The Cabinet Office, government of Japan ＞ Top page of OTO ＞ Reorganization of the Office of the Trade and Investment Ombudsman
(Provisional Translation)
Recommendation on Market Access Issues as Concerns Standards, Certification and Others
"6th Report of Market Access Ombudsman Council (March 16, 2000)"
March 16, 2000
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 Remarks
II. Recommendations (12 cases)
1. Animals and Plants, Foods
1-(1) Allowing food testing to be conducted by private sector organaizations
2. Pharmaceuticals, Medical Devices, Cosmetics
2-(1) Relaxing regulation on dietary supplements
3-(1) Introducing the market principle to port business
3-(2) Eliminating regulations prohibiting tandem riding of motorcycles on expressways
3-(3) Review of standards for certificate of custody space for motor homes (large campers)
3-(4) Changes to the vehicle inspection system for towing vehicles and for towed vehicles
3-(5) Report on study for establishing new categories of towing licenses
3-(6) Report of committeee studying regulations on trailer homes
4-(1) Improvement of customs inspection system for containerized cargo
4-(2) Improvement of customs clearance procedures such as NACCS using the Internet
5-(1) Review of landing examination criteria
5-(2) Reviewing standards for installing equipment using fire under the Fire Service Law
III. Deliberation and Actions Taken on 41 Other Complaints
I. General Remarks
As stated in the "Ideal Socioeconomy and Policies for Economic Rebirth," "establishing a fair and transparent market and giving consumers a voice" and "creating an appealing business environment" are vital policy directions which should be promoted in order to renew Japan's socioeconomic structure.
The activities of the Office of the Trade and Investment Ombudsman (OTO) are intended to make these policy directions a reality, from the standpoint of measures to improve access to Japan's markets.
Since autumn 1999, the Market Access Ombudsman Council (MAOC) has conducted intensive discussions concerning 53 complaints brought by foreign embassies and chambers of commerce and industry in Japan. Based on these discussions, we hereby make the following recommendations to the government in order to further improve market access.
1. Possible Adverse Effects Resulting from Slowness in Improving Market Access
One of the roles of MAOC is to make recommendations for improvements from a comprehensive viewpoint, in each category, in order to throw light on the sources of problems through examination of individual complaints. The process of examining the complaints presented during this fiscal year has further reinforced our concern that slowness in improving market access could have the following adverse effects on Japan.
(1) Loss of Status as a Business Center
Today, when entirely Internet-based companies and other business modes not previously foreseen are spreading throughout the world, establishing a status as a business center concentrating human resources and capital assets can have an important impact on national power in the face of intense global competition. If domestic and foreign companies starting up operations in Japan face too heavy a burden, not only will goods no longer be manufactured here, it will also fail to attract human resources, capital and information.
Problems caused by slowness in improving market access will not just result in a reduced flow of human resources and capital in the medium to long term. This is also having a negative impact on important policies today concerning support for new types of businesses and businesses in venture fields which will help restore the economy to full vigor.
(2) Loss of Status as a Physical Distribution Hub in Asia
The time and money burden occasioned by high domestic shipping costs, complicated import procedures and so on, is leading to avoidance of Japanese air and sea ports for shipment of goods, which are tending to shift to other Asian locales like Korea, Hong Kong, Taiwan, Singapore. If this state of affairs continues, Japan will experience a further decline in its position as a physical distribution hub.
(3) Broad Perceptions of Japan as "Different"
In case after case, things which are possible and taken for granted in other countries are not possible in Japan because of regulatory restrictions. Because of these impediments, certain products and services common in other countries are not available in Japan, and the Japanese public cannot enjoy the higher standard of living resulting from the convenience of such goods or services. If this situation is experienced too often, Japan risks becoming widely known in the international community as a "different" or "unusual" country.
2. Issues in Common Among Individual Complaints
In order to eliminate the above concerns, specific improvements must be made, and the following elements common to individual complaints addressed as well.
(1) Characteristic Complaints Received by the OTO
The OTO, whose aim is to improve market access, became aware of the following characteristic issues in its current review of complaints addressed to it.
1) Reducing Regulatory Costs
Requirements for various procedures and regulations which the government does not feel are a major problem are often ultimately perceived by businesses to be a great burden in terms of time and money. And even if measures are taken to improve the situation, the more delay involved in implementation, the higher the expenses incurred by businesses. This results not only in a greater burden for the public but also has a marked negative effect on the domestic economy.
2) Ensuring Transparency of Regulation
The existence of regulation per se, and the lack of transparency where regulation is concerned, often causes problems.
Adopting a positive list detailing what is permitted does not clarify what is not permitted. In order to keep regulation to a minimum, the negative list format listing only items to which regulation applies, should be adopted.
Further, even though standards themselves may be written down, clear criteria must be adopted to leave no possibility for leeway in interpretation by individual officials.
In cases where de facto regulation is based on directives or notices which are not laws, the system is perceived as especially lacking in transparency by foreign business and others trying to enter the Japanese market for the first time. Working on the basic premise of ensuring transparency, standards. should be based as much as possible on laws.
There are also many cases where the regulations of many different bodies, for example multiple ministries or agencies, the central and local governments, or private sector regulation in which the government is indirectly involved, are intertwined. It should be made clear which body bears responsibility, when regulations are established or changed.
3) Actively Responding to New Products and Services from Abroad
With globalization and diversification of consumption, more and more new products and services are expected to enter from abroad. In such circumstances, it would be a major problem if goods and services long used in other countries were not able to be introduced. Current standards and systems sometimes also pose problems when the same product is used in Japan for a purpose other than had originally been planned.
In such a situation, existing systems should be reviewed at an early date instead of automatically applying existing specifications or standards, and in this connection, active reference should be made to systems or procedures which have been used in other countries without any problems.
(2) "Public and Private," "Ceding Authority to Local Governments," "Computerization"
The issues of "public and private," "ceding authority to local governments" and "computerization" are often discussed. In the current examination of the complaints presented, MAOC perceived that the following problems exist where market access is concerned.
1) Fairness Exists not Just in the Public Sector
Some ministries believe that for-profit enterprises lack fairness and that only non-profit corporations directed and overseen by the government are fair; this attitude is nothing but an anachronism. The issue of whether an enterprise is fair should be judged on actual performance, not by virtue of its being established for profit or not.
2) The Central Government's Role in Ceding Authority to Local Governments
As more authority is ceded to local governments, the central government will cede as much of its authority as possible. The central government should retain only minimal involvement in administrative services directly related to daily life, so that local residents' needs may be met appropriately. However, the government should make some safety-related standards and specifications clearly uniform. In this case, it should indicate clear guidelines, to facilitate administrative implementation by individual local governments.
3) Promoting Computerization
In response to the Internet, which is spreading rapidly throughout the world, an urgent issue is how to greatly speed up the use of the electronic format to improve market access. Computerization is very convenient not only for business but for the government as well. For example, computerized import procedures were considered a pioneering undertaking in the electronic government administration. But in order to further improve market access, the government should act soon to computerize itself more widely in today's Internet age, using the electronic format more extensively for various procedures and for making information available.
(3) Essentials in the Process of Improving the System
In the actual process of improving the system, it is essential to take the following points into consideration:
1) Shorten Time Needed and Clarify Who Will Make Changes
In its response to the complaints presented to the OTO and other issues, the government must take into consideration that socioeconomic changes are taking place much faster than before and that considerable losses are incurred as a result of its delays in examining issues and acting on them. The government should, as a matter of course, study the issues presented and act on them at an early date and consider taking action on a quarterly basis, as is the practice abroad, instead of on a fiscal year or calendar year basis. Where this is concerned, we believe it would be useful to analyze the factors causing bottlenecks in reducing the time required to draw up policy proposals.
It is also essential to clarify which entity will make which changes, and by what date.
2) Respond Comprehensively in Areas Attracting Repeated Complaints
In the course of the OTO's activities so far, certain areas have been the subject of repeated complaints or often mentioned as issues. In these areas, the government should think first of adopting comprehensive measures to eliminate complaints and issues on a wholesale basis, rather than making piecemeal attempts to improve the situation.
3) Recognize the Importance of Disclosing Information and of Conducting Public Relations
Where certain systems concerning product safety and so on are concerned, measures such as mutual recognition on an international basis and systems based on self-verification and self-maintenance are being adopted. However, there were some cases where domestic and foreign businesses were not aware of these changes. Disclosing clear information, carrying out public relations work concerning systems, and promoting systems and educating concerned parties about them should be considered a duty when changes are made to systems.
(4) Use of the OTO System to Expand Global Trade and Investment
Improving market access in all countries of the world and expanding trade and investment are vital to the growth of the global economy.
Based on our experience for nearly 20 years now, we believe that Japan's OTO system, using an ombudsman group to effect change in relation to specific market access issues, can often be useful in eliminating barriers to market access in other countries as well.
In particular, non-trade tariff barriers are said to be "invisible barriers." But abstract rules alone do not always work to resolve the issues, and individual barriers must be removed in order to improve the situation.
Organizations like APEC, OECD, WTO and others should make use of various venues and occasions to stress the importance of such a system in improving global market access. In fact, Korea opened an ombudsman office for foreign investment in October 1999 for handling various issues which arise in the process of foreign investing in Korea. We warmly welcome such moves.
3. Conclusion
The government should endeavor to promote the spread of the ways of thinking described above and continue to make renewed efforts to facilitate market access, following the recommendations made for each of the specific cases described below.
The OTO intends to follow up implementation and results obtained from the government's response to the recommendations contained in this Report as needed, and if necessary, to conduct further study of the issues. We hope that in response, the government will take the measures required.
Regarding some of the complaints described in this Report, we welcome the fact that many ministries/agencies responded flexibly and in a forward-looking manner. In many other cases, the complainants agreed with the policies for dealing with the issues which were put forth by the ministries concerned, but they were not fully satisfied in all cases. The ministries concerned should not take complainants' agreement as a sign that all is well; rather, the fact that complaints were raised indicates the need for continuing review of the matters related to those complaints.
In conclusion, as part of the reorganization of central government ministries from January 6, 2001, it has already been decided to transfer the functions of the OTO secretariat to the Cabinet's Office. Until now, processing of many complaints has taken considerable time, because they involved many different ministries and bureaus, but we hope that reorganization of the ministries will visibly reduce this and that renewed efforts will be made to improve market access.
II. Recommendations (12cases)
1. Animals and Plants, Foods
1-(1) Allowing food testing to be conducted by private sector organizations
1. Complainant: Nagoya Chamber of Commerce and Industry
2. Ministry concerned: Ministry of Health and Welfare
3. Background:
According to Article 15, Paragraph 3 of the Food Sanitation Law, the minister for health and welfare may order foods for which an import declaration has been made to undergo testing at a test laboratory designated by the minister of Health and Welfare, when local conditions in the product country indicate a risk that the food in question may be in violation of the Food Sanitation Law.
When testing is ordered, expenses for test laboratories designated by the minister must be borne by the importer. The importer is notified of test results via the minister for health and welfare, after which the importer is allowed to import the said food.
In accordance with Article 15, Paragraph 6 of the Food Sanitation Law, the testing fee is not to exceed the amount stipulated by government ordinance (\139,400 per test category), based upon which the testing facility has received permission from the minister for health and welfare. In accordance with Article 19-4 of the Food Sanitation Law, only corporations (public incorporated bodies or foundations) established under Article 34 of the Civil Code may be designated testing facilities.
4. Complaint:
When the quarantine station requests that imported foods be tested, testing must be done at a test laboratory designated by the Ministry of Health and Welfare, and only facilities which are public incorporated bodies or foundations may be used.
Since private sector companies cannot be designated testing facilities, no competition exists, and users must put up with a low standard of service, for example not being informed beforehand of how much time and money testing will require. Testing fees are also expensive.
Accordingly, testing facilities other than public incorporated bodies or foundations, and including private sector companies, should be eligible to be designated testing facilities.
5. Results of deliberation:
According to the ministry concerned, public corporations (public incorporated bodies or foundations) established in accordance with Article 34 of the Civil Code are as fair as the government, but for-profit, private sector testing facilities are likely to be less fair and to make errors more often compared to public service corporations, and they are thus not allowed as designated testing facilities. However, this is a outdated perception on the part of the ministry concerned and is not a convincing reason.
Private sector companies endeavor to continually adopt the newest technology and to carry out testing accurately and efficiently, in order to provide inexpensive service satisfactory to customers. Assuming that testing is accurate, importers are not likely to use testing facilities that are expensive and take time, and under market principles, such organizations will be weeded out naturally.
Many private sector testing facilities are capable and fair, and designation of testing facilities should be made based on technological standards for carrying out testing rather than because they are either public service corporations or private sector companies.
Based on the above, the following measures should be taken by the ministry:
(1) The ministry should study testing facilities, with a view to also designating private sector testing facilities as designated facilities under the Food Sanitation Law, and reach a conclusion on this matter during 2000.
(2) Regarding designation of testing facilities, the ministry should study and reach a conclusion during 2000 concerning the taking of measures to draw up standards on operation and supervision, and of technical standards, and to revoke designation when testing facilities are found to be inadequate, in order to ensure that the said facilities meet standards for reliability, fairness and impartiality.
2. Pharmaceuticals, Medical Devices, Cosmetics
2-(1) Relaxing regulation on dietary supplements
1. Complainant: US Embassy
2. Ministry concerned: Ministry of Health and Welfare
3. Background:
(1) There is a growing interest in health among the Japanese public, and so-called "dietary supplements," products to secondarily supply or supplement nutrients, are currently being sold. The United States or other countries have laws covering dietary supplements where the efficacy or preventive properties of the foods themselves are concerned, whereas Japan does not.
(2) In Japan, substances ingested orally are classified either as foods, pharmaceuticals or quasi-pharmaceuticals (referred to hereafter as "pharmaceuticals"). Whether a product is a pharmaceutical is determined comprehensively based on type of ingredients, format (formulation, package, wrapping, design), on labeling describing purpose of use, effects and efficacy, method of administration dosage and method of sales, instructions given when selling and so on, and decided according to whether people usually perceive that it is a product intended for the purposes described in the Pharmaceutical Affairs Law. Standards are determined by the "standards concerning the scope of pharmaceuticals," a notice issued by the head of the bureau. Accordingly, even though a product may be sold in other countries as a food, it may come under the pharmaceuticals classification in Japan, depending on its formulation, ingredients. Labeling concerning effects, efficacy and so on may also be regulated. In accordance with revisions made to the above standards, some products have begun to be handled not as pharmaceuticals but as foods, as follows: from March 1997, some vitamins; from March 1998, some herbs; from March 1999, some minerals.
(3) However, in order for dietary supplements from other countries to be imported as foods, all their ingredients, additives and so on must be permitted for use in foods in Japan. Accordingly, additives approved for use during the pharmaceuticals manufacturing process may not actually be allowed to be used in products classified as foods, since they are not designated as additives under the Food Sanitation Law. Additionally, vitamins and minerals, even if they are the principal ingredients in dietary supplements, may be regulated as food additives.
(4) In accordance with the "Decision, . on dietary supplement categories" made by the Office of Market Access in December 1998, the ministry concerned is currently studying the matter in two committees, the Study Group on Handling of So-called Dietary Supplements and the Study Group on Reviewing Standards on the Scope of Pharmaceuticals.
4. Complaint:
(1) Legislation of the Definition of Certain Foods as Dietary Supplements and their System
In order to do in Japan what is done for dietary supplements of the food category in the United States, the classification of dietary supplements and their system should be legislated. The system of dietary supplements consists of many factors including ingredients, shapes, directions for use, exclusion of the ingredients of dietary supplements from the definition of food additives and health benefit claims and should be legislated as follows.
1) The term 'dietary supplement' means a product intended to supplement the diet that contains one or more of the following dietary ingredients:
(a) a vitamin; (b) a mineral; (c) an herb or other botanical; (d) an amino acid and a protein; (e) a fatty acid and its glyceride; (f) dietary fiber and a carbohydrate; (g) a dietary substance for use by man to supplement the diet; (h) a concentrate, metabolite, constituent, extract, or combination of any ingredient described in clause (a), (b), (c), (d), (e), (f) or (g).
In addition dietary substances such as glutathione, coenzyme Q-10 and taurine should be excluded from the classification as substances to be solely used for drugs (1-a) in the regulation, concerning the range of drugs, of the Medical and Pharmaceutical Safety Bureau. They are constituents of foods and are used as an ingredient of dietary supplements in overseas markets.
2) Foods including dietary supplements should be able to take any form that is safe and convenient for consumers and appropriate for maintaining their quality.
3) Labeling and specifying directions for usage and dosage should not be restricted for dietary supplements.
4) The ingredients described in clause above which are used in or intended for use in dietary supplements should be excluded from the definition of food additives of the Food Sanitation Law in order to avoid the restriction of ingredients of dietary supplements for the reason that they are not listed in the positive list of food additives.
5) Making health benefit claims, which describe the role of a dietary ingredient intended to affect the structure or function in humans and characterize the documented mechanism by which a dietary ingredient acts to affect such structure or function, should be allowed for dietary supplements if they have scientific substantiation for such a role and a mechanism in order to enable consumers to make an appropriately informed choice for their own health. These health benefit claims should be excluded from the third definition of drugs of Pharmaceutical Affairs Law, which states that articles intended to affect the structure or any function of the body of man or other animals are drugs.
(2) Exclusion from the definition of food additives
A vitamin including its various chemical forms and compounds and a mineral compound in a vitamin or mineral dietary supplement should be regarded as food stuff and not a food additive because it is the main ingredient of such a dietary supplement. The definition of food additives of the Food Sanitation Law states that additives are the stuff used in the process of manufacturing foods or for the purpose of processing foods or preserving foods by addition or mixture to foods, soaking foods and other means.
Complex supplements, which contain multiple ingredients of vitamins, minerals and/or herbs, are popular in Europe and the United States. In such cases, other ingredients except for one, which is the main food stuff of a dietary supplement, could be interpreted as food additives, even if the above statement is affirmed. Therefore Clause 4) of Item 1 is necessary in order to exclude all the ingredients from food additives in such a case.
(3) Abolishment of the upper limits for daily intake
The upper limits for daily intake for vitamins B6, B12, K, biotin, pantothenic acid, folic acid and minerals including zinc, chromium, selenium, manganese, molybdenum, copper, fluorine and iodine should be abolished because MOHW has established the recommended dietary allowances for these nutriente recently.
5. Results of deliberation:
According to the ministry concerned, the necessary measures were taken during FY1999 to abolish maximum levels on daily intakes for substances for which a daily requirement is established. This action is commendable.
As a result of deregulation, some vitamins, herbs and minerals have successively been deemed not to be pharmaceuticals under the Pharmaceutical Affairs Law and it is possible to distribute them as foods from March 1, 1997, but according to the complainant, restrictions concerning food additives under the Food Sanitation Law actually apply, and as far as export of products is concerned, the situation remains unchanged. For its part, the ministry maintains that the complaint is from the perspective of the situation in the United States only, and that the Codex, established to study international specifications for foods, and many other countries, lack a system for dietary supplements like that described in the complaint, and that where some ingredients contained in dietary supplements which correspond to food additives are concerned, in many foreign countries other than the United States, only those listed on their positive lists may be used.
Given the decision made by the Office of Market Access, the ministry says that its Study Group on Handling of So-called Dietary Supplements ("the Study Group," hereafter) is currently studying dietary supplements like vitamins, minerals, herbs and so and that it will make public a final report by April 1, 2000.
The 2nd Experts Committee meeting of the OTO (held in December 1999) examined this matter and determined that the ministry's handling of the issue through its Study Group could be a serious issue if the complainant perceives that it goes against the Office of Market Access's decision. The Committee chairman issued an opinion that the ministry should respond in accordance with the intent of the Office of Market Access's decision.
Subsequently, the ministry issued an interim report whose main points were introducing a mandatory warning against excessive ingestion, based on scientific proof, of vitamin, mineral and herbal dietary supplements, and allowing labeling concerning the benefits of nutrients, in order to give consumers more choice. In accordance with the final report the ministry will make by April 1, 2000, specifications and standards for individual ingredients and labeling standards will be studied with a view to implementing the system and these are planned to be implemented successively. In addition, the Food Sanitation Investigation Council's joint subcommittee on food additives and toxicity will begin studying food additive regulation where so-called dietary supplements are concerned.
Based on the above, the following measures should be taken by the ministry concerning the dietary supplement category.
(1) In accordance with the Office of Market Access's decision, the ministry should decide how to handle the dietary supplement category and reach a conclusion on revisions of standards for the scope of pharmaceuticals, in order that products usually distributed and sold as dietary supplements in other countries may be handled as foods in Japan without being regulated as pharmaceuticals.
