The Cabinet Office, government of Japan ＞ Top page of OTO ＞ Reorganization of the Office of the Trade and Investment Ombudsman
(Provisional Translation)
Recommendation on Market Access Issues as concerns the Standards, Certification and Others
"5th Report of Market Access Ombudsman Council"
March 17, 1998
Market Access Ombudsman Council
Based on the "Policy Actions on Market Opening Measures as concerns Standards, Certifications and others"(adopted by the Office of Market Access, May 27,1993),etc., clarify in this report where the problems with Japan's standards, certification and others lie and recommend actions needed in this relation to complaints received from foreign businesses and others.
We ask the Office of Market Access to decide on the action that respects this report to the furthest extent possible, and to take measures at an early date.
I. General Observation
II. Recommendations (8 cases)
1. Animals and Plants, Foods(None)
2. Pharmaceuticals, Medical Devices, Cosmetics
2-(1) Simplification of approval procedures for foreign manufacture of medical devices
3. Manufacturing(None)
4. Transportation and Traffic(None)
5-(1) Deregulation of construction licenses
6. Information and Telecommunications
6-(1) Improvement of policy on registration of Internet domain names by JPNIC
7-(1) Improvement of tax payment method for postal matter from abroad
7-(2) Improvement of post-clearance audit methods
8-(1) Clarification of tariff review mechanisms
8-(2) Thorough implementation of the simplified certification of the system for exempting withholding tax at source for foreign banks
8-(3) Improvement of the issue of the per capita rate for local inhabitants tax on corporation
III. Consideration and Corresponding Policies of Forty-five Other Complaints
I. General Observation
1. The Need for Regulatory Reform
Since 1994, the Market Access Ombudsman Council (MAOC) has prepared a yearly report to clarify problems as concerns standards, certification and others and to state its pinions regarding actions needed; this year's report is the fifth such report. Further, the Council studied common elements in the past OTO-cases and in June 1997 presented its recommendations on measures needed to address them in order to improve market access, taking its mission in the broadest sense, by which the Council could actively contribute to economic structural reform, one of the government's six major reforms.
The government has indicated that it will respect the Council's recommendations to the greatest extent possible and take the necessary measures. The government is making a coordinated effort to promote deregulation in a planned manner, to improve market access, and we trust that it will actively continue that effort.
However, it is a fact that foreign businesses continue to bring complaints concerning market access to the Council, which must deal with similar problems year after year. It is important, of course, for the government to take the necessary steps concerning the complaints raised. However, it should be more trusting of the sense of responsibility and of the abilities of businesses and consumers, and a comprehensive overhaul of regulations, reviewing the reasons for their existence, should be undertaken, from the viewpoint of ensuring fairness and transparency.
2. Issues on Which the Government Should Give a Clearer Response
We trust that the government will take appropriate action on the following common factors which came to the Council's attention during its work of compiling this report on complaints brought before the OTO since the fall of 1997.
(1) Clarifying and disclosing the process of drawing up regulations and of standards for application
The government should endeavor to improve transparency and be more aware of its accountability to the public.
Government response must be flexible and adaptable, but matters left to the government's discretion should be eliminated as much as possible. Notwithstanding the implementation of the Administrative Procedures Law, there are cases in which the spirit of the law is not observed; the government should endeavor to clarify and to make public the process through which various regulations are drawn up and their standards for application. Since some complaints concern differences in application of regulations by regional offices, standards for application which have been put in writing should be strictly adhered to by these offices, and they should be kept informed of changes in ministry policies and systems. In addition, the government should draw up manuals describing duties concerning administrative procedures. This will not only help shorten the time needed for such procedures, it can also contribute to detecting the causes when delays in procedures occur and point to ways of remedying them quickly.
Where administrative decisions are concerned, the fact that these involve multiple ministries and that the process of coordinating among the ministries lacks transparency sometimes arouses mistrust on the part of foreign governments, foreign businesses and others. Responsibility should be clarified, by describing the liaison and coordination system among the ministries and operating guidelines for the system.
Furthermore, when the government studies the Council's recommendations, it is not clear what actually takes place, and notwithstanding our efforts, unfortunate misunderstandings sometimes arise as a result (for example, complainants may get the impression that nothing at all has been done, etc.). Accordingly, the government should actively provide information about the process of studying our recommendations, by publishing an interim report.
(2) Reviewing rules, standards and others in order to keep up with changes in technology, etc.
The ministries should continually review rules, standards and others, to ascertain whether they are needed and whether their content is appropriate in terms of the needs of the general public and of international harmonization. In particular, various systems should be reviewed on a continuing basis, to match the pace of technological change, as it is important to use new technology to improve government administrative services and to be prepared to respond to new situations when various systems have become outdated.
When no international standards exist, the government should not wait for such standards to be created, but should in fact take active steps to encourage other countries to draw up international standards based on those which exist in Japan.
Among the complaints brought to the OTO which are described in this report, there were cases of clear discrepancies between the justification given by the ministries about the various requirements to be met for obtaining permits, approvals and so on, and what the system actually required. For example, a condition for obtaining a permit to start a business or to install certain machinery requires the presence of a person with certain specific qualifications. But the need for such qualifications has become obsolete due to changes in the type of business, or improvements in machinery's performance and safety. In addition to doing away with requirements that are now mere formalities, the government should ensure that requirements always accurately reflect market conditions or technological standards, to foster self-responsibility among consumers and businesses.
(3) Establishing a business environment appealing to the international community
The government should not insist that there exist no problems because its regulations apply to domestic and foreign businesses alike or that regulations in other countries are more restrictive. In particular, as far as actions to actively respond to increased activity in services trade, for example employment or business activities of non-Japanese and the growing demand, at home and abroad, for promotion of inward investment in Japan, it is important that the government take active and positive steps toward creating a business environment that appeals to the international community.
(4) Actively supporting mutual recognition agreements
The recommendations mentioned above noted the need to promote mutual recognition agreements. Active steps are needed to encourage the use of foreign test data and of organizations evaluating conformity and discussions with other leading countries on improving access to Japan's domestic markets, including the establishment of a comprehensive framework for promoting mutual recognition. On these occasions, an important element of the discussions will be how to overcome difficulties resulting from differences in Japan's systems and those of the counterpart countries, and the government should endeavor to describe the certification system in terms which are convincing from an international perspective as well.
(5) Improving publicity and clarifying systems
The Council dealt with some perceived complaints about Japan's system of standards and certification, import procedures and so on, raised by foreign businesses because they were not aware that regulations had been relaxed. Measures should be taken to facilitate understanding of the system as a whole for domestic and foreign users, including providing information on criteria and methods of implementation, recent changes in regulations and so on, by making public announcements on these matters using various media.
Regarding complaints raised due to misunderstandings of the systems, etc., public relations activities should be undertaken to help clear up these misunderstandings. Efforts to change the system so that it can readily be understood by anyone are needed as well.
(6) Clarifying deadlines for implementation
Given that rapid change in domestic and international conditions is a characteristic of modern life, the government should shorten the time required to study and make changes to the systems, when implementing measures to be taken concerning OTO cases and dealing with various issues, and indicate a clear time frame for doing so.
From this perspective, every effort was made in this report to specify deadlines by which matters would be implemented or studied.
3. Follow-up by the Government
In accordance with the reasoning outlined above, the Council hopes that the government will make renewed efforts to improve market access. Organizations involved with systems concerning specifications and standards, etc. or their application should respond similarly.
The Council has held yearly follow-up meetings to examine the government's response to opinions in our reports so far and to make recommendations, if necessary, concerning implementation of the recommended measures, but foreign businesses and others have indicated that this follow-up is inadequate. In its "Emergent Economic Policy Package Reforming Japan for the 21st Century" (November 18, 1997), the government (Ministerial Conference for Economic Measures) has pledged to undertake an overall inspection of past OTO cases during FY 1998, and depending on its findings, further action may be taken.
The Council will follow up on the opinions stated in this report as necessary, and we trust that the government will take the necessary measures, in accordance with the findings of our follow-up meetings.
II. Recommendations (8cases)
2. Pharmaceuticals, Medical Devices, Cosmetics
2-(1) Simplification of approval procedures for foreign manufacture of medical devices
1. Complainant: Taipei Economic and Cultural Representative Office in Japan
2. Ministry concerned: Ministry of Health and Welfare
3. Background:
(1) Approval, etc. needed for the import of medical devices
The Pharmaceutical Affairs Law stipulates that in order to import medical devices (those stipulated in Article 1, Attachment 1 of the implementing ordinance for the Pharmaceutical Affairs Law, under Article 2, Clause 4 of the said Law), permission for import and sale (Article 22 of the said Law) as well as approval for each product category (Article 14 of the said Law) must be obtained from the Minister for Health and Welfare (except for medical devices designated as exempt by the Minister).
Regarding approval of medical devices, a system under which foreign manufacturers can directly obtain approval for manufacture of medical devices (Article 19-2 of the said Law) was introduced in 1983.
(2) Approval of medical devices
In order to obtain approval, each medical device concerned must be evaluated to ensure that its structure, efficiency, performance, etc. are effective and safe. However, no approval is needed for product categories designated by the Minister for Health and Welfare.
Medical devices for which approval is not required for each product category (ministerial ordinance, Article 18) include 82 types used directly by medical professionals, whose effectiveness, safety and quality has been confirmed, and which are technically established, as well as 128 types already in widespread use whose effectiveness is well-known and which conform to the Japan Industrial Standards (JIS) in terms of quality and format and are based on existing medical and engineering knowledge.
The average processing period for approval is within one year for new devices, and within four months for most other medical devices.
(3) Requirements for approval of foreign manufacturers
When foreign manufacturers request approval directly from the Minister for Health and Welfare, they are required to appoint an in-country caretaker (ICC) (Article 19-2 of the said Law). Standards for appointing a ICC (ministerial ordinance Article 26-5) are the same as those for domestic manufacturers, etc. which are required to have a technical director on duty (ministerial ordinance Article 24, Clause 3).
(4) Systems in other countries
In the United States, medical devices (except for some low-risk items) require government certification before sale. In such cases, foreign manufacturers can obtain certification directly.
In the EU, a new EU Directive concerning regulations on medical devices is scheduled to be implemented in June 1998. Under this Directive, the CE marking must be applied to medical devices based on approval by third-party certification organizations (except for some low-risk items which are subject to self-certification). Foreign manufacturers may directly declare conformity to their products to requirements for CE marking.
4. Complaint:
According to the Pharmaceutical Affairs Law, approval procedures for medical devices (low-frequency treatment equipment and body-fat scales) to be imported take approximately one year. In addition, appointing and retaining an ICC is a considerable expense which is a great burden to businesses importing in small quantities.
Furthermore, requirement criteria for ICCs are stringent, making it difficult for foreign manufacturers to obtain approval directly.
Accordingly, the Complainant believes that the ICC system should be abolished and approval procedures simplified so that foreign manufacturers can apply for approval directly, as which procedure like the United States Food and Drug Administration (FDA) and the CE marking of the EU. In addition, mutual recognition should be introduced, so that FDA or CE marking certification can be used as an equivalent standard in Japan.
5. Results of deliberation:
According to the Ministry concerned, the specific responsibilities of the ICC which foreign manufacturers must appoint when applying for approval to manufacture medical devices are to collect information on any problems caused by the medical device in question and to retrieve defective products. On the other hand, the technical director which domestic manufacturers must employ is mainly in charge of supervising the employees working at the manufacturing plant (at the importer) and overseeing manufacturing equipment and materials; the technical director is not directly responsible for collecting information on problems, etc. Accordingly, the qualifications required for ICCs and for technical directors are the same, but their obligations under the Pharmaceutical Affairs Law are different.
The system of approval for foreign manufactures in the Pharmaceutical Affairs Law is praiseworthy because it establishes legal non-discrimination between domestic and foreign entities where approval procedures are concerned. It is also understandable that the safety of domestic users of medical devices must be guaranteed in some way. However, because the ICC is charged with collecting information on problems with medical devices, it is sufficient for this individual to have appropriate clerical processing abilities, and it is not necessary for the person to have the same qualifications as a technical director to carry out the duties concerned.
Regarding introducing the mutual recognition system, the ministry's acceptance of foreign test data in principle is a positive factor. Based on the recommendations of the Council, the government has undertaken to actively "promote mutual recognition", and should also actively promote mutual recognition of third-party certification in other countries, depending on the type of medical device in question.
Based on the above, the ministry concerned should take the following actions:
(1) Regarding the qualification requirements for the ICC needed for applications for approval of foreign products, 1) those requirements should be appropriate to the actual duties required; 2) ranks of risk should be introduced, in accordance with the degree of risk of the medical device in question. These actions should be studied and a conclusion reached during fiscal 1998.
(2) A study of expanding the range of product categories of medical devices for household use not requiring approval is already under way, but as recommended in the 4th Report of the Market Access Ombudsman Council (March 17, 1997), the results of study should be made public by March 31, 1998. Further, if approval is not necessary, this will eliminate the need for appointing ICCs as well, and the range of product categories of low-risk medical devices other than for household use should also be expanded.
(3) Active measures to promote mutual recognition should be taken, when other countries request meetings concerning mutual recognition for medical devices.
5. Construction
5-(1) Deregulation of construction licenses
1. Complainant: European Union Delegation of the European Commission in Japan
2. Ministry concerned: Ministry of Construction
3. Background:
(1) Current state of systems in the construction industry
To ensure appropriate execution of construction work, protect procuring entities and promote the healthy development of the construction industry, those who intend to do construction businesses (with the exception of those engaging in minor construction works only) are required to obtain a construction license (Construction Business Law, Article 1, Article 3).
1) Licenses from the Minister of Construction and licenses from prefectural governors
When a construction company intends to have business offices in two or ore prefectures, a license must be obtained from the Minister of Construction; when a construction company intends to have businesses offices in one prefecture only, a license must be obtained from the governor of the prefecture concerned.
2) Licenses for ordinary construction business and licenses for special construction business
For each construction project ordered directly by a procuring entity, contractors that contract all or part of the project above a specific value out to sub-contractors must obtain a license for special construction business. Others must obtain a license for ordinary construction business
3) Licensing system by work type
A licensing system is in effect for each of 28 type classifications of construction work.
4) Validity period for construction licenses
Construction licenses are valid for a period of five years and must be renewed at the end of the validity period (the validity period was extended from the previous three years when the Construction Business Law was revised in June 1994).
5) License Requirements (Construction Business Law Articles 7 and 15)
1] A construction company that wants to get a license shall have at least one full-time board director with specific experience to be responsible for management operations. (The Minister of Construction can approve persons with experience in foreign countries as having the equivalent required experience: Construction Business Law Article 7 Section 1b), Article 15 Section 1.)
2] A full-time engineer with specific qualifications or actual experience must be employed at each office. (The Minister of Construction can approve persons with experience in foreign countries as having the equivalent required experience: Construction Business Law Article 7 Section 2c), Article 15 Section 2c).)
3] The applicant must not have a certain record of a breach of laws and contracts.
4] The applicant must have sufficient assets or credit-worthiness to carry out the contract.
(2) Current state of systems regarding Kenchikushi (architects and building engineers)
1) Persons with foreign architect licenses who wish to be licensed in Japan may, in the case of first class Kenchikushi (architects and building engineers), be certified by the Minister of Construction, and in the case of second class Kenchikushi or of Mokuzo-Kenchikushi (architects and building engineers for wood constructions), by the prefectural governor, as having equivalent or superior qualifications and obtain a license without passing the Kenchikushi's licensing examination (Kenchikushi's Law, Article 4, Clause 3).
2) Most foreign countries also have legal or private qualification systems for architectural design. However, few have a clear system for handling persons with foreign licenses such as Japan's, and the equivalency of qualifications is more often recognized under a bilateral mutual recognition system. Professional associations from various countries, including Japan, are currently working to formulate criteria for mutual recognition.
4. Complaint:
Japan currently has a complex system of 28 types of construction licenses, for each type of classification, and workers with special qualifications must be hired, local governments require that construction firms establish local business offices, which are expensive to maintain, and so on. When a construction company does business in one prefecture, only one license from the prefectural governor is needed. But if it expands its business to other prefectures, it must obtain a new license from the Minister of Construction, which is a bothersome process.
Where architect qualifications are concerned, although the conditions are improved, there still remains room to be improved. For example, the Ministry of Construction and local governments require that examinations be passed in Japanese, without regard for holders of equivalent qualifications from abroad. In addition, such persons are required to have three years' experience in Japan, over and above their work experience in foreign countries.
Given these circumstances, the complainants recommend the following:
(1) Reducing the type classifications of construction licenses
(2) Reducing the cost involved in obtaining licensing as a construction company
(3) Streamlining procedures for obtaining and renewing licenses
(4) Recognizing certain technical qualifications among European architect licenses as equivalent to those of first class Kenchikushi (architects and building engineers) in Japan.
5. Results of deliberation:
(1) Construction licenses
Given the technical progress made since the system of 28 type classifications was introduced, the time has come for a review of the system. Further, under the present system, it is possible for a general contractor to contract for special works and for every contractor to contract for appurtenant works, even if the company does not have a license for the work, furthermore, the company can undertake actual construction for himself when the technical requirements are met. However, some foreign businesses are unfamiliar with the definitions for the various types of classifications or the meaning of general works and appurtenant works, which could have a negative impact on inward investment in Japan.
Businesses are also obliged to employ a full-time stationed engineer in order to obtain a construction license, but the qualifications required for full-time stationed engineers are the same in some type of classifications. Therefore, grouping the current classifications for construction licenses by related type would have the practical effect of reducing the types of licenses and of simplifying the system. Where this is concerned, the Central Council on Construction Contracting Business recommended initiating a study on grouping type classifications (February 4, 1998).
Restrictions on market access such as construction licenses should be kept to a minimum to begin with. Additionally, it is important to provide information on the technical abilities of construction companies, from the perspective of selection through market mechanisms.
Based on the above, we recommend that the ministry take the following steps:
1) Enhance activities to publicize the workings of the construction license system should be undertaken, by producing a pamphlet in English and other means, during FY 1998.
2) A comprehensive study concerning review of the type classifications for construction licenses should be undertaken and a conclusion reached at an early opportunity. The issue of making public information on construction companies should be studied at the same time.
3) Regarding the procedures for obtaining and renewing construction licenses, although it is a positive development to have undertaken the simplification by uniforming applicant processes of plural licenses, extending validity period for licenses, and eliminating some of the documents required for license renewal, have been taken, further streamlining should be studied.
