Japan WT/TPR/S/107
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II. TRADE POLICY REGIME:  FRAMEWORK AND OBJECTIVES
(1) TRADE POLICY OBJECTIVES
1. The overall aim of Japan's trade policy, which has remained unchanged since its previous
Trade Policy Review, is to ensure the country's long-term prosperity and growth by promoting
business activities in Japan and at an international level.  To this purpose, Japan aims to further
strengthen the multilateral trading system while, at  the same time, linking and integrating with other
countries and regions.
2. With a strong preference for multilateral trade liberalization, Japan grants at least MFN
treatment to all countries except Andorra and North Korea;  it has traditionally avoided regional and
bilateral preferential trade agreements.  Japan supports the "open regionalism" approach of the Asia-
Pacific Economic Cooperation (APEC) Forum, and pa rticipates in other regional fora such as the
Asia-Europe meeting (ASEM) and the ASEAN+3.  However, it was not party to any preferential
trading agreement until recently;  this changed with the signing of a bilateral free-trade agreement
with Singapore in January 2002.  Japan has also  proposed an "initiative for a Japan-ASEAN
Comprehensive Economic Partnership", which would encompass broader issues than conventional
free-trade agreements, such as science and technology, human resource development, and tourism.Japan points out that although regional arrangements are being pursued, it has by no means
abandoned multilateralism, and that regional and bilateral trade agreements are useful tools for market
liberalization and economic structural reform, complementing multilateral efforts as long as they are
consistent with WTO rules.
1  In this context, the authorities maintain that Japan's bilateral agreement
with Singapore will be fully consistent with WTO rules.
3. Japan continues to grant preferential treatment to products from certain developing and least
developed countries under the Generalized System of Preference (GSP) scheme.  The GSP, which iscurrently valid until 2011, is extended to 149 countries and 15 territories;  a list of 47 least developed
countries qualifies for further preferential treatment (e.g. tariff-free and quota-free treatment).
(2) T
RADE POLICY FORMULATION AND EVALUATION
(i) Trade policy formulation and administration
4. In January 2001 the Government enacted a number of new laws to bring about administrative
reform in Japan.  The main goals of the reforms were:  to establish a system with more effective
political leadership;  to restructure national administrative organs;  to introduce greater transparency
in administration;  and to drastically streamline the Central Government (Box II.1).
5. Despite the administrative reform measures taken, according to the authorities, trade policy
formulation in Japan has not changed significantly since its previous Review.  Trade-related issuesremain the responsibility of a number of ministries, including the Ministry of Foreign Affairs
(MOFA) and the Ministry of Economy, Trade and Industry (METI).
2  Other ministries and agencies
                                                     
1 MOFA (2001).
2 There are currently 12 Ministries instead of 22 at the time of the previous Review in 2000.  These are:
the Prime Minister's Office;  the Cabinet Office;  Ministry of Agriculture, Forestry and Fisheries;  Ministry ofEconomy, Trade and Industry;  Ministry of Education, Culture, Sports, Science and Technology;  Ministry ofthe Environment;  Ministry of Finance;  Ministry of Foreign Affairs;  Ministry of Health, Labour and Welfare;
Ministry of Justice;  Ministry of Land, Infrastructure and Transport;  and the Ministry of Public Management,
Home Affairs, Posts and Telecommunications.  The METI, which was changed from the Ministry ofWT/TPR/S/107 Trade Policy Review
Page 14
with responsibility for sectoral issues are also involved in trade policy formulation and
implementation.  The overall coordination of trade policies, including ensuring consistency, remains
the final responsibility of the Cabinet, with input from advisory councils such as the Council on
Economic and Fiscal Policy, which was created in the Cabinet Office as part of the administrative
reforms.  Trade and other policy issues are also debated in various Committees, including Standing
Committees in the Diet and the Committees of the Liberal Democratic Party.3
(ii) Evaluation of trade-related policies
6. In addition to the independent Board of Audit, Mi nistries evaluate their own trade-related  and
other policies.  Under the reform programme introduced in 2001, each office and Ministry is required
to evaluate the effects of its policies before and after implementation and to utilize the results of this
evaluation in the planning and drafting of additional policies (Chart II.1).4  Some of these evaluations
have been made publicly available and thus enhance public accountability.5  In addition to evaluations
by individual ministries, the reform programme calls for the establishment of a ministry in charge of
policy evaluation and other affairs (Somusho), which, along with the Committee for the Evaluation of
Policies and Independent Administrative Institutions, will provide an independent assessment of the
policies implemented by these ministries and other agencies.6
                                                                                                                                                                    
International Trade and Industry (MITI) in January 2000, is charged with "boosting the economic vitality of the
private sector, promoting the smooth development of ex ternal economic relations and ensuring a stable energy
supply as part of the broad responsibility of facilitating economic and industrial development" (METI, 2000).
3 It is reported that, under a well established convention, the Liberal Democratic Party committees
debate (and can veto) major policies before they are submitted to the Cabinet for approval (Asahi Shimbun[Online].  Available at: www.asahi.com/english/business/K2002022200547.html [22 April 2002]).
