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
"2nd Report of the Market Access Ombudsman Council"
March 14, 1995
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. in this report, we clarify where the problems with Japan's standards, certification and others lie and recommend actions needed in relation to complaints received by foreign businesses and others.
We wish the Office of Market Access undertakes to determine actions, respecting this to the furthest extent possible, and to take measures based on Report this at an early date.
I. General Observations
II. Recommendations
1. Animals and plants, food
1-(1) Improvement of the plant quarantine system and others relating to the import cut flowers
1-(2) Review of heat processing standards relating to the import of meat of cloven-hoofed animals
1-(3) Acceptance of foreign test results relating to the import of mineral water
2. Pharmaceuticals
2-(1) Simplification of approval procedures etc. for in-vitro diagnostics
2-(2) Abolition of handling health foods made from natural herbs as drugs
2-(3) Simplification of approval and licensing procedures for proprietary drugs
3. Manufacturing and related areas
3-(1) Acceptance of country of origin certificates by intermediary exporting countries relating to the import of silk fabrics
3-(2) Establishment of classification standards for X-ray film
3-(3) Changes to approval procedures for electric and electronic products
4. Transport and traffic
4-(1) Acceptance of data from EU testing organizations in other than automobile-producing countries
4-(2) Relaxation of weight restrictions when freight containers are transported by road
4-(3) Abolition of restrictions on transportation ships built for export
5. Construction
5-(1) Improvement of the inspection system for multi-story car parks
5-(2) Improvement of the certification system for wallpaper
6. Tertiary industries and related area
6-(1) Liberalization on representation of parties by foreign lawyers in international arbitration
6-(2) Review of regulation on premium offers
6-(3) Deregulation of the restriction of the number of races open to foreign horses and horse owner registration of persons residing overseas by the Japan Racing Association
7. Import procedures
7-(1) Extension of work hours for Customs offices and other bodies relating to import processing procedures
7-(2) Simplification of post-clearance examination of the Consumption duty on duty-free imports, etc.
I. General Observations
1. The Government is currently undertaking to carry out deregulation from a viewpoint of expanding domestic demand, promoting imports, improving the quality of people's life, providing more opportunities for the creation of new businesses, giving consumers more choices and expecting the decrease in the discrepancy between world and domestic prices.
The activities of the Office of Trade and Investment Ombudsman (OTO) involve reviewing regulations from a viewpoint of improving market access and contribute to the basic policy targets mentioned above. Bearing this recognition, we have examined a number of issues raised by foreign businesses and others as concerns the standards, certifications and other since the last autumn.
2. It is necessary to make an ongoing effort to review regulations and their necessities, in the direction of keeping the regulations to a minimum and in harmony with international practices from the viewpoint of responding appropriately to the socioeconomic changes and technological advances which have occurred since such regulations were implemented, and of improving market access.
Summing up the work relating to the complaints brought before the OTO this time, we request appropriate action from the government on the following points.
(1) Where import procedures are concerned, measures, including extension of operation hours, have been taken so far to speed up processing and lighten the burden on applicants. Nevertheless, further improvements are needed in this area responding appropriately to increased imports and distribution conditions, and taking the needs of applicants into consideration more fully.
Improving the efficiency transportation of goods including the connection between international and domestic transport will contribute to smoothing the way for import and measures to this end must continue to be promoted in the future.
(2) Regarding the standards and certification system, in the areas where standards, etc. internationally agreed on are in existence, further efforts will be made to improve international harmonization to improve market access. As well, in the areas where there are no international standards, the domestic system must be reviewed with thorough reference to the thinking behind the systems in use in other countries and to the socioeconomic effect of these systems.
When newly imported products are being hampered due to the absence of appropriate specifications or standards for them, specifications and standards should be reviewed at an early date from a viewpoint of improve market access.
(3) Acceptance of foreign test data contributes to improvement of market access because it simplifies and speeds up application procedures and reduces the burden on applicants. Accordingly, these measures should be continued to put ahead, including in fields in which supply of imported goods had not been anticipated. Further, given the international role of the English language, permitting applications written in English would further reduce the burden on applicants, and a study of such a method is also required.
(4) Providing information on Japan's standards, certifications and others can help foreign businesses understand requirements more fully and contribute to smoothing imports. Therefore, active efforts should be made to provide related laws and manuals on procedures in English, to publicize the system for accepting foreign test data, and to provide information on progress being made in harmonizing domestic specifications and standards with international standards.
3. Based on the above views, the Council hopes that the government will make more efforts to improve market access. The Council also intends to follow up on the status of implementation of the government's actions in response to the recommendations in this report.
II. Recommendations
1. Animals and plants, food
1-(1) Improvement of the plant quarantine system and others relating to the import cut flowers
1. Complainant: European Business Council
2. Ministry concerned: Ministry of Finance, Ministry of Agriculture, Forestry and Fisheries, Ministry of Transport
3. Complaint
Regarding imports of cut flowers into Japan, the complainant has raised the following six issues relating to the plant quarantine system and others which it believes should be changed.
(1) Elimination of zero tolerance
Japan applies quarantine to all insect pests, including those found in Japan, and adopt zero tolerance standard, under which any tolerance levels are accepted, for insect pests found in samples selected for inspection.
However, most industrial countries have already adopted the concept of PRA (Pest Risk Analysis) system, which is going to be internationally standardized by the United Nations Food and Agriculture Organization (FAO) and single out for quarantine only specific insect pests. Some countries have also adopted a plant quarantine system establishing tolerance levels for the number of insect pests found.
The complainant therefore holds that Japan should also adopt PRA and target only specific insect pests for quarantine, and that at least as far as pests found in Japan are concerned, minimum tolerance standards should be adopted (establishing standards for permissible ratio of pests detected in extracted samples).
(2) Extending plant quarantine and Customs inspection hours
Regular working hours for plant quarantine and Customs officers are from 8:30 a.m. to 5:00 p.m.
However, the plant quarantine station at Narita Airport is open until 9:00 p.m., and Customs officers there are on duty 24 hours a day.
At Nagoya and Fukuoka airports, on the other hand, the plant quarantine stations carry out inspection until 5:00 p.m. (until 6:30 p.m. if a prior request is received). Customs officers work overtime if a request is made by 5:00p.m. The last international cargo flight arrivals at Nagoya and Fukuoka airports are at 9:00 p.m. and 8:00 p.m. respectively. This means that under present working hours, there are cases where quarantine and Customs inspections cannot be carried out and importers must keep shipments in bonded warehouses overnight or time cargoes to arrive the next day.
Storing and refrigerating cut flowers until the next day means increased expense and since the flowers lose freshness, their quality is impaired and their product value deteriorates.
Accordingly, hours of operation of the quarantine stations and Customs at these airports should be extended so that the last flights of the day can be cared.
(3) Simplifying and speeding up plant quarantine procedures, increasing quarantine officers
In Japan, Fridays and Mondays are the main days for sales of cut flowers and most importers time their imports of cut flowers to arrive two days earlier (Wednesdays and Saturdays). If shipments arrive in late afternoon, however, it often happens that they cannot be inspected before noon the following day and as a result the flowers go on sale three days after import (on the days - Saturdays and Tuesdays- following the main flower selling days), meaning that their product value declines substantially.
The reason for this situation is the extreme shortage of plant quarantine inspectors at Narita Airport, the airport with the largest number of flights and the main port of entry for cut flower imports, which limits the volume of inspections which can be carried out in one day.
Another problem which all airports have in common is that plant quarantine procedures are not computerized and there is no interface between the plant quarantine and Customs clearance systems, which causes delivery delays.
Accordingly,
1) the number of plant quarantine inspectors at Narita Airport should be increased;
2) plant quarantine stations and Customs should be linked by an online computer system to speed up procedures.
(4) Simplifying verification procedure for cut flowers having undergone pre-shipment inspection
Cut flowers imported from the Netherlands are inspected in the country Holland before export by Japanese quarantine officers inspecting under Japanese standards, according to the pre-shipment inspection system, but the samples of all shipments are subjected to confirmation inspections after arrival in Japan. This means additional time is necessary before shipment, and random checks should be carried out instead of checking all shipments.
(5) Expanding warehouse and sorting facilities
Cut flowers arriving at international airports are usually kept in some part of the international cargo sheds (warehouses, sorting areas) at each airport designed as a bonded warehouse until completion of the usual import procedures, and are shipped out from there once procedures are completed.
However, warehouse space is shortened, which means that it takes time to sort cargo, slowing down the entire shipping process, and since the areas are not temperature-controlled, product quality of the cut flowers deteriorates. Refrigerated facilities are available but temperature control is not appropriate (there are no 15-deg. C facilities), and they are too small and too expensive.
The sorting areas are also shortened so that efficient (low-cost) and rapid labeling of boxes is impossible, which is often responsible for problems in connecting with domestic shippers.
The sorting areas also lack temperature control, and in many cases are not even covered.
Accordingly, improvements to international cargo sheds are needed, especially at Narita Airport, which is the largest port of entry for cut flowers.
(6) Reducing fumigation fees by competition
If pests are found after cut flowers are inspected, the shipment in question must either be disinfected or destroyed, as directed by plant quarantine inspectors under the Plant Quarantine Law. Fumigation is one disinfecting method, and fumigation is carried out at each international airport by fumigation companies which are registered to the Agriculture, Forestry and Fisheries Minister under the Pesticides Control Law.
