Japon

WT/TPR/S/397/Rev.
6 November2020
(20-7890) Page: 1/208
Trade Policy Review Body
TRADE POLICY REVIEW
REPORT BY THE SECRETARIAT
JAPAN
Revision
This report, prepared for the fourteenth Trade Policy Review of Japan, has been drawn up by the
WTO Secretariat on its own responsibility. The Secretariat has, as required by the Agreement
establishing the Trade Policy Review Mechanism (Annex 3 of the Marrakesh Agreement Establishing
the World Trade Organization), sought clarification from Japan on its trade policies and practices.
Any technical questions arising from this report may be addressed to Mr. Sergios Stamnas (tel.: 022
739 5382); Mr. Pierre Latrille (tel.: 022 739 5266) and Ms. Katie Waters (tel.: 022 739 5067).
Document WT/TPR/G/397 contains the policy statement submitted by Japan.
Note: This report was drafted in English.

WT/TPR/S/397/Rev.1 • Japan
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CONTENTS
SUMMARY ...................................................................................................................... 10
1 ECONOMIC ENVIRONMENT ........................................................................................ 15
1.1 Main Features of the Economy .....................................................................................15
1.2 Recent Economic Developments ...................................................................................17
1.2.1 Growth, income, and employment .............................................................................17
1.2.2 Prices .....................................................................................................................20
1.2.3 Main macroeconomic policy developments ..................................................................20
1.2.3.1 Monetary and exchange rate policy .........................................................................20
1.2.3.2 Fiscal policy..........................................................................................................22
1.2.4 Structural policies ....................................................................................................22
1.2.4.1 Tax reform ...........................................................................................................22
1.2.4.2 Privatization .........................................................................................................23
1.2.4.3 Competition policy and corporate governance ...........................................................23
1.2.4.4 Labour market policies...........................................................................................24
1.2.5 Balance of payments ................................................................................................25
1.3 Developments in Trade and Investment ........................................................................26
1.3.1 Trends and patterns in merchandise and services trade ................................................26
1.3.2 Trends and patterns in foreign direct investment (FDI) .................................................29
2 TRADE AND INVESTMENT REGIMES........................................................................... 34
2.1 General Framework ....................................................................................................34
2.2 Trade Policy Formulation and Objectives........................................................................35
2.3 Trade Agreements and Arrangements ...........................................................................37
2.3.1 WTO ......................................................................................................................37
2.3.2 Regional and preferential agreements ........................................................................41
2.3.2.1 Regional trade agreements (RTAs) ..........................................................................41
2.3.2.1.1 CPTPP ...............................................................................................................42
2.3.2.1.2 EU-Japan Economic Partnership Agreement ...........................................................43
2.3.2.2 Preferential trade agreements (PTAs) ......................................................................43
2.3.2.3 Other agreements and arrangements ......................................................................45
2.3.2.3.1 Asia-Pacific Economic Cooperation (APEC) .............................................................45
2.3.2.3.2 Other................................................................................................................46
2.4 Investment Regime ....................................................................................................46
2.4.1 Investment framework .............................................................................................46
2.4.2 Business environment ..............................................................................................49
3 TRADE POLICIES AND PRACTICES BY MEASURE ........................................................ 52
3.1 Measures Directly Affecting Imports ..............................................................................52
3.1.1 Customs procedures, valuation, and requirements .......................................................52
3.1.2 Customs valuation ...................................................................................................54
3.1.3 Rules of origin .........................................................................................................54
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3.1.4 Tariffs ....................................................................................................................55

3.1.4.1 MFN applied tariff ..................................................................................................55
3.1.4.2 Bound tariff ..........................................................................................................60
3.1.4.3 Tariff reductions and exemptions ............................................................................60
3.1.4.4 Preferential tariff ...................................................................................................62
3.1.4.5 Retaliatory tariff system.........................................................................................63
3.1.5 Other charges affecting imports .................................................................................63
3.1.6 Import prohibitions, licensing and quotas ....................................................................63
3.1.6.1 Import prohibitions ...............................................................................................63
3.1.6.2 Import licensing (approvals) and quotas ..................................................................63
3.1.7 Anti-dumping, countervailing, and safeguard measures ................................................68
3.1.7.1 Anti-dumping measures .........................................................................................68
3.1.7.2 Countervailing measures ........................................................................................69
3.1.7.3 Safeguards...........................................................................................................70
3.2 Measures Directly Affecting Exports ..............................................................................70
3.2.1 Customs procedures and requirements .......................................................................70
3.2.2 Taxes, charges, and levies ........................................................................................70
3.2.3 Export prohibitions, restrictions, and licensing .............................................................70
3.2.4 Export support and promotion ...................................................................................73
3.2.4.1 Export subsidies ...................................................................................................73
3.2.4.2 Taxation and special customs procedures .................................................................73
3.2.4.3 Free zones and free ports ......................................................................................73
3.2.4.4 Export promotion ..................................................................................................74
3.2.5 Export finance, insurance, and guarantees ..................................................................74
3.3 Measures Directly Affecting Production and Trade ...........................................................76
3.3.1 Incentives ...............................................................................................................76
3.3.1.1 Taxation ..............................................................................................................77
3.3.1.2 Subsidies and other assistance programmes.............................................................79
3.3.2 Standards and other technical requirements ...............................................................81
3.3.2.1 Legal and institutional framework ...........................................................................81
3.3.2.2 Standards ............................................................................................................83
3.3.2.3 Technical regulations .............................................................................................84
3.3.2.4 Conformity assessment and inspection ....................................................................84
3.3.2.5 Labelling requirements ..........................................................................................85
3.3.3 Sanitary and phytosanitary (SPS) requirements ...........................................................86
3.3.3.1 SPS measures ......................................................................................................86
3.3.3.2 Legislative framework ............................................................................................87
3.3.3.2.1 The Food Safety Basic Act ...................................................................................87
3.3.3.2.2 The Food Sanitation Act ......................................................................................87
3.3.3.2.3 The Plant Protection Act ......................................................................................89
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3.3.3.2.4 Act on Livestock Infectious Diseases Control ..........................................................89

3.3.3.2.5 Agricultural Chemicals Control Act ........................................................................90
3.3.3.2.6 Other................................................................................................................90
3.3.4 Competition policy and price controls .........................................................................90
3.3.4.1 Competition policy ................................................................................................90
3.3.4.2 Price controls........................................................................................................94
3.3.4.3 Corporate governance ...........................................................................................95
3.3.5 State trading, state-owned enterprises (SOEs), and privatization ...................................96
3.3.6 Government procurement .........................................................................................98
3.3.7 Intellectual property rights (IPRs) ............................................................................ 105
3.3.7.1 Features and IP strategy ...................................................................................... 105
3.3.7.2 Policies on promotion and commercialization of innovation ....................................... 107
3.3.7.3 International cooperation and harmonization .......................................................... 110
3.3.7.4 General regulatory framework .............................................................................. 112
3.3.7.5 Patents .............................................................................................................. 112
3.3.7.6 Utility models (UMs) ............................................................................................ 115
3.3.7.7 Designs ............................................................................................................. 116
3.3.7.8 Trademarks ........................................................................................................ 116
3.3.7.9 Geographical indications ...................................................................................... 118
3.3.7.10 Undisclosed information and trade secrets ............................................................ 119
3.3.7.11 Copyright ......................................................................................................... 119
3.3.7.12 Enforcement ..................................................................................................... 120
4 TRADE POLICIES BY SECTOR ................................................................................... 124
4.1 Agriculture, Forestry, and Fisheries ............................................................................. 124
4.1.1 Agriculture ............................................................................................................ 124
4.1.1.1 Trade ................................................................................................................ 125
4.1.1.2 Agricultural policy ............................................................................................... 126
4.1.1.3 Institutional and legal framework .......................................................................... 128
4.1.1.4 Trade policies and border measures ...................................................................... 129
4.1.1.5 Domestic support ................................................................................................ 133
4.1.1.5.1 General support programmes ............................................................................ 133
4.1.1.5.2 Support levels.................................................................................................. 134
4.1.1.5.2.1 WTO notifications .......................................................................................... 134
4.1.1.5.2.2 OECD indicators ............................................................................................ 135
4.1.1.5.3 Specific products .............................................................................................. 137
4.1.1.5.3.1 Rice ............................................................................................................. 137
4.1.1.5.3.2 Other cereals, sugar beet, starch potatoes, buckwheat, and rapeseed .................. 138
4.1.1.5.3.3 Fruits and vegetables ..................................................................................... 138
4.1.1.5.3.4 Tobacco ....................................................................................................... 139
4.1.1.5.3.5 Livestock and livestock products ..................................................................... 139
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4.1.1.5.3.6 Dairy ........................................................................................................... 140

4.1.2 Fisheries ............................................................................................................... 141
4.1.2.1 Features ............................................................................................................ 141
4.1.2.2 Policy and institutional issues ............................................................................... 145
4.1.2.3 Regulatory developments ..................................................................................... 145
4.1.2.4 Stock management ............................................................................................. 145
4.1.2.5 International agreements ..................................................................................... 146
4.1.2.6 Border and domestic support measures ................................................................. 146
4.2 Mining and Energy .................................................................................................... 148
4.2.1 Mining .................................................................................................................. 148
Policy and institutional developments .................................................................... 149
Regulatory and operational developments .............................................................. 149
Energy ................................................................................................................. 150
Hydrocarbons ..................................................................................................... 154
4.2.2.1.1 Coal ............................................................................................................... 154
4.2.2.1.2 Oil .................................................................................................................. 155
4.2.2.1.3 Gas ................................................................................................................ 155
Electricity ........................................................................................................... 156
4.3 Manufacturing .......................................................................................................... 159
4.3.1 Features ............................................................................................................... 159
4.3.2 Policy and institutional developments ....................................................................... 160
4.3.3 Border measures ................................................................................................... 161
4.3.4 Domestic support measures .................................................................................... 162
4.4 Services .................................................................................................................. 163
4.4.1 Financial services ................................................................................................... 163
4.4.1.1 Regulatory evolutions in the banking sector ........................................................... 166
4.4.1.2 Regulatory evolution in other financial services sectors ............................................ 168
4.4.2 Telecommunication services .................................................................................... 168
4.4.3 Postal, courier and express services ......................................................................... 171
4.4.4 Transport services ................................................................................................. 174
4.4.4.1 Maritime transport .............................................................................................. 174
4.4.4.1.1 Market overview .............................................................................................. 174
4.4.4.1.2 Regulatory developments .................................................................................. 175
4.4.4.2 Air transport....................................................................................................... 178
4.4.5 Environmental services ........................................................................................... 181
4.4.5.1 Water distribution services and waste water treatment/sewage services .................... 181
4.4.5.2 Waste management services ................................................................................ 183
4.4.5.3 Air and noise pollution abatement services ............................................................. 185
4.4.5.4 Remediation, and nature and landscape protection services ..................................... 185
4.4.6 Distribution services with a specific focus on e–commerce .......................................... 186
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4.4.7 Legal services ....................................................................................................... 188

5 APPENDIX TABLES .................................................................................................. 191
CHARTS
Chart 1.1 Product composition of merchandise trade, 2015 and 2018 .......................................27
Chart 1.2 Direction of merchandise trade, 2015 and 2018 .......................................................28
Chart 3.1 Tariff distribution by type of duty, FY2019 ..............................................................56
Chart 3.2 Share of non-ad valorem duties, by HS section, FY2019 ...........................................57
Chart 3.3 Tariff escalation by 2-digit ISIC industry, FY2019 .....................................................59
Chart 3.4 Simple average applied MFN tariff rates, by HS section, FY2016 and FY2019 ...............60
Chart 3.5 Systems for reduction and exemption of customs duty .............................................61
Chart 3.6 IP revenue, 1996-2018 ....................................................................................... 105
Chart 3.7 Charges for the use of IP, n.i.e., 1996-2018 .......................................................... 106
Chart 3.8 Import seizure, 2014-18 ..................................................................................... 121
Chart 3.9 IP cases handled by courts, and individuals arrested for IP infringement, 2009-18 ..... 122
Chart 4.1 Trade in agriculture, 2014-18 .............................................................................. 125
Chart 4.2 Support notified to the WTO Committee on Agriculture, FY2012-16 .......................... 134
Chart 4.3 Amber Box support, FY2012-16 ........................................................................... 135
Chart 4.4 Value of production and support to agriculture, 2012-18 ......................................... 136
Chart 4.5 Fisheries and aquaculture production, FY2017 ....................................................... 141
Chart 4.6 Trade of fish and fishery products, by main partners, 2017 ..................................... 144
Chart 4.7 Primary energy supply, FY2017 and FY2030 (planned) ........................................... 151
Chart 4.8 Relative shares of the various renewable energies for FY2017 and FY2030 (planned) . 151
Chart 4.9 Target costs of energy storage systems in households, FY2016-2020 ....................... 152
Chart 4.10 Electricity and oil prices trend ............................................................................ 157
Chart 4.11 Power-generation mix, FY2017 and FY2030 (planned) .......................................... 157
Chart 4.12 Electricity system reform .................................................................................. 158
TABLES
Table 1.1 Selected macroeconomic indicators, 2014-18 ..........................................................16

Table 1.2 Basic economic indicators, 2014-17........................................................................18
Table 1.3 Balance of payments, 2014-18 ..............................................................................25
Table 1.4 Trade in services, 2014-18 ....................................................................................29
Table 1.5 Inbound and outbound flows of direct investment, by activity, 2014-18 ......................30
Table 1.6 Inbound and outbound flows of direct investment, by main origin and destination,
2014-18 ...........................................................................................................................31
Table 1.7 Inbound and outbound stock of direct investment, by main origin and destination,
2014-18 ...........................................................................................................................32
Table 2.1 Major trade-related laws and regulations, November 2019 ........................................35
Table 2.2 Selected notifications under WTO agreements, January 2017-November 2019 .............38
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Table 2.3 Selected features of RTAs in force ..........................................................................42

Table 2.4 GSP graduation rules ............................................................................................44
Table 2.5 Main beneficiaries of GSP scheme, 2017-18 ............................................................45
Table 2.6 FDI restrictions, 2019 ...........................................................................................47
Table 3.1 Structure of MFN tariffs FY2016 and FY2019 ............................................................56
Table 3.2 Tariff summary, FY2019........................................................................................58
Table 3.3 Summary analysis of preferential tariffs, FY2019 .....................................................62
Table 3.4 Goods subject to import licensing under the Import Trade Control Order.....................64
Table 3.5 Allocation of import quotas by item, FY2018 ............................................................66
Table 3.6 Import quotas on fisheries products 2016-17 ..........................................................67
Table 3.7 Anti-dumping measures in force, July 2019 .............................................................68
Table 3.8 Bonded areas, features .........................................................................................73
Table 3.9 NEXI trade insurance products, 2018......................................................................75
Table 3.10 Tax revenue, FY2015-19 .....................................................................................76
Table 3.11 Central government tax incentives, 2019 ..............................................................78
Table 3.12 Subsidy and other assistance schemes terminated, 2017-19 ...................................79
Table 3.13 Subsidy to promote clean energy vehicle purchases ...............................................80
Table 3.14 Main laws on standards and technical regulations ...................................................81
Table 3.15 JISs established, revised, and withdrawn, April 2018-March 2019 ............................83
Table 3.16 Exemptions from the Anti-Monopoly Act (AMA), 2019 .............................................92
Table 3.17 Enforcement of competition policy, 2012-18 ..........................................................94
Table 3.18 Large state enterprises, FY2017 ...........................................................................97
Table 3.19 State-trading enterprises notified to the WTO under Article XVII, 2018 .....................98
Table 3.20 Use of different procurement methods by the central Government and IAA
entities, 2017 .................................................................................................................. 101
Table 3.21 Foreign participation in central government and IAA entity procurement ................. 101
Table 3.22 Awards to foreign suppliers by origin, 2017 ......................................................... 101
Table 3.23 Central government and IAA entity procurement, by product and by origin,
2016 and 2017 ................................................................................................................ 102
Table 3.24 Central government and IAA entity procurement, by type of service, 2016 and
2017 .............................................................................................................................. 103
Table 3.25 Patent applications and patents granted, 2009-18 ................................................ 114
Table 3.26 Patent applications to the JPO, by field of technology and origin, top five fields
of technology in 2016 ....................................................................................................... 114
Table 3.27 UM applications and registrations, 2009-18 ......................................................... 116
Table 3.28 Design applications and registrations, 2009-18 .................................................... 116
Table 3.29 Trademark applications and registrations, 2009-18 .............................................. 117
Table 3.30 Confiscated IPR-infringing goods, 2013-18 .......................................................... 121
Table 4.1 Farm households and average farm size, 2015-18 ................................................. 124
Table 4.2 Total agricultural production and production of selected products, 2014-18 ............... 125
Table 4.3 Imports of agricultural products, 2014-18 ............................................................. 125
Table 4.4 Exports of agricultural products, 2014-18 ............................................................. 126
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Table 4.5 SSGs, FY2017/18 ............................................................................................... 130

Table 4.6 TRQ fill ratio, FY2017/18 ..................................................................................... 131
Table 4.7 Other products for which tariff quotas are applied, 2019 ......................................... 132
Table 4.8 Imports under the SBS system, FY2013-17 ........................................................... 133
Table 4.9 Food assistance FY2013-FY2016 .......................................................................... 133
Table 4.10 Total PSE and SCT values for selected commodities, 2012-18 ................................ 136
Table 4.11 Payment rates for other cereals, sugar beet, starch potatoes, buckwheat, and
rapeseed, 2016 and 2019 ................................................................................................. 138
Table 4.12 Administered prices for calves, FY2019 (JPY) ....................................................... 140
Table 4.13 Exports of fish and fish products, 2014-18 .......................................................... 142
Table 4.14 Imports of fish and fish products, 2014-18 .......................................................... 143
Table 4.15 Fisheries subsidies notified in July 2019 for FY2016 and FY2017............................. 147
Table 4.16 Basic indicators on mining, 2016 ........................................................................ 148
Table 4.17 Mining production, 2015-18 ............................................................................... 148
Table 4.18 Major mining imports ........................................................................................ 149
Table 4.19 Domestic support to energy-related projects, 2020 .............................................. 153
Table 4.20 Domestic support to some manufacturing-related projects .................................... 162
Table 4.21 Telecommunication prices, 2017 ........................................................................ 170
Table 4.22 Maritime transport, main economic indicators ...................................................... 175
Table 4.23 Overview of the ports' recently accorded terminal concessions ............................... 177
Table 4.24 Overview of airlines, 2018 ................................................................................. 179
Table 4.25 Overview of airport concession process ............................................................... 180
Table 4.26 Main characteristics of public-private contractual arrangements for the
management and operation of water distribution ................................................................. 182
management and operation of sewage treatment facilities .................................................... 183
Table 4.28 Number of individuals and firms exercising legal professions ................................. 188
BOXES
Box 2.1 Investment framework ............................................................................................49

Box 2.2 National Strategic Special Zones ..............................................................................51
Box 3.1 Changes to goods listed in Appended Tables I and II of the Export Trade Control
Order, 2017-19..................................................................................................................72
Box 3.2 Key agencies responsible for SPS measures ...............................................................86
Box 4.1 Main economic indicators of the financial services sector, 2016-18 ............................. 163
Box 4.2 Main indicators of the banking sector, 2015-18 ........................................................ 164
Box 4.3 Main indicators of the insurance sector, 2015-18 ...................................................... 164
Box 4.4 Main indicators of the pension fund and stock exchange and securities sectors ............ 165
Box 4.5 Main economic indicators of the telecommunications sector ....................................... 168
Box 4.6 Postal, courier and express domestic regime............................................................ 171
Box 4.7 Market overview of water distribution and waste water treatment/sewage services ...... 181
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Box 4.8 Market overview of waste management services ...................................................... 184

Box 4.9 Noise pollution abatement services ......................................................................... 185
Box 4.10 Regulatory overview of remediation, and nature and landscape protection services .... 186
APPENDIX TABLES
Table A1.1 Merchandise exports by group of products, 2014-18............................................. 191

Table A1.2 Merchandise imports by group of products, 2014-18 ............................................ 193
Table A1.3 Merchandise exports by destination, 2014-18 ...................................................... 195
Table A1.4 Merchandise imports by origin, 2014-18 ............................................................. 196
Table A3.1 Taxation rates, November 2019 ......................................................................... 197

Table A3.2 Tax credit for R&D expenses .............................................................................. 199
Table A3.3 Provisions of the IP chapters of the CPTPP and EU-Japan EPA ................................ 200
Table A3.4 Summary of laws protecting IPRs, 2019 .............................................................. 202
Table A4.1 Self-sufficiency at the product-specific level on a volume basis, 2014-18 ................ 204
Table A4.2 Bilateral air transport agreements, 2019 ............................................................. 205
Table A4.3 State of implementation of the Basel regulatory framework ................................... 207
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SUMMARY
1. Since the previous Trade Policy Review in 2017, the Government continued to support growth
by easing financial conditions, reducing the fiscal deficit, and raising employment and female labour
force participation, thus ensuring Japan's longest economic expansion of the post-war era. Annual
GDP growth peaked at 1.9% in 2017, and its annual average rate stood at 1.1% (2016-18), a minor
slowdown compared to previous performance (averaging 1.2% over 2013-15). Monetary and fiscal
stimulus measures are being used to spur economic recovery. Japan has maintained its position as
the world's third largest and fifth most competitive economy (2018). According to latest available
data, income inequality and a poverty gap remained virtually unchanged. Inflation dropped
considerably below the Bank of Japan's target before picking up (1% in 2018), whereas the relatively
low unemployment rate continued to decline (2.4% in 2018).
2. During the review period, trade-related structural reforms (e.g. in the areas of taxation,
competition policy, corporate governance, and labour market policies) were undertaken. Both multi
factor and labour productivity registered positive growth, and targets were set for the latter; SMEs'
productivity in manufacturing remains relatively low compared to large firms. Monetary policy,
involving, among others, Quantitative and Qualitative Monetary Easing (QQE) with negative interest
rate, continued to provide a monetary stimulus to growth and help building a stable financial
environment.
3. Japan maintains a free-floating exchange rate regime; no foreign exchange intervention took
place during the review period. Heightened global uncertainty contributed to a slight appreciation in
the JPY/USD exchange rate. The current account registered a larger overall surplus, that peaked at
4.1% of GDP in 2017, inter alia, due to a rising primary income surplus deriving mainly from
investment income, and shrank in 2018 to 3.5% of GDP, reflecting smaller goods trade and income
balances; this ratio was estimated to remain virtually unchanged in 2019. Foreign exchange reserves
(excluding gold) increased steadily. Gross external debt also rose steadily over the review period
(81% of GDP in 2018). The fiscal deficit, often financed through supplementary budgets to the
annual budget, declined slightly (3.2% of GDP in 2017 and 2018) but the gross financial liabilities
of general government rose (224.2% of GDP in 2018). The authorities envisaged taking temporary
and special offsetting/mitigating fiscal measures in the initial budgets for FY 2019 and FY 2020 to
address concerns related to the increase in the consumption tax rate from 8% to 10% on 1 October
2019.
4. The relative importance of international trade in Japan's economy, its degree of openness,
and its integration into the world economy and global value chains continued to be reflected by the
ratio of its trade (exports plus imports) in goods and services to GDP; despite a drop from its 2014
peak to a 2016 trough, this ratio increased to 36.7% in 2018. Notwithstanding some minor
fluctuations in trade shares, Japan's main trading partners remain China, the United States and the
European Union, whereas its main inbound/outbound foreign direct investment (FDI) partners were
virtually the same, i.e. the United States, the British Cayman Islands, the European Union and the
Republic of Korea. The FDI inbound stock continued to rise steadily and was largely held by European
Union investors. Government initiatives to attract FDI have been focused on providing matching and
advisory services. Over the review period, the main law governing FDI, the Foreign Exchange and
Foreign Trade Act, was amended for reasons of security protection, by: expanding the scope of prior
checking of unlisted stock transfers between foreign investors; and introducing a provision that
unregistered foreign investors may be subject to executive orders, including orders to sell their
holding stocks. Prior notification and approval requirements are in place for investments where there
could be significant adverse effects on the smooth management of the national economy or on the
grounds of public order, public safety or national security. FDI restrictions remain in place in the
telecommunications, broadcasting and radio sectors.
5. Japan aims to develop "free, fair and high-level trade rules" domestically, with key trading
partners and in international fora (including the WTO), as well as to make progress in reinforcing
economic ties and cooperation with emerging economies. Its 2018 White Paper on International
Economy and Trade includes promoting exports and the use of Economic Partnership Agreements
(EPAs). Trade-related policy objectives are also contained in various other strategies also being
implemented, including: the evolving Abenomics programme; the 2016 Japan Revitalization
Strategy; the Future Investment Strategy; the New Economic Policy Package; and the 2019 Growth
Strategy. Over the review period, Japan was involved in three new dispute settlement cases as
complainant, one new dispute settlement case as respondent, and reserved its third-party rights in
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34 cases. Japan maintained a strong record of notifications to the WTO, although up-to-date
notifications on domestic support in agriculture and government procurement are outstanding. Since
2017, new regional trade agreements that have entered into force for Japan are: the Comprehensive
and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EU-Japan EPA. Japan also
signed the First Protocol to Amend the Agreement on ASEAN-Japan Comprehensive Economic
Partnership (AJCEP), which includes chapters on trade in services and on investment, as well as a
trade agreement with the United States. Changes were made to the framework for graduation from
Japan's GSP scheme, with a view to granting preferences to the economies that need them most.
Key initiatives to improve the business environment include: introducing labour force reforms;
improving corporate governance; and lowering corporate tax. Regulatory reform pilot schemes
continue to be undertaken through the National Strategic Special Zone initiative.
6. The general thrust of Japan's trade policy remained relatively unchanged during the period
under review. The tariff remains one of the main trade policy instruments and a minor source of tax
revenue (1.65% of total tax revenue in FY2019). The structure of the MFN applied tariff remains
complex, with a total of 272 tariff rates (same as in FY2016); there are 136 different ad valorem
rates, 75 different specific rates, 29 different alternate rates and 24 different compound rates, as
well as 8 different other types of duty. In FY2019, Japan's overall simple average applied MFN tariff
rate rose slightly to 6.3% (up from 6.1% in FY2016), mainly due to higher AVEs and, to a much
lesser extent, to a HS nomenclature change. The simple average tariff rate for agricultural products
(WTO definition) is 17.9% compared with 3.5% for non-agricultural products. Duty-free lines
represent 40.5% of all lines. 7.1% of Japan's tariff lines are non-ad valorem, and all the highest
tariffs have non-ad valorem rates. Japan bound 98.1% of tariff lines, and the overall gap between
the simple averages of MFN applied and bound rates remains minimal, at 0.05 percentage points,
thus conferring a high level of predictability. Under Japan's RTAs, preferential tariffs have
significantly increased market access for these trading partners by around doubling the number of
duty-free tariff lines.
7. Since 2017, there have only been minor changes to Japan's customs procedures. These
include the introduction of: tougher penalties for failure to obtain the required import/export
permissions; a new principle on cargo reporting; and flexibility to authorized economic operators to
lodge their import/export declarations at any customs office, not just the one where their
imports/exports are stored.
8. During the review period, changes to Japan's import licensing regime related to the removal
of import restrictions on: (i) whales and their preparations, due to Japan's withdrawal from the
International Whaling Commission; and (ii) weapons and other items from Eritrea because sanctions
were lifted by a United Nations Security Council resolution. Import quotas continue to be applied to
various marine products, with the aim of conserving exhaustible natural resources and enforcing
government measures to restrict quantities of the like domestic products; quota fill rates in 2017
ranged from 2.7% to 98.4%.
9. Amendments to the legislation on anti-dumping and countervailing measures aimed to ease

the conditions for applicants requesting the imposition of these measures. Japan maintains seven
anti-dumping measures, relating to five products and applying to two trading partners. Definitive
duties were imposed for the first time during the review period on polyethylene terephthalate with
a high degree of polymerization from China and carbon steel butt-welding fittings from China and
the Republic of Korea; they were removed on electrolytic manganese dioxide from South Africa and
Spain. Japan did not apply any safeguard or countervailing measures during the review period, nor
did it initiate any investigations in these areas.
10. Over the review period, there were various changes to Japan's export control regime with
respect to goods and destinations. Japan does not levy any export taxes, nor does it maintain any
export quotas or operate export subsidy programmes. The Nippon Export and Investment Insurance,
one of Japan's official export credit agencies, was transformed from an incorporated administrative
agency to a wholly government owned special stock company, in order to, inter alia, better reflect
in its business practices the Government's priority areas.
11. Domestic support to production and trade remains in place. It is available to foreign and
domestic companies through tax incentives, grants and loan schemes. New programmes launched
over the review period were aimed at: promoting business investment by local SMEs, assisting the
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business succession of SMEs, and spurring wage hikes and productivity. Activity-specific support
was provided by central or local governments.
12. During the review period, various amendments were made to standards legislation, inter alia,
to expand the scope of Japanese Industrial Standards to encompass services, programmes and other
electronic records and business management systems, as well as to allow standards to be drafted
by accredited private-sector associations. The scope of Japanese Agricultural Standards was
enlarged to include production processes, handling methods (related to services) and testing
methods. Amendments to food labelling standards, inter alia, require the place of origin of the
product's heaviest ingredient to be labelled, and introduce stricter requirements for the use of
"non-GM" labels.
13. Concerning SPS, the Food Sanitation Act was amended in order to reflect changing dietary
patterns and the environment surrounding food in Japan, as well as to increase hygiene controls;
with respect to imports, control processes applied to the competent authorities in the country of
export have been strengthened. The Agricultural Chemicals Control Act was also amended, with a
view to improving pesticide safety and contribute to more efficient agriculture. Japan sets some
standards on food additives and maximum residue limits (MRLs) that are different from Codex
standards and MRLs; these are apparently based on scientific evidence. Over the review period,
Japan expanded the scope of animal quarantine for raw milk to also include milk products.
14. State participation in certain activities persists. State trading entities engaging in leaf tobacco,
opium, rice, wheat, barley, and milk products remained in place. Major commercial state-owned
enterprises include those engaging in energy, financial services, telecommunications and some
transport-related activities. Market monopolies are retained in the domestic manufacturing of
tobacco and in the importation of leaf tobacco. During the review period, the basic rules on
government procurement remained virtually unchanged. Japan, a WTO Government Procurement
Agreement signatory, promotes Green procurement and the participation of SMEs in the market.
Despite no origin-based restrictions, foreign companies continue to retain a low share in the public
procurement market.
15. Since the last Review, the legal framework governing competition policy was updated to,
inter alia, introduce procedural undertakings under the CPTPP. The number of cease-and-desist
orders, as well as the surcharge payment amounts, dropped. Price surveys remain in place on certain
pharmaceutical products based on a drug price standard. Action was taken to improve corporate
governance by amending the main regulatory framework in this area.
16. Intellectual property (IP) remains of vital importance to the economy, and revenue from IP
rights grew exponentially in recent years. A new IP Strategy Vision was released in 2018 to offer a
medium- to long-term perspective on the evolution of society and the IP system. Recent
amendments to legislation were linked to this Strategy, and related to: patents, trademarks and
geographical indications; expansions in the scope and length of protection for designs; new data
protections; new copyright restrictions; and measures to facilitate IP right enforcement. An
Integrated Innovation Strategy was adopted in 2018 and an Integrated Innovation Strategy
Promotion Council was set up.
17. The agricultural sector accounts for a small share of GDP (1.2% in 2017) and employment
(3.8% in the same year), and continues to be characterized by small farm holdings, most of which
are run as side-businesses. While agricultural output and exports were on a growing trend over the
review period, Japan continues to run a significant trade deficit in agricultural goods. Agricultural
policy goals, inter alia, include making agriculture a growth industry, with greater private-sector
participation, increasing exports, and reaching certain self-sufficiency targets. Support to the
agricultural sector (0.84% of GDP in 2018) remains relatively high, and was estimated to be over
double the OECD average. Tariffs vary considerably among agricultural products, with just below
one quarter duty-free and a maximum tariff (AVE, out of quota) of 499.7%. Japan applies 18 tariff
rate quotas, covering 101 tariff lines (HS six-digit level); fill rates ranged from 23.4% to 305.6%.
Over the review period, Japan applied either volume- or price-based special safeguards several times
to out-of-quota imports of a variety of products. Key developments over the review period were:
the abolition of direct payments for rice and rice production volume targets (although direct
payments to rice farmers remain in place for optimizing the use of paddy fields); the introduction of
a new revenue insurance programme applicable to almost all farm products; a review of the
Agricultural Mutual Aid system; the abolition of administered prices for beef and pig meat; increased
- 13 -
support for domestic beef and pork producers; and the introduction of a modified support system
for milk.
18. During the review period, the fisheries production, fishing fleet, number of fishermen and fish
consumption all declined. Japan amended its Fisheries Act in 2018 to adopt the system of individual
quotas, transferrable under certain conditions, within a Total Allowable Catch system, and to open
the sector to private investors in addition to cooperatives by reforming the allocation of fishing rights.
For FY2019, the average MFN tariff applied on fish and fish products was 6.1%, and rates ranged
from zero to 15% (same in FY2016). Programmes to support fisheries totalled JPY 68.7 billion in
FY2017. Various measures against illegal, unreported and unregulated fishing were taken. In
December 2018, Japan announced its withdrawal from the International Convention for the
Regulation of Whaling, and its intent to resume commercial whaling from July 2019. This withdrawal
became effective on 30 June 2019.
19. The mining and quarrying sector continued to contribute a small share to GDP and
employment (0.1% in 2017). Mineral resource exploitation is undertaken under concession
agreements. Japan continues to import nearly 92% of its energy supplies and, as such, remains
vulnerable to global commodity price movements. A 2018 Strategic Energy Plan is aimed, inter alia,
at increasing the share of locally produced renewable energy (including nuclear) in the total energy
mix, from 12% in 2017 to 24% in 2030, restoring nuclear capacity, meeting national objectives for
the reduction of greenhouse gas emissions, developing electric and hydrogen vehicles, and
promoting energetically autonomous housing, and raising energy efficiency. During the review
period, Japan pursued the liberalization and reform of its electricity and gas sectors. For both sectors,
entry to the retail market was completely liberalized, and the next phase, i.e. the unbundling of
vertically integrated regional utility, is underway. Electricity retail prices remain regulated.
20. Manufacturing (20.8% of GDP in 2018) accounts for the majority of merchandise exports, and
remains driven by the transport equipment, machinery (general purpose, production and business-
oriented), food products, chemical, and basic metals activities. During the review period, certain
manufacturing policy developments, including artificial intelligence, robotics and related plans
interlinked with services activities, were undertaken. Since the previous review, the average MFN
applied tariff for manufactured products dropped, and TRQs continued to apply on 62 manufactured
items; peak rates (AVEs) affect footwear (219.4%) and silk (97.9%). A few more industrial items
were subject to anti-dumping duties. Domestic support continued under several non-industry-
specific schemes, involving tax and non-tax incentives; activity-specific incentives were available,
inter alia, to the bekko (tortoiseshell) and ivory crafts industries, the leather and leather goods
industries, the manufacture of traditional craft products, R&D for care robot equipment, sochu
manufacture, and fuel-cell vehicles and connected industries
21. The share of services in GDP and total employment stood at 69.5% and 72.7%, respectively,
in 2017; in 2018, services represented 7.2% of total merchandise and services exports. During the
review period, the financial services regime remained basically unchanged. The Financial Services
Authority was reorganized to be less sanction-oriented and to encourage financial services
stakeholders to develop and consolidate their position in the market. Basel IV principles and anti-
money laundering measures were progressively implemented. Japan is in the process of developing
a safe regulatory framework for e-payments and crypto currencies. High-speed trading of securities
was further regulated.
22. During the period under review, changes to the telecommunications services regulatory
framework involved the protection of consumers and their ability to change operators without
excessive penalties and keep the same number. The prices of telecom services remain relatively
high by international standards. Modern networks and equipment, such as LTE, 5G and IoT, are
being actively deployed.
23. The regime governing the postal, courier and express regimes remained stable during the
period. The Japan Post Holdings privatization process was relaunched in 2017, with the sale of 23.6%
of government shares, and a further sale is scheduled. The universal service encompasses the
totality of postal items and services. "General correspondence services" and "special correspondence
services" were liberalized in 2002, but no licences were awarded to private operators for general
correspondence services, and the 532 special correspondence services operators are all Japanese
despite a non-discriminatory regime. Some foreign express carriers operate in Japan and receive
national treatment except air cabotage rights.
- 14 -
24. The air transport regime remains basically unchanged, except for the concession process of
airports which was accelerated. Japan signed several air services agreements, liberalizing additional
frequencies and capacities, during the review period. Regarding maritime transport, the ports
concession process was also accelerated, and support for the Japanese merchant fleet was prolonged
and extended. Japan imposes no restrictions on foreign carriers, except for access to the flag and
cabotage. The port sector remains open to foreign investment.
25. During the review period, the regime of distribution services remained unchanged. There are
no economic needs tests for large stores, and several major foreign distributors are present in the
market. The share of e-commerce in the distribution of physical goods is progressing smoothly but
at a faster pace in the Business to Business than in the Business to Consumers segment.
26. Network environmental services, such as distribution of water, sewage and waste disposal,
remain open to the private sector, including foreign operators and investors, via various PPP
formulas. However, no foreign operators are present in these segments. National treatment applies
across the board to all environmental services.
27. The practice of legal services is not reserved for nationals but, with respect to the practice of
Japanese law, a Japanese qualification is required. Foreign firms can establish and employ Japanese
lawyers to practice Japanese law.
- 15 -
1 ECONOMIC ENVIRONMENT
1.1 Main Features of the Economy
1.1. Japan's highly-developed, high-income and market-oriented economy, with a population of

126.2 million (as at 1 March 2019), remains the world's third largest, behind the United States and
China, in gross domestic product (GDP) terms.1 According to the World Bank economic complexity
index, it remains the world's most diverse economy, due to the sophistication of its exports, with
the services sector constituting the backbone of the economy.2 Japan has an ageing population, and
the highest ratio of public debt (gross financial liabilities of general government) to GDP of any
developed nation. Small and medium-sized enterprises (SMEs) continue to play a considerable role
in the economy. However, according to the Organisation for Economic Co-operation and
Development (OECD), despite public support, they face a productivity gap with large companies,
and struggle to take advantage of international trade opportunities (Section 1.2.1). 3 The
Government continued to support growth (Table 1.1) by easing financial conditions, reducing the
fiscal deficit, and raising employment and female labour force participation, thus ensuring Japan's
longest economic expansion in the post-war era.4 According to latest available data, between 2012
and 2015, Japan's income inequality and poverty gap remained virtually unchanged.5
1.2. Despite an estimated growth above the potential growth (Section 1.2.1), as at May 2019, risks
to the outlook were skewed to the downside. 6 Endogenous risks involving macro-financial
vulnerabilities, fiscal consolidation needs, and limited monetary policy space make the economy
vulnerable to adverse shocks. The intertwined challenges of rapid population ageing, involving a
sharp rise in social spending, and high government debt (gross financial liabilities of general
government) intensified during the review period. Risks have also risen from deteriorating global
conditions. Exogenous risks involve developments in overseas economies, including the
consequences of protectionist moves, developments in the Chinese economy, and progress in global
adjustments in IT-related goods.7
1
World Bank, The World by Income and Region. Viewed at: http://datatopics.worldbank.org/world-
development-indicators/the-world-by-income-and-region.html; and World Bank Country and Lending Groups.
Viewed at: https://datahelpdesk.worldbank.org/knowledgebase/articles/906519-world-bank-country-and-
lending-groups.
2
World Bank, Countries With The Most Diverse Economies. Viewed at:
https://www.worldatlas.com/articles/countries-with-the-most-diverse-economies.html.
3
In 2016, SMEs represented 68.9% of all employment, 99.7% of all enterprises and 52.9% (2015) of
total value added. Data from the 2016 Economic Census for Business Activity, prepared by the Ministry of
Internal Affairs and Communications and Ministry of Economy, Trade and Industry.
4
The current economic plan of the Government (Abenomics) is anchored on "three arrows" — bold
monetary easing, flexible fiscal policy, and structural reforms. International Monetary Fund (IMF) (2018),
Japan: 2018 Article IV Consultation — Press Release; Staff Report; and Statement by the Executive Director
for Japan, IMF Country Report No. 18/333, 28 November, Washington, D.C. Viewed at:
https://www.imf.org/en/Publications/CR/Issues/2018/11/27/Japan-2018-Article-IV-Consultation-Press-
Release-Staff-Report-and-Statement-by-the-Executive-46394; and OECD (2019), OECD Economic Surveys:
Japan 2019, OECD Publishing, Paris. Viewed at: https://doi.org/10.1787/fd63f374-en.
5
As at 2015, Japan's income inequality indicator stood at 0.339 compared to 0.330 in 2012. The Gini
coefficient is based on the comparison of cumulative proportions of the population against cumulative
proportions of income they receive, and it ranges between 0 in the case of perfect equality and 1 in the case of
perfect inequality. As at 2015, Japan's poverty gap stood at 0.337 compared to 0.339 in 2012. The poverty
gap is the ratio by which the mean income of the poor falls below the poverty line. The poverty line is defined
as half the median household income of the total population. In 2015, the relative poverty rate of the elderly in
Japan was 20%, well above the 12.5% OECD average. OECD (2019), OECD Economic Surveys: Japan 2019,
OECD Publishing, Paris. Viewed at: https://doi.org/10.1787/fd63f374-en OECD (2019), Income inequality
(indicator) (doi: 10.1787/459aa7f1-en) (Accessed on 28 May 2019); OECD (2019), Poverty gap (indicator) doi:
10.1787/349eb41b-en (Accessed on 28 May 2019).
6
IMF (2018), Japan: 2018 Article IV Consultation — Press Release; Staff Report; and Statement by the
Executive Director for Japan, IMF Country Report No. 18/333, 28 November, Washington, D.C. Viewed at:
Release-Staff-Report-and-Statement-by-the-Executive-46394; and OECD (2019), OECD Economic Surveys:
7
Bank of Japan,Statement by Haruhiko Kuroda, Governor of the Bank of Japan, concerning the Bank's
Semiannual Report on Currency and Monetary Control before the Committee on Financial Affairs, House of
Councillors, on May 9, 2019. Viewed at:
https://www.boj.or.jp/en/announcements/press/koen_2019/data/ko190509a.pdf.
- 16 -
Table 1.1 Selected macroeconomic indicators, 2014-18

2014 2015 2016 2017 2018
National accounts (% change, unless otherwise indicated)
GDP real growth rate 0.4 1.2 0.6 1.9 0.8
Consumption -0.5 0.2 0.3 0.9 0.5
Private consumption -0.9 -0.2 -0.1 1.1 0.4
Government consumption 0.5 1.5 1.4 0.3 0.8
Gross fixed capital formation 3.1 1.6 -0.3 2.9 1.1
Exports of goods and services (XGS) 9.3 2.9 1.7 6.8 3.3
Imports of goods and services (MGS) 8.3 0.8 -1.6 3.5 3.4
XGS/GDP (%) (at current market price) 17.5 17.6 16.3 17.8 18.5
MGS/GDP (%) (at current market price) 20.0 18.0 15.3 16.8 18.2
Unemployment rate (%) 3.6 3.4 3.1 2.8 2.4
Productivity (% change)
Labour productivity 0.1 1.4 -0.1 1.2 0.5
Multi-factor productivity 0.0 1.2 0.4 .. ..
Prices and interest rates (%, unless otherwise indicated)
Consumer price index (CPI) (average, % change) 2.8 0.8 -0.1 0.5 1.0
GDP deflator (% change) 1.7 2.1 0.3 -0.2 -0.1
Discount rate 0.30 0.30 0.30 0.30 ..
Six-month London interbank offered rate (LIBOR) 0.178 0.132 0.013 0.015 0.015
Deposit rate 0.415 0.406 0.300 0.321 ..
Lending rate 1.219 1.143 1.045 0.994 ..
Interest rate spread 0.804 0.737 0.744 0.673 ..
Exchange rates
JPY/USD (annual average) 105.94 121.04 108.79 112.17 110.42
NEER based on Unit Labour Costs, Index 81.24 77.59 87.58 83.62 83.32
(2010=100)
NEER, Index (2010=100) 81.09 75.74 87.50 84.43 84.67
REER based on CPI, Index (2010=100) 74.58 69.40 78.82 75.01 74.38
REER based on Unit Labour Costs, Index 78.16 74.36 84.58 78.72 77.56
(2010=100)
Money and credit (% change)
Broad money (M2) 3.4 3.7 3.4 4.0 2.9
Domestic credit to private sector 2.5 3.0 1.7 5.2 0.1
General government (% of current GDP)
Revenue 33.3 34.2 34.3 34.2 33.9
Expenditure 38.9 38.0 37.9 37.4 37.1
Overall balance -5.6 -3.8 -3.7 -3.2 -3.2
Primary balance -4.9 -3.2 -3.0 -2.7 -2.9
Gross financial liabilities of general government 217.9 216.5 222.8 222.5 224.2
Saving and investment (% of current GDP)
National savings (gross) 24.7 27.1 27.4 27.9 27.9
National investment 23.9 24.0 23.4 23.9 24.4
External data (% of current GDP, unless otherwise indicated)
Current account 0.7 3.1 4.0 4.1 3.5
Merchandise trade balance -2.1 -0.2 1.0 0.9 0.2
Merchandise exports 14.4 14.2 12.9 14.2 14.8
Merchandise imports 16.5 14.3 11.9 13.3 14.6
Services balance -0.6 -0.4 -0.2 -0.1 -0.1
Capital account 3.4 3.7 3.6 3.8 3.9
Financial account 4.0 4.1 3.8 4.0 4.0
Direct investment 0.0 -0.1 -0.1 -0.1 0.0
Merchandise exports (% change in USD) 0.6 -11.0 2.2 8.3 6.8
Merchandise imports (% change in USD) 1.8 -21.2 -7.1 10.3 12.3
Service exports (% change in USD) 21.0 -0.7 8.0 6.3 3.7
Service imports (% change in USD) 12.7 -7.2 4.4 3.6 4.1
- 17 -
2014 2015 2016 2017 2018

Terms of trade 86.2 98.4 106.8 101.4 95.5
Total reserves, excluding gold (USD billion) 1231.0 1207.0 1188.3 1232.2 1238.9
% of GDP 25.4 27.5 24.1 25.4 24.9
in months of imports of goods and services 14.2 16.8 17.0 16.2 14.7
Gross external debt (JPY trillion, end-period) 328.9 356.0 399.5 406.4 444.7
Short-term 247.1 265.6 296.0 292.2 321.1
Long-term 78.6 86.9 97.9 108.3 116.7
Direct investment: intercompany lending 3.2 3.5 5.6 5.9 6.9
Debt service ratio .. .. .. .. ..
.. Not available.
Note: Annual percentage changes under the national account are based on chain-linked 2011 real figures.
Source: Cabinet Office (Japan), Ministry of Finance (Japan), International Monetary Fund (IMF), World Bank,
and OECD online information.
1.2 Recent Economic Developments
1.2.1 Growth, income, and employment
1.3. During the review period (2016-18), the annual average GDP growth rate stood at 1.1%, a
minor slowdown compared to the average of 1.2% over the period 2013-15 (Table 1.1). Growth
above its estimated potential rate continued to be supported by the "three arrows" of Abenomics,
and by both domestic and external demand, where corporate profits and fixed business investment
remain favourable, even after accounting for recent natural disasters. 8 An increase in private
consumption, which was supported by improvement in employment and income conditions,
constituted another factor that stimulated growth. Nevertheless, output growth slowed since 2017,
reflecting weaker exports as world trade decelerated.9 As at May 2019, Japan's economy was likely
to continue on a moderate expanding trend, despite being affected by the current slowdown in
overseas economies.10According to the IMF, underlying growth is to remain solid, notwithstanding
the effects of the October 2019 consumption tax rate hike from 8% to 10% (Section 1.2.4.1), and
growth will move closer to its estimated potential over the medium term.11 According to the OECD,
output growth is expected to remain close to 0.75% through 2020, as shortages of labour and
capacity, combined with record-high profits, continue to support business investment and wages.12
1.4. Since 2016, the overall sectoral pattern of Japan's GDP and employment has remained virtually
unchanged (Table 1.2). According to OECD data, the annual growth rate of multi-factor productivity
in the economy was -0.05% (2014), 1.05% (2015), -0.02% (2016) and 1.20% (2017); the annual
growth rate of labour productivity forecast stood at 0.99% (2014), 1.00% (2015), 0.99% (2016),
1.00% (2017) and 0.99% (2018 and 2019). 13 According to the OECD, since 2012, labour
productivity growth has slowed to an annual pace of 1.0%; the Government set a goal to double
8
Release-Staff-Report-and-Statement-by-the-Executive-46394; OECD (2019), OECD Economic Surveys: Japan
2019, OECD Publishing, Paris. Viewed at: https://doi.org/10.1787/fd63f374-en.
9
OECD (2019), OECD Economic Surveys: Japan 2019, OECD Publishing, Paris. Viewed at:
https://doi.org/10.1787/fd63f374-en.
10
Bank of Japan online information. Viewed at:
11
According to the IMF, in the absence of effective mitigating fiscal measures, the consumption tax
increase could lead to volatility in private consumption and investment. Its effect is expected to carry past
2019 and adversely affect domestic demand and overall growth in 2020. IMF (2018), Japan: 2018 Article IV
Consultation — Press Release; Staff Report; and Statement by the Executive Director for Japan, IMF Country
Report No. 18/333, 28 November, Washington, D.C. Viewed at:
Release-Staff-Report-and-Statement-by-the-Executive-46394.
12
13
OECD data as at 12 November 2019. Viewed at: https://data.oecd.org/lprdty/multifactor-
productivity.htm#indicator-chart and https://data.oecd.org/lprdty/labour-productivity-forecast.htm#indicator-
chart.
- 18 -
productivity growth to 2% by 2020, including by promoting artificial intelligence and robots, as well
as measures for the Supply System Innovation under the 2017 New Economic Policy Package
(Sections 2.1 and 2.4.2). 14 Furthermore, according to the OECD, despite a high level of public
support for SMEs, in financial year (FY) 2017, productivity in large firms was 2.5 times higher than
in SMEs in manufacturing, a large gap by international standards (Sections 1.1, 1.2.4.1, 1.2.4.3,
1.2.4.4 and 3.3.1.2). 15 Nevertheless, according to the World Economic Forum's Global
Competitiveness report for 2018, Japan was the world's fifth most competitive nation out of
140 countries (Section 2.4.2). According to United Nations Conference on Trade and Development
(UNCTAD) estimates, in 2017, Japan ranked 19th (17th in 2010) among the world's 25 top exporting
economies by global value chain (GVC) participation rate, as its average GVC participation growth
was zero in the period 2010-17 compared to 9% between 2000 and 2010; its GVC participation in
exports (48%) stood below the average level of both the developed (60%) and developing (56%)
exporting economies.16
Table 1.2 Basic economic indicators, 2014-17

2014 2015 2016 2017a
Real GDP (JPY trillion, 2011 price (chain-linked)) 510.7 516.9 520.1 530.1
Current GDP (JPY trillion) 513.9 531.3 536.0 545.1
Current GDP (USD billion) 4,850.4 4,389.5 4,926.7 4,859.8
GDP per capita at current market price (USD) 38,156.2 34,568.8 38,804.9 38,342.7
GDP by economic activity (2011 real price, chain-linked, % change)
Agriculture, forestry, and fishing -3.1 -4.5 -7.6 -1.7
Mining -3.5 -19.0 -9.5 11.4
Manufacturing 3.0 4.1 -0.7 3.7
Transport equipment 4.7 6.6 -1.0 6.1
General-purpose, production and business-oriented 3.5 5.9 -3.1 9.7
machinery
Food products and beverages 1.7 3.8 1.1 -0.5
Chemicals 0.7 12.7 9.7 -2.2
Basic metals 3.6 -4.9 2.8 0.5
Construction 3.9 0.9 1.5 4.2
Electricity, gas and water supply 1.1 -9.7 1.2 9.4
Electricity supply 6.0 -15.2 2.6 14.7
Gas and water supply -1.2 -6.3 0.2 4.9
Services -0.4 1.1 0.7 1.3
Wholesale and retail trade -3.8 2.0 0.0 1.5
Wholesale trade -5.3 3.6 1.5 2.8
Retail trade -1.5 -0.4 -2.1 -0.4
Transport and postal services 2.3 -3.8 -1.6 3.2
Accommodation and food service activities 1.1 -5.4 4.7 1.9
Information and communications 0.6 2.3 -0.2 0.9
Communications and broadcasting -0.1 2.7 0.5 1.3
Information, image and sound 1.2 2.0 -0.7 0.5
Finance and insurance 0.0 4.1 -1.4 2.5
Real estate 1.3 1.3 1.1 1.6
Renting of dwellings 1.6 1.7 0.9 1.6
Other real estate -0.5 -1.4 2.1 1.7
Professional, scientific and technical activities -1.2 1.1 4.0 0.1
Public administration 0.4 -0.2 0.0 0.0
Education 0.7 1.1 0.4 0.6
Human health and social work activities -0.5 4.3 2.7 0.8
Other service activities -0.2 -1.5 -2.1 0.6
Share of economic activities in current GDP, at factor cost (%)
Agriculture, forestry, and fishing 1.1 1.1 1.2 1.2
Mining 0.1 0.1 0.1 0.1
14
According to the authorities, the productivity-enhancing measures of the Package included: the
establishment and enforcement of the Act on Special Measures for Productivity Improvement (regulatory
sandbox, promotion of industrial data utilization, etc.); tax reduction on capital investment by SMEs;
establishment and enforcement of tax policies, such as the reduction of corporate tax on companies actively
investing in equipment and information technology; budget measures such as the Subsidy for Manufacturing
and Service of SMEs; and the promotion of regulatory reforms, such as the System Improvements of Self-
Driving-Cars.OECD, OECD Economic Surveys: Japan 2019. Viewed at: https://doi.org/10.1787/fd63f374-en.
15
16
UNCTAD (2018), World Investment Report 2018 – Investment and New Industrial Policies, Geneva.
Viewed at: https://unctad.org/en/PublicationsLibrary/wir2018_en.pdf.
- 19 -
2014 2015 2016 2017a

Manufacturing 19.9 20.9 20.8 20.8
Transport equipment 3.1 3.4 3.2 3.3
General-purpose, production and business-oriented 2.9 3.1 3.0 3.2
machinery
Food products and beverages 2.4 2.5 2.6 2.5
Chemicals 1.9 2.2 2.3 2.2
Basic metals 1.8 1.8 1.8 1.8
Electricity, gas and water supply 2.4 2.6 2.6 2.6
Electricity supply 0.9 1.2 1.2 1.2
Gas and water supply 1.5 1.5 1.4 1.4
Services 71.0 69.7 69.7 69.5
Wholesale and retail trade 14.4 14.1 13.9 14.0
Wholesale trade 8.6 8.4 8.3 8.5
Retail trade 5.8 5.6 5.6 5.5
Transport and postal services 5.2 5.1 5.1 5.1
Accommodation and food service activities 2.5 2.3 2.6 2.5
Information and communications 5.1 5.1 5.0 4.9
Communications and broadcasting 2.3 2.3 2.3 2.2
Information, image and sound 2.8 2.7 2.7 2.7
Finance and insurance 4.5 4.4 4.2 4.2
Real estate 11.8 11.5 11.5 11.4
Renting of dwellings 10.2 9.9 9.9 9.8
Other real estate 1.6 1.5 1.6 1.6
Professional, scientific and technical activities 7.3 7.3 7.5 7.5
Public administration 5.2 5.0 5.0 5.0
Education 3.7 3.6 3.6 3.6
Human health and social work activities 6.8 6.9 7.1 7.0
Other service activities 4.6 4.4 4.3 4.3
Share of employment by economic activity (%)
Agriculture, forestry, and fishing 4.1 4.0 3.9 3.8
Mining 0.1 0.1 0.1 0.1
Manufacturing 15.5 15.3 15.2 15.2
Food products and beverages 2.4 2.3 2.3 2.3
Transport equipment 2.0 2.0 2.1 2.1
General-purpose, production and business-oriented 2.0 2.0 2.0 2.0
machinery
Fabricated metal products 1.3 1.3 1.3 1.3
Electrical machinery, equipment and supplies 1.0 1.0 1.0 1.0
Electricity, gas and water supply 0.9 0.9 0.9 0.9
Services 71.8 72.1 72.6 72.7
Wholesale and retail trade 17.4 17.3 17.2 17.2
Transport and postal services 6.0 5.9 5.9 5.9
Accommodation and food service activities 6.2 6.1 6.1 6.1
Information and communications 2.7 2.8 2.7 2.8
Finance and insurance 2.4 2.4 2.5 2.6
Real estate 1.5 1.6 1.6 1.6
Professional, scientific and technical activities 8.3 8.5 8.7 8.9
Public administration 2.9 2.9 2.9 2.9
Education 2.9 2.9 2.8 2.8
Human health and social work activities 12.0 12.4 12.7 12.6
Other service activities 9.5 9.4 9.4 9.3
a Latest available data as at end-November 2019.

Source: Cabinet Office; and IMF online information.
1.5. Japan's relatively low unemployment rate declined significantly to 2.4% in 2018 (Table 1.1) or
less than half of the OECD average (5.3%).17 This reflects growth developments and the increasingly
tight labour market. Furthermore, Japan's labour market remains characterized by the simultaneous
hiring of new graduates, which helps to avoid periods of joblessness and contributes to the relatively
low youth unemployment rate.18
OECD, Unemployment rate. Viewed at: https://data.oecd.org/unemp/unemployment-rate.htm.

