-to-market products or that used a  new distribution channel took longer than 90 days to receive approval.  Over half of the companies reported that in general Japan has done little to  expedite and simplify the application review process. Further, regarding a  commitment related to Japan's ability to meet its application processing  requirement, all 13 U.S. companies indicated that Japan had not increased the number of staff responsible for processing applications. Company  officials attributed problems with timely processing to this lack of  staffing.
section_title: Concerns Expressed Over Japan's Implementation of Certain Third Sector Protections
paragraphs: Under the 1994 agreement, the Japanese government committed to avoid  “radical change” in the third sector until foreign, as well as small and mid-sized Japanese, insurers had had a reasonable period of time to  compete in a deregulated primary sector. Six companies, representing over  80 percent of U.S. premiums, reported that the Japanese government had  not taken sufficient action to avoid “radical change” in the third sector.
The 1996 agreement included specific commitments by the Japanese  government to prohibit or substantially limit large Japanese insurers'  subsidiaries from marketing certain third sector products in the life and  non-life areas. In the life insurance area of the third sector, Japan  committed to prohibit Japanese subsidiaries from selling stand-alone  medical and stand-alone cancer insurance. Two U.S. life insurance  companies in Japan reported that the Japanese government had not met  this commitment. One U.S. life insurance company reported that the  Japanese government had failed to prevent Yasuda Fire and Marine, a large  Japanese company, from selling stand-alone cancer insurance through its  relationship with INA Himawari, a life insurance subsidiary in Japan of the  U.S. company CIGNA Corporation. (See app. IV for detailed information on  certain USTR actions related to these companies.) Another U.S. life  insurance company reported that a Japanese insurer, Tokyo-Anshin, was  effectively selling stand-alone cancer insurance even though the company  offers it as a rider to a base life insurance policy.
In the non-life insurance area, seven restrictions on sales by Japanese  subsidiaries were put in place by the 1996 agreement, primarily to protect  the existing sales networks of foreign insurers for personal accident  insurance. Among U.S. non-life companies expressing an opinion, all  reported that Japan had met most commitments in this area, though three  companies reported that the Japanese government had not complied with  one commitment—restricting sales of personal accident insurance  endorsed by interindustry associations.
section_title: USTR Is the Principal Monitoring Agency; Believes Japan Has Made Progress, but Has Not Met Certain Key Agreement Commitments
paragraphs: The U.S. government has given the insurance agreements high-level  attention and monitors them on an ongoing basis. USTR is the principal  U.S. government agency responsible for monitoring and enforcing the  insurance agreements. The U.S. embassy in Tokyo also plays a major role,  with the Departments of Commerce and State providing additional  assistance. The Departments of the Treasury and Justice play much less  active roles. USTR officials reported that they hold interagency meetings at  least once every 2 months, and more often as issues arise, to discuss the  status of the insurance agreements. USTR and the U.S. embassy in Tokyo  rely mainly on industry groups and individual companies for information  on the status of the agreements' implementation. USTR attempts, but is not  always able, to thoroughly verify the accuracy or completeness of industry  data on implementation. In monitoring the agreements, USTR has  determined that Japan has made progress in deregulating its insurance  industry but has identified key commitments that remain unmet.
subsections: section_title: USTR Plays Lead Role in Monitoring and Enforcement
paragraphs: USTR's Japan Office, the office with primary responsibility for monitoring  and enforcing the insurance agreements, currently has a total staff of four  permanent employees and one temporary employee from the State  Department, twice the amount of people that it had 4 years ago. However,  the lead USTR official for Japan insurance issues announced his departure  in September 1999. This office is responsible for monitoring approximately  20 trade agreements negotiated under the current and previous  administrations that cover diverse issues such as telecommunications and  autos and auto parts. USTR's Offices of the General Counsel and Services,  Investment, and Intellectual Property also provide assistance with the  insurance agreements when necessary.
USTR has estimated that its efforts, combined with those of the U.S.  embassy in Japan, constitute about 80 percent of total U.S. government  efforts to monitor and enforce the Japanese insurance agreements.  According to USTR, these two agencies confer on the agreements almost  daily. USTR also estimated that the Commerce Department contributes  about an additional 10 percent of U.S. government monitoring and  enforcement efforts and reported that the Treasury Department's role is  limited. According to our survey, U.S. insurance companies in Japan have  communicated most frequently with staff from the U.S. embassy in Tokyo  and USTR regarding the agreements.
According to our survey, six U.S. insurers, which account for over 80 percent of all U.S. premiums generated in Japan, believed that USTR  does not have sufficient resources (personnel, funding, and so on) to  monitor and enforce the insurance agreements. USTR officials reported  that two Japan Office employees have worked part-time on insurance and  that more people are needed to work on insurance and other U.S.-Japan  trade issues. Moreover, a 1998 USTR document noted that the U.S. Trade  Representative spent more time on Japan insurance during much of 1998  than on any other single issue.
section_title: U.S. Agencies Meet at Least Bimonthly to Discuss Insurance Agreements
paragraphs: USTR has reported that coordination among U.S. government agencies to  monitor the insurance agreements takes place about every 2 months and  becomes more frequent prior to consultations with Japan. Meetings are  called as needed rather than being regularly scheduled in advance, a  circumstance that USTR officials view as typical for the agency. According  to a USTR official, there are no minutes or records of decisions for these  meetings. Typically, the Deputy Assistant U.S. Trade Representative for  Japan notifies about a dozen other U.S. government officials of meetings on  insurance. An exception to the usual working-level nature of the process  occurred in the spring and summer of 1998. Spurred by congressional  interest, the process was elevated to a more senior level, and more  agencies participated during two interagency reviews of the activities of  one U.S. insurance company and its Japanese partner. One of these reviews  reached the Cabinet level.
USTR officials have stated that it is difficult to get all agency  representatives to consistently attend meetings because these agencies'  offices have to focus on too many other issues to spend much time on the  U.S.-Japan insurance issue. One USTR official noted that, as a result of  budget pressures and declining staff levels, agencies choose to focus on  issues where they have the lead. In addition, a lack of personnel with  technical insurance industry knowledge and frequent personnel turnover in  certain agencies limit the understanding of issues among the interagency  participants. (Insurance is not regulated at the federal level in the United  States.) Decisions typically depend on consensus among those  participating, rather than on formal clearance with each official on the  meeting notification list.
section_title: U.S. Government Monitoring and Enforcement Efforts Rely Heavily on Private Sector Information
paragraphs: For monitoring and enforcing the agreements, USTR and the U.S. embassy  in Tokyo rely primarily on information provided by U.S. insurance  companies and industry groups, as well as on information collected by  officials at the U.S. embassy in Tokyo from Japanese sources. For  example, USTR relied heavily on information provided by the U.S.  insurance industry in Japan to make its July 1, 1998, decision that the  Japanese government had not met key primary sector deregulation criteria  stipulated in the 1996 agreement. (See app. III for further information on  USTR's key monitoring and enforcement decisions.) USTR officials report  that while neither USTR nor the U.S. government in general possess the  resources or technical capabilities to independently investigate or verify  this type of information, the agency does make an effort to do so by  consulting with experts and industry analysts.
USTR officials and an economic officer at the U.S. embassy in Tokyo report  that one large U.S. insurance provider is a key source of information on the  Japanese insurance market. This company provides the U.S. government  with information on the insurance industry and identifies and provides  details on problems with the agreements' implementation. The embassy  official speaks with representatives from this provider several times a  week. According to USTR, without this company's assistance, much of  what the U.S. government has accomplished in encouraging deregulation of  the Japanese insurance market would not have been possible. USTR and  embassy officials also gather information from several other U.S. insurance  companies; the embassy official speaks with representatives from these  companies about once a week or once every few weeks in order to obtain  as complete a perspective as possible on various issues.
In addition to using information from individual companies, USTR relies on  several industry groups to identify and explain insurance issues. These  groups include the American Chamber of Commerce in Japan (ACCJ), the  American Council of Life Insurance (ACLI), the Coalition of Service  Industries, the International Insurance Council, and the Foreign Non-Life  Insurance Association (which is located in Japan). Company participation  in these groups varies, and no one group has a membership that includes all  U.S. participants in the Japanese insurance market. Some U.S. insurance  companies have noted that even the associations to which they belong do  not always capture their views on insurance issues. However, USTR  officials maintain that they solicit competing viewpoints in cases where  companies are in disagreement. Further, insurance experts at the state  level from the National Association of Insurance Commissioners have  joined USTR in meetings with Japan on insurance issues. For example, the  association hosted working-level consultations between the U.S. and  Japanese governments in April 1999. The support of these technical experts  helped create a dialogue between U.S. and Japanese regulators on new  ways to ease the product approval process.
section_title: U.S. Government Recognizes Progress in Insurance Deregulation, but Has Identified Unmet Japanese Commitments
paragraphs: As part of its monitoring efforts, the U.S. government has reported that  Japan has made some progress in deregulating the primary insurance  sector. According to a recent U.S. embassy document on Japan's insurance  reforms, there is evidence that deregulation has been taking hold, with new  entrants into the life and non-life primary sectors, stronger linkages  between foreign and Japanese firms, and examples of product and price  competition. However, in July 1998 (and again in April 1999) USTR  reviewed the state of implementation and determined that Japan has not  implemented certain deregulation actions called for in the 1996 agreement.  Specifically, USTR stated that the Japanese government has not fully  implemented its obligations regarding the reform of rating organizations  that have historically established prices for major non-life insurance  products, and regarding the timely processing of new product and rate  applications. As a result, USTR does not support initiation of the 2.5-year  countdown toward opening the third sector. In addition, USTR said that  Japan violated third sector protections by licensing a cancer insurance  product to a large Japanese insurance company. (For more information on  how the U.S. government reached these conclusions, see app. III.)
The Japanese government has stated that it has fully implemented both  agreements, including all deregulation actions. Therefore, on July 1, 1998,  Japan began its countdown of the 2.5-year period before opening the third  sector to increased competition. Further, Japan reports that the approval of  the cancer insurance product under dispute is not an agreement violation  but conforms to limitations negotiated by Japan and the United States.
section_title: U.S. Insurance Industry Views U.S. Government Monitoring Efforts More Favorably Than Enforcement Actions
paragraphs: More U.S. insurance companies expressed favorable views of U.S.  government actions to monitor the insurance agreements than reported  favorable views of enforcement efforts. As shown in figure 1, 7 of the 13  U.S. insurance companies operating in Japan, accounting for about 50  percent of U.S. premiums, reported that, overall, the U.S. government had  been effective or very effective in monitoring the agreements. Four  companies, representing 13 percent of U.S. premiums in Japan, believed  that the U.S. government had been effective in enforcing the agreements.  Four companies reported that U.S. government monitoring efforts had  been as effective as ineffective. Five companies provided this neutral  response regarding enforcement efforts.
