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 the Standards, Certification and Others
"Report of the Comprehensive Review"
December 7, 1998
Market Access Ombudsman Council
Based on the decision "the Comprehensive Review Process of OTO Cases" (the Office of MarketAccess on December 18, 1997), this report undertakes a comprehensive review of past complaints handled under the Office of Trade and Investment Ombudsman (OTO), offering detailed proposals concerning additional steps which should be taken to further improve market access.
We hope that this report will give the Office of Market Access incentive to study specific measures and act upon them at an early date.
I. Introduction
II. General Observations
1. Specific areas targeted in the Comprehensive Review
2. Common issues to which the government should respondappropriately
III. Comments by MAOC - Measures Which Should be Taken by the Government
1. Relaxing the regulations of the Pharmaceutical Affairs Law
2. Relaxing regulation in the areas of physical distribution and road traffic
(1) Tall Containers
(2) House Trailers and Campers
(3) Motorcycles
3. Relaxing regulations on labeling and specifications for food products, etc. (JAS system)
4. Relaxing regulation concerning acceptance of foreign test data
5. Simplifying and speeding up import procedures
6. Making active efforts to tackle so-called private sector regulation
(1) Giving the OTO More Publicity
(2) Other
IV. Conclusion
I. Introduction
The Emergency Economic Package decided by the Ministerial Council on Economic Measures in November 1998 have three aims: (1) To create sufficient demand to underpin firm confidence that the economy will definitely achieve positive growth in FY1999 (2) To create jobs and new businesses to prevent increased unemployment (3) Advance international coordination, especially focusing on reducing external economic friction.
The Office of Trade and Investment Ombudsman (OTO) was established by the Ministerial Council on Economic Measures in February 1982 amid growing trade friction, to deal swiftly and appropriately with complaints about import inspections and other market access issues. The functions of the OTO were later strengthened by establishing the Office of Market Access (OMA), headed by the Prime Minister in 1994.
Over its 16-year history, the OTO has handled approximately six hundred complaints. In addition, the Market Access Ombudsman Council (MAOC) has since 1994 compiled yearly reports, titled "Recommendations on Market Access Issues as Concerns Standards, Certification and Others," in response to complaints made by foreign and domestic businesses parties, through which an additional three hundred complaints have been addressed. MAOC also examined common aspects shared by past complaints and in June 1997 presented its Proposals concerning general issues requiring action for improving market access.
In November 1997, the OMA decided to conduct a comprehensive review within FY 1998 of the status of past specific complaints handled by the OTO and to take further action, depending on their status, to make more rapid progress in improving market access, one of the main pillars of the "Emergency Economic Measures in Preparation for the 21st Century (November 1997)."
Accordingly, the MAOC reviewed the actions taken on past complaints by the concerned ministries or agencies, and has compiled the following report of specific proposals to the government for further improving market access.
II. General Observations
In the course of conducting this Comprehensive Review, since June 1998, MAOC notes that the government took necessary actions on nearly 70% of past complaints brought before the OTO where actions were decided to be taken, and that in certain cases market access has improved much more than had been expected. This trend is to be commended (see Note).
However, this evaluation is based solely on the framework of policies for response decided by the government. From the viewpoint of the domestic economy and of the original intent of the complaint or problem, serious study is needed as to whether the complaints were truly resolved in the best manner. Classification of the processing of individual complaints also shows that in nearly 30% of the cases, these were considered to have been "processed" in accordance with the concerned ministry's policy of retaining existing regulations, although it is not clear whether complainants were truly satisfied with this. Accordingly, as part of its comprehensive review activities, MAOC held hearings not only from the ministries concerned but from the complainants as well.
1. Specific areas targeted in the Comprehensive Review
MAOC examined the processing status of each complaint, grouping the cases in accordance with factors in common such as laws or areas in which specific complaints shared, and examined principally those complaints so as to cover as many past complaints as possible in order to determine the matters requiring further study. Specifically, the following seven areas were selected as requiring further examination: 1) the Pharmaceutical Affairs Law; 2) matters concerning physical distribution and road traffic; 3) the JAS system; 4) acceptance of foreign test data, etc.; 5) import procedures; 6) private sector regulations; and 7) standards for landing examination. These matters were chosen mainly from the viewpoints below.
(1) Laws, etc. which give rise to repeated similar complaints or problems
In terms of ministries which came up the most frequently in the comprehensive review, the Ministry of Health and Welfare was the focus of the largest number of complaints, 268 (including complaints where this ministry was involved together with other ministries), accounting for over 30% of all complaints (789 in total). By law involved, the largest number of complaints (140) had to do with the Food Sanitation Law followed by the Pharmaceutical Affairs Law (95).
Various changes have been made to the Pharmaceutical Affairs Law, in the areas of cosmetics, medical equipment and pharmaceuticals, but further changes in the areas regulated by the Pharmaceutical Affairs Law are requested even most recently, for example, setting up a new category for nutritional supplements, reviewing the requirements for import sales permits for cosmetics and medical equipment, and so on. In particular, the problems in setting up a new category for nutritional supplements and progress in taking measures for this type of product have been raised every year since 1994. Accordingly, the Comprehensive Review dealt with the issue of relaxing the regulations of the Pharmaceutical Affairs Law.
Where the Food Sanitation Law is concerned, the largest number of complaints had to do with simplifying and speeding up import procedures, a trend that applies to all complaints brought before the OTO. Complaints about simplifying and speeding up import procedures account for over 30% of all complaints made to the OTO, and in numerical terms they are typical ones the OTO receives.
Various measures have been effected to simplify import procedures, for example, computerized handling of applications and extended hours of operation. Surveys on the time required for import procedures have been taken regularly since 1991, and since this provides objective data by which the effectiveness of the measures may be evaluated, this matter was taken up for study in the Comprehensive Review.
Additionally, many complaints about standards and certification concerning acceptance of foreign test data, etc. were examined as OTO complaints.
(2) Complaints which should be handled collectively
Some complaints need to be addressed not just individually but on a collective basis for related complaints and issues as well, as otherwise it is difficult to arrive at a fundamental solution.
One example of this is the above-mentioned simplification of import procedures, which cannot be resolved effectively unless the individual ministries work together to arrive at collective measures. From this viewpoint, the Comprehensive Review also examined complaints like those about house trailers, which require broad-ranging study.
(3) Cases which continue to be processed as complaints
Some complaints made to the OTO concern matters which were raised in the past and which should have been processed then. In such instances, it is necessary to consider whether the farthest-reaching measures had been taken when the complaint was initially processed. From this perspective, the Comprehensive Review examined complaints relating to containers for maritime transport, house trailers (towing permits, etc.) and motorcycles, which even now are being processed as individual complaints.
(4) Importance of tackling private sector self-regulation
Although the government is making progress in relaxing regulation, the issue of self-regulation by the private sector is becoming a great problem, and for this reason, this matter was examined in the Comprehensive Review.
Most of the complaints relating to private sector self-regulation handled by the OTO concerned problems relating to specification setting and conformance evaluation operations conducted by private sector organizations such as non-profit organizations and the like, in which the public sector was involved.
(5) Follow-up to the Proposals of June 1997
In June 1997, MAOC issued its Proposals, which singled out common factors among complaints handled by OTO in the past and clarified the problems with Japan's system of standards, certification and others and made comprehensive comments on measures needed.
The MAOC Proposals raised the matter of methods used for conformance evaluation (certification that products have been examined or tested, or that they meet certain specifications and standards), and the private sector practice of activities relating to standards and certification by private sector groups with no legal basis as one factor in common among many OTO complaints. Also, the Comprehensive Review deals with progress made concerning acceptance and mutual recognition of foreign test data and efforts made to deal with so-called private sector regulation. In particular, since Proposals that Japan also should take other active steps to promote mutual recognition with other major countries, including development of a comprehensive framework for this purpose, the Review examined the status of negotiations between Japan and the EU on a cooperation agreement concerning mutual recognition.
