3rd Report of the Market Access Ombudsman Council (March 18, 1996)

5-(1) Relaxing Regulations of Imported Housing Materials

1. Complainant: Japan Foreign Trade Council, The American Chamber of Commerce in Japan, The Tokyo Chamber of Commerce and Industry

2. Ministry concerned: Ministry of Construction; Ministry of Agriculture, Forestry and Fisheries; and Ministry of Health and Welfare

3. Background Information:

(1) JIS/JAS certification for imported housing materials (for 2 x 4 construction)

1) JIS/JAS certification for imported housing materials (for 2 x 4 construction)
The Building Standard Law provides minimum standards concerning the site, construction equipment, and use of buildings.
"Notification on Technical Standards of Wood Frame Construction" issued under the law applies to houses built by wood frame construction (2 x 4 construction) method. The notification states that the construction materials must, in principle, be those conforming to JIS (Japan Industrial Standard) or JAS (Japan Agricultural Standard). Construction materials not conforming to these standards also can be used if the Minister of Construction determines that they would not impair structural strength.
The Government Housing Loan Corporation's common construction specifications concerning 2 x 4 construction assumes that the construction meets the standards of the notification and therefore requires that in line with the provision of the notification, the construction materials, in principle, conform to either JIS or JAS. Construction materials not conforming to these standards can be used, however, if the Minister of Construction determines that such materials would not impair structural strength. The specifications are compiled by the Corporation, from the client's point of view, as a means of consumer protection where the contents of the construction contract can be made concrete, and from the architect's and contractor's point of view, as a convenience where they need not prepare their own specifications from scratch. Clients (applicants) or architects/contractors may use the specifications if necessary. The specifications provide as examples common materials and construction methods in the country. The specifications can be modified, excluding the parts pertaining to the construction-related laws and the Corporation's requirements, by deleting some parts or adding other materials or construction method according to individual designs. Furthermore, the loan can be obtained from the Corporation, without using the common construction specifications as long as the construction conforms to the provisions of the notification.

2) JAS system
JAS is the system where, based on the JAS Law, products are inspected (graded) and are allowed to bear the JAS mark if they meet the JAS specifications. The system is intended to improve the quality of agricultural and forest commodities, rationalize production, and simplify and ensure fairness in transactions. Grading is performed by Registered Grading Organizations which meet the standards stipulated by the Minister of Agriculture, Forestry and Fisheries.
Approved and permitted plant system is established under the JAS grading scheme. Since 1983, foreign manufacturers have been able to have their plants approved and permitted as domestic manufacturers can. In addition, the designated foreign testing organization (FTO) system was launched in 1986 to facilitate the approval and permission of foreign plants and the grading of products produced at these plants. Since then, the inspection data prepared by FTO have been utilized.

(2) Certification for exterior wall and roofing materials as noncombustible materials

The Building Standards Law provides fire protection standards concerning exterior wall and roofing materials to ensure safety of buildings against fire. If the construction materials used for these parts demonstrate a certain level of fire preventive property and are found to satisfy these standards, they can be used as fire preventive materials. Once materials are certified as fire-preventive materials, the materials, in principle, need not be tested again. Note that "fire preventive material" is a general term referring to any one of noncombustible material, quasi-noncombustible material, fire retardant material, or quasi-fire retardant material. Noncombustible material demonstrates the highest fire preventive property of these materials.

The Government Housing Loan Corporation, due to its mission to support the construction of high-quality homes along with the housing policies and due to its need to secure its loan assets as a financial institution, stipulates construction standards of eligible houses for its loans. Among these standards, there are regulations concerning the structure of roofs, which provides that the roof must be made of or covered with noncombustible materials. Therefore, roofing materials used for eligible houses for the Corporation's loan must be certified as noncombustible ones by the Minister of Construction. In addition, while, the Building Standard Law requires that the roofing materials be noncombustible only in certain areas, the Corporation requires in its construction standards that the roofing material be noncombustible regardless of areas.