Most companies expressed satisfaction with U.S. government efforts  concerning the insurance agreements, particularly in situations involving  U.S. government interaction with U.S. industry. For example, nine  companies reported that the U.S. government had sought input from  industry on the status of agreement implementation to a great or very great  extent. Further, seven companies stated that the U.S. government had given  thorough consideration to implementation issues identified by industry to a  great or very great extent. Ten companies reported that the U.S.  government had represented the U.S. insurance industry in Japan generally  or very adequately. Companies providing these responses represented  around 40-50 percent of U.S. premiums in Japan.
However, U.S. insurance companies that account for a large percentage of  U.S. premiums in Japan expressed a lower level of satisfaction with other  aspects of U.S. government monitoring and enforcement efforts,  specifically in terms of timeliness, accuracy of information, and  consistency of government policy. Six companies, which accounted for  over 80 percent of U.S. premiums in Japan, reported that the U.S.  government had not acted upon agreement implementation concerns in a  timely manner. Further, seven companies, which also accounted for over 80 percent of U.S. premiums in Japan, reported that the information  provided to them by the U.S. government on implementation had not been  clear and accurate. Finally, five companies, accounting for almost 90  percent of U.S. premiums in Japan, reported that U.S. government policy  actions regarding the agreements had not been consistent over time. The  largest U.S. insurance company in Japan expressed a strong level of  dissatisfaction with a U.S. government decision that Japan's failure to  prevent certain activities of a competing firm was not violating a third  sector restriction in the 1996 agreement.
section_title: Agency Comments
paragraphs: We obtained oral comments on a draft of this report from officials from  USTR, including the General Counsel and staff from the Japan Office.  USTR declined the opportunity to provide an overall assessment of the  report.  USTR and an official at the U.S. embassy in Tokyo provided several  technical comments, which we incorporated into the report as appropriate.
As arranged with your office, unless you publicly announce its contents  earlier, we plan no further distribution of this report until 30 days after the  date of this letter. At that time, we will send copies of this report to  interested congressional committees and to Ambassador Charlene  Barshefsky, the U.S. Trade Representative; the Honorable William M. Daley,  Secretary of Commerce; the Honorable Madeleine K. Albright, Secretary of  State; the Honorable Lawrence H. Summers, Secretary of the Treasury; the  Honorable Janet Reno, Attorney General; the Honorable Lynn Bragg,  Chairman of the International Trade Commission; the Honorable Jacob  Lew, Director, Office of Management and Budget; and to the firms we  contacted in preparing this report. Copies will also be made available to  others upon request.
If you or your staff have any questions about this report, please contact me  at (202) 512-4128. Other GAO contacts and staff acknowledgments are  listed in appendix VI.
section_title: Questionnaire on the Status of Implementation of the U.S.-Japan Insurance Agreements
paragraphs: We distributed a questionnaire to 13 insurance companies (5 life and 8 non-life companies) and three insurance brokers operating in Japan that  are either wholly or majority U.S. owned. We obtained a 100-percent  response rate to the questionnaire. The questionnaire contains four  sections: (1) implementation/impact of the 1994 U.S.-Japan insurance  agreement, (2) implementation/impact of the 1996 U.S.-Japan insurance  agreement, (3) the combined implementation/impact of the 1994 and 1996  agreements, and (4) monitoring and enforcement of the agreements. We  also administered a supplemental questionnaire that was only distributed  to the 13 companies. The supplemental questionnaire asked for detailed  information concerning applications companies had submitted.
Some of the questions in the questionnaire only applied to non-life  companies, while others only applied to life companies, and these  questions are noted in the attached questionnaire. Also, brokers were  asked fewer questions than the companies because some of the  commitments in the agreements did not pertain to them. For each question  in the following questionnaire and supplemental questionnaire, we have  displayed the company responses. The broker responses are displayed in  parenthesis next to company responses.
section_title: Analysis of Company Questionnaires on the Status of Implementation of the U.S.-Japan Insurance Agreements
paragraphs: This appendix presents a discussion of the results of the company  questionnaires (see app. I) on the 1994 and 1996 U.S.-Japan insurance  agreements. The following discussion is structured differently from our  discussion of this topic in the main body of the report. The discussion in  the main body of the report is structured around issues, such as  implementation, impact, and concerns related to the agreements. This  discussion is structured to follow the order of the questionnaire. We first  discuss company responses to questions on implementation and impact of  the 1994 agreement, then follow with a discussion of company responses to  the 1996 agreement. We end the discussion with company views on the  future impact of the agreements as well as company experiences in sales  and market share over the last few years.
In our discussion of company responses to questions on the 1994  agreement, where appropriate, we compare responses in our current  survey to those responses to a 1996 survey we conducted on the 1994  agreement. Eleven of the 13 companies and two of the three brokers  included in our current survey also responded to our 1996 survey. While our  current survey section on the 1994 agreement covers the same major issues  we covered in our 1996 survey, we did not ask as many detailed questions  about the agreement as we did in our prior survey nor did we ask about  certain commitments that had clearly been implemented prior to the  creation of our 1999 survey.
Finally, our discussion of survey results is supplemented with information  obtained during interviews with U.S. insurance companies in Japan.
subsections: section_title: 1994 Agreement Largely Implemented and Provides Positive Impact, but Concerns Exist Over Implementation of Key Commitments
paragraphs: In our 1999 survey, 8 of the 13 companies, representing about 90 percent of  the premiums generated by U.S. companies in Japan, and two of the three  brokers reported that the 1994 agreement had enhanced their ability to  compete in Japan. This represents a positive change from our 1996 survey,  when most companies reported that Japan had implemented the 1994  agreement to varying degrees, but the agreement had no effect on their  ability to compete. However, companies reported concerns over Japan's  implementation of specific commitments under the agreement.
subsections: section_title: Company Views on Implementation and Impact of Selected Key Commitments Under the 1994 Agreement
paragraphs: The 1994 agreement included commitments by Japan to increase  transparency, deregulation, competition, and access to insurance programs  of government corporations, while protecting foreign companies' shares in  the third sector. Table 1 lists selected key commitments by the Japanese  government under the 1994 agreement. Company views on the extent to  which Japan has implemented these commitments and their impact follow  the table.
Our analysis of questionnaire responses indicates that most of the  commitments to improve transparency and procedural protections have  been met. Most companies (10 of 13) reported that they had been given  meaningful and fair opportunities to share their views with Japanese  officials regarding insurance laws, ordinances, and/or regulations. One  company official indicated that the Financial Supervisory Agency (FSA),  which assumed regulatory authority over product approval from the  Ministry of Finance (MOF), encouraged greater dialogue with companies  and appeared to value and respect diverse opinions. Further, 10 companies  reported that they had received equal treatment in insurance industry  groups. Also, 10 companies reported that the Japanese government had not  required their company to coordinate its applications with other insurance  providers (which may be potential competitors) and had not conditioned or  delayed acceptance of their applications based on whether they had  consulted with other insurance providers.
Several companies, however, expressed concern over the Japanese  government's commitment to publish and/or make publicly available  licensing, product, and rate approval standards. Almost half of the  companies (6 of 13) reported that the Japanese government had done little  or nothing to meet this commitment. This result is very similar to what  companies reported to us during our 1996 survey. Officials from two  companies told us that the MOF and FSA were reluctant to put anything in  writing with respect to approval standards. An official from another  company told us that it was difficult to develop products because the rules  of the product approval process were unclear. With respect to Japan's  commitment to encourage Japanese advisory groups to allow foreign  companies to attend group meetings when these groups are asked to  provide recommendations related to insurance, four U.S. companies  reported that they had attended only a few of these meetings, while another  two U.S. companies reported that they had not attended any meetings.  Officials from two other companies told us that the most effective way to  communicate with the Japanese government was through industry  associations, such as the Life Insurance Association of Japan and the  Foreign Non-Life Insurance Association of Japan, rather than individually.
Overall, 7 of the 13 companies, representing about 90 percent of the  premiums of U.S. companies in Japan, reported that the Japanese  government's actions to improve transparency and procedural protections  had no effect on their ability to compete in Japan. Three companies  reported that these actions had a generally positive effect.
subsections: section_title: Deregulation
paragraphs: Our analysis of questionnaire responses indicates that the Japanese  government has implemented many of the specific deregulatory  commitments in the 1994 agreement. Four of six non-life companies  reported that the Japanese government had, to a moderate or great extent,  expanded the types of non-life products to which flexible rates could be  applied. Eight companies submitted applications using data collected  outside of Japan and were allowed to use this data. This represents twice  the number of companies that reported using outside data in our 1996  survey. However, over half of the companies (7 of 13), representing about  45 percent of the premiums, reported that generally the government had  done little to expedite and simplify the application review process. This  result is very similar to what companies reported to us during our 1996  survey.
Concerning Japan's implementation of its commitment to establish a  brokerage system, two of the three brokers reported that the Japanese  government's decision to recognize and license brokers had enhanced their  ability to compete in Japan. However, all brokers told us that they  continued to face obstacles in Japan, including a lack of price and product  differentiation, restrictions on the types of products they can offer, and  restrictions on the structure of their business operations. In terms of the  impact of brokers on insurance companies, two companies reported that  the establishment of a brokerage system had a generally positive effect on  their ability to compete in Japan, while seven companies reported that this  system had no effect.