(2) Where food additives are concerned, the ministry should study and reach a conclusion during FY2000 concerning how to handle food additive regulation in the case of dietary supplements, so that products usually distributed and sold as dietary supplements in other countries may be handled appropriately in Japan.
(3) The ministry should report to the Market Access Ombudsman Council on the status of the dietary supplement category, at an early date during FY2000.
3. Transportation and Traffic
3-(1) Introducing the market principle to port business
1. Complainant: Tokyo Chamber of Commerce and Industry
2. Ministry concerned: Ministry of Transport
3. Background:
(1) Current situation where port transport business is concerned
In order to establish order to port transport business, a license system is used to control entry, under Article 4 of the Port Transport Business Law. Approval of the Minister of Transport must be obtained to set or change fares and fees for port transport business in the way that the Ministry of Transport ordinance indicates.
(2) Background to the revisions made to the Port Transport Operations Law
The Administrative Reform Council submitted its final report in December 1997. Regarding port transport business, it recommended abolishing the business license system (Supply-Demand Adjustment) and adopting a permission system instead, and abolishing the fee approval system and replacing it with a fee filing system. In accordance with the Council's final report, from May 1998 the Council for Transport Policy began deliberating on specific approaches for deregulation and compiled its final report on specific measures (introducing the market mechanism), for deregulating port transport business in June 1999. In order to actualize this final report, the Ministry of Transport submitted a bill to amend the Port Transport Operations Law to the Diet in February 2000.
4. Complaint:
>Port business longshoring and transport fees are high and processing is slow. It is said that it costs almost as much to ship cargo by sea from foreign ports to Japanese ports as it does to transport the said cargo overland from Japanese ports to neighboring cities inland, and there are same cases where rather than use Japanese ports for transshipment, it is cheaper for shippers to transship at Pusan in neighboring Korea. Since the cost of port business in Japan is too high, it places imports at a price disadvantage compared to domestic products. Furthermore, cargo transactions are delayed because Sunday and Nighttime operations are insufficient. The market mechanism should be introduced to port business, to reduce port longshoring and transport costs and speed up operations.
The final opinion of the Administrative Reform Council were made in December 1997, but implementing them during 2000 is taking too much time. Over 90% of the members of the Tokyo Chamber of Commerce and Industry are small and medium enterprises or very small businesses, and in today's economic climate they are facing great difficulties; reducing costs is an issue that requires not a second's delay. The complainant requests implementation of deregulation at an early date.
5. Results of deliberation:
One of the reasons why port business longshoring fees and transport fees are higher in Japan compared to other ports in East Asia is that entry into port business is restricted by the Port Transport Business Law, which means that port business which already have licenses are protected and not exposed to competition from ordinary businesses carrying out similar transport operations, and that operations lack efficiency.
As a result, the costs for using Japanese ports are high compared to international levels, and various port charges in Japan are twice as high as those of Singapore, Pusan, Kaohsiung and others. Whereas ports like Hong Kong and Singapore are handling 4-5 times the volume of cargo compared to 10 years ago, cargo volume remains at the same level in Kobe and in Yokohama is barely 1.5 times the cargo volume of 10 years ago. The status of Japanese ports has declined considerably as far as their use as important physical distribution points is concerned.
The longer action is delayed and protection is continued, the more overhaul of efficiency of port business will be delayed and international competitiveness affected even more seriously. Accordingly, a system should be established for boosting efficiency of port business to a level comparable to those in other countries at an early date.
The ministry submitted a bill to amend the Port Transport Business Law, calling for implementing deregulation (switching from a business license system to an business permission system [eliminating Supply-Demand Adjustment], changing the fee approval system to a fee filing system) first at ordinance-designated specific ports (the 9 major ports of Keihin, Chiba, Shimizu, Nagoya, Yokkaichi, Osaka, Kobe, Kammon, and Hakata, which handle the bulk of containerized cargo volume), and for making operations more efficient and improving service by expediting cooperation and consolidation of operators through Business Cooperatives, to the 147th regular session of the Diet in February 2000, and wishes to implement deregulation during 2000.
In order to ensure that deregulation is effective, new entry of good, competitive companies into port transport business should be guaranteed, and to avoid formation of cartels and so on, competition among operators should be promoted and maintained, in order to lower charges for port operations, fares and so on, and shorten processing time, as soon as possible.
Based on the above, the ministry should take the following actions where introducing market mechanisms into port business is concerned.
(1) In order to boost efficiency and improve service through competition as soon as possible, deregulation in the form of switching from a business license system to a business permission system (eliminating Supply-Demand Adjustment) and changing the fee approval system to a fee filing system should be carried out at the 9 major ports handling the bulk of containerized cargo (Keihin, Chiba, Shimizu, Nagoya, Yokkaichi, Osaka, Kobe, Kammon, and Hakata) as quickly as possible during 2000.
(2) To ensure that deregulation is effective, measures should be taken so that entry of new operators is not hampered.
3-(2) Eliminating regulations prohibiting tandem riding of motorcycles on expressways
1. Complainant: US Embassy
2. Ministry concerned: National Police Agency
3. Background:
According to Article 71-4, Paragraph 3 of the Road Traffic Law, drivers of motorcycles (excluding those equipped with sidecars) are prohibited from driving motorcycles carrying any person other than the driver (referred to hereafter as "tandem riding") on national expressways and motorways (referred to hereafter as "expressways").
Prohibition of tandem riding of motorcycles on expressways was introduced when the Road Traffic Law was revised in 1965, after many fatal accidents related to tandem riding had occurred on the Metropolitan expressway and the Meishin Expressway.
Tandem riding of motorcycles on expressways is prohibited for the following reasons:
(1) it is difficult to balance well in tandem riding on a motorcycle, and to drive continuously at high speed on expressways extremely heighten the danger of tandem riding.
(2) the conditions of Japanese expressways are different from those in the U.S. or Europe, for example, they have many curves, short visible distance, narrow lane width, and shoulders.
4. Complaint:
Japan's Road Traffic Law prohibits tandem riding on expressways. However, accident data from Japan and many other countries reveal that it is safer to drive motorcycles and other vehicles on expressways than ordinary roads, and to ride in tandem on motorcycles rather than singly. The following specific grounds make it clear that prohibiting tandem riding of motorcycles in Japan is not an appropriate measure.
(1) The prohibition on tandem riding of motorcycles forces motorcycles off expressways and onto more hazardous ordinary roads.
(2) When motorcycles are ridden in tandem, drivers tend to drive more safely and carefully than when riding singly.
(3) The latest large motorcycles are vastly improved, compared to motorcycles of the 1960s and 1970s, and they are built to run safely at driving speed on expressways for both driver and passenger.
(4) American insurance companies offer discount insurance rates for touring type motorcycles which are often driven on expressways carrying a passenger in addition to the driver.
(5) Judging from age, occupation, education and income levels, Japanese owners of large motorcycles are socially aware and responsible.
(6) Japanese motorcycle rider groups and motorcycle manufacturers support lifting the ban on tandem riding. This prohibition is not in line with international standards and the National Police Agency has failed to show any objective proof regarding safety.
Accordingly, the prohibition on tandem riding of motorcycles on expressways not only unfairly limits American manufacturers' opportunities for entry into the Japanese market, it also lowers the safety of Japanese expressways, and the agency in charge should eliminate this restriction.
5. Results of deliberation:<
The agency in charge is pointing out that it is inappropriate to lift the ban on tandem riding by reason as following: it is difficult to balance well in tandem riding on expressways, and to drive continuously at high speed on expressways extremely heighten the danger of tandem riding, the ratio of fatal accidents (number of fatal accidents / number of personal accidents) and the fatality ratio (number of deaths / number of deaths plus injured) of motorcycles on expressways are higher than those of any other vehicles, the conditions of standard Japanese expressways are different from those in other advanced countries in such conditions as line structure, lane width, etc., furthermore, there is a doubt about the stability of the pillion seat, and so on. However, it is seemed that the complainant is not convinced, given that motorcycles are allowed to be ridden singly on expressways, and that tandem riding is permitted on ordinary roads.
On the other hand, the issue of danger due to fatigue of the pillion seat rider as a result of extended running at high speed must be considered. In addition, some motorcycle users in Japan drive dangerously, so the public are strongly convinced that driving motorcycles is unsafe. Given this situation it is difficult to eliminate the prohibition on tandem riding. Therefore, the agency concerned, together with other organizations and bodies, must take stronger measures to prevent dangerous driving by motorcycle users and establish safe driving practices. Motorcycle users should make efforts to drive more safely and observe good driving manners. It is also necessary to ensure the safety of motorcycle pillion seats, in terms of the actual equipment. Besides, the usage style for motorcycles may be different in Japan compared to that in the United States and Europe, and there are probably also differences in licensing systems and so on. The OTO Secretariat should conduct a broad study of trends regarding these aspects in other countries.
This complaint was once submitted in 1993, and the Office of Market Access decided in June 1994 that "where safety of tandem riding of motorcycles is concerned, the agency concerned should study the safety data submitted by the complainant and review regulations if no problems are found with safety." The complainant and the agency concerned have been exchanging data lately, but the OTO Secretariat should mediate, to avoid needless misunderstandings from developing.
Based on the above, the concerned agency and others should take the following measures regarding the prohibition of tandem riding on motorcycles:
(1) The agency concerned should promote public relations and enlightening activities in order to improve driving manners among motorcycle users and establish safe driving of motorcycles. It should also improve driver education, by giving instruction in tandem riding and strengthen enforcement against hazardous driving.
(2) The OTO Secretariat should conduct a broad study of trends in other countries concerning usage styles and national attitudes toward motorcycles, and of licensing systems, and compile its findings during 2000.
3-(3) Review of standards, etc. certificate of custody space for motor homes (large campers)
1. Complainant: US Embassy
2. Ministry concerned: National Policy Agency
3. Background:
Based on the Article 1 of the Enforcement Order for the Law for Securing Custody Space for Vehicles and Related Issues, custody space for a vehicle must be secured within a 2 km radius of the base of its usage [owner's residence]. However, when the conditions described below are met, motor pools are recognized as the "base of using" and motor home owners are able to obtain a parking certificate:
(1) Custody and management of the motor home is delegated to a custody facility meeting the following requirements, for a certain period on a continuing basis:
1) the facility is delegated by the vehicle owner and is in the business of storing and caring for motor vehicles
2) the facility has a manager and entrances/exits of the vehicles in question are recorded in a logbook, .
(2) The vehicles eligible belong to class a) and b) below:
1) the vehicle is classified as a camper, a vehicle for special use (license class 88), in the usage classifications of the vehicle inspection certificate system
2) the vehicle in question meets the following size criteria:
vehicle length over 5.7 meters or
vehicle width over 1.9 meters
4. Complaint:
(1) Among camper vehicles which belong to license class 88, many are trailers less than 5.7 meters long and under 1.9 meters wide. It is difficult to find parking for such vehicles near their owners' residences and if kept near owners' residences, such vehicles could obstruct the smooth flow of traffic. Accordingly, even though they are less than 5.7 meters and under 1.9 meters wide, issuance of parking certificates for these vehicles [in motor pools] should be allowed. However, this excludes self-propelled vehicles (equipped with a motor) and applies only to camper-trailers and cargo trailers.
Camper-trailers and cargo trailers are vehicles used infrequently (several times a year, at most) and since they are not always being towed, they are likely to cause traffic jams or accidents in urban areas with heavy traffic. To avoid such accidents, ., delegating storage of camper-trailers and cargo trailers to suburban parking lots is expected to reduce accidents, . since owners would drive to these parking lots in the vehicles they usually drive and leave from there for recreation.
Further, there are few parking lots in the center of cities, so keeping such vehicles in suburban parking lots would free up parking space.
(2) Where care and supervision are concerned, a caretaker must be on duty at all times, and in terms of operation, the storage area must be fenced in and the entrance locked. However, this type of supervision is expensive and places a great burden on motor home owners. Therefore, measures for simplifying actual supervision should be taken, by permitting a type of supervision involving locking the vehicle wheels by a clump and leaving the key in the care and supervision of a caretaker living nearby and so on, to achieve the same effect as at present.
5. Results of deliberation:
Towed camper-trailers are not used on a daily basis, and considering their size when hitched to the towing vehicle, they certainly qualify for special measures concerning certificate of custody space, and therefore this matter needs to be handled realistically. The agency concerned is currently conducting a study on camping trailer formats and their usage, and its willingness to apply the same special measures to small trailers as to large motor homes if there are no particular problems is a positive step.
Regarding whether to recognize the parking lot applied for as the base of using of motor homes, the agency concerned follows standards and makes decisions on a case by case basis. But where application of the standards in question is concerned, as long as vehicles can be prevented from entering or leaving without restriction in the absence of the caretaker, it is not necessary for a caretaker to be on duty 24 hours a day, and it is also not obligatory to install a fence, and all parties concerned should be informed of this.
Based on the above, the agency concerned should take the following measures concerning review of standards, etc. for certificate of custody space for vehicles:
The agency should study whether to approve motor pools as the base of using for small towed camper-trailers, based on their format, usage, etc., and whether they are eligible for the special measures permitting their owners to obtain a certificate of custody space [in motor pools], and take the necessary measures during 2000 if there are no particular problems.
3-(4) Changes to the vehicle inspection system for towing vehicles and for towed vehicles
1. Complainant: US Embassy
2. Ministry concerned: Ministry of Transport
3. Background:
(1) In Japan, regulations call for towed vehicles to be inspected hitched to the towing vehicle at the time of new vehicle registration. This is because it is impossible for the towed vehicle to move on roads under its own power, and because when checking whether the towed vehicle meets the safety regulations for road vehicles it is necessary to check conformity with said regulations in the hitched state as well. In addition to towing capability, checking for conformity with safety regulations involves ascertaining the minimum turning radius of the towing and towed vehicles when hitched, operation of vehicle lights, control capabilities, extent of field of vision in the rear-view mirror of the towing vehicle and so on.
(2) The notation column of the vehicle inspection certificate for the towed vehicle notes the name and type of the towing vehicle for which conformity with safety regulations was checked (when the type is not known, the frame number is noted except production run number, manufacturing plant, etc. that each vehicle bears a different number). (Enforcement Regulations for Road Vehicle Act, Article 35-3, No. 15)
(3) At the time of inspection of towed vehicles upon new vehicle registration, or when application for inspection is made for the purpose of adding the type of the towing vehicle to the vehicle inspection certificate, a hitching specification certificate is drawn up for each towing vehicle hitched to the towed vehicle. This certificate contains information on the parking brake of the towing vehicle needed for the towed vehicle. In order to add notations for name and type of multiple towing vehicles on the vehicle inspection certificate of the towed vehicle, it is only necessary to check the said specification certificate when inspecting only the towed vehicle, to determine whether the towing vehicle in question can tow the towed vehicle.
4. Complaint:
Restrictions inherent in the vehicle inspection system make it a de facto impossible for individuals to hitch a camper-trailer (towed vehicle) rented or otherwise borrowed to their own cars in order to go camping. Camper-trailers are relatively expensive and it is also difficult to find places to keep them, so private ownership is difficult, but many consumers would like to use one if they were available for rental, and there appears to be very strong potential demand. Also, if consumers went to areas near campgrounds in their own vehicles and were able to rent camper-trailers there, this would have positive effects where road congestion, the environment and so on are concerned. However, the spread of imported camper-trailers for such uses is impeded.
(1) Carrying out independent inspections of towing vehicles. and mandating labeling concerning towing capacity
Under the current Japanese vehicle inspection system, the towing vehicle is restricted by type (or by frame number, when the type is not known), and inspecting towed vehicles independently, at the time of new vehicle registration, is not accepted. But out of all items, except for towing capacity, which safety regulations specify must be checked in the hitched state, only the vehicle's minimum turning radius depends on the performance of the towing vehicle. Operation of vehicle lights can be checked during new vehicle registration of the towed vehicle by using an available towing vehicle. Scope of the field of vision of the rear-view mirror can be set adequately following instructions in the user's manual or other materials. Accordingly, there is no need to check any of these regulations in the hitched state.
In the United States and Europe, towing vehicles carry labeling regarding towing capacity, and users can select the type of towed vehicle appropriate for the towing capacity of their vehicle.
Thus, the system should be changed to allow independent inspection of towing and towed vehicles at the time of new vehicle registration. Provisions should also be made for mandatory labeling of towing capacity on towing vehicles, to allow consumers to freely select and use towed vehicles.
(2) Simplifying procedures for drawing up hitching specification certificates
The hitching specification certificate required for each towing vehicle must be drawn up by the party making application. However, the figures which must be noted on the certificate require complex calculations that is asked a specialist for the vehicle must be taken in for inspection, and so on. But regarding vehicles manufactured these days, these figures can most likely be calculated from the weight of the towing and towed vehicles.
Accordingly, measures should be taken to make it unnecessary to draw up a hitching specification certificate, by using a conversion chart showing the weights of the towing and towed vehicles to clarify cases in which the towing vehicle has the required weight for towing the towed vehicle, in order to lighten the burden involved in preparing this certificate. When doing so, measures should also be taken to loosen regulations for the parking brake when hitched in the current regulations, since it is excessive for towing the towed vehicle.
5. Results of deliberation
According to the ministry concerned, since the main type of trailer used in Japan so far has been large semi-trailers used for transporting cargo, insufficient consideration had been given to camper-trailers. Further, in accordance with the safety regulations for road vehicles running performance, brake strength and so on are necessary to ensure safety when the vehicles are hitched, and the hitching specification certificate is needed in order to check safety efficiently. But given that camper-trailers have become much more prevalent in recent years, there is some leeway for simplifying procedures pertaining to meeting s regulations in the hitched state for lightweight camper-trailers, based on their weight, brake system and minimum turning radius and on the presumption that they are safe. This issue will be examined with a view to simplification, by studying the correlation between vehicle performance and vehicle weight.
When new products cannot be handled within the framework of existing systems, it is necessary to review those systems. In such cases, safety must be ensured, but no long periods should be taken to examine whether to introduce in Japan methods which are already in use in Europe and the United States.
Based on the above, the ministry concerned should take the following measures concerning inspection and registration of towing and towed vehicles:
With a view to making it possible to use rented camper-trailers, in order to allow camper-trailers to be towed by vehicles other than those already registered, the ministry should immediately begin examining simplification of procedures when registering camper-trailers, including whether it is possible to introduce an American/ European-style system whereby auto makers label vehicles as to the maximum weight of towed vehicle they have the capacity to tow, and reach a conclusion during 2000 at the latest.
3-(5) Report on study for establishing new categories of towing licenses
1. Agency concerned: National Police Agency
2. Background:
Since the maximum weight of vehicles which may be towed by holders of an ordinary driver's license is 750 kg, drivers must obtain a separate license for towing camper-trailers (which usually weigh approximately 2 tons). However, there is currently only one type of towing license, which places no restrictions on the weight of the towed vehicle, and since drivers wishing to obtain a towing license must learn advanced driving skills which are not necessarily needed when towing a camper-trailer, the complainant stated that separate categories of towing licenses based on the weight of the towed vehicle should be established.
In the comprehensive review of work on complaints before the OTO carried out in 1998, the Office of Market Access had decided that a study concerning establishing separate categories of towing licenses should be initiated as soon as possible, and that a report on study findings be presented to MAOC during 1999.
3. Contents of report:<
(1) Findings concerning usage of camper-trailers
Between September and October 1998, the Tokyo Metropolitan Police Department surveyed all applicants for new towing licenses and for towing license renewal at driver's license examination centers, concerning possibility of using or usage of camper-trailers. (A total of 327 individuals - 123 applicants for new licenses and 204 persons renewing - were surveyed.) New license applicants were asked to answer a multiple answer question concerning the type of vehicle they were planning to drive after obtaining a towing licenses, and 13.0% answered a "camper-trailer." Among applicants for renewal, who were asked a multiple answer question about the type of vehicle they currently towed, 4.9% answered a "camper-trailer." In other words, survey findings indicated that needs for a license to tow camper-trailers were not necessarily widespread but existed among a certain percentage of drivers.
(2) Findings concerning characteristics of accidents involving towed vehicles, by weight
The Institute for Traffic Accident Research and Data Analysis analyzed the characteristics of accidents involving towed vehicles, by weight, based on figures for accidents involving personal injury between 1995 and 1997. Among the 6,052 accidents involving towing by large vehicles (weighing 3 tons or more), the fatality rate was 3.9%, and 10.8% of accidents involved serious injury. Among the 2,201 accidents involving towing by sub-compact vehicles (weighing under 3 tons), the fatality rate was 0.6%, and 10.8% of accidents involved serious injury.
