The Cabinet Office, government of Japan ＞ Top page of OTO ＞ Reorganization of the Office of the Trade and Investment Ombudsman

(Provisional Translation)

Proposals of the Market Access Ombudsman Council on Market Access Issues as concerns the Standards, Certification and Others

June 18, 1997
Market Access Ombudsman Council

Based on the "Outline of Operations for the Market Access Ombudsman Council" (adopted by the head of the Office of Market Access on 25 February 1996), the present report considers issues common among cases previously handled by the Office of the Trade and Investment Ombudsman, clarifies where the problems relating to Japan's system of standards, certification, etc., and presents the Council's recommendations for necessary action in response to those problems.

The Council requests that the Office of Market Access will act promptly to study and implement concrete measures in accordance with this report.

I. Introduction

II. Perspective of the Proposals

1. Issues concerning the standards and certification system: The problem of private organizations involved in conformity assessment
2. Trends toward improving market access
3. The direction of reform of the standards, certification and others system
4. Measures relating to private-sector practices

III. Tasks for Improving Market Access

1. Measures relating to setting specifications and standards

(1) Reevaluating the need for and content of specifications and standards
(2) Setting appropriate specifications and standards for new products
(3) Clarifying specifications and standards
(4) Conformance with international specifications and standards
(5) Actively promoting performance-based specifications and standards

2. Measures relating to conformity assessment with standards and specifications

(1) Fostering the principle of competition in conformity assessment
(2) Making active use of overseas conformity assessment bodies and promoting mutual recognition
(3) Shift to system for eliminating the requirement for third-party certification
(4) Simplifying and speeding up conformity assessment procedures

3. Measures relating to private-sector business practices
(1) Measures regarding specifications- and standards-setting and conformity assessment conducted by private organizations
(2) Eliminating anti-competitive business practices through vigorous enforcement of the Antimonopoly Act

4. Measures for adding transparency to the domestic system

(1) Fully applying the spirit of the Administrative Procedures Law
(2) Actively publicizing systems which are closely related to market access
(3) Thorough guidance for regional government bureaus
(4) Adhering to international rules

5. Fostering self-responsibility among consumers and businesses

6. Promoting investment and others in Japan

(1) Promoting investment in Japan
(2) Lightening the burden of applications, etc.

IV. Conclusion

(For reference)

1. Arrangement and Classification of Past Matters Handled by the

(1) Arrangement and classification of past matters handled by the OTO
(2) Active measures to promote market access

2. Important Events in Japan and Abroad Concerning Market Access

(1) International trends concerning improved market access
(2) Improving conditions to facilitate market access

I. Introduction

With progressing integration of the world economy and the advent of the so-called "age of mega-competition," it has become imperative to reform various systems in Japan that are no longer able to meet the demands of the times. To that end, vigorous efforts are being made to promote reforms, including administrative reform and structural reform of the economy.

As part of this broad reform movement, a program of systematic deregulation has been devised with the principal aims of opening up the Japanese economy to other countries and developing a more liberal and fair socioeconomic system based on the principles of self-responsibility and market mechanisms.

The Office of Trade and Investment Ombudsman (OTO) reviews regulations and practices from the perspective of improving market access. The "Deregulation Action Program" further revised in March this year (adopted by the Cabinet on March 28, 1997) states that "in order to promote deregulation which helps improve market access, the functions of the Office of the Trade and Investment Ombudsman (OTO) shall be actively applied."

In February this year, the OTO marked the 15th anniversary of its establishment. To date, it has handled some 550 separate complaints. Furthermore, each year since FY 1992, the Market Access Ombudsman Council (hereafter "the Council") has compiled its "Recommendations on Market Access Issues as Concerns Standards, Certification and Others" on the basis of problems indicated by foreign and domestic businesses and others. Through this process, the Council has dealt with some 240 cases over the past five years, and has made recommendations concerning necessary measures in approximately 100 of those cases.

Given the great importance of improving market access, and applying the OTO's achievements so far in dealing with complaints and identifying problems, the proposals made herein are aimed at making a positive contribution toward improving market access and thereby economic structural reform of our economy through maximum application of the functions of the Market Access Ombudsman Council.

II. Perspective of the Proposals

In promoting structural reform of the Japanese economy, the Council emphasizes the importance of increasing benefits for consumers by "improving market access". In an era when people, goods, capital and information move freely, improving market access is a crucial requirement for fostering an open, world-leading socioeconomic system. Furthermore, increases in imports and foreign investment due to improved market access will extend consumers' variety of choice by introducing previously unavailable goods and services into the Japanese market, and will also contribute to reduce the gap between foreign and domestic prices. At the same time, this will contribute to rectifying the high cost structure in industry, and various forms of competition among domestic and foreign enterprises will help invigorate and raise the efficiency of Japan's economy, and thereby also help to create employment opportunities. That is, in this age when enterprises can actively choose which countries to operate in, improved market access will enhance the attractiveness of Japan's business environment to foreign enterprises and also help prevent deindustrialization.

For these reasons, we must take the initiative to improve market access as part of the overall effort to effect structural reform of the economy.

1. Issues concerning the standards and certification system: The problem of private organizations and conformity assessment

Despite the government's legislative efforts to deregulate the economy and adjust Japanese specifications and standards to conform with international norms, dissatisfaction persists among both domestic and foreign businesses who feel that in reality there has been little improvement in market access in Japan. Reviewing the breakdown of complaints and problems accepted and dealt with by the OTO since 1989, it is conspicuous that around one-third relate to activities to evaluate product conformity to specifications and standards (i.e. certification to certify conformity with inspection, testing and certain specifications and standards, etc.), including requests for acceptance of foreign test data.

The next most common categories of complaints are those relating to the need for setting specifications and standards and those relating to the content of specifications and standards, such as whether or not they conform to international norms.

Problems involving private organizations engaged in the standards and certification system -- such as authorized corporations, nonprofit organization for the benefit of the public and voluntary organizations (hereafter collectively referred to as "private organizations") -- are expected to become more important as deregulation proceeds. In particular, special attention has been given to cases related to how those organizations set specifications and carry out conformity assessment. Many of the cases we have handled involved requests to harmonize specifications with international norms or to approve products conforming with foreign specifications. In regard to the work of such private organizations in setting specifications and conducting conformity assessment, it was found that in some cases conformity assessment procedures carried out autonomously by these organizations on the basis of specifications which do not always conform to international norms are in practice as influential and obstructive to market access as are government systems.