Among other matters, which the Proposals mentioned was the Japan Agricultural Standards (JAS) system, insisting that its comprehensive revisions must be carried out about the specifications and standards. In September 1997, the Basic Matter Sub-committee was established under the Research Committee for Agricultural and Forest Products Standard to study directions for changing the JAS system. Accordingly, MAOC described the measures being taken in this area. Regarding nutritional supplements and house trailers mentioned in (1) and (2) above, respectively, since the Proposals stated the need for active steps to establish a new category (in the case of nutritional supplements), and the need for the concerned ministry to study the relationship between house trailers and existing laws, at an early date and actively respond (in the case of house trailers), it was necessary for the Comprehensive Review to study these issues as well.
(6) Other areas
Many OTO cases were the result of misunderstandings of the system. Furthermore, sufficient publicity of measures taken is needed so that the changes made can contribute to actual improvement of market access. One example of this is the measures covering standards for landing examination and administration of length of stay adopted in relation to landing examination standards.
2. Common issues to which the government should respond appropriately
The government should respond appropriately to the following common issues, which arose in the process of examining individual matters.
(1) Training staff capable of handling the work of harmonizing specifications and standards with international norms
As the global economy becomes increasingly unified, work in harmonizing specifications and standards with international norms are being carried out in many areas. It is important for Japanese specialists to actively contribute to this undertaking and to endeavor to sufficiently consider the specifications and standards in use in Japan as well.
Individuals involved in this work should not merely attend meetings but should also be prepared to make substantive contributions by taking the initiative to prepare drafts. However, few officials are capable of doing this now, and more people need to be trained at an early date.
(2) Determining policies for an active response to international trends
In international negotiations at the WTO and other bodies, some issues should be based on reciprocity principle. While domestic regulations, in areas where specifications and standards are being standardized internationally, or where systems are being harmonized on an international basis, regulations be adopted taking international trends into consideration. But where harmonization with international specifications and standards and acceptance of foreign test data and conformity evaluation results are concerned, the government should take the initiative to implement these, without insisting on reciprocity, from the perspective of taking active measures to improve market access.
The government should also be prepared to actively request improvements when other countries impose unfair regulations.
(3) Improving accountability to the international community
As the global economy becomes more unified, it is possible that other countries could single out not just regulations directly affecting imports but various domestic regulations as creating problems for market access.
When regulations are viewed as a problem, the government should clearly communicate the actions it has taken so far and its future policies concerning market access. In case regulations are retained, it must also be able to provide practical and persuasive explanations for the need to do so.
(4) Making efforts to put specifications and standards into law and drawing up a negative list of regulations
This report touches on the use of de facto specifications and standards set out in directives and notices which are not laws in some cases, indicating that the extent of the discretionary powers of the bureaucracy are unclear. As our Proposals stated, it is important to adopt measures which embody the spirit of transparency in administrative decisions as much as possible, and the details of regulations should, in principle, be those which are set out in the relevant laws. In such cases, a negative list system should be used to keep regulation to a minimum.
(5) Actively instituting change, and responding in timely fashion to new specifications and standards
The survey on the status of complaints by the Office of the OTO reveals that in many cases, even though no particular measures had been taken at first, new measures to improve the situation were taken later. These actions are commendable. In the future, individual complaints should be acted upon, as quickly and as pro-actively as possible and a comprehensive review of the regulatory system itself should be undertaken on a regular basis.
It is also often the case that domestic specifications and standards fail to keep up with the spread of new products in growth industries, and responses to this should be as rapid and as appropriate as possible.
(6) Adopting the viewpoint of improving the overall domestic economy
When studying complainants' requests for improved market access in a specific industry, the effects of more open access on the domestic economy as a whole should be taken into consideration and efforts made to maximize this as much as possible. Cost-benefit analyses are often made when regulations are to be changed. These analyses should not focus on direct cost-benefits alone. Although certain appropriate prerequisites may be needed, they should also take into consideration the indirect impact that regulatory reforms could have on the overall domestic economy as well. Efforts should also be made to inform the public of analysis findings in a clear and simple fashion.
(7) Studying methods for evaluating improvements in market access
It is important to evaluate improved market access by citing specific figures as much as possible, and not by using qualitative descriptions. Although there are many ways of evaluating the same measures, depending on pre-conditions, this is a point that deserves attention. In this report, MAOC has attempted to analyze the results of OTO activities in numerical terms, by citing changes in import volume and so on for products mentioned in complaints to the OTO.
Note: Outline of Study by the Office of the OTO on the Processing Status of Past Complaints
Regarding the 789 complaints made to the OTO in the past (238 complaints described in OTO Advisory Council reports and reports Nos. 1-4 of the MAOC, as well as 551 individual complaints processed by October 31, 1997), the Secretariat of the OTO produced the summary below on the status of complaints (381 matters) on which some action was to be taken, in accordance with the relevant ministries' policies, as of June 19, 1998. Since one complaint may include more than one matter, the total number of matters handled (824) slightly exceeds the total number of past complaints (789).
(1) The necessary measures have been completely implemented for nearly 70% of matters
Of the above 381 matters, divided into those for which, as a result of processing complaints in the OTO, action was or will be taken measures were implemented completely in 256 matters, or nearly 70%. Measures were partially implemented in another 57 matters. In 20 of those matters, measures could not be implemented in full due to some reasons on the part of the complainants and not related to the administrative authorities.
(2) The implementation rate of improvement measures exceeds 98%
Additionally, new measures not originally included in the relevant ministries' policies were implemented in 63 matters, as a result of promotion of deregulation or other changes.
Thus, of the 381 matters on which the relevant ministries intended to take some type of action, improvement measures were implemented in 376 matters, which translates to an implementation rate of over 98%.
| Breakdown of Current Status of Complaints to the OTO | No. of Matters | |
| (1) Measures which were, or were to be, taken were implemented in full |
256
|
|
| (2) Measures were partially implemented |
57
|
|
| [1] Measures were which, or were to be, taken were partially but not completely implemented |
37
|
|
| [2] Matters concerning which measures could not be implemented in full due to some reasons on the part of the complainants |
20
|
|
| (3) New measures not originally included in the relevant ministries' policies were implemented as a result of promotion of deregulation or other changes |
63
|
|
|
|
376
|
|
|
|
381
|
|
|
|
824
|
|
III. Comments by MAOC - Measures Which Should be Taken by the Government
III-1. Relaxing the regulations of the Pharmaceutical Affairs Law
1. The issues
Of the total complaints made to the OTO by foreign and domestic parties, 95 cases concerned application of the Pharmaceutical Affairs Law, the next-largest number after complaints having to do with the Food Sanitation Law. For the record, the first complaint ever made to the OTO had to do with simplifying the procedures required by the Pharmaceutical Affairs Law and the High Pressure Gas Control Law when importing West German-made automobiles, which include a first-aid kit and a fire extinguisher as standard equipment. (Measures concerning these respective laws were subsequently implemented.)
Complaints relating to the Pharmaceutical Affairs Law have been grouped into the categories of cosmetics, medical equipment, pharmaceuticals and so on, as described below.
(1) Cosmetics
Since the establishment of the OTO, complainants have asked for simplification of procedures for receiving additional or initial approval for individual ingredients, which can be incorporated in cosmetics. Over the past few years, however, the way of regulating cosmetics itself, for example, the approval system of ingredients contained by cosmetics type, like lipstick or foundation, harmonization with international standards for ingredients that cosmetics may contain, the import sales permit system, have begun to be discussed.