4 In January 2001, the Government introduced a government-wide policy evaluation system to
improved the transparency of the Government, to strengthen its accountability to the public, and to improve the
quality of public administration.  Furthermore, in order to make the Policy Evaluation System more effectiveand increase public confidence in the system, the Government implemented, on 1 April 2002, the GovernmentPolicy Evaluation Act;  all ministries are now conducting their own policy evaluations.
5 From January 2001, the National Public Safety Commission, National Police Agency, Defence
Agency, and the following ministries, published their policy evaluation reports in connection with the FY2002
Budgetary Request and FY2001 Supplementary Budget:  Public Management, Home Affairs, Posts andTelecommunications;  Education, Culture, Sports, Science and Technology;  Health, Labour and Welfare;Agriculture, Forestry and Fisheries;  Economy, Trade and Industry;  Land, Infrastructure and Transport;  andEnvironment.  In addition, the Cabinet Office, Defence Agency, and ministries of Foreign Affairs;  Finance;Agriculture, Forestry and Fisheries;  and Land, Infrastr ucture and Transport are to make their policy evaluation
results know to the public.
6 Headquarters for the Administrative Reform of the Central Government (2001).Japan WT/TPR/S/107
Page 15
Box II.1:  The main features of Central Government Reform
As a result of a number of measures taken between 1999 and 2001, the Central Government decision-making
structure has been changed.  The four key objectives of the reform programme are:  to strengthen the role ofthe Cabinet;  to reorganize the Central Government;  to increase transparency in administration;  and tostreamline the Government.
An enhanced role  for the Cabinet   The changes made include:  a reduction in the maximum number of
Ministers of State from 20 to 14 (with an additional three to be appointed if necessary);  clarification of the
Prime Minister's authority to make Cabinet proposals on "basic principles" (on external and national securitypolicies, on administration and financial management, on the management of the economy and budgetaryplanning, and on the organizational and personnel affairs of administrative organs);  clarification of theCabinet Secretary's planning and drafting functions ;  additional positions in the Cabinet Secretariat;
flexibility in the number of Special Advisors and Private Secretaries to the Prime Minister;  and flexibility in
recruiting individuals from inside and outside the Government.  In addition, a Cabinet Office, headed by thePrime Minister, was established and is expected to provide further support for the Cabinet and PrimeMinister.  Further support to the Cabinet and Prime Minister is expected to be provided by the creation ofnew posts of State Secretary and Parliamentary Secretary in each Ministry and a realignment andrationalization of policy councils, including a reduction in their number from 211 to 90 and guidelines to
make them more accountable and better managed.
Restructuring of national administrative organs   New laws have been enacted to establish ten ministries
in addition to the Cabinet Office;  to ensure efficient interaction between Ministries, an inter-ministerialcoordination system has been created.  Efforts have also been made to better evaluate government policiesthrough the creation of a ministry in charge of policy evaluation (the Somusho), which along with theCommittee for the Evaluation of Policies and Independent Administrative Institutions, will be responsible
for evaluating government policy.
Transparent Administration   A system of independent administrative institutions (IAIs) has been created
within ministries, allowing them (including institutions such as the National Museum, the National ScienceMuseum, etc.) greater flexibility in meeting mid-term and annual objectives as agreed with the relevantminister.  The budgets of the IAIs are to include two kinds of allocations, a lump-sum grant with flexible use
(management grant), and facility expenses.  The employees  of the IAIs are expected not to be subject to the
same rules as other public-sector employees.  Each IAI will be evaluated by the IAI Evaluation Committees,established in the relevant ministry, and by the Somusho whose members will be selected from outside thepublic sector.
Streamlining the Government   This is aimed at "reviewing the undertakings of the State, to abolish,
privatize, deregulate or delegate to local government s jobs not necessarily performed by the State and to
promote more efficient implementation of those which the State must continue to administer, for example,
by utilizing the private sector".  The rationalization programme will include abolishing the ConstructionMachinery Engineering Centre in the Hokkaido Development Agency, privatizing food inspection,abolishing the Government's monopoly on industrial alcohol, and transferring the departments of standardsimplementation to the private sector.  There are also plans to outsource certain government activities to theprivate sector, to deregulate and delegate to local gove rnments, and to reform government enterprises (such
as the transformation of the postal services into the newly established Japan Postal Services Public
Corporation, and the bureaux of mint and printing into IAIs).  There will also be a streamlining of theadministration including a reduction in the number of Ministers' Secretariats, bureaux and divisions, and a
reduction in the number of employees in national administrative organizations by 25% over the ten-yearperiod beginning in 2000/01.