(3) JWWA (Japan Waterworks Association) mark on plumbing fixtures and designated contractor system

According to Article 16 of the Waterworks Law, water suppliers (e.g. city, town, village) may reject application for their services contract or suspend their services if the structure and materials of plumbing fixtures (i.e. service pipe branched from their distribution pipe and water supply equipment directly connected to the water service pipe) do not meet the standards.

Under the above circumstances, each water supplier stipulates in his water supply ordinance (water supply regulations) that the structure and materials of plumbing fixtures usable for his waterworks should be "product meeting JIS, products meeting JWWA standard, products that have received type approval of JWWA, or other products deemed appropriate by the water supplier," for example. Based on such regulations, the association of water suppliers, JWWA has set type approval standards for water supply equipment which have no provision in JIS. The association registers the types, inspects the products to determine if they conform to the registered type, and indicates to users that the products have been inspected. The effective period of the registration is set to be three years.

Furthermore, under the water supply ordinances, water suppliers either designate or register contractors that can properly work on plumbing fixtures based on such designation criteria as "those who employ technicians certified by the city and have business offices in the city" (designated contractor system).

Although the sections on plumbing and distribution facilities works in the Government Housing Loan Corporation's specifications quote the JIS and JWWA specifications, these specifications can be modified if necessary, depending on designs.

4. Complaint:

The complainant claimed that domestic regulations are restricting the use of imported housing materials and are obstacles to reducing prices of imported houses, and raised the following issues.

(1)
1) According to the Ministry of Construction notification, constructing a house of 2 x 4 construction requires, in principle, use of nails and other hardware with JIS certificate and lumber with JAS certificate. This regulation does not apply to a house of conventional construction.
The Government Housing Loan Corporation applies JIS more pervasively than the Ministry of Construction, which may result in little use of nearly all imported materials. For example, the Corporation stipulates the type of JIS-certified nails used for wood frames, the interval, pattern, and even the quantity of nails hammered. The CN90 nail stipulated by the Corporation, for example, is not only expensive, but is too long and too large in diameter for 2 x 4 construction (it sometimes causes the lumber to crack). Likewise, the Corporation prohibits the use of American-made hardware. Because of the Corporation's regulation, American-made connectors used for panels must be replaced with Japanese-made connectors before the panels are used in Japan.
2) Use of lumber, plywood, structural lumber, etc., with JAS mark is a requirement for the Corporation's loan. However, JAS materials are expensive and are limited to those that are certified at certified plants. In addition, it is difficult to acquire JAS certification in the United States. Furthermore, acquisition of JAS certification requires both extensive amounts of money and time.

(2) Since asphalt-roofing material is not an approved construction material in Japan, the home with the material is not eligible for Corporation's loan and is thus preventing the import of the material. It is also difficult for imported external wall and roofing materials to get certified as noncombustible materials.

(3) The restrictions on the connecting water supply equipment are severe. For example, waterworks contractors will not accept water supply equipment without a JWWA mark and only designated waterworks contractors can work on waterworks systems. Another problem is that the JWWA mark is a condition for eligibility for Corporation's loan.

As for the issues described the above, the ministry concerned should allow in Japan the use of products that can be used in foreign countries, for example, by introducing the mutual recognition system (e.g. with standards of WWPA (Western Wood Product Association), APA (American Plywood Association)). At the same time, the foreign products should be made eligible for Government Housing Loan Corporation's loan. Furthermore, the ministry concerned should simplify and expedite inspections in Japan.

5. Results of Deliberation:

The issues of imported housing materials are generally seen as the symbol of the closed nature of Japanese market. Taking account of the large price discrepancy between Japan and abroad, it is necessary to expedite the international harmonization of specifications and standards. In addition, Japan should take the initiative in accepting materials from foreign countries.

(1) JIS/JAS certifications for imported housing materials (for 2 x 4 construction)

Since the notification of the technical standards for 2 x 4 construction was issued in 1982, containing the detailed standard of the lumber, plywood, nails, etc., the constructors have gained much know-how. Also there is little ground for such claims as that Japan is hotter and more humid than the United States. Consequently, it is necessary to revise the notification significantly.