(2) Medical equipment
The Pharmaceutical Affairs Law lists certain products, such as mercurythermometers, etc., which do not require import approval from the minister for Health and Welfare, providing they meet specified standards or other conditions. Complainants have been requested that the number of products not requiring approval be expanded. Other complainants have requested that businesses be exempt from the requirement to notify the ministry that they engage in sales, in the case of newly imported equipment. Some complained that certain types of medical equipment be eligible for coverage under the health insurance system, although this latter issue is not directly concerned with the Pharmaceutical Affairs Law.
(3) Pharmaceuticals
Between 1982 and 1987, the OTO received many complaints concerning simplification of import approval procedures/reducing the number of documents required in applications for pharmaceuticals made by late entrants in the market or new drugs. Complaints about delegation of authority were also received. But after FY1995, when a number of complaints concerning simplification of approval procedures for manufacturing or sales permits of drugs for general use were received, few complaints have been made about pharmaceuticals.
(4) Nutritional supplements
Together with growing public interest in health, many so-called nutritional supplement products, intended to supply secondary or supplementary nutrients, have come to be distributed and sold. However, in Japan nutritional supplements are not covered under any existing laws, and depending on their shape, some supplements which are distributed as food products in other countries are considered to be drugs in this country. Accordingly, complainants have asked that the legal position of nutritional supplements be clarified and that regulations pertaining to them be loosened.
(5) In-vitro diagnostic products
Pregnancy tests and other diagnostic products not usually used directly on the human body require import approval as drugs. Complainants have requested comprehensive simplification of the handling of this type of product, since some countries in Europe do not regulate them in this way.
2. Outline of Measures Taken by the Ministry (of Health and Welfare)
(1) Cosmetics
After gradual steps for simplifying procedures for receiving additional or initial approval for individual ingredients which can be incorporated in cosmetics had been implemented, the ministry's study group on the regulation of cosmetics, established in July 1995, drew up specific proposals for regulation of cosmetics in the future. These included eliminating the system of separate approval by type and using a negative list and a positive list of specific ingredient groups instead, introducing labeling that lists all ingredients. Based on these proposals, the relevant laws will be amended and the necessary measures will be implemented by FY2000.
(2) Medical equipment
The list of products not requiring import approval from the minister for Health and Welfare has been gradually expanded. From March 1998, for medical equipment for household use like massage apparatus and health products incorporating magnets, import approval is no longer required.
Although not a matter relating to the Pharmaceutical Affairs Law, a complaint made in 1995 about material price standards for cardiac pacemakers has been referred to the Central Social Insurance Medical Council and is under study by the body.
(3) Pharmaceuticals
Approval procedures have gradually been simplified by requiring fewer documents or by computerization, and since March 1997, the standard clerical processing period for drugs developed by late-comers was shortened from 18 months to 12 months. Additionally, standard specifications for many ingredients included in pharmaceuticals were established by March 1998. Applications for approval of partial change are no longer required after that date, if the change made is within the standard specifications.
(4) Nutritional supplements
The authorities concerned studied the issue about the classification of drugs and foods and reached the conclusion that over the medium and long term, a new category for nutritional supplements should be established. In March 1997, a ministry-wide study by the bureaus concerned was initiated. In November 1998, approval was granted from the Public Health Council and the Food Safety Council to study nutritional supplements; a study group composed of members from the relevant areas was established to study this matter.
The review of the classification of drugs and foods is being carried out as part of the Action Program on Deregulation. Vitamins, since March 1997, and some herbs, since March 1998, are now allowed to be distributed as food products, and the handling of minerals is currently under study.
(5) In-vitro diagnostic products
In March 1996, the rage of productswas clarified which is exempted from the need to apply for approval ofpartial change when ingredients were changed. Since August 1997, the numberof documents required when applying for approval has been reduced.
A study of the systems in use in Europe and the United States has also been underway since FY1996, to examine the extent to which such products do not require approval as drugs.
3. Results of Study Under the Comprehensive Review
(1) Loosen regulation based on the principle of self-responsibility of consumers and enterprises
Government regulation should be kept to the minimum, by using negative lists. Even the Pharmaceutical Affairs Law, which regulates substances which could have harmful effects on the human body, should employ the spirit of the product liability law to the fullest extent, with regulation further loosened based on the principle of self-responsibility of consumers and enterprises. When this is done, the directives, which actually serve to put regulations into effect, should be reviewed as well. Instead, by amending laws, regulations should be conducted by laws to the last detail in principle.
For example, to obtain an import sales license for cosmetics, businesses are required to meet requirements both physical (i.e., testing facilities) and human resources (assigning a technician responsible) for each sales office, in order to legally guarantee the appropriate supervision of products or recall of defective products. However, in other industries, businesses usually take the necessary provisions for this without the need for legal stipulation. Furthermore, the academic qualifications required by law are not essential to the duties being carried out; conversely, it is not the case that persons who simply meet the academic qualifications can always do the job adequately. Regarding clarification of the legal position of nutritional supplements, the labeling regulations in place to differentiate between drugs and foods prevent effective description of dosage, usage and precautions for vitamins. This could mean that in some cases, consumers would not have enough information about how much of a certain product to take in order to meet their requirements.
(2) Provide specifications and standards appropriate to new products
When no specifications and standards appropriate to new foreign products like nutritional supplements or in-vitro diagnostics exist, a prompt and positive response is needed to review the existing designations of drugs and cosmetics as necessary and create new categories. When this is done, the ministry should not wait for international specifications to be established; instead, it should set a deadline and reach a conclusion at an early date, in order to contribute to the establishment of international specifications. And, to ensure transparency of the study process, it should set up study groups including outside participants when necessary.
(3) Steadily implement the measures advocated in the final report of the study group on regulation of cosmetics
Members of the American Chamber of Commerce and the European Business Council who have participated in the above-mentioned study groups consider the future loosening of regulation concerning cosmetics described in this report as "a major step forward," and the measures should be steadily implemented.
However, although MAOC understands the need for time to implement domestic procedures to amend the relevant laws and inform consumers and other parties, so that the changes will not come into effect until FY2000, the ministry should provide a detailed timetable for the various steps necessary.
4. Specific Proposals
Based on the above, MAOC requests that the ministry concerned implement the following measures to further improve market access.
(1) Draw up and steadily implement a concrete schedule and procedures for carrying out the proposals of the final report of the study group on regulation of cosmetics. In addition, where the requirement for physical plant and assignment of technicians responsible when applying for an import sales license is concerned, evaluate the status of quality control at an early date and comprehensively review this requirement including its necessity.
(2) Where clarification of the position of nutritional supplements is concerned, the ministry should:
1) make details of new categories, during FY1999;
2) eliminate or substantially relax the restrictions on shape, by putting the standards into law;
3) permit labeling which indicates appropriate dosage, nutritional supplement benefits and precautions to allow consumers to choose products they need in an appropriate manner by putting the standards into law.
(3) Establish a study group, which includes outside experts during the first half of FY1999 to study the option of establishing a new category under the Pharmaceuticals Affairs Law for in-vitro diagnostic products and set a clear deadline for completion of study of this matter.
III-2. Relaxing regulation in the areas of physical distribution and road traffic
As mentioned in section II.1, MAOC's comprehensive review of complaints relating to physical distribution and road traffic covered the areas of (1) Tall Containers, (2) House Trailers and (3) Motorcycles.
(1) Tall Containers
1. The issues
(1) Relaxing height restrictions
There has been a marked increase in international physical distribution, and from the viewpoint of promoting containerization and integration of maritime and land transport, complainants have requested loosening of vehicle height restrictions (3.8 m) set out in the Ordinance for Implementing the Road Traffic Law which affect international maritime containers based on ISO-specification commonly used for international physical distribution (note: 'tall (maritime) containers' originally referred to containers 8.6 ft (2.59 m) high but currently means those which are 9.6 ft (2.9 m) high).