Fumigation fees at Narita Airport are extremely expensive compared to those in other countries. The reason for this is considered to be lack of competition as there are only two fumigation companies at Narita Airport. Therefore, the fees should be reduced by stimulating competition between the fumigation companies.
4. Results of deliberation:
Establishing a rapid and low-cost system for completing import procedures after arrival is an important issue where commodities, such as cut flowers, to which freshness is essential are concerned.
Accordingly, the following measures are necessary to eliminate holding over of cargo at airports until the following day for the sake of import procedures.
(1) The FAO is currently working toward establishing international standards for Pest Risk Analysis (PRA) by 1997. A study of measures is needed to ensure rapid response to the establishment of the standards, including a study of risk assessment measures for insect pests, for the purpose of clearly indicating pests which are not subject to be quarantined in Japan.
The concerned ministry is currently working on developing methods to prove that insect pests are of the same type as those found in Japan. Regarding pests for which methods have already been developed, the countries where the insect pests are found will be asked for their understanding regarding the methods used by bilateral discussion.
Regarding disposal of shipments in which insect pests have been found, the system currently used by Japan is intended to keep the financial burden to a minimum. On the other hand, it can lead to a higher defective product rate estimate for shipments than other methods.
But if other methods were to be adopted, more time might be needed for inspection. Therefore, to ensure efficient examination and reduce the burden on applicants, a further study of sampling methods is needed, in consultation with experts.
(2) Hours of operation of the plant quarantine stations and duty hours for Customs officers at Nagoya and Fukuoka airports should be arranged to permit appropriate handling up to the last international cargo flight of the day.
Accordingly, to improve administrative efficiency, the plant quarantine stations should extend hours for inspections done on request. Regarding Customs, the ministry concerned is currently studying extending the duty hours of Customs officers, taking into consideration demand for work outside of regular hours to handle import procedures for goods including cut flowers and available staff, and these measures should be supported.
Specific measures to improve these systems should be studied immediately.
(3)
1) At Narita Airport, the port of entry for the largest volume of cut flowers, leaving cargo unprocessed until the next day increases costs and causes product quality to deteriorate, as the complainant claims. Therefore, plant quarantine inspection must be carried out quickly.
Accordingly, increasing the number of plant quarantine officers should be studied based on the volume of work and of imported cargo handled. In addition, the possibility of re-hiring retired quarantine officers on a non-regular basis, or of contracting with private sector technicians, should be studied.
2) The ministries concerned are working to develop an interface between the computer systems for plant quarantine stations and Customs, and efforts must be continued to make the system operative at an early date.
(4) Since there have been many cases of infringement regarding cut flowers examined under the pre-inspection in the Netherlands, the ministry concerned has ruled that inspection of every shipment is necessary. But the reasons for the occurrence of infringements should be clarified through discussions by Japanese and Dutch experts. Based on the conclusions reached, bilateral consultations will be needed to discuss the possibility of using random checks.
(5) Space for international cargo sheds at Narita Airport will be expanded with the completion of a Cargo Building No.4 (44,000 square meters, with about half the space for import cargo) during FY1995, and the specific layout should reflect users' needs.
Therefore, the ministry concerned should urge the parties concerned to provide opportunities for users to state their opinions, including improvement of refrigeration facilities requested by the complainant, in the near future. Based on the outcome of these meetings, the necessary improvements to warehousing and sorting areas should be made respectively.
All areas used as bonded warehouses have also been covered, and the Cargo Building No.4 will also have covered areas. These measures are positive and early consideration should also be given to providing covered areas for leaving samples awaiting testing.
(6) Although fumigation fees at Narita Airport are a contractual matter between fumigation companies and importers, the concerned ministry should encourage the users and fumigation companies to discuss the matter and study ways of improving the situation so that the complaint about fumigation fees should be lowered.
Regarding the improvement of sheds, the concerned ministry should urge the related parties so that more space for fumigation warehouses are secured.
1-(2) Review of heat processing standards relating to the import of meat of cloven-hoofed animals
1. Complainant: Thai Embassy
2. Ministry concerned: Ministry of Agriculture, Forestry and Fisheries
3. Complaint:
Based on the Animal Infections Disease Control Law, Japan bans the import of the meat etc. of cloven-hoofed animals (cattle, swine, etc.) from areas with outbreaks of malignant animal infectious diseases (Foot-and-mouth disease, Rinderpest, and African swine fever).
However, even when from areas of import ban, products accompanied by a certificate stating as having undergone heat processing according to standards set by the Minister of Agriculture, Forestry and Fisheries, in facilities designed and equipped to prevent contamination by animal infectious diseases and designated by the Minister and accompanied by a certificate issued by a government organization of the exporting country are allowed to be imported.
The heat processing standards for the meat etc. of cloven-hoofed animals stipulated by the Minister (notification by the Ministry of Agriculture, Forestry and Fisheries) are as follows:
1) By boiling, or exposing to steam of over 100 °C, so that the temperature at the center of the meat remains at 70 °C or more for one minute or more
2) By heating in a water bath, drying with hot air or other methods, so that the temperature at the center of the meat remains at 70 °C. or more for 30 minutes or more
The complainant would like to export deep-fried processed foods made from the meat etc. of cloven-hoofed animals (frozen pork cutlets, etc.) produced in Thailand and so raised the following issues.
Deep-frying in oil falls under "other methods" mentioned in the current heat processing standards and required processing is as described in 2) above, but deep-frying in oil for over 30 minutes renders the product inedible. Foods deep-fried after being processed according to method 1) above can be exported but there is no demand since such processing causes major taste deterioration.
Accordingly, the method of deep-frying in oil so that the temperature at the center of the meat etc. of cloven-hoofed animals remains at 70 °C or more for one minute or more should be added to the current heat processing standards.
4. Results of deliberation:
If heat processing methods not included in the current standards are shown, the standards should be reviewed immediately, as far as the effectiveness of such methods in killing organisms causing animal infectious diseases is verified.
Therefore, in this case, given the importance of preventing Foot-and-mouth disease in Japan, the following measures should be adopted, taking into consideration safety based on scientific proof.
The complainant has indicated willingness to provide scientific test data concerning the effectiveness of deep-frying in oil to kill organisms causing livestock epidemics, and therefore the concerned ministry should provide clear information to the complainant soon as to the content and format of the data which should be submitted to avoid requests for supplementary data later.
After the data in question is submitted, the time required to make the addition to the standards should be made clear and conveyed to the complainant, and technical discussions between Japanese and Thai experts should be held at an early date.
1-(3) Acceptance of foreign test results relating to the import of mineral water
1. Complainant: Keidanren
2. Ministry concerned: Ministry of Health and Welfare
3. Complaint:
Under the Food Sanitation Law, food importers are generally required to file a report with the Health and Welfare Minister through a quarantine station. The quarantine station carries out document inspection for all items and makes spot checks as necessary to check that the items meet the specification guidelines set out in the Food Sanitation Law.
Standards for mineral water are formulated in the Specification Guidelines for Foods, Additives, etc. (notification of the Ministry of Health and Welfare) and inspection is carried out at time of import.
Japanese specification standards were changed in December 1994 to be compatible with an international standard: i.e. the Codex European Regional Standard for National Mineral Waters specified by the Codex Commission.
The complainant raised the following issues:
(1) Since Japanese specification standards for mineral water have been made compatible with European food standards, test result certificates issued by all foreign public testing organizations for mineral water imported from countries which have adopted these standards should be admitted, regardless of whether they have been registered with the Ministry of Health and Welfare.
(2) Unlike other soft drinks, mineral water must undergo testing for microorganisms each time it is imported. This is not consistent, and it should be handled in the same manner as other soft drinks.
(3) Even though the producer of a product is the same, if the importer or port of entry is different, the product is required to be re-tested on all items. However, previous test results should be used and testing procedures simplified.
(4) The necessary documents which must be presented to the quarantine station when reporting import should be clarified and the list of documents required should be posted at all quarantine stations.
4. Results of deliberation:
(1) To improve market access for food products, it is important to accept foreign test results as much as possible, when verifying at the time of import whether the necessary sanitary measures have been taken in the exporting country. This handling should be actively adopted for products with specification standards compatible with international standards in particular.
The ministry concerned has so far adopted the Exporting Country Public Testing Organization System (under which testing organizations with testing capacities meeting specific standards approved by exporting countries register with the Ministry of Health and Welfare and whose test result certificates are accepted, and for which testing at time of import is omitted), and introduced the Pre-certification System for Imported Food, etc. (under which foods, etc. that is ascertained by the Ministry of Health and Welfare, to be compatible with the Food Sanitation Law and their manufacturers are registered with the Ministry of Health and Welfare through the exporting country's government, and testing for the foods, etc. at the time of import is omitted) in March 1994.
It is expected that this system will be used widely and more widespread foreign test results will be accepted.
Therefore, the government should continue efforts to publicize these systems, in particular, by holding meetings with various countries so that registration for the Pre-certification System can be made quickly.
When doing so, based on the present complaint, the opinions and requests of concerned parties should be heard concerning which imported foods from which countries the systems should be used for more extensively and the necessary measures promoted taking this into consideration.
