The Cabinet Office, government of Japan ＞ Top page of OTO ＞ Reorganization of the Office of the Trade and Investment Ombudsman
(Provisional Translation)
Recommendation on Market Access Issues as concerns Standards, Certifications and others
"3rd Report of the Market Access Ombudsman Council"
March 18, 1996
Market Access Ombudsman Council
Based on "Policy Actions on Market Opening Measures as concerns Standards, Certifications and others" (adopted by the Office of Market Access May 27 1993) etc., we clarify in this report where the problems with Japan's standards, certification and others lie and recommend actions needed in relation to complaints received from foreign businesses and others.
We ask the Office of Market Access to decide on the action that respects this report to the furthest extent possible, and to take measures at an early date.
I. General Observations
II. Recommendations
1. Animals and Plants, Foods
1-(1) Dispatching Plant Quarantine Inspectors to Control the Vapor Heat Treatment of Fresh Fruits before Being Shipped to Japan
1-(2) Partial Revision of JAS concerning Imported Fruit Juices
1-(3) Review of Designation System for Animal Feed Additives
1-(4) International Harmonization for Veterinary Drug Residue Standards in Edible Meats
2. Drugs, Medical Devices, Cosmetics
2-(1) Clarifying the Definition of "Dietary Supplements" and Deregulating Their Restrictions
2-(2) Deregulation and Simplification of Cosmetic Regulations/p>
3-(1) Simplification of Prior Confirmation Procedure for Fabrics of Silk and Other Fiber
3-(2) International Harmonization of Approval for Hi h-Pressure Containers
3-(3) Mutual Recognition of Electric Machines with Explosion-Proof Construction
4-(1) Facilitating Imports of Camping Trailers and Motorhomes
4-(2) Revision of Import Inspection System for Vessels, Vessel Engines and Propulsion Devices, etc./p>
5-(1) Relaxing Regulations of Imported Housing Materials
5-(2) Improvement of Procedures of Foreign Construction Materials Quality Assessment and Verification System
6-(1) Review of Worker Dispatching Undertakings
6-(2) Review of Employment Placement Projects
6-(3) Revision of the Criteria of the Examination for Landing in Japan and Other Regulations
7-(1) Introduction of the Nationwide Common Bond for the Release of Imported Goods before (Formal) Permit
7-(2) Introduction of Pre-Filing System
7-(3) Simplification of Import Procedures concerning Generalized System of Preferences Certificate of Origin
I. General Observations
1. As the global economy enters an age of so-called "mega-competition", it is becoming necessary for Japan to quickly undertake fundamental structural reforms against the high cost structure of the economy symbolized by price discrepancies between Japan and abroad and the problem of inefficiency, aiming at a brighter future for the economy. To this end, the government has presented its policy that it will conduct an overall review of the regulations from the basic viewpoint that freedom is the rule and economic regulations should be applied as an exception and that social regulations should be as limited as possible in light of their inherent objectives.
The activities of the Office of Trade and Investment Ombudsman (OTO) for fourteen years have involved reviewing regulations to improve market access, and this has also contributed to the basic policy targets mentioned the above.
Only when the market access issues raised by foreign businesses are viewed as important information and earnest attempts are made to resolve them, can truly significance structural reform be realized. Such actions will allow foreign businesses to freely enter the Japanese markets or create new markets and, as a result, contribute to the development of the Japanese economy and creation of additional employment.
2. Bearing the above in mind, we have examined a number of issues raised by foreign businesses concerning standards, certifications, etc., since last fall.
The issues in this report cover broader fields than those in the past three reports. That is, in addition to the issue that the current standards and certifications may be obstacles to market access, there are some issues concerning the promotion of flow of people and reallocation of employment. Others issues are that it is necessary to establish new specifications or standards when a product based on a new concept or technology is introduced into Japan. Constructive measures to deal with these issues are expected to help resolve a number of difficulties Japan faces, including the expansion of consumption, investment, and employment, promotion of direct investment into Japan, and correction of the price discrepancies between Japan and overseas.
Summarizing the deliberations of issues covered in this report, we request the government to take appropriate measures on the following matters common to each issue. Furthermore, since the ministries or agencies concerned and related private sector organizations have not necessarily coped with these matters satisfactorily, we encourage the government to once again tackle the following seriously.
(1) The government should constantly review the necessity of a regulation in light of changes in economic and social conditions and progress in technology since the regulation was established, and try to reduce government interventions into the market so as to leave it to private sector's initiatives. In particular, considering manufacturers' involvement in improving quality control as necessitated by the enforcement of the Product Liability Law, we believe that there is much room to introduce the self-certification system.
(2) If internationally agreed specifications and standards exist, Japan's specifications and standards should promptly be aligned with them.
In areas where no international specifications and standards are established, the government should take the initiative in researching the specifications and standards of other countries and collecting the data, and incorporate the specifications and standards commonly accepted overseas into the Japanese system. Moreover, it is important for the government to take constructive measures such as contributing to the preparation of international standards by taking advantage of the knowledge in Japan.
Also some instances are observed where imports are being hindered because there are no specifications and standards applied to new products from abroad. In such cases, mechanically applying existing specifications and standard would not do. In order to cope with new situations and benefit consumers, it is necessary to review the existing system that is becoming obsolete, which may lead to preparation of new specifications and standards appropriate for the product.
(3) The system for accepting foreign inspection data, even if it exists, is rarely utilized in practice because only a few foreign inspection institutions are authorized and/or there exist the differences in testing methods. Consequently, further improvement is required. Acceptance of foreign test data contributes to the improvement of market access because it simplifies and expedites application procedures and reduces the pecuniary and clerical burden on applicants. Therefore, this should be promoted more actively.
(4) Providing information on Japan's standard and certification systems can help foreign businesses better understand the requirements and facilitate imports. Therefore, an active effort should be made to provide information on the general mechanisms of the systems including their actual workings, mechanisms of accepting foreign inspection data, and how Japan's specifications and standards are harmonized with international standards.
(5) It is essential to reduce not only administrative involvement through deregulation but also limit administrative discretion in order to ensure transparency. When imposing a regulation, the government should disclose a clear set of standards, and set up the system that would prevent the individuals engaged from manipulating the regulations. The administrative system that works in line with clear standards without arbitrary discretion should encourage the private sector to use its creativity and ingenuity. This is the task that needs to be promoted further in the future.
In relation to the above, some cases have been reported where the actions of jurisdictional authorities caused unnecessary distrust. Consequently, it is necessary for the government officials to change their awareness and to take the appropriate action.
3. The Council expects the government and related private sector organizations to make further effort to improve market access based on the views presented the above. The Council intends to follow up the progress and results of implementation of the government's measures in response to the recommendations in this report, and bring matters under deliberation if necessary.
Furthermore, practices of the private sector should also be reviewed according to the needs of the times, which awaits future discussion.
II. Recommendations
1. Animals and Plants, Foods
1-(1) Dispatching Plant Quarantine Inspectors to Control the Vapor Heat Treatment of Fresh Fruits before Being Shipped to Japan
1. Complainant: Thai Embassy
2. Ministry concerned: Ministry of Agriculture, Forestry and Fisheries
3. Background Information:
If a plant is a host plant to a pest that has not been found in Japan and may cause a serious damage to agricultural production when entering the country, the Plant Quarantine Law prohibits the import of the host plant from the region where the pest occur. In case of Thailand, since oriental fruit flies and melon flies, both of which are serious pests, have been found there, the law prohibits the import of mango and papaya, both of which are host plants of the pests, from Thailand. However, the import of four specific varieties of the fresh fruits of mango from the Kingdom of Thailand to Japan is approved, if they meet the standard designated by the Minister of Agriculture, Forestry and Fisheries. The notice by the Ministry of Agriculture, Forestry and Fisheries indicates the standard: the method of transportation, inspection and certification matters done in place of origin, method of disinfection and packing, and place of packaging. The standard also prescribes vapor heat treatment (VHT, hereafter) by the Thai side before shipment to Japan and, to confirm this process, that the Japanese side will dispatch plant quarantine inspectors. In essence, the plant quarantine certificate issued by the plant quarantine office of the Kingdom of Thailand that states, as a result of an inspection by the plant quarantine office of the Kingdom of Thailand, the office recognizes or believes that the product is free of harmful animals or plants must carry a statement by a plant quarantine inspector of Japan that he confirms the inspection and disinfection have been implemented appropriately. It is agreed that the expenses for the Japanese side plant quarantine inspectors that are incurred during their stay in Thailand must be borne by the Thai side.
4. Complaint:
The complainant states that Thai suppliers fully understand the Japanese governments' concern over the contamination of imported fruits by fruit flies and such and that they are willing and prepared to accommodate VHT. However, the complainant raised the following problems concerning the Japanese side's alleviation of the standards.
Thai exports its mangos to twelve countries. Japan is the only country to assign plant quarantine inspector, let alone conduct VHT. The other countries allow the import of mangos based on a certificate issued by the Thai government. The expenses incurred for the Japanese plant quarantine inspectors' stay borne by the Thai side raise the export cost to Japan. Furthermore, even if Thai side constructs additional VHT facilities in other regions in Thailand and request Japan to assign more plant quarantine inspectors, there is a concern that Japan will not assign a sufficient number of quarantine inspectors.
As for VHT, Thai specialists trained in Japan use Japanese machinery, and have gained sufficient experience since 1986 so that they are fully capable of managing the VHT on their own. Therefore, from 1997, Thai specialists should be authorized to manage the VHT on their own, and attach computer temperature records to the quarantine certificate for the Japanese authorities' reference.
5. Results of Deliberation:
The ministry concerned claims that it is prepared to assign a sufficient number of Japanese side quarantine inspectors when the Thai side increases the facilities in the future. In addition, the ministry should carry out the following.
(1) While the ministry concerned claims that its engineers have discussions with the Thai side engineers in the field, there is a discrepancy in the recognition of failures to satisfy the designated standards, which are claimed to have occurred in the field, between the Thai side and the ministry concerned. In addition, there is a difference in the recognition of the acceptance conditions for Thai-grown mangos imposed by other countries. Therefore, first of all, the two sides should confirm the facts.
(2) The complete extermination technology by VHT was developed with the technological cooperation of Japanese experts. Thai engineers have also received training in Japan. Therefore, Thai and Japanese sides should promptly discuss the feasibility of abolishing a Japanese plant quarantine inspector's checking the VHT and the conditions therefor (e.g. appropriate facilities and trained technicians) as well as to confirm the facts mentioned the above.
(3) As for the problem of expenses, even if a decision should be made to continue to assign an inspector, Thai and Japanese sides should promptly discuss the feasibility and measures for reducing the burden on Thai side by simplifying the procedure, such as by shortening the overall duration of the inspector's stay in Thailand.
1-(2) Partial Revision of JAS concerning Imported Fruit Juices
1. Complainant: Japan Foreign Trade Council
2. Ministry concerned: Ministry of Agriculture, Forestry and Fisheries
3. Background Information:
Law Concerning the Standardization and Proper Labeling of Agricultural and Forestry Products (JAS Law) prescribes the agricultural commodity standards (JAS system) in order to improve the quality of agricultural commodities, rationalize their production, simplify and ensure fairness in their transaction, and rationalize their use and consumption. At the same time, the law prescribes the standards (quality labeling standards system) that manufacturers must conform to in displaying the quality of agricultural commodities in order to help general consumers in their choice.
While JAS, or Japan Agricultural Standard, is an voluntary standard based on application by manufacturers, the government is advancing the international harmonization of the standard in order to achieving harmony with international standards (e.g. for food products, Codex). In revising the standard, the government follows international rules by making preliminary announcement of the intention as stipulated by WTO.
The JAS for fruit juices has been revised 21 times since 1970 due to changes in supply and demand conditions and development of needs. However, the quality of recently imported fruit juices has sometimes failed to meet the JAS. As for the procedure of revising the standard, opinions will be heard from the industry, and the matter will be deliberated by the Agricultural Commodity Standard Investigation Committee. The preliminary public notice of the intention to revise the standard is being published in AFF, a publication issued by the Ministry of Agriculture, Forestry and Fisheries, and JETRO's trade publications to fully inform those concerned in Japan and abroad.