Source:   Headquarters for the Administrative Reform of the Central Government (2001), Central
Government Reform of Japan , January.WT/TPR/S/107 Trade Policy Review
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Chart II.1
Development of policy evaluation system in Japan
Final Report of Administrative Reform Council (3  Decembe r 1997)
•  Strengthen the evaluation of policy ex ante and ex post, and reflect the results of the evaluation to policy planning functi on
•  Establish a clearly distinguished evaluation section in every ministry
•  Strengthen the evaluation function covering Government comprehensively
April
1999
Draft proposal on standard guideline 
for policy evaluation was decided and 
made public (31 July 2000)
June
2001Incidental Vote
Drafting bill for policy evaluation 
was requested
January
2001Study group for policy evaluation 
methods (27 August 1999) (Final report 
was produced and made public on 12 
Decembe r 2000)
Enforcement (1 April 2002)December
1997
July
2000
Study  group for legislation on policy 
evaluation (11 September 2000)  
(Group Report was produced and made 
public on 26 December 2000)
December
2000
The Bill was enacted (22 June) and 
promulgated (29 June)Government policy evaluation bill was submitted to the Diet
Guideline based on the Act was decided by the CabinetDecember
2001Prime Minister ordered to accelerate 
drafting of the bill (14 July 2000)
The principles of administrative
reform (12 December 2000)
Introduction of Policy Evaluation 
(6 January 2001) Guideline was 
decided (15 January).  Implementation 
outlines are being developed
Source :   Information provided by the Japanese authorities.Polic y to promote Reform related to 
Central Government 
Reorganization (27 April 1997)
This policy decided the basic direction 
on policy evaluation.  It also clarified 
that the Government shall develop a 
standard guideline for policy 
evaluationBill to establish Ministry of Public 
Management, Home Affairs, Posts 
and Telecommunication
The Ministry shall conduct unified or 
comprehensive evaluation of the 
policy of each government office, or 
conduct evaluation to ensure the 
objective and strict implementation of 
policy evaluationBill to establish Cabinet Office/Bill 
to amend National Administrative Organization Law
Ministries and cabinet office shall 
evaluate their own policy  *  Framework was decided
March
2001Japan WT/TPR/S/107
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(3) TRADE AGREEMENTS AND ARRANGEMENTS
(i) WTO
(a) Introduction
7. As a strong supporter of the multilateral trading system, Japan continues to participate
actively in the WTO.  Japan has strongly backed efforts to launch new multilateral trade negotiations
in the WTO.  At the WTO Ministerial meeting at Doha in November 2001, Japan urged Members tolaunch a new round of trade negotiations under the comprehensive Work Programme.  Japan believed
especially that there was a firm need for clarification and improvement of the rules on anti-dumping
in order to complement trade liberalization and safeguard the achievements of previous rounds of
trade negotiations;  agriculture and services, which were already being discussed as part of the built-in
agenda, would also benefit from inclusion in such a broad-based round, although negotiations inagriculture, given its importance for "non-trade concerns" such as food security, rural development,
and the environment should be balanced and acceptable for every country.
7  While recognizing that
other issues, such as investment, competition, trade facilitation, and transparency in government
procurement, were new and some Members were reluctant to include them in the WTO, Japan
believed that Members should aim at starting negotiations on these four issues.  Similarly, it believesthat Members should pursue further discussions on the issue of trade and the environment with a view
to reaching a consensus on "how the perspectives of sustainable development and preservation of the
environment can be reflected in the negotiations".
8
8. In the ongoing negotiations in agriculture and services, Japan has made several proposals.
Presenting these in the Special Session of the Committee on Agriculture, Japan argued that the
discussions on further liberalization in agriculture should be based on five main points:  consideration
of the "multi-functionality" of agriculture;  ensuring food security;  redressing the imbalance in rulesand disciplines applied to agricultural exporting countries and importing countries;  consideration for
developing countries;  and consideration for the concerns of consumers and civil society.
9  With
regard to services, Japan noted that there appear s to be a positive relationship between the number of
commitments made by Members in the GATS, economic growth, and trade in services.10
Consequently, Japan, along with other Members, has argued that the MFN principle is one of the most
important pillars of the WTO;  therefore, Japan believes that the MFN exemptions taken by several
Members are a deviation from this essential principle and should be eliminated.11  However, given the
diversity of Members' interests, discussions to lib eralize services further should be included in a
broad-based agenda of new negotiations, that responds to the interests of all Members.12
9. Japan is also a participant in the WTO's Working Groups on Trade and Investment, Trade and
Competition Policy, and Transparency in Government Procurement, and has submitted a number of
                                                     
7 Based on WTO documents WT/MIN(01)/ST/9, 10 November 2001, and WT/MIN(01)/ST/26,
10 November 2001.
8 WTO document WT/MIN(01)/ST/9, 10 November 2001.
9 See, for example, WTO document G/AG/NG/W/116, 20 February 2001;  Japan's negotiating proposal
is contained in WTO document G/AG/NG/W/91, 21 December 2000.
10 See for example, "Proposal by Japan on the Negotiations on Trade in Services" [Online].  Available
at:  www.mofa.go.jp/policy/economy/wto/propos0012.html [18 January 2002].
11 The Annex on Article II exemptions of the GATS states that "in principle such exemptions shall not
exceed a period of ten years".