(2) Regarding mineral water imported from the EU Countries, since EU standards for microorganisms are almost consistent with Japanese standards, the ministry concerned has simplified the documents required to be presented at the time of import, based on an agreement between the governments of Japan and the EU.
This is a positive measure and the system should be further publicized and microorganism standards of other countries which export mineral water to Japan and wish to receive similar treatment should be checked. If their standards are found to be compatible with Japanese standards, similar agreements with those countries should be concluded.
(3) The ministry concerned has indicated that it is possible to use prior test results when the same product is being imported by the same importer.
(4) Quarantine stations throughout the country should be advised in writing by April 1995 to post a list of documents which must be presented to quarantine stations when importing mineral water in locations visible to importers, and to distribute such a list if requested.
2. Pharmaceuticals
2-(1) Simplification of approval procedures etc. for in-vitro diagnostics
1. Complainant: European Business Council, German Embassy
2. Ministry concerned: Ministry of Health and Welfare
3. Complaint:
According to the Pharmaceutical Affairs Law, when manufacturing and importing drugs or medical instruments, approval to manufacture (import) and license to manufacture (import generally) is required for each product.
In-vitro diagnostics belong to diagnostic drugs used in clinical tests and are used to detect or measure substances from samples taken from humans.
Although the approval and license are also required for manufacturing and importing of in-vitro diagnostics as other drugs, approval and licensing procedures for them are being simplified through cabinet ordinances, ministerial ordinances and notices.
The complainants state that since in-vitro diagnostics and medical instruments used with them are not regulated as drugs or medical instrument in many European countries, additional costs and are required when they plan to sell in-vitro diagnostics and medical instruments use with them developed in Europe in Japan, because of such Japanese regulation additional costs and time are required. Therefore they raised the following problems:
(1) The Pharmaceutical Affairs Law should be amended to place in-vitro diagnostics and medical instruments used with them in a separate category to simplify their handling in a basic and systematic way instead of the current system of partial simplification of procedures through cabinet ordinances, ministerial ordinances and notices.
(2) Further, even during this period, approval (licensing) procedures (requirements) should be simplified under the current system.
4. Results of deliberation:
It goes without saying that in-vitro diagnostics and instruments for them are used to diagnose diseases and establish treatment methods and that it is important that they be safe, of good quality, and used appropriately. However, they are different from other drugs and medical instruments since they are not used directly on the human body and the most important consideration is their function (efficacy). Given these characteristics, the concerned ministry has streamlined approval procedures by simplifying the documentation required to be attached and by shortening standard clerical processing time through cabinet ordinances, ministerial ordinances and notices and will continue to simplify procedures as much as possible. Where medical instruments used with them is concerned, the ministry is also studying eliminating approval procedures, except for new equipment.
In connection with the study of this question, a draft EU Committee order is being studied, which establishes a third category separate from drugs and medical instruments for in-vitro diagnostic products while the main European countries producing in-vitro diagnostics currently regulate these in various classifications. This difference in classification of such products in Japan and in Europe and the United States is behind this complaint. Therefore, it is essential in order to improve market access in this area to make the practical burden for approval be similar to U.S. and European levels by international harmonization of the system, while ensuring the function of the in-vitro diagnostics in question. The following measures are needed:
(1) The ministry concerned is taking steps to simplify approval procedures while ensuring the function of in-vitro diagnostic drugs. In this process, the gradual preparation of standards for in-vitro diagnostics, in consultation with the concerned parties including the complainants, and the establishment of the range of in-vitro diagnostics for which approval is not rewired and other measures, should be considered and implemented at early date as possible under the condition that necessary function of in-vitro diagnostics is ensured, so that the actual clerical burden in connection with approval examination is brought to U.S. and European levels. Regarding the question raised of establishing a separate classification from drugs and medical instruments for in-vitro diagnostics, the systems used in Europe and the United States will be studied to contribute to the consideration of above-mentioned measure.
It is expected that promoting these measures, together with the ministry's already established policy of not requiring approval for in-vitro diagnostic medical equipment except for new equipment, will be found satisfactory by the complainants.
(2) In order to simplify approval (license) procedures (requirements) further under the current system, the following measures should be taken immediately, taking into consideration the complaint raised.
1) When approval examination for in-vitro diagnostics takes place, depending on the product, this is sometimes subject to deliberation by or consultation with the Central Pharmaceutical Affairs Council, or documentation on test results from the National Institute of Health Institute must be attached. Criteria are currently established for conditions under which products are subject to deliberation by or consultation with the Central Pharmaceutical Affairs Council, or for which tests must be requested from the National Institute of Health, and some categories are given as examples. However, because complainants have mentioned that there are cases where it is difficult to know beforehand whether a product falls in the criteria, standards should be further clarified during FY1995, in consultation with the complainants, and the categories affected listed as far as possible and announced.
2) One of the requirements for a license to manufacture (import) drugs is that each manufacturing plants (import business office) establishment have a supervisor (pharmacist), and that when biological products are handled there be a separate supervisor with knowledge of microbiology (when in-vitro diagnostics are handled, there should be a separate supervisor with experience as a pharmacist). In cases where in-vitro diagnostics are handled, given their characteristics, the requirement for separate supervisors for biological and non-biological products should be simplified during FY1995 so that one pharmacist may assume both duties.
3) Data on stability tests are required to be attached when application for approval of in-vitro diagnostics is made. The ministry concerned will grant approval even in cases where the established validity period is under six months, if there are rational reasons for this. The notices concerning this should be amended during FY1995 to make it clear that periods shorter than six months are acceptable. When this is done, the meaning of "rational reasons" should be clarified as far as possible.
4) The standard clerical processing period for approval for in-vitro diagnostics is six months. Because this is considered by other countries to be a kind of promise, in order to complete the process, from receipt of application to actual delivery of the approval certificate to the applicant, within a six-month period, clerical process will be improved, with applications on floppy disk scheduled for introduction in FY1995, a computer on-line system to be set up between the Ministry and each prefecture, and others.
2-(2) Abolition of handling health foods made from natural herbs as drugs
1. Complainant: American Chamber of Commerce in Japan
2. Ministry concerned: Ministry of Health and Welfare
3. Complaint:
Under Pharmaceutical Affairs Law, "drugs" are defined as:
* substances included in the Japanese Pharmacopoeia
* substances used for diagnosing, treating or preventing disease in humans or animals
* substances intended to have an effect on the bodily structure or function of humans or animals.
From the viewpoint of clearly distinguishing between drugs and foods and of controlling drugs not approved or permitted, the Director of the Ministry of Health and Welfare's Pharmaceutical Affairs Bureau has issued a list setting out standards for the scope of drugs and giving specific examples of ingredients.
In order to manufacture, import or sell substances classified as drugs, under the Pharmaceutical Affairs Law it is necessary to obtain approval to manufacture (import) and permission to manufacture (import and sell) these.
The complainant states that health foods made from 100% natural herbs which are sold in other countries as foods are regulated under the Pharmaceutical Affairs Law because they are handled as drugs in Japan and raises the following complaints because this in effect prevents their sale.
(1) That the scope of natural herbs which can be sold as foods be expanded
(2) That some natural herbs are handled as drugs when they are sold in capsule or tablet form even though they can be sold as foods in other cases, and that all such herbs, regardless of format, should be allowed to be sold as foods.
4. Results of deliberation:
The ministry concerned is undertaking a gradual review of its list concerning which substances should be classified as drugs, given changes in consumers' attitudes toward drugs caused by diversification of the daily diet, changes in the use of foods as drugs and others. Taking this complaint, which points out differences in the systems of other countries in terms of scope of drugs, into full consideration, access of products which are already distributed as foods in other countries to the Japanese market should be facilitated.
Doing this will necessitate decisions on all individual ingredients, and given the complaint received, views should be exchanged with the complainant at an early date, so that a solution satisfactory to the complainant concerning handling of the products, which the complainant will indicate, involved can be reached as quickly as possible.
2-(3) Simplification of approval and licensing procedures for proprietary drugs
1. Complainant: American Chamber of Commerce in Japan
2. Ministry concerned: Ministry of Health and Welfare
3. Complaint:
The Pharmaceutical Affairs Law stipulates that the manufacturing or import of drugs shall generally require approval to manufacture (import) and license to manufacture (import) each product.
Approval standards for proprietary drugs, which can be bought at pharmacies without a doctor's prescription, are drawn up by drug classes, for cold remedies, pain killers and anti-pyretics and so on, and the authority to approve products within the approval standards is delegated to prefectural governors.
The standard clerical processing period for proprietary drugs is 10 months, which is shorter than that for prescription drugs (18 or 24 months). Since examination of products meeting approval standards can be standardized, the clerical processing period is even shorter.
The following complaint was made: In Japan, excessive time is required for procedures, since even those proprietary drugs which meet approval standards must gain approval and license as drugs, and therefore the competent authorities should study adopting a reporting system like that in use in the United States or a similar system.
4. Results of deliberation:
According to the ministry concerned, approval standards for proprietary drugs are general guidelines of examination to secure its transparency, and approval examination of ingredients, quantity, efficacy, and specifications, etc. must be carried out for each product to in order to ensure its quality efficacy and safety.