4. Complaint:
The complainant raised the following issue concerning the review of JAS for fruit juices.
(1) Although the import of fruit juices is on the rise, some orange juice products (made in Brazil, Florida, or Mexico), for example, do not satisfy the JAS in acidity, and some grape juice products (American white grape juice, American red grape juice and Brazilian grape juice) do not satisfy the JAS in amino nitrogen or ash content. Consequently, the JAS is not compatible to the actual situation. Therefore, the JAS should be fundamentally revised to suit the actual situation of imported fruit juices.
(2) Acidity in orange juice and amino nitrogen and ash content in grape juice are not stipulated by the Codex, the international standard. In this respect, JAS is unique to Japan. Furthermore, it is difficult to measure amino nitrogen and ash content, and possible in Japan only, in practice, which involves much cost.
5. Results of Deliberation:
The ministry concerned should actively review the JAS for fruit juices by taking into account the diversification of consume needs, the actual situation of imported products and international standards. The ministry concerned should take the following actions for each part of the complaint:
(1) The ministry concerned began the deliberation on the revision of JAS for fruit juices in November 1995. The ministry concerned plans to make a specific proposal within fiscal year 1996. The proposal will be finalized after the required deliberations at the Agricultural Commodity Standard Investigation Committee, and filing the procedure with WTO for preliminary public notice of intention. The ministry concerned claims that for this reform, it will consider the actual situation of imported fruit juices, and develop more general standards (not standards according to places of origin) and that it will fully consider international standards. Therefore, the ministry concerned should fully consider the imported products, including those pointed out by the complainant. In addition, the ministry concerned, in deliberating the revision, claims that it will take the initiative in collecting a broad range of overseas data instead of merely taking specific requests into accounts and waiting for samples and data to be submitted. Such positive efforts should be actively promoted.
(2) Since the acidity for orange juice and amino nitrogen and ash content for grape juice are not stipulated by international standards, in deliberating the revision, an effort should be made to reach a conclusion on the necessity of stipulating these items in JAS for fruit juices as early as possible.
1-(3) Review of Designation System for Animal Feed Additives
1. Complainant: Japan Foreign Trade Council
2. Ministry concerned: Ministry of Agriculture, Forestry and Fisheries
3. Background Information:
Under the Law concerning Safety Assurance and Quality Improvement of Feed, the Minister of Agriculture, Forestry and Fisheries has the authority to establish standards for the methods of manufacturing, using, preserving feed additives, or labeling their quality, or the authority to establish specifications for their ingredients, in order to prevent the production of harmful livestock products or hindrance to the production of livestock products through damage to livestock, due to the use of feed containing feed additives. The Minister is required to ask for the recommendation of the Agricultural Materials Council in establishing or revising these standards.
The evaluation guideline for feed additives that serve as an indicator for the deliberation at the Agricultural Materials Council is provided by the "On the Establishment of Standards for Evaluation of feed Additives," which also requests the preparation of reference materials necessary to prove that a feed additive meets the required conditions and provides an outline on how to conduct the principal tests for preparing the reference materials (hereinafter referred to as the "Guideline").
The Guideline prescribes that a feed additive used to "promote the effective use of nutrition in the feed" be tested for its effectiveness (field effectiveness test using the target animal) at no less than one domestic facility.
4. Complaint:
The complainant raised the following issue with the field effectiveness test of feed additives.
As a condition for having foreign feed additives designated, part of the field tests must be conducted in Japan. The time and expenses required for this requirement hinders timely access to the market and presents the danger of giving domestic manufacturers some advantage. Therefore, the current system should be reviewed, for example, to accept as official data such foreign data as those from tests conducted in line with EC directives.
5. Results of Deliberation:
The ministry concerned plans to continue to deliberate the review of the Guideline by taking into account the purport of the complaint. The meeting of the Examination Committee on the Effect and Safety, Agricultural Materials Council was held in November 1995 and confirmed that the examination of the review of the field effectiveness test under the Guideline would start in fiscal year 1996. As for the simplification of domestic tests by accepting foreign data, paying enough attention to ensuring safety of feed additives, the results of the deliberations at the Agricultural Materials Council should be compiled within fiscal year 1996, and then action should be taken based thereon.
1-(4) International Harmonization for Veterinary Drug Residue Standards in Edible Meats
1. Complainant: Tokyo Chamber of Commerce and Industry
2. Ministry concerned: Ministry of Health and Welfare
3. Background Information:
Under the Food Sanitation Law of Japan, the Minister of Health and Welfare, from the viewpoint of public health, may establish standards of foods for sale. It is prohibited to sell or import food products that do not conform to the standards. Of the veterinary drug used in the production of livestock and cultivated fish, antibiotics and synthetic antibacterial agent must be kept out of meat, poultry meat, and fish and shellfish for fear of affecting the health of the people who consume food products containing these chemicals.
An international organization (Joint FAO/WHO Food Standards Programme Codex Alimentarius Commission) is currently advancing the establishment of international standards (Codex Alimentarius) for veterinary drug remaining in food products. As of July 1995, the Commission made recommendations on international standards for fifteen substances.
As for foreign countries, the United States has standards on the residue values for approximately 80 substances in animal medicine, including antibiotics, synthetic antibacterial agent, hormones and anthelmintics. EU plans to establish residue standards for all substances used as veterinary drugs in EU by the end of 1996. At present, EU has residue standards on 40 substances.
Because scientific evaluations have recently been established both in Japan and abroad on the effect of consuming food products containing antibiotics and synthetic antibacterial agent on the health (i.e. establishment of evaluation techniques and accumulation of testing data), it has become possible to establish the safety standards of some substances in food products that would have no effect on the health when consumed (including effects on the bacteria in the digestive tubes). The ministry concerned claims that it will introduce the principles of MRL (maximum residue level) that the EU and Codex Alimentarius Commission adopted, and successively set MRLs for those substances for which international standards have been established and the data for safety evaluation are available. In December 1995, the ministry concerned set MRLs for six substances. The ministry concerned will continue to establish MRLs for each substance for which the data necessary for safety evaluation will become available.
As for Naicarbazin, which has been pointed out by the complainant, the United States sets its MRLs in poultry of 4.00 ppm. However, no residue standard level has been set in Japan, EU, or Codex Alimentarius Commission.
4. Complaint:
The following complaint was raised.
In Japan, absolutely no chemical residue is permitted in edible meats, which is quite different from the international standard that allows residue of approximately 0.1 ppm (depending on the chemical). For example, whereas the domestic tolerance for Naicarbazin (antibacterial agent) in poultry is 0.03 ppm, or detection limit, the tolerance standard of the FSIS (an institution under the U.S. Department of Agriculture) is 4.00 ppm, i.e. more than 100 times the domestic standard. Therefore, the Japanese standard should be alleviated to bring it in line with the international standard. The ministry concerned claims that it will not immediately set a MRLs because the safety of Naicarbazin has yet to be evaluated by an international institution. However, Japan should set its own standard level. In addition, an inspection certificate should be accepted in lieu of conducting a domestic inspection for poultry imported from Brazil.
5. Results of Deliberation:
The ministry concerned claims that the data required for evaluating the safety of Naicarbazin, an example of the problems, are not available around the world and so it cannot immediately establish the residue standard level. However, no major problem has occurred in the United States for approximately 20 years, which should serve as sufficient safety data.
It is clear that Japan is lagging behind the United States and EU in the establishment of MRLs, so it is expected by the rest of the world to take a more active approach. Consequently, the ministry concerned should take the actions listed the below.
The ministry concerned recognizes that the domestic inspection of Naicarbazin, which is mandated for the import of poultry from Brazil, may be omitted if a residue prevention measure including appropriate inspection in Brazil, is taken. The discussion with the Brazilian government is under way.
(1) The ministry concerned plans to clarify the deliberation schedule at the Food Safety Council for MRLs for which international standards have been already established and bring the standards in line with the international standards as soon as possible. In this case, the ministry concerned should clarify and announce what veterinary drugs it plans to set MRLs for and when these standards will be established. In addition, when the standard setting work at the international institution reaches a certain stage, Japan should also begin to prepare for establishing MRLs for veterinary drugs and establish the standards as soon as possible.
(2) As for veterinary drugs for which no international standards have been set, the ministry concerned should collect data, consult the Food Safety Council, including on the feasibility of accepting the standard levels of the United States, EU, etc., and advance the establishment of domestic MRLs at an early date.
In addition, for substances for which there is a great need to establish MRLs, the ministry concerned should contribute to the establishment of international standards by submitting to the international institution data on safety and other means.
(3) The ministry concerned should further expedite the deliberation by the Food Safety Council on the establishment of MRLs for veterinary drugs in food products.
(4) In establishing MRL for each veterinary drug, the ministry concerned should prepare a priority list based on requests from within Japan and abroad and announce the list as well as the standard establishment schedule during fiscal year 1996.
2. Drugs, Medical Devices, Cosmetics
2-(1) Clarifying the Definition of "Dietary Supplements" and Deregulating Their Restrictions
1. Complainants: American Chamber of Commerce in Japan, Japan Foreign Trade Council, Tokyo Chamber of Commerce and Industry
2. Ministry concerned: Ministry of Health and Welfare
3. Background Information:
As people have become more interested in their health, they are getting more interested in food products that supplements nutrition in a secondary and supplementary manner, or the so called "dietary supplements." Many types of dietary supplements are on the market today; many of which are imported products.
Such countries as the United States, Denmark and Netherlands have established legal infrastructure for dietary supplements by taking into account their effectiveness and preventative effects.
In Japan, there is no legal definition of dietary supplements. What individuals consume orally are classified into food products or drugs. Whether a product is considered a drug or not is determined by examination of various factors such as the ingredients of the product, shape (e.g. dosage form, container, packaging, design, etc.), purpose, indications and dosage indicated on the product, sales method, and demonstration or presentation upon sale. That is, the judgment of the ministry concerned depends on whether the product would normally be recognized as a product whose purpose is governed by the Pharmaceutical Affairs Law. As a guideline for this judgment, "the Standards Defining Range of Drugs" is available. Therefore, even if a product is sold as a food product overseas, depending on the dosage form or ingredient, for example, the product may be considered a drug in Japan. In other words, for a dietary supplement product to be allowed into Japan as a food product, all the food product raw materials, food product additives, etc., must be permitted for use in food products in Japan. The dosage form should not resemble that of a drug and the indication of its effects is also subject to regulation. Since whether a product is considered a drug depends on the "recognition of an average person," the Ministry of Health and Welfare has revised its judgment criteria according to changes in the awareness of general consumers, diversification of dietary life style, and changes in how the product has been used for a drug.
If a product is considered a drug, under the Pharmaceutical Affairs Law, the product can not be manufactured or imported as a business unless the manufacturer or importer of the product obtains a license.
Furthermore, the ministry concerned is advancing a deliberation on the review of the classification of food product and drug, including the factors of safety and pharmacological effects. Under the Deregulation Action Plan (March 1995), the ministry concerned plans to make vitamins exempt from the drug regulations by the end of fiscal year 1996 and herb by the end of fiscal year 1997, and then consecutively other products as well.
4. Complaint:
A complaint was made that all products that are sold as food products overseas should be sold as food products in Japan, without being classified as drugs and therefore subject to the regulations of drugs.
(1) Recognition of dietary supplements
Dietary supplements, which are distributed all over the world, should be clearly defined in a law based on nutritional requirement (referred to as RDA (recommended daily allowance) abroad) in the interest of international harmonization. In this case, "the Standards Defining Range of Drugs" should be revised so as to remove food products considered dietary supplements from the range of drugs.