2. Trends toward improving market access

In some cases, measures based on the Council's concrete recommendations, regarding cases it has dealt with have taken too long to be implemented or are otherwise inadequate. In general, however, the government is steadily taking appropriate measures and in a number of areas is in the process of implementing bold revisions, including amendments of relevant laws. The Council has examined these welcome concrete measures with the aim of determining the direction of changes in standards, certification and related areas that its hopes will be incorporated into other systems as well.

At the international level, too, the WTO agreement, which should be observed to improve market access in various countries, has been concluded. In particular, the Agreement on Technical Barriers to Trade (TBT) and the Agreement on the Application of Sanitary and Phytosanitary Measures (SPS), lay down rules in order to avoid creating unnecessary obstacles to trade. Detailed agreements have also been concluded at Summit Meetings and in the OECD and APEC frameworks. In the EU, vigorous efforts are under way not only to achieve uniform mutual recognition within the region but also to establish mutual recognition with countries outside of the region. Recently, there has been particularly strong interest in the issue of accepting the methods of conformity assessment and results of inspection. The view that once inspected on conformity assessment, the result should be acceptable for any markets all over the world is gradually gaining solid support. This view is in line with the trend of cases dealt with by the OTO.

Significant changes are also taking place within Japan. In 1993, the Administrative Procedures Law, which defines responsibilities for setting and announcing examination criteria for approvals, certification, and so on was enacted (effective from 1994) with the aim of ensuring impartiality and increasing transparency in administrative operations. In 1994, the Product Liability Law was enacted (effective from 1995), which generally defines the compensation liabilities for manufacturers and so on in cases of damage caused by defects in their products. Each of these sets down rules for a broad area, and paves the way for a shift from administration based on highly discretionary, prior regulations based on separate regulatory laws for each industry, to administration which emphasizes ex post facto redress through the application of rule-based, transparent administrative operations and civil liability rules. In this respect, they hold great significance for improving market access.

3. The direction of reform of the standards, certification and others system

In view of the preceding, the Council takes the basic view that, in order to further enhance market access, the government, while continuing to make administrative operations more transparent, must basically undertake ex post facto monitoring and correction of basic rule transgressions, based on the principle of corporate and consumer self-responsibility and allowing maximum scope for market mechanisms to operate. At the same time, it must effect further revisions of the standards, certification and other domestic systems with a view to ensuring their conformance to international systems. As it does so, furthermore, it will need to keep safety-related and other socially oriented regulations to the minimum required by existing policy aims.

Specifically, the government should rigorously reevaluate whether or not certain areas require regulation through the setting of specifications and standards to begin with, and in particular whether or not such regulation is necessary at the present time. In regard to specifications and standards which are necessary, it is important not only to endeavor to clarify them and make efforts to ensure that they conform to international norms but also to establish effective measures for reform of the conformity assessment system which determines whether or not products comply with those specifications and standards.

4. Measures relating to private-sector practices

In order to ensure the effectiveness of market access reform measures, private-sector practices are important issues which require study, including the activities of private organizations in setting specifications and standards and conducting conformity assessment. Despite efforts by the government to abolish and relax regulations and harmonize the system of standards, certification and related areas with international norms, there remain cases whereby actions by private organizations are hindering market access.

In these proposals, the Council, recognizing the impact of these activities on market access, deliberated the measures the government should take in regard to private-sector practices, as well as the extent of the government's own involvement with the relevant private organizations and their practices. In view of the fact that improving market access is a task which Japan must undertake on its own initiative, it is expected that business organizations and all relevant private organizations will regard the matters mentioned below as issues which they must address directly and earnestly strive toresolve.

III. Tasks for Improving Market Access

Taking important domestic and overseas trends bearing on market access into consideration, our analysis of cases dealt with in detail by the OTO in the past highlights the following as areas requiring positive action by the government to effect further improvement of market access in the years ahead.

Using these issues as guidelines for decision-making, each ministry and agency concerned should reevaluate the system under its jurisdiction from the perspective of further improving market access. Furthermore, in its acceptance and handling of individual complaints and issues from now on, the OTO must apply the following tasks as evaluation criteria.

1. Measures relating to setting specificationsand standards

(1) Reevaluating the need for and content of specifications and standards

It is necessary to conduct well-timed and appropriate reevaluations of both the need for and the content of specifications and standards in light of, among other factors, technological advances, requests for deregulation, diversification of consumer needs, and demands to harmonize specifications and standards with international norms etc.

The Japanese Industrial Standards (JIS) system (Industrial Standardization Law) extensively incorporates the perspectives of all relevant parties, including producers, users and consumers, and provides for zero-base (comprehensive) review every three years. Such active measures are commendable. Similarly, under other specifications and standards systems, such as the Japan Agricultural Standards (JAS; Law on Standardization for Agricultural Products and Rationalization of Quality Labeling), in addition to promoting harmonization with international standards, active steps are being taken to abolish obsolete specifications and standards and revise specifications and standards in accordance with needs, based on actual production, distribution and consumption conditions. Carrying out this kind of comprehensive review for the specifications and standards including the aforementioned measures, is necessary. Furthermore, in setting, amending and abolishing specifications and standards, the ministries and agencies concerned should cooperate to harmonize JIS as much as possible with technical standards in mandatory regulations, standards for government procurement, and so on.

(2) Setting appropriate specifications and standards for new products

In some cases, the fact Japan has no system of specifications and standards appropriate to new foreign products gives rise to cases of import impediment. In order to respond appropriately to new circumstances and contribute to consumer benefit, it is important, if need be, to carry out wide-ranging revisions of existing laws and to set out specifications and standards which can accommodate the advent of new products. In regard to dietary supplements, it is necessary to take active steps to treat these as a new category. In regard to camping trailers, with clarifying camping trailers' regulations and specifications in use in the United States, the ministries and agencies concerned should take an active response by studying promptly the relationship between existing domestic laws and camping trailers' specifications.

Furthermore, while it is necessary to consider actively incorporating private-sector specifications when setting government specifications, in such cases due consideration must be given to ensuring equal opportunity for all foreign businesses and other "outsiders."

(3) Clarifying specifications and standards

Market access problems for many items stem from the fact that Japan's specifications and standards are not specific, leaving much to the discretion of the government or relevant private conformity assessment bodies in some cases. Specifications and standards must be prescribed as clearly and precisely as possible so as to minimize the margin for administrative discretion. Such clarification will lead to be practical to also help simplify the conformity assessment process. In the case of the Waterworks Law, detailed standards relating to the structure and materials of "domestic water supply equipment" were established by ministerial ordinance, and it results that self-verification is scheduled to be adopted as the fundamental system.