Overall, 9 of the 13 companies, representing about 45 percent of premiums,  reported that the Japanese government's implementation of its 1994  deregulatory commitments had a positive effect on their ability to compete  in Japan. Eight companies reported that the Japanese government's  implementation of its deregulatory commitments had enhanced their  abilities to differentiate product rates and forms. Also, five companies  reported that the implementation of deregulation commitments had  increased companies' abilities to distribute insurance products. These  results represent a positive change over our prior survey, when most  companies reported that Japan's actions had done little to enhance their  abilities to differentiate product rates and forms and distribute insurance  products.
section_title: Entry Into the Third Sector by Subsidiaries
paragraphs: Six companies, representing about 80 percent of U.S. premiums, reported  that the Japanese government had not taken sufficient action to avoid  “radical change” in the third sector (that is, had not prevented large  Japanese companies from entering into the third sector). Two U.S. insurers  believed that radical change had occurred because two Japanese  companies, Yasuda and Tokyo-Anshin, were operating in the third sector in  a manner the U.S. insurers believed violated both agreements. Two  companies, representing about 45 percent of U.S. premiums, reported that  Japan had not taken sufficient action to avoid radical change in the third  sector and that this inaction had a generally negative effect on their ability  to compete in Japan. One company stated that Japan had taken sufficient  action to avoid radical change and that this action had a very negative  impact on its ability to compete. Five companies, representing about 40 percent of premiums, reported that Japan's efforts to avoid radical  change had a generally positive effect.
section_title: Government Corporations
paragraphs: The insurance programs of government corporations are large and  profitable, according to officials from two U.S. insurance companies.  However, most companies reported that the insurance programs of these  corporations are not fully available to them. Seven companies reported that  for the most part, these corporations had not allocated shares of premiums  using fair, transparent, nondiscriminatory, and competitive criteria, as  required by the 1994 agreement. This result is very similar to our last  survey. In our current survey, one company official stated that the formula  used by the Housing Loan Corporation (the only government corporation  that has disclosed its formula for allocating shares to insurance companies)  to allocate premiums gave less than 5 percent of the shares to foreign  companies. Furthermore, according to this company official, this  government corporation gave the entire foreign share to one large U.S.  company, with the expectation that the company would share the  premiums with other foreign companies through reinsurance agreements.
section_title: Competition
paragraphs: Many companies reported that Japan had not taken sufficient action to  promote competition in the insurance market. Five of the 13 companies,  representing about 70 percent of U.S. premiums, reported that the  Japanese government had not vigorously enforced the Anti-Monopoly Act  in the insurance sector. Eight companies and all three brokers reported  that keiretsu practices and case agents still adversely affected them to a  moderate or greater extent. Officials from two companies indicated that  Japanese companies would usually not buy insurance outside of their  keiretsu. However, officials from two companies and one broker believed  that keiretsu groups would weaken over time. Overall, 9 of the 13  companies, representing about 90 percent of the premiums, reported that  Japan's efforts to improve competition by taking antitrust actions had no  effect on their ability to compete in Japan. This result is very similar to  what companies reported to us in our 1996 survey.
section_title: 1996 Agreement Also Largely Implemented and Provides Positive Impact, but Some Key Commitments Not Fully Met
paragraphs: In our 1999 survey, 9 of the 13 companies, representing around 50 percent  of U.S. premiums, and two of the three brokers reported that the 1996  agreement had a positive effect on their ability to compete in Japan.  Companies reported that while Japan had implemented many of the  commitments, some had not been fully met.
subsections: section_title: Company Views on Implementation and Impact of Selected Key Commitments Under the 1996 Agreement
paragraphs: The 1996 agreement listed several deregulation commitments for the  primary sector. In addition, the agreement listed other commitments that  restrict entry into the third sector by subsidiaries of large Japanese  companies. The agreement clarified when these restrictions could be lifted  by explicitly linking them to the implementation of five primary sector  deregulation commitments. The agreement states that these restrictions  will be lifted 2.5 years after the five primary sector commitments have been  implemented. Under the 1996 agreement, the Japanese government also  made a commitment to take steps to increase the number of staff who  process insurance applications. Table 2 lists selected key commitments by  the Japanese government under the 1996 agreement. Company views on  the extent to which Japan has implemented these commitments and their  impact follow the table.
Our analysis of questionnaire responses indicates that for the most part  Japan has implemented its deregulatory commitments and these  commitments are having a positive effect. For example, the three non-life  companies who submitted applications to offer automobile insurance  through the direct response system (for example, marketing over the  telephone) reported that these applications have been approved. One of  these three companies reported that this method of offering insurance had  a very positive effect on its ability to compete in Japan, while the other two  companies reported no effect. An official from another company noted that  the approval of direct marketing of automobile insurance should help  toward gaining the approval of direct marketing for other insurance  products.
Of the five primary sector deregulatory commitments that serve as criteria  for lifting restrictions on the entry into the third sector by subsidiaries of  large Japanese companies, four of these apply only to non-life companies.  All of the non-life companies expressing an opinion reported that Japan  had implemented three of these four commitments (that is, approval of  differentiated automobile insurance applications, further liberalization of  commercial fire insurance, and elimination of the obligation to use rating  organization rates). One non-life insurer reported that Japan's commitment  to expand the notification system had not been implemented, while all  other non-life insurers reported that this commitment had been met. These  eight non-life companies had mixed views on the extent to which these  deregulatory actions affected their ability to compete in Japan.
One of the three non-life insurers that had obtained approval to offer  differentiated automobile insurance reported that this had a very  positive effect on its ability to compete in Japan.
Two non-life companies viewed the liberalization of commercial fire  rates as generally positive, with one company official indicating that the  liberalization was producing discounts of up to 30 percent. However,  four of the six non-life companies that offered commercial fire  insurance reported that this liberalization had no effect on their  company's ability to compete in Japan. Officials from two companies  stated that the threshold—the minimum insured amount above which  flexible rates could be applied—was still too high. An official from one  of these companies stated that the keiretsu ties controlled which insurer  provided commercial fire insurance for large corporations.
Four of the six non-life companies that offered products under the  notification system viewed the system as having no effect on their  ability to compete in Japan, while two companies viewed the system as  having a positive effect.
Three companies reported that Japan's reform of rating organizations  had a generally positive effect on their ability to compete, while four  reported that Japan's effort had no effect or a generally negative effect.  One company reported that the elimination of the obligation to use  rating organization rates gave it greater discretion over setting premium  rates. Another official indicated that his company left the rating  organization because it was no longer required to be a member.
The fifth commitment that serves as a criterion for lifting restrictions in the  third sector applies to all insurers. This commitment requires that  applications for differentiated products or rates be approved within the  standard 90-day processing period. Seven of the 13 companies,  representing about 60 percent of U.S. premiums, reported that Japan had  implemented this commitment. However, five companies, representing  about one-third of U.S. premiums, reported that Japan had not met this  commitment. About half the companies (6 of 13) reported Japan's  approval of applications for differentiated products or rates within the  standard 90-day processing period had a positive effect on their ability to  compete in Japan.
We asked companies to provide us with information on the number of  applications they had submitted since the 1996 agreement was signed.  Companies reported that 422 of the 466 applications they had submitted  since the 1996 agreement was signed had been approved and 44 were still  pending. No companies reported that any applications had been rejected.  Companies also reported that 21 of the 422 approved applications, or 5 percent, were approved more than 90 days after submission, as shown in  figure 2. This does not necessarily mean that the Japanese government was  not in compliance with the standard 90-day processing period. This is  because the FSA may suspend the 90-day period under some  circumstances. The 21 applications that took longer than 90 days to  approve were submitted by three companies. Fifteen of the 21 applications  were for applications to sell new-to-market products or to sell through a  new distribution channel, as shown in figure 3. The remaining 6 of 21  applications were for revising company-exclusive product forms or rates.  The applications that have been approved to sell standard products or to  revise standard products or rates were all approved within 90 days.
In summary, regarding the five commitments that serve as criteria for lifting  third sector restrictions, five companies, representing about one-third of  U.S. premiums, reported that Japan had not complied with the commitment  to approve applications for differentiated products within a 90-day period.
One of these companies also reported that Japan had not complied with its  commitment to expand the notification system.
In addition to asking companies to report on the effect of the individual  deregulatory commitments, we also asked companies to report on the  overall effect of deregulatory actions taken by Japan on their ability to  compete. Seven of the 13 companies, representing about 45 percent of U.S.  premiums, and two of the three brokers reported that the Japanese  government's implementation of its deregulatory commitments under the  1996 agreement had enhanced their ability to compete in Japan. Four of the  companies and one broker reported that the Japanese government's  implementation of its deregulatory commitments had no effect, while one  company reported that the Japanese government's implementation of these  commitments had a generally negative effect.
subsections: section_title: Entry Into the Third Sector by Subsidiaries
paragraphs: In the non-life area of the third sector, restrictions on sales by Japanese  subsidiaries were set forth in the agreements primarily to protect the  existing sales networks of foreign insurers for personal accident insurance.  For five of the eight non-life companies expressing an opinion, all reported  that Japan had met most of the these commitments. However, not one  company (of those expressing an opinion) reported that Japan had  prohibited the sales of personal accident insurance to association  members. Overall, three of the non-life companies, representing a majority  of the non-life premiums, reported that Japan's implementation of  restrictions on sales by Japanese subsidiaries had a generally positive  effect.
In the life area of the third sector, Japan committed to prevent Japanese  subsidiaries from selling stand-alone medical and stand-alone cancer  insurance, but allowed for the sale of these products as riders to an  underlying base policy if the rider-to-base-policy ratio was within  prescribed limits. Two U.S. life insurance companies reported that Japan  had not prevented Japanese subsidiaries from selling stand-alone medical  and stand-alone cancer insurance. One of these companies reported that  the Japanese government had failed to prevent Yasuda, a large Japanese  company, from selling stand-alone cancer insurance through its  relationship with INA Himawari. The other company reported that another  Japanese insurer, Tokyo-Anshin, was effectively selling stand-alone cancer  insurance even though the company offers it as a rider to a base life  insurance policy. These two companies reported that the Japanese  government's inability to prevent Japanese companies from selling stand-alone cancer insurance had a negative effect on their ability to  compete in Japan.
section_title: Other Issues: Increasing the Number of Regulatory Staff to Process Applications
paragraphs: The Japanese government committed under the 1996 agreement to take  steps to increase the number of staff who process insurance applications.  Ten of the 13 companies reported that Japan had decreased the level of  staff responsible for insurance product approval, while the remaining three  companies reported that Japan had maintained the same level of staffing.  An FSA official told us that the agency had nine individuals responsible for  processing insurance applications. Officials from seven companies told us  that this staffing level was too small to handle the volume of insurance  applications. Five company officials told us that they had difficulty in  arranging a meeting with the FSA, and two of these officials indicated that  once they had secured a meeting, they were given little time to discuss their  applications with agency officials. One company official believed his  company could only submit applications twice a year because of the FSA's  staffing level. Two company officials expressed concern over the ability of  the FSA to meet the standard 90-day period for product approval, given the  expected increases in the volume of applications.
section_title: U.S. Companies' Views on the Future Effects of the Agreements
paragraphs: In soliciting company views on the future effects of the agreements, we  chose a 2- and 5-year time period to obtain company views both before and  after Japan intends to lift the third sector restrictions in January 2001.  Eleven of the 13 companies, representing about 50 percent of U.S.  premiums, and one of the three brokers reported that over the next 2 years,  the agreements would have a very or generally positive effect on their  ability to compete in Japan, as shown in figure 4. Two companies told us  that they reported positively because of Japan's commitment to restrict the  entry by large Japanese companies into the third sector over the next 2 years. However, over the next 5 years, a smaller number of companies  reported a positive outcome, as 7 of the 13 companies, representing about  25 percent of U.S. premiums, reported that the agreements would have a  positive effect. Brokers were more positive over the next 5 years, as all  three reported that the agreements would have a positive effect over this  time period. Two companies told us that once the third sector was opened  to large Japanese companies, the third sector business of these U.S.  companies would suffer.
section_title: U.S. Company Sales and Market Shares Increase; Some Companies Attribute Agreements
paragraphs: Most of the U.S. insurance companies with sales in Japan in fiscal year 1997  or earlier reported that their sales and market shares in the primary and  third sectors had increased since the 1994 agreement was signed.  Specifically, eight companies realized increases in their primary sector  sales, and six realized increases in primary sector market share, as shown  in figure 5. Two of the eight companies that reported increases in primary  sector sales attributed the increases to actions taken by Japan under the  agreements. In the third sector, eight companies realized increases in third  sector sales, and six realized increases in market share, as shown in figure 6. Five of the eight companies that reported increases in third  sector sales attributed the increases to actions taken by Japan under the  agreements.
section_title: U.S. Trade Representative’s Key Monitoring and Enforcement Decisions
paragraphs: USTR is the lead U.S. trade agency, with primary responsibility for  monitoring and enforcing the U.S.-Japan insurance agreements. This  appendix reports on the process and information USTR used in reaching  key decisions regarding Japan's implementation of the agreements, as well  as current U.S. government and industry positions on outstanding issues.  Two of these decisions were reached on July 1, 1998, and decisions to drop  or raise certain issues in the third sector have since been made. In some  instances, Japanese, foreign, and U.S. industry groups and U.S. companies  have expressed opinions that run counter to USTR's current position on  specific implementation issues.