17
18
- 20 -
1.2.2 Prices
1.6. During the review period, CPI inflation remained considerably below the Bank of Japan's target,
picking up from -0.1% (2016) to 1.0% in 2018, inter alia, on the back of soaring vegetable prices,
higher energy prices, high raw materials prices, and personnel expenses reflected in firms' prices,
as well as quantitative and qualitative monetary easing, accompanied by yield curve control and
negative interest rates since 2016 (Table 1.1, Section 1.2.3.1). 19 According to the authorities,
sluggish inflation was also partly due to firms' preference to invest in labour-saving technology rather
than raise prices and wages. According to the IMF, under current policies, including the 2.2% hike
in unit labour costs in 2018, a consumption tax-induced spike expected in 2020 and the provision of
free childcare for children aged three to five, with the output gap remaining positive, inflation is
likely to rise gradually but to remain below target.20
1.2.3 Main macroeconomic policy developments
1.2.3.1 Monetary and exchange rate policy
1.7. The Bank of Japan (BoJ), the independent central bank, has continued to carry out currency
and monetary control to achieve a price stability target of 2%. 21 To this end, it has encouraged
short- and long-term interest rates to remain at target levels, and has purchased assets, mainly
through open market operations classified into two broad categories: operations to supply funds to
financial markets via loans or the purchase of Japanese government bonds (JGBs); and operations
to absorb funds from financial markets, such as sales of bills issued by the BoJ and sales of Japanese
government securities (JGSs) held by the BoJ with repurchase agreements.
1.8. A loose monetary policy continued to provide a monetary stimulus to growth, and helped to
build a stable financial environment. Since 2013, the BoJ has maintained a framework of Quantitative
and Qualitative Monetary Easing (QQE). The 2016 QQE with a negative interest rate was
strengthened in September 2016 with a QQE with Yield Curve Control. 22 In July 2018, the BoJ
decided to strengthen its commitment to achieving the price stability by maintaining low levels of
short- and long-term interest rates for an extended period of time, taking into account uncertainties
regarding economic activity and prices, including the effects of the October 2019 consumption tax
19
2019, OECD Publishing, Paris. Viewed at: https://doi.org/10.1787/fd63f374-en; and BoJ, Statement by
Haruhiko Kuroda, Governor of the Bank of Japan, concerning the Bank's Semiannual Report on Currency and
Monetary Control before the Committee on Financial Affairs, House of Councillors, on 9 May 2019. Viewed at:
20
2019, OECD Publishing, Paris. Viewed at: https://doi.org/10.1787/fd63f374-en; and BoJ, Statement by
Haruhiko Kuroda, Governor of the Bank of Japan, concerning the Bank's Semiannual Report on Currency and
Monetary Control before the Committee on Financial Affairs, House of Councillors, on May 9, 2019. Viewed at:
21
BoJ, About the Bank. Viewed at: https://www.boj.or.jp/en/about/outline/index.htm/; and What is
monetary policy and how is it carried out in Japan? Viewed at:
https://www.boj.or.jp/en/announcements/education/oshiete/seisaku/b26.htm/.
22
In January 2016, the BoJ introduced a negative interest rate of -0.1% on part of banks' excess
reserves, a policy also used by a number of European central banks. With headline inflation falling back into
negative territory in the second quarter of 2016, it introduced QQE with yield curve control in September 2016,
that consists of two major components: the first is yield curve control, in which the BoJ controls short- and
long-term interest rates through market operations; and the second is an inflation-overshooting commitment,
in which the BoJ commits to expanding the monetary base until the year-on-year rate of increase in the
observed CPI exceeds the price stability target of 2% and stays above the target in a stable manner. BoJ, What
is Quantitative and Qualitative Monetary Easing (QQE) with Yield Curve Control? Viewed at:
https://www.boj.or.jp/en/announcements/education/oshiete/seisaku/b27.htm/; OECD (2019), OECD Economic
Surveys: Japan 2019, OECD Publishing, Paris. Viewed at: https://doi.org/10.1787/fd63f374-en; and
WTO document WT/TPR/S/351/Rev.1, 20 June 2017.
- 21 -
hike.23 The BoJ decided to conduct market operations and asset purchases in a more flexible manner
(i.e. widening the range for the 10-year JGB yield, in effect allowing yields to drift upward and
downward) in order to enhance the sustainability of the QQE with Yield Curve Control; it also
explicitly committed to keep short- and long-term policy rates low for an extended period of time.
Since then, the degree of market functioning has improved, with the BoJ conducting JGB purchases
in a flexible manner. In April 2019, the BoJ decided to clarify forward guidance for policy rates
introduced in July 2018, and maintain the current extremely low levels of short- and long-term
interest rates for an extended period of time, at least through around spring 2020, taking into
account uncertainties regarding economic activity and prices including developments in overseas
economies and the effects of the scheduled consumption tax hike.24 At the same time, it decided to
take measures for the expansion of eligible collateral for the BoJ's provision of credit, thereby
contributing to smooth fund-provisioning, and securing market functioning. Under the QQE, as at 1
March 2019, the BoJ's holdings of JGBs had reached 85% of GDP.25 On 31 October 2019, the BoJ
decided on a new forward guidance where, as for the policy rates, it expected short- and long-term
interest rates to remain at their current or lower levels as long as it was necessary to pay close
attention to the possibility that the momentum toward achieving the price stability target is lost.26
Regarding the short-term rates, the BoJ would apply a negative interest rate of minus 0.1% to the
Policy-Rate Balances in current accounts held by financial institutions at the BoJ. Concerning the
long-term interest rate, the BoJ would purchase JGBs so that 10-year JGB yields remain at around
zero percent. Monetary policy is expected to remain accommodative, and support favourable
financial conditions, possibly for an extended period, to successfully reflate the economy, while
carefully monitoring and mitigating side effects.27
1.9. Japan continues to maintain a free-floating exchange rate regime; there has been no foreign
exchange intervention in recent years (last one in 2011). 28 The exchange system is free of
restrictions on the making of payments and transfers for current international transactions, with the
exceptions of restrictions imposed solely for the preservation of national or international security.
According to the IMF, Japan's 2018 external position and real exchange rate were projected to be
broadly consistent with fundamentals and desirable policies.29 Furthermore, the IMF indicated that
heightened global uncertainty contributed to a slight appreciation in the JPY/USD exchange rate
(Table 1.1) and weaker equity prices.
23
The policy guideline set the short-term policy interest rate at minus 0.1% on the Policy-Rate Balances
in current accounts. While the target level of the 10-year JGB yields was maintained at around zero interest,
the BoJ made it clear that the actual yields might move upward or downward to some extent, mainly
depending on developments in economic activity and prices. Regarding the amount of JGBs to be purchased,
the BoJ would: purchase them promptly and appropriately in case of a rapid increase in the yields; and
purchase them in a flexible manner so that their outstanding amount would increase at an annual pace of
about JPY 80 trillion. IMF (2018), Japan: 2018 Article IV Consultation — Press Release; Staff Report; and
Statement by the Executive Director for Japan, IMF Country Report No. 18/333, 28 November, Washington,
D.C. Viewed at: https://www.imf.org/en/Publications/CR/Issues/2018/11/27/Japan-2018-Article-IV-
Consultation-Press-Release-Staff-Report-and-Statement-by-the-Executive-46394; BoJ, Strengthening the
Framework for Continuous Powerful Monetary Easing. Viewed at:
http://www.boj.or.jp/en/mopo/mpmdeci/state_2018/k180731a.htm/; and BoJ, Statement on Monetary Policy,
25 April 2019. Viewed at: https://www.boj.or.jp/en/announcements/release_2019/k190425a.pdf.
24
BoJ, Statement by Haruhiko Kuroda, Governor of the Bank of Japan, concerning the Bank's
Semiannual Report on Currency and Monetary Control before the Committee on Financial Affairs, House of
Councillors, on May 9, 2019. Viewed at:
25
26
BoJ, Statement on Monetary Policy 31 October 2019. Viewed at:
https://www.boj.or.jp/en/mopo/mpmdeci/state_2019/index.htm/.
27
28
29
- 22 -
1.2.3.2 Fiscal policy
1.10. The fiscal deficit of the general government (central Government, local government and social
expenditure) declined slightly from 3.8% (2015) to 3.2% (2017 and 2018) of GDP (Table 1.1.) as a
result of efforts to reduce the primary deficits of the central and local governments. With major
expenditure consisting of social welfare, public works and defence, the fiscal deficit continues to be
mainly financed by tax revenue and the issuance of JGBs. 30 Gross financial liabilities of general
government rose from 216.5% of GDP in 2015 to 224.2% in 2018, the highest ever recorded in the
OECD area. 31 Japan's sizeable fiscal shortfalls are partly due to either revenue shortfall or
expenditure overruns, for which supplementary budgets are, inter alia, needed to supplement the
annual budget. Due to lower-than-expected growth, repeated supplementary budgets (three in
FY2016, one in FY2017, and two in FY2018) and delays in the consumption tax rate hike from 8%
to 10%, the FY2018 benchmark for the primary deficit of central and local governments was
missed.32 The New Plan to Advance Economic and Fiscal Revitalization (Cabinet Decision of 15 June
2018) postponed the primary surplus target of central and local governments from FY2020 to
FY2025; according to the IMF, while the Plan sets up a review of the social security system by
FY2020, the current framework lacks a long-term plan to address the increases in social security
expenditures and ensure debt sustainability.33 The Council on Economic and Fiscal Policy, which is
chaired by the Prime Minister and includes five ministers, the central bank governor and four
private-sector experts, also formulated three benchmarks for FY2021 to monitor progress: halving
the primary deficit of central and local governments from its FY2017 level to around 1.5% of GDP;
reducing the outstanding debt of central and local governments to 180%-185% of GDP (according
to the Government, it was 189% in FY2017); and cutting the fiscal deficit of central and local
governments to below 3% of GDP.34
1.2.4 Structural policies
1.11. Trade and domestic reform are considered intrinsically linked, and constitute the "third arrow"
of Abenomics. Japan's ambitious structural reform agenda, inter alia, covering deregulation efforts
in the gas and electricity markets, was aimed at lifting growth, including reflation. However,
according to the IMF, bottlenecks remain in labour and product markets, and in the corporate sector
(Sections 1.2.4.3, 1.2.4.4 and 2.4.2).35
1.2.4.1 Tax reform
1.12. The 2019 tax reform proposals were, inter alia, aimed at levelling demand fluctuations that
could occur upon the consumption tax rate hike (see below), ensuring the termination of deflation
and economic revitalization, addressing international tax avoidance in an effective manner, and
developing the environment for tax payments taking into account the diversification of economic
transactions.36 On 27 March 2019, the Diet reportedly approved legislation for the Government's tax
reform proposals for 2019. Some of the main measures affecting corporate and international taxation
included: tax treatment of virtual currencies; amendments to the taxation of reorganizations;
30
Population ageing has a major impact on the fiscal situation. Public social spending doubled from 11%
of GDP in 1991 to 22% in 2018, surpassing the OECD average. Around 80% of this is for pensions, health and
long-term care, the second-highest share in the OECD. OECD (2019), OECD Economic Surveys: Japan 2019,
OECD Publishing, Paris. Viewed at: https://doi.org/10.1787/fd63f374-en.
31
32
https://doi.org/10.1787/fd63f374-en; and Ministry of Finance. Viewed at:
https://www.mof.go.jp/english/budget/budget/index.html.
33
34
35
36
FY2019 Tax Reform (Main Points), (Cabinet decision 21 December 2018). Viewed at:
https://www.mof.go.jp/english/tax_policy/tax_reform/fy2019/tax2019.pdf.
- 23 -
amendment of the Earnings Stripping Rules (in force from 1 April 2020); Controlled Foreign
Company (CFC) Rules (fiscal years of Japanese companies ending on or after 1 April 2019 in respect
of CFC fiscal years beginning on or after 1 April 2018); Transfer Pricing Rules in line with OECD
guidelines (in force from 1 April 2020); and amendments to the treatment of repo transactions by
specified foreign companies.37 Other areas where measures were passed included: individual income
taxation (enhancement of the tax credit for housing loans; and creation of Forest Environment Tax
(provisional) and Forest Environment Transfer Tax (provisional); review of the furusato nozei or
hometown tax donation system; and tax exemption schemes for the individual inhabitant tax, to
deal with child poverty); asset taxation (creation of a new tax system for business succession by
sole proprietors, etc.; and review of the tax exemption schemes for lump-sum gifts of educational
funds and marriage/childcare funds); corporate taxation (revision of the research and development
(R&D) tax credit scheme; investment-friendly packages for SMEs; establishment of local taxation
systems for the sustainable development of cities and rural areas, etc.); consumption taxation
(revisions to automobile taxation; and improvement of convenience of the consumption tax
exemption system for foreign tourists); and customs tariffs (extension of the application period of
temporary tariff rates, etc.; and review of tariff rates, etc., on individual items).
1.13. Issues related to the consumption tax rate hike from 8% to 10% on 1 October 2019, such as
economic/demand fluctuations and the impact on low-income households, have been of major
concern.38 The authorities have envisaged taking a number of fiscal measures in the initial budgets
for FY 2019 and FY 2020 to avoid a situation similar to the economic volatility that followed the 2014
consumption tax rate hike. 39 The measures under consideration include: providing free early
childhood education and care for children aged three to five; maintaining the consumption tax rate
at 8% for foods and drinks, excluding liquors and eating-out services; increasing public investment
in FY 2019-20; introducing tax or spending measures to support purchases of cars and homes;
increasing support for older persons through subsidies and reduced long-term care insurance
premiums for those with low income; providing vouchers for purchases of goods and services by
low-income households and those with children under the age of three; and introducing points
rewards for purchases using cashless payment at small retailers. According to OECD estimates, the
implementation of these measures could cost around 1% of GDP, offsetting the revenue from the
tax rate hike in FY 2019-20.40
1.2.4.2 Privatization
1.14. During the review period, state involvement in the economy remained relatively unchanged,
and was spread over several activities (e.g. trading of leaf tobacco, rice, wheat, barley and milk
products, as well as energy, financial services, telecommunications, water supply, and some
transport-related activities), as there was a virtual standstill in the privatization process
(Section 3.3.5); some airport operation concessions were granted, and a reduction of the
government shareholding in Japan Post Holdings was underway during the review period
(Sections 4.4.2 and 4.4.7).
1.2.4.3 Competition policy and corporate governance
1.15. Since its last Review, Japan undertook competition policy-related legislative amendments.
The Antimonopoly Law was amended to fulfil its commitments under the Comprehensive and
Progressive Agreement for Trans-Pacific Partnership (CPTPP) (Section 2.3.2.1.1) in 2018, and to
revise the surcharge system in 2019. The Unfair Competition Prevention Law was amended to
37
KPMG, Japan e-Tax News. Viewed at: https://assets.kpmg/content/dam/kpmg/jp/pdf/2019/jp-en-e-
taxnews-20190327.pdf; and Orbitax, Japan Passes 2019 Tax Reform Measures. Viewed at:
https://www.orbitax.com/news/archive.php/Japan-Passes-2019-Tax-Reform-M-37132.
38
The 8% consumption tax rate was one of the lowest in the OECD; it was last raised from 5% in 2014.
According to the OECD, achieving a sufficient primary surplus (Section 1.2.3.2) through the consumption tax
alone would require raising the rate to between 20% and 26%, above the 19% OECD average. OECD (2019),
OECD Economic Surveys: Japan 2019, OECD Publishing, Paris. Viewed at: https://doi.org/10.1787/fd63f374-
en.
39
40
- 24 -
encourage businesses to utilize data and increase productivity from new information technologies
(Sections 2.1, 2.4.2 and 3.3.4.1).
1.16. The 2017 New Economic Policy Package (Sections 2.1 and 2.4.2) called for improving
corporate governance to boost strategic investment in fixed assets, R&D and human resources.41
The revision of the 2015 Corporate Governance Code, based on the G20/OECD Principles of
Corporate Governance, and the Corporate Governance System Guideline in 2018 made a number of
important changes relating to cross-shareholdings annual assessments, the diversity of corporate
boards, chief executive officer appointments/dismissals, and independent advisory committees for
nominations/remuneration (Section 3.3.4.3). In addition, the Group Governance System Guideline
was formulated in 2019, demonstrating best practices for governance in the management of group
companies, including those in the management of listed subsidiaries with a controlling shareholder.
Furthermore, the 2014 Stewardship Code was revised in 2017 to require asset managers to resolve
conflicts of interest and to promote effective monitoring of asset managers by asset owners (e.g.
corporate pension funds) (Section 3.3.4.3).
1.2.4.4 Labour market policies
1.17. During the review period, action was taken to address labour market rigidities, which is a
priority reform area.42 According to the IMF, despite challenges posed by the dual labour market,
seniority system, and long-working-hours culture, new regulations on wage gaps, working hours and
overtime (to come into effect in April 2020) are to boost productivity.43 On 29 June 2018, legislation,
commonly referred to as the Work Style Reform Law, was passed, principally to address issues
related to working hours and to the disparity in treatment between regular and non-regular
employees. It provides for: an upper limit for permitted overtime hours of 45 hours per month and
360 hours per year or, under agreement with workers, up to 100 hours of overtime per month, as
long as they do not exceed an annual limit of 720 hours (large companies since April 2019, SMEs
from April 2020); fair treatment of employees, regardless of employment status (large companies
from April 2020, SMEs from April 2021); mandatory Paid Time Off usage by employees (since April
2019); a mandatory minimum interval between working hours (since April 2019); reinforcement of
the protective role of industrial (company) doctors; and the obligation of awareness of employee
working hours.44 To promote faster growth in base wages, after the FY2018 Tax Reform (Cabinet
Decision 22 December 2017), the Government implemented a three-year corporate tax credit for
firms that increase employees' pay by 3% a year or more and reach a certain threshold for domestic
investment.45 Since 2016, it has also raised the minimum wage, which is only around 40% of the
median wage, by 3% per year. An Overtime Work Improvement Subsidy, established in FY2017,
encourages the introduction of rest periods in SMEs, and the recently revised Act on Special
Measures for Improvement of Working Hours Arrangements requires all firms to make "efforts" to
establish an interval time.46
41
42
According to the OECD, Japan's traditional labour model – lifetime employment, a seniority-based
wage system and mandatory retirement – discourages the employment of older persons and women, and
labour mobility. In 2016, 81% of firms set a mandatory retirement age of 60. Those who are re-hired tend to
work in non-regular jobs that pay less and do not fully utilize their skills. According to the World Economic
Forum's Global Competitiveness Index, Japan is ranked as the 10th most severe among OECD countries
restrictions on hiring and firing of workers. The employment rate for women rose sharply over the past five
years, from 60.7% in 2012 to 69.6% in 2018, well above the 60.1% OECD average; nevertheless, half of the
new workers are non-regular workers. OECD (2019), OECD Economic Surveys: Japan 2019, OECD Publishing,
Paris. Viewed at: https://doi.org/10.1787/fd63f374-en.
43
44
https://doi.org/10.1787/fd63f374-en; and Orrick, Japan Enacts Work Style Reform Law. Viewed at:
https://blogs.orrick.com/employment/2018/08/08/japan-enacts-work-style-reform-law/.
45
FY2018 Tax Reform (Main Points) (Cabinet Decision on December 22, 2017). Viewed at:
https://www.mof.go.jp/english/tax_policy/tax_reform/fy2018/tax2018a.pdf; OECD (2019), OECD Economic
Surveys: Japan 2019, OECD Publishing, Paris. Viewed at: https://doi.org/10.1787/fd63f374-en.
46
- 25 -
1.18. Efforts toward further boosting labour supply in order to compensate for demographic
headwinds, including from female (Section 2.4.2), older and foreign workers, continued. In
December 2018, the Diet approved a new status of residence for work-ready foreigners with certain
expertise and skills in industries that need more workers, such as construction, agriculture and care
workers, to be employed for up to five years in Japan for the first time, beginning in April 2019.47
In line with the Basic Policy 2018, which has the subtitle of "Realizing Sustainable Economic Growth
by Overcoming the Decreasing Birth Rate and Aging Population", and with the Growth Strategy 2018
and 2019, the Government is to, inter alia, promote investment in human resources by greater
labour participation of female and older workers and free early childhood education ("human
resources development revolution").48
1.2.5 Balance of payments
1.19. Japan's merchandise trade deficit shifted to a declining surplus in 2016, 2017 and 2018,
whereas its declining deficit in services bottomed out in 2017 and rose in 2018 (Table 1.3). The
merchandise trade surplus exceeded the deficit in services. Consequently, the current account
registered a larger overall surplus, that rose from 3.1% of GDP in 2015 to a peak of 4.1% in 2017
(Table 1.1), inter alia, due to a rising primary income surplus (almost entirely investment income).
Direct investment abroad, particularly toward Asia, was continuously in net outflow in recent years.
According to the IMF, the current account surplus shrunk in 2018 to 3.5% of GDP, reflecting smaller
goods trade and income balances; it was projected to 3.485% in 2019.49
Table 1.3 Balance of payments, 2014-18

(USD billion)
2014 2015 2016 2017 2018
Current account 36.4 136.5 197.0 201.6 174.7
Goods and services balance -128.6 -23.3 40.4 37.6 4.0
Goods balance -99.8 -7.3 51.2 43.8 11.2
Exports 699.2 622.0 635.8 688.7 735.7
Imports 799.0 629.4 584.7 644.8 724.5
Services balance -28.8 -15.9 -10.7 -6.2 -7.2
Receipts 163.8 162.7 175.7 186.8 193.7
Payments 192.6 178.6 186.4 193.0 200.9
Primary income 183.9 176.0 176.3 183.0 189.1
Credit 256.8 248.7 265.5 278.9 297.4
Compensation of employees 0.2 0.2 0.2 0.2 0.2
Investment income 256.6 248.5 265.3 278.6 297.2
Debit 72.9 72.6 89.2 95.9 108.3
Compensation of employees 0.2 0.2 0.3 0.3 0.3
Investment income 71.5 71.7 88.0 95.0 107.2
Secondary income -19.0 -16.3 -19.7 -18.9 -18.4
Credit 16.6 16.9 17.9 20.1 21.9
Debit 35.5 33.2 37.7 39.0 40.3
Capital account -2.0 -2.3 -6.6 -2.5 -1.9
Balance on current and capital account 34.4 134.2 190.5 199.1 172.8
47
The number of foreign employees (including foreign trainees) reported by firms doubled from 0.70
million in 2013 to 1.46 million in October 2018; they account for only about 2% of Japan's labour force, one of
the lowest shares in the OECD. It is estimated that, under the new residency status, up to 345,150 foreign
workers are to be accepted in 14 industries in the period 2019-24. OECD (2019), OECD Economic Surveys:
48
49
Release-Staff-Report-and-Statement-by-the-Executive-46394; IMF (2019) World Economic Outlook, April; and
IMF, World Economic Outlook, April 2019, Growth Slowdown, Precarious Recovery. Viewed at:
https://www.imf.org/en/Publications/WEO/Issues/2019/03/28/world-economic-outlook-april-2019.
- 26 -
2014 2015 2016 2017 2018

Financial account 58.7 180.9 264.8 166.2 181.9
Direct investment 118.2 133.2 137.7 153.4 133.2
Japan's direct investment abroad 137.9 138.4 178.6 173.8 159.1
Direct investment in Japan 19.8 5.3 41.0 20.4 25.9
Portfolio investment -40.3 132.4 268.0 -49.2 92.2
Financial derivatives 34.3 17.9 -15.2 30.6 1.0
Other investment -61.9 -107.7 -120.4 7.9 -68.5
Reserve assets 8.5 5.1 -5.3 23.6 23.9
Net errors and omissions 24.4 46.7 74.3 -32.9 9.1
Source: IMF e-library data.
1.20. Japan's gross external debt, which remains largely short-term (72.2% in 2018), rose steadily
over the review period (Table 1.1). No debt service ratio data and/or analysis were available from
the authorities.
1.21. Since 2016, a bottom year, the annual amount of Japan's foreign exchange reserves
(excluding gold) have increased steadily by an overall 10.4%, to about USD 1,239 billion in 2018
(Table 1.1); they were equivalent to 24.9% of GDP and 14.7 months of imports of goods and
services, compared to 24.1% of GDP and 17.0 months in 2016, and almost four times the short-term
external debt. On 31 August 2019, according to Ministry of Finance data, they totalled
USD 1,331.5 billion.50 Japan, remains the second largest foreign creditor of the United States; as at
February 2019, its holdings of US Treasury Bills stood at USD 1.07 trillion (having peaked at the end
of 2014 at USD 1.24 trillion).51
1.3 Developments in Trade and Investment
1.3.1 Trends and patterns in merchandise and services trade
1.22. The relative importance of international trade in Japan's economy, its degree of openness,
and its integration into the world economy and global value chains continued to be reflected in the
ratio of its trade (exports plus imports) in goods and services to GDP; despite a drop from its 2014
peak to a 2016 trough, this ratio increased to 36.7% in 2018 (Table 1.1).
1.23. Since its previous Review, Japan's merchandise trade (both for imports and exports) has
remained largely dependent on manufactures (Chart 1.1, Tables A1.1 and A1.2). The share of
non-electrical machinery and chemicals in total exports has risen, whereas the share of automotive
equipment, office machines and telecommunications equipment and iron and steel has dropped. The
share of fuels and other mining rose to 23.3% and 6.5% of total imports respectively whereas
manufactures and agriculture dropped to 57.4% and 11.1%, respectively.
1.24. At the same time, while Japan's merchandise exports to economies in the region rose, their
share in imports was reduced (Chart 1.1, Tables A1.1 and A1.2). Notwithstanding some minor
fluctuations in trade shares, Japan's main trading partners remain China, the United States and the
European Union. The share of Japan's merchandise trade with the European Union increased. China's
share in exports rose, and that in imports decreased; regarding the United States, the opposite
occurred.
1.25. During the review period, Japan remained a net importer of services, running a declining
deficit in the services account, amounting to 0.1% of GDP in 2017 and 2018 (Section 1.2.5, and
50
Ministry of Finance, International Reserves/Foreign Currency Liquidity (as of August 31, 2019).
Viewed at: https://www.mof.go.jp/english/international_policy/reference/official_reserve_assets/e0108.html;
and International Reserves/Foreign Currency Liquidity (as of April 30, 2019). Viewed at:
https://www.mof.go.jp/english/international_policy/reference/official_reserve_assets/e3104.html.
51
The authorities clarified that the amount of the holdings of US Treasury Bills includes Japan's foreign
exchange reserves and also those of Japanese financial institutions and Japanese companies, etc. Viewed at:
https://wolfstreet.com/2019/04/15/who-bought-the-huge-1-26-trillion-of-new-us-government-debt-over-the-
past-12-months/.
- 27 -
Tables 1.1 and 1.4). Business services, charges for intellectual property, transportation and travel
remain the major traded services.
Chart 1.1 Product composition of merchandise trade, 2015 and 2018
Chart 1.1 Product composition of merchandise trade, 2015 and 2018
2015 2018
Exports (f.o.b.)
Other transport equipment

5.1% Other transport equipment
4.9%
Consumer goods
Automotive products Consumer goods
8.9% Automotive products
21.9% 8.8%
21.5%
Other
Other
6.8% 7.2%
Agriculture
1.7% Agriculture
Other electrical Other electrical 1.6%
Mining
machines machines Mining
4.3%
6.5% 6.5% 4.3%
Manufactures Manufactures
87.2% Iron & steel
86.8% Iron & steel
4.9%
Office machines & Office machines & 4.2%
telecommunication telecommunication
equipment equipment
9.6% Chemicals Chemicals
8.9%
10.1% 10.7%
Other semi-manufactures Non-electrical machinery Other semi-manufactures

Non-electrical machinery
4.7% 16.9% 4.4%
15.6%
Total: USD 624.9 billion Total: USD 738.2 billion
Imports (c.i.f.)
Transport Transport
equipment equipment
4.9% Textiles & 4.9% Textiles &
clothing 5.9% clothing 5.2%
Electrical machines Electrical machines
17.5% 16.3%
Other consumer goods Other consumer
9.8% goods 9.1%
Non-electrical
machinery 6.5% Other
Other Manufactures
Non-electrical Manufactures 1.7%
1.8% 57.4%
machinery 59.5%
5.8%
Agriculture Other semi-manuf. Agriculture
11.9% 5.1% 11.1%
Other semi-manuf.
5.5%
Chemicals
10.2%
Chemicals
10.2%
Fuels Fuels
Other mining
Other mining 20.5% 23.3%
6.5%
6.3%
Source: UNSD, Comtrade database (SITC Rev.3).
Source: UNSD, Comtrade database (SITC Rev.3) .

- 28 -
Chart1.2
Chart 1.2Direction
Direction of merchandise
of merchandise trade,
trade, 20152015
and and
20182018
2015 2018
Exports (f.o.b.)
Other
3.3% Other
3.4%
United States
20.2% United States
Other Asia Other Asia 19.1%
15.6% 16.4%
Thailand Thailand
Other America
4.5% Other America 4.4%
5.3%
5.6%
Hong Kong, Hong Kong,
Asia China 4.7% Asia
China 5.6%
56.1% 57.9%
EU-28 EU-28
Chinese Taipei 10.6% 11.4%
5.9% Chinese Taipei
5.7%
Middle East Middle East
Korea, Rep. of 4.2% Korea, Rep. of 3.0%
7.0% 7.1%
China China
17.5% 19.5%
Imports (c.i.f.)
Other United States Other

United States
6.2% 10.9% 5.1%
11.2%
Other America Other Asia Other America

Other Asia 5.3% 17.0% 5.2%
17.9%
EU-28 EU-28
11.4% 11.7%
Australia
Australia 6.1%
5.6% Asia Asia
57.1% United Arab 54.2%
Emirates 3.8% Chinese Taipei Saudi Arabia
Chinese Taipei 3.6% 4.5%
3.7%
Other Korea, Rep. of United Arab
Korea, Rep. of Middle East 4.3% Emirates 3.7%
4.3% 5.3%
Other Middle East
4.3%
China China
25.7% 23.2%
Source: UNSD, Comtrade database.

Source: UNSD, Comtrade database.
- 29 -
Table 1.4 Trade in services, 2014-18

2014 2015 2016 2017 2018
Total credit (USD billion) 163.8 162.7 175.7 186.8 193.7
(% of total credit)
Manufacturing services on physical inputs owned by 0.2 0.1 0.4 0.4 0.4
others
Maintenance and repair 1.2 0.4 0.5 0.5 0.5
Transportation 24.2 21.8 18.0 18.3 14.9
Travel 11.5 15.3 17.5 18.2 21.7
Business 1.6 1.6 1.5 1.4 1.8
Personal 9.9 13.8 16.0 16.8 19.9
Construction 6.9 6.6 5.3 5.6 4.8
Insurance and pension 1.0 1.0 1.2 1.2 1.3
Financial services 4.5 6.3 6.7 5.6 6.0
Charges for the intellectual property 22.8 22.4 22.3 22.3 23.5
Telecommunication, computer and information 2.0 2.0 2.2 2.7 2.4
Other business services 22.9 21.0 22.4 22.1 21.8
Personal, cultural and recreational services 0.3 0.4 0.5 0.6 0.3
Government goods and services n.i.e. 2.7 2.7 2.9 2.6 2.4
Total debit (USD million) 192.6 178.6 186.4 193.0 200.9
(% of total debit)
Manufacturing services on physical inputs owned by 2.6 2.5 2.8 2.8 2.5
others
Maintenance and repair 3.7 1.9 2.4 2.6 2.7
Transportation 23.8 23.0 20.5 20.8 19.1
Travel 10.0 8.9 10.0 9.4 10.1
Business 1.6 1.4 1.6 1.4 1.7
Personal 8.5 7.6 8.4 8.0 8.4
Construction 5.4 4.6 4.0 4.3 4.1
Insurance and pension 2.7 2.7 3.1 3.3 3.6
Financial services 2.7 3.4 3.3 4.0 4.1
Charges for the intellectual property 10.9 9.5 10.9 11.1 10.8
Telecommunication, computer and information 6.0 7.5 7.7 7.4 7.9
Other business services 30.7 34.2 33.6 32.7 33.9
Personal, cultural and recreational services 0.4 0.7 0.7 0.6 0.3
Government goods and services n.i.e. 1.0 1.1 1.1 1.0 1.0
Source: IMF e-library data.
1.3.2 Trends and patterns in foreign direct investment (FDI)
1.26. FDI is not only an additional source of capital. It is also considered to bring with it
entrepreneurship, management skills and, especially, new technology, which contribute to improved
multi-factor productivity. Japan's inbound FDI stocks as a share of GDP (4% in 2016) are the lowest
in the OECD, due to tradition-related challenges in certain areas (e.g. mergers and acquisitions,
corporate governance, and labour market rigidities) that are being addressed by the authorities. 52
FDI inflows peaked at USD 19.4 billion in 2016 (Table 1.5). During the review period, inflows were
largely concentrated in the manufacturing of electric machinery, transportation equipment, and
chemicals and pharmaceuticals, as well as in services, mainly finance and insurance (Tables 1.4 and
1.5); in 2018, they originated mainly in the United States, the Cayman Islands, the European Union
and the Republic of Korea. The FDI inbound stock continued to rise steadily and was largely held by
European Union investors (Table 1.7). Despite a decline in its share, the United States remains the
second FDI stock holder, followed by Singapore. Within the European Union, in 2017, the largest
single stock holder remained the Netherlands, where around 80% of investment was in electrical
machinery, followed by France, where over 70% of investment was in transportation equipment;
52
U.S. Department of State, 2018 Investment Climate Statements: Japan. Viewed at:
https://www.state.gov/reports/2018-investment-climate-statements/japan/; and OECD, Foreign direct
investment (FDI). Viewed at: https://www.oecd-ilibrary.org/finance-and-investment/fdi-
stocks/indicator/english_80eca1f9-en.
- 30 -
around 80% of the stock from North America was in the non-manufacturing sector, with the majority
in the finance and insurance industry.53
1.27. Japan remains not only one of the major exporters of goods, but also of capital. Monetary
easing in Japan and "search-for-yield" by Japanese investors continued to support FDI outflows and
overseas diversification by institutional investors.54 FDI outflows peaked in 2017 and then dropped
by an overall 14.4% in 2018 (Table 1.5). Unlike inflows, during the review period, outflows were
largely concentrated in services (communications, and finance and insurance) and manufacturing
(chemicals and pharmaceuticals, and transportation equipment) (Table 1.5). At the same time, the
main individual destinations were the European Union, the United States (albeit a decline) and the
Cayman Islands. Similar to the inbound stock, the outward FDI stock continued to rise steadily, with
the United States and the European Union remaining the main destinations (Table 1.7).
Table 1.5 Inbound and outbound flows of direct investment, by activity, 2014-18
2014 2015 2016 2017 2018
Inbound flows
Total (JPY billion) 1,274.5 360.2 2,106.1 1,231.3 1,088.5
Total (USD billion) 12.0 3.0 19.4 11.0 9.9
(% of total inbound flows)
Manufacturing 35.0 84.2 64.9 91.4 134.4
Food 9.9 6.1 2.2 2.4 2.2
Textiles 0.3 3.4 0.1 0.2 -0.3
Lumber and pulp 0.2 0.6 0.1 0.0 0.0
Chemicals and pharmaceuticals -2.5 39.4 2.4 -0.8 15.2
Petroleum -5.8 -0.1 -6.9 1.8 2.2
Rubber and leather -0.8 0.0 0.0 0.0 -0.1
Glass and ceramics 0.8 5.1 -0.1 0.9 0.2
Iron, non-ferrous, and metals 0.9 -2.4 -0.3 -0.2 0.4
General machinery 5.1 15.1 6.1 16.2 -1.6
Electric machinery 9.9 9.0 38.6 40.9 75.1
Transportation equipment 10.8 -34.9 19.1 31.4 28.1
Precision machinery 3.6 -0.7 -0.5 -2.7 -0.7
Other manufacturing 2.7 43.7 4.1 1.4 13.6
Non-manufacturing 65.0 15.8 35.1 8.6 -34.4
Farming and forestry 0.0 0.3 0.0 0.1 0.4
Fishery and marine products 0.0 0.1 0.0 0.0 0.2
Mining 0.1 0.5 0.1 1.5 0.3
Construction -0.1 2.1 0.5 0.4 -2.1
Transportation -7.1 19.7 7.7 6.4 0.2
Communications 14.4 34.1 5.4 -2.1 -27.1
Wholesale and retail -20.3 -132.4 -12.5 -47.5 -65.2
Finance and insurance 62.4 50.9 18.0 15.6 44.7
Real estate 1.9 -4.5 1.9 4.2 8.5
Services 2.9 9.1 7.9 21.7 -0.9
Other non-manufacturing 10.9 35.9 6.3 8.1 6.9
Outbound flows
Total (JPY billion) 13,862.2 16,492.1 16,964.8 18,471.9 15,808.3
(% of total outbound flows)
Manufacturing 50.0 37.4 34.9 34.2 38.3
Food 14.4 2.6 2.4 6.1 0.2
53
JETRO (2018), JETRO Invest Japan Report 2018, November. Viewed
at:https://www.jetro.go.jp/en/invest/reports/.
54
- 31 -
2014 2015 2016 2017 2018

Textiles 0.9 0.3 1.0 0.5 1.2
Lumber and pulp 1.2 0.7 0.7 0.1 0.7
Chemicals and pharmaceuticals 5.0 6.5 5.0 6.4 10.0
Petroleum 0.4 -0.1 0.0 0.1 0.3
Rubber and leather 2.4 1.4 2.3 0.7 1.1
Glass and ceramics 1.4 1.2 0.7 1.0 1.2
Iron, non-ferrous, and metals 5.1 1.8 2.6 2.1 2.6
General machinery 5.6 5.8 4.0 5.3 4.3
Electric machinery 4.6 6.2 6.4 3.7 5.7
Transportation equipment 7.4 9.5 8.1 5.5 8.9
Precision machinery 0.5 0.6 0.8 1.9 0.8
Other manufacturing 1.0 0.8 0.8 0.9 1.1
Non-manufacturing 50.0 62.6 65.1 65.8 61.7
Farming and forestry 0.2 0.1 -0.1 -0.1 0.0
Fishery and marine products 1.1 0.1 0.1 0.0 0.0
Mining 4.1 3.5 4.0 0.5 5.5
Construction 0.3 0.3 1.1 1.0 1.7
Transportation 1.2 5.9 1.4 0.6 1.5
Communications 5.9 8.7 11.4 13.8 27.2
Wholesale and retail 14.2 10.0 12.0 16.9 9.8
Finance and insurance 14.7 25.4 5.5 20.3 17.4
Real estate 1.2 2.7 3.3 3.9 3.2
Services 5.0 4.0 24.1 5.5 -9.0
Other non-manufacturing 2.1 1.8 2.2 3.3 4.4
Memorandum:
JPY/USD 105.94 121.04 108.79 112.17 110.42
Source: Ministry of Finance (Japan), Outward/Inward Direct Investment, breakdown by Region and Industry.
Viewed at:
https://www.mof.go.jp/english/international_policy/reference/balance_of_payments/ebpfdii.htm.
Table 1.6 Inbound and outbound flows of direct investment, by main origin and
destination, 2014-18
2014 2015 2016 2017 2018
Inbound flows
Total (JPY billion) 1,274.5 360.2 2,106.1 1,231.3 1,088.5
Total inbound flows (USD billion) 12.0 3.0 19.4 11.0 9.9
(% of total inbound flows)
United States 56.8 107.0 23.3 37.5 47.7
Cayman Islands 5.3 4.7 3.0 29.4 37.3
EU-28 -18.7 -164.4 29.4 23.5 19.8
France 11.7 73.6 24.2 31.8 31.8
United Kingdom 9.9 28.2 -6.3 0.9 10.8
Belgium -2.3 -1.0 0.3 -1.5 6.1
Sweden -11.5 -9.2 -0.4 2.4 1.8
Republic of Korea 6.4 30.4 3.1 8.5 19.2
Israel 2.4 -1.0 -0.1 0.2 12.7
Hong Kong, China 13.3 29.3 6.5 -0.9 7.6
China 2.8 2.8 1.4 5.5 4.5
Chinese Taipei 9.9 18.4 11.9 6.8 4.4
British Virgin Islands 0.5 0.6 1.3 -0.3 4.1
Australia 3.7 12.5 2.3 2.8 1.0
Saudi Arabia, Kingdom of 0.1 1.8 0.3 0.5 0.8
Outbound flows
Total (JPY billion) 13,862.2 16,492.1 16,964.8 18,471.9 15,808.3
- 32 -
2014 2015 2016 2017 2018

(% of total outbound flows)
EU-28 16.4 24.3 33.5 35.0 31.2
United Kingdom 5.6 12.0 27.5 15.8 12.6
Netherlands 3.4 5.3 2.0 9.0 5.5
Ireland 0.4 -0.6 1.7 1.2 4.4
Spain 0.7 0.4 0.5 0.2 3.0
Germany 1.4 2.2 1.1 1.6 1.6
United States 37.6 36.0 33.0 28.8 14.3
Cayman Islands 0.8 5.8 13.1 2.4 11.7
Singapore 6.2 5.1 -11.8 4.1 8.8
China 8.0 6.9 6.3 6.5 7.3
Thailand 4.2 2.8 2.7 3.3 3.8
Indonesia 3.7 2.3 2.0 2.2 2.2
India 1.8 -0.8 2.7 0.9 2.2
British Virgin Islands 0.2 0.1 2.3 0.1 2.0
Canada 1.4 0.9 0.5 0.6 1.7
Brazil 2.4 -0.2 1.3 -0.8 1.5
Hong Kong, China 2.0 1.9 1.2 1.7 1.5
Viet Nam 1.3 1.1 1.1 1.2 1.3
Memorandum:
JPY/USD 105.94 121.04 108.79 112.17 110.42
Source: Ministry of Finance (Japan), Outward/Inward Direct Investment, breakdown by Region and Industry.
Viewed at:
https://www.mof.go.jp/english/international_policy/reference/balance_of_payments/ebpfdii.htm.
Table 1.7 Inbound and outbound stock of direct investment, by main origin and
destination, 2014-18
2014 2015 2016 2017 2018
Inbound stock (USD billion) 198.2 205.7 241.1 256.8 278.2
(% of total inbound stock)
EU-28 41.9 42.4 43.8 45.2 44.4
Netherlands 13.3 14.9 13.7 16.6 15.1
France 11.8 12.3 12.0 12.1 12.2
United Kingdom 8.0 7.8 7.8 6.2 8.5
Germany 4.5 3.1 3.2 3.2 3.6
Luxembourg 2.7 3.2 3.1 3.0 2.7
Sweden 0.3 0.6 0.8 0.9 0.9
United States 29.0 27.6 25.2 23.2 21.3
Singapore 7.3 7.3 8.4 8.6 8.6
Cayman Islands 4.4 4.3 4.2 4.7 5.4
Switzerland 4.6 4.5 4.6 4.4 4.7
Hong Kong, China 3.8 4.2 3.9 3.3 3.3
Chinese Taipei 1.7 2.1 2.7 2.3 2.4
Australia 1.5 1.1 1.2 1.2 1.8
China 0.6 0.9 0.7 1.0 1.2
Thailand 0.6 0.7 0.8 0.8 0.8
Canada 0.8 0.7 0.7 0.6 0.6
Outbound stock (USD billion) 1,185.4 1,261.0 1,356.7 1,554.7 1,645.9
(% of total outbound stock)
United States 32.2 33.2 33.4 31.6 30.6
EU-28 22.5 23.1 23.9 25.9 26.0
United Kingdom 6.5 7.1 9.1 9.9 9.9
Netherlands 8.2 8.4 7.8 8.4 8.1
- 33 -
2014 2015 2016 2017 2018

Germany 1.6 1.7 1.6 1.7 1.8
Belgium 1.6 1.4 1.3 1.3 1.3
France 1.2 1.0 1.0 1.0 1.0
China 8.8 8.6 8.0 7.7 7.5
Singapore 3.9 4.0 3.1 4.1 4.8
Thailand 4.4 4.1 4.1 4.1 4.2
Australia 5.3 5.3 4.9 4.4 4.1
Cayman Islands 1.1 1.2 2.4 2.3 2.9
Hong Kong, China 2.0 2.0 2.1 2.0 2.0
Indonesia 2.0 1.9 2.0 2.0 1.8
India 1.2 1.1 1.3 1.4 1.5
Brazil 2.6 2.0 1.8 1.4 1.3
Canada 1.4 1.3 1.2 1.1 1.1
Viet Nam 1.0 1.0 1.1 1.0 1.0
Malaysia 1.2 1.1 0.9 0.9 1.0
Chinese Taipei 1.0 1.0 1.0 1.0 0.9
Note: End-period figures.

Source: JETRO, Japanese Trade and Investment Statistics. Viewed at:
https://www.jetro.go.jp/en/reports/statistics.html.
- 34 -
2 TRADE AND INVESTMENT REGIMES
2.1 General Framework
2.1. There were no changes to the Japanese Constitution over the review period. This, inter alia,
sets out the roles and responsibilities of the legislature (the Diet 1 ), the executive branch (the
Cabinet) and the Judiciary.2 With respect to the legislative process, bills can be submitted either by
Diet Members or by the Cabinet, but only the Cabinet can submit the national budget or treaties.
Bills become law on passage by both Houses, except as otherwise provided by the Constitution. The
newly enacted law must be promulgated before it comes into force by publication in an official
gazette.3 Under Article 73 of the Constitution, the Cabinet is responsible for enacting cabinet orders
to execute the provisions of Constitution and the law.
2.2. The overall economic policy of Japan continues to be guided by the evolving Abenomics
programme, which has two key goals: Achieving Sustainable Growth, and Realizing Society 5.0.
With respect to the former, the aim is to reach a nominal GDP of JPY 600 trillion through a virtuous
cycle of increases in production, income and consumption. Efforts are centred on four areas, relating
to: (a) productive individuals; (b) smart regulations and laws; (c) attractive international
opportunities; and (d) more competitive businesses.4 The goal of Realizing Society 5.0 is to enhance
human comfort and sustainability, and resolve social challenges, such as the declining birth rate, an
ageing population, and environmental and energy issues, through the development and use of new
innovations, including the Internet of Things, big data, artificial intelligence, robotics, and the sharing
economy.5
2.3. As part of the implantation strategy for the Abenomics programme, the 2016 Japan
Revitalization Strategy is being pursued.6 This involves reforms to: cultivate new promising markets;
engender a productivity revolution to mitigate supply-side constraints and impending workforce
shortages; and enhance the capability of individuals to facilitate industrial transformation. Initiatives
being implemented are: the launch of the 10 Strategic Public-Private Joint Projects (an initiative to
cultivate new markets and for knowledge- and strategy-sharing between the public and private
sectors); the introduction of a road-map method for the back calculation of goals 7 ; regulatory
reforms to reduce administrative costs for businesses; education/skills/workforce reforms;
encouraging joint research between industry and academia; the introduction of a Japanese Green
Card for Highly-Skilled Foreign Professionals (see below); support to business to introduce
information technology and robots; promotion of technology in the fields of health care, the
environment and energy; development of a large-scale hydrogen supply chain (by 2030);
development of the sports sector in connection with the 2020 Olympic Games; measures to improve
the productivity of the services sector (Section 4.4); continued reform of the agriculture sector
(Section 4.1); measures to enhance and promote tourism; encouragement of National Strategic
Special Zones utilization (see below); corporate governance reforms (see below); measures to
ensure vibrant financial/capital markets (Section 4.4.1); and expansion of private participation in
public services and assets. Various new entities were established to guide some of these efforts,
namely, the Public-Private Council for the Fourth Industrial Revolution, the Artificial Intelligence
Technology Strategy Council; and the Council for Promoting Human Resource Development to
Respond to the Fourth Industrial Revolution.
1
The Diet consists of two houses; a House of Representatives (Lower house) and a House of Councillors
(Upper house), and both sets of parliamentarians are directly elected. For more information on their mandate,
see House of Representatives, Powers of the National Diet. Viewed at:
http://www.shugiin.go.jp/internet/itdb_english.nsf/html/statics/guide/powers.htm.
2
The Constitution of Japan. Viewed at:
http://japan.kantei.go.jp/constitution_and_government_of_japan/constitution_e.html.
3
Cabinet Legislation Bureau, The law-making process. Viewed at:
https://www.clb.go.jp/english/process.html.
4
As reported by the authorities, simultaneous measures in a wide range of fields will also be necessary
to achieve the nominal GDP target.
5
Government of Japan, Abenomics. Viewed at: https://www.japan.go.jp/abenomics/index.html.
6
Japan Revitalization Strategy 2016. Viewed at:
http://www.kantei.go.jp/jp/singi/keizaisaisei/pdf/2016_hombun1_e.pdf.
7
As explained by the authorities, the purpose of the road-map method for the back-calculation of goals
is for the Government to implement reform in a timely manner through the sharing of future images of
technologies to be implemented between the public and private sectors, as well as coordinating the agreed
reforms and their timing.
- 35 -
2.4. In 2017, the Government released its Future Investment Strategy, which identifies five areas
for the promotion of investment in order achieve Society 5.0, namely: the extension of a healthy
lifespan; the realization of a mobility revolution; creating next-generation supply chains; building
and developing pleasant infrastructure and towns; and advancing FinTech.8
2.5. Furthermore, in December 2017, the Cabinet released its New Economic Policy Package, which
forms the framework up to 2020 for promoting "supply system innovation" and a "human resources
development revolution".9 With respect to supply system innovation, priority areas include, inter
alia: measures to support SMEs and small-scale entrepreneurs; the creation of a supportive
environment for wage increases and business succession; the revitalization of regional economies;
continued corporate governance reforms; the enactment of a regulatory sandbox; reforms to areas
where there is sluggish productivity; innovation promotion; and infrastructure development for
Society 5.0. With respect to the human resources development revolution, the focus is on reducing
the costs and increasing the quality and accessibility of education, particularly for children;
promoting flexible working styles; and improving compensation for care workers. These human
resources-related initiatives will be financed through revenue obtained from a consumption tax
increase planned for October 2019 (Section 3.3.1.1).
2.2 Trade Policy Formulation and Objectives
2.6. The institutional framework for trade policy-making has not changed since Japan's previous
Review. Overall coordination of trade policies rests with the Cabinet. The Ministry of Economy Trade
and Industry (METI) and the Ministry of Foreign Affairs (MOFA) continue to formulate and implement
trade policy. Several other ministries and official agencies have trade policy related responsibilities
(Sections 3 and 4). The mandates of various of the legislature's (Diet) committees include trade (i.e.
committees on economy trade and industry; financial affairs; forestry and fisheries; and
fundamental national policies). As indicated in a previous Review, ministries and agencies receive
inputs from the private sector concerning matters related to trade policies, through, inter alia,
exchanging opinions with private entities and receiving petitions from them.
2.7. Progress in realizing Japan's trade policy objectives are contained in the White Paper on
International Economy and Trade 2018. This Paper reports on steps taken to develop "free fair and
high-level trade rules" domestically, with key trading partners and in international fora (including
the WTO), as well as progress in reinforcing economic ties and cooperation with emerging economies
in Asia, Africa, the Russian Federation and the Middle East. Its "comprehensive trade policy" includes
promoting the use of economic partnership agreements (EPAs), the establishment in 2016 of a
Consortium for New Export Nation (Section 3.2), and measures to increase food exports
(Section 4.1).10
2.8. All laws and regulations are published in the Government Gazette and are made available on
the Internet11; some have been translated into English on a separate site. 12 The main laws and
regulations relating to trade, and amendments since January 2017, are presented in Table 2.1.
Table 2.1 Major trade-related laws and regulations, November 2019

Legislation Latest
amendment(s)
Foreign trade and exchange restrictions
Foreign Exchange and Foreign Trade Act (1949 Law No. 228) 2017, 2018
Export and Import Transaction Act (1952 Law No. 299) 2019
Foreign Exchange Order (1980 No. 260) 2018
The Order on Inward Direct Investment (1980 No. 261) 2017
Export Trade Control Order (1949 Order No. 378) 2017, 2018, 2019
Import Trade Control Order (1949 Order No. 414) 2003
8
Prime Minister's Office of Japan, Fundamental Ideas. Viewed at:
https://www.kantei.go.jp/jp/singi/keizaisaisei/pdf/miraitousi2017_summary.pdf.
9
New Economic Policy Package 2017 (English translation). Viewed at:
https://www5.cao.go.jp/keizai1/package/20171208_package_en.pdf.
10
METI, White Paper on International Economy and Trade 2018. Viewed at:
https://www.meti.go.jp/english/report/data/wp2018/wp2018.html.
11
Government Gazette (contains documents in Japanese only). Viewed at: https://kanpou.npb.go.jp.
12
Laws and regulations that have been translated into English may be viewed at:
http://www.japaneselawtranslation.go.jp.
- 36 -
Legislation Latest
amendment(s)
Customs- and tariff-related regulations
Customs Law (1954 Law No. 61) 2017, 2018
Customs Tariff Law (1910 Law No. 54) 2017, 2018, 2019
Temporary Tariff Measures Law (1960 Law No. 36) 2017, 2018, 2019
Cabinet Order Relating to Countervailing Duties (1994 Order No. 415) 2017
Cabinet Order Relating to Anti-Dumping Duties (1994 Order No. 416) 2017
Cabinet Order Relating to Emergency Duties (1994 Order No. 417) 2009
Cabinet Order Relating to Retaliatory Duties (1994 Order No. 418) 2000
Cabinet Order on Tariff Quotas (1961 Order No. 153) 2017, 2018, 2019
Act on the provision of information regarding originating goods declared under Economic 2016, 2018
Partnership Agreements (2014 Law No. 112)
Trade promotion
Trade and Investment Insurance Act (1950 Law No. 67) 2017, 2019
Services and energy
Banking Law (1981 Law No. 59) 2019
Insurance Business Law (1995 Law No. 105) 2019
Financial Instruments and Exchange Law (1948 Law No. 25) 2017
Telecommunications Business Act (1984 Law No. 86) 2017, 2018, 2019
Law Concerning the Measures by Large-Scale Retail Stores for Preservation of the Living 2000
Environment (1998 Law No. 91)
Civil Aeronautics Act (1952 Law No. 231) 2017
Marine Transportation Act (1949 Law No. 187) 2017
Act on Special Measures concerning the Handling of Legal Services by Foreign Lawyers 2014
(1986 Law No. 66)
Certified Public Accountants Act (1948 Law No. 103) 2019
Certified Tax Accountant Law (1951 Law No. 237) 2017, 2018
Electricity Business Act (1964 Law No. 170) 2017
Gas Business Act (1954 Law No. 51) 2017
Oil Stockpiling Act (1975 Law No. 96) 2012
Act on the Quality Control of Gasoline and Other Fuels (1976 Law No. 88) 2014
Standards and technical regulations, SPS
Industrial Standardization Act (1949 Law No. 185) 2017, 2018
Act on Japanese Agricultural Standards (1950 Law No. 175) 2017
Act on Securing Quality, Efficacy and Safety of Products including Pharmaceuticals and 2016
Medical Devices (1960 Law No. 145)
Food Sanitation Act (1947 Law No. 233) 2018
Food Labelling Act (2013 Law No. 70) 2018
Quarantine Act (1951 Law No. 201) 2014
Plant Protection Act (1950 Law No. 151) 1996
Act on Livestock Infectious Diseases Control (1951 Law No. 166) 2011
Building Standard Law (Law No. 201) 2018
Electrical Appliances and Materials Safety Act (1961 Law No. 234) 2014
Consumer Product Safety Act (1973 Law No. 31) 2014
High Pressure Gas Safety Act (1951 Law No. 204) 2019
Act on the Rational Use of Energy (1979 Law No. 49) 2018
Fire Service Law (1948 Law No. 186) 2017, 2018
Intellectual property rights
Patent Act (1959 Law No. 121) 2017, 2018, 2019
Customs Law (1954 Law No. 61) 2017, 2018
Unfair Competition Prevention Act (1993 Law No. 47) 2018
Utility Model Act (1959 Law No. 123) 2019
Design Act (1959 Law No. 125) 2018, 2019
Trademark Act (1959 Law No. 127) 2017, 2018, 2019
Copyright Law (1970 Law No. 48) 2018
Civil Code (1896 Law No. 89) 2017, 2018, 2019
Agriculture
Basic Law on Food, Agriculture and Rural Areas (1999 Law No. 106) 1999
Others
Administrative Procedure Act (1993 Law No. 88) 2017
Act on Prohibition of Private Monopolization and Maintenance of Fair Trade (Anti-Monopoly 2019
Act) (1947 Law No. 54)
Act Against Unjustifiable Premiums and Misleading Representations (1962 Law No. 134) 2014
Source: WTO document WT/TPR/S/351/Rev.1, 20 June 2017; and Government Gazette. Viewed at:
https://kanpou.npb.go.jp.
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2.9. As indicated in a previous Review, under the 2001 Government Policy Evaluations Act (GPEA) 13,
the Cabinet Order for Enforcement of the Government Policy Evaluation Act 14 , and the Basic
Guidelines for Implementing Policy Evaluations (as revised in 2017) 15 , the Cabinet Office and
ministries are required to evaluate policies before and after implementation, and to publish the
results of these evaluations. According to the authorities, evaluation reports are published on each
ministry's website, and they can also all be accessed (in Japanese only) through the Policy Evaluation
Portal Site.16 The 2017 revision to the Basic Guidelines introduces the provision that, where ex ante
evaluation of regulations is required by Cabinet Order for Enforcement of the GPEA, ex post
evaluation is now also mandatory. Since 2007, draft bills to enact, revise or abolish regulations
through enactment, revision or abolition of a law or Cabinet Order must be evaluated by ex ante
regulatory impact analyses, the results of which are published on the Policy Evaluation Portal Site.
The GPEA contains provisions that policy evaluations must use the findings of persons with relevant
knowledge and experience in accordance with the special characteristics of the policy. While public
comment procedures are not a requirement, the administrative organs do have discretion to ask for
the opinions of stakeholders and the public.
2.3 Trade Agreements and Arrangements
2.3.1 WTO
2.10. Japan applies at least MFN treatment to all WTO Members. At present, countries or territories
to which MFN treatment is not applied are Andorra, Equatorial Guinea, the State of Eritrea, Lebanon,
the Democratic People's Republic of Korea, South Sudan, and the Democratic Republic of
Timor-Leste.
2.11. Japan is a signatory to the 1979 Agreement on Trade in Civil Aircraft, and is a party to the
Plurilateral Agreement on Government Procurement (GPA), as revised. It is a signatory to the WTO
Information Technology Agreement (ITA), and participated in the ITA expansion negotiations; once
fully implemented, tariff reductions are expected to bring considerable benefits for Japanese
exports.17 Japan accepted the 2005 Protocol Amending the TRIPS Agreement on 31 August 2007,
and accepted the 2014 Protocol concerning the Trade Facilitation Agreement on 1 June 2015. During
the 2017 WTO Ministerial Conference, Japan joined the joint ministerial statements on electronic
commerce 18 ; investment facilitation for development 19 ; the establishment of a WTO informal
programme for MSMEs20; and services domestic regulation.21 Japan also supported the Buenos Aires
Joint Declaration on Trade and Women's Economic Empowerment.22
2.12. Since 1 January 2017, Japan has been involved in two new dispute settlement cases as a
complainant, against the Republic of Korea (DS571 –Measures Affecting Trade in Commercial Vessels
and DS553 – Sunset Review of Anti-Dumping Duties on Stainless Steel Bars) and one new complaint
against India (DS584 – Tariff Treatment on Certain Goods).23 It has been involved in one new case
13
Government Policy Evaluations Act (English translation) incorporating revisions in 2003. Viewed at:
http://www.soumu.go.jp/english/kansatu/evaluation/evaluation_09.pdf. There were further minor revisions to
the Act in 2015.
14
Cabinet Order for Enforcement of the Government Policy Evaluation Act. Viewed (in Japanese) at:
http://www.soumu.go.jp/main_content/000556219.pdf. This Order was most recently revised in 2015.
15
Basic Guidelines for Implementing Policy Evaluation (English translation). Viewed at:
http://www.soumu.go.jp/main_content/000556221.pdf.
16
Ministry of Internal Affairs and Communications, Policy Evaluation Portal Site. Viewed at:
http://www.soumu.go.jp/main_sosiki/hyouka/seisaku_n/portal/.
17
According to the METI, the value of Japanese exports of the 201 products covered by the expansion
negotiations is around JPY 9 trillion, and the value of tariff reductions from these negotiations is estimated at
around JPY 170 billion. METI, White Paper on International Economy and Trade 2018. Viewed at:
https://www.meti.go.jp/english/report/data/wp2018/pdf/3-1-4.pdf.
18
WTO document WT/MIN(17)/60, 13 December 2017.
19
20
21
22
WTO, Joint Declaration on Trade and Women's Economic Empowerment on the Occasion of the WTO
Ministerial Conference in Buenos Aires in December 2017. Viewed at:
https://www.wto.org/english/thewto_e/minist_e/mc11_e/genderdeclarationmc11_e.pdf.
23
WTO, Japan and the WTO. Viewed at:
https://www.wto.org/english/thewto_e/countries_e/japan_e.htm.
- 38 -
as respondent over this period (DS590 – Measures Related to the Exportation of Products and
Technology to Korea), and 34 new cases as third party.24
2.13. Over the review period, Japan submitted several notifications under different WTO
agreements (Table 2.2); notifications are outstanding in the areas of domestic support in agriculture
and government procurement.
Table 2.2 Selected notifications under WTO agreements, January 2017-November 2019
WTO Agreement Description of requirement Document symbol and date of
most recent notification
Agriculture
Article 18.2 Domestic support (DS:1) G/AG/N/JPN/219, 03/07/17
G/AG/N/JPN/235-236, 19/02/19
Article 18.3 Domestic support (DS:2) G/AG/N/JPN/220, 03/07/17
Article 18.2 Volume of imports under tariff quotas (MA:2) G/AG/N/JPN/217, 11/05/17
G/AG/N/JPN/225, 22/05/18
G/AG/N/JPN/238, 15/5/2019
Article 5.7 Special safeguard (MA:3 and MA:4) G/AG/N/JPN/218, 20/06/17
G/AG/N/JPN/221, 09/01/18
G/AG/N/JPN/222, 09/02/18
G/AG/N/JPN/223, 12/03/18
G/AG/N/JPN/227, 12/06/18
G/AG/N/JPN/228, 10/07/18
G/AG/N/JPN/234, 07/02/19
G/AG/N/JPN/242, 09/09/19
G/AG/N/JPN/241, 01/08/2019
G/AG/N/JPN/242, 09/09/19
G/AG/N/JPN/243, 08/10/19
G/AG/N/JPN/244-246, 08/11/19
Articles 5.7 and 18.2 Special safeguard (MA:5) G/AG/N/JPN/216, 11/05/17
G/AG/N/JPN/226, 23/05/18
G/AG/N/JPN/239, 15/05/19
Articles 10 and 18.2 Export subsidies (outlays and quantities) (ES:1) G/AG/N/JPN/215, 03/05/17
G/AG/N/JPN/224, 15/05/18
G/AG/N/JPN/240, 15/05/19
Article 10 and 18.2 Volume of food aid in the context of export subsidy G/AG/N/JPN/230-233, 03/12/18
commitments (ES:3)
Article 16.2 Measures concerning the possible negative effects of G/AG/N/JPN/229, 15/11/18
the reform programme on least-developed and net
food importing developing countries (NF:1)
Anti-dumping
Article 16.4 - semi Semi-annual report under Article 16.4 of the G/ADP/N/294/JPN, 07/02/17
Agreement G/ADP/N/300/JPN, 21/07/17
G/ADP/N/308/JPN, 02/02/18
G/ADP/N/314/JPN, 09/08/18
G/ADP/N/322/JPN, 04/02/19
G/ADP/N/328/JPN, 22/10/19
G/ADP/N/334/JPN, 15/11/19
Article 16.5 Notification of domestic procedures and authorities G/ADP/N/14/JPN/Add.46,
competent to initiate and conduct investigations 17/10/2018
Article 18.5 Laws and regulations G/ADP/N/1/JPN/2/Suppl.9,
25/06/2018
State trading
GATT 1994 Article XVII:4(a) Understanding on the Interpretation of Article XVII
Notification of products traded by State enterprises, G/STR/N/17/JPN, 11/10/18
State trading activities
Regional Trading Arrangements
GATT 1994 Article XXIV:7(a) Free-Trade Areas
Notification of regional trade agreement WT/REG277/N/3, 24/08/18
Notification of regional trade agreements S/C/N/920; WT/REG395/N/1,
20/12/18
Notification of regional trade agreement S/C/N/921; WT/REG396/N/1,
14/01/19
GATS Article V:7(a)
Notification of regional trade agreements S/C/N/920; WT/REG395/N/1,
20/12/18
24
The new cases since 1 January 2017 in which Japan has been involved as a third party are cases:
DS577; DS576; DS573; DS567; DS566; DS564; DS561; DS560; DS559; DS558; DS557; DS556; DS554;
DS552; DS551; DS550; DS548; DS547; DS546; DS545; DS544; DS543; DS542; DS541; DS539; DS538;
DS536; DS534; DS533; DS529; DS526; DS523; DS522 and DS521. WTO, Japan and the WTO. Viewed at:
https://www.wto.org/english/thewto_e/countries_e/japan_e.htm.
- 39 -

Notification of regional trade agreement S/C/N/921; WT/REG396/N/1,
14/01/19
Government Procurement
Article XVI:4-5 Statistics for 2016 reported under Article XVI:4 of GPA/142/Add.9, 03/04/18
the revised GPA
Article XXII:8 Work Programme on the Collection and Reporting of GPA/WPS/STAT/20, 14/06/17
Statistical Data GPA/WPS/STAT/24, 14/09/17
Annexes 1, 2 and 3 Thresholds GPA/THR/JPN/1, 07/02/18
of Appendix 1
Import Licensing Procedures
Articles 5.1 to 5.4 Agreement on Import Licensing Procedures - G/LIC/N/2/JPN/4, 17/04/18
Notification under Article 5.1 to 5.4 of the Agreement
Article 7.3 Replies to questionnaire on import licensing G/LIC/N/3/JPN/16, 02/10/17
procedures - Notification under Article 7.3 of the G/LIC/N/3/JPN/17, 09/10/18
Agreement on Import Licensing Procedures G/LIC/N/3/JPN/18, 09/10/19
Market Access
Article XXVIII:5 Invocation of paragraph 5 of Article XXVIII G/MA/344, 13/10/17
QR (G/L/59) – Quantitative restrictions G/MA/QR/N/JPN/4, 16/10/18
biennal
Trade Facilitation
Articles 22.1 and Notification under Article 22.1 and 22.2 G/TFA/N/JPN/1/Rev.1, 27/06/17
22.2 G/TFA/N/JPN/3, 10/09/18
G/TFA/N/JPN/4, 07/03/19
Articles 1.4, 10.4.3, Notification under Article 1.4, 10.4.3, 10.6.2 and G/TFA/N/JPN/2, 10/08/17
10.6.2 and 12.2.2 12.2.2 G/TFA/N/JPN/2/Corr.1, 19/12/18
Subsidies and Countervailing Measures
Article 25.11 Countervailing duty actions taken G/SCM/N/321/Add.1, 23/10/17
G/SCM/N/328/Add.1, 20/04/18
G/SCM/N/334/Add.1, 19/10/18
Article 25.1 Subsidies programmes G/SCM/N/315/JPN, 09/06/17
G/SCM/N/315/JPN/Corr.1,
03/01/18
G/SCM/N/343/JPN, 19/07/19
Article 25.12 Notification of domestic procedures and authorities G/SCM/N/18/Add.46, 17/10/18
competent to initiate and conduct investigations
Article 32.6 Laws and regulations G/SCM/N/1/JPN/2/Suppl.9,
25/06/18
Rules of Origin
Notification of preferential rules of origin for LDCs G/RO/LDC/N/JPN/1, 11/07/17
Notification of preferential rules of origin G/RO/N/188, 16/10/2019
Safeguards
Article 12.5 and 8.2 Laws and regulations G/L/1226; G/SG/N/12/JPN/3,
06/04/18
GL/1240; G/SG/N/12/JPN/4,
22/05/18
Sanitary and Phytosanitary Measures
Article 7, Annex B Notification of sanitary and phytosanitary measures 2017 – 48 notifications
2018 – 65 notifications
2019– 88 notifications
Technical Barriers to Trade
Article 2.10 Urgent technical regulations G/TBT/N/JPN/543, 06/01/2017
G/TBT/N/JPN/548, 01/03/2017
G/TBT/N/JPN/560, 23/06/2017
G/TBT/N/JPN/566, 05/09/2017
G/TBT/N/JPN/571, 03/11/2017
G/TBT/N/JPN/575, 20/12/2017
G/TBT/N/JPN/587, 05/03/2018
G/TBT/N/JPN/599, 22/06/2018
G/TBT/N/JPN/606, 27/08/2018
G/TBT/N/JPN/611, 21/11/2018
G/TBT/N/JPN/616, 21/12/2018
G/TBT/N/JPN/620, 26/02/2019
G/TBT/N/JPN/626, 17/06/2019
G/TBT/N/JPN/632, 11/09/2019
G/TBT/N/JPN/641, 18/11/2019
- 40 -

Article 2.9 Technical regulations 2017 – 23 notifications
2018 – 32 notifications
G/TBT/N/JPN/617, 03/01/2019
G/TBT/N/JPN/618, 18/01/2019
G/TBT/N/JPN/619, 31/01/2019
G/TBT/N/JPN/621, 01/03/2019
G/TBT/N/JPN/622, 18/03/2019
G/TBT/N/JPN/623-624, 21/03/2019
G/TBT/N/JPN/625, 24/04/2019
G/TBT/N/JPN/627, 19/07/2019
G/TBT/N/JPN/628, 23/07/2019
G/TBT/N/JPN/629-630, 09/08/2019
G/TBT/N/JPN/631, 02/09/2019
G/TBT/N/JPN/633, 03/10/2019
G/TBT/N/JPN/634-635, 10/10/2019
G/TBT/N/JPN/636, 17/10/2019
G/TBT/N/JPN/637, 21/10/2019
G/TBT/N/JPN/638-639,
12/11/2019
G/TBT/N/JPN/642, 18/11/2019
G/TBT/N/JPN/643, 21/11/2019
Articles 2.9 and 5.6 Notification with Article 10.6 G/TBT/N/JPN/562, 14/07/2017
G/TBT/N/JPN/563, 28/07/2017
G/TBT/N/JPN/576, 08/01/2018
G/TBT/N/JPN/578, 09/01/2018
G/TBT/N/JPN/596, 01/05/2018
G/TBT/N/JPN/601, 28/06/2018
G/TBT/N/JPN/640, 12/11/2019
Unspecified Notification with Article 10.6 G/TBT/N/JPN/552, 27/03/2017
Article 5.6 Conformity assessment procedures G/TBT/N/JPN/544, 23/01/2017
Annex 3(c) Notification of acceptance G/TBT/CS/N/189, 20/04/2017
G/TBT/CS/N/195, 21/11/2017
Intellectual property
TRIPS Article 63.2 Laws and regulations IP/N/1/JPN/28; IP/N/1/JPN/G/2,
17/02/2017
IP/N/1/JPN/29; IP/N/1/JPN/G/3,
17/02/2017
IP/N/1/JPN/30; IP/N/1/JPN/P/13,
06/08/2018
IP/N/1/JPN/31; IP/N/1/JPN/T/8,
06/08/2018
IP/N/1/JPN/32; IP/N/1/JPN/D/8,
06/08/2018
IP/N/1/JPN/36; IP/N/1/JPN/C/6,
07/03/2019
12/02/2019
12/02/2019
IP/N/1/JPN/35; IP/N/1/JPN/U/2,
12/02/2019
24/05/2019
24/05/2019
19/09/2019
IP/N/1/JPN/43; IP/N/1/JPN/D/9,
20/09/19
IP/N/1/JPN/42; IP/N/1/JPN/U/3,
20/09/19
26/09/2019
General Agreement on Trade in Services (GATS)
Notification pursuant to Article III:3 of the GATS S/C/N/930, 07/03/19
Notification pursuant to Article VII:4 of the GATS S/C/N/961, 15/10/2019
Regional Trade Agreements
Article V:7(a) Notification of regional trade agreement S/C/N/920; WT/REG395/N/1,
20/12/18
S/C/N/921; WT/REG396/N/1,
14/01/19
Source: WTO documents online.