(2) Approval of Kenchikushi (architects and building engineers)
The fact that the Kenchikushi (architects and building engineers)'s Law contains clear provisions for permitting persons with foreign architect licenses to practice their profession in Japan is a positive factor. However, given that the criteria for applying approval criteria are not written down, this could invite undeserved criticism from foreign countries. For example, regarding the need to pass examinations in Japanese, which the Complainant mentions, the ministry concerned states that, depending on the circumstances, a paper written in a foreign language can be presented instead, but the criteria for exemption from the examination in Japanese are not clear to persons outside the ministry.
Accordingly, the ministry should take the following measure, in the spirit of the Administrative Procedures Law:
Criteria for application of Article 4, Clause 3 of the Kenchikushi's Law should be drawn up and made public during FY 1998.
6. Information and Telecommunications
6-(1) Improvement of policy on registration of Internet domain names by JPNIC
1. Complainant: Australian Embassy, Australia and New Zealand Chamber of Commerce
2. Ministry concerned: Ministry of Posts and Telecommunications
3. Background:
(1) Establishment of JPNIC
In Japan, registration and assignment of Internet domain names is handled solely by the Japan Network Information Center (JPNIC), as private incorporated juridical body.
JPNIC had as its predecessor JNIC, which was established in December 1991 with the support of the Japan Council of Research Networks (JCRN), a group composed of representatives from Internet service providers and academics. JPNIC was established in March 1993 and recognized as a corporation under the Ministry of Posts and Telecommunications, Ministry of Education, Ministry of International Trade and Industry, and the Science and Technology Agency, on March 31, 1997.
(2) Requirements for domain name registration
In order to prevent trademark-related problems and the emergence of domain name brokers, JPNIC's policies on domain name registration are to process applications in the order they are received, to assign only one domain name per organization, to restrict transfers, and to require a local base (that companies, etc., be registered in Japan).
When necessary, JPNIC requires applicants to produce a copy of company registration and a certificate of the seal impression of the company's representative, in order to verify particulars regarding identity when a domain name is registered.
(3) Requirements for registration in other countries
Australia does not allow individual companies to have multiple domain names. It also requires presentation of the company's business registration when application for domain name registration is made.
In New Zealand, multiple domain names are allowed, and there are no restrictions on the location of the business.
4. Complaint:
The Complainant maintains that
(1) Although JPNIC policies place a limit of one domain name per company, those policies should be changed to allow the use of separate domain names for different departments within a company or for separate projects.
(2) Although under JPNIC policies companies not registered in Japan are not given Japanese domain names (www.***.co.jp), those policies should be changed to allow foreign companies not registered in Japan to use Japanese domain names.
(3) JPNIC registration fees should be lowered by introducing the principle of competition, and it should be possible to carry out application procedures online.
5. Results of deliberation:
There are no uniformed international standards regarding restrictions on the number of domain names that may be applied for or requiring the applicant to have a local base. Since various standards are in use in industrial countries, JPNIC's operating policies cannot necessarily be deemed a market barrier, in view of the existing international situation. Furthermore, online registration procedures have been available since December 1991. Neither are registration fees expensive by international standards; when registering directly with JPNIC, the fee is ¥20,000, but when registration is done through an Internet provider that is a member of JPNIC, each member sets its own registration fee and in that sense, there is competition, among members.
However, considering that many countries, for example the United States, Britain, Germany and so on, already permit multiple domain names per organization and have less stringent requirements than Japan concerning local residence, differences in policies regarding domain name registration should be examined to determine whether they impede access, including inward investment, to Japanese markets.
Under the civil law, JPNIC is a non-profit organization supervised by the ministries concerned. The ministries can give the necessary orders, and as was recommended by the Council (June 18, 1997), notwithstanding the fact that JPNIC's policies are internal ones, the ministries should take the necessary measures, if these policies are inappropriate from the viewpoint of market access.
The ministries established a study group in March 1998 which will examine methods of supervising domain names and investigate the matter from a broad perspective. However, the group should also study the issues of market access and promotion of inward investment, taking international trends into consideration, and reach a conclusion during 1998. After this, the ministries should urge JPNIC to revise its operating policy regarding domain names, if necessary.
7. Import Procedures
7-(1) Improvement of tax payment method for postal matter from abroad
1. Complainant: Japan Foreign Trade Council, Tokyo Chamber of Commerce and Industry
2. Ministry concerned: Ministry of Finance, Ministry of Home Affairs
(1) When postal matter from abroad containing dutiable content is received, the customs house sends the addressee a notice of duties due through the post office. The post office must deliver the notice of duties due to the addressee before releasing the postal matter.
Foreign postal matter on which the amount of duties (customs duty, and national and local consumption tax) assessed is under ¥10,000 is delivered at the same time as the notice of duties due, and the postal matter is handed over to the addressee in exchange for payment of duties. When duties due on foreign postal matter exceed the amount of ¥10,000, the notice of duties due is sent to the addressee first. The addressee must go to the post office where the postal matter has been held and may collect the postal matter once the duties due have been paid (Customs Law, Article 77, International Postal Matter Regulations, Article 72).
(2) The local consumption tax on dutiable articles is assessed based on the taxation on cargo basis (for import transactions, a tax base of its taxation on cargo basis is an amount of consumption tax for dutiable goods) of the prefecture where the bonded area is located (when dutiable goods are imported from other than a bonded area, the prefecture where the customs office with the Director-General of customs assessing the duties is located), payable by the person picking the postal matter up from a bonded area. The government collects the taxation on cargo basis in the same way that the consumption tax is collected, together with the consumption tax.
The taxation on cargo basis paid to the government first goes into the National Tax Receipt Fund and is then paid out to the prefecture where the bonded area is located (when dutiable goods are imported from other than a bonded area, the prefecture where the customs office assessing the duties is located). (Local Tax Law, Article 72-78, Article 72-100, Article 72-103; Law on the National Tax Receipt Fund, Article 2)
4. Complaint:
Duties on foreign postal matter had previously been payable in revenue stamps, but the payment method was changed to cash after introduction of the local consumption tax. When payment is in cash, company employees must obtain a temporary payment in advance or pay out of their own pockets in lieu of the company, and this is very inconvenient in the case of small postal items. In order to improve the efficiency of payment of duties on samples, etc. at the time of import, the Complainant believes that payment of duties on foreign postal matter should be allowed to be made using revenue stamps, as before.
5. Results of deliberation:
It is taken for granted that the government should always have the convenience of taxpayers foremost in mind. The ministries concerned give the reasons for changing from payment of duties on foreign postal matter in revenue stamps to cash as follows:
(1) revenue from revenue stamps goes into the national government's general accounts budget, and accordingly it is not possible to pay for local consumption tax, which is a local tax, using revenue stamps;
(2) since it is not desirable from the viewpoint of taxpayers' convenience to pay the national tax portion of the assessment using revenue stamps and the local tax portion in cash, the tax law states that local consumption tax shall be paid together with the national consumption tax.
Although the ministries' concern for taxpayers' convenience is laudable, what the government believes in convenient and what taxpayers actually experience in some cases does not necessarily coincide, and as a matter of fact, the Complainant feels inconvenienced by the current method of paying in cash.
Further, although the ministries have stated to the Complainant that the problem of having employees pay out of their own pockets in the company's stead can be remedied by changing company accounting systems, the government should show more willingness to consider the actual convenience of taxpayers, without insisting unduly on existing methods.
Based on these circumstances, the following measures should be taken:
In addition to paying in cash, the Complainant suggested allowing payment of duties on foreign postal matter to be made using a combination of revenue stamps and prefectural revenue stamps. A study as to the feasibility of this method should be undertaken immediately and a conclusion should be reached during FY 1998.
7-(2) Improvement of post-clearance audit methods
1. Complainant: Tokyo Chamber of Commerce and Industry
2. Ministry concerned: Ministry of Finance
3. Background:
(1) Consumption tax
1) Post-clearance audit methods
Post-clearance audits of the consumption tax carried out by customs officials are based on the right of those officials to ask questions (as described in 2] below) about ledgers and documents, etc. in which information must be recorded and which must be preserved (for example, records on corporate taxes and consumption tax must be preserved for 7 years), as called for under the Consumption Tax Law and other laws.
2) Customs officials' right to audit through questions, etc.
When it is necessary to conduct an audit of consumption tax, customs officials have the right to question individuals receiving taxable goods from bonded areas, or to inspect the taxable goods, ledgers and documents, and so on (Consumption Tax Law, Article 62, Clause 3). Individuals declining to answer questions, who answer untruthfully, who refuse to allow the officials to carry out their duties or hinder their duties, or who otherwise object are liable to a fine of ¥100,000 or less (Consumption Tax Law, Article 68).
(2) Customs duties
1) Post-clearance audit methods
Post-clearance audits of customs duties carried out by customs officials are based on the right of those officials to ask questions (as described in 2) below) about ledgers and documents, etc. in which information must be recorded and which must be preserved, as called for under laws other than the Customs Law.
2) Customs officials' right to audit through questions, etc.
When it is necessary in the conduct of their duties, customs officials have the right to question importers, within the scope deemed necessary, ledgers and documents about goods imported, or to inspect the goods (Customs Law, Article 105, Clause 1, main text and sub-section 6). Individuals declining to answer questions, who answer untruthfully, who refuse to allow the officials to carry out their duties or hinder their duties, or who otherwise object are liable to a fine of ¥500,000 or less (Customs Law, Article 114, Section 5).
(3) Additional Tax
Given that post-clearance audits by customs officials have tended to be found cases of underfiling return in tax, additional tax for deficient returns and additional tax for no return or after due date to internal consumption tax and tariff have been introduced since October 1997 on imported goods, in order to maintain fair imposition of duties and other taxes on taxpayers and to encourage accuracy in self-assessed taxation.
When a customs audit determines that a self-assessed filing return was inaccurate and a corrected or revised declaration is filed, the additional tax for deficient returns are, in principle, the additional tax amount in the revised declaration multiplied by 10% (for some specific amounts, 15%) (Customs Law Article 12-2, Clause 1). Additional tax for no return or after due date when no declaration has been made by the time of import on goods requiring a tax declaration, and when the amount of tax is determined or when a revised declaration is filed after the amount of tax is determined through a customs audit, are the amount of tax to be paid after determination of said amount, or filing of a revised declaration, multiplied by 15% (Customs Law Article 12-3, Clause 1).
4. Complaint:
(1) Need for consumption tax audits
Post-clearance audits are conducted for import declarations relating to the consumption tax, but from the viewpoint of balance between imports and exports, to importers who end up receiving a deduction or a tax refund for the consumption tax on goods stocked, after filing a revised declaration, the audit represents a considerable burden. Therefore, companies targeted for audits relating to the consumption tax should be selected appropriately.
(2) More appropriate targeting for post-clearance audits
The Tokyo Customs Bureau conducts post-clearance audits of all head offices within its jurisdiction once every four years, and all documents relating to goods which have transited customs elsewhere must be kept in Tokyo. Further, since the target of audits varies depending on the fiscal year, businesses are expected to keep track of large quantities of documents, including bank remittance slips, currency rate certificates, suppliers' invoices, invoices outstanding, etc. Audits should be restricted to cases involving sums over specific amounts, and not cover all cases.
5. Results of deliberation:
Post-clearance audits should be carried out using methods which do not merely accommodate the auditing side, but should also take into consideration the costs of preparation and the work efficiency of the parties being audited, i.e. the taxpayers. The ministry concerned asserts that it only requires the minimum amount of documentation necessary. However, the feeling of the Complainant is that compared to the documents actually examined during the audit, the volume of documentation which must be made available is extremely large, and taxpayers are forced to bear an unnecessarily heavy burden.
The introduction of newly additional tax for tariffs and the consumption tax in October 1997 is likely to increase the incentive for taxpayers to file accurate declarations in self-assessed taxation. Accordingly, some believe that there is room for loosening tariff audit methods.
The ministry concerned states that it audits companies with a good record of filing declarations less frequently. This is a praiseworthy action, but it should take other measures, for example, clarifying the documents required, and so on, to encourage importers to file declarations accurately and to reduce the burden imposed on them.
Although documentation stored on floppy disks and other media is already being used in the audits, considering that the Corporate Tax Law allows records to be preserved on electronic media, as recommended in the 4th Report of the Market Access Ombudsman Council (March 17, 1997), use of information in this format should be further promoted.
Based on the above, our recommendations to the ministry in this case are as follows:
That a study should be undertaken immediately concerning tariff audit methods, including how ledgers and documents should be subject to audit and how stored in electronic data forming part of those documents is used, enhanced public relations concerning inspections, and so on, from the perspective of lightening the burden on taxpayers and improving the efficiency of tax collection, and that a conclusion be reached during 1998.
8. Other
8-(1) Clarification of tariff review mechanisms
1. Complainant: Australian embassy, New Zealand embassy, the American Chamber of Commerce in Japan
2. Ministry concerned: Ministry of Foreign Affairs, Ministry of Finance, Ministry of Agriculture, Forestry and Fisheries, Ministry of International Trade and Industry
3. Background:
Foreign governments' requests concerning tariffs have heretofore been dealt with mainly through successive multilateral negotiations under GATT or WTO. Specific requests are dealt with through diplomatic channel. These requests are presented to the Ministry of Foreign Affairs, which are to be communicated to the Ministry of Finance or other ministries concerned.
Where requests from domestic businesses and others are concerned, the respective ministries concerned in charge deal with the matters raised. Ministries handling commodities make a comprehensive examination of the possibility of acceding to the request, taking relations with domestic industry into consideration, and present their decision to the Ministry of Finance as a request.
The Ministry of Finance then presents the requests received from ministries handling commodities to the Customs Tariff Council for study and has tariff changes ratified by the Diet on the basis of the Council's recommendations.
4. Complaint:
When presenting requests concerning tariffs to the Japanese government, it is difficult to determine which ministry, one handling commodities, or one handling institutional matters, to contact, and there is also a lack of transparency in how requests are handled. If necessary, the tariff review mechanism should be clarified in writing, and an independent mechanism set up which could accept requests concerning tariffs.
5. Results of deliberation:
The basic approach to negotiating with other countries over tariff rate revisions is to hold diplomatic negotiations for deciding scope of the tariff concession, in multilateral government negotiations before the WTO, whose goal is to establish a multilateral trading system. When studying tariff rate changes, countries must take their respective domestic industries and impact on employment into consideration. Accordingly, specific requests by foreign governments or by companies are not all invariably granted.
The Japanese public also wants the government to be more forthcoming with information about administrative matters and to give more transparency to government decision-making process, and the need for the government to explain clearly how it operates in making decisions is stronger than ever. This also applies to the decision-making process regarding tariffs, but there is the risk that the government could be placed at a disadvantage in tariff negotiations, if it one-sidedly pursues transparency, and accordingly it should be noted that there are limits to the transparency which is possible.
With this in mind, the following measures should be taken by the ministries concerned, taking into consideration conditions existing in other countries:
(1) The ministries concerned are taking steps to put tariff review procedures in writing within the government. This action is a positive development, and the procedures should be put down in writing and made public at an early date. The contents should be as detailed and as clear as possible, and an English translation should be prepared and published at the same time.
(2) Efforts to improve transparency in the operations of the Customs Tariff Council are being made. For example, the Council's recommendations are already being published in newspapers, meeting agendas have been available to the public since FY 1995, and from FY 1996, the Council's recommendations have been available to access through electronic mail and the Internet in public. These are commendable measures, but the ministries concerned should continue their efforts to make the Council's operations more transparent.
8-(2) Thorough implementation of the simplified certification of the system for exempting withholding tax at source for foreign banks
1. Complainant: Korean embassy
2. Ministry concerned: Ministry of Finance
3. Background:
(1) Obligation to withhold tax at the source when paying domestic taxable income to foreign companies
In principle, interest received by non-resident, foreign companies such as foreign banks, etc. is taxed by withholding at the source, in principle, when paid by Japanese borrowers, etc. (Income Tax Law, Article 212, Clause 1).
(2) Special tax measures concerning domestic taxable income of foreign banks with permanent domestic facilities
Regarding the interest on loans paid to foreign banks with domestic branches (permanent facilities), tax is paid on the income declared by the branch. If the branch presents a certificate (certificate of exemption from withholding tax at the source, hereafter, "certificate of exemption") issued by the head of the tax office with jurisdiction over the foreign bank to the borrower, the borrower (the party paying domestic taxable income) is not required to withhold at the source, as a special measure (Article 180 of the Income Tax Law, Article 42-2 of the Special Tax Measures Law). When the borrower, i.e. the party with the obligation to withhold at the source, pays interest, the certificate of exemption is necessary, to establish whether the interest 1) belongs to the branch (in which case it is exempt from withholding at the source), or whether it 2) belongs to the head office (in which case it is subject to withholding at the source).
In order to be exempt from withholding at the source on interest paid to them, foreign banks had formerly been required to submit the certificate of exemption to the borrower, but since March 1995, the system was simplified, while retaining the principle of exempting foreign banks from withholding at the source, and they are now merely required to show the certificate.
(3) The main requirements necessary for foreign banks to qualify for special tax measures are as follows:
* Present notification showing that the party has become an ordinary foreign company
* In cases where registration of the foreign company is necessary, present company registration papers
* That the domestic taxable income for which an exemption from withholding at the source is being sought be included in income which is subject to corporate tax, under ordinances of the Corporation Tax Law, etc.
* That the foreign company has not been unlawfully exempted from income or corporate tax in the past (Article 304 of the implementing ordinance to the Income Tax Law)
4. Complaint:
Although the certificate of exemption system has been changed from having to obtain a certificate to showing it, foreign banks with branches in Japan must still obtain a certificate of exemption from the tax office with jurisdiction over them, and in order to show it to the borrower, actually make a copy of the certificate, at the branch's discretion, and send it to the borrower; accordingly, the inconvenience the system presents for foreign banks has not been alleviated. Regarding the interest paid by parties which have borrowed funds from domestic branches of foreign banks, Article 180 of the Income Tax Law, which deals with exemption of the obligation to withhold income tax at the source, should be revised, and like domestic banks, foreign banks should not have to show the certificate of exemption to borrowers.
5. Results of deliberation:
The ministry concerned states that the branches and the head office of a foreign bank are legally one entity; this is done so that attribution of income for tax purposes can be made appropriately in relation to the expense involved. Accordingly, regarding interest income paid by domestic borrowers on operating funds lent by foreign bank branches, it is not possible for the borrower, who has the obligation to withhold tax at the source, to determine, by examining the loan contract, whether the interest is income belonging to the branch located in Japan or to the bank's head office abroad and this is an important justification for the requirement that foreign banks, etc. show their certificate of exemption. In other words, borrowers have no other way, except by seeing the certificate of exemption, of determining whether the interest they pay is income attributed to the bank's domestic branch or to its head office abroad, and without this system, borrowers may be unable to fulfill their obligation to withhold at the source.