12 "Proposal by Japan on the Negotiations on Trade in Services" [Online].WT/TPR/S/107 Trade Policy Review
Page 18
proposals and discussion papers to these bodies and to the Council for Trade in Goods on the subject
of trade facilitation.13
(b) Notifications
10. Like all members of the WTO, Japan is required  to notify its laws and measures under various
WTO Agreements.  The status of selected notifications as of July 2002 is shown in Table II.1.
Table II.1
Status of notifications to the WTO, July 2002
WTO Agreement Description of requirementDocument symbol of most recent
notification and date
Anti-dumping
Article 16.4 Anti-dumping actions taken G/ADP/N/85/JPN, 1 March 2002
Article 16.5 Domestic procedures and authorities competent to
initiate and conduct investigationsG/ADP/N/14/Add.14, 26 April 2002
Article 18.5 Laws and regulations (and changes thereof) G/ADP/N/1/JPN/2/Suppl.3, 19 June 2002
Agriculture
Articles 10 and 18.2 Export subsidies (outlays and quantities) G/AG/N/JPN/74, 26 April 2002
Article 18.2 Domestic support (DS:1) G/AG/N/JPN/72, 19 February 2002
Article Domestic support (DS:2) G/AG/N/JPN/62, 1 March 2001
Article 18.2 Information on tariff quotas administration (MA:1) G/AG/N/JPN/57, 14 September 2000
Article 18.2 Volume of imports under tariff quotas (MA:2) G/AG/N/JPN/66, 21 August 2001
Article 5 Volume based special safeguard (MA:3) G/AG/N/JPN/71, 18 February 2002
Article 5 Price based special safeguard (MA:4) G/AG/N/JPN/75, 12 June 2002
Article 5 Special safeguard (MA:5) G/AG/N/JPN/73, 26 April 2002
Article 10 Volume of food aid in the context of export subsidy
commitments (ES:3)G/AG/N/JPN/67, 17 September 2001
Article 16.2 Measures concerning the possible negative effects of
the reform programme on least developed and net
food importing developing countriesG/AG/N/JPN/68, 17 September 2001
Annex 5 Tariff quotas G/AG/N/JPN/1/Add.1;
G/AG/N/JPN/8/Add.1;
G/AG/N/JPN/23/Add.2;
G/AG/N/JPN/57/Add.1, 27 June 2001
GATT 1994 (Article VI:
Customs Valuation)Checklist of issues G/VAL/N/2/JPN/1, 9 May 2000
Table II.1 (cont'd)
                                                     
13 In the Working Group on Trade and Investment for example, Japan has highlighted the importance
of transparency in international investment rules and has suggested that the WTO may play a useful role inincreasing international transparency by acting as a notification point for Members' policies (WTO documentWT/WGTI/W/87, 5 July 2000).  In the Working Group on  Trade and Competition Policy, Japan has urged that
developing countries adopt competition policy legislation, which will assist them in meeting their growth and
development goals.  In this context the Government of Japan had provided technical assistance in a number of
areas and has suggested several areas in which assistance could be provided by WTO Members to developingcountries (WTO document WT/WGTCP/W/145, 11 September 2000).  Using its own post-war development asan example, Japan has argued that the early introduc tion of competition policy contributed significantly to
Japan's development and therefore developing countries need not fear that the introduction of competition policylaws would harm their development goals (WTO document WT/WGTCP/W/157, 3 January 2001).  In the
Council for Trade in Goods, Japan introduced some of the issues concerning customs procedures in the context
of facilitating trade (WTO document G/C/W236, 24 October 2000).Japan WT/TPR/S/107
Page 19
WTO Agreement Description of requirementDocument symbol of most recent
notification and date
GATT 1994  (Art. XVII:4(a)Understanding on the
Interpretation of
Article XVII)Notification of products traded by state enterprises G/STR/N/7/JPN, 6 August 2001
Government Procurement
(Article XXIV:6)Modifications to Appendix I GPA/W/186, 15 March 2002
Import Licensing Procedures
Articles 1.4(a) and 8.2(b) Laws and regulations relevant to import licensing G/LIC/N/1/JPN/1, 27 February 1996;
G/LIC/N/1/JPN/2/Rev.1, 26 February 1997
Article 5.1 Notification of licensing procedures and changes G/LIC/N/2/JPN/3, 27 April 2001
Article 7.3 Questionnaire; rules and information concerning
procedures for the submission of applicationsG/LIC/N/3/JPN/2, 13 February 2002
Subsidies and
Countervailing Measures
Article 32.6 Laws and regulations G/SCM/N/1/JPN/2/Suppl.2,
21 November 1997
Article. 25.11 Countervailing duty actions taken G/SCM/N/81/Add.1, 26 April 2002
Article 25.1 Subsidies programmes G/SCM/N/71/JPN, 29 May 2002
Article 25.12 Notification of domestic procedures and authorities
competent to initiate and conduct investigationsG/SCM/N/18/Add.14, 26 April  2002
Safeguards
Article 12.6 Laws and regulations G/SG/N/1/JPN/3, 5 June 2001
Article 12.1(a) Initiation of investigation relating to serious injury or
threat thereofG/SG/N/6/JPN/1/Corr.1, 22 January 2001
Article 12.1(b) Finding of serious injury or threat thereof caused by
increased importsNo notification
Article 12.1(c) Decision to apply or extend a safeguard measure No notification
Article 12.4 Notification of provisional safeguard measures G/SG/N/7/JPN/1, 25 April 2001
Article 12.5 Notification of termination of safeguard investigation G/SG/N/9/JPN/1, 10 January 2002
