| OTO No. | 611 | Classification | MHW-252,MHA-22 | |
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| Date of Acceptance | October 20, 2000 | Ministry/Agency Receiving Complaint | Cabinet Office (Economic Planning Agency) | |
| Responsible Ministries | Ministry of Health, Labour and Welfare (Ministry of Health and Welfare) Ministry of Public Management, Home Affairs, Posts and Telecommunications (Ministry of Home Affairs) | Related Laws | Water Supply Law, Local Autonomy Law | |
| Complainant | Netherlands Embassy (Proxy Complaint) | Exporting Countries | The Netherlands | |
| Subject | Elimination of requirement for domestic powdered activated charcoal for purification of water in bidding specifications | |||
| Description of Complaint | A local government that procures powdered activated charcoal as a chemical for water supply has established bidding specifications that require the powdered activated charcoal for procurement to be "Japanese products" and instruct bidders to submit "a written analysis of ingredients (specifying amounts of heavy metal ingredients) to certify the quality of chemicals in accordance with the standards of the Japan Water Works Association (JWWA)." It may be natural for the specifications to require certain levels of quality, but the requirement for the domestic products to exclude foreign products uniformly amounts to an unfair import barrier.
When the complainant asked the local government in question about the reasons for the requirement, the local government answered that it did not admit foreign powdered activated charcoal in bidding because a survey of other domestic cities found that foreign powdered activated charcoal had problems including faster sedimentation, inclusion of extraneous substances and an unavailability in tank lorries. But these problems with some foreign products cannot become the reason for excluding all foreign products. The complainant believes that the products of a Dutch activated charcoal maker do not have such problems. If the local government were to exclude foreign products having problems, it should allow foreign products in bidding and implement strict examination of products. The complainant understands that water supply is basically undertaken by local governments and managed according to conditions of local governments. But the practice of the local government in question is unfair. Accordingly, the complainant wants the central government to advise the local government in question to eliminate the requirement for domestic products in bidding specifications. |
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| Details of Measures | The ministry replied as follows. 1. The standards for powdered activated charcoal for purification of water are provided as performance standards in the ministerial ordinance for technological standards of water supply facilities. On this complaint, the Ministry of Health, Labour and Welfare told the local government in question that even foreign powdered activated charcoal, if meeting performance standards as provided in the ministerial ordinance, can be used for purification of water (Ministry of Health, Labour and Welfare (Ministry of Health and Welfare)). 2. The complaint is interpreted as requesting the central government to advise the local government in question to eliminate the requirement fordomestic products in bidding specifications. Local governments independently prepare specifications for their biddings in their own power and within their responsibilities. Unless such procedure is identified as illegal, the Ministry of Public Management, Home Affairs, Posts and Telecommunications believes that it is inappropriate to advise the local government in question to eliminate the requirement for domestic products. The WTO government procurement agreement obliges agreement participants to give national and nondiscriminatory treatments to foreign products. A requirement for domestic products in bidding specifications for procurement subject to the agreement may run counter to the agreement. However, the agreement is applied only to prefectural and designated municipal governments among Japan's local governments. It cannot be applied to the local government in question (Ministry of Public Management, Home Affairs, Posts and Telecommunications (Ministry of Home Affairs)). 3. In response to the above 1. reply, the complainant and the local government in question are proceeding with consultations. |
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| Status of Processing | Processed (April 17, 2001) | Classification | A | |
| Remarks |
A written reply was made on October 31, 2000 (Ministry of Health, Labour and Welfare (Ministry of Health and Welfare)).
A written reply was made on November 15, 2000 (Ministry of Public Management, Home Affairs, Posts and Telecommunications (Ministry of Home Affairs)). At the 15th OTO Grievances Resolution Meeting held on 16th February 2001, the Committee pointed out that as regard to the status of processing as contained in 1(2) above, the advices given to local government were considered as inappropriate. Based on Local Government Legislation Article 254 (6), it is stated as "substantially inappropriate and also against public interest". Likewise, under the same Article, the WTO government procurement agreement also maintains the same point of view. As the agreement was drafted in view of the presence of inappropriate transaction as defined under the WTO, the spirit of consensus has been ignored based on the reason that local organizations concerned is not a prefectural or designated municipal governments. Under this respect, the Ministry forwarded its reply as follows, (abstract of the Ministry's reply to the Committee's comments) In so far as the supply condition of the local government under the WTO definitional system or the objectivity of the WTO government procurement agreement is concerned, it is the Ministry's intention to announce all the opportunities, hitherto exist to the local organizations which also cover those town areas. As far as the application of the prevailing WTO government procurement agreement on the local governmental organizations is concerned, (omission) our country has made its disclosure in an annexure to the prefectural and designated municipal governments based on the findings pertaining to such issues as local governmental contractual practice and foreign enterprises entry and exist situation. (omission) Apart form the obligations on supply transactions as contained under the agreement, it is noted that the provision of other general information to meet the different conditions of the respective local governmental organizations so that decisions may be made based on the information thereof is going to be difficult. (omission) Furthermore, as far as the present case in concerned, we are aware that the local governmental organizations have taken the initiative to improve the prevailing conditions. (omission) |
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