Therefore, to make this system function effectively, all domestic businesses planning to borrow from foreign banks, etc. should be informed, either by having the foreign banks send notices to their borrowers, or through public announcements by the government, that the borrower incurs the obligation to withhold at the source when the bank does not show its certificate of exemption.
Although the certificate of exemption has a one-year validity period, considering that the said certificate is issued contingent on the bank meeting a number of conditions, in addition to having permanent facilities, in many cases these conditions will remain unchanged as long as the bank in question operates in Japan. Accordingly, some believe that there is little necessity for the certificate of exemption to be valid for one year only. But the ministry concerned states that if the validity period is extended, borrowers will have to bear a heavier burden from failing to withhold at the source (if the certificate of exemption is cancelled, etc. and the borrower incurs the obligation to withhold at the source, the borrower having to pay the tax withheld and claim it later from the foreign bank), and that this will also cause a problem as far as the period of limitation of the right to collect income tax withheld at the source is concerned.
An additional problem with the certificate of exemption is that, in cases where only one certificate of exemption is issued, it is difficult to deal efficiently with multiple borrowers.
Based on the above, the ministry concerned should take the following measures:
(1) "Tax-Answer" and the Internet should be used to enhance publicity regarding the system of exemption from withholding at source for interest on loans received by foreign banks, and the names, etc. of foreign banks which have received certificates of exemption from withholding at the source.
(2) In order to implement more thoroughly the simplification already made in FY1995, with the view to ease the clerical burden on foreign banks, i.e., requiring foreign banks to show the certificates rather than requesting them to submit the certificates to borrowers, a study on details of the system, including the number and validity periods of the certificates, will be initiated immediately, and from the viewpoint of the principle of non-discrimination between domestic and foreign entities in the financial sector and of ensuring appropriate taxation of foreign companies. A conclusion should be reached during FY 1998 and the necessary measures taken thereafter.
8-(3) Improvement of the issue of the per capita rate for local inhabitants tax on corporation
1. Complainant: Korean embassy
2. Ministry concerned: Ministry of Home Affairs
3. Background:
(1) Types of corporation tax
Among the types of taxes applied to corporations, there is the corporate tax, which is a national tax, and local taxes including enterprise tax (prefectural tax) and local inhabitant taxes on corporation (prefectural tax, municipal tax), collected in accordance with the Local Tax Law.
(2) Breakdown of local inhabitant taxes on corporation
The amount of local inhabitant taxes on corporation is based on the total tax calculated according to the corporation tax rate for inhabitants tax and the per capita rate for local inhabitant tax on corporation. The per capita rate for local inhabitant tax on corporation is collected so that "companies broadly contribute to the expenses of the local community of which they are members" (the recommendations of the Taxation Commission, January 1984), and even if the company has no income (regardless of whether it has any profit-generating operations in the community, for example, if the company has employee housing located in the community in question), it is taxed the per capita rate for local inhabitant tax on corporation.
(3) Taxpayer of per capita rate for local inhabitant tax on corporation
Taxpayer of per capita tax rate for local inhabitant tax on corporation are having offices or places of business, employee housing and so on, and corporate or foundation without status of juridical person but which have a designated representative or manager, in the prefecture and the municipality. In the case of foreign companies, the scope of offices or places of business, etc. liable for taxation is set out in Article 7-3-5 of the Cabinet ordinance for the Local Tax Law.
(4) Calculation standards and tax rates
The per capita rate for local inhabitant tax on corporation is calculated based on the total amount of capitalization or investment and on the amount of asset accumulation and according to the standard tax rate (the tax rate usually applied by local governments). Because there are differences in the financial ability of companies to bear the tax burden, depending on their capitalization, and because of the need to lessen the burden on small and medium-size companies, there are five standard tax rate brackets for prefectural tax, ranging from ¥20,000 to ¥800,000, and nine standard tax rate brackets for municipal tax, ranging from ¥50,000 to ¥3,000,000 (maximum tax rate of ¥60,000 to ¥3,600,000).
The tax rate for prefecture tax is set only on the basis of the amount of capitalization, etc., but the tax rate for municipal tax is set according to the amount of capitalization as well as on whether the number of employees in the company is above or below 50.
* The maximum tax rate is the highest tax rate, which may not be exceeded, in the taxing at an excessive rate. Taxing at an excessive rate to collect, within the scope of the maximum tax rate, which is over and above standard tax rate, when there are special fiscal reasons for doing so.
4. Complaint:
When the inhabitant tax is collected on branches of foreign companies, the Local Tax Law stipulates that the tax rate is determined in accordance with the amount of capitalization of the head office in the home country. In some cases, companies must pay substantial local taxes, regardless of the size of the branch.
Because of this, the Complainant requests that the calculation standards for inhabitant tax on foreign companies' branches be changed to the calculation method for capitalization ("head office capitalization" multiplied by "branch assets," divided by "total assets") which is used for calculating the maximum allowable deduction for entertainment expenses or donations.
5. Results of deliberation:
According to the ministry concerned, the basic reasoning behind the per capita rate for local inhabitant tax on corporation is to have companies, which are members of the community, broadly contribute to the community's expenses; taking the ability of the companies to pay taxes into account, they are taxed a specific amount according to the tax bracket they are in depending on the amount of capitalization and number of employees they have. Some believe that the tax calculation standard based on the number of employees should be introduced for prefectural tax as well, and that the standard should be revised. However, since such a revision could result in higher taxes, any review of the tax rate for the local inhabitant tax on corporation should be made from a comprehensive perspective, including its relationship to other local taxes.
The tax rate for per capita rate for the local inhabitant tax on corporation is applied to domestic and foreign companies alike, and is, accordingly, non-discriminatory. Some believe that the issue of differences in tax systems between Japan and abroad should be studied.
The Taxation Commission will continue to study the issue of local corporation taxes. And, the ministry concerned should undertake a broad study of issues, including that of the per capita rate for local inhabitant tax on corporation, from the viewpoints of fairness, impartiality and simplicity, and in order to create a climate facilitating the business activities of domestic and foreign companies.
III. Consideration and Corresponding Policies of Forty-five Other Complaints
1-(1) Lift the import ban on Belgium-grown peppers and tomatoes
1-(2) Simplify processed food import inspection
1-(3) Improve procedures for importing laver
1-(4) Abolish the advance import confirmation system for wakame seaweed
1-(5) Review domestic standards on food additives
1-(6) Expand acceptance of foreign countries' investigation data related to alcoholic beverage ingredient analysis tables
2. Pharmaceuticals, Medical Equipment and Cosmetics
2-(1) Promptly deregulates nutrition supplements
2-(2) Ensure fair enforcement of the Pharmaceutical Affairs Law
2-(3) Give the regulations on the ingredients used in cosmetics the same form as those of the E.U.
3-(1) Coordinate standards for electricity-generating equipment for emergency use on the international level
3-(2) Relax inspections related to LPG bulk container import
3-(3) Simplify procedures for importing high-pressure gas
3-(4) Relax standards for designating chief electrical engineers for shopping centers
3-(5) Simplify safety authorization for electrical appliances (amusement-related machinery for commercial use)
3-(6) Approve the import of chemical products approved by TSCA and the like
3-(7) Deregulate import of electrical appliances meeting U.S. standards
3-(8) Internationally standardizes the technical standards, etc., for electrical appliances
3-(9) Internationally coordinates the dangerous goods class
3-(10) Relax the standards on designation of personnel responsible for handling freezers for building use
3-(11) Expand the use of clothing labels that are in English
3-(12) Expedite import inspections on samples of raw materials of poisonous substances, narcotics and the like
3-(13) Simply application procedure related to the standards for preventing the explosion of electric machinery
3-(14) Deregulate pressurized containers and the like
4-(1) Clarify and internationally coordinate the certification procedures pertaining to engines used in shipping
5-(1) Improve the quality inspection and verification system for overseas construction materials (materials imported for public construction)
5-(2) Simplify JIS verification procedure pertaining to glass used for construction
5-(3) Simply certification work for construction materials, etc.
5-(4) Promote the import of overseas construction materials
7-(1) Improve method for reporting subsidiary materials
7-(2) Provide a "before permission" (BP) system and the like
7-(3) Simplify procedures for re-importing processed goods
7-(4) Rationalize the system of consigned processing trade
7-(5) Simply the tariff quota application form
7-(6) Abolish the external payment on trade report and import report, etc., or ease the necessary report conditions
7-(7) Increase the number of import cargo inspection personnel
7-(8) Simplify the types of import application forms
7-(9) Simplify clearance procedures for imported houses
7-(10) Simplify import clearance procedures pertaining to product repair
7-(11) Make confirmation of actual articles on import declaration flexible
7-(12) Promote introduction of EDI to import clearance procedures
7-(13) Implement 24-hour-a-day processing of import declarations
8-(1) Deregulate the system on security deposits and paid-in capital pertaining to foreign insurance companies
8-(2) Deregulate the labour field
8-(3) Apply deregulation to lawyers engaged in foreign legal affairs in Japan
8-(4) Prohibit copying of musical scores under the Copyright Law
1. Animals, Plants and Foods
1-(1) Lift the import ban on Belgium-grown peppers and tomatoes
1. Complainant: Delegation of the European Commission in Japan
2. Ministry concerned: Ministry of Agriculture, Forestry and Fisheries
3. Complaint:
Import of Belgium-grown peppers and tomatoes has been banned under the Plant Protection Law, owing to outbreaks of the Mediterranean fruit fly and tobacco blue mold. In 1994, Japan and Belgium began discussions on lifting the ban on the import of peppers, etc., and the ministries concerned provided explanations on the reasons for banning import, the required procedure for lifting the ban, and the necessary materials, etc., that must be submitted for consideration.
Belgium responded to Japan's requests as far as possible, submitting scientific data and the like. In July of 1997, although on-site confirmation made by specialists of the ministries concerned was requested for final confirmation of quarantine measures, Belgium-grown peppers and tomatoes were not subjected to examination. The ministries concerned should advance the cause of lifting the ban on imports by conducting on-site confirmation and the like and lift the ban on the import of Belgium-grown peppers and tomatoes.
4. Corresponding Policy of the Ministries concerned:
The ministries concerned have already begun deliberations with the Belgian government concerning the status of Mediterranean fruit fly and tobacco blue mold outbreaks in Belgium and the required quarantine measures for lifting the ban on import of Belgium-grown peppers and tomatoes as fresh produce and have clearly expressed the following to the Belgium Plant Sanitation Agency.
(1) Japan's reasons for banning import of the produce
(2) The materials Belgium must submit
(3) The required procedure, etc., for lifting the import ban
The information and cooperation sought from the Belgian government are the same as that sought from the government of the Netherlands when the ban on the import of peppers and tomatoes grown in the Netherlands was lifted. Details follow.
(1) Because outbreaks of Mediterranean fruit fly and tobacco blue mode occurred in Belgium, the import of peppers and tomatoes (which are hosts to these parasites) as fresh produce was banned.
(2) Belgium may submit any of the following materials for Japan's consideration of lifting the ban on imports.
* Its technology for complete disinfecting of the Mediterranean fruit fly and tobacco blue mold
* Its quarantine measures for completely preventing parasitism of the pertinent harmful pests
* Proof that the pertinent harmful pests do not exist in Belgium
(3) The required procedure for lifting the ban on imports is as follows.
* Scientific materials that prove the quarantine measures are effective must be submitted.
* Japan will review these materials.
* If the materials satisfy Japan's requirements, Japan will dispatch its specialists for on-site inspection. (If the materials are insufficient, submission of additional materials will be required.)
* If the on-site inspection proves satisfactory, an explanatory meeting will be held with the related parties.
* There will then be a public hearing.
* The related legislation will then be revised (the ban on imports lifted).
Belgium submitted documents in June and November of 1996. After giving them thorough consideration, in May of 1997, Japan both requested that Belgium submit basic materials that would indicate the absence of Mediterranean fruit fly outbreak and replied that it could not accept the produce, as Belgium's quarantine measures to prevent the spread of tobacco blue mold into Japan were inadequate. Thus, in December of 1997, Belgium submitted additional materials, which are currently under review; we expect to give our reply sometime in March of 1998.
Following are our assertions on the pertinent materials.
* The past meteorological data indicate no outbreak of the Mediterranean fruit fly.
* We are prepared to both conduct an investigation on the outbreak of tobacco blue mold to specify the regions in which it occurs and to conduct testing to confirm that it has not infected tomatoes and peppers.
To Belgium's July 1997 request for on-site confirmation we replied that as such confirmation is the final confirmation of quarantine measures, it would be premature to conduct it prior to completing our review of quarantine measures.
1-(2) Simplify processed food import inspection
2. Ministry concerned: Ministry of Health and Welfare
3. Complaint:
For exports of new processed foods to Japan, the Food Sanitation Law requires the submission of manufacturing process tables, ingredient analysis tables and the like, based on which Japan's inspection agency (Japan Food Safety Council) re-inspects ingredients, etc. The time and expense involved in this required inspection are excessive.
For exports of new processed foods, if the results of the inspections conducted by Korea's official domestic agency (Korea Institute of Food Hygiene) are submitted, they should be accepted and Japan's inspections omitted.
4. Corresponding Policy of the Ministries concerned:
Reports are made each time food, etc., is to be imported for sales or business purposes, and items are subjected to inspection as necessary.
In this case, an inspection agency with standard inspection capability and that is under the jurisdiction of or recognized and designated by the exporting country should be registered with the Ministry of Health and Welfare in advance. Since Showa 57, under the "Foreign Official Laboratories" system, when the results of the inspections conducted by such a public agency are presented (excluding those pertaining to inspected items that could be subject to change during transit, such as bacterial and mildew infections), the inspection at time of import is omitted.
Korea Institute of Food Hygiene registered accordingly in 1995, and its inspection results are being accepted.
1-(3) Improve procedures for importing laver
1. Complainant: Korean Embassy in Japan
2. Ministry concerned: Ministry of Agriculture, Forestry and Fisheries, Ministry of International Trade and Industry
3. Complaint:
Japan Laver Importers Association has a monopolistic hold on the work related to dry laver imports, and the complicated import procedures, expensive commissions, etc., have a restrictive effect on actual imports. In keeping, the following improved measures should be considered.
The task of submitting to the ministries concerned the original and copy of the basic agreement concluded with the Association on the buying and selling of imported laver should be abolished.
The governments of both countries involved should determine import quantities, and trade should be conducted without specific conditions, within the same range by both countries' import and export firms. The Association should solely confirm the quantities imported.
4. Corresponding Policy of the Ministries concerned:
For laver sheet, domestic production has been amounting to 10 billions of sheet in terms of quality and 100 billion yen in terms of value, annually, and is holding an important position in Japan's fishery. In this regard, laver sheet is subject to import quota system in order to prevent upset of the demand and supply balance in Japan. In this system, actual import as a commercial business of laver sheet to Japan is conducted at the industry level, according to the outcome of consultation conducted between industry sectors of Japan and the Republic of Korea, including importers, traders, processors, etc. for the Japanese side and exporters for the Republic of Korea side, taking into account market situation, quality, price, etc.
Therefore, under these circumstances, for ensuring smooth import of laver sheet, high respect should be had for the outcome of consultation conducted at industry level between Japan and the Republic of Korea in the future.
In addition, ways of purchase and sale are solely subject to trade practice.
The issues including the points raised the Korean Embassy in Japan and the points presented thereafter were addressed and discussed in depth in the latest governmental consultations at working level on trade of fishery products between Japan and the Republic of Korea held on January 15 and 16, 1998 and both sides shared the views that further discussion would be made in the same consultations to follows.
1-(4) Abolish the advance import confirmation system for wakame seaweed
1. Complainant: Korean Embassy in Japan
2. Ministry concerned: Ministry of Agriculture, Forestry and Fisheries, Ministry of International Trade and Industry
3. Complaint:<
The advance import confirmation system went into effect to ensure the implementation of the trade volume agreement system based on private meetings held between Japan and Korea. However, despite the fact that the trade volume agreement was abolished in 1995, the advance import confirmation system has been continued.
Since the advance import confirmation system brings about increased work for importation and creates import barriers, this system should be abolished.
4. Corresponding Policy of the Ministries concerned:
The advance import confirmation system for wakame seaweed (Undaria Fusio Formis) is playing an important role to adequately provide information on demand and supply situation to sectors concerned, by promptly and appropriately grasping import trend of wakame seaweed, which is harvested seasonally concentrated, along with the situation of domestic production, and therefore it is considered necessary to maintain this system in the future.
Since the reports from customs are of after-the event and it needs certain time to receive the reports from customs, this system can not be replaced with the reports from customs.
In addition, approximately 35,000 Mt of wakame seaweed has been imported annually in recent years. With respect to composition by exporting countries for recent years, while the amount of import of wakame seaweed from the Republic of Korea has been decreasing, that from People's Republic of China has been substantially increasing. It is considered that this derives from difference in quality, price, etc. of the products concerned between these two countries.
The issues including the points raised the Korean Embassy in Japan and the points presented thereafter were addressed and discussed in depth in the latest governmental consultations at working level on trade of fishery products between Japan and the Republic of Korea held on January 15 and 16, 1998 and both sides shared the views that further discussion would be made in the same consultations to follows.
1-(5) Review domestic standards on food additives
1. Complainant: Tokyo Chamber of Commerce
2. Ministry concerned: Ministry of Health and Welfare
3. Complaint:
Japan's regulations on food additives, such as the nitrite content of meat products being 0.07g or less and on the use of benzoic acid, are limited to certain items, such as caviar, margarine, syrup and soy sauce; however, the EU and U. S. A. ernization and diversification of the dietary habits and the developing physique of the Japanese people and the like have given rise to a variety of changes in dietary habits, and regulations should be relaxed in kind.
4. Corresponding Policy of the Ministries concerned:
Based on the stipulations of Article 7, Clause 1 of the Food Sanitation Law, from the perspective of public health, standards and specifications on food additives and the like (pertaining to usage, manufacturing and ingredients) were established based on "Standards and Specifications on Food, Additives, etc." (December 12, Showa 34; Notification No. 370 of the Ministry of Health and Welfare), and Clause 2 of the same article prohibits the import, sale, etc., of items that do not conform to these standards and specifications.