Sanitary and Phytosanitary
Measures
Article 6, Annex B Notification of emergency measures No notification
Article 7, Annex B Notification of changes in sanitary and phytosanitary
measuresNo notification
Technical Barriers to Trade
Article 15.2 Laws and regulations (and changes) No notification
Article 10.6 Information about technical regulations, standards and
conformity assessment proceduresNo notification
Textiles and Clothing
Articles 2.8 and 2:11 Notification of programmes of integration G/TMB/N/377, 26 January 2001
Article 3.1 Restrictions maintained prior to entry into force of the
WTO AgreementG/TMB/N/425, 15 February 2002
G/TMB/N/425 /Add.1, 14 June 2002
Article 3.2(b) Notification of phase out of restrictions maintained G/TMB/N/399, 11 May 2001
TRIMs
Article 6.2 Publications in which TRIMs may be found G/TRIMS/N/2/Rev.9, 28 September 2001
Article 5.1 Investment measures No notification
Table II.1 (cont'd)WT/TPR/S/107 Trade Policy Review
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WTO Agreement Description of requirementDocument symbol of most recent
notification and date
TRIPS
Article 63.2 Laws and regulations IP/N/1/JPN/1, 1 March 1996;
IP/N/1/JPN/1/Add.1, 12 July 1996;
IP/N/1/JPN/C/1, 20 March 1996;IP/N/1/JPN/C/1/Rev.1, 25 February 1998;
IP/N/1/JPN/C/1/Rev.1/Add.1, 7 August 1998;
IP/N/1/JPN/D/1, 15 April 1996;IP/N/1/JPN/I/1, 19 April 1996;
IP/N/1/JPN/L/1, 11 July 1996;
IP/N/1/JPN/T/1/Rev.1, 5 September 1997
Article 69 Contact points IP/N/3/Rev.6, 1 March 2002
Article 4(d) Notification of international agreements related to the
protection of intellectual property and which entered
into force prior to the entry into force of the WTO
AgreementIP/N/4/JPN/1, 29 February 1996
General Agreement on
Trade in Services (GATS)
Article III:3 Changes to laws and regulations affecting services S/C/N/179, 6 November 2001
Article VIII:4 Monopolies and exclusive providers of services No notification
Plurilateral Agreement onGovernment procurement
Article XIX:5 Statistics on government procurement GPA/40/Add.3, 10 December 2001
Article XXIV:5(b) National implementing legislation (and changes) GPA/37, 20 June 2000
Article XXIV:6(b) Modifications to Appendix I GPA/W/152, 20 September 2001;  and
GPA/W/152/Corr.1, 10 October 2001
Source : WTO documents.
(c) Disputes
11. Japan's use of the WTO Dispute Settlement Mechanism has increased over the years.  Since
its last Review, Japan has been involved in one dispute as a respondent and three disputes as a
complainant (Table AII.1).  In addition, Japan was involved as a third party in 12 cases during this
period.
(ii) Regional agreements
(a) APEC14
12. In keeping with its policy of supporting unilateral or multilateral trade and investment
liberalization, Japan is a strong supporter of AP EC's "open regionalism" goals.  The Twelfth APEC
Ministerial Meeting, in November 2000, reaffirmed the Bogor goals of free and open trade andinvestment and agreed that creative and efficient ways had to be found to prepare each APEC member
for this eventuality.  Particular emphasis was placed on the use of information and communications
technology to accelerate economic growth and the goal of tripling the number of people in the region
with individual and community-based access to the Internet by 2005 and of enabling all communities
to have individual or community-based access by 2010.  As an advocate of "open regionalism"
                                                     
14 APEC members are:  Australia, Brunei Darussalam, Canada, Chile, China, Chinese Taipei,
Hong Kong China, Indonesia, Japan, Korea, Malaysia, Mexico, New Zealand, Papua New Guinea, Peru, the
Philippines, Russia, Singapore, Thailand, the United States, and Viet Nam.Japan WT/TPR/S/107
Page 21
moreover, APEC continues to support a fair, rules-based multilateral trading system and emphasized
the need for a new WTO round to be launched in 2001.15
13. At the APEC Ministerial Meeting, held in Shanghai in October 2001, Ministers recognized
the importance of maintaining openness, given espe cially the international economic slowdown, and
again stressed the importance of launching new multilateral trade negotiations.16  At the meeting,
Japan proposed the "APEC Trade Facilitation Initiative", which would include:  implementation ofpaperless trading within APEC, thereby reducing  or eliminating the need for paper documents
required for customs and other cross-border-trade administration;  cooperation for adoption of a
common framework for trade-related procedures among enterprises;  implementation of standardized
data and formats for customs clearance;  and adoption of the revised Kyoto Convention on
simplification and harmonization of customs procedures.  Japan is also an active participant in theAPEC subcommittees and has taken a number of initiatives in the Sub-committee on standards and
conformance (SCSC) to align standards in member states with international standards, including
cooperation with the Pacific Area Standards Congress in priority areas.  Japan has been involved in
organizing the training programme provided by the APEC/SCSC in 2001/02 and will be organizing
the Peer Review Programme for National Metrology Institutes in 2002.