- 41 -
2.3.2 Regional and preferential agreements
2.3.2.1 Regional trade agreements (RTAs)
2.14. As set out in the METI's 2018 White Paper on International Economy and Trade, expanding
free trade and promoting economic partnerships is central to Japan's trade policy. It is considered
that tapping into the Asia-Pacific region's growth and large markets by creating a global web of
economic partnerships is essential to the country's growth. In this regard, a target was set to raise
free trade agreement (FTA) coverage to 70% by 2018. Japan is aiming for the swift conclusion of
Regional Comprehensive Economic Partnership negotiations, through which the FTA ratio will exceed
70%25, as set out in the Growth Strategy 2019 (Section 1).
2.15. Japan has RTAs in force with: Australia; Brunei Darussalam; Chile; India; Indonesia;
Malaysia; Mexico; Mongolia; Peru; the Philippines; Singapore; Switzerland; Thailand; Viet Nam;
ASEAN Member economies26; EU member economies27; and participants in the Comprehensive and
Progressive Agreement for Trans-Pacific Partnership (CPTPP). New developments over the review
period were the entry into force of the CPTPP and the EU-Japan Economic Partnership Agreement
(see below). Taken together, these economies accounted for 38.7% of Japan's merchandise imports
and 34.8% of its merchandise exports in 2018. All agreements provide for liberalization of goods
and services. An overview of the services provisions in RTAs is provided in Section 4. Japan's
transition period in most of its RTAs lasts up to 15 years. However, in the RTAs with the European
Union and the CPTPP, Japan has a transition period of 21 years, up to 2038. By the end of these
transition periods, between 6% and 5%, respectively, of tariff lines remain subject to duties, most
of which relate to agricultural products (Table 2.3). Most of the agreements have been considered
in the WTO Committee on Regional Trade Agreements (CRTA) based upon factual presentations
prepared by the WTO Secretariat, except for: the EU-Japan EPA, the CPTPP, and the ASEAN-Japan
EPA (factual presentations for which are currently being prepared).28
2.16. In February 2019, Japan signed the First Protocol to Amend the Agreement on ASEAN-Japan
Comprehensive Partnership, which includes chapters on trade in services and investment. In
October 2019, Japan signed the Japan-United States Trade Agreement to eliminate or reduce tariffs
on certain agricultural and industrial products, and the Japan-United States Digital Trade Agreement,
which is intended to establish high standard rules in this area.29
2.17. Japan is a participant in the negotiations, launched in 2013, to create the Regional
Comprehensive Economic Partnership, which would to bring together in a single RTA the member
States of ASEAN and those economies with which ASEAN has RTAs in force 30; the aim is to conclude
this Agreement in 2019. Negotiations on an FTA between Japan, China and the Republic of Korea
are ongoing. Bilateral RTAs are also being negotiated with Colombia and Turkey. Negotiations with
the Gulf Cooperation Council 31 have been postponed, and those with the Republic of Korea have
been suspended.
25
Share of trade value in total Japanese trade value with economies with which EPAs/FTAs have been
signed or entered into force.
26
ASEAN member economies are: Brunei Darussalam; Cambodia; Indonesia; Lao PDR; Malaysia;
Myanmar; the Philippines; Singapore; Thailand; and Viet Nam.
27
EU member economies: Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark,
Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta,
Netherlands, Poland, Portugal, Romania, Slovak Republic, Slovenia, Spain, Sweden, and United Kingdom.
28
Factual presentations are available on the WTO's Regional Trade Agreements Information System
(RTA-IS). Viewed at: http://rtais.wto.org/UI/PublicMaintainRTAHome.aspx.
29
Ministry of Foreign Affairs of Japan, Joint Statement of Japan and the United States, 25 September
2019. Viewed at: https://www.mofa.go.jp/na/na1/us/page4e_001102.html.
30
The economies with which ASEAN has RTAs in force are: Japan, China, the Republic of Korea;
Australia; New Zealand and India. India opted out of RCEP in November 2019.
31
The Gulf Cooperation Council consists of: Bahrain, Kingdom of; Kuwait, the State of; Oman; Qatar;
Saudi Arabia, Kingdom of; and the United Arab Emirates.
- 42 -
Table 2.3 Selected features of RTAs in force

Title Goods liberalization Selected Japan's
(Entry into force) coveragea merchandise trade
(2018)
EU-Japan EPA End transition period 2038: 532 tariff lines S, GP, CP, E, 11.7% total imports
(01.02.2019) will remain dutiable (6% of total) L, e-com 11.4% total exports
CPTPP End transition period 2038: 459 tariff lines S, GP, CP, E, 17.1% total imports
(30.12.2018) will remain dutiable (5% of total) L, e-com 13.2% total exports
Mongolia-Japan EPA End transition period 2031: 1,115 tariff S, CP, E, L, e- 0.004% total imports
(07.06.2016) lines will remain dutiable (12.3% of total) com 0.1% total exports
Australia-Japan EPA End transition period 2029; 868 tariff lines S, GP, CP, e- 6.1% total imports
(15.01.2015) will remain dutiable (9.5% of total) com 2.3% total exports
Peru-Japan EPA End transition period 2027; 892 tariff lines S, GP, CP, E 0.3% total imports
(01.03.2012) will remain dutiable (10.1% of total) 0.1% total exports
India-Japan EPA End transition period 2026; 986 tariff lines S, GP, CP, E 0.7% total imports
Viet Nam-Japan EPA End transition period 2024; 946 tariff lines S, GP, CP, E 2.8% total imports
Switzerland-Japan EPA End transition period 2024; 987 tariff lines S, GP, CP, E, 1.0% total imports
(01.09.2009) will remain dutiable (11.2% of total) e-com 0.5% total exports
Philippines-Japan EPA End transition period 2023; 814 tariff lines S, GP, CP, E, 1.4% total imports
(11.12.2008) will remain dutiable (9.1% of total) L, e-com 1.5% total exports
ASEAN-Japan EPA End transition period 2023: 1,225 tariff S 15.0% total imports
(01.12.2008) lines will remain dutiable (13.5% of total) 15.5% total exports
Brunei-Darussalam- End transition period 2023; 1,125 tariff S, GP, E 0.3% total imports
Japan EPA lines will remain dutiable (12.6% of total) 0.01% total exports
31.07.2008
Indonesia-Japan EPA End transition period 2023; 962 tariff lines S, GP, CP, E 2.9% total imports
Thailand-Japan EPA End transition period 2022; 870 tariff lines S, GP, CP, E, 3.3% total imports
(01.11.2007) will remain dutiable (9.8% of total) e-com 4.4% total exports
Chile-Japan EPA End transition period 2022; 981 tariff lines S, GP, CPb 1.0% total imports
(03.09.2007) will remain dutiable (11% of total) 0.3% total exports
Malaysia-Japan EPA End transition period 2021; 882 tariff lines S, CP, E 2.5% total imports
Mexico-Japan EPA End transition period 2015: 1,180 tariff S, GP, CP, E, L 0.8% total imports
(01.04.2005) lines will remain dutiable (13% of total) 1.6% total exports
Singapore-Japan EPA End transition period 2022: 1,281 tariff S, GP, CP, e- 1.3% total imports
(30.11.2002) lines will remain dutiable (14% of total) com 3.2% total exports
a Services (S); government procurement (GP); competition policy (CP); environment (E); labour (L);
e-commerce (e-com).
b Under the Chile-Japan EPA, a joint statement issued upon signature of the Agreement includes
attachments on environment and labour.
Source: WTO's RTA-IS. Viewed at: http://rtais.wto.org/UI/PublicMaintainRTAHome.aspx.
2.3.2.1.1 CPTPP
2.18. Japan signed the CPTPP on 8 March 2018, and the agreement entered into force for Japan on
30 December 2018. The agreement covers both trade in goods and services. 32 According to the
authorities, the economic benefits are estimated to be a JPY 8 trillion boost to Japan's GDP and the
creation of 460,000 jobs; it is expected to serve as a new growth engine for the Japanese economy.
2.19. CPTPP signatories are: Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico,
New Zealand, Peru, Singapore, and Viet Nam. As at July 2019, the CPTPP had not yet entered into
force for: Brunei Darussalam, Chile, Malaysia, and Peru.33
2.20. Japan's Schedule to Annex 2-D sets out its reduction and elimination of customs duties. Upon
entry into force of the agreement, 83.3% of tariff lines were duty free. The transition period is
32
New Zealand Foreign Affairs and Trade, CPTPP text. Viewed at:
https://www.mfat.govt.nz/en/trade/free-trade-agreements/free-trade-agreements-in-
force/cptpp/comprehensive-and-progressive-agreement-for-trans-pacific-partnership-text#CPTPP.
33
As notified to the WTO in WTO documents WT/REG395/N/1 and S/C/N/920 of 20 December 2018, the
CPTPP entered into force on 30 December 2018 for Australia, Canada, Japan, Mexico, New Zealand, on
30 December 2019 for Singapore, and on 14 January 2019 for Viet Nam. For the rest of the parties, entry into
force will be in accordance with Article 3, paragraph 2 of the CPTPP.
- 43 -
21 years for Japan (i.e. ending in 2038). At the end of this period, 459 tariff lines will remain subject
to duties. 34 Tariff rate quotas, applied to 160 lines, are either CPTPP-wide or country-specific.
Services commitments on investment and cross-border trade in services are scheduled on a negative
list basis, while commitments on the temporary entry of business persons are scheduled on a
positive-list basis (Section 4.4).
2.21. The CPTPP contains a bilateral agreement between Japan and Canada on motor vehicle trade,
which stipulates the rights and duties agreed between the two countries as a result of bilateral
market access negotiations on motor vehicles.35 This contains provisions on a 12-year period for
transitional safeguard measures; specific dispute settlement procedures; and the establishment of
a special bilateral Committee on Motor Vehicles. Safeguard provisions are in place for agricultural
products and forest goods (Section 4.1).
2.22. The CPTPP has provisions on, inter alia: trade facilitation; e-commerce; government
procurement; competition policy; state-owned enterprises and designated monopolies; intellectual
property rights (Section 3.3.7); labour; environment; competitiveness and business facilitation;
development; SMEs; regulatory coherence; and transparency and anti-corruption.
2.3.2.1.2 EU-Japan Economic Partnership Agreement
2.23. The EU-Japan Economic Partnership Agreement (EPA) was signed on 17 July 2018, and
entered into force on 1 February 2019.36 It was notified to the WTO on 14 January 2019.37 It covers
both trade in goods and services. It is the world's largest RTA, with signatories together accounting
for nearly one third of world GDP.38
2.24. Customs duty reductions/elimination are implemented over a 21-year period, as set out in
Annex 2-A to the EPA, ending in 2038. At the end of this transition period, 94% of Japan's tariff lines
at the HS nine-digit level will be duty free. Tariffs, ranging from 3.7% to 22.5% will remain on
532 products. Japan maintains tariff rate quotas on various agricultural products; under the EPA,
quota quantities are subject to increases over a specified period, depending on the product. 39
Services commitments on investment, and cross-border trade in services are scheduled on a
negative list basis.
2.25. The EPA has provisions on, inter alia, e-commerce; government procurement (Section 3.3.6);
competition policy (Section 3.3.4); state-owned enterprises; enterprises granted special rights or
privileges and designated monopolies; intellectual property (Section 3.3.7); trade and sustainable
development; agricultural cooperation; and SMEs.
2.3.2.2 Preferential trade agreements (PTAs)
2.26. Japan offers preferential tariff treatment to 128 developing economies and five territories
under its GSP scheme.40 This includes all least developed countries (LDCs) who qualify for more
extensive product coverage (98% of tariff lines 41) and duty-free and quota-free treatment.42 In
2017, Japan notified to the WTO its preferential rules of origin for LDCs. 43 Product coverage under
34
MFAT, Annex 2-D – Tariff Schedule of Japan. Viewed at: https://www.mfat.govt.nz/assets/Trans-
Pacific-Partnership/Annexes/2-D.-Japan-General-Notes-to-Tariff-Schedule.pdf; and
https://www.mfat.govt.nz/assets/Trans-Pacific-Partnership/Annexes/2-D.-Japan-Tariff-Elimination-
Schedule.pdf.
35
CPTPP Appendix D. Viewed at: https://www.mfat.govt.nz/assets/Trans-Pacific-Partnership/Text/2.-
National-Treatment-and-Market-Access-for-Goods.pdf.
36
EU–Japan EPA. Viewed at: http://publications.europa.eu/resource/cellar/5805924c-09a3-11e9-81b4-
01aa75ed71a1.0006.01/DOC_1.
37
WTO documents WT/REG396/N/1; and S/C/N/921, 14 January 2019.
38
WTO document WT/TPR/OV/21, 27 November 2018.
39
EU-Japan EPA Annex 2-A, Part 3, Section B.
40
Japan Customs, List of GSP Beneficiaries. Viewed at: http://www.customs.go.jp/english/c-
answer_e/imtsukan/1504_e.htm.
41
WTO document WT/TPR/G/351, 18 January 2017.
42
Details of the evolution of Japan's GSP scheme are contained in WTO document WT/TPR/G/351,
18 January 2017.
43
WTO document G/RO/LDC/N/JPN/1, 11 July 2017. This notification was made pursuant to the 2015
Ministerial Declaration on preferential rules of origin for LDCs (WT/L/917/Add.1).
- 44 -
the duty-free, quota-free scheme for LDCs and the GSP scheme is reviewed each year as part of the
annual tariff revision. The GSP scheme itself is revised every ten years, with the next revision in
March 2021.
2.27. Under the GSP scheme, preferential tariff rates apply to 400 tariff lines at the nine-digit level
in Chapters 1 to 24 (agriculture and fisheries) (excluding in-quota rates), and to 2,621 tariff lines in
Chapters 25 to 97 (industrial products).44 The main exclusions are rice and rice products, meat and
meat products, fish, dairy products, pineapples, cereal products, textiles and clothing, leather and
leather products, and footwear. The preferential margin varies from one product to another.
2.28. In 2017, Japan changed the criteria for graduation from its GSP scheme; it applies rules
relating to entire graduation, partial graduation and product-by-exclusion (Table 2.4). Partial
graduation has been enforced since 1 April 2018, and entire graduation has been enforced since
1 April 2019.45 According to the authorities, the aim of the revision is to spread GSP benefits fairly
to the economies that really need the preferential treatment. Since 1 January 2017, the following
economies have been entirely graduated from Japan's GSP scheme: Chile, Saint Christopher and
Nevis, and Uruguay in 2017; Antigua and Barbuda, and the Seychelles in 2018; and Brazil, China,
Malaysia, Mexico, and Thailand in 2019. 868 items from China (such as food, chemical products and
textiles) and 2 food-related items from Brazil were subject to partial graduation in 2018. As at
mid-2019, only one product (grain sorghum (other than seed) (not for feeding purposes) from
Argentina was subject to exclusion from preferential treatment under product-by-exclusion.
Table 2.4 GSP graduation rules

Graduation type Rules applied
Entire graduation A country/territory shall be excluded from the list of GSP beneficiaries when it has been
(out) classified as a high-income economy in the World Bank Statistics for three consecutive
years or has been classified as an upper-middle economy and the value of the
beneficiary's exports exceeds 1% of the total value of world exports in the WTO Statistics
for three consecutive years.
Entire graduation (in) A country/territory which had been excluded once from the list of beneficiaries can be
designated as a beneficiary again, if it so requests, if: it has not been classified as a high-
income country for three consecutive years; and has not been classified as an upper
middle-income country and the value of the beneficiaries' exports does not exceed 1% of
the total value of world exports for three consecutive years.
Partial graduation A product originating from a beneficiary is to be excluded from application of Japan's GSP
scheme for one year (renewable) when: (i) the beneficiary is classified as a high-income
economy in the World Bank Statistics of the previous year or is classified as an upper
middle-income economy and the value of the beneficiaries exports exceeds 1% of the
total value of world exports in the WTO Statistics of the previous year; and (ii) the value
of Japan's imports of the product originating from the beneficiary exceeds JPY 1 billion
and 25% of the total value of Japan's imports of the product from all over the world in
the trade statistics of two years previous.
Product-by-exclusion A product originating from a beneficiary is to be excluded from Japan's GSP scheme for
three years, when the total value of Japan's import of a product originating from the
beneficiary for the previous three years exceeds both JPY 4.5 billion and 50% of the total
value of Japan's imports of the product from all over the world.
Source: Japan Customs, Graduation/Exclusion from the GSP scheme. Viewed at:
http://www.customs.go.jp/english/c-answer_e/imtsukan/1506_e.htm.
2.29. Around 1.7% of imports, out of the total amount of imports in 2018, enter under GSP benefits
from developing countries and LDCs. In 2017 and 2018, China was the main beneficiary of the
Scheme, followed by Bangladesh, Cambodia and Myanmar (Table 2.5).
44
These figures are based on the 2019/20 tariff schedule in the HS17 nomenclature.
45
Before this change, Japan applied the "entire graduation" to a beneficiary only when the beneficiary
had been classified as a "high income economy" in the World Bank Statistics for three consecutive years; since
April 2019, Japan also applies entire graduation to an "upper-middle income economy" when the value of its
exports exceeds 1% of the total value of world exports in the WTO Statistics for three consecutive years as
well. Japan used to apply "partial graduation" when the beneficiary was classified as a high-income country in
the World Bank Statistics of the previous year; since April 2018, the exclusion was also applied to beneficiaries
classified as upper-middle income economies, the value of whose exports exceeds 1% of the total value of
world exports in the WTO Statistics of the previous year. There were no changes to rules on product-by-
exclusion.
- 45 -
Table 2.5 Main beneficiaries of GSP scheme, 2017-18

Country/territory Imports under GSP 2017 Country/territory Imports under GSP 2018
JPY million Share (%) JPY million Share (%)
Total 1,375,507 100 Total 1,042,174 100
China 903,295 65.7 China 510,337 49.0
Bangladesh 113,468 8.2 Bangladesh 138,703 13.3
Cambodia 109,930 8.0 Cambodia 138,123 13.3
Myanmar 96,624 7.0 Myanmar 115,613 11.1
Brazil 27,782 2.0 Madagascar 18,983 1.8
South Africa 15,030 1.1 South Africa 16,892 1.6
Ecuador 14,779 1.1 Brazil 16,690 1.6
Mauritania 13,852 1.0 Mauritania 14,994 1.4
Madagascar 11,988 0.9 Ecuador 11,211 1.1
Indonesia 8,710 0.6 Turkey 7,838 0.8
Sri Lanka 7,367 0.5 Colombia 7,706 0.7
Colombia 6,869 0.5 Sri Lanka 7,726 0.7
Turkey 6,707 0.5 Lao PDR 6,147 0.6
Morocco 5,595 0.4 Morocco 4,058 0.4
Lao PDR 5,410 0.4 Iran 3,173 0.3
Source: Information provided by the authorities. Japan Customs. Viewed at:

http://www.customs.go.jp/kyotsu/import/tokkei/index.htm.
2.3.2.3 Other agreements and arrangements
2.3.2.3.1 Asia-Pacific Economic Cooperation (APEC)
2.30. Japan is member of APEC46, which accounted for 74% of its trade (imports and exports) in
2018. One of its objectives is free and open trade and investment by 2020. In APEC's 2018 Bogor
Goals Progress Report, which monitors progress towards this target, it is noted that, while positive
steps have been taken, there is a need for continuous improvement in various areas.47 With respect
to Japan specifically, the Report, inter alia, highlights tariff liberalization undertaken; relaxation of
rules in some services sectors; initiatives to attract and facilitate foreign investment; trade
facilitation measures; developments in the areas of government procurement and intellectual
property rights; energy liberalization; and measures to facilitate entry of visitors into Japan.
Attention was also drawn to FDI restrictions in TV broadcasting.
2.31. In 2016, APEC leaders adopted the Lima Declaration on the Free Trade Area of the Asia Pacific
(FTAAP), which envisages negotiations on a comprehensive RTA which would include
"next-generation trade and investment issues". These negotiations would be held outside of APEC
but in parallel with the APEC process, building upon regional undertakings such as the CPTPP and
the Regional Comprehensive Economic Partnership. APEC members are now examining how current
pathways could contribute to the realization of the FTAAP. 48 Other key areas of the APEC's work over
the review period related, inter alia, to: the digital economy; building a seamless and
comprehensively connected and integrated Asia-Pacific by 2025; increasing the APEC's
competitiveness in the services sector by 2025; developing policies to take advantage of global value
chains; advancing economic, financial and social inclusion; and ensuring food security and
sustainability.49
46
APEC members are: Australia; Brunei Darussalam; Canada; Chile; China; Hong Kong, China;
Indonesia; Japan; Korea, Republic of; Malaysia; Mexico; New Zealand; Papua New Guinea; Peru; the
Philippines; Russian Federation; Singapore; Chinese Taipei; Thailand; United States; and Viet Nam.
47
Areas of progress at the APEC-wide level noted are: tariff and services liberalization; implementation
of measures to attract FDI; trade facilitation efforts; improvements to the quality of regulations; and RTA
expansion. Unfinished business relates to high agricultural tariffs, unilateral services restrictions, an increase in
trade remedies, and an accumulation of specific trade concerns in areas like sanitary and phytosanitary
measures. APEC, APEC's Bogor Goals Progress Report 2018. Viewed at:
https://www.apec.org/Publications/2018/11/APEC-Bogor-Goals-Progress-Report.
48
APEC, Lima Declaration on FTAAP. Viewed at: https://www.apec.org/Meeting-Papers/Leaders-
Declarations/2016/2016_aelm/2016_Annex%20A.aspx.
49
APEC, Leaders' Declarations 2016-18. Viewed at: https://www.apec.org/Meeting-Papers/Leaders-
Declarations.
- 46 -
2.3.2.3.2 Other
2.32. Japan participated in numerous trade-related meetings and arrangements, which include the
Asia-Europe meeting (ASEM) 50 , the Organization for Economic Cooperation and Development
(OECD); the G7; the G20; the ASEAN+3; and the Tokyo International Conference on African
Development.
2.4 Investment Regime
2.4.1 Investment framework
2.33. The Office of Invest Japan, which falls under the Cabinet Office, is responsible for providing
information on investments and related matters, and dealing with any investment-related
complaints. It brings together contact points in various ministries, government organizations and
local governments.51 It has three key committees: (i) the Council for Promotion of Foreign Direct
Investment, which is responsible for attracting new investment projects and coordinating with
foreign businesses to undertake necessary reforms to promote FDI 52 ; (ii) the Task Force for
Promotion of Foreign Direct Investment in Japan, which manages the Investment Advisor
Assignment System (see below); and (iii) the Working Group for Revising Regulations and
Administrative Procedures, which is responsible for simplifying regulations and administrative
procedures associated with FDI in Japan, and coordinating the relative ministries and agencies.53
2.34. The Investment Advisor Assignment System has been operating since 2016; it provides the
framework and conditions under which assigned state ministers may advise companies that have
made major investments in Japan from abroad.54
2.35. Various laws and regulations govern investment in Japan: the Foreign Exchange and Foreign
Trade Act (FEFTA) 55 and its implementing regulations (the Cabinet Order on Inward Direct
Investment; the Order on Inward Direct Investment56; and the Foreign Exchange Order57); and the
Act for Promotion of Japan as an Asian Business Center, 2012.
2.36. In 2017, the FEFTA was amended, inter alia, to expand the scope of a prior checking of
unlisted stock transfers between foreign investors, and to introduce a provision that foreign investors
investing in Japan without being registered may be subject to executive orders, including orders to
50
ASEM is a forum for informal dialogue and cooperation; it comprises 30 European economies,
21 Asian economies, the European Union and the ASEAN Secretariat. ASEM. Viewed at:
https://www.aseminfoboard.org.
51
These contact points are: JETRO; Government of Japan; METI; Japan Fair Trade Commission;
Financial Services Agency; Ministry of Land, Infrastructure and Transport; Ministry of Justice; Ministry of
Education, Culture, Sports, Science and Technology; Ministry of Finance; Ministry of Environment; Ministry of
Agriculture, Forestry and Fisheries; Reconstruction Agency; and local governments of Yokohama City and the
Osaka prefecture. Cabinet Office, Invest Japan. Viewed at: http://www.invest-
japan.go.jp/link/link/en_index.html.
52
Invest Japan. Viewed at: http://www.invest-japan.go.jp/committee/about_council.pdf.
53
For details of the composition of these entities, see Invest Japan. Viewed at: http://www.invest-
japan.go.jp/committee/en_index.html.
54
Invest Japan. Viewed at: http://www.invest-
japan.go.jp/policy/investment_advisor_assignment_system/implementation_en.pdf.
55
FEFTA (as amended in 2017). Viewed at:
http://www.japaneselawtranslation.go.jp/law/detail/?id=3267&vm=04&re=01. Notification requirements on
inward direct investment are set out in Chapter V.
56
Cabinet Order on Inward Direct Investment. Viewed at:
http://www.japaneselawtranslation.go.jp/law/detail/?re=02&dn=1&x=0&y=0&co=1&ia=03&yo=&gn=&sy=&ht
=&no=&bu=&ta=&ky=order+on+inward+foreign+direct+investment&page=3; and
http://www.japaneselawtranslation.go.jp/law/detail/?re=02&dn=1&x=0&y=0&co=1&ia=03&yo=&gn=&sy=&ht
=&no=&bu=&ta=&ky=order+on+inward+foreign+direct+investment&page=4.
57
Foreign Exchange Order (English translation). Viewed at:
http://www.japaneselawtranslation.go.jp/law/detail/?ft=1&re=02&dn=1&co=01&ia=03&ja=04&x=72&y=12&k
y=foreign+exchange+order&page=6.
- 47 -
sell their holding stocks; these measures were taken in order to protect Japan's essential security.58
There have been no further amendments since 2017.
2.37. Under the 2012 Act for the Promotion of Japan as an Asian Business Centre, incentives are
provided to encourage investment in establishing R&D and regional headquarters.59 Personal income
tax benefits are provided under the Act on Special Measures Concerning Taxation. 60 Other
investment incentives are: assistance for fund raising by the Small and Medium Business Investment
and Consultation Co. Ltd., applicable to SMEs (this also covers small and medium-sized stock
companies with capital not less than JPY 300 million); acceleration of patent examinations;
shortened investment procedures; and acceleration of the status of residency examinations.61 An
evaluation was undertaken on the effectiveness of these incentive schemes.
2.38. As set out in Article 55-5 of the FEFTA, inward FDI generally requires ex post facto reporting
to the Minister of Finance and the minister in charge of the sector involved, by the 15 th day of the
month following the investment. The FEFTA and its implementing regulations set out prior
notification and approval requirements for industries where it is considered that there could be
"significant adverse effect on the smooth management of the national economy". These include:
agriculture, forestry and fisheries, crude oil, leather and leather products, and air and maritime
transport.62 According to the authorities, there were 226 such prior notifications in FY2017 and 220
in FY2018. The FEFTA and its implementing regulations also set out prior notification and approval
requirements in some other sectors, on the grounds of public order, public safety, and national
security. These sectors include: aircraft, arms, explosives, nuclear power, electric utilities, gas
utilities, water, heat generation, rail transport, passenger transport, telecommunications
(accompanying certain network facilities), television and cable television, and broadcasting
sectors.63 Prior notifications may be filed within six months before the date of the investment, and
the examination period for approval is about two weeks; in FY2017, there were 666 such prior
notifications and, in FY2018, 683.
2.39. FDI restrictions exist in the following sectors: broadcasting; radio; and telecommunications
(Table 2.6). No new FDI restrictions were introduced over the review period.
Table 2.6 FDI restrictions, 2019

Sector Description of restriction Legislative
basis
Broadcasting Basic broadcasting operations may, inter alia, not be provided by a Broadcasting
person who does not have Japanese nationality; a foreign Act
government or its representative; or a foreign corporation or Radio Act
organization.
Radio Radio station licences may not be granted to: a person who does Radio Act
not have Japanese nationality; a foreign government or its
representative; a foreign corporation or organization; a
corporation or organization which is represented by any person
listed in the preceding items; or one third or more officers which
are those persons; or one third or more voting rights of which are
made up of the aggregate of voting rights held by those persons.
These FDI restrictions do not apply to: experimental radio
stations; amateur radio stations; radio stations on board ships and
aircraft; radio stations transmitting radio communications between
specific fixed points for embassies/consulates etc.; radio stations
58
METI, Promulgation of the Cabinet and Ministerial Orders and the Public Notices for the Enforcement
of the Revised Foreign Exchange and Foreign Trade Act. Viewed at:
https://www.meti.go.jp/english/press/2017/0714_003.html.
59
Among the various incentives, a programme to reduce patent fees paid in relation to R&Dproject
outcomes ended at the end of FY2018.
60
Act on Special Measures Concerning Taxation. Act No. 26 of 1957 (last amended by Act No. 23 of
2008). Viewed at: http://www.japaneselawtranslation.go.jp/law/detail/?id=3132&vm=&re=. As noted by the
authorities, corporate income tax incentives under this Act were abolished in the FY2015 tax reform.
61
METI, Act for Promotion of Japan as an Asian Business Center. Viewed at:
https://www.meti.go.jp/english/policy/external_economy/investment/act_information.html, supplemented by
information provided by the authorities.
62
The Public Notice setting out requirements in this regard. Viewed at:
http://www.japaneselawtranslation.go.jp/common/data/notice/142713_checked_2016-12-15-18-14-08.html.
63
WTO document WT/TPR/S/276/Rev.1, 18 June 2013. The Public Notice setting out requirements in
this regard was viewed at: http://www.japaneselawtranslation.go.jp/common/data/notice/143020.html.
- 48 -
Sector Description of restriction Legislative

basis
established for the purpose of communicating with mobile radio
stations or receiving equipment for portable use; radio stations
established to conduct telecommunications services; radio stations
established for the purpose of controlling the position, etc. of an
artificial satellite equipped with radio equipment of a radio station
for the purpose of conducting telecommunications services.
Telecommunications Less than aggregate one third shares in Nippon Telegraph and Act on Nippon
Telephone Corporation may be directly held by the aggregate of (i) Telegraph and
persons without Japanese nationality; (ii) a foreign government or Telephone
its representatives; (iii) foreign juridical persons or entities; and Corporation
(iv) juridical persons/entities whose voting rights are directly held
by those persons/entities listed in (i) to (iii) and which exceed the
prescribed ratio.
Source: Information provided by the authorities.
2.40. The Government's investment goals are to increase the inward FDI stock to JPY 35 trillion by
2020.64 By end-2018, the inward FDI stock reached JPY 30.7 trillion. Since its previous Review, the
Council for Promotion of Foreign Direct Investment has continued to undertake initiatives to attract
inward investment65, through the 2016 Policy Package for Promoting Foreign Direct Investment into
Japan to Make Japan a Global Hub. 66 Specific programmes were adopted. Firstly, the Support
Program for Regional Foreign Direct Investment in Japan (Support Program) was adopted in
May 2018. Under this Program, relevant ministries and agencies implemented: help for local
governments formulate plans to attract foreign companies; support in matching foreign and local
companies; advise to local governments on the effective use of available measures to attract foreign
companies; and advise to foreign companies and local governments on regulations and
administrative procedures.67 This Program is designed to ensure FDI inflows, which are currently
concentrated in Tokyo, have broader geographical reach. Secondly, the Program to Intensively
Attract Foreign Direct Investment in Regional Japan was adopted in April 2019; this Program includes
strengthening of the Support Program, and efforts to further improve Japan's business
environment. 68 Other programmes aimed at increasing the FDI stock are the Basic Policy on
Economic and Fiscal Management and Reform 2017, a Council on Economic and Fiscal Policy initiative
decided by the Cabinet, the Japanese Revitalization Strategy 2016, and the Cabinet's 2019 Growth
Strategy (Section 1).
2.41. Virtually all of Japan's RTAs in force contain investment provisions; in this regard, new
investment commitments entered into force over the review period with CPTPP partners and the
European Union (see above). As at July 2019, Japan had bilateral investment treaties (BITs) in force
with 30 economies. New BITs entered into force with Uruguay, Saudi Arabia, Oman, Kenya, Israel
and Iran in 2017, and with Armenia in 2019 (Box 2.1). BITs were also signed with Argentina,
Armenia, Jordan, and the United Arab Emirates, but are not yet in force.69 As at May 2019, Japan
had 61 tax conventions in force, dealing with the elimination of double taxation, with 71 jurisdictions.
Over the review period, Japan signed new such tax conventions with Latvia, Lithuania, Estonia,
Iceland, Croatia, Colombia, Ecuador, and Argentina; and amended existing conventions with:
Austria, the Russian Federation, Denmark and Spain.70
64
This target was set out in the Japan Revitalization Strategy 2013, and reaffirmed in the Japan
Revitalization Strategy 2016. MOFA, Invest Japan. Viewed at:
https://www.mofa.go.jp/policy/economy/japan/invest/index.html.
65
The Council for Promotion of Foreign Direct Investment was established in 2014. It comprises several
ministers who are advised by representatives from JETRO, universities, research institutes, corporations, and
city mayors.
66
Invest Japan, Policy Package for Promoting Foreign Direct Investment into Japan to Make Japan a
Global Hub. Viewed at: http://www.invest-japan.go.jp/documents/pdf/policy_package_en.pdf.
67
Invest Japan, Support Programme for Regional Foreign Direct Investment in Japan. Viewed at:
http://www.invest-japan.go.jp/committee/support_program_en.pdf.
68
Invest Japan. Viewed at: http://www.invest-japan.go.jp.
69
UNCTAD, Investment Policy Hub. Viewed at:
https://investmentpolicyhub.unctad.org/IIA/CountryBits/105#iiaInnerMenu.
70
Ministry of Finance, Japan's Tax Convention Network. Viewed at:
https://www.mof.go.jp/english/tax_policy/tax_conventions/international_182.htm. This includes details of
jurisdictions with which Japan has: (i) tax conventions (mainly for the elimination of double taxation and the
- 49 -
2.42. From a domestic perspective, Japan considers that there is a strong need for tax and
investment-related treaties to support and protect its increasing levels of investment abroad, and to
encourage investment into Japan. Guided by the Action Plan Aiming to Facilitate an Investment
Environment Through Promoting the Conclusion of Investment-Related Treaties, formulated in 2016,
the Government plans to accelerate the conclusion of investment-related treaties and the revision
of existing ones; its target is to have in force investment-related treaties with 100 countries and
regions by 2020. It is also considering inclusion of trade in services and e-commerce in these
agreements, to reflect economic and social developments.71
Box 2.1 Investment framework
RTAs in force with investment provisions
EU-Japan EPA (investment liberalization provisions only); CPTPP; Japan-Mongolia EPA; Australia-Japan EPA;
Japan-Peru EPA; India-Japan EPA; Japan-Switzerland EPA; Japan-Philippines EPA; Indonesia-Japan EPA;
Brunei Darussalam-Japan EPA; Japan-Thailand EPA; Chile-Japan EPA; Japan-Malaysia EPA; Japan-Mexico
EPA; and Japan-Singapore EPA
Other agreements in force with investment provisions
China-Japan-Republic of Korea Trilateral Investment Agreement
BITs in force
Armenia; Bangladesh; Cambodia; China; Colombia; Egypt; Hong Kong, China; Iran, Islamic Rep. of; Iraq;
Israel; Kazakhstan; Kenya; Korea, Rep. of; Kuwait, State of; Lao People's Democratic Republic;
Mozambique; Myanmar; Oman; Pakistan; Papua New Guinea; Peru; Russian Federation; Saudi Arabia,
Kingdom of; Sri Lanka; Turkey; Ukraine; Uruguay; Uzbekistan; and Viet Nam
Membership of investment-related intergovernmental agreements
Multilateral Investment Guarantee Agency Convention; International Centre for Settlement of Investment
Disputes Convention; and New York Convention; OECD Invisible Operations; OECD Capital Movements; and
the Energy Charter Treaty
Source: UNCTAD, Investment Policy Hub. Viewed at:

https://investmentpolicyhub.unctad.org/IIA/CountryOtherIias/105#iiaInnerMenu.
2.4.2 Business environment
2.43. Japan is ranked in 39th place out of 190 economies in the World Bank's 2019 Doing Business
report; it scores well in the areas of resolving insolvency, getting electricity, dealing with construction
permits, and registering a property. Its poorest rankings are for: starting a business, getting credit,
and protecting minority investors.72 It ranks in 5th place in the World Economic Forum's (WEF) 2018
Global Competitiveness report, an improvement on the previous year. Its strongest rankings are in
the areas of health, digital infrastructure, and physical infrastructure. Its weakest rankings are for:
institutions (related to low levels of social capital); corporate governance; and skills. The WEF report
further notes that, while Japan is an innovation hub, it needs to develop the "softer" drivers of
innovation, such as risk aversion, creativity and critical thinking.73 While Japan is well-ranked in
indices relating to perceptions of corruption74, it has been urged to take stronger measures against
supply-side corruption by Japanese companies in their foreign business activities.75
2.44. Key measures being implemented to improve the business environment relate to: introducing
labour force reforms (Section 1, and below); improving corporate governance (Section 3.3); and
prevention of tax evasion and avoidance; (ii) tax information exchange agreements; and (iii) conventions on
mutual administrative assistance in tax matters.
71
METI, Investment-related treaties. Viewed at:
https://www.meti.go.jp/english/report/data/wp2018/pdf/3-1-2.pdf.
72
World Bank, Doing Business 2019 – Training for Reform. Viewed at:
http://www.doingbusiness.org/content/dam/doingBusiness/media/Annual-Reports/English/DB2019-
report_web-version.pdf.
73
WEF, Global Competitiveness Report 2018. Viewed at:
http://www3.weforum.org/docs/GCR2018/05FullReport/TheGlobalCompetitivenessReport2018.pdf.
74
In Transparency International's 2018 Corruption Perceptions Index, Japan is ranked in 18th place out
of 180 economies. Viewed at: https://www.transparency.org/cpi2018.
75
OECD, Japan must make fighting international bribery a priority. Viewed at:
http://www.oecd.org/daf/anti-bribery/japan-must-make-fighting-international-bribery-a-priority.htm.
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lowering corporate tax (Section 3.3.1.1). Given that SMEs and micro enterprises account for around
99.7% of all companies and 70% of all employees in Japan 76 , the Government continues to
implement various policy measures to assist them, namely: financing support, such as loans from
public financial institutions; measures to realize wage increases; and productivity-improvement
assistance.77 In 2017, a crisis-related guarantee scheme for SMEs was established, through revisions
to the SME Credit Insurance Law, to provide an additional safety net to these companies and to
promote management and productivity improvements.78 The authorities indicated that efforts are
also being made by the SME Agency Japan to help these companies deal with structural
transformation challenges, such as ageing business owners, labour shortages, natural disaster
prevention, and mitigation measures. In July 2019, the Act on the Strengthening of the Management
of SMEs was enacted; this aims to strengthen SME management, and support the continuation of
their business activities, particularly in light of the ageing of business owners. In order to help SMEs
prepare for natural disasters, the Government established a plan approval system for specific
measures SMEs should take before natural disasters, and strengthened the support systems of the
Society of Commerce and Industry and the Chamber of Commerce and Industry. Additionally, to
cope with ageing of business owners, the Government expanded coverage of special arrangements
under the Civil Code in terms of a statutory reserved portion to include individuals, to effectively
carry out the Tax System for Individual Business Succession, established in 2019. In 2019, an
innovation initiative was set up by a government council to assist start-ups become globally
competitive; it is aimed at doubling the number of innovative start-ups by 2024.79
2.45. With respect to labour force reforms, one element is to promote women's participation in the
work force through measures such as increased childcare capacity, increased child care leave
benefits, training and education programmes, and more flexible working conditions80; according to
official sources, the number of women joining the workforce increased by around 2.9 million between
2012 and 2018, with Japan's women's labour force participation rate being 74% in 2017. 81 However,
it seems that Japan has large scope to make improvements in areas such as women's economic
empowerment, increasing the number of women in management positions, and reducing the
significant gender pay gap. 82 As explained by the authorities, Japan has positioned women's
empowerment at the centre of its economic growth strategy, and promoted comprehensive and
diverse policies, including: enactment of the Women's Empowerment Act; work-style reform;
expanded childcare facilities; increased childcare leave benefits; and promoting the participation of
men in housework and childcare. Another element of labour reform is to attract experienced overseas
professionals. Steps taken were the establishment of the Japanese Green Card for Highly-Skilled
Foreign Professionals. 83 Skilled non-Japanese workers may apply for permanent residency after
76
Latest data provided by the authorities (June 2016).
77
WTO document WT/TPR/M/351/Add.1, 27 April 2017.
78
METI, An Act to Amend the Small and Medium-Sized Enterprise Credit Insurance Act (Act No. 56 of
2017). Viewed at: https://www.meti.go.jp/press/2017/10/20171020001/20171020001.html.
79
Nippon, Japan to Pick Base Cities to Create Globally Competitive Startups. Viewed at:
https://www.nippon.com/en/news/yjj2019061101169/japan-to-pick-base-cities-to-create-globally-
competitive-startups.html.
80
The New Economic Policy Package sets out various of these initiatives. Additionally, in June 2018, a
work reform bill was passed by the Diet, which limits overtime hours (except for white-collar workers) to
address traditionally long working hours and associated work stress. It also provides for "equal pay for equal
work", to address wage gaps between regular and non-regular employees and promote flexible working. Nikkei
Asian Review, Five things to know about Japan's work reform law. Viewed at:
https://asia.nikkei.com/Economy/Five-things-to-know-about-Japan-s-work-reform-law. Since the OECD
reports that more women than men are engaged in non-regular employment, this measure may benefit them
more. OCED, Japan Economic Snapshot. Viewed at: http://www.oecd.org/economy/surveys/japan-economic-
snapshot/. Government of Japan, Women's Empowerment. Viewed at:
https://www.japan.go.jp/diversity/women.
81
Government of Japan, Women's Empowerment. Viewed at:
https://www.japan.go.jp/diversity/women/.
82
As reported by the OECD, the gender pay gap in Japan is the third highest among OECD Members.
OECD, Japan Economic Snapshot. Viewed at: http://www.oecd.org/economy/surveys/japan-economic-
snapshot/. In the WEF Global Gender Gap Report 2017, Japan was ranked in 114th place out of 144 economies.
Its rankings for the component pillars were: 114th place for economic participation and opportunity; 74th place
for educational attainment; 1st place for health and survival; and 123rd place for political empowerment. Viewed
at: http://www3.weforum.org/docs/WEF_GGGR_2017.pdf. As reported by the authorities, women in
management positions in the private sector approached 10% by in 2018. Government of Japan, Women's
Empowerment. Viewed at: https://www.japan.go.jp/diversity/women.
83
METI, Working in Japan – Open for Professionals, March 2018. Viewed at:
https://www.meti.go.jp/english/policy/external_economy/professionals/pdf/recruitment201803.pdf.
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three years (one year for professionals with particularly high skills), rather than five, as previously.
The system is operational since April 2017. Furthermore, in 2018, a new residency status was
approved for foreigners with skills to work in industries where manpower is lacking, including
construction, agriculture, and long-term care.84 As at end-June 2019, 20 foreign nationals had been
admitted as residents under the specified skills workers programme; as indicated by the authorities,
while there are no targets set, Japan expects to admit around 345,000 such workers over the next
five years. As at June 2018, the number of recognized Green Cards was 815.
2.46. As reported in the previous Review, regulatory reform pilot schemes were launched under the
National Strategic Special Zone initiative, established in 2013. Under this initiative, regulatory
reforms proposed by the private sector, and agreed with local and central governments, are tested
within a "sandbox" environment. The idea is that, if pilot reforms are successful, they will be
implemented country-wide. Ten zones were designated, each of which is focused on encouraging
specific activities in certain spheres (Box 2.2), through regulatory reform.85 As at end-September
2019, 335 projects had been undertaken. Examples of successful achievements in the Zones include:
an automated bus driving test conducted on a public road in Semboku City, and acceptance of non-
Japanese workers who have certain skills to help turn agriculture into a growth industry in Kyoto
Prefecture, Niigata City, Okinawa Prefecture and Aichi Prefecture.
Box 2.2 National Strategic Special Zones
Tokyo Zone International business and innovation hub, and a multicultural city, and for the
exhibition of near-future technologies
Kansai Zone Innovation in medical care, and entrepreneurial support
Niigata City Zone Agricultural reform in large-scale farming
Yabu City Zone Agricultural reform in hilly and mountainous areas
Fukuoka City and Employment system reform to promote business creation, and actions to address the
Kitakyushu City Zone declining and ageing population
Okinawa Prefecture Zone International tourism
Senboku City Zone Reform in agriculture and forestry, and for international exchange in the medical field
Sendai City Zone Promotion of active social participation of women and start-ups
Aichi Prefecture Zone General reform of education, employment, and agriculture, and fostering of industry
leaders
Hiroshima Prefecture and International exchange and the utilization of big data
Imabari City Zone
Source: WTO document WT/TPR/S/351/Rev.1, 20 June 2017.
84
MOFA, A New Status of Residence – "Specified Skilled Worker" – has been created. Viewed at:
https://www.mofa.go.jp/files/000459527.pdf; and Ministry of Justice, Efforts for Acceptance of Foreign Nations
and Harmonious Coexistence. Viewed at:
http://www.moj.go.jp/nyuukokukanri/kouhou/nyuukokukanri01_00127.html.
85
Government of Japan, Abenomics. Viewed at:
https://www.japan.go.jp/abenomics/_userdata/abenomics/pdf/1901_abenomics.pdf; and WTO document
WT/TPR/S/351/Rev.1, 20 June 2017.
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3 TRADE POLICIES AND PRACTICES BY MEASURE
3.1 Measures Directly Affecting Imports
3.1.1 Customs procedures, valuation, and requirements
3.1. Japan Customs, under the Ministry of Finance, continues to administer and enforce customs
legislation. Customs and tariff policies are formulated by the Customs and Tariff Bureau of the
Ministry. Japan has nine regional Customs offices.1
3.2. The Customs Act remains the principal piece of legislation covering customs procedures and
documentation. 2 Over the review period, amendments to the Customs Act in 2017 and 2018,
inter alia, integrated a new principle regarding reporting on matters related to cargoes in
electromagnetic records, and strengthened penalties for failure to obtain export and import
permissions when required. Other regulations governing customs procedures are: Cabinet Order
No. 150 of 1954 (Order for Enforcement of the Customs Act) and the Ministry of Finance Ordinance
for Enforcement of the Customs Act (No. 55 of 1966).
3.3. Japan deposited its instrument of acceptance of the Trade Facilitation Agreement (TFA) with
the WTO in 2015. In the same year, it set up a national committee on trade facilitation (the Liaison
Conference on Trade Facilitation), which is a forum for information-sharing, at the director-general
level, among the relevant ministries and agencies. Japan maintains various enquiry points, as
stipulated in Article 1.3 of the TFA.3 Over the review period, Japan notified its assistance and support
for capacity building for the years 2015, 2016 and 2017 4 ; it also submitted a notification on
publication and availability of information, on formalities connected with importation, exportation
and transit, and on customs cooperation.5
3.4. There are no registration requirements for importers. A customs declaration is needed for
importation, and must be accompanied by an invoice, bill of lading, insurance certificate, freight
account, and packing list. Additional documents may be necessary, depending on the type of goods.6
There are no fees required by Customs for an import declaration, although Customs charges fees
for certain services, such as granting permits for goods examination (both imports and exports)
outside of designated areas.7 The authorities confirmed that Japan has no preshipment inspection
(PSI) requirements in place.
3.5. Use of customs brokers is not mandatory. Online processing of procedures with customs and
other related agencies is undertaken through the Nippon Automated Cargo and Port Consolidated
System (NACCS), Japan's single electronic window. The NACCS Center collects usage fees. In 2018,
around 99% of import/export declarations were processed through this System. According to the
authorities, no consideration is currently being given to making submission of customs declarations
through the NACCS compulsory. Importers can pay the assessed customs duty electronically through
the NACCS, which is connected to a multi-payment network, which links teller institutions
(government authorities) with private banks. The NACCS also provides various online logistics
1
Hakodate, Kobe, Moji, Nagasaki, Nagoya, Okinawa, Osaka, Tokyo and Yokohama.
2
Customs Act. Viewed at: http://www.kanzei.or.jp/kanzei_law/329AC0000000061.en.html#c1.
Amendments to the Customs Act were viewed (in Japanese) at:
http://hourei.ndl.go.jp/SearchSys/viewEnkaku.do?i=nH9Wu%2Ffb7G0ZmTuWwPe%2FQA%3D%3D.
3
These enquiry points are listed in the Secretariat Report for Japan's previous Review. WTO document
WT/TPR/S/351/Rev.1, 20 June 2017.
4
Notification under Articles 22.1 and 22.2 of the TFA. WTO documents G/TFA/N/JPN/3,
10 September 2018; G/TFA/N/JPN/1/Rev.1, 27 June 2017; and G/TFA/N/JPN/4, 7 March 2019.
5
Notification under Articles 1.4, 10.4.3, 10.6.2 and 12.2.2. WTO documents G/TFA/N/JPN/2,
10 August 2017; and G/TFA/N/JPN/2/Corr.1, 19 December 2018.
6
These additional documents may include certificates of origin; statement on reduction of, or exemption
from, customs duty and excise tax (when such reduction or exemption is applicable to the goods); and
documents required under Japan's generalized system of preferences.
7
Japan Customs' rates for the fees and permits it issues were viewed at:
http://www.customs.go.jp/english/exp-imp/customsfee.htm.
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services to the private sector, the scope of which were expanded through the programme
development and modification of the NACCS in 2017.8
3.6. Importers may submit documents to Customs before their cargo's arrival in Japan, so that they
can be notified in advance as to whether a customs inspection of the cargo will be required. A pre-
arrival declaration form must be submitted to the customs office that controls the customs bonded
(hozei) area where the cargo is expected to be brought in (although this requirement does now not
apply to Authorized Economic Operators (AEOs) (see below)). Inspection of a shipment under pre-
arrival is conducted before the cargo is transferred into a hozei area.
3.7. An AEO system remains in place which, inter alia, simplifies customs procedures for AEOs9;
AEO importers and customs brokers may submit import and duty/tax payment declarations
separately, allowing them to submit import declarations in advance of cargo arrivals and to have
goods released before submitting the duty/tax payment declaration. A full description of the AEO
scheme (including legal and institutional framework, eligibility criteria, and mutual recognition
agreements (MRAs) with trading partners) is contained in the previous Review. 10 Since 2017, AEOs
have been granted the flexibility to lodge their import/export declarations at any customs office, not
just the one where the imported goods are stored. The purpose of this change is to enable greater
efficiencies and cost reductions.11 As at July 2019, there were 701 AEOs. In 2018, they accounted
for about 13% of imports and about 53% of exports on a trade value basis. AEO customs brokers
deal with about 80% of imports and around 85% of exports. Over the review period, Customs signed
MRAs for AEO programmes with China (October 2018), and Australia (June 2019). Additionally, an
MRA with Chinese Taipei is based on a private-sector arrangement. Consultations on MRAs regarding
AEO schemes are being held with Switzerland and the United Kingdom. Under the MRAs, Japan
Customs takes into account the status of the members of the other AEO programmes when
conducting its own risk assessment.
3.8. Imports are held at hozei areas at the ports of entry. Once the necessary inspection takes
place, and customs duties and taxes are paid, an electronic "Notice of Import Permit" is issued by
Customs.
3.9. As indicated by the authorities, Japan Customs undertook its most recent time release study
in March 2018. Customs clearance times (measured from the time when traders submit their
declarations to Customs to when Customs permits the importation) were: 2.1 hours for sea cargo
and 0.3 hours for air cargo. The World Bank's 2019 Doing Business report ranks Japan in 56th place
out of 190 economies for ease of trading across borders; it indicates that the time to import averages
3.4 hours for documentary compliance and 39.6 hours for border compliance. The cost to import is
reported as USD 107 for documentary compliance and USD 299.2 for border compliance.12
3.10. Data is not publicly released on the percentage of imported goods which are subject to the
various types of inspection by Customs (i.e. physical inspection, or documentary inspection), nor is
information available on the basis for which goods are physically inspected. Japan also uses post-
clearance audit (PCA); over the period 1 July 2017 to 30 June 2018, Japan Customs conducted PCA
for 4,266 importers.
8
The NACCS is managed and run by a private company, the Nippon Automated Cargo and Port
Consolidated System, Inc. (NACCS Center). The NACCS Center undertakes (i) online processing of procedures
with customs and other relevant authorities; and (ii) private-sector services for arriving/departing ships and
aircraft or import/export cargo. In 2010, the Sea-NACCS and the Air-NACCS were integrated into one
integrated NACCS, along with the Port EDI System (integrated in 2008), and the METI's Japan Electronic Open
Network Trade Control System (integrated in 2010). Its main features are: a system to complete
administrative procedures; a database system for cargo and transport management; and a communication
system among users. NACCS. Viewed at: https://www.naccs.jp; and UNESCAP, Towards a Single Window
Trading Environment – Japan's Development of a Single Window – Case of NACCS. Viewed at:
https://www.unescap.org/sites/default/files/brief6.pdf.
9
Types of operators eligible to be AEOs are: importers, exporters, manufacturers, warehouse operators,
customs brokers, and logistics operators.
10
11
The regulation implementing this change is Cabinet Order No. 133 of 2017. Viewed at:
http://www.customs.go.jp/kaisei/seirei/H29seirei133/yoko.pdf.
12
World Bank, Doing Business 2019. Viewed at:
http://www.doingbusiness.org/content/dam/doingBusiness/media/Annual-Reports/English/DB2019-
report_web-version.pdf.
- 54 -
3.11. As mentioned in the previous Review, advance rulings may be requested by importers or
other interested parties on: tariff classification, customs valuation, the origin of goods, and duty
relief/exemption for goods due for import. In principle, advance rulings are issued within 90 days of
request for customs valuation, and within 30 days for other requests. Advance rulings are binding
on Customs.
3.12. Complaints against Customs' decisions may be made to the Director-General of Customs or
directly to the Minister of Finance within three months of the decision. Further appeals may be lodged
with the Minister of Finance within one month of the decision by the Director-General of Customs. A
lawsuit may be filed against the Minister's decision within six months of such a decision. Since
1 January 2017, 99 complaints, eight appeals and two lawsuits against Customs decisions were filed;
of these, 56 complaints and two appeals were decided in favour of the complainant.
3.13. Japan has signed agreements and arrangements for the exchange of customs information
with 35 countries and regions.13 It became a signatory to the WCO's Revised Kyoto Convention in
2001, and makes use of international standards in customs and trade facilitation.
3.1.2 Customs valuation
3.14. Japan's rules on customs valuation are contained in the Customs Tariff Act 14; they were not
changed over the review period. Customs valuation is determined on the basis of the transaction
value of the goods (c.i.f. value); should it not be possible to use this method, other methods used
(in order) are: transaction value of identical or similar goods; computed value based on the domestic
selling prices or the production costs of those goods; and values determined by other methods. 15
The authorities noted that data is not available on Japan's use of the various different means of
determining customs value.
3.1.3 Rules of origin
3.15. Japan notified the WTO that is has non-preferential rules of origin (ROOs)16; these are to
determine, inter alia, whether to apply most favoured nation (MFN) rates (as opposed to general
rates (Section 3.1.4) to establish the country of origin for some trade remedy measures and import
trade statistics. Non-preferential ROOs are detailed in Article 4-2 of the Cabinet Order for
Enforcement of the Customs Law, and Articles 1-5 and 1-6 of the Ordinance for Enforcement of the
Customs Law. MFN tariff rates are applicable to imports from eligible countries, where the country
of origin is defined as the country in which the goods concerned have been wholly obtained or have
undergone substantial transformation (change of tariff classification at the Harmonized System (HS)
four-digit level).
3.16. Japan also applies preferential rules of origin under the Generalized System of Preferences
(GSP) and its various RTAs (Section 2.3 and Section 3.1.4). To benefit from preferential duties,
certificates of origin need to be provided by authorized institutions in the exporting country or by
approved exporters (in the case of some RTAs). In order to prove the origin of the product being
imported, it generally has to have been "wholly obtained" or "substantially transformed" (e.g. change
of tariff classification at the HS four-digit level or 40% of value-added) in the exporting country. For
goods not wholly obtained, specific criteria based on change of tariff classification rules, processing
rules, and value-added rules are applied, on a product-by-product basis.
13
Australia; Austria; Belgium; Brazil; Brunei Darussalam; Canada; Chile; China; Chinese Taipei;
European Union; France; Germany; Hong Kong, China; India; Indonesia; Italy; Korea, Republic of; Macao,
China; Malaysia; Mexico; Mongolia; Netherlands; New Zealand; Norway; Peru; Philippines; Russian Federation;
Singapore; South Africa; Spain; Switzerland; Thailand; United Kingdom; United States; and Viet Nam. These
agreements include customs cooperation provisions in EPAs with 12 countries and regions, and in the CPTPP.
14
Customs Tariff Act. Viewed at:
http://www.kanzei.or.jp/kanzei_law/143AC0000000054.en.html#a9_2.
15
Japan Customs, Rules of Origin. Viewed at: http://www.customs.go.jp/roo/english/index.htm.
16
WTO documents G/RO/N/1, 9 May 1995; and G/RO/N/1/Add.1, 22 June 1995.
- 55 -
3.17. Japan Customs maintains a webpage, in English, on its ROO framework (both preferential and
non-preferential), which includes, inter alia, contact points, legal texts and a facility for searching
for product-specific ROOs.17
3.1.4 Tariffs
3.18. The main laws governing the setting of tariffs are the Customs Tariff Act 18 (which, inter alia,
provides for customs duty rates through the appended Tariff Schedule, customs duty reductions and
exemptions, and the application of tariff rate quotas) and the Temporary Tariff Measures Act19 (which
provides for temporary exemptions to the Customs Act and the Customs Tariff Act to allow for
customs duty adjustments, if needed, for the sound development of the national economy). Over
the review period, the Customs Tariff Act was amended several times, inter alia, to extend the
effective periods of temporary rates of customs duty and the related exemption system; review
customs duties on individual items; extend special tariff measures in the Okinawa prefecture 20; and
apply duty-free rates to certain products (as a result of the revision of the preferential tariff system.21
3.19. In FY2019, customs duties amounted to 1.65% of central government tax revenue
(Table 3.10).
3.1.4.1 MFN applied tariff
3.20. Since 2017, Japan has eliminated tariffs on: p-nitrochlorobenzene, m-aramid, synthetic
filament tow, certain toys and sanitary articles (effective 1 April 2017)22; naphthols and their salts,
vinylene carbonate, fluoroethylene carbonate, ethyl methyl carbonate, propylene carbonate and
diethyl carbonate, hexamethylenediamine and its salts, crystal violet lactone, bio-polyethylene, and
polytrimethylen terephtalate (effective 1 April 2019).23 Additionally, import tariffs on seven lines at
the six-digit level were reduced under the Expansion of the Information Technology Agreement.24
3.21. The Japanese tariff schedule has been based, since 2017, on the HS 2017, and contains
110 more tariff lines than its HS12 version. It has three distinct sets of rates: statutory rates
(including both general and temporary rates); WTO bound rates; and preferential rates (under the
GSP and RTAs). In the case of statutory rates, the "temporary" rate, which is reviewed annually, is
normally used instead of the higher general rate; the lower of the statutory and WTO bound rates is
applied to WTO Members on an MFN basis, except when preferential rates are applied. Where the
temporary, general or preferential rate is above the WTO bound rate, the latter applies to WTO
Members. As indicated by the authorities, general rates are set with a long-term perspective, based
upon, inter alia, the conditions of domestic industries. Temporary rates are applicable only for a
certain period of time, in order to modify general rates to meet policy needs or for other reasons.
3.22. The structure of Japan's MFN applied tariff remains complex, with a total of 272 tariff rates
(same as in FY2016); there are 136 different ad valorem rates, 75 different specific rates,
29 different alternate rates, and 24 different compound rates, as well as 8 different other types of
duty (6 differential duties and 4 sliding duties). In FY2019, Japan's tariff schedule comprised
9,181 lines, excluding in-quota rates (compared to 9,071 in FY2016) at the HS nine-digit level (Table
3.1).25 Of all tariff lines, 92.9% involve ad valorem rates (including duty-free lines, which represent
40.5% of all lines). The remaining 7.1% (i.e. 648 lines) are non-ad valorem (Chart 3.1).
17
Japan Customs, Rules of Origin. Viewed at: http://www.customs.go.jp/roo/english/index.htm.
18
Custom Tariff Act (Act No. 54 of 1910), as amended. Viewed at:
http://www.kanzei.or.jp/kanzei_law/143AC0000000054.en.html.
19
Temporary Tariff Measures Act. Viewed at:
http://www.kanzei.or.jp/kanzei_law/335AC0000000036.en.html#a1.
20
The application period of the "Selective Taxation" system was extended for two years, and the
application period of the "Specified Duty-Free Shop" system was extended for three years.
21
Japan Customs, Customs Tariff Act revision (2/2017); Customs Tariff Act revision (2/2018); and
Customs Tariff Act revision and Temporary Tariff Measures Act revision (2/2019). Viewed at:
http://www.customs.go.jp/kaisei/horitsu.htm.
22
HS 2904.99; 3908.90; 5501.10; 9503.00; 9619.00.
23
HS 2907.15; 2920.90; 2921.22; 2932.20; 3901.10, 3901.20, 3901.40, 3901.90; 3907.99.
24
HS 3215.11; 3215.19; 3506.91; 3907.99; 3506.91; 3923.10; 5911.90.
25
Excluding in-quota lines.
- 56 -
Table 3.1 Structure of MFN tariffs FY2016 and FY2019