(4) Conformance with international specifications and standards

Wherever there are existing standards set by international standardization bodies such as the International Organization for Standardization (ISO), the International Electrotechnical Commission (IEC), the Food and Agriculture Organization of the United Nations (FAO) and the World Health Organization (WHO)'s Codex Alimentarius Commission, those standards shall, in principle, be used as a basis for corresponding standards in Japan. In areas where no such international standards exist, Japan must take active part in the formulation and adoption of such standards. The general principle of harmonization with international standards has been a goal of Japanese national policy for some time. However, the cost of modification, inspection and other requirements for products which already meet international standards in order to comply with distinctive Japanese standards and specifications remains a common problem in many conformity cases we deal with. A recent case in point concerned bringing JAS fruit juice standards into line with relevant international standards, While positive steps are now being taken to that end, comprehensive revisions must be carried out including the actions mentioned above.

Furthermore, rather than simply wait for international standards to be formulated, it is necessary to harmonize domestic specifications and standards with international norms as speedily as possible by preparing or revising domestic specifications and standards even while corresponding international standards are still at the draft stage.

Even in areas where there are no international norms, the pertinence of any specifications and standards unique to Japan must be clearly explicable. In regard to the output calculation formula unique to Japan that had long applied to propelling devices for fishing vessels, prompt measures were taken to adopt regulations in harmony with international standards after review of this case.

(5) Actively promoting performance-based specifications and standards

Specifications and standards which prescribe materials and specifications in minute detail may be precise, but since they exclude elements which are not specified even though these may perform the same function as those which are specified, it is necessary to shift from highly prescriptive to performance-based specifications and standards so as to enable distribution of a diverse range of products, including foreign products.

The government switched to performance-based prescriptions in clarifying materials standards for domestics water supply equipment (in a ministerial ordinance concerning structural and material standards for waterworks equipment covered under the Waterworks Law). Revisions in favor of performance-based regulations are also being considered for the Building Standard Law and the Law for Safety of Vessels and should be implemented immediately. Given that highly prescriptive specifications and standards are still being applied in many areas of the standards, certification and related systems, performance-based specifications and standards must be adopted more actively from now on.

This shift to performance-based specifications and standards will, however, require that conformity assessment be carried out with greater transparency and efficiency than in the past, and the nature of conformity assessment bodies and so on need to be discussed [see 2. below]. Furthermore, from the perspective of convenience for small and medium-size companies, it may be appropriate to apply performance-based standards in conjunction with prescriptive specifications and standards.

2. Measures relating to conformity assessment with standards and specifications

(1) Fostering the principle of competition in conformity assessment

The work of conformity assessment such as inspection, certification and so on should be opened up to the private sector so as to increase the number of organizations involved and thereby allow the principle of competition to reduce the costs and improve the quality of inspection, certification and so on. Plans are being made to open JIS certification work, which until now has been the exclusive domain of the government, to both domestic and foreign private organizations. Also under consideration in regard to the Building Standard Law are plans to allow private organizations to conduct building confirmation, inspection, and so on, which until now had been carried out by the local government. Measures of this kind are commendable. In principle, such functions should also be opened up to the private sector in other systems where conformity assessment is currently monopolized by the government and specially designated private organizations.

(2) Making active use of overseas conformity assessment bodies and promoting mutual recognition

Efforts should be made to prevent additional costs due to double inspection and so on by actively utilizing reputable conformity assessment bodies in other countries. In the case of structural standards for explosion-proof electrical machinery, for example, even though the standards conform to international standards and the relevant conformity assessment is carried out by a legal authorized organization, concerns about the reliability of conformity assessment conducted in other countries etc. make it necessary to have the products tested again domestically. This problem demands immediate discussion leading to positive, concrete measures. Using ISO/IEC guidelines concerning conformity assessment can guarantee the reliability of evaluation, and testing organizations meeting those standards should be allowed to perform conformity assessment. [See 3-(1)]

Once taken, these measures will becomes the basis for promoting a system of mutual recognition concerning conformity assessment conducted in other countries. The EU is actively negotiating mutual recognition programs with other OECD countries etc., and at the end of May 1997 basic agreement in some areas was reached for a similar program between the EU and the United States. Japan also should take other active steps to promote mutual recognition with other major countries, including device of a comprehensive framework. Furthermore, after clarifying the relationship between the government and conformity assessment bodies [see 3-(1)], and making reference to the corresponding efforts of the EU and so on, prompt action must be taken to devise a conformity assessment system that gives due consideration to market access.

(3) Shift to system for eliminating the requirement for third-party certification

Conformity assessment should be greatly simplified by adopting a system which, in principle, eliminates the requirement for third-party certification and is based on self-verification according to clearly defined standards and specifications. In many cases, the quality control levels and technical capabilities of businesses are markedly superior to those when the relevant specifications or standards were set, so that it is not always necessary for the government to verify conformity with specifications and standards beforehand. For foreign or small-to-medium-size businesses without sufficient reliability or testing/inspection capabilities, however, it is important to establish systems for voluntary test laboratory authorization and third-party certification. It is commendable that, in regard to JIS, a test laboratory authorization system is being set up based on international rules (ISO and IEC guidelines). Similar measures must be actively adopted as much as possible for other systems as well, including utilization of the new certification systems introduced by amendments to the Industrial Standardization Law.

In areas where third-party certification is not required, designation of voluntary third-party certification organizations could, on the contrary, reduce transparency in the conformity assessment system. Accordingly, it is necessary to ensure common awareness, at the distribution stage, that third-party certification etc. is not legally required.

(4) Simplifying and speeding up conformity assessment procedures

In areas where government or other conformity assessment is essential, efforts should be made, as much as possible, to simplify and speed up the process and extend the time intervals between inspections. It is commendable that extension of the time intervals between inspections, simplification of inspections utilizing voluntary record-keeping for maintenance, and other measures are planned in regard to the Ship Safety Law. Under the same law, rationalization of inspection system by applying international standards concerning businesses' quality management (ISO 9000 series) is also deliberated. In other systems as well, wherever businesses' quality management and related systems are the subject of conformity assessment, in principle such evaluation should be simplified and made quicker by the application of international standards.

3. Measures relating to private-sector business practices

(1) Measures regarding specifications- and standards-setting and conformity assessment conducted by private organizations

In cases where private organizations set specifications and standards and conduct conformity assessment, they comprise two groups: those which are authorized by law to perform such tasks, and other which perform them autonomously with no legal basis.