After consulting with industry sources, USTR released an assessment on  July 1, 1998, of Japan's implementation of five key primary sector  deregulation measures contained in the 1996 agreement. USTR stated that  while Japan had met three of these measures, it had failed to fully  implement the two remaining commitments. USTR had identified problems  in two areas: (1) unjustified delays in approving applications for  differentiated products and rates within the standard processing period of  90 days and (2) inadequate reform of rating organizations. Therefore, USTR  announced that it did not support initiating a 2.5-year countdown to open  the third sector in 2001. In contrast, Japanese officials have stated that  Japan has fully implemented the five deregulation measures, and on July 1,  1998, Japan initiated the 2.5-year countdown.
Also, on July 1, 1998, USTR notified Japan that by allowing a Japanese  insurance company (Tokyo-Anshin) to sell a cancer insurance product,  Japan had circumvented the 1994 and 1996 agreements' terms that  effectively reserved the third sector market for foreign and small and  medium-sized Japanese firms. Japan responded that the agreement permits  this particular cancer insurance product to be sold since it conforms to  limitations negotiated by Japan and the United States. USTR has also  reviewed other possible third sector violations, in one case determining  that there was no violation, and in another, choosing to raise the issue with  Japan.
USTR has not revised its July 1998 assessment of Japan's compliance with  the insurance agreements. In an April 1999 meeting with Japanese officials,  USTR repeated its position that Japan has not complied with two  outstanding deregulatory requirements (90-day product approval and rating  organization reform). Additionally, USTR said that Japan continues to  allow the ongoing violation of the third sector provisions of the  agreements. USTR has not undertaken any formal legal actions concerning  the agreements, but the U.S. Trade Representative has noted that the  United States can take action against Japan through World Trade  Organization (WTO) dispute settlement procedures, if necessary, to secure  U.S. rights under the insurance agreements. These actions are possible now  that Japan has included many of its insurance commitments in the recently  implemented WTO financial services agreement.
subsections: section_title: USTR Solicited Information on Japan's Implementation of Five Deregulation Criteria
paragraphs: To reach its July 1998 decision that Japan had not fully complied with all  the five deregulation criteria, USTR relied on information it solicited from  industry, both in the United States and in Japan, as well as information  gathered by the U.S. embassy in Tokyo. The embassy works closely with  some U.S. companies in its data collection. However, some firms are not in  contact with the U.S. embassy. In addition, USTR consulted with other  agencies. The decision was preceded by a series of bilateral consultations  between the governments to review Japan's implementation of the five  commitments. One large U.S. firm in Japan provided key information to  USTR about Japan's implementation of the primary sector deregulation  criteria and possible third sector violations.
In addition to soliciting the concerns of individual U.S. insurance  companies, USTR also received information from two industry groups: the  American Chamber of Commerce in Japan (ACCJ) and the American  Council of Life Insurance (ACLI). In May 1998, the ACCJ insurance  subcommittee informed USTR that it believed Japan was not in compliance  with the two primary sector deregulation criteria previously mentioned, a  position supported by eight members of the subcommittee and opposed by  one. (Four U.S. firms were not participants in the May 1998 ACCJ decision.)  In April 1998, ACLI provided an analysis of Japan's implementation, which  voiced positions similar to those of the ACCJ and expressed additional  concerns that Yasuda, a Japanese insurer, and INA, its U.S. partner, were  causing “radical change” in the third sector.
USTR feels that such industry information is critical for purposes of  identifying private sector concerns. However, USTR recognizes that there  are certain limitations associated with relying on information from industry  associations. No one trade association represents all U.S. insurance  companies, and for those represented, association positions may not  capture all company views on agreement implementation. Groups such as  ACCJ do not encompass all company views, as some companies do not  belong or do not actively participate. Participating companies reported that  there are divisions among ACCJ insurance subcommittee members and  cited instances where ACCJ position papers have not reflected their  company's views.
section_title: USTR Determines Status of Implementation of Deregulatory Commitments on July 1, 1998
paragraphs: Of five primary sector deregulation criteria in the 1996 agreement, USTR  concluded on July 1, 1998, that Japan has implemented three of them.  USTR found that Japan has not complied with the criterion to approve  differentiated products within 90 days and that fundamental reform of  rating organizations was incomplete. Our fieldwork conducted in Tokyo in  March 1999 found that U.S. insurance companies had mixed views  regarding Japan's implementation of the five criteria.
subsections: section_title: USTR Noted Three of Five 1996 Primary Sector Deregulation Criteria Met
paragraphs: Four of the five primary sector deregulation criteria apply only to products  of non-life insurers. USTR has stated that Japan has implemented three of  these four insurance deregulation criteria. These were requirements to (1) approve applications within 90 days for “differentiated” auto insurance,  which allows the insurer the flexibility to develop, price, and market  automobile insurance based on risk factors, such as the age, gender, and  driving history of the driver and the use and type of vehicle; (2) further  liberalize commercial fire insurance by decreasing limits for using an  “advisory rate system,” which gives insurers the freedom to set rates  outside the rates established by the Property Casualty Insurance Rating  Organization; and (3) expand the application of Japan's “notification  system,” whereby an insurance company, after filing its product plan with  the regulatory authority, can begin to market an insurance product after 90 days, unless disapproved by the government, to a list of additional  products and allow marketing of those products within 90 days. According  to U.S. government officials, USTR's assessment of compliance was based  on the insurance industry's views.
section_title: USTR Decided 90-Day Product Approval Commitment Unmet
paragraphs: The 1996 agreement requires that Japan approve applications for  differentiated life and non-life products or rates within a standard  processing period of 90 days. In 1998, one U.S. company raised concerns  with USTR that Japan was not in compliance with this requirement. On July 1, 1998, USTR determined that Japan had not fully implemented its  obligations in this area and noted that in a number of specific cases, Japan  had “unjustifiably exceeded the standard 90-day processing period.”  According to USTR, the criterion's reference to a “standard 90-day  processing period” recognizes that the period can be exceeded in specific  circumstances.
In reaching its July 1998 decision, USTR sought examples from industry on  numerous occasions of applications whose processing exceeded 90 days so  it could raise this issue with Japan. One U.S. firm provided USTR with time  lines for four applications whose processing time exceeded 90 days; USTR  told us that it had never examined the actual applications. Based on the  information provided by this provider, USTR believed that these  applications were unacceptably delayed by the Japanese government.
Following June 1998 consultations with USTR, Japan responded that, per  the terms of the 1996 agreement, no applications for differentiated  products (other than differentiated automobile insurance) had been  received 90 days prior to the July 1, 1998, deadline and thus the  commitment was considered met. USTR rejected this reasoning as a  misinterpretation of the agreement. In addition, Japan consistently  maintained that it processed applications within the standard period of 90 days. According to Japan, under its regulations, the standard 90-day  period could be suspended if the agency responsible for processing  applications requires a company to revise or supplement information on an  application and that the four USTR examples had experienced delays due  to such inadequacies. USTR officials acknowledged that the 90-day period  can be effectively extended for this purpose but found that they were  unable to respond to Japan's claims that the delays were justified, since  USTR did not have permission from the insurance provider to discuss  application details. USTR officials told us that they do not possess the  technical ability to evaluate the applications' content.
Before the April 1999 consultations with Japan, about four companies  reported to USTR that they had had recent good experiences with Japanese  product approval; among those companies were two that had previously  complained about the application process. USTR officials were not  convinced that these experiences represented a systemic improvement.
In April 1999, USTR again cited Japan for continued failure to fully  implement the 90-day processing period requirement, offering several new  examples from the company that had provided cases to USTR for the July  1998 decision of applications whose processing exceeded 90 days. As  before, USTR reviewed the time lines with the company but not the actual  applications. Japan responded that the approval of applications in excess  of 90 days is permitted under Japanese regulations. For these cases, Japan  maintained that the applications were delayed due to sloppiness and  errors. According to USTR officials, USTR was not given permission by the  company to reveal its identity to the Japanese, and thus USTR was unable  to engage in detailed discussions with Japan regarding suspension of the  90-day period and whether the suspensions were justified in these cases.
Also related to the product approval process, several industry participants  that we interviewed in March 1999 reported that the transfer of product  approval authority from MOF to the newly created FSA resulted in a  reduction in the number of insurance product examiners. This, in turn,  resulted in a more understaffed office, with overworked employees, who,  according to U.S. insurers, may be unable to process applications in a  timely fashion. The Foreign Non-Life Insurance Association reported that  while its members have not complained about Japan's failure to meet the  90-day commitment, they have faced difficulties in meeting with FSA  officials to submit applications. The FSA agreed that it has few insurance  staff but notes that this staff would increase from 9 to 11 in the new fiscal  year 1999 government budget.
section_title: USTR Decided Fundamental Rating Organization Reform Incomplete
paragraphs: One of the primary sector deregulation criteria in the 1996 insurance  agreement that applies only to non-life products required Japan to  implement “the necessary legal changes to eliminate obligations for  members of rating organizations to use rates calculated by rating  organizations.” There are two rating organizations in Japan that non-life  insurance companies may belong to—one for auto insurance, the other for  additional types of property/casualty insurance. Historically, rating  organizations collected claims and expense data from member firms and  computed premium rates that were approved by the government. Rating  organization members were required to use the approved rate, unless the  Minister of Finance approved a deviation based on the firm's circumstance.  The result was considerable uniformity in insurance policies and rates for  major non-life insurance products.
At the time of U.S.-Japan consultations in June 1998, the necessary legal  changes to meet the deregulation criterion were pending. While all  necessary legal reforms were made by July 1, and the U.S. government was  aware that rating organization members were no longer required to use  rating organization rates, USTR concluded in its July 1, 1998, statement that  “fundamental reform” of rating organizations was incomplete.