(b) ASEM
14. The Asia-Europe Meeting (ASEM), which was first held in March 1996, aims to create a new
Asia-Europe partnership to build a greater underst anding, and strengthen dialogue, between the two
regions.
17  The Third ASEM meeting, held in Seoul in October 2000, established the Asia-Europe
Cooperation Framework 2000.  With regard to economic  and financial issues, the Framework aims to
focus efforts on strengthening dialogue and cooperation in order to facilitate sustainable economic
growth.  The key priorities include:  intensifying dialogue between economics ministers and seniorofficials on trade and investment (SOMTI) to strengthen the multilateral trading system and trade and
investment flows between Asia and Europe through further enhancement of the trade facilitation and
investment promotion action plans (TFAP and IPAP );  intensifying dialogue between finance
ministers to improve the international financial architecture and to prevent the re-occurrence of
financial and economic crises;  and enhancing dialogue in the field of science and technology and onkey issues relating to the sustained development of the two regions and the global economy.
18
15. The ASEM meeting also agreed to intensify efforts to increase trade and investment flows
between the two regions.  In this context, particip ants asked for further efforts to be undertaken to
strengthen existing mechanisms, such as the IPAP, a nd to develop others in order to strengthen trade
and investment ties between Asia and Europe in an open and transparent manner.19
                                                     
15 APEC (2000a) and APEC (2000b).
16 APEC (2001).
17 ASEM brings together the 15 EU Member States and ten Asian countries (Brunei Darussalam,
China, Indonesia, Japan, Korea, Malaysia, the Philippines, Singapore, Thailand, and Viet Nam).  Other than thesummit meetings (held in March 1996, April 1998, and October 2000), there are regular meetings between
Foreign Ministers (February 1997, March 1999, and May 2001), Finance Ministers (September 1997, January
1999, and January 2001), and Economic Ministers (October 1997, October 1999, and 2001).  Other groups thatmeet regularly under the ASEM forum include a senior o fficials' meeting on trade and investment (SOMTI) and
the Business Forum, which brings together private sector representatives from the two regions.
18 "Asia-Europe Cooperation Framework 2000" [Online].  Available at: www.mofa.go.hp/policy/
economy/asem/asem3/framework.html [16 January 2002].
19 Chairman's Statement at the Third Asia-Europe Meeting, Seoul 20-21 October 2000 [Online].
Available at:  www.mofa.go.jp/policy/economy/asem/asem3/statement.html [16 January 2002].WT/TPR/S/107 Trade Policy Review
Page 22
16. Japan has been a participant in the TFAP and has served as a facilitator in the priority areas of
public procurement and customs procedures.  Japan held an ASEM seminar on government
procurement in March 2001 to contribute to the TFAP's concrete goals for 2000-02.  A seminar was
also held on digital opportunities as part of the programme on addressing the digital divide between
countries, endorsed by the third ASEM meeting.
(c) ASEAN+3
17. Although not a member of the Association of  South-East Asian Nations (ASEAN), Japan,
along with China and the Republic of Korea holds regular meetings with ASEAN under the
ASEAN+3 framework of cooperation.  The high level meetings are held annually;  the Fourth and
Fifth ASEAN+3 summits were held in November 2000 and November 2001.20
(d) Others
18. Japan participates in a number of regional initiatives, including cooperation in metrology and
measurement standards through the Asia Pacific Metrology Programme and the Asia Pacific Legal
Metrology Forum;  it also participates in the APLAC (Asia Pacific Laboratory Accreditation
Cooperation) to assist in capacity building for deve loping countries in the Asia-Pacific region.  More
generally, Japan provides technical assistance for developing countries, particularly in theAsia-Pacific region.
(iii) Bilateral agreements
(a) Japan–U.S. bilateral relationship
21
19. The U.S.–Japan Enhanced Initiative on Deregulation and Competition Policy (Enhanced
Initiative), established under the Japan–U.S. Framework for a new Economic Partnership
(Framework), in June 1997, has continued efforts by both Japan and the United States to deregulate
and increase competition in their respective economies.  The Enhanced Initiative has been reorganizedand incorporated to a new framework, the U.S.–J apan Economic Partnership for Growth, which was
established on 30 June 2001.  The Partnership aims to "promote sustainable growth by addressing
issues such as sound macroeconomic policies, structural and regulatory reform, financial and
corporate restructuring, foreign direct investment and open markets";  the Partnership also provides a
structure for cooperation and engagement on bilateral, regional, and global economic and tradeissues.