Most towed vehicles are large vehicles. The number of vehicles which may be towed by small vehicles is small. Therefore, although the ratio of fatal accidents to total accidents is small in the case of small vehicles, the rate of accidents occurring during towing is not low, considering that towing is infrequent.
(3) Findings concerning accidents involving light towed vehicles
When police departments in all prefectures throughout Japan surveyed accidents occurring between November 1998 and June 1999 involving vehicles towing lightweight (750 kg or less) vehicles as the primary party, the number of accidents was low, there being only two accidents involving property damage during this period.
4. Results of deliberation:
According to the agency concerned, approximately 30,000 persons obtain a 1st class 1 towing license every year. The vehicle used for the towing license test is not very large (the towing vehicle weighs 3.3 tons and the towed vehicle 1.9 tons, for a total combined weight of 5.2 tons), and applicants' skills driving on S-shaped curves and reversing direction by backing up, maneuvers essential when driving, are tested. On the other hand, the agency wishes to conduct a separate study on accident rates for camper-trailers and for other types of towed vehicles exceeding 750 kg in weight and to investigate whether there are differences in driving skills for the respective types of towed vehicles.
The issue in this case is that only one type of test towing and towed vehicles respectively is used when testing for towing licenses. Accordingly, in addition to clarifying the issues, a further study should be conducted to determine whether it is necessary to establish categories based on the weight of the towed vehicle, when towing license testing is carried out.
Based on the above, the following actions should be taken regarding establishing different towing license categories:
(1) The agency concerned should study whether it is necessary to establish categories based on the weight of the towed vehicle when towing license testing is carried out, and reach a conclusion during 2000.
(2) Specifically, a detailed analysis of the accident rate and characteristics of accidents involving camper-trailers weighing over 750 kg and not more than about 2 tons and other towed vehicles should be carried out as soon as possible.
(3) A study of whether there are differences in driving skills needed when towing camper-trailers weighing over 750 kg and not more than about 2 tons and other towed vehicles should be carried out as soon as possible.
3-(6) Report of committee studying regulations on trailer homes
1. Agency concerned: Economic Planning Agency
2. Background:
(1) Because large towed trailer homes are not very common in Japan, their legal position is not clear. Some authorities consider them "vehicles," since they have wheels, and are able to move on roads, whereas others consider them "buildings," since they remain in a certain location and are used there for a certain period of time. When trailer homes are treated as vehicles, they come under the provisions of the Road Transport Vehicle Law. When treated as buildings, some trailer homes which, based on their size, configuration, state of installation are judged capable of moving voluntarily at any time, were judged as not coming under the provisions of the Building Standards Law. This is informed by a directive from the Ministry of Construction in March 1997 to all concerned parties.
(2) In the comprehensive review of work on complaints before the OTO carried out in 1998, the issuance of this directive was regarded as a positive step. However, this alone is insufficient and the interpretations of businesses and of government bureaucrats as to the legal position of trailer homes regarding location of installation and aim of installation continue to differ, leading to on-site disputes concerning application of the law.
(3) Given these circumstances, the OTO decided in December 1998 to establish a study committee which would report to MAOC during 1999. In February 1999, a study committee concerning regulations on trailer homes was established within the OTO Liaison and Coordinating Committee and presented a report to MAOC in December 1999.
3. Contents of report:
(1) The study committee determined that the issue requiring urgent action is whether all trailer homes at campgrounds are buildings. Under current laws, trailer homes themselves are not immediately considered buildings, their classification being determined by type of use and so on.
(2) Confusion over application of the Ministry of Construction's directive on trailer homes arises because in areas earmarked for urban development under the Urban Planning Law, some businesses have argued that "trailer homes used at campgrounds are not buildings" and that zoning-based restrictions on usage applicable if trailer homes were ordinary buildings do not apply.
(3) In urban areas, if trailer homes are used for various types of operations, such operations should be carried out after obtaining verification of construction as a building, in the zoning area for which such operations are allowed. The Report of the Study Committee Concerning Regulations on Trailer Homes will be sent to local public bodies, and to other organizations connected with trailer homes, in order to once again inform the parties concerned of the intent of the Ministry of Construction's directive.
(4) From this study it became clear that in Japan, there are relatively few examples of usage of trailer homes. It is too early to introduce new laws and it is appropriate to deal with the issue within the framework of existing laws for the time being.
(5) As of 1998, there were approximately 230,000 recreational vehicles (RVs) with accommodation facilities in Japan (US shipments of RVs totaled approximately 450,000 yearly in 1998), most of which are self-propelled RVs. Most camper-trailers in Japan in the past few years are imported. In Japan, the participation rate in automobile camping among persons aged 15 and over is approximately 6% of the total population (in the US, an estimated 52.80 million people take part annually), and the total average length of stay per year is 1.6 nights, which is quite short (approximately 10 days in the US). Automobile camping has spread and expanded rapidly since the 1990s, but the main style of camping is vehicle + tent.
(6) The study committee concerning regulations on trailer homes. will continue to exist and will report on matters studied to MAOC in the future as necessary.
4. Results of deliberation:
Concerning the application of existing laws to new products, there are always 'gray zones', and at this point unforeseen difficulties may arise concerning the use of trailer homes for camping in the future. For the time being, although it may be too early to make new laws or establish public standards concerning trailer homes, legal research concerning trailer homes should be continued.
Based on the above, the ministries and agencies concerned should take the following measures to prevent confusion at the stage of applying the Ministry of Construction's directive on trailer homes before it occurs, and to promote the healthy growth of the trailer home market and create an environment conducive to promoting imports.
The Report of the Study Committee Concerning Regulations on Trailer Homes has been sent to local public bodies, and to other organizations connected with trailer homes, but efforts should be made to prevent confusion at the stage of applying the Ministry of Construction's directive on trailer homes before it occurs, by sending out the Report once more to inform all parties thoroughly. The study committee should continue to exist within the OTO Liaison and Coordinating Committee and report to MAOC on matters studied in the future as necessary.
4. Import Procedures
4-(1) Improvement of customs inspection system for containerized cargo
1. Complainant: Tokyo Chamber of Commerce and Industry
2. Ministry concerned: Ministry of Finance
3. Background:
When cargo is imported, the importer or the customs broker as the importer's proxy (referred to hereafter as "customs broker") uses NACCS (Nippon Automated Cargo Clearance System) to make an import declaration to customs. Customs examines the contents of the declaration and conducts physical examinations if necessary. When the import cargo is containerized (cargo imported loaded in a container), there are three types of physical examinations: sample examination, sampling examination and whole examination involving removal of cargo from the container.
When containerized cargo is subject to physical examination, customs informs the customs broker of the examination via NACCS. The customs broker transports the container to the examination place specified by customs; when whole examination is carried out, the entire contents of the container are removed and examined. In such cases, if the customs broker is not licensed to conduct transport operations within port areas, the broker delegates a port transport operator to transport the cargo to the examination place, unload the container and open the cargo.
The charges for these operations are borne by the importer. Whole examination of the cargo also takes time, delaying pick up of the cargo by the importer.
4. Complaint:
When a whole examination of containerized cargo is carried out, the container must be transported to an examination place specified by customs, and the cargo removed from the container, and if necessary, opened for inspection; however, all the expenses involved must be borne by the consignee (importer). In addition, since only licensed port transport operators may carry out these operations, there is little competition, leading to inefficiency in operations; customs examinations take two or three days, and delays in customs clearance results in losses that must be borne by the importer as well.
If the purpose of physical examinations is to control smuggling and check offenses of declaration by fraud, no time should be allowed to move the container. Instead, customs officials should carry out random checks on the spot. If physical examinations are carried out for these purposes, there is no point in having the container moved and carrying out whole examination.
If the container is in fact moved and a whole examination carried out, the expense involved should be borne by customs. Also, in addition to shortening the time needed for examination, the importer should be notified in writing of the reason for whole examination beforehand, and results of the physical examination should be reported afterward.
5. Results of deliberation:
Since whole examination of containerized cargo are carried out without indicating the reason for examining the cargo and on a compulsory basis, importers have complained, in cases where the cargo was in order, "Even though there were no problems with the cargo in the end, we were forced to unilaterally bear the costs related to physical examination and resulting delays". Similar dissatisfaction have also been received in the past.
On the other hand, contraband like drugs, guns and other socially undesirable cargo are uncovered mainly through whole examinations (in 1999, customs confiscated a record 2.2 tons of illegal drugs before they were released, and of this amount 1.1 tons were discovered during whole examination). Although it is true that a much larger proportion of total cargo targeted for whole examination was legal cargo compared to the illicit cargo discovered, the socially undesirable cargo would not have been discovered at all if whole examinations did not exist, and accordingly whole examination have great socially redeeming value.
According to the ministry concerned, since providing information concerning physical examinations other than the number of cases of contraband caught, such as reasons for examination or the number of examinations carried out, could reveal customs examination methods to smugglers and have a negative impact on future examinations. Accordingly, no information on examination can be provided, and furthermore no other country provides similar information. Regarding having the importer bear examination expenses, this is the commonly accepted practice in other countries, but care should be exercised so that these expenses are not excessive compared to cases where no examinations are carried out.
Given the above, in terms of a policy which can fulfill both the need to detect socially undesirable cargo and reduce the burden on importers, use of large X-ray apparatus to examine containers while loaded on transport vehicles to permit examination of the contents, a method already adopted in other countries, would be useful.
Regarding shortening of customs processing time, the pre-arrival examination system will be useful, when used in conjunction with the simplified declaration procedures scheduled to be introduced during FY2000, and efforts should be made to inform the parties involved and encourage them to use these systems.
Based on the above, the ministry concerned should take the measures described below to improve the customs examination system relating to containerized cargo.
(1) Where whole examination is concerned, large X-ray apparatus used to examine containers while loaded on transport vehicles to permit examination of the contents should be introduced as soon as possible, to fulfill the two aims of reducing the burden of examination expenses and shortening examination time, as well as of detecting socially undesirable cargo.
(2) To help reduce the time needed for customs clearance of imported cargo, the ministry should endeavor to inform the parties involved about the pre-arrival examination system and the simplified declaration procedures scheduled to be introduced during FY2000, and encourage them to use these systems.
4-(2) Improvement of customs clearance procedures such as NACCS using the Internet
1. Complainant: Tokyo Chamber of Commerce and Industry
2. Ministry concerned: Ministry of Finance
3. Background:
(1) Method of connecting to NACCS
NACCS (Nippon Automated Customs Clearance information processing System, which includes Sea-NACCS and Air-NACCS) is a computer system using dedicated lines and terminals which connect the NACCS Operations Organization, the system's operating entity, with customs offices, customs brokers, steamship companies, airlines, banks and others, to carry out import and export customs clearance procedures for air and sea cargo speedily and reliably.
To use NACCS, users are required to sign a contract with the NACCS Operations Organization and pay user and connection fees. Changes made to the Sea-NACCS system in October 1999 now make it possible to use personal computers available on the market or company intranets as access terminals, but connections are still made only over dedicated lines.
(2) Prior instruction system
The prior instruction system allows importers to verify tariff codes and tariff rates for the cargo to be imported with customs and to receive a reply beforehand. Information is currently supplied in three ways: written reply, verbal reply or by e-mail.
In the case of a written reply, attaching this reply to the import declaration basically ensures that this tariff code and tariff rate will be used during customs inspection. But in the case of e-mail and verbal replies, they are considered as reference information and they lack the same authority as written replies.
(3) Search system for classification information
The search system for classification information consists of a database based on prior instruction examples, but dedicated terminals are located only in the main customs offices throughout the country and may only be used there.
4. Complaint:
(1) Customs procedures using NACCS may currently be carried out only by connecting between dedicated lines and the NACCS Operations Organization host computer. However, NACCS should be modified so that, like MITI's Foreign Exchange and Trade Control Law-related procedures, the system can be accessed over the Internet.
(2) Prior instruction of tariff codes and tariff rates is done frequently, but since inquiries and replies by e-mail are not considered to have the same authority as written replies, users are forced to make inquiries and receive replies in writing, which is inefficient. E-mail inquiries and replies should be accorded the same authority as written inquiries and replies. In the private sector, even transactions involving funds transfers, like banking or stock transactions, are done over the Internet safely and on an extensive scale. Given today's technological standards, the issues of security of replies by e-mail and volume of electronic information are technologically feasible.
(3) Under the current search system for classification information, when users attempt to check past cases of prior instruction, they cannot use the system unless they go to a customs office. Since this is impractical, the information should be put into a database which can be accessed through the Internet, to allow users to check past inquiries and replies.
5. Results of deliberation:
NACCS was first introduced in 1978 for air cargo and was hailed as a pioneer in the electronic government administration. The ministry concerned indicates that it will consider providing access to the system through the Internet if the technological issues involving safety can be solved and if there is strong demand from private sector users for Internet access.
Regarding prior instruction by e-mail, the ministry concerned is making efforts to reply with information which can be used for reference as much as possible, within the scope of the limited information which can be obtained by e-mail, and intends to take an active stance regarding the use of e-mail.
Regarding the search system for classification information, the ministry concerned indicates that it will take steps to allow access through the Internet, if the issues of capacity and so on can be resolved.
Based on the above, the ministry concerned should take the measures below concerning improving NACCS customs procedures using the Internet.
(1) Regarding NACCS, in conjunction with revision of to Air-NACCS in autumn 2001, active efforts should be made to allow use of the system from the Internet. Measures should also be taken as soon as possible to allow Sea-NACCS, of which revision was made in October 1999, to be accessed from the Internet without waiting for the next modifications to the system, which are scheduled for 2008.
(2) Regarding prior instruction by e-mail, rather than not granting authority equivalent to that of written replies to all e-mail replies, the ministry should study giving e-mail replies the same authority as written replies, when classification is simple and sufficient information is provided, and should reach a conclusion regarding realistic ways of accomplishing this, during 2000.
(3) Regarding the search system for classification information, the ministry should complete a study during 2000 aimed at establishing a new system, in addition to utilizing search system on dedicated terminals located at customs offices, allowing users to view and search for classification information over the Internet.
5. Other Areas
5-(1) Review of landing examination criteria
1. Complainant: Korean Embassy
2. Ministry concerned: Ministry of Justice
3. Background:
(1) The Immigration Control and Refugee Recognition Act (referred to hereafter as "the Act") is established to assure equitable control on the entry and exit of persons entering or leaving Japan. Under Article 2-2 of the Act, foreigners residing in Japan are required to obtain the status of residence determined by the landing permission, the acquisition of status of residence or by the permission of any change thereof. The statuses of residence are categorized according to the activities permitted to the foreigners etc., and indicate the types of foreigners who may be permitted to land or reside in Japan. The immigration control administration is based on this system. There are currently 27 statuses of residence, classified into the following groups.
1) Statuses of residence based on the activities in which foreigners are authorized to engage in Japan
1] 6 statuses, e.g. "Diplomat" (ambassadors from foreign governments, etc.), and "Official" (employees of foreign government embassies, etc.) (Group 1 in the Annexed Table 1 of the Act)
2] 10 statuses, e.g. "Investor / Business Manager" (managers of foreign-capital companies, etc.), "Legal / Accounting Services" (lawyers, etc.) (Group 2 in the Annexed Table 1 of the Act.)
3] 2 statuses, e.g. "Cultural Activities" (researchers studying Japanese culture, etc.) (Group 3 in the Annexed Table 1 of the Act.)
4] 4 statuses, e.g. "College Student" (students in universities, etc. "Per-College Student" (student in high schools, etc.) (Group 4 in the Annexed Table 1 of the Act.)
5] 1 status, "Designated Activities" (domestic help for foreign diplomats, etc.) (Group 5 in the Annexed Table 1 of the Act.)
2) Statuses of residence based on the personal relationship or status of foreigners
4 statuses, e.g. "Permanent Resident" (individuals granted permission for permanent residence by the Minister of Justice) (Annexed Table 2 of the Act)
Furthermore, regarding 2] (Group 2 in the Annexed Table 1 of the Act) and 4] (Group 4 in the Annexed Table 1 of the Act) above, since the activities of these individuals could affect domestic industry or the lives of the general public, the Article 7, Paragraph 1-(2) of the Act states that unless such activities meet the landing examination criteria set out by the ministerial ordinance, the individual will be refused permission to land.
(2) The activities permitted under the "Investor/Business manager" status are, according to the Annexed Table 1-(2) of the Act, "to commence the operation of international trade or other business, to invest in international trade or other business and to operate or manage that business, or to operate or manage international trade or other business on behalf of the foreign nationals who have begun such an operation or have invested in such a business."
According to the Ministerial Ordinance to provide for Criteria pursuant to Article 7, Paragraph 1-(2) of the Act, cases where the applicant to commence the operation of international trade or other business, the facilities to be used as an office for the business concerned must be in Japan and the business concerned must be maintained in such a scale as to employ at least 2 full-time employees in Japan, in addition to those who operate and / or manage the business.
4. Complaint:
Under the Ministry of Justice's landing examination criteria, the status of residence of "Investor / Business Manager" can be obtained only when the Japan-based company of the foreign company operated by the applicant employs two or more locally-based persons (this, in addition to Japanese nationals, includes foreigners with the status of "Permanent Resident", "Spouse or Child of Japanese National", "Spouse or Child of Permanent Resident", "Long Term Resident" or "Special Permanent Resident"). According to the Ministry of Justice, this rule was established to clarify "a substantial amount of capital" provided for in Article 1(b) of the Japan-US Treaty of Friendship Commerce and Navigation, as condition for the "permission for landing and stay of businesses in which they have invested, or in which they are actively in the process of investing", and where relations with third countries are concerned, this applies to all countries in accordance with the principle of most favored nation status.
However, high wage levels in Japan can make it very expensive for a business to employ two or more locally-based persons when a business is established. In the case of 'venture' businesses and so on, for example, obliging them to employ two locally-based persons as the equivalent of "investing a substantial amount of capital" is something they can ill afford, and it is more appropriate to leave decisions concerning employment up to the business's own judgment.
Where this is concerned, Korea's Law on Investment by Foreigners and Introduction of Foreign Capital does not require that Korean nationals be employed, when non-nationals are granted permission for stay under similar status.
Accordingly, the requirement to employ locally-based persons should be eliminated from the landing examination criteria for permissions for stay under the "Investor / Business manager" status.
5. Results of deliberation:
According to the Ministry concerned, the criteria related to the "Investor / Business manager" status were originaly required to ensure the stability and continuity of the business. The Ministry stated that even under current conditions, this continues to be an appropriate requirement and that there was no need to review, these criteria and the way of their application. However, the Ministry, after studying the issue in the OTO process, indicated the following : (1) Even if two locally-based persons are not necessarily employed, when an investment "in such a scale" is made, applicants can be granted landing permission under the "Investor / Business Manager" status. But in the actual application of the examination criteria, the intention of requiring an investment "in such a scale" to employ at least two locally-based persons has not been entirely understood accurately. Applicants will be granted permission to land in Japan under the "Investor / Business Manager" status in cases where it is acknowledged that the business has made a substantial amount of investment in such a scale in Japan, even if the business does not actually employ two locally-based persons. (2) Further, the Ministry will make efforts to establish examination guidelines which are as practical as possible, based on actual examples of application. This stance on the Ministry's part is commendable.
As the Ministry concerned is aware, since no guidelines exist for judging specifically how much an investment "in such a scale" to employ at least two locally-based people required for granting permission to land is, in case such people are not actually employed, it is difficult for immigration bureaus in various regions of the country to conduct examination when two locally-based people are not employed. In the business climate of the past few years, there have been spreading companies in new types of businesses such as Internet-based business and so on have been spreading, which can conduct operations on a continual and stable basis even if they do not necessarily employ two locally based people, and it is necessary to actively accept these businesses from the perspective of promoting inward investment.
Based on the above, the Ministry concerned should take the following measures concerning the "Investor / Business Manager" status of residence.
(1) Where criteria for the "Investor / Business Manager" status of residence are concerned, the applicant will be granted permission to land as an investor or manager, if an investment "in such a scale" to employ at least two locally-based people is made, even if such people are not actually employed. However, since this was not always the case under current mode of the application of examination criteria, regional immigration bureaus should be notified immediately that in the future, they should grant applicants permission to land in Japan under the "Investor / Business Manager" status in cases where it is acknowledged that a substantial investment in such a scale has been made in Japan, even if two locally-based persons are not employed.