At present, as for 2 x 4 construction, when using products not conforming to Japanese specifications and standards such as JIS and JAS, it is necessary to prove that using these products will not impair structural strength, and obtain the certification of the Minister of Construction. For a business importing small number of houses in different types as a package, this procedure is a large burden both in terms of cost and time. In reality, the specifications are said to be serving as the de facto mandatory specifications.

Therefore, it is necessary in the meantime to incorporate the specifications for lumber, plywood, nails, etc. that are generally approved abroad into the Japanese system. The ministry concerned is currently studying and deliberating together with foreign specification /certification institutions whether construction materials conforming to foreign specifications satisfy the performance required by the Building Standard Law. Completing their deliberation, the ministry will implement consecutively the changes. In this process,

1) the study and deliberation under way should be concluded as soon as possible,
2) if the house is generally used abroad, allow the materials used for that house to be imported as a package and
3) even if careful examination is required for accepting the specifications, do not wait for requests from overseas institutions, but the ministry concerned should actively solicit overseas institutions for request and collect data on its own for materials that are in great demand.

It is necessary for the ministry concerned to assume an positive stance in certifying construction material specifications that are common abroad.

In addition, an overall revision should be made so that the current method where specific specifications are listed is replaced with the method where performance-based standards necessary for structural strength are indicated and the use of construction materials that have been appropriately certified by third parties to satisfy the standards is allowed.

The complainants claim that the common specifications of the Government Housing Loan Corporation are considered at construction sites to be even more demanding than the standards of the Ministry of Construction, and the specifications are being employed as essential requirements. Taking the claim seriously, it is necessary to consider, as the ministry concerned has stated, undertaking a measure in early part of fiscal year 1996 to inform thoroughly those concerned that the structural standards are absolutely the same whether in the common specifications or the Ministry's standards. In this process, it is necessary to take the followings into consideration:

1) to inform thoroughly those concerned that specifications other than the common specifications can be used,
2) to express more clearly that the specifications for materials stipulated in the common specifications other than those covered by the notification can be modified unless the modifications violate the Building Standards Law, and
3) for the common specifications to be also accommodated to the revision if the notification is revised to a performance-based standard format.

(2) Certification of exterior wall and roofing materials as noncombustible materials

The ministry concerned plans to abolish the requirement for the Government Housing Loan Corporation's loan that the roofing materials be noncombustible in April 1996. This step will allow the use of asphalt roofing materials as construction materials for houses eligible for the Corporation's loans without being certified by the Minister of Construction, unless the houses will be built in areas under a legal restriction, such as in Quasi-fire Protection Districts. All those concerned should be informed of this change.

As for the noncombustible material certification, the ministry concerned has been certifying even imported materials as noncombustible materials if the ministry has confirmed they can demonstrate a certain degree of fire preventive property in a test equivalent to the one conducted on domestic materials. In addition, the ministry concerned is elucidating the procedure for designating overseas testing laboratories to promote the acceptance of test results from overseas. In the future, it is necessary for the ministry concerned to inform actively related overseas organizations in order to promote the acceptance of foreign test data, and to facilitate the certification procedure in Japan in order to promote the designation of overseas testing laboratories.

In the interest of international harmonization of standards, introduction of the principle of self responsibility, and expansion of freedom of choice in the private sector, the ministry concerned plans to replace the current system mainly of prescriptive regulations with, in principle, the system of performance-based regulations, which will not discriminate against foreign parties. To this end, the ministry concerned plans to establish the framework for the new building regulations within fiscal year 1996. In studying this framework, the ministry concerned should take into full account the points mentioned above and should take active measures without waiting for legal amendments. From this point of view, it is commendable that the ministry concerned has decided to change the building regulations of the structure of 2 x 4 construction houses, for which there has been strong demand both from within Japan and abroad, to a performance-based regulations.

