OTO No.620

OTO No.	620	Classification	MOF-114, MAFF-91
Date of Acceptance	October 31, 2000	Respective Office Receiving Complaint	Cabinet Office (Economic Planning Agency)
Responsible Ministries	Ministry of Finance, Ministry of Agriculture, Forestry and Fishery	Related Laws	Customs Law, Customs Tariff Law
Complainant	Tokyo Chamber of Commerce and Industry (Proxy complaint)	Exporting Countries
Subject	Flexible management of the pre-permission delivery system for products subject to tariff quotas
Description of Complaint	Import quotas are set for the first and second halves of every fiscal year. If a quota is fulfilled as the end of each half-year period approaches, the primary tariff ceases to be applicable. The complainant, who imports malt, wants the government to allow importers receiving tariff quotas continuously to take delivery of imports before submitting tariff quota applications in October and April to sufficiently cope with sharp demand and supply fluctuations that can stem from introduction of new products and other developments. Such pre-permission delivery should be made within quotas planned for applications while deposits amounting to secondary tariffs should be set aside.
Details of Measures	The ministries replied as follows: (1) In principle, importers cannot take delivery of imported cargoes before import permission (Article 67, Customs Law). If import permission is delayed for reasons such as the one that a considerable number of days are required to determine tax standards, however, importers can take delivery of imported cargoes before import permission by submitting deposits amounting to tariffs on the imports and receiving approval by customshouse chiefs (Article 73, Customs Law). Laws for imposing customs should be those available upon import declaration (Article 5, Customs Law). Therefore, applicable tariffs for the pre-permission delivery system are those that are based on laws available upon import declaration rather than import permission. If importers, who have filled their assigned quotas for the first half of a fiscal year, make declarations of imports subject to quotas and permission in the second half, only secondary tariffs are applicable for calculating customs. (2) The tariff quota system applies primary tariffs (zero or low rates) to imports within quotas to ensure supply of cheap imports for purchasers, while setting secondary tariffs (higher rates) on imports beyond quotas to help protect domestic producers. Tariff quotas are determined for certain periods under the "Ordinance on Tariff Quota Systems" based on demand of purchasers, fluctuations in domestic production and other domestic demand and supply conditions. In view of the characteristics of tariff quotas, we believe that it is not appropriate to admit imports (delivery) for primary tariffs beyond quotas within a certain period of time.
Status of Processing	Processed (December 12, 2001)	Classification of Action	D
Remarks	A written reply was made on November 14, 2000.