(2) In order to clarify the scale of investment equivalent to employing at least two full-time employees, the Ministry should draw up, during 2000, practical examination guidelines applying to cases where two persons are not employed.
(3) Regarding new types of businesses, for example Internet-based businesses and so on which can conduct operation of a substantial scale on a continual and stable basis even if they do not necessarily employ two locally-based people, these businesses should be positively accepted from the perspective of promoting inward investment, and according to the above guidelines investment should be smoothly made and landing and stay of their managers should be controlled.
5-(2) Reviewing standards for installing equipment using fire under the Fire Service Law
1. Complainant: Tokyo Chamber of Commerce and Industry
2. Ministry concerned: Ministry of Home Affairs
3. Background:
(1) System for fire prevention restrictions under the Fire Service Law
The Fire Service Law aims to protect citizens' lives, persons and assets from disasters, and the handling of equipment using fire is covered by municipal ordinances. The Fire Defense Agency of the Ministry of Home Affairs sets out the prototype rules of the fire prevention ordinances (hereafter referred to as "the prototype rules" and the head of the Agency issues a notice to the governors of all prefectures requesting them to direct the heads of municipalities, which set out the ordinances, to begin preparing proposals for fire prevention ordinances in accordance with the prototype rules. Additionally, as a supplement to this notice, a notice detailing points requiring attention concerning application of the prototype rules is issued in the name of Fire Defense Agency section heads to the officials in charge of fire service in each prefecture.
(2) Standards, certification
1) Standards relating to equipment using fire
Standards relating to equipment using fire are set out in municipal ordinances following the prototype rules of the fire prevention ordinances, to maintain a safe distance in fire prevention terms (separation distance) between equipment using fire and building structures and flammable materials. The specific distance is stipulated in a separate schedule, for equipment consuming small amounts of energy.
In the case of equipment consuming large amounts of energy, the separation distance is not uniform and is often judged in each case by the fire service authorities. Accordingly, many municipal ordinances do not specify a uniform distance, in the case of equipment using fire consuming large amounts of energy.
In the case of equipment for which there are no specifications in ordinances, the Japan Gas Appliances Inspection Association public service foundation carries out fire prevention capacity evaluation. For commercial gas equipment meeting the fire prevention capacity evaluation standards and displaying certification of the Association, the Research Committee for Installation Standards for Gas-Consuming Equipment within the above-mentioned Association has established installation standards for such equipment. The Fire Defense Agency issues a notice in the name of section heads to the officials in charge of fire service in each prefecture, requesting them to direct that commercial gas equipment meeting the fire prevention capacity evaluation standards and displaying certification by the Japan Gas Appliances Inspection Association be installed in accordance with the said installation standards, and municipalities use this as the specific judgment criterion when applying their ordinances. The installation standards for commercial gas equipment apply only to equipment meeting the fire prevention capacity evaluation standards and displaying certification by the Association. For equipment not displaying certification by the Association, there are no established standards, and judgment is made by the fire service authorities in each case.
2) Confirmation of safety by the fire service authorities
When the fire service authorities are notified of installation of equipment using fire, confirmation is made in each case as to whether installation meets ordinance standards. In the case of many municipalities whose fire prevention ordinances do not specify the separation distance, for example, in the case of commercial gas equipment consuming particularly large amounts of energy, the fire service authorities confirm the safety of the commercial gas equipment in question based on the structure of the areas adjacent to the location of installation, test data for the equipment, labeling stating that the equipment meets the fire prevention capacity evaluation standards of the Japan Gas Appliances Inspection Association, and so on.
4. Complaint:
The complainant imported commercial gas equipment from abroad and attempted to use it, but was instructed by the fire department to use equipment which had passed inspection by the Japan Gas Appliances Inspection Association and was certified by the Research Committee for Installation Standards for Gas-Consuming Equipment. Although the equipment imported meets the standards and specifications of other countries, it must undergo costly and time-consuming re-inspection in order to be used in Japan.
At present, the Fire Defense Agency of the Home Affairs Ministry sets out specific judgment criteria for only certain products displaying certification by specific public service bodies, where application of ordinances is concerned, and this is a barrier to the entry of foreign products in the Japanese market. Further, only the Japan Gas Appliances Inspection Association carries out fire prevention capacity evaluation, and test data from foreign countries is not even accepted.
The Fire Defense Agency of the Home Affairs Ministry should clarify specific judgment criteria for all products, not only those certified by specific public service bodies.
5. Results of deliberation:
According to the ministry concerned, it is difficult to specify a uniform separation distance in the case of equipment using fire consuming large amounts of energy, and accordingly the fire service authorities determine the separation distance on site, based on test data for the equipment and the building structure. However, for equipment using fire for which no uniform guidelines are set out, some fire service authorities have difficulty handling the matter adequately when judging the separation distance based on test data in individual cases, and as a result, confusion such as that described in this complaint occurs in some cases. Therefore, the ministry concerned should show some guidelines for separation distance, both for fire prevention and to improve market access.
The ministry concerned issues a notice to the prefectures requesting them to install commercial gas equipment certified by the Japan Gas Appliances Inspection Association based on the installation standards for commercial gas equipment drawn up by the Association, but for products other than those certified by a specific association, it should ensure that all fire service authorities are aware of the need to confirm separation distance in each case, based on test data and so on.
Based on the above, the ministry concerned should take the following measures concerning separation distance for equipment using fire.
(1) For equipment using large amounts of energy and for which it is possible to establish types for separation distance, the ministry should draw up guidelines during FY2000 and inform fire service authorities of these guidelines.
(2) All fire service authorities should be informed immediately, by notice or other appropriate means, of the need for each fire service authority to also confirm the safety in terms of fire prevention of equipment other than that which has passed inspection and been certified by the Japan Gas Appliances Inspection Association or other bodies.
III. Deliberation and Actions Taken on 41 Other Complaints
1-(1) Flexible application of food labeling regulations
1-(2) Relaxing plant quarantine standards (kiwi fruit)
1-(3) Relaxing plant quarantine standards (apples)
1-(4) Permitting use of imazalil
1-(5) Improving the import system for dairy products
1-(6) Improving import procedures for laver
1-(7) Abolishing the advance import confirmation system for wakame seaweed
1-(8) Reviewing plant quarantine standards
1-(9) Inspection of imported tableware
1-(10) Responses of the quarantine station to minor errors
1-(11) Use of food additives permitted in other countries
1-(12) Abolishing double sampling inspections
1-(13) Expansion of countries to which animal quarantine inspection certificates may be transmitted electronically
2. Drugs, Medical Devices and Cosmetics
2-(1) Promoting mutual certification when medical devices are imported
2-(2) Changing labeling methods for cosmetics and clarifying the implementation schedule for changing the regulation system applied to cosmetics
3. Manufacturing
3-(1) Simplifying importer registration of poisonous and deleterious substances
3-(2) Simplifying examination procedures for chemicals
3-(3) Acceptance of foreign standards regarding electrical products
3-(4) Acceptance of foreign standards regarding gas appliances
4. Transportation and Traffic
4-(1) Reviewing maximum limits on the width of camper-trailers and reviewing how permits allowing passage of special vehicles are handled
5. Construction
5-(1) Improving evaluation standards for inspection of management items relating to public works projects ordered by local governments
5-(2) Correcting exclusionary goods procurement for construction projects
5-(3) Acceptance of foreign test data in inspecting imported building materials
5-(4) Relaxing regulation of foreign-specification non-combustible materials
5-(5) Early introduction of mutual certification in the construction field, and promotion of international harmonization of performance standards and performance testing methods for construction materials
5-(6) Indicating the schedule for implementing performance standards of the Building Standards Law and establishing transparency in setting down government ordinances and rules.
5-(7) Limiting ordinances passed by local governments based on the Building Standards Law and making related information available
7. Import Procedures
7-(1) Temporary customs clearance of special vehicles from Korea
7-(2) Combining payment of tonnage duty at ports in the Hanshin area
7-(3) Simplifying import procedures for poisonous and deleterious substances for private use
7-(4) Toy imports
7-(5) Reviewing the declaration of payment of consumption tax system when imported goods are cleared through customs
7-(6) Exempting cargo produced from molds provided gratis from the consumption tax when imports are cleared through customs
7-(7) Improving the application of preferential tariffs
7-(8) Clarifying standards for opening customs office outside of regular hours and eliminating overtime service fees
7-(9) Simplifying documentation used for preparing customs statistics
7-(10) Pre-clearance inspection of chilled products
7-(11) Coordinating tariff codes and tariff rates
7-(12) Speeding up replies for prior instruction
7-(13) Simplifying procedures for applying Article 8 of the Temporary Tariff Measures Law at the time of import
8. Other Areas
8-(1) International harmonization of verification testing methods for mutable abiogenesis of glutalaldehyde
1. Animals and Plants, Foods
1-(1) Flexible application of food labeling regulations
1. Complainant: New Zealand Embassy
2. Ministry concerned: Ministry of Agriculture, Forestry and Fisheries
3. Complaint:
Recent measures in the context of the revised Basic Agriculture Law appear to envisage labelling of food in order to promote demand for domestic agriculture products. In addition, due to the revised JAS Law, mandatory country of origin labelling, which was previously required for nine specific food items, is to be necessary for all fresh foods.
We are concerned that these expanded labelling requirements are being taken in the context of the revisions to the Basic Agriculture Law which explicitly aim to increase demand for domestic agriculture products, and that the new measures could be used in practice to discriminate in favour of domestic food products.
The report of the Investigative Council on Basic Problems Concerning Foods, Agriculture and Rural Areas, submitted to the Prime Minister on 17 September 1998, and MAFF's 'Fundamental Principles of Agricultural Policy Reform' of December 1998, are explicit about the objective of increasing domestic agricultural production and food self-sufficiency, and that consumers are expected to make efforts to contribute to achieving these goals. The two documents indicate that in this context consumers will be encouraged to adopt "Japanese-style dietary habits" and labelling will be expanded in order to enable consumers to make "a good choice of products".
Given this background, certain provisions in the revised Basic Agriculture Law are of concern. In particular,
Article 12 which says that "Consumers shall be encouraged to ... be more positive in improving their dietary patters.",
Article 16. 1 which requires that "The State shall take necessary measures such as ...proper food labelling in order to secure food safety, improve good quality, and help consumers make prper selections", and
Article 16. 2: "The State shall take necessary measures such as developing guidelines for a healthy dietary patternq・ハn order to promote better dietary patterns and the effective use of agricultural resources."
According to the 'Outline of Principles of New Measures for Dairy Farming and Industry' paper (March 1999) the word "milk" may only be used for (dairy) products whose main raw material is liquid milk (Section III.4 (1)). The paper is explicit that the purpose of this measures is "to expand the consumption of domestic milk".
Given this background, we trust that the Japanese authorities will appreciate that New Zealand has an understandable concern that the new food labelling system has the potential to be misused to discriminate against imported products.
We therefor request:
(1) Confirmation that the new labelling system will not lead to discrimination in practice against imported products;
(2) that the proposed restriction on the use of the term 'milk' (see above 'Outline of Principles of New Measures for Dairy Farming and Industry' paper) not be applied in a way that disadvantages use of imported dairy product inputs such as SMP;
(3) that instead of mandatory country of origin labelling (which may bring less favourable treatment in practice to imported products), producers be permitted to identify the country of origin/area of origin of fresh foods.
4. Corresponding Policy of the Ministries concerned:
Portions concerning the JAS Law
(1) Circumstances of Revision of JAS Law
The Ministry of Agriculture, Forestry and Fisheries (MAFF) had set up the Committee for Basic Problem in the Research Committee for Agriculturural and Forest Products Standards in September 1997. The Committee for Basic Problem published the report"Review of Labelling and Legal System for Food etc.(conclusion)"in October 1998, based upon results of seven-times meetings and public comments. The report indicated the development of labelling standards for all items which consumers need from the view of consumer protection, the response to consumers' and producers' needs on origin labelling for perishable foods, and the promotion of alighnment of labelling and standards to international standard.
In December 1998, the Office of Market Access (OTO) also requested to take the following measures in the report by the Research Committee for Agriculturural and Forest Products Standards toward further improvement of market access;
1) To carry out the contents of the report steadily, current standards should be revised and their implementation should be improved, and immediate actions should be taken in cases where institutional review is needed.
2) Based on the consumers' needs, existing guideline for labelling of origin on marine products should be reviewed, if necessary, these measures should be based on a law.
The revised JAS Law, came into effect as of 1 in July 1999, was prepared necessary revision based on the report of the Research Committee and conclusion of the Office of Market Access (OTO).
(2) Origin Labelling in quality labelling standard for perishable products
Under the existing standard, origin labelling for perishable products are mandated for 9 items such as broccoli and onion. In this revision, coverage of origin labelling (country or place) will be extended to all perishable products (agricultural, livestock and marine products) to contribute consumers' rational choice for not only imported products but also domestic ones. How consumers choose products based on origin labelling may depend on the extent of effort in price (reduction) and quality improvement among products origin including foreign countries conducted so far or from now. Therefore, we would not intend to give any advantages to domestic products only and not to provide discriminatory treatments against imported products.
Many of imported products can maintain profitable status with own advantages in quality, as Japan is the biggest importing country in the international society.
(3) Future Schedule
On the establishment of mandatory quality labelling standards for all perishable foods, transparency will be maintained through the necessary procedures such as collection of public comments and notification to WTO by April 2000.
Portions concerning the Principle
(1) The Principles of the New Measures for Dairy Farming and Industry stipulate, Considering that appropriate labeling helps consumers to choose appropriate products, the rules for labeling of milk varieties will be reformed (e.g. the products that processed from mainly from raw milk shall be labeled "gyu-nyu" in principle.) in order to expand the consumption of domestic milk varieties".
(2) "Milk varieties (gyu-nyu-rui)" used in this context means a generic term for "normal liquid milk (gyu-nyu)", "processed milk", "milk beverage", "partially skimmed milk" and "skimmed milk" in "Ministerial Ordinance Concerning Compositional Standards, etc., for Milk and Milk Products" and the related rule. It is obvious that "gyu-nyu-rui" also covers either imported products or products that are manufactured from imported ingredients in Japan, if they are classified into one of "gyu-nyu-rui".
(3) For appropriate labeling of "gyu-nyu-rui", "the Fair Trade Rule for Labeling of Drinking Milk" shall be amended and it is now at procedural process. The purpose of this revision is to expand total consumption of "gyu-nyu-rui" by preventing consumers from being misled or confused. We do not intend to discriminate in favor of the products processed from domestic dairy products.
(4) In addition, note that total demand for "gyu-nyu-rui" is expected to expand by the amendment of the labeling rules, and demand for skimmed milk powder as raw material for "gyu-nyu-rui" is estimated to grow. Therefore, the import of skimmed milk powder from New Zealand, the one of major exporter of it to Japan, is thought to be steady.
(For reference)
The word of "milk" in Japanese implies "gyu-nyu", "miruku" and "nyu". Under the current labeling rule, the categories of "normal liquid milk (gyu-nyu)", "processed milk" and "milk beverage", shall be labeled just as each name on a retail package. On the other hand, the term of "gyu-nyu" can be used as a brand name for not only "gyu-nyu" but the products categorized in "processed milk" and "milk beverage", even if raw milk is not used as its raw materials, once those are complied with the compositional criteria. Hence, this causes confusion among consumers.
Under new labeling rule, the term "gyu-nyu" is not allowed to use as a brand name of processed milk and milk beverage in case where they contain raw milk as raw material less than 50% in volume. However "miruku" and "nyu" may be used as a brand name as before.
5. Remarks
The complainant understood the policies concerning the new food labeling system and mandatory labeling of place of origin for the time being. The two countries agreed to continue discussing labeling of milk products at bilateral meetings to exchange information on dairy product supply and demand.
The Fair Trade Rules for Labelling of Drinking Milk mentioned in the above policies of the ministry were amended on December 22, 1999.
1-(2) Relaxing plant quarantine standards (kiwi fruit)
1. Complainant: New Zealand Embassy
2. Ministry concerned: Ministry of Agriculture, Forestry and Fisheries
3. Complaint:
Fumigation occurs whenever Japanese plant quarantine officers identify on imported product an organism not included on Japan's list of 57 non-quarantine pests. New Zealand kiwifruit on which common storage organisms are found are required to be fumigated, even though comparable organisms are found in Japan without being subject to effective control programmes, and thus there is no scientific justification to fumigate imports in terms of plant protection. Fumigation reduces the shelf-life of the product and can lead to consumer about fumigation residues, which has the effect of discriminating against imported kiwifruit from New Zealand. Imports of New Zealand kiwifruit have been subject to an increasing rate of fumigation, from an average of around around 13% of lots per shipment in 1996, to 30% 1997, and 40-43 per cent in 1998. As for 1999, from June this year, fumigation rates have been around 80 per cent.
We request that the fumigation requirement should be applied only to pests which are found on imported fruit and which do not occur in Japan or are subject to effective control programmes.
4. Corresponding Policy of the Ministries concerned:
(1) Over the past few years, fumigation rate for New Zealand kiwi fruit, which was 24.3% in 1996, has been increasing, reaching 71.1% in 1999 (January-June) (on a per case basis).
As the result of inspection, quarantine pests such as Fuller's Rose Weevil and thrips have been found, especially the Fuller's Rose Weevil's detection is the highest during the import inspection. In 1996, Fuller's Rose Weevil were found at the rate of 19.1% (on a per case basis), but this had risen to 61.9% in 1999 (January-June).
Since Fuller's rose weevil has a characteristic to lay eggs into chasms such as bark of the stem and a calyx of fruit as hiding eggs from view, clusters of its eggs were sometimes (often) found in a calyx of a kiwifruit by our inspection, and in particular this year their detection has increased rapidly.
(2) Fuller's rose weevil is designated as "quarantine pests" stipulated in Article 5-2 of Plant Protection Law, since it does not occur in Japan.
Fuller's rose weevil is known as one of the agricultural pests causing a serious damage to a great variety of plants, such as shrubs and trees, for example, kiwifruit, citrus fruit, apple, pear, rose and chrysanthemum.
Therefore, Fuller's rose weevil is to be subject to import quaratine in Japan as it is deemed to be an important pest which we should guard against its import.
As for thrips, these pests are also designated as "quarantine pests", because Some speices do not occur in Japan, and even for those which are present in Japan, they are subject to neccesary domestic control measures.
Therefore, the pests subject to fumigation concerning Kiwifruits produced in New Zealand are not common strage organisms as stated in complaint, but "quarantine pests" which may have potential import effects on agricultural production in Japan. We are of the view that fumigation is based on sientific evidence and in consistent with international standards for phytosanitary measures.
(Further developments)
Regarding the ministry's policies, the complainant argued that (1) a list of quarantin pests should be drawn up, rather than using a list of non-quarantine pests; (2) it should be ascertained whether Fuller's Rose Weevil really exists in Japan.
The ministry replied as follows to the complainant's arguments:
(1) Japanese positions on this issue may differ since each import quarantine scheme is different. New Zealand' system is that in cases where application of import authorized for new plants is made, approval is not granted until PRA to pests which could be infested with the plants is finished. Under this system, pests which is deemed to be harmful for New Zealand are added to the positive list, based on PRA. This system can ensure security by means of that plants infested with the pests which PRA by importing country has not been finished are not approved to be imported.
On the other hand, we consider our system is carrited out in a more transparent manner, since it enable applicant to import all of plants, except those subject to import prohibition or to growing-site inspection in exporting countries. However, for the purpose of preventing the introduction or establishment of harmuful pests accunted for more than 100 thousands including unknown ones which may cause serious damage to domestic agriculture, and on the basis of the idea that the negative list approach can be effective operrated, it is necessary to determine quarantine pests in negative not listing by positive way. To this end, it is not approapriate to argue the issue by picking up only difference in how to indicate quarantine pests between us.
(2) Fuller's Rose Weevil had not distributed in Japan, but in the past few years it has been discovered in certain very limited fields and accordingly, Japan has controled it with national subsidy and even stricter import quarantine inspections are being carried out to prevent further invasion.
5. Remarks
The two countries agreed to continue discussing this issue in bilateral meetings.
1-(3) Relaxing plant quarantine standards (apples)
1. Complainant: New Zealand Embassy
2. Ministry concerned: Ministry of Agriculture, Forestry and Fisheries
3. Complaint:
Imports of six kinds of raw apples from New Zealand, which have passed the MAFF standard, is now permitted. However, this standard requires that the apples should be planted in the specific area where Japanese and New Zealand plant quarantine officers can conduct inspections on fireblight on apples in adequate season. As a result, New Zealand apples-growers, who are taking part in Japan export programme, have to create 500 metre buffer zones around the designated orchards, facing increased costs. New Zealand submitted to MAFF on 27 August 1998 a scientific study demonstrating that mature apples cannot be a vector for fireblight. MAFF Plant Quarantine responded with a series of questions on 13 August 1999.
