RESTRICTED
WORLD TRADE GATS/SC/46/Suppl.1
28July1995
ORGANIZATION(95-2227)
Trade inServices
JAPAN
Schedule ofSpecific Commitments
Supplement 1
(This isauthentic inEnglish only)
_______________
This textreplaces theFinancial Services section contained inpages 52to62of
document GATS/SC/46.JAPAN -SCHEDULE OFSPECIFIC COMMITMENTS
Modes ofsupply: (1) Cross-border supply (2) Consumption abroad (3) Commercial presence (4) Presence ofnatural persons
Sector orsubsector Limitations onmarket access Limitations onnational treatment Additional commitments
7.FINANCIAL SERVICES
Inaddition toPartIIIofthisAgreement andtheAnnex onFinancial Services, Japan undertakes itsspecific commitments withrespect toFinancial
Services under thisAgreement inaccordance withtheUnderstanding onCommitments inFinancial Services (hereinafter referred toasthe
"Understanding", attached tothisSchedule, which forms anintegral partofthisSchedule). Thus, theobligations under theUnderstanding are
incurred inthesectors ofFinancial Services additionally tothose covered bytheprovisions ofPartIIIofthisagreement andtheAnnex onFinancial
Services.
Forprudential reasons within thecontext ofparagraph 2(a)oftheAnnex onFinancial Services, Japan shallnotbeprevented from taking measures
suchasnon-discriminatory limitations onjuridical forms ofacommercial presence. Forthesame reasons, Japan shallnotbeprevented from
applying non-discriminatory limitations concerning admission tothemarket ofnewfinancial services which shallbeconsistent withregulatory
framework aimed atachieving suchprudential objectives. Inthiscontext, securities firms areallowed todealinsecurities defined intherelevant
Japanese law,andbanks arenotallowed todealinthose securities unless allowed inaccordance withthesaidlaw.
With respect tospecific commitments inthesectors ofFinancial Services, services supplied intheterritory ofaMember other thanJapan tothe
service consumer inJapan without anyactive marketing from theservice supplier areconsidered asservices supplied under paragraph 2(b)of
Article IofthisAgreement.
GATS/SC/46/Suppl.1
Page1JAPAN (continued) GATS/SC/46/Suppl.1
Page2
Modes ofsupply: (1) Cross-border supply (2) Consumption abroad (3) Commercial presence (4) Presence ofnatural persons
Sector orsubsector Limitations onmarket access Limitations onnational treatment Additional commitments
A.Insurance andInsurance-
Related ServicesSpecific commitments inthemarket access
column withrespect tothesupply ofaservice
asprescribed inparagraph 2(a)and(b)of
Article IofthisAgreement areunbound
except forobligations under paragraph 3and4
oftheUnderstanding respectively which are
incurred inthissector additionally tothose
covered bytheprovisions ofPartIIIofthis
Agreement andtheAnnex onFinancial
Services, subject toconditions and
qualifications setoutbelow.
(1)Commercial presence isinprinciple
required forinsurance contracts onthe
following items andanyliability arising
therefrom:
(a)goods being transported within
Japan;
(b)ships andaircraft ofJapanese
registration.(1)None
Thecross-border insurance transactions
forships ofJapanese registration which
areusedforinternational maritime
transport andaircraft ofJapanese
registration willbeliberalized bytheend
ofJune1996.JAPAN (continued)
Modes ofsupply: (1) Cross-border supply (2) Consumption abroad (3) Commercial presence (4) Presence ofnatural persons
Sector orsubsector Limitations onmarket access Limitations onnational treatment Additional commitments
60percentofamounts ofreinsurance on
thecompulsory automobile thirdparty
liability insurance issubject to
compulsory coverage bythe
Government.
Insurance services arenotallowed tobe
supplied through anintermediary in
Japan.
(2)Commercial presence isinprinciple
required forinsurance contracts onthe
following items andanyliability arising
therefrom:
(a)goods being transported within
Japan;
(b)ships andaircraft ofJapanese
registration.
Thecross-border insurance transactions
forships ofJapanese registration which
areusedforinternational maritime
transport andaircraft ofJapanese
registration willbeliberalized bytheend
ofJune1966.(2)None
GATS/SC/46/Suppl.1
Page3JAPAN (continued) GATS/SC/46/Suppl.1
Page4
Modes ofsupply: (1) Cross-border supply (2) Consumption abroad (3) Commercial presence (4) Presence ofnatural persons
Sector orsubsector Limitations onmarket access Limitations onnational treatment Additional commitments
60percentofamounts ofreinsurance on
thecompulsory automobile thirdparty
liability insurance issubject tothe
compulsory coverage bythe
Government.