(2) Raising the weight limit for special vehicle transit permits
The Road Law sets the maximum weight limit for vehicles using roads, but again from the above-mentioned perspective, complainants have requested that transit of fully loaded maritime containers (note: the total weight for fully loaded maritime containers is 24 t for a 20 ft container and 30.5 t for a 40 ft container) be allowed.
2. Outline of Measures Taken by the Ministry and Agency concerned (the Ministry of Construction and/or the National Police Agency)
(1) Relaxing height restrictions
Maritime containers (with a height of 8.6 ft) clear the maximum height restriction if transported on low-bed trailers. As a provisional measure until low-bed trailers became more common, transport was allowed using level-bed trailers (total height 4.0 m) temporarily between 1978-1982. But since over 90% of the trailers now in use are of the low-bed type, there are no plans to re-introduce this measure.
Because it is impossible to develop ultra-low-bed trailers which would make it possible to transport tall maritime containers (with a height of 9.6 ft) within the maximum height restriction, since April 1980 it has been possible for low-bed trailers (total height 4.1 m) to transit on specified routes as vehicles exempted from load limits and under special vehicle transit permits. Specified routes are those which have been inspected and specified based on requests by transport operators. They are extended to 13,000 km as of April 1998. The following steps have been taken where transit permits are concerned: 1) in principle, the specified routes may be used 24 hours a day; 2) the interval for acceptance of route applications has been shortened and inspections have been speeded up; 3) the number of documents required for applications has been reduced and the validity period for permits for vehicles exempted from load limits has been substantially extended (to one year); 4) vehicles are given transit permits for tunnels on expressways. Beginning October 1, 1998, the criteria for specified route designation for expressways have also been loosened.
According to the Ministry of Construction, if level-bed trailers carrying ordinary maritime containers are allowed to transit as special vehicles, other ordinary vehicles must also be allowed to transit. But this poses major safety problems and permits cannot be granted immediately. At any rate, where relaxation of height restrictions is concerned, the cost-effectiveness of rebuilding tunnels and other structures to ensure safety and smooth passage, from the long-term perspective of facilitating physical distribution, is being investigated and a study, including review of design standards for road clearances, will be undertaken.
(2) Raising the weight limit for special vehicle transit permits
Regarding the principal routes for physical distribution linking major ports and physical distribution centers, since April 1998 it has been possible for semi-trailers carrying fully loaded 20 ft and 40 ft maritime containers to transit on 32,500 km of expressways and specified routes where bridge reinforcement work has been completed. Since June of the same year, the weight limit for ordinary special vehicle permits was raised as well. The New 5-Year Road Construction Plan will undertake road improvements, including bridge reinforcement given the transport needs for maritime containers and the network of roads over which fully loaded containers can transit is expected to total approximately 60,000 km by the end of FY2002.
Concerning the status of the above-mentioned specified routes, a overall inspection is being undertaken to check if access to major physical distribution facilities like industrial parks is possible. Given physical distribution needs and the status of road improvements, measures are currently being taken to add more specified routes during FY1998. Furthermore, as an interim measure until roads connecting to expressways or specified routes are designated as specified routes, steps are being taken during FY1998 to administer such roads in the same manner as specified routes for special vehicle transit permits, when the relevant road supervisory authority deems that the road structure is safe and that transit poses no safety hazards.
Currently held semi-trailers carrying fully loaded containers for transport exceed the axle weight limit (10 t). But as an interim measure, semi-trailers which have undergone the necessary modifications will be allowed to transit for a 10-year period beginning April 1998.
3. Results of Study Under the Comprehensive Review
(1) Review the cost-effectiveness of loosening height restrictions on tall containers
To bring Japan's physical distribution service up to par with international levels, regulation by negative list could be studied over the long term. This means allowing tall containers to transit on every road in principle and drawing up a negative list of routes over which they cannot transit.
The cost-benefit analysis of relaxing height restrictions being carried out by the Ministry of Construction deals only with savings on vehicles, which is a direct or technological effect, and cost alone; it fails to incorporate the macroeconomic perspective, that is, the impact that more efficient physical distribution would have on domestic living standards. The assumption is that all tunnels would simultaneously be rebuilt over the short term, but consideration should be given to loosening height restrictions in a planned manner, by concentrating investment on routes or regions which are important for physical distribution, applying new specifications to new or rebuilt routes.
To boost the impartiality of the study itself, it should be delegated to a private sector organization. Based on study findings, the issue of loosening height restrictions should be considered in a positive manner as far as possible
(2) Speed up creation of a transport network for maritime containers
The extension to 60,000 km of the road network over which fully loaded containers may be transported, expected to be completed by the end of FY2002, should be speeded up as much as possible.
4. Specific Proposals
Based on the above, MAOC requests that the ministry concerned implement the following measures to further improve market access.
(1) The cost-benefit analysis of loosening height restrictions for maritime containers should incorporate the macroeconomic perspective of benefits to the overall domestic economy and the perspective of planned deregulation. Delegate the study to a private sector body, setting a deadline for study findings by the end of FY1999, and study the issue of loosening height restrictions based on those findings.
(2) The extension to 60,000 km of the road network over which fully loaded maritime containers may be transported is expected to be completed by the end of FY2002, but this project should be speeded up as much as possible.
(2) House Trailers and Campers
1. The issues
(1) Application of the Garage Law
It seemed very difficult to find out park places for large house trailers (large towed camping vehicles) in metropolitan areas, under the provisions of the Garage Law which stipulated that vehicles are parked at a location within a 2-km radius of the owner's home (main place of usage). Furthermore, realistically speaking, it was unlikely that such large vehicles would be used as a regular means of transport in the vicinity of their owners' homes and parked illegally. Accordingly, complainants claimed that the interpretation and application of the concept of "main place of usage" should be amended so that owners were allowed to keep such vehicles in motor pools or other storage places in areas other than near their homes.
(2) Application of the Road Transport Vehicle Law and the Building Standards Law
Since house trailers are not commonly used in Japan, their legal position is not clear. Some authorities consider them "vehicles," since they are equipped with wheels and can move over roads while others view them as "buildings," since they are left in place and used over certain periods. Complainants claimed that, 1) as long as house trailers were used for their original purpose, the restrictions of the Building Standards Law should not apply to them, and 2) that the concerned ministries should create new specifications and standards applying to house trailers.
(3) Application of the Road Traffic Law
In order to encourage wider use of camping trailers (towed camping vehicles), complainants had requested that the weight limit on vehicles
(currently 750 kg) which can be towed by holders of permits for ordinary passenger cars be raised. However, the National Police Agency gave reasons and refused to allow this. Subsequently, the complainants requested that different classes of towing permits, based on the weight of the towed vehicle, be established.
2. Outline of Measures Taken by the Ministries and Agency (Ministry of Construction, National Police Agency, Ministry of Transport)
(1) Relaxing regulations concerning vehicle storage places
Subject to certain conditions, motor pools (storage places) have been recognized as the "main place of usage" since August 1995, and it is now possible for owners to receive storage [parking] place certificates even if such facilities are over 2 km away from their homes.
(2) Facilitating imports of house trailers and campers
A directive was issued and the relevant local officials were informed in March 1997 that certain house trailers, depending on size, type and usage were not considered as buildings under the Building Standards Law.
(3) Relaxing regulations concerning obtaining of towing permits
In order to examine the issue of establishing different classes of towing permits based on the weight of the towed vehicle, a study on the qualifications for driving in each category, and the practicality of establishing different classes should be undertaken. The relevant authorities are currently collecting data on the accident characteristics of towed vehicles by weight
and demand for restricted towing permits.