However, because foreign businesses have complained that application procedures to receive approval and license as drugs take time, in order to improve market access in this area, approval and license procedures need to be simplified as much as possible, with thorough reference to systems in various countries, to reduce the clerical burden on applicants, and the time required for approval and license need to be shortened as much as possible.
The ministry concerned will streamline the documentation required for approval applications and will simplify and speed up procedures for approval and permission as follows during the current fiscal year and during FY1995.
(Measures to be taken in FY1994)
* Introduction of the division licensing system
Under this system, approval and license for each product will no longer be required if delegated manufacturers have a division license for corresponding manufacturing process
* Promotion of standardization of ingredient specifications, etc.
Standardized specifications for ingredients contained in drugs will be set out and successively incorporated into specification manuals, to make it possible to simplify the documentation needed for approval applications. For ingredients whose standardization is included in the specification manuals, approval application for partial change will no longer be required if the changes are made within the standardization specifications for the ingredient in question.
(Measures to be taken in FY1995)
* For drugs belonging to any of the pharmacotherapeutic categories whose approval standards are prepared, approval authority will be delegated to the prefectural governors.
Approval standards for external hemorrhoid preparations will be set out in FY1995
* Authority to license manufacturing and import will be delegated to the prefectural governors.
Authority will be delegated, except for manufacturing of vaccine etc.
* An application examination system by floppy disk will be introduced
* Standardization of ingredient specifications will be promoted
The government should make efforts to bring time and costs needed for approval and licensing procedures to a level similar to that of other countries by promoting the above measures.
3. Manufacturing and related areas
3-(1) Acceptance of country of origin certificates by intermediary exporting countries relating to the import of silk fabrics
1. Complainant: German Chamber of Commerce in Japan
2. Ministry concerned: Ministry of International Trade and Industry
3. Complaint:
Since 1976 the Government of Japan has concluded volume quotas for imports of silk fabrics in the bilateral agreements with China and Korea, two of the main producing areas. From the viewpoint of making these bilateral agreements effective, and to prevent falsification of country of origin, country of origin certificates issued by official organizations in the country of origin are checked at the customs in case of silk fabrics imported from the EU and some other countries.
The complainant believes that this checking system makes it possible to determine the source of the imports that is regarded as one of the corporate secrets, and that country of origin certificates issued by the exporting country should be accepted.
4. Results of deliberation:
As the Ministry has been studying the EU regulations concerning unified country of origin, it has been made clear that in the EU, country of origin certificates issued by the non-producing countries are treated in the same way as those issued by the producing countries.
Accordingly, it is decided that necessary measures will be taken by the end of this fiscal year to enable silk fabrics, as long as they are produced in the EU to pass through the Japanese Customs when they are accompanied by country of origin certificates issued by official organizations in the non-producing countries within the EU.
It is considered to be consistent with the EU unification to take measures which are designed to enable imports from the EU countries to pass through the Japanese Customs when they are accompanied by the country of origin certificates issued by official organizations in the non-producing EU countries, and therefore, such measures are regarded as appropriate in facilitating further market access. It is expected that this step will satisfy the request made by the complainant.
3-(2) Establishment of classification standards for X-ray film
1. Complainant: German Embassy
2. Ministry concerned: Ministry of International Trade and Industry
3. Complaint:
X-ray film for industrial use is used for non-destructive inspection such as, for photographing welded portions of gas pipelines.
In Japan, standard for X-ray film for industrial use is JIS (Japan Industrial Standards) K7618, which is harmonized with ISO (International Standardization Organization) 7004. However, neither JIS nor ISO specify classification standards for X-ray film, and the ISO/TC135 (technical committee on non-destructive testing) of the ISO is at present discussing classification standards to make international standards on classification standards.
The following complaint has been made.
In Japan, naming there is usually the custom in a deal that purchaser orders a product manufactured by a specific company by stating "XX or the equivalent" on specifications for X-ray film used in non-destructive testing.
However, since "the equivalent" is not defined, it is difficult for users (companies doing non-destructive testing) to clarify the definition of "the equivalent" under the situation that there are no classification standards in JIS, and in fact the stated product is used.
This makes it difficult for companies other than those named to enter the Japanese market of X-ray film for industrial use.
In Europe, X-ray film for industrial use is classified according to the newly-introduced EN-584-1 in European standards (December 1994. To become effective in March 1995.).
Accordingly, in Japan, JIS should make classification standards for X-ray film for industrial use.
4. Results of deliberation:
As part of measures to improve access to Japan's market for X-ray film for industrial use, the following measures should be taken to establish classification standards for X-ray film in Japan at an early date.
The ISO/TC 135 committee is at present discussing to make international standard for X-ray film. The ministry is planning to make active efforts to participate in the committee and even before international standards will be made up, to start work to harmonize JIS with the Draft International Standard which is based on the committee draft that is scheduled to be made by October 1995. By expediting this work, the ministry should make classification standards harmonizing with international standards in JIS, when international standard on classification standards will be made.
Further, in reference to the complaint that although European classification standards of X-ray film for industrial use were established in December 1994, the fact that Japan has no classification standards puts foreign products into disadvantage condition in a deal. The ministry states that approximately 31% of domestic demanded (1993) are supplied by imported products and that foreign products have achieved sufficient access to Japanese market. However, given the complainant's assertion that foreign products are at a disadvantaged condition in a deal, the ministry should continue to exchange views, including discussions on possible ways of dealing with the situation, with concerned parties as necessary, in order to gain the understanding of the complainant.
3-(3) Changes to approval procedures for electric and electronic products
1. Complainant: Taipei Economic and Cultural Representative Office in Japan
2. Ministry concerned: Ministry of International Trade and Industry
3. Complaint:
To prevent hazards and defects due to electrical products of inferior quality, the Electrical Appliance and Material Control Law and related laws set out technical standards for electrical products, and products which do not meet such standards may not be manufactured or sold.
Electrical products are divided into Type A electrical products (282 items), which require approval (type permit) by the Minister of International Trade and Industry based on technical standards, and Type B electrical products (216) which require self-verification.
Where Type A electrical products are concerned,
(1) domestic or foreign manufacturers, after being registered by the Ministry as manufacturers, must have the products they are intending to manufacture and sell tested under the appropriate type classification at a testing organization specified by the Minister, and after obtaining type permit (in the case of foreign manufacturers, type approval) from the Ministry, must sell the products with specified labeling attached after the manufacturer verifies once more that they meet technical standards; or,
(2) importers must have the products they are intending to import and sell tested under the appropriate model classification at a testing organization specified by the Minister, and after obtaining type approval, must sell the products with specific labeling attached after the importer verifies once more that they meet technical standards.
For Type B electrical products, it is required that
(3) after reporting the start of manufacturing operations to the Minister, a domestic manufacturer must verify (self-verification) that the products intended to be manufactured and sold meet technical standards and sell them with specific labeling attached, or that
(4) after reporting the start of business operations to the Minister, the importer must verify (self-verification) that the products intended to be imported and sold meet technical standards and sell them with specific labeling attached.
The following complaint has been raised concerning these procedures.
First, the Electrical Appliance and Material Control Law and related laws are complicated and detailed, and since many documents are available only in Japanese, they are not easy for foreign businesses to understand. Accordingly, the complainant would like English versions of such publications as the "The Collected Electrical Appliance and Material Control Law and Related Laws," the "Manual for Application Procedures," the "Explanation of Technical Standards for Electric Products," and the "Adjudication Methods and Applications for Technical Standards for Electric Products." The Japan Electrical Products Testing Laboratory has held seminars for Taiwanese businesses, but it is not easy to understand the complicated Electrical Appliance and Material Control Law and related laws in such short briefings.
Second, the Japanese language must be used in application procedures for registration and type approval, but the use of English should be permitted as well, to lighten the burden on foreign businesses. In particular, the fact that manufacturer registration requires that the application for registration and floor plans of factories or business establishments be filled out in Japanese and that manufacturer's staff be present and give explanations in Japanese when the plant is inspected by officials from the Japan Electrical Products Testing Laboratory, are particularly onerous burdens.
4. Results of deliberation:
(1) Translating the related laws of the Electrical Appliance and Material Control Law into English would be a meaningful step from the viewpoint of the aim of the law; i.e. to prevent hazards and defects due to electrical products of inferior quality. Therefore, the ministry, with the cooperation of JETRO and others in translating the related laws of the Electrical Appliance and Material Control Law into English, has prepared and distributes the "English Guide to the Electrical Appliance and Material Control Law" and the "English Pamphlet on the Electrical Appliance and Material Control Law."
Where the related laws of the Electrical Appliance and Material Control Law are concerned, the Japan Electrical Products Testing Laboratory, with the cooperation of JETRO, has already translated the technical standards for 340 items out of 498 into English, and this material is available for a fee. This is a noteworthy step from the viewpoint of improving market access and furthering the understanding of foreign businesses regarding the Japanese system, and translation of the technical standards for the remaining items should be continued.
(2) Regarding seminars on the Electrical Appliance and Material Control Law sponsored by Taiwanese testing organizations, the Japan Electrical Products Testing Laboratory dispatched lecturers a total of eight times up to the last fiscal year and a total of four times in the current fiscal year. If Taiwanese sponsors of the seminars wish to extend the duration of seminars or otherwise present more detailed programs, the ministry is prepared to request the Japan Electrical Products Testing Laboratory to cooperate as far as possible.