We request that Japan accept our scientists' arguments that mature apples cannot be a vector for fireblight, and thus abolish the standard which requires 500 m buffer zones and plantation in designated areas.
4. Corresponding Policy of the Ministries concerned:
(1) Apples is prohibited to import as host of fireblight by Plant Protection Law because there are records that fireblight infested to apple. However, in cases where certain phytosanitary measure which prevents to introduce fireblight into Japan is established, this prohibition is lifted on condition that this measure applies.
(2) Though New Zealand side represented to abolish this phytosanitary measure, it is difficult to do so because it is possible that fireblight infested to apple. It is possible to consider modification of the current measure if New Zealand side offers alternative measure and demonstrates scientifically and technicallys that new measure also prevents to introduce fireblight.
(3) In any case, we think that it is important to discuss further this issue between New Zealnd and Japan plant quarantine authorities from the scientific and technical viewpoints.
5. Remarks
The two countries agreed that their respective plant quarantine authorities would continue discussing this matter.
1-(4) Permitting use of imazalil
1. Complainant: New Zealand Embassy
2. Ministry concerned: Ministry of Health and Welfare
3. Complaint:
Based on 'Standards and Specification on Foods, Additives etc', imazalil should not be used for foods except citrus fruit (except mikan) and banana. The maximum residue level of imazalil for citrus (except mikan) is 0.005 g per 1 kg, and 0.002 g per 1 kg for banana.
Imazalil is permitted to use for citrus fruits but not for mikan, which appears to be an unjustifiable and arbitrary distinction. We request MHW to permit the use of imazalil at the same residue level for mikan as for other citrus fruits.
According to the MHW, if this were allowed, daily intake of imazalil could exceed the Codex acceptable daily intake (ADI). Based on the WTO Agreement on Sanitary and Phytosanitary (SPS) Measures (Article 2.2), we ask MHW to provide scientific data to support its position that our request will result in the ADI for imazalil being exceeded.
4. Corresponding Policy of the Ministries concerned:
The usage standards for food additives would have to be changed to allow post-harvest use of imazalil on mandarin oranges. However, Japanese consume a larger quantity of mandarin oranges compared to people in other countries, and if the current usage standards were expanded and the allowable residual level of imazalil for mandarin oranges were set at 5ppm, in accordance with the Codex Committee standards, it is clear that the ADI would be exceeded when the maximum theoretical daily intake is estimated. Amending the usage standards in this way is neither advisable, in terms of ensuring the safety of the public's daily diet, nor appropriate in scientific terms.
Accordingly, usage standards for imazalil cannot be amended at this point.
5. Remarks
The ministry explained the scientific basis for its measures to the complainant. The complainant is currently considering how to respond.
1-(5) Improving the import system for dairy products
1. Complainant: New Zealand Embassy
>2. Ministry concerned: Ministry of Agriculture, Forestry and Fisheries
3. Complaint:
With the exception of the Designated Dairy Products for General Use (DDPGU) quota, all other dairy products for domestic use are underfilled. In the case of the DDPGU quota (covering e.g. Skim Powder and other solids), the Government of Japan or its agent (the Agriculture and Livestock Industries Corporation (ALIC) charges a 'mark up' before resale of the imported products which it purchases. The administration by ALIC of the quota impairs the ability of New Zealand to derive full benefit from that quota, in particular because the exporter is not able to establish direct relations with Japanese customers.
We therefor request that the Japanese government:
(1) make the administration of the other dairy products tariff quotas more transparent to help in allowing the market access opportunity to be completely filled;
(2) unilaterally liberalise its existing trade regime to allow New Zealand exporters to establish direct relations with Japanese customers including under the DDPGU quota.
4. Corresponding Policy of the Ministries concerned:
(1) Boundary measures carried out by Japan, including the tariff quota system for dairy products, are based on the UR Agreement.
(2) Regarding implementation to establish transparency of the tariff quota system and improve quota usage rate:
1) The necessary information on setting tariff quotas on dairy products for specific use, for example standards for setting quotas, applicants' qualifications, and so on, is provided in tariff quota announcements, publicity by the Ministry of International Trade and Industry, the Internet and so on. In addition, the ministry has spent considerable time explaining to New Zealand how the tariff quota system is applied, at semiannually held bilateral meetings to exchange information on dairy product supply and demand, and believes that transparency is not an issue.
2) Regarding measures for improving the quota usage rate, the ministry follows a policy of reducing quota volume the following fiscal year, in the case of importers with a low usage rate, and of increasing the quota for importers with a high usage rate or for newcomers. Since FY1997, a system has been introduced which allows applicants to make a second application for any quota remaining within the fiscal year.
3) The reason why a number of tariff quotas remain unused is that quotas higher than demand were set for certain products as a result of negotiations to begin with. Where dairy products for specific uses are concerned, domestic demand volume is down in the case of dairy products for use in school lunches and for infant formula because the number of schoolchildren and infants has been declining, and in the case of dairy products used as animal feed, because of a drop in the number of heads of livestock.
(3) Regarding the unilateral demand for import liberalization also including DDPGU:
1) Regarding dairy products imported through the state trade enterprise, the Agriculture and Livestock Industries Corporation (ALIC) that is an approved under the WTO Agreement. ALIC is carrying out the commitment of the WTO Agreement in a sincere manner and is importing dairy products for which there is market demand.
2) The "markup" which ALIC charges upon those dairy products is also allowed under the WTO Agreement.
(Further developments)
Regarding the reply, the complainant argued that (1) the unused portion of the tariff quota is expanding at a rate more than the rate of decline in the number of schoolchildren; (2) reallocation of unused quotas is insufficient; (3) the reason for the poor quota usage rate is the poor usage rate of basket quotas (for reference: quotas for the other dairy products); (4) region-limited quotas are impeding imports; (5) end-user's quotas are impeding imports; and (6) the fact that the names of importers allocated quotas are not made public impedes imports.
The ministry intends to continue discussion of these issues in bilateral talks scheduled for April 2000, but replied to the complainant's assertions as follows:
(1) The ministry will explain the reason for the low quota usage rate for skimmed milk powder for school lunch after more careful analysis.
(2) When there is quota remaining after being allocated at the beginning of the fiscal year, a system allowing application for additional quotas has been in force since FY1997 and is functioning adequately. Administratively terms, it is not possible to allocate the unused portion of quotas that have already been allocated.
(3) Regarding basket quotas (quotas for other dairy products), in FY1998 the usage rate for ice cream users was poor, and based on performance figures, the quota will be alloacted the following fiscal year so that the unused quota is reduced.
(4) Demand for products which are covered by the region-specific quota exists only in Okinawa at this time.
(5) All users are covered by the user quotas for the ingredients concerned.
(6) The names of parties allocated quotas cannot be made public, under GATT Article 13 concerning protection of the privacy of parties allotted quotas.
5. Remarks
Both countries agreed to continue discussing this issue at bilateral meetings to exchange information on dairy product supply and demand.
After analyzing the reasons for the low quota usage rate for skimmed defatted milk powder in school lunch, the ministry determined that this was due, in addition to a drop in the number of schoolchildren, to increased use of rice for school lunch and a corresponding decrease in demand for bread, resulting in a declining quota usage rate for skimmed milk powder which is used as an ingredient in bread, and conveyed this reply to the complainant.
1-(6) Improving import procedures for laver
1. Complainant: Korean Embassy
2. Ministry concerned: Ministry of Agriculture, Forestry and Fisheries, Ministry of International Trade and Industry
3. Complaint:
At working level meetings on trade in fishery products between Japan and the Republic of Korea held in 1998, it was agreed to end the Japan Laver Importers Association's monopolistic import system and to change to a quota-based import system.
Though, under the new import system for laver, two-thirds of the quota is allocated to users, since eligibility for application is restricted to the Laver Association, this does nothing to amend the Laver Association's monopoly on imports and constitutes a de facto limitation on imports. In addition, the import ratio of dried laver to seasond laver is fixed (in 1999, the ratio was 80% for dried laver and 20% for flavored laver).
Accordingly, importers and exporters in the two countries should be allowed to conduct transactions freely within the scope of the import quota.
Further, qualifications for application under the first-came first-served quota established in FY1998 require applicants to have done import business valued at $100,000 or more. This requirement should be relaxed.
Additionally, the Ministry of International Trade and Industry makes a public announcement of laver imports in February each year, but this should take place in December each year, in order that exporters in the Republic of Korea make prior preparations for product export volume in December, the laver havest season.
4. Corresponding Policy of the Ministries concerned:
(1) Laver being one of the main products of coastal fisheries in Japan, it is subject to import quotas, to prevent unrestricted imports of laver from giving a negative impact on the livelihood of fishery house hold.
(2) In response to a complaint by the Korean Embassy in 1997 concerning import procedures for laver, the matter was discussed at working level meetings on trade in fishery products between Japan and the Republic of Korea held in January and September 1998. Based on discussions at those meetings, the changes in import procedures described below were made in February 1999. At a further working level meeting in March 1999, the Republic of Korea expressed its thanks to Japan for having incorporated its requests in many of the changes made to the system.
1) Regarding the import quota volume (announced in February 1999), this was set at 69 million sheets (a 33% increase compared to the previous year's import volume), based comprehensively on previous import volume, increase in imports and on domestic conditions for accepting imports, in accordance with actual supply and demand trends in Japan's laver market.
2) The requirement that originals and copies of contracts for buying and selling imported laver be submitted to the ministries concerned was eliminated, and handling of imports solely through the Japan Laver Importers Association was abolished.
3) A first-come first-serve quota of 5 million sheets was established for parties wishing to enter the business, to allow transactions to take place freely, and from the viewpoint of respecting import performance, a quota of 18 million sheets was allocated to traders with an established record and a quota of 46 million sheets to the users.
(3) When the Republic of Korea has complaints regarding trade in fishery products between Japan and the Republic of Korea, the two countries have agreed to discuss these issues further at regular working level meetings on trade in fishery products held as they have been until now.
(For reference)
1) Traders quota with an established record: quota allocated to traders with a track record of importing Korean-produced laver
2) First-come first-served quota: quota allocated to traders wishing to enter the business for the first time
3) Users quota: in order to obtain a stable supply of Korean-produced laver for processing required by processors or laver distributors, a quota is allocated to the associations to which these parties belong. Associations which have been g allocated a quota order the quantities of laver they need from importers and after receiving it, distribute it to their members.
5. Remarks
On February 1, 2000 the Ministry of International Trade and Industry announced the following measures to improve the system, which the complainant accepted:
(1) the 1999 import quota of 69 million sheets has been increased to 120 million sheets (a year on year increase of 74%), and within this quota, the total volume for the demand side quota was reduced from 67% to 63%, while a five-fold increase was made in the quota on a first-come, first-served basis.
(2) the requirement that applicants for the first-come, first-served basis quota have done $100,000 or more import business has been eliminated.
(3) the timing of the ministry's announcement was moved up from the end of February to the beginning of February.
1-(7) Abolishing the advance import approval for wakame seaweed
1. Complainant: Korean Embassy
2. Ministry concerned: Ministry of Agriculture, Forestry and Fisheries, Ministry of International Trade and Industry
3. Complaint:
The advance import approval has been in effect for imports of wakame seaweed (Undaria fusio formis), in order to ensure application of the trade volume agreement system by a private sector council. However, even though the trade volume agreement system was abolished in 1995, the advance import confirmation system continues to be used.
The advance import approval should be abolished, since due to the increase in import-related operations, it constitutes a de facto restriction on imports.
4. Corresponding Policy of the Ministries concerned:
(1) Since harvesting of wakame seaweed is seasonal, the advance import approval has contributed to the appropriate supply of this product to parties concerned, by providing early and appropriate information on domestic production and import trends.
(2) This system is not an import restriction, as importers may import any volume of the product, after applying for confirmation from the minister for international trade and industry and receiving confirmation concerning volume, country of origin and so on. Current advance import approval, never prevents the Republic of Korea from exporting wakame seaweed. In fact, some countries have increased their export volume under this system, and it is possible to expand exports, when the wakame seaweed in your country meets the needs of the Japanese market.
(3) The handling of this system was on the agenda at working level meetings on trade in fishery products between Japan and the Republic of Korea held in March 1999 and the matter was discussed. The two countries agreed to continue discussing this matter at further working level meetings.
5. Remarks
The Ministry of International Trade and Industry's notice was amended in January 2000 and the advance import confirmation system for wakame seaweed imports was abolished. The complainant accepted this policy.
1-(8) Reviewing plant quarantine standards
1. Complainant: Korean Embassy
2. Ministry concerned: Ministry of Agriculture, Forestry and Fisheries
3. Complaint:
As a result of overzealous application of quarantine standards by Japanese quarantine bureau officials unnecessary, fumigation is lowering the product quality of fresh vegetables (cucumbers, eggplants, chili peppers, lettuce, cabbage) and flowers (roses, lilies, chrysanthemums) exported from Korea, and exporters are being made to bear unnecessary expenses for quarantine.
In particular, the following five pests are currently widely distributed in Japan and since quarantine measures are excessive, they should be placed on the list of quarantine-exempt pests.
1] Thrips palmi
2] Franklinniella occidentalis
3] Myzus persicae
4] Macrosiphum euphorbac
5] Acarus siro
4. Corresponding Policy of the Ministries concerned:
Regarding the five pests the complainant requests be placed on the non-quarantine pests list, four of them - Thrips palmi, Franklinniella occidentalis, Myzus persicae, and Macrosiphum euphorbac - are important pests whose presence is under surveillance in Japan. When necessary as a result of surveillance, the government sets out the outlines of an eradication program, or makes recommendations concerning eradication which local governments carry out. Because of this, these organisms are subject to public eradication, and are classified as quarantine pests in the word list of the International Plant Protection Convention (IPPC).
Where Acarus siro is concerned, the ministry is studying whether it is possible to place this organism on the non-quarantine pests list.
(Further developments)
With respect to the ministry's policy of considering the four pests targeted for public eradication, the complainant stated that (1) there are many diverging views within the IPPC concerning the definition and application of public eradication, and (2) it is unacceptable that, in the event that pests are detected, eradication is recommended in the case of domestic plants, but the forcible measures of fumigation or destruction are imposed in the case of imported products, and wished to continue discussing this issue at a bilateral working level meeting on plant quarantine.
The ministry replied that if desired, discussions could be continued at the bilateral working level meetings on plant quarantine scheduled for February 2000.
5. Remarks
The two countries agreed to continue discussion the issue at bilateral working level meetings on plant quarantine.
6. Council member's opinion
In this case, the Council member asked whether requiring fumigation or destruction in the case of imported products but only recommending eradication when domestic products are concerned, in the event that pests are discovered, was not in fact a double standard. To this, the ministry replied that "thorough eradication, under the direction of prefectural authorities, is carried out when pests are found on domestic agricultural products at the cultivation site, and eradication is carried out for both domestic and imported products." Indicating no need for a further reply, the Council member then asked whether it is satisfiable that the use of pesticides to eradicate pests while domestic agricultural products are being grown, and eradication through fumigation or destruction, in the case of post-harvest imports, constituted fair treatment of domestic and foreign products.
1-(9) Inspection of imported tableware
1. Complainant: Tokyo Chamber of Commerce and Industry
2. Ministry concerned: Ministry of Health and Welfare
3. Complaint:
Each time chinaware and other tableware is imported, all new products must undergo testing in Japan each time, and this is expensive.
Measures should be taken to make it possible to use foreign test results.
4. Corresponding Policy of the Ministries concerned:
Regarding the use of foreign test data, the foreign official laboratories system was introduced from March 1982. Under this system, products are tested before export, at public testing facilities registered with the Ministry of Health and Welfare by the exporting country; the test results are shown when the products are imported, and if the results conform with the Food Sanitation Law, no testing of the products is required at the time of import. As of September 14, 1999, 2,513 facilities in 52 countries had been registered. Beginning from December 1994, apparatus, packaging wrapping and toys made from materials using the same coloring agents and manufactured by the same method are exempted from testing at the time of import for an unlimited period, by attaching a copy of the initial test results.
5. Remarks
The complainant accepted this policy.
1-(10) Response of the quarantine station to minor errors
1. Complainant: Osaka Chamber of Commerce and Industry
2. Ministry concerned: Ministry of Health and Welfare
3. Complaint:
When foods are imported and import declarations for foods are submitted to the quarantine station, the quarantine station requires that documents be resubmitted when there are typing mistakes or other errors of a clearly careless nature, causing a loss of time.
The quarantine station should not require documents to be resubmitted in such cases.
4. Corresponding Policy of the Ministries concerned:
Regarding typing mistakes and other minor mistakes in the particulars on import declarations for foods, an administrative memorandum was issued on December 20, 1971 to respond to similar complaints, and the chief of quarantine stations were notified in notice No. 184 by the director for food health, Environmental Health Bureau issued on August 18, 1982. The parties concerned will be further reminded of this through notices and at liaison meetings.
5. Remarks
The complainant accepted this policy.
1-(11) Use of food additives permitted in other countries
1. Complainant: Osaka Chamber of Commerce and Industry
2. Ministry concerned: Ministry of Health and Welfare
3. Complaint:
When foods are imported from other countries, import is not allowed if the foods contain food additives other than those specified by the minister for health and welfare.
Imports of foods containing food additives whose safety has been ascertained in other countries should be allowed.
4. Corresponding Policy of the Ministries concerned:
Designation of new food additives is done according to policy on revising guidelines for specification and use of food additives (in notice No.29 from the director of the Environmental Health Bureau issued in March 1996). In accordance with this policy, a specific request for designation must be made and data on safety attached.
As is done in the United States and Europe, designation of food additives is carried out after scientific evaluation has been made. The fact that an additive's safety has been confirmed abroad means that scientific data which can be used for reference exists, and if an application is made and the relevant data attached, the matter will be dealt with appropriately after deliberation by the Food Sanitation Investigation Council.
5. Remarks<
The complainant accepted this policy.
1-(12) Abolishing double sampling inspections
1. Complainant: Osaka Chamber of Commerce and Industry
2. Ministry concerned: Ministry of Health and Welfare, Ministry of Agriculture, Forestry and Fisheries
3. Complaint:
Monitoring tests for O-157 on imported meat are conducted by both the animal quarantine office of the Ministry of Agriculture, Forestry and Fisheries and the quarantine station of the Ministry of Health and Welfare.
Double sampling of the same cargo is inefficient and sampling should be conducted only once.
4. Corresponding Policy of the Ministries concerned:
Ministry of Health and Welfare
Monitoring tests conducted by quarantine stations are done from the viewpoint of food sanitation. Since April 1996, however, food sanitation inspections and animal quarantine/plant quarantine are carried out simultaneously, if the importer requests this and the departments carrying out the respective inspections, after studying the request, determine that this is possible. In such cases, measures are taken to carry out the inspections simultaneously, to make cargo unpacking operations more efficient.
Ministry of Agriculture, Forestry and Fisheries
Based on the Animal Infectious Diseases Control Law, animal quarantine offices inspect animals and livestock products in order to prevent infectious diseases from entering the country.
Under the said Law, importers of animals or of livestock products are required to promptly make a declaration to an animal quarantine office and undergo inspection by animal quarantine officers.
Having received a declaration by importers, animal quarantine officers check the paperwork and inspect the actual products for which a declaration was made; if abnormalities are detected, detailed inspection is conducted.
This testing is carried out for all shipments declared; no sampling inspections are done.
Inspection for the E. coli O-157 done by officials at the point of entry was carried out with the cooperation of importers on a temporary basis as a measure to prevent food poisoning and is not currently being done.
5. Remarks
The complainant accepted this policy.
1-(13) Expansion of countries to which animal quarantine inspection certificates may be transmitted electronically
1. Complainant: Osaka Chamber of Commerce and Industry
2. Ministry concerned: Ministry of Agriculture, Forestry and Fisheries
3. Complaint:
Meat which is imported must be accompanied by a health certificate issued by a government organization of the exporting country. In the case of Australia, electronic transmission of inspection certificates has been possible since March 1998.
To speed up quarantine procedures for importing meat, the Ministry of Agriculture, Forestry and Fisheries should actively approach other countries, for example the United States (the U.S. Department of Agriculture), to expand the number of countries from which certificates may be transmitted electronically and implement this at an early date.