(2) Deregulation of labeling and establishment of a guideline
Taking account of the functions of the food and its physiological actions in the body, the ministry concerned should allow the functions of the product as a dietary supplement and methods of its effective use as well as precautions to be explained. In addition, the indication of other necessary information such as the eligible age group should be permitted. In this case, establishing "the appropriate labeling guideline" may need to be considered, in order to prevent indications of superfluous effects and incorrect use.
(3) Liberalization of shape (dosage form)
The ministry concerned should allow consumers to freely select the dosage form that is safe, easy to use, and necessary for the preservation of quality. Dosage form should not be used as a means to distinguish from drugs at the cost of convenience to consumers. In addition, at present, only Japan uses dosage form for this purpose.
(4) Deregulation of ingredients restriction
Even food product raw materials or ingredients that have been used extensively in Europe or the United States, or whose safety has been sufficiently verified, can be considered drugs. Those cannot be used as dietary supplements in Japan and their usage standards are extremely severe. Therefore, deregulation is necessary.
5. Results of Deliberation:
The ministry concerned should take the following actions in addition to the deregulation measures it has announced so far.
It is undesirable that products distributed and sold as food products abroad are classified as drugs. In addition, in order to conform to changes in consumer needs such as changes in dietary life style, it is necessary to take some measures for dietary supplements. As for the classification of drugs and food products, in the mid- to long-term, the ministry concerned should consider deregulating the restrictions on food product raw materials and ingredients and establishing a new category for dietary supplements.
As the current regulation on shape (dosage form) is too complex to understand, it should be abolished or substantially eased if appropriate indication as a food product (a dietary supplement) is established so that consumers can make correct choices without getting mixed up.
As for the restriction on labeling, priority should be given to consumers' interests. Because food products require appropriate labeling on ingesting method, dietary supplement claim, precautions, etc., the ministry concerned should relax the regulations on labeling, which enables consumers to appropriately select the product they require.
Furthermore, products distributed and sold abroad normally as food products should not be regulated as drugs, but be allowed into the market as food products in Japan. In addition to the measures under the Deregulation Action Plan (March 1995), the ministry concerned should ease as much as possible the current regulations on shape (dosage form) and labeling, for example, for vitamins in fiscal year 1996 and for herb in fiscal year 1997. The measures should be advanced consecutively to products other than vitamin and herb, beginning with minerals in fiscal year 1998.
2-(2) Deregulation and Simplification of Cosmetic Regulations
1. Complainant: Tokyo Chamber of Commerce and Industry
2. Ministry concerned: Ministry of Health and Welfare
3. Background Information:
Imported cosmetics are subject to the following regulations under the Pharmaceutical Affairs Law in the interest of ensuring safety.
(1) License for the import of cosmetics
A person who wishes to import cosmetics as a business shall obtain a license for each business office as a cosmetic importer. Requirements for the license include the installation of testing facilities (or utilization of another testing facilities) and the availability of a responsible engineer. When a licensed importer wishes to increase or revise his list of licensed imported products (category), it shall obtain a license for the new or revised products (category) for each office. When the product (category) is outside the comprehensive licensing standards of cosmetics by category (CLS, hereafter) the business shall obtain the following approval.
(2) Category license and category approval
CLS are for the ingredients that are generally considered safe when used as ingredients in cosmetics. They show ingredients and their quantities for each of 25 categories (including cosmetic lotion and lipstick).
The importer will obtain a category license for a cosmetic within CLS (since he normally gets category licenses for all his cosmetics upon being licensed as an importer, it is rare to get an additional product license for a category license), then submit an imported product notice (carrying domestic name of product, foreign name of product, name of manufacturer, and ingredients etc.) for each product. After completing this procedure, the importer will be allowed to import the product.
If the cosmetic is outside the CLS (for example, cosmetic containing an ingredient that has never been used in Japan), the importer shall obtain a category approval that provides an overall approval on the ingredients, volumes, etc., for each category. In processing the application for the approval, the approval review will be conducted based on the data on safety and other materials submitted by the applicant. After obtaining a category approval and an additional product license for each category of this approval, an additional product licenses for each product is not required, i.e. importing products needs only submitting an imported product notice for each product.
Furthermore, when submitting an imported product notice, the importer shall attach a certificate on the ingredients prepared by the manufacturer. Note that it is not necessary to submit an imported product notice for each act of import when a same importer continually imports the cosmetics for which the notice has been submitted.
(3) Approval and license
The application for an approval will be reviewed to check whether there will be any problems with the cosmetics. For a license, a review will be conducted to examine whether the cosmetics will be able to be appropriately controlled. As an approval (required only for cosmetics outside CLS) is given as a pre-condition to an import license, in principle, only the person who received the approval for the product can apply for the import license or additional (revision) import product (category) license (normally, approval application may be submitted concurrently with the license application). In addition, it is also possible for a foreign manufacturer to apply for an approval.
(4) Labeling
When selling cosmetics, the importer shall show in Japanese on the product his name and address, name of the cosmetic, names of ingredients designated by the Ministry of Health and Welfare such as those that may cause allergic reactions, manufacturing number or manufacturing code, etc. The United States requires that all ingredients be displayed on the product, and EU plans to introduce the same system.
(5) Miscellaneous
Quality standards for cosmetics stipulate substances such as prohibited ingredients in cosmetics.
The United States and EU, like Japan, employ a negative list (i.e. a list of prohibited ingredients) and a positive list (i.e. a list of permissible ingredients), but the contents of their restrictions (lists) differ between two countries.
The ministry concerned plans deregulation according to the following schedule based on the Deregulation Action Plan (March 1995).
1) Concerning CLS, during fiscal year 1996, the ministry concerned will integrate categories and increase the number of usable ingredients for each category.
2) Review regulations on the licensing system and labeling pertaining to the manufacture and import of cosmetics, including the alignment of current ingredient regulation with the international regulation, paying attention to international developments in regulations for cosmetics.
In March 1996, the ministry concerned took a measure to permit parallel import, provided the importer attaches data on all the ingredients, in lieu of the certificate of ingredients prepared by the foreign manufacturer, to the imported product notice.
4. Complaint:
The following issues were raised.
(1) Some products manufactured and sold in the United States according to the U.S. FDA (Food and Drug Agency) standard cannot be imported into Japan due to domestic regulations. For example, a business attempted to import soap bars from the United States, but since the soap contained ingredients that haven't been employed in cosmetics in Japan the business needed an approval and consumed time and money in collecting the data. In order to promote imports, the ministry concerned should deregulate the restriction on ingredients of cosmetics.
(2) When importing cosmetic soap bars, the Pharmaceutical Affairs Law requires installation of testing facilities and hiring of a chemical engineer. However, the regulation is not needed on cosmetics that individuals have purchased abroad and have been accustomed to using, so it should be abolished.
(3) When importing shampoo, even if it is the same product manufactured by the same manufacturer (i.e. the ingredients and the manufacturing method are the same), it is necessary to undertake the procedure, such as collecting data, for each product category, from the very beginning. A simpler method should be made available for products whose imports have been licensed.
5. Results of Deliberation:
Consumers have selected and used at their own responsibility cosmetics not subject to Japanese regulations on overseas trips and through mail order purchases. The enforcement of the Product Liability Law has helped in creating an environment where products can be distributed, sold, or consumed by consumers or businesses at their own responsibility. Furthermore, in terms of administrative efficiency, the regulations should be kept at the minimum for their purposes.
Considering these factors, the ministry concerned should review the entire structure of cosmetics regulations, including licensing and ingredient labeling, as well as international harmonization, during the fiscal year 1996. In this review, the required measures should be taken for the following points.
(1) Modification of CLS, from the viewpoint of international harmonization, should be promoted. As a result, ingredients which are used in the United States, EU countries, etc., should be incorporated into CLS, referring to the regulations in the United States and EU. Furthermore, to make approval unnecessary upon import of a cosmetic whose ingredients are the same as those of an approved cosmetic, the specifications of the ingredients outside CLS should be established based on the data submitted upon approval procedure and be promptly included in CLS.
(2) The system of licensing an importer for each office should be reviewed during fiscal year 1996, including the necessity of employing a responsible engineer and installing testing facilities, then the required improvement measures should be taken promptly.
(3) As for the import product notice submitted when actually importing a product, the notice should be reviewed during fiscal year 1996 to reduce the burden, and then the required improvement measures should be promptly taken.
3. Manufacturing
3-(1) Simplification of Prior Confirmation Procedure for Fabrics of Silk and Other Fiber
1. Complainant: The Tokyo Chamber of Commerce and Industry
2. Ministry concerned: Ministry of International Trade and Industry
3. Background Information:
Since fiscal year 1976 Japan has held bilateral consultations to make quantitative arrangements for imports of silk fabrics (except for fabrics of silk and other fiber) in bilateral agreements from major suppliers, namely People's Republic of China and the Republic of Korea. The Prior Confirmation System has been implemented to ensure effectiveness of these arrangements and to prevent the falsification of place of origin makings and illegitimate imports (i.e. after the importation the silk made-up goods will be restored to and used as raw silk, silk yarn, or silk fabrics).
The Ministry of International Trade and Industry's headquarters and its regional bureaus handle procedures of the prior confirmation system for silk fabrics and specially woven silk fabrics. Since most of the applicants for silk products for Japanese "kimono" are concentrated in certain regions such as Kinki, regional bureaus confirm places of origin for these silk products. Applications for fabrics of silk and other fiber, silk bed linens, etc., have been accepted and examined by those officials with advanced specialized knowledge at the Ministry's headquarters. Such knowledge is required to undertake detailed verification because a series of illegitimate imports occurred in the past where importers made false declarations to make silk fabrics appear as if they were silk made-up products.
In addition, detailed information is required in the application form for silk products for Japanese "kimono", fabrics of silk and other fiber, silk bed linens, etc., because such information is necessary to prevent illegitimate imports where the importer falsifies what is actually a silk fabric as a silk made-up product.
4. Complaint:
(1) Whereas silk fabrics are handled by both the headquarters and regional bureaus of the Ministry of International Trade and Industry, fabrics of silk and other fiber are handled only by the headquarters of the Ministry. This is extremely inconvenient and should be remedied.
(2) The information required in the application form for prior confirmation is extremely detailed and some of the information is believed to be unnecessary. Therefore, the application form should be simplified.
5. Results of Deliberation:
(1) Having received the complaint, the ministry concerned plans to start accepting applications for fabrics of silk and other fiber, silk bed linens, etc., via its regional bureaus in April 1996, whereas they are accepted only at the headquarters now. Such a response is believed to reduce the burden on the applicant.
(2) As for the information required in the application form for prior confirmation of silk products for Japanese "kimono", fabrics of silk and other fiber, silk bed linens, etc., are kept the minimums required to identify the products in order to prevent illegitimate imports. Consequently, it is difficult to simplify the application form. In some cases, however, it may be possible to determine whether the cargo is as described in the application, for example, with photographs submitted by the applicant. Therefore, the ministry concerned is attempting to carry out the procedure flexibly on a case-by-case basis.
The flexible processing using photographs, etc., submitted by the applicant is commendable in that it reduces the burden on the applicant. It should be notified to relevant parties, as it is necessary to ensure transparency of the procedure. Considering the complaint, continual review should be conducted to simplify other application procedures in the interest of reducing the burden on the applicant.
3-(2) International Harmonization of Approval for Hi h-Pressure Containers
1. Complainant: The Tokyo Chamber of Commerce and Industry
2. Ministry concerned: Ministry of International Trade and Industry
3. Background Information:
Under the High-pressure Gas Control Law, one who manufactures or imports a high-pressure container must have it inspected. If the container conforms to the specifications for containers by type of high-pressure gas and by size of pressure, it is supposed to pass the inspection and the gas type is stamped on the container. If one wishes to change type of high-pressure gas kept in the container, he must submit an application again and have the information stamped on the container. A high-pressure container must not be filled with high-pressure gas of a type other than the stamped one.
As for danger-free liquid fluoro carbon, several types of the gas may be kept in the same container after obtaining a special filling permission under the High-pressure Gas Control Law.
