RESTRICTED
WORLD TRADE WT/GC/COM/3
21July1995
ORGANIZATION(95-2102)
Original: English
JAPAN -UNITED STATES: AUTO AND AUTO PARTS ISSUES
Statement byJapan attheMeeting oftheGeneral Council on11July1995
1. TheGovernment ofJapan (GOJ), following thesubstantive conclusion oftheJapan-US autos
andautopartstalkson28June, made abriefstatement ontheresult oftheconsultations inthemeeting
oftheCouncil forTrade inGoods on3July. Responding torequests forfurther details, wewould
liketoprovide Members withmoreample information today forthepurpose ofenhancing transparency.
Wewelcome anyquestions orcomments. WearesurethattheGovernment oftheUnited States (USG)
would alsoliketorespond tothem, ontheirpart.
Theconclusion arrived aton28Juneconsists ofthefollowing three elements: theconclusion
oftheconsultations onautos andautopartsunder theJapan-US Framework Talks; twosetsof"Joint
Announcements", which were made outside thescope oftheFramework Talks; andtheJointPress
Statement regarding competition policies.
2. Theconclusion under theFramework Talks isconcerning "Measures bytheGOJandtheUSG
intheautos andautoparts sector". Itconsists of:
(1) Measures regarding Market Access forForeign Vehicles inJapan;
(2) Measures regarding Opportunities ofForeign Parts Purchases;
(3) Measures regarding Regulatory Reform intheareaofautos andautopartssector; and
(4) Assessment oftheimplementation oftheMeasures andConsultations.
TheGOJwishes toreiterate thattheseMeasures aretobeapplied tothirdcountries onanm.f.n.
basis.
(1) Measures toencourage imports andfacilitate Market Access forForeign Vehicles in
Japan
Thepurpose oftheMeasures inthisareaistoensure thatJapanese dealers arefree
tosellcompeting foreign motor vehicles, tofacilitate contracts between foreign vehicle
manufactures andJapanese vehicle dealers andtoencourage foreign manufacturers topursue
market opportunities inJapan. TheMeasures include thefollowing:
(a) TheGOJ welcomes andsupports theannouncements issued byindustry
associations, suchastheJapan Automobile Manufacturers Association (JAMA)
andindividual companies, andwillgivenotice toJapanese dealers informing
thattheyarefreetosellcompeting motor vehicles.
(b) Both governments willeach designate agovernment contact person, and
welcome thefactthateachJapanese vehicle manufacturer andeachUSvehicle
manufacturer havedesignated acompany contact person respectively.WT/GC/COM/3
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(c) TheGOJwillprovidefinancialsupporttotheJapanExternalTradeOrganization
(JETRO) foritsactivities, suchasexhibitions offoreign motor vehicles and
willalsoprovide financing fortheimportation offoreign motor vehicles.
(d) TheUSGwillprovide support totheUSvehicle manufactures intheirefforts
toexpand exports ofUSmotor vehicles toJapan, aswellastheirongoing
efforts toincrease theircompetitiveness.
(2) Measures toexpand opportunities offoreign parts purchases
Thepurpose ofthemeasures inthisareaistoexpand opportunities topurchase foreign
autoparts byJapanese vehicle manufacturers inJapan andthrough theirtransplants abroad.
Themeasures include thefollowing:
(a) TheGOJwillprovide support totheJapanese vehicle manufactures 'activities
topromote relationships between Japanese vehicle manufacturers andforeign
autoparty suppliers.
(b) TheGOJwillprovide financial support totheJETRO foritsactivities, such
asexhibitions offoreign autoparts andwillalsoprovide financing forthe
importation offoreign autoparts.
(c) TheUSG willprovide support toUSautoparts suppliers fortheirefforts to
promote thesales ofUSautoparts toJapanese vehicle manufactures andto
Japanese transplant vehicle manufacturers, aswellasfortheirefforts toenhance
thecompetitiveness oftheirproducts.
(3) Deregulatory Measures intheareaofautos andautoparts sector bytheGOJ
Thepurpose ofthemeasures inthisareaistoimprove market access forcompetitive
foreign partssuppliers intheJapanese autopartsaftermarket, while maintaining appropriate
automotive safety andenvironmental standards. Themeasures include thefollowing:
(a) Deregulation ondisassembling repair requirements (thedecrease inthenumber
ofso-called critical parts requirements).
(b) Deregulation oncertified anddesignated garages.
(c) Deregulation onmodification inspection requirements.
(d) Notification ofregulatory change andtheimplementation ofacampaign to
emphasize non-discriminatory treatment offoreign autoparts.
(e) Implementation ofthe"Aftermarket Access Improvement Programme".
(4) Theassessment oftheimplementation ofthemeasures mentioned above andthe
evaluation ofprogress achieved willbebased ontheoverall consideration ofthe
qualitative andquantitative criteria (i.e."objective criteria"), forwhich annual
consultations between thetwogovernments willbeheld. Theobjective criteria, which
arebynomeans numerical targets tocommit thefuture outcome butarecriteria to
track thepastprogress, include:WT/GC/COM/3
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- change inthenumber andvalue ofnewforeign vehicles soldinJapan;
- change inthevalue offoreign autoparts imported intoJapan;
- efforts offoreign companies tooffer competitive products;
- market conditions, including theexchange ratesofforeign currencies.