4. Corresponding Policy of the Ministries concerned:
Based on the Animal Infectious Diseases Control Law, animal quarantine offices inspect animals and livestock products in order to prevent infectious diseases from entering the country.
Under the said Law, animals and livestock products may not be imported into Japan unless accompanied by a health certificate issued by a government of the exporting country. However, this requirement does not apply when the particulars of the certificate have been transmitted electronically by the government of the exporting country to the Animal Quarantine Service's computers and recorded in the computer's file.
Electronic transmission of health certificates between Australia and Japan has been taking place since March 1998, at the request of Australia, and in order to expand use of the system, it has been described at APEC (Asia-Pacific Economic Conference) meetings.
The ministry intends to expand use of the system for electronic transmission of health certificates, in response to requests from other countries.
5. Remarks
The complainant accepted this policy.
2. Drugs, Medical Devices and Cosmetics
2-(1) Promoting mutual certification when medical devices are imported
1. Complainant: Tokyo Chamber of Commerce and Industry
2. Ministry concerned: Ministry of Health and Welfare
3. Complaint:
When new medical devices are imported, even though they may be approved for sale and use by the U.S. Food and Drug Administration (FDA) or carry the CE mark, indicating certification in Europe, import approval must be obtained after carrying out various tests and application procedures. It takes between six months and three years to obtain import approval, and this is reflected in the cost of imported medical devices.
Approval procedures in Japan should be radically streamlined, in the case of medical devices approved by the FDA or carrying the CE mark.
4. Corresponding Policy of the Ministries concerned:
The ministry believes that it is not possible to simplify approval procedures for medical devices approved in other countries, so that the quality, efficacy and safety of medical devices used in Japan may be ensured.
However, to reduce the burden on applicants and speed up the supply of medical devices useful for health and medical care, test data carried out in other countries is accepted for the application of approval, in the case the data fit valid guidelines and requirements in Japan. The ministry also actively responds when other countries request meetings to discuss mutual approval for medical devices.
5. Remarks
The complainant accepted this policy.
2-(2) Changing labeling methods for cosmetics and clarifying the implementation schedule for changing the regulation system applied to cosmetics
1. Complainant: Keidanren
2. Ministry concerned: Ministry of Health and Welfare
3. Complaint:
(1) Changing labeling methods for cosmetics
The complainant states that the labeling requirements for cosmetics under the Pharmaceutical Affairs Law should be changed to allow products to be sold with labels bearing the name of the seller only, in the case of manufacturers or importers who already have licenses, when products are manufactured or imported for sellers wishing to sell the products under their own name only, as follows: 1] that, upon prior notification of the ministry by both the business with a permit and the seller, labeling show the name of the seller followed by the code used in the notification, or 2] that the label show the seller's name and the license number of the business with a license, in order to clearly identify manufacturer liability.
The ministry's policy mentions that it "requires that the name of the manufacturer (importer) be shown," in order to carry out centralized supervision of all safety-related information, but in fact, in many cases product labels show both the seller and the manufacturer (importer)'s name, and if problems with the safety or quality of the product arise, consumers usually contact the seller. This is because the name of the seller, who is responsible for business operations regarding the product, is shown in larger type on the label than the manufacturer (importer)'s name, and the telephone number shown is that of the seller. In other words, even under the current system, this only means that the seller communicates safety information received from consumers to the manufacturer (importer) on a de facto basis and that this is not mandated by law.
Accordingly, if it were legally required that sellers communicate safety information about side-effects after the product is marketed to the manufacturer (importer), even if the label carries only the seller's name, it would be possible for manufacturers (importers) to oversee relevant information. Where consumers are concerned, in many cases, it is often the seller who assumes the primary responsibility for product liability, and thus there should be no problems if a system is established that allows consumers to contact sellers directly.
Further, if methods 1] or 2] above were adopted, the administrative authorities would also know who assumes product liability.
In the case of foods, the Food Sanitation Law already allows labels to carry only the name of the seller, and there have been no cases where liability for the product has been an issue, from the viewpoint of either the administrative authorities or consumers.
(2) Clarifying the implementation schedule for changing the regulation system for cosmetics
The ministry is currently working on changing the regulation system for cosmetics, but has not disclosed any information concerning a specific implementation schedule or procedures. Based on the decision of the Office of Market Access in December 1998, the ministry should carry out this work "after clarifying the implementation schedule and procedures."
4. Corresponding Policy of the Ministries concerned:
(1) Changing labeling methods for cosmetics
Since cosmetics are intended to be used by applying or spraying onto the human body, under the Pharmaceutical Affairs Law, businesses engaged in manufacturing or importing cosmetics are required to have a license when manufacturing or importing cosmetics, from the viewpoint of health and sanitation.
Under the such Law, if some problem with cosmetics should arise, it is mandatory for manufacturers (importers), as part of their responsibility in manufacturing (importing) the product, to report side effects and to report on product recalls, in order to prevent further damage to health and to take the necessary safety measures, such as product recall.
This responsibility is placed on manufacturers (importers), who are very familiar with the contents and characteristics of the products, so that they may carry out centralized supervision of safety information on side effects of products after marketing.
Safety or quality problems with products are often discovered by consumers when they actually use the products, and if there is a problem, quick response is possible because of the system in use where consumers can contact the responsible party directly. To make this possible, it is necessary not only for the administrative authorities, but also for consumers, to know about the party with manufacturing liability, and accordingly, labeling must carry the name of the manufacturer (importer).
Therefore, it is not possible for products to be sold without showing the name of the manufactures (importers) with a license directly on the product container, from the viewpoint of health and sanitation.
In cases where only the seller's name is shown directly on the product container, information is known only to the seller, but since there is no legal obligation for the seller and the manufacturer (importer) to transmit information to each other, information the seller has obtained may not always be reliably transmitted to the manufacturer (importer).
However, taking into consideration the requests of the American Chamber of Commerce in Japan (ACCJ), the European Business Council (EBC) and representatives of domestic companies, the ministry is studying a review of the provisions for implementation under the Pharmaceuticals Affairs Law, concerning facilities and equipment required when obtaining a license, the requirement for manufacturing (importing) control manager, and the extent to which businesses with licenses may contract out or undertake manufacture of products on each other's behalf, so that manufacturers (importers) may obtain licenses with less bother and expense. This review is being carried out at the same time as the comprehensive review of cosmetics regulations which is scheduled to be implemented by the end of FY2000.
(2) Clarifying the implementation schedule for changing the regulation system applied to cosmetics
In accordance with the government's Action Plan for Promoting Deregulation in operation since 1998, the regulation system for cosmetics is scheduled to be changed by the end of FY2000. Specifically, a proposal for a new system will be announced at the end of this fiscal year (FY1999), and after notifying the WTO and taking the procedure of public comments, the relevant requirements will be amended and the new system will be implemented by the end of FY2000, after a certain preparatory period has elapsed.
5. Remarks
The complainant is currently studying this reply.
6. Council member's comments
Regarding this case, the Council member commented that "the ministry stresses the need for centralized supervision of safety information, but the fact that the ministry accepts only information collected and collated by manufacturers under its control is administrative negligence. Although it is certainly necessary to prevent damage caused by cosmetics, since it is often the case that consumers discover this when they actually use the products, it is more useful if the ministry supports lawsuits under the Product Liability (PL) Law and takes measures based on those actual circumstances." To this the ministry replied that "the Pharmaceuticals Affairs Law requires manufactures (importers) to report to the authorities the information that they have collected centrally, in order to clarify responsibility for manufactured products. On the other hand, if consumers or medical authorities report information on the safety of cosmetics directly to the ministry, the ministry will take appropriate action. Cosmetics may have unknown and unforeseeable side effects, and while the PL Law basically does not hold manufacturers responsible in the case of such side effects, the Pharmaceutical Affairs Law makes it mandatory to report side effects, in other words, the purposes of the two laws are different." In response, the Council member said "while deregulation is being actively promoted, consumers will be protected not by the authorities clinging to existing laws, but by the vigorous application of the Anti-monopoly Law and the PL Law and the penetration of these laws into society."
3. Manufacturing
3-(1) Simplifying importer registration of poisonous and deleterious substances
1. Complainant: Tokyo Chamber of Commerce and Industry
2. Ministry concerned: Ministry of Health and Welfare
3. Complaint:
When importers of poisonous and deleterious substances attempt to import poisonous or deleterious substances other than those for which they are registered, they must change their registration prior to this. However, the time required between applying for and receiving registration is two months.
Since the required facilities do not differ based on the type of substance, importers should not be required to register for each specific substance; instead, it should be possible for importers to import all the substances listed on a schedule attached to the Poisonous and Deleterious Substances Control Low their applications for registration.
4. Corresponding Policy of the Ministries concerned:
Since registration for each poisonous or deleterious substance is necessary to determine appropriate standards for stockpiling and holding, to prevent health and sanitation risks, and it is necessary to know the names and addresses of manufacturers and importers making specific substances in advance, in the case of accidents or crimes involving the said substances, the ministry will continue to require registration for each substance.
When businesses register as manufacturers or importers of poisonous or deleterious substances, prefectural authorities do a pro forma inspection of the application, conduct on-site inspection of the facilities and the ministry, determine whether the substances are on the list of poisonous or deleterious substances disignated by the minister, and inspect facilities; these activities require 60 days. However, efforts will be made to process applications as quickly as possible, in the order they were received.
5. Remarks
The complainant accepted this policy.
6. Council member's comments
The Council member commented as follows: "Although we do not disagree with the importance of preventing risks to health and sanitation, it is important to adopt practical measures designed to ensure that the aim of the law is achieved efficiently, rather than continuing to apply pro forma regulations like those in this case."
3-(2) Simplifying examination procedures for chemicals
1. Complainant: Tokyo Chamber of Commerce and Industry
2. Ministry concerned: Ministry of International Trade and Industry, Ministry of Health and Welfare.
3. Complaint:
When businesses import cartridges for personal computer printers, copiers or fax machines, the Law Concerning the Examination and Regulation of Manufacture, etc. of Chemical Substances is applied to the new chemical substances in the toner or ink inside the cartridges, requiring that the minister for health and welfare and the minister for international trade and industry be notified. This procedure is complicated, requiring that detailed documentation be drawn up for notification, and the procedure should be simplified.
4. Corresponding Policy of the Ministries concerned:
(1) Simplification of the notification procedure
The Law Concerning the Examination and Regulation of Manufacture, etc. of Chemical Substances (hereafter referred to as "the Law") is under the dual administration of the Ministry of Health and Welfare and the Ministry of International Trade and Industry. Because of this, notification of manufacture or import of new chemical substances called for by the Law must be made to both ministries; however, a uniform format has been adopted for the test reports and other documentation attached to the notification, as needed. But the contents of documentation which must be prepared for submittal to respond to questions about certain items raised by the examination councils may differ depending on the questions raised.
To simplify the procedures for notification of new chemical substances based on the Law, including notification of new chemical substances in small quantities, the ministries are currently developing an electronic-based notification system, and acceptance of notifications sent by electronic media will begin from FY2000.
(2) "Products" as defined under the Law
The regulations of the Law deal with the chemical substances constituting products, and not with so-called finished products. For this reason, as indicated in I.(4) of the "Application of the Law Concerning the Examination and Regulation on Manufacture, etc. of Chemical Substances" (notice issued jointly by the director of the Pharmaceutical Affairs Bureau, Ministry of Health and Welfare and the director of the Basic Industries Bureau, Ministry of International Trade and Industry, No. MHW 291-62/No. MITI 171, dated March 24, 1987), substances having a specific usage form or mixtures, in which only when the substances are mixed does a product result, and which in principle are used for the final use of the product in question (in other words, which are in a form that ordinary consumers use) are considered "products" and are exempt from the notification requirement based on Article 3 of the Law.
Accordingly, regarding imports of toner and ink cartridges containing new chemical substances, if these coincide with the description of "products" above, no prior notification for new chemical substances is necessary; if they do not, prior import notification for new chemical substances is required under the Law. Specifically, if the toner or ink for ordinary consumers is sealed inside a cartridge and is in a form intended to be used by ordinary consumers, it can be considered a "product" under the Law. However, since toner, ink and cartridges may come in many different form, it is difficult to judge across the board whether all of them meet the above definition of a "product."
Regarding import of "products" using Class I specified chemical substances (9 substances, including PCB) or Class II specified chemical substances (23 substances, including trichloroethylene) designated under the Law, separate regulations, in accordance with Article 13, etc. of the Law, apply.
5. Remarks
The complainant accepted this policy.
3-(3) Acceptance of foreign standards regarding electrical products
1. Complainant: Tokyo Chamber of Commerce and Industry
2. Ministry concerned: Ministry of International Trade and Industry
3. Complaint:
Insulated resin materials and wire coverings with heat resistance approved under UL, CSA or other foreign specifications are not allowed under the Electrical Appliance and Material Control Law. Because of this, even parts (materials) which meet foreign specifications must undergo heat resistance approval anew before they are allowed to be imported and used in Japan.
Parts (materials) approved under the principal foreign specifications should be allowed to be used within Japan under similar conditions.
4. Corresponding Policy of the Ministries concerned:
In the United States, UL specifications generally apply to products and materials on the market. In the case of insulating materials where the maker tries to use materials for which there are no rules for materials under UL specifications, these must be certified by UL, in order to be evaluated under specifications for maximum usage temperature.
Japan's Electrical Appliance and Material Control Law, on the other hand, specifies maximum usage temperatures for insulating materials used in electric appliances through a simplified system, and if the materials are used at temperatures below the maximum, they can be used without being certified. This applies regardless of whether the product has been UL-certified.
But when individual insulating materials are used at temperatures exceeding the specified maximum, certification must be obtained for each in the same way as with UL. Thus if the usage temperatures for the UL-certified insulating materials mentioned in this complaint exceed the maximum temperatures for which the Electrical Appliance and Material Control Law states no certification is necessary, each must obtain certification for use in the same way as with UL.
This complaint concerns acceptance of the certification results of materials evaluated based on specifications, rather than acceptance of the specifications themselves. Where mandatory safety-related specifications are concerned, items from foreign makers in countries where there are no means of regulating businesses cannot be accepted without certification, and given that various countries have different systems, for the CE mark, the UL mark or labeling according to the Electrical Appliance and Material Control Law, materials must each be certified individually before they can be accepted.
>5. Remarks
The complainant accepted this policy.
3-(4) Acceptance of foreign standards regarding gas appliances
1. Complainant: Tokyo Chamber of Commerce and Industry
2. Ministry concerned: Ministry of International Trade and Industry
3. Complaint:
Commercial gas appliances imported after meeting foreign standards (CE, AGA) must be certified once again by the Japan Gas Appliance Inspection Association. This is duplicated effort and is inefficient.
The standards of the Japan Gas Appliance Inspection Association should be harmonized with those of foreign countries so that inspection of appliances meeting foreign standards may be omitted.
4. Corresponding Policy of the Ministries concerned:
(1) Gas appliance mainly for commercial use that uses large amounts of gas does not come under any public regulations in Japan. The Japan Gas Appliance Inspection Association's certification system for a commercial gas cooking appliance is a voluntary, private sector certification system.
(2) The ministry is aware that the Japan Gas Appliance Inspection Association is attempting to harmonize its voluntary standards with standards of foreign countries, and that test of appliance meeting foreign standards cannot be omitted, for the following reasons:
1) Regarding the certification system for gas appliances by testing organizations, the testing personnel carry out type test, to check that the appliance conforms in terms of materials, construction and performance, and on factory audits, where they ascertain that the manufacturing facilities can continue producing appliance conforming to standards. This certification system is the same in Japan as for CE and AGA.
2) However, since the types, composition and supply pressure for gas used are different in every country, no international standards exist, and each country sets its own standards, and based on those standards, carries out its own test and certification. For example, in combustion tests to verify for complete combustion, the calorific value of gas used in Japan and in various EU countries differs markedly, and gas appliances which burn EU-country gases well may not necessarily do so with Japanese gas. In the United States, combustion tests are conducted by taking the appliance input rate to its maximum capacity (25% over consumption), and may not necessarily burn Japanese gas well. Additionally, temperature increase tests to check the rise in temperature in areas adjacent to where the gas appliance is installed are not conducted using Japanese gas, because of differences in calorific value and so on.
5. Remarks
The complainant accepted this policy.
4. Transportation and Traffic
4-(1) Reviewing maximum limits on the width of camper-trailers and reviewing how the right-of-way permit for special motor vehicles are handled
1. Complainant: US Embassy
2. Ministry concerned: Ministry of Construction, Ministry of Transport
3. Complaint:
(1) Reviewing maximum limits on the width of camper-trailers
In Japan, the Road Law and the Road Vehicle Act set the maximum width of vehicles at 2.5 meters. However, the width of most U.S.-made camper-trailers (predicated on obtaining a vehicle registration) currently exceeds the above maximum width by a few centimeters (2,540 mm-2,578 mm) and this width limitation constitutes a major barrier to imports of U.S.-made camper-trailers to Japan.
On the other hand, large buses and trucks when rear-view mirrors are installed on the outside of the vehicle body, exceed 2.5 meters in width and are sometimes nearly 3 meters wide. But if they are 2.5 meters or less in width when the mirrors are removed, the safety regulations for road vehicles treat them as under the width limit. Even though large buses and trucks nearly 3 meters wide are considered to be within the limit, camper-trailers exceeding the maximum width by a mere few centimeters are deemed to be over the limit, which is unreasonable.
Accordingly, even though camper-trailers may be more than 2.5 meters wide, if there are no problems with safety, as in the case of large trucks and buses mentioned above, measures should be taken to allow them to use Japanese roads without any restrictions whatsoever.
(2) Reviewing how the right-of way permit for special motor vehicles are handled
When vehicles exceed 2.5 meters in width, they are considered special motor vehicles and require the right-of-way permit for special motor vehicles. However, since camper-trailers are used infrequently, few such vehicles are currently in use in Japan and owners of camper-trailers close to 2.5 meters wide currently drive them after thoroughly checking that the roads they intend to use are sufficiently wide, and when the right-of-way permit for special motor vehicles are issued, the specific routes and time to be taken should be left to the responsibility of their users.
4. Corresponding Policy of the Ministries concerned:
(1) Reviewing maximum limits on the width of camper-trailers
Ministry of Construction
The width of roads is determined in anticipation of their use by vehicles with certain properties (2.5 meters is the width of the designed vehicle), and roads are designed to permit safe and smooth passage of vehicles. The maximum vehicle width set out in the Cabinet Order on Vehicle Restriction, is determined based on the properties of design vehicles. (Maximum vehicle width is the same as vehicle width set out in the Treaty on Road Transport.)
Accordingly, under present conditions it is not possible to raise the maximum vehicle width allowed and still ensure the safe and smooth ordinary passage of vehicles, as this would require extensive improvement involving road widening.
Methods for determining vehicle width rules under the safety regulations for road vehicle are no different than those of United States domestic laws. The viewpoint on vehicle width contained in the Cabinet Order on Vehicle Restrictions is within the provisions of this ordinance, provided that the vehicle load does not extend beyond the body of the vehicle.
>Ministry of Transport
Unless restrictions are placed on vehicle width, in relation to roads, bridges, tunnels and so on, this will have a major impact on other transport, and accordingly, taking domestic road conditions into consideration, limits are placed on the width of vehicles that may operate on them ordinarily without restriction.
Rules on the width of vehicles set out in the "Dimensions and Weight of Vehicles for International Transport" in the Treaty on Road Transport are the same as well, and methods for regulating vehicle width are the same as in U.S. domestic law, so Japanese rules on vehicle width are not unusual in international terms.
Therefore, under current conditions, it is not possible to relax vehicle width requirements.
As the complainant pointed out, rearview mirrors are not included in the width of the vehicle, but in order to ensure safety, they are required to have a shock absorbing structure, so that they can fold back if they should come in contact with other transport.
(2) Reviewing how the right-of way permit for special motor vehicles are handled
Ministry of Construction
Even if a vehicle exceeds the maximum limits, the road administration may allow the vehicle to pass, under certain conditions, if the vehicle structure or load is of a special nature and this is considered unavoidable (Road Law, Article 47-2 paragraph 1). In the case of camper-trailers exceeding 2.5 meters in width, the vehicle structure is not specialized and it is therefore not subject to the above permission and cannot use the roads.
Ministry of Transport
In the case of vehicles requiring a width in excess of the regulations, so that their structure enables them to transport large or long loads which cannot be separated, the relaxation of the safety regulations of the Road Vehicle is allowed, but the approval is possible only when the load is large and the vehicle's structure makes approval unavoidable. In the case of vehicles like camper-trailers, however, which can certainly meet Japanese domestic regulations, relaxati on of the maintenance regulations cannot be allowed.