4. Complaint:
In the United States, whatever type of Fluoro carbon may be kept in a high-pressure container affixed to a Fluoro carbon recovery device (naturally, the pressure-proof performance of the container is designed to meet the Fluoro carbon with the highest pressure). In Japan, however, several types of Fluoro carbon cannot be stored in the same container. As this poses an extremely cumbersome operational problem, the law should be revised as the law is in the United States.
In addition, the permitted gas types may be limited to safe types of liquid Fluoro carbon of no more than the pressure of 20 kg/cm².
5. Results of Deliberation:
It is commendable that the ministry concerned is studying the feasibility of adding gas types to those that the ministry concerned allows for storage in the same container or the feasibility of grouping gas types to enable the storage of several gas types without a special filling permission (no changes will be made to flammable gas or hyperbolic gas for fear safety problems) in the interest of simplifying the procedure for changing high-pressure gas types. The ministry concerned claims that it will study the safety factors from physical and chemical viewpoints, conclude in three or four years, and take the measures.
3-(3) Mutual Recognition of Electric Machines with Explosion-Proof Construction
1. Complainant: Tokyo Chamber of Commerce and Industry
2. Ministry concerned: Ministry of Labour
3. Background Information:
Under the Industrial Safety and Health Law, electric machines and equipment used where there is combustible gas and a danger of an explosion or fire must be explosion-proof electric machines and equipment. Furthermore, one who manufactures or imports explosion-proof electric machines and equipment must receive the type inspection of the type inspection institution designated by the Minister of Labour (Technical Institution of Industrial Safety).
IEC (International Electrotechnical Commission) establishes international standards (IEC standards) for explosion-proof electric machines and equipment. EU has the CENELEC standards, the contents of which are identical to those of IEC standards.
In Japan, the standards for the explosion-proof structure were aligned with the IEC standards in 1988. Consequently, explosion-proof electric machines and equipment manufactured according to the IEC standards are considered to meet Japanese standards. As for actually imported machines and equipment, the type inspection is employed to verify that they satisfy the IEC standards.
In addition, in the type inspection, inspection data from designated foreign inspection institutions (designated by the Minister of Labour) are accepted. If data prepared by a designated foreign inspection institutions are submitted, an inspection conducted on the actual equipment can be omitted. At present, only one institution in the United Kingdom is designated a foreign inspection institution. However, other institutions will be examined on demand and designated if admitted to be eligible.
4. Complaint:
Even if importers or foreign manufacturers import explosion-proof electric machines and equipment that have been certified by foreign inspection institutions, since the explosion-proof structure standards of an exporting country differ from those of Japan, the imported machines and equipment cannot be used without the type inspection conducted by Technical Institution of Industrial Safety. Before a certification can be obtained in Japan, time is required for redesigning and application. Also, for example, because of the differences in the interpretation of the regulations concerning the process line wall in the explosion-proof vessel, even if the equipment has been certified by a European inspection institution, a complex modification has been required for the equipment to be certified in Japan.
Since the electric machines and equipment explosion-proof structure standards of Japan are alleged to be aligned to the IEC standards, products that have been certified by foreign inspection institutions as meeting the IEC standards or any other foreign standards that are aligned to the IEC standards should be allowed to pass the certification automatically.
5. Results of Deliberation:
The ministry concerned claims that the electric machines and equipment explosion-proof structure standards of Japan are harmonized with the international standards, IEC standards. However, the ministry concerned performs type inspection on products, which are certified by foreign inspection institutions as having been manufactured according to the IEC standards, upon their import into Japan. As for the simplification of inspection by harmonization of standards, the ministry concerned only accepts inspection data from designated foreign inspection institutions.
The true purpose of international harmonization of standards and certification systems is to prevent Japanese standards or certification systems from causing a barrier against imports of products manufactured according to foreign specifications and standards and to avoid additional costs incurred from modification, re-inspection, etc.
To this end, the ministry concerned should proceed with the review as follows.
(1) Type inspection in Japan should be promptly eliminated for a product that has been certified by a foreign government or an institution authorized by a foreign government as meeting the IEC standards or foreign standards aligned with the IEC standards, and it should be handled as having passed the type inspection. In addition, if the details or interpretation of the standards are different between Japan and overseas, they should be standardized as soon as possible.
(2) Conduct type inspection only on products that have not been certified as meeting the IEC standards of foreign standards aligned to the IEC standards. In this case, make an effort to publicize the designated foreign inspection institution system, and actively designate those institutions which many importers have requested for designation. In addition, promote actively the acceptance of foreign inspection data.
(3) Perform actively investigation and deliberation to successively take the necessary measures, in about five years from now, towards mutual certification of standards other than IEC standards as well.
4. Transportation and Traffic
4-(1) Facilitating Imports of Camping Trailers and Motorhomes
1. Complainant: American Embassy in Japan
RVIA (Recreational Vehicle Industry Association)
RPTIA (Recreational Park Trailer Industry Association)
2. Ministry concerned: Ministry of Construction, Ministry of Transport
3. Background Information:
In the United States, camping trailers (hauled by tractors, including travel trailers, fifth wheel trailers and park trailers) and motorhomes (with engines) are used extensively for leisure. Their facilities, installation method, etc., are stipulated by ANSI (American National Standards Institute) standards.
In Japan, a motorhome may be registered and operated, in principle, as an automobile stipulated by the Road Vehicles Act. On the other hand, no clear legal provisions exist for camping trailers because they have not been popular in Japan, and therefore their use has not been known. Naturally, there are no specific standards for camping trailers.
Some consider that camping trailers should be regarded as "automobiles" defined by the Road Vehicles Act since they are equipped with wheels and can be moved on the road. Others consider that they should be considered as "buildings" defined by the Construction Standard Law because they are fixed to the ground for a certain period of time.
(1) Regulations concerning automobiles and vehicles
"Automobiles" defined by the Road Vehicles Act must satisfy the following conditions for operation:
1) The structure and equipment of automobiles must satisfy the safety regulations for Road Vehicles stipulated by the Road Vehicles Act;
2) Concerning 1), automobiles must be inspected by the Minister of Transport and be granted a valid automobile inspection certificate;
3) Automobiles must be registered in the automobile registration file; and
4) Upon the inspection and registration, it is necessary to pay the automobile weight tax, insurance premiums for automobile third party liability insurance, etc.
In addition, if the Director-General of a District Transport Bureau certifies that the structure or use of the vehicle is special, it may be allowed to be operated under a relaxed set of safety regulations for Road Vehicles. In addition, in the test operating of the vehicle, provided there is special necessity and the permit of temporary operation is given by the Director-General of a District Transport Bureau, the vehicle may be driven without registration.
Furthermore, the Road Law and its cabinet decree (Vehicle Control Order) stipulate the standards such as the length and width of vehicles suitable for travel on roads. Vehicles not conforming to these standards may travel on roads, under certain conditions, if the road authorities grant these vehicles with special structure permission.
(2) Regulations concerning buildings
The Building Standard Law defines buildings as "those with roofs and columns or walls (including similar structures) of constructions fixed to the ground". The law provides the technical standards buildings must satisfy. In addition, if a building employs special construction materials or structural methods not anticipated usually by the law, it is necessary to obtain the approval of the Minister of Construction that the building has the strength equal to or greater than the provision of the law.
There are no specific standards for camping trailers concerning such facilities as electricity, gas, and water. Consequently, the standards under existing laws are applied, depending on how the utilities are connected.
4. Complaint:
A form of leisure called "destination camping" using a camping trailer or motorhome has developed over many years in the United States. Destination camping means spending a vacation staying in a camping trailer at a well-equipped camping site. Standards of the facilities, installation sites, installation method, etc., for these special vehicles have been established by ANSI. In the United States, these vehicles are regulated by their own specifications and standards as "special vehicles for destination camping", and therefore never regulated as "buildings".
In Japan, camping trailers have been imported into and sold without clear legal classification. If imports and sales increase in such a situation, camping trailers may be subject to excessive regulations both as buildings and automobiles (vehicles), and there is a concern of the proliferation of dangerous use on the other hand.
The complainant claimed that the current regulations should be reviewed and new specifications and standards promptly prepared according to the inherent use of camping trailers for destination camping so that their imports will be facilitated and they will be used safely. The complainant raised the following issues:
(1) As long as a camping trailer is used for its inherent purpose, it should not be subject to the Building Standard Law.
(2) The ministries concerned should prepare new specifications and standards for camping trailers for destination camping based on ANSI standards.
As for motorhomes, there are a number of discrepancies in the standards for auxiliary facilities between Japan and the United States. It is the complainant's wish to deliberate these problems again after observing the progress in the main issues concerning camping trailers.
5. Results of Deliberation:
If existing laws are mechanically applied when a new product unfamiliar to Japanese is imported, there is concern that the product might be subject to excess regulation. What matters is how convenience and safety will be ensured to the consumer in line with the inherent use of the product. In order to facilitate the import of the product and benefit the consumer in addition to ensuring safety, it is necessary to revise or establish specifications and standards according to the inherent properties of the product.
As camping trailers have been unfamiliar in Japan, no legal framework has been developed according to their inherent properties. Considering that there is a good possibility that camping with camping trailers will become a popular form of leisure, it is not desirable to continue to mechanically apply the current legal system to the products.
Consequently, the following actions should be taken in the meantime.
(1) According to the Ministry of Transport, camping trailers are classified as "automobiles" under the Road Vehicles Act. However, it is observed that, in Japan, camping trailers have been not used for the originally intended purpose: they have been used the same as buildings in urban areas. Consequently, the Ministry of Construction asserts that it is necessary to apply the Building Standard Law to camping trailers that are installed at fixed places for an extended period of time and are used for housing, lodging, etc. This is because it is necessary to ensure safety against earthquakes, fire, typhoons, etc., and to ensure appropriate habitation environment like general houses, inns, etc. The Ministry of Construction states that camping trailers used for camping at camping grounds and those that can be moved on roads at any time like motorhomes will not generally be subject to the Building Standard Law. As this is a commendable judgment, the ministry concerned should make an effort to inform those concerned of the decision.
(2) The Ministry of Transport, the Ministry of Construction, and other relevant ministries (the relevant ministries, hereafter) should study and conclude within one year or so on how to prepare new specifications and standards for camping trailers, i.e. whether the new specifications and standards should be established within the current legal framework or a new law (including amendments of existing laws) should be enacted. To this end, the relevant ministries should, with the cooperation of the complainant, study how a foreign camping trailer would violate the existing laws when it is used as originally intended at a campsite without any modification to its structure. They should examine how the laws themselves or their applications should be remedied to accommodate the use of the camping trailer. To be more specific, the relevant ministries should promptly study the specifications on camping trailers and U.S. regulations submitted by the complainant (in particular, those believed to violate the current Japanese regulations) and compare them with the current laws of Japan.
This Council plans to seek reports from the relevant ministries and study the case if necessary.
4-(2) Revision of Import Inspection System for Vessels, Vessel Engines and Propulsion Devices, etc.
1. Complainant: Tokyo Chamber of Commerce and Industry
2. Ministry concerned: Ministry of Transport
3. Background Information:
(1) Duty to undergo vessel inspection
In Japan, the ship safety law provides structural and facility requirements for vessels and requires the vessel owners to have their vessels inspected in order to maintain the seaworthiness of the vessels and the safety of human lives. Based on the provision, when taking a vessel out on its first voyage or when the vessel inspection certificate expires, the vessel owner must have his boat undergo a periodical inspection. The inspection is, in principle, conducted by Japan Craft Inspection Organization (JCI) if the vessel is smaller than 20 gross tons and by a District Transport Bureau if 20 gross tons or larger.
(2) Type approval system
A manufacturer of a vessel or products such as an engine may apply for type approval for the vessel or product with the Minister of Transport. A manufacturer who receives a type approval may take the verification that proves the manufactured vessel or product meets the type.