USTR stated that certain aspects of rating organization reform, such as the  continued collection of expense data and the collection of data for  additional insurance products, promote anticompetitive activities among  companies and therefore the rating organization criterion has not been  met. The two specific issues raised by USTR are not mentioned in the  bilateral agreements. USTR most recently raised its concerns about Japan's  incomplete compliance in April 1999 meetings with Japanese officials.  Japanese officials responded that the 1996 agreement only required that the  use of rating organization rates not be mandatory, a commitment that has  been met.
One of USTR's outstanding concerns about Japanese rating organizations  involves the scope of cost data that such organizations can collect from  member firms. Specifically, USTR opposes the continued collection of  expense data from member firms, believing it limits competition and  promotes price uniformity. As part of rating organization reform that took  effect in July 1998, the Japan Fair Trade Commission imposed restrictions  on what kind of expense data the rating organizations could collect from  member firms on a voluntary basis. This restriction was to ensure that the  full rate, which member firms had previously been required to use in  establishing company rates, could no longer be computed by these firms.  However, according to USTR, the collection of partial expense data on a  voluntary basis would still enable firms to set prices in a way that would  lead to cartel-like, or uniform, practices. Several U.S. insurance providers  that we interviewed in March 1999 agreed with USTR's overall position that  fundamental reform has not yet occurred.
However, both Japanese rating organizations, as well as the Japanese  government and the Foreign Non-Life Insurance Association, reported to  us that now, after the reforms, the rating organizations can only collect  partial expense data on a voluntary basis and, therefore, the data held by  these organizations is incomplete and does not provide a basis to establish  an industry rate. One rating organization reported that since the July 1998  reforms, it now collects one-tenth of the data it formerly collected, while  the other organization said it is unsure of the accuracy or value of the  expense data, since the data is incomplete in scope. Further, since all  companies choose whether or not to participate in the system, the  completeness of the data cannot be assumed. The Foreign Non-Life  Insurance Association questioned the statistical validity of the data  because not all firms participate and less data is collected. One large U.S.  non-life company characterized the collected data as “useless.” Further,  Japanese officials have stated that rating organizations in the United States  collect and publish complete expense data from companies and do so for  more product lines. Finally, one U.S. firm told us that it welcomed the  potential for its competitors to price uniformly, since it could price beneath  the uniform price and gain market share. Also, the Foreign Non-Life  Insurance Association noted that small firms need data, including expense  data, to function, since their sales volume is not large enough to be a  statistically sound sample from which to forecast costs and derive rates.
Another issue raised by USTR about rating organization reform concerned  the scope of business the rating organizations covered. Specifically, USTR  opposes the expansion of rating organization authority to collect data for  additional products such as nursing care and medical insurance. USTR  views such expansion as being inconsistent with Japan's objective of  achieving fundamental reform.
ACCJ and the Foreign Non-Life Insurance Association had expressed  concern over this expansion prior to the July 1, 1998, announcement.  However, the Foreign Non-Life Insurance Association reversed its position  before July 1, 1998, and now supports this expansion of data collection.  One U.S. insurance company we interviewed said that it would like rating  organizations to expand the number of product lines for which they collect  data. According to one Japanese rating organization, the collection of data  serves to encourage new entrants and promote competition, a position  agreed to by the Insurance Services Office, a U.S. supplier of insurance information. The Japanese rating organization further suggested that data  for more product lines are available in the United States.
section_title: U.S. Insurance Industry Expresses Mixed Views on USTR's Position on Primary Sector Deregulation
paragraphs: In response to our January 1999 survey and March 1999 fieldwork, U.S.  companies offered mixed views regarding implementation of the five  primary sector deregulation criteria. In interviews with our staff in Tokyo  during March 1999, representatives of four insurance providers voiced their  support for USTR's position on primary sector deregulation. One company  attributed recent Japanese progress in deregulating the insurance market  to USTR's aggressively pushing insurance issues. Representatives of five  other providers volunteered in interviews that Japan had complied with the  agreements' deregulation commitments. One company said that U.S.  criticism of Japan's insurance reform efforts can undermine the efforts of  Japanese officials pushing for broad financial sector deregulation.
section_title: USTR Also Identified Third Sector Violation
paragraphs: USTR has contended that Japan is violating the third sector protections of  the 1996 insurance agreement. On July 1, 1998, USTR stated its concerns  with Japan's licensing of a cancer hospitalization insurance rider to Tokyo- Anshin, the life subsidiary of a large Japanese non-life insurance company.  The 1996 agreement stated that life subsidiaries of non-life insurance  providers will not be allowed to sell stand-alone cancer insurance.  Japanese subsidiaries may sell cancer insurance as a rider to a life  insurance policy provided that cancer benefit payments are limited to a  specific percentage of life insurance benefit payments, as set forth in a  September 1996 memorandum between the two governments. USTR's  analysis concluded that, based on the Tokyo-Anshin insurance policy's  design and marketing, the rider was clearly intended to circumvent third  sector protections. According to USTR, the rider was essentially a “stand-alone” product, equivalent to cancer policies prohibited for sale by  Japanese life subsidiaries under the 1996 agreement.
USTR first raised the issue beginning in January 1998 after two U.S.  companies raised concerns about the rider. The government of Japan  responded that the rider conformed exactly to the limitations established in  the September 1996 memorandum with USTR that defined permitted  cancer riders. According to Japan, because this cancer rider is only sold in  conjunction with a life insurance policy, it cannot be considered a “stand- alone” product.
USTR took its July 1998 position on the basis of information provided by  one U.S. life insurance company and the ACCJ insurance subcommittee.  However, according to the two other U.S. life firms selling cancer insurance  interviewed by us in March 1999, the Tokyo-Anshin rider is in compliance  with the agreement and is not a third sector violation. Of these two  companies, the one that is an ACCJ member chose not to oppose the  position taken by the ACCJ insurance subcommittee expressing concern  on this issue but thinks USTR lacks a basis to pursue the issue with Japan.  USTR continues to raise this issue with Japan. While USTR has not  undertaken any formal legal action it has underscored its position that  Japan not approve similar riders for other Japanese insurers.
section_title: USTR Reviews Other Possible Third Sector Violations
paragraphs: In 1997 and 1998, USTR reviewed the activities of one U.S. life insurance  company, INA, and its Japanese partner, Yasuda Fire and Marine. These  activities had been identified by competing U.S. insurers as a violation of  the third sector provisions of the 1994 and 1996 agreements. USTR, in  consultation with other U.S. agencies, determined in August 1998 that the  activities were not a violation of the agreement. (See app. IV for further  details.)
USTR continues to review allegations of another third sector violation that  was brought to its attention by industry. Specifically, during 1998, one U.S.  insurance company lobbied the U.S. government to stop plans by a  Japanese company to discount personal accident insurance offered to  members of an association of small- and medium-sized businesses.  According to the U.S. firm and the ACCJ, the discount deviated from past  practice and constituted “radical change.” USTR asked the government of  Japan not to allow the introduction of the discounting prior to  consultations with U.S. government officials. Japan did not agree to this  approach. The U.S. government conducted a review of the U.S. company's  concerns and found that only this company supported the ACCJ finding.  USTR continues to raise this issue with Japan but has not determined that  the sales represent a third sector violation.
section_title: U.S. Government Actions Regarding One U.S. Insurer
paragraphs: The U.S. government negotiated the 1994 and 1996 insurance agreements  with the knowledge that a U.S. insurer, CIGNA Corporation, was  considering selling a majority interest in its life insurance subsidiary in  Japan (INA) to a large Japanese insurer, Yasuda Fire and Marine. Following  completion of negotiation of the 1996 U.S.-Japan insurance agreement but  before the agreement was signed, USTR and the Japanese government  created a separate document, referred to as a “minute,” that was intended  to provide a limited exception to the agreement. According to USTR  negotiators, this exception, which proved difficult to negotiate, was meant  to allow CIGNA, per a business agreement reached in 1993, to sell a  majority interest in INA (which has third sector business) to Yasuda and  then allow the Japanese-owned INA to continue to have a limited level of  third sector life sales. Sales of third sector life “niche” products, such as  cancer and medical insurance, by subsidiaries of large Japanese insurance  companies, were expressly prohibited in the 1996 agreement. According to  USTR officials, the “minute” would also prevent other large Japanese non- life insurers from similarly entering the third sector. During subsequent  discussions, the two governments never reached agreement concerning the  precise meaning of the “minute” and how it could be implemented. Further,  views differ between USTR and two U.S. insurance companies regarding  the extent to which USTR provided details of this exception to industry at  the time it was negotiated. The document's actual impact on the third  sector sales of a Yasuda-owned INA has never been tested, since the  majority sale has not taken place. Our observations on certain aspects of  the “minute” are included at the end of this appendix.
Concerns of large U.S. insurers regarding U.S. government actions related  to this sale continued beyond creation of the “minute” and involved (1) U.S.  government discussions with the Japanese government during the fall of  1997 that, while not opposing Japan's approval of the sale, expressed  concern over whether the ongoing third sector activities of Yasuda and INA  met the terms of the agreements and the “minute”; (2) USTR discussions  with Japanese officials regarding Japan's December 1997 decision to  include the 1996 U.S.-Japan insurance agreement in the WTO financial  services agreement and what this development meant for the proposed  majority sale of INA and its subsequent third sector sales; and (3) two 1998  U.S. government interagency reviews of the third sector activities of  Yasuda and INA that determined that no agreement violations had  occurred. The most active parties during these events have been the largest  U.S. insurance companies operating in Japan (AIG, AFLAC, and CIGNA)  and the Office of the U.S. Trade Representative. In response to your request  for details regarding the extent and nature of U.S. government actions  related to the proposed sale of INA to Yasuda and subsequent related  events, we are providing the following information.
subsections: section_title: U.S. Government Negotiated the 1994 and 1996 Agreements With Knowledge of Possible Majority Sale of INA to Yasuda
paragraphs: In 1993, Yasuda Fire and Marine, a large Japanese non-life insurance  company, purchased a 10-percent interest in INA Life Insurance Company,  a subsidiary of CIGNA Corporation, a U.S. company. This deal also  provided for the possibility of the future sale of an additional 50 percent of  INA to Yasuda. In 1996, Yasuda announced its intention to acquire a  majority interest in INA from CIGNA. (See fig. 7 for a time line of events  from 1993 to 1996 regarding the Yasuda-INA deal.) USTR was aware of this  possible majority sale of INA to Yasuda before the 1994 agreement was  negotiated. The language of the 1994 agreement that committed Japan to  avoiding “radical change” in the third sector by large Japanese insurers was  negotiated by U.S. officials because INA had sales in the third sector. This  language was agreed to by CIGNA and AIG, the company expressing  concern over the possible sale at the time. USTR officials believed that this  language would provide flexibility for CIGNA to pursue a profitable  business strategy while still protecting the U.S. presence in the third sector  from increased competition from large Japanese insurers. The U.S. and  Japanese negotiators never defined the term “radical change” in the 1994  agreement.