5. Remarks
The complainant is currently studying this matter.
6. Council member's comments
Regarding the width of camper-trailers, the Council member commented that "the complainant would probably be satisfied if a grace period of 3-4 years were allowed for vehicles exceeding the maximum width, after which width exceeding 2.5 meters would not be permitted." In reply, the ministries concerned said that "the measure described by the Council member is a possible alternative as a temporary measure when regulated dimensions are changed, but when regulated dimensions as in this case have been in effect for many years and are sufficiently well known, that does not constitute a reason for adopting such a measure.
5. Construction
5-(1) Improving evaluation standards for inspection of management items relating to public works projects ordered by local government
1. Complainant: Korean Embassy
>2. Ministry concerned: Ministry of Home Affairs
3. Complaint:
One of the requirements for participation in tendering for public works projects is, in principle, a total score of 1,250 points for inspection of management items. However, in some cases of public works projects ordered by local public bodies, total scores required are set at 2,000 points or more. For example, tendering requirements for the construction of the Saitama Prefectural Stadium in November 1997 called for 2,100 points, 2,000 points in the case of the Gumma Prefectural Art Museum in June 1998, 2,000 points in the case of the reconstruction of the Wakayama Prefectural Goryo Hospital in May 1999, 2,000 points in the case of seawall construction at Kobe Port Island in July 1999, and 2,000 points in the case of construction related to the City of Kawasaki Fire Service Bureau in August 1999. Since the scores required by these local public bodies are too high, foreign companies are in effect prevented from participating in tendering.
Qualifications for participation in tendering should be restricted to those essential for ensuring the capacity to fulfill the contract, and local public bodies should be instructed to set the scores required at 1,250, as is the case for construction under the direct jurisdiction of the Ministry of Construction.
4. Corresponding Policy of the Ministries concerned:
Local public bodies are free to set the qualifications for participation in tendering as they see fit, and the central government cannot ask them to uniformly set requirements at a certain level.
However, the Agreement on Government Procurement applies to the prefectures and to ordinance-designated cities as well, and given that Article 8 (b) of the Agreement states that "requirements for participation in tendering must be restricted solely to those essential for ensuring the capacity of the supplier to fulfill the contract concerning the tendering in question," the Ministry of Home Affairs, together with the Ministry of Construction, is issuing a notice requesting local public bodies to avoid setting score requirements unduly high in the light of the project content as a way of arbitrarily restricting who may participate in the bid competition.
Where the Korean Embassy's complaint is concerned, there was some factual discrepancy in the cases mentioned, and the facts are set out below:
(1) The system based on total score for inspection of management items was amended in July 1998; since April 1999, the standard for evaluation points (impartial scoring) for inspection of management items, for projects under the direct jurisdiction of the Ministry of Construction, was set at 1,250 points, in principle; previous to that, a score of 1,500 was required.
(2) Tendering requirements for construction of an offshore seawall at Kobe Port Island in July 1999, and for construction related to the City of Kawasaki Fire Service Bureau in August 1999, were set at 1,500 points, not 2,000 points.
(3) Accordingly, since the time of setting the standard of 1,250 points for projects under the direct jurisdiction of the Ministry of Construction, there have been no cases of local public bodies requiring 2,000 points or more.
(4) Additionally, in all five cases cited as examples, the local public bodies in question subsequently lowered the score requirements which had been set, after carefully reconsidering harmonization with the Agreement on Government Procurement.
5. Remarks
The complainant accepted this policy.
The Ministry of Home Affairs, together with the Ministry of Construction, issued a notice to the prefectures and to ordinance-designated cities on February 16, 2000, to ensure appropriate setting of requirements concerning scores for inspection of management items needed for participation in tendering in public works projects by local public bodies to which the Agreement on Government Procurement applies.
5-(2) Correcting exclusionary goods procurement for construction projects
1. Complainant: Korean Embassy
2. Ministry concerned: Ministry of Construction, Ministry of Education, Ministry of Home Affairs, Ministry of Transport
3. Complaint
In public works projects like bridge construction and so on, contractors often avoid using imported materials, fearing that this will have a negative effect on project management. And even when imported materials are used, they are required to pass unnecessary strength testing and undergo other discriminatory handling.
These actions inhibit the use of foreign materials and measures to improve the situation should be taken.
4. Corresponding Policy of the Ministries concerned:
In the case of public works
For materials used in Ministry of Construction projects, quality specifications are shown on the blueprints (plans, specifications). When they are not shown on the blueprints, the materials used should be of appropriate quality meeting JIS standards, or be of equivalent or better quality.
Accordingly, the blueprints do not specify specific makers' products, but merely show the quality standards and specifications for the materials.
In order to handle foreign materials different from domestic standards in the same way as domestic standards products, quality inspection and certification of foreign building materials are carried out (by the Public Works Research Center and by the Japan Testing Center for Construction Materials).
Inspection certificates enable the public clients projects to confirm that the quality and performance of the materials is equivalent to that of domestic materials, and they are treated in the same way as domestic materials.
In the case of construction projects
Ministry of Construction
Ministry of Construction's building and refurbishing projects already handle foreign materials and equipment different from domestic specifications in the same way as domestic specification materials and equipment, when they are acknowledged to be of equivalent quality.
In order to promote the smooth use of foreign materials and equipment in building and refurbishing projects, building materials and equipment manufactured domestically are also evaluated for quality and performance by the Public Buildings Association.
Regarding steelwork construction, blueprints do not specify the names of any specialty steel makers.
Ministry of Education
The Ministry of Education believes that there have been no cases of discriminatory handling such as that described in the complaint.
This ministry will continue to respect the Agreement on Government Procurement and place orders for construction in a transparent, impartial manner and in a way that fosters competition.
Ministry of Home Affairs
The matter described in the complaint is an issue involving procurement by the contractor. However, direction and supervision of contractors is not in the purvey of the Ministry of Home Affairs.
Ministry of Transport
For materials used in Ministry of Transport construction, quality specifications are shown on the blueprints (plans, specifications). When they are not shown on the blueprints, the materials used should be of medium quality meeting JIS standards, or be of equivalent or better quality.
Accordingly, the blueprints do not specify specific makers' products, but merely show the quality standards and specifications for the materials.
5. Remarks
The complainant accepted this policy.
5-(3) Acceptance of foreign test data in inspecting imported building materials
1. Complainant: Tokyo Chamber of Commerce and Industry
2. Ministry concerned: Ministry of Construction
3. Complaint:
In importing foreign building materials, even products that satisfy foreign standards should be tested again in Japan, and it costs more than one million yen.
Testing of building materials should be simplified, making use of test data from the original country and so on.
4. Corresponding Policy of the Ministries concerned:
In accordance with revisions of the Building Standards Law made in 1998, foreign testing bodies can be designated to carry out certification of foreign manufacturers making parts certified by the minister of construction after meeting certain requirements and certification of foreign manufacturers. In addition, foreign evaluation bodies recognized by the minister of construction can evaluate technical evaluation as conforming to specified standards, where performance set out in ordinances of the Building Standards Law is concerned.
At present, a Canadian testing organization (ULC) and an Australian testing organization (CSIRO) have been designated.
5. Remarks
The complainant accepted this policy.
5-(4) Relaxing regulation of foreign-specification non-combustible materials
1. Complainant: Tokyo Chamber of Commerce and Industry
2. Ministry concerned: Ministry of Construction
3. Complaint:
It is sometimes necessary to use non-combustible materials approved by the minister for construction or conforming to Ministry of Construction notice No. 1828, but with regard to approval or conformity certifications, requirements should be relaxed to allow materials conforming to foreign specifications from the United States or Europe.
4. Corresponding Policy of the Ministries concerned:
In approving of non-combustible materials, it is necessary to see whether construction materials satisfy requirements specified in orders. Even foreign materials that satisfy foreign requirements still need to see whether they satisfy the requirements in by orders.
In accordance with revisions of the Building Standards Law made in 1998, foreign recognized evaluation body approved by the minister of construction can evaluate conformance to requirements set out in ordinances of the Building Standards Law.
5. Remarks
The complainant accepted this policy.
5-(5) Early introduction of mutual certification in the construction field, and promotion of international harmonization of performance standards and performance testing methods for construction materials
1. Complainant: Japan-America Cooperative Conference
2. Ministry concerned: Ministry of Construction
3. Complaint:
In response to requests from both Japan and abroad for active acceptance of certification by foreign testing organizations and evaluation bodies concerning building materials and building methods, meetings have been held between the Ministry of Construction and the foreign organizations concerned with a view to introducing a mutual certification system, but very little progress has been made. The system should be introduced at an early date.
Harmonization with performance standards and performance testing methods for building materials is needed, and action toward achieving international harmonization should be taken at an early date, based on the work being done at the ISO (International Organization for Standardization).
4. Corresponding Policy of the Ministries concerned:
In accordance with revisions of the Building Standards Law made in 1998, foreign testing bodies can be designated to carry out certification of foreign manufacturers making parts certified by the minister of construction after meeting certain requirements, and certification of foreign manufacturers. In addition, foreign evaluation bodies recognized by the minister of construction can evaluate technical evaluation as conforming to specified standards, where performance set out in ordinances of the Building Standards Law is concerned.
International harmonization of performance testing methods for building materials, is now under study, in preparation for implementation in June next year of the cabinet ordinance on the Building Standards Law.
5. Remarks
The complainant accepted this policy.
5-(6) Indicating the schedule for implementing performance standards of the Building Standards Law and establishing transparency in setting down government ordinances and rules
1. Complainant: Japan-America Cooperative Conference
2. Ministry concerned: Ministry of Construction
3. Complaint:
The Building Standards Law was revised at the regular session of the Diet in June 1998, and provisions regarding performance (system whereby various materials, equipment, and structural methods may be used as long as they meet specific performance requirements) are to be implemented by June 12, 2000.This is a major overhaul of the law in the direction of deregulation and foreign businesses look forward to its appropriate application and effectiveness. However, no information has been provided on when implementation ordinances and rules for implementation will be set and concerning the schedule until announcement is made, and neither are many details of the above known. The revised law is an issue that very much interests not only Japanese but also foreign industries and organizations concerned, and since it has a major impact, implementation should be carried out smoothly and with the greatest attention possible. The implementation schedule should be made clear and cabinet ordinances and so on should be clear and transparent.
4. Corresponding Policy of the Ministries concerned:
Regarding the content of cabinet ordinances, the ministry is planning to announce these in proposal form as necessary and appropriately, based on the "Procedures for Submitting Comments Concerning Setting or Abolition of Regulations" (the so-called public comment procedures) decided by the Cabinet on March 23, 1999.
5. Remarks
The complainant accepted this policy.
The ministry announced the proposed changes to the implementation ordinances and held public comment procedures between February 15 and March 14, 2000. The outline of the ordinances was also presented in English.
5-(7) Limiting ordinances passed by local governments based on the Building Standards Law and making related information available
1. Complainant: Japan-America Cooperative Conference
2. Ministry concerned: Ministry of Construction
3. Complaint:
The Building Standards Law sets out the minimum standards necessary for plots of land where buildings stand and is applied uniformly throughout the country. However, in cases where the intent of the law is not achieved, due to local conditions, certain areas of it can be set out by local government ordinances.
Although the principle of local autonomy must be respected, if, in the name of local uniqueness, ordinances with content detracting from the law's intent and from consistency and uniformity in its implementation were to be adopted, this would result in meaningless confusion for businesses.
Accordingly, ordinances should be implemented only for purely practical reasons and clear intentions.
Further, if ordinances are implemented, information on their intent, content and necessary procedures should be provided, for example by notification or through the Internet, to make the information accessible to anyone who needs it.
The language used in ordinances and detailed regulations should be standardized and clarified, to avoid differences in interpretation depending on the region or on the individual official concerned.
4. Corresponding Policy of the Ministries concerned:
It is essential for local governments to use their ordinances, in order to respond adequately to regional climate, customs and needs of communities with diversity. Restrictions by local government ordinances is mentioned in the Building Standards Law, and the scope of the restrictions and the standards for the buildings are clarified in cabinet orders and notifications. Since local government ordinances are established in democratic way through local assembly proceedings within the scope of the Building Standards Law, the ministry believes that the need for and purpose of adopting local government ordinances is clear to all.
Regarding disclosure of information on local government ordinances, this has been done in accordance with the Law on Concerning Access to Information Held by Administrative Organs promulgated in May 1999 (1999 Law No. 42) and measures taken by individual local public bodies.
5. Remarks
The complainant accepted this policy.
7. Import Procedures
7-(1) Temporary customs clearance of special vehicles from Korea
1. Complainant: Korean Embassy
2. Ministry concerned: Ministry of Finance
3. Complaint:
Based on the agreement at Cabinet-level meetings between Japan and Korea in 1967 allowing temporary imports and exports of vehicles by ship, the Korean government in 1970 adopted a Notice on Customs Clearance of Vehicles for Temporary Import/Export of Vehicles by Ship (Customs Agency Notice No. 98-56), allowing temporary import customs clearance of vehicles used by Japanese travellers and trucks transporting live fish, trucks equipped with refrigerating or freezing units and other special vehicles. Japan, on the other hand, although allowing the temporary import and customs clearance of Korean travellers' vehicles in to Japan, does not allow temporary import and customs clearance of trucks transporting live fish, trucks equipped with refrigerating or freezing units and other special vehicles. Because of this, it is impossible to transport exports of live fish or refrigerated/frozen agricultural produce or marine or livestock products to Japan in Korean vehicles. This is not only inconvenient for Korean exporters, it also leads to higher costs.
To lower transport and distribution costs and shorten time needed for transportation, the Japanese government should permit temporary import and customs clearance of the above-mentioned special vehicles from Korea, in accordance with the above-mentioned Cabinet-level meeting agreement and based on the principle of bilateral reciprocity.
4. Corresponding Policy of the Ministries concerned:
(1) In 1970, the Japanese and Korean customs authorities agreed to simplify customs procedures for temporary import of private vehicles brought into Japan by travellers from Korea using the Kampu [Shimonoseki-Pusan] ferry. In 1971, customs import/export declarations and other procedures were amalgamated and simplified, for private vehicles covered under Article 17, Paragraph 1-10 (tax-exempt for re-export) of the Customs Tariff Law.
Note: Under Article 17, Paragraph 1-10 of the Customs Tariff Law, vehicles for private use accompanied by the individual or shipped unaccompanied by persons entering Japan for purposes other than transferring their place of residence to Japan, are exempt from customs duties provided they are re-exported within one year of the day that import permission was granted. Vehicles are currently non-dutiable and under Article 13, Paragraph 1-4 of the Law Concerning Levying of Domestic Consumption Tax on Imports, goods covered under Article 17, Paragraph 1-10 of the Customs Tariff Law are exempt from consumption tax.
(2) Although trucks transporting live fish, trucks equipped with refrigerating or freezing units and other special vehicles are not covered under Article 17, Paragraph 1-10 of the Customs Tariff Law, the ministry is studying applying similar provisions and simplify procedures for import and export.
5. Remarks
The complainant accepted this policy.
7-(2) Combining payment of tonnage duty at ports in the Hanshin area
1. Complainant: Korean Embassy
2. Ministry concerned: Ministry of Finance
3. Complaint:
In the Keihin area, all ports in Tokyo and Kanagawa prefectures in the said area are designated together as the open port of Keihin, and paying tonnage duty in any of these ports gives access to the facilities of all ports in the area. On the other hand, where the Hanshin area is concerned, ports in the prefectures of Osaka and Hyogo, even when geographically in close proximity, are designated as separate open ports, and users must pay individual tonnage duty for use of facilities at each port in the area.
For this reason, shipping companies using ports in the Hanshin area, which is a major distribution point, must bear higher expenses compared to shipping companies using ports in the Keihin area, the main distribution point for Kanto, and they suffer a disadvantage (one private sector business estimated the additional costs incurred from using Hanshin area ports at 4.25 million yen per year for a 5,300 TEU ship).
Accordingly, payment of tonnage duty should be combined for ports in the Hanshin area, as is done in the Keihin area, so that port users paying tonnage duty at one Hanshin area port are entitled to use facilities at all ports in this area.
4. Corresponding Policy of the Ministries concerned:
(1) Tonnage duty and special tonnage duty (hereafter referred to as "tonnage duty") are levied when foreign trading vessels enter open ports, with the taxation rate assessed based on net tonnage; open ports are designated taking into consideration cargo imports and exports and foreign trading vessels moving in and out of those ports, and other conditions. Further, since the areas covered by open ports differ from port to port based on law and this is difficult for port users to know this, in terms of the Customs Law, this is determined by the port area set out for ports under the Port Regulation Law, which uniformly specifies port areas throughout Japan. But in special cases, such as when foreign trading vessels are expected to enter port on a regular basis outside of port areas specified by the Port Regulation Law, or when foreign trading vessels are not expected to enter port inside port areas specified by the Port Regulation Law, exceptions are made and open port areas different from those based on the Port Regulation Law are designated.
(2) Regarding combining payment of tonnage duty for Hanshin area ports as one open port, there are no special reasons for designating an open port area different from that based on the Port Regulation Law, and in terms of ensuring fair treatment compared to ports in other areas, it is not possible to combine Hanshin area ports into one open port merely because they are in geographical proximity.
5. Remarks
The complainant accepted this policy.
7-(3) Simplifying import procedures for poisonous and deleterious substances for private use
1. Complainant: Tokyo Chamber of Commerce and Industry
2. Ministry concerned: Ministry of Health and Welfare
3. Complaint:
When poisonous and deleterious substances are imported for private use, they must be accompanied by a Pharmaceutical inspector's certificate (so called "Yakkan Shomei"). Obtaining the certificate requires considerable documentation and import procedures are delayed because it takes 3-4 days between applying for and receiving the certificate.
The documentation required should be reduced and the time to issue the certificate should be shortened as well.
4. Corresponding Policy of the Ministries concerned:
The Poisonous and Deleterious Substances Control Law requires the registration of those who import these substances for the purpose of sale or distribution. When these substances are imported for private use, no registration as an importer is required.
However, in order to confirm that these are for private use and not for sale or distribution, importers are required to obtain a Pharmaceutical inspector's certificate (so called "Yakkan-Shomei").
Because there is a strong risk to humans depending on how such substances are used, a document describing method of use is necessary, in order to confirm that the substances are used properly. The other documents are the minimum required for confirming that no import business permit is needed, and the number of documents required cannot be reduced.
Concerning time frame, if the application for the certificate is directly brought to the Ministry of Health and Welfare, the certificate will be issued on the spot after verification of the contents. Applications by postal mail are also processed immediately within a day.
5. Remarks
The complainant accepted this policy.
7-(4) Toy imports
1. Complainant: Tokyo Chamber of Commerce and Industry
2. Ministry concerned: Ministry of Health and Welfare, Ministry of Finance
3. Complaint:
When toys designated by the minister for health are imported, they must be inspected. However, if the products conform to United States ASTM or CE standards, they should be exempt from inspection.
Further, even though imports are done on a continuing basis, customs carries out random inspections and customs clearance does not go smoothly. It appears that customs is requiring importers to show the actual products imported so that tariff codes may be determined, but if the tariff code declared in the exporting country is used, this should make inspection unnecessary. If goods classification standards vary depending on the country, this should be harmonized internationally and the same tariff code as that declared in the exporting country applied.
4. Corresponding Policy of the Ministries concerned:
Ministry of Health and Welfare
When toys are imported, conformity with the specification standards set out in the Food Sanitation Law is verified; however, this regulation is not especially stringent by international standards. It is not possible to exempt toys on the ground that they conform to ASTM or CE from import inspection, but taking into consideration the establishment of international standards in the future, the ministry believes that it will be necessary to exchange information.
Regarding use of foreign test data, the foreign official laboratories system was introduced from March 1982. Under this system, products are tested before export, at public testing facilities registered with the Ministry of Health and Welfare by the exporting country; the test results are shown when the products are imported, and if the results conform with the Food Sanitation Law, products are exempted from testing at the time of import. As of September 14, 1999, 2,513 facilities in 52 countries had been registered. Beginning from December 1994, apparatus, packaging wrapping and toys made from materials using the same coloring agents and manufactured by the same method are exempted from testing at the time of import for an unlimited period, by attaching a copy of the initial test results.
Ministry of Finance
Article 67 of the Customs Law (permit for export or import) states that importers of goods must make a declaration to the head of customs, undergo the necessary testing and receive permission; customs may inspect the goods if necessary. However, it is not possible to inspect all goods, and depending on the goods, examination of documents is done.
