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| 6th Report of Market Access Ombudsman Council (March 16, 2000) |
1. Complainant: New Zealand Embassy
2. Ministry concerned: Ministry of Agriculture, Forestry and Fisheries
3. Complaint:
Recent measures in the context of the revised Basic Agriculture Law appear to envisage labelling of food in order to promote demand for domestic agriculture products. In addition, due to the revised JAS Law, mandatory country of origin labelling, which was previously required for nine specific food items, is to be necessary for all fresh foods.
We are concerned that these expanded labelling requirements are being taken in the context of the revisions to the Basic Agriculture Law which explicitly aim to increase demand for domestic agriculture products, and that the new measures could be used in practice to discriminate in favour of domestic food products.
The report of the Investigative Council on Basic Problems Concerning Foods, Agriculture and Rural Areas, submitted to the Prime Minister on 17 September 1998, and MAFF's 'Fundamental Principles of Agricultural Policy Reform' of December 1998, are explicit about the objective of increasing domestic agricultural production and food self-sufficiency, and that consumers are expected to make efforts to contribute to achieving these goals. The two documents indicate that in this context consumers will be encouraged to adopt "Japanese-style dietary habits" and labelling will be expanded in order to enable consumers to make "a good choice of products".
Given this background, certain provisions in the revised Basic Agriculture Law are of concern. In particular,
Article 12 which says that "Consumers shall be encouraged to ... be more positive in improving their dietary patters.",
Article 16. 1 which requires that "The State shall take necessary measures such as ...proper food labelling in order to secure food safety, improve good quality, and help consumers make prper selections", and
Article 16. 2: "The State shall take necessary measures such as developing guidelines for a healthy dietary pattern...in order to promote better dietary patterns and the effective use of agricultural resources."
According to the 'Outline of Principles of New Measures for Dairy Farming and Industry' paper (March 1999) the word "milk" may only be used for (dairy) products whose main raw material is liquid milk (Section III.4 (1)). The paper is explicit that the purpose of this measures is "to expand the consumption of domestic milk".
Given this background, we trust that the Japanese authorities will appreciate that New Zealand has an understandable concern that the new food labelling system has the potential to be misused to discriminate against imported products.
We therefor request:
(1) Confirmation that the new labelling system will not lead to discrimination in practice against imported products;
(2) that the proposed restriction on the use of the term 'milk' (see above 'Outline of Principles of New Measures for Dairy Farming and Industry' paper) not be applied in a way that disadvantages use of imported dairy product inputs such as SMP;
(3) that instead of mandatory country of origin labelling (which may bring less favourable treatment in practice to imported products), producers be permitted to identify the country of origin/area of origin of fresh foods.
4. Corresponding Policy of the Ministries concerned:
Portions concerning the JAS Law
(1) Circumstances of Revision of JAS Law
The Ministry of Agriculture, Forestry and Fisheries (MAFF) had set up the Committee for Basic Problem in the Research Committee for Agriculturural and Forest Products Standards in September 1997. The Committee for Basic Problem published the report"Review of Labelling and Legal System for Food etc.(conclusion)"in October 1998, based upon results of seven-times meetings and public comments. The report indicated the development of labelling standards for all items which consumers need from the view of consumer protection, the response to consumers' and producers' needs on origin labelling for perishable foods, and the promotion of alighnment of labelling and standards to international standard.
In December 1998, the Office of Market Access (OTO) also requested to take the following measures in the report by the Research Committee for Agriculturural and Forest Products Standards toward further improvement of market access;
1) To carry out the contents of the report steadily, current standards should be revised and their implementation should be improved, and immediate actions should be taken in cases where institutional review is needed.
2) Based on the consumers' needs, existing guideline for labelling of origin on marine products should be reviewed, if necessary, these measures should be based on a law.
The revised JAS Law, came into effect as of 1 in July 1999, was prepared necessary revision based on the report of the Research Committee and conclusion of the Office of Market Access (OTO).
(2) Origin Labelling in quality labelling standard for perishable products
Under the existing standard, origin labelling for perishable products are mandated for 9 items such as broccoli and onion. In this revision, coverage of origin labelling (country or place) will be extended to all perishable products (agricultural, livestock and marine products) to contribute consumers' rational choice for not only imported products but also domestic ones. How consumers choose products based on origin labelling may depend on the extent of effort in price (reduction) and quality improvement among products origin including foreign countries conducted so far or from now. Therefore, we would not intend to give any advantages to domestic products only and not to provide discriminatory treatments against imported products.
Many of imported products can maintain profitable status with own advantages in quality, as Japan is the biggest importing country in the international society.
(3) Future Schedule
On the establishment of mandatory quality labelling standards for all perishable foods, transparency will be maintained through the necessary procedures such as collection of public comments and notification to WTO by April 2000.
Portions concerning the Principle
(1) The Principles of the New Measures for Dairy Farming and Industry stipulate, Considering that appropriate labeling helps consumers to choose appropriate products, the rules for labeling of milk varieties will be reformed (e.g. the products that processed from mainly from raw milk shall be labeled "gyu-nyu" in principle.) in order to expand the consumption of domestic milk varieties".
(2) "Milk varieties (gyu-nyu-rui)" used in this context means a generic term for "normal liquid milk (gyu-nyu)", "processed milk", "milk beverage", "partially skimmed milk" and "skimmed milk" in "Ministerial Ordinance Concerning Compositional Standards, etc., for Milk and Milk Products" and the related rule. It is obvious that "gyu-nyu-rui" also covers either imported products or products that are manufactured from imported ingredients in Japan, if they are classified into one of "gyu-nyu-rui".
(3) For appropriate labeling of "gyu-nyu-rui", "the Fair Trade Rule for Labeling of Drinking Milk" shall be amended and it is now at procedural process. The purpose of this revision is to expand total consumption of "gyu-nyu-rui" by preventing consumers from being misled or confused. We do not intend to discriminate in favor of the products processed from domestic dairy products.
(4) In addition, note that total demand for "gyu-nyu-rui" is expected to expand by the amendment of the labeling rules, and demand for skimmed milk powder as raw material for "gyu-nyu-rui" is estimated to grow. Therefore, the import of skimmed milk powder from New Zealand, the one of major exporter of it to Japan, is thought to be steady.
(For reference)
The word of "milk" in Japanese implies "gyu-nyu", "miruku" and "nyu". Under the current labeling rule, the categories of "normal liquid milk (gyu-nyu)", "processed milk" and "milk beverage", shall be labeled just as each name on a retail package. On the other hand, the term of "gyu-nyu" can be used as a brand name for not only "gyu-nyu" but the products categorized in "processed milk" and "milk beverage", even if raw milk is not used as its raw materials, once those are complied with the compositional criteria. Hence, this causes confusion among consumers.
Under new labeling rule, the term "gyu-nyu" is not allowed to use as a brand name of processed milk and milk beverage in case where they contain raw milk as raw material less than 50% in volume. However "miruku" and "nyu" may be used as a brand name as before.
5. Remarks
The complainant understood the policies concerning the new food labeling system and mandatory labeling of place of origin for the time being. The two countries agreed to continue discussing labeling of milk products at bilateral meetings to exchange information on dairy product supply and demand.
The Fair Trade Rules for Labelling of Drinking Milk mentioned in the above policies of the ministry were amended on December 22, 1999.