In addition, if a vessel or product that has obtained type approval is manufactured at the factory that is certified by the Minister of Transport, and the chief inspector of the factory confirms that the vessel or product meets the type, it is regarded to have passed the above verification.
If a vessel or product passes the verification for type, the first periodic inspection after that can be skipped.
(3) Inspection by classification society
Vessels other than passenger ships are inspected by a Japanese classification society authorized by the Minister of Transport (Nippon Kaiji Kyokai). If the vessel is registered for classification, it will be deemed as having passed the government's inspection for certain items while the classification is maintained. The government has the authority to give approval to inspection regulations used by Nippon Kaiji Kyokai, conduct an on-site investigation, and establishes penalties in case there is an illicit act.
(4) Use of foreign test data
If an inspection applicant submits test data of a test conducted by a foreign testing institution according to Japanese regulations or a method equivalent to or even more rational than the Japanese testing method, these data will be accepted and the government's tests designed to derive the data will be omitted. To be more specific, the following test data are accepted:
1) Data of a test that was witnessed by a government inspection officer of a country with an advanced maritime industry;
2) Test data of an official testing institution that satisfies conditions that it maintains neutrality in conducting the test and that the government of the country where the institution operates accepts the data (e.g. Underwriter's Laboratory's data (the United States)).
(5) International technical standards
For vessels engaged in international navigation, International Maritime Organization (IMO) studies international technical standards and establishes technical standards in the form of international treaties such as the International Convention of Safety of Life at Sea (SOLAS). SOLAS Convention states that, in principle, the government officials of the flag country of the vessel must inspect the vessel and that the government of the flag country may, however, consign the inspection to an authorized organization such as a classification society. Since vessels inspected by classification societies were sometimes found not to meet international standards and many such vessels were involved in maritime accidents, IMO established the "Guidelines for the authorization of organizations on behalf of the Administration" (effective in January 1996). As this illustrates, IMO is requesting the treaty countries to consign the test to more competent organizations and carry out more careful supervision of them.
IMO is also examining mutual approval pertaining to standard certification. IMO deliberated the mutual approval of lifesaving equipment since 1992, but decided that it was premature for the mutual approval.
International Standardization Organization (ISO) is developing international technical standards for pleasure boats such as yachts of less than 24m in length and for such equipment installed on the vessels as vessel engines, propulsion devices, rigging, etc. In other words, at present, there are no international standards for these products. Consequently, each country inspects these products based on her own technical standards.
4. Complaint:
The complainant claimed that vessels, vessel engines, propulsion devices, etc., approved abroad should require no re-inspection in Japan or require only simplified inspection, and raised the following problems:
(1) A yacht inspected by a British classification society was imported from the United Kingdom (however, some of the equipment such as lights were made in another country). Before being used, the yacht was inspected by JCI. JCI required that the lights be replaced with Japanese-made counterparts. These lights passed inspection overseas and so should not require inspection in Japan (however, it has not been confirmed whether the lights in this case were approved by the British classification society).
(2) Inspection certificates or data for a small- or medium-sized vessel engine are not accepted, which holds true even for engines regarded as established in the United States, Europe, or other industrialized nations. Material test, drawing examination, durability inspection, etc. must be performed again. Under the current law, some details of the tests are at the discretion of the local inspector, which raises the question of fairness and transparency. The model that is manufactured in an industrialized country and is inspected and certified by a national institution of the country or a certain testing institution, provided it is accompanied by the certificate, should be treated as if it were manufactured by an authorized factory in Japan and passed the specified inspections. (AS for this complaint, specific information such as engine type or details on the inspection certificate or data has not been clarified.)
(3) Even if an engine's design has been inspected by the Japanese government, it must be tested by the Japanese government (including JCI) at the plant before shipment or upon import. If the test is conducted upon import and the engine is partially disassembled by a party other than the manufacturer, it will no longer be covered by the manufacturer's warranty. If the engine's design has been inspected, it should be approved only with the shipment test by the manufacturer. Even if manufacturer's test is insufficient, those products at least that have passed test by primary classification societies in the world (e.g. ABS of the United States, DNV of Norway, GL of Germany) should be accepted only with document examinations.
In addition, too many burdens is placed upon the applicant in submitting data from overseas testing institutions because he is required to indicate the testing method and other details. The Japanese government should discuss the testing methods and other details with overseas testing institutions and further promote the use of foreign testing data.
5. Results of Deliberation:
According to the ministry of concern, there is no international precedence of mutual approval concerning vessels because
1) at present, there is no internationally uniform and detailed safety standard,
2) SOLAS Convention requires that the government of the flag country itself must perform the inspections, and
3) IMO reached the conclusion that it was premature for mutual approval of standard certification between foreign governments and that it is sufficient to use mutually testing data.
Although there may be no international technical standards for pleasure boats, vessel engines, propulsion devices, etc., ISO is studying an internationally uniform standard for pleasure boats. In addition, EU is working on mutual approval within the region. Therefore, the ministry concerned should take positive steps on the following points pertaining to pleasure boats, small vessel engines, etc.:
(1) The ministry concerned should contribute to the development of the ISO standard for pleasure boats and when the standard is established, should promptly harmonize the domestic standard with the ISO standard. Furthermore, the ministry concerned should observe the situations in EU, the United States, and other major industrialized countries and, if there is no particular problem in the inspection standards in these countries, should consider accepting their inspection standards and allowing the use of the pleasure boats in Japan only with the examination of documents such as certification of conformance in the country of origin and a physical inspection of the boat, and reach a conclusion during fiscal year 1998.
(2) According to the ministry concerned, JCI accepts testing data from foreign public testing institutions and attempts to facilitate imports. In order to further the acceptance of testing data from overseas testing institutions and reduce the burden on applicants, the ministry concerned should discuss actively the inspection methods with institutions from which no testing data is currently accepted. As for the testing data from principal classification societies, the ministry concerned should consider promptly accepting the data that would not hinder safety, and reach a conclusion by the end of 1998, confirming the effectiveness of the "Guidelines for the authorization of organizations on behalf of the Administration" effective in January 1996.
(3) The type approval system, the authorization system of factory, etc. are already in place so as to rationalize and simplify inspections. Through public relations to foreign companies, the ministry concerned should make an effort to promote the use of these systems and to improve them. For example, as for the authorization system of factory, measures such as promotion of certification by using ISO 9000 series should be examined and conclusion should be reached by the end of fiscal year 1997. In addition, a vigorous effort should be made to reduce the number of inspection items and simplify the inspection procedures paying attention to the progress in technology.
In taking the above measures, it is necessary to ensure that they do not impair the safety of human lives and preservation of the environment.
5. Construction
5-(1) Relaxing Regulations of Imported Housing Materials
1. Complainant: Japan Foreign Trade Council, The American Chamber of Commerce in Japan, The Tokyo Chamber of Commerce and Industry
2. Ministry concerned:
Ministry of Construction; Ministry of Agriculture, Forestry and Fisheries; and Ministry of Health and Welfare
3. Background Information:
(1) JIS/JAS certification for imported housing materials (for 2 x 4 construction)
1) JIS/JAS certification for imported housing materials (for 2 x 4 construction)
The Building Standard Law provides minimum standards concerning the site, construction equipment, and use of buildings.
"Notification on Technical Standards of Wood Frame Construction" issued under the law applies to houses built by wood frame construction (2 x 4 construction) method. The notification states that the construction materials must, in principle, be those conforming to JIS (Japan Industrial Standard) or JAS (Japan Agricultural Standard). Construction materials not conforming to these standards also can be used if the Minister of Construction determines that they would not impair structural strength.
The Government Housing Loan Corporation's common construction specifications concerning 2 x 4 construction assumes that the construction meets the standards of the notification and therefore requires that in line with the provision of the notification, the construction materials, in principle, conform to either JIS or JAS. Construction materials not conforming to these standards can be used, however, if the Minister of Construction determines that such materials would not impair structural strength. The specifications are compiled by the Corporation, from the client's point of view, as a means of consumer protection where the contents of the construction contract can be made concrete, and from the architect's and contractor's point of view, as a convenience where they need not prepare their own specifications from scratch. Clients (applicants) or architects/contractors may use the specifications if necessary. The specifications provide as examples common materials and construction methods in the country. The specifications can be modified, excluding the parts pertaining to the construction-related laws and the Corporation's requirements, by deleting some parts or adding other materials or construction method according to individual designs. Furthermore, the loan can be obtained from the Corporation, without using the common construction specifications as long as the construction conforms to the provisions of the notification.
2) JAS system
JAS is the system where, based on the JAS Law, products are inspected (graded) and are allowed to bear the JAS mark if they meet the JAS specifications. The system is intended to improve the quality of agricultural and forest commodities, rationalize production, and simplify and ensure fairness in transactions. Grading is performed by Registered Grading Organizations which meet the standards stipulated by the Minister of Agriculture, Forestry and Fisheries.
Approved and permitted plant system is established under the JAS grading scheme. Since 1983, foreign manufacturers have been able to have their plants approved and permitted as domestic manufacturers can. In addition, the designated foreign testing organization (FTO) system was launched in 1986 to facilitate the approval and permission of foreign plants and the grading of products produced at these plants. Since then, the inspection data prepared by FTO have been utilized.
(2) Certification for exterior wall and roofing materials as noncombustible materials
The Building Standards Law provides fire protection standards concerning exterior wall and roofing materials to ensure safety of buildings against fire. If the construction materials used for these parts demonstrate a certain level of fire preventive property and are found to satisfy these standards, they can be used as fire preventive materials. Once materials are certified as fire-preventive materials, the materials, in principle, need not be tested again. Note that "fire preventive material" is a general term referring to any one of noncombustible material, quasi-noncombustible material, fire retardant material, or quasi-fire retardant material. Noncombustible material demonstrates the highest fire preventive property of these materials.
The Government Housing Loan Corporation, due to its mission to support the construction of high-quality homes along with the housing policies and due to its need to secure its loan assets as a financial institution, stipulates construction standards of eligible houses for its loans. Among these standards, there are regulations concerning the structure of roofs, which provides that the roof must be made of or covered with noncombustible materials. Therefore, roofing materials used for eligible houses for the Corporation's loan must be certified as noncombustible ones by the Minister of Construction. In addition, while, the Building Standard Law requires that the roofing materials be noncombustible only in certain areas, the Corporation requires in its construction standards that the roofing material be noncombustible regardless of areas.
(3) JWWA (Japan Waterworks Association) mark on plumbing fixtures and designated contractor system
According to Article 16 of the Waterworks Law, water suppliers (e.g. city, town, village) may reject application for their services contract or suspend their services if the structure and materials of plumbing fixtures (i.e. service pipe branched from their distribution pipe and water supply equipment directly connected to the water service pipe) do not meet the standards.
Under the above circumstances, each water supplier stipulates in his water supply ordinance (water supply regulations) that the structure and materials of plumbing fixtures usable for his waterworks should be "product meeting JIS, products meeting JWWA standard, products that have received type approval of JWWA, or other products deemed appropriate by the water supplier," for example. Based on such regulations, the association of water suppliers, JWWA has set type approval standards for water supply equipment which have no provision in JIS. The association registers the types, inspects the products to determine if they conform to the registered type, and indicates to users that the products have been inspected. The effective period of the registration is set to be three years.
Furthermore, under the water supply ordinances, water suppliers either designate or register contractors that can properly work on plumbing fixtures based on such designation criteria as "those who employ technicians certified by the city and have business offices in the city" (designated contractor system).
Although the sections on plumbing and distribution facilities works in the Government Housing Loan Corporation's specifications quote the JIS and JWWA specifications, these specifications can be modified if necessary, depending on designs.
4. Complaint:
The complainant claimed that domestic regulations are restricting the use of imported housing materials and are obstacles to reducing prices of imported houses, and raised the following issues.
(1)
1) According to the Ministry of Construction notification, constructing a house of 2 x 4 construction requires, in principle, use of nails and other hardware with JIS certificate and lumber with JAS certificate. This regulation does not apply to a house of conventional construction.