(3) JWWA marks of water supply equipment and designated contractor system

The ministry concerned is considering the following improvement measure concerning the regulation of plumbing fixtures.

First, as for the designated contractor system, in order to prevent the designation requirement for a contractor from becoming an obstacle to entry into the market, and to make it objective, rational, and uniform throughout the country, the ministry concerned is making efforts so that a partial amendment of the Waterworks Law will pass at the current session of the Diet. The amendment includes such steps as the creation of a plumbing fixtures works chief technician system, elucidation of the designation requirements for plumbing fixture contractors, etc.

As for the type approval and inspection system, the ministry concerned plans to expedite the Deregulation Action Plan (March 1995) as much as possible and review the system to make it more rational within fiscal year 1996, such as by elucidating the standards of water supply equipment structure and materials, employing performance-based standards, simplifying and rationalizing inspection system, harmonizing the system with international systems, and abolishing redundant inspections by water suppliers. Then, from fiscal year 1997, the ministry concerned plans to put the changes into effect. To make these changes possible, the ministry concerned plans to take a prompt measure for improving the JWWA and asks local governments to remedy any irrational points. The investigation of determining which foreign specification certification data can be accepted will be conducted over three years from fiscal year 1995 in order to contribute to these steps.

The steps described above will improve market access for plumbing fixtures and are noteworthy. At the same time, the following points should be considered and executed at an early stage.

Basically, the ministry concerned should consider a measure to accept those water supply equipment approved for general use overseas, without subjecting them to type approval or inspection in Japan.

In this case, if the product has been certified by a certifying institution overseas based on standards with no particular problems, the product should be approved for use in Japan. In addition, even if a product must be inspected, when the company's quality control system is reliable (e.g. the company has been certified for ISO 9000 series), the self-inspection should be accepted. Also a sampling inspection should be allowed in the inspection conducted by a third party institution. In essence, the individual inspection required for the type approval under the current system needs a significant rationalization.

Government decision (March 26, 1996)

5-(1) Relaxing Regulations of Imported Housing Materials

(1) The specifications that are generally approved for 2 x 4 construction housing materials will be incorporated into the Japanese system. In this process, the study and deliberation under way with the foreign specification/certification institutions will be concluded as soon as possible and materials of houses generally used abroad will be allowed into Japan as a package. The ministry concerned will actively solicit overseas institutions for request and will collect data on its own for materials that are in great demand. The building regulations of the structure of 2 x 4 construction method will be revised to performance-based regulations. The third-party certification system will be introduced to the certification of performance-based standards.

A measure will be studied soon and taken by the beginning of fiscal year 1997 to thoroughly inform those concerned that the structural standards of the Government Housing Loan Corporation's 2 x 4 construction common specifications are absolutely the same as the standards under the Building Standard Law. If the notification on 2 x 4 construction is revised to performance-based standard format, the specifications will also be accommodated to the revision from the fiscal year 1997 version.

Designating overseas testing laboratories will be promoted in order to facilitate the certification as noncombustible materials of exterior wall and roofing materials. At the same time, the requirement for the Government Housing Loan Corporation's loan will be abolished that the roofing materials be noncombustible.

Furthermore, the framework for the new building regulations will be established within fiscal year 1996 to change the building regulations to a performance-based regulations.

(2) As for regulations on plumbing fixtures, a partial amendment of the Waterworks Law will pass at the current session of the Diet including such steps as the creation of plumbing fixtures works chief technician system, elucidation of the designation requirements for plumbing fixtures contractors, etc.

The current type approval and inspection system for water supply equipment will be abolished, and the following measures will be taken. The preparations necessary for the measures will be made within fiscal year 1996 aiming at implementing the measures in fiscal year 1997.

