5th Report of Market Access Ombudsman Council (March 17, 1998)

8-(1) Clarification of tariff review mechanisms

1. Complainant: Australian embassy, New Zealand embassy, the American Chamber of Commerce in Japan

2. Ministry concerned: Ministry of Foreign Affairs, Ministry of Finance, Ministry of Agriculture, Forestry and Fisheries, Ministry of International Trade and Industry

3. Background:

Foreign governments' requests concerning tariffs have heretofore been dealt with mainly through successive multilateral negotiations under GATT or WTO. Specific requests are dealt with through diplomatic channel. These requests are presented to the Ministry of Foreign Affairs, which are to be communicated to the Ministry of Finance or other ministries concerned.

Where requests from domestic businesses and others are concerned, the respective ministries concerned in charge deal with the matters raised. Ministries handling commodities make a comprehensive examination of the possibility of acceding to the request, taking relations with domestic industry into consideration, and present their decision to the Ministry of Finance as a request.

The Ministry of Finance then presents the requests received from ministries handling commodities to the Customs Tariff Council for study and has tariff changes ratified by the Diet on the basis of the Council's recommendations.

4. Complaint:

When presenting requests concerning tariffs to the Japanese government, it is difficult to determine which ministry, one handling commodities, or one handling institutional matters, to contact, and there is also a lack of transparency in how requests are handled. If necessary, the tariff review mechanism should be clarified in writing, and an independent mechanism set up which could accept requests concerning tariffs.

5. Results of deliberation:

The basic approach to negotiating with other countries over tariff rate revisions is to hold diplomatic negotiations for deciding scope of the tariff concession, in multilateral government negotiations before the WTO, whose goal is to establish a multilateral trading system. When studying tariff rate changes, countries must take their respective domestic industries and impact on employment into consideration. Accordingly, specific requests by foreign governments or by companies are not all invariably granted.

The Japanese public also wants the government to be more forthcoming with information about administrative matters and to give more transparency to government decision-making process, and the need for the government to explain clearly how it operates in making decisions is stronger than ever. This also applies to the decision-making process regarding tariffs, but there is the risk that the government could be placed at a disadvantage in tariff negotiations, if it one-sidedly pursues transparency, and accordingly it should be noted that there are limits to the transparency which is possible.

With this in mind, the following measures should be taken by the ministries concerned, taking into consideration conditions existing in other countries:

(1) The ministries concerned are taking steps to put tariff review procedures in writing within the government. This action is a positive development, and the procedures should be put down in writing and made public at an early date. The contents should be as detailed and as clear as possible, and an English translation should be prepared and published at the same time.

(2) Efforts to improve transparency in the operations of the Customs Tariff Council are being made. For example, the Council's recommendations are already being published in newspapers, meeting agendas have been available to the public since FY 1995, and from FY 1996, the Council's recommendations have been available to access through electronic mail and the Internet in public. These are commendable measures, but the ministries concerned should continue their efforts to make the Council's operations more transparent.

Government decision (March 23, 1998)

5-(1) Clarification of tariff review mechanisms

(1) Procedures for review of customs tariffs will be put down in writing at an early date and made public. The content of this publication will be made as detailed and as clear as possible. An English translation will be prepared and published at the same time.

(2) The operations of the Customs Tariff Council will be made more transparent.