1) Cases based on legal authorization

The ministries and agencies concerned must, in addition to adhering to the principles set out in 1 and 2 above, apply appropriate laws to promptly rectify any improprieties such as over-dependence on industry officials in their respective industries.

There have been cases in the past where although the government requested a nonprofit organization for the benefit of the public by notification to conduct inspections relating to legally adopted standards, in reality those who conducted the inspections were from the industry concerned. Such problems should be rectified promptly, and the ministries and agencies concerned must clarify the legal basis of such private-sector conformity assessment activities and transparent relationships established between such private organizations and the government. In regard to nonprofit organizations, the measures in "Standards for Delegating Testing, etc. to Nonprofit Organizations for the Benefit of the Public" (decided by the Cabinet on September 20, 1996), whereby the government should delegate testing, etc. only in cases where requirements are met concerning the clarity of testing, etc. standards and the impartiality, etc. to the officials belonging to the nonprofit organizations concerned, which are scheduled to be adopted by the end of fiscal year 2000, should be implemented as soon as possible. In particular, measures should be taken promptly in relation to private organizations which have been the subject of complaints dealt with in the past by the OTO.

2) Cases based on no legal authorization

In regard to private organizations acting autonomously, although in some cases they help reduce costs and improve quality through standardization of specifications and provide useful information which enhances consumer choice, due consideration must be given to the fact that in cases where, for instance, their standards do not conform with international norms, in practice they may impede the import of foreign products and foreign direct investment in Japan. There is the danger that, even if the government were to effect deregulation, such deregulation would lose effective significance if unauthorized private organizations continued to conduct conformity assessment on the basis of unchanged specifications. Taking appropriate measures in this regard is an important task in the overall effort to improve market access.

First, the government must give due consideration to the nature of its involvement so as to ensure that certification activities conducted voluntarily by unauthorized private organizations are not misunderstood to be government activities. Although it is already clear from legal provisions that certification by unauthorized private organizations bears no relation to the government's standardization and certification systems and so on, the government must strictly abstain from applying that system in such a way that acquiring certification from certain private organizations effectively becomes a necessary or even sufficient condition of acquiring government certification, approval and so on. Furthermore, since the government's de facto participation in certification work conducted by unauthorized private organizations may give rise to this kind of misunderstanding, it must refrain from taking part in such work.

Second, in the operation of private organizations, since according to the Civil Law that of nonprofit organizations for the benefit of the public fall under the supervision of the competent government ministries, which may issue directives as required, those ministries should take whatever measures are needed in regard to specifications-setting and conformity assessment by those organizations, such as by providing guidance to ensure that such activities are appropriate from the standpoint of market access. They should also provide guidance to prevent misunderstanding about the government's connection with those activities, such as by providing guidance over the wording and so forth of publicity materials, etc. produced by the organizations concerned.

(2) Eliminating anti-competitive business practices through vigorous enforcement of the Antimonopoly Act

Depending on the contents, or on how the specification and standards of private organizations are applied, etc., their activities may have the effect of restraining competition. The Antimonopoly Act prohibits trade associations from, inter alia, substantially restraining competition in a particular field of business and causing companies to employ such acts as constitute unfair trade practices. For example, there could be cases, under the circumstances where it is difficult for a company to do business if the company did not undergo conformity assessment from a trade association, the trade association

-would unfairly limit the use of conformity assessment by that company;
-would influence certain companies not to do business with dealers carrying products which fail to meet that trade associations' own specifications and standards; or
-would adopt rules discriminatory to certain businesses and instruct or demand that they be observed. The Antimonopoly Act should be vigorously enforced in such cases.

Not only in cases relating to the standards and certification system but in general, anti-competitive practices among private parties are contrary to market rules, and for the government, which has a duty to implement those rules, eliminating such practices is an important task. In order to promote fair and free competition among domestic and foreign businesses alike, vigorous application of the Antimonopoly Act, among other measures, is vital. The government should seek to correct anti-competitive practices in the private sector by investigating actual situations when necessary and vigorously enforcing the Antimonopoly Act, and also by acting promptly to rectify any anti-competitive administrative guidance if it gives rise to anti-competitive practices in the private sector. Strict measures should be taken, for example, whenever anti-competitive practices are evident in business practices at the distribution stage.

4. Measures for adding transparency to the domestic system

(1) Fully applying the spirit of the Administrative Procedures Law

From the standpoint of improving market access, increasing the transparency of administrative procedures is a key task. From this perspective, it is necessary not only, of course, to adhere to the Administrative Procedures Law, but also to give maximum application to the spirit of ensuring administrative transparency that accompanied the Law's enactment, such as by voluntarily formulating and publicizing standards for examination, penalties and so on, as much as possible, even if there is no legal obligation to do so.

Cases handled by the OTO have occasionally concerned areas not covered by the Administrative Procedures Law. Nevertheless, even where the Law does not apply, its spirit of striving to ensure fairness and maximize transparency of administrative operations must be respected.

(2) Actively publicizing systems which are closely related to market access

Many complaints handled by the OTO still arise from misunderstandings about relevant systems. In order, furthermore, that the government's ongoing deregulation efforts may bear fruit for the actual improvement of market access, they must be given ample publicity, and more active efforts, including via the Internet, are needed to disseminate general information and so on about the relevant systems. Especially in regard to systems which have been the subject of complaints handled by the OTO, since these systems bear heavily on the question of market access, particular attention must be given to making their essential aspects easy to understand.

Also, given the importance of English as an international language of trade and investment, it is necessary to produce English translations of key documents as much as possible. Among the documents which should be translated into English are directives and notifications which set forth the criteria for administrative decision-making, particularly the most important ones.

(3) Thorough guidance for regional government bureaus

In addition to those in the area of import inspection procedures, some specific market access problems stem from the response of regional government bureaus. Given that complaints have arisen because the manner in which the regional agencies apply the system differs from the relevant ministry's declared policy, ministerial policy must be strictly adhered to in every office. It is important that the ministry's initiatives to improve market access be properly understood and implemented at the local bureaus with which domestic and foreign businesses are in actual contact.

(4) Adhering to international rules

Information about formulating specifications and standards, conformity assessment procedures and so on should be actively disseminated in accordance with the TBT and SPS agreements of the WTO. In particular, the process of formulating specifications and standards should be based on international rules, with ample opportunities for input from a diverse range of third parties, including foreign nationals.

5. Fostering self-responsibility among consumers and businesses

Although the Product Liability Law differs from administrative regulations concerning product safety in significance and intent, due consideration should also be given to the fact that as it becomes established, it could spur quality control and design safety efforts in the private sector and thereby reduce the need for government product safety regulations.