3. Results of Study Under the Comprehensive Review
(1) Establish a working group to study regulations affecting house trailers
As complainants stated in hearings, businesses and administrative authorities have different interpretations of what the site and purpose of installation of house trailers mean, based only on the directive issued in March 1997 by the Ministry of Construction, and disputes over application of the law could occur on site. In order for the decision made by the Office of Market Access that "the provisions of the Building Standards law do not apply to structures [vehicles] used for camping on campgrounds" to stand, a directive that merely clarifies the language of the Building Standards Law has little effect, because the legal position of "campgrounds" per se is unclear.
Regarding the establishment of new specifications and standards for house trailers the authorities had been scheduled to reach a decision during FY1997 as to whether provisions should be made within the framework of the existing law or a new law implemented. However, examination of various specifications and the state of regulation in the United States are still continuing and no conclusion has been reached. However, MAOC believes that the government should make it clear ahead of time which ministry the data to be provided by the United States authorities should be submitted to.
Accordingly, a working group for study should be set up to examine the regulations affecting house trailers and specific consideration to amending the relevant laws as necessary should be undertaken.
(2) Carry out a study on towing permits by weight class at an early date
The study on establishing weight classes for towing permits should reach a conclusion as soon as possible.
4. Specific Proposals
Based on the above, MAOC requests that the ministries and agencies concerned implement the following measures to further improve market access.
(1) To study the regulations affecting house trailers and reach a conclusion at an early date, the Secretariat the OTO should discuss with the ministries concerned, set up a working group for study and present a report to MAOC during 1999
(2) Begin a study on establishing weight classes for towing permits as soon as possible and present a report to MAOC during 1999.
(3) Motorcycles
1. The issues
Complainants believed that the following regulations made it difficult for American and European manufacturers of large motorcycles to enter the Japanese market and that these regulations should be eased:
(1) Prohibition of tandem riding on expressways
Japan and Korea were the only two countries, which prohibit tandem riding on expressways, and complainants wanted this prohibition eliminated.
(2) Driving tests for large motorcycles (with engine displacement of 400 cc or more)
Driving tests for large motorcycles were administered at driving permit test facilities only. Since there was no system providing for such driving tests at accredited driving schools, obtaining permits for large motorcycles was difficult and this situation should be improved.
(3) Raising the speed limit on expressways
Whereas the speed limit for passenger cars on expressways is 100 km/h, the speed limit for motorcycles is set at 80 km/h, which in fact make it more hazardous for motorcycles, and accordingly the speed limit should be raised.
2. Outline of Measures Taken by the Agency (National Police Agency)
(1) Prohibition of tandem riding on expressways
Although the Secretariat the OTO decided that "data supplied by the complainants on the safety of tandem riding on large motorcycles should be studied and this regulation reviewed if there were no safety problems," the agency replied that the complainants had submitted no new data.
(2) Changes to the driving test system for large motorcycles
Driving permits for motorcycles per se were eliminated in September 1996, and two new classes of permits, the large motorcycle permit for motorcycles with engine displacement of 400 cc or more and the ordinary motorcycle permit for those with engine displacement under this figure, were established, with driving test requirements reflecting the characteristics of each class.
A system of driving tests for large motorcycle permits at accredited driving schools was established.
(3) Research into vehicle speed differences on expressways
The Japan Traffic Control Technology Association is currently conducting research into vehicle speed differences and safety measures on expressways.
3. Results of Study Under the Comprehensive Review
(1) Early implementation of a study of vehicle speed differences on expressways
Unless there are differences in vehicle characteristics among vehicles operating on expressways, it appears safer for all vehicles to operate under the same speed limit.
If regulation is necessary where tandem riding on motorcycles on expressways is concerned, the agency concerned must give the complainants a persuasive explanation to that. Accordingly, the agency should endeavor to collect data on safety.
In any case, MAOC will continue to observe how the agency proceeds in handling complainants' requests concerning the prohibition on tandem riding and the speed limit on expressways, studying the issues in complaint resolution meetings as necessary. Conclusions on research into different speed limits should also be reached as soon as possible.
4. Specific Proposals
Based on the above, MAOC requests that the agency concerned implements the following measures to further improve market access.
(1) Present a report to MAOC during FY1999 on the study of vehicle speed differences and safety measures on expressways.
III-3. Relaxing regulations on labeling and specifications for food products, etc. (JAS system)
1. The issues
Although the OTO has received only seven complaints about the Japan Agricultural Standards (JAS) system, fewer by far compared to those about the Food Sanitation Law or the Pharmaceutical Affairs Law, JAS issues like the food labeling system and JAS specifications for fruit juice have a comparatively large impact on daily life in Japan. Another complaint had to do with standards for New Zealand radiata pine, one of the main products from man-made forests in that country (this complaint is currently being partially processed: the Japanese authorities are waiting for New Zealand to provide the data necessary for amending the specifications).
MAOC's Proposals also mentioned the need for a comprehensive review of JAS specifications and standards, and a Basic Matter Sub-committee, to study directions for amending the JAS system, was set up under the JAS Research Committee in September 1997. This committee has met seven times and presented its findings on revisions to the JAS system in October 1998, after which a report titled "Revision of JAS standards and Food Labeling System" was issued.
(1) Introducing a date labeling system for foods consistent with international specifications
In 1992, the U.S. Embassy and the American Chamber of Commerce in Japan complained that foreign products suffered a disadvantage due to the time needed for transport and Customs clearance, because of the unduly short sales and stocking periods based on production dates adopted by Japanese retailers and wholesalers reflecting Japanese consumers' preference for freshness. They claimed that a 'best by' labeling system based on international specifications was needed.
(2) Reviewing JAS specifications for fruit juice
In 1995, the Japan Foreign Trade Council (JFTC) claimed that JAS specifications failed to reflect actual conditions and should be reviewed comprehensively to reflect conditions of imported fruit juice. This is because even through increasing amounts of fruit juice were being imported, some orange juice did not meet JAS specifications for acidity, and some grape juice failed to meet JAS specifications for amino nitrogen and ash content. JFTC also pointed out that these specifications cover items unique to Japan which were not set out in the international specifications (Codex), and that since these items could actually be tested only in Japan they imposed additional costs.
2. Outline of Measures Taken by the Ministries (Ministry of Agriculture, Forestry and Fisheries, Ministry of Health and Welfare)
(1) Introducing a date labeling system for foods consistent with international specifications
The study group on food product date labeling of the Ministry of Health and Welfare produced a report stating that "labeling which gives a 'best by' date for consumption provides more useful information regarding quality retention than production dates," which was then passed on to the Food Safety Council for approval. In December 1994, the relevant ministerial ordinances were amended to switch from production date to 'best by' labeling. After a two-year transition period, the revisions came into force from April 1995.
The Ministry of Agriculture, Forestry and Fisheries also set up a study group named the "discussion group on the food labeling issue." This group produced a report reaching the same conclusions as the MHW study group. After the report was approved by the JAS Research Committee, JAS specifications and quality labeling standards were amended in December 1994.
(2) Reviewing JAS specifications for fruit juice
In August 1998, the items concerning acidity (for condensed orange juice) and amino nitrogen and ash content (for grape juice) were removed from the quality specifications for fruit juice.