In addition, concerning the procedure for revising the usage standards on food additives, based on the report of the Food Safety Council in March of 1996, we are in the process of designating "Policy for Designating Food Additive and Revising Usage Standards" (Notification No. 29 of the Director of the Environmental Health Bureau). Based on this policy, and adding materials on safety and the like, if there is an actual request, it will be conducted through the deliberation of the Food Safety Council.
The procedure for revising the food additive usage standards will be implemented based on actual requests from related businesses and the like in various Western countries, as well, and on scientific evaluation.
5. Remarks
The complainant's opinion is as follows:
"I understand that this is the policy as it stands."
1-(6) Expand acceptance of foreign countries' investigation data related to alcoholic beverage ingredient analysis tables
1. Complainant: Tokyo Chamber of Commerce
2. Ministry concerned: Ministry of Health and Welfare
3. Complaint:
In the import of alcoholic beverages, the presence or absence of antioxidants and other additives, the substance name, the content, etc. must be in accord with the Food Sanitation Law. The ingredient analysis tables used in making this judgment are limited to those issued by inspection agencies authorized by the Ministry of Health and Welfare. If analysis tables are issued by inspection agencies other than those that have been authorized, either the tables must be redone by an authorized inspection agency or analysis and inspection must be conducted in Japan.
Concerning the acceptance of ingredient analysis tables issued by public inspection agencies not authorized by the Ministry of Health and Welfare and manufacturers who have cleared the fixed conditions, the analysis tables issued by such makers should be considered valid and the range of inspection data from foreign countries accepted should be expanded.
4. Corresponding Policy of the Ministries concerned:
To confirm that food, etc., is in accord with the standards and specifications based on the Food Sanitation Law, at time of import, presentation of documentation of the results of inspection conducted by inspections agencies designated by the Minister of Health and Welfare or the public inspection agencies of the exporting country is requested.
The public inspection agencies of the exporting country that have standard inspection capability and are under the jurisdiction of or authorized and designated by the exporting country should be registered with the Ministry of Health and Welfare in advance. When the results of the inspections conducted by such public agencies are presented (excluding those pertaining to inspected items that could be subject to change during transit, such as bacterial and mildew infections), the inspection at time of import is omitted. Based on this system, acceptance of the documentation on inspection results at time of import when an exporting country requests and engages in registration of a public inspection agency has increased compared with the past.
Concerning the manufacturer's inspection room, etc., if the inspection agency has inspection capability above the standard and has been authorized and designated by the exporting country, it will be possible to consider it as a public inspection agency of the exporting country when there is a request from the government of the exporting country to do so. However, in accepting the results of inspections conducted by inspection agencies under the jurisdiction of or recognized and designated by the exporting country, etc., from the standpoint of ensuring objectivity of the inspection results, it will be difficult to accept the results of inspections conducted by manufacturers' inspection rooms, etc., not recognized and designated by the government of the exporting country and to omit the inspection at time of import.
5. Remarks
The complainant's opinion is as follows:
"I understand that this is the policy as it now stands."
2. Pharmaceuticals, Medical Equipment and Cosmetics
2-(1) Promptly deregulates nutrition supplements
1. Complainant: U.S. Chamber of Commerce in Japan, American Embassy in Japan
2. Ministry concerned: Ministry of Health and Welfare
3. Complaint:
Concerning the Cabinet decision to deregulate nutrition supplements based on the March 26, 1996 decision of the Office of Market Access and the program to promote deregulation that followed, status of progress has not been clarified and almost no progress has been made in actual liberalization. In keeping, it is important to make the status of progress in deregulation transparent and to implement deregulation promptly.
Two new problems have emerged, as follows.
(1) Considerations of the investigative committee on herbs, etc., and the ministries concerned have been extremely slow; it will likely take many years for deregulation to become a reality.
(2) For nutrition supplements, which have gone from being regarded as pharmaceuticals to being regarded as food, the strict regulation of them as food poses a serious barrier to imports.
Based on the above, the following improved measures should be considered.
(1) For dose-type nutrition supplements, because at present only 7 kinds of vitamins have been deregulated and conditional deregulation applies to the remainder, the liberalization of all dose-type nutrition supplements should be promoted.
(2) Investigation of benefits, etc., that have yet to be investigated should be done immediately.
(3) Because the ministries concerned are only beginning internal cross-investigations on this new category, "nutrition supplements," and investigation status lacks transparency, schedules should be clarified and actual measures to make progress transparent and adoption measures implemented immediately upon.
(4) Deregulation of the herbs, minerals, etc., that are commonly distributed and sold overseas as food should be advanced without delay so that they may be distributed and sold as food without being regulated as pharmaceuticals.
4. Corresponding Policy of the Ministries concerned:
In Japan, pharmaceuticals and foods are judged collectively based on ingredients, indications, dosage, claim, etc. As long as claim of benefits is effects are not advocated, the major vitamins are classified as food, even if capsules and other pharmaceutical-like dosages are used. For vitamins used exclusively as pharmaceuticals and that may be problematic in terms of side effects and other safety issues, content is restricted and handling is as described above.
Overseas, the status of regulations on the "dietary supplement " classification, indications and dosage all differ; Japan's situation is thus not unique. For example, in terms of dosage, over seven countries, including France and Switzerland, use one judgment standard for pharmaceuticals.
At present, the U.S., Europe, Japan and other countries are participating in the FAO/WHO joint food standards program (CODEX), and although guidelines on range, indications, etc., of nutrition supplements are under consideration, agreement has not been reached.
For U.S. nutrition supplements, in addition to the number of times the U.S. Food and Drug Administration has issued warnings concerning quality and safety, Japan, which has no experience in this area, also requires scientific investigation to permit related distribution in Japan.
(1) These problems are discussed below.
1) Because many of the herbs involved are unknown in Japan and related safety has not yet been confirmed, the investigative committee on herbs is scientifically investigating safety, and based on the investigation results, it is considering other primary factors (usage purpose, indications, claim, etc.), and attempting to resolve which kinds of herbs should be freed from the framework of pharmaceutical regulations. The range of herbs under investigation is those sold as food in the U.S. and Europe. Preferential positioning will be based on sales results (sales position) in the U.S., and investigations are being conducted from the necessary information that has been obtained.
Subjects for investigation include the 150 kinds of herbs for which there is demand in the U.S. market (from the September 9, 1997 MOSS follow-up meeting), and the necessary measures will be implemented within fiscal year 1997.
2) Concerning deregulation related to relevance as pharmaceuticals, an investigative committee (a research group on vitamins) has been established that is conducting investigations, and deregulation is being worked on. Having conducted investigations of each country's market, regulatory system, usage methods, indications, etc., and international trends based on the program to promote deregulation, the investigative committee is now investigating scientific safety. Deregulation is being undertaken using the examination results thus obtained as a reference.
Concerning the designation of new food additives, based on the policy indicated in March of 1996 in the WTO report and other procedures, the same as in various European countries, when there is an actual request from related businesses, deregulation will be implemented based on the deliberation of the Food Safety Council. At the February 1996 Expert Meeting of the Market Access Ombudsman Council of OTO, at which the subject of reviewing the standards on the range of pharmaceuticals was deliberated, parties related to one of the complainants in attendance, the U.S. Chamber of Commerce in Japan, stated something to the effect that a rational system has been established for the designation, etc., of food additives and that there is no need to change it.
(2) The following concerns the request for improvements.
In future, as well, Japan will both be involved in the work of establishing guidelines on nutritional supplements at CODEX and will be advancing investigations in consideration of these international trends. When these international trends have been determined, Japan will not delay, and to ensure a system, on which international agreement has been reached, it will take the following measures.
1) Concerning the liberalization of form (including dosage-form, container, package and design), deregulation of vitamin dosage has already been undertaken, and minerals and herbs are also being investigated while giving consideration to clear, appropriate labeling as food that will allow consumers to make correct selections without confusion.
2) Restrictions on indications are being examined, giving consideration to labeling that will enable consumers to accurately select what they need by themselves in terms of appropriate ingestion and nutrition-supplementing effect, caution labels, etc.
3) In terms of measures for dealing with nutrition supplements as a new category, the period for such measures is currently being examined by the related departments within the ministries, and with international trends kept in view, reports and the like will be made on the results of these investigations, as necessary.
* Attention will be given to CODEX trends and overseas legal systems and market conditions will be investigated.
* Opinions will be exchanged on items with special characteristics, etc., that are regulated domestically under the Pharmaceutical Affairs Law, Food Sanitation Law, Nutrition Improvement Law and similar laws.
4) Concerning the handling of nutrition supplements normally handled as food overseas, deregulation of vitamins went into effect in March of 1997. In April of 1997, the investigative committee on herbs was established, and measures are to be implemented within the same fiscal year. In June of 1997, an investigative committee on minerals was established, and measures are slated for sometime within fiscal year 1998. We wish to have personnel representing the U.S. Chamber of Commerce in Japan and American Embassy staff in attendance at these investigative committees.
2-(2) Ensure fair enforcement of the Pharmaceutical Affairs Law
1. Complainant: U.S. Chamber of Commerce in Japan
2. Ministry concerned: Ministry of Health and Welfare
3. Complaint:
For the antiseptic solution used in piercing, import approval as a pharmaceutical used in treating wounds must be obtained. However, without obtaining the import approval, some enterprises in Japan are importing and selling this antiseptic solution within Japan as a quasi-drug, in violation of Articles 13, 23, and 59 of the Pharmaceutical Affairs Law.
Or, they obtain approval for its use solely on the ears and market self-piercing as body piercing.
Sanctions should be brought against this type of illegal marketing of pharmaceuticals, etc., and the law enforced fairly.
4. Corresponding Policy of the Ministries concerned:
The Pharmaceutical Affairs Law regulates the manufacture and distribution of pharmaceuticals, quasi-drugs, cosmetics, and medical devices.
For example, under Article 22 of the Pharmaceutical Affairs Law, a party attempting to engage in the import of pharmaceuticals, quasi-drugs, cosmetics, and medical devices as a business would need the license of the Minister of Health and Welfare (or the prefectural governor). Moreover, this license would be required for each sales office, and if it were not renewed within the period stipulated in the government ordinance, it would become invalid once said period has elapsed.
Based on this ordinance, the Minister of Health and Welfare (or the prefectural governor) strictly handles any acts in the manufacture and distribution of pharmaceuticals, quasi-drugs, cosmetics, and medical devices that are in violation of the Pharmaceutical Affairs Law.
This time we will conduct an investigation to determine if the brokers indicated are actually in violation of the law and will handle the matter accordingly.
5. Remarks
The complainant's opinion is as follows:
"I understand that this is the policy as it now stands."
2-(3) Give the regulations on the ingredients used in cosmetics the same form as those of the E.U.
1. Complainant: Tokyo Chamber of Commerce
2. Ministry concerned: Ministry of Health and Welfare
3. Complaint:
(1) Concerning regulations on the ingredients used in cosmetics, abolishing the system requiring approval for each type and switching to regulations based on a "negative list" would give direction to the deregulation. Along with giving the following content the same form as that of the E.U., the E.U.'s data should be accepted for conformance evaluation.
1) Negative list
2) A positive list for when the transition to the negative list is made
3) Handling of new combined ingredients
4) List of existing combined ingredients
(2) Items unique to Japan (concerning report format, data submission, etc.) should not be part of the approval procedure.
4. Corresponding Policy of the Ministries concerned:
Concerning Japan's cosmetic regulations, in December of 1996, an investigative committee on appropriate cosmetic regulations was established to investigate how to achieve deregulation; international harmonization is under investigation, giving maximum consideration to ensuring consumer safety. In March of 1997, the collected findings were presented in terms of future direction for cosmetic regulations and related subjects.
Concerning regulations on the ingredients used in cosmetics, it has been indicated that from the standpoint of corresponding promptly to diverse needs and ensuring safety, ingredients for which combination is prohibited or limited that are published on the negative list will be regulated, the same as in the EU and U.S.A., and along with abolishing the approval system, for a specified group of ingredients, such as preservative, ultraviolet-light absorbent, and tar pigment, the names of the ingredients that it is possible to combine will be collected, a positive list established, and regulation enforced in kind.
At present, concerning the actual topics pertaining to the adoption of such methods that are similar to those of the EU and U.S.A. have been examined by the working group of the investigative committee. Differences between the U.S. and Europe in the items published on the list and differences in the groups of ingredients on the positive list will be examined and the challenge of achieving international harmonization with the EU and U.S.A. taken on.
The working group was held in December of 1997 and January of 1998, and their report is scheduled for discussion by the investigative committee during fiscal year 1997.
The final report of the investigative committee is expected to be made public in May of 1998.
5. Remarks
The complainant's opinion is as follow
3. Industry
3-(1) Coordinate standards for electricity-generating equipment for emergency use on the international level
1. Complainant: U.S. Chamber of Commerce in Japan
2. Ministry concerned: Ministry of International Trade and Industry
3. Complaint:
Under the regulations of the Ministry of Trade and Industry, the electricity-generating equipment used in reserve electricity-generating facilities for emergency use, certification of the engine model and class, electric generator model, control panel model and the like is required. Combinations of these individual components must be authorized as sets. For obtaining certification, a large volume of detailed documents, including design plans, performance, sales history, manufacturer's quality control and organization, etc., is required. Individual components and sets must be subjected to the inspection of Nippon Engine Generator Association, at considerable expense. Thus, internationally recognized standards should be accepted.
4. Corresponding Policy of the Ministries concerned:
(1) The technical standards for ensuring electricity-related safety based on the Electricity Enterprises Act were revised on March 27, 1997 to solely express the functions that must be satisfied to ensure safety; concrete stipulations on materials, structure and other items were avoided as much as possible. As far as maintaining safety levels goes, the utilization of fair, private standards from overseas, like those of ASME, has been recognized domestically from the outset.
It is thus in error to state that overseas standards are not recognized.
(2) In the Electricity Enterprises Act, technical standards have been established for ensuring safety, but no system has been adopted for authorizing the standards for electricity-generating facilities, etc.
It is thus not accurate to say that the regulations of this ministry necessitate the certification of engine models and classes, electric generator models and sizes, and control panel models.
(3) The certification system related to electricity-generating facilities that is implemented by the corporate Nippon Engine Generator Association is a private, autonomous authorization system and has no relation to the procedures based on the Electricity Enterprises Act, which is a public regulation pertaining to electricity-related safety in Japan.
We are attempting to eradicate these kinds of misunderstandings, and Nippon Engine Generator Association is creating pamphlets (completion of Japanese version: May 1997; completion of English version: June 1997) and is clarifying that this certification system is a private, autonomous one.
3-(2) Relax inspections related to LPG bulk container import
1. Complainant: Japan Foreign Trade Council
2. Ministry concerned: Ministry of International Trade and Industry
3. Complaint:
Although ASME specifications are recognized in relation to special authorization of U.S.-made LPG bulk containers, the import inspection is conducted based on the various regulations pertaining to Japan's High Pressure Gas Safety Law, preventing actual import. It thus cannot be said that relaxed import policy has been adopted. There is a method of having the inspection conducted in Japan following import, but it is expensive and unrealistic.
In keeping with the program to promote deregulation that was reviewed in March of 1997, the law was revised on April 1, 1997 to authorize autonomous inspection and stamping for superior overseas manufacturers. However, for LPG bulk containers, Japan's High-Pressure Gas Safety Institute still requires on-site inspections in the U.S. or inspection at time of import, which are extremely expensive. Thus, import of LPG bulk containers should be authorized using ASME inspection and stamping, mentioned previously.
4. Corresponding Policy of the Ministries concerned:
In April of 1997, under the High Pressure Gas Safety Law, a system was created to register overseas manufacturers of containers, etc., for which autonomous inspection and autonomous stamping of containers (cylinders and other containers moved on the ground) would be recognized, making autonomous inspection and autonomous stamping possible. Similarly, for specified equipment (LPG bulk tanks and items fixated on the ground) as well, a system was created for registering the overseas manufacturers of specified equipment, and autonomous inspection has already been made possible. Concerning the inspection at time of registration under this system, we wish review the overseas data.
In addition, in the technical standards for specified equipment under this same law, materials meeting ASME standards are being recognized; henceforth, we wish to consider how to smooth the way for the import of bulk tanks and other specified equipment.
3-(3) Simplify procedures for importing high-pressure gas
1. Complainant: Japan Foreign Trade Council and Tokyo Chamber of Commerce
2. Ministry concerned: Ministry of International Trade and Industry
3. Complaint:
(1) It should be possible to have the high-pressure gas import report accepted not only by the prefectural governor of the designated landing place but also by the prefectural governor of the place where the importer is located.
[Tokyo Chamber of Commerce]
(2) In the March 1997 review of the program to promote deregulation, the high-pressure gas import report was abolished, but the report is still required when making a request for inspection to the prefectural governor. Thus, the abolition of the import report should be made common knowledge to each prefecture.
[Japan Foreign Trade Council]
(3) The inspections that the prefectures are to conduct should be entrusted to private companies and the like and the work involved expedited.
[Japan Foreign Trade Council and Tokyo Chamber of Commerce]
4. Corresponding Policy of the Ministries concerned:
(1) High-pressure gas import procedures
Although the high-pressure gas import report was abolished in March of 1997 and no longer must be made, based on what Japan Foreign Trade Council has pointed out, we plan to again make this common knowledge to the relevant prefectural authorities and the like.
(2) Inspection at time high-pressure gas is imported
Because the procedure for importing high-pressure gas is generally conducted in bonded areas, in view of the examples of the import inspections of other ordinances and the severity of damage from accidents involving high-pressure gas, the inspecting body is limited to administrative offices under the High Pressure Gas Safety Law.
(3) In addition, to expedite the import procedure, since April of 1997, measures to improve operations have been considered, such as handling copies of the application for the inspection of imported high-pressure gas that have been stamped by the inspection personnel, etc., as certificates of having passed the inspection and making clearance possible on the day of inspection, rather than after the certain number of days that has been required. Moreover, categories (type of gas, etc.) to determine safety will be established and measures to drastically reduce the time and labour involved in import inspections by further simplifying the current inspection system considered so that related conclusions may be drawn within fiscal year 1998.
Additionally, we wish to direct the prefectural inspecting bodies to make sure that the delays in inspection referred to do not occur.
5. Remarks
The complainant's opinion follows.
"(3)I understand that this is the policy as it now stands."
3-(4) Relax standards for designating chief electrical engineers for shopping centers
1. Complainant: Tokyo Chamber of Commerce
2. Ministry concerned: Ministry of International Trade and Industry
3. Complaint:
Because many shopping centers exceed the 1000KW of the contracted electrical power, they must employ a permanent, full-time chief electrical engineer.