(3) Regarding the use of English on applications for manufacturer registration and type approval of electrical products, the ministry's position is that such procedures are necessary to ensure safety of electrical appliances, and that since accurate, strict and rapid testing and adjudication are necessary, it is necessary to use Japanese on applications and that the use of any language other than Japanese cannot be allowed.
However, the possibility of allowing the use of English on applications for registration and type approval should be studied, given increasing internationalization, recognition of the role of English as an international language, and as a way of reducing the burden on foreign businesses.
In the case of Taiwan, the Merchandise Inspection Bureau of the Economic Department has concluded a cooperation agreement with the Japan Electrical Products Testing Laboratory concerning model testing for electrical products, and effective use of this scheme could lighten the applicant's language burden upon testing. The Merchandise Inspection Bureau of the Economic Department and the Japan Electrical Products Testing Laboratory are also planning to enter into a cooperation agreement concerning registration of businesses, which, if implemented, will lighten the burden regarding language at the time of plant inspections. Such measures should be taken quickly.
(4) The ministry is currently reviewing the system for ensuring the safety of electrical products. Namely, during FY1995, 117 items in Type A electrical products, including household appliances such as air conditioners, refrigerators, televisions and so on, will be transferred to Type B, and the reporting forms for Type B electrical products will be rationalized. In addition, the ministry's policy of transferring more products to the Type B classification. This will make it unnecessary for foreign manufacturers intending to export to Japan to apply for manufacturer registration and type approval for these electrical products. Further, the ministry intends to make the specifications of the Electric Appliance and Material Control Law compatible with those of the IEC (International Electromechanical Commission) within the next five years.
These measures are noteworthy from the viewpoints of the importance of producers/importers assuming responsibility for their products and of international harmonization of standards.
Efforts are also being made to create and establish a private sector third-party approval system, and bearing the present complaint in mind, the ministry should encourage the parties involved to make the system easy for foreign businesses to use as well.
4. Transport and traffic
4-(1) Acceptance of data from EU testing organizations in other than automobile-producing countries
1. Complainant: German Embassy
2. Ministry concerned: Ministry of Transport
3. Complaint:
Since 1975, the Ministry of Transport has designated ten automobile testing organizations within the EU as public testing organizations, and accepts test data obtained from these testing organizations in examinations for imported vehicles concerning compatibility of the standards. Since 1977, automobile inspectors have been dispatched abroad to carry out type certification testing at foreign automobile makers.
The complainant states that test data from the foreign testing organizations designated by the Ministry of Transport can be used only for type certification testing of automobiles produced in the countries where the testing organizations are located. Since this means that automobiles produced in countries without a specified testing organizations have to undergo the Ministry's own type certification testing, the complainant states that data from designated foreign testing organizations should be accepted for vehicles produced in any countries.
4. Results of deliberation:
Until now, test data from foreign testing organizations has been accepted only for vehicles produced in the countries where the testing organizations are located because the organizations are considered to be capable of vouching only for the accuracy of the test data produced there.
However, the Ministry has been studying the unified EU approval system which has been introduced gradually in the EU since 1993. Since this system is becoming established and because the EU Committee has undertaken to mediate in resolving any disputes if cases of manipulated test data arise, the Ministry has determined that treating the EU as a single country poses no problems. Amended directives have been issued and from the spring of 1995, data from designated testing organizations in other than producing countries within the EU will be accepted.
This measure is appropriate because it will facilitate foreign makers' access to the Japanese automobile market and because it is consistent with the movement of the EU unification.
4-(2) Relaxation of weight restrictions when freight containers are transported by road
1. Complainants: Australian Embassy, French Embassy, American Chamber of Commerce in Japa
2. Ministry concerned: Ministry of Transport, Ministry of Construction
3. Complaint:
ISO standards are the established international standards for freight containers. Widely used containers meeting ISO specifications are 20-ft containers with the gross weight limit of 24 tons and 40-ft containers with the gross weight limit of 30.48 t. These containers are transported by road by vehicles called semi-trailers.
The Road Law and related ordinances, etc. sets maximum gross weight limits for vehicles transiting roads, in order to preserve road structures and prevent traffic hazards. The maximum gross weight limits depend mainly on the strength of bridges and are set according to vehicle length and wheelbase (distance between the centers of the vehicle's front and rear axles).
Taking the importance of semi-trailers carrying freight containers in terms of international distribution into consideration, they are allowed to transit carrying heavier loads than ordinary vehicles, by permission of road authorities (referred to hereafter as transit permits), on some conditions, such as operating at low speed, to preserve road structures.
To ensure the safety of road transport vehicles, the Road Transport Vehicle Law and related ordinances, etc. sets a maximum gross weight and length for vehicles allowed to transit on roads, in consideration of the effect that this has on bridges etc. Maximum weight loads are also specified for each vehicle.
Regarding 20-ft containers, if dedicated vehicles developed recently to meet ISO standards revised in 1988 are used, it is possible to carry containers fully loaded to ISO standards. However, in the case of 40-ft containers, only those with a total weight of 24 tons may be transported by road; transit of 40-ft containers fully loaded to ISO standards is not allowed.
The 11th 5-Year Road Improvement Program (from FY1993 to FY1997) is currently being undertaken, and bridges on trunk roads are being strengthened.
The following complaints have been raised concerning weight restrictions on road transport of freight containers.
That is, containerization and integrated sea-land transport benefit both businesses and consumers by such forms as lowering in the form of lower prices for imports. Therefore, weight restrictions on road transport of freight containers should be relaxed because of the need to promote more containerization and integration of sea-land transport in Japan.
In particular, in the case of 20-ft containers, if newly-developed dedicated vehicles with a wheel base of 12.5 meters are used, fully loaded containers are allowed to transit, but the maximum load is restricted to 20.32 tons if vehicles with a wheel base of 10 meters, the type of vehicle used so far, are used. The newly-developed vehicles present the following problems:
1) operators bear a cost burden in having to replace vehicles in a short time;
2) forklifts are unable to go into the containers when loading, because the rear end of containers is ahead of that of trailers; and
3) the vehicle has relatively poor maneuverability because the wheel base is long. To remedy this situation, the complainants requested that the following measures be adopted.
(1) Where 20-ft containers are concerned, transit of containers fully loaded to ISO standards on vehicles with a wheel base of 10 meters should be allowed at the end of the 5-Year Road Improvement Program.
1) When doing so, the specifications for vehicles (axle weight, number of axles, chassis strength, etc.) for which this would be allowed should be clarified as soon as possible
2) Indications should be given concerning the extent of vehicle modifications needed to allow transit of existing vehicles with a wheel base of 10 meters when fully loaded.
(2) Regarding 40-ft containers, transit of fully-loaded containers should be permitted when the 5-Year Road Improvement Program is completed, and specifications for vehicles allowed to carry fully-loaded containers should be clarified as soon as possible.
(3) Information on road sectors where weight restrictions will be relaxed on completion of the 5-Year Road Improvement Program should be made available as soon as possible. Further, if possible, weight restrictions on roads with sufficient strength should be gradually relaxed, even partway through the 5-Year Road Improvement Plan.
(4) Road improvements to permit relaxation of weight restrictions should be carried out on main roads within major metropolitan areas along which many major customers are located, rather than on expressways linking urban centers.
4. Results of deliberation:
(1) Promoting integrated sea-land transport contributes greatly to efficient distribution, and from the viewpoint of international harmonization, freight containers meeting ISO standards should be allowed to transit fully loaded as soon as possible, on roads where there is major domestic distribution demand for transport by freight container.
Regarding 20-ft containers, the complainants state that vehicles with a wheelbase of 12.5 meters, which are currently allowed to transport fully loaded containers, are not convenient because of its inferiority of maneuverability, etc. Therefore, transport by other vehicles, including modified versions of those currently used for transporting 20-ft containers, with better maneuverability and so on, should be made possible.
Bridges on national expressways have been adapted by the concerned ministry to bear the passage of semi-trailers carrying ISO-standard fully loaded 40-ft containers. Furthermore, because of the spread of transport of international cargo, the Road Structure Ordinance was amended in November 1993; under this amendment, bridges to be built on other roads in the future will be strengthened, and existing bridges will gradually be strengthened as well. Doing so will permit the creation, by the end of FY1997, of a road network of important distribution routes capable of handling semi-trailers carrying fully loaded 40-ft containers, which will be allowed to transit with transit permits issued by road authorities. The ministry will also allow transport of fully loaded 20-ft containers on vehicles with a wheel base of 10 meters, when axle weight restrictions, etc. are met, on road networks capable of handling vehicles carrying fully loaded 40-ft containers.
From the viewpoint of allowing transit of fully loaded freight containers as soon as possible, transit of fully loaded containers should be allowed under the condition of acquiring the transit permits if a certain road networks can be established by securing detour roads and so on, even before the end of the 11th 5-Year Road Improvement Program.
Information on road networks where weight restrictions to be relaxed should be provided as soon as possible, to help related businesses in their operations.
(2) To support increased road transport of ISO-standard freight containers, the development and modification of vehicles for this purpose should be carried out smoothly.