The Government Housing Loan Corporation applies JIS more pervasively than the Ministry of Construction, which may result in little use of nearly all imported materials. For example, the Corporation stipulates the type of JIS-certified nails used for wood frames, the interval, pattern, and even the quantity of nails hammered. The CN90 nail stipulated by the Corporation, for example, is not only expensive, but is too long and too large in diameter for 2 x 4 construction (it sometimes causes the lumber to crack). Likewise, the Corporation prohibits the use of American-made hardware. Because of the Corporation's regulation, American-made connectors used for panels must be replaced with Japanese-made connectors before the panels are used in Japan.
2) Use of lumber, plywood, structural lumber, etc., with JAS mark is a requirement for the Corporation's loan. However, JAS materials are expensive and are limited to those that are certified at certified plants. In addition, it is difficult to acquire JAS certification in the United States. Furthermore, acquisition of JAS certification requires both extensive amounts of money and time.
(2) Since asphalt-roofing material is not an approved construction material in Japan, the home with the material is not eligible for Corporation's loan and is thus preventing the import of the material. It is also difficult for imported external wall and roofing materials to get certified as noncombustible materials.
(3) The restrictions on the connecting water supply equipment are severe. For example, waterworks contractors will not accept water supply equipment without a JWWA mark and only designated waterworks contractors can work on waterworks systems. Another problem is that the JWWA mark is a condition for eligibility for Corporation's loan.
As for the issues described the above, the ministry concerned should allow in Japan the use of products that can be used in foreign countries, for example, by introducing the mutual recognition system (e.g. with standards of WWPA (Western Wood Product Association), APA (American Plywood Association)). At the same time, the foreign products should be made eligible for Government Housing Loan Corporation's loan. Furthermore, the ministry concerned should simplify and expedite inspections in Japan.
5. Results of Deliberation:
The issues of imported housing materials are generally seen as the symbol of the closed nature of Japanese market. Taking account of the large price discrepancy between Japan and abroad, it is necessary to expedite the international harmonization of specifications and standards. In addition, Japan should take the initiative in accepting materials from foreign countries.
(1) JIS/JAS certifications for imported housing materials (for 2 x 4 construction)
Since the notification of the technical standards for 2 x 4 construction was issued in 1982, containing the detailed standard of the lumber, plywood, nails, etc., the constructors have gained much know-how. Also there is little ground for such claims as that Japan is hotter and more humid than the United States. Consequently, it is necessary to revise the notification significantly.
At present, as for 2 x 4 construction, when using products not conforming to Japanese specifications and standards such as JIS and JAS, it is necessary to prove that using these products will not impair structural strength, and obtain the certification of the Minister of Construction. For a business importing small number of houses in different types as a package, this procedure is a large burden both in terms of cost and time. In reality, the specifications are said to be serving as the de facto mandatory specifications.
Therefore, it is necessary in the meantime to incorporate the specifications for lumber, plywood, nails, etc. that are generally approved abroad into the Japanese system. The ministry concerned is currently studying and deliberating together with foreign specification /certification institutions whether construction materials conforming to foreign specifications satisfy the performance required by the Building Standard Law. Completing their deliberation, the ministry will implement consecutively the changes. In this process,
1) the study and deliberation under way should be concluded as soon as possible,
2) if the house is generally used abroad, allow the materials used for that house to be imported as a package and
3) even if careful examination is required for accepting the specifications, do not wait for requests from overseas institutions, but the ministry concerned should actively solicit overseas institutions for request and collect data on its own for materials that are in great demand.
It is necessary for the ministry concerned to assume an positive stance in certifying construction material specifications that are common abroad.
In addition, an overall revision should be made so that the current method where specific specifications are listed is replaced with the method where performance-based standards necessary for structural strength are indicated and the use of construction materials that have been appropriately certified by third parties to satisfy the standards is allowed.
The complainants claim that the common specifications of the Government Housing Loan Corporation are considered at construction sites to be even more demanding than the standards of the Ministry of Construction, and the specifications are being employed as essential requirements. Taking the claim seriously, it is necessary to consider, as the ministry concerned has stated, undertaking a measure in early part of fiscal year 1996 to inform thoroughly those concerned that the structural standards are absolutely the same whether in the common specifications or the Ministry's standards. In this process, it is necessary to take the followings into consideration:
1) to inform thoroughly those concerned that specifications other than the common specifications can be used,
2) to express more clearly that the specifications for materials stipulated in the common specifications other than those covered by the notification can be modified unless the modifications violate the Building Standards Law, and
3) for the common specifications to be also accommodated to the revision if the notification is revised to a performance-based standard format.
(2) Certification of exterior wall and roofing materials as noncombustible materials
The ministry concerned plans to abolish the requirement for the Government Housing Loan Corporation's loan that the roofing materials be noncombustible in April 1996. This step will allow the use of asphalt roofing materials as construction materials for houses eligible for the Corporation's loans without being certified by the Minister of Construction, unless the houses will be built in areas under a legal restriction, such as in Quasi-fire Protection Districts. All those concerned should be informed of this change.
As for the noncombustible material certification, the ministry concerned has been certifying even imported materials as noncombustible materials if the ministry has confirmed they can demonstrate a certain degree of fire preventive property in a test equivalent to the one conducted on domestic materials. In addition, the ministry concerned is elucidating the procedure for designating overseas testing laboratories to promote the acceptance of test results from overseas. In the future, it is necessary for the ministry concerned to inform actively related overseas organizations in order to promote the acceptance of foreign test data, and to facilitate the certification procedure in Japan in order to promote the designation of overseas testing laboratories.
In the interest of international harmonization of standards, introduction of the principle of self responsibility, and expansion of freedom of choice in the private sector, the ministry concerned plans to replace the current system mainly of prescriptive regulations with, in principle, the system of performance-based regulations, which will not discriminate against foreign parties. To this end, the ministry concerned plans to establish the framework for the new building regulations within fiscal year 1996. In studying this framework, the ministry concerned should take into full account the points mentioned above and should take active measures without waiting for legal amendments. From this point of view, it is commendable that the ministry concerned has decided to change the building regulations of the structure of 2 x 4 construction houses, for which there has been strong demand both from within Japan and abroad, to a performance-based regulations.
(3) JWWA marks of water supply equipment and designated contractor system
The ministry concerned is considering the following improvement measure concerning the regulation of plumbing fixtures.
First, as for the designated contractor system, in order to prevent the designation requirement for a contractor from becoming an obstacle to entry into the market, and to make it objective, rational, and uniform throughout the country, the ministry concerned is making efforts so that a partial amendment of the Waterworks Law will pass at the current session of the Diet. The amendment includes such steps as the creation of a plumbing fixtures works chief technician system, elucidation of the designation requirements for plumbing fixture contractors, etc.
As for the type approval and inspection system, the ministry concerned plans to expedite the Deregulation Action Plan (March 1995) as much as possible and review the system to make it more rational within fiscal year 1996, such as by elucidating the standards of water supply equipment structure and materials, employing performance-based standards, simplifying and rationalizing inspection system, harmonizing the system with international systems, and abolishing redundant inspections by water suppliers. Then, from fiscal year 1997, the ministry concerned plans to put the changes into effect. To make these changes possible, the ministry concerned plans to take a prompt measure for improving the JWWA and asks local governments to remedy any irrational points. The investigation of determining which foreign specification certification data can be accepted will be conducted over three years from fiscal year 1995 in order to contribute to these steps.
The steps described above will improve market access for plumbing fixtures and are noteworthy. At the same time, the following points should be considered and executed at an early stage.
Basically, the ministry concerned should consider a measure to accept those water supply equipment approved for general use overseas, without subjecting them to type approval or inspection in Japan.
In this case, if the product has been certified by a certifying institution overseas based on standards with no particular problems, the product should be approved for use in Japan. In addition, even if a product must be inspected, when the company's quality control system is reliable (e.g. the company has been certified for ISO 9000 series), the self-inspection should be accepted. Also a sampling inspection should be allowed in the inspection conducted by a third party institution. In essence, the individual inspection required for the type approval under the current system needs a significant rationalization.
5-(2) Improvement of Procedures of Foreign Construction Materials Quality Assessment and Verification System
1. Complainant: Korea Foreign Trade Association
2. Ministry concerned: Ministry of Construction
3. Background Information:
In public works in Japan, the quality of materials used for the works is stipulated by specifications or design drawings. Therefore, unless a material satisfies the specifications or design drawing, it cannot be used for the works.
In civil engineering works ordered by the Ministry of Construction and its related public corporations the "civil engineering common specifications" of each ordering institution stipulates that the quality of principal materials must satisfy or exceed the corresponding specification (e.g. JIS).
Business of Foreign Construction Materials Quality Assessment and Verification entails the assessment and certification institutions (Public Works Research Center and Japan Testing Center for Construction Materials) checking the imported materials to see if they conform to the material quality regulations specified in the civil engineering common specifications on behalf of the ordering party with a view to carrying out the quality confirmation procedure accurately and promptly when using construction materials produced overseas in the domestic construction market, ensuring favorable quality of construction products, and contributing to the smooth use of foreign materials. A contractor can obtain an approval to use the material by submitting to the ordering party the certificate issued in advance by the assessment and certification institution.
This business was conducted on a trial basis since June 1993 and, in response to the demand to reduce price discrepancies between Japan and abroad and promote deregulation, in June 1994, the following reforms were made to further utilization of materials:
1) Whereas the certification was valid only in specified works during the trial period, after the reform, the certification was applied to the quality of materials used in any works, during the effective period (1-year) of the certification.
2) Whereas the applicant for quality assessment and certification was limited to the contractor of the works during the trial period, the reform enabled the manufacturer of the construction material and an agent assigned by the manufacturer or works contractor to apply for the quality assessment and certification as well.
3) Whereas only 18 items out of cement, steel materials, etc., stipulated by JIS were subject to the quality assessment certification during the trial period, after the reform, the coverage was extended to 39 items. As for materials not included in the 39 items, any materials would be eligible for the business on demand if the quality is stipulated in the civil engineering common specifications, in principle.
4) Whereas the sum of the application charge and assessment and certification charge was ¥1,000,000 per item during the trial period, after the reform, it was lowered to ¥500,000.
The assessment is conducted on quality performance, quality control system, and transportation and storage systems.
4. Complaint:
(1) Business of Foreign Construction Materials Quality Assessment and Verification was launched to facilitate the use of construction materials produced abroad and is believed to be a desirable system.
However, the assessment is conducted with no distinction between companies that have obtained the ISO (9000 series) certification and those that have not. In case of the former, the contests of the documents that they must submit are almost identical to those of ISO certification. Therefore, Foreign Construction Materials Quality Assessment should be omitted for products of companies with the ISO certification, and treated in the same manner as those products that have obtained certification by the assessment.
(2) The one-year term of validity of the assessment and certification makes it necessary to renew the verification for the same construction materials every year. This causes a burden because many pubic works continue for more than one year. Construction materials such as cement do not incur a deviation in quality from product to product, which is quite different from agricultural products. Since the product of one factory is of the same quality and specifications, it is a waste of human and physical resources to review them every year. Therefore, the term of validity of the review certification should be prolonged from the current one year to five years or longer, or to the average length of public works.
(3) The expense necessary for the assessment (¥500,000 of review fee and ¥100,000 of renewal fee) is excessive. The charge for assessment should be lowered.
5. Results of Deliberation:
Since public works are ordered by the country and other public institutions, their orders should be models in facilitating access for foreign companies so that there will be no criticism from abroad. In this respect, it is extremely important to improve the assessment and certification business and promote its use. This will also contribute to reducing the cost of public works by accepting materials that are less expensive but are of comparable quality from abroad. Therefore, the ministry concerned should take the following steps.