However, in light of the fact that improvements in operations technology and materials used in recent years have increased the reliability of electrical equipment, etc., for facilities for which a chief electrical engineer must be employed, measures should be considered to raise the lower limit of the contracted electrical power from the current 1000KW to 3000KW.
4. Corresponding Policy of the Ministries concerned:
(1) Under the stipulations of the Electricity Enterprises Act, parties establishing electricity-using structures for business purposes must designate a chief electrical engineer, but because of the large financial burden put upon medium- and small-scale consumers for the work of designating a chief engineer, when the work related to supervision of the safety of electricity-using structures is entrusted to a party that meets the specific required conditions, and it is recognized that safety equivalent to that of a place of operation designating a chief electrical engineer has been secured, the pertinent work can then be reduced (non-designation approval) under the regulations of the Electricity Enterprises Act.
In addition, although one chief electrical engineer is to be designated per place of operation, as a rule, the recognition of having one engineer concurrently hold other posts (concurrent post approval) is now under way.
(2) In terms of expanding the ranges targeted for non-designation approval and concurrent post approval, based on a Cabinet decision in March 1996, since September of 1997, the targeted range for non-designation approval has been related to receiving voltage of 7,000V or less (all high-voltage receiving ranges) and that for maximum electrical power to up to 2,000KW.
5. Remark
The complainant's opinion follows.
"I understand that this is the policy as it now stands."
3-(5) Simplify safety authorization for electrical appliances (amusement-related machinery for commercial use)
1. Complainant: Tokyo Chamber of Commerce
2. Ministry concerned: Ministry of International Trade and Industry
3. Complaint:
Amusement-related machinery for commercial use (TV game equipment, pinball game equipment, and other mechanical games for commercial purposes, as well as stationary electric rides) is regulated under the Electrical Appliance and Materials Control Law.
In 1995, TV game equipment and mechanical games for commercial use went from being classified as government-approved items (category A electrical appliance and material) to being classified as autonomously approved items (category B electrical appliance and material). However, the Electrical Appliance and Materials Control Law Enforcement Ordinance should also be revised so that stationary electric rides are designated as a category B electrical appliance and material.
4. Corresponding Policy of the Ministries concerned:
(1) Concerning the items regulated under the Electrical Appliance and Materials Control Law, in July of 1995, 117 items classified as category A electrical appliances and materials (for which government approval of models is necessary), which were nearly all household electrical appliances, were changed to category B electrical appliances and materials (for which a business's autonomous confirmation suffices).
(2) As the electric rides prescribed in the Electrical Appliance and Materials Control Law are those that children will use, safety is particularly required, and they are thus handled as category B electrical appliances and materials (for which approval of models is necessary).
(3) From the standpoint of deregulation, revision from category A electrical appliances and materials (those for which government approval is required) to category B electrical appliances and materials (those for which autonomous confirmation suffices) is being done as in the past, and we will continue with related consideration.
3-(6) Approve the import of chemical products approved by TSCA and the like
1. Complainant: Tokyo Chamber of Commerce
2. Ministry concerned: Ministry of Health and Welfare, Ministry of International Trade and Industry
3. Complaint:
Diisopropenylbenzene, an intermediate chemical product, is registered with TSCA, but because it has not been registered in Japan, based on laws pertaining to regulations on the examination, manufacture, etc., of chemical substances, it cannot be imported, necessitating the use of a substitute material that is more expensive to manufacture.
The import of diisopropenylbenzene should be unconditionally or conditionally approved or inspection simplified by application of overseas inspection data.
4. Corresponding Policy of the Ministries concerned:
The U.S. TSCA, Europe's Revised Order No. 7 on the Classification, Packaging and Labeling of Dangerous Substances, and Japan's Law concerning Examination and Regulation of Manufacture, etc., of Chemical Substances all differ in terms of purpose, system structure, and the safety data, etc., necessary for advance import inspection. For the interim, even if the relevant chemical substances are registered on the TSCA inventory or EINECS, if the safety required by Japan's Law concerning Examination and Regulation of Manufacture, etc., of Chemical Substances is not ensured, in order to ensure that the objective of the law, the prevention of damage to human health through an environment in which chemical substances exist, is met, it will not be possible to do away with the confirmation of safety based on advance import inspections and the like and confirm usage.
Concerning safety-related data obtained overseas, when it is recognized that the testing facilities are in conformance with the principles of good laboratory practice (GLP) of the OECD, the attempt is being made to accept this data for the inspections under the Law concerning Examination and Regulation of Manufacture, etc., of Chemical Substances, and safety-related data obtained overseas is already being accepted.
3-(7) Deregulate import of electrical appliances meeting U.S. standards
1. Complainant: Tokyo Chamber of Commerce
2. Ministry concerned: Ministry of International Trade and Industry
3. Complaint:
In the import and sale of stands, dimmer switches, etc., that bear the U.S. standard UL mark, there is a regulation that prohibits sales unless that "T" mark is obtained. However, if voltage conversion can be done by means of a transformer, import should be recognized.
4. Corresponding Policy of the Ministries concerned:
(1) In terms of the safety standards for electrical goods, we consider the coordination of each country's standards with the IEC standards, which are international, to be important. In Japan, since Showa 58, the IEC standards have been adopted as the technical standards for electrical goods, and further coordination with the IEC standards is being planned until the end of fiscal year 1997. In keeping, there will be no problem if the U.S. standards have been coordinated with the IEC standards.
(2) Appliances using a light source like the electrical stands mentioned in this request are classified as a category B electrical appliance and material, for which a report will suffice.
5. Remarks
The complainant's opinion is as follows:
"The corresponding policy is satisfactory."
3-(8) Internationally standardizes the technical standards, etc., for electrical appliances
1. Complainant: Tokyo Chamber of Commerce
2. Ministry concerned: Ministry of International Trade and Industry
3. Complaint:
(1) In July of 1995, when the Electrical Appliance and Material Control Law Enforcement Ordinance was implemented, further coordination of the technical standards under this law with the international (IEC) standards was expressed, but time has passed with no clear action plan stated. A time limit should be set and coordination of the IEC standards and the technical standards of the Electrical Appliance and Material Control Law achieved promptly.
(2) For the purpose of reducing expenses, etc., by providing exemption from import inspections, an early-stage mutual agreement should be reached on mutual approval of the standards for and authorization of industrial appliances.
(3) The fact that most of Japan's plug receptacles are the 2-wire type, with no earth line appears to be a non-tariff barrier to overseas countries. Thus, use of the 3-wire type should be promoted.
4. Corresponding Policy of the Ministries concerned:
(1) We recognize that coordination of the safety standards for electrical appliances with the IEC standards, which are the international version of the standards of each country, is an international trend, and we consider it important for each country to strive toward such coordination. Since Showa 58, Japan has adopted the IEC standards as the technical standards for electrical appliances.
Concerning further coordination of the technical standards for electrical appliances with the IEC standards, as is clearly specified in the March 1997 revision of the program to promote deregulation, further coordination with the IEC standards (commonly known as IEC-J) by the end of fiscal year 1997 has been planned for, which will lead to further international coordination and increase both the international quality and transparency of the standards.
(2) At present, a mutual approval agreement between Japan and the E.U. is underway. The Ministry of International Trade and Industry also recognizes the importance of promoting a mutual approval agreement with the E.U. that includes both testing and authorization. In June of 197, at the EU-Japan Summit, it was specified that work to conclude mutual approval agreements in fields designated as appropriate is to be accelerated and reinforced, and successive mutual approval agreements should be started in the possible fields and in the possible formats, and Japan is in the process of continuing deliberations with the E.U.
(3) As there are no problems in terms of safety with the current 2-wire plug, making the 3-wire type compulsory would be an extremely high economic burden; thus, we will not employ measures to make it compulsory but consider it appropriate to leave selection freely up to the consumer.
5. Remarks
The complainant's opinion is as follows.
"I understand that this is the policy as it now stands."
3-(9) Internationally coordinates the dangerous goods class
1. Complainant: Tokyo Chamber of Commerce
2. Ministry concerned: Ministry of Home Affairs
3. Complaint:
(1) Because the definition of dangerous goods under the Fire Service Law is unique to Japan and different from that of the E.U., North America and other advanced countries, Japanese regulations for storage and transportation on dangerous goods have been incurring additional costs, etc. The regulations targeting all liquids with a flash point, in particular, should be revised.
(2) Unified standards should be created quickly in discussion with advanced Western countries and Japanese own classification should be restructured.
4. Corresponding Policy of the Ministries concerned:
Reconsideration of the regulations on dangerous goods with a high flash point has been incorporated in the program to promote deregulation. Since March 1997, the Dangerous Goods Committee of the Fire and Disaster Management Agency has been conducting investigations in order to make a conclusion in fiscal year 1999.
As a substructure of the Committee, working group that includes representatives from industries concerned (investigative working group on dangerous goods with a high flash point) has been established.
The aforementioned investigative work is expected to proceed as follows.
* Fiscal year 1997:" Analysis of accidents"," an investigation of the status of overseas regulations, etc.".
* Fiscal year 1998:"Performing hazard evaluating tests for analysis of ignition and flame expansion characteristics of dangerous goods due to the difference in flash points", and "discussion about various regulations on dangerous goods".
* Fiscal year 1999: Deliberation about "testing methods and criteria", "regulations concerning position, structure and equipment of dangerous goods facilities", "storage, handling, and transportation of dangerous goods".
5. Remarks
The complainant's opinion is as follows.
"I understand that this is the policy as it now stands."
3-(10) Relax the standards on designation of personnel responsible for handling freezers for building use
1. Complainant: Tokyo Chamber of Commerce
2. Ministry concerned: Ministry of International Trade and Industry
3. Complaint:
Because the manufacture of chlorofluorocarbon gas is prohibited, a substitute for it is used even in freezers for building use. Conventionally, types of freezers were adopted for which no special personnel responsible for freezing safety were designated, but for the aforementioned reason, the types of freezers requiring personnel so qualified have increased. If new freezing equipment has been authorized as equipment so designated, the qualified personnel are not necessary even at present, but for existing equipment, measures to be considered to relax the standards for designating qualified personnel from 300 tons or more to 600 tons or more.
4. Corresponding Policy of the Ministries concerned:
Because chlorofluorocarbon 11, which does not come under the category of high-pressure gas, is mainly used for the freezers for building use already in existence, in this case, the High-Pressure Gas Safety Law is not applied.
In new freezers for buildings, as a substitute for chlorofluorocarbon 11, the manufacture of which is prohibited, chlorofluorocarbons 22 and 134a - which come under the category of high-pressure gas, owing to their thermal properties - are used as coolants. The High-Pressure Gas Safety Law is thus applied, and if freezing capacity exceeds 50 tons per day, designation of personnel responsible for freezing safety is necessary.
However, designation of freezing safety personnel is not necessary in the following cases.
(1) When using freezers that the Minister of International Trade and Industry, etc., has recognized the structural and functional safety of via various types of safety equipment, control equipment, and the like
(2) When using freezers for which safety has guaranteed through general assembly, airtight testing, and trial operation at the freezer-manufacturing factory, and for which freezing capacity is below 300 tons per day
3-(11) Expand the use of clothing labels that are in English
1. Complainant: Tokyo Chamber of Commerce
2. Ministry concerned: Ministry of International Trade and Industry
3. Complaint:
A notification revision of October 1997 indicated that composition labels in English (but not labels indicating home and other care methods) would be recognized in the domestic sale of imported clothes. Thus, from the standpoint of reducing costs, increasing imports, and coordinating the JIS standards for labeling using symbols with the ISO standards, care labels in English within the range of the consumer's understanding should also be recognized.
4. Corresponding Policy of the Ministries concerned:
(1) Composition labels
Concerning clothing quality labels, the actual items to be indicated (fiber composition, washing and care labeling codes using symbols, etc.) are specified in the official regulations on fiber manufacturing quality labels, based on the Household Goods Quality Labeling Law.
Recently, in a review of the Household Goods Quality Labeling Law, in consideration of the extent of consumer recognition, the use of the terms "cotton," "wool," and "silk" on fiber composition labels has expanded, and the terms "nylon," "polyester," "rayon," and "acetate" will be added, making it possible to use labels that use these terms.
We plan to continue our review of this issue, giving consideration to the extent of consumer recognition.
(2) Care labeling code-using symbols
The care labeling codes for home washing, etc., that use symbols are stipulated in JIS L 0217 ("Label Codes for the Care of Fibers Manufactured and Labeling Methods"). JIS L 0217 is cited in the Household Goods Quality Labeling Law, and labeling must be in keeping with it. In terms of international standards, there is ISO3758 ("Textiles - Care labeling code using symbols"), in which labels that use symbols alone are recognized. However, as no evaluation method has been prescribed at present, from the standpoint of appropriately enforcing the Household Goods Quality Labeling Law, it would not be appropriate to introduce it domestically.
In March of 1995, JIS L 0217 coordinated its stipulations on use of a white base cloth, black or dark blue codes, and a red "x" to indicate prohibitions with ISO 3758 and eliminated the color stipulations. However, complete coordination of JIS L 0217 with the international standards is expected to be done promptly, as soon as ISO standards have been established for the test evaluation method that is currently under review at ISO.
Ministry of International Trade and Industry work necessary for international coordination in fiscal year 1995 and fiscal year 1996 will focus on both conducting investigations of the status of coordination of the related standards with the international standards and conducting investigative research aiming at accord between the test method that is slated to be added to the ISO standards and the actualities of life in Japan. In fiscal year 1997, we plan to participate in ISO deliberations based on the results of this investigative research.
5. Remarks
The complainant's opinion is as follows.
"I understand that this is the policy as it now stands."
3-(12) Expedite import inspections on samples of raw materials of poisonous substances, narcotics and the like
1. Complainant: Tokyo Chamber of Commerce
2. Ministry concerned: Ministry of Health and Welfare
3. Complaint:
When a small quantity of a poisonous substance is to be imported, for a non-registered poisonous substance, it can take up to two months after the application to revise importer registration has been made for approval to be granted.
Based on a premise of clarifying the usage purpose and usage place (company name), registration of small-quantity samples should be simplified by means of a revision application reception counter and import approved.
Approval for samples, etc., should be expedited so that no more than 15 days, at most, are required.
4. Corresponding Policy of the Ministries concerned:
No matter how small the quantity, a poisonous substance is a chemical substance that can cause injury in small quantities. Because establishing a special-case system on the premise of small quantities would go against the logic of the Poisonous Substances Control Law, we are unable to accept this request. The import of poisonous substances that the client would provide to another party for evaluative analysis or public-relations purposes could put the other party or any third party involved in transport, etc., at risk. Thus, the Poisonous Substances Control Law prohibits their handling by anyone other than the registered import brokers. Registration determines whether the relevant import broker can appropriately handle the poisonous substance or not. Using the fact of quantities being small or substances being samples as reasons for giving priority in the registration process could affect other applicants' business and would result in loss of fairness. It is also inappropriate because it would complicate registration work needlessly.
The process from application to registration does not take two months in all cases. We endeavor to have applications processed in order, as quickly as possible, while preserving fairness.
Moreover, the application for revising registration does not require the relevant poisonous substance to have arrived at the airport, etc., or for it to actually be presented; this makes it possible for there to be sufficient time to apply to register the sample for import.
Under the Poisonous Substances Control Law, registration as an importer does not apply to import for the import broker's own analysis, testing, or other private consumption.
3-(13) Simply application procedure related to the standards for preventing the explosion of electric machinery
1. Complainant: Tokyo Chamber of Commerce
2. Ministry concerned: Ministry of Labour
3. Complaint:
The procedures for obtaining authorization of models pertaining to the explosion-prevention standards when importing and using electric machines and appliances are complicated. The following measures should thus be considered.
(1) Accept products that meet the standards of the EU and various other countries.
(2) Accept the inspection data of overseas government agencies and the like and the data prepared by overseas manufacturers.
(3) Simply the application procedure.
4. Corresponding Policy of the Ministries concerned:
(1) In this case, as referred to in the "Report on the Third Market Access Meeting" (March 1996), the necessary investigations and reviews are currently underway.
(2) In terms of accepting the inspection data of overseas government agencies, we are striving to both actively designate overseas government inspection agencies that have not already been designated and publicize this designation system.
Moreover, according to the complainant, accepting the data prepared by overseas manufacturers would mean accepting the English-language versions of the documents that must accompany the application for authorization, such as structural diagrams of the machinery for the pertinent models, without having them translated into Japanese. Even from an international perspective, submitting application documents that are in the language of the accepting country (for Japan, this would of course be Japanese) is simply a matter of course.
(3) So that this application procedure will be handled promptly by the authorizing agencies, related consultations are being made available and application guidance prepared. In future, by holding explanatory meetings and the like on this guidance, we wish to guide the authorizing agencies in expediting the application process for applicants.
5. Remarks
The complainant's opinion is as follows.
"I understand that this is the policy as it now stands."
3-(14) Deregulate pressurized containers and the like
1. Complainant: Tokyo Chamber of Commerce
2. Ministry concerned: Ministry of International Trade and Industry, Ministry of Labour
3. Complaint:
Regulation of the design, manufacture, and inspection of compressors, boilers, heat exchangers and other pressurized containers involves complex and unclear technical standards and complicated procedures, owing to the various different ordinances from different government offices (Ministry of International Trade and Industry and Ministry of Labour). At present, excessive time and effort are required, making the process inefficient. As the regulations make the bringing in of overseas products highly disadvantageous in terms of cost and delivery time, the following improved measures should be considered.
(1) Make the technical standards consistent with JIS. For pressurized containers, make them consistent with JISB8270 (basic standards on pressurized containers).
(2) Aim to internationalize the technical standards in future.
1) Establish a mutual approval system between JIS and ASME.
2) Reduce and clarify additional specifications using ASME, an international standard, as a base.
3) Recognize the inspection agencies designated overseas for overseas business (Lloyd's, etc.) and internationalize technical standards and inspections.
(3) Make an actual clear, international-like procedural manual pertaining to bringing in over overseas goods.
(4) Aim to reduce and simplify the items to be inspected and the inspection documents and minimize the translation of inspection documents, etc., into Japanese.
(5) Transfer all obligation and authority pertaining to inspections to private inspection companies.
4. Corresponding Policy of the Ministries concerned:
(1)
Revision of the JIS standards on pressurized containers will be begin in fiscal year 1997, and in cooperation with the related ministries, coordination of the mandatory legislation (High-Pressure Gas Safety Law, Gas Enterprises Act, Electricity Enterprises Act and Industrial Safety and Health Law) will be aimed for as much as possible.