Insurance services arenotallowed tobe
supplied through anintermediary in
Japan.
(3)Establishment ofcommercial presence as
insurance brokers isnotallowed untilthe
endofJune1996.
60percentofamounts ofreinsurance on
thecompulsory automobile thirdparty
liability insurance issubject tothe
compulsory coverage bythe
Government.
Insurance intermediation services arenot
allowed tobesupplied forinsurance
contracts made byaninsurance service
supplier whoisnotlicensed inJapan.
(4)Unbound except asindicated in
horizontal commitments(3)Foreign lifeinsurance
companies arerequired toretain
inyencurrency anamount
corresponding totheirtechnical
andclaim reserves foryen-
denominated insurance policies
inJapan untiltheendof
June1966.
Asindicated inhorizontal
commitments
(4)Unbound except asindicated in
horizontal commitmentsJAPAN (continued)
Modes ofsupply: (1) Cross-border supply (2) Consumption abroad (3) Commercial presence (4) Presence ofnatural persons
Sector orsubsector Limitations onmarket access Limitations onnational treatment Additional commitments
B.Banking andOther
Financial Services
(excluding Insurance and
Insurance-Related
Services)Specific commitments inthemarket access
column withrespect tothesupply ofaservice
asprescribed inparagraph 2(a)and(b)of
Article IofthisAgreement areunbound
except forobligations under paragraph 3and4
oftheUnderstanding respectively which are
incurred inthissector additionally tothose
covered bytheprovisions ofPartIIIofthis
Agreement andtheAnnex onFinancial
Services subject toconditions and
qualifications setoutbelow.
(1)Commercial presence isrequired for
discretionary investment management
services.
(2)Overseas deposits andtrustcontracts
denominated inforeign currencies, the
sumofwhich areover100million yen
value, andthose denominated inyenare
subject toapproval. Business
corporations which satisfy thestandards
ofin-house systems relating tolegal
affairs, riskmanagement andfinancial(1)None
(2)None
GATS/SC/46/Suppl.1
Page5JAPAN (continued) GATS/SC/46/Suppl.1
Page6
Modes ofsupply: (1) Cross-border supply (2) Consumption abroad (3) Commercial presence (4) Presence ofnatural persons
Sector orsubsector Limitations onmarket access Limitations onnational treatment Additional commitments
management setoutbytheMinistry of
Finance maybegiven anapproval
effective foranindefinite period oftime
withrespect tooverseas deposits
denominated inforeign currencies over
100million yenvalue forthepurpose of
portfolio investment subject onlytoex-
postreporting.
Thefollowing capital transaction services
maybesupplied through authorized
foreign exchange banks inJapan, or
otherwise areinprinciple subject to
approval:
(a)Trade in:
(i)payment instruments suchas
cheques andbills;
(ii)foreign exchange; and
(iii)derivative products which
involve outright foreign
exchange transactions suchas
currency spotoptions.JAPAN (continued)
Modes ofsupply: (1) Cross-border supply (2) Consumption abroad (3) Commercial presence (4) Presence ofnatural persons
Sector orsubsector Limitations onmarket access Limitations onnational treatment Additional commitments
Business corporations areexempted
from obtaining approval andmay
invest inallsecurities derivative
products listed onoverseas
exchanges fortheirownaccount
subject onlytoexpost-reporting.
Business corporations which satisfy
thestandards ofin-house systems
relating tolegalaffairs, risk
management andfinancial
management setoutbytheMinistry
ofFinance areexempted from
obtaining approval andmayinvest
infinancial futures andoptions
listed onoverseas exchanges for
theirownaccount subject onlyto
expose reporting.
(b)Special methods ofsettlement such
asoffsetting andanymethod
whereby aresident either makes
payment forthenon-resident
concerned toanother resident or
receives payment made byanother
resident forthenon-resident
concerned.
(c)Swaps
GATS/SC/46/Suppl.1
Page7JAPAN (continued) GATS/SC/46/Suppl.1
Page8
Modes ofsupply: (1) Cross-border supply (2) Consumption abroad (3) Commercial presence (4) Presence ofnatural persons
Sector orsubsector Limitations onmarket access Limitations onnational treatment Additional commitments
(3)Commercial presence forinvestment
trustmanagement services must bea
juridical person established inJapan.
(4)Unbound except asindicated in
horizontal commitments(3)Thedeposit insurance system
doesnotcover deposits taken by
branches offoreign banks.