(1) The ISO 9000 series certification guarantees the quality management system of the certified company or factory and does not indicate that products manufactured by the company or factory satisfy a certain set of specifications. Therefore, whether a company has acquired the certification or not, it is necessary, in principle, for its overseas construction material to obtain the quality assessment and certification. However, the ministry concerned omits the part of the assessment under the current business that pertains to quality management system, as far as products of ISO-certified companies are concerned. The ministry concerned should study whether there are those specifics of the assessment that are common to ISO certification in early part of fiscal year 1996, and omit any parts of the assessment if possible.
As for products such as cement for which there is a JIS specification but is usually neither produced nor delivered as a JIS product, the ministry concerned decided that if a mill sheet (a quality guarantee) certifying that the quality is of JIS or higher is submitted along with the product, it may be used as with domestic products without undergoing the required quality review and inspection. This decision was notified to relevant institutions in September 1995 to harmonize the handling of foreign products with domestic products. Also it is important to inform work contractors of such simplified in procedures.
(2) The term of validity quality assessment and certification should be extended as much as possible. There is little meaning in conducting a review every year on construction materials whose quality remains constant like that of industrial products, unless there is a special reason such as a change in the quality performance of the material used in public works along with a change in JIS. Having received the complaint, the ministry concerned is considering prolonging the term of validity of the certification from the current one-year to approximately three years from fiscal year 1996.
(3) The charge for assessment should be lowered to reflect the minimum amount of necessary expenses, taking into account the roles of the assessment and certification institution as a public corporation, and in order to promote entry by foreign businesses. In particular, the charge should be further lowered for products of ISO 9000 series certified companies to reflect the omitted assessment items. Having received the complaint, the ministry concerned is considering discount of the charge for assessment by the maximum of 40% from fiscal year 1996.
It is hoped that through these steps, the business of assessment and certification will be used by a greater number of businesses and will promote the entry of foreign businesses into the public works market.
6. Employment and Labour
6-(1) Review of Worker Dispatching Undertakings
1. Complainant: French Embassy
2. Ministry concerned: Ministry of Labour
3. Background Information:
(1) The following regulations are imposed on worker dispatching undertakings.
1) In the interest of maintaining protection of workers and harmony between Japanese employment practices and system of worker dispatching undertakings, this business is restricted to the works which require special knowledge, technique or experience and where prompt and accurate adjustment of demand and supply of workforce needs to be carried out. At present, 16 works are designated as permitted ones.
2) Those who intend to start worker-dispatching undertakings for the designated works must obtain a license (the term of validity of three years) for each workplace. To obtain the license, they must appoint responsible persons with not less than three years of experience (depending on the number of dispatched workers), secure office space of not less than 30m2, etc. In addition, when a company tries to engage in both workers dispatching undertakings and employment placement projects, it must separate the office space and human resources for each business.
(2) The Administrative Reform Committee deliberated worker-dispatching undertakings, and compiled a report last December. The Central Employment Security Council made a proposal last December, and revision of the Worker Dispatching Law is being scheduled.
(3) As for worker dispatching undertakings overseas, the business needs permission from a state in the United States, notification in France (reason for the dispatch, period of the dispatch, and renewal of dispatch period are restricted), and permission in Germany (permitted works are on a negative list, where all works other than construction are permitted; dispatch period and its renewal are restricted).
4. Complaint:
The complainant claimed that successful worker dispatching companies overseas were facing difficulties in Japan due to regulations, and raised the following issues.
(1) While the designated works are limited to 16 ones, they should be liberalized in principle. At present, blue-collar works are not included. However, in France, works such as welders that require special technique are permitted.
(2) When a company tries to engage in both workers dispatching undertakings and employment placement projects, offices and employees must be separated between them. This imposes inefficiency and costs on the company, so the regulation should be relaxed.
(3) One responsible person with more than a certain years of experience must be employed for every 100 dispatched workers, which should be relaxed.
(4) The regulation requiring the minimum floor space in the office should be relaxed. In particular, when a company tries to engage in both workers dispatching undertakings and employment placement projects, the company must secure the required space for each business. Therefor the company is imposed a burden.
5. Results of Deliberation:
The deliberation of this case should be based on that the worker dispatching undertakings system is established and operated to protect workers and to make the adjustment of demand and supply of workforce, and this case is an important issue from the viewpoint of promoting direct foreign investment into Japan, by foreign companies starting businesses in Japan for instance.
As the various regulations stated in the complaint appear to be excessive, only truly necessary restrictions should be remained, and the following steps should be taken.
(1) As for the kinds of designated works, the ministry concerned plans to add 12 kinds of works to the current 16 ones. The ministry concerned should continue to take the changes in times into account, hear the demands of businesses concerned of home and abroad, and review the regulation if necessary, including the feasibility of employing a so-called 'negative list'.
(2) As the various requirements of the permission might hinder investment and foreign businesses entry into Japan, besides the simplification of procedure which is scheduled in the legislation draft, simplification of related documents such as business plans should be promptly implemented. In addition, constructive steps should be taken for the below 1) in the Central Employment Security Deliberative Council's examination of fee-charge employment placement businesses and the below 2) and 3) in the succeeding deliberation.
1) The regulations concerning running both workers dispatching undertakings and employment placement projects should be considerably relaxed.
2) The regulation on the ratio of the number of responsible persons to that of dispatched workers and the length of work experience should be considerably relaxed while taking account of protecting dispatched workers.
3) As the regulation on office space appears to be excessive, it should be considerably relaxed.
6-(2) Review of Employment Placement Projects
1. Complainants: French Embassy, American Chamber of Commerce in Japan
2. Ministry concerned: Ministry of Labour
>3. Background Information:
(1) Under the Employment Security Law, fee-charge employment placement projects are regulated as follows.
1) Because of the public nature of employment placement projects, the business is allowed to deal with 29 occupations requiring special technique.
2) Taking account of protection of workers and of the ILO Convention No. 96 that Japan ratified, the ceiling of registration fee, 540 yen, is set. Similarly, the ceiling of referral commission, 10.1% of the referred worker's 6-month wages, is set. The commission is collected from those seeking workers.
3) Those who try to engage in employment placement projects must clarify the occupations that they plan to handle and obtain the permission for each business office (the term of validity of one year, conforming to ILO Convention No. 96). Requirements for the permission are the following: appointment of responsible persons with more than a certain years of experience (ten years combined of actual experience in the occupation and/or in the employment placement projects); and more than a certain office space (20m² + (the number of occupations - 1) x 6.6m²). When a company tries to engage in both workers dispatching undertakings and employment placement projects, it must separate the office space and human resources for each business. Financial conditions are checked once a year when the permission needs to be renewed. Whether or not the permission is granted is notified in 80 days of standard processing period, based on the Administrative Procedure Law. If no permission is granted, the reason is stated in the notice.
(2) The Administrative Reform Council deliberated how employment placement projects should be, and compiled a report last December. The Central Employment Security Deliberative Council is also deliberating the matter now.
(3) As for fee-charge employment placement projects overseas, the business needs permission in 43 states (no restriction on occupation handled) and are under fee regulations in 35 states in the United States. In France, the business is, in principle, state-managed and the only artists and housekeepers are permitted. In Germany the business requires permission with no restriction imposed on the occupations handled.
4. Complaint:
The complainant claimed that the current complex regulatory structure is not suitable for business environment. Therefore, the complainant raised the issue that the ministry concerned should relax the following regulations so that the private-sector employment placement projects develop and the foreign businesses secure Japanese employees more easily.
(1) When occupations are becoming more and more specialized the currently designated kinds of occupation does not suit the actual business situations. It is also impossible to keep the designated kinds of occupations up to date. Thus the ministry concerned should liberalize, in principle, the designated kinds of occupations that employment placement projects can handle, otherwise adopt a negative list where occupations they cannot handle are designated.
(2) Permission should not be required for each office as it is now, but for every company. Its term of validity should be extended from one year to five years, and financial and other company conditions should be inspected only when the permission is renewed. All information necessary for obtaining the permission should be promptly supplied by the Ministry of Labour when it is requested. In addition, the application form should be simplified and whether or not permission has been granted should be notified to the applicant in writing within three weeks. Furthermore, if no permission is granted, the reason should be notified as well.
For a small company, the documents required to be submitted and regulations on the layout inside the office are burden that impairs growth of the business. Therefore, the regulations should be eased.
(3) When a company tries to engage in both workers dispatching undertakings and employment placement projects, offices and employees should be separated between them. This imposes inefficiency and costs on the company, so the regulation should be relaxed.
(4) It is unrealistic to mandate the employment of individuals with more than a certain years of experience and to limit their activities to the occupations they experienced. That is, it is questionable to assume that one will be qualified to refer individuals to a certain occupation where the one has on-the-job experience. The required skills can be understood and learned by anyone with the aptitude and experience in a personnel-related field. The current system cannot measure the aptitude of an individual for the post. Therefore, this regulation should be abolished.
(5) The regulation requiring the minimum floor space in the office should be relaxed. In particular, when a company tries to engage in both worker dispatching undertaking and employment placement projects, the company must secure the required space for each business. Therefor the company is imposed a burden.
(6) The present law stipulates the referral fee, which imposes too many burdens on the referred company. The referral fee should be decided by market principles, and those seeking workers should freely select a referral service company in a free and competitive market.
Since the employment placement business is subject to complex and strict regulations as described above, these regulations should be eliminated and workers should be granted as much freedom of choice as possible for their self-fulfillment in free economy.
5. Results of Deliberation:
The deliberation of this case should be based on that the fee-charge employment placement projects system is established and operated to protect workers and to make the adjustment of the demand and supply of workforce, and this case is an important issue from the viewpoint of promoting direct foreign investment into Japan, by foreign companies starting business in Japan for instance.
First, the renewal of the term of validity of the permission should be simplified as much as possible. The related documents required for the permission should be simplified, by eliminating the employees' resumes within fiscal year 1995 for example. And then efforts should be continued to achieve further simplification. While paying attention to the progress of deliberations in revising the ILO Convention No.96, constructive steps should be taken on the following matters, under the current ILO Convention No.96, in the studies concerning the fee-charge employment placement projects in progress at the Central Employment Security Deliberative Council.
(1) The kinds of the designated works should be increased as many as possible, including the feasibility of employing a so-called 'negative list'.
(2) Concerning the fees, steps should be taken to utilize market mechanism as much as possible within the regulations based on the current ILO Convention.
(3) There are various regulations concerning the permission. The following reviews should be made.
1) The regulation of permission for each office should be relaxed as much as possible.
2) The regulation of running both worker dispatching undertakings and employment placement projects and of office space should be considerably relaxed.
3) The regulation concerning the length of work experience on the occupations appears to be excessive and should be considerably relaxed.
6-(3) Revision of the Criteria of the Examination for Landing in Japan and Other regulations
1. Complainant: French Embassy
2. Ministry concerned: Ministry of Justice
3. Background Information:
(1) Foreign nationals who enter or reside in Japan are assigned one of the status of residence provided by the Immigration-Control and Refugee-Recognition Act. The law clearly stipulates what types of foreign nationals fit into which status and what activities they can be engaged in. In general, to expand its operation into Japan, a company opens an office in Japan. For a foreign national to work at the office, he may be assigned a status of residence such as "Investor/Business Manager", "Researcher, "Engineer" "Specialist in Humanities / International Services", "Intra-company Transferee", etc.
1) For the "Investor /Business Manager", one must manage or administer the business in which no less than two full-time employees are engaged and the facility used as an office must be located in Japan.
2) For the "Researcher", "Engineer", or "Specialist in Humanities / International Services", one must be employed based on a contract with a public or private organization in Japan. For example, employment based on a contract with the headquarters overseas would not be accepted.
3) For the "Intra-company Transferee", one must have been employed for at least one year at the headquarters, branch, etc., located overseas, then be transferred to work at a main office or branch in Japan.
For these status one must receive a monthly salary of no less than ¥250,000, if he is engaged in an occupation requiring the train of thought or sensitivities rooted in foreign culture. Otherwise, compensation must be no less than that a Japanese person would receive in the same post.
