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

5-(2) Improvement of Procedures of Foreign Construction Materials Quality Assessment and Verification System

1. Complainant: Korea Foreign Trade Association

2. Ministry concerned: Ministry of Construction

3. Background Information:

In public works in Japan, the quality of materials used for the works is stipulated by specifications or design drawings. Therefore, unless a material satisfies the specifications or design drawing, it cannot be used for the works.

In civil engineering works ordered by the Ministry of Construction and its related public corporations the "civil engineering common specifications" of each ordering institution stipulates that the quality of principal materials must satisfy or exceed the corresponding specification (e.g. JIS).

Business of Foreign Construction Materials Quality Assessment and Verification entails the assessment and certification institutions (Public Works Research Center and Japan Testing Center for Construction Materials) checking the imported materials to see if they conform to the material quality regulations specified in the civil engineering common specifications on behalf of the ordering party with a view to carrying out the quality confirmation procedure accurately and promptly when using construction materials produced overseas in the domestic construction market, ensuring favorable quality of construction products, and contributing to the smooth use of foreign materials. A contractor can obtain an approval to use the material by submitting to the ordering party the certificate issued in advance by the assessment and certification institution.

This business was conducted on a trial basis since June 1993 and, in response to the demand to reduce price discrepancies between Japan and abroad and promote deregulation, in June 1994, the following reforms were made to further utilization of materials:

1) Whereas the certification was valid only in specified works during the trial period, after the reform, the certification was applied to the quality of materials used in any works, during the effective period (1-year) of the certification.
2) Whereas the applicant for quality assessment and certification was limited to the contractor of the works during the trial period, the reform enabled the manufacturer of the construction material and an agent assigned by the manufacturer or works contractor to apply for the quality assessment and certification as well.
3) Whereas only 18 items out of cement, steel materials, etc., stipulated by JIS were subject to the quality assessment certification during the trial period, after the reform, the coverage was extended to 39 items. As for materials not included in the 39 items, any materials would be eligible for the business on demand if the quality is stipulated in the civil engineering common specifications, in principle.
4) Whereas the sum of the application charge and assessment and certification charge was ¥1,000,000 per item during the trial period, after the reform, it was lowered to ¥500,000.

The assessment is conducted on quality performance, quality control system, and transportation and storage systems.

4. Complaint:

(1) Business of Foreign Construction Materials Quality Assessment and Verification was launched to facilitate the use of construction materials produced abroad and is believed to be a desirable system.

However, the assessment is conducted with no distinction between companies that have obtained the ISO (9000 series) certification and those that have not. In case of the former, the contests of the documents that they must submit are almost identical to those of ISO certification. Therefore, Foreign Construction Materials Quality Assessment should be omitted for products of companies with the ISO certification, and treated in the same manner as those products that have obtained certification by the assessment.

(2) The one-year term of validity of the assessment and certification makes it necessary to renew the verification for the same construction materials every year. This causes a burden because many pubic works continue for more than one year. Construction materials such as cement do not incur a deviation in quality from product to product, which is quite different from agricultural products. Since the product of one factory is of the same quality and specifications, it is a waste of human and physical resources to review them every year. Therefore, the term of validity of the review certification should be prolonged from the current one year to five years or longer, or to the average length of public works.

(3) The expense necessary for the assessment (¥500,000 of review fee and ¥100,000 of renewal fee) is excessive. The charge for assessment should be lowered.

5. Results of Deliberation:

Since public works are ordered by the country and other public institutions, their orders should be models in facilitating access for foreign companies so that there will be no criticism from abroad. In this respect, it is extremely important to improve the assessment and certification business and promote its use. This will also contribute to reducing the cost of public works by accepting materials that are less expensive but are of comparable quality from abroad. Therefore, the ministry concerned should take the following steps.

(1) The ISO 9000 series certification guarantees the quality management system of the certified company or factory and does not indicate that products manufactured by the company or factory satisfy a certain set of specifications. Therefore, whether a company has acquired the certification or not, it is necessary, in principle, for its overseas construction material to obtain the quality assessment and certification. However, the ministry concerned omits the part of the assessment under the current business that pertains to quality management system, as far as products of ISO-certified companies are concerned. The ministry concerned should study whether there are those specifics of the assessment that are common to ISO certification in early part of fiscal year 1996, and omit any parts of the assessment if possible.

As for products such as cement for which there is a JIS specification but is usually neither produced nor delivered as a JIS product, the ministry concerned decided that if a mill sheet (a quality guarantee) certifying that the quality is of JIS or higher is submitted along with the product, it may be used as with domestic products without undergoing the required quality review and inspection. This decision was notified to relevant institutions in September 1995 to harmonize the handling of foreign products with domestic products. Also it is important to inform work contractors of such simplified in procedures.

(2) The term of validity quality assessment and certification should be extended as much as possible. There is little meaning in conducting a review every year on construction materials whose quality remains constant like that of industrial products, unless there is a special reason such as a change in the quality performance of the material used in public works along with a change in JIS. Having received the complaint, the ministry concerned is considering prolonging the term of validity of the certification from the current one-year to approximately three years from fiscal year 1996.

(3) The charge for assessment should be lowered to reflect the minimum amount of necessary expenses, taking into account the roles of the assessment and certification institution as a public corporation, and in order to promote entry by foreign businesses. In particular, the charge should be further lowered for products of ISO 9000 series certified companies to reflect the omitted assessment items. Having received the complaint, the ministry concerned is considering discount of the charge for assessment by the maximum of 40% from fiscal year 1996.

It is hoped that through these steps, the business of assessment and certification will be used by a greater number of businesses and will promote the entry of foreign businesses into the public works market.

Government decision (March 26, 1996)

5-(2) Improvement of Procedures of Foreign Construction Materials Quality Assessment and Verification System

It will be studied whether there are those specifics of quality assessment and certification that are common to ISO certification in early part of fiscal year 1996 and any parts of the assessment will be omitted if possible. From fiscal year 1996, the term of validity of the certification will be prolonged from the current one year to approximately three years, and the charge for assessment will be discounted by the maximum of 40%.

Follow-up (May 12, 1997)

5-(2) Improvement of Procedures of Foreign Construction Materials Quality Assessment and Verification System

After studying overlap in the content of quality inspection and certification operations for foreign construction materials and those for ISO certification, the ministry omitted inspection for manufacturing and quality control items, in the case of factories having obtained ISO 9000 certification.

The period of validity of quality inspection certificates was extended from the current one year to three years, and inspection fees will be lowered a maximum of 40%. This change was implemented on September 27, 1996, under the "Changes to particulars for quality inspection and certificates for foreign construction materials."