Asindicated inhorizontal
commitments
(4)Unbound except asindicated in
horizontal commitments(3)With respect tothe
assets ofemployees '
pension funds qualified
bytheMinister of
Health andwelfare to
bemanaged by
discretionary
investment
management service
suppliers, Japan no
longer employs the
classification ofNew
Money* andassets
other thanNew
Money.
*New Money isanasset mainly consisting ofaccumulation ofpremiums collected byEmployees 'Pension funds after thedaywhen suchFunds arequalified bythe
Minister ofHealth andWelfare asappropriate forexpanding their means ofasset management toinclude discretionary investment management services.GATS/SC/46/Suppl.1
Page9
UNDERSTANDING ONCOMMITMENTS INFINANCIAL SERVICES
Participants intheUruguay Round havebeenenabled totakeonspecific commitments with
respect tofinancial services under theGeneral Agreement onTrade inServices (hereinafter referred
toasthe"Agreement") onthebasis ofanalternative approach tothatcovered bytheprovisions of
PartIIIoftheAgreement. Itwasagreed thatthisapproach could beapplied subject tothefollowing
understanding:
(i) itdoesnotconflict withtheprovisions oftheAgreement;
(ii) itdoesnotprejudice therightofanyMember toschedule itsspecific commitments
inaccordance withtheapproach under PartIIIoftheAgreement;
(iii) resulting specific commitments shallapply onamost-favoured-nation basis;
(iv) nopresumption hasbeencreated astothedegree ofliberalization towhich aMember
iscommitting itself under theAgreement.
Interested Members, onthebasisofnegotiations, andsubject toconditions andqualifications
where specified, haveinscribed intheirschedule specific commitments conforming totheapproach
setoutbelow.
A. Standstill
Anyconditions, limitations andqualifications tothecommitments noted below shallbelimited
toexisting non-conforming measures.
B. Market access
Monopoly rights
1. Inaddition toArticle VIIIoftheAgreement, thefollowing shallapply:
EachMember shalllistinitsschedule pertaining tofinancial services existing monopoly rights
andshallendeavourtoeliminatethemorreducetheirscope.Notwithstandingsubparagraph1(b)
oftheAnnex onFinancial Services, thisparagraph applies totheactivities referred toin
subparagraph 1(b)(iii) oftheAnnex.
Financial services purchased bypublic entities
2. Notwithstanding Article XIIIoftheAgreement, eachMember shallensure thatfinancial service
suppliers ofanyother Member established initsterritory areaccorded most-favoured-nation treatment
andnational treatment asregards thepurchase oracquisition offinancial services bypublic entities
oftheMember initsterritory.
Cross-border trade
3. EachMember shallpermit non-resident suppliers offinancial services tosupply, asaprincipal,
through anintermediary orasanintermediary, andunder terms andconditions thataccord national
treatment, thefollowing services:GATS/SC/46/Suppl.1
Page10
(a) insurance ofrisksrelating to:
(i) maritime shipping andcommercial aviation andspace launching andfreight
(including satellites), withsuchinsurance tocover anyorallofthefollowing:
thegoods being transported, thevehicle transporting thegoods andanyliability
arising therefrom; and
(ii) goods ininternational transit;
(b) reinsurance andretrocession andtheservices auxiliary toinsurance asreferred toin
subparagraph 5(a)(iv) oftheAnnex;
(c) provision andtransfer offinancial information andfinancial dataprocessing asreferred
toinsubparagraph 5(a)(xv) oftheAnnex andadvisory andother auxiliary services,
excluding intermediation, relating tobanking andother financial services asreferred
toinsubparagraph 5(a)(xvi) oftheAnnex.
4. Each Member shallpermit itsresidents topurchase intheterritory ofanyother Member the
financial services indicated in:
(a) subparagraph 3(a);
(b) subparagraph 3(b); and
(c) subparagraphs 5(a)(v) to(xvi)oftheAnnex.
Commercial presence
5. EachMember shallgrant financial service suppliers ofanyother Member therighttoestablish
orexpand within itsterritory, including through theacquisition ofexisting enterprises, acommercial
presence.
6. AMember mayimpose terms, conditions andprocedures forauthorization oftheestablishment
andexpansion ofacommercial presence insofarastheydonotcircumvent theMember 'sobligation
under paragraph 5andtheyareconsistent withtheother obligations ofthisAgreement.
Newfinancial services
7. AMembershallpermitfinancialservicesuppliersofanyotherMemberestablishedinitsterritory
tooffer initsterritory anynewfinancial service.