(%, unless otherwise indicated)
MFN applied Final
FY2016 FY2019 bounda
Bound tariff lines (% of all tariff lines) 98.2 98.1 98.1
Simple average rate 6.1 6.3 6.4
WTO agricultural products 16.3 17.9 18.3
WTO non-agricultural products 3.6 3.5 3.5
HS 01-24 14.5 15.7 16.2
HS 25-97 3.5 3.3 3.4
Duty-free tariff lines (% of all tariff lines) 40.1 40.5 38.2
Simple average rate of dutiable lines only 10.2 10.6 10.6
Tariff quotas (% of all tariff lines) 1.7 2.0 2.0
Non-ad valorem tariffs (% of all tariff lines) 6.8 7.1 6.6
Non-ad valorem tariffs with no ad valorem equivalents (AVEs) (% of 1.6 1.7 1.6
all tariff lines)
Domestic tariff "peaks" (% of all tariff lines)b 6.7 6.9 6.7
International tariff "peaks" (% of all tariff lines)c 7.6 7.9 8.0
Standard deviation 16.7 18.0 18.3
Nuisance applied rates (% of all tariff lines)d 1.5 1.6 1.5
Number of lines 9,071 9,181 9,006
Ad valorem rates 8,452 8,533 8,403
Duty-free lines 3,641 3,717 3,504
Non-ad valorem rates 619 648 603
Specific 242 247 240
Compound 57 75 76
Alternate 288 295 287
Other 32 31 0
a Final bound rates are based on the FY2019 tariff schedule. Calculations are based on 9,006 bound
rates (including 19 partially-bound rates). Excluding 175 unbound rates.
b Domestic tariff peaks are defined as those exceeding three times the overall simple average applied
rate.
c International tariff peaks are defined as those exceeding 15%.
d Nuisance rates are those greater than zero, but less than or equal to 2%.
Note: All tariff calculations exclude in-quota lines. Including AVEs, as available, provided by the
authorities. In case of unavailability, the ad valorem part is used for compound and alternate rates.
FY2016 and FY2019 are based on HS12 and HS17 nomenclature, respectively.
Chart 3.[1] Tariff distribution by type of duty, FY2017
Source: WTO calculations, based on data provided by the authorities; and Japan Customs online information.
Viewed at: https://www.customs.go.jp/english/tariff/.
Chart 3.1 Tariff distribution by type of duty, FY2019
Ad valorem duty
5 2 .5 %
Spec ific duty 2 .7 %
C ompound duty 0 .8 %
Non-ad valorem duty
7.1%
A lternate duty 3 .2%
O ther 0 .3 %
D uty free
4 0 .5 %
Source: WTO Secretariat calculations, based on Japan Customs online information. Viewed at:
https://www.customs.go.jp/english/tariff/.
Source: WTO Secretariat calculations, based on Japan Customs online information.
- 57 -
3.23. The non-ad valorem rates apply mainly to fats and oils, followed by footwear, prepared foods,
mineral products, live animals and animal products, vegetables, and textiles and clothing
(Chart 3.2).
Chart 3.[] Share of non-ad valorem duties, by HS section, FY2019
Chart 3.2 Share of non-ad valorem duties, by HS section, FY2019
45%
(37)
40%
35%
30%
(25)
25%
20%
(127)
(35)
15% (103)
(71) (209)
10%
(648)
5% (28)
(6) (2)
(5) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0)
0%
Prepared food, etc.
Base metals & prod.

Fats and oils
Misc. manufactures
Precious stones, etc.
Total
Mineral prod.
Footwear
Precision instruments
Textiles & articles
Pulp, paper, etc.
Vegetable products
Chemicals & prod.
Articles of stone
Live animals & prod.
Works of art, etc.

Machinery
Arms & ammunition

Hides & skins
Plastic & rubber
Wood & articles
Transport equipment
Note:
Note: Each bar
Each bar depicts
depictsthe
thepercentage
percentageofof tariff
tariff lines
lines within
within each
each HS HS section
section that that
carrycarry non-ad
non-ad valorem
valorem duties;
the figures
duties; theinfigures
parentheses show the show
in parentheses corresponding number of lines.
the corresponding number In -quota rates
of lines. are not
In-quota included.
rates are not
included.
Source: WTO Secretariat estimates, based on Japan Customs online information.
Source: WTO Secretariat estimates, based on Japan Customs online information. Viewed at:
https://www.customs.go.jp/english/tariff/.
3.24. In FY2019, Japan's overall simple average applied MFN tariff rate was 6.3% (up from 6.1%
in FY2016). This was mainly due to higher ad valorem equivalents (AVEs) and, to a much lesser
extent, because of a HS nomenclature change. Import duties on agricultural products are higher
than duties on non-agricultural products: the simple average for agriculture (WTO definition) is
17.9% (16.3% in FY2016), compared with 3.5% for non-agricultural products (3.6% in FY2016)
(Table 3.2). The authorities provided data for 490 out of 648 AVEs based on import data as at
26 April 2019.26 Consequently, the tariff analysis is based on 99.2% of the 9,181 tariff lines. The
simple average for all the AVEs supplied is 37.3%, higher than at the time of Japan's previous Review
(when it was 32.7%, based on 2014 import data). The highest rates, which are out-of-quota AVE
rates, are 499.7% for certain broad and horse beans peas, followed by 389.8% for pegin beans, and
for certain other beans. All the 100 highest tariffs had non-ad valorem rates.
26
For 54 of the 295 alternate rates, and for 27 of the 75 compound rates, no AVEs were provided (the
ad valorem parts were used). For 65 of the 247 specific rates and for 12 of the 31 "other" rates, no AVEs were
provided.
- 58 -
Table 3.2 Tariff summary, FY2019

Number Average Range Standard Duty free Non-ad
of lines (%) (%) deviation (%) valorem
rates (%)
Total 9,181 6.3 0-499.7 18.0 40.5 7.1
HS 01-24 2,241 15.7 0-499.7 32.7 17.7 15.1
HS 25-97 6,940 3.3 0-219.4 7.2 47.8 4.5
By WTO category
WTO agricultural products 1,836 17.9 0-499.7 36.2 24.5 18.8
Animals and products thereof 230 10.6 0-72.4 14.0 33.5 17.8
Dairy products 82 74.9 5-298.2 65.2 0.0 76.8
Fruit, vegetables, and plants 509 14.2 0-499.7 40.8 14.9 2.9
Coffee and tea 69 19.3 0-108.1 14.5 10.1 8.7
Cereals and preparations 343 27.0 0-251.3 36.5 9.6 29.2
Oil seeds, fats, oil and their products 130 5.2 0-267.2 23.8 41.5 30.8
Sugars and confectionary 49 37.0 0-166.2 34.2 6.1 59.2
Beverages, spirits and tobacco 146 17.9 0-70.4 12.9 17.1 25.3
Cotton 5 0.0 0-0 0.0 100.0 0.0
Other agricultural products, n.e.s. 273 5.2 0-279.2 21.3 61.9 5.1
WTO non-agricultural products 7,345 3.5 0-219.4 6.7 44.5 4.1
Fish and fishery products 528 6.1 0-15 3.6 4.7 0.2
Minerals and metals 1,253 0.9 0-10 1.6 72.2 2.4
Chemicals and photographic supplies 1,245 2.4 0-6.5 1.8 31.4 0.6
Wood, pulp, paper and furniture 508 1.9 0-10 2.7 63.8 0.0
Textiles 1,468 5.5 0-25 2.5 4.6 13.9
Clothing 400 9.0 0-13.4 2.1 1.0 0.0
Leather, rubber, footwear and travel goods 308 14.7 0-219.4 26.1 37.3 8.1
Non-electric machinery 607 0.0 0-0 0.0 100.0 0.0
Electric machinery 315 0.1 0-4.8 0.6 97.8 0.0
Transport equipment 151 0.0 0-0 0.0 100.0 0.0
Non-agricultural products, n.e.s. 472 1.3 0-8.4 2.3 72.5 0.4
Petroleum 90 1.6 0-7.9 1.9 32.2 36.7
By ISIC sector
ISIC 1 - Agriculture, hunting and fishing 686 5.5 0-279.2 18.0 45.5 5.0
ISIC 2 - Mining 109 0.1 0-4.1 0.5 96.3 0.9
ISIC 3 - Manufacturing 8,386 6.4 0-499.7 18.2 39.4 7.3
Manufacturing, excluding food processing 6,731 3.4 0-219.4 7.3 46.4 4.6
By stage of processing
First stage of processing 1,200 7.2 0-499.7 32.4 49.9 4.8
Semi-processed products 3,494 4.7 0-166.2 7.8 27.3 8.3
Fully processed products 4,487 7.3 0-298.2 18.3 48.2 6.7
By HS section
01 Live animals and products 741 14.1 0-298.2 31.7 16.1 13.9
02 Vegetable products 596 15.8 0-499.7 47.9 30.7 11.9
03 Fats and oils 89 4.4 0-29.8 4.6 24.7 41.6
04 Prepared food, beverages and tobacco 815 18.3 0-201.3 18.6 9.0 15.6
05 Mineral products 249 0.7 0-7.9 1.4 67.5 14.1
06 Chemicals and products thereof 1,133 2.3 0-23.5 2.2 36.3 0.4
07 Plastics, rubber, and articles thereof 297 2.4 0-6.5 1.9 35.4 2.0
08 Raw hides and skins, leather, and its 193 10.5 0-30 10.8 33.7 0.0
products
09 Wood and articles of wood 322 3.2 0-10 2.9 37.6 0.0
10 Pulp of wood, paper and paperboard 167 0.0 0-0 0.0 100.0 0.0
11 Textiles and textile articles 1,851 6.4 0-97.9 5.3 4.6 11.3
12 Footwear, headgear, etc. 104 27.3 0-219.4 39.3 4.8 24.0
13 Articles of stone, plaster, cement 164 1.2 0-8 1.7 60.4 0.0
14 Precious stones and metals, pearls 75 1.4 0-10 2.3 70.7 0.0
15 Base metals and articles thereof 846 0.9 0-7.5 1.6 72.0 3.3
16 Machinery, electrical equipment, etc. 924 0.0 0-4.8 0.3 99.2 0.0
17 Transport equipment 162 0.1 0-8.4 0.7 99.4 0.0
18 Precision equipment 258 0.2 0-16 1.5 96.5 0.0
19 Arms and ammunition 22 6.9 5.4-8.4 1.5 0.0 0.0
20 Miscellaneous manufactured articles 166 1.7 0-6.6 2.1 58.4 1.2
21 Works of art, etc. 7 0.0 0-0 0.0 100.0 0.0
Note: Excluding in-quota lines and including AVEs, as available, provided by the authorities. In case of
unavailability, the ad valorem part is used for compound and alternate rates.
Source: WTO Secretariat calculations, based on data provided by the authorities; and Japan Customs online
information. Viewed at: https://www.customs.go.jp/english/tariff/.
- 59 -
3.25. Overall tariff escalation is highest for the first stage of processing, and lowest for
semi-processed products. However, this trend is not always reflected at the product level. For
example, for food, beverages and tobacco, the semi-processed stage attracts the highest average
tariffs (Chart 3.3).
Chart 3.3 Tariff

Chart 3[].Tariff escalation
escalation by 2-digit
by 2-digit ISIC FY2019
ISIC industry, industry, FY2019
20%
18%
16%
14%
Average applied rate First stage of processing

12%
in manufacturing
Semi-processed
(6.4%)
10%
Fully processed
8%
6%
4%
2% n.a.
n.a.
0%
31 32 33 34 35 36 37 38 39 Total
manuf.
31 Food , beverages and tobacco 34 P aper, printing and publis hing 37 Bas ic metals
32 T extiles and leather 35 C hemicals 38 Fabric ated metal products and mac hinery
33 Wood and furniture 36 N on- metallic mineral products 39 O ther manufac turing
n.a. Not applicable.

Note: C alculations exclude in-quota rates and include AVEs, as available. In case of unavailability, the ad valorem part is used for
Note: compound and alternate
Calculations rates. in-quota rates and include AVEs, as available. In case of unavailability, the
exclude ad
valorem part is used for compound and alternate rates.
Source: WTO Secretariat calculations, based on data provided by Japanese authorities and Japan Customs online information.
Source: WTO Secretariat calculations, based on data provided by the authorities; and Japan Customs online
3.26. Simple average applied MFN tariffs are relatively high for footwear and headgear, prepared
foods, vegetables, live animals, hides and skins, arms and ammunition, and textiles and clothing
(Chart 3.4).
3.27. In FY2019, 181 tariff lines (127 agricultural tariff lines (WTO definition) and 54 non-agriculture
tariff lines were subject to MFN tariff rates quotas, of which 11 are subject to state-trading
operations27 (Section 3.3.3). The out-of-quota rates for 38 tariff lines are ad valorem, while those
for 143 tariff lines are non-ad valorem. The average rates differ considerably: in-quota rates average
18.4%, while out-of-quota rates average 81.7%. The quota allocation method and process are
described in Section 4.1.
27
In FY2016, there were 158 tariff lines with out-of-quota tariff rates. The increase is explained by the
splitting of tariff lines under the HS subheading 0404 (whey).
- 60 -
Chart 3.[] Simple average applied MFN tariff rates, by HS section, FY2016 and FY2019
Chart 3.4 Simple average applied MFN tariff rates, by HS section, FY2016 and FY2019
35%
FY2016 FY2019
30%
25%
20%
15%
10%
5%
0%
Misc. manufactures
Total
Articles of stone
Footwear, headgear
Works of art, etc.

Chemicals & prod.
Precision instruments
Arms & ammunition

Pulp, paper, etc.
Plastic & rubber
Vegetable products
Fats and oils
Base metals & prod.

Prepared food, etc.
Mineral prod.
Hides & skins
Wood & articles
Precious stones, etc.
Machinery
Live animals & prod.
Transport equipment
Textiles & articles
Note: Excluding in-quota rates. Including AVEs provided by the authorities, as available. The ad valorem
part of compound and alternate rates are used where AVEs are not available.
Note: Excluding in-quota rates . Including ad valorem equivalents (AVEs) provided by the Japanese authorities,
Source: as available.
WTO The ad
Secretariat valorem part
calculations, of compound
based and alternate
on data provided rates
by the are used where
authorities; AVEs Customs
and Japan are not available.
online
Source: WTO Secretariat calculations, based on data provided by the Japanese authorities and Japan C ustoms online
information.
3.28. Seasonal tariffs, which differ from MFN rates, apply to six tariff lines, relating to plantains,
bananas, oranges, and grapes.28
3.1.4.2 Bound tariff
3.29. Japan has bound 91.8% of its tariff lines (including partially-bound lines). 175 lines are
unbound29; these relate mainly to fisheries (fish, crustaceans, and seaweed), petroleum oils, and
wood and articles thereof. There are no instances where MFN applied rates exceed bound rates. The
overall gap between the simple averages of MFN applied and bound rates is low, at 0.05 percentage
points (Table 3.1). The highest gap (40 percentage points) is applied for beef jerky in airtight
containers, other than chilled or frozen.
3.1.4.3 Tariff reductions and exemptions
3.30. Customs duty reduction and exemptions are in place, inter alia, to develop domestic
industries, to promote trade and science, to meet requirements associated with social welfare, and
to eliminate double taxation. There are two types of customs duty exemptions: (i) a permanent
28
The tariff lines for which seasonal tariffs are applied are: plantains, fresh (HS 0803.10.100); bananas,
fresh (HS 0803.90.100); oranges, fresh or dried (HS 0805.10.000); grapes, fresh (HS 0806.10.000); bananas,
provisionally preserved (HS 0812.90.100); and oranges, provisionally preserved (HS 0812.90.200). There are
two tariff lines on grapefruit, on which seasonal tariffs are applied (grapefruit including pomelos, fresh or dried
(HS 0805.40.000) and grapefruit including pomelos, provisionally preserved (HS 0812.90.300)). However, the
MFN applied tariff and the seasonal tariff are the same (at 10%).
29
The decrease in unbound tariff rates as compared with the situation in FY2016 is due to a
nomenclature change.
- 61 -
system, as set out in the Customs Tariff Law; and (ii) a temporary system, as set out in the
Temporary Tariff Measures Law (Chart 3.5).30
Chart 3.5 Systems for reduction and exemption of custom duty
Chart 3.5 Systems for reduction and exemption of customs duty
C ustoms Tariff Law (as at 1 April 2004):
Reduction for deterioration and damage (Art. 10)

Reduction or exemption for commodities, pork, sugar, etc. (Art. 12)
Unconditional exemption (in a limited sense) (Art. 14, 1-8, 16-18)
Unconditional Reduction for goods exports for processing or repair (Art. 11)
Reduction or exemption
reduction of and
for re-importation Exemption for re-importation (Art. 14, 9-11, 13 and 14)
exemption from
Customs duty Reduction for re-importation (Art. 14-2)
Reduction or exemption for marine products, etc., collected or caught in foreign countries (Art. 14-3)
Exemption for goods for diplomats (excluding automobiles, liquors and tobacco) (Art. 16)
Exemption for exportation of goods manufactured from duty -paid raw materials (Art. 19-2)
Permanent Conditional Exemption for special uses (Art. 15)

reduction of and
Exemption on goods for diplomats (automobiles, liquors, tobacco (Art. 16)
exemption from
Customs duty Exemption for re-exportation (Art. 17)
(General) Reduction or exemption for re-exportation
Reduction for re-exportation (Art. 18)
Conditional
reduction of and Reduction or exemption on raw materials for manufacturing use (Art. 13)
exemption from Reduction or exemption on raw materials for use in production of export goods (Art. 19)
Customs duty
Temporary Tariff measures Law:
Unconditional
reduction of and
Reduction for products manufactured from goods exported for processing or assembling (Art. 8)
exemption from
Customs duty Exemption for goods exported for processing or repair under Economic Partnership Agreement (Art. 8-7)
Conditional
reduction of and
Temporary exemption from Exemption for hand luggage brought out of Okinawa Prefecture by travellers (Art. 14)
Customs duty
(General)
Conditional
reduction of and
Exemption for parts of aircrafts, etc. (Art. 4)
exemption from
Customs duty
Note: In addition to the above-mentioned system for reduction and exemption of Customs duty, there are
systems for reduction and exemption of Customs duty under certain international conventions.
Source: Ministry of Foreign Affairs (MOFA), Measures, Including Barriers, Affecting Trade and Investment.
Note: In addition to the above-mentioned system for reduction and exemption of Custom duty, there are systems
Viewed at: https://www.mofa.go.jp/region/asia-paci/australia/study0504/chapter4-2.pdf.
for reduction and exemption of Customs duty under certain international conventions.
3.31. Among these various provisions, Article 12 of the Customs Tariff Law provides for duty
reductions/exemptions in cases
Source: MOFA online information. where
Viewed at:the prices of imported daily necessities have increased (to
https://www.mofa.go.jp/region/asia-paci/australia/
prevent study0504/chapter4-2.pdf.
price increases of daily necessities, such as food and clothing), to maintain stability in
people's everyday lives. The merchandise goods currently subject to such duty
reductions/exemptions are imported rice, husked or in the husk; barley; wheat; foodstuffs; apparel;
and other goods which are closely related to people's daily lives.
3.32. Under Article 13 of the Customs Tariff Law, customs duties may be reduced or exempted on
imported raw materials, to develop domestic industries manufacturing specific products, or to
maintain stability in people's everyday lives ("end-use concessions"). The merchandise goods
currently subject to such duty reductions/exemptions are: (i) mixed feeds: kaoliang and other grain
sorghums; maize (corn); rye; powdered banana; sugar (with a specified sucrose content); molasses;
Japan Customs, Customs Tariff Law and Temporary Tariff Measures Law. Viewed at:
30
http://www.customs.go.jp/english/c-answer_e/imtsukan/1602_e.htm.
- 62 -
manioc or sliced and half-dried sweet potatoes (including powder or pellets of manioc and sliced and
half-dried sweet potatoes); (ii) unmixed feeds: kaoliang and other grain sorghums and maize (corn);
and (iii) groundnut oil and groundnut. End-use concessions are published in the Official Gazette.
3.33. In FY2017, foregone tax revenue relating to customs duty reductions and exemptions
amounted to just over JPY 165 billion (around 16.1% of tariffs collected).31
3.1.4.4 Preferential tariff
3.34. Japan offers preferential tariff rates to 128 developing countries and 5 territories under the
GSP; and 46 LDCs receive additional preferences. Japan also grants preferential access under its
RTAs with ASEAN, Australia, Brunei Darussalam, Chile, CPTPP Member economies, the European
Union, India, Indonesia, Malaysia, Mexico, Mongolia, Peru, Philippines, Singapore, Switzerland,
Thailand and Viet Nam (Section 2.3).
3.35. Under Japan's RTAs, preferential tariffs significantly increased market access for these trading
partners. While the percentage of duty-free rates under the MFN tariff was 40.3% in FY2019, it was
around double under the respective RTAs (Table 3.3).
Table 3.3 Summary analysis of preferential tariffs, FY2019

Total WTO agriculture WTO non-agriculture
Average Duty-free Average Duty-free Average Duty-free
(%) rates (%) (%) rates (%) (%) rates (%)
MFN 6.3 40.5 17.9 24.5 3.5 44.5
GSP 5.3 58.3 16.8 32.7 2.4 64.8
LDC 0.5 97.4 1.7 96.8 0.2 97.6
RTAs
Singapore 3.6 84.3 14.0 54.1 1.0 91.8
Mexico 3.4 85.3 15.8 41.6 0.4 96.3
Malaysia 3.1 86.3 13.8 54.4 0.5 94.3
Chile 3.3 86.2 14.5 56.0 0.6 93.8
Thailand 3.1 87.2 13.8 56.3 0.5 94.9
Indonesia 3.3 85.9 14.6 54.7 0.5 93.8
Brunei Darussalam 3.7 84.5 14.7 54.5 1.0 91.8
ASEAN 3.2 85.8 14.3 54.5 0.5 93.6
Philippines 3.0 88.8 13.6 60.3 0.4 96.0
Switzerland 3.3 85.2 14.3 54.9 0.6 92.8
Viet Nam 3.2 86.5 14.3 55.3 0.5 94.3
India 3.5 78.4 15.0 39.7 0.7 88.1
Peru 3.3 83.8 14.6 46.7 0.5 93.1
Australia 3.2 83.9 14.4 48.6 0.5 92.7
Mongolia 3.9 78.5 15.8 39.6 1.1 88.2
TPP11 3.0 84.6 13.3 49.2 0.6 93.4
European Union 3.0 84.7 13.2 49.8 0.6 93.4
Memorandum
Singaporea 2.6 87.9 11.8 56.9 0.4 95.7
Mexicob 2.7 88.1 12.6 55.0 0.3 96.3
Malaysiaa 2.5 88.4 11.7 57.0 0.3 96.2
Chileb 2.7 88.5 12.2 58.2 0.3 96.1
Thailandc 3.1 87.2 13.8 56.5 0.5 94.9
Indonesiac 3.1 86.4 14.1 54.9 0.5 94.3
Brunei Darussalama 2.6 87.9 12.1 57.0 0.4 95.7
Philippinesc 3.0 88.9 13.6 60.4 0.4 96.0
Viet Nama 2.6 88.2 12.0 57.4 0.3 95.9
Perub 2.7 86.2 12.4 51.5 0.4 94.9
Australiab 2.8 85.6 12.5 50.7 0.4 94.3
a Based on the lowest rate applied from the country's EPA, the ASEAN EPA, and the TPP11.
b Based on the lowest rate applied from the country's EPA and the TPP11.
c Based on the lowest rate applied from the country's EPA and the ASEAN EPA.
Note: Calculations exclude in-quota lines. Including AVEs, as available, provided by the authorities. In case
of unavailability, the ad valorem part is used for compound and alternate rates.
Source: WTO Secretariat calculations, based on information provided by the authorities; and Japan Customs
online information. Viewed at: https://www.customs.go.jp/english/tariff/.
In 2017, foregone tax revenue relating to customs duty reductions and exemptions was
31
JPY 165.3 billion. The customs revenue account settlement for the year was JPY 1,024.1 billion.
- 63 -
3.1.4.5 Retaliatory tariff system
3.36. Under Article 6 of the Customs Tariff Act32, Japan maintains a retaliatory tariff system, under
which additional tariffs may be imposed in either of the following situations: (i) when there is a need
for taxation to defend Japan's interests and accomplish the aim of a WTO agreement; or (ii) when a
certain party or parties treat vessels, airplanes and cargoes from, or via, Japan with discrimination
and inexpedience. The authorities noted that Japan currently does not impose this tariff. 33
3.1.5 Other charges affecting imports
3.37. Japan levies a consumption tax of 10% (up from 8% in October 2019) on goods imported
into, or manufactured in, Japan. With respect to imports, the tax is paid on the customs value of the
goods, plus the customs duty and any other excise taxes payable.34
3.38. Details of excise rates applied are set out in Section 3.3.1.1.
3.1.6 Import prohibitions, licensing and quotas
3.1.6.1 Import prohibitions
3.39. Import prohibitions are contained in Article 69-11 of Japan's Customs Law.35 There were no
changes to these items over the review period. Import prohibitions include certain: drugs; arms;
explosives; chemicals; pathogens; forged/altered money, bank notes, revenue stamps, and postal
stamps; books, drawings, carvings, etc., detrimental to public security or corrupting public morals;
child pornography; intellectual property (IP)-infringing goods; and goods produced using unlawfully
obtained trade secrets (as stipulated in the Unfair Competition Prevention Act). Exceptions to some
of these import prohibitions apply to persons authorized to import such items under domestic
laws/regulations or international treaties.
3.1.6.2 Import licensing (approvals) and quotas
3.40. Article 52 of the Foreign Exchange and Foreign Trade Act provides the main legal basis for
the imposition of import approvals, through a Cabinet Order. 36 The implementing regulation in this
regard is the Import Trade Control Order (last amended in 2003), under which the Minister of
Economy, Trade and Industry has the authority to (i) designate goods subject to import approval,
based on places of origin or places of shipment of goods, and approve imports of these goods; and
(ii) designate goods subject to import quotas, and approve imports of these goods. 37 In 2017, the
Foreign Exchange and Foreign Trade Control Act was amended, inter alia, to strengthen penalties
(both fines and administrative penalties) for violations of import and export control regulations. 38
Import licensing requirements are also maintained under the Ethanol Business Act for alcohol of
90% volume or over, from all trading partners.
32
Customs Tariff Act. Viewed at: http://www.kanzei.or.jp/kanzei_law/143AC0000000054.en.html#a6.
33
According to the authorities, the most recent occasion when Japan applied a retaliatory tariff was with
respect to certain goods originating in the United States, from September 2005 until August 2014. This was in
relation to the Byrd Amendment. The authorities also indicated that Japan notified the WTO that it retains the
right to impose this tariff.
34
Japan Customs, Outline of Tariff and Duty Rates System. Viewed at:
http://www.customs.go.jp/english/summary/tariff.htm.
35
Customs Act. Viewed at:
http://www.kanzei.or.jp/kanzei_law/329AC0000000061.en.html#c6s4ss2a69_11. The goods listed in the
Customs Act reflect goods which are prohibited under other laws and regulations. Details of these
laws/regulations are contained in Japan's most recent notification on quantitative restrictions. WTO document
G/MA/QR/N/JPN/4, 16 October 2018.
36
Foreign Exchange and Foreign Trade Act. Viewed at:
http://www.japaneselawtranslation.go.jp/law/detail/?id=3267&vm=04&re=01.
37
Import Trade Control Order, Cabinet Order No. 414 of 29 December 1949, as amended. Viewed at:
http://www.japaneselawtranslation.go.jp/law/detail/?ft=1&re=2&dn=1&co=01&ia=03&x=37&y=17&ky=custo
ms&page=37.
38
Global Compliance News, Japan implements amendment of the Foreign Exchange and Foreign Trade
Act. Viewed at: https://globalcompliancenews.com/japan-amendment-foreign-exchange-trade-20171018/.
- 64 -
3.41. Japan notified its replies to the WTO questionnaire on import licensing procedures for 2018
and 2017. 39 It also notified a new import licensing requirement for certain mercury and
mercury-added products; this is to implement the Minamata Convention on Mercury (adopted in
October 2013), which aims to protect human health and the environment from anthropogenic
emissions and releases of mercury and mercury compounds.40 No issues were raised about Japan's
import licensing regime by Members in the WTO's Committee on Import Licensing over the review
period.
3.42. Goods subject to import approvals under the Import Trade Control Order are set out in
Table 3.4. When there are changes to the items on this list, they are published as an "import notice"
in the Official Gazette. Import approvals are generally valid for six months. Over the review period,
import licensing requirements were removed for: (i) whales and their preparations in July 2019, due
to Japan's withdrawal from the International Whaling Commission (IWC); and (ii) weapons and other
items from Eritrea because sanctions were lifted by a UN Security Council resolution and, hence, the
restrictions were removed.
Table 3.4 Goods subject to import licensing under the Import Trade Control Order
Items HS nos. Application Rationalea
Marine animals and their preparations; 01.06; 02.08; 02.10; Products shipped Prevent adverse effects
fish, crustaceans, other aquatics and 03.01-03.07; 05.04; from outside on fishing activities of
their preparations; products of animal 05.06-05.08; 05.11; Japanese waters Japanese fishermen
origin (marine animals, fish, 12.12; 15.04; 15.06;
crustaceans and molluscs); seaweeds 15.21; 16.01; 16.02;
and their preparations 16.04; 16.05; 21.06;
23.01; 23.09
Salmon and (salmon) trout and their 03.01; 03.02; 03.03; China, Compliance with
preparations 03.04; 03.05; 16.04 Democratic UNCLOS provisions
People's Republic
of Korea, Chinese
Taipei
Fresh and chilled Bluefin tuna farmed 03.02; 03.04 Non-members of Compliance with ICCAT
in the Atlantic Ocean and the the ICCAT resolution
Mediterranean
Fresh and chilled Southern bluefin tuna 03.02; 03.04 Products from Compliance with CCSBT
non-members of resolution
the CCSBT
Foot-and-mouth disease vaccine Ex. 3002.30 All trading Protection of animal
partners life/health
Propellant powders 36.01; 36.02; ex 36.03 All trading Security
partners
Nuclear goods 26.12; ex 28.44; ex All trading Security
81.09; 84.01; ex 90.30 partners
Weapons, ammunition, etc. ex 84.11; ex 84.12; All trading Security
87.10; ex 88.02; ex partners
89.06; 93.01-93.04; ex
93.05; 93.06; 93.07
Wild animals and plants in Appendix I Not provided All trading Compliance with CITES
of the CITES partners
Wild animals and plants in CITES Not provided CITES non- Compliance with CITES
Appendices II and III members
Substances that deplete the ozone Not provided All trading Compliance with various
layer, specified hazardous wastes, and partners, with national laws and
waste chemical weapons goods certain international
exceptionsb conventions/protocols
Foreign cultural property Not provided All trading Compliance with the
partners Hague Convention for
the Protection of Cultural
Property in the Event of
Armed Conflict
Rough diamonds 71.02 All trading Compliance with the
partners Kimberly Process
Certification Scheme and
UN Security Council
Resolution 1343
Cultural property illegally acquired in 97.01- 97.06 Iraq Compliance with UN
Iraq Security Council
Resolution 1483
39
WTO documents G/LIC/N/3/JPN/17, 9 October 2018; and G/LIC/N/3/JPN/16, 2 October 2017.
40
WTO document G/LIC/N/2/JPN/4, 17 April 2018.
- 65 -
Items HS nos. Application Rationalea

All goods from the Democratic People's All Democratic To take the measures
Republic of Korea People's Republic decided by the
of Korea Government
Weapons and other items from Libyan Not provided Libyan Arab Compliance with UN
Arab Jamahiriya Jamahiriya Security Council
Resolution 1970
Charcoal 44.02 Somalia Compliance with UN
Security Council
Resolution 2036
Chemical weapons and other items Includes: 97.01-97.06 Syrian Arab Compliance with UN
related to chemical weapons Republic Security Council
programmes, and cultural property Resolutions 2118 and
illegally removed from the Syrian Arab 2199
Republic
Mercury HS 2805.40 Non-parties to Compliance with the
the Minamata Minamata Convention on
Convention Mercury
Mercury-added products Not provided All trading Compliance with the
partners Minamata Convention on
Mercury
a Abbreviations used in this column are: the United Nations Convention on the Law of the SEA
(UNCLOS); the International Commission for the Conservation of Atlantic Tunas (ICCAT); the
Commission for the Conservation of Southern Bluefin Tuna (CCSBT); and the Convention on
International Trade in Endangered Species of Wild Fauna and Flora (CITES).
b The approval requirements do not apply to members of the Montreal Protocol and to the Chemical
Weapons Convention for the goods that they cover, respectively.
Source: WTO document G/LIC/N/3/JPN/17, 9 October 2018; Import Trade Control Order; and WTO
document G/MA/QR/N/JPN/4, 16 October 2018.
3.43. Japan has "prior confirmation" and "customs clearance confirmation" systems in place to
facilitate trade and, at the same time, ensure that imports of goods meet the standards of
international treaties and agreements. Under these systems, if certificates or documents, such as
export permits from the exporting country, are provided, then importers are not required to also
obtain import approval. While the purpose of the systems is the same, the "prior confirmation"
system requires confirmation from the Minister of Economy, Trade and Industry or other relevant
minister, whereas under the "customs clearance confirmation" system, confirmation must be
obtained during customs clearance.
3.44. Goods subject to import quotas are set out in the METI's Public Notice No. 170 of 1966, as
last amended by Public Notice No. 106 of 2019.41 Products subject to import quotas are: (i) certain
marine products (see below); and (ii) controlled substances listed in Annex A, Group 1 of the
Montreal Protocol on Substances that Deplete the Ozone Layer (excluding, inter alia, those imported
by persons required to obtain import approval (see above)). With respect to the latter, the list of
these controlled substances was adopted at the Montreal Protocol 28th Party Meeting held in October
2016. Hydrofluorocarbons, for which import restrictions came into effect from 1 January 2019, were
added as controlled substances.
3.45. Import quotas for marine products are determined on an annual basis, taking into
consideration the balance of domestic supply and demand.42 The METI is responsible for determining
quota volumes, based on consent from the Ministry of Agriculture, Forestry and Fisheries (MAFF),
and for administering the import quota system. Announcements are made in the METI website (in
Japanese), the Official Bulletin of Economy, Trade and Industry, and the International Trade Bulletin
specify quota volumes and application procedures. Quotas are allocated under the following
categories43:
• new importers. Trading companies, on a first-come-first-served basis;
41
METI, Public Notice No. 170 of 1966, as amended. Viewed (in Japanese) at:
https://www.meti.go.jp/policy/external_economy/trade_control/01_seido/03_law/download_yunyu/kokuji_yun
yukohyo.pdf.
42
The amount of imports, domestic production, consumption, and prices in the previous year, as well as
projections for the coming year, are taken into account.
43
METI. Viewed at:
https://www.meti.go.jp/policy/external_economy/trade_control/03_import/04_suisan/about/senchaku.html.
- 66 -
• trading companies. Two categories apply: (i) allocations on a performance basis (this is the
allocation scheme for companies that have stably imported the items subject to import quota
in the past); and (ii) newcomer-oriented performance basis (this is the scheme for
companies that have imported a certain amount or more of the quota on a first-come-first
served basis in the previous year);
• designated corporations. Quotas are allocated to corporations supplying raw materials to the
fisheries processing association appointed by the Commissioner of the Fisheries Agency (this
association then supplies raw materials to processing industries);
• fishery industries. Quotas are allocated to fisheries associations, approved by the

Commissioner of the Fisheries Agency (the purpose is to import fish caught by Japanese
vessels operating in foreign Exclusive Economic Zones); and
• foreign fishery development. Quotas are allocated to corporations designated by the fisheries
associations or exporters associations which are approved by the foreign government that
is developing the utilization of its fisheries resources based on effective and sustainable
conservation and management measures.
3.46. Successful applicants are issued with a certificate of import quota, normally for six months,
and a certificate of import approval, which must be provided to Customs. No licensing fees or
administrative charges are levied; and no deposits or advance payments are required. Most import
quotas are applied globally, with exceptions for some products, such as laver, where only specific
exporting countries have an interest; in such cases, country-specific quotas are applied in addition
to global quotas.44 Importers are required to report to the METI on the actual volumes imported.
Generally, unused allocations are not added to quotas for the following period. 45 The allocation of
import quotas for FY2018 is set out in Table 3.5.
Table 3.5 Allocation of import quotas by item, FY2018

Trading Designated Foreign Fishery First- Total Unitb
companies corporations fishery industries come- quota
development first- amounta
served
basis
Fish and shellfish 1.2 0.8 n.a. 0.2 0.3 2.6 USD
(HS 0301.99.2; million
03.02; 03.03;
03.04; 03.05;
03.07)
Horse mackerel 79.6 30.3 n.a. 3.0 12.0 125.0 TMT
Mackerel 127.0 80.1 n.a. 5.0 15.0 227.0 TMT
Sardines 15.0 13.0 n.a. 18.0 5.1 50.8 TMT
Scallops 1.9 3.0 n.a. 0.08 0.6 5.7 TMT
Herring (except 44.5 10.5 n.a. n.a. 10.0 65.0 TMT
Clupea pallasi)
Herring (Clupea 28.2 18.5 33.0 n.a. 12.2 92.0 TMT
pallasi)
Cod 16.4 2.8 32.0 19.6 2.0 72.7 TMT
Alaska pollock 111.8 52.1 700.0 160.0 3.0 1027.0 TMT
Squid and 26.8 24.1 n.a. 18.4 5.6 75.0 TMT
cuttlefish
Dried squid 2.5 1.4 n.a. n.a. 0.5 4.5 TMT
Cod and pollock 40.4 15.2 30.0 7.1 5.5 98.3 TMT
roe
Dried laver 0.6 0.7 n.a. n.a. 0.005 1.3 Million
sheets
44
45
According to Japan's notification, exceptionally, the quota of the succeeding period can be added to if
an importer has no responsibility for the cause of unused allocations, or if unused allocations are due to a
prohibition on the exporter's side.
- 67 -
Trading Designated Foreign Fishery First- Total Unitb

companies corporations fishery industries come- quota
development first- amounta
served
basis
Dried seaweed n.a. 0.1 n.a. n.a. 0.005 0.1 TMT
(Enteromopha
and Monostroma
species)
Kombu n.a. 2.8 n.a. n.a. 0.2 3.0 TMT

a Figures have been rounded up/down; hence, in some cases, the total quota amount may not exactly
reflect the sum of the individual import quotas.
b TMT = thousand tonnes.
Source: METI. Viewed at:
https://www.meti.go.jp/policy/external_economy/trade_control/03_import/04_suisan/index.html.
3.47. Steps taken by the METI to ensure full use of import quotas are as follows: (i) if any of the
quota amount remains unallocated, the METI re-allocates the unallocated portion to any applicant
requesting additional import quotas; and (ii) the METI examines applicants' records in the previous
year, so that, if a trading company fails to import more than 80% of the amount of its allocated
import quota, without a rational reason, it will not receive an import quota for the following year.
Quota volumes and actual imports over the period 2016-17 are set out in Table 3.6. In 2016 and
2017, import quotas were only fully filled for dried laver; fill rates for other products ranged from
2.7% to 91.3% in 2017 (Table 3.6). The authorities indicated that quotas are set, taking into account
the balance of domestic supply and demand; variations in fill rates relate to business demands.
Japan indicated that its import quota administration system is consistent with the GATT (Articles XI
2(c) and XX(g)), and was notified to the WTO.46
Table 3.6 Import quotas on fisheries products 2016-17

Commodity Unit 2016 Actual Fill rate 2017 Actual Fill rate
quota imports (%) quota imports (%)
Squid and cuttlefish TMT 131.95 129.05 97.8 86.95 59.14 68.0
Pacific herring TMT 92.00 24.01 26.1 92.00 16.02 17.4
Dried seaweed Million 1,199.00 756.16 63.1 1274.00 885.17 69.5
sheets
Non-sugar seaweed Million 532.00 351.72 66.1 532.00 453.74 85.3
sheets
Seaweed preparations Million 747.00 272.95 36.5 918.00 294.33 32.1
sheets
Cod and pollock roe TMT 98.33 37.25 37.9 98.33 36.43 37.0
Dried squid cuttlefish TMT 4.50 4.27 94.9 4.50 4.11 91.3
Kombu preparations TMT 0.60 0.47 78.3 0.60 0.33 55.0
Mackerel TMT 227.00 127.06 56.0 227.00 124.88 55.0
Sardines TMT 50.80 0.69 1.4 50.80 1.39 2.7
Atlantic herring TMT 65.00 4.85 7.5 65.00 4.54 7.0
Fish and shellfish USD 45.00 27.49 61.1 45.00 20.68 46.0
million
Kombu TMT 2.96 1.55 52.4 2.96 1.74 58.8
Dried laver TMT 0.13 0.13 100.0 0.13 0.13 100.0
Horse mackerel TMT 125.00 18.50 14.8 125.00 16.89 13.5
Callop TMT 5.72 3.22 56.3 5.72 3.72 65.0
Yellowtail, saury, USD 26.40 22.29 84.4 26.40 22.19 84.1
adductor muscle of million
shellfish and dried
sardines
Note: TMT = thousand tonnes.

3.48. Japan's tariff rate quota regime is described in Section 4.1.
46
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3.1.7 Anti-dumping, countervailing, and safeguard measures
3.1.7.1 Anti-dumping measures
3.49. Japan's legislative framework for anti-dumping duties is the Customs Tariff Act47, the Cabinet
Order Relating to Anti-Dumping Duties, and the Guidelines for Procedures Relating to Anti-Dumping
Duty. 48 In 2017, the Cabinet Order and Guidelines were amended to change the definition of
"interested parties for domestic industry", and reduce the burden for applicants requesting the
imposition of an anti-dumping duty by easing the conditions for making such a request. With respect
to the latter, before the amendment, it was not clear to what extent an applicant was required to
substantiate the impact of the dumped product on domestic industry; the amendment specifies that
such impact is to be indicated "by reasonably available information". Moreover, under the previous
regime, the applicant was requested to show that the degree of support of the request for the
imposition of an anti-dumping duty in the domestic industry satisfied the requirement; amendments
authorize the minister in charge of the industry to confirm such degree of support. These
amendments were notified to the WTO49; no questions related to these changes were raised in the
WTO Committee on Anti-Dumping Practices.
3.50. Anti-dumping investigations may be initiated when the Government of Japan considers it
necessary, (i) when an application for investigation, which shows enough evidence, is submitted by
a domestic industry to the Minister of Finance (i.e., upon application); or (ii) when there is enough
evidence other than the application (i.e., e officio).50 The decision is published as a public notice in
the Official Gazette, by the Minister of Finance. Investigations are carried out by a team comprised
of officials from the Ministry of Finance Office of Trade Remedy Affairs, the METI's Office for Trade
Remedy Investigations, and the ministry in charge of the relevant industry. The final decision to
impose an anti-dumping duty is issued as a Cabinet Order. Provisional measures may be applied no
earlier than 60 days from the initiation of the investigation, if affirmative preliminary determinations
are made. Provisional measures are, in principle, applied for up to four months, although a longer
time-frame may apply upon request by exporters representing a significant percentage of the trade
involved. Exporters may offer an undertaking to revise prices or cease exports, so that the injurious
effect of the dumping on the domestic industry is eliminated. Anti-dumping duties can be imposed
for a period not exceeding five years, and may be extended thereafter following a review. Each
extension of the measure may not be longer than five years. 51
3.51. As at end-October 2019, seven anti-dumping measures were in force, relating to five products
and applying to two trading partners. Definitive duties were imposed for the first time during the
review period on: polyethylene terephthalate with a high degree of polymerization from China; and
carbon steel butt-welding fittings from China and the Republic of Korea (Table 3.7). Anti-dumping
duties on electrolytic manganese dioxide from South Africa and Spain were removed in March
2019.52
Table 3.7 Anti-dumping measures in force, July 2019

Exporter Products Status
affected concerned
China Electrolytic Initiation of investigation on 27 April 2007
manganese dioxide Provisional duties imposed on 14 June 2008 (34.3%-46.5% duty rate)
Definitive duty imposed on 1 September 2008 (34.3%-46.5% duty rate)
Sunset review on 30 October 2012
Extension of definitive duty on 6 March 2014 (34.3%-46.5% duty rate)
Sunset review on 18 April 2018
47
Customs Tariff Act. Viewed at:
http://www.kanzei.or.jp/kanzei_law/143AC0000000054.en.html#a9_2.
48
The Cabinet Order Relating to Anti-Dumping duties was viewed at: https://elaws.e-
gov.go.jp/search/elawsSearch/elaws_search/lsg0500/detail?lawId=406CO0000000416&openerCode=1. The
Guidelines for Procedures Relating to Anti-Dumping Duty were viewed at:
http://www.customs.go.jp/tokusyu/ad_gl.htm and
https://www.meti.go.jp/policy/external_economy/trade_control/boekikanri/trade-remedy/law/index.html.
49
WTO documents G/ADP/N/1/JPN/2/Suppl.9, 25 June 2018; and G/ADP/N/1/JPN/2/Suppl.9,
25 June 2018.
50
Article 8(5) of the Customs Tariff Act.
51
A more detailed description of Japan's anti-dumping procedures and time-frames is contained in the
Secretariat Report for its previous Review. WTO document WT/TPR/S/351/Rev.1, 27 April 2017.
52
WTO document G/ADP/N/328/JPN, 22 October 2019.
- 69 -
Exporter Products Status

affected concerned
Extension of definitive duty on 5 March 2019 (34.3%-46.5% duty rate)
Toluenediis- Initiation of investigation on 14 February 2014
ocyanate Provisional duties imposed on 25 December 2014 (69.4% duty rate)
Definitive duty imposed on 25 April 2015 (69.4% duty rate)
Potassium Initiation of investigation on 26 May 2015
hydroxide Provisional duties imposed on 9 April 2016 (73.7% duty rate)
Definitive duty imposed on 9 August 2016 (73.7% duty rate)
Polyethylene Initiation of investigation on 30 September 2016
terephthalate with Provisional duties imposed on 2 September 2017 (39.8%-53.0% duty rate)
a high degree of Definitive duty imposed on 28 December 2017 (39.8%-53.0% duty rate)
polymerisation
Carbon steel butt- Initiation of investigation on 31 March 2017
welding fittings Provisional duties imposed on 28 December 2017 (57.3% duty rate)
Definitive duty imposed on 31 March 2018 (57.3% duty rate)
Korea, Potassium Initiation of investigation on 26 May 2015
Rep. of hydroxide Provisional duties imposed on 09 April 2016 (49.5% duty rate)
Definitive duty imposed on 09 August 2016 49.5%
Carbon steel butt- Initiation of investigation on 31 March 2017
welding fittings Provisional duties imposed on 28 December 2017 (41.8%-69.2% duty rates)
Definitive duty imposed on 31 March 2018 (41.8%-69.2% duty rates)
Source: WTO documents G/ADP/N/322/JPN, 4 February 2019; G/ADP/N/314/JPN, 9 August 2018;