3. Next, letmeexplain thetwosetsof"Joint Announcements" regarding dealerships andautos
andautoparts. These JointAnnouncements weremade outside thescope oftheJapan-US Framework
Talks. Iwillalsoexplain theJoint Press Statement regarding competition policy.
(1) Dealerships
There aretwoJoint Announcements ondealerships.
(a) InthefirstAnnouncement, bothgovernments tooknoteofthedevelopments,
suchastheUSmotor vehicle manufacturers 'announcement tocontinue tomake
efforts, forexample introducing aseries ofnewright-hand drive vehicles to
expand their presence intheJapanese market, andtheJapan Automobile
Manufactures 'Association 'sannouncement toconduct asurvey ofitsmembers
forthepurpose ofidentifying dealers thathavetheintention orinterest tosell
foreign motor vehicles.
(b) Inthesecond Announcement, theUSG envisions thatthecombination of
implementingthemeasuresundertheautomotiveframework,andtheintensified
efforts oftheUSvehicle manufactures, willleadtoanincrease ofdirect
franchise agreements between theUSvehicle manufactures andtheJapanese
dealers toresult inacertain increase ofnewsalesoutlets. Ontheother hand,
theGOJannounced thatithashadnoinvolvement inthisforecast asitwas
beyond thescope andresponsibility ofagovernment, andthatthese forecasts
were solely those oftheUSG.
(2) Autos andautoparts
There arealsotwoJoint Announcements regarding autos andautoparts.
(a) Concerning thefirstAnnouncement,
(i) TheGOJhasarticulated, andtheUSG agreed with, fourguiding
principles forprivate sector efforts intheautomotive sector:
globalization, localization, industrial cooperation andtransparency.
(ii) BothgovernmentswelcomedtheplansannouncedbytheJapanesemotor
vehicle manufacturers toincrease overseas production, localize
procurement ofparts, increase purchases ofcompetitive foreign parts
onaglobal basisandtoensure transparency intheirpartspurchasing.
Bothgovernments arealsopleased tonotethestatement bytheUS
motorvehiclemanufacturersexpressingtheirplansandintenttoexpand
theirpresence intheJapanese market based onoffering competitive
products, prices andservice inJapan.
Atthesame time, bothgovernments recognized andunderstood,WT/GC/COM/3
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(i) theplans newly announced byUSorJapanese companies arenot
commitments,
(ii) these plans arenotsubject tothetraderemedy lawsofeither country,
and
(iii) changes inmarket condition mayaffect thefulfilment ofthese plans.
(b) Inthesecond Joint Announcement, USTR estimated onthebasis ofthese
individual company plans, theincrease ofUSparts purchase andproduction
ofvehicles intheUS.Ontheother hand, theGOJannounced thatithashad
noinvolvement inthiscalculation because itwasbeyond thescope and
responsibility ofagovernment andthatUSTR 'sestimates weresolely itsown.
(3) Joint Press Statement regarding competition policy.
IntheStatement,
(a) Minister Hashimoto andAmbassador Kantor shared theview thatstrong
competitionpolicyandenforcementtoensurefairmarketaccessandcompetition
inallindustrial sectors including theautomotive sector isofimportance to
Japan.
(b) Minister Hashimoto confirmed theintention oftheGovernment ofJapan to
pursue thestrengthening oftheJapan FairTrade Commission interms ofits
organization andstaffresources, subject to,asappropriate, theapproval by
theDietofJapan.
TheGOJwelcomes theoutcome ofthetalks, which doesnotinclude numerical targets that
stood asthemostserious obstacle totheprocess ofconsultations, thusconfirming theposition ofthe
GOJthatthisissue ofnumerical targets isoutside thescope ofboththeroleandresponsibility ofthe
government.
4. Webelieve thatthefactthatsuchadifficult tradedispute could havebeensettled inconformity
withtherulessetoutintheWTO Agreement signifies avictory forthenewly-created WTO. Wefeel
thatitwasmeaningful tohavehadthetalksinGeneva, which symbolizes themultilateral free-trading
system. Letmeexpress onbehalf oftheGOJourgratitude totheWTO andtoanumber ofitsMembers
forextending theirsympathetic consideration towards ourstance thatthisdispute should besettled
inaccordance withtheinternational rules.
5. Itistheexpectation oftheGovernment ofJapan thatthisconclusion willhelpmultiply import
opportunities totheJapanese market forourtrading partners. Iwould alsoliketoreiterate thepolicy
oftheGovernment ofJapan tocontribute tothedevelopment ofworld tradethrough further deregulation
andimprovement ofmarket access, while observing, together withother Members oftheWTO,
international rules, theWTO Agreement inparticular.