(3) Framework of the report by the JAS Research Committee "Revision of JAS standards and Food Labeling system"
1) Review the labeling system
- Expand the products to which labeling applies (so that labeling standards are adopted to all products consumers require)
- Review labeling items (label place of origin of fresh foods, taking consumer and producer needs into consideration)
- Establish comprehensive labeling standards (implement a system laying down general labeling rules for all foods, not for specific types of food items)
- Take steps to standardize food labeling (study from a broad perspective the introduction of a framework for unified, comprehensive food labeling covering quality, public health, nutritional information and misleading information)
2) Review the specifications system
- Establish guidelines for setting and revising specifications
- Improve procedures for setting and revising specifications (introduce a system for regular reevaluation of all specifications, and ensure transparency in procedures for setting and revising specifications)
- Eliminate specifications whose roles have been accomplished
- Respond to internationalization (promotes international harmonization of specifications and introduce performance-based specifications)
3) Review the conformity assessment system
- Introduce system certification (study a system whereby products made in factories which use specific quality systems can label marks without testing)
- Use the services of private accreditation body (authorize domestic and foreign to perform grading, factory certification, etc.)
3. Results of Study Under the Comprehensive Review
(1) Steadily implement the report " Revision of JAS standards and Food Labeling system " by the JAS Research Committee
The Basic Matter Sub-committee under the JAS Research Committee currently compiled its findings on directions for amending the JAS system, including promoting international harmonization of specifications and use of private conformity assessment bodies, an action which is commendable from the viewpoint of improving market access.
The JAS system should be reviewed keeping international trends, such as those within the WTO in mind and giving sufficient consideration to the type of information that consumers really need.
(2) Review labeling guidelines and actively put guidelines into law
Because labeling guidelines for organic produce and marine products are voluntary; they sometimes do not have the expected results. The use of guidelines should be reviewed and measures based on putting guidelines into law should be taken for products where the demand for labeling is strong.
4. Specific Proposals
Based on the above, MAOC requests that the ministry concerned implement the following measures to further improve market access.
(1) To steadily implement the findings of the report " Revision of JAS standards and Food Labeling system " by the JAS Research Committee, review the specifications and application of the system and take immediate steps to deal with matters, which require institutional review.
(2) Review the system of labeling guidelines used for organic produce and marine products, in accordance with demand by consumers, and put guidelines into law where necessary.
III-4. Relaxing regulation concerning acceptance of foreign test data
1. The issues
Slightly over 10% of complaints received by the OTO are claims that import inspection procedures should be simplified by using test data from foreign testing organizations, or that domestic certification procedures should be greatly streamlined by accepting conformity assessment results from other countries. The tendency nowadays is for complaints to move one step further than acceptance of foreign test data. They ask that confirmation assessment results be accepted and that a mutual recognition system be promoted.
By type of product, complainants requested acceptance of foreign test data for food like mineral water, automobiles (exhaust standards), automotive parts, imported building materials, materials like wallpaper, products which fall under the Pharmaceutical Affairs Law like cosmetics or medical equipment, electrical products and waterworks equipment like faucets.
2. Outline of Measures Taken by the Ministries Concerned
At this time, there are virtually no types of products for which foreign test data is refused out of hand. In addition, harmonization of domestic specifications and standards with international norms is proceeding, and systems for accepting foreign test data and for mutual recognition are in the process of being established. Based on MAOC's Proposals, and not in response to complaints, the Telecommunications Business Law and the Radio Law were amended in April 1998 so that, regardless of whether a mutual recognition system exists, a system for accepting certification by foreign conformity assessment bodies and results of test data for telecommunications terminals and wireless facilities was created. This is the first standards certification system under the Japanese system of obligatory regulation.
However, the number of foreign testing organizations designated as those from which test data can be accepted is small. Various ministries have differing standards concerning acceptance of certificates written in English.
In many cases, Japan requires in principle that testing and certification organizations are government or non-profit bodies, whereas in other countries private organizations often play this role. Promoting mutual recognition will mean that certification obtained through conformity assessment procedures of other countries, including such organizations, is recognized as equivalent to certification obtained through conformity assessment procedures which domestic testing and certification bodies have carried out so far, and that conformity assessment results are accepted.
3. Results of Study Under the Comprehensive Review
(1) Promoting acceptance of foreign test data and conformity assessment results
The government's basic stance should be to accept foreign test data and conformity assessment as much as possible. When this is not done, practical reasons should be given. At the same time, active efforts should be made to expand the types of data which will be accepted. This issue can also be approached based on reciprocity, but considering that Japan must take active steps to improve market access, this country should also take the initiative in accepting foreign test data. Some sources raise the issue of the reliability of the data but a flexible approach should be employed, for example by instituting a trial period.
If the government accepts not only foreign test data but also foreign conformity assessment, this can significantly cut down on procedures needed to obtain certification in Japan. As MAOC stated in its Proposals, active use should be made of foreign conformity assessment bodies and acceptance of their assessment promoted.
Where mutual recognition is concerned, the issue discussed is usually that of accepting conformity assessment for industrial products. However, given that the service sector of the economy is steadily expanding and that trade in services today accounts for an increasingly large proportion of international trade, it is important to take measures to improve market access not only for hard goods but also for 'soft' products like services and foreign domestic investment.
In any case, it is vital that the government take a flexible attitude to foreign test data and conformity assessment from the view point of opening the domestic market as much as possible.
(2) Entering into a mutual recognition agreement with the EU at an early date
Since May 1995, Japan and the EU have been in discussions intended to establish a framework for cooperation in mutual recognition. The two sides are currently negotiating common general rules and annex for telecommunications equipment, electrical products, manufacturing and quality control standards
(GMP: Good Manufacturing Practice) for pharmaceuticals and Good LaboratoryPractice (GLP) for chemicals, on a priority basis. Domestically, the administrative authorities are also coordinating to undertake preparations for amending the various laws related to such an agreement.
If Japan and the EU promote cooperation in mutual recognition, this could accelerate the pace of market opening in a wide range of sectors.
Accordingly, the ministries concerned should begin the necessary preparations for drawing up proposed amendments to the relevant domestic laws soon and endeavor to conclude the agreement at an early date.
4. Specific Proposals
Based on the above, MAOC requests that the following measures be implemented to further improve market access.
(1) The concerned ministries should begin the necessary preparations for drawing up proposed amendments to the relevant domestic laws soon, and endeavor to achieve early ratification of a cooperation agreement on mutual recognition between Japan and the EU.
III-5. Simplifying and speeding up import procedures
1. The issues
Complaints about simplifying or speeding up import procedure account for over 30% of all complaints received by the OTO; in terms of numbers, such complaints are typical of those made to the OTO. Between 1985-1988, especially, half or more of the complaints concerned simplifying or speeding up import procedures.
The complaints indicate the need for consolidating legal procedures and entities relating to imported goods, extending the work hours of the relevant administrative offices, simplifying certificates and introducing prior application procedures.
(1) Consolidating legal procedures and entities relating to imported goods
Parties wishing to import goods must declare the particulars required to the head of Customs and receive an import permit. Depending on the type of goods involved, further notifications or inspections are required, under the provisions of the Food Sanitation Law, the Plant Protection Law or the Domestic Animal Infectious Diseases Control Law.
Importing goods involves many different administrative entities (Customs, quarantine, plant quarantine or animal quarantine offices) and because the counters accepting the respective applications are located in different areas, such counters should be consolidated and procedures and entities unified.
(2) Extending hours of operation of the relevant administrative offices
The OTO has received complaints that the system of Customs offices remaining open on weekends or in the evenings outside normal work hours upon prior application should be extended to inspection of food, animals and plants. Some parties have also requested that the fees for extending the business hours of Customs and for applying to keep offices open outside of normal work hours be lowered.
(3) Simplifying certificates
Complainants have requested simplifying the obligation to present the various certificates required by the Food Sanitation Law, in the case of the same product imported on a continuing basis. The government also requests sanitation certificates issued by the exporting country, for meat, ham, etc., both for animal quarantine and under the Food Sanitation Law. But this sometimes causes delays in clearing Customs, and some parties have requested that these certificates be consolidated.
(4) Introducing prior application
Complainants have requested a system of prior examination of import cargoes and of import permits granted before payment of tariffs, to shorten the time needed for Customs procedures.