[MITI]
There exists a major difference in the purpose, content, and validity between the Industrial Safety and Health Law and those of Industrial Standardization Law. Industrial Safety and Health Law is a compulsory legislation with regulations in order to prevent work-related accidents which harm human life and health, whereas Industrial Standardization Law is a voluntary legislation aiming at improvement of quality and productivity. Therefore it is not appropriate to unify the Construction of Code of the Industrial Safety and Health Law, and JIS Standard which is a technical standard of the Industrial Standardization Law. However, the Ministry of Labour is making an effort to seek for conformity for acceptance with the JIS standard, where it is appropriate.
[Ministry of Labour]
(2)
1) As there is no authorization system on pressurized containers under the Industrial Standardization Law, we will need to consider this issue.
[MITI]
The JIS standards do not stipulate an accreditation system for pressure vessels and would not adapt well to a mutual recognition system with the ASME standards.
[Ministry of Labour]
2) In terms of the technical standards of the High-Pressure Gas Safety Law, at present, the ASME standards are a recognized element pertaining to specific equipment (particularly necessary for the inspections of design, material quality and the manufacturing process for preventing the explosion of high-pressure gas and other accidents).
As the technical standards of the Electricity Enterprises Act avoid, as much as possible, specific stipulations on materials, structure and the like, as long as the safety level can be guaranteed, the use of fair, private standards from overseas, like ASME, has been recognized in Japan from the first.
The technical standards of the Gas Enterprises Act cite a portion of the JIS standards in stipulating materials, structures and the like, and to broaden the field of choice for enterprises, for materials with functional qualities equivalent or superior to those conforming to the technical standards, parts of ASME, ISO and other international standards have been recognized by means of related notifications.
At present, the issue of steering technical standards in the direction of stipulating performance is under consideration, with conclusions expected sometime in fiscal year 1999. In this case, it is expected that the JIS standards, overseas standards, etc. will be accepted into the inspection standards.
[MITI]
2) At present system, pressure vessels manufactured by ASME standards can be recognized conformity with the Industrial Safety and Health Law and its Construction Code. Our system accepts not only standard models made of materials by JIS, design and manufacturing prescribed in Construction Code, but the equivalent models if their safety is proved equal or superior.
The documents for proving the equivalency are clearly described depending on the case, and limited to the necessary minimum.
[Ministry of Labour]
3) Under the High-Pressure Gas Safety Law, when the materials necessary for the inspection of specific equipment to be imported have been submitted, domestic testing may be omitted. Moreover, it may be possible for overseas manufacturers of specific equipment that have been registered with the Minister of International Trade and Industry as having excellent quality-control systems to conduct their own inspections on the specific equipment.
Under the Electricity Enterprises Act, the operation and inspection records of the manufacturers, etc., in the manufacturing country are accepted in the welding inspection of the goods for import.
Under the Gas Enterprises Act, the inspection work is done on the government level, but the issue of involving third-party inspection agencies is now under consideration, and a conclusion is expected to be reached within fiscal year 1999.
[MITI]
Under the Industrial Safety and Health Law, five agencies, such as Lloyd's Register of Shipping, have already been recognized as designated overseas inspection agencies.
[Ministry of Labour]
(3) As a manual on the inspection methods and procedural methods under the High-Pressure Gas Safety Law, "Application and Inspection of High-Pressure Gas Equipment for Import" (issued by the High Pressure Gas Safety Institute, in Japanese and English) is being distributed.
Procedures related to the Electricity Enterprises Act have been publicized by means of "Guidance on the Welding Inspection Application and on Making the Application for Welding Inspection for Imported Goods" (issued by Japan Power Engineering and Inspection Corporation), with consideration given to transparency.
Concerning the Gas Enterprises Act, "Essentials of the Pre-usage Inspection" and "Essentials of the Periodic Inspection" have been created, which each gas-related enterprise may purchase.
[MITI]
Although the procedures under the Industrial Safety and Health Law concerning the import of pressure vessels have been clarified through ordinances and the like, we may consider creating a procedural manual in cooperation with the related organizations, if necessary, and aim to set forth our conclusions by the end of fiscal year 1998
[Ministry of Labour]
(4) Concerning the High-Pressure Gas Safety Law, both the range of specific equipment and a reduction of the inspection during processing for each specific piece of equipment are under consideration. In addition, even the English-language versions of the materials necessary for the inspections are being accepted.
For the welding inspection for goods to be imported under the Electricity Enterprises Act, the aim is to make the inspection simpler than that for pressure-resisting structures welded within Japan. In addition, even the English-language versions of the materials necessary for the inspection are being accepted.
The items for inspection and inspection documents under the Gas Enterprises Act are at the necessary minimum. Concerning equipment targeted for inspection, etc., in view of technical progress, improved safety levels and the like, successive rationalization of regulations is underway. For example, a reduction, etc., of the targeted range of construction plan approval, reports, and pre-usage inspections by February 1997 have been aimed for. In addition, even the English-language versions of the materials necessary for inspections are being accepted.
[MITI]
We consider the existing items checked by the inspection is the necessary minimum.
Applications in languages other than Japanese are not acceptable under the Industrial Safety and Health Law. This is because we can not eliminate the risk that applicant's intentions concerning safety matters are misinterpreted and misconveyed and thus hinders proper investigation, which could put human life and health at risk.
[Ministry of Labour]
(5) Under the High-Pressure Gas Safety Law, it is possible to have inspections of specific equipment done by private inspection companies.
Under the Electricity Enterprises Law, the addition of private enterprises to the designated inspection agencies for conducting the welding inspections is currently under consideration, along with the entire system, and conclusions are expected to be reached within 1999.
Under the Gas Enterprises Act, inspection work is done on the government level, but the issue of involving third-party inspection agencies is now under consideration, and a conclusion is expected to be reached within fiscal year 1999.
[MITI]
Under the Industrial Safety and Health Law, a system for designated overseas inspection agencies was introduced in 1985. The new rule is; if inspection is done by a designated overseas inspection agencies, such as Lloyds Register of Shipping, for a machine at an overseas manufacturing site, another inspection in Japan for the same machine is no longer necessary.
[Ministry of Labour]
4. Transport and Traffic
4-(1) Clarify and internationally coordinate the certification procedures pertaining to engines used in shipping
1. Complainant: U.S. Chamber of Commerce in Japan
2. Ministry concerned: Ministry of Transport
3. Complaint:
Ministry of Transport and Japan Craft Inspection Organization regulations concerning certification for engines used in shipping are unclear and arbitrary. Particularly concerning what is necessary for the certification of shipping engines, whether internationally accepted documentation will be accepted, and if additional documentation, such as the manufacturer's report, are required, etc., the current regulations and their application to new products should be clarified. In keeping, internationally recognized standards should be accepted.
4. Corresponding Policy of the Ministries concerned:
Inspections for ship engines are conducted similarly for all engines, based on public regulations and inspection methods, with no internal-external distinctions. In fact, more than 20% of the engines inspected in fiscal year 1996 had been manufactured overseas. Since there are no uniform standard for engines based on international agreements or the like, at present, each country is inspecting engines in its own way.
However, based on the 3rd Report of the Market Access Ombudsman Council of March 18, 1996 and the March 17, 1997 report, rationalization of inspections with ISO9000 series has been implemented from March 1998.
5. Construction
5-(1) Improve the quality inspection and verification system for overseas construction materials (materials imported for public construction)
1. Complainant: Korean Embassy in Japan
2. Ministry concerned: Ministry of Construction
3. Complaint:
In the operation of the inspection and verification system for overseas materials imported for the construction ordered by public agencies, the same inspections are applied, with no distinction made between the materials of companies that have acquired the internationally recognized ISO certification and the materials of companies that have not. At present, external bodies of the Ministry of Construction are conducting the work for authorizing quality inspections, but the inspecting agency differs with each construction project, necessitating considerable time and expense. Through these regulations, even if materials satisfy the Korean or international standards, in some cases they cannot be used for public construction within Japan.
In light of the purpose of the inspection and verification system, for all products for which ISO certification has been acquired, either effect equal to that of the quality inspections of overseas construction materials should be recognized or introduction of a mutual certification system pertaining to quality standards should be aimed for.
4. Corresponding Policy of the Ministries concerned:
(1) In public construction, specifications and the like normally stipulate use of materials of quality equal or superior to the JIS standards; however, for construction materials manufactured overseas, the inspection and verification work involves ensuring that the relevant materials satisfy JIS and that the quality control system of the factory or enterprise that manufactured those materials is conducive to reliable supply of them. Based on this work, smooth, effective utilization of construction materials manufactured overseas is attempted.
In addition, in 1996, the validity of the inspection and verification was extended from one year to three, and other efforts are being made to improve the system.
(2) ISO certification (ISO 9000 series) is a quality system to ensure that suppliers can continuously supply consumers with the products and/or services that satisfy their requirements and that stipulates actual status, etc. In this verification work, for materials manufactured at factories or enterprises that have received this certification, the parts of inspections that would be duplicated are omitted.
(3) JIS standards already exist, like those for cement, but for products not produced and supplied as JIS products, if a mill sheet (quality assurance document) is appended and submitted indicating that the quality of products not produced and supplied as JIS products is equal or superior to that of the JIS standards, we are planning to notify the related agencies that the materials can be used in the same way as domestic ones and to coordinate handling with domestically produced materials.
(4) Concerning JIS, in the December 1996 report on the review of the industrial standardization system, promotion of coordination with the international standards is expressed, and coordination with JIS and the international standards is currently being advanced.
(5) As the following items differ in actuality, we are in the process of verifying the complainant's opinion.
1) Although it was stated that "the same inspections are applied, with no distinction made between the materials of companies that have acquired the internationally recognized ISO certification and the materials of companies that have not," for products of enterprises that have obtained ISO9000 series certification, inspection of items pertaining to the product control system have been omitted from the past, and since September of 1996, the items for which inspections are omitted has increased.
2) Although it was stated that "...the inspecting agency differs with each construction project," concerning materials for civil engineering, Public Works Research Center and Japan Testing Center for Construction Materials conduct the inspections, and the inspecting agencies thus do not differ with each construction project. In addition, verification may be used for multiple construction projects within the (three-year) period for which verification is valid.
3) Although it was stated that "[Inspection requires] considerable time and expense," the inspection takes one month from the time the application documents have been received, as a rule.
4) As for the statement "for the ordered construction, the external bodies of the Ministry of Construction inevitably require performance inspections, quality inspections, and other separate quality confirmation procedures," the results of our investigation indicate that there are no external organizations (public corporations) to which this pertains. As the essentials state, with or without this quality inspection, verification and work, acceptance inspections and the like at construction sites will be conducted in accordance with the ordering party's specifications.
5-(2) Simplify JIS verification procedure pertaining to glass used for construction
1. Complainant: U.S. Chamber of Commerce in Japan
2. Ministry concerned: Ministry of Construction
3. Complaint:
The burden of the necessary JIS verification procedures ("JIS verification," hereinafter) for supplying imported glass for use in public construction work is a barrier to market access, and the following improvements should be made.
(1) Acquisition of JIS verification is necessary for construction glass that is to be supplied for public construction work, but as the voluminous documentation that must be submitted along with samples is excessively expensive, procedures should be simplified.
(2) JIS verification should be revised within a short time. Too much time is being taken to revise the procedure, and a reduction of time is thus necessary.
4. Corresponding Policy of the Ministries concerned:
At the Government Buildings Department of the Ministry of Construction, at the time construction materials are carried on site, supervisory staff attempts to confirm, with the objective of securing quality, whether the materials satisfy the quality and performance specified on the blueprints.
Conventionally, for materials without the JIS mark and official verification, for each individual construction site, supervisory personnel confirmed conformance, necessitating that they verify test data and judge whether quality and performance conformed to the blueprints. For this procedure, control and verification of test data took time and effort, which could obstruct the smooth use of the relevant construction materials.
For this reason, with the aims of making this confirmation work efficient and promoting the use of good, low-price construction materials from overseas, Public Building Association and Better Living began quality and performance evaluation work on construction materials. At the Government Buildings Department, in addition to the aforementioned confirmation procedure, since March of 1994 it has been possible to confirm by submitting copies of the above organizations' evaluations. During the three-year period for which an evaluation is valid, it will also be valid at Government Building Department sites.
Moreover, at the aforementioned organizations, from the standpoint of reliability, the data necessary for evaluation purposes is from the tests of public agencies and testing agencies within Japan and overseas, and which country's testing agency is selected is left to the applicant to judge.
In addition, when renewing an evaluation after three years, as long as there have been no changes in standards, materials or the like, test data will not be confirmed, and new testing will not be necessary.
As in the past, it is also possible to seek confirmation of quality and performance at individual sites.
This quality and performance evaluation work is useful for promoting the use of overseas construction materials.
The U.S. Chamber of Commerce has referred to verification based on quality and performance work as "JIS verification," but there is no direct connection to it.
5-(3) Simply certification work for construction materials, etc.
1. Complainant: Tokyo Chamber of Commerce
2. Ministry concerned:Ministry of Construction, Ministry of Home Affairs
3. Complaint:
For overseas manufacturers, the acquisition of Japan's certification for construction materials, etc. involves time and expense. In keeping, for materials in conformance with ASTM and other overseas standards, adoption of a mutual recognition system or harmonization of the domestic standards (such as in the Building Standards Law and Fire Services Law) with the international standards should be aimed at and certification work simplified.
4. Corresponding Policy of the Ministries concerned:
(1) At present, to study procedure of accepting overseas building materials upon request, if conditions such as assurance of standard performance and rules of international sharing of responsibility are satisfied. Specifically for wood frame construction (two-by-four construction methods, etc.), building materials conforming to overseas standard shall be generally accepted if they satisfy requirements stipulated in the Japanese wood frame construction technical standard. To the present, U.S. and Canadian lumber has generally been accepted.
In terms of simplifying the certification work, "Guideline for dealing with Test Result" was established in October of 1994, and concerning performance testing for building materials, construction methods, rationally conducted based on the Building Standards Law, the results of testing conducted by a testing organization that satisfies the set conditions for testing systems and the like are being accepted without making inquiries on domestic or overseas status. And, in order to both ensure non-discriminatory practices in terms of domestic or overseas status for standards and certification in the construction field, from the standpoint of aiming for international accord of the standards and certification system, "Guideline for designating Testing Organizations" was established and the designation procedure clarified, using international standards (ISO/IEC Guide 25) as a reference. To the present, as of December 1995, a Canadian testing organization has been designated.
The plan is to publicize accepted test results and the like in July of 1998 via the Internet, etc.
[Ministry of Construction]
(2) To promote internationalization, we have been taking active part in the expert committees of ISO (International Organization for Standardization), TC21 (fire-fighting equipment), TC38/SC19 (fiber combustion action), TC92 (fire prevention testing) TC94 (protective garments), TC145 (safety sign, etc.) ISO meetings and the like.
Moreover, overseas materials for use in fire defense equipment and the like recognized as equal or superior to the domestic standards (JIS, etc.) are being accepted as appropriate.
[Ministry of Home Affairs]
5. Remarks
The complainant's opinion is as follows.
"I understand that this is the policy as it now stands."
5-(4) Promote the import of overseas construction materials
1. Complainant: Tokyo Chamber of Commerce
2. Ministry concerned: Ministry of Construction
3. Complaint:
The following should be aimed for: an early switchover from the specifications and stipulations of the Building Standards Law to performance stipulations, expansion of the application range, and expansion of the application of a mutual approval system.
4. Corresponding Policy of the Ministries concerned:
With its objectives being the protection of the life, health and property of the people, the Building Standards Law sets forth the minimum standards for building sites, structures, etc. This law focuses on the standards for buildings alone: the actual stipulations (specifications and stipulations) of the specifications for construction methods, materials, dimensions, etc. For this reason, "Revision of the Program to Promote Deregulation" (Cabinet decision of March 1997) sets forth the intentions to review a transition from the standards that specify materials, specifications and standards in detail under the standard system of the Building Standards Law to standards that specify performance and to establish a new systematic framework.
At present, based on the March 1997 report of Building Council, the task of revising the Building Standards Law, which is the mainstay for introducing performance stipulations to construction standards, has been undertaken, and a bill is expected to be submitted at the regular session of the Diet in 1998.
Concerning the import of overseas construction materials, based on "Revision of the Deregulation Action Program" (March 28, 1997 Cabinet decision), the public residential construction specifications were revised in September 1997, and it was clarified that for the public residential construction work engaged in by public bodies such as local governments, the standards of the foreign countries that have been accepted in Japan will be handled similarly to JIS and JAS.
(Concerning policy on a mutual approval system, please see "Simplify the approval work for construction materials, etc.")
7. Import Procedures
7-(1) Improve method for reporting subsidiary materials
1. Complainant:Japan Foreign Trade Council, Tokyo Chamber of Commerce
2. Ministry concerned: Ministry of Finance
3. Complaint:
When fulfilling the manufacturing (processing) contracts for several kinds of products and subsidiary materials are supplied through several types of export or are supplied from third parties free of charge, although all subsidiary materials may not necessarily be used in all products, the subsidiary materials for each product must be calculated each time and deducted from the total quality supplied by the time of final shipment. This complicates the procedures at time of import and gives rise to concern that errors will be made in reports. A lump-sum calculation method should be made possible for the subsidiary material reporting method.
4. Corresponding Policy of the Ministries concerned:
From the past, calculation of the expenses, etc., required for tools has been omitted from the method for calculating the taxable amount of subsidiary materials, and the amount pertaining to individually imported cargo has been divided proportionally and included in the taxable amount of the imported cargo; the lump-sum calculation method is not approved.
The method for determining the taxable amount for such imported freight is implemented under internationally unified rules, based on the "Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade 1994" (customs evaluation agreement); Japan cannot thus handle it in its own special way.
For cargo imported in the same continuous import transaction, if a "Comprehensive Evaluation Report" stipulating the method for settling the taxable amount is submitted prior to the import declaration, submission of the evaluation report can be omitted for two years, as a rule, for individual import declarations.
5. Remarks
The complainant's opinion is as follows.
"I understand that this is the policy as it now stands."
7-(2) Provide a "before permission" (BP) system and the like
1. Complainant:Japan Foreign Trade Council, Tokyo Chamber of Commerce
2. Ministry concerned: Ministry of Finance
3. Complaint:
(1) For final quality analysis at the landing site, BP (transactions before import permission) clearance was attempted, but because the contract was not countersigned, it was not possible. In consideration of the inevitability of the fact that for imports from neighboring countries, contracts might not be sent in time for the cargo's arrival, improvements should be made so that processing can be done via after-the-fact submission.