G/ADP/N/308/JPN, 2 February 2018; G/ADP/N/300/JPN, 21 July 2017; G/ADP/N/294/JPN,
7 February 2017; and G/ADP/N/272/JPN, 23 July 2015; and information provided by the authorities.
3.1.7.2 Countervailing measures
3.52. The Customs Tariff Law, the Cabinet Order Relating to Countervailing Duties, and the
Guidelines for Procedures relating to Countervailing Duty form the legal and regulatory framework
for the application of countervailing duties.53 In 2017, the Cabinet Order was amended to change
the definition of "interested parties for domestic industry" in the same way, and for the same
reasons, as for the above-mentioned Order Relating to Anti-Dumping Duties. Likewise, the
Guidelines were also amended in the same way, and for the same reasons, as the Guidelines for
Procedures Relating to Anti-Dumping Duty (see above). These amendments were notified to the
WTO54; no questions related to these changes were raised in the WTO Committee on Subsidies and
Countervailing Measures.
3.53. As described in the previous Review, under the Customs Tariff Law, investigations may be
initiated when the Government considers it necessary, when an application is submitted by domestic
industry, or when there is enough evidence with regard, inter alia, to the importation of the
subsidized product and the material injury to the domestic industry caused by such importation. 55
The decision to initiate an investigation is published as a public notice in the Official Gazette, by the
Ministry of Finance. The final decision to impose a countervailing duty must be made within
approximately one year. Countervailing duties can be imposed for a period not exceeding five years,
and each extension may not exceed five years.56
3.54. Japan did not apply any countervailing measures during the review period, nor did it initiate
any countervailing investigations.
53
Cabinet Order Relating to Countervailing Duties. Viewed at: https://elaws.e-
gov.go.jp/search/elawsSearch/elaws_search/lsg0500/detail?lawId=406CO0000000415&openerCode=1.
Guidelines for Procedures relating to Countervailing Duties. Viewed at:
http://www.customs.go.jp/tokusyu/cvd_gl.htm and
54
WTO document G/SCM/N/1/JPN/2/Suppl.9, 25 June 2018; and G/SCM/N/1/JPN/2/Suppl.9,
25 June 2018.
55
As noted in the Secretariat Report for Japan's previous Review, the Minister of Finance, the minister in
charge of the relevant industry and the Minister of Economy, Trade and Industry must jointly make a decision
to initiate an investigation.
56
A more detailed description of Japan's countervailing procedures and time-frames is contained in the
Secretariat Report for its previous Review. WTO document WT/TPR/S/351/Rev.1, 20 June 2017.
- 70 -
3.1.7.3 Safeguards
3.55. The Customs Tariff Law, the Cabinet Order Relating to Emergency Duties, the Import Trade
Control Order, and the Regulations to Govern Emergency Measures comprise the legal framework
for the application of safeguard measures in Japan. 57 These are supplemented by procedural
guidelines. 58 There were no changes to these laws and regulations over the review period. A
description of safeguard investigation procedures and time-frames is contained in the Secretariat
Report for Japan's previous Review.59 Japan did not apply any safeguard measures during the review
period, nor did it initiate any safeguard investigations.
3.56. Japan reserved the right to use the special agricultural safeguard (SSG) on 147 tariff lines;
details on its imposition of SSGs over the review period are contained in Section 4.1. All the RTAs
to which Japan is signatory contain provisions on bilateral safeguards. The authorities confirmed that
no bilateral safeguards investigations were undertaken over the review period, and no safeguard
measures were imposed under any of Japan's EPAs.
3.2 Measures Directly Affecting Exports
3.2.1 Customs procedures and requirements
3.57. The Customs Law remains the principal piece of legislation covering customs procedures and
documentation. Japan Customs remains responsible for implementing export procedures.
Documentary requirements remain unchanged. These are: the export declaration form (Customs
form C-5010), invoices, and other documents as required by specific laws and regulations. Some of
the original documents must also be physically provided to customs during the customs clearance
process. Japanese Customs does not levy fees for export declarations.
3.2.2 Taxes, charges, and levies
3.58. No export taxes, charges or levies are applied by the Government or other public authorities.
Japan does not apply minimum export prices for any product.
3.2.3 Export prohibitions, restrictions, and licensing
Export prohibitions
3.59. Under the Customs Law, export prohibitions apply to a limited range of products, including:
narcotics and certain other drugs; child pornography; articles which infringe intellectual property
rights; and certain articles that constitute unfair competition under the Unfair Competition
Prevention Act (essentially related to intellectual property rights). There were no changes to the list
of export prohibitions over the review period.60
3.60. In 2019, Japan extended a prohibition on all exports to (and imports from) the Democratic
People's Republic of Korea. This was implemented under the Foreign Exchange and Foreign Trade
Act61, which requires that exporters must obtain export approval from the Minister of Economic
Trade and Industry62; and was effected through a change to the Supplementary Provisions of the
57
The Cabinet Order Relating to Emergency Duties and the Regulations to Govern Emergency Measures
were viewed at: https://elaws.e-
gov.go.jp/search/elawsSearch/elaws_search/lsg0500/detail?lawId=406CO0000000417&openerCode=1.
58
The procedural guidelines were viewed at:
59
60
Export restrictions are set out in Article 69-2 of the Customs Act. Viewed at:
http://www.kanzei.or.jp/kanzei_law/329AC0000000061.en.html#c6s4ss1a69_2.
61
An English translation of the Foreign Exchange and Foreign Trade Act was viewed at:
http://www.japaneselawtranslation.go.jp/law/detail/?ft=1&re=02&dn=1&co=01&ia=03&x=39&y=14&ky=expo
rt+trade+control+order&page=5.
62
METI, Extension of Ban on Imports from and Exports to North Korea, Pursuant to the Foreign
Exchange and Foreign Trade Act. Viewed at: https://www.meti.go.jp/english/press/2019/0409_004.html.
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Export Trade Control Order (see below). The authorities confirmed that there are no circumstances
under which such export approval will be granted.
Export control measures
3.61. The Trade and Economic Cooperation Bureau in the METI is responsible for export control
policy and legislation, and participates in international export control discussions and negotiations.
3.62. The Foreign Exchange and Foreign Trade Act (FEFTA) provides the legal basis for applying
various export licensing requirements.63 Product lists and detailed operational guidelines are found
in secondary legislation, including Cabinet Orders and Ministerial Orders. The main Orders under the
Act are the Export Trade Control Order of 1949 (last amended in 2019) and the Foreign Exchange
Order of 1980 (last amended in 2019). In 2017, the FEFTA was amended, inter alia, to deter business
actions designed to avoid administrative sanctions under the export (and import) prohibition order
by using distinct companies.64
3.63. Normally, each export consignment falling under the scope of the Export Trade Control Order
or the Foreign Exchange Order requires an individual export licence. However, there are five different
kinds of bulk export licences, which are described in the Secretariat Report of Japan's previous
Review.65 Changes were introduced in July 2019 to the licensing system, with the result that the
relevant bulk licences for exports of three items (fluorinated polyimide, resist and hydrogen fluoride,
and their relevant technologies) to the Republic of Korea are no longer applicable. 66 According to the
Japanese authorities, so far, these changes have had no impact on actual production or the global
supply chain.
Export Control Order
3.64. The Export Trade Control Order sets out the goods and their destinations for which METI
approval is required.67 In a few cases, prior approval of the Ministry of Agriculture, Forestry and
Fisheries (MAFF) is also required, or permission must be obtained under other laws/regulations. 68
Several controlled products/destinations relate to Japan's international commitments or non-binding
arrangements.69 The specific goods/destinations subject to export approval are listed in several
tables appended to the Order. Over the review period, there were various changes to the goods
subject to export approval contained in Appended Tables I and II (Box 3.1). The list of luxury goods
subject to export approval to the Democratic People's Republic of Korea was extended to include
tapestry and porcelain tableware (Appended Table II-2 to the Export Trade Control Order). With
respect to countries/areas listed as subject to strict export control, South Sudan was added to, and
63
An English translation of the FEFTA was viewed at:
64
The Revised Act introduces a new system under which Japan can issue a prohibition order on board
members or employees of a company on which an import/export prohibition order has been imposed,
preventing them from taking board member or other positions in charge of import/export operations in another
company. METI online information. Viewed at: https://www.meti.go.jp/english/press/2017/0714_003.html.
65
66
METI, Promulgation of the Cabinet and Ministerial Orders and the Public Notices for the Enforcement
of the Revised Foreign Exchange and Foreign Trade Act. Viewed at:
67
An English translation of the Export Trade Control Order containing latest amendments from the Extra
Cabinet Order No. 19 of 2018 was viewed at:
rt+trade+control+order&page=58. More recent amendments to the Export Trade Control Order were viewed
at: https://www.meti.go.jp/english/policy/external_economy/trade_control/index.html.
68
Export Trade Control Order, Article 2.
69
These international commitments and non-binding arrangements are: the CITES Convention; the
Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposal; the
Convention on the Prohibition of the Development, Manufacture, Stockpiling and Use of Chemical Weapons and
on their Destruction; the Convention on the Means of Prohibiting and Preventing the Illicit Import, Export and
Transfer of Ownership of Cultural Property; the Convention on the Safety of the Management of Spent Fuels
and Radioactive Wastes; the Rotterdam Convention on the Prior Informed Consent Procedure for Certain
Hazardous Chemicals and Pesticides in International Trade; the Minamata Convention on Mercury; the
Wassenaar Arrangement on transfers of conventional arms and dual-use goods and technologies; the Missile
Technology Control Regime; the Treaty on the Non-Proliferation of Nuclear Weapons; the Nuclear Suppliers
Group; and the Australia Group.
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Eritrea removed from, the list in 2019 and 2018, respectively, to implement UN Security Council
resolutions.70 Recent changes to the system resulted in the Republic of Korea now being listed under
"Group B" countries and regions.71
Box 3.1 Changes to goods listed in Appended Tables I and II of the Export Trade Control
Order, 2017-19
Goods removed from lists: semi-finished or primary ceramic products; thermoplastic copolymers; robots
capable, in real time, of three-dimensional image processing; high-speed cinema recording cameras,
mechanical cameras, streak cameras, electronic cameras or related components; and some blood products.
Goods added to the lists: parts of plasma-melting furnaces and electron-beam melting furnaces;
components designed for encoders; specified hazardous wastes and other goods subject to special provisions
for temporary landed goods; parts of devices used for the manufacture of tritium; assemblies or parts thereof
used for the repair of reactor vessels or reactors and storage tanks, containers or receivers; devices for the
synthesis of nucleic acids or binding between nucleic acids; electro-optic modulators; substrates used for the
manufacture of masks; and polycrystal substrates.
Source: Information provided by the authorities; and METI, Cabinet Decision on the Bill for the Cabinet Order
for Partial Revision of the Foreign Exchange Order and the Export Trade Control Order. Viewed at:
https://www.meti.go.jp/english/press/2018/1106_001.html; and Cabinet Decision on the Bill of the
Cabinet Order for Partial Revision of the Export Trade Control Order. Viewed at:
3.65. To obtain an export licence, the exporter must apply to the METI, using the relevant
application form and supporting documents, including an end-use certificate for the end-user. In
practice, licences are refused for military weapons and certain materials which can be used in
developing weapons of mass destruction. Japan permits arms exports to partner countries for joint
development, provided the government of the country-of-destination obtained consent from Japan
before any item exported from Japan was transferred from a third country. For dual-use items,
licence approval depends on the METI's risk assessment, which is based on the destination and the
end-user.72
Foreign Exchange Order
3.66. The Foreign Exchange Order sets out the technologies and destinations for which permission
from the METI is required for transfer outside Japan73; amendments to the Order entered into force
in 2019 to comply with a change in applicable goods subject to export control. 74
Export quotas
3.67. Japan does not maintain any export quotas.
70
METI, New Listing of South Sudan in Appended Table 3-2 of the Export Trade Control Order. Viewed
at: https://www.meti.go.jp/english/press/2019/0409_003.html; and Cabinet Decision on the Cabinet Order to
Partially Amend the Export Trade Control Order. Viewed at:
https://www.meti.go.jp/english/press/2018/1214_003.html. Appended Table III-2 and Appended Table IV of
the Export Control Order list the areas subject to strict export control ("Group D" countries and regions).
Trading partners listed in Appended Table III-2 are Afghanistan, Central African Republic, Democratic Republic
of the Congo, Iraq, Lebanon, Libya, the Democratic People's Republic of Korea, Somalia, Sudan and South
Sudan. Trading partners listed in Appended Table IV are: Iran, Iraq and the Democratic People's Republic of
Korea.
71
METI, The Cabinet Approved Partial Amendment to the Export Trade Control Order. Viewed at:
72
73
An English translation of the Foreign Exchange Order was viewed at:
74
Technologies involving design, manufacture, or use of assemblies or parts thereof used for the repair
of reactor vessels or reactors and storage tanks, containers or receivers were added. METI, Cabinet Decision on
the Bill for the Cabinet Order for Partial Revision of the Foreign Exchange Order and the Export Trade Control
Order. Viewed at: https://www.meti.go.jp/english/press/2018/1106_001.html.
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3.2.4 Export support and promotion
3.2.4.1 Export subsidies
3.68. According to the authorities, Japan has no export subsidy programmes in place; over the
review period, it notified the WTO Committee on Agriculture that it had not provided export subsidies
for the fiscal years 2016 and 2017 (Table 2.2).
3.2.4.2 Taxation and special customs procedures
3.69. Japan's Bonded Area System allows for the storage, processing, manufacturing or display of
foreign goods at designated locations or facilities (i.e. goods that have arrived in Japan from overseas
but that have not received an import permit from the Director-General of Customs, hence duties
and taxes would not have been paid). There are various types of bonded areas (Table 3.8).
Table 3.8 Bonded areas, features

Number
Types Principal features Length of storage
(2019)
Designated Loading/unloading, transport and temporary 1 month 89
bonded areas storage of foreign goods
Customs Loading/unloading, transport and long-term 2 years (may be 4,724
warehouses storage of foreign goods extended)
Customs Processing and manufacturing using foreign goods 2 years (may be 249
factories as material extended)
Customs display Display and use of foreign goods Decided by the n.a.
areas Director-General of
Customs
Integrated Loading/unloading, transport long-term storage, 2 years (may be 4
bonded areas processing and manufacturing, and display of extended)
foreign goods
n.a. Not available.

Source: Japan Customs. Viewed at: https://www.customs.go.jp/english/c-answer_e/sonota/9203_e.htm.
3.70. Japan's Customs Transportation System allows for foreign goods to be transported between
bonded areas, ports and airports. The approval of the Director-General of Customs is required.75
3.71. Under the Customs Tariff Law, customs duties are, either conditionally or unconditionally:
(i) reduced for goods exported for processing or repair (Article 11); (ii) exempt for exportation of
goods manufactured from duty-paid raw materials (Article 19-2); (iii) reduced or exempt for
re-exportation (Article 17 and 18); (iv) reduced or exempt for raw materials used in the production
of export goods (Article 19); (v) refunded on raw materials for manufacturing export goods
(Article 19); (vi) refunded on the export of products manufactured with duty-paid materials (Article
19-2); and (vii) refunded on the export of goods whose nature and form are unchanged from the
time of their importation (Article 19-3).76
3.2.4.3 Free zones and free ports
3.72. Japan operates International Logistics Hub Industry Development Zones (ILHIDZs) in Naha
District (former a Free Trade Zone) and Uruma/Okinawa District. The ILHIDZs are special economic
zones based on the Act on Special Measures for the Promotion and Development of Okinawa.
Incentives offered to domestic and foreign companies include: a 40% deduction from corporation
income tax for a ten-year period following the establishment of the business (domestic companies
only); an investment tax credit; and a special depreciation system. With respect to customs duties,
a selective system applies77, and the customs bond permission fee is halved for customs warehouses
75
Japan Customs, Outline of the Customs Bonded System. Viewed at:
http://www.customs.go.jp/english/c-answer_e/sonota/9203_e.htm.
76
Japan Customs, Systems for Reduction, Exemption, Refund and Repayment of Customs Duty Except
Exemptions under International Conventions and Agreements. Viewed at:
http://www.customs.go.jp/english/summary/refunds_system.pdf.
77
With respect to products accepted into Japan which are processed or manufactured in a bonded
factory using foreign cargo, the choice is available to choose between a tax system whereby tax is paid either
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and customs factories, customs display areas, and integrated bonded areas. Various local tax
incentives are also offered. Subsidies of up to 25% are available for land and building expenses, and
of up to 50% for transportation expenses related to the domestic transportation to and from Okinawa
prefecture of materials (targeted at manufacturing companies). 78 Additionally, low-interest,
long-term loans are offered to companies establishing in the ILHIDZs by the Okinawa Development
Finance Corporation.79
3.2.4.4 Export promotion
3.73. The Japan External Trade Organization (JETRO) remains the official agency responsible for
promoting exports through information, research, support for, and participation in international
trade fairs, and other activities to promote exports from, and investment in, Japan; it has
74 overseas offices in 54 countries.80 Since 2016, JETRO has been providing export-related services
under the Consortium for the New Export Nation; these include advice to Japanese SMEs on their
exports and overseas investment, for example, in terms of foreign country regulations and contract-
drafting in English. In 2017, JETRO established the Japan Agricultural and Foodstuff Exports as a
new service in its Trade Tie-up Promotion Programme; this provides an Internet matching services
for Japanese agricultural and food products.81 In the same year, it also established the Japan Food
Product Overseas Promotion Center, in order to promote branding and marketing of Japanese
agricultural, forestry, fishery and food products in overseas markets. Since 2019, JETRO has
strengthened its support to promote innovation, expansion of Japanese start-ups overseas, and
inward FDI in Japan, corresponding to global acceleration of cutting-edge technologies and the digital
economy.
3.2.5 Export finance, insurance, and guarantees
3.74. The Nippon Export and Investment Insurance (NEXI) and the Japan Bank for International
Cooperation (JBIC) remain the official export credit agencies. As noted in previous Reviews, in
providing financial services, Japan follows the terms and conditions of the OECD Arrangement on
Officially Supported Export Credits.
3.75. In April 2017, NEXI was transformed, under the Act on General Rules for Incorporated
Administrative Agencies, and the Trade and Investment Insurance Act, from an incorporated
administrative agency into a special stock company wholly owned by the Government of Japan. It
continues to be regulated by the METI. The stated rationale for this change was to strengthen NEXI's
ties with the Government, to improve business management, and to better reflect the intentions of
government policies in NEXI's business (these include support for: the expansion of SMEs in the
agricultural, forestry and fisheries industries; the aircraft and ship sectors; overseas infrastructure
development opportunities; and securing a stable supply of natural resources and energy). Also, in
2017, the Government's Special Account for Trade Reinsurance was abolished, and the assets and
liabilities of the account were absorbed by NEXI. Following this development, NEXI began to cede
reinsurance to private-sector reinsurance companies. In October 2017, NEXI established a dollar-
based loan insurance policy, so that it can provide consistently dollar-based supports for Japanese
companies.82 Other developments in terms of insurance products offered are: the relaunch of the
underwriting of Export Credit Insurance for projects with long-term deferred payment; the expansion
of the scope of investment and loan insurance for natural resources and energy (aimed at securing
natural resources and supporting relevant businesses); and the establishment of loan insurance for
green innovation (aimed at supporting environment protection-related businesses).
on the materials or on the products. Prefecture of Okinawa, Industrial Site Guide, 2019-2020. Viewed at:
https://www.pref.okinawa.jp/site/shoko/kigyoritchi/documents/eng1.pdf.
78
Prefecture of Okinawa, Industrial Site Guide, 2019-2020. Viewed at:
https://www.pref.okinawa.jp/site/shoko/kigyoritchi/documents/eng1.pdf; Invest Okinawa, Special Economic
Zone & Promotional video. Viewed at: http://invest-okinawa.biz/en/charm/.
79
The Economist, Free ports, zones. Viewed at:
http://country.eiu.com/article.aspx?articleid=1857197369&Country=Japan&topic=Regulation&subtopic=Trade
+policy&subsubtopic=Free+ports%2c+zones&oid=1767197360&aid=1.
80
JETRO is an incorporated administrative agency under the Japan External Trade Organization
Incorporated Administrative Agency Act of 2002.
81
JETRO, Establishment of Japan Agricultural & Foodstuff Exports (JAFEX). Viewed at:
https://www.jetro.go.jp/en/news/releases/2017/a3e08559704012dd.html.
82
Information provided by the authorities.
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3.76. In conducting its business, NEXI provides trade and investment insurance, with the objective
of breaking even, financially. If NEXI faces funding difficulties, the Government may step in to ensure
insurance claims are paid83; over the review period, no such governmental countermeasures were
required. NEXI offers several insurance products, and covers both political and commercial risks.
Insurance products related to trade, and most recent data on premium income and claims paid, is
set out in Table 3.9.84 A description of NEXI's insurance products for investment and financing (which
account for the larger share of NEXI's premium income) are described in NEXI's 2017 Annual Report;
these include buyer's credit insurance, which covers the risks of non-repayment of loans made by
Japanese commercial banks to foreign companies for the purchase of goods exported from Japan.
Table 3.9 NEXI trade insurance products, 2018

(JPY million)
Premium Claims Under-
Insurance type Description income paid written
2018 2018 amount
Export credit insurance Insurance for export, intermediary trade 12,032 18,082 5,030,034
and technical cooperation: coverage of
risks such as pre-shipment risks or non-
payment risks pertaining to export,
intermediary trade and technical
cooperation conducted by Japanese
exporters
Insurance for licence export: coverage of
the non-payment risks that affect
Japanese companies, related to licence
fees (i.e. royalties on patents, know-
how, copyright, etc.)
Trade insurance for Coverage of risks such as pre-shipment 259 0 7,443
standing orders from risks or non-payment risks that affect
specific buyers Japanese companies who continually
export or conduct intermediary trade
with specific buyers
Comprehensive export Coverage of risks such as pre-shipment 127 0 58,024
insurance with risks or non-payment risks that affect
simplified procedure Japanese companies who continually and
repeatedly export or conduct
intermediary trade with numerous
buyers
Export credit insurance Coverage of non-payment risks 84 78 9,812
for SMEs and the pertaining to exports conducted by
agriculture forestry Japanese SMEs and organizations related
and fishery sector to the agriculture forestry and fishery
sector
Export bill insurance Coverage of non-payment of 130 10 13,023
documentary bills or exchange
purchased by Japanese commercial
banks
Prepayment import Coverage of risks that affect Japanese 3 0 214
insurance importers who are unable to receive the
refund of their payment made on
advanced payment terms in the event
the shipment does not arrive
Source: NEXI, Annual Report 2018. Viewed at: https://www.nexi.go.jp/corporate/booklet/pdf/annual2018-

e.pdf; and information provided by the authorities.
3.77. The JBIC was established under the Japan Bank for International Cooperation Act of 2011,
and is wholly government-owned. It provides loans and guarantees, and engages in equity
participation, with a view to: promoting the overseas development and securing resources which are
important for Japan; maintaining and improving the international competitiveness of Japanese
industries; promoting overseas business having the purpose of preserving the global environment;
and preventing disruptions to the international financial order or taking appropriate measures with
83
These governmental countermeasures are prescribed in the Trade and Investment Insurance Act.
84
Both trade and investment insurance products are described in more detail in NEXI's 2017 Annual
Report. Viewed at: https://www.nexi.go.jp/corporate/booklet/pdf/annual2017-e.pdf.
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respect to damages caused by such disruptions. 85 Only a small share of its total lending and
investments is geared towards providing export loans, largely bank-to-bank loans and buyer's
credits (some JPY 102.8 billion in FY2018, representing 6% of all actual lending and investments in
that year). According to the authorities, export loans are provided based on the conditions of the
OECD Arrangement on Officially Supported Export Credits; export loans are also available from the
private sector. Most of the JBIC's lending/investment activity is not trade-related: overseas
investment loans accounted for 69% of lending commitments in FY2018; untied loans, 2%;
guarantees, 20%; and equity participations, 3%.
3.78. JBIC funding comes from different sources, mostly government accounts or with government
guarantees, including Government-Guaranteed Foreign Bonds, and borrowing from the Fiscal
Investment and Loan Program and the Foreign Exchange Fund Special Account.86
3.3 Measures Directly Affecting Production and Trade
3.3.1 Incentives
3.79. Total central government tax revenue in Japan in FY2019 was JPY 62,495 billion, with the
biggest contributions from: income tax, the consumption tax, and corporation tax. Revenue from
customs duties accounted for 1.65% of the total in the same year (Table 3.10). Various local
government taxes are levied at both the prefectural and local levels. Taxation rates at central and
local government levels for FY2019 are set out in Table A3.1.
Table 3.10 Tax revenue, FY2015-19

FY2015 FY2016 FY2017 FY2018 FY2019
Total for general account 56,285.4 55,468.6 58,787.5 59,928.0 62,495.0
(JPY million)
(% of total)
Direct tax 54.4 54.2 56.4 56.8 56.0
Income tax 31.6 31.7 32.1 32.5 31.9
Corporation tax 19.2 18.6 20.4 20.5 20.6
Inheritance tax 3.5 3.8 3.9 3.7 3.6
Indirect tax 45.6 45.8 43.6 43.2 44.0
Consumption tax 31.0 31.1 29.8 29.7 31.0
Gasoline tax 4.4 4.4 4.1 3.9 3.7
Liquor tax 2.4 2.4 2.2 2.2 2.0
Stamp revenue 1.9 1.9 1.8 1.8 1.7
Customs duty 1.9 1.7 1.7 1.7 1.7
Tobacco tax 1.7 1.6 1.5 1.5 1.4
Petroleum and coal tax 1.1 1.3 1.2 1.2 1.1
Motor vehicle tonnage tax 0.7 0.7 0.6 0.7 0.6
Promotion of power 0.6 0.6 0.6 0.5 0.5
resources development tax
Aviation fuel tax 0.1 0.1 0.1 0.1 0.1
International tourist taxa n.a. n.a. n.a. 0.01 0.1
Tonnage tax 0.02 0.02 0.02 0.02 0.02
Liquefied petroleum gas tax 0.02 0.02 0.01 0.01 0.01

a Imposed on travellers departing Japan since 7 January 2019.
Note: FY2015-17 settled amount; FY2018 budgeted amount revised; FY2019 budgeted amount.
Source: Ministry of Finance, Tax and Stamp Revenues. Viewed at:
https://www.mof.go.jp/english/tax_policy/taxes_and_stamp_revenues/index.htm.
3.80. Direct taxes include individual income tax and corporation tax. Over the review period, the
corporation tax rate (both national and local) was reduced from 29.97% to 29.74% in 2018 (the
national corporation tax rate was reduced from 23.4% to 23.2%) The highest individual income tax
rate (including local taxes) is 55%. Some reforms to the individual income tax were also introduced
85
JBIC Annual Report 2018. Viewed at: https://www.jbic.go.jp/en/information/annual-
report/pdf/2018E_01.pdf.
86
Ministry of Finance, Fiscal Investment and Loan Program Report 2018. Viewed at:
https://www.mof.go.jp/english/filp/filp_report/zaito2018/pdf/filp2018_eng.pdf.
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in 2018 with respect to allowable deductions87; and, in 2019, with respect to tax credits, exemptions,
donations, and environmental taxes.88 All income earned in Japan is taxable, both for residents and
non-residents, and the corporation tax rate is the same for foreign and domestic corporations.
3.81. Indirect taxes, including consumption tax (VAT) and excise taxes (applied, inter alia, to liquor,
tobacco, gasoline, and automobiles), account for most of the remainder of total tax revenue. Recent
tax reforms are detailed in Section 1.2.4.1. These include a consumption tax increase in
October 2019; and amendments to the tobacco tax in FY2018. The consumption tax was increased
from 8% to 10%. Reduced consumption tax rates (of 8%) apply to food and beverages (except
liquors and eating out), and subscribed newspapers issued twice or more per week; there are no
exempt or zero-rated items.
3.82. Besides being subject to a motor vehicle tonnage tax, passenger cars are also subject to the
automobile tax, an annual tax which is commensurate to the volume of the engine size of the vehicle.
Rates did not change over the review period. A passenger car with a cylinder volume of between
660 and 1,000 cc is subject to a tax of JPY 29,500 per year. Mini vehicles (Kei cars) which are no
larger than 11.2 ft by 4.9 ft and with an engine below 660 cc are subject to a Kei car tax of JPY
10,800. Tax reforms introduced in the 2019 Budget are to: reduce the automobile tax for those who
purchased automobiles after the consumption tax rate hike; revise the eco-car tax deduction under
the motor vehicle tonnage tax; ensure that the local tax revenue loss will be fully supplemented by
national taxes (i.e. through an increase in the compensation rate for the motor vehicle tonnage tax
and the gasoline tax); and reduce the tax rate on acquisitions of automobiles (a newly-introduced
environmental performance excise) by 1%, as a one-year temporary measure from October 2019.89
3.83. The Aviation Fuel Tax is imposed on the quantity of aviation fuel loaded on an aircraft in the
territory of Japan. Rates did not change over the review period. Aviation fuel for international airlines
is exempt. Revenue from the tax is transferred to a special account for airport construction, and is
also partly transferred to local public authorities to prevent obstacles such as aircraft noise.90
3.84. Under the Liquor Tax Act, alcoholic beverages are classified into several categories based on
their basic ingredients, manufacturing process, and characteristics. Rates did not change over the
review period. Tax rates, applied to domestic and imported products, are stipulated for each
category, considering factors such as how items are produced and consumed.91
3.85. National and local taxes on tobacco are being raised by JPY 3 per cigarette in a three-phased
period (JPY 1 per cigarette in each phase) which started in 1 October 2018. A new tax category was
created for heat-not-burn tobacco products, and the taxation system will be revised in consideration
of the products' characteristics.92 The phase-out of the preferential tax treatment for Japanese-
produced "third class cigarettes" was completed in 201993; all cigarettes are now taxed at the same
rates.
3.3.1.1 Taxation
3.86. As indicated by an external source, foreign investors generally have the same access to
incentives offered by central and local governments; these include grants and loan assistance (see
below) and tax incentives which generally favour SMEs. 94 Central government tax incentives are
87
MOF, FY 2018 Tax Reform (Main Points). Viewed at:
https://www.mof.go.jp/english/tax_policy/tax_reform/fy2018/tax2018a.pdf.
88
http://www.mof.go.jp/english/tax_policy/tax_reform/fy2019/tax2019.pdf.
89
http://www.mof.go.jp/english/tax_policy/tax_reform/fy2019/tax2019.pdf
90
91
92
Tobacco Tax Law. Viewed (in Japanese) at: https://elaws.e-
gov.go.jp/search/elawsSearch/elaws_search/lsg0500/detail?lawId=359AC0000000072; and Local tobacco tax
law. Viewed (in Japanese) at: https://elaws.e-
gov.go.jp/search/elawsSearch/elaws_search/lsg0500/detail?lawId=325AC0000000226.
93
94
The Economist, Japan, General incentives. Viewed at:
http://country.eiu.com/article.aspx?articleid=1077197291&Country=Japan&topic=Regulation&subtopic=Nation
al+incentives&subsubtopic=General+incentives&aid=1&oid=1077197291. The authorities indicated that the
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contained in Table 3.11. These are aimed, inter alia, at: promoting employment, regional
revitalization, improving productivity, and encouraging research and investment. Tax incentives are
also in place to promote the installation of energy-saving facilities.95
3.87. Over the review period, new or revised tax incentives for companies were, inter alia, designed
to: promote business investment by local SMEs, promote business succession of SMEs, and spur
wage hikes and productivity, including through revisions to the tax system for R&D (Table A3.2).96
According to the authorities, no studies were undertaken over the review period on the effectiveness
of tax (and non-tax) incentives.
Table 3.11 Central government tax incentives, 2019

Title Overview
Tax incentives for strengthening local business facilities
Employment promotion - Establishment/expansion of headquarters functions within eligible areas (incl.
taxation FDI in Japan): tax credit of up to JPY 600,000 per new employee.
- Relocation of headquarters functions to within eligible areas from the
23 wards of Tokyo: tax credit of up to JPY 900,000 per new employee.
Corporate income tax - Establishment/expansion of headquarters functions within eligible areas (incl.
incentives for capital FDI in Japan): a special initial depreciation of 15% of the standard acquisition
investment (tax cut for cost, or 4% tax credit on the acquisition value of specified business facilities.
offices) - Relocation of headquarters functions to within eligible areas of the 23 wards
of Tokyo: a special initial depreciation of 25% of the standard acquisition cost,
or a 7% tax credit on the acquisition value of specified business facilities.
Incentives regarding Special Zones
National Strategic Special Special regulatory measures, tax treatment (for corporate income tax), and
Zone financial/monetary support are available for companies with business plans in
National Strategic Special Zones.
Comprehensive Special Special regulatory measures, tax credit (for corporate income tax), and
Zones fiscal/financial support are available for companies with business plans in
designated Comprehensive Special Zones.
Special Zones for Special measures, such as deregulation, tax incentives, etc., are available in
Reconstruction disaster-afflicted areas where local governments made designated plans.
Incentives based on the Act on Special Measures for Productivity Improvement
Connected Industries Tax measures supporting the introduction of systems, sensors, robots, etc.
Taxation System necessary in efforts to boost productivity, through collaboration and utilization
of data, and for which certain cybersecurity measures are taken.
Tax measures: 30% special depreciation or a 3% tax deduction. The tax credit
rate is 5% in the case of wage increases in which the rate of increased pay and
allowance for employees is over 3% from the previous year.
Tax incentives based on the Act on Strengthening a Framework for Regional Growth and
Development by Promoting Regional Economy Advancement Projects (Tax Credit for Regional
Future Investment Promotion)
Tax incentives for capital - Machinery, appliances and fixtures: a special initial depreciation of 40% of
investment the standard acquisition cost, or a 4% tax credit (if certain requirements are
met: 50% special initial depreciation, or 5% tax credit)
- Buildings, attached facilities and structures of specific business facilities: a
special initial depreciation of 20% of the standard acquisition cost, or a 2% tax
credit.
- Maximum amount of tax deduction: 20% of the amount of corporate or
income tax in the period concerned.
Companies must prepare a business project and obtain the required prefectural
and ministerial approvals.
Tax exemption or unequal Confirmed companies may be able to receive exemptions or reductions on
taxation of local taxes property acquisition taxes and property taxes by local authorities.
Subsidy Programme for Projects Promoting Foreign Direct Investment, Site Location and Regional Development
ended in March 2017.
95
Corporations that install energy-saving facilities can apply 30% special depreciation of the price of
those facilities. SMEs can alternatively apply a 7% tax credit for the purchase of these facilities. WTO document
WT/TPR/M/351/Add.1, 27 April 2017.
96
MOF, FY 2019 Tax Reform (Main points). Viewed at:
https://www.mof.go.jp/english/tax_policy/tax_reform/fy2019/tax2019.pdf; FY 2018 Tax Reform (Main points).
Viewed at: https://www.mof.go.jp/english/tax_policy/tax_reform/fy2018/tax2018a.pdf; and FY 2017 Tax
Reform (Main points). Viewed at: https://www.mof.go.jp/english/tax_policy/tax_reform/fy2017/tax2017a.pdf.
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Title Overview
Tax incentives for R&D
R&D Tax Credit System Table A3.2
Promotion of Open Tax credit for the total amount of expenses for joint or contract research with
Innovation universities, national research institutes, etc.
Tax credit = total amount of special R&D expenses times 20%, 25% or 30%.
Maximum amount of tax credit: 10% of the amount of corporate or income tax
in the period concerned
Tax incentive for wage and productivity improvement
Tax deduction system for Tax incentives for companies which carry out: wage hikes (+3% year-on-year
wage and productivity for large firms; 1.5% year-on-year for SMEs); and investment and employee
improvement training: maximum 20% tax credit (25% for SMEs). Maximum amount of tax
credit: 20% of the amount of corporate or income tax in the period concerned.
Preferential tax treatment for Special Zones
Special Zone for Companies who contribute to maintaining employment opportunities in
promoting investment in reconstruction industry accumulation areas are eligible to apply for a special
reconstruction of industry tax measure when they make capital investments or employ disaster victims
in Fukushima
Source: JETRO, Incentive Programs. Viewed at: https://www.jetro.go.jp/en/invest/incentive_programs.html;

and information provided by the authorities.
3.3.1.2 Subsidies and other assistance programmes
3.88. In its latest notification to the Committee on Subsidies and Countervailing Measures under
Article XVI:1 of GATT 1994 and Article 25 of the Agreement on Subsidies, Japan listed 51 subsidy
schemes provided by central or local governments, largely for fiscal years 2016 and 2017; support
was mainly targeted at the following activities/sectors: crafts; mining and energy; beverages (sake
and shochu); agriculture; fisheries; leather; and R&D for next-generation technology. In most cases,
subsidies took the form of grants. Interest subsidies and loans were also used to subsidize some
economic activities. The most significant subsidy programmes in value terms were (i) loans for
purchasing petroleum and liquefied petroleum gas for stockpiling by private companies
(JPY 517.9 billion in FY2016 and JPY 335.2 billion in FY2017); and (ii) grants for rice production,
which have since been abolished (subsidy of JPY 98.7 billion in FY 2015 and JPY 70.8 billion in FY
2016). No new subsidy programmes were introduced over the reporting period covered by Japan's
notification, but several were terminated (Table 3.12).
Table 3.12 Subsidy and other assistance schemes terminated, 2017-19

Scheme Date of
termination
Subsidy for the tortoiseshell and ivory crafts industries 3/2017
Subsidy for supporting action to improve energy efficiency by private enterprises 3/2017
Geothermal energy programme 3/2017
Subsidy for R&D for the practical application of advanced ultra-supercritical technology for 3/2016
a thermal power plant
Grant for the technical development of a full-MOX ABWR plant system 3/2017
Subsidy for R&D for care robot equipment 3/2018
Measures for rice 2018
Local subsidies for promoting the manufacture of traditional craft products (3 Prefectures) End-FY2017;
FY2018
Local measures for eggs (1 Prefecture) End-FY2016
Local subsidy measures for vegetables (4 Prefectures) End-FYs
2016, 2017
and 2018
Local subsidy measures for fruit (1 Prefecture) End-FY2018
Subsidy for inland water aquaculture End-FY2018
Source: WTO documents G/SCM/N/315/JPN, 9 June 2017; and G/SCM/N/343/JPN, 19 July 2019.
3.89. Subsidies are available for the purchase of clean energy vehicles sold by car makers, and for
building hydrogen fueling stations.97 The subsidy to promote clean energy vehicle purchases applies
to the purchase of electric battery vehicles, plug-in hybrid electric vehicles, fuel-cell energy vehicles,
and clean diesel vehicles (Table 3.13). The subsidy amount is calculated based on the grade of the
97
The Economist, Japan, Industry-specific incentives. Viewed at:
al+incentives&subsubtopic=Industry-specific+incentives&aid=1&oid=1077197291.
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clean energy vehicle, and is paid within the limits set per vehicle grade (it is not paid if the calculated
amount is under JPY 15,000). The budgetary allocation for this subsidy scheme was JPY 16 million
in 2019. The upper limit of the subsidy scheme for building hydrogen stations is from JPY 180 million
to JPY 390 million. The upper limit on the subsidy for the operation of hydrogen stations is from
JPY16 million to JPY 26 million. These limits depend on the type of machines involved.
Table 3.13 Subsidy to promote clean energy vehicle purchases

Vehicle type Subsidy amount
Electric battery vehicles Subsidy is calculated on the driving range per charge. Maximum subsidy of
JPY 400,000
Plug-in hybrid vehicles Subsidy of JPY 200,000 for all vehicles (limited to electric vehicles with
calculated driving range of over 40 km)
Fuel-cell energy vehicles Subsidy amount is calculated based on the price difference between the clean
Clean diesel vehicles energy vehicle and the gasoline-powered vehicle of the same model/grade.
Maximum subsidy amount for fuel-cell vehicles is JPY 2,250,000. Maximum
subsidy amount for car-derived vans is JPY 150,000
3.90. Various subsidies to encourage the establishment of foreign-affiliated businesses are also
provided at the local level.98 These subsidies, inter alia, relate to rent costs; expenses; depreciable
assets; investments; employment; and research costs.
3.91. Since 2016, new subsidy programmes were introduced in the following areas: subsidies for
manufacturing, information and communications technology introduction, and sustainability support
for SMEs (FY2019 budget, allocation of JPY 110.0 billion); and group subsidies (FY2018
supplementary budget, allocation of JPY 31.4 billion).99
3.92. Various new support programmes were introduced for the agriculture and fisheries sectors
(Section 4.1).
3.93. The Development Bank of Japan Inc. (DBJ), which is wholly owned by the Government, offers
various financial services, including long-term loans and investment in both local and foreign projects
involving natural resources and energy; technology development; marine transport; urban renewal;
and antipollution technology.100 According to the authorities, interest rates are market-based but
the DBJ may offer longer-term loans than those available through commercial banks. Priorities for
the DBJ are in the areas of crisis response operations (i.e. supply growth capital from the perspective
of promoting the competitiveness of Japanese enterprises along with regional revitalization). The
DBJ's capital, funded by the Government, was JPY 1,000.4 billion as at 31 March 2019. As at the
same date, the Bank had total assets of JPY 16,827 billion and loans of JPY 13,063 billion.101
3.94. As set out in government budgets over the period FY2017-19, various new support
programmes were introduced, namely: support for SME business succession; establishment of bases
for revitalizing local economies; transition to the production phase towards post-"K-computer";
promotion of capital investment by local core companies; expansion of measures to assist business
succession; support to information technology innovation and artificial intelligence system
co-development; support for introducing leading-edge energy-saving equipment; grants to advance
regional reinvigoration; and development and demonstration of smart agriculture technology. The
authorities indicated that, while the type of support is mainly subsidies, these do not constitute
"subsidies" and are not "specific" under the WTO Subsidies and Countervailing Measures Agreement.
98
JETRO, Incentive Programs. Viewed at: https://www.jetro.go.jp/en/invest/incentive_programs.html.
99
As explained by the authorities, the group subsidy is a special measure, based on the fact that
physical damage, such as damage to facilities and equipment, is widespread, and the supply chain is damaged,
resulting in a stagnation of the economy. Measures were taken in 2011, 2016 and 2018. In order to support
the restoration of facilities and equipment affected by the disaster, the Government supports some expenses,
such as the restoration of facilities based on the SME group's reconstruction project plan.
100
The Economist, Japan, Industry-specific incentives. Viewed at:
al+incentives&subsubtopic=Industry-specific+incentives&aid=1&oid=1077197291.
101
DBJ, About DBF/Timeline. Viewed at: https://www.dbj.jp/en/co/info/outline.html.
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3.3.2 Standards and other technical requirements
3.95. The Ministry of Foreign Affairs (the International Trade Division, within the Economic Affairs
Bureau) remains Japan's Notification Authority under the Agreement on Technical Barriers to Trade
(TBT Agreement). Over the review period, no specific trade concerns on Japan's measures were
raised by other WTO Members in the TBT Committee. The WTO was notified that the Japan Standards
Association and the Optoelectronics Industry and Technology Development Association accepted the
Code of Good Practice for the Preparation, Adoption and Application of Standards (Annex 3 to the
WTO TBT Agreement).102
3.96. Between January 2017 and early September 2019, Japan submitted 93 regular notifications
to the WTO Committee on Technical Barriers to Trade; the 60-day period for comments was observed
for 77 regular notifications. The type of measures notified to the WTO included 69 technical
regulations (Article 2.9) and 1 conformity assessment procedure (Article 5.6). Japan notified
13 urgent technical regulations (Article 2.10), mainly related to consumer and human health
protection.
3.97. Japan is a member of the International Organization for Standardization (ISO), the
International Telecommunication Union, the International Electrotechnical Commission (IEC), the
International Accreditation Forum, the Bureau international des poids et mesures, the Organisation
internationale de métrologie légale, and the International Laboratory Accreditation Cooperation, as
well as several regional standards and accreditation bodies.
3.98. Japan has MRAs concerning results of conformity assessment procedures in force with the
European Communities, Singapore, the Philippines, Thailand, and the United States.
3.3.2.1 Legal and institutional framework
3.99. There were no changes to the agencies in charge of TBT issues over the review period. These
remain the METI; the Ministry of Internal Affairs and Communications (for communications
equipment); the MAFF (for foodstuffs, agricultural, forestry and fisheries products); the Ministry of
Health, Labour and Welfare (for drugs and medical devices); the Consumer Affairs Agency (for
labelling) and the Ministry of Environment (for environment).103
3.100. The main laws on standards and technical regulations in Japan, together with the agency
responsible, are described in Table 3.14.
Table 3.14 Main laws on standards and technical regulations

Legislation/agency Purpose
Industrial Standardization Act, Applies to: all products except medicines, agriculture and fertilizer
1949 /METI chemicals, silk yarn, foodstuffs, agricultural and forestry products;
data; services; and management systems.
The Act establishes the Japanese Industrial Standards (JIS)
Committee and the JIS Mark Scheme, and provides the legal basis for
standards, certification, and accreditation of certification bodies and
laboratories.
Consumer Product Safety Act, 1973 Sets out requirements for: (i) a narrow range of specified products
/METI which must comply with technical requirements; and (ii) specified
maintenance products (some types of domestic water heaters and
electric appliances) which must be provided with information on
maintenance. It also provides the legal basis for reporting product
accident information for consumer products.
Act on Securing Quality, Efficacy Regulates the manufacture, import and sale of pharmaceuticals,
and Safety of Products including medical devices, regenerative and cellular therapy products, gene
Pharmaceuticals and Medical therapy products, and cosmetics.
Devices, 1960 /Ministry of Health,
Labour and Welfare
WTO documents G/TBT/CS/N/189, 20 April 2017; and G/TBT/CS/N/195, 21 November 2017.

102
A fuller description of the sub-entities responsible for TBT issues is contained in WTO document
103
WT/TPR/S/351/Rev.1, 20 June 2017 (Box 3.2).

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Legislation/agency Purpose
Act on Japanese Agricultural Applies to foods, drinks, oils, and fats, and agricultural, forestry,
Standards, 1950/MAFF livestock and fishery products and products made from them, except
liquors, drugs, cosmetics and regenerative medical products. It
provides the legal basis for the Japanese Agricultural Standards, and
criteria for adopting standards, quality grading, certification, and
accreditation of certifying bodies, laboratories and inspectors.
Building Standard Law, 1950 Applies to buildings and construction thereof. It provides for the
/Ministry of Land, Infrastructure, establishment of standards for the construction of buildings, including
Transport and Tourism fireproofing and procedures for inspection, certification of buildings,
and type approval.
Electrical Appliances and Materials Applies to electrical appliances and materials. The Act regulates the
Safety Act, 1961/METI manufacture and sale of electrical appliances, and requires
manufacturers and importers of these appliances to register with the
METI and ensure conformity with technical requirements.
Measurement Act, 1992/METI Establishes the units of the International System of Units (ISU) as the
measurement units in Japan, and provides the legal basis to apply and
verify them and certify devices for their measurement.
Food Labelling Act, 2013/Consumer Ensures a unified food-labelling system, by establishing standards and
Affairs Agency specifying other necessary information regarding the labelling of food
that is intended for sale (see below).
3.101. Over the review period, amendments were made to some of these laws.
3.102. Amendments to the Industrial Standardization Act, effective 1 July 2019, were to: expand
the scope of standardization to: services; programmes and other electronic records and business
management systems; simplify the process for establishing JISs (see below); strengthen penalties
to ensure the reliability of the JIS mark 104 ; and promote public and private standardization
activities.105
3.103. In 2017, the Law Concerning Standardization of Agricultural and Forestry Products was
amended, and was renamed the Act on Japanese Agricultural Standards. The overall aim of the
amendments was to expand a standardization framework for contributing to the sound development
of industries related to agriculture, forestry and fishery, and to help protect the interests of general
consumers. Under the previous Law, the scope of Japanese Agricultural Standards (JASs) was limited
to the "quality" of covered goods, and amendments expanded the potential scope of JASs to include
production processes; handling methods (related to services), and testing methods. Additionally,
the JAS accreditation framework was expanded, and a laboratory and inspector accreditation system
was established (see below).106 In tandem with the aforementioned amendments, the Act on the
Food and Agricultural Materials Inspection Center Incorporated Administrative Agency was amended
to enable domestic operators to rapidly obtain certification if international standards are based on
JASs.107 The authorities confirmed that, presently, no international standards are based on JASs.
3.104. The Building Standard Law was amended in 2018 (Act No. 67 of 2018) to improve building
safety, particularly considering recent large-scale fires and technological developments relating to
fire prevention. Main changes related to: ensuring the safety of buildings and urban areas; utilizing
existing building stock; and promoting the maintenance of wooden buildings.108
104
Any juridical person who violates the Act, i.e. entities which indicate JIS marks on their products
without a valid certificate, or which do not obey an order by a competent minister, will be fined up to
JPY 100 million (it was JPY 1 million before the amendment). The maximum fine for individuals remains
unchanged, at JPY 1 million.
105
Industrial Standardization Act. Viewed at (in Japanese):
https://www.meti.go.jp/policy/economy/hyojun-kijun/jisho/jis.html.
106
MAFF, About the new JAS system. Viewed at: http://www.maff.go.jp/j/jas/h29_jashou_kaisei.html.
107
Business rules were established so that the FAMIC can certify international standards certification
bodies. MAFF, About the new JAS system. Viewed at: http://www.maff.go.jp/j/jas/h29_jashou_kaisei.html.
108
Ministry of Land, Infrastructure, Transport and Tourism, About law (2018 law 67th) which revises a
part of Building Standard Law. Viewed at:
http://www.mlit.go.jp/jutakukentiku/build/jutakukentiku_house_tk_000097.html.
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3.3.2.2 Standards
3.105. There are two types of standards in Japan: the JIS and the JAS.
3.106. JISs are drafted by interested parties or by industrial associations entrusted by the
competent ministry. The draft is sent to the competent minister and, thereafter, the Japan Industrial
Standards Committee undertakes its deliberation/consultation work, which includes a 60-day period
for public comment. Once completed, the draft is reported to the competent minister, to be
established or revised as a JIS and notified in the Official Gazette. To speed up the development of
a JIS, amendments to the Industrial Standards Act in 2019 (see above) enabled JIS drafts to be
proposed by private associations which are accredited by the competent minister as having expertise
in developing JISs, thus skipping the Committee deliberation phase (the 60-day public comment
period remains a requirement). 109 Each JIS is reviewed every five years, which can result in
withdrawal of outdated standards.110 As at end-March 2019, there were 10,773 JISs (Table 3.15).
According to the authorities, the number of JISs with corresponding international standards was
6,062 (end-March 2019), and other JISs (4,711) have no corresponding international standards
because the target products' features are exclusively for the domestic market. The proportion of
those JISs which are harmonized with, or which modified, ISO or IEC international standards
(according to the definition of ISO/IEC Guide 21-1), was 97%.
Table 3.15 JISs established, revised, and withdrawn, April 2018-March 2019
Number of Number of Number of JISs in force
newly revised JISs JISs at end-March
established withdrawn 2019
JISs
Civil engineering and architecture 14 27 0 601
Mechanical engineering 46 38 8 1,778
Electronic and electrical engineering 35 90 43 1,731
Automotive engineering 9 12 4 367
Railway engineering 1 10 3 151
Shipbuilding 0 0 0 391
Ferrous materials and metallurgy 6 23 1 461
Non-ferrous materials and metallurgy 1 12 2 391
Chemical engineering 20 67 5 1,782
Textile engineering 6 2 0 237
Mining 5 4 2 170
Pulp and paper 1 1 0 80
Management systems 4 8 0 105
Ceramics 5 15 0 390
Domestic wares 3 4 0 201
Medical equipment and safety 20 26 8 575
appliances
Aircraft and aviation 0 0 0 8
Information processing 7 6 5 468
Miscellaneous packing, welding, 13 18 9 886
radioactivity, etc.
Total 196 363 90 10,773
3.107. According to the authorities, approximately 7,522 domestic and 1,005 foreign factories in
24 countries and economies are certified to affix JIS marks (JIS Mark scheme). The authorities state
that domestic and foreign factories are treated in the same manner regarding certification of the JIS
marks, and the JIS Mark scheme is internationally harmonized, based on ISO/IEC 17065. As at
March 2019, 24 organizations were accredited as JIS mark certification bodies.
3.108. JASs are proposed either by the MAFF or by interested parties and are drafted by the MAFF.
For non-compulsory JASs, a 60-day period for the submission of public comments is provided for.
The draft is then submitted to the JAS Council for a final decision. JASs are issued as public notices,
as specified in the Act on Japanese Agricultural Standards. As at March 2019, there were 73 JASs.
During the period from April 2016 to March 2019, 12 new standards were established, 46 were
109
Japanese Industrial Standards Committee, Flowchart of JIS development. Viewed at:
https://www.jisc.go.jp/eng/jis-act/flow-dev.html.
110
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revised, and 1 was abolished. At the time of the previous review, 78% of JASs were harmonized
with international standards. Those not in harmony include canned asparagus and fruit juices. Except
for the JAS for Organic Plants and the JAS for Organic Processed Foods of organic plants (see below),
JASs are voluntary. The JAS Law allows third-party organizations to certify operators (i.e.
manufacturers) to allow them to affix JAS marks. In 2017, the JAS certification framework was
expanded, and a registered testing company system was established under which the MAFF registers
testing organizations that meet international standards.111 The Minister of Agriculture, Forestry and
Fisheries, registered certifying bodies (RCBs) and registered overseas certifying bodies (ROCBs) are
responsible for monitoring and managing JAS marks. 112 Foreign producers or manufacturers that are
certified by RCBs and ROCBs may conduct their own grading and affix the JAS marks to their
products. The authorities indicated that, as at March 2019, there were 22 ROCBs and 79 domestic
RCBs. There are around 3,000 foreign certified operators and around 8,000 domestic certified
operators.
3.3.2.3 Technical regulations
3.109. With respect to the drafting of technical regulations and mandatory JASs, the
development/consultation process is generally as follows: the agency responsible hears opinions
from stakeholders, and prepares the draft of a technical regulation. The agency submits the draft to
its relevant advisory council, which is generally composed of representatives from industry,
academics, and consumer groups, for deliberation. The advisory council then deliberates the draft,
and prepares its proposal; comments submitted from all stakeholders (including foreign businesses)
are taken into consideration (a 60-day period is provided for comments). A report is made of the
result, and is sent to the competent minister. Finally, a public announcement of the technical
regulation is published in the Official Gazette. 113 The procedure for revising and withdrawing
technical regulations is basically the same as the procedure for preparing, adopting and applying
them. As indicated by the authorities, no data is available on the number of technical regulations in
force.
3.110. As reported by the authorities, regarding regulations on vehicle safety and environmental
protection, Japan has taken measures such as the introduction of international regulations into its
national regulations with respect to International Whole Vehicle Type Approval under the UN/ECE
World Form for Harmonization of Vehicle Regulations. The authorities indicated that Japan adopted
16 UN/ECE World Forum technical regulations out of the existing 20.
3.111. There are two mandatory JASs: the JAS for Organic Plants (which was revised in 2017) and
the JAS for Organic Processed Foods of organic plants (revised in 2017 and 2018).
3.3.2.4 Conformity assessment and inspection
3.112. Overseas manufacturers of electrical and consumer products may undergo conformity
assessment and certification conducted in foreign countries by foreign-registered conformity
assessment bodies, in accordance with relevant laws (e.g. the Electrical Appliances and Materials
Safety Act and the Consumer Product Safety Act). Regarding the Consumer Product Safety Act, there
are one foreign-registered and six domestically registered conformity assessment bodies. Regarding
the Electrical Appliances and Materials Safety Act, there are seven foreign-registered and seven
domestically registered conformity assessment bodies.114
3.113. Japan accepts test data on chemical products developed in other countries, based on OECD
Test Guidelines, OECD Good Laboratory Practice principles, and the Decision of the OECD Council
Concerning the Mutual Acceptance of Data in the Assessment of Chemicals.115
111
MAFF, About the new JAS system. Viewed at: http://www.maff.go.jp/j/jas/h29_jashou_kaisei.html.
112
WTO document WT/TPR/S/243/Rev.1, 2 May 2011.
113
114
At the time of the previous Review, a list of registered conformity assessment bodies was provided.
115
As reported at the time of the previous Review, a trading partner that wants its data to be accepted
under the scheme of OECD Mutual Acceptance of Data must be an OECD member, with a recognized national
compliance programme, or a full adherent to the Council Acts related to the Mutual Acceptance of Data in the
Assessment of Chemicals. WTO document WT/TPR/M/351/Add.1, 27 April 2017 (pg. 209).
- 85 -
3.114. The METI has designated 24 inspection bodies, of which 8 are foreign.116 They include: 7
bodies under the Consumer Product Safety Act, 14 under the Electrical Appliances and Materials
Safety Act, 2 under the Act on the Securing of Safety and the Optimization of Transaction of Liquefied
Petroleum Gas, and 1 under the Gas Business Act.
3.3.2.5 Labelling requirements
3.115. Labelling requirements are contained in various laws: the Food Labelling Act; the Consumer
Product Safety Law; the Household Goods Quality Labelling Act; the Electrical Appliances and
Materials Safety Act; the Industrial Safety and Health Act; the Act Concerning Business Associations
and Measures for Securing Revenue from the Liquor Tax; and the Fertilizer Regulation Act. Over the
review period, "labelling standards for manufacturing process and quality of wine"117, established by
the National Tax Agency, entered into force in 2018.
3.116. The 2013 Food Labelling Act, which entered into force in 2015, sets out nutritional labelling
requirements and the inclusion of allergen information on imported and domestically produced pre-
packaged processed food products.118 The Act was amended in 2018 (Act No. 97 of 2018) to increase
the transparency of food-related business operators and to improve food safety for consumers.
Amendments included requirements for food-related business operators to notify government
agencies when they recall foods that are not labelled according to food-labelling standards, and the
application of fines for non- or false reporting.119 The implementing regulation for the Food Labelling
Act is the Food Labelling Standard (Ordinance of the Cabinet Office No. 10 of 2015, as amended).
At the time of the previous Review, Members raised the issue of the Act's labelling requirements for
plant products containing chemical substances applied post-harvest, a requirement that is not
required for such substances applied pre-harvest. As explained by the authorities, this relates to
whether such substances are considered as pesticides (if applied pre-harvest) or food additives (if
applied post-harvest); some Members noted that this labelling requirement places more burden on
trading partners than on Japanese producers.120
3.117. The Food Labelling Standard covers all food and drink sold in Japan. Importers are
responsible for ensuring that their products are properly labelled (standard-compliant product
labelling is not required at the time of customs clearance).121 An amendment to the Food Labelling
Standard in September 2017 (Cabinet Office Ordinance No. 43 of 2017) introduced the requirement
to indicate on the label the place of origin of the heaviest ingredient of those contained in the final
product; this applies to all processed foods domestically produced and sold122, with the exception of
a few items, for which separate standards apply.123 There is a transition period for compliance, which
ends in 2022. Previously, the requirement was for specified processed foods to be labelled with the
place of origin of the heaviest ingredient, provided it was over 50% of the product's weight. 124 For
imported processed foods, the country of origin of the product must be labelled (labelling the place
116
Regarding the Consumer Product Safety Act, there is one foreign-registered. Regarding the Electrical
Appliances and Materials Safety Act, there are seven foreign-registered.
117
National Tax Agency, About the "Product Quality Labeling Standard for Fruit Sake". Viewed at:
https://www.nta.go.jp/taxes/sake/hyoji/kajitsushu/index.htm.
118
Food Labelling Act. Viewed at:
https://www.caa.go.jp/policies/policy/food_labeling/food_labeling_act/#laws.
119
CAA (in Japanese). Viewed at:
https://www.caa.go.jp/policies/policy/food_labeling/food_labeling_act/amendment_001/pdf/amendment_001_
190122_0001.pdf.
120
USTR, Foreign Trade Barriers. Viewed
at: https://ustr.gov/sites/default/files/files/Press/Reports/2018%20National%20Trade%20Estimate%20Report
.pdf.
121
USDA, GAIN Report. Viewed at:
https://gain.fas.usda.gov/Recent%20GAIN%20Publications/An%20Overview%20of%20the%20Food%20Labeli
ng%20Standard_Tokyo_Japan_5-26-2017.pdf.
122
Japan's notifications to the WTO regarding this amendment are: G/TBT/N/JPN/551, 27 March 2017;
G/TBT/N/JPN/551/Add.1, 21 July 2017; G/TBT/N/JPN/551/Add.2, 4 October 2017; and
G/TBT/N/JPN/551/Add.3, 17 November 2017. The Add.1 and Add.2 documents contain explanatory materials
on the new labelling system. The Add.3 document contains a link to an English translation of a comparison of
provisions prior to and after the amendment.
123
The following items have separate standards, which set out the ingredients that are subject to
mandatory country of origin labelling: (i) pickled agricultural products (top 4 or 3 agricultural ingredients which
constitute 5% or more); (ii) frozen vegetable products (top 3 predominant ingredients, which constitute 5% or
more); (iii) processed eel products and eel; (iv) dried bonito flakes and dried bonito; and (v) rice balls.
124
WTO. Viewed at: https://members.wto.org/crnattachments/2017/TBT/JPN/17_5119_00_e.pdf.
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of origin of ingredients is not required). In May 2018, a further amendment to the Standard
introduced a new labelling method for aseptic filling tofu; introduced labelling requirements for
fungicides used for food; expanded the foods for which fungicides (fludioxonil) can be used; and
provided for "Mortadella Bologna" to be labelled as "Bologna sausage" as the generic term of the
product.125
3.118. The Food Labelling Standard provides the legal basis for GM labelling requirements.
Presently, the list of GM products that need to be labelled comprises eight crops (soybeans, corn,
rapeseed, potatoes, cottonseed, alfalfa, papaya, and sugar beet) and 33 kinds of designated
processed food, mainly made of soybeans or corn; papaya; and processed foods containing papaya
as a main ingredient.126 In March 2018, the report of an expert panel on GM labelling was compiled;
it led to an amendment to the Food Labelling Standard, to ensure that "non-GM" labels may only be
used if it is confirmed that the product is not comingled with GM products at all (previously the label
could still be used with 5% GM comingling of soybean and corn).127
3.119. Other developments over the review period were: (i) the introduction of new labelling
requirements for pressure cookers and autoclaves for home use, as well as lighters (through
revisions to the Ministerial Ordinance of the Consumer Product Safety Law)128; and (ii) "hats" were
added to the Textile Goods Quality Labelling Regulation, and "thermos bottles made of stainless
steel for table use" were added to the Miscellaneous Manufactured Goods Quality Labelling
Regulation (these Regulations fall under the Household Goods Quality Labelling Act).
3.3.3 Sanitary and phytosanitary (SPS) requirements
3.3.3.1 SPS measures
3.120. The Standards Information Service, within the International Trade Division of the MOFA's
Economic Affairs Bureau, remains Japan's enquiry point and national notification authority under the
SPS Agreement. Over the review period, Brazil raised a specific trade concern regarding Japan's
restrictions on avocados.129 Japan is a member of the Codex Alimentarius Commission and the World
Organization for Animal Health (OIE), and is a contracting party to the International Plant Protection
Convention.
3.121. The key agencies responsible for SPS measures are contained in Box 3.2; there were no
major changes to this institutional framework over the review period.
3.122. Between January 2017 and early September 2019, Japan submitted 187 regular notifications
to the WTO Committee on Sanitary and Phytosanitary Measures. Three were emergency
notifications. 130 All notified measures related to international standards, guidelines or
recommendations.
Box 3.2 Key agencies responsible for SPS measures
MAFF
Food Safety and Consumer Affairs Bureau
Responsible for SPS measures relating to animal feed, animals, plants, veterinary drugs, etc.
Ministry of Health, Labour and Welfare (MHLW)

Pharmaceutical Safety and Environmental Health Bureau
Responsible for the administration of food safety, including specifications and standards for food, food
additives, pesticide residues, animal drug residues, radioactive materials, GM foods, food containers,
inspection, and safety measures for food.
Cabinet Office – Food Safety Commission
Conducting risk assessment on food, and making recommendations to relevant ministries
Implementing risk communication among stakeholders, e.g. consumers and business operators
Responding to food-borne accidents and emergencies.
125
WTO document G/TBT/N/JPN/598, 7 June 2018.
126
127
WTO document G/TBT/N/JPN/608, 10 October 2018.
128
WTO document G/TBT/N/JPN/596, 1 May 2018.
129
WTO. Viewed at: https://www.wto.org/english/news_e/news19_e/sps_22jul19_e.htm.
130
WTO SPS IMS. Viewed at: http://spsims.wto.org/.
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Ministry of the Environment

Responsible for managing risks to the environment from imports, including from invasive alien species.
MAFF and MHLW