22  The structure consists of several fora:  the U.S.–Japan Subcabinet Economic Dialogue will
meet at least once a year to set the direction of the Partnership;  the Private Sector/Government
Commission, which will include interactions between th e private sector and government officials;  the
Regulatory Reform and Competition Policy Initiative will focus on sectoral and cross-sectoral issues
                                                     
20 At the Fourth ASEAN+3 Summit meeting held in November 2000, Japan outlined three principles
for enhancing open regional cooperation in East Asia, notably by building partnership, through open regional
cooperation, and thro ugh comprehensive dialogue and c ooperation (Prime Minister Mori's Statement at the
ASEAN+3 Summit meeting in Singapore, November 24 2000 [Online].  Available at:www.mofa.go.jp/region/asia-paci/asean/conference/asean3/state0011.html [17 January 2002]).
21 According to the authorities, there is no legally binding bilateral agreement between Japan and the
United States.
22 U.S.–Japan Economic Partnership for Growth [Online].  Available at:  www.mofa.go.jp/region/n-
america/us/pmv0106/joint_e.html [15 January 2002].Japan WT/TPR/S/107
Page 23
relating to regulatory reform and competition policy23;  the Financial Dialogue, which will address
key macroeconomic and financial sector issues;  the Investment Initiative to address regulations and
legislation relating to improving the environment fo r foreign direct investment;  and the Trade Forum
to address trade and trade-related issues raised by either government.
20. In October 2001, the Automotive Consultative Group (ACG) was established by the
Governments of Japan and the United States.  The ACG will address trade and trade-related  issues,including those relating to regulatory matters and co mpetitive procurement practices in both U.S. and
Japanese automotive industries.  The ACG will also address relevant policy issues that arise as a result
of the changes in the sector, including globalization and technological advances, as well as increasing
concerns regarding global environmental issues.
(b) Japan–European Union bilateral relationship
21. Since its previous Review, Japan has continued to pursue bilateral cooperation with the
European Union.  At the Tenth Japan–EU Summit in Brussels, in December 2001, Japan and the
European Union adopted an "Action Plan for EU-Jap an Co-operation" to strengthen their bilateral
relationship by providing the foundations to build the "Decade of Japan–Europe Co-operation", which
was declared at the Ninth Summit in Tokyo in July 2000.  The Action Plan includes strengthening theeconomic and trade partnership through, inter alia , implementing the Mutual Recognition Agreement,
which entered into force on 1 January 2002.  The MRA covers conformity assessment procedures in
telecommunications terminal equipment, radio equipment, and electrical products;  good laboratory
practice (GLP) for chemicals;  and good manufacturi ng practice (GMP) for medicinal products.  The
Action Plan also calls for strengthening cooperation in information and communications technology.
Efforts to be undertaken in this regard include  cooperation in:  technical, regulatory, and data
protection issues;  multilateral trade and economic issues, including through the WTO and regionaleconomic and trade policy;  and development and poverty alleviation.
24
(c) Japan–Singapore Economic Agreement
22. The Japan–Singapore Economic Agreement for a New Age Partnership (JSEPA) was signed
by the Prime Ministers of Japan and Singa pore on 13 January 2002.  After a Joint Study Group
meeting in 2000, the formal negotiations betwee n the two countries started in January 2001.
According to remarks made by the Prime Minister of Singapore at the signing ceremony, the JSEPA
will go beyond a conventional free-trade agreement, focusing also on key growth areas such as
information and communications  technology, science and technology, financial services, tourism, and
human resource development.25
23. The JSEPA is expected to be applied in the latter half of 2002:  once it is in force, the overall
simple applied preferential tariff average will be 4.7% including AVEs, and 2.6% excluding AVEs.
Many agricultural products have been excluded from the JSEPA.  Other areas covered by the
agreement include rules of origin, customs proce dures, mutual recognition, investment, movement of
                                                     
23 In this context, four sectoral working groups on telecommunications, information technology, energy
and medical devices/pharmaceuticals, and a cross- sectoral working group have been established.
24 "An Action Plan for EU–Japan Cooperation", European Union–Japan Summit, Brussels, 2001
[Online].  Available at:  www.mofa.go.jp/region/europe/eu/summit/action0112.html [15 January 2002].
25 Remarks by Prime Minister Goh Chok Tong at the signing ceremony of the Japan–Singapore
Economic Agreement for a New Age Partnership, on 13 January 2002, Singapore Government Press Release
[Online].  Available at:  http://app.internet.gov.s g/data/sprinter/pr/weekly/ 2002011305.htm [14 January 2002].WT/TPR/S/107 Trade Policy Review
Page 24
natural persons, intellectual property, government procurement, competition, services, and paperless
trading.
(d) Others
24. Since its previous Review, Japan has also made efforts to strengthen bilateral economic
relations with other countries, notably Korea, Mexico, Chile, Australia, and ASEAN countries.  The
"21st Century Japan–Korea Economic Relations Study Team", which was set up in December 1998,
has since released a joint research report.  On the basis of this report and a symposium held in
May 2000, the Prime Minister of Japan and the President of the Republic of Korea agreed to establish
a Japan–Republic of Korea FTA Business Forum in September 2000.  The Forum held two meetings,
in September 2001 and in January 2002, and released a recommendation that requested the
two governments to proceed immediately with a co mprehensive economic partnership agreement.  On
the basis of this recommendation, Japan and Korea agreed to establish an industry-government-
academia research group (the Japan–Korea FTA Joint Study Group) on a Japan–ROK FTA in
March 2002.