By late 1995, the U.S. insurance industry was expressing strong concerns  over implementation of Japan's Insurance Business Law. Revisions to this  law, the first major changes in 50 years, would for the first time allow life  insurance companies to enter the non-life insurance business through a  non-life subsidiary, and, similarly, for non-life insurance companies to enter  the life insurance business through a life subsidiary. Although the 1994  agreement restricted the entry of Japanese companies into the third sector,  U.S. officials were concerned that Japan would allow these subsidiaries to  move rapidly into the third sector. As a result of these concerns, bilateral  negotiations on insurance began and would continue for a year- until  December 1996.
In August 1996, Yasuda formally announced its intention to purchase a  majority interest in INA from CIGNA. According to Yasuda, this  strengthened relationship was intended to improve INA Life's distribution  network and serve as Yasuda's means for achieving entry into the life  insurance market (through the acquisition, rather than the establishment,  of a life insurance subsidiary). Press reports noted that this sale could  provide Yasuda entry into Japan's third sector life insurance market.
CIGNA came to USTR in May 1996 to discuss its intention to sell a majority  interest in INA to Yasuda and projected sales in the third sector for the  resulting company. CIGNA requested that this transaction and the business  of the Yasuda-owned company not be compromised during the ongoing  negotiations or through any resulting new bilateral agreement. In an effort  to maintain a united industry position, USTR asked CIGNA not to press the  issue at that point and noted that the situation should be handled close to  the completion of the negotiations. According to a former USTR official,  CIGNA did not contact USTR again on this issue during the negotiations,  even though USTR was in frequent contact with the company regarding the  content of the agreement and had shared drafts of the agreement with  CIGNA (as well as other U.S. companies). This negotiator noted that USTR  assumed that CIGNA had worked out an arrangement with the Japanese  Ministry of Finance (MOF) on its own. Therefore, the U.S. government did  not include any text to address CIGNA's specific interests in the agreement.  This former USTR official noted that as negotiations were concluding,  USTR was focused on primary sector deregulation and other (third sector)  commitments in the draft agreement. A USTR official stated that the  Japanese government never raised the issue of the sale of INA to Yasuda  during the negotiations. CIGNA's failure to pursue the issue with USTR as  negotiations neared completion, as well as USTR's failure to address the  Yasuda/INA situation during the negotiations, were oversights by both  parties, in the view of former negotiators. Negotiations on a new insurance  agreement were concluded on December 15, 1996, though the agreement  was not signed until December 24, 1996.
section_title: Creation of Exception to the 1996 Agreement for Yasuda/INA Proved Difficult
paragraphs: “f the Japanese were to interpret INA Life as a ‘life subsidiary of a non-life insurance  company' when Yasuda acquired a majority interest, then it would prohibit INA Life from  selling medical or cancer insurance until the year 2001. This would have a severe adverse  impact on INA Life given its current product and marketing mix and its long-term strategic  direction.”
At that point, CIGNA proposed that technical language be inserted into the  1996 agreement that would exclude INA, even if majority Japanese owned,  from coming under the definition of a “life subsidiary of a non-life  insurance company.” CIGNA compared this approach to the exemption  requested and received by UNUM (another U.S. insurance company  operating in Japan) with respect to group long-term disability insurance  and income indemnity insurance in the 1996 agreement. USTR also  received letters from Members of Congress expressing support for the  exemption for INA from the life third sector restraints of the 1996  agreement.
USTR took action to address CIGNA's concerns, given that the majority  sale had been planned prior to the 1994 agreement and the agency needed  to maintain unified U.S. industry support for the as yet unsigned 1996  agreement. USTR officials were reluctant to go back to the Japanese  government, which was being criticized in the Japanese press as a victim of  U.S. pressure in agreeing to the terms of the 1996 agreement, and asking for  additional commitments. Further, one of these officials stated that USTR  did not want to reopen the agreement out of concern that the Japanese  government would then also want to reopen other issues, thus possibly  leading to the unraveling of the agreement. USTR negotiators believed that  a separate document was necessary. USTR immediately contacted the  Japanese Ministry of Foreign Affairs (MOFA) and initiated new  discussions.
USTR negotiated with the Japanese government from December 18 to 21,  1996. USTR requested a “grandfather” clause to allow the sale of INA to go  through but also proposed restricting INA's activities in the third sector,  once the company was owned by Yasuda, to avoid “radical change.” USTR  was the only U.S. agency involved in these discussions. MOFA was the lead  Japanese agency and consulted Ministry of Finance officials as necessary.
Negotiations over the “minute” proved difficult. The Japanese government  was reluctant to make any accommodation for the United States beyond  those embodied in the then-pending 1996 agreement. Moreover, there was a  concern that a specific commitment regarding the CIGNA-Yasuda  transaction could be viewed as singling out one large Japanese insurer for  special, favorable treatment in the third sector.
Under these circumstances, the Japanese government sought to keep any  understanding reached regarding the transaction and subsequent third  sector activities by a Yasuda-controlled INA as informal as possible. For  their part, USTR negotiators reported that they would have preferred, and  attempted to obtain, a more formal document than the “minute,” but that  their paramount concern was the substance, not the form, of the  understanding. At the same time, USTR negotiators understood the  sensitivity of the matter for the Japanese government.
No explicit agreement was reached between the two sides during the  negotiations regarding precisely how, or to what extent, the Japanese  government would restrict INA's activities in the third sector following  consummation of the sale. In particular, the two sides did not agree on the  question of whether the Japanese government had legal authority through  the use of its licensing powers to restrict INA's post-transaction activities in  the third sector. However, USTR negotiators felt that the references in the  “minute” recommitting Japan to avoid “radical change” in the third sector  and to making necessary modifications to INA's post-transaction licenses,  meant that Japan had committed to keeping INA's third sector business  activities very limited. Further, based on past experience, USTR officials  felt that Japan could use both formal and informal means to limit INA's  third sector activities.
While no other U.S. government agencies were involved in negotiating the  document, a copy of the draft “minute” was faxed to the U.S. embassy in  Tokyo, and the National Economic Council (NEC) was reportedly aware of  its existence. Two Members of Congress who had requested that USTR  facilitate the transaction also received copies of the documented  exception, according to one of the negotiators. This former USTR official  does not know if key congressional committees ever received the  document, which, if they did not, he described as an oversight on the part  of USTR. The exact text of the document is reproduced in figure 8.
section_title: Disagreement on Meaning of the Exception for Yasuda/INA
paragraphs: Current and former USTR officials stated that the final document, the so- called “minute,” was intended to ensure that (1) the 1996 U.S.-Japan  insurance agreement would not prevent CIGNA from carrying out its  preexisting business plan to sell a majority interest in INA to Yasuda, (2) INA would continue to have only a very limited presence in the third  sector if the transaction went forward, and (3) other large Japanese non- life insurers would be prevented from similarly entering the third sector.  There was no attempt during the “minute” negotiations to specify what  might constitute a limited presence or radical change. Further, USTR  officials have noted that there have never been discussions between the  U.S. and Japanese governments to define limited presence or radical  change regarding INA's post-sale, third sector activities.
U.S. and Japanese officials have disagreed over how the “minute” could be  implemented. Based on experience with the Japanese government and the  knowledge that Japan could use formal or informal means to affect  company behavior, USTR officials felt confident that Japan could exert a  level of control over INA's third sector activities by modifying INA's  licenses or other means, once it is majority owned by Yasuda. From the  time of the “minute” negotiations in December 1996 until July 1998,  Japanese officials emphasized that they had no legal authority to impose  restrictions on acquired subsidiaries lawfully operating in the third sector.  However, after July 1998, Japanese officials said that as a result of  legislative changes that went into effect at that time (discussed later), a  Yasuda-owned INA would not be allowed to operate in the third sector at  all. USTR does not accept this position and has stated that it expects Japan  to abide by the terms of the “minute.”
In addition, the enforceability of the “minute” is perceived differently by  the two governments. USTR officials stated that the “minute” is a fully  negotiated and enforceable document and characterized it as a mutual  understanding between governments. They have also noted that  implementation of the “minute” is integral to Japan's compliance with the  insurance agreements. In contrast, a MOFA official told us that the  “minute” is in “no way” part of the 1996 agreement. Instead, this official  characterized the document as a “non-paper memorandum for  negotiators.” One MOFA official told a U.S. embassy representative that the  “minute” does not have the same status as the bilateral agreement and that  Japan does not want to be held by it.
section_title: Views Differ Regarding the Extent to Which USTR Disclosed the Exception to Key U.S. Insurance Companies
paragraphs: According to a former negotiator, USTR was in frequent contact with a  senior CIGNA official during negotiation of the “minute.” This official was  shown drafts of the document in order to verify factual information  included in the “minute.” (See fig. 9 for a time line of events from 1996 to  1997 regarding the Yasuda-INA deal.) A former USTR negotiator stated that  CIGNA knew what USTR was trying to accomplish in negotiating the  “minute” (including allowing the sale but restricting Yasuda's post- acquisition third sector activities in order to avoid “radical change”).  According to CIGNA's outside counsel, on December 24, 1996, the day the  insurance agreement was signed, CIGNA was informed by USTR that Japan  had agreed to language that stated that INA would be permitted to maintain  its licenses and product approvals after the purchase of majority ownership  by Yasuda. Further, the deal was viewed as unique by both governments  because it predated the 1994 insurance agreement. CIGNA outside counsel  was shown a draft version of the “minute” in January 1997. This version of  the “minute,” like the final version, mentioned “necessary license  modifications” but did not specifically address the level of third sector  activity permitted by the Yasuda-owned company. Nevertheless, according  to CIGNA's legal counsel, CIGNA was satisfied that this arrangement would  meet its needs. Moreover, CIGNA was not concerned about the level of  formality or the enforceability of the document.
Around December 21, 1996, USTR officials contacted AFLAC and AIG,  INA's primary U.S. competitors in the life third sector, regarding the  situation with CIGNA, INA, and Yasuda. U.S. government and industry  officials characterized these discussions very differently. According to  USTR notes taken during the discussion with AFLAC, a USTR negotiator  told a company official that USTR needed to ensure that “the deal can go  forward, and it is not a precedent for other deals.” USTR informed AIG that  a problem had arisen with Yasuda/INA and USTR had to find a way to deal  with it. USTR needed to make an adjustment as this issue threatened the  recently concluded agreement of supplementary measures. Former and  current USTR officials stated that they informed the two companies that an  “accommodation” was necessary for INA and Yasuda, though no mention of  the existence of a document was made. USTR officials did not explicitly  convey their intention to AIG or AFLAC that the “accommodation” would  allow for limited third sector sales by Yasuda once it acquired a majority  interest in INA. However, according to these officials, AFLAC and AIG  understood that the accommodation would allow for the majority sale and  limited third sector activities for the subsequent company. USTR officials  stated that neither company raised objections during their communications  with USTR (though AIG expressed some unhappiness).