Responsible for SPS measures relating to fish and fishery products (the MAFF is responsible for animal
(including aquatic) health. The MHLW is responsible for food safety (including the establishment of criteria
or standards for food and monitoring, and guidance of food distributed in Japan, including imported food)).
Source: WTO document WT/TPR/S/351/Rev.1, 20 June 2017.
3.123. As reported by the authorities during its last Review, SPS measures in Japan are in general
based on relevant international standards or, where its measures do not conform to those, on
scientific risk assessment.131 Risk assessments undertaken by the Food Safety Commission of Japan
(FSCJ) are available on its website.132 Likewise, risk analyses for phytosanitary measures undertaken
by the Risk Analysis Division of the Plant Protection Station are published online.133 However, during
Japan's previous Review, various Members raised the issue of Japan's alignment with international
Codex standards with respect to maximum residue limits (MRLs) and additives standards, and with
OIE rules with respect to import restrictions on beef, poultry and other animal products. Japan
responded to these questions at the time of its previous Review.134 As indicated by the authorities,
since its last Review, Japan has allowed beef imports from Austria and the United Kingdom, and
lifted age restrictions to beef imported from Canada, Ireland and the United States. It has also
started reviewing the portions of commodities to which MRLs apply, with a view to harmonizing them
with Codex standards.
3.124. Regarding food safety of imported foods, Japan accepts the results of inspections by
inspection agencies that foreign governments recognize as having certain control by foreign
government agencies and that have internationally valid inspection accuracy. Items for which the
sanitary conditions are liable to change during transport by ship or air (for example, bacteria and
mycotoxin) are excluded.135
3.3.3.2 Legislative framework
3.3.3.2.1 The Food Safety Basic Act
3.125. The Food Safety Basic Act falls under the responsibility of the Food Safety Commission of
Japan (FSCJ) and the Consumer Affairs Agency.136 It aims to comprehensively promote policies to
ensure food safety by: establishing basic policy principles; clarifying the responsibilities of national
and local governments and food-related business operators, and the roles of consumers; establishing
a basic direction for policy formulation; and setting out the mandate of the FSCJ. There were minor
amendments to the Act in 2018, to reflect amendments to other laws.
3.3.3.2.2 The Food Sanitation Act
3.126. The Food Sanitation Act, which falls under the responsibility of the MHLW, aims to prevent
eating- and drinking-related sanitation hazards, through measures to ensure food safety.137 The Act
applies to food and drink. Its implementing regulations are the Order for Enforcement of the Food
Sanitation Act (Cabinet Order No. 229, 1953), last amended in 2017, and the Ordinance for
Enforcement of the Food Sanitation Act (Ordinance of the MHLW No 23, 1948), last amended in
2018.
131
WTO document WT/TPR/M/351/Add.1, 27 April 2017
132
FSCJ risk assessments are available (in Japanese) at: http://www.fsc.go.jp/hyouka/index.html.
133
MAFF, Phytosanitary risk analyses (in Japanese) are available at:
http://www.maff.go.jp/j/syouan/keneki/kikaku/pra.html; and
http://www.maff.go.jp/j/syouan/keneki/kikaku/prareport.html.
134
135
MHLW, List of Foreign Official Laboratories. Viewed at:
https://www.mhlw.go.jp/english/topics/importedfoods/1-10.html.
136
FSCJ, Food Safety Basic Act (in Japanese). Viewed at:
http://www.fsc.go.jp/hourei/index.data/kihonhou_20180615.pdf.
137
MHLW, Food Sanitation Act (in Japanese). Viewed at:
https://www.mhlw.go.jp/content/11131500/000345801.pdf.
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3.127. Over the review period, amendments were made to the Act (in 2018) to reflect changing
dietary patterns and the environment surrounding food in Japan, as well as to increase hygiene
controls to be compatible with international standards and prevent interregional food poisoning
cases.138 New provisions directly related to imports and exports are: (i) meat and poultry meat,
which are foods where control processes are particularly important to prevent the occurrence of
health effects, may not be imported into Japan unless they are manufactured at facilities where the
competent authorities of the exporting country confirm that food hygiene controls based on hazard
analysis and critical control points (HACCP) principles are in place; and (ii) a requirement to attach
a health certificate, which describes the status of hygiene control issued by the exporting country,
regarding the import of food whose risk increases depending on hygiene practices (namely: milk,
milk products, oysters to be eaten raw, and puffer fish). Other amendments include: strengthened
cooperation between national and local governments with respect to interregional food poisoning
cases; institutionalized food hygiene controls for food business operators based on HACCP principles;
tightened sanitary regulations for utensils, containers and packaging for food and food additives;
revision of the licensing system for food businesses and the establishment of a notification system
for the same; and the establishment of a reporting system for food recalls.139
3.128. Under the Act, the MHLW is responsible for establishing MRLs for agricultural chemicals
(pesticides, feed additives and veterinary drugs). Foreign countries may apply to the MHLW to
establish or revise MRLs for newly approved agricultural chemicals used in/on foods exported to
Japan. In this regard, an application must be made to the MHLW, and risk assessments are
undertaken by the FSCJ.140 Some concerns were expressed about the length of the review process
for the registration of new pesticides and the establishment of MRLs.141 In this connection, Japan
indicated that it has decided to streamline an approval process for pesticides and food additives by
utilizing a unified application and deliberation process. Notifications on standard processing periods
are published online.142 For items where no MRLs have been established, Japan maintains a positive
list system for agricultural chemicals, so as to generally prohibit the distribution of foods that contain
agricultural chemicals above a certain level. As indicated by the authorities, when violations of MRL
standards are found in imported foods, Japan clarifies the increased surveillance measures for the
targeted food and the requirements for lifting them. In so doing, it takes in consideration the test
results and the status of control for pesticide residues in the exporting country; measures are based
on the relevant Codex guidelines, and try to minimize the burden on the exporting country. Since
Japan's previous Review, the following standards of pesticide residues and additives in food have
been established, revised or revoked: colistin sulfate and virginiamycin; salinomycin; L-carnitine;
alkaline protease; chlorpropham; and guanidinoacetic acid.143
3.129. As set out in the Act, when food and related products are imported into Japan, an import
notification must be submitted to the Quarantine Station, containing information such as food
ingredients, processing method and food additives. The MHLW's food sanitation inspectors undertake
a documentary check to ensure compliance with standards set in the Food Sanitation Act; import
inspections are undertaken if deemed necessary. An inspection order lists the various foods from all
or specified trading partners which are subject to mandatory inspection.144 As noted in the previous
Review, imported food may be exempt from inspection if a cargo is inspected by an official inspection
organization in the exporting country which is registered with the Government of Japan and bears
the result of the inspection; exclusions apply to items whose characteristics may change during
transportation. As at April 2019, 4,085 foreign testing laboratories were so registered in Japan.
138
WTO, . G/SPS/N/JPN/552, 17 January 2018 and its related link. Viewed at:
https://members.wto.org/crnattachments/2018/SPS/JPN/18_0425_00_e.pdf.
139
MHLW, Amendment of the Food Sanitation Act. Viewed at:
https://www.mhlw.go.jp/stf/seisakunitsuite/bunya/kenkou_iryou/shokuhin/yunyu_kanshi/index_00016.html.
140
Risk assessments are undertaken under the provisions of the Food Safety Basic Act.
141
USTR, Foreign Trade Barriers. Viewed at:
https://ustr.gov/sites/default/files/files/Press/Reports/2018%20National%20Trade%20Estimate%20Report.pdf.
142
Standard processing period notifications are available online at: https://www.mhlw.go.jp.
143
These were notified to the WTO in documents: G/SPS/N/JPN/523, 523/Corr.1, 24 July 2017
/28 July 2017; G/SPS/N/JPN/524, 25 July 2017; G/SPS/N/JPN/564, 20 February 2018; G/SPS/N/JPN/580,
21 June 2018; G/SPS/N/JPN/604, 22 November 2018; and G/SPS/N/JPN/619, 13 February 2019.
144
MHLW. This inspection order was viewed at:
https://www.mhlw.go.jp/english/topics/importedfoods/16/schedule01.html.
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3.3.3.2.3 The Plant Protection Act
3.130. The Plant Protection Act, which falls under the responsibility of the MAFF, provides the legal
basis for regulations on plant protection, including quarantine for local, imported and exported
plants.145 There were no changes to the Act over the review period. The Act's main implementing
regulation is the Ordinance for Enforcement of the Plant Protection Act.146 As notified by Japan to
the WTO, revisions of the Ordinance's annex tables (relating to: quarantine pests; plants subject to
field inspection in exporting countries; import prohibited plants; and plants subject to specific
phytosanitary measures to be carried out in exporting countries) will enter into force in January
2020.147
3.131. All non-prohibited plants and plant products are subject to quarantine inspection. Importers
must submit an "application for import plant inspection" to the Plant Protection Station at the point
of entry, together with the phytosanitary certificate issued by the national plant protection
organization of the exporting country.148 Import inspections are conducted upon the goods' arrival.
3.132. Over the review period, Japan notified the WTO of new measures to reduce the risk of the
introduction of Candidatus Liberibacter solanacearum through the import of carrots (seeds and
seedlings) and celery (seedlings)149 and of Xylella fastidiosa through the importation of host plants
for planting (excluding seeds and fruit).150
3.3.3.2.4 Act on Livestock Infectious Diseases Control
3.133. The Act on Livestock Infectious Diseases Control falls under the MAFF's responsibility.151 It
aims to protect and promote the livestock industry, by preventing the outbreak and spread of
infectious diseases in livestock. Over the review period, there were minor amendments to the Act in
order to reflect amendments to other laws.
3.134. Under the Act (Chapter IV), a certificate of quarantine inspection issued by the governmental
authority in the exporting country is required for: (i) animals, their carcasses or bones, meat, eggs,
skin and hide, hair, and their containers and packing; (ii) straw from grain (with some exceptions)
and forage for feed; and (iii) bedding material. Imports must arrive at designated locations.
Inspections are undertaken by the Animal Quarantine Service.
3.135. Japan's Third Free Countries List catalogues the countries/areas considered to be free from
various livestock diseases and are, hence, eligible to export to Japan. There are four sub-lists:
(i) cloven-hoofed animals and meat; (ii) cervid animals or deer meat, etc; (iii) pigs and pig meat,
etc.; and (iv) poultry and poultry meat, etc. 152 Imports from all other countries/regions are
prohibited.
3.136. In November 2017, Japan introduced new animal quarantine regulations for raw milk and/or
milk products153; imports must be accompanied by an inspection certificate issued by the competent
145
Plant Protection Act. Viewed at:
http://www.japaneselawtranslation.go.jp/law/detail/?ft=1&re=2&dn=1&x=0&y=0&co=01&ia=03&ky=plant+pr
otection+act&page=22.
146
Ordinance for Enforcement of the Plant Protection Act. Viewed (in Japanese) at:
http://www.maff.go.jp/pps/j/law/houki/shorei/shorei_12_html_12.html.
147
Japan notified the WTO of proposed changes to these lists in 2019. WTO document
G/SPS/N/JPN/620, 4 March 2019; and of the revision itself in WTO document G/SPS/N/JPN/620/Add.1,
7 August 2019.
148
Plant Protection Station, Import and Export Plant Quarantine – FAQ. Viewed at:
http://www.pps.go.jp/english/faq/index.html.
149
WTO document G/SPS/N/JPN/383/Add.1,11 January 2017.
150
WTO document G/SPS/N/JPN/405/Add.2, 11 January 2017.
151
The Act on Livestock Infectious Diseases Control. Viewed at: https://elaws.e-
152
MAFF, The Third Free Countries List. Viewed at: http://www.maff.go.jp/aqs/english/news/third-
free.html.
153
Previously, only raw milk fell within the scope of animal quarantine in terms of milk and dairy
products.
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authority of the exporting country, and dairy imports (and exports) are subject to inspection by the
Animal Quarantine Service at designated entry points.154
3.3.3.2.5 Agricultural Chemicals Control Act
3.137. The Agricultural Chemicals Control Act falls under the responsibility of the MAFF and the
Ministry of Environment. 155 It was amended in 2018 (Act No. 53 of 2018) in order to improve
pesticide safety and contribute to more efficient agriculture. Amendments include: (i) the
introduction of a re-evaluation system; and (ii) the revision of evaluation for registration.156 From
April 2020, risk assessment for pesticide operators and honeybees is to be introduced, and target species of
animals and plants are to be added for ecological risk assessment.157
3.3.3.2.6 Other
3.138. As indicated by the authorities, from a food safety perspective, there are no hormone-specific
regulations in Japan; they are subject to the same regulations as other veterinary drugs. With
respect to hormone-fed animals (no products), there are no restrictions on imports.158
3.139. The MHLW ensures the safety of GM foods through safety assessments by the Food Safety
Commission, which are based on scientific data. Without passing the safety assessment, GM foods
and foods using them as raw materials, cannot be produced, imported or marketed.
3.140. In March 2011, soon after the accident at the Tokyo Electric Power Co. (TEPCO) Fukushima
Daiichi Nuclear Power Station, Japan started decontamination of crop land and fruit trees and
introduced controls over feeds and agricultural inputs. It also introduced a risk-based food
monitoring scheme which is based on Codex standards for radioactive caesium in food but,
apparently in practice, is even more stringently applied. Enforced by the national laws, food products
that exceed this stringent maximum level are recalled and disposed of. As reported by the
authorities, due to these measures, food products exceeding the Japanese maximum level drastically
decreased after the accident, and detection rates have remained low and stable for many years.
They further indicated that the purpose of sampling is to detect contamination or to remove
restrictions; most detections were limited to the wild harvest monitored at areas where distribution
is already restricted. The authorities reported that, since early 2013 (the last case in April), none of
the farm products and fishery harvests have exceeded the Codex guideline level defined as safe for
human consumption, and even the wild edible fungi, fern sprout and leaf buds have not exceeded
the level for food for small-scale consumption. The only harvests which still exceed the level are
certain game meat, although the detection rate is very low, and those detected are neither
distributed nor exported.
3.3.4 Competition policy and price controls
3.3.4.1 Competition policy
3.141. Competition policy continues to be governed by the Act on Prohibition of Private

Monopolization and Maintenance of Fair Trade of 1947 (the Anti-Monopoly Act, or AMA) (last
amended in 2019, see below), which aims to promote, inter alia, fair and free competition, stimulate
the creative initiative of entrepreneurs, and encourage business activities for enhanced economic
development and consumer welfare. 159 The Japan Fair Trade Commission (JFTC) is the agency
responsible for implementing the AMA. To ensure further transparency of law enforcement and to
improve predictability for business operators, the JFTC issued guidelines on various monopoly or
154
MAFF, Animal quarantine inspection for dairy products. Viewed at:
http://www.maff.go.jp/aqs/topix/dairy_products_en.html.
155
Agricultural Chemicals Control Act. Viewed (in Japanese) at: https://elaws.e-
156
WTO document G/SPS/N/JPN/593, 1 August 2018; and MAFF (in Japanese). Viewed at:
http://www.maff.go.jp/j/nouyaku/n_kaisei/h300615/attach/pdf/index-18.pdf.
157
WTO document G/SPS/N/JPN/624, 20 March 2019.
158
In this regard, the authorities indicated that if "hormones" means Zeranol, r-BST or Ractopamine for
growth promotion, they are not allowed to be used on animals, since they are not approved as veterinary
drugs nor designated as feed additives.
159
JFTC, The Antimonopoly Act (AMA). Viewed at:
https://www.jftc.go.jp/en/legislation_gls/amended_ama09/index.html.
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unfair trade issues under the AMA, and detailed rules on investigation. All the legislation and
implementing rules are published on the JFTC's official website.160
3.142. During the review period, the main prohibitions under the AMA remained unchanged. They
cover unreasonable restraint of trade, exclusionary private monopolization, unfair trade practices,
and business combination. Under exclusionary private monopolization, four typical conducts,
consisting of "below-cost pricing", "exclusive dealing", "tying" and "refusal to support and
discriminatory treatment", are considered most likely to fall into the prohibited conducts category.
According to the authorities, there are not many private monopolization cases in Japan. Regarding
mergers and acquisitions, the JFTC maintains guidelines (issued on 31 May 2004 (last updated on
14 June 2011)), through which it clarifies the principles underlying the determination of whether a
merger or acquisition would restrain competition. In FY2017 and FY2018, the JFTC received 206 and
321 notifications of business combination plans, respectively. The rule-of-reason approach is
generally used by the JFTC in investigations.
3.143. During the review period, the main regulatory change in this area was the AMA amendment
introducing the Commitment Procedures under the CPTPP (Section 2.3.2.1.1, and below). The
amended AMA came into force on 30 December 2018, the same date as the CPTPP. 161 The purpose
of the Commitment Procedures is to establish a scheme to resolve suspected AMA violations by
consent between the JFTC and the enterprise concerned; as at end-October 2019, there were no
progress and plans for the establishment of the scheme. According to the Procedures, where there
is a suspicion of violation other than hardcore cartel such as price-cartel or bid-rigging cases, the
JFTC and the enterprise can consult with each other and work out sufficient remedies to eliminate
the violation. If such remedies are approved by the JFTC and are well-implemented, no orders will
be issued by the JFTC. It is believed that the Commitment Procedures would facilitate early resolution
of competition concerns, and contribute to the effective and efficient enforcement of the AMA through
cooperation between the JFTC and alleged violators. To ensure the transparency and predictability
of enforcement, the JFTC also established rules and policies, such as the "Rules on Commitment
Procedures by the Fair Trade Commission" in 2017 and the "Policies Concerning Commitment
Procedures" in 2018.162
3.144. On 19 June 2019, the Antimonopoly Act (AMA) Amendment Bill was approved in the 198 th
ordinary session of the Diet, and the enacted Act was promulgated on 26 June 2019. The purpose
of the amended Act is to deter "unreasonable restraint of trade effectively, invigorate the economy,
and enhance consumer interests by fair and free competition, through increasing incentives for
enterprises to cooperate in the JFTC's investigations and imposing an appropriate amount of
surcharges according to the nature and extent of the violation. The enacted Act shall come into effect
on the date specified in the Cabinet Order, within one year and six months from 26 June 2019.
3.145. Several activities or business practices remain exempt from the scope of the AMA.
Competition in these areas may be covered by other legislation and different institutions
(Table 3.16). No other exemptions were introduced since 2017. To ensure the smooth and
appropriate pass-on of consumption tax when its rate is raised, the "Act Concerning Special Measures
for Correcting Practices Impeding Consumption Tax Pass-on, etc. with the Aim to Ensure Smooth
and Proper Pass-on of Consumption Tax" was passed and promulgated in June 2013. The Act, which
was valid until 31 March 2017, came into effect on 1 October 2013. In November 2016, the Act was
amended to be valid until 31 March 2021, due to the postponement of the scheduled tax rate
increase (Sections 1.1 and 1.2). The Act prohibits conduct including: refusal to shift consumption
taxes by price reduction or slashing; and request to purchase goods, use of service, or provision of
economic benefits in return for the acceptance of shifting of consumption taxes. It exempts pass-on
cartels and representation cartels by firms or trade associations from application of the AMA if the
following requirements are met: prior notification submitted to the JFTC; with respect to pass-on
160
Relevant legislation can be viewed at:
https://www.jftc.go.jp/en/legislation_gls/imonopoly_guidelines.html.
161
Enactment of the Act for Partial Amendment of the Act on the Development of Related Legislation
Following the Conclusion of the Trans-Pacific Partnership Agreement. Viewed at:
https://www.jftc.go.jp/en/pressreleases/yearly-2018/June/180629_file/180629_1.pdf.
162
Rules on Commitment Procedures by the Fair Trade Commission. Viewed at:
https://www.jftc.go.jp/en/legislation_gls/antimonopoly_rules_files/rules_on_commitment_procedures_by_the_
fair_trade_commission.pdf; and Policies Concerning Commitment Procedures. Viewed at:
https://www.jftc.go.jp/en/legislation_gls/antimonopoly_rules_files/policies_concerning_commitment_procedur
es.pdf.
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cartels, two thirds or more of the participating firms must be small and medium-sized businesses;
"decisions on agreement on prices" shall not be exempted; and, with respect to representation
cartels, only the concerted practice in relation to decisions on representation methods concerning
consumption taxes is exempt.
Table 3.16 Exemptions from the Anti-Monopoly Act (AMA), 2019

Relevant ministries and Legislation System
agencies
1. Exemptions under the AMA (1 law, 3 systems)
JFTC Section 21 Acts under intellectual property
rights
Section 22 Acts of cooperatives
Section 23 Resale price-maintenance
contracts concerning published
works
2. Exemptions under various individual laws (16 laws, 21 systems)
JFTC Act Concerning Special Measures for Correcting Pass-on cartels
Practices Impeding Consumption Tax Pass-on, Representation cartels
etc. with the Aim to Ensure Smooth and Proper
Pass-on of Consumption Tax
Financial Services Agency Insurance Business Act Insurance cartels
Act on Non-Life Insurance Rating Organization Certain conduct by non-life
of Japan insurance rating bodies
Ministry of Justice Corporate Reorganization Act Reorganization company's
acquisition of its shares
Ministry of Finance Act Concerning Liquor Business Associations Rationalization of cartels
and Measures for Securing Revenue from
Liquor Tax
Ministry of Education, Copyright Act Cartels on fees for secondary use
Culture, Sports, Science and of commercial phonograms
Technology
MHLW Act on Coordination and Improvement of Cartels to prevent excessive
Environmental Health Industry competition
MAFF Agricultural Cooperative Act Certain conduct by agricultural
cooperatives, federations of
agricultural cooperatives, central
unions of agricultural
cooperatives, and agricultural
producers' cooperative
corporations
METI Export and Import Transaction Act Cartels on export
Act on the Organization of Small and Medium- Joint business activities
Sized Enterprise Association
Small and Medium-Sized Enterprise Certain conduct by federations of
Cooperatives Act small business associations
Ministry of Land, Marine Transportation Act Maritime transportation cartels
Infrastructure, Transport (international); and maritime
and Tourism transportation cartels (coastal
service)
Road Transportation Act Transportation cartels
Civil Aeronautics Act Aviation cartels (international);
and aviation cartels (domestic)
Coastal Shipping Association Act Maritime transportation cartels
(coastal service); and joint
shipping businesses
Act Concerning Special Measures for Regulation Cartels to reduce supplied
and Vitalization of Public Motor Vehicle transportation capacity
Transportation Services in Specified Area and
Quasi-specified Area
International arrangements and agreements

3.146. The JFTC remains actively involved in competition policy activities at multilateral
frameworks, such as the International Competition Network, and those under the OECD, the APEC,
and the United Nations Conference on Trade and Development (UNCTAD). It also cooperates closely
with foreign competition authorities through different types of agreements, including inter-agency
memoranda of understanding (MoUs) and administrative agreements to conduct joint enforcement
- 93 -
activities.163 During the review period, new agreements included the inter-agency cooperation MoUs
with Canada (MoU, May 2017), China (MoU, May 2019), Mongolia (MoU, March 2017) and Singapore
(MoU, June 2017).164
3.147. Most of Japan's RTAs contain a competition-related chapter (Section 2.3.2.1).165 In general,
while respecting each party's domestic laws and regulations in controlling anti-competitive activities,
focus is usually on the general principles that should be followed in competition enforcement, and
the necessity to enhance cooperation, coordination and technical assistance.
3.148. During the review period, the Japan-EU EPA (February 2019) and the CPTPP (December
2018) also included competition chapters.166 In the Japan-EU EPA, the two parties also emphasize
the importance of non-discrimination, procedural fairness and transparency in competition
enforcement, and the independence of competition agencies. They also agree to promote
cooperation and coordination between the competition authorities within the framework of the 2003
Agreement between the EC and Japan concerning cooperation on anti-competitive activities.167 In
the CPTPP, Japan, together with other parties, focuses on the basic requirements on procedural
fairness and transparency, cooperation and technical cooperation. They also touch upon the private
rights of action and consumer protection.168
Enforcement
3.149. Japan maintains both a criminal enforcement system and a civil administrative enforcement
route. The JFTC has the exclusive authority to impose administrative orders. With respect to criminal
sanctions, the JFTC only has the authority to file criminal accusations with the Public Prosecutor's
Office. An investigation on possible violations of the AMA may be initiated as a result of: a report
from the general public, detection by the JFTC itself, notification by the Small and Medium Enterprise
Agency, or a report by leniency applicants. In addition, private damage actions may be brought by
those affected by specific violations.
3.150. Japan maintains a 2005 leniency programme, under which, since 2009, a total of five
violators and two or more violators belonging to the same company group are permitted to jointly
file the application for surcharge reduction or immunity. In March 2019, the bill to amend the AMA
was submitted to the Diet, to reform the leniency programme. The amendment allows the JFTC to
reduce the amount of surcharges when enterprises submit information which contributes to the fact
finding. It also abolishes the current limit on the number of leniency applicants. The bill was enacted
and promulgated in June 2019. The amendment shall come into effect on the date specified by the
Cabinet Order, and by no later than 25 December 2020.
3.151. Following an AMA amendment enacted on 26 June 2019, the calculation period of the
surcharge was increased from a maximum of three years to up to ten years before the start of an
investigation. Criminal accusations may result in a fine of up to JPY 500 million for firms, or
imprisonment of up to five years and a fine of up to JPY 5 million for individuals. For many years
now, civil administrative processes have largely remained the main method used for enforcement.
During the review period, the number of investigated and processed cases, as well as the surcharge
payment amounts, are described in Table 3.17.
163
Table 3.13 in WTO document WT/TPR/S/351/Rev.1, 20 June 2017.
164
JFTC, International Agreements. Viewed at:
https://www.jftc.go.jp/en/int_relations/agreements.html.
165
Table 3.14 in WTO document WT/TPR/S/351/Rev.1, 20 June 2017.
166
JFTC, Implementing Agreement between the Government of Japan and the Government of Mongolia
Pursuant to Article 1.12 of the Agreement between Japan and Mongolia for an Economic Partnership. Viewed
at: https://www.jftc.go.jp/en/int_relations/agreements_files/EN_JMEPA_IA.pdf.
167
Competition Policy. Viewed at:
https://www.jftc.go.jp/en/int_relations/agreements_files/nichieuepaen.pdf.
168
Competition Policy. Viewed at: https://www.jftc.go.jp/en/int_relations/agreements_files/TPP.pdf.
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Table 3.17 Enforcement of competition policy, 2012-18

Details Fiscal year
2012 2013 2014 2015 2016 2017 2018
(A) Cease-and-desist orders
Number of cases 20 18 10 9 11 13 8
Private monopolization 0 0 1 0 0 0 0
Cartels 20 17 7 7 9 11 7
Price-fixing cartels 1 8 5 2 1 1 1
Bid-rigging 19 9 2 5 8 10 6
Unfair trade practices 0 1 2 0 2 1 1
Commenced hearings 22 12 72 1 - - -
(B) Surcharge payment orders
Number of addressees 108 176 128 31 32 32 18
Surcharge amount (JPY billion) 25.07 30.24 17.14 8.51 9.14 1.89 0.26
Commenced hearings 25 13 70 0 - - -
(C) Recently processed investigation cases
Cases investigated
Carry-overs from the previous 9 13 10 11 15 21 25
fiscal year
New cases begun during the 266 137 118 127 134 122 118
current fiscal year
Total 275 150 128 138 149 143 143
Cases processed
Legal measures
Cease-and-desist orders 20 18 10 9 11 13 8
Surcharge payment ordersa 0 0 0 0 0 0 0
Sub-total 20 18 10 9 11 13 8
Others
Warnings 6 1 1 6 10 3 3
Cautions 208 114 102 106 84 88 95
Discontinued casesb 28 7 4 2 22 13 14
Subtotalc 242 122 107 114 117 105 112
Total 262 140 117 123 128 118 120
Carry-overs to the next fiscal 13 10 11 15 21 25 23
year
Criminal accusations 1 1 0 1 0 1 0
a Surcharge payment orders were made without a cease-and-desist order.

b Discontinued due to lack of evidence of wrong-doing or a self-reported remedy by a business
operator to be enough to remove competition concerns.
c This subtotal includes the cases which the JFTC found to be in violation of the AMA but decided to
close the investigation because the relevant violation had already ceased to exist.
3.3.4.2 Price controls
3.152. According to the authorities, there are no controls on the prices that can be charged for
goods and services in Japan.
3.153. Japan maintains a price survey scheme on certain pharmaceutical products, based on a drug
price standard. The reimbursement price of medicines used/dispensed under the National Health
Insurance is defined by the MHLW since 1950s. The actual purchase prices paid by medical
institutions and pharmacies (prevailing market price) are surveyed (drug price survey), and the
prices specified in the drug price standard are revised periodically based on the results of the
survey. 169 All medicines covered by the National Health Insurance (approximately 20,000) are
subject to the price survey. To control healthcare costs (Section 3.3.7), the Government has been
revising drug prices biennially, based on the actual purchasing price, leading to annual price cuts of
5% to 7% since 2017.170 The latest pricing reform in April 2018 added pressure; for example, the
scope of the price-maintenance premium (PMP), introduced in 2010 to delay biennial price cuts, was
narrowed to drugs deemed truly innovative, which numbered 560 in 2018 as opposed to 823 in
169
MHLW, Update of Drug Pricing System in Japan. Viewed at:
170
McKinsey & Company, Change in the Japanese pharmaceutical market: Cradle of innovation or grave
of corporate profits?. Viewed at: https://www.mckinsey.com/industries/pharmaceuticals-and-medical-
products/our-insights/change-in-the-japanese-pharmaceutical-market-cradle-of-innovation-or-grave-of-
corporate-profits and https://www.reuters.com/article/us-japan-drugs/as-medical-costs-mount-japan-to-
weigh-cost-effectiveness-in-setting-drug-prices-idUSKCN1Q71ZG.
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2016.171 From 2021, annual price revisions will begin for drugs with a large yakkasa (dispenser
margin). However, the 2018 honebuto, or Basic Policy on Economic and Fiscal Management and
Reform, called for price revisions of all products in 2019, the year of the consumption tax rate hike
(Sections 1.1 and 1.2), that would bring forward the de facto shift to annual revision that is planned
as from the year 2021.172
3.3.4.3 Corporate governance
3.154. According to the OECD, better corporate governance has the potential to improve the
allocation of capital and the monitoring of firm performance, leading to better use of Japan's high
level of business R&D and human capital.173 It could also facilitate the downsizing or closing of low-
productivity activities and the shift of resources to high-productivity activities.
3.155. In line with the 2017 New Economic Policy Package's call for improving corporate
governance, the main regulatory framework in this area was amended. 174 The 2015 Corporate
Governance Code, and the Corporate Governance System Guideline were revised in 2018. In the
Code, companies are now required to annually assess whether to maintain each individual
cross-shareholding and disclose the results of the assessment; this is expected to reduce
cross-shareholdings, which have been found to have a negative impact on productivity. The diversity
of corporate boards is to be improved, as the revised Guideline includes principles on the
qualifications of outside directors, and states that the chair of the board should be a non-executive
director. Boards should appoint CEOs through objective, timely and transparent procedures. The
establishment of independent advisory committees, such as those for nominations and
remuneration, was stated in the Code.175 All listed companies are expected to comply with the Code
or explain reasons for not applying it; as at December 2018, out of 3,621 (3,533 in 2017) companies,
2,621 (2,540 in 2017) listed on the First and Second Sections of the Tokyo Stock Exchange complied
with, or provided explanation for not complying with, all 78 principles of the Code (73 prior to the
2018 Code amendment), whereas another 1,000 (993 in 2017) complied with or provided
explanation for the five General Principles only.176 As at December 2018, 18% of companies had
complied with all principles in the Code, while another 67% complied with more than 90%. The share
of companies with nomination committees increased from 32% in 2017 to 50% in 2019, while the
share with remuneration committees rose from 35% to 52%.
3.156. The 2014 Stewardship Code, aimed at encouraging "institutional investors to fulfil
stewardship responsibilities by improving and fostering their investee companies' corporate value
and sustainable growth through constructive engagement", was revised in 2017 to require asset
managers to resolve conflicts of interest and to promote effective monitoring of asset managers by
asset owners (e.g. corporate pension funds). Institutional investors and asset owners are expected
171
The PMP, which rewards innovation and allows for pricing stability throughout the patent life of a
medicine, significantly reduced the drug lag and accelerated patient access to innovative pharmaceutical
products. However, in 2018, Japan made changes to its reimbursement system that may reverse this trend.
The number of products that can qualify for the PMP was reduced, and fewer companies received the full
benefit of the PMP due to newly established requirements. Several factors taken into consideration in PMP
calculations, such as the number of local clinical trials and product launches, appear to make it easier for
Japanese companies to qualify for the premium. The authorities indicated that local and foreign companies are
treated equally under the PMP. Reflecting the criticism that products which are not innovative were given the
PMP, in 2018, the eligibility criteria was revised to focus on the innovation and superiority of the efficacy.
USTR, 2019 National Trade Estimate Report on Foreign Trade Barriers. Viewed at:
https://ustr.gov/sites/default/files/2019_National_Trade_Estimate_Report.pdf.
172
Reportedly, Japan's plan to move from the biennial price revision to an annual price revision, and its
implementation of a new Health Technology Assessment may seemingly create uncertainty about prices for
advanced medical devices and innovative pharmaceuticals, undermining investment planning for capital-
intensive product developments in the country. USTR, 2019 National Trade Estimate Report on Foreign Trade
Barriers. Viewed at: https://ustr.gov/sites/default/files/2019_National_Trade_Estimate_Report.pdf.
173
OECD, OECD Economic Surveys: Japan 2019. Viewed at: https://doi.org/10.1787/fd63f374-en.
174
175
Since 2002, listed Japanese companies have been permitted to have three board committees —
audit, compensation and nominating. However, according to an analysis of 3,803 such companies, only 22%
had an audit committee and less than 1% had all three committees. Harvard Business Review, Carlos Ghosn,
Nissan, and the Need for Stronger Corporate Governance in Japan. Viewed at: https://hbr.org/2018/12/ghosn-
nissan-and-the-need-for-stronger-corporate-governance-in-japan.
176
Tokyo Stock Exchange Inc. (2019), Status of Response to Revision of the Corporate Governance
Code Flash Report (as at 31 December 2018), 21 February; and OECD, OECD Economic Surveys: Japan 2019.
Viewed at: https://doi.org/10.1787/fd63f374-en.
- 96 -
to assume a higher level of fiduciary responsibility, with the aim of enhancing their investee
companies' values. In 2018, Japanese companies' ROE seemed to be at around 9%, lagging behind
that of the United States.177 As at August 2019, 256 institutional investors had adopted the Code,
of which nearly half were foreign. While almost all major asset managers and public pension funds
have signed up, only 21 of the more than 10,000 corporate pension funds had joined, reflecting their
lack of human resources for stewardship activities. By end-2016 (latest available data), the
implementation rate of each of the Code's seven principles was more than 90%.
3.157. According to the OECD, while Japan has established a corporate governance system in line
with best practices, its full impact will only be seen gradually. 178 According to Wellington
Management, corporate governance continues to improve slowly but steadily, as evidenced by rising
shareholder returns, unwinding of cross-shareholdings, and increasing numbers of independent
board members.179 According to the IMF, deeper corporate governance reform, including further
strengthening across the banking and insurance sectors, could help deploy cash reserves, and boost
investment and productivity, including via more ambitious requirements for outside directors,
explicit limits on cross-shareholdings, and enhanced transparency of beneficial ownership.180
3.3.5 State trading, state-owned enterprises (SOEs), and privatization
3.158. During the review period, state involvement in the economy remained relatively unchanged.
State trading entities continued to engage in leaf tobacco, opium, rice, wheat, barley and milk
products. Major commercial SOEs include those operating in energy, financial services,
telecommunications and some transport-related activities. The State continues to wholly or partially
own several companies, including large ones (Table 3.18), in the delivery of goods and services that
the authorities believe would not be adequately provided by the private sector alone. Ownership is
maintained either directly or via Incorporated Administrative Agencies (IAAs), which are public-
sector corporations with a separate legal personality; as at 1 April 2019, there were 87 IAAs (88 in
2017).181 As at 31 December 2016 (latest data available), there was a total of 228 (234 in 2015)
entities with government capitalization; the total amount of capitalization stood at JPY 76.0 trillion
(JPY 80.1 trillion as at 31 March 2015).182 Based on the OECD definition of SOEs, Japan identified
1 majority-owned listed enterprise (Japan Post Holdings Co., Ltd, 218,312 employees, valued at
USD 55.8 billion), 7 majority-owned non-listed enterprises (37,953 employees, valued at
USD 26.5 billion), 2 minority SOEs (Japan Tobacco Inc.,63,968 employees (as at 31 December
2018) and Nippon Telegraph and Telephone Corporation, 303,350 employees (as at 31 March 2019))
and no statutory corporations or quasi-corporations.183 In 2014, based on the OECD definition of
SOEs, Japan had identified 26 SOEs: 2 minority-owned listed enterprises, 8 majority-owned
177
Nikko am, Where Are We With Corporate Governance In Japan? Viewed at:
https://en.nikkoam.com/articles/2018/06/where-are-we-with-corporate-governance-in-japan.
178
179
Wellington Management. Viewed at: https://www.wellington.com/en/insights/japans-corporate-
governance-reforms-progress-report/?_c=fw3i0sx.
180
IMF, Japan: 2018 Article IV Consultation — Press Release; Staff Report; and Statement by the
Executive Director for Japan. Viewed at: https://www.imf.org/en/Publications/CR/Issues/2018/11/27/Japan-
2018-Article-IV-Consultation-Press-Release-Staff-Report-and-Statement-by-the-Executive-46394.
181
They include: the Research Institute of Economy, Trade and Industry; the National Center for
Industrial Property Information and Training; NEXI; the National Institute of Advanced Industrial Science and
Technology; the National Institute of Technology and Evaluation; the New Energy and Industrial Technology
Development Organization; JETRO; the Institute of Developing Economies, JETRO (IDE-JETRO); the
Information-technology Promotion Agency, Japan; the Japan Oil, Gas and Metals National Corporation; the
Organization for Small & Medium Enterprises and Regional Innovation, Japan; Japan International Cooperation
Agency; the Japan Aerospace Exploration Agency; the Japan Water Agency; the Environmental Restoration and
Conservation Agency of Japan; the Japan Atomic Energy Agency; and the Japan Agency for Medical Research
and Development. The authorities indicated that they do not keep track of company shareholdings owned by
the IAAs. METI, Incorporated Administrative Agencies. Viewed at:
https://www.meti.go.jp/english/network/incorporatedad.html.
182
183
The authorities did not consider the listed Tokyo Electric Power Company (TEPCO) an SOE for the
purpose of the OECD exercise. Over 50% of TEPCO's shares are held by the Nuclear Damage Compensation
and Decommissioning Facilitation Corporation, whose ownership is shared between the Government and a
number of energy companies. Furthermore, the 14 statutory and quasi-corporations previously included in the
OECD dataset were excluded because they do not engage in economic activities. Two majority-owned
non-listed entities in the "other activities" category were excluded for the same reason (Japan Energy Service
Corporation and the Nippon Automated Cargo and Port Consolidated System). OECD, The Size and Sectoral
Distribution of State-Owned Enterprises. Viewed at: http://dx.doi.org/10.1787/9789264280663-en.
- 97 -
non-listed enterprises, and 16 statutory corporations or quasi-corporations.184 Market monopolies

continue to be retained in domestic manufacturing of tobacco and the importation of leaf tobacco.
Table 3.18 Large state enterprises, FY2017a

Name/operation Total Total Total State/public
asset operating operating authority
value revenue profit shareholding
(JPY (JPY billion) before/after
billion) tax
(JPY billion)
New Kansai International Airport Company Ltd 1,881 62 .. 100%
Established in 2012 for the operation of Kansai
International Airport and Itami Airport
Narita International Airport Corporation Ltd 810 231 52/35 100%
Established in 2004 for the operation of Narita
International Airport
East Nippon Expressway Company Limited 1,851 1,056 -0.2 100%
Central Nippon Expressway Company Limited 1,532 972 7 100%
West Nippon Expressway Company Limited 1,171 1,621 5 100%
Honshu-Shikoku Bridge Expressway Company 61 79 1 66.63%
Limited
Nippon Automated Cargo and Port Consolidated 20 n/a 1 50.01%
System, Inc.
Yokohama-Kawasaki International Port 8 8 0.04 50%
Corporation
Tokyo Metro Co. Ltd. 1,550 426 88/60 53.41%
Established in 2004 for the operation and Government of
management of railway business in the Tokyo Japan; and
area 46.6% Tokyo
Metropolitan
Government
Japan Overseas Infrastructure Investment 41 0.07 n/a 87.2%
Corporation for Transport & Urban Development
Japan Environmental Storage & Safety 111 75 26 100%
Corporation
Nippon Telegraph and Telephone Corporation 6,710 663 725/724 33.3%
(NTT)
Owns all the shares issued by NTT East and NTT
West. Required to ensure proper and stable
provision of telecommunications services by
these companies throughout Japan, including
remote rural areas, as well as to conduct
research relating to telecommunications
technologies
Japan Post Holdings Co. Ltd 290,640 .. 709/512 56.87%
Owns all the shares issued by Japan Post Co. Ltd
Fund Corporation for the Overseas Development 6 0.1 -1 73.37%
of Japan's ICT and Postal Services Inc.
Development Bank of Japan 16,740 267 120 100%
Japan Bank for International Cooperation 15,992 n/a n/a 100%
Nippon Export and Investment Insurance 1,709 n/a 61 100%
Japan Finance Corporation 21,603 606 117 (excluded 100%
from tax)
Private Finance Initiative Promotion Corporation 39 0.9 0.5 50%
of Japan
Cool Japan Fund Inc. 52 0.8 -8 84.55%
Innovation Network Corporation of Japan 771 22 -55 95.33%
Japan Tobacco Inc. 556 168 215 33.4%
Mainly engaged in the manufacture and sale of
tobacco products, prescription drugs and
processed foods
Agriculture, Forestry and Fisheries Fund 26 0.4 -2 94.03%
Corporation for Innovation, Value-chain and
Expansion Japan
n/a Not applicable.

.. Not available.
184
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a Although not listed as "large" entities, companies such as Tokyo Metro Co. Ltd, Japan Petroleum
Exploration Co. Ltd, INPEX Corporation (oil and gas exploration), and Japan Railway Construction,
Transport and Technology Agency have operating revenues exceeding JPY 100 billion.
Source: Information provided by the authorities; and WTO document WT/TPR/S/351/Rev.1, 20 June 2017.
3.159. According to Japan's latest WTO notification pursuant to the provisions of Article XVII: 4(a)
of the GATT 1994 and paragraph 1 of the understanding on the interpretation of Article XVII and
covering the period 2015-17, four state-trading enterprises remained operational (Table 3.19).
Table 3.19 State-trading enterprises notified to the WTO under Article XVII, 2018
Agency Nature of exclusive rights Features
Japan JT has a monopoly on domestic JT purchases all the leaf tobacco produced by
Tobacco Inc. manufacturing of tobacco. Therefore, domestic tobacco cultivators who enter into a
(JT) the importation of leaf tobacco for the contracted purchase agreement with it. JT imports
manufacture of tobacco in Japan is and exports on the basis of commercial
dependent on purchases by JT. consideration.
MHLW The MHLW has an exclusive right to The MHLW supplies opium for medical and
import and export opium. It scientific purposes, and to conduct necessary
determines the price for the purchase control over the cultivation of the opium poppy,
of the opium from opium poppy and the transfer, receipt, possession, and other
cultivators, after consulting with the relevant activities of opium and poppy straw. The
Ministry of Finance, on the basis of MHLW stopped importing opium in January 2018.
factors such as the condition of No opium exports are undertaken by the MHLW.
production by opium poppy
cultivators, the import price of opium,
and other economic conditions. The
MHLW also purchases all opium
gathered by opium poppy cultivators
or research cultivators.
MAFF The MAFF can import rice, wheat and Mark-ups on imported rice, wheat and barley are
barley, and can export rice when a used for their management costs, such as storage,
particular necessity exists, based on buying and selling costs. Almost all imports of rice,
the Law for Stabilization of Supply- wheat, and barley continued to be carried out by
Demand and Price of Staple Food. The the MAFF (except for barley imports in FY2016 and
Law does not restrict the importation FY2017, representing about 30% of its total
or exportation of rice, wheat or barley imports). The MAFF does not conduct any
by the private sector. commercial export of rice, wheat, or barley. Most
of the wheat and barley consumed in Japan is
imported.
Agriculture The ALIC is authorized to take The ALIC collects mark-ups of designated dairy
and Livestock measures to stabilize supply/demand products within Japan's scheduled rate; its resale
Industries and prices for milk products (e.g. prices are determined by a tender. In the period
Corporation milk/buttermilk powder, condensed FY2015-17, average domestic sales prices were up
(ALIC) milk, whey and butter). Private to more than three times above the import price.
traders can freely import these During the same period, the ALIC ensured an
products by paying the out-of-quota average of about 82% of skimmed milk powder
tariff rate. and skimmed milk solids imports, 95% of butter
and butter oil imports, and around 32% of whey
and modified whey imports. It did not export or
purchase any domestic produce.
Source: WTO documents G/STR/N/17/JPN, 11 October 2018; and WT/TPR/S/351/Rev.1, 20 June 2017.
3.160. During the review period, there was virtually a standstill in the privatization process; some
airport operation concessions were granted, and a reduction of the government shareholding in
Japan Post Holdings was underway during the review period (Sections 4.4.1.1 and 4.4.3).
3.3.6 Government procurement
3.161. Japan's government procurement market is estimated to more than USD 610 billion (Euros
550 billion) annually.185 According to OECD data, it represented 16.1% of GDP in 2017 (same as in
2015), well above the OECD average (12.8%). 186 In 2017 procurement spending was mainly
Online data (https://www.eu-japan.eu/government-procurement).

185
The authorities indicated that they do not have official data on government procurement. WTO
186
document WT/TPR/S/351/Rev.1, 20 June 2017; OECD data (https://stats.oecd.org/); OECD, Government at a

- 99 -
allocated to healthcare (44.6%), economic affairs (14.3%) and social protection (13.8%), virtually
unchanged compared to 2015 levels.187 According to the statistics notified to the WTO in 2017, the
central Government awarded 7,407 procurement contracts, with a total value of SDR 11.1 billion,
which Japan had the obligation to open to international competition (see below).188 The Ministry of
Land, Infrastructure, Transport and Tourism, the Ministry of Justice, the Ministry of Environment,
and the MHLW were the four entities that had the largest procurement value. Local government
entities awarded 7,787 contracts worth JPY 1.62 trillion, virtually the same amount awarded by the
central Government.
3.162. During the review period, the basic rules on government procurement remained virtually
unchanged. With regard to the procurement procedures, the central Government, local governments
and public corporations follow their respective procedures established by different laws and
regulations due to their autonomous status. For the central Government, the main laws and
regulations include: the Accounts Law of 1947 (last amended in 2017, to align some wordings in
accordance with the revised Civil Code); the Cabinet Order Concerning the Budget, Auditing and
Accounting of 1947 (amended to change some article numbers in 2017 in accordance with the
revision of the Gas Business Act, and in 2018 in accordance with the revision of the Civil Code); the
Special Provisions for the Cabinet Order concerning the Budget, Auditing and Accounting of 1946;
and the Regulations on the Management of Contract Administration (Ministry of Finance Ordinance
No. 52 of 1962). The legal framework for local entities includes: the Local Autonomy Law of 1947;
and the Ordinance for Enforcement of the Local Autonomy Law of 1947. Procurement procedures
followed by public corporations are set out in their accounting or internal statutes. Ministers who
oversee public corporations are responsible for ensuring the consistency of their procurement
activities with the rules. According to the authorities, there are no differences among the procedures
applying to different categories of entities.
3.163. As a party to the WTO Agreement on Government Procurement (GPA), Japan implements
the GPA rules and other international agreements through: the Cabinet Order Stipulating Procedures
for Government Procurement of Products or Specified Services; the Cabinet Order Stipulating
Procedures for Government Procurement of Products or Specified Services in Local Governments
Entities; and the Ministerial Ordinance Stipulating Special Procedures for Government Procurement
of Products or Specified Services. To implement the Japan-EU EPA (Section 2.3.2 and below), the
Cabinet Order Stipulating Procedures for Government Procurement of Products or Specified Services
was revised on 19 December 2018 (Cabinet Order No. 340 of 2018) and the Cabinet Order
Stipulating Procedures for Government Procurement of Products or Specified Services in Local
Governments Entities on 21 and 27 December 2018 (Cabinet Order No.347 and No.353 of 2018).
On 6 November 2016, with the agreement of other parties to the GPA, Japan withdrew the Kyushu
Railway Company from its GPA schedule as the result of the privatization of the company.189
3.164. Many of the EPAs signed between Japan and its trade partners contain chapters on
government procurement (Section 2.3.2).190 During the review period, two more agreements with
government procurement chapters were signed and subsequently came into force, namely the CPTPP
(or TPP11) and the Japan-EU EPA. Japan's government procurement commitments under the CPTPP
are roughly the same as its GPA commitments.191 While its undertakings under the Japan-EU EPA
are built on its GPA commitments, the coverage of local government entities under this EPA is further
expanded to local independent administrative agencies.192
3.165. In addition to the market access commitments undertaken under the GPA and various EPAs,
Japan maintains various "voluntary measures", the outcome of bilateral negotiations with the United
Glance 2017 – Country Fact Sheet: Japan. Viewed at: http://www.oecd.org/gov/gov-at-a-glance-2017-

japan.pdf; OECD, Government at a Glance 2019 – Country Fact Sheet: Japan. Viewed at:
www.oecd.org/gov/gov-at-a-glance-2019-japan.pdf.
187
OECD (2019), Government at a Glance 2019, OECD Publishing, Paris, Viewed at:
https://doi.org/10.1787/8ccf5c38-en.
188
WTO document GPA/STAT(17)/JPN/1, 5 April 2019.
189
WTO document WT/Let/1210, 22 November 2016.
190
191
MFAT. The government procurement commitment of Japan under the CPTPP is available at:
https://mfat.govt.nz/assets/Trans-Pacific-Partnership/Annexes/15-A.-Japan-Government-Procurement-
Annex.pdf.
192
MOFA. The government procurement chapter of the Japan-EU EPA is available at:
https://www.mofa.go.jp/files/000382132.pdf.
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States in the past, to facilitate foreign suppliers' opportunities to access its government procurement
markets. These access opportunities are applied at multilateral level. They included the lowering of
the thresholds of contract value above which the procurement would be open to international
competition, the extension of the period for tenderers to submit their tenders, and an increase in
the number of procuring entities whose procurements are open to international competition.
However, due to the fact that the 2014 revised GPA has "caught up" with voluntary measures as
compared to the GPA 1994, the benefits that can be drawn from these voluntary measures have
become marginal. Details on the remaining value added of these voluntary measures is essentially
of a procedural nature as indicated in the previous TPR Report of Japan.193
3.166. Open tendering, selective tendering and single tendering remain the main procurement
methods, and follow the GPA thresholds for contracts under its coverage. The conditions and
thresholds for selective tendering and single tendering in the central Government outside of the
coverage of GPA is stipulated in Cabinet Order on Budgets, the Settlement of Accounts, and
Accounting.194 The conditions and thresholds for single tendering for local government procurement
outside of the coverage of GPA is stipulated in the Ordinance for Enforcement of the Local Autonomy
Law of 1947. 195 During the review period, the threshold values for each method remained
unchanged. Among the different procurement methods, open tendering is the basic procedure, and
represents most of the central government procurement contracts and value (Table 3.20). Under
open tendering, qualified suppliers are invited, through tender notices published in the official
gazette "Kanpo", to participate in the tendering procedures. Under selective tendering, permanent
lists of qualified suppliers are established by procuring entities. The procuring entity invites, from
among the qualified suppliers, those considered capable of implementing the contract to participate
in the tendering procedures. Interested suppliers need to apply to the procuring entity concerned
for qualification. Efforts to achieve unified qualification across different central government entities
have been made since 2001. In order to increase opportunities to participate in tender, suppliers
are advised by the relevant authority to apply for qualification in advance.196 The single tendering
corresponds to "limited tendering" in the GPA, and constitutes the second most important
procurement method in terms of number of contracts and procurement value (Table 3.20). In 2017,
1,103 GPA-covered contracts, representing a value of more than SDR 2 billion, were awarded
through single tendering, accounting for about one seventh of the contracts, or 18% of the total
procurement value.197 The breakdown of contracts by procuring method at the central government
and IAA (Section 3.3.5) level are contained in Table 3.20. Japan maintains special procurement
procedures for individual sectors, such as supercomputers (since 16 July 1987), non-R&D satellites
(since 14 June 1990), computer products and services (since 20 January 1992), telecommunications
193
WTO document WT/TPR/S/351/Rev.1, 20 June 2017, Tables 3.23 and 3.24.
194
Chapter VII (Contracts) Section3 (Contracts Under Selective Tender) Article 94 of the Cabinet Order
stipulates the following thresholds: when having construction or manufacturing done at a target price that does
not exceed JPY 5 million; when purchasing assets at a target price that does not exceed JPY 3 million; when
borrowing an object at an annual or total target lease charge that does not exceed JPY 1.6 million; when
selling off assets at a target price that does not exceed JPY 1 million; when lending out an object at an annual
or total target lease charge that does not exceed JPY 500,000; and when the target price of a contract other
than a work contract for construction or manufacturing, a sale and purchase contract for assets, or a contract
to lend or borrow an object does not exceed JPY 2 million. Regarding single tendering, Chapter VII (Contracts)
Section4 (Discretionary Contracts) Article 99 of the Cabinet Order stipulates the following thresholds: when
having construction or manufacturing done at a target price that does not exceed JPY 2.5 million; when
purchasing assets at a target price that does not exceed JPY 1.6 million; when borrowing an object at an
annual or total target lease charge that does not exceed JPY 800,000; when selling off assets at a target price
that does not exceed JPY 500,000; when lending out an object at an annual or total lease charge that does not
exceed JPY 300,000; and when the target price of a contract other than a work contract for construction or
manufacturing, a sale and purchase contract for assets, or a contract to lend or borrow an object does not
exceed JPY 1 million. Cabinet Order on Budgets, the Settlement of Accounts, and Accounting (unofficial
translation). Viewed at:
http://www.japaneselawtranslation.go.jp/law/detail/?re=01&kn%5b%5d=%E3%82%88&ky=%E6%A0%AA%E
5%BC%8F&page=2.
195
If they stipulate a threshold, its value should not exceed the following levels: contract for
construction or manufacturing either (i) JPY 2.5 million or (ii) JPY 1.3 million; purchase of assets either (i)
JPY 1.6 million or (ii) JPY 800,000; borrowing an object either (i) JPY 800,000 or (ii) JPY 400,000; selling off
assets either (i) JPY 500,000 or (ii) JPY 300,000; lending out an object JPY 300,000; and Other contracts either
(i) JPY 1 million or (ii) JPY 500,000. (i) refers all prefectural governments entitled "To", "Do", "Fu" and "Ken",
and all designated cities entitled "Shiteitoshi", while (ii) refers to cities other than those under (i).
196
MOFA, Suggestions for Accessing the Government Procurement Market of Japan. Viewed at:
https://www.mofa.go.jp/files/000037391.pdf.
197
WTO document GPA/STAT(17)/JPN/1, 5 April 2019.
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products and services and medical technology products and services (since 28 March 1994). The
procedures are considered as voluntary measures to promote procurement based on
non-discriminatory, transparent, fair and open competition. The use of overall-greatest-value
method in tender evaluation is encouraged or obligatory under these measures. The measures are
contained in the Operational Guideline on Procedures for Government Procurement etc.
(Understanding among related ministries and agencies concerned in procurement, 31 March
2014).198
Table 3.20 Use of different procurement methods by the central Government and IAA
entities, 2017
Number of contracts Percentage of the total value
All procurements 14,710 100.0
Open tendering procedures 11,461 72.5%
Selective tendering procedures 62 0.3%
Single tendering procedures 3,187 27.2%
Note: The authorities indicated that the data of "voluntary measures" (see above and below) differ from
those under the GPA coverage (i.e. excluding construction services, local government procurement
and procurement under GPA Annex 2).
Source: Chapter II, Products and Services Covered by the Government Procurement Survey. Viewed at:
http://japan.kantei.go.jp/procurement/2018/2FY2018ch2.pdf.
3.167. Japan has no restrictions on the place of origin of products or the nationality of suppliers in
government procurement. The principle of non-discrimination is pursued in all procurement
activities. However, there has been concern over the apparently low share of foreign companies in
public procurement; it seems that this is partly due to non-regulatory barriers, the geographical
distance from certain overseas markets, and a lack of knowledge of the local market.199 Foreign
participation in government procurement is described in Tables 3.21 and 3.22.
Table 3.21 Foreign participation in central government and IAA entity procurement
(%)
Year Relative foreign share of procurement value Relative foreign share of number of
contracts awarded
2015 2.2% 3.2%
2016 2.7% 2.1%
2017 4.4% 2.8%
Table 3.22 Awards to foreign suppliers by origin, 2017

Number of contracts Value (JPY billion)
United States 132 43
European Union 157 52
Others 126 5
Total 415 100
198
Prime Minister of Japan and His Cabinet, Japan's Government Procurement: Policy and Achievements
Annual Report (FY2018 version) - Toward Government Procurement Open to the World. Viewed at:
http://japan.kantei.go.jp/98_abe/documents/2019/_00002.html.
199
EU-Japan Centre for Industrial Cooperation, Public Procurement in Japan: An Outline. Viewed at:
https://www.eu-japan.eu/government-procurement/public-procurement-japan-outline.
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3.168. Tables 3.23 and 3.24 detail foreign participation in Japan's government procurement, in
value terms, by type of product and service, in 2015 and 2016 (the latest year for which data were
available). Foreign participation shares were relatively high only in certain categories of goods,
including medical, dental, surgical and veterinary equipment, aircraft and associated equipment,
scientific and controlling instruments and apparatus, minerals, and non-ferrous metals and articles
thereof.
Table 3.23 Central government and IAA entity procurement, by product and by origin,
2016 and 2017
2016 2017
Total
Total value Foreign Foreign
No. Products value
(JPY 100 share share
(JPY 100
million) (%) (%)
million)
1 Products from agriculture, and from agricultural 26.6 35.0 21.4 14.8
and food processing
2 Mineral products 4,441.2 10.7 264.2 16.8
3 Products of the chemical and allied industries 31.8 5.8 33.8 3.1
4 Medicinal and pharmaceutical products 674.3 14.2 1,209.6 7.0
5 Artificial resins; rubber, raw hides and skins; 15.4 0 7.5 0
leather; and articles thereof
6 Wood and articles of wood; paper-making 150.5 0 264.5 0
material; paper and paperboard, and articles
thereof
7 Textiles and textile articles; thread for spinning 77.7 2.9 94.5 1.4
and weaving; and articles thereof
8 Articles of stone, of cement and of similar 4.2 0 15.5 0
materials; ceramic products; glass and
glassware; and articles thereof
9 Iron and steel, and articles thereof 18.2 0 94.6 4.6
10 Non-ferrous metals, and articles thereof 33.7 6.4 52.6 16.9
11 Power-generating machinery and equipment 71.0 6.2 151.2 1.6
12 Machinery specialized for particular industries 300.7 0 199.2 0
13 General industrial machinery and equipment 70.5 3.1 107.7 1.0
14 Office machines and automatic data processing 1,769.4 6.9 2,173.7 8.5
equipment
15 Telecommunications and sound recording and 540.5 0.9 688.4 3.1
reproducing apparatus and equipment
16 Electrical machinery, apparatus and appliances, 867.2 2.3 304.5 3.1
and electrical parts thereof
17 Road vehicles 362.9 2.6 440.9 2.2
18 Railway vehicles and associated equipment 3.3 0 50.3 0.4
19 Aircraft and associated equipment 64.9 27.0 77.6 20.2
20 Ships, boats and floating structures 76.9 0 101.4 0
21 Sanitary, plumbing, and heating equipment 5.2 0 7.1 0
22 Medical, dental, surgical and veterinary 724.8 17.5 641.2 34.4
equipment
23 Furniture and parts thereof 27.1 0 45.7 0
24 Scientific and controlling instruments and 484.3 22.6 628.4 26.9
apparatus
25 Photographic apparatus and equipment, optical 32.1 12.5 32.8 3.6
goods, and clocks
26 Miscellaneous articles 2,180.8 2 1,957.3 4.1
Total 9,055.1 6.9 9,665.8 8.9
(2017) http://japan.kantei.go.jp/procurement/2018/2FY2018ch2.pdf; and (2016)
https://www.kantei.go.jp/jp/kanbou/29tyoutatu/dai2/dai2honbun.pdf.
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Table 3.24 Central government and IAA entity procurement, by type of service, 2016 and
2017
Type of service 2016 2017
Total value Foreign Total value Foreign
(JPY 100 million) share (JPY 100 share
(%) million) (%)
Total 9,374,1 3.6 12,981.9 5.7
Maintenance and repair of motor vehicles 25.8 0 20.7 0
Maintenance and repair of motorcycles 0 0 0 0
and snowmobiles
Other land transport services (except 104.8 0 103.8 0
mail transportation)
Rental services of sea-going vessels with 8.0 0 7.9 0
operator
Rental services of non-sea-going vessels 1.7 0 1.6 0
with operator
Air transport (except mail transportation) 36.5 7.6 67.2 5.0
Freight transport agencies 23.9 0 44.0 0
Courier services 3.8 0 2.4 0
Telecommunication services 128.9 5.5 180.1 9.5
Computer and related services 6,359.2 3.7 8,360.9 8.6
Market research and public opinion 47.1 3.4 34.3 4.4
polling
Advertising services 662.4 0 614.0 0
Armoured car services 92.5 0 4.4 0
Building cleaning services 347.7 0 772.0 0.2
Publishing and printing services 188.1 0.2 180.9 0.1
Repair services incidental to metal 107.5 1.2 120.9 3.9
products, machinery and equipment
Sewage and refuse disposal, sanitation 1,016.9 0 2,348.5 0
and other environmental protection
Repair services of personal and 0 0 0 0
household goods
Food serving services 0.6 0 1.1 0
Beverage serving services 0 0 0 0
Leasing or rental services concerning 0 0 0 0
agricultural machinery and equipment
without operator
Leasing or rental services concerning 0.2 0 0 0
furniture and other household appliances
Leasing or rental services concerning 0 0 0.1 0
pleasure and leisure equipment
Leasing or rental services concerning 0.2 0 0 0
other personal or household goods
Management consulting services 0.5 0 0 0
Services related to management 0 0 0 0
consulting (except 86602 Arbitration and
conciliation services)
Packaging services 5.4 0 5.9 0
Services incidental to forestry and 0 0 4.8 0
logging, including forest management,
and publishing and printing services
Primary education services 0 0 0 0
Secondary education services 0 0 0 0
Higher education services 0.3 0 0.3 100
Adult education services 3.4 0 2.3 0
Motion picture and video tape production 1.7 0 0.3 0
and distribution services
Other 206.9 44.0 103.3 0.4
(2017) http://japan.kantei.go.jp/procurement/2018/2FY2018ch2.pdf; and (2016)
https://www.kantei.go.jp/jp/kanbou/29tyoutatu/dai2/dai2honbun.pdf.
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3.169. Japan maintains a government procurement policy to promote environmental protection.