For newly-entering companies, domestic and foreign alike, having to bear the responsibilities of, on the one hand, pre-existing regulations for standards and certification and, on the other, the potential for ex post facto compensation liability entailed by the Product Liability Law may become a major inhibiting factor in terms of both cost and future business potential. With the aim of firmly establishing the principle of self-responsibility among companies, prior regulations should be limited to the minimum necessary to conform with international norms. On the other hand, the spirit of the Product Liability Law should be applied to the fullest extent to ensure that, once they do enter the market, manufacturers (or importers, etc.) who produced (or imported) and distributed the products concerned bear the responsibility for any damage caused by defective products.

In particular, by reconsidering the need for the government to confirm compliance with specifications and standards in advance, it is necessary to actively promote the adoption of a system whereby, in principle, government or third-party certification is not required, that is, a system based on self-verification. In regard to the Electrical Appliance and Material Control Law, the enforcement of the Product Liability Law resulted in numerous items going from being subject to government certification to being subject to self-verification. Efforts should be made to adopt similar measures in other areas as well [see 2-(3) above].

Further, in order to foster an environment conducive to effecting such transition, it is necessary to actively promote efforts to provide consumers with adequate information; and, with the aim of establishing the principle of self-responsibility among consumers, to increase measures in support of fostering the basic knowledge and skills consumers need in order to make independent decisions as the principals in economic acts. As part of measures to improve the environment, it is also necessary to reinforce the practice of disclosure of information by companies to consumers.

6. Promoting investment and others in Japan

(1) Promoting investment in Japan

Cases dealt with by the OTO increasingly concern issues which should be addressed with a view to promoting investment in Japan, not only in terms of the long-standing aim of increasing imports but also from the viewpoint of creating an internationally attractive business environment. In addition to contributing to the efficiency and vigor of Japan's economy through the transfer of new technology and advanced management resources, promoting investment in Japan is also important for responding appropriately to regional deindustrialization brought about by offshore relocation of enterprises. From the point of view of promoting inward investment, it is important for investors to be able to secure talented personnel to invigorate their businesses, and in that respect positive action is being taken on the issues of landing examination criteria and fee-charging employment placement projects about which complaints have been made in the past. Other necessary actions on these issues should continue to be taken in the future as well.

(2) Lightening the burden of applications, etc.

The burden of all types of applications, declarations, record-keeping and so on at the import and other stages should be lightened, to make the system more convenient for those who use it and to help foster a business environment with international appeal. Amendments to the Plant Quarantine Law and the Law on Prevention of Infectious Diseases in Livestock, for instance, have enabled ministries handling imports to simplify and speed up import procedures by interfacing their computer systems. Such measures are commendable. The government should consider to take positive steps toward approving the use of microfilm and electronic medias to preserve documents which are required by law to be preserved.

According to "Measures to Ease the Burden of Applications" (adopted by the Cabinet on February 10, 1997), measures to simplify applications and other procedures and use electronic media will, in principle, be introduced by the end of fiscal year 1998, and earlier wherever possible. The adoption of these measures should be actively promoted.

IV. Conclusion

An open, competitive and transparent market can be brought about only through sustained efforts to reform each individual system, from regulations based on legislation, directives, etc. to customary practices of the government and private businesses, in a wide range of areas. To that end, along with the steady relaxation and abolition of regulations which are currently being actively carried out, it is necessary to take the initiative to evaluate the individual, specific complaints made by domestic and foreign businesses actually endeavoring to gain access to Japan's market as valuable issues, and to respond earnestly to them.

We, the Market Access Ombudsman Council, hereby submit our proposals based on our review of complaints and problems raised in the past and on its study of elements they share in common. The Council sincerely hopes that the task of improving market access will be more actively addressed in the structural reforms currently being carried out by the government, and that concrete measures will be taken accordingly. For its part, the Council intends to follow up on market access improvement efforts made on the basis of its proposals and, where necessary, to make further recommendations for reform.

(For Reference)

The following describes the results of deliberations involved in "II. Perspective of the Proposals", and is provided here for reference:

1. Arrangement and Classification of Past MattersHandled by the OTO

(1) Arrangement and classification of past matters handled by theOTO

In order to clarify common elements to matters handled by the OTO, a total of 408 complaints received and processed under the general principles set down by the OTO since 1989 have been arranged and classified by type. Table 1 describes the results of the arrangement and classification.

When the matters and complaints received were arranged by type, those having to do with 5. "Efforts to simplify and expedite inspection procedures" were the most frequent. This may be broken down into complaints requesting a reduction in the documents required, shortening the time required for procedures, and a review of testing or inspection methods. This was followed in the degree of frequency by 1. "Efforts to reduce government interference" (exemption from government regulations, elimination of specifications and standards), 4. "Clarification and quantification of standards and specifications" (clarifying and quantifying operating specifications), 2. "Efforts to achieve international harmonization" (harmonizing with international specifications and standards), 3. "Efforts to accept foreign test data" and 6. "Efforts to ensure transparency in other domestic systems" (requesting explanations for the reasons for certain systems and regulations, requesting improvement in private sector practices, requesting the use of English in applications).

These results indicate that although various measures have been taken so far, for example, in "Improving the Standards and Certification System" (March 26, 1983, Liaison and Coordinating Secretariat for the Standards and Certification System and Others) and in the "Outline of the Action Program for Improving Market Access" (July 30, 1985, Government and LDP Secretariat for Promoting External Economic Measures), problems remain where facilitating market access is concerned (Note 1).