In contrast, AFLAC stated that “based on prior discussions with USTR and  the Japanese government, and on restrictions in the 1996 agreement,  AFLAC did not oppose CIGNA's sale of a controlling interest in INA to  Yasuda. But USTR did not discuss, nor did AFLAC agree to, a special carve- out  for INA's continued or expanded  operations in the third sector after a takeover by Yasuda.” An AIG official  also noted that AIG did not understand at that point that an  accommodation had been reached with Japan that would allow for some  level of third sector sales once INA was majority owned by Yasuda.
The “minute” document itself was not shown to companies other than  CIGNA until October 1997, when AIG and AFLAC were raising concerns  with USTR over Yasuda's and INA's increasing third sector activities  (discussed later). According to USTR officials, no company representatives  ever asked USTR about the existence of this document until that time.  These officials noted that, when AIG and AFLAC inquired at a meeting in  late October as to whether there was an agreement with Japan concerning  the sale of INA to Yasuda, they did not respond in the affirmative or  negative, but instead, after the meeting, conferred with a senior USTR  official. A few days later, USTR called both companies to the agency and, at  separate meetings, presented them both with copies of the “minute”  document.
AFLAC's and USTR's portrayals of how the existence of the “minute”  document was disclosed differ. According to an AFLAC official, USTR  repeatedly denied the existence of this written agreement before October  1997 when questioned by the company. However, according to a USTR  official, agency officials never denied the existence of the “minute.” In  addition, a U.S. embassy official also reported that he was asked about the  “minute” twice before it was publicly acknowledged by USTR. The  embassy did not provide any information to the companies and later asked  USTR for guidance on how to respond to such inquiries. According to this  official, he was told to refer companies to USTR on this issue.
Two former USTR officials who were involved in negotiating the “minute”  have since stated that, in their judgment, the document should have  immediately been fully disclosed to industry. While AIG and AFLAC did not  raise objections in December 1996 when USTR informed them of the  “accommodation” for the sale of INA to Yasuda, they reacted negatively  upon learning of the existence of the “minute.” An AFLAC official has noted  that the 1996 agreement states that no large Japanese insurer will sell  stand-alone cancer or stand-alone medical insurance prior to 2.5 years after  primary sector deregulation; in his view, this prohibition should include  INA once it is majority owned by Yasuda, a large Japanese insurer. Further,  an AIG official has written that “regrettably, USTR saw fit in late 1996 to  allow an exception , which has the effect of  allowing a U.S. company to divest itself in Japan, thus reducing the overall  U.S. market penetration while jeopardizing the integrity of the entire  agreement.”
section_title: USTR Expressed Concerns to Japan in 1997 Over Yasuda's Ongoing Third Sector Activities While Making Clear That the Majority Sale of INA Should Be Allowed
paragraphs: In late September 1997, as a result of urgent concerns on the part of AIG  and AFLAC, an official from the U.S. embassy in Tokyo met with Japanese  government officials from the Ministries of Finance and Foreign Affairs, at  USTR's instruction, to discuss a recent expansion of third sector activities  by INA and Yasuda. This U.S. embassy official emphasized that while the  two governments had reached an understanding (the “minute”) to allow  Yasuda to move forward with its plans to acquire a controlling interest in  INA, the understanding also contained a commitment to constrain the  growth of INA's third sector business so as to avoid “radical change.” The  U.S. embassy representative informed Japanese officials that INA's third  sector licenses must be modified in order to achieve this commitment.
The U.S. government had concerns that Yasuda and INA were acting in a  manner inconsistent with the agreements' restrictions on avoiding “radical  change” by greatly expanding the marketing of INA products by Yasuda  sales agents before the majority acquisition. This U.S. embassy official  expressed concerns to Japanese officials that Yasuda had more than  doubled the number of agents selling INA products in a 1-year period and,  as a result, INA was rapidly increasing its third sector sales. This change  was characterized to Japan as “historically unprecedented” and “resulting  in a serious loss of business for U.S. firms in the third sector.” He  emphasized the U.S. belief that the bilateral insurance agreement  compelled MOF to limit the growth of INA's third sector business and  agents to historical trends and roll back the past year's dramatic increase in  INA's force of Yasuda agents.
Japanese officials responded that INA's activities had nothing to do with  the agreements. They stated that the agreements' provisions apply to  Japanese, not U.S., subsidiaries and INA is majority-owned by a U.S.  company. They noted that Yasuda owned only 10 percent of INA and any  market developments reflected the independent operations of INA. These  officials also emphasized that there was no basis under Japanese law to  restrict the license of a company operating properly under law and  regulation, and, further, an agent rollback would be impossible.
After U.S. embassy meetings with the Japanese government, CIGNA's  outside counsel expressed concern to USTR that the U.S. government's  recent communication with MOF had threatened the majority sale. CIGNA  believed, as a result of its discussions with MOF, that the U.S. government  would only support MOF approval of the sale if Yasuda and INA were to be  restricted from selling any third sector products and reduce the number of  Yasuda agents at INA to the number at the end of the previous fiscal year.  CIGNA requested that USTR rectify the situation by sending a letter to MOF  supporting the sale without conditions or modification of licenses.
USTR met with CIGNA's outside counsel and explained that USTR did not  oppose the transaction but had concerns about Yasuda's third sector  activities. Again, USTR noted that, while it was still looking into the facts,  Yasuda's current activities might violate the terms of the insurance  agreement. USTR pointed out to CIGNA that while what might constitute  “radical change” was not precisely defined, the threshold was not very  high- particularly when activities by a large Japanese insurance company  might result in a direct loss of business for U.S. firms.
USTR eventually concluded that sending a letter to MOF would be  counterproductive based on concerns that the letter might be  misinterpreted. During this period, while USTR was communicating  frequently with CIGNA regarding the majority sale of INA to Yasuda and  subsequent third sector activities, USTR received congressional letters of  support for the transaction, as well as letters claiming that Yasuda was  violating the agreements and should not be allowed to sell third sector  products after the sale.
In October of 1997, a senior USTR official traveled to Japan for 2 days of  meetings with Japanese officials and certain U.S. companies to discuss the  activities of INA and Yasuda. This official emphasized to Japanese officials  that (1) the transaction should be allowed to go forward, (2) INA's licenses  should be modified as necessary, (3) this is the only exception to the  agreement, and (4) Yasuda's actions both before and after the acquisition  should not be permitted to result in radical change in the third sector. He  noted that there was evidence suggesting that Yasuda was controlling INA  and might be causing radical change.
Japanese officials again responded that Yasuda's and INA's activities before  the acquisition cannot constitute an agreement violation since INA is a U.S.  company. Furthermore, these officials said that Japan could not impose  legally enforceable restrictions (such as license modifications) upon the  activities of INA just because it is acquired by Yasuda. However, Japanese  officials also suggested that, recognizing the agreement's spirit, Yasuda was  likely to act on its own initiative to keep INA's activities in the third sector  within a certain limit.
CIGNA correspondence with USTR shows that the company was unhappy  with USTR's visit to Japan, believing that a link had been made with  Japanese officials that the transaction should not be approved unless  Yasuda's current activities were restricted. CIGNA also expressed concern  that USTR was discussing its private business decisions with its  competitors.
The U.S. and Japanese governments had additional discussions in late 1997  regarding the majority sale and subsequent third sector activities of INA  once it was owned by Yasuda. No agreement was ever reached as to how or  whether the third sector sales of INA could be restricted.
section_title: Japan Included the 1996 Agreement in Its 1997 WTO Financial Services Commitments
paragraphs: During the WTO financial services negotiations, the U.S. government  requested that Japan include the 1996 bilateral insurance agreement in its  WTO commitments. The U.S. government held this position (1) in order to  seek third country support for full implementation of the agreement, (2) to  have access to WTO dispute settlement procedures, and (3) to respond to  U.S. industry support for this initiative.
In December 1997, the Japanese government agreed to include most of the  provisions in the 1996 agreement in the WTO financial services agreement,  including third sector provisions. (See fig. 10 for a time line of events from  1997 to the present regarding the Yasuda-INA deal.) Japan's legislation that  implements its WTO financial services commitments authorizes MOF to  prohibit entry into the third sector by acquired, as well as newly  established, subsidiaries. A MOFA official confirmed to us that Japan's  implementing legislation and its referral to established as well as acquired  subsidiaries implied that if Yasuda were to acquire INA, INA would be  considered a life insurance subsidiary of a non-life insurance company  subject to the third sector sales prohibition in the 1996 agreement.  Therefore, while Japanese officials had said, before implementation of  Japan's WTO financial services commitments, that they were unable to use  legal means to regulate third sector activities even following Yasuda's  purchase of the company, Japan has now implemented its WTO insurance  commitments and has expressed a view that INA's sales in the third sector,  post transaction, would be completely prohibited.
In February 1998, MOF notified insurers to explain that Japan's  commitments under the WTO financial services agreement prohibit sales of  third sector products by acquired life subsidiaries of non-life insurance  providers. One day later, Yasuda announced that it would delay its majority  purchase of INA until agreement restrictions are lifted on sales of third  sector products by life subsidiaries of non-life insurance companies.
In later communication with USTR, CIGNA did not preclude the possibility  that the sale still might go through before third sector restrictions are lifted.  Therefore, in June 1998, the month before Japan's WTO insurance  commitments were implemented on July 1, USTR engaged in discussions  with Japanese officials regarding the consistency of Japan's implementing  legislation with the intent of the “minute.” Specifically, USTR sought  reassurance that INA could continue third sector sales if acquired by  Yasuda. USTR officials claim that Japanese officials responded in a  noncommittal fashion and never provided an answer. USTR officials have  emphasized to Japan that it has an obligation to uphold the “minute,” which  allows for the majority sale of INA to Yasuda, and to limit third sector  activity for the new entity, regardless of Japan's WTO insurance  commitments.
section_title: U.S. Government Review of Yasuda's and INA's Ongoing Activities in the Third Sector Determined That No Agreement Violations Have Occurred
paragraphs: In early 1998, USTR began a review of the ongoing activities of Yasuda and  INA to determine whether they were consistent with the third sector  restrictions in the 1994 and 1996 agreements. Two companies, AFLAC and  AIG, had contended that Yasuda, through its partnership with INA, had  entered the third sector and caused radical change to that sector in  contravention of the agreements. USTR provided CIGNA, AFLAC, and AIG  with an opportunity to present their views in writing. AFLAC and AIG  argued that Yasuda had effectively entered the third sector through receipt  of financial benefits it had obtained in connection with its business  relationship with INA. They also argued that because of its relationship  with Yasuda, INA was a de facto Japanese company and that its third sector  activities violated the agreements' restriction on these activities by  Japanese companies. Finally, the U.S. companies argued that changes to  INA's corporate structure and business operations constituted radical  change and should therefore not have been permitted.