* Elucidate Japanese standards for water supply equipment structure and materials, and employ performance-based standards.
* Eliminate the requirement that water supply equipment must undergo type approval and inspection before being used as well as elucidate Japanese standards, i.e. receiving a third-party certification is not an obligation.
* As for the inspection for the third-party certification, accept the self-inspection system. Also, allow a sampling inspection conducted by a third party institution. In essence, rationalize significantly the individual inspection required for the type approval under the current system.
* Promote mutual recognition with overseas certifying institutions to harmonize with overseas standards.
* Request water suppliers for necessary reviews such as abolishing redundant inspections of products that meet the country's standards.

Follow-up (May 12, 1997)

5-(1) Relaxing Regulations of Imported Housing Materials

(1) The ministry has discussed with related foreign organizations in the U.S., Canada and other countries to promote mutual recognition on building standards and has taken steps to certify building materials used for wood frame construction which meets foreign standards and to allow imports of building materials for houses in common use abroad as a package. The ministry is actively collecting opinions from foreign organizations and information on foreign standards and certification system. In addition, performance-based standards for technical structural standards of wood frame have been established since March 1997 in revision of the Notification.

The common specifications of the Housing Loan Corporation for FY1996 which are stipulated under the Building Standards Law have been clarified, to make it clear that loan standards for structures in the common specifications are the same as those under the Building Standards Law. Additionally, it has been made clearer that specifications for materials not listed in the common specifications may be modified as long as they do not contravene the Building Standards Law. It has also been made clear that specifications other than the common specifications may be used (May 1996). Specifications will also be changed, in conjunction with the change in the listings (June 1997).

(2) Due to changes in the building standards for houses built using Housing Loan Corporation loans, the requirement for non-combustible roofing materials was abolished (April 1996) and steps were taken to inform the public of this in guides to using Housing Loan Corporation loans.

To smooth certification of fire preventive materials such as non-combustible materials, the ministry has drawn up "Guidelines for acceptance of test results" and "Guidelines for Designating Testing laboratories." Based on these, the ministry has made it possible to accept test results from both Japan and abroad. It is currently contacting concerned organizations in the U.S. and Canada, and other and has accepted test data from Canada and Korea based on the "Guidelines for acceptance of test results" (October and November, 1996).

(3) The ministry will review the regulatory systems of Building Standards Law with a view to replacing prescriptive standards which designates in detail materials specifications, and products standards to be used, with standards which designate required performance and establish a new regulatory framework, based on the reports of the Building Council in March 1997. The ministry will now undertake the work toward reviewing the law and is planning to submit a draft to the regular session of the Diet in FY1998.

(4) The Waterworks Law was changed (in June 1996 and partially implemented) to establish a chief plumbing technician system, clarify requirements for designation as a plumbing contractor, and make uniform provisions nationwide.

The following measures were taken concerning type approval and inspection for plumbing fixtures:

1) Through the passing of a government ordinance (March 1997) changing some provisions for application of the Waterworks Law and of a ministerial ordinance (March 1997) concerning standards for the structure and quality of materials for plumbing fixtures, the standards for the structure and quality of materials for plumbing fixtures was clarified and performance-based standards were established (to be implemented in October 1997).
2) Due to clarification of standards through the passing of a ministerial ordinance and abolition of type approval by the Japan Waterworks Association (JWWA), it will no longer be obligatory to undergo third-party certification.
3) The expert committee on plumbing fixtures of the waterworks subcommittee of the Living Environment Advisory Council ("the expert committee," hereafter) studied specific ways of implementing inspections by third-party certification organizations, including the introduction of a self-inspection system and sampling inspections and issued a report on this (March 1997).

Based on the report's recommendations, guidelines for third-party approval will be established and the concerned parties informed.

4) After studying the standards in use in the United States and other countries and harmonizing Japanese standards with international standards, the ministry issued an ordinance concerning standards for structure and materials quality of plumbing fixtures after notifying the WTO.

A budget was also provided for promoting mutual certification with foreign certification organizations from FY1997.

5) The expert committee's report clearly stated that no duplicated inspections for products meeting Japanese standards should be carried out. This will be made known and this will be further enforced through directives issued in the future.