(Note 1) Main content of measures taken to improve market access so far
1] "Improving the Standards and Certification System" (March 26, 1983, Liaison and Coordinating Secretariat for the Standards and Certification System and Others)
Laws were revised to establish a legal framework for non-discrimination between domestic and foreign businesses, and the following five principles were noted:
a) ensuring transparency; b) supporting internationalization; c) promoting the acceptance of foreign test data; d) simplifying and expediting certification procedures; and e) improving import procedures.
2] "Outline of the Action Program for Improving Market Access" (July 30, 1985, Government and LDP Secretariat for Promoting External Economic Measures)
a) taking the basic approach of "unrestricted in principle, with restrictions as the exception," government interference shall be kept to the minimum and matters shall be left to the choice and responsibility of consumers." (Remainder omitted)

Table 1 - Arrangement and Classification of Cases Handledby the OTO, by Type of Complaint (since 1989)

Type of Complaint Number
1. Efforts to reduce government interference 144
(1) Exempting from regulations 71
(2) Eliminating specifications and standards 73
2. Efforts to achieve international harmonization 114
(1) Harmonizing with international standards and specifications 79
(2) Accepting products conforming to foreign specifications 34
(3) Other 1
3. Efforts to accept foreign test data 45
(1) Using foreign test data 43
(2) Accepting data created by the applicant 2
4. Clarification and quantification of standards and specifications 134
(1) Clarifying and quantifying operating specifications 92
(2) Creating appropriate standards, changing existing standards 42
5. Efforts to simplify and expedite inspection procedures 188
(1) Reducing the number of documents required 47
(2) Shortening the examination period 48
(3) Eliminating verification of trivial items 4
(4) Reducing frequency of testing 15
(5) Reviewing testing and inspection methods 43
(6) Extending business hours for offices concerned 11
(7) Increasing the number of officers handling 2
(8) Reducing inspection fees 11
(9) Improving inspection facilities 3
(10) Other 4
6. Efforts to ensure transparency in other domestic systems 39
(1) Giving prior notification when standards and specifications are adopted or changed 1
(2) Giving concerned parties, including non-Japanese, opportunities to voice their opinions 4
(3) Translating laws into English 2
(4) Creating manuals for procedures 3
(5) Rectifying private sector practices 8
(6) Explaining reasons for systems or regulations 18
(7) Using English in applications 3
7. Other 7
(1) Eliminating imitations 3
(2) Other 4
Total 671
(Note)
1: The breakdown of 408 cases is for 179 separate complaints accepted from 1989 to 1996, and for 229 matters raised between 1992 and 1996 (of which the Market Access Ombudsman Council made recommendations on 104, and 125 others)
2: The major classifications for the complaints are based on Attachment 2 of the "Outline of Operations for the Office of the Trade and Investment Ombudsman" (February 18, 1982) and on the "General Principles for Accepting and Handling Specific Complaints Concerning Market Access Issues, Including Import Procedures, and to Smooth the Flow of Imports." Within each major classification, sub-classifications on elements shared in common were extracted and the complaints arranged and classified according to these sub-classifications.
3: The total number of complaints arranged and classified does not correspond to the actual number of cases, since many of the complaints and matters brought before the Council included multiple requests.

Recently, the OTO has handled numerous cases involving private sector organizations such as authorized corporations, nonprofit organization for the benefit of the public and voluntary organizations whose relationship with the government is not always clear and whose standards and specifications and the conformity assessments they conduct present barriers to market access. This may be a reason for dissatisfaction that market access has not improved significantly in actual terms, despite the fact that the government has amended laws to ease regulation and made moves to harmonize domestic standards with international norms. Further, surface deregulation may have made systems less clear to new domestic and foreign market entrants. With this in mind, special emphasis was given to the issue of private organizations in the council's deliberations.

The government has been aware of this problem for quite some time, and has undertaken to ascertain that the standards set down by private organizations and the certification activities they engage in thoroughly adhere to the five areas mentioned above (see Note 1) and noted in, for example, "Improving the Standards and Certification System" adopted in 1983. Complaints concerning private organizations are arranged and classified in Table 2.

The results of this classification show that many requests relating to harmonization with international standards and specifications or acceptance of foreign products conforming with international specifications have been made. If requests for acceptance of foreign test data are included, this accounts for nearly half of the cases brought to the OTO. Considering that few private organizations are delegated duties based on laws or legal statutes, the voluntary compliance evaluations they carry out using specifications that do not necessarily accord with government specifications and the fact that in practice these assessments have as great an impact as government systems means that they often impede market access.

Table 2 - Arrangement and Classification of Complaints Concerning Private Organizations

Type of Complaint
Number
1. Efforts to reduce government interference 6
(1) Exempting from regulations 2
(2) Eliminating specifications and standards 4
2.Efforts to achieve harmonization with international specifications and standards 19
(1) Harmonizing with international specifications and standards 8
(2) Accepting products conforming to foreign specifications 11
3. Efforts to accept foreign test data 4
(1) Using foreign test data 3
(2) Accepting data created by the applicant 1
4. Clarification and quantification of standards and specifications 10
(1) Clarifying and quantifying operating specifications 6
(2) Creating appropriate standards, changing existing standards 4
5. Efforts simplify and expedite inspection procedures 10
(2) Shortening the examination period 1
(4) Reducing frequency of testing 1
(5) Rectifying private sector practices 7
(8) Reducing inspection fees 1
6. Efforts to ensure transparency in other domestic systems 3
(5) Rectifying private sector practices 1
(6) Explaining reasons for systems or regulations 2
(Note) see Note 1 in Table 1.

(2) Active measures to promote market access

Of the matters handled by the OTO in the past, 60 percent of the individual complaints have been resolved by taking action to promote imports. In compiling the report titled "Recommendations on Market Access Issues as Concerns Standards, Certifications and Others" on complaints from domestic and foreign businesses, particulars concerning which the Market Access Ombudsman Council has made recommendations on have been acted upon by the Office of Market Access in policy actions which have been publicized in Japan and abroad.

We, the Council, generally follow up on recommendations made in specific cases the next year. In cases where progress is insufficient, further follow-ups are made until the actions recommended have been taken in full. Nevertheless, standards and specifications have been reviewed comprehensively in a number of fields in the past few years, following recommendations by the Council. The actions of the ministries concerned in the matters listed in Table 3 are commendable from the perspective of improving market access.

Efforts have been underway for a number of years to harmonize standards and specifications with international norms, and recently there has been a shift from minutely prescribed standards and specifications to adopting performance-based standards and specifications specifying only minimum performance.

In regard to conformity assessment for testing, certification and so on, many complaints have been made that the government monopolizes these tasks, even when the task is delegated to a private organization, or that even though products may conform to overseas standards or have obtained certification, they are nevertheless required to undergo complicated tests, incurring additional costs, once they are in Japan. Until now, we have made efforts to promote the acceptance of foreign test data and mutual recognition in order to simplify compliance evaluation. From this year, under the Industrial Standardization Law, international guidelines will be adopted to make use of conformity assessment organizations, and the system has been changed so that this task may be carried out by multiple private organizations, including overseas bodies. In regard to the Waterworks Law, the system was changed so that third-party certification of the structure and materials of waterworks equipment is not legally required.

These responses are commendable from the perspective of improving market access and should be used as reference in the case of other similar systems.