(2) If the "Temporary Visitor" is granted, one may be engaged in sightseeing, recreation, sports; visiting relatives, inspection tours, seminars, meetings, business reporting, or any similar activities during the short period of stay in Japan. An employee of a company overseas may, while receiving compensation from the home country, be engaged in activities such as negotiation on contracts, attendance to effecting transactions and signing contracts, and liaison with the headquarters or branches in his home country, but may not be engaged in activities for which he gets paid in Japan. In addition, the maximum term of stay is 90 days.
(3) Foreign nationals residing in Japan may change their status. In this case, the Minister of Justice may give permission only when he finds that are reasonable grounds to grant the change of status of residence.
(Reference)
Foreign Investment in Japan Development Corporation (FIND) was set up in 1993 with the support of the Ministry of International Trade and Industry, among others, to promote investment into Japan. In the same year, the Business Support Center was opened in Akasaka Twin Tower Building. The Center provides office space that can serve as the center for export activities to Japan, consultation, and the space for business seminars, training, and negotiations.
4. Complaint:
A famous French company attempted to open a representative office in Osaka. The company appointed to the representative a French individual living in Japan who was completely familiar with both technology and language. However, when his status of residence expired and his petition to change his status of residence into the "Specialist in Humanities / International Services" was rejected, he could no longer stay in Japan.
He temporarily returned to France, and applied for the "Engineer" to re-enter Japan, but the application was rejected again.
The reason for the rejections was that working in Japan is based on a contract with the headquarters in France. The requirement for obtaining the "Specialist in Humanities / International Services", that is, "activity based on a contract with a public or private organization in Japan", was not found to be satisfied.
French businesses often consult with the embassy on such problems pertaining to status of residence. Opening an office is the first step in investing into Japan. The contents and standards of the examination of a status of residence under such circumstances should be made as flexible as possible by more generous interpretation of the current law.
5. Results of Deliberation:
Japan's basic policy today is to expand investment into Japan. Therefore, it is necessary to eliminate the various obstacles to making investment into Japan.
According to the ministry concerned, it is possible to open a representative office by utilizing the "Temporary Visitor" status of residence. However, there are restrictions such as the following: changes in the status of the "Temporary Visitor" are limited to special circumstances; the "Temporary Visitor" status is valid for 90 days; and on this status activities to get paid are prohibited.
Consequently, current regulations should be changed so that when a foreign national wishes to establish a company in Japan, it is easier for the company's representative to obtain a status of residence or its change. Although it may be necessary to impose a certain restriction on the acceptance of foreign nationals whose purpose of entry is employment, the ministry concerned should elucidate the interpretation of the regulations in order to make the applicability and the criteria of the examination for landing more transparent. Furthermore, as in this case, when a foreign national is attempting to open a new office in Japan based on a contract with a foreign company, for the purpose of engaging in sound economic activity, an improvement measure should be taken to allow him to get a status of residence (approval of its change) by reviewing practical operation of the current law and ordinances.
7. Import Procedures
7-(1) Introduction of the Nationwide Common Bond for the Release of Imported Goods before (Formal) Permit
1. Complainant:Japan Foreign Trade Council, Tokyo Chamber of Commerce and Industry
2. Ministry concerned: Ministry of Finance
3. Background Information:
Article 73 of the Customs Law stipulates, "Any person who is to receive any foreign goods after import declaration but prior to import permit shall deposit security equivalent to an amount of customs duty payable and shall obtain the approval of the Director-General of Customs".
This article allows cargo to be picked up before import permit for the users' convenience and smooth operation of tariff administration. This is because, otherwise, an importer may miss his business opportunity if the cargo is left too long in the bonded area under the following conditions:
* The product has never been imported and so some time will be required for the examination of tax assessment standard.
* There is a danger that the imported cargo may vanish, leak, deform, or become damaged.
This system allows the imported cargo to be withdrawn from the bonded area into Japan without paying for the tariff. Instead, it is necessary for the importer to place a collateral ('Before Permission' collateral, or BP collateral hereafter) equal in value to the tariff to guarantee the payment of the tariff. For users' convenience in placing collateral, they are allowed to utilize a fixed collateral (collateral for tariff payments with different due dates) deposited with the customs office. However, this system can be applied only to cargo whose import is declared at the customs office where the fixed collateral is placed and not to cargo whose import is declared at any other customs offices.
In addition, as for the payment of the tariff for the imported cargo, the payment may be extended by up to three months, provided collateral is placed. Based on the Deregulation Action Program (March 1995), a revision was made so that the bond for the comprehensive deferred payment for Custom duties and taxes can be utilized anywhere in Japan. The improved Customs entry processing system for sea cargo (Sea-NACCS) has been in effect since April 1995 and the improved Customs entry processing system for air cargo (Air-NACCS) also has been in effect since November 1995.
4. Complaint:
The complainant utilizes the fixed collateral system because he needs to receive his cargo before the import is permitted. Under the current system, however, when applications for approval are concentrated at one customs office and the collateral becomes deficient, even though there is sufficient collateral placed with other customs offices within the same customs jurisdiction, additional collateral must be placed.
The system should be changed so that when one places BP collateral with a customs, it can be used at all customs office under the same jurisdiction. Ultimately, as with Bond system for the comprehensive deferred payment for Customs duties and taxes, the BP collateral should be accepted nationwide.
5. Results of Deliberation:
As of November 1995, 52 companies place fixed collateral with more than one customs offices and 9 companies with more than one customs. While these numbers are fewer than those who utilize Bond system for the comprehensive deferred payment for Customs duties and taxes (approximately 1,100 companies), the ministry concerned plans to hear the opinions of importers and related organizations, study the matter including its legal factors, then conclude on the matter by around the end of this fiscal year.
To simplify import procedures, it is important to make BP collateral usable at any customs. Since Bond for the comprehensive deferred payment for Customs duties and taxes can already be utilized anywhere in Japan, it is necessary to consider making BP collateral usable nationwide as soon as possible, for users' convenience.
7-(2) Introduction of Pre-Filing System
1. Complainant: Tokyo Chamber of Commerce and Industry
2. Ministry concerned: Ministry of Finance
3. Background Information:
In Japan, in principle, one receives his cargo after the following procedure: it is placed in the bonded area; import declaration is made; examination and inspection are performed; and import is permitted. In 1988, the pre-arrival examination system was introduced to expedite the receipt of imported cargo. The system is the following:
* It allows the importer to submit to the customs import-related documents (referred to as pre-declaration) before the cargo arrives (up to 11 days before the planned import declaration date). By completing the examination before the cargo arrives,
* The customs can notify the importer whether an inspection is necessary. If no inspection is necessary, the cargo, after arriving in Japan (i.e. after confirmation is made that it has been placed in the bonded area), instantly is permitted to be imported by a computer system (NACCS).
The United States, on the other hand, employs a pre-filing (permit) system. Filing for receipt can be made up to five days before the planned arrival date in case of sea cargo and after departure of the flight in case of air cargo. By making the pre-filing, the importer can undertake receipt preparations in advance. In addition, customs provides pick-up permission before the cargo's arrival. Therefore, if the cargo does not require any inspections, it may be picked up immediately after its arrival.
The United States is the only industrialized country to have the pre-filing (permit) system. In other countries, import permission is granted after the cargo's arrival.
4. Complaint:
As import customs clearance procedure for imported cargo is performed after the cargo is carried into the bonded storage area, it takes at least two days after the cargo arrives until it can be delivered. The pre-arrival examination system is applied to customs clearance procedure for urgent cargo, but it is "a tentative declaration" that is made in the system. The import permission is granted only after the cargo arrives, notice of its transfer into bonded area is submitted, and the declaration is switched to "a formal declaration".
In case of urgent cargo, one or two hours may be crucial. By utilizing the formal declaration before the cargo is carried into the bonded area, as with the pre-filing (permit) system in the United States, the ministry concerned should allow the importer to receive and pick up the cargo immediately after it arrives.
5. Results of Deliberation:
The tasks pertaining to import customs clearance procedures, which serve as the interface for international and domestic distribution, must meet the users' needs for prompt customs clearance.
The ministry concerned has, based on the Deregulation Action Program (March 1995), decided to implement early in fiscal year 1996 "immediate release system of air cargo at the time of arrival report" to further expedite the customs clearance procedure for air cargo. Under this system, out of the cargoes that the customs has determined require no inspection, urgent cargoes that importers wish to pick up immediately are promptly permitted to be imported as soon as their arrival is confirmed, without waiting for confirmation of their transfer into the bonded area. The introduction of this system, the ministry concerned claims, will considerably reduce the time required between cargo arrival and import permit, and will have comparable effects as the system in the United States in terms of expedient customs clearance.
To make the system truly effective, the ministry concerned should pay much attention to the operational aspects including the scope of its application and the procedures in order to fully respond to the users' needs for prompt customs clearance. For example, the ministry concerned should consider the specifics of confirmation of cargo's arrival and make it as convenient as possible for the user. In essence, the ministry concerned should manage the system so that it deserves the name of "immediate release system". At the same time, it is necessary to inform all those concerned of the creation of this system.
Furthermore, observing how the system is utilized in air cargo, it is necessary to consider applying the system to sea cargo in order to expedite customs clearance.
7-(3) Simplification of Import Procedures concerning Generalized System of Preferences Certificate of Origin
1. Complainant: Tokyo Chamber of Commerce and Industry
2. Ministry concerned: Ministry of Finance
3. Background Information:
For preferential tariff to apply, it is necessary for the importer to submit to the Director-General of Customs upon declaring the import a preferences certificate of origin (Form A) that states the cargo is a product from the country to which Japan applies a preferential treatment.
In addition, the cargo must be directly transported to Japan from the preferred country that is the origin of the cargo. However, if the cargo is transported from the preferred country that is the origin through a non-origin country, it is necessary for the importer to submit a document proving that the cargo was merely reloaded or was temporarily warehoused or that it was exhibited in an exposition, exhibition, etc.
4. Complaint:
The complainant claimed that the import procedure concerning generalized system of preferences certificate of origin is too complicated, and raised the following issues.
(1) When a product of a preferred tariff country is imported via a third country, when a Chinese product is imported via Hong Kong, for example, normally the preferences certificate of origin from China, as well as the invoice from the Chinese side exporter and the re-export origin certificate from Hong Kong side are required. This should be changed so that the product can be cleared through customs with only the preference certificate of origin from China.
(2) If the invoice date on the preferential origin certificate and the actual invoice date are different and the correct certificate is not obtained, the product cannot be imported; otherwise it is taxed. Customs clearance based on a simplified examination according to past record should be adopted or the preferences certificate of origin should be abolished.
5. Results of Deliberation:
(1) The ministry concerned claims that it is necessary to submit the invoice of the exporter upon declaring the import, whether or not the import is eligible for preferential tariff.
However, when a product is imported into Japan from the preferential country of origin via a non-origin country, if it is stated in column No. 3 of the preferences certificate of origin issued by the country of origin that the product will be routed via a non-origin country, it is not necessary for the importer to submit a re-export origin certificate issued by a non-origin country. When there is no mention that the product is routed via a non-origin country, the preferential tariff can still be applied if the importer submits a re-loading certificate issued by the customs of the non-origin country.
(2) The ministry concerned claims that even if the invoice number and date provided in column No.10 of the preferences certificate of origin are different from the actual number and date, if the preferences certificate of origin can be confirmed as a valid one, the preferential tariff will be still applied.
(3) Furthermore, the ministry concerned revised the Temporary Tariff Measure Law Enforcement Ordinance (enforced on January 1,1996) so that if a product is approved by the Director-General of Customs as clearly coming from the claimed origin due to its type or shape, the importer need not submit the preferential origin certificate.
The revision of the Temporary Tariff Measure Law enforcement Ordinance is commendable as a concrete step towards simplifying and expediting import procedure.
It is necessary for the ministry concerned to continue to simplify and expedite import procedure for users' convenience.