For the convenience vehicle manufacturers and vehicle transport operators, the conditions which vehicles must meet to be allowed to transit carrying fully loaded containers should be clarified well in advance, through coordination by the concerned ministries and agencies, of the date when transit by vehicles carrying fully loaded containers will be allowed. At that time, the opinions of the complainants and of the Regarding transport of fully loaded 20-ft containers by vehicles with a wheel base of 10 meters, the concerned ministry maintains that for technical reasons, it is considered that the number of axles on semi-trailers should be increased from the current four to five.
The concerned ministry will also allow weight loads limit for vehicles with a wheelbase of 10 meters in current use to be amended by appropriate modifications, if this meets the security standards for road transport vehicles.
(3) The concerned ministry will carry out improvements to important distribution routes, such as roads linking national expressways and main container yards, within the 11th 5-Five Year Road Improvement Program. Regarding the decision on the specific roads to be improved, priority should be given to roads with major demand for transport of freight containers. When deciding which roads will be improved, the ministry will take into consideration roads where there is currently heavy transport of freight containers under transit permits.
4-(3) Abolition of restrictions on transportation ships built for export
1. Complainant: Taiwan Trade and Culture Representative Office
2. Ministry concerned: Ministry of Transport
3. Complaint:
To ensure the healthy development of Japan's international sea transport, the Temporary Shipbuilding Adjustment Law was adopted in 1953. Under this law, shipbuilders intending to build steel-hulled ships of overall gross tonnage of over 2,500 tons or over 90 meters in length for use on the DEEP seas or near seas must obtain a permit from Minister of Transport before beginning construction. Minister of Transport must grant permission for construction if there is no oversupply of ships in the navigating area or route for which construction of the said ship is intended, and if construction coincides with the standards set down by the law.
Regarding ships for use in near seas (general cargo ships with dead weight of under 12,000 tons, used to transport timber, plywood, miscellaneous goods, steel, etc.), because of the sharp decline in the import volume of log from the southern Pacific, which is the main cargo, and the resulting oversupply of ships, since 1972 the ministry has regulated shipbuilding based on the Temporary Shipbuilding Adjustment Law. Building of ships for export is allowed only when it is clear that the ships will be not used in Japan, and to verify this, the entity ordering the ship is required to declare in a written manner not to load or unload in Japan.
The complainant states that this restriction on the loading of cargo by foreign ships protects the interests of domestic ships and violates free competition, and should be abolished.
4. Results of deliberation:
Under current international economic conditions, Japan must take the initiative to maintain and strengthen the system of free competition by making more efforts to improve market access not only in the area of importation of goods but also in the area of service sectors including in the field of maritime transport. Further, in order to maintain economic vitality, by promoting deregulation, it is necessary to conduct a thorough review of economic regulations which restrict competition, and act in the direction of abolishing them in principle.
By making it impossible for ships built in Japan to load or unload cargo in Japan, the regulation mentioned in this complaint aim to limit free competition in the maritime transport sector. This is a problem. Further, considering Japan's superior global position as a shipbuilding nation and the fact that it is discriminative to apply such a regulation only to foreign ships built in Japan, it is natural for the complainant to request abolition of the regulation in question.
Additionally, this regulation has been in place for more than 20 years, but in view of the original purpose of the law on which this regulation is based, that is, to promote the healthy development of Japan's international maritime transport sector, efforts should be made to create a climate of active international competition instead. It is therefore inappropriate to continue such regulation restricting competition by reason of adjusting supply and demand.
With the above in mind, the restrictions making it impossible for foreign ships built in Japan to load or unload cargo in Japan should be abolished at an early date.
5. Construction
5-(1) Improvement of the inspection system for multi-story car parks
1. Complainant: German Embassy
2. Ministry concerned: Ministry of Construction
3. Complaint:
The structures and facilities of off-road car parks (car parks for general public use) designated in the Car Park Law and having a vehicle parking surface of 500 square meters or more, are set down in the Building Standard Law and other ordinances. In addition, the regulations of Clause 11 of the Car Park Law states that the technical standards applied shall be those set out by the Building Standard Law.
Since off-road car parks using special equipment like the vertical circulation or double-tier method do not come under technical standards, car parks with standards of the equivalent effect as the above-mentioned standards may not be used for general public use unless they are approved by the Construction Minister. Regarding clerical work for examination pertaining to such approval by the Minister, the Multi-story Car Park Industry Association has been requested to carry out safety examinations of special equipment from the technical viewpoint since 1965.
The following complaints have been made concerning technical examination for approval by the Minister.
First, regarding examinations by the Multi-story Car Park Industry Association, the complainant is concerned that since the Examination Committee includes engineers from companies competing with the applicant, examinations may not be impartial and that competitors' employees involved in the examination may use technical data presented during examination for their own companies' benefit, the system should be changed so that competitors' employees cannot influence authorization.
Further, since it is difficult to build structures like multi-story car parks in Japan exclusively for testing purposes, inspections of similar structures already built in foreign countries carried out according to Japanese standards should be allowed, and that in such cases, TUV (Technical Inspection Association) Rhineland, which is recognized worldwide for technical expertise and which has an office in Japan, should be asked to carry out technical examinations.
4. Results of deliberation:
(1) Since the ministerial approval which is the subject of this complaint is a government certification, efforts should be made to carry out examinations more impartially.
Regarding technical examinations by the Multi-story Car Park Industry Association, since only a limited number of people have the required technical expertise, the Ministry has included persons from private sector companies on the Examination Committee. Regarding the impartiality of examinations, the Ministry has issued written directives to the Multi-story Car Park Industry Association. According to the Ministry, decisions regarding examinations have not been affected by competing companies and the system currently operates fairly. However, to avoid arousing concerns like those mentioned by the complainant, the examination system will be improved during FY1995, such as by making the Committee set up a committee composed of neutral academic experts and so on.
(2) Regarding special equipment for multi-story car parks, in view of the cost which may be involved in installing prototype equipment in Japan for inspection purposes, it may be practical in some cases to carry out inspections in foreign countries where the equivalent equipment is already built. In these cases, the Ministry will consider dispatching members of the Examination Committee from the Multi-story Car Park Industry Association abroad to carry out on-site inspection, if the applicant so requests. This type of flexible response measures is actively taken to facilitate the entry of high-quality foreign products.
(3) The Ministry will consider the use of foreign inspection organizations for technical examinations of multi-story car parks, if the inspection organization in question has sufficient experience and ability and if there is concrete demand for this among foreign producers. The Ministry will begin by giving TUV's Japan office an opportunity to provide a detailed description of its study system, and will carry out an on-site inspection at an early date in FY1995. This is a positive step from the viewpoint of facilitating market access and a specific study of this matter should be undertaken soon.
5-(2) Improvement of the certification system for wallpaper
1. Complainant: French Embassy
2. Ministry concerned: Ministry of Construction
3. Complaint:
According to the Building Standards Law, interior finishing materials for rooms and evacuation routes in special buildings, large-scale buildings, etc. must be noncombustible, in order to prevent the spread of fire in the early stages and to secure safe evacuation. Interior finishing materials like wallpaper and so on used in such buildings must be certified by the Minister of Construction as noncombustible material, quasi-noncombustible material or fire retardant material (referred to hereafter as "fire preventive material"), depending on the type and size of building. Certification of these fire preventive material requires testing, for each classification, for flammability, cracking, and emission of poisonous gases after application of a specified amount of heat, according to testing methods set out by Notification of the Ministry of Construction in order to evaluate their performance as fire preventive material.
There are two types of certification: Individual certification and General certification. For Individual certification, each type of product undergoes the tests specified by the Ministry of Construction, and each receives individual certification. For General certification, on the other hand, the Wallcoverings Association of Japan, an industry association, receives comprehensive certification depending on material, installation method and so on for five types of products classified according to their main constituent materials, for example, fabric, vinyl, etc, and for wallpaper in general ('special wallpapers') which belongs to none of the foregoing categories. In that case, individual makers and sellers, by undergoing verification by the Association that each type of product meets certification requirements and the required fireproof performance evaluation testing, can obtain certification for each type of product and be exempted from some of the testing required by Notification of the Ministry of Construction notices.
The following complaints were received concerning certification procedures for wallpaper as fire preventive material.
Since French approval of wallpaper as fire preventive material cannot be accepted in Japan, the wallpaper must be re-tested in Japan. It should be possible for products tested by approved testing organizations to receive certification as fire preventive material in Japan before shipment. Therefore, French testing organizations should be approved as organizations testing compatibility with Japanese standards.
Further, polyester-based materials, which are widely used in Europe, should be eligible for General certification. Additionally, the standard width of French wallpaper is 70 cm, which hinders imports into Japan because it does not coincide with Japanese certification standards.
4. Results of deliberation:
(1) The concerned ministry accepts performance test data from foreign testing Laboratories based on the Japanese Building Standard Law as data used in obtaining certification as fire Preventive material in Japan. Additionally, to harmonize with international practice, an "Guidelines for Designating Testing Laboratories" was adopted on October 21, 1994, which follows international standards (ISO Guide 25) concerning conditions for designating beforehand the testing laboratories from which test data will be accepted. Accordingly, beginning April 1,1995, French testing laboratories meeting the requirements set out in the above-mentioned Guidelines may be designated as testing laboratories beforehand, making it possible to accept their test data when fire preventive material are certified.
Acceptance of foreign test data is very important from the viewpoint of improving market access, and in order to conduct designation of testing organizations smoothly, active efforts should be made to publicize the changes in this system.