Table 3: Examples of changes to systems, contributing to improved market access

1) Electric Appliance and Material Control Law (revised law in effect from July 1995)
* Except for relatively hazardous items among Class A products requiring government conformity assessment, 117 items were moved to Class B as they were judged to require only self-certification. The documentation required for Class B items was streamlined in conjunction with the enforcement of the Product Liability Law. Further study of moving additional products to Class B will be undertaken.
* The work of harmonizing specifications with those of the IEC, which are the international norm, will be continued.
2) Plant Protection Law (revised June 1996, in effect from April 1997)
* Pests subject to quarantine measures will be determined by procedures based on international guidelines.
* Overall import procedures will be simplified and speeded up by computerizing and interfacing operations(using electric media to cut down on paper) among the ministries which deal with imports.
3) Waterworks Law (the government ordinance revising the implementation order for the Waterworks Law, and the ministerial ordinance concerning structural and material standards for domestic water supply equipment will go into effect in October 1997)
* Structural and material standards for domestic water supply equipment, which had heretofore been applied differently by individual waterworks utilities, have been clarified so that the system may be used uniformly throughout the country, in order to promote competition.
* With the clarification of structural and material standards for domestic water supply equipment, self-certification is now the basic rule.
* International standards (ISO/IEC guidelines) will be employed for using and certifying conformity assessment bodies.
4) Industrial Standardization Law(scheduled to go into effect in September 1997)
* A comprehensive reevaluation of the certification system, in view of demands for internationalization of approval procedures under the TBT agreement and mutual recognition systems at summit meetings, etc. was carried out.
* Conformity assessment work which is currently monopolized by the government or specially designated nonprofit organizations will be opened to domestic and foreign private organizations and market mechanisms will be introduced to the conformity assessment system, in order to reduce costs and improve quality.
* A self-conformance labeling system following ISO guidelines will be introduced, and a system of testing businesses will be introduced for the benefit of foreign businesses without sufficient reliability or testing capacities. In the future, mutual recognition with other countries will facilitate trade.
* With the exception of regulations which are currently being harmonized with international standards, all regulations (approximately 6,000) will be reviewed comprehensively every three years, beginning in 1997.
* Japan will contribute to the work of setting international standards by taking active measures to provide information when international proposals for specifications are made.
5) Building Standard Law
* The adoption of performance-based building regulations will smooth entry of foreign products and building materials into the domestic market. For the convenience of small and medium-size companies, a two-track system retaining prescriptive regulations will be used. (The listing of technical regulations for the wood-frame construction was amended in March 1997.)
* Building materials conforming to international specification standards and meeting the performance requirements for the wood-frame construction will be generally accepted.
* (The Building Council has made recommendations on the following items and revisions to the law are being studied.)
*Introducing performance-based building regulations to encourage the development of new products and technologies and facilitate the entry of foreign products and building materials into the Japanese market.
* Allowing private-sector organizations to carry out building confirmation and inspection, to ensure the administrative effectiveness.
* Studying the issue of reviewing regulation items in accordance with technological progress. (Remainder omitted)
6) Ship Safety Law
* Inspections will be simplified, in accordance with technological progress (the interval between inspections will be extended and self-maintenance will be utilized for simplification of inspections). (Scheduled to become effective from July 1997.)
* Technical standards will be reviewed, in conjunction with a shift from prescriptive requirements for specifications to functional requirements (adoption of performance-based requirements).
* The ISO 9000 series will be used to approve factories carrying out self-certification.

2. Important Events in Japan and Abroad Concerning Market Access

(1) International trends concerning improved market access

Important developments have taken place in many areas, helping the OTO resolve complaints brought before it and contributing to improved market access.

1) Actions by international standardization organizations

International standardization organizations are those bodies which have received approval to standardize specifications and conformity assessment procedures. Of those bodies, the ISO (International Organization for Standardization) handles international standardization of specifications and conformity assessment procedures in the areas of mining and manufacturing, agriculture and forestry, and service industries. The IEC (International Electrotechnical Commission) handles the same task for the electrical industry, and the two organizations have formulated ISO/IEC guidelines.

In regard to foodstuffs, the Joint FAO/WHO Codex Alimentarius Commission, the so-called Codex Committee, is a joint undertaking of the United Nations' Food and Agriculture Organization and of the World Health Organization; its mission is to protect the health of consumers and ensure fairness in foodstuffs trade. It was established by FAO and WHO in 1962 to draw up international specifications (the Codex specifications) pertaining to food sanitation, food additives and pollutants, residual agricultural chemicals and food labeling for foods important in international trade.

2) The WTO agreements

The WTO Agreement which came into effect in January 1995 established the rules which encompass those new issues such as trade in services, intellectual property rights and trade and investment measures as a result of Uruguay Round negotiations and created a broader-based multilateral trade system. The Agreement on Technical Barriers to Trade (TBT), which is part of the WTO Agreement, stipulates that international standards and international guidelines shall be used in principle to avoid creating unnecessary obstacles to international trade when member countries propose, adopt or apply technical regulations and conformity assessment procedures, and sets down procedures to follow in providing information or issuing notifications concerning specifications and conformity assessment procedures. In relation to sanitary and phytosanitary measures, the Agreement on the Application of Sanitary and Phytosanitary Measures (SPS) provides for concrete rules to be applied to ensure that the primary aim of sanitary and phytosanitary measures, namely measures to protect human, animal or plant life or health, is accomplished and to minimize their negative effects on trade. This agreement was negotiated and agreed to at the Uruguay Round as part of the talks on agriculture.

Given that Japan's economic growth depends on a fair and transparent multilateral international trading system, the need for us to take the initiative in strictly abiding by provisions of the above agreements is obvious.

Note 2 : Principal provisions of the TBT Agreement

1] Where legislation for technical standards is required, the relevant international standards shall be used as a basis for those technical standards.
2] In principle, conformity assessment procedures for specifications and standards shall use the guidelines and recommendations of international standardization organizations.
3] The conformity assessment results of foreign conformity assessment procedures bodies certified according to the guidelines or recommendations of international standardization organizations shall be accepted.
4] Members are encouraged to enter into negotiations for the conclusion of agreements for mutual recognition of results of each others' conformity assessment procedures.

Note 3 : Principal provisions of the SPS Agreement
1] Where international standards, guidelines or recommendations exist, members shall, in principle, base their sanitary or phytosanitary measures on those.
2] In cases where there is a scientific justification, members may introduce sanitary or phytosanitary measures that result in a higher level of sanitary or phytosanitary protection than would be achieved by measures based on the relevant international standards, guidelines or recommendations.
3] If the exporting member objectively demonstrates to importing member that its measures achieve the importing members appropriate level of sanitary or phytosanitary protection, the members shall accept the sanitary or phytosanitary measures of other members as equivalent, even if these measures differ from their own or from those used by other countries trading in the same product.
4] Members shall ensure that control, inspection and approval procedures are undertaken and completed without undue delay and in no less favorable a manner for imported products than for like domestic products.