During this review, the U.S. Trade Representative expressed a reluctance to  choose sides among U.S. companies and a hope that the companies could  cooperate to find a mutually agreeable business solution. However, such a  solution never materialized. Therefore, USTR examined each of the  allegations and, as summarized in a classified memorandum, concluded  that the activities of Yasuda and INA did not constitute a violation of the  agreements. After conducting an analysis of INA's operations, USTR's  fundamental position was that INA is a U.S. company and, therefore, its  activities do not fall within the terms of the 1994 and 1996 agreements. This  decision was agreed upon during interagency meetings that reached the  subcabinet (NEC Deputies) level and included officials from the  Departments of State, Commerce, the Treasury, and Justice; as well as the  NEC and USTR. On July 1, 1998, USTR communicated the consensus  decision to CIGNA, AIG, and AFLAC.
In response to a request by AFLAC and a few Members of Congress, an  additional interagency review was subsequently conducted in late July and  early August 1998. This final review reached the level of the Cabinet (NEC  Principals), whose review had participation from the Council of Economic  Advisers; the Office of Management and Budget; the National Security  Council; NEC; the Departments of Commerce, Justice, Labor, State, and the  Treasury; and USTR. During this second review, all three companies  presented their arguments orally to the interagency group. The original  conclusion- that information provided to date did not support a  determination that the activities of INA and Yasuda in the third sector had  violated the 1996 agreement- was reaffirmed. During the second  interagency review, which reached a consensus decision that there was no  violation of the “radical change” provisions of the 1996 agreement, the  Department of Commerce recommended that additional measures be taken  to monitor the situation. A Commerce official proposed that an interagency  team conduct further work in Tokyo to verify the facts presented to the  U.S. government. According to USTR, this suggestion was not adopted  based on the general interagency view that no further information was  necessary to resolve the issue.
In discussing how USTR's views evolved from raising serious concerns  regarding a possible violation of the agreements with Japan in late 1997 to a  final determination that no violation of third sector provisions had  occurred, USTR officials noted that AIG and AFLAC expressed concerns  over Yasuda and INA activities in an extremely urgent manner in 1997. As  the companies emphasized that they were losing business as a result of  these activities, USTR felt compelled to address the issue with the  Japanese government immediately. However, over the next several months,  as USTR was able to conduct its own analysis of the situation, it ultimately  determined that no violation had occurred.
Both AFLAC and CIGNA raised concerns about the process used by USTR  to conduct the formal review of Yasuda's and INA's activities in the third  sector. AFLAC expressed frustration over USTR's requests for updated  information on the situation after the agency did not act on information  provided by AFLAC months earlier. CIGNA felt that it never received a  complete explanation from USTR as to what accusations had been made  against the company, but was compelled to respond to allegations made  against it nonetheless in an attempt to defend itself.
AIG and AFLAC disagreed with the interagency decision. However, officials  from one company have also noted that Yasuda's activities in the third  sector have slowed. Specifically, these officials have stated that the rapid  growth in the Yasuda agent force selling INA products has ended and their  company's existing client base is no longer being actively threatened. INA's  principal U.S. third sector competitor believes that the government of  Japan has been successful in restraining Yasuda's activities through the use  of “soft controls,” such as requiring a slowdown in the projected  registration of Yasuda agents with INA in the company's business plans.  This company has also noted that the impact of Yasuda's and INA's  activities on its business has been small to date. Neither AFLAC nor AIG is  currently pressing this issue with the U.S. government.
section_title: Our Observations on the “Minute”
paragraphs: We have observations in the following three areas regarding the “minute”:  (1) the difficulties USTR faced in creating the “minute,” (2) the  consequences of USTR's lack of complete communication with industry  regarding the limited exception, and (3) the problems USTR encountered  due to the use of undefined terms in the text of the “minute.”
Because the issue of the majority sale of INA to Yasuda and the resulting  company's allowable third life sector activities were not addressed during  the course of the 1996 insurance agreement negotiations, USTR was put in  a difficult position. After the agreement negotiations were concluded,  USTR felt compelled to preserve CIGNA's support for the agreement by  accommodating the company's business plans that predated negotiation of  both insurance agreements but that would clearly violate the 1996  agreement's terms if not addressed by the two governments. This situation  was made more delicate due to the fact that competing U.S. companies had  opposing and strong views as to whether or how Yasuda/INA should be  allowed to sell third sector life products. In deciding to accommodate  CIGNA's sale of INA to Yasuda and subsequent third sector life sales by the  company, USTR took a position that appeared to benefit one U.S. firm at  the expense of others. USTR faced the difficult challenge of determining  the U.S. interest in a case where U.S. companies' interests were opposed.
Moreover, given the sensitive issues the “minute” raised in Japan, USTR  officials believed that broad dissemination of the document might lead to  its disavowal and possibly to the unraveling of the 1996 agreement itself.  USTR therefore sought to limit distribution of the “minute” and thus did not  provide copies to the two other U.S. insurance companies that had an  interest in developments related to Yasuda/INA. Further, in late December  1996, USTR did not explicitly describe to AIG and AFLAC the extent to  which a Yasuda-owned INA would be allowed access to the third sector life  insurance business. This “grandfather” document added to the 1996  agreement, combined with USTR's incomplete description of the exception  and the failure of USTR to provide the actual document to industry, created  frustration with USTR on the part of U.S. insurers that lasted for months.
Further, the “minute” used undefined terms that made its meaning and  implementation uncertain. While USTR officials maintained that a Yasuda- owned INA would only be allowed restricted access to the third sector, it is  unclear what language or provision in the “minute” requires that the  company maintain only a limited presence. As a result of this undefined  language in the “minute,” the U.S. and Japanese governments had  numerous consultations during 1997 regarding the meaning of the  document's terms. U.S. and Japanese government officials have expressed  very different understandings of the “minute,” with Japan's actions  suggesting an unwillingness, even an inability under Japanese law, to  implement the document as intended by USTR. After several months of  discussions, the two governments were never able to reach an agreement  as to how Yasuda might be restricted in the third life sector, demonstrating  the questionable value of the “minute” in creating a limited exception to the  1996 agreement to accommodate CIGNA.
section_title: Objectives, Scope, and Methodology
paragraphs: The Chairman of the House Subcommittee on Trade, Committee on Ways  and Means, asked us to examine (1) the views of U.S. insurance companies  operating in Japan regarding the agreements' implementation and impact  on their ability to compete in the Japanese market; (2) the roles and efforts  of the Office of the U.S. Trade Representative and the Departments of  Commerce, State, and the Treasury in monitoring and enforcing the  agreements, and U.S. government views on whether Japan has met its  commitments under the agreements; and (3) U.S. insurance industry views  on U.S. government monitoring and enforcement efforts. We also collected  information addressing U.S. government actions related to one U.S. insurer  and its Japanese partner.
To obtain the views of U.S. insurance companies regarding the agreements'  implementation and impact on their ability to compete in Japan, we  distributed a questionnaire to all 13 U.S. insurers and three brokers in  Japan that are either wholly or majority U.S. owned. Surveys for life and  non-life insurers differed somewhat depending on whether a particular  commitment applied to them, and the survey included far fewer questions  for brokers as several of the commitments in the agreements do not  directly pertain to them. The survey was distributed in January 1999, and  we obtained a 100-percent response rate to our questionnaire. We then  traveled to Japan and met with representatives from all the insurers and  brokers in March to obtain detailed explanations of and clarifications to  their questionnaire responses. In some cases, responses were revised  during discussions at our meetings. The questionnaire asked U.S. insurers  and brokers for their views on the implementation and the impact of those  provisions of the agreements for which the companies would have first- hand experience. All of the questions were referenced back to their related  provisions in the agreements. For the questions related to the 1994  agreement, we developed, where possible, similar or identical questions to  those we used in a 1996 survey on the implementation and impact of the  1994 agreement. This allowed us in some cases to compare how company  responses had changed over time. Eleven of the 13 companies and two of  the three brokers included in our current survey also responded to our 1996  survey. In analyzing questionnaire results, we examined response  frequencies. We also computed the percentage of U.S. insurance sales in Japan represented by company responses. In requesting company  participation in our survey, we pledged that company responses would be  reported in aggregate form and that we would not identify specific  responses with the individual companies. In certain cases, the reporting of  responses in conjunction with the percentage of U.S. insurance premiums  in Japan associated with that response limits this confidentiality. In those  cases, the firms that could be identified, due to their large size, gave us  permission to report the market premium data. We also interviewed and  collected information from industry groups and insurance companies in the  United States.
To identify the roles and efforts of USTR and the Departments of  Commerce, State, and the Treasury in monitoring and enforcing the  insurance agreements, as well as U.S. government views on  implementation, we conducted interviews with officials from each agency,  including the U.S. embassy in Tokyo. We reviewed available information  from USTR and the U.S. embassy in Tokyo to establish the nature and  frequency of interagency interaction. We also assessed extensive  documentation from USTR and the U.S. embassy in Tokyo to review  USTR's determination regarding the status of agreement implementation  and discussed USTR's determination with U.S. companies and Japanese  government agencies and industry groups. Information on Japanese law in  this report does not reflect our independent legal analysis but is based on  interviews and secondary sources.
We also used the 1999 questionnaire to obtain the views of U.S. insurance  companies regarding U.S. government monitoring and enforcement of the  agreements. All 13 insurance companies and three brokers were asked  questions regarding overall U.S. government monitoring and enforcement  efforts, as well as questions related to their specific experiences with  various government agencies. As with implementation and impact  questionnaire responses, we conducted follow-up interviews in Japan with  U.S. participants in the Japanese market. We also held interviews with  industry groups and insurance companies in the United States. We  examined extensive documentation regarding monitoring and enforcement  actions by USTR and the U.S. embassy in Tokyo that have proven  controversial with some U.S. insurers operating in Japan.
We performed our review from July 1998 to June 1999 in accordance with  generally accepted government auditing standards.
section_title: GAO Contacts and Staff Acknowledgments
subsections: section_title: GAO Contacts
section_title: Staff Acknowledgments
paragraphs: In addition to those named above, Emil Friberg, José Peña, Kay Halpern,  Kim Frankena, Richard Burkard, Kathleen Joyce, and Rona H. Mendelsohn  made key contributions to this report.
section_title: Related GAO Products
paragraphs: U.S.-Japan Trade: U.S. Company Views on the Implementation of the 1994  Insurance Agreement (GAO/NSIAD/GGD-97-64BR, Dec. 20, 1996).
U.S.-Japan Trade: The Japanese Insurance Market (GAO/NSIAD-99-108BR,  Mar. 15, 1999).
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