25. The Japan–Mexico Joint Study Group on the Strengthening of Bilateral Economic Relations
is studying ways to strengthen the bilateral economic relations, including the possibility of a Japan–Mexico FTA.  The final report of the study group is expected to be published in July 2002.
26. In June 2000, a joint study report on a Japan–Chile FTA was released by the Japan–Chile
FTA Study Group, which comprised academics and lead ing figures from industry.  The report states
that an FTA between Japan and Chile would provide an effective means of further strengthening
economic relations between the two countries, and that maximum efforts should be made to conclude
a Japan–Chile FTA as soon as possible.
27. The Prime Ministers of Japan and Australia agreed in May 2002 that the two governments
would launch high-level consultations to explore all options for deeper economic linkages.
(iv) Preferential treatments
(a) Generalized System of Preferences
26
28. Japan's Generalized System of Preferences (GSP) scheme grants preferential tariff treatment
to certain developing countries under the Temporary Tariff Measures Law.  The Government has theauthority to voluntarily designate, withdraw, suspend, and limit beneficiaries or products that receive
preferential treatment under the GSP scheme.
27  In 2001, Japan extended the effective period of GSP
to 31 March 2011 and introduced various measures, such as expanding the product coverage of tariff-
free and quota-free treatment for goods originating in the LDCs.  As a result, all textile and clothing
products from LDCs are duty free and quota free.  In 2002, Japan added Senegal to the list of LDCbeneficiaries.
29. The current GSP scheme grants preferential treatment to 149 developing countries and
15 territories for 221 agricultural and fishery products at the HS nine-digit level and many industrial
                                                     
26 Unless otherwise indicated, this section on GSP is based on Ministry of Foreign Affairs document,
"Japan's GSP" [Online].  Available at:  www.mofa.go.jp/policy/economy/gsp/index.html [11 January 2002].
27 In order to qualify for preferential treatment under the GSP, the country or territory must:  be a
developing economy;  have its own tariff and trade system;  request preferential tariff treatment;  and be
prescribed by a Cabinet Order as a country or territory benefiting from GSP treatment.Japan WT/TPR/S/107
Page 25
products.28  The depth of tariff cuts varies depending on products;  in case of sensitive industrial
products, there are 81 product groups (1,181 items at the HS nine-digit level) to which various
preferential rates apply (0%, 20%, 40%, 60%, or 80% of MFN rate) up to specified ceilings;  once
preferential imports of the good exceed their ceiling, such preference is suspended.29  The ceilings are
open for utilization by all beneficiaries except the LDCs' beneficiaries;  however, if preferential
imports from one particular beneficiary exceed one fifth of the total value or volume of the ceiling,the preferential treatment for that beneficiary is suspended.  Preferential treatment is suspended on a
monthly basis when ceilings are reached.  Preferential treatment under the GSP scheme is granted on
the condition that goods fulfil Japan's GSP rules of origin (Chapter III(2)(ii)).
30. Imports of certain products from the designated LDCs under the GSP programme are eligible
for tariff-free and quota-free entry (i.e. suspension of preferential imports over the ceilings is notapplied).  There are currently 47 LDC beneficiaries.
31. In accordance with a "graduation" rule introduced in 1998, countries or territories currently
beneficiaries under the GSP programme may be excluded under certain conditions.
30  Under the rule,
19 beneficiaries have become ineligible for the GSP treatment since 2000, while five countries and a
territory have become eligible.  According to Japan's FY2001 tariff schedule, 3,389 tariff lines at theHS nine-digit level are eligible for preferential treatment for non-LDC beneficiaries, while 4,460 tariff
lines are eligible for the special preferential treatment for the LDC beneficiaries.  The main
beneficiary of GSP is China, unchanged since the previous Review.
                                                     
28 In terms of tariff preferences for non-LDC beneficiaries, the tariff preferences for agricultural and
fishery products are specified in the form of a positive list;  all industrial products are granted the tariffpreferences except certain goods (consisting mainly of petroleum) in a negative list, and certain goods providedonly special tariff preferences for LDC beneficiaries.
29 The ceilings, which are applied on the basis of fiscal year, are defined as the value or volume of
imports to which general tariff preference was applied in the previous fiscal year, multiplied by 1.03.
30 The process of "graduation" begins with the "partial graduation" process.  A particular good of a
beneficiary is to be excluded from the GSP scheme if the beneficiary is classified as a "high income country"category in the World Bank Atlas and imports of the par ticular good from the beneficiary exceed 25% of Japan's
total imports of the good and ¥1 billion in value.  In addition, a beneficiary becomes ineligible for the GSP
scheme if it is classified as a "high income country" category in the World Bank Atlas over three consecutive
years.