(2) Concerning import clearance of coal for electric power, because of the low price of freight, bunker liquidation occurs nearly every time. Because some local ports and customhouses will not accept BP clearance, when bunker liquidation occurs, a revised declaration is made and back taxes paid. Handling when the freight price has not been settled (approving BP clearance) should be unified for all customs offices.
(3) With BP clearance, once volume has been measured and the tax standard settled, the "Tariff Payment Notice for Freight Approved for Transactions Before Import Permission" is received from customs and tariffs paid, but because payment is limited to cash or checks, time and effort are involved. In keeping, for payment of taxes at IBP, it should be possible for the importer to transfer payment directly to the designated financial agency of each customs office.
4. Corresponding Policy of the Ministries concerned:
(1) Any person who is to import any goods shall declare to the Director -General of Customs necessary matters with respect to the goods and obtain on import permit, after necessary examination of the goods concerned (Article 67 of the Customs Law). In case of depositing security equivalent to an amount of customs duty payable and obtaining the approval of the Director-General of Customs, any person can be receive them after import declaration but prior to import permit (Article 73 of the Customs Law).
The "Before Permit (BP)" was established to facilitate smooth customs administration and for the importers' convenience. For example, if import permission will be delayed owing to circumstances on the declaring party's side, such as when time is required for settling the taxation standard or the like, transactions before import permission has been obtained can be approved under the stipulations of the Customs Law.
For having such transactions approved before import permission has been granted, it is necessary to confirm in the contracts or the like that the taxation standard, etc., has not been fixed. However, because the purpose is simply to confirm the contents of the contract, approval can be granted using a copy of the contract (including one sent by facsimile), and not the original.
(2) This applies when time will be required to settle a taxation standard that has not been settled at the time of import declaration for bunker liquidation, and it is possible to obtain approval for transactions before import permission has been granted. Even for tariffs that have been confirmed as designated, in such cases, the attempt is made to approve transactions before import permission has been granted, and handling does not differ depending on the tariff.
(3) Not limited to cargo for which transactions before import permission (BP) have been approved, payments of tariffs, etc. are remitted to Bank of Japan, revenue agents, or customs staff engaged in the receipt of tariffs, etc., in cash or check form.
Although the complainant's grievance is not completely clear, nearly all financial agencies serve as revenue agents, and direct payment of cash or check form through the nearest revenue agency is possible. Having customs offices specify financial agencies for paying tariffs and the like would inconvenience those remitting payments.
5. Remarks
The complainant's opinion is as follows.
For "(1)": "I am satisfied with the corresponding policy."
For "(2)" and "(3)": "I understand that this is the policy as it now stands."
7-(3) Simplify procedures for re-importing processed goods
1. Complainant: Japan Foreign Trade Council, Tokyo Chamber of Commerce
2. Ministry concerned: Ministry of Finance
3. Complaint:
(1) Calculation of tax reduction at time of import is based on the sum indicated on the application form of confirmation on processing and assembling export cargo. Style processing details for each contract are appended to this application and applied for. It is customary for each contract to stipulate several styles for processing. As the calculation of tax reduction at time of import is made for each style, the calculations take time, delaying clearance. A simplified calculation method should thus be introduced, such as dividing by the volume of each contract.
(2) Concerning overseas consigned processing trade of outer garments and the like, at the time of exporting the relevant goods, submission of all materials leading up to the import of the relevant goods is necessary (example: marking sheets, cloth samples, documentation of calculations illustrating the process for calculating the cost price, etc.). However, the procedure should be simplified by reducing the documents that need to be submitted and the like.
(3) When sending goods back overseas once to have processing readjusted and then re-importing them, because it is difficult to prove that this is the case, the result is that tariffs are paid twice. Double collection of tariffs should be avoided by using IDs and invoices from time of import.
4. Corresponding Policy of the Ministries concerned:
(1) Under the tax reduction system for re-import of processed goods (Temporary Tariff Measures Law, Article 8), when raw materials are exported from Japan, processed or assembled overseas, and then re-imported to Japan in product form, the tariff on the portion pertaining to the exported raw materials used in the products is abated from the tariff on the product.
In applying this system, for products having the same tariff number and tariff rate, because it is necessary to calculate the reduced tax amount by comparing the tax value of the portion of exported materials used with the tax value of the products, it is necessary to calculate the tariff reduction for each product style. (Usually, not only with the tariff number and tariff rate will differ with the style, but the percentage, etc.; of exported materials used will also differ.)
However, for products with different styles that are classified under the same tariff number, if processing fees are the same and dimensions differ in keeping with size differences of the relevant products, simplified handling of goods having multiple styles is approved, in which a collective tax reduction is calculated; this fact will be put in writing to again make it common knowledge to customs offices.
(2) In calculating the reduced amount of tax in the tax reduction system for re-import of processed goods, as it is necessary to accurately determine the volume, etc., of exported raw materials used, when an export declaration on the raw materials is made, the application form of confirmation on processing and assembling export cargo must be submitted that provides details on cargo (product) processing, assembling, etc. Moreover, for outer garments and the like, to expedite the confirmation of raw materials at time of product import, the submission of cloth samples is requested before the raw materials are exported.
As the specifications on markings make it possible to expedite the confirmation of how many meters of uncut cloth are necessary to manufacture one suit of clothing, submission is requested the time the import declaration is made.
In any matter, the submission of these materials is required for prompt confirmation of the sameness of the products and the exported materials and for appropriate calculation of the tax reduction. So that the submission of materials that are not indispensable to calculating the tax reduction is not requested, this fact will be put in writing to again make it common knowledge to customs offices.
(3) Under the stipulations on tax refunds for goods in breach of contract in Article 20 of the Customs Tariff Law, when imported cargo for which tariffs have been paid must be exported and returned because the quality, quantity, etc., differ from the contents of the contract, it is possible to have the tariffs refunded within six months (extension to up to one year possible) from the day that permission was given to import the pertinent cargo by bringing the cargo to a bonded area.
In keeping, when these stipulations are applied, when imported products are exported for the purpose of repair or mending and then re-imported, although the tariff is paid again, the originally paid tariff will be refunded. In addition, because it will not be necessary to prove at time of re-import that goods were exported from Japan when the double payment of tariffs is abolished, we wish to consult with the nearest customs offices on actual cases.
5. Remarks
The complainant's opinion is as follows.
For "(1)," "(2)" and "(3)": "I understand that this is the policy as it now stands."
7-(4) Rationalize the system of consigned processing trade
1. Complainant: Tokyo Chamber of Commerce
2. Ministry concerned: Ministry of International Trade and Industry
3. Complaint:
Whether or not a consigned product processing license is applied for and obtained, at time of product import, not only processing fees but materials costs, which should be paid for in the domestic goods, are subjected to tariffs.
For importing materials originally approved as domestic goods, the levying of tariffs cannot be acquiesced to; thus, in cases where permission for acquisition had been obtained, material costs should be tax exempt. The consigned processing licensing system, which was established to protect domestic industry, should be abolished.
4. Corresponding Policy of the Ministries concerned:
The consigned processing trade for which export approval is necessary pertains to the following two cases:
1) When exporting cotton and silk cloth as raw materials and commissioning the spot dyeing processing of textiles
2) When exporting tanned leather or semi-finished leather goods and commissioning the manufacturing of tanned leather, leather products and semi-finished leather goods
The reasons why approval is necessary in the above cases are as follows.
Japan's textile spot-dyeing processing industry is experiencing a trend in reduced value of production, owing to the leveling off of demand for Japanese-style dress, etc., in recent years. In addition, the working environment is severe and a long time is required to master the processing techniques, making it difficult to secure successors and new workers.
Moreover, in Japanese leather and leather products industries consist primarily of medium and small sized enterprises, and many of these enterprises belong to household industries being operated in a family-like way. Their business basis is unstable. In addition, these industries are often the main industries in the area which face difficult historical and social problems.
In view of the above circumstances, it will be difficult to abolish the current approval system that has been introduced to avoid causing adverse effects to business activities of Japanese industries concerned.
Despite the gravity of the situation for related industries in Japan, the Government of Japan has been implementing tariff reductions.
7-(5) Simply the tariff quota application form
1. Complainant: Tokyo Chamber of Commerce
2. Ministry concerned: Ministry of International Trade and Industry
3. Complaint:
Preparation of the documents to be appended to the tariff quota application form when importing tanned leather footwear is complicated. Submission of documents should be lightened for experienced applicants.
4. Corresponding Policy of the Ministries concerned:
Because documents to be required are at the necessary minimum, it will be difficult to simplify the application procedure any more by reducing the documents.
Of the documents that must be appended to the tariff quota application form, the documents related to import clearance (invoices, etc.) are not requested not only to check the applicants' past import performance but to confirm whether or not each contract relating to the import of the goods and custom clearance for those goods is made in its own name.
7-(6) Abolish the external payment on trade report and import report, etc., or ease the necessary report conditions
>1. Complainant: Tokyo Chamber of Commerce
2. Ministry concerned:Ministry of Finance, Ministry of International Trade and Industry
3. Complaint:
At present, the import report, external payment on trade report, etc., are submitted in every case that involving ¥5,000,000 or more, but these reports should be abolished or the reporting burden be substantially eased (the amount required to be reported should be raised.).
4. Corresponding Policy of the Ministries concerned:
(1) The report on payment or receipt concerning invisible trade is indispensable to compile balance of payments statistics and is difficult to be abolished. Raising the minimum amount required to be reported will be considered, if no difficulty is found in maintaining statistical accuracy in the new reporting system under the revised Foreign Exchange and Foreign Trade Control Law (it's revised name called "Foreign exchange and Foreign Trade Law") that has been in effect since April of 1998.
The revision of the Foreign Exchange and Foreign Trade Control Law made this time provides for an efficient and effective ex-post facto reporting system that pertains to cross-border capital transactions and the like. From this perspective, means related to report styles, submission formats, and the like are currently under consideration for sufficiently reducing the burden on those making reports.
[Ministry of Finance]
(2) The import report is to be abolished on March 31, 1998.
(3) The external payment on trade and other reports are to be abolished on March 31, 1998.
[MITI]
5. Remarks
The complainant's opinion is as follows.
"I am satisfied with the policy as it now stands."
7-(7) Increase the number of import cargo inspection personnel
1. Complainant: Tokyo Chamber of Commerce
2. Ministry concerned: Ministry of Finance
3. Complaint:
Compared with the volume of cargo imports via international mail, there is a shortage of inspection personnel, overall. Even for imports made with the purpose of quick selling, because of the inspection, it can take four or five extra days for the products to reach a company, resulting in a loss of sales time. Plans should be made to increase the number of personnel for inspecting imported cargo at customs offices.
4. Corresponding Policy of the Ministries concerned:
In recent years, the volume of international mail has increased, but customs inspections are basically completed on the day that an item is received from a postal service office.
5. Remarks
The complainant's opinion is as follows.
"I understand that this is the policy as it now stands."
7-(8) Simplify the types of import application forms
1. Complainant: Tokyo Chamber of Commerce
2. Ministry concerned: Ministry of Finance
3. Complaint:
(1) Many of the types of import application documents resemble one another. These types should be simplified.
(2) When import declarations are made, a portion of unsigned invoices are accepted, but in consideration of EDI, this should be done for all via legal revision.
4. Corresponding Policy of the Ministries concerned:
(1) For general cargo other than postal matter, the importer or the like declares the necessary items to the director of the customs office and must receive permission by having the cargo undergo the necessary inspections (Article 67 of the Customs Law). However, efforts are being made to simplify and rationalize the appending of documents at the time of declaration.
For small-value cargo of ¥200,000 or less, simplification of clearance handling by simplifying the items, etc., specified on the application is approved, and a simple clearance system based on limit values is being introduced.
Customs authorities posted at the main government offices are available individually for importers, etc., to consult with.
(2) Introduction of EDI to each type of import procedure is currently under consideration, and because invoice format differs for each enterprise and inventory, immediate introduction of EDI is difficult. In keeping, for the time being, it is basically necessary to confirm signatures by having invoices (or copies of them) submitted.
5. Remarks
The complainant's opinion is as follows.
For "(1)" and "(2)": "I understand that this is the policy as it now stands."
7-(9) Simplify clearance procedures for imported houses
1. Complainant: Tokyo Chamber of Commerce
2. Ministry concerned: Ministry of Finance
3. Complaint:
The import volume for one high-grade 250m² (75 tsubo) American house (when materials have been imported as much as possible) accounts for four 40-foot containers. Because the first two containers pertain to the main item itself, there are few articles of different types, and thus little time is required for clearance. However, because the third and fourth containers involve many different kinds of items, clearance takes too much time. For the containers for constructing one house, methods should be divided in terms of the method for establishing a special tariff rate and the method for calculating each single item, and it should be determined in advance which method will be adopted.
4. Corresponding Policy of the Ministries concerned:
For prefabricated houses contracted in terms of number of houses (heading 9406 on Custom Tariff Schedules), even when an import declaration is made dividing by the number of times of transport and other conditions, when it is possible to confirm, via contracts, blueprints, etc., that the declared cargo is part of the relevant per fabricated house, the customs office will approve utilization of the Before Permit, and while the final cargo declaration is awaited, both import procedures for collective import as a prefabricated house and those for declaration of single items for each arrival are possible.
5. Remarks
The complainant's opinion is as follows.
"I understand that this is the policy as it now stands."
7-(10) Simplify import clearance procedures pertaining to product repair
1. Complainant: Tokyo Chamber of Commerce
2. Ministry concerned: Ministry of Finance
3. Complaint:
Although game machinery is being exported to various countries worldwide, when repairs and the like are necessary, goods can be sent back and re-imported for repair of the P.C.B. only. In such cases, the existence of the country of origin is a problem, and confirmation can delay import procedures. Customs inspections should be relaxed when the country of origin is indicated on the invoices, etc. (in this case, "MADE IN JAPAN").
4. Corresponding Policy of the Ministries concerned:
Under Article 14, Clause 10 of the Customs Tariff Law (pertaining to tariff exemption for re-imports), when re-importing cargo that was exported from Japan, if its nature and form has not changed since time of export, it will be granted a tariff exemption. The re-import exemption system can be approved for even a portion of the exported cargo, as long as it can be confirmed that it has been separated from the main cargo exported.
In keeping, to have the tariff exemption for re-imports applied to the main cargo exported, although it is sufficient to submit the export permission form or, instead, the certificate of proof or the like when making the import declaration, with an export permission form alone on which the item name (product name) of the exported cargo, the volume, etc., have been specified for that portion of goods, it cannot be confirmed that the relevant portion of goods was exported from Japan. Thus, the submission of catalogues, manufacturer's explanations, and other materials that prove that the relevant goods were exported from Japan is requested, from which it can be confirmed that the relevant goods were part of the cargo exported. It would thus be difficult to grant tariff exemption just on the basis of indication of the country of origin.
5. Remarks
The complainant's opinion is as follows.
"I am satisfied with the policy as it now stands."
7-(11) Make confirmation of actual articles on import declaration flexible
1. Complainant: Tokyo Chamber of Commerce
2. Ministry concerned: Ministry of Finance
3. Complaint:
It was explained to us that prior classification information from the customs office do not apply to the cargo that has arrived but to samples acquired in advance. However, as it is not always the case that samples can be acquired in advance, if the quantity for confirmation is small, it should be handled in the clearance line.
4. Corresponding Policy of the Ministries concerned:
The customs office gives prior classification information no matter whether the imported cargo has arrived or not. However, for cargo that has arrived, it is given in the customs authority clearance line for expected imports, and for cargo that has not yet arrived, it is given at Custom Appraiser (however, at the Tokyo customs, it is given in the Office of Customs Counselor). In any case, concerning prior classification information, so that responses are given as quickly as possible, we will again give instruct the customs offices thoroughly, in writing, in this regard.
5. Remarks
The complainant's opinion is as follows.
"I am satisfied with the policy as it now stands."
7-(12) Promote introduction of EDI to import clearance procedures
1. Complainant: Tokyo Chamber of Commerce
2. Ministry concerned: Ministry of Finance
3. Complaint:
The plan of introduction of EDI in the upgraded custom clearance system for maritime cargo, Sea-NACCS (Nippon Automated Cargo Clearance System) is unclear. Measures for EDI should be included when the upgraded system will take place the current system.
4. Corresponding Policy of the Ministries concerned:
In order to upgrade the Sea-NACCS, the developing body, which consists of customs, related parties such as custom brokers, carriers (including shipping agents) warehouse companies and banks, and the Nippon Automated Cargo Clearance System Operation Organization as the operational body in March 1997.
In December of 1997, the developing body confirmed services by the upgraded Sea-NACCS as follows:
(1) From entry report up to domestic delivery of cargo through import declaration for importation,
(2) From carrying cargo into port area to exit report through export declaration for exportation.
The developing body also confirmed the introduction of EDI and the concept of the EDI agreement for upgraded Sea-NACCS users and these confirmations were immediately made public by the Internet home page (http://www.naccs.go.jp) by the operational body.
Though importers and exporters including compliance do not have a seat in the developing body, customs brokers insist their interests to the developing body not only as brokers but also as importers and exporters.
5. Remarks
The complainant's opinion is as follows:
"I understand that this is the policy as it now stands."
7-(13) Implement 24-hour-a-day processing of import declarations
1. Complainant: Tokyo Chamber of Commerce
2. Ministry concerned: Ministry of Finance
3. Complaint:
With the new computation system currently under review, different from the conventional system that necessitated special opening, a 24-hour-a-day import declaration processing system should be established.
4. Corresponding Policy of the Ministries concerned:
Air-NACCS corresponds to 24-hour-a-day processing for air cargo (see note). The upgraded Sea-NACCS, which is expected to begin operating in 1999, will likely make such systematic handling for sea cargo possible as well.
Note: All year long, Air-NACCS operates 24 hours a day, 365 days a year. However, for system maintenance purposes, operations are stopped for 90 minutes, from 4:30 a.m. to 6:00 a.m. each day.
5. Remarks
The complainant's opinion is as follows.
"I understand that this is the policy as it now stands."
8. Other
8-(1) Deregulate the system on security deposits and paid-in capital pertaining to foreign insurance companies
1. Complainant: Korean Embassy in Japan
2. Ministry concerned: Ministry of Finance
3. Complaint:
Under Japan's insurance-related laws, the amount of the security deposit for foreign insurance companies will be raised from 100 million yen to 200 million yen by April 1, 2000. In addition, when establishing a corporation here, paid-in capital of over 30 billion yen must be paid. As such uniform regulations reduce an insurance company's liquid assets and give rise to concern over problems arising with working assets, class-based implementation corresponding to a company's business results, number of staff members, etc., should be carried out.
4. Corresponding Policy of the Ministries concerned:
There are some factual errors in this complaint (as of the year 2001, not 2000; 10 million yen, not 100 million yen, and one billion yen, not 30 billion yen), and we are in the process of verifying this with the complainant. From the perspective of protecting the policyholders, etc., in Japan, the security deposit system has set the minimum sum for business security money, and for capital, as well, the minimum necessary amount to ensure smooth execution of insurance work has been set. Operation under such a uniform system is thus appropriate, while class-based implementation would not be.
8-(2) Deregulate the labour field
1. Complainant: U.S. Chamber of Commerce in Japan
2. Ministry concerned: Ministry of Labour
3. Complaint:<
Because the excessive regulation of Japan's labour environment makes it difficult to provide opportunities for and to appoint talented personnel seeking foreign-affiliated firms, posing barriers to investment in Japan, the following improved measures should be considered.
(1) Provide a new base for the various labour laws and regulations
1) The various labour laws and regulations should be equally fair to employees and employers.
2) Office procedures and the like should be clear, fair, and not require the judgment of responsible counter-based personnel.
3) For the increasingly complicated labour issues, either a special court of law should be established or a labour issue specialist should be appointed to be present in court.
4) The government should privatize functions of the Ministry of Labour such as placement/recruiting services, etc.
5) Interpretation of ILO Conventions should be relaxed to facilitate the competitiveness of Japanese enterprises on the world market.
(2) Certain legalities that should be abolished or revised
1) Abolition of the one-year-contract restriction to make contracts for a free time frame possible
2) The stipulation that all employees are to take lunch at the same time
3) Restrictions on mass layoffs
(3) Items that should be included in the relaxation of various labour laws and regulations
1) The system concerning overtime work, holiday work and late-night work by women should be made equal to that by men.
2) Fee-charging employment placement projects and worker dispatching undertakings
1] The negative list in the regulations on private, fee-charging employment placement projects under the Employment Security Law should not include anything that does not pertain to illegal activities and persons requiring societal protection. It should not include specific industries or occupations, as a rule.
In addition, a simplified permission system and a system for settling commissions based on market supply and demand should be established.
2] The range of occupations for which worker dispatching undertakings is permitted should be specified in accordance with a negative list that is limited to illegal activities and persons requiring societal protection.
In addition, the routine operations of the worker dispatching undertakings should not be supervised excessively.
3) When introducing new technology, regulations on employee contract periods should make it possible to make use of the opportunity. In addition, the government should support employee education and small- and medium-size enterprises.
4) Temporary personnel loans and transfers should not be obstructed by regulations and the like.
5) The concept of the importance of personnel evaluations in settling the place of employment should be legalized.
4. Corresponding Policy of the Ministries concerned:
(1)
1) The various labour laws stipulate what is required of employers, employees, the country and the like and do not grant authority to have either employees or employers overworked.
2) Concerning the complainant's assertion, protection is granted under Japan's Administrative Procedure Law and Administrative Appeal Law. In other words, when a petition is made concerning nonrecognized treatment, the reason is to be clarified in writing (Administrative Procedure Law, Article 8) and the examination standards pertaining to the petition must be made public (Administrative Procedure Law, Article 5), as a rule. Thus, settlement is not based on unclear handling resulting from the arbitrary judgment of labour standard supervisory offices. In addition, parties with grievances may request an investigation based on Article 5 of the Administrative Appeal Law.
3) We agree that at present, it is taking time in court to resolve not only labour problems but others as well, but as improvement of the courts is a judicial problem, it is not within our realm to respond.
4) Placement/recruiting services of Public Employment Security Offices function as a so-called "safety net" which all people can use it fairly and for free to guarantee the people their right to work. It is indispensable for the Japanese government to keep this system to perform the duty of ILO88.
Ordinarily, placement/recruiting services are performed as public organizations in other countries, too. There is no country in which all placements /recruiting services are performed by private companies.
By the way, in the communique of the OECD's meeting of the employment, labour and social affairs committee at ministerial level held in October 1997, it was announced that "Ministers regard the effective provision of placement and related services which enhance the functioning of the labour market as an essential element of a nation's infrastructure."
For these reasons, the government should perform placement/recruiting and related services, and should not privatize them from now on, too.
5) In Japan, under Article 98 of the Constitution, which provides that "the treaties concluded by Japan and established laws of nations shall be faithfully observed", a careful study on the light of conformity with national laws and regulations need to be made enough in ratifying the treaties, and the treaties ratified must be faithfully observed. ILO Conventions also must be met with such strict policy.
(2)
1)
1] Under Article 14 of the Labour Standards Act, to prevent the abuse of untoward physical restraint from a long-term labour contract, labour contracts stipulating terms over one year cannot be concluded, as a rule, excluding those contracts for which no term is stipulated.
2] However, to correspond to the needs of enterprises engaged in creative work activities who wish to utilize for a fixed term domestic or non-domestic personnel with specialized abilities and to correspond to the increase in people who, in keeping with the diversification of values, wish to continue demonstrating specialized abilities without being restrained to a specific enterprise, the necessity of reviewing the current regulations has emerged.
3] In the Program to Promote Deregulation that that Cabinet resolved in March 1997, concerning the upper limit of the term for labour contracts, based on consideration of labour contracts and legislation on the whole, the upper limit of the term of the labour contract has been extended from three years to on the order of five years, particularly for people possessing specialized abilities, people of advanced age following retirement at the age limit, and people involved in projects of a fixed time frame.
4] Concerning the upper limit of the term of labour contracts, based on the recommendation of the Central Labour Standards Investigative Council last December, a proposed law that revises a portion of the Labour Standards Act and includes the content described next has just been submitted to the Diet.
In the following cases, the upper limit of the term of labour contracts should be taken to be three years.
* When securing the relevant personnel for places of work that lack personnel possessing the advanced specialized knowledge, techniques or experience necessary for the development of new commodities, new services, or new technology or for scientific research
* When newly securing the relevant personnel for places of work that lack personnel possessing the advanced specialized knowledge, techniques, or experience necessary for starting, changing, expanding, reducing, or abolishing a business, the work for which is slated to be completed within a set time
* For workers of or over the age of 60
2) No regulation exists that compels all employees to take lunch at the same time.
3) A legal precedent has been established that invalidates layoffs made without rational reasons and a socially acceptable basis. In addition, for an enterprise to engage in organized layoffs, a legal precedent has been set requiring that the following four conditions be satisfied:
* the necessity of reducing staff,
* the necessity of choosing an organized layoff as a means of reducing staff,
* the appropriateness of the personnel targeted for the layoff, and
* the appropriateness of layoff-related methods. We feel that there is no special aspect of this legal precedent that should be revised.
The Labour Standards Act stipulates the following:
* the advance notification procedures in the event of a layoff and the applicable exceptions (Articles 20 and 21) and
* the prohibition of layoffs during the period of days off for an injury sustained at work or hospitalization for treatment of illness and the 30-day-period that follows and during the days off before and after childbirth and the 30-day-period that follows (Article 19).
(3)
1) From the perspective of realizing the equal treatment of men and women in the workplace and expanding the range of occupations for women, the regulations on overtime work, holiday work, and late-night work by women have been revised together with the amendment of the Equal Employment Opportunity Law (Law Respecting the Improvement of the Welfare of Women Workers, including the Guarantee of Equal Opportunity and Treatment between Men and Women in Employment). The regulations on working time of the Labour Standards Law will be the same for men and women from April 1 of 1999, when the Law respecting the Improvement of Ministry Labour-related laws to Guarantee Equal Opportunity and Treatment between Men and Women in Employment (promulgated as Law No.92 on June 18, 1997) will go into effect.
2)
1]
* Respecting views of the Administrative Reform Committee on December, 1995, based on the proposal by the Central Employment Security Deliberative Council on December, 1996, the range of occupations handled by placement agencies has been expanded, and the use of the negative list was begun, allowing all jobs other than those mentioned to be handled since April, 1997.
In addition, based on March, 1997, the Plan for the Promotion of Deregulation, etc. policies concerning further expansion of occupations handled will be decided, based on the ILO 181 Convention on June 1997, etc. Further study will be initiated by the Central Employment Security Deliberative Council in fiscal 1997.
* As for the simplification of procedures and documents related to permission for fee-charging employment placement projects, relaxation of the experience requirements for responsible person with more than a certain years of experience for such introductions has been implemented since April 1997.
* Respecting views of the Administrative Reform Committee on December 1995, based on the proposal by the Central Employment Security Deliberative Council on December, 1996, commissions may be set freely after receiving approval, from April, 1997, (previously, the maximum allowed had been 10.1% of wages paid in the first six months after employment).
2] The Cabinet Order for the Worker Dispatching Law was revised and an additional 11 types of designated works has been added, which, in combination with the previous 16 types brings the total to 26 (Implemented December, 1996).
In addition, based on March, 1997, the Plan for the Promotion of Deregulation, etc. beginning on January, 1997, the Central Employment Security Deliberative Council continues to discuss a comprehensive review of the worker dispatching undertaking system, including the creation of the negative list on the scope of occupations for which worker dispatching is permitted, length of dispatching period, and measures for protecting workers, with the basic direction of review decided on December, 1997. At Present, the Central Employment Security Deliberative Council is engaged in further considerations to take realization of this basic direction.
3) A legal precedent of the invalidity of layoffs made for without rational reason and a socially acceptable basis has been established, and there is no special reason to revise it.
The Labour Standards Act stipulates the following:
* the obligation of providing 30 days notification prior to a layoff or paying some layoff notification compensation instead (Article 20), to alleviate difficulties in living circumstances resulting from a sudden layoff and
* the prohibition of layoffs in the period for injury sustained in the course of work or treatment for hospitalization and the 30-day-period that follows and the days off before and after childbirth and the 30-day-period that follows (Article 19).
4) The precedent is as follows.
1] Clear consent, etc., to the basic stipulations and adoption of employment regulations and labour agreements that dictate transfers is a necessary basis. In addition, a transfer order will be invalid if it is an acknowledged misuse of authority, in consideration of necessity from a work standpoint, rationality of personnel selection, etc.
2] Concerning re-assignments, if there is no necessity from a work standpoint or if there is such necessity, the order will be considered valid, as long as extenuating circumstances do not exist, such as the involvement of unjust motives and purposes, a disadvantage to the worker that is in marked excess of reasonably tolerable limits, and the misuse of authority. There is no special reason for changing this legal precedent.
Under the labour-related laws, there are no stipulations restricting transfers and re-assignments.
(5) Employment regulations on working hours, wages, layoff-related measures, etc., of the relevant workplace are established after the operations chief has considered the opinions of the majority of the workers, but under Article 89 of the Labour Standards Act, an employer of 10 or more workers is obligated merely to create employment regulations and submit them to the authority of the labour standards supervisory office. However, whether layoffs, re-assignments, reshuffling, etc., will be approved and what capability evaluation standards will be used should be left to discussions between labour and management at each place of work, and it is not appropriate to make uniform stipulations by law.
8-(3) Apply deregulation to lawyers engaged in foreign legal affairs in Japan
1. Complainant: U.S. Chamber of Commerce in Japan
2. Ministry concerned: Ministry of Justice
3. Complaint:
In Japan's legal services market, both foreign and Japanese lawyers are prevented from providing customers with comprehensive global services. Because Japan's advances in market access have rapidly heightened the necessity of such international legal services here as well, access in Japan to the international legal services that can easily be accessed in other business and financial centers throughout the world should be possible.
Measures should thus be to achieve the following.
(1) Approve the free formation of partnerships between domestic lawyers and gaikokuho-jimu-bengoshi ("foreign lawyers").
(2) Approve foreign lawyers' hiring of domestic lawyers, in the same way that domestic lawyers' hiring of foreign lawyers is approved
(3) Approve foreign lawyers' provision of counsel on the laws of third powers to the same extent as domestic lawyers'.
(4) Reduce the work experience requirement from five years to two, and no matter if experience was obtained in the offices of foreign or native lawyers, include the number of years of work experience in international law offices in all legal areas, including Japan, in the calculation of this requirement.
(5) Substantially increase the number of lawyers by increasing the number of judicial trainees to be accepted by the Judicial Training Center of the Supreme Court in Japan to at least 1,500 a year.
(6) For business organizations widely recognized as effective business organizations in nearly all countries that are centers of advanced business, approve the specialist corporations used as legal specialist organizations. However, make sure that doing so will not result in a distinct disadvantage compared with forming partnerships with international legal offices already conducting business in Japan.
(7) Relax excessively strict regulations on lawyer advertising and make it possible for lawyers to have the general public rationally informed of their services.
4. Corresponding Policy of the Ministries concerned:
(1) Concerning the partnerships of bengoshi ("bengoshi", domestic lawyer, hereinafter) and gaikokuho-jimu-bengoshi (foreign lawyers qualified by Japanese law, "GJB" hereinafter), revision of the law which came into effect in January 1995 has opened the way for bengoshi and GJB to run a joint enterprise, and on October 30, 1997, the Study Commission on the Issue of Foreign Lawyers (jointly held by the Ministry of Justice, "MOJ" hereinafter, and Japan Federation of Bar Associations), which was composed of knowledgeable members, submitted its report on the system of accepting foreign lawyers ("this report," hereinafter). Based on this report, MOJ submitted to this session of the Diet a bill that abolish the restriction regarding the objectives which the joint enterprise could pursue in cases involving foreign legal matters, and thus bengoshi and GJB can offer in each sphere legal services up to the stage of ultimate solution of legal cases, which is litigation stage and so on, based on a comprehensive and integrated cooperation.
(2) Concerning the employment of bengoshi by GJB, the report indicated that it brings about very serious problem in connection with the qualification system in Japan, etc., (the employment of GJB by bengoshi brings no such problem), while above (1)-mentioned revision of the law which assure systematically the form of enterprise in which bengoshi and GJB cooperate together comprehensively and integratedly, it will substantially meet the needs regarding to the employment.
Based on the report, MOJ submitted above (1)-mentioned bill to solve the problem regarding to the employment.
(3) Concerning the third country law, GJB is prohibited from handling such legal business from the point of view of protection of clients and so on. However, based on the report, MOJ submitted to this session of the Diet a bill which enable GJB to handle legal business concerning the third country law on the condition that he or she has to receive written advice from foreign lawyer qualified in that third country and engaged in legal business concerning the third country law based on his or her qualification.
(4) Concerning the practicing experience requirement, based on the report, MOJ submitted to this session of the Diet a bill that practicing experience period is shortened to three years or more from five years or more currently required. Besides, as for a place where foreign lawyer has the experience of having engaged in legal business, currently he or she has to have the experience in the country of primary qualification, additionally the period during which he or she, on certain conditions, engaged in legal business concerning the law of the country of primary qualification in other foreign countries outside the country of primary qualification can be included to the above period.
(In the U.S., only about 20 states have a system of accepting foreign lawyer, besides two of them impose the practicing experience requirement of three years or more, and the rest impose that requirement of four or five years or more. In addition, only two states permit the period during which foreign lawyer engaged in legal business in other foreign countries outside the country of primary qualification can be included.)
Moreover, based on the report, MOJ submitted to this session of the Diet a bill that up to the one year the period of the provision of assistant services to the bengoshi and so on as employee, as an exception, can be included to the above period.
(5) On October 1997, the three branches of the legal profession ("MOJ", Supreme Court and Japan Federation of Bar Association) agreed to reform the present system of the training of legal apprentices, and to increase the number of successful applicants for the National Bar Examination from 700 to 800 in 1998, to 1,000 in and after 1999, in round figures. Required measures based on this agreement will be devised and the increase in the number of people who pass National Bar Examination is expected to lead to an increase in the number of lawyers. In addition, it has been agreed to deliberate upon the matter of increasing the number of people passing National Bar Examination to about 1,500, after making continuous investigation and consideration of the results of the above reform, trends in social needs for legal professionals and so on.
(6) Concerning the incorporations of law firms, MOJ has been studying and surveying the actual conditions, as the "Further revision to the Deregulation Action Program" of the Government in March 1997 decided. The result of the study will be concluded within fiscal 1998, and necessary measures will be taken based on the conclusion as soon as possible.
(7) Concerning the restrictions on advertisement by bengoshi, MOJ has been studying and surveying the actual condition, as the "Further revision to the Deregulation Action Program" of the Government in March 1997 decided. The result of the study will be concluded within fiscal 1998, and necessary measures will be taken based on the conclusion as soon as possible.
8-(4) Prohibit copying of musical scores under the Copyright Law
1. Complainant: German Chamber of Commerce in Japan
2. Ministry concerned: Ministry of Education
3. Complaint:
Domestic libraries provide the service of free lending of the musical scores they have purchased, but this means that it is possible for scores loaned to orchestras and the like to be copied and distributed to orchestra members.
In Germany, the copying of musical scores is prohibited under copyright law, but this is not so in Japan. This poses an extremely large problem among those involved in music publishing in Germany, and should this matter not be resolved, measures appropriate for the Japanese market will be considered.
4. Corresponding Policy of the Ministries concerned:
As regards the protection of copyright, multilateral agreements such as the Berne Convention. The Universal Copyright Convention and the TRIPS Agreement have been established based on detailed negotiations and discussions by the relevant countries in order to ensure harmonization among copyright laws of all countries concerned.
Foreign works are protected under the Copyright Law. And Japan has ratified the above three treaties, fulfilling all the obligations.
Article 30 of the Copyright Law, which provides for a limitation on copyright to permit reproduction for private use, is applicable only to the case in which a user reproduces a work "by himself or herself" for the purpose of his or her personal use, family use or other similar uses within a limited circle. And therefore, such an act as copying and distributing musical works to members of an orchestra, which was mentioned in the complaint, is not covered by this provision, and constitutes infringement.
As copyright is a private right, the rightholder the right of which is infringed should take the initiative for civil and/or criminal remedies available in accordance with the provisions of relevant treaties.
The complaint that the complainant has presented, as described above, is an illegal act, and as it is not necessary to prohibit something that is already illegal under the current law, the premise of total prohibition of the copying of musical scores will not serve.
In the meantime, we would like to be given proof of the assertion of significant damage incurred from acts which have not been prohibited under the current Copyright Law. We would also like to know which measures have been requested by Germany to countries such as in Europe other than Japan which do not have prohibiting stipulations similar to those of Germany.