2. Outline of Measures Taken by the Ministries Concerned
(1) Consolidating legal procedures and entities relating to imported goods
The individual ministries in charge of administering the legal procedures for imports have each introduced their own computer processing systems. For example, the NACCS (Nippon Automated Cargo Clearance System) Customs clearance information processing system for processing Customs procedures began operation in August 1978. In February 1996, the Ministry of Health and Welfare began using FAINS (Food Automated Import notification and Inspection Network System); a computerized system to assist checking imported food products. The Ministry of Agriculture, Forestry and Fisheries introduced ANIPAS (ANimal quarantine Inspection Procedure Automated System), a computerized system for processing paperwork related to animal quarantine testing, and PQ-Network, a similar system for quarantine testing for imported plant material, in April 1997.
To speed up and simplify import procedures overall, work to interface NACCS and other computer systems have been proceeding. Interfacing with the Ministry of Health and Welfare's system was completed in February 1997 and with the Ministry of Agriculture, Forestry and Fisheries' two systems in April 1997. As a result, approximately 90% of import declarations requiring procedures involving multiple administrative branches can be processed on NACCS terminals.
The ministries concerned are continuing to computerize operations: by the end of FY1999, import/export permits and approval procedures required under the Foreign Exchange and Foreign Trade Control Law, and arrival and departure procedures at major ports and international airports will be put into electronic data format(EDI: Electronic Data Interchange), and further coordination among the above-mentioned computer systems will make it possible to carry out import/export and various port/airport procedures by computer and have one-stop service for this.
(2) Extending hours of operation of the relevant administrative authorities
Since 1995, the business hours of the quarantine, animal quarantine and plant quarantine offices at major airports such as Narita, Nagoya and Fukuoka have been extended and the number of personnel on duty increased. The hours of operation of the Customs offices at Nagoya and Fukuoka airports were also extended beginning in April 1995. Regarding approval fees for Customs outside of normal work hours, the number of declarations capable of being handled per individual application for approval of operation of Customs offices outside normal hours was expanded in January 1994, resulting in a de facto lowering of costs to importers.
(3) Simplifying certificates
The validity period for the various certificates required by the Food Sanitation Law was extended, in the case of the same product being imported on a continuing basis.
There is no change in the current situation of the MHW and the MAFF requiring different sanitation certificates from exporting countries. When bilateral discussions with the exporting countries concerning the contents of the certificates and held, efforts to have certificates issued which satisfy the two ministries' information requirements are being made.
(4) Introducing prior application
A new examination system was introduced in April 1988 whereby in advance of a shipment's arrival, importers can submit import declarations to Customs and undergoes Customs inspection.
In April 1989, a system for extending the deadline for payment of Customs duties was introduced, whereby the payment deadline for such duties might be extended to within three months of the date of import, conditional on collateral being offered.
Additionally, in April 1996, a system of on the spot import permits (allowing an import permit to be granted at the time of the cargo's arrival, without the need to transport it to a bonded area first) was introduced for certain types of air cargo, to further speed up Customs clearance.
3. Results of Study Under the Comprehensive Review
(1) Shortening time required from imported goods' entry into port to declaration
The Emergency Economic Measures announced on November 16, 1998 contain a provision to boost the competitiveness of cities in the international community by improving hub ports and airports. However, there is no point in improving the physical infrastructure if there is no corresponding qualitative improvement in 'soft' areas like import procedures. Further, cutting down on the time needed for import procedures can enhance "the time value" that is, value added through distribution.
Including measures taken in response to complaints to the OTO, various steps have been implemented so far to simplify and speed up import procedures. For example, in a survey conducted in 1991, the time needed for procedures between entry into port of sea cargo and granting of an import permit was 168.2 hours; in the 1998 survey, this had been reduced to 86.7 hours. However, this is still much longer than the 54.5 hours needed for the same in 1991 in the United States and there is room for improvement.
Examining the breakdown of the time required, Customs clearance procedures in Japan, from declaration to permit, do not take significantly longer than in other industrial countries. Efforts to shorten the time needed for overall import procedures should be concentrated on reducing the time it takes between entry into port and declaration.
The reason that this step takes so long is that weekends and holidays come up during the interval for procedures. Where transport of cargo which has arrived in port to a bonded area is concerned, the ministries involved should work in closer coordination and the parties concerned should make efforts to ensure that transport continues smoothly, even on holidays, at the major ports.
Regarding the interval between transport to a bonded area and declaration, another factor in addition to holidays is the time required to verify declarations for Customs tariffs. Because Customs brokers compete on the basis of which of them can pick cargoes up faster, some of them pay the required tariffs and consumption taxes on behalf of the importer in return for handling their business.
In any case, if tariff declarations are the reason for cargo backlogs and hinder the speeding up of import procedures as a whole, the possibility of adopting a system modeled on the Customs clearance procedures in use in the United States, where procedures for picking cargo up and for paying tariffs are separate, should be studied.
(2) Further streamlining of the import procedure system
Computerization of the various legal procedures pertaining to imports and interfacing of computer systems has contributed to speeding up and simplifying imports. The new sea system scheduled to be introduced in FY1999 sets up a structure for all procedures from arrival into port and unloading of cargo to domestic cargo pickup, and will computerize Customs import and port entry and departure procedures and offer one-stop service.
These are commendable actions, but to further speed up and simplify import procedures, more interfacing should be done so that in the future the data entered in a processing system for Customs clearance and other legal procedures can be shared and simplified. The system should also be improved so that all import procedures can be processed in an integrated system.
4. Specific Proposals
Based on the above, MAOC requests that the following measures be implemented to further improve market access.
(1) Shorten the time needed between entry into port to declaration as much as possible, by encouraging the parties concerned to make more efforts to keep ports operating on a level comparable that that of other countries, on holidays. Also, consider the introduction of a system that will ensure appropriate Customs clearance and help improve the efficiency of physical distribution, referring to examples of Customs clearance procedures used in the United States and Europe as models.
(2) Continue making efforts to computerize and offer one-stop service in order to further simplify and speed up import/export and port-related procedures. In addition, consider introducing an upgraded computer system that will process all import procedures in a integrated system.
III-6. Making active efforts to tackle so-called private sector regulation
1. The issues
There are many different perspectives on private sector regulation. For example, the report of the Economic Council's working group on private sector regulation (April 7, 1998) defines such conduct as "regulations other than those based on Japanese laws, set out by industry associations and others to regulate business activities between private sector businesses, which directly or indirectly affect daily living and have a negative impact on domestic standards of living through their impact on business activities." However, even though such regulation is defined as "regulations other than those based on Japanese laws," the public sector is sometimes involved in important ways, through public regulations and/or administrative guidance.
Most of the complaints received by the OTO concerning private sector regulation are cases where the public sector is involved. For example, problems with specifications laid out or conformity assessment operations carried out by non-profit foundations or other private bodies. Other complaints are related to business practices with regard to food date labeling. In its Proposals (June 18, 1997), MAOC proposed measures to be taken to review and eliminate private sector regulation.
(1) Specifications and standards, conformity assessment operations carried out by non-profit foundations and other private sector bodies
In terms of the number of complaints received, many related to the conformity assessment activities of private sector groups such as certification foundations, non-profit foundations and voluntary groups. The requests are harmonization with international specifications or acceptance of products conforming to foreign specifications. Furthermore, since the relationship between the activities of private sector bodies and public sector regulations is not always clear, in some cases private sector regulations constitute an impediment to market access, due to the fact that voluntary restrictions set out by private sector groups are sometimes misinterpreted as obligatory regulations. In terms of private sector groups named, more than 10 complaints, the largest number, were received about the Japan WaterWorks Association; many of these complaints requested permission to use bronze faucets or international harmonization of model approval for faucets and other waterworks equipment.