Transfers ofinformation andprocessing ofinformation
8. NoMember shalltakemeasures thatprevent transfers ofinformation ortheprocessing of
financial information, including transfers ofdatabeelectronic means, orthat,subject toimportation
rules consistent withinternational agreements, prevent transfers ofequipment, where suchtransfers
ofinformation, processing offinancial information ortransfers ofequipment arenecessary forthe
conduct oftheordinary business ofafinancial service supplier. Nothing inthisparagraph restricts
therightofaMember toprotect personal data,personal privacy andtheconfidentiality ofindividual
records andaccounts solongassuchrightisnotusedtocircumvent theprovisions oftheAgreement.GATS/SC/46/Suppl.1
Page11
Temporary entry ofpersonnel
9. (a) EachMember shallpermit temporary entry intoitsterritory ofthefollowing personnel
ofafinancial service supplier ofanyotherMember thatisestablishing orhasestablished
acommercial presence intheterritory oftheMember:
(i) senior managerial personnel possessing proprietary information essential to
theestablishment, control andoperation oftheservices ofthefinancial service
supplier; and
(ii) specialists intheoperation ofthefinancial service supplier.
(b) Each Member shall permit, subject totheavailability ofqualified personnel inits
territory, temporary entry intoitsterritory ofthefollowing personnel associated with
acommercial presence ofafinancial service supplier ofanyother Member:
(i) specialists incomputer services, telecommunication services andaccounts of
thefinancial service supplier; and
(ii) actuarial andlegalspecialists.
Non-discriminatory measures
10. EachMember shallendeavour toremove ortolimitanysignificant adverse effects onfinancial
service suppliers ofanyother Member of:
(a) non-discriminatory measures thatprevent financial service suppliers fromoffering in
theMember'sterritory,intheformdeterminedbytheMember,allthefinancialservices
permitted bytheMember;
(b) non-discriminatorymeasuresthatlimittheexpansionoftheactivitiesoffinancialservice
suppliers intotheentire territory oftheMember;
(c) measures ofaMember, when suchaMember applies thesame measures tothesupply
ofbothbanking andsecurities services, andafinancial service supplier ofanyother
Member concentrates itsactivities intheprovision ofsecurities services; and
(d) other measures that,although respecting theprovisions ofthisAgreement, affect
adversely theability offinancial service suppliers ofanyother Member tooperate,
compete orenter theMember 'smarket;
provided thatanyaction taken under thisparagraph would notunfairly discriminate against financial
service suppliers oftheMember taking suchaction.
11. With respect tothenon-discriminatory measures referred toinsubparagraphs 10(a) and(b),
aMember shallendeavour nottolimitorrestrict thepresent degree ofmarket opportunities northe
benefits already enjoyed byfinancial service suppliers ofallother Members asaclassintheterritory
oftheMember, provided thatthiscommitment doesnotresult inunfair discrimination against financial
service suppliers oftheMember applying suchmeasures.GATS/SC/46/Suppl.1
Page12
C. National treatment
1. Under theterms andconditions thataccord national treatment, eachMember shallgrant to
financial service suppliers ofanyotherMember established initsterritory access topayment andclearing
systems operated bypublic entities, andtoofficial funding andrefinancing facilities available inthe
normal course ofordinary business. Thisparagraph isnotintended toconfer access totheMember 's
lender oflastresort facilities.
2. Whenmembershiporparticipationin,oraccessto,anyself-regulatorybody,securitiesorfutures
exchange ormarket, clearing agency, oranyother organization orassociation, isrequired byaMember
inorder forfinancial service suppliers ofanyother Member tosupply financial services onanequal
basiswithfinancial service suppliers oftheMember, orwhen theMember provides directly orindirectly
suchentities, privileges oradvantages insupplying financial services, theMember shallensure that
suchentities accord national treatment tofinancial service suppliers ofanyother Member resident in
theterritory oftheMember.
D. Definitions
Forthepurposes ofthisapproach
1. Anon-resident supplier offinancial services isafinancial service supplier ofaMember which
supplies afinancial service intotheterritory ofanother Member fromanestablishment located inthe
territory ofanother Member, regardless ofwhether suchafinancial service supplier hasorhasnot
acommercial presence intheterritory oftheMember inwhich thefinancial service issupplied.
2. "Commercial presence" means anenterprise within aMember 'sterritory forthesupply of
financial services andincludes wholly orpartly-owned subsidiaries, jointventures, partnerships, sole
proprietorships,franchisingoperations,branches,agencies,representativeofficesorotherorganizations.
3. Anewfinancial service isaservice ofafinancial nature, including services related toexisting
andnewproducts orthemanner inwhich aproduct isdelivered, thatisnotsupplied byanyfinancial
service supplier intheterritory ofaparticular Member butwhich issupplied intheterritory ofanother
Member.