(2) In order to introduce a system of mutual recognition of performance evaluation carried out by certification organizations in the counterpart country, the concerned ministry is discussing France, the United States, Canada, the EU, etc. In the case of discussions on mutual recognition with France, an agreement was signed to promote mutual recognition relating to building standards in May 1994, and discussions on specific items for wallpaper etc. took place in mid-January 1995.
Introduction of the mutual recognition system should be actively supported in order to improve market access.
(3) The ministry explained to the complainant that even in the case of wallpaper made mainly of polyester, if it can be ascertained that the product in question meets the requirements for 'special wallpapers', a wallpaper category for which constituent materials are not designated, this wallpaper can be certified under specified certification using simplified procedures.
(4) Since wallpaper size generally has no connection with fire preventive properties, wallpaper can be certified as fire preventive materials, including General certification, even though its width is 70 cm, and the ministry explained to the complainant that this particular complaint was based on a misunderstanding.
(5) The ministry is currently consulting with the organizations and so on improved in General certification, to further streamline procedures for General certification by the end of FY1994. To provide information on the certification system for foreign wallpaper manufacturers and importers, the ministry will also produce a pamphlet in English describing Japanese building standards concerning wallpaper and certification procedures.
6. Tertiary industries and related area
6-(1) Liberalization on representation of parties by foreign lawyers in international arbitration
1. Complainants: European Business Council, German Embassy
2. Ministry concerned: Ministry of Justice
3. Complaint:
Article 72 of Japan's Lawyer Law forbids anyone but lawyers from engaging in legal work in general as a business (in a repetitive and continued fashion) for the purpose of receiving remuneration. Since acting as a representative for the parties in procedures for international commercial arbitration also falls under this prohibition, persons with foreign legal qualifications are not allowed to undertake this work. However, persons with foreign legal qualifications may engage in certain legal work in the laws of their country of primary qualification if they receive approval from the Minister of Justice and register with the Japan Federation of Bar Associations (JFBA). In this case, they are also allowed to act as representatives in international commercial arbitration which is governed by the law of their country of primary qualification.
With the increase in legal work under both Japanese and foreign laws, the complainant believes that this restriction should be abolished and that foreign lawyers should be allowed to act as representatives in international commercial arbitration for the efficiency, better service, etc.
4. Results of deliberation:
In April 1993, the OTO Advisory Council presented the following views to the government on the subject of deregulation on the work of gaikokuhou-jimu-bengoshi, including that which is the subject of this complaint.
With the globalization of world trade and increasing interdependence in trade and investment, Japan needs to review its systems and restrictions to harmonize them with those of the international community, not excepting legal services. Corporate activities have also become more international in scope, and legal matters involving both Japanese and foreign law will continue to increase. It will thus be necessary to meet users' needs for better service by diversifying the types of legal services available and promoting competition. Therefore, logical conclusion acceptable to the international community must be reached as soon as possible.
With this in mind, the Study Commission on the Issue of Foreign Lawyers, held by the ministry and the JFBA, recommended, in September 1993: "In order to respond to the demands of our era which require the development of a more sophisticated international commercial arbitration system in Japan, serious consideration be advanced rapidly among agencies concerned with an aim to amend the system toward further liberalization of representation in international commercial arbitration."
Accordingly, the Study Commission on the Representation of Parties in International Arbitration, held by the ministry and the JFBA, is currently studying directions for liberalization, and will take the necessary measures based on the results of the Study Commission. The Study Commission has been meeting once a month since June 1994.
These are the steps which have been taken so far, and the Study Commission should reach conclusions with internationally acceptable logic at an early date, and based on these conclusions, the necessary measures, including adjustment of related laws, should be taken as soon as possible.
6-(2) Review of regulation on premium offers
1. Complainant: American Chamber of Commerce in Japan
2. Ministry concerned: Fair Trade Commission
3. Complaint:
The intent of regulation on premium offers is to ensure that there are no impediments to fair competition through escalation of competition by means of premiums, which causes the means of competition to shift from price and quality to provision of fancy premiums and distorts appropriate selection of goods by consumers. To this end, the following regulations are in effect, in accordance with the Anti-monopoly Act and its special law, the Premiums and Representations Act, and various notices based on these laws:
(1) At the regulations based on the Premiums and Representations Act
At the Premiums and Representations Act (Act Against Unjustifiable Premiums and Misleading Representations, 1962), "premiums" are defined as the "economic benefit" of objects used as "a means of inducing customers," "provided in connection with a transaction concerning commodity or service which the firm supplies." "Price reduction", "after-sales service" and "attached equipment" are excluded from premiums.
1) Closed lotteries
The maximum amount and total amount of premiums offered by lotteries (closed lotteries) (drawings, etc.) is set according to the "Notification Concerning Restriction on Lotteries on Prize Competitions (Notice No. 3, 1977)."
2) Premiums offered to general consumers not by lotteries
The maximum amount of premiums offered to general consumers not by lotteries is set according to the "Notification Concerning Restriction on Premium Offered to General Consumers (Notice No.5, 1977)."
3) Restrictions by separate industry
Notices are in effect which set restrictions on premiums in 29 individual industries, based on conditions in the industries concerned.
4) Fair Competition Codes
Regarding premiums or representations, businesses or trade associations may, with the authorization of the Fair Trade Commission, set fair competition codes, to prevent unjustifiable inducing customers and to ensure fair competition. Some regulations by Notification on Premium Offered to General Consumers and some of notification restricting premiums by separate industry have regulations such as "within the scope of normal business practices". If fair competition codes pertaining to premiums are set out, the content of the codes must be taken into consideration.
(2) Premium restrictions based on the Anti-monopoly Act
1) Regulations on department stores
In principle, department stores (large-scale retailers) are forbidden to offer premiums conditional to the purchase of their goods (Notification No. 7, 1954).
2) Open lotteries
The maximum amount for provision of economic benefit through drawings using advertisements and other methods without connection with transactions (open lotteries) is set at 1 million yen (Notice No. 34, 1971).
The complainant asked for a review of regulations, believing that, compared to mass media advertising, offering premiums is a useful means for foreign companies and small firms to compete against large firms because it is a low-cost method that makes varied sales promotions aimed at specific targets possible, and that liberalization or relaxation of regulation on premium offers will, therefore, stimulate competition and bring many benefits to consumers, producers and retailers.
The following specific issues were mentioned.
(1) Since the definition of "premiums ","open lotteries" and "closed lotteries" is complicated, these restrictions lack transparency. These should not be linked by expressions like "actions in connection with to a transaction" or "a means of inducing customers" but should be linked to the presence or absence of "proof of purchase."
(2) Maximum limits on premiums were quite restrictive even at the time they were originally set. Considering subsequent inflation and other factors, in actual terms these limits are even more restrictive in the light of current economic conditions, and the maximum premium amount should be increased ten-fold and the percentage value of maximum premiums increased two- or three-fold.
(3) The fair competition codes set out by firms or trade associations deprive companies newly entering the market of a useful competitive tool. It should be made clear that associations have no authority to impose the codes on non-member companies. Alternatively, the fair competition codes should be abolished or their content raised to the level of general regulations.
(4) Attaching lists of requirements for entry to products or displaying them in-store should be permitted as means of open lotteries, and means for consumer participation in the most effective in-store sales promotion activities should be diversified.
(5) The following measures are needed to liberalize other sales promotion activities:
1) Rules should be amended to facilitate joint sales promotion activities by more than one company from different industries.
2) Sales campaign with premium offers by department stores, currently prohibited in principle, should be liberalized.
3) Offering of "fantasy prize" premiums of very large sums should be allowed occasionally.
4) Because of various fair competition codes, samples and other trial products are restricted to small items. However, firms should be allowed to provide products themselves as samples, without having to produce sample products especially for that purpose.
4. Results of deliberation:
Offering of premiums (including open lotteries. Ditto throughout) is an effective sales promotion method which makes it possible to promote new products to specific targets at low cost, compared to mass media advertising, and is a useful means of stimulating competition among companies.
The Fair Trade Commission will review of its Notifications concerning premiums offers by department stores, and the maximum limit on amounts of premiums in each category during FY1995 according to the conclusions that will be presented a study group of academic experts at the end of March 1995 concerning review and clarification of regulations on premiums.
When doing so, considering the changes in socioeconomic conditions since specific restrictions were established, a basic reevaluation of the need for regulation will be undertaken, with the aim of promoting fair competition. Specific contents of the review should be indicated, with a view to making regulation clear and keeping restrictions to a minimum, within the scope of necessity, and should be implemented as soon as possible during FY1995.
In connection with the issues raised in this complaint, the following specific measures are necessary:
(1) The definition and interpretation of premiums, including the distinction between open and closed lotteries, should be clarified and regulations made more transparent.
(2) As considerable time has passed since many of the specific regulations on maximum limits to premiums were set, these limits should be reviewed, taking intervening changes in socioeconomic conditions into consideration.
(3) In addition to clarifying that industry association cannot extend the fair competition codes to companies which do not participate in the codes, the content and application of fair competition codes should be reviewed.
(4) Sales campaign with premium offers by department stores should be liberalized and the offering of premiums within the scope of general regulations allowed.
The question of undertaking a review of the other items mentioned in this complaint should also be studied.