(2) Practices relating to data labeling on food products
A complaint was received that foreign products, due to the time needed for transport and Customs clearance, are at a disadvantage compared to domestic products because of the unduly short sales and stocking periods based on production dates adopted by Japanese retailers and wholesalers reflecting Japanese consumers' marked preference for freshness. It insisted that changes should be made to the unduly short sales and stocking periods in use.
2. Outline of Measures Taken by the Ministries Concerned
(1) Specification and standards, conformity assessment operations carried out by non-profit foundations and other private sector bodies
Many organizations have been taking steps to harmonize their specifications and standards with international ones, accept foreign test data or clear up misunderstandings concerning government involvement. But the number of foreign testing organizations from which test data has been accepted is still very small, because the domestic organizations concerned are unable to take remedial action unless applications to allow use of foreign test data are made.
Where the Japan Waterworks Association is concerned, the model approval system itself was abolished in March 1997. Also, government and ministerial ordinances related to the Waterworks Law were issued clarifying the standards for the structure and materials quality of water supply equipment, which had previously differed among individual waterworks operators, and which now make it possible to apply the system uniformly throughout Japan. Additionally, a system of self-verification by manufacturers was introduced and it is no longer mandatory to obtain third-party certification.
(2) Practices relating to data labeling on food products
In December 1994, the MHW changed its ministerial ordinances and the MAFF the JAS specifications concerning quality labeling standards from production date to 'best by' labeling. However, the American Chamber of Commerce, which lodged this complaint with the OTO, claims that problems of business practices in the distribution sector such as product returns remain unresolved.
3. Results of Study Under the Comprehensive Review
(1) The need to investigate and publicize the state of, and barriers posed by, private sector regulations
The situation regarding private sector regulations is complicated. Furthermore, this refers to regulations in which the public sector is substantially involved in one way or another and which it is not necessarily appropriate to call 'private sector regulations'. Accordingly, the actions which the government should take regarding private sector regulations are unavoidably on a case by case basis, and further research and study from various perspectives into the actual status and barriers posed by private sector regulations is needed. In particular, in July 1998 the Fair Trade Commission released a report, titled "Findings on the Status of Voluntary Standards and Certification of Non-Profit Foundations and Other Bodies," concerning the setting of specifications and standards and the conformity assessment activities of private sector bodies. However, it is necessary to gather more information on how these bodies operate so that their activities do not pose barriers to market access.
Further, premised on effective actions regarding private sector regulations, people should be informed that even though the government loosens regulations in various areas, the continued existence of private sector regulations could have a negative impact on improved living standards. Accordingly, visual and other media should be used to publicize, in an easily understood way, the results of research and study into the status of, and barriers resulting from, private sector regulations.
(2) Positive action by the Fair Trade Commission
The FTC insists that it has taken positive action against private sector regulations so far. However, MAOC believes that application of the Antimonopoly Law can play an important role in this area. Accordingly, strict measures based on this law should be taken when violations exist. Anti-competitive private sector practices should be investigated and rectified. In cases where administrative guidance encouraging anti-competitive practices exists, FTC should actively coordinate with the ministries concerned.
To support the FTC's activities, it is important to make the public more disposed to actively report specific examples of suspected infringements of the Antimonopoly Law due to private sector regulations to the FTC. The FTC itself should also take steps to encourage active reporting by the general public.
(3) Action on the issue by the government as a whole
When directives encouraging anti-competitive measures issued by the administrative authorities are behind private sector regulations, this must be rectified immediately; when the authorities are not involved, they should again make it be known that this is so, to clear up misunderstandings, and clarify who is indeed responsible. Parties might wish to apply for redress to the government for specific losses due to the existence of private sector regulations. However, if they avoid complaining directly to the authorities apparently involved when there is a large degree of public sector involvement in the regulations, they may sometimes give up because they cannot find the appropriate channels to complain to within the government. Further, as has already been demonstrated, since the concept of private sector regulation per se is vague, interpretations could vary depending on the ministry or on the government official involved, or different ministries could respond in different ways to the issue. Therefore, one possibility is for the government to establish a coordination and liaison framework among the ministries concerned, which can receive complaints in cases where it is unclear where the complaint should be addressed. When the OTO receives complaints, it should adopt the perspective of the complainants and respond as effectively as possible, making use of its accumulated know-how in this area.
4. Specific Proposals
Based on the above, MAOC requests that the following measures be implemented to further improve market access.
(1) Investigate the status of, and barriers constituted by, private sector regulations from various perspectives, and report findings in an easily understood manner using various media outlets.
(2) The Fair Trade Commission should take measures to encourage the public to report on private sector regulations.
(3) When the OTO receives complaints, it should make any effort to solve them. Also, if necessary, the government should consider establishing a coordination and liaison framework concerning private sector regulations among the ministries concerned.
III-7. Other Issues Studied
(1) Giving the OTO More Publicity
>3. Results of Study Under the Comprehensive Review
As MAOC pointed out in the General Observations in its 5th Report on Policy Actions, unless actions taken to remedy various matters are sufficiently publicized and foreign businesses are made aware of the changes, the end result is the same as if no changes were made.
For example, regarding landing examination standards, even though the limit on maximum period of stay (5 years) for the "internal company transfer" status was abolished in January 1998, the OTO received a complaint (OTO-584) requesting extension of period of stay later the same year, in October. In such a case, the complainant should have gathered information, but this type of occurrence also points to the need for better publicity. In fact, when complaints received by the OTO are grouped by type of processing, clearing up misunderstandings accounts for the largest proportion of the cases.
Renewed efforts should be made to publicize the activities of the OTO in a clear, easily understood manner, so that latent complaints can be brought into the open and contribute to further improving market access.
4. Specific Proposals
Based on the above, MAOC requests that the following measures be implemented to further improve market access.
1) Actively publicize actions taken to improve market access in a clear, easily understood manner.
2) Make renewed efforts to publicize the activities of the OTO in a clear, easily understood manner.
(2) Other
Based on the comprehensive review activities undertaken, MAOC will monitor the manner, in which the cases listed below are processed by the respective ministries, bringing them before the Grievance Resolution Council if necessary.
(1) OTO-566: Deregulation concerning motorcycles
(2) OTO-569: Relaxing regulations for obtaining towing licenses
(3) OTO-575: Extension of roads on which trailers transporting ISO-standard containers for sea transport can pass
(4) OTO-578: Change in labeling method for cosmetics
(5) OTO-584: Review of landing examination criteria
IV. Conclusio
Based on the common issues and specific proposals described in the foregoing, MAOC hopes that the government will make renewed efforts to improve market access. MAOC will follow up on the implementation of government responses to the specific proposals of this report, and will undertake further study if this should prove necessary.
The method particular to Japan of going through the OTO to improve market access in response to complaints by domestic and foreign parties has brought about many concrete results and has contributed to changing this country's economic structure through deregulation. Ministries' responses to complaints and to MAOC's opinions have also become much more positive compared to the first years of MAOC's establishment.
However, the government continues to receive numerous requests for improved market access from domestic and foreign businesses each year. In order to create an open socioeconomic system and to make the domestic economy more efficient and vital by encouraging various types of competition among domestic and foreign firms, the government must continue to take a positive outlook that each specific complaint presents a precious opportunity and to respond with sincerity. Where regulations, which are the subject of numerous complaints, are concerned, action is needed to respond not only to each specific complaint but also to undertake a comprehensive review of the regulations themselves.
MAOC will continue its activities of identifying the problems relating to Japan's system of standards, certification and others based on requests made by foreign and domestic parties and to make recommendations on actions needed. It will also examine in detail specific issues frequently mentioned in complaints and make concrete recommendations for improving market access.