The relevant legislation includes the Act on Promotion of Procurement of Eco-Friendly Goods and
Services by the State and Other Entities (Act No.100 of 2000), the Act on Promoting Green
Procurement, and the Act on Promotion of Contracts of the State and Other Entities, Which Show
Consideration for Reduction of Emissions of Greenhouse Gases, etc. (Act No. 56 of 2007, "Green
Contract Act").200
3.170. Government procurement based on the Act on Promoting Green Procurement is implemented
through the Basic Policy for Promotion of Procurement of Eco-Friendly Goods and Services, decided
by the Cabinet in February 2001; the Policy was last revised in February 2019.201 It designates goods
and services, including those related to public construction works, which should be purchased and
utilized by government entities and IAAs, etc. It also sets out evaluation criteria that procuring
entities should use in bid assessment for purchasing designated products. The Policy provides that
green procurement should not be an unnecessary impediment to international trade, and should
comply with the GPA rules. It is revised as necessary. Since 2016, three revisions were made to it.
These changes were notified to the WTO Committee on Government Procurement.202 After years of
addition and adjustment, the current number of designated products has grown to 21 fields covering
276 items, from stationery to electronic appliances and vehicles, and from building materials to
transportation and building cleaning services.
3.171. The government implementation rules of the Green Contract Act, namely the "Basic Policy
for the Promotion of Contracts Considering Reduction of Emissions of Greenhouse Gases and Others
by government entities and independent administrative agencies, etc.", was decided by the Cabinet
in December 2007, and was subsequently revised to add contract categories, etc. During the review
period, three additional revisions were made to this Policy.203 Currently, it covers contracts related
to the supply of electricity, the purchase and lease of vehicles, the procurement of ships, industrial
waste disposal, energy conservation improvement projects, and building design and operation
maintenance.204 The Policy requires that the reduction of emissions of greenhouse and other gases
should be taken into account when relevant procurement entities conclude contracts.
3.172. The implementation of these two policies is mandatory for government entities and IAAs,
etc. They should be implemented in a manner that is compliant with the GPA, and should not impede
international trade.
3.173. Japan also maintains policies to promote the participation of SMEs in government
procurement. The relevant guiding legislation is Act No.97 on Ensuring the Receipt of Orders from
the Government and Other Public Agencies by Small and Medium Sized Enterprise Operators of
1966, that remained unchanged during the review period. 205 According to this Act, the central
Government, IAAs and national university corporations set their own procurement target value from
SMEs every fiscal year. The target amount for micro, small and medium-sized enterprises (MSMEs),
set at 55.1% of the total budget of "public demand", stood at JPY 3.8 trillion in 2017 and
JPY 4.0 trillion in 2018. Local governments follow the policies of the central Government on an
"endeavour basis".
3.174. Japan's Government Procurement Review Board (GPRB) continued to review complaints filed
by suppliers. For government procurement of goods and services valued at not less than
SDR 100,000 and that of construction services not less than SDR 4.5 million, a supplier may file a
200
The Act on Promoting Green Procurement is available at:
http://www.japaneselawtranslation.go.jp/law/detail/?ft=2&re=01&dn=1&yo=&ia=03&kn[]=%E3%81%8F&_x=
17&_y=13&ky=&page=2; and the Green Contract Act is available at:
http://www.japaneselawtranslation.go.jp/law/detail/?ft=1&re=01&dn=1&co=02&ia=03&x=14&y=7&ky=%E5
%9B%BD%E7%AD%89%E3%81%AB%E3%81%8A%E3%81%91%E3%82%8B&page=2.
201
The latest version of the Basic Policy is available at:
http://www.env.go.jp/en/laws/policy/green/h31bp_en.pdf.
202
WTO documents GPA/37/Add.14, 3 April 2017; GPA/37/Add.15, 3 April 2018; and GPA/LEGIS/JPN/1,
18 April 2019.
203
WTO documents GPA/37/Add.14, 3 April 2017; GPA/37/Add.15, 3 April 2018; GPA/LEGIS/JPN/1,
8 April 2019; GPA/99/Add.5, 3 April 2017; GPA/99/Add.6, 3 April 2018; and GPA/LEGIS/JPN/2, 8 April 2019.
204
The latest version of this Basic Policy is available at:
http://www.env.go.jp/en/laws/policy/green/20190208contract.pdf.
205
The English translation of the Act is available at:
http://www.japaneselawtranslation.go.jp/law/detail/?printID=&re=02&id=862&lvm=01&vm=02.
- 105 -
complaint if he suspects a breach of any provision of the GPA, or other applicable measures
designated by the Head of the Council of Government Procurement Review (CGPR). Between 2017
and September 2019, a single complaint against the consistency of the tendering process of the
National University Corporation Akita University under Article 15 Paragraph 5 (b) of the revised
Agreement was filed on 27 March 2018.
3.3.7 Intellectual property rights (IPRs)
3.3.7.1 Features and IP strategy
3.175. IP is of vital importance to the economy. The Japan Patent Office (JPO) found a correlation
between patent rights and operating profits on sales for SMEs, which account for more than 99% of
all businesses in Japan.206 Over the five-year period ending in December 2017, revenue from IP
increased by over 74%, and exceeded JPY 50,000 billion in 2018.207 Chart 3.6 depicts the growth in
IP revenue since1996.
Chart 4.[JPN] IP revenue, 1996-2018
Chart 3.6 IP revenue, 1996-2018
JPY
JPYbillion
billion
60,000
50,000
40,000
30,000
20,000
10,000
0
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Source: Bank of Japan. Viewed at: http://www.stat-search.boj.or.jp/index_en.html.

Source: Bank of Japan online information.
3.176. According to OECD international trade statistics, Japan ranks third, behind the United States
and the European Union, regarding charges for the use of IP (i.e. royalties and licensing revenue).
These charges constituted 22% of Japan's services exports in 2017. According to the Bank of Japan,
Japan generated a trade surplus of JPY 2.6 trillion in charges for the use of IP in 2018.
3.177. Chart 3.7 presents the growth in charges for the use of IP since 1996. Although Japan does
not parse its IP export statistics by sector, in 2017, motor vehicles and pharmaceuticals generated
the largest amount of technology exports, with growth anticipated in robotics and medical care. The
surplus was reportedly influenced by the flow of funds among subsidiaries partnerships with foreign
corporations, and shifts in production abroad.208
206
JPO, 2017 Basic Survey on IP Activities by Small and Medium Enterprises in Japan; intervention by
Japan, Meeting of the Council for TRIPS of 19 October 2017.
207
Information provided by the authorities; and Cislo, C., Japan's Intellectual Property Revenue is
Soaring, Bloomberg Businessweek, 16 January 2018.
208
OECD, Quarterly International Trade Statistics, Vol. 2018, Issue 3. Viewed at:
https://doi.org/10.1787/int_trade-v2018-3-table95-en; OECD, Figure 6: Composition of Japan's exports by
destination and product category in 2017, in OECD Economic Surveys: Japan 2019, 15 April 2009, Version 2;
JPO, Annual Report 2019 (in Japanese). Viewed at:
https://www.jpo.go.jp/resources/report/nenji/2019/index.html#0100; Nikkei Asian Review, Japan's intellectual
property generating revenue at record pace, 16 January 2018; and Nikkei Asian Review, Japan enjoys 30%
jump in intellectual property trade surplus, 21 August 2018.
- 106 -
Chart 4.[JPN] Charges for the use of IP, n.i.e., 1996-2018
Chart 3.7 Charges for the use of IP, n.i.e., 1996-2018
JPY
JPYbillion
billion
4,000
Charges for the use of industrial property n.i.e.
3,500
Charges for the use of copyrights n.i.e.
3,000 Charges for the use of intellectual property n.i.e.
2,500
2,000
1,500
1,000
500
-500
-1,000
-1,500
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Source: Bank of Japan. Viewed at: http://www.stat-search.boj.or.jp/index_en.html.

Source: Bank of Japan online information.
3.178. Developing earnings from IP has been a key element of the Government's long-term growth
strategy. "To secure our nation's position and enable it to take the lead in international competition,
it is necessary to revamp systems for creating IP and for creating value from IP to make them faster
and more flexible through a pro-innovation approach to IP strategy …". 209 On 12 June 2018, the
Intellectual Property Strategy Headquarters issued its fourth Intellectual Property Strategy Vision
(2018 IP Strategy Vision), a policy document issued every five years to offer a medium- to long-term
perspective on the evolution of society and the IP system. The 2018 IP Strategy Vision foresees
Japan in 2025-30 as a "value design society", where innovation is driven by latent needs and wants
rather than technology or markets. It identified the following steps towards achieving this goal:
(i) fostering and accumulating human resources and organizations that generate values through
innovation; (ii) establishing mechanisms that encourage the exchange and sharing of intellectual
assets and expand values; and (iii) producing, disseminating, and developing values that will be
shared globally.210
3.179. The IP Strategy Headquarters issues an annual strategic programme to realize the IP
Strategy Vision. It establishes the Government's IP strategy for the year, across all relevant agencies
and ministries. The 2018 IP Strategy Vision prioritized (i) cultivating human resources and business
to meet future needs; (ii) encouraging ambitious and creative activities; and (iii) designing
structures for new fields. Included within these key priorities were (i) accelerating open innovation;
(ii) supporting regional companies, SMEs and venture companies; (iii) establishing a sustainable
content creation ecosystem; (iv) strengthening IP strategy relating to data, artificial intelligence,
and other new data-related assets; and (v) encouraging innovation and branding through design
management.211
3.180. There is a clear link between the 2018 IP Strategic Programme and the modifications that
were made to Japan's IP laws during the review period, including expansions in the scope and
breadth of protection for designs, new data protections, new flexible copyright restrictions that
account for the rise of digitization and networking, and modifications to litigation procedures and
damages calculations intended to facilitate the enforcement of IPRs. Japan's IP regime was also
influenced by international commitments, particularly the entry into force of the CPTPP and the
EU-Japan EPA. These agreements prompted some significant amendments, including an extension
of the copyright term of protection from 50 to 70 years, and high-level protection for more than
200 European geographical indications (GIs).
209
IP Strategy Headquarters, Intellectual Property Strategic Programme 2018, 12 June 2018, p. 4.
(2018 IP Strategic Programme).
210
IP Strategy Headquarters, Intellectual Property Strategy Vision – Towards a "Value Design Society",
12 June 2018, pp. 49-60. (2018 IP Strategy Vision).
211
2018 IP Strategic Programme, pp. 8, 10-13, 18-22, and 29-31.
- 107 -
3.3.7.2 Policies on promotion and commercialization of innovation
3.181. Japan seeks to be "the most innovation-friendly country in the world".212 The WEF's 2018
Global Competitiveness Report ranked it sixth in innovation capability, boosted by its R&D score,
which was, in turn, influenced by its status as the country with the most patent families per capita
filed in at least two of the five largest IP offices in the world (IP5).213 The Global Innovation Index
ranked Japan 15th overall, but third for innovation quality.214
3.182. Japan's total R&D expenditure is the third highest in the world, after the United States and
China. Its gross expenditure on R&D reached its highest level ever in FY2017, at JPY 19.05 trillion,
a 3.4% increase over FY2016 but similar to expenditures in FY2014 and FY2015. As a percentage of
GDP, Japan's gross domestic expenditure on R&D drifted between 3.14% and 3.4% from 2012 to
2017, and stood most recently at 3.2% in 2017. Government-financed R&D as a percentage of GDP
declined somewhat since 2013, and was 0.48% in 2017. Nearly 50% of government R&D funding is
directed to public organizations, and 43% is allocated to universities and colleges.
Government-financed expenditures have historically represented a lower percentage of Japan's total
R&D than in other comparison countries (the European Union, the United States, the Russian
Federation, China, India, and the Republic of Korea).
3.183. Japan has the third highest number of researchers in the world, again behind the United
States and China. The number of new master's and doctoral degree recipients per million people,
however, declined in Japan, while it has increased in all other comparison countries.215 The 2018 IP
Strategy Vision expressed concern that scientific research capacity to create new technologies is
showing signs of decay216, and the Government noted decreases in basic research capacity.217
3.184. Compared with the United States, Japan has only recently initiated a legal framework for
promoting the commercialization of government-financed innovations and public-private
collaboration. In 1998, Japan introduced technology licensing organizations (TLOs) at universities,
to promote the transfer of technology to industry, followed one year later by the Act on Special
Measures Concerning Revitalization of Industry and Innovation in Industrial Activities (Japan's
analogue to the 1980 US Bayh-Dole Act), which transferred rights associated with
government-funded research results from the Government to individual researchers. Then, in 2004,
following the privatization of national universities, universities gained the right to own and license
patents associated with the results of research generated by their professors.218
3.185. The University Network for Innovation and Technology Transfer (UNITT) monitors the
technology transfer system, and promotes partnerships between academia and industry. Its most
recent annual survey of universities and TLOs reveals that total licensing revenue exceeded
JPY 3 billion in FY2016, triple the amount generated in FY2005, but significantly less than the
USD 3.14 billion in revenue reported in 2017 by analogue institutions in the United States.
Universities and public research institutions in Japan have historically collaborated closely with large
corporations, who jointly own inventions and may license them royalty-free. This may influence not
only revenue, but also the frequency with which such innovations spur the creation of new
212
Council for Science, Technology and Innovation, Integrated Innovation Strategy, 2018. Viewed at:
https://www8.cao.go.jp/cstp/english/doc/integrated_main.pdf.
213
WEF, The Global Competitiveness Report 2018: Competitiveness Rankings. Viewed at:
http://reports.weforum.org/global-competitiveness-report-2018/competitiveness-rankings/.
214
Dutta, S., Lanvin, B. and Wunsch Vincent, S. eds., Global Innovation Index 2019: Creating Healthy
Lives – The Future of Medical Innovation, 12th ed., Cornell University, INSEAD; and WIPO, 2019.
215
Ministry of Education, Culture, Sports, Science and Technology (MEXT), Digest of Japanese Science
and Technology Indicators 2018, pp. 1-2, 6, and 10. Viewed at: https://www.nistep.go.jp/wp/wp-
content/uploads/NISTEP-RM274-SummaryE.pdf; OECD, Table 2 – Gross domestic expenditure on R&D as a
percentage of GDP and Table 12 – Government-financed GERD as a percentage of GDP, in Main Science and
Technology Indicators, Vol. 2018, Issue 2, https://doi.org/10.1787/7ec29b83-en; Statistics Bureau of Japan,
Summary of Results (2018). Viewed at: https://www.stat.go.jp/english/data/kagaku/1545.html; and MEXT,
Current status of S&T in Japan and other selected countries, R&D expenditures, 2016, pg. 8. Viewed at:
http://www.mext.go.jp/component/b_menu/other/__icsFiles/afieldfile/2016/09/28/1377328_03.pdf.
216
2018 IP Strategy Vision, pg. 7.
217
Council for Science, Technology and Innovation, The 5th Science and Technology Basic Plan,
22 January 2016. Viewed at: https://www8.cao.go.jp/cstp/english/basic/5thbasicplan.pdf.
218
JPO, Looking Back on Japan's Industry-Academia Collaboration and Support on Startups. Viewed at:
https://www.wipo.int/edocs/mdocs/aspac/en/wipo_ip_oka_18/wipo_ip_oka_18_p15.pdf.
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businesses.219 The percentage of surveyed institutions which launched a start-up in FY2016 was
26.5%, compared to 79.6% in the United States.220
3.186. The JPO, in collaboration with other agencies and the National Center for Industrial Property
Information and Training (INPIT), launched new support programmes specifically designed to
address the needs of universities, SMEs and start-ups. In 2017, the JPO and the INPIT opened a
new INPIT-KANSAI office in Osaka, to provide improved support for universities, SMEs, and start-ups
located in the region. They can also benefit from reduced patent fees, as described in
Section 3.3.7.4, face-to-face consultations with patent examiners, and accelerated examination in
certain circumstances. SMEs and start-ups may take advantage of a JETRO Innovation Programme,
which supports participation in overseas trade shows and business matching programmes.
3.187. SMEs may also avail themselves of comprehensive IP Support Service Counters in all
47 prefectures, which provide free-of-charge assistance from experts on legal matters, branding,
business development, agriculture, and GIs. An IP Finance Portal Site helps SMEs to evaluate the
business potential of their IP, along with financing and management support from financial
institutions. The Global IP Producers programme offers support for establishing and protecting IPRs
overseas221, and JPO offers SMEs an insurance scheme, for which it pays half of the premium, which
covers the cost of overseas IP litigation.222
3.188. In 2018, the JPO established the "IP acceleration programme for start-ups", which
dispatches expert teams of venture capitalists, business consultants, and attorneys to provide
hands-on support in the early stages of development to selected start-ups.223 The JPO also offers
"super-accelerated examination" to start-ups, so they can obtain patent rights within one month for
inventions that are already being worked.224 Most recently, the JPO launched IP Base, an online
community providing essential information on IP strategies, JPO support, event information, and
access to IP experts for start-ups. 225 Start-ups can also expect to benefit from government
procurement programmes, set forth in the 2018 IP Strategy Vision, to promote partnerships between
start-ups and existing businesses.226
3.189. Japan is adapting its IP regime and associated processes to the development of Big Data,
artificial intelligence (AI) technologies, and the Internet of Things (IoT). Standard essential patents
(SEPs), which are essential to implement standards in fields such as wireless communications, have
become critical to the development and implementation of new technologies, and licences are
increasingly sought by companies in previously distinct industries with diverse sets of technical
knowledge and corporate cultures. In response to increasing disputes over SEPs, Japan launched
several initiatives during the review period.
3.190. First, the JPO published a non-binding Guide to Licensing Negotiations Involving Standard
Essential Patents, in order to enhance transparency and predictability, facilitate negotiations, and
help prevent or quickly resolve disputes. The Guide draws upon relevant court decisions in various
countries, and thus attempts to articulate global norms. 227 Second, the JPO expanded its "Hantei"
advisory opinion service on whether a patent claim reads on a product, to offer opinions on standard
essentiality in April 2018. Although the opinions are non-binding, they are influential in licensing
negotiations, and facilitate dispute resolution.228 Third, a new specialized IP International Arbitration
219
Tantiyaswasdikul, K., Technology Transfer for Commercialization in Japanese University: A Review of
the Literature. Viewed at: http://www.asia.tu.ac.th/journal/J_Studies30_1/70-85.pdf.
220
UNITT, Outline of University Technology Transfer Survey, 2017 Edition. Viewed at:
https://unitt.jp/en/survey/patent/; and AUTM, 2017 Licensing Activity Survey. Viewed at:
https://autm.net/AUTM/media/SurveyReportsPDF/AUTM_2017_US_Licensing_Survey_no_appendix.pdf.
221
JPO Status Report 2019, pp. 102-104; and JPO Status Report 2018, pp. 80-82.
222
The Economist Intelligence Unit, Japan: Export insurance and credit, 1 September 2018.
223
METI, Ten Startups Selected as the First Recipients of Support Measures under IPAS. Viewed at:
224
JPO Status Report 2019, pg. 102.
225
METI, JPO Opens Member Registration for "IP Base" Website. Viewed at:
226
2018 IP Strategy Vision, pp. 51-52.
227
JPO, Announcement for release of "Guide to Licensing Negotiations involving Standard Essential
Patents". Viewed at: https://www.jpo.go.jp/e/system/laws/rule/guideline/patent/seps-tebiki.html.
228
JPO, Manual of "Hantei" (Advisory Opinion) for Essentiality Check (Revised Version) and New
Operation based on the Manual of "Hantei" (Advisory Opinion) for Essentiality Check (Revised Version). Viewed
at: https://www.jpo.go.jp/e/system/trial_appeal/hantei_hyojun.html.
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Centre opened in Tokyo in 2018. Although it can handle a range of matters, it claims to be uniquely
capable of resolving complex disputes involving SEPs.229
3.191. The JPO also established an IoT Committee and an IoT Examination Team to ensure high-
quality IoT patents. New case examples, including trained AI models, 3D printing, data structures,
and others, were added to its Examination Handbook for Patents and Utility Models, in order to assist
inventors with obtaining rights in these rapidly developing areas.230 The JPO also established new
use-specific sub-classifications for IoT technologies, and proposed their adoption as international
patent classifications.231
3.192. Japan's national scheme for scientific research and technology development is governed by
the Science and Technology Basic Plan (Basic Plan), formulated by the Cabinet Office's Council for
Science, Technology and Innovation every five years. Using the Basic Plan as a general guideline,
comprehensive strategy plans are formulated annually, and are executed by various ministries and
agencies, most notably the Ministry of Education, Culture, Sports, Science and Technology (MEXT)
and the METI. The Basic Plan for 2016-20 (Fifth Basic Plan) aims to, inter alia, increase R&D
investments to 4% of GDP (with government-financed R&D reaching 1% of GDP), foster the
sustainable creation of IP, promote the strategic use of IP by SMEs and universities, develop
innovation systems that contribute to regional revitalization and the creation of SMEs and start-ups,
and institute reforms to promote academic and basic research in tandem with reforms of research
funding.232
3.193. In 2018, the Cabinet adopted an Integrated Innovation Strategy, and established an
Integrated Innovation Strategy Promotion Council. University reforms, technologically disruptive
R&D programmes, supportive start-up ecosystems, and the promotion of science and technology for
the achievement of SDGs are among the hallmarks of the Strategy, which is to be implemented
horizontally across ministries and agencies.233
3.194. The Integrated Innovation Strategy prioritizes the following five fields for development: AI
technology, biotechnology, environment and energy, safety and security, and agriculture. 234
Statistics regarding R&D expenditures by private enterprises reflect Japan's traditional areas of
economic and competitive strength, with most spent on transportation equipment (22.2%), followed
by medicines (10.6%) and information and communication electronics equipment (9.7%). 235 Among
private researchers, over half specialize in either (i) mechanical engineering, shipbuilding and
aeronautical engineering; or (ii) electronical engineering and telecommunications engineering.236
Patent applications originating from Japan reflect somewhat overlapping technological foci, with the
greatest proportion falling into the category of "electrical machinery, apparatus, energy" (10.7%),
followed by "optics" (6.4%), "computer technology" (6.3%), "semiconductors" (6.0%), and
"transport" (5.6%).237
229
International Arbitration Center in Tokyo, IACT's Advantages. Viewed at: https://www.iactokyo.com/.
230
five IP offices, IP5 Statistics Report, 2017 Edition. Viewed at:
https://www.fiveipoffices.org/wcm/connect/fiveipoffices/a622e09a-c52d-4ec1-894f-
1a215342a28c/IP5SR%2B2017%2Bfull.pdf?MOD=AJPERES&CVID.
231
JPO Status Report 2018.
232
Council for Science, Technology and Innovation, The 5th Science and Technology Basic Plan. Viewed
at: https://www8.cao.go.jp/cstp/english/basic/5thbasicplan.pdf.
233
234
235
MEXT, Digest of Japanese Science and Technology Indicators 2018, pp. 1-2. Viewed at:
https://www.nistep.go.jp/wp/wp-content/uploads/NISTEP-RM274-SummaryE.pdf; OECD, Table 2 – Gross
domestic expenditure on R&D as a percentage of GDP and Table 12 – Government-financed GERD as a
percentage of GDP, in Main Science and Technology Indicators, Vol. 2018, Issue 2 (2019),
https://doi.org/10.1787/7ec29b83-en; Statistics Bureau of Japan, Summary of Results (2018). Viewed at:
https://www.stat.go.jp/english/data/kagaku/1545.html; and MEXT, Current status of S&T in Japan and other
selected countries, R&D expenditures, 2016, pg. 8. Viewed at:
http://www.mext.go.jp/component/b_menu/other/__icsFiles/afieldfile/2016/09/28/1377328_03.pdf.
236
MEXT, Digest of Japanese Science and Technology Indicators 2018, pp. 6 and 10.
237
WIPO, World Intellectual Property Indicators 2018, p. 56. Viewed at:
https://www.wipo.int/edocs/pubdocs/en/wipo_pub_941_2018-chapter2.pdf.
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3.195. Japan has also sought to improve the commercialization of privately-held patents. The JPO
estimated that just over half of Japanese corporations' patents are dormant 238, which may reflect
the relatively narrow scope of patent claims in Japan, a past emphasis on patent quantity over
quality, defensive use of patents to prevent the use of the technology by competitors, a lack of
interest in the patented technology, and/or a lack of awareness of its value. Japan launched
programmes to assist enterprises with assessing the business value of their IP, and promoted open
innovation through intermediary patent platforms, among other initiatives.239
3.3.7.3 International cooperation and harmonization
3.196. Japan pursues enhanced standards of IP protection with its trading partners in various
bilateral, regional, and multilateral fora, such as WIPO, UPOV240, the G20, APEC, and the OECD, in
addition to the WTO.241 At WIPO, Japan financed and supported IP development activities in the
Asia-Pacific region, Africa, and LDCs, through annual voluntary contributions exceeding CHF 5 million
to two Japan Funds-in-Trust programmes. 242 It also facilitated the establishment and
implementation of plant variety protection systems in Asia through UPOV. 243 At the WTO, it is a
dynamic participant in the TRIPS Council, where it has actively engaged in topics including IP and
innovation, IP and the public interest, technology transfer to LDCs, and access to medicines. It also
adhered to the review function of the TRIPS Council by systematically notifying changes to its patent,
design, trademark, GI, unfair competition, and copyright laws, as mandated by TRIPS Article 63.2244,
and reporting on its implementation of Article 66.2 and technical and financial cooperation activities.
3.197. Japan identified a pressing need for emerging economies, such as those of ASEAN, with
which it conducts 15% of its trade, to improve and strengthen their IP systems. 245 The ASEAN-Japan
EPA currently in force commits the parties to "explore and undertake economic cooperation
activities" with respect to IP (among other fields).246 Reports suggest that Japan seeks higher levels
of IP protection in the Regional Comprehensive Economic Partnership RTA, under negotiation with
the ASEAN countries (as well as Australia, China, India, New Zealand, and the Republic of Korea).247
Japan is also negotiating separate agreements with other trading partners, including India, China,
and the Republic of Korea, that may address IP. It also promotes IP harmonization and efforts to
facilitate the establishment and protection of rights through high-level dialogues, partnerships, and
consultations at bilateral, regional, and organizational levels.248 For example, an MoU with China
provides for a Japan-China IP Working Group to hold annual meetings to discuss a range of IP issues,
238
JPO, Annual Report 2019 (in Japanese). Viewed at:
https://www.jpo.go.jp/resources/report/nenji/2019/index.html#0100.
239
2018 IP Strategic Programme, pp. 9-10; and Swedish Agency for Growth Analysis, Japan's
governmental intermediary patent platforms for open innovation. Viewed at:
https://www.tillvaxtanalys.se/download/18.a70b1491500264a2b244323/1443423745819/Japan%27s+govern
mental+patent+platforms+for+open+innovation.pdf.
240
International Union for the Protection of New Varieties of Plants.
241
MOFA IP Affairs Division, MOFA's Initiatives to Promote Protection of Intellectual Property Rights.
Viewed at: https://www.mofa.go.jp/files/000228532.pdf.
242
WIPO, Japan Funds-In-Trust for Industrial Property – Asia-Pacific. Viewed at:
https://www.wipo.int/cooperation/en/funds_in_trust/japan_fitip_aspac/; and Japan Funds-In-Trust for
Industrial Property – Africa & LDCs. Viewed at:
https://www.wipo.int/cooperation/en/funds_in_trust/japan_fitip/.
243
WTO document IP/C/W/632, 14 September 2017.
244
WTO documents IP/N/1/JPN/30-IP/N/1/JPN/P/13, 6 August 2018; IP/N/1/JPN/34-IP/N/1/JPN/P/14,
12 February 2019; IP/N/1/JPN/39-IP/N/1/JPN/P/15, 24 May 2019; IP/N/1/JPN/40-IP/N/1/JPN/P/16,
24 May 2019; IP/N/1/JPN/32-IP/N/1/JPN/D/8, 6 August 2018; IP/N/1/JPN/31-IP/N/1/JPN/T/8, 6 August 2018;
IP/N/1/JPN/33- IP/N/1/JPN/T/9, 12 February 2019; IP/N/1/JPN/38-IP/N/1/JPN/T/10, 10 April 2019;
IP/N/1/JPN/29-IP/N/1/JPN/G/3, 17 February 2017; IP/N/1/JPN/37-IP/N/1/JPN/G/4, 5 April 2019;
IP/N/1/JPN/35-IP/N/1/JPN/U/2, 12 February 2019; and IP/N/1/JPN/36-IP/N/1/JPN/C/6, 7 March 2019.
245
246
ASEAN-Japan EPA, Article 53. Viewed at:
https://www.mofa.go.jp/policy/economy/fta/asean/agreement.pdf.
247
Yu, P.K., The RCEP and Intellectual Property Norm-setting in the Asia-Pacific, Texas A&M School of
Law Legal Studies Research Paper Series No. 18-20 (9 August 2018). Viewed at:
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2810579.
248
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including enforcement, online infringement, counterfeit products, legal systems, trends, and future
strategies.249
3.198. The JPO seeks to harmonize IP systems and their operation through various collaborative
efforts with like-minded foreign counterparts, including: the IP5 250 and its sister fora, the ID5
(designs) and TM5 (trademarks); the Patent Prosecution Highway (PPH) 251 ; a US-Japan
Collaborative Search Pilot Programme wherein examiners of each office share independently
conducted prior art searches when a patent has been applied for in both countries; and an initiative
with the USPTO on industrial design protection involving, inter alia, the creation of a US-Japan
Common Classification System for industrial designs.252
3.199. The JPO also supports the development of IPRs and systems in emerging and developing
countries in Asia, the Pacific, Africa, and the Middle East, by collaborating with ASEAN, the African
Regional Intellectual Property Organization (ARIPO)253, the Gulf Cooperation Council (GCC) 254, and
member country IP offices both bilaterally and multilaterally. Its initiatives include providing training
on examination practices, accepting trainees from other countries, supporting efforts to accede to
international application systems (e.g. Madrid Protocol and Hague Agreement) and regional IP
systems (e.g. ARIPO and African Intellectual Property Organization (OAPI) 255), cooperating in the
revision and preparation of patent examination manuals and guidelines, and promoting the
commercialization and awareness of IP and counterfeit products. The JPO coordinates particularly
closely with ASEAN IP Offices, with which it executed a Memorandum of Cooperation in 2012.256
3.200. Similarly, the Japan Copyright Office supported overseas copyright systems and anti-piracy
efforts through bilateral consultations, training programmes for government officials, copyright
awareness campaigns, seminars and symposia.257 Japan also undertakes IP training initiatives in
cooperation with WIPO and the Japan International Cooperation Agency, an incorporated
administrative agency.258
3.201. The Office of Intellectual Property Protection259, a cross-governmental consultation office

organized under the METI and established in 2004, coordinates the efforts of relevant ministries and
agencies to protect Japanese IP. Companies and other entities experiencing infringement abroad
may request consultation services and information, and may petition the Government to conduct an
249
METI, Summary of the 2017 Annual Report from the Office of Intellectual Property Protection,
23 June 2017.
250
The IP5 is a forum of the five largest IP offices in the world, and is comprised of the European Patent
Office, the JPO, the Korean Intellectual Property Office, the National Intellectual Property Administration of the
People's Republic of China, and the US Patent and Trademark Office (USPTO).
251
The PPH allows an application that is determined to be patentable by the office of first filing to
undergo accelerated examination and simplified procedures with the office of second filing. The JPO had
established PPH relationships with 42 fellow IP offices as at December 2018. New arrangements were put in
place with Turkey, Brazil, Argentina, New Zealand, Chile, and Peru during the review period, with a pilot PPH
planned with India for 2019. JPO Status Report 2019, pg. 90; and METI, The JPO and the DIPP, MCI, India
Agree in Principle to Start a Bilateral PPH. Viewed at:
252
METI, The JPO Strengthens Its Cooperative Relationship with the USPTO on Industrial Designs.
Viewed at: https://www.meti.go.jp/english/press/2018/0615_003.html.
253
The ARIPO is an intergovernmental organization that facilitates cooperation in IP matters among its
19 mostly English-speaking member States.
254
The GCC Patent Office grants patents under a unitary system that are valid in all member States
(Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates).
255
The OAPI is an intergovernmental organization that facilitates cooperation in IP matters among its
17 mostly French-speaking member States.
256
JPO, Status Report 2019, pg. 78. Viewed at:
https://www.jpo.go.jp/e/resources/report/statusreport/2019/document/index/all.pdf; METI, Japan-ASEAN IP
Cooperation Programs Enhanced. Viewed at: https://www.meti.go.jp/english/press/2019/0807_001.html; WTO
document IP/C/W/632, 14 September 2017; and Intellectual Property Watch, ARIPO, Japan Government to
Train 1,000 People in IP Systems in Africa. Viewed at: https://www.ip-watch.org/2017/09/29/aripo-japan-
government-train-1000-people-ip-systems-africa/.
257
ACA, Policy of Cultural Affairs in Japan, Fiscal Year 2017, pg. 56; ACA, Policy of Cultural Affairs in
Japan, Fiscal Year 2018, pg. 64. Viewed at:
http://www.bunka.go.jp/english/report/annual/pdf/r1394357_01.pdf.
258
WTO document IP/C/W/632, 14 September 2017.
259
The office was transferred from METI to JPO on 1 April 2020 to integrate their functions and
strengthen anti-counterfeit measures. The office name was changed to "Anti-counterfeit office, JPO".
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investigation.260 The number of consultation cases has been growing, and reached a record high in
2017.261
3.202. Japanese companies and citizens overseas may request assistance from JETRO overseas
offices and the MOFA's IP Officers, who have been appointed in each of the MOFA's diplomatic
establishments since 2005 to serve as a central contact point on IP infringement matters.262
3.3.7.4 General regulatory framework
3.203. Japan participates in many international conventions and treaties relating to IP, including
21 treaties administered by WIPO.263 During the review period, it acceded to the WIPO Marrakesh
Treaty to Facilitate Access to Published Works for Persons Who Are Blind, Visually Impaired or
Otherwise Print Disabled (Marrakesh Treaty), which entered into force for Japan on
1 January 2019.264 Since Japan had already accepted the Protocol Amending the TRIPS Agreement
in 2007, its entry into force on 23 January 2017 applied to Japan, whereupon it took direct effect
domestically, pursuant to the Japanese Constitution.
3.204. Japan has entered into a range of bilateral, regional, and multilateral instruments, including
RTAs, investment treaties, framework agreements, MoUs and memoranda of cooperation that
address IP. All Japan's 17 RTAs in force (Table 2.3) contain IP provisions, and the majority contain
high levels of IP content. 265 Japan's RTAs with developed economies tend to include detailed
mandates for IP protection. The EU-Japan EPA and the CPTPP, which entered into force during the
review period, both contain lengthy IP chapters and high levels of protection (notable IP provisions
of each are set out in Table A3.3).
3.205. The institutional framework of the IP regime did not change during the review period. The
2002 Basic Law on Intellectual Property (Basic Law) defines the role of each institution. It established
the Intellectual Property Headquarters, comprising the Prime Minister, Cabinet members, and key
figures from the private sector. It develops measures to fulfil the mandates and coordinate the work
of various governmental authorities responsible for the administration and enforcement of IPRs. 266
Table A3.4 summarizes the substantive laws addressing each main type of IPR. Several IP laws were
modified during the review period (discussed in the relevant sections below). Japan notified certain
amendments to the TRIPS Council as pertaining to the CPTPP 267, although some related to CPTPP
provisions that were suspended following the US withdrawal from the agreement, e.g. patent term
extensions in the event of registration delays, and the extended copyright term.
3.3.7.5 Patents
3.206. Several amendments were made to the Patent Act during the review period. The "grace
period" for exceptions to the novelty requirement was extended from six months to one year 268, to
address the increased risk of involuntary disclosure associated with joint research and
university-industry collaboration through open innovation.269 Another revision provided for patent
260
METI, Summary of the 2017 Annual Report from the Office of Intellectual Property Protection. Viewed
at: https://www.meti.go.jp/english/press/2017/pdf/0623_001a.pdf (this site may be transferred from METI to
JPO in the near future).
261
METI, Release of Annual Report on the Office of Intellectual Property Protection (2018). Viewed at:
https://www.meti.go.jp/english/press/2018/0629_001.html (this site may be transferred from METI to JPO in
the near future).
262
MOFA IP Affairs Division, MOFA's Initiatives to Promote Protection of Intellectual Property Rights.
Viewed at: https://www.mofa.go.jp/files/000228532.pdf.
263
WIPO, WIPO-Administered Treaties. Viewed at:
https://www.wipo.int/treaties/en/ShowResults.jsp?country_id=87C.
264
WIPO, WIPO-Administered Treaties. Viewed at:
https://www.wipo.int/treaties/en/ShowResults.jsp?lang=en&treaty_id=843.
265
See Valdés, R. and McCann, M., Intellectual Property Provisions in Regional Trade Agreements:
Revision and Update, WTO Staff Working Paper ERSD-2014-14, 23 September 2014.
266
WTO document WT/TPR/S/351/Rev.1, 20 June 2017, Chart. 3.4 Structure of IPR administration and
enforcement.
267
WTO documents IP/N/1/JPN/36-IP/N/1/JPN/C/6, 7 March 2019; IP/N/1/JPN/33-IP/N/1/JPN/T/9,
12 February 2019; IP/N/1/JPN/34-IP/N/1/JPN/P/14, 12 February 2019; IP/C/M/91/Add.1, 2 April 2019,
paras. 3-4; and IP/C/M/92/Add.1, 22 July 2019, para. 5.
268
WTO document IP/N/1/JPN/30-IP/N/1/JPN/P/13, 6 August 2018.
269
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term extensions in the event of delays in registration beyond five years after filing or three years
after examination of requests, for applications filed after 10 March 2020.270 Finally, annual patent
fees, examination fees, and fees for PCT international applications were cut by 50%-75% for SMEs,
R&D organizations (including universities, TLOs, and R&D IAAs) and start-ups. Basic examination
fees were increased by JPY 20,000 to make up revenue loss.271
3.207. These amendments were included in revised patent examination guidelines. 272 Patent
procedures remain otherwise unchanged since the previous Review.273 Japan does not provide for
provisional patent applications, but an initial application need only satisfy formalities, such as the
existence of a claim, and applications are not substantively reviewed until the request for
examination, which must be filed within three years of the filing date. Subsequent applications may
add embodiments, drawings, and claims, and claim domestic priority within one year from the filing
date of the first application.
3.208. The JPO aims to provide the "world's fastest and utmost quality patent examinations", to
respond to the accelerated cycle of creating, establishing, and utilizing IPRs and to facilitate
acquisition and protection of rights abroad. The JPO seeks to reduce the average period from filing
a request for examination to the establishment of right (total pendency) to 14 months or less, and
the average period from filing a request for examination to issuing a first action (FA pendency) to
10 months or less, by 2023.274 It already partly met this goal in FY2017, with total and FA pendency
averaging 14.1 and 9.3 months, respectively 275 , now claimed as the "world's fastest patent
examination".276
3.209. Accelerated and super-accelerated examination programmes reduced average FA pendency

to 2.3 months and 0.7 months, respectively, for qualifying applications in 2018. Accelerated
examination is available upon request for applications made by SMEs, applications that have been
filed in more than one country, and applications for inventions that have already been put into
practice. Accelerated examination for inventions involving environment-related technologies is under
trial.277 A pilot super-accelerated examination may be requested for "highly important" applications,
including inventions already put into practice by either a start-up or an applicant who has filed for
patent protection abroad.278 The JPO outsources prior art searches279, plans to employ AI technology
to improve speed and quality, and has introduced design-driven management principles to improve
the quality of its services to users.280
3.210. During the review period, the number of patent applications filed annually worldwide
continued to grow. Although the third highest in the world, the annual number of patent applications
received by the JPO has continued a pattern of either negligible growth or decline since 2005.
According to the authorities, this reflects a shift in application strategy, from quantity to quality.
Compared with most other top global IP offices, the proportion of domestic filings is high in Japan 281,
although the percentage of foreign filings has gradually increased, with 19.1% of applications
originating from abroad in 2018, compared to 15.3% in 2009 (Table 3.25). Most foreign applicants
originate from the United States, the European Union, China, and the Republic of Korea, with
applications from China overtaking those from the Republic of Korea for the first time during the
review period.282
270
WTO document IP/N/1/JPN/34-IP/N/1/JPN/P/14, 12 February 2019.
271
WTO documents IP/N/1/JPN/39-IP/N/1/JPN/P/15, 24 May 2019; and IP/N/1/JPN/40-
IP/N/1/JPN/P/16, 24 May 2019.
272
JPO, Examination Guidelines for Patent and Utility Model in Japan. Viewed at:
https://www.jpo.go.jp/e/system/laws/rule/guideline/patent/tukujitu_kijun/index.html.
273
For a visual depiction of the examination, appeals, trials, and opposition process for patents, see JPO
Status Report 2019, pg. 118. Viewed at: https://www.jpo.go.jp/e/resources/report/statusreport/2019/.
274
Intellectual Property Strategy Headquarters, Intellectual Property Strategic Programme 2017, pg. 26.
Viewed at: https://www.kantei.go.jp/jp/singi/titeki2/kettei/chizaikeikaku20170516_e.pdf.
275
276
2018 IP Strategic Programme, pg. 1.
277
278
279
280
JPO Status Report 2019, pg. 114; and WIPO document WIPO/IP/ITAI/GE/18/P9. Viewed at:
https://www.wipo.int/edocs/mdocs/globalinfra/en/wipo_ip_itai_ge_18/wipo_ip_itai_ge_18_p9.pdf.
281
WIPO, World Intellectual Property Indicators 2018, pg. 8.
282
JPO Status Report 2019, pp. 18-19; JPO Status Report 2016, pp. 11 and 13.
- 114 -
Table 3.25 Patent applications and patents granted, 2009-18

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Patent applications to JPO by origin
Japan 295,315 290,081 287,580 287,013 271,731 265,959 258,839 260,244 260,292 253,630
Other 53,281 54,517 55,030 55,783 56,705 60,030 59,882 58,137 58,189 59,937
Total 348,596 344,598 342,610 342,796 328,436 325,989 318,721 318,381 318,481 313,567
% Other 15.3% 15.8% 16.1% 16.3% 17.3% 18.4% 18.8% 18.3% 18.3% 19.1%
Patents granted by JPO by origin
Japan 164,459 187,237 197,594 224,917 225,571 177,750 146,749 160,643 156,844 152,440
Other 28,890 35,456 40,729 49,874 51,508 49,392 42,609 42,444 42,733 42,085
Total 193,349 222,693 238,323 274,791 277,079 227,142 189,358 203,087 199,577 194,525
% Other 14.9% 15.9% 17.1% 18.2% 18.6% 21.7% 22.5% 20.9% 21.4% 21.6%
Patent applications originating from Japan to all patent offices
Total 462,666 467,249 473,715 487,360 470,615 464,274 456,305 454,973 459,406 ..
applications
of Japanese
origin
.. Not available.
3.211. Although domestic patent applications have declined overall since 2007, applications in the
fields of business methods, biotechnology, mechanical parts, and control/robotics experienced
growth from 2013 to 2014 (latest available data).283 A 2019 JPO study also found that, although
small in absolute terms, the number of domestic patent applications filed annually for AI-related
inventions is growing rapidly, with a 65% increase between 2016 and 2017 alone. 284
3.212. The top five fields of technology for patent applications filed with the JPO, as at 2016, were:
"electronical machinery, electrical energy"; "furniture, games"285; "computer technology"; "optics";
and "transport". Table 3.26 provides details regarding applications in each of these subject areas,
from 2009 to 2016. Applications declined overall in all five fields, except for "furniture, games". The
share of applications from non-residents in each of these fields also declined, although the share of
total applications from non-residents increased, indicating a divergence among the top fields in which
domestic and non-resident inventors seek to obtain Japanese patents.
Table 3.26 Patent applications to the JPO, by field of technology and origin, top five
fields of technology in 2016
2009 2010 2011 2012 2013 2014 2015 2016
Electrical machinery, electrical energy
Japan 32,843 34,153 35,643 34,900 33,031 32,035 29,692 26,647
Other 6,944 7,184 7,733 7,453 7,474 7,113 5,466 2,151
Total 39,787 41,337 43,376 42,353 40,505 39,148 35,158 28,798
% Other 17.5% 17.4% 17.8% 17.6% 18.5% 18.2% 15.5% 7.5%
Furniture, games
Japan 13,510 12,731 12,324 13,372 13,136 13,503 14,918 19,897
Other 1,445 1,483 1,454 1,458 1,499 1,514 1,169 413
Total 14,955 14,214 13,778 14,830 14,635 15,017 16,087 20,310
% Other 9.7% 10.4% 10.6% 9.8% 10.2% 10.1% 7.3% 2.0%
Computer technology
Japan 27,059 26,080 24,404 23,796 22,159 21,729 20,167 18,247
Other 7,646 7,681 8,198 8,104 8,309 8,022 5,999 1,978
Total 34,705 33,761 32,602 31,900 30,468 29,751 26,166 20,225
% Other 22.0% 22.8% 25.1% 25.4% 27.3% 27.0% 22.9% 9.8%
Optics
Japan 30,171 27,953 26,552 24,254 22,825 21,387 20,987 18,849
Other 3,574 3,565 3,399 3,398 3,628 3,519 2,916 916
Total 33,745 31,518 29,951 27,652 26,453 24,906 23,903 19,765
% Other 10.6% 11.3% 11.3% 12.3% 13.7% 14.1% 12.2% 4.6%
283
JPO, Annual Report 2019 (in Japanese), pg. 62. Viewed at:
https://www.jpo.go.jp/resources/report/nenji/2019/index.html#0100.
284
METI, Recent Trends in AI-related Inventions. Viewed at:
285
Games includes computer games.
- 115 -
2009 2010 2011 2012 2013 2014 2015 2016

Transport
Japan 17,917 17,694 18,659 18,820 18,906 18,559 18,117 18,057
Other 3,131 3,439 3,966 3,875 3,709 3,776 3,017 1,279
Total 21,048 21,133 22,625 22,695 22,615 22,335 21,134 19,336
% Other 14.9% 16.3% 17.5% 17.1% 16.4% 16.9% 14.3% 6.6%
Note: Figures are tentative.

3.213. Japan's grant rate continued to increase during the review period, and is considered high
among top global IP offices.286 Patents were most frequently granted in the same five fields in which
applications were most commonly received. Patent grants in the fields of semiconductors and optics
declined, while those in the transport field grew. As shown in Table 3.25, the proportion of patents
granted to applicants of foreign origin seemingly peaked in 2015, at 22.5%, and stood at 21.6% in
2018. Most patents granted to non-residents during the review period fell into the fields of "medical
technology", "computer technology", "electronic machinery, apparatus, energy", "pharmaceuticals",
and "digital communication".287
3.214. Japan also ranks third in the number of applications filed globally, by origin. Among patent
applications originating from Japan, 43.5% are filed abroad, a figure that has remained stable over
the past five years and reflects both the globalization of IP protection and a desire among Japanese
right holders to commercialize technology abroad. Applicants from Japan account for over a third of
non-resident applications filed in Germany, Indonesia, the Republic of Korea, and Thailand, and
helped to drive record numbers of PCT international patent application filings in 2017. 288 See
Section 3.3.7.2 for the most popular fields of technology among Japanese patent applicants.
3.215. Japan's approach to parallel imports and compulsory licensing did not change during the
review period.289 Japan maintains that parallel imports promote price competition, and submits that
the Anti-monopoly Act prohibits their obstruction in certain circumstances. 290 Section 92 of the
Patent Act can permit compulsory licenses for the improvement of inventions, but its application has
been limited by a bilateral agreement with the United States, in effect since 1995. 291 No legislative
or regulatory action was taken on the proposal in the Intellectual Property Strategic Programme
2017 for an alternative dispute resolution system for SEPs, which some viewed as introducing
compulsory licences.292
3.216. The Intellectual Property High Court (IP High Court) and Supreme Court issued significant
decisions in the "Maxacalcitol" patent case in 2016 and 2017, finding infringement of a process
patent for the manufacture of a pharmaceutical based upon the doctrine of equivalents; in so doing,
it clarified certain criteria for infringement, and clarified that this doctrine may be applied to
equivalent materials and arts in existence at the filing date of the patent at issue.293
3.3.7.6 Utility models (UMs)
3.217. Except for an adjustment to the calculation of infringement damages, discussed in

Section 3.3.7.12, there were no significant amendments to the Utility Model Act or the process for
registering a UM, during the review period. Applications and registrations of UMs continued their
decades-long decline. Almost all applications lead to grant (Table 3.27), and are registered faster
than patents since there is no substantive examination.
286
WIPO, World Intellectual Property Indicators 2018, pp. 32-33; JPO Status Report 2019, pg. 18.
287
WIPO, IP Statistics Data Center, December 2018. Viewed at:
https://www3.wipo.int/ipstats/index.htm.
288
WIPO, World Intellectual Property Indicators 2018, pp. 8, 27-28, and 32-33.
289
WTO document WT/TPR/S/351/Rev.1, 6 August 2018, para. 3.185.
290
291
Bharadwaj, A. and Yoshioka-Kobayashi, T., Regulating Standard Essential Patents in Implementer-
Oriented Countries: Insights from India and Japan (2018), pg. 196. Viewed at:
https://link.springer.com/content/pdf/10.1007%2F978-981-13-1232-8_10.pdf.
292
Intellectual Property Strategy Headquarters, Intellectual Property Strategic Programme 2017,
pp. 28-29. Viewed at: https://www.kantei.go.jp/jp/singi/titeki2/kettei/chizaikeikaku20170516_e.pdf.
293
IP Court. Viewed at: http://www.ip.courts.go.jp/app/files/hanrei_en/003/002003.pdf; and Supreme
Court. Viewed at: http://www.courts.go.jp/app/hanrei_en/detail?id=1516.
- 116 -
Table 3.27 UM applications and registrations, 2009-18

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
UM applications to JPO, by origin
Japan 7,799 6,889 6,305 6,292 5,965 5,429 5,213 4,928 4,578 3,810
Other 1,708 1,790 1,679 1,820 1,657 1,666 1,647 1,552 1,528 1,578
UM registrations granted by JPO, by origin
Japan 7,361 6,756 5,998 6,221 5,738 5,322 5,098 4,756 4,526 3,796
Other 1,658 1,816 1,597 1,833 1,625 1,695 1,597 1,541 1,498 1,507
3.3.7.7 Designs
3.218. With the goals of protecting design innovations that use emerging technologies, and of
expanding opportunities for brand development, significant revisions to the Design Act were
submitted to the Diet in March 2019, and were promulgated in May 2019. The scope of protected
designs will be expanded to include graphic images that are not recorded or displayed on articles
(e.g. images displayed through the Internet or projected onto walls). The revised Act will also newly
protect spatial designs, such as interior and exterior building designs.
3.219. The term of protection for all design rights will be extended from 20 years from the
registration date to 25 years from the filing date. Protection from "indirect infringement" will be
expanded to include manufacturing or importing products which have been broken up into parts for
the purpose of circumventing IPRs on designs. In 2018, the grace period was extended to one
year294, in parallel with a similar revision for patents (Section 3.3.7.5).
3.220. The JPO took steps during the review period to improve the speed and quality of
examination, including setting quantitative goals. In 2017, 2018 and 2019, the Examination
Guidelines for Design were revised to simplify and clarify procedures for applicants. Accelerated
examinations are available on request in certain situations, including when counterfeit products are
on the market. Pendency periods declined slightly during the review period, to 6.2 months (FA
pendency) and 7.0 months (total pendency) in FY2018.295
3.221. In recent years, the total number of design applications and registrations stabilized
somewhat, with applications from abroad accounting for a growing share (Table 3.28). This increase
in foreign applications may be associated with Japan's 2015 accession to the Hague Agreement,
which permits an applicant to simultaneously file for design rights in multiple jurisdictions.
Table 3.28 Design applications and registrations, 2009-18

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Design applications to JPO, by origin
Japan 27,674 28,083 26,658 27,934 26,407 24,868 24,804 24,543 24,432 23,453
Other 3,201 3,673 4,147 4,457 4,718 4,870 5,099 6,336 7,529 7,953
Design registrations granted by JPO, by origin
Japan 25,819 24,458 23,042 24,610 24,272 23,092 21,950 21,206 21,480 21,339
Other 2,993 2,980 3,232 3,739 4,016 4,214 4,347 4,138 5,855 6,279
3.3.7.8 Trademarks
3.222. The Trademark Act governs the registration and protection of trademarks. The Unfair
Competition Prevention Act offers additional protection against unauthorized use of well-known
marks, and imitation of the non-functional configuration of a good.
3.223. The Act was revised during the review period to limit claims of priority for divisional
applications to those with paid parent application filing fees.296 Presumed statutory damages for
trademark infringement were revised to include the cost of obtaining and maintaining the trademark,
294
WTO document IP/N/1/JPN/32-IP/N/1/JPN/D/8, 6 August 2018.
295
JPO Status Report 2019, pg. 64; JPO Status Report 2018, pg. 47.
296
WTO document IP/N/1/JPN/31-IP/N/1/JPN/T/8, 6 August 2018.
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a revision prompted by the CPTPP.297 Modifications to Japan's GI regime (Section 3.3.7.9) also led
to consequential amendments to the Act.298 A 2019 amendment permitted the owner of a famous
mark representing the nation, a local government or agency, or a public interest non-profit to grant
non-exclusive licences. The revision was intended to facilitate the use of such marks by industries
and businesses in collaboration with public or non-profit entities, such as universities.
3.224. The examination, appeal, trial, grant and opposition processes for a trademark did not
change during the review period.299 The 2017 revision of the Examination Guidelines for Trademarks
sought to enhance predictability and clarity for applicants, considering changes in the commercial
environment, trends in user needs, and recent judicial precedents, among others. 300
3.225. Although the number of trademark applications submitted to the JPO decreased slightly in
2018, the number of applications had been growing at annual rates from 6%-18% since 2014
(Table 3.29). Non-traditional trademarks, including motions, holograms, colours, sounds, and
positions, have been registrable in Japan since 2015. As at December 2018, 433 non-traditional
trademarks had been registered, from 1,746 applications (mostly combinations of colours and
devices/words).301
3.226. Trademark applications originating from outside of Japan continue to represent 18%-21%
of all applications, with most coming from the European Union, the United States, China, and the
Republic of Korea. Applications from China, which accounted for 9% of foreign applications in 2013,
represented 28% of foreign applications in 2017.302
Table 3.29 Trademark applications and registrations, 2009-18