6-(3) Deregulation of the restriction of the number of races open to foreign horses and horse owner registration of persons residing overseas by the Japan Racing Association
1. Complainant: Australia/New Zealand Chamber of Commerce
2. Ministry concerned: Ministry of Agriculture, Forestry and Fisheries
3. Complaint:
In accordance with the Horse Racing Law and the Japan Racing Association Law, the Japan Racing Association (JRA) holds horse races and registers horse owners and racehorses.
The JRA sets its basic and related policies for horse racing programs as part of its operations plan for the next fiscal year, drawn up around October each year. As of 1995, for foreign-bred horses, the ratio of races in which horses, which have never raced abroad (mixed races), may participate is set at 47%, and horses which have raced abroad may participate in six races (international races). Regarding expanding the number of races in which foreign-bred horses may participate, in response to demands by racing fans, to contribute to the improvement of domestically-bred horses, and because of increased internationalization, in November 1992 the JRA adopted and announced a plan to liberalize racing participations (to raise the ratio of mixed races to 55% and to hold 12 international races by 1999, the final year of the plan). The expansion each year has been made in accordance with on this plan.
As far as the issue of registration of horse owners is concerned, owners are subject to a strict adjudication process to ensure absolute fairness in horse races, and they are thereafter monitored for criminal activity and so forth. The JRA registers only persons residing in Japan as horse owners with the reason that the examination and monitoring of persons residing abroad is difficult. Horse owner registration of foreign nationals residing in Japan is handled in the same way as for Japanese citizens.
The complainant believes that such measures by the JRA place unfair and unnecessary restrictions on the importation of foreign-bred racehorses into Japan and on opportunities to race in Japan. The complainant is aware that the JRA has adopted a liberalization policy but believes that this has experienced setbacks in the study process, and that additional relaxation of regulations should be undertaken within an appropriate period.
4. Results of deliberation:
International contacts among sponsors from various countries are growing in the field of horse racing, and Japan is expected to take various measures in response, from the viewpoint of international harmonization of our society and economy.
The JRA should hold discussions with the complainant concerning racing restrictions on foreign-bred horses at an early date and should make efforts to gain the understanding of the complainant regarding internationalization measures.
Regarding registration of horse owners, the JRA should solicit opinions from various related foreign organizations, etc. including the complainant, study the systems in use in various countries, and consider at an early date a method of examining persons residing abroad equally appropriate to that used for persons residing in Japan. The JRA should discuss this matter with the complainant and endeavor to obtain the understanding of complainant.
From the viewpoint of taking measures to internationalize horse racing, the Ministry should encourage the JRA to hold talks with the complainant and to study the issue of horse owner registration of persons residing abroad in the immediate future.
7. Import procedures
7-(1) Extension of work hours for Customs offices and other bodies relating to import processing procedures
1. Complainant: Keidanren
2. Ministry concerned: Ministry of Finance, Ministry of Agriculture, Forestry and Fisheries, Ministry of Health and Welfare
3. Complaint:
Customs and inspection procedures based on other laws (food inspection, animal quarantine, plant quarantine) for imported goods are based the Customs Law, in the case of Customs procedures, on the Food Sanitation Law, in the case of food inspection, and on the Domestic Animal Infections Disease Control Law and the Plant Protection Law respectively, in the case of animal and plant quarantine.
Hours of operation for Customs, quarantine stations, animal quarantine stations and plant quarantine stations are from 8:30 a.m. to 5:00 p.m. Mondays to Fridays. Where Customs is concerned, the Customs Law makes provisions for overtime customs service: i.e. extended hours of operation upon application, and under this system, Customs terminal are on duty 24 hours a day, seven days a week at Narita Airport, Kansai Airport and the Tokyo Air Cargo Terminal. In quarantine inspections, hours of operation may be extended upon application. Regarding import-related procedures based on other laws, only at Kansai Airport service is available 24 hours a day. At other airports and ports, hours are extended as necessary, in accordance with import volume, etc. For example, inspection services are available at Narita until 9 p.m. seven days a week.
The following complaint has been received concerning these operations.
Regarding Customs, when goods are handled outside of regular working hours, a prior application must be made to this effect and the specified overtime customs service fees paid. To promote imports, the system should be changed so that Customs inspection is available 24 hours a day without having to apply for extension of regular working hours. Further, overtime customs service fees for extended working hours should be lowered as much as possible.
Regarding inspection procedures under other laws, there is no system for extending working hours upon application, and it is impossible for goods to be inspected at night. Accordingly, hours during which food inspection and animal and plant quarantine services are available should be extended at major airports and ports, to permit imports 24 hours a day. At the very least, a system similar to that for Customs of extending working hours upon application should be introduced.
4. Results of deliberation:
Regarding the hours during which import procedures, the link between international and domestic distribution, are performed, an appropriate response to airport and port operations and user demand is necessary. With regard to goods arriving by air in particular, it is important to improve the system so that import procedures can be completed soon after the goods have arrived at the airport.
However, the present situation at major airports is that the bodies handling import procedures are not processing goods arriving on the last flight of the day, so that in some cases importers must wait until the next day to complete import procedures, or schedule the arrival of goods to take place the following day. Therefore, in order to smooth importation of such goods, the systems in use in all bodies handling import-related procedures should be improved with demand in mind.
Where Customs is concerned, the concerned ministry is studying extending the working hours of Customs staff at Nagoya and Fukuoka airports, based on demand for after hours processing and staff availability. This will increase convenience for users, including making it possible to present applications for after hours processing outside of regular working hours and the necessary measures should be taken soon.
As for overtime customs service fees, the ministry concerned reviewed these, including the number of standard applications, in January 1994. Further revisions should be undertaken as necessary, taking the clerical processing situation into consideration.
Regarding inspection procedures based on other laws, services are available on a round-the-clock basis only at Kansai Airport. At other airports, there is no system in place to process goods arriving on the last international cargo flight of the day. Accordingly, the issue of increasing staff and extending working hours at Narita, Nagoya, Fukuoka and other major airports to make possible inspection of goods aboard the last international cargo flight of the day should be considered, taking administrative efficiency into mind.
7-(2) Simplification of post-clearance examination of the Consumption duty on duty-free imports, etc.
1. Complainant: Keidanren
2. Ministry concerned: Ministry of Finance
3. Complaint:
Under the rules of the Consumption Tax Law, the tax assessment standard for consumption tax base on imported goods is the price subject to Customs duty plus the amount of Customs duties and other domestic consumption taxes except the consumption tax.
At the time of import declaration, in cases it is inappropriate to make the price subject to Customs duty only the price prescribed in the invoice plus transportation and insurance fees because ingredients have been supplied free of charge, or a special relationship, for example a parent company-subsidiary relationship, between the seller and the buyer in an import transaction affects the transaction price, a valuation declaration must be presented which shows the base for calculation of the price subject to Customs duty. Since October 1993, for imported goods Customs duty is zero or on which a specific duty is assessed, the requirement of submitting a valuation declaration was abolished, as part of measures to streamline clearance. However, at Customs, even if Customs duty is zero or a specific duty is assessed, based on the Consumption Tax Law, post-clearance examination of the items to be declared in the consumption tax is carried out as necessary to guarantee that import declarations are made appropriately. When this occurs, the related documents must be submitted to permit verification of whether the price subject to Customs duty was calculated appropriately.
The following complaint was raised in connection with the procedure.
Since importers are required to prepare all the documents necessary for calculation of the price subject to Customs duty when a post-clearance examination is to be made, eliminating the requirement to submit a valuation declaration when import declaration is made has not lightened the clerical burden in actual terms. Accordingly, where the consumption tax on imported goods is concerned, if the amount of tax to be paid at the time of import and the amount of tax to be paid when the imported product is sold are totaled, this ensures that the amount which is the selling price, multiplied by the tax rate, is paid, and therefore the consumption tax on goods for which Customs duty is zero should be taxed based on the invoice price. Alternatively, the post-clearance examination should be simplified, requiring only essential documents to be submitted for post-clearance examination, which would at least lighten the clerical burden.
4. Results of deliberation:
Regarding the consumption tax on imported goods, the ministry believes that because the total of the amount of tax paid at the time of import and the amount of tax paid when the imported product is sold does not always coincide with the selling price multiplied by the tax rate, it is necessary to require that the appropriate burden of the consumption tax be borne at the time of import, and regardless of whether Customs duty is assessed or not, that it is not appropriate to assess tax based on the invoice price. Where simplification of post-clearance examination is concerned, from the viewpoint of ensuring that this system is carried out appropriately, the appropriateness of the declared price is ascertained by checking ledgers and other documents as necessary through post-clearance examination, and when declarations are inappropriate, it is necessary to require the minimum amount of documents for post-clearance examination, to rectify declarations, maintain order in declarations and ensure appropriate and fair taxation.
According to the ministry, these documents are needed to calculate the declared amount, and they are usually prepared at the declaration stage and kept on hand.
To ensure appropriate and fair taxation, a certain clerical burden is unavoidable, but it is necessary to reduce the clerical burden concerning payment of the consumption tax on imported goods as much as possible.
Accordingly, the ministry, taking into consideration the complaint which has been presented, should continue to adopt a policy to require only necessary and indispensable documents for post-clearance examination from import declarer in the future.