3) Efforts by the EU to improve market access

The measures for improving market access adopted by the EU countries to create a single European market in conjunction with EU unification offer many insights into the same issue which Japan is now studying.

Initially, the EU countries attempted to standardize the domestic standards in use in each country for all products. But because it took so long to establish standardization under this so-called 'old approach,' this effort has been abandoned, except for pharmaceuticals, food additives, agricultural parts, automobiles and some other products. Under the new approach adopted in its stead in 1985, only essential requirements pertaining to health and safety observed by each country are determined at the EU commission level; any products which meet these requirements may be distributed freely within the EU. The setting of technical standards other than essential requirements is delegated to nonprofit private standardization organizations, and they are voluntary standards. Further, in order to promote mutual recognition with countries outside the EU, the global approach adopted in 1989 set down guidelines equivalent to those of the ISO/IEC for activities - that is, conformity assessment procedures for sampling, testing, inspection, evaluation, verification (approval), guarantee of conformity (self-declaration of conformity, certification by a third party), registration, recognition, certification and so on -- determining whether products, processes and services meet the specified requirements. This system stipulates the conformity assessment procedures necessary for each product, so that products in conformity may be distributed within the EU even if they come from outside the region. Based on this system, the EU is currently holding discussions with many countries, including Japan, toward concluding mutual recognition agreements. Agreements with Australia, New Zealand and the United States are alreadyin effect.

4) Others

Referring to standards and certification procedures, the Economic Declaration at the Lyon Summit (June 18,1996) stated that "We also believe that there is more to be done in areas where other obstacles still seriously impede freer access to markets, in particular: by encouraging more convergence between national standards and international norms, by further regulatory reform and by mutual recognition of procedures for testing and for certification".

At a meeting of OECD ministers held in May 1997, the participants welcomed the "Report on Regulatory Reform" and endorsed its principles. The Report's policy recommendations state, in regard to individual countries' standards and certification, the following: " Eliminate unnecessary regulatory barriers to trade and investment by enhancing implementation of international agreements and strengthening international principles." Specifically, the Report made these recommendations;
1] implement, and work with other countries to strengthen, international rules and principles to liberalize trade and investment, as contained in WTO agreements, OECD recommendations and policy guidelines, and other agreements;
2] reduce as a priority matter those regulatory barriers to trade and investment arising from divergent and duplicative requirements by countries;
3] develop and use whenever possible internationally harmonized standards as a basis for domestic regulations, while collaborating with other countries to review and improve international standards to assure they continue to achieve the intended policy goals efficiently and effectively; and
4] expand recognition of other countries' conformity assessment procedures and results through, for example, mutual recognition agreements(MRA) or other means. The ministers agreed to work to implement the Report's recommendations.

Also in the APEC (Asia-Pacific Economic Cooperation) , in order to achieve the long-term goal of free and open trade and investment by no later than 2010 in the case of industrialized economies and 2020 in case of developing economies, member economies agreed to ensure the transparency, to align member economies' mandatory and voluntary standards with international standards, to achieve mutual recognition of conformity assessment and to promote cooperation for technical infrastructure development in the area of standards and conformance in the Osaka Action Agenda of 1995. As for mutual recognition, guidelines are set forth toward pursuing mutual recognition arrangements in regulated sectors through the development of plurilateral mutual recognition arrangements.

(2) Improving conditions to facilitate market access

A number of noteworthy across the board developments concerning the standards and certification system, etc. in general have taken place in Japan in recent years. Specifically, the Administrative Procedures Law, prescribing common particulars for procedures relating to administrative penalties, was passed in 1993 and went into effect in 1994. The Product Liability Law, making manufacturers responsible for damages caused by defective products, was passed in 1994 and implemented in 1995.

Further, in 1996 the Cabinet adopted standards concerning delegation of testing to nonprofit organizations.

1]The Administrative Procedures Law

In response to claims by domestic and foreign sources that administrative guidance tended to be used extensively in carrying out government administration, or that standards pertaining to examination or processing of penalties were not clear, the Administrative Procedures Law was adopted to ensure fairness and improve clarity in administrative procedures by setting down common rules for penalties, administrative guidance and procedures for notification. Through the enactment of this Law, the government assumes the duty of establishing and publicizing examination criteria for permits, permissions, etc. and of making efforts to establish and publicize standards for penalties for punitive measures, except in designated areas where it has been judged inappropriate to adopt common rules for procedures.

2]The Product Liability Law

Under the Product Liability Law, injured parties have the right to sue manufacturers for compensation without having to prove negligence on their part, when defects in manufacturers' products cause loss of life, injury or property damage. Based on legal developments in the United States and Europe, the aim of this law is to lessen the burden of proof on plaintiffs, but it is also important in that at the same time it provides a clear legal basis for the liability of manufacturers making defective products and of importers importing such products. With the enactment of this law, it is hoped that manufacturers will endeavor to make safer products for consumers.

To give plaintiffs redress after the fact, the Product Liability Law sets across the board rules for civil code liability when accidents caused by products occur. This new law effectively effect constitutes a revision of product safety measures in effect in Japan, which had heretofore been pre-prescribed product safety rules in individual areas. This can also be considered an important step in a shift from administration of prescribed rules to administration based on ex post facto supervision grounded in clear rules, which is one of the administrative reforms needed today.

3]Standards for delegating testing to nonprofit organizations

An important decision was also made regarding testing by nonprofit organizations. Considering that some nonprofit organizations perform administrative acts, the government adopted "Standards for Permits to Establish Nonprofit Organizations for the Benefit of the Public and for Their Guidance and Supervision" and "Standards for Delegating Testing, etc. to Nonprofit Organizations for the Benefit of the Public " (decided by the Cabinet in September 1996). When testing work is delegated to a nonprofit organization or when a nonprofit organization's own testing is recommended, the requirements are that the testing or recommendation etc. be based on laws or government ordinances, that the content of the testing be clear, that the organization in question have no discretionary powers, that regulations concerning the duties of its officers be in place, and that less than half of its directors be former government or concerning industry officials (this latter requirement in the case of delegation only). The measures necessary for this will be implemented by the end of fiscal year 2000.