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Trademark applications, by origin
Japan 90,474 92,163 84,673 95,548 92,496 100,053 117,960 133,337 154,780 145,274
Other 20,367 21,356 23,387 23,462 25,179 24,389 29,323 28,522 36,159 39,209
Trademark registrations, by origin
Japan 88,449 79,338 70,800 77,129 82,736 79,562 75,965 81,838 84,960 89,108
Other 20,268 18,442 18,479 19,231 20,663 20,334 22,120 23,369 26,220 27,439
3.227. As the number of trademark applications grew, so did examination pendency periods. The
average FA pendency and total pendency were 7.9 and 9.3 months, respectively, in FY2018,
compared to 4.3 and 5.8 months in FY2015. The 2018 IP Strategic Programme expressly aimed to
prevent longer examination periods. 303 Accordingly, the JPO outsourced and computerized
examination processes, and increased the number of assistants for examiners.304 It also launched a
pilot "Fast Track examination" in October 2018, which aims to shorten FA pendency by two months
for applications for traditional trademarks that (i) only designate goods and services listed in the
Nice Classification, the Examination Guidelines for Similar Goods and Services, or the Enforcement
Regulation of the Trademark Act; and (ii) were not amended prior to examination. This initiative
adds to the existing system of accelerated examination, which saw greater demand during the review
period, with requests growing by 53% in 2018 alone. FA pendency for accelerated examination
averaged 1.7 months in 2018.305
3.228. Japan's Regional Collective Trademark System (RCT), introduced in 2006 and managed by
the JPO, co-exists with the sui generis system of GI protection introduced in 2015 under the authority
297
WTO document IP/N/1/JPN/33- IP/N/1/JPN/T/9, 12 February 2019.
298
WTO document IP/N/1/JPN/38-IP/N/1/JPN/T/10, 10 April 2019.
299
For a visual depiction of the examination, appeals, trials, and opposition process for trademarks, see
JPO, Trademark Updates in Japan, 2019. Viewed at:
https://www.jpo.go.jp/e/system/trademark/gaiyo/document/index/panhu29.pdf.
300
301
302
303
304
305
JPO Status Report 2019, pp. 68-70.
- 118 -
of the MAFF (Section 3.3.7.9).306 The JPO promotes the RCT through seminars, brochures, an annual
Regional Collective Trademark System Guidebook, and a new RCT symbol mark which may be used
by both the JPO and right holders. 645 regional collective trademarks from 1,224 applications had
been registered by the end of 2018.307
3.229. Japanese courts issued several noteworthy decisions regarding trademarks, during the
review period. The Supreme Court held, in 2017, that abuse of rights could be used as a defence to
an infringement suit, even after the expiration of the invalidation period of the registered trademark,
so long as the infringer's mark is sufficiently well-known to invalidate the registered mark. 308
Concerning distinctiveness, the IP High Court allowed an appeal against the JPO's refusal to register
plaintiff Daimler AG's "EQ" designation for "automobiles", and revoked the JPO trial decision. The IP
Court determined that, while the trademark consisted solely of a very simple and common mark, it
was used for a concentrated advertisement in order to give the impression to consumers interested
in automobiles, including those who paid attention to an electric car released by the plaintiff and its
brand name, that it is the plaintiff's new brand for an electric car. Moreover, the trademark was well-
known as the plaintiff's brand for an electric car among consumers who recognize a relationship
between the trademark and the plaintiff, even though the length of the advertisement was relatively
short and the number of automobiles sold using the trademark as part of the product name was not
high.309
3.230. Two other IP High Court decisions addressed confusion in connection with the goods or
services pertaining to a business of another person. A 2017 ruling in the "Runbird" took into account
actual trading practices in connection with the designated good at issue in the course of finding a
likelihood of confusion between the plaintiff's and the defendant's marks. A 2018 ruling found that
the trademark "Guzzilla", designated for mining and construction machines and apparatuses, created
the likelihood of confusion with the mark "Godzilla", which has been well-known since before the
filing of the trademark registration as applied to toys, stationery, clothing, food, general
merchandise, etc. associated with the popular film.
3.3.7.9 Geographical indications
3.231. The 2014 Act on Protection of the Names of Specific Agricultural, Forestry and Fishery
Products and Foodstuffs introduced a sui generis system of protection for GIs of foods, beverages,
and agricultural and marine products. It prohibits direct or indirect use of a GI on a non-originating
product, and applies the level of protection required by Article 23 of the TRIPS Agreement to all
registered GIs (not only wine and spirits). The Act was amended in 2016 and 2018 to conform with
Japan's international commitments.
3.232. The 2016 amendments enable mutual GI protection through international agreements. The
amended GI Act can mutually protect GIs with the foreign country which has the equivalent GI
protection system to Japan. It does not provide protection for names that are generic term. Also,
protections are usually not provided to names that are identical or similar to certain registered
trademarks.310
3.233. The 2018 amendments were enacted in response to the EU-Japan EPA that entered into
force on 1 February 2019. The amendments of the ACT provide for a transition period, during which
prior good-faith use of an identical or similar GI may be continued for up to seven years following
the registration or designation of a GI. The amendments also provide for the co-existence of
trademarks registered in good faith, prior to the date of registration or designation of a GI, as well
as for homonymous GIs.311 Finally, the amendments expand the regulatory scope beyond products
and packages, to include advertisements, price lists, and transaction documents.312
306
WTO document WT/TPR/S/351/Rev.1, 20 June 2017, Table 3.37 Major distinctions between MAFF's
GI system and the JPO's Collective Trademark System.
307
JPO Status Report 2019, pg. 72; JPO Status Report 2018, pg. 52.
308
Japan IP Court. Viewed at: http://www.ip.courts.go.jp/app/files/hanrei_en/205/002205.pdf.
309
Japan IP Court. Viewed at: http://www.ip.courts.go.jp/app/files/hanrei_jp/770/088770_hanrei.pdf.
310
WTO document IP/N/1/JPN/29-IP/N/1/JPN/G/3, 17 February 2017.
311
In the context of this Review, the authorities indicated that the amendments limit the prior use for
the duration of seven years from the date of the registration or designation of the GI.
312
WTO document IP/N/1/JPN/37-IP/N/1/JPN/G/4, 5 April 2019.
- 119 -
3.234. Applications for all GIs except those applied to alcoholic beverages are handled by the
MAFF. 313 Applications for GIs for alcoholic beverages are submitted to the Commissioner of the
National Tax Agency, and designated in accordance with the Indicating Standards Concerning
Geographical Indications for Liquor. 314 As at September 2019, Japan had registered 86 GIs for
agricultural products and 10 GIs for liquor.315 It also directly protects 211 European GIs through the
EU-Japan EPA.316
3.3.7.10 Undisclosed information and trade secrets
3.235. The Unfair Competition Prevention Act (UCPA) protects trade secrets and prohibits unfair
competition. A METI study group, tasked with identifying an IP system that is responsive and
supportive of the Fourth Industrial Revolution, reported, in 2017, that then-existing measures were
insufficient to prevent the unfair use of data.317 Accordingly, 2018 amendments to the UCPA, which
took effect on 1 July 2019, establish civil remedies for the wrongful acquisition, disclosure, and use
of "data for limited provision" – information that is valuable to business and society but does not
qualify as a trade secret or for copyright protection. This includes technical or business information
accumulated in a reasonable amount, managed by electronic or magnetic means, and regularly
provided to specific persons.318 The law is reportedly the first in the world to attempt to protect Big
Data. The METI published new Guidelines on Protected Data on 23 January 2019, which offer
practical guidance on the amendments, including examples of targeted behaviours.319
3.236. The 2018 amendments also clarify protections for technological access restrictions that are
designed to prevent unauthorized use or copying. They specify that providing codes and services
that interfere with such restrictions constitute acts of unfair competition and are subject to civil and
criminal penalties. These amendments took effect on 29 November 2018.320
3.3.7.11 Copyright
3.237. The Copyright Law underwent significant revisions in 2016 and 2018, that took effect on
30 December 2018 and 1 January 2019, respectively. The first amendments were enacted in order
to comply with Japan's obligations under the CPTPP, and the second were made to conform to the
Marrakesh Treaty.321
3.238. The Copyright Act enumerates an exclusive list of circumstances in which unauthorized use
is permissible (rights restrictions provisions). New flexible limitations were introduced, to respond
to digitization and networking. The provisions aim to promote information technology innovation and
the development of AI technologies by permitting, inter alia, certain unauthorized uses that either
do not impair or cause only minor harm to the copyright owner's interest and further a service or
other function that uses Big Data. More specifically, the amendments permit the free use of a
copyrighted work when necessary to (i) test technology for the use of the copyright work; (ii) analyse
information; or (iii) process information using a computer without human recognition. Unauthorized
use is also now permitted, as required, to ensure the smooth or efficient use of a copyrighted work
313
For a visual depiction of the application, opposition, and registration process for GIs, see MAFF,
Geographical Indication (GI) Protection System in Japan, "How to Register". Viewed at:
http://www.maff.go.jp/e/japan_food/gi_act/pdf/gi_pamph.pdf.
314
National Tax Agency, Notice on Establishing Indication Standards Concerning Geographical
Indications for Liquor (National Tax Agency Notice No. 19). Viewed at:
https://www.nta.go.jp/english/taxes/liquor_administration/geographical/01.htm.
315
MAFF, Information on Registered GIs. Viewed at:
http://www.maff.go.jp/e/policies/intel/gi_act/register.html; and National Tax Agency, Information on GIs
protected in Japan. Viewed at:
https://www.nta.go.jp/english/taxes/liquor_administration/geographical/02.htm.
316
European Commission, EU-Japan EPA, Annex 14-B. Viewed at:
http://trade.ec.europa.eu/doclib/press/index.cfm?id=1684.
317
METI, The Intellectual Property System for the Fourth Industrial Revolution: Outline of the Study
Group's Report, 19 April 2017, pg. 3. Viewed at:
https://www.meti.go.jp/english/press/2017/pdf/0419_001b.pdf.
318
WTO document IP/N/1/JPN/42-IP/N/1/JPN/U/3, 20 September 2019.
319
METI, Unfair Competition Prevention Act. Viewed at:
https://www.meti.go.jp/english/policy/economy/chizai/chiteki/.
320
WTO document IP/N/1/JPN/35-IP/N/1/JPN/U/2, 12 February 2019.
321
WTO document IP/N/1/JPN/36-IP/N/1/JPN/C/6, 7 March 2019.
- 120 -
in a computer. Minor use as part of a computer's information processing and provision of

corresponding results also does not require authorization.
3.239. The revision also facilitates the use of copyrighted materials in computerized education,
promotes the use of copyrighted works in archives, and enhances opportunities for persons with
disabilities to access information.322 Copyright term was extended from 50 years to 70 years after
the author's death.
3.240. The Basic Act on the Promotion of Culture and the Arts was revised, and renamed the Basic
Act on Culture and the Arts, in June 2017. Its revisions included supporting cooperation for overseas
copyright systems, developing an environment for the appropriate distribution of copyrighted works,
and promoting anti-piracy.323 As mandated by the Basic Act on Culture and the Arts, a Basic Plan on
the Promotion of Culture and the Arts was adopted by the Cabinet in March 2018, and sets forth the
Agency for Cultural Affairs' vision and strategy for FY2018-22.324
3.241. In 2017, the Japanese Society for Rights of Authors, Composers and Publishers (JASRAC)
tried to revise royalty rules for the collection of usage fees for music performed in music classes.
The arbitration by the Agency for Cultural Affairs (ACA) was initiated following a request from the
representative of users, the result of which was a revision to the royalty rules, enforced from 2018.
However, based on administrative advice from the ACA, the JASRAC collected the fees only from
music classes that accepted the new royalty rules.
3.242. In FY2016, following a large number of requests by the National Diet Library, the ACA
granted 47,699 compulsory licences for the legal use of works where the author is unknown; as
explained by the authorities, the reason for this high number is that mass applications are made in
batches every few years. The ACA granted an additional 5,183 requests in FY2017. The 2018 IP
Strategic Programme suggested facilitating the use of the compulsory licensing system for orphaned
works325 and, as at April 2018, the fee was reduced by nearly half.326
3.3.7.12 Enforcement
3.243. Counterfeiting and piracy continue to cause meaningful losses to the Japanese economy. A
2019 fiscal year report commissioned by the JPO estimates JPY 24 billion as the total profit lost by
all industrial property right holders, based upon survey data.327 The report indicates recent signs of
improvement. 23.4% of respondents reported losses in the FY2019 report, decrease of 1.3% over
the prior year.328 Online piracy, in particular, has been referred to as a "rampant problem" that could
significantly impair the rights of copyright holders.329 The Content Overseas Distribution Association
estimates that piracy costs Japanese publishers JPY 400 billion per year.330
3.244. Japan Customs is responsible for enforcing IPRs at the border, and seizes infringing goods.
The majority of suspension cases are brought by right holders, although Japan Customs is
empowered to act ex officio when it suspects infringing goods. There were no changes to the
Customs Law during the review period that materially impact the process, availability, or protections
associated with IPR enforcement at the border.
322
ACA, Policy of Cultural Affairs in Japan, Fiscal Year 2018, pg. 61.
323
324
ACA, Basic Plan on the Promotion of Culture and the Arts. Viewed at:
http://www.bunka.go.jp/english/policy/foundations/basic_policy.html; and Basic Plan on the Promotion of
Culture and the Arts (in Japanese). Viewed at:
http://www.bunka.go.jp/seisaku/bunka_gyosei/hoshin/pdf/r1389480_01.pdf.
325
326
327
The report is a questionnaire survey for a random sample of 4,740 Japanese companies out of
196,669 companies who registered with JPO as industrial property right holders in FY2018. 2,427 companies
responded. The report estimates total profit loss, based on the profit loss of 39 companies who reported their
profit loss in the survey. JPO (in Japanese). Viewed at:
https//www.jpo.go.jp/resources/statistics/mohou_higai/document/index/0000.pdf.
328
564 companies, out of 2,414 respondents in FY2019 report, reported losses in FY2019.
329
330
Nikkei Asian Review, Kawa Saki, W. and Iwa Sawa, A., Pirate manga link site given harsh sentence in
Japan, 18 January 2019.
- 121 -
3.245. With respect to import seizures, Japan Customs statistics do not distinguish between seizures
undertaken following complaint and ex officio. The number of total annual cases fluctuated in recent
years. The number of articles seized annually had also been declining since 2014, before nearly
doubling in 2018, following the seizure of a large shipment of pharmaceuticals (Chart 3.8). Most
cases and articles relate to trademark infringement, although the numbers related to patents and
designs grew during the review period. Bags, apparel, and footwear accounted for more than half of
import seizure cases, but pharmaceuticals, housewares, and appliances were seized in the greatest
quantities. More than 80% of the cases and articles were traced to China. Advances in cross-border
e-commerce increased the rate of infringing goods imported by post.
Chart 3.8 Import seizure, 2014-18
Chart 3.8 Import seizure, 2014-18
Number of cases Number of articles ('000)
35,000 1,000
900
30,000
800
Number of cases
25,000 700
600 Number of articles ('000)

20,000
500
15,000
400
10,000 300
200
5,000
100
0 0
2014 2015 2016 2017 2018
Source: Japan
Source: Japan Customs,
Customs, 2018
2018 Seizure
Seizure Statistics
Statistics of IPR of IPR Border
Border Enforcement.
Enforcement. Viewed at:
Viewed at:
www.customs.go.jp/mizugiwa/chiteki/pages/statistics/statistics2018.pdf.
www.customs.go.jp/mizugiwa/chiteki/pages/statistics/statistics2018.pdf
3.246. Seizures of exports remained marginal during the review period, with no cases in 2017.
However, over 11,000 articles destined for China were seized in 2016, and 15 cases were brought
in 2018 – both anomalous figures among statistics dating from 2011.331 Low rates of seizure at the
border of infringing goods destined for export have been attributed to strong domestic enforcement.
Statistics from the National Police Agency in Table 3.30 show the volume of confiscated IPR-
infringing goods from 2013 to 2018, with few discernible trends.
Table 3.30 Confiscated IPR-infringing goods, 2013-18

Type 2013 2014 2015 2016 2017 2018
Fake brand-name products 104,776 118,464 84,411 385,273 58,459 129,248
Videos/DVDs 576,075 290,659 82,770 8,561 199,333 596,346
Computer software 3,278 1,592 448 27,209 125 1,473
Music CDs/ tapes 5,837 16,127 181 88 1,203 1,412
Products featuring characters 13,482 3,092 7,678 10,585 6,632 2,360
Total 703,448 429,934 175,488 431,716 265,752 730,839
Source: National Police Agency (in Japanese). Viewed at:

https://www.npa.go.jp/bureau/safetylife/keizai/niseburanndohinkaizokubannnokonnzetu.pdf.
3.247. The legal framework surrounding the judicial enforcement of IPRs remained stable during
the review period. District courts continue to exercise jurisdiction over civil IP infringement disputes
in the first instance, with Osaka District Court and Tokyo District Court retaining exclusive authority
over patent-related disputes. District court decisions may be appealed to the IP Court, which also
hears in the first instance suits against JPO appeal/trial decisions. Judgements of the IP Court may
Japan Customs, 2018 Seizure Statistics of IPR Border Enforcement. Viewed at:
331
http://www.customs.go.jp/mizugiwa/chiteki/pages/statistics/statistics2018.pdf.
- 122 -
be appealed to the Supreme Court, which has final jurisdiction and limits its review to the legal,
rather than factual, findings of the IP Court.
3.248. The number of IP cases handled by domestic courts, and the number of individuals arrested
for IP infringement declined during the review period, ending an upward trend that dated to 2009-10
(Chart 3.9). In 2018, 514 IP disputes were handled in the courts, compared to 606 in 2015, and
626 individuals were arrested for IP-related offenses, compared to 868 in 2015. This amounts to a
decline of 15% in the number of court cases, and of 28% in arrests. The authorities reported that
fewer instances of copyright infringement over the Internet were detected in recent years, which
reduced the total number of IP cases and arrests. The number of individuals arrested for trademark
infringement also declined, although the number of cases involving trademark violations remained
stable.
Chart 4.[JPN] IP cases handled by courts and individuals arrested for IP infringement, 2019-2018
Chart 3.9 IP cases handled by courts, and individuals arrested for IP infringement,
2009-18
1,000
900
800
Number of IP infringement cases
700
Number of persons arrested for IP infringement
600
500
400
300
200
100
0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Source:
Source: National Policy
The National Agency
Policy Agency(in Japanese).
online Viewed
information at:
(in Japanese). Viewed at:
http://www.npa.go.jp/bureau/safetylife/keizai/niseburanndohinkaizokubannnokonnzetu.pdf.
http://www.npa.go.jp/bureau/safetylife/keizai/niseburanndohinkaizokubannnokonnzetu.pdf.
.
3.249. Japan has historically been a comparatively challenging litigation venue for enforcing patent
rights, with patentees winning infringement suits at a 42.4% rate in Osaka and Tokyo District Courts,
compared to 70% in US trial courts.332 Japan has been considering how to improve IP litigation
procedures, to facilitate the exercise of IPRs and deter infringement. A joint JPO/METI Industrial
Structure Council report in February 2019 proposed improved evidence collection procedures,
damages calculations, court procedures, and litigation costs.333 Since then, "in-camera" rules for the
examination of evidence by the courts have been clarified, and now include protections for trade
secrets.334 A bill submitted to the Diet on 1 March 2019 aims to address some of these concerns in
two ways. First, the bill allows courts handling patent infringement disputes to engage neutral
technological experts who could conduct and report upon on-site inspections of domestic plants and
other suspected infringement sites, when necessary, considering the probability of infringement, the
need for sufficient evidence, and the proportionality of the burden on the accused. Second, the bill
allows patent, UM, design, and trademark right holders to claim damages based on the total number
of infringing products sold, regardless of the production capacity of the right holder, using a
hypothetical licence issued to the infringer.335
332
Tessensohn, J.A., Japan Patent Disputes: Patent Litigation and Settlement Trends, Managing
Intellectual Property, September 2016, pp. 9-12.
333
METI, Industrial Structure Council, Patent System Subcommittee, Designing an Intellectual Property
Dispute Settlement System for Effective Rights Protection, February 2019, pg. 5. Viewed at:
https://www.jpo.go.jp/e/resources/shingikai/document/190215_tokkyo_houkoku/english.pdf.
334
WTO documents IP/N/1/JPN/41-IP/N/1/JPN/P/17, 19 September 2019; IP/N/1/JPN/43-
IP/N/1/JPN/D/9, 20 September 2019; IP/N/1/JPN/44-IP/N/1/JPN/T/11, 26 September 2019; and
IP/N/1/JPN/44-IP/N/1/JPN/T/11, 26 September 2019.
335
METI, Cabinet Decision on the Bill for the Act of Partial Revision of the Patent Act. Viewed at:
- 123 -
3.250. The Government is also reportedly considering establishing an international division within
the IP Court where cases could be heard in English, in order to make the country a more attractive
venue for multinational IP disputes. In FY2016, 166 patent-related cases were heard in Japan,
compared to 5,080 in the United States. It is believed that this measure may help Japanese
businesses protect their IPRs more effectively, save time and costs on litigation abroad, and boost
patent filings by foreign companies.336
3.251. Implementation of the CPTPP led to new provisions for copyright enforcement, including
measures to prevent the circumvention of access controls; ex officio prosecution of certain criminal
infringements; a royalty right for secondary use of sound recordings distributed over the Internet;
and the addition of a new method using a collective management organization royalty rule to
calculate compensatory damages.337
3.252. In February 2019, the Copyright Subdivision of the Council for Cultural Affairs reported on
societal issues requiring a re-examination of the copyright system, such as "leech" sites, which
provide links to infringing content and thereby facilitate and foster piracy, and the need for the
creators of works to receive appropriate returns.338 It is not clear whether linking to pirated content
or operating a leech site violates the existing Copyright Law. However, certain leech site operators
were arrested on suspicion of copyright violations339, and were criminally prosecuted during the
review period. In 2018, the Government called for temporary "emergency measures", encouraging
Internet service providers to voluntarily block infringing sites and considered, but ultimately
postponed, legislation to legalize such blocking.340 In 2019, an ACA expert panel report proposed
criminalizing operating leech sites and knowingly providing links to pirated materials, as well as
expanding the scope of illegal downloads, currently limited to music and videos, to include all
copyrighted materials, including manga, computer games, books and other writings.341 A planned
amendment to the Copyright Law implementing the recommendations was, however, also
postponed.342
336
Nikkei Asian Review, Eto, T., Japan considers allowing patent litigation in English.
337
338
ACA, Policy of Cultural Affairs in Japan, Fiscal Year 2017, pp. 54-55.
339
The Japan Times, Murai, S., Internet piracy taking major bite out of Japan's famed manga culture.
Viewed at: https://www.japantimes.co.jp/news/2018/04/10/reference/internet-piracy-taking-major-bite-
japans-famed-manga-culture/#.XUat7x0zbIV; and Kyodo, Japanese man wanted for running illegal manga site
detained in Philippines. Viewed at: https://www.japantimes.co.jp/news/2019/07/09/national/japanese-man-
wanted-running-illegal-manga-site-detained-philippines/#.XUa4_B0zbIU.
340
Nikkei Asian Review, Kawa Saki, W. and Iwa Sawa, A., Pirate manga link site given harsh sentence in
Japan. Viewed at: https://asia.nikkei.com/Politics/Pirate-manga-link-site-given-harsh-sentence-in-Japan.
341
The Japan Times, Kyodo, Japan to make unauthorized downloads of all copyrighted work illegal.
Viewed at: https://www.japantimes.co.jp/news/2019/02/14/national/japan-make-unauthorized-downloads-
copyrighted-work-illegal/#.XUWbtOQ7buh.
342
The Japan Times, Kyodo, Japan shelves bill on stricter copyright control after academics, manga
artists and fans air concerns. Viewed at: https://www.japantimes.co.jp/news/2019/03/13/national/japan-
shelves-bill-stricter-copyright-control-academics-manga-artists-fans-air-concerns/#.XUW0dh0zbIU.
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4 TRADE POLICIES BY SECTOR
4.1 Agriculture, Forestry, and Fisheries
4.1.1 Agriculture
4.1. Agriculture In 2017 (latest year of available data), agriculture, forestry and fishing contributed
around 1.2% to GDP, and 3.8% to total employment (Section 1, Table 1.2). Although agriculture
remains a relatively small part of the economy and employment, it continues to be considered
important for food security as well as for historical and cultural reasons.
4.2. In 2018, there were nearly 1.2 million commercial farm households (defined as farms of at
least 0.3 ha or with annual sales of at least JPY 500,000). Commercial farm households may be
classified as: either part-time or full-time; or as a business, semi-business, or side-business
(Table 4.1). Even commercial farm households are usually small in size; in 2018, the average size
was 2.46 ha, compared with an average of 2.2 ha in 2015. Nearly half of commercial farm households
are mainly engaged in rice production, and well over half of cultivated land is under rice production.
According to the OECD, impediments to consolidating farmland include the difficulty of locating
landowners, and the high costs of leasing farmlands to full-time farmers.1
Table 4.1 Farm households and average farm size, 2015-18

Unit 2015 2016 2017 2018
Farm households '000 2,155 .. .. ..
Of which
Commercial farm households '000 1,330 1,263 1,200 1,164
Of which
Full-time '000 443 395 381 375
Part-time '000 887 867 819 789
Commercial farm households '000 1,330 1,263 1,200 1,164
Of which
Business farms '000 294 285 268 252
Semi-business '000 257 237 206 188
Side-business '000 779 741 727 725
Ha cultivated land/household
Commercial farm households Ha 2.20 2.35 2.41 2.46
Business farm households Ha 5.57 5.93 6.16 6.45
.. Not available (data on farm households are available only every five years).
Note: Definitions:
Farm household: a farm with cultivated land under management of at least 10 ares (0.1 hectares) or
with sales of agricultural products of at least JPY 150,000 in the previous year.
Commercial farm household: a farm with cultivated land under management of at least 30 ares or
with sales of agricultural products of at least JPY 500,000 in the previous year.
Full-time farm household: a commercial farm household with no household members engaged in
jobs other than farming.
Part-time farm household: a commercial farm household with at least one household member
engaged in a job other than farming.
Business farm household: a commercial farm household for which agricultural income exceeds 50%
of the household income and has at least one household member (under 65 years old) engaged in
own farming for at least 60 days per year.
Semi-business farm household: a commercial farm household for which non-agricultural income
exceeds 50% of the household income, and with at least one household member (under 65 years
old) engaged in own farming for at least 60 days per year.
Side-business farm household: a commercial farm household with no members (under 65 years old)
engaged in own farming for more than 60 days per year.
4.3. Total agricultural output (the sum of the value of crops, livestock and processed agricultural
products) has been on a growing trend since 2014. Rice remains the most important single item,
but its total output remains less than that of vegetables or livestock (Table 4.2).
1
OECD Economic Survey Japan, April 2019. Viewed at:
https://www.oecdilibrary.org/docserver/fd63f374en.pdf?expires=1569408615&id=id&accname=oci195767&ch
ecksum=81B51161847459D7F5629BAD30843747.
- 125 -
Table 4.2 Total agricultural production and production of selected products, 2014-18
Total Crops Rice Vegetables Wheat Soya beans
agricultural
output
JPY bn JPY bn '000 JPY '000 JPY '000 JPY '000
tonnes bn tonnes bn tonnes bn tonnes
2014 8,364 5,363 1,434 8,439 2,242 13,764 .. 852 .. 232
2015 8,798 5,625 1,499 7,989 2,392 13,654 .. 1,004 .. 243
2016 9,203 5,980 1,655 8,044 2,557 13,180 .. 791 .. 238
2017 9,274 5,961 1,736 7,824 2,451 13,344 .. 907 .. 253
2018 .. .. .. 7,782 .. .. .. 765 .. 211
Livestock and its Beef Beef Raw milk Pigs Pig Hen eggs
products cattle meat
JPY bn JYP bn '000 JPY '000 JPY '000 JPY '000
tonnes bn tonnes bn tonnes bn tonnes
2014 2,945 594 502 697 7,334 633 1,264 511 2,502
2015 3,118 689 481 731 7,379 621 1,254 547 2,521
2016 3,163 739 464 739 7,394 612 1,279 515 2,562
2017 3,252 731 469 740 7,277 649 1,272 528 2,601
2018 .. .. 475 .. 7,289 .. 1,284 .. 2,628
.. Not available.
4.1.1.1 Trade
4.4. Japan has a deficit in trade in agricultural goods, with imports of over USD 59.9 billion and
exports of USD 5.2 billion in 2018.2 While exports of agricultural products gradually increased over
the period 2014-18, imports fluctuated (Chart 4.1).
Chart 4.1 Trade in agriculture, 2014-18

Chart 4.1 Trade in agriculture, 2014-18
USD
USD billion
billion
70 10%
9%
60
8% Exports of agricultural products (USD billion)
50
Imports of agricultural products (USD billion)
7%
Exports of agricultural products as a % of total exports
6%
40 Imports of agricultural products as a % of total imports
5%
30
4%
20 3%
2%
10
1%
0 0%
2014 2015 2016 2017 2018
Note: Data is based on WTO agriculture definition.

Note: Data is based on WTO agriculture definition.
Source: WTO calculations, based on data taken from the UNSD Comtrade database.
4.5. Imports of agricultural products are widely spread across many different tariff lines, with the
top ten products representing 41% of total agricultural imports (Table 4.3).
Table 4.3 Imports of agricultural products, 2014-18

HS subheading - description 2014 2015 2016 2017 2018
Total agricultural imports USD million 58,952.7 53,674.3 53,317.7 56,729.1 59,563.7
0203 - Meat of swine, fresh, chilled '000 tonnes 829.4 790.6 861.2 932.1 925.0
or frozen USD million 4,314.6 3,513.2 4,166.2 4,378.5 4,404.9
1005 - Maize '000 tonnes 15,034.8 14,708.2 15,341.8 .. ..
USD million 3,861.9 3,236.5 3,066.8 3,083.6 3,370.7
'000 tonnes 620.4 604.7 619.3 700.5 741.2
2
For the purposes of this Section of the Trade Policy Review report, the definition of agricultural
products used is that set out in Annex 1 of the Agreement on Agriculture, where fish and fish products are
taken to include HS2017 Headings 020840, 03, 051191, 1504, 1603, 1604, 1605, and 230120.
- 126 -

1602 - Other prepared or USD million 2,823.8 2,628.8 2,620.8 3,001.5 3,216.8
preserved meat, meat offal or
blood
2403 - Other manufactured '000 tonnes 8.3 7.9 12.6 25.7 33.7
tobacco and manufactured tobacco USD million 40.6 54.0 495.2 1,805.3 2,659.5
substitutes
2402 - Cigars, cheroots, cigarillos '000 tonnes 73.5 75.5 .. 60.2 53.3
and cigarettes USD million 3,364.3 3,078.1 3,249.7 2,634.9 2,456.4
0201 - Meat of bovine animals, '000 tonnes 219.3 204.7 229.1 265.8 278.8
fresh or chilled USD million 1,596.7 1,506.9 1,656.3 1,927.3 2,103.5
2204 - Wine of fresh grapes '000 tonnes 279.4 289.1 276.4 283.9 266.8
USD million 1,641.6 1,490.2 1,500.0 1,616.2 1,688.9
1001 - Wheat and meslin '000 tonnes 5,759.5 5,530.7 5,446.6 7,507.0 7,494.0
USD million 1,971.1 1,652.5 1,361.7 1,528.9 1,638.7
1201 - Soya beans '000 tonnes 2,827.7 3,242.6 3,131.6 3,320.9 3,051.6
USD million 1,832.8 1,704.2 1,527.7 1,546.3 1,538.9
0202 - Meat of bovine animals, '000 tonnes 299.5 289.3 274.1 307.1 328.6
frozen USD million 1,295.5 1,277.0 993.4 1,191.5 1,370.5
.. Not available.
4.6. Agricultural exports tend to be processed products; in almost all top ten export categories,
there was a steady increase in both volume and value terms over the period 2014-18, with the
notable exception of cigars, cheroots, cigarillos and cigarettes, which saw a marked decline
(Table 4.4).
Table 4.4 Exports of agricultural products, 2014-18

Total agricultural exports USD million 3,414.4 3,706.3 4,285.7 4,497.2 5,179.4
2106 - Food preparations, n.e.s. '000 tonnes 25.7 28.9 29.1 31.4 34.5
USD million 346.1 418.7 486.0 522.8 741.9
2103 - Sauces and preparations '000 tonnes 82.2 91.6 101.0 110.0 118.2
USD million 290.3 293.1 341.8 358.0 397.5
1905 - Bread, pastry, other '000 tonnes 26.1 30.4 31.4 30.2 31.4
bakers' wares USD million 251.6 280.7 330.2 313.0 333.1
2202 - Waters with added sugar '000 tonnes 72.1 81.4 86.9 105.0 109.6
USD million 150.5 163.1 178.9 218.5 255.2
2208 - Alcohol of strength less '000 tonnes 13.1 14.5 17.6 22.2 27.2
than 80% vol. USD million 100.9 130.1 157.9 192.1 231.4
2206 - Other fermented '000 tonnes 17.7 20.1 22.5 29.4 31.3
beverages USD million 112.7 120.2 149.0 174.7 209.6
2402 - Cigars, cheroots, '000 tonnes 10.0 11.3 8.7 3.3 3.5
cigarillos and cigarettes USD million 181.5 193.6 192.1 118.0 145.0
0902 – Tea '000 tonnes 3.6 4.3 4.3 4.7 5.2
USD million 75.2 85.9 108.9 129.9 142.4
1902 - Pasta, noodles, lasagne, '000 tonnes 28.2 31.9 36.5 39.3 42.6
etc. USD million 90.7 94.8 122.1 129.7 141.3
1901 - Food preparations of '000 tonnes 16.0 15.4 17.2 18.1 20.0
flours, malt extract, etc. USD million 88.0 89.0 117.0 122.0 136.6
4.1.1.2 Agricultural policy
4.7. The overall goal for the sector is to make agriculture a growth industry, with greater private-
sector participation.3 The agricultural policy is set out in the Food, Agriculture and Rural Areas Basic
Plan, which is reviewed roughly every five years. The current Plan, adopted in March 2015, sets out
3
OECD Economic Survey Japan, April 2019. Viewed at:
https://www.oecdlibrary.org/docserver/fd63f374en.pdf?expires=1569408615&id=id&accname=ocid195767&ch
ecksum=81B51161847459D7F5629BAD30843747.
- 127 -
the objectives of doubling incomes in agriculture and rural areas over the next ten years, by
increasing domestic and export demand, improving value chains, reducing costs, promoting
structural reform, and improving productivity. 4 In September 2019, the Ministry of Agriculture,
Forestry and Fisheries (MAFF) launched the process of developing the next five-year plan, to be
released in 2020.5 Agricultural policy continues to emphasize self-sufficiency, and the Plan sets
self-sufficiency targets for FY2025 of 45% on a calorie basis and 73% on a production value basis,
as well as a self-sufficiency target for feeds of 40% for FY2025. In 2017, self-sufficiency on a calorie
basis was as 37%, under target due to climate change affecting the production of main crops such
as wheat and soybeans.6 Self-sufficiency rates for individual products vary year-on-year but are
consistently high (at 70% and above) for: unshu, rice; eggs; sweet potato; fungi; vegetables and
tubers (Table A4.1). Agricultural policies are reviewed annually in the MAFF's Annual Report/White
Papers on Food, Agriculture and Rural Areas in Japan.7
4.8. As reported in Japan's previous Review, in May 2016, the MAFF developed the Strategy to
Promote Exports of Agriculture, Forestry, Fisheries Products and Foods, under which governmental
support includes: information to farmers on market trends; matching of producers and exporters;
and participation in food fairs. In June 2016, the Cabinet adopted the Japan Revitalization Strategy
2016 (Section 2), which sets the export target for major agriculture, forestry, and fisheries products
and foods at more than JPY 1 trillion by 20198; according to the authorities, by end-2018, the value
of exports of these products reached JPY 906.8 billion.
4.9. In 2017, Japan released a Policy Package for Enhancing the Competitiveness of Japan's
Agriculture. It aims to increase farmer's competitiveness through 13 actions, namely: reducing the
price of farming inputs; structural reform of distribution and processing; manpower development;
the development of a strategic export system; the indication of country of origin of ingredients; a
study of the introduction of checkoff programmes9; the introduction of a revenue insurance system;
a revision of the land improvement system; improvements to employment structures in farm
villages; the promotion of feed rice; the reinforcement of the production structure for beef cattle
and dairy farming; ensuring steady management of the compound feed price stabilization system;
and the reform of the raw milk distribution system.10
4.10. A Food Industry Strategy was issued in April 2018, which was developed by the Government
and various agricultural stakeholders. It identifies the challenges and issues/changing trends facing
the food industry along the food chain, as well as its potential strengths. It incorporates proposals
and an Action Plan.11
4.11. Key policy developments over the review period were the abolition of the Direct Payment for
Rice and of the administrative allocation of rice production volume targets; the introduction of a new
Revenue Insurance programme, applicable to almost all farm products; a review of the Agricultural
Mutual Aid System; the abolition of administered prices for beef and pig meat; and increased support
for domestic beef and pork producers (see below). In 2018, a new residency status was approved
by the Diet, to grant a new type of residency status to foreigners into sectors that need more
4
The 2015 Basic Plan and related documents were viewed at:
http://www.maff.go.jp/j/keikaku/k_aratana/h27_keikaku.html.
5
MAFF, Basic Plan for Food, Agriculture and Rural Areas. Viewed at:
http://www.maff.go.jp/j/keikaku/k_aratana/index.html.
6
Self-sufficiency data on a product-by-product basis may be viewed (in Japanese) at:
http://www.maff.go.jp/j/zyukyu/zikyu_ritu/attach/pdf/012-14.pdf.
7
The Annual Reports/White Papers covering the period under review were viewed at:
http://www.maff.go.jp/j/wpaper/index.html.
8
Cabinet of Japan. Viewed at:
http://www.kantei.go.jp/jp/singi/keizaisaisei/pdf/2016saikou_torikumi.pdf; the target year was changed from
2020 to 2019.
9
As indicated by the authorities, checkoff programmes include promotion activities based on producers'
contributions.
10
MAFF, The Policy Package for Enhancing Competitiveness of Japan's Agriculture (Outline). Viewed at:
http://www.maff.go.jp/e/policies/law_plan/attach/pdf/index-4.pdf.
11
MAFF. Viewed (in Japanese) at: http://www.maff.go.jp/j/press/shokusan/seizo/attach/pdf/180406-
2.pdf.
- 128 -
workers, the agricultural sector being one of these (Section 2.4.2); this policy was implemented in
April 2019.12
4.1.1.3 Institutional and legal framework
4.12. The MAFF is responsible for agricultural policy. There were no changes to its responsibilities
over the review period. It has several divisions which deal with all aspects of agriculture (as well as
forestry and fishing), including trade policy and trade negotiations relating to agricultural products,
administering tariff quotas, statistics, domestic market supervision, agricultural insurance, SPS and
TBT measures relating to agriculture, and overseeing and promoting R&D undertaken under the
Agriculture, Forestry and Fisheries Research Council.13 The MAFF also has under its responsibility a
public-private investment fund (A-FIVE) which invests in the agricultural sector.
4.13. The Prime Minister chairs the Headquarters on Creating Dynamism through Agriculture,
Forestry and Fishery Industries and Local Communities; established in 2013, this brings together
various government ministers. In 2019, a revised Plan for Creating Dynamism in Agriculture,
Forestry and Fishery Industries and Local Communities was approved. This includes export
opportunities; technology/smart agriculture; and farmland use.
4.14. The main general law governing the agricultural sector is the Basic Law on Food, Agriculture
and Rural Areas (last amended in 1999), which obliges the Government to establish a basic plan for
food, agriculture and rural areas, setting out national policies and objectives.
4.15. The Act on the Support for Strengthening Agricultural Competitiveness entered into force in
2017.14 Its stated purpose is to promote structural reforms and business entry to the agricultural
production-related industries in Japan, so as to ensure the sustainable development of agricultural
and agricultural production-related industries. Actions/policies to be taken by the Government are:
• policies to realize the supply of high-quality and affordable agricultural materials, including:
(i) a review of regulations on agricultural materials to make them, where relevant,
reasonable based on the latest scientific knowledge; (ii) the setting of development targets
for agricultural machines and other agricultural materials, as well as the promotion of
collaboration among R&D agencies, universities and private businesses; (iii) the promotion
of aggregation of brands of agricultural materials where the proliferation of small brands
accounts for low productivity; (iv) the promotion of technological development and
production or supply of seeds and seedlings by private businesses, as well as the provision
of knowledge of their production held by R&D agencies or prefectures; (v) the promotion of
business restructuring/entry into the agricultural material business; and (vi) the provision
of information to farmers to assist in their procurement of agricultural materials;
• policies to rationalize agricultural product distribution, including: (i) reviewing regulations

on agricultural product distribution; (ii) promoting business restructuring/entry for
agricultural product wholesale and retail businesses and manufacturing and processing
businesses; (iii) promoting direct sales from farmers/farmers bodies to consumers;
(iv) providing information for shipment of agricultural products to farmers; and (v) ensuring
the quality, production or distribution methods, or any other characteristics of agricultural
products are properly evaluated; and
• measures to promote business restructuring or business entry, including the development

of a framework through which enterprises wishing to restructure/enter the market may
submit their business plans to the competent minister to be certified. The Act provides for
financial support to successfully certified enterprises through: the Organization for Small and
Medium Enterprises and Regional Innovation, Japan; the Japan Finance Corporation; and
the Agriculture, Forestry and Fisheries Fund Corporation for Innovation, Value-chain and
12
OECD, Economic Survey Japan 2019. Viewed at: https://www.oecd-ilibrary.org/docserver/fd63f374-
en.pdf?expires=1569408615&id=id&accname=ocid195767&checksum=81B51161847459D7F5629BAD3084374
7.
13
14
The Agricultural Competitiveness Enhancement Support Act. Viewed at:
http://www.japaneselawtranslation.go.jp/law/detail/?ft=1&re=02&dn=1&x=55&y=8&co=01&ia=03&ja=04&ky
=support+for+strengthening+agricultural+competitiveness&page=7.
- 129 -
Expansion Japan (A-FIVE). Based on the Act on Special Measures Concerning Taxation,
special provisions for depreciation, the registration and licence tax, and refunds by
carry-back of loss are applied to certified enterprises carrying out business restructuring.
4.16. The Act on the Support for Strengthening Agricultural Competitiveness requires the
Government to undertake a survey, approximately every five years, of the supply of agricultural
materials and agricultural product distribution, both in Japan and abroad; examine its policies; and
establish implementing guidelines to promote business restructuring/business entry. Since
implementation of the Act, 21 business restructuring plans and 1 business entry plan have been
certified.
4.17. Over the review period, the Agricultural Management Framework Reinforcement Act was
amended in order to promote the utilization of farmland with unidentified owners, and thereby enable
restructuring. Additionally, the Urban Farmland Lease Facilitation Act was amended in order to assist
farmers who want to produce in an urban farmland.
4.1.1.4 Trade policies and border measures
4.18. In 2017, the Japan Food Product Overseas Promotion Center was established within the Japan
External Trade Organization (JETRO); it aims to raise awareness of Japanese products globally,
establish the "Japan brand", and seek further export opportunities for Japanese food products15
(Section 3.2.4.4).
4.19. Export insurance from Nippon Export and Investment Insurance is available for agricultural
products in the same way as for exports of other goods (Section 3.2.5).
4.20. The simple average tariff on agricultural products (WTO definition) increased to 17.9% in
FY2019 from 16.3% in FY2016, due to changes in the unit prices leading to increases in ad valorem
equivalents (AVEs) of non-ad valorem tariffs. In general, tariffs on agricultural products (17.9%) are
higher than tariffs on non-agricultural products, with an average of 3.5%. Tariffs vary considerably
among agricultural products, with just below one quarter duty-free, and a maximum tariff (AVE,
out-of-quota) of 499.7%. 17.5% of agricultural tariff lines are non-ad valorem.
4.21. The Government considers that, as a result of full implementation of the two new RTAs that
entered into force over the review period (the CPTPP and the Japan-EU EPA (Section 2), there will
be price declines for certain agricultural, forestry and fisheries products. It estimates a total loss of
approximately JPY 110 billion for these products under the Japan-EU EPA, and of approximately
JPY 150 billion under the CPTPP. The agricultural products projected to be hardest hit are pig meat
and dairy products under the Japan-EU EPA, and beef, dairy products and pig meat under the CPTPP.
However, the Government is of the view that domestic production volumes and farmer's incomes
will be maintained through government measures.16
4.22. Japan reserved the right to use special agricultural safeguards (SSGs) on 147 tariff lines based
on the Consolidated Tariff Schedule (CTS) in HS2002.17 During FY2018 and FY2019, Japan applied
either the volume- or price-based SSGs several times to out-of-quota imports of a variety of products
(Table 4.5).
15
MAFF, FY2018 Annual Report on Food, Agriculture and Rural Areas in Japan. Viewed at:
16
Official documents on the impact of the CPTPP and the Japan-EU EPA on agriculture, forestry and
fisheries are available (in Japanese) at: http://www.maff.go.jp/j/kanbo/tpp/.
17
WTO document TN/AG/S/29/Rev.1, 11 January 2017. As reported in previous Reviews, Japan had the
right to use the SSG on 121 tariff lines, as the CTS in this case was based on HS1996 (WTO document
TN/AG/S/12, 20 December 2004). The number of lines increased to 147, due to the CTS now being based on
HS2002.
- 130 -
Table 4.5 SSGs, FY2017/18

HS Description Type of Date or period
SSG of application
FY2017
040120190 Milk and cream, not concentrated or containing Volume 01/06/2017 to
added sugar or other sweetening matter. 31/03/2018
- Of a fat content, by weight, exceeding 1% but
not exceeding 6%: sterilized, frozen or
preserved
040210129,040210212, Milk and cream, concentrated or containing Volume 01/02/2018 to
040210217,040210229, added sugar or other sweetening matter: 31/03/2018
040221119,040229119, in powder, granules or other solid forms, of a fat
040221129,040229129, content, by weight, not exceeding 1.5%:
040221212,040221217, in powder, granules or other solid forms, of a fat
040221229,040229291 content, by weight, exceeding 1.5%
Not containing added sugar or other sweetening
matter:
Other:
040291129 Milk and cream, concentrated, not containing Price 07/08/2017
added sugar or other sweetening matter
- of a fat content, by weight, exceeding 7.5%
040390113, 040390118, Buttermilk, curdled milk and cream, kephir and Volume 01/03/2018 to
040390123, 040390128, other fermented or acidified milk and cream, 31/03/2018
040390133, 040390138 sterilized, frozen, preserved, concentrated or
containing added sugar or other sweetening
matter, flavouring, fruits or nuts
071335299 Cow peas (Vigna unguiculata) Price 09/02/2018
071360299 Other pigeon peas (Cajanus cajan) Price 20/12/2017
100630090 Rice (semi-milled or wholly milled rice, whether Price 27/06/2017
or not polished or glazed)
110819099 Other starches (excluding Sago starch) Price 06/09/2017
110820090 Inulin Price 20/06/2017,
22/06/2017,
30/08/2017,
25/09/2017,
13/11/2017
190190132 Food preparations of goods of heading 04.01 to Price 26/06/2017,
04.04, containing not less than 30% natural milk 22/12/2017
constituents, of the articles in dry weight,
excluding whipped cream in pressurized
containers
- containing not more that 30% milk fat by
weight
210690119 Food preparations containing by weight not less Price 30/05/2017
than 30% natural milk constituents on the dry
matter
- not more than 30% by weight of milk fat
210690129 Food preparations containing by weight not less Price 18/04/2017
than 30% natural milk constituents on the dry
matter
- not more than 30% by weight of milk fat
FY2018
040120190 Milk and cream, not concentrated or containing Volume 01/07/2018 to
added sugar or other sweetening matter 31/03/2019
- of a fat content, by weight, exceeding 1% but
not exceeding 6%: sterilized, frozen or
preserved
040390113, 040390118, Buttermilk, curdled milk and cream, kephir and Volume 01/06/2018 to
040390123, 040390128, other fermented or acidified milk and cream, 31/03/2019
040390133, 040390138 sterilized, frozen, preserved, concentrated or
containing added sugar or other sweetening
matter, flavouring, fruits or nuts
071360299 Other pigeon peas (Cajanus cajan) Price 18/05/2018,
23/07/2018,
16/11/2018
110100200 Wheat or meslin flour Price 02/11/2018
110812099 Maize (corn) starch Volume 01/02/2019 to
31/03/2019
110819099 Other starches (excluding Sago starch) Price 10/10/2018
- 131 -
HS Description Type of Date or period

SSG of application
110820090 Inulin Price 16/04/2018,
10/07/2018,
24/08/2018,
04/09/2018,
25/01/2019,
29/01/2019,
22/02/2019,
28/02/2019,
190120159, 190190179 Food preparations of flour, meal, or starch, Volume 01/03/2019 to
which contain more than 85% by weight of flour, 31/03/2019
groats, meal and pellets of rice, wheat, triticale
or barley, starch, or any combination thereof,
excluding cake-mixes and the kind used as food
suitable for infants or young children or for
dietetic purposes
- mostly containing starch (excluding wheat
starch)
Source: WTO documents G/AG/N/JPN/239, 15 May 2019; and G/AG/N/JPN/226, 23 May 2018.
4.23. According to its most recent notification on imports under tariff quotas (for FY2017/18) to the
WTO Committee on Agriculture, Japan applies 18 tariff rate quotas (TRQs) covering 101 tariff lines
at the HS six-digit level.18 Fill rates varied considerably from one quota to another, ranging from
23.4% to 305.6% (Table 4.6). The authorities indicated that low fill rates for some TRQ products
were mainly due to decrease of domestic demand.
Table 4.6 TRQ fill ratio, FY2017/18

Description of products No. of tariff lines Tariff In-quota Fill rate
quota imports %
quantity
(MT)
Skimmed milk powder (for 040210, 040221 7,264 1,701 23.4
school lunches)
Skimmed milk powder (for 040210, 040221, 040229 74,973 28,817 38.4
other purposes)
Evaporated milk 040291 1,500 1,445 96.3
Whey and modified whey (for 040410 45,000 36,675 81.5
feeding purposes)
Prepared whey (for infant 040410, 040490 25,000 7,507 30
formula)
Butter and butteroil 040510, 040590 581 191 32.9
Mineral concentrated whey 040410 14,000 10,104 72.2
Prepared edible fat 210690 18,977 16,946 89.3
Other dairy products for 040110, 040120, 040130, 133,940 133,402 99.6
general use 040291, 040310, 040390,
040490, 180620, 180690,
190110, 190120, 190190,
210112, 210120, 210610, 210690
Designated dairy products for 040210, 040221, 040229, 137,202 419,234 305.6
general use 040299, 040390, 040410,
040510, 040520, 040590
Dried leguminous vegetables 071310, 071332, 071333, 120,000 73,605 61.3
071339,
071350, 071390
Wheat, meslin, triticale and 100110, 100190, 100890, 5,740,000 5,761,674 100.4
their processed products 110100, 110290, 110311,
110319, 110320, 110419,
110429, 110811, 190120,
190190, 190410, 190420,
190430, 190490, 210690
Barley and its processed 100300, 110290, 110319, 1,369,000 349,350 25.5
products 110320, 110419, 110429,
190120, 190190, 190410,
190420, 190490, 210690
18
WTO document G/AG/N/JPN/238, 15 May 2019.
- 132 -
Description of products No. of tariff lines Tariff In-quota Fill rate

quota imports %
quantity
(MT)
Rice and its worked and/or 100610, 100620, 100630, 682,200 676,997 99.2
prepared products 100640, 110230, 110319,
110320, 110419, 110429,
190120, 190190, 190410,
190420, 190490, 210690
Starches, inulin, and their 110812, 110813, 110814, 157,000 157,825 100.5
preparations 110819, 110820, 190120, 190190
Ground-nuts 120210, 120220 75,000 36,946 49.3
Tubers of konnyaku 121299 267 68 25.5
Silk-worm cocoons and raw 500100, 500200 798 445 55.8
silk
Note: Milk powder (tariff lines 040221 and 040299) was not included.
Source: WTO document G/AG/N/JPN/238, 15 May 2019.
4.24. The method of administering TRQs varies from one item to another, although the competent
authority for administering for all but one quota is the MAFF (the exception being "designated dairy
products for general use", where the competent authority is the Agriculture Livestock Industries
Corporation, a state trading enterprise). One quota (prepared edible fat) is partially allocated to a
supplying country. Under all methods, the applicant for an allocation must meet criteria, such as
end-use requirements, record as an importer, or planned usage. There were no substantive changes
to quota administration methods since 2009.19 Tariff quotas are applied for various other products
(Table 4.7).
Table 4.7 Other products for which tariff quotas are applied, 2019
Description HS code Out-of-quota rate HS code In-
quota
rate - %
Cheese and curd for use as material 04061009 29.8% 040610010 0
for processed cheese 040640090 040640010
040690090 040690010
Maize other than seed 100590099 50% or JPY 12/kg, 100590091 0
whichever is the greater
100590092 0
100590095 0
100590096 3
Malt 110710019 JPY 21.30/kg 110710011 0
Malt 110710029 JPY 21.30/kg 110710021 0
Malt 110720020 JPY 21.30/kg 110720010 0
Chocolate preparations 180690319 23.8% + JPY 679/kg 180690311 21
Tomato puree 200290219 16% 200290211 0
Tomato puree 200290229 16% 200290221 0
Prepared pineapples 200820119 JPY 33/kg 200820111 0
Prepared pineapples 200820219 JPY 33/kg 200820211 0
Raw hides and skins 410120212 30% 410120211 12
Source: Data based on Japanese 2019/20 tariff schedule.
4.25. A simultaneous buy and sell (SBS) system for rice and wheat remains in place. Its purpose is
to meet specific needs, such as imports of small quantities of rice (maximum 100,000 tonnes) and
wheat. Under this system, an importer and a domestic user make a joint bid to the MAFF, submitting
the government purchase price from the importer and the government sale price on the domestic
Japanese market. The MAFF collects the difference in the prices. Since the previous Review, there
have been no changes in SBS system. The volume of imports for both products fluctuated
(Table 4.8). The "ordinary tender system" is used for large-quantity imports.
19
Footnote 11 of Section 4.1.2.2 of WTO document WT/TPR/S/310/Rev.1, 6 May 2015 lists the WTO
notifications from Japan with respect to the administration of tariff quotas. The latest notification was in 2009.
- 133 -
Table 4.8 Imports under the SBS system, FY2013-17

('000 tonnes)
2013 2014 2015 2016 2017
Rice 61 12 29 73 100
Wheat 1,087 684 682 531 649
Source: Data provided by the authorities.
4.26. Japan did not reserve the right to use export subsidies on any agricultural products and,
during the review period, it notified the WTO Committee on Agriculture that it did not use any in
FY2016/17, FY2017/18 or FY2018/19.20
4.27. Japan's food assistance is provided under non-emergency programmes. It responds to

requests from recipient countries or international organizations. Cash is provided for the purchase
of food from the open market.21 Over the review period, Japan notified volumes exported for FY2013
to FY2016 (Table 4.9).
Table 4.9 Food assistance FY2013-FY2016

FY Rice Other agri-food productsa Oil
(tonnes) (tonnes) (litres)
2013 72,501 48,989 0
2014 90,045 46,463 2,364,000
2015 89,157 31,587 967,773
2016 69,508 16,791 792,660
a Other agri-food products include processed food, maize, maize meal, sorghum/millet, pulses, wheat
and wheat flour, depending on the year.
Source: WTO documents G/AG/N/JPN/230-233.
4.1.1.5 Domestic support
4.1.1.5.1 General support programmes
4.28. Domestic support programmes apply at both the general and product levels. At the general
level, support is provided for, inter alia, infrastructure, through extension services, and for
insurance/disaster relief programmes.
4.29. At the prefectural level, government-supported institutions are charged with promoting
farmland consolidation. These prefectural institutions rent farmland, improve infrastructure (if
necessary), and lease the land to core farmers. They had a total budget of JPY 22 billion in 2019.
Land owners in the areas that ease the farmland to the above-mentioned institutions can receive
payments of up to JPY 22,000 (28,000 in hilly and mountainous areas) per 0.1 ha; and farmers that
reduce business scale by leasing farmland can receive payments of up to JPY 700,000 per household
are available for the purpose of leasing land to farmers.22
4.30. The Agricultural Disaster Compensation Act used to serve as the legal basis for the Agricultural
Mutual Aid System (AMAS) that provides compensation from losses caused by natural disasters
(including from extreme weather), diseases, and other events. In 2018, the Act was revised, and
renamed the Agricultural Insurance Act. It introduces procedural efficiencies as well as a Revenue
Insurance Program (RIP). The RIP, effective from 2019, operates in addition to the AMAS, and is
applicable to all farm products and certain livestock products. It is a voluntary insurance system,
designed to compensate farmers in the event of revenue decreases; farmers taking out insurance
policies are paid back for 90% of the loss when the loss is more than 10%, based on five-year
20
WTO documents G/AG/N/JPN/215, 3 May 2017; G/AG/N/JPN/224, 15 May 2018; and
G/AG/N/JPN/240, 15 May 2019.
21
WTO document G/AG/W/196, 12 April 2019.
22
- 134 -
average farming income. The Government contributes 75% of the reserve fund and about 50% of
the premiums (the insurance premium rate is 1.08%).23
4.31. Three direct payments programmes fall under the Act on Multi-Functionality of Agriculture24:
(i) the direct payments for environmentally friendly agriculture, under which a total area of
79,465 ha was estimated to receive an average payment of JPY 56,808 per ha in FY2019; (ii) the
direct payments for farmers in hilly and mountainous areas, under which payment rates depend on
the slope of the land and production factors, ranging from JPY 21,000 per 0.1 ha for paddy fields in
high-inclination areas to JPY 300 per 0.1 ha for pasture on a mild slope. In FY2018, the scheme
covered 664,315 ha and 604,920 participants, amounting to a total of JPY 53.1 billion; and (iii) direct
payments to maintain and enhance multi-functionality, under which unit prices depend on the type
of land use and activity, to conserve or improve local resources, including mowing of farmland slopes
or simple repairing of channels. In FY2018, the scheme covered 2,292,522 ha and
28,348 organizations, amounting to a total of JPY 93.6 billion.
4.1.1.5.2 Support levels
4.1.1.5.2.1 WTO notifications
4.32. The most recent notification from Japan to the WTO Committee on Agriculture concerning
domestic support covers FY2016. 25 According to the notification, about 67% of all support for
agriculture (support notified under the Green Box, Blue Box and Amber Box (including de minimis))
is under the Green Box, and 30.5% under the Amber Box (including de minimis) (Chart 4.2)
Chart 4.2Support
Chart 4.2 Support notified
notified to the
to the WTO WTOon
Committe Committee on Agriculture, FY2012-16
Agriculture, FY2012-16
JPY
JPYbillion
billion
2,000
1,800
1,600
de minimis
1,400
Current Total AMS
1,200
Blue Box
1,000
Green Box
800
600
400
200
0
2012 2013 2014 2015 2016
Source: WTO documents G/AG/N/JPN/191, 31 March 2014; JPN/219, 3 July 2017; JPN/235, 19 February
Source: WTO documents: G/AG/N/JPN191, 31 March 2014; JPN/219, 3 July 2017; JPN/235, 19 February 2019;
2019; and JPN/236, 19 February 2019.
and JPN/236, 19 February 2019.
Green Box
4.33. Total support notified under the Green Box decreased over the period FY2012
(JPY 1,876.9 billion) to FY2014 (JPY 1,603.3 billion) and then steadily rose again, reaching
JPY 1,904.5 billion in FY2016. The major items of spending were on infrastructural services;
23
MAFF (in Japanese). Viewed at: http://www.maff.go.jp/j/keiei/nogyohoken/syu_kyosai.html; FFTC-AP
online information; and Food and Fertilizer Technology Center for the Asian and Pacific Region, Overview of
Japan's Rice Policy for the Last 30 Years: from Price Support to Direct Payments. Viewed at:
http://ap.fftc.agnet.org/ap_db.php?id=911.
24
There were no changes to the Act on Multi-Functionality of Agriculture over the review period. Further
details on support provided under the Act are available (in Japanese) at:
http://www.maff.go.jp/j/press/nousin/nihon/190628.html.
25
WTO document G/AG/N/JPN/236, 19 February 2019.
- 135 -
payments for conversion from rice production; personnel expenses for government officials; farmers'
pension programmes; and, in some years, disaster rehabilitation services and general services for
the livestock industry, including extension and infrastructure.
Blue Box
4.34. All spending notified under the Blue Box was for the rice income stabilization programme.
Over the period FY2012-16, spending levels fluctuated, from a high of JPY 155.9 billion in 2013 to a
low of JPY 70.8 billion in FY2016 (Chart 4.2).
Amber Box
4.35. Total support under the Amber Box since 2012 (including de minimis) fluctuated over the
period FY2012-16, reaching a peak in FY2015 and dropping slightly in FY2016. The main products
for which price support was provided were pig meat, and beef and veal; in both cases, support levels
increased over the period 2014-16 (Chart 4.3).
Chart 4.3 Amber Box support, FY2012-16

Chart 4.3 Amber Box support, FY2012-16
JPY billion
JPY billion
1,000
900
800
Non product specific

700
Other product specific
600 Sugar
Milk
500
Beef and veal
400 Pig meat
300
200
100
0
2012 2013 2014 2015 2016
Note: "Other product specific" includes eggs, fruit, starches and vegetables.
Note: "Other product specific" includes eggs, fruit, starches and vegetables.
Source: WTO notifications.
Source: WTO notifications.
4.1.1.5.2.2 OECD indicators
4.36. The OECD has been publishing reviews of agricultural policies in Japan, other OECD countries,
and some other economies for several years. In these publications, the value of transfers to
agricultural producers is measured using the Producer Support Estimate (PSE) and associated
indicators. The methodology for calculating these indicators is different from that used to calculate
the Aggregate Measure of Support, and the two sets of data are neither compatible nor
comparable.26
26
The total PSE is "the annual monetary value of gross transfers from consumers and taxpayers to
agricultural producers, measured at the farm gate level, arising from policy measures that support agriculture,
regardless of their nature, objectives or impacts on farm production or income. It includes market prices
support, budgetary payments and budget revenue foregone, i.e. gross transfers from consumers and taxpayers
to agricultural producers arising from policy measures based on: current output, input use, area
planted/animal numbers/receipts/incomes (current, non-current), and non-commodity criteria". Thus, the PSE
includes estimates for the value of transfers provided by market access measures, such as tariffs and tariff
quotas, as well as input subsidies, direct payments to producers that are coupled to prices or production, and
direct payments decoupled from prices and production. OECD, The Size and Sectoral Distribution of SOEs in
OECD and Partner Countries, pg. 49. Viewed at: http://dx.doi.org/10.1787/9789264215610-en.
- 136 -
4.37. Over the period 2012-18, movements in the value of production were largely reflected in
similar fluctuations in levels of support to agriculture (Chart 4.4). As reported by the OECD, support
to producers remains high, at 2.5 times higher than the OECD average. According to OECD
calculations, market price support remains the main element of producer support, and is mainly
sustained by border measures, for rice, pork and milk. It further notes that the termination of rice
farm support led to a decrease in direct payments since 2018, and that budgetary support to
producers mostly focuses on area and income-based payments.27
Chart 4.4 Value of production and support to agriculture, 2012-18

Chart 4.4 Value of production and support to agriculture, 2012-18
JPY billion
JPY billion
10,000
9,000
TSE total
8,000 PSE total
MPS total
7,000
Value of production
6,000
5,000
4,000
3,000
2,000
1,000
0
2012 2013 2014 2015 2016 2017 2018
Note: TSE
Note: TSE == Total
Total support
support estimate;
estimate; PSEPSE = Producer
= Producer support
support estimate;
estimate; MPS =MPS = Market
Market price support
price support.
Source: OECD
Source: OECD.Stat. Viewed at:
Stat. Viewed at: https://stats.oecd.org/index.aspx.
https://stats.oecd.org/Index.aspx.
4.38. As previously, single commodity transfers (SCTs) make up most of the support provided to
agriculture; rates of support vary from one product to another but accounted for just under half of
gross farm receipts in 2018 (which includes the value of farm production plus non-market-price
support payments). For most commodities, the SCT fluctuated over the past seven years, showing
no clear trends. The share of PSE in GDP fluctuated over the period 2012-18, from a low of 0.75%
in 2015 to a high of 1.01% in 2012 (Table 4.10).
Table 4.10 Total PSE and SCT values for selected commodities, 2012-18
2012 2013 2014 2015 2016 2017 2018
PSE
JPY billion 4,975 4,619 4,223 3,989 4,614 4,754 4,618
% gross farm 52.83 49.56 46.05 41.31 45.87 46.89 46.74
receipts
% of GDP 1.01 0.92 0.82 0.75 0.86 0.87 0.84
SCTss
Total (JPY billion) 4,470 4,110 3,684 3,396 4,022 4,165 4,042
Rice
SCT (JPY billion) 1,592 1,551 1,171 839 1,191 1,399 1,211
% of gross receipts 78 74 69 56 69 76 67
Wheat
SCT (JPY billion) 37 37 38 39 34 32 35
Barley
SCT (JPY billion) 16 16 14 16 15 15 15