Even in the case of goods imported on a continuing basis, inspection is sometimes necessary, to confirm whether the content of the declaration (goods, amount) is appropriate, and to check for drugs, guns or other socially undesirable items, and it is therefore not possible to omit inspections across the board.
Regarding application of the tariff code declared in the exporting country, if the exports originate from a country participating in the HS Treaty, the first six digits of the code are the same as those in the nine-digit code used by Japan and can be used as is in Japan. However, the last three digits are a code used only in Japan and accordingly in some cases it is not possible to use the exporting country's code as is.
5. Remarks
The complainant accepted this policy.
7-(5) Reviewing the declaration system of payment of consumption tax when imported goods are cleared through customs
1. Complainant: Tokyo Chamber of Commerce and Industry
2. Ministry concerned: Ministry of Finance
3. Complaint:
The United States levies no taxes at the time of import except for customs duties, but in Japan consumption tax is paid even on goods which require no customs duties, when the goods are imported and cleared through customs. Post-import reporting applied mainly to dutiable goods, before the consumption tax was introduced, but now all goods are subject to post-import reporting and this involves a great deal of clerical work.
Accordingly, as in the case of customs duties, importers should be exempted from paying consumption tax when the goods are cleared through customs; this would make it unnecessary to declare the value of non-dutiable goods and simplify customs clearance.
4. Corresponding Policy of the Ministries concerned:
(1) Consumption tax on imported goods is levied at the time of import, for the reasons below. It is to be declared and paid on each occasion, and it is not possible to establish a system for declaring and paying the tax for a specific period all at once, as in the case of domestic transactions.
1) When businesses import, if consumption tax is not levied at the time of import, it becomes possible to lay in stock of imports at the price excluding tax, whereas domestic goods are laid in at the price including tax, which will impinge upon the fairness of economic transactions.
2) Since parties liable for paying tax on imported goods include not only the taxed businesses but tax-exempt businesses and private individuals as well, the opportunity to levy the tax is lost if this is not done at the time of import.
Further, even if the importer is a business taxed on domestic transactions, consmption tax paid on imports corresponding to tax-exempt sales cannot be claimed as tax on laying in stock, and it is necessary to levy the appropriate tax at the time of import.
3) When goods are imported, the importer must make a declaration to the head of the customs office even if the goods are non-dutiable and obtain an import permit, and accordingly, levying domestic consumption tax applicable to imports as part of import procedures and completing payment of the tax together with duties when clearing customs is the most efficient and practical method.
4) Like Japan, other countries also use the system of completing tax-related procedures at the time of import.
Regarding payment of consumption tax on imports, a grace period (of within 3 months) is allowed, and more extensive computerization, including the NACCS system, is in use to speed up customs clearance paperwork and add to the convenience of taxpayers.
(2) Parties importing cargo must make an import (tax payment) declaration because in order to determine the taxable case resulting from the act or fact of importing and to ensure revenue from tariffs and consumption tax, tax is levied at the time of declaration as part of import procedures, and tariffs and consumption tax are collected together, and it is thus impractical and inappropriate to delay declaration (evaluation) for non-dutiable goods only.
It is of course necessary to carry out correct tariff valuation of non-dutiable goods, but in order to lighten the paperwork burden on importers, it is not necessary to submit a valuation declaration for non-dutiable goods. (Customs Law Basic Directive 7-10(1))
(3) Where consumption tax on imports is concerned, customs offices, in order to maintain orderly declaration and tax appropriately and fairly, conduct inspections after import permits are granted (post-inspection) by checking ledgers to confirm whether value was declared appropriately; in case of inappropriate declaration, rectification is required, to ensure appropriate application of the system.
In a decision in March 1995, the Office of Market Access stated that "parties making declarations should only be required to present the minimum documentation necessary, in the case of post-inspection." However, when documentation to be inspected is preserved electronically, customs offices do not require the taxpayer to print out all the documentation; instead, as a way of lightening the burden, confirmation is carried out by searching the electronic data.
5. Remarks
The complainant accepted this policy.
7-(6) Exempting cargo produced from molds provided gratis from the consumption tax when imports are cleared through customs
1. Complainant: Tokyo Chamber of Commerce and Industry
2. Ministry concerned: Ministry of Finance
3. Complaint:
When products are imported which are made from molds sold to a domestic customer and then shipped abroad gratis, the value of the molds must be included in the customs value. In such cases, even though consumption tax was paid on the molds in Japan, the molds are subject to double taxation; this is not a reasonable system.
In such cases, consumption tax was already paid in Japan and accordingly the products should be exempt from consumption tax when imported.
4. Corresponding Policy of the Ministries concerned:
The taxation standards for consumption tax on imports are:
1) given that in the case of imports, liability for payment of consumption tax, which is an ad valorem tax, arises when they are removed from bonded areas, it is appropriate to apply the price (market price) of the imported goods at the time of removal as the taxation standard;
2) and this price is the price of the imports when they enter the country of import and is balanced in relation to domestic transaction prices;
and calculation of customs value is based on this. This is the same calculation method as that used by major countries using a value-added tax
The calculation method for customs value is set out in the Customs Tariff Law Article 4 to Article 4-4, which conforms to the international agreement "Agreement on Implementation of Article 7 of the General Agreement on Tariffs and Trade 1994" (Agreement on Customs Valuation)."
In other words, as in this case, when goods produced from molds provided gratis are imported, customs duty is calculated by adding the cost of the molds as called for by the provisions of the Customs Tariff Law Article 4 Paragraph 1-3b. This is because, in this case, compared to the seller buying molds and manufacturing imports, since the cost of the molds is low, it is deemed to be the regular price (in the case of the molds not being provided gratis), and since customs duies are assessed based on this customs value as the basis for duty assessment, this customs duty and the customs value added together constitute the price (market price) at the time of the transaction, and it is practical to assess consumption tax based on this tax standard.
The consumption tax levied on consumption in general is levied on sales of businesses at each stage of transaction, but in order for the tax not to become cumulative, the system of deducting the tax at the previous stage (input tax recovery system) is used so that even though tax is levied at multiple stages of transactions, use of the input tax recovery system is a fair system that places no burden on businesses.
Specifically, businesses may deduct consumption taxes on stocking necessary to generate sales from the consumption tax (including at the time of import) levied on sales during the taxation period (the calendar year, in the case of private individuals, and the business year, in the case of companies), and pay the difference to the tax authorities (in cases where more consumption tax was paid on stocking than the amount of consumption tax on sales, the difference is refunded). Accordingly, using the input tax recovery system means that the importer pays no consumption tax levied on goods at the time of import as in this case, including the portion on the value of the molds included in the tax standard according to the adding valuation.
5. Remarks
The complainant accepted this policy.
7-(7) Improving application of preferential tariffs
1. Complainant: Tokyo Chamber of Commerce and Industry
2. Ministry concerned: Ministry of Finance
3. Complaint:
Since limits are imposed to quotas for preferential tariffs each fiscal year, goods for which quotas are fully used up toward the end of the fiscal year often fail to qualify for preferential tariffs. Specifically, particle board is a building material used for interiors and for finishing. In the construction industry, periods for completing construction often coincide with the end of the fiscal year and demand for this material increases when the end of construction is near, but on the other hand fiscal year quotas for preferential tariffs are fully used because it is the end of the fiscal year and the goods do not qualify for the preferential tariff.
In the case of construction materials like this, the method of administering the quota should be changed so that there is numerical quota for preferential tariffs remaining unused at the end of the fiscal year.
4. Corresponding Policy of the Ministries concerned:
Since the complainant states that the method of administering quotas for preferential tariffs for building materials (probably referring in this case to quota ceiling value) should be changed to allow quotas to remain until the end of the fiscal year, these are probably products controlled on a day-to-day or month-to-month basis which would no longer qualify for preferential tariff rates during the fiscal year. In the case of these products, there is the advantage that if import value during the fiscal year does not exceed the ceiling at the end of the fiscal year, preferential tariffs can be applied, or that import declarations applying preferential tariffs can be made for specified periods, even if the ceiling amount is exceeded.
One method such as the complainant describes of ensuring that quotas remain (ceiling amounts are not exceeded) at the end of the fiscal year is the prior quota assignment method; under this method, parties having been assigned a quota are able to import in a planned manner, within the ceiling amount, and quality for preferential tariffs. But with this method, since it is impossible for the total value to which preferential tariffs have been applied to exceed the ceiling during the fiscal year, the value to which preferential tariffs apply throughout the fiscal year is ultimately lower, compared to the method of controlling products on a day-to-day or month-to-month basis.
Further, under the prior quota assignment, application of preferential tariffs is restricted to the same types of products as those produced by domestic industries engaged in activities to promote structural reform, when there is the risk that those products will have a detrimental effect on activities concerning structural reform of the said industries.
For these reasons, importers would benefit from using the method of products controlled on a day-to-day or month-to-month basis.
Although this has not been mentioned in this complaint, coordination with the ministries in charge of materials would be necessary, in the event that the ceiling amounts were expanded or eliminated.
5. Remarks
The complainant accepted this policy.
7-(8) Clarifying standards for opening customs offices outside of regular hours and eliminating overtime service fees
1. Complainant: Tokyo Chamber of Commerce and Industry
2. Ministry concerned: Ministry of Finance
3. Complaint:
Application for service outside of regular hours requires payment of service fees. However, interpretation as to whether this refers to the time for initiating procedures or for completion of examination of documents differs depending on the official in charge, and standards for service outside of regular hours should be clarified.
Further, since services provided outside of regular hours are the same as during regular service hours, the overtime service fee itself should be eliminated
4. Corresponding Policy of the Ministries concerned:
(1) Regarding operation of administrative offices on holidays or operation of customs offices during hours outside of regular hours, parties requesting customs service outside of regular hours may apply for approval to the director general of regional customs, stating the type of service required, the time and the reason for the request. The director general of regional customs will approve the application if it is deemed that service outside of regular hours will not interfere with the administration of the customs office. (Customs Law, Article 98; Cabinet Order for Enforcement of the Customs Law, Article 87)
Parties whose request for customs service outside of regular hours has been approved must pay service fees (approval fees for service outside of regular hours). (Customs Law, Article 100)
Approval fees for service outside of regular hours are set on an hourly basis or part thereof, in accordance with the time spent by customs officials performing duties outside of regular hours. (Law on Customs-related Service Charges, Article 2)
Accordingly, the hours of operation outside regular hours refer to the time from beginning to end of the service outside regular hours requested by the applicant, and these standards are already clear.
(2) The system for providing service outside regular hours is used when customs service outside regular hours is requested. Since it is intended for the convenience of importers or exporters, applicants, who are the recipients of this benefit, are asked to bear service charges to cover administrative costs in connection with the service, and accordingly it is not possible to eliminate service charges.
5. Remarks
The complainant accepted this policy.
7-(9) Simplifying documentation used for preparing customs clearance statistics
1. Complainant: Osaka Chamber of Commerce and Industry
2. Ministry concerned: Ministry of Finance
3. Complaint:
In order to compile customs clearance statistics, customs requires documentation showing the price for the types of goods shown on the invoice, further broken down into categories for individual products of each type. For example, when the invoice shows the unit price for pieces of meat, separate documents must be submitted showing the price for each type of cut, for example, loin, filet, and so on, and this is very time-consuming work.
The requirement that importers show the unit price for each type of product in various sub-categories in order to compile customs clearance statistics should be simplified.
4. Corresponding Policy of the Ministries concerned:
(1) Customs clearance statistics are compiled and made public in accordance with Article 102 of the Customs Law and international treaties concerning economic statistics. These statistics are extremely important, being one of the main indicators of the state of the Japanese economy, and they are widely used in Japan and abroad.
(2) From the viewpoint of protection of domestic industries and so on, statistics are broken down
1) when tariff rates differ based on product type, or
2) when it is necessary to obtain an idea of import trends.
In the case of 2), even when the same tariff rate applies to different product types, when it is necessary to have an idea of import trends - for example, it is impossible to determine type and price if an invoice describes a product simply as "meat," importers must supply documentation other than invoices to be used for determining type and price.
(3) Where requirements for presenting documentation at the time of customs clearance are concerned, only documents essential for verifying important items during customs inspection are required, taking the burden on importers fully into account. The ministry has been taking measures to simplify and streamline documentation requirements, and will require only the minimum documentation necessary when it is impossible to determine important items, such as classification from invoices.
5. Remarks
The complainant accepted this policy.
7-(10) Pre-clearance inspection of chilled products
1. Complainant: Osaka Chamber of Commerce and Industry
2. Ministry concerned:> Ministry of Finance
3. Complaint:
Ensuring and maintaining freshness of chilled products is very important, given their nature, and although it is essential to check products after they arrive, under the current system checking cannot be done until after customs clearance, so a certain amount of time is needed for checking after customs clearance and before distribution.
For this reason, checking of products before customs clearance, at wharf-side refrigerated warehouses (bonded warehouses) should be permitted, in order for distribution of chilled products to begin immediately after customs clearance.
4. Corresponding Policy of the Ministries concerned:
Regarding handling of foreign cargo prior to customs clearance, Article 40, Paragraph 1 of the Customs Law allows importers to inspection, repacking, sorting or any other care the contents of the cargo in question while it is held in bonded area. Paragraph 2 of the said Law allows importers to display samples, carry out simple processing or other similar actions, after receiving permission from the Director-General of Customs. Accordingly, the Customs Law allows ordinary checking even prior to customs clearance.
5. Remarks
The complainant accepted this policy.
7-(11) Coordinating tariff codes and tariff rates
1. Complainant: Osaka Chamber of Commerce and Industry
2. Ministry concerned: Ministry of Finance
3. Complaint:
Customs determines the tariff code and tariff rate for new products, but a different tariff code and tariff rate is sometimes applied to the same product at different customs offices.
When the tariff code and tariff rate for a new product is determined at one customs office, this should be coordinated so that importers can declare the same tariff code and tariff rate at every other customs office in Japan.
4. Corresponding Policy of the Ministries concerned:
Japan's tariff schedule is based on the HS Treaty, and interpretation of the schedule is made public in the HS Explanatory Notes and the Classification Opinions (including classification standards used in Japan as well).
The prior instruction system - in which importers and other parties may inquire to customs regarding the classification (tariff code) and the tariff rate based on the tariff schedule which are applicable to the cargo they are planning to import, and receive a reply prior to import (Customs Law Article 7, Paragraph 3), is used to improve the convenience of importers.
Additionally, a classification center has been established to ensure uniformity of classification throughout Japan and a search system for classification information is available, in which examples of imported cargo classifications can be viewed at all customs offices.
These measures have been taken to ensure uniformity of tariff codes and tariff rates, and to improve transparency. We believe that the prior verification system is particularly useful in the case of new products, and interested parties are encouraged to use it.
5. Remarks
The complainant accepted this policy.
7-(12) Speeding up replies for prior instruction
1. Complainant: Osaka Chamber of Commerce and Industry
2. Ministry concerned: Ministry of Finance
3. Complaint:
When application is made to customs for prior instruction, it takes approximately one month to receive a reply from the customs office to which application was made, since all applications require confirmation by the Tokyo head customs office as the final decision.
Prior instruction should be speeded up so that replies can be received within about two weeks.
4. Corresponding Policy of the Ministries concerned:
A standard processing period (10 days) is set for prior instruction, and the ministry endeavors to complete processing within that period; some replies are even issued before the period is up. However, in cases where classification is difficult, replies are sometimes issued after consultation with the Tokyo Customs Office classification center. In cases where more than 10 days are required, importers are notified that additional time is needed.
5. Remarks
The complainant accepted this policy.
7-(13) Simplifying procedures for applying Article 8 of the Temporary Tariff Measures Law at the time of import and customs clearance
1. Complainant: Osaka Chamber of Commerce and Industry
2. Ministry concerned: Ministry of Finance
3. Complaint:
Regarding the system to exempt re-imported products from customs duties based on Article 8 of the Temporary Tariff Measures Law, it takes considerable time and effort to prepare the necessary paperwork and attach the documentation required relating to procedures from customs clearance for export to customs clearance for import.
For example, predicated on the use of this system, when fabric is exported and processed and re-imported as garments, export procedures for fabric allow declaration to be made on the basis of roughly estimated amount of fabric required, multiplied by the number of garments. Product import procedures, however, require importers to work out the amount of fabric required based on the amount of fabric needed for making each size, multiplied by the number of garments in each size. These figures are then compared with the export figures, and if the difference is substantial, customs requires a processing certificate from the overseas sewing plant.
However, obtaining such certificates from plants abroad (particularly China) takes time and effort, and meanwhile the goods remain in port-side warehouses.
Accordingly, when finished products are imported, importers should be allowed to calculate the amount of fabric used by multiplying the average amount of fabric required per garment item by the total number of garments imported, to simplify procedures.
4. Corresponding Policy of the Ministries concerned:
(1) Outline of system
Under this system, in principle, products processed or assembled from raw materials exported from Japan which are imported within one year of the date of export are exempt from paying import duty equivalent to duty paid when the raw materials were exported.
(2) Export procedures
1) When making use of this system, at the time of export of raw materials, all that is required is for customs to confirm the actual volume of the raw materials exported and it is not necessary to calculate the projected volume of raw materials used, by working out the amount of fabric required and so on.
2) Taking the burden on the importer into consideration, when the amount of fabric needed for the same style differs depending on garment size, the amount of duty reduction when finished products are imported is calculated by multiplying average amount of fabric needed by the number of items imported, and it is not necessary to calculate the amount of fabric needed per size.
5. Remarks
The complainant accepted this policy.
8. Other Areas
8-(1) International harmonization of verification testing methods for mutagenic properties of glutalaldehyde
1. Complainant: U.S. Embassy
2. Ministry concerned: Ministry of Labor
3. Complaint:
Glutalaldehyde (hereafter referred to as GA), used in hospitals as a disinfectant, was deemed an "existing chemical substances with strong mutagenic properties" under the Industrial Safety and Health Law in October 1998. However, this determination was probably made only on the basis of in vitro test results.
In the United States and Europe, on the other hand, tests made to check for mutagenic properties in GA do not conclude that GA has mutagenic properties only on the basis of in vitro testing; a comprehensive judgment is made using both in vitro and in vivo testing, after which it has been found that mutagenic properties are not a concern.
Accordingly, from the viewpoint of international harmonization of testing methods, test results from foreign countries regarding the mutagenic properties of GA should be accepted and this should be deemed not a concern.
Note: In vitro testing: the chemical substance being tested is added to cells which are cultured and checked for chromosomal abnormalities.
In vivo testing: rats or other living organisms are injected with the chemical substance being tested and their cells are checked for chromosomal abnormalities.
4. Corresponding Policy of the Ministries concerned:
In its hazard-assessment testing system, the Ministry of Labor focuses on carcinogenic properties. Tests for mutagenic properties using microorganisms (in vitro) and for chromosomal abnormalities using cell cultures (in vitro) based on Article 57-4 of the Industrial Safety and Health Law are conducted to screen substances for carcinogenic properties. The results of these two hazard-assessment tests determine the presence or absence of mutagenic properties.
As a result, substances evaluated as mutagenic properties are identified as such in announcement from the Director-General of Labor Standards Bureau of the ministry, in order to protect workers from damage for their health, and guidance concerning manufacturing and handling methods is given. Similar announcement has already been carried out for over 100 such substances with the guidance to protect workers from damage for their health. The ministry believes that in vitro testing alone is sufficient for evaluation results of tests for mutagenic properties.
However, since these tests are carried out to screen substances for carcinogenic properties, this issue will be considered separately when it is clear that the substance in question does not have carcinogenic properties.
(Further developments)
In the light of the Ministry of Labor's policies, the complainant submitted documentation to the ministry in November 1999 showing that GA has no carcinogenic properties.
The ministry subsequently replied that since the data submitted did not clearly indicate that testing had been carried out at testing facilities conforming to OECD-GLP standards and conducted in accordance with OECD test guidelines, it was not appropriate to evaluate whether GA had carcinogenic properties or not on this basis and that further documents were required to certify this.
The complainant is currently readying the documents requested by the ministry.
(For reference)
The OECD (Organization for Economic Cooperation and Development) has drawn up OECD test guidelines and OECD-GLP (Good Laboratory Practice), and upon the OECD's recommendation that they be adopted by member countries, the Ministry of Labor amended the relevant laws in May 1988 to mandate that hazard-assessment testing of new chemical substances be carried out according to OECD test guidelines and that such testing of the substances in question be carried out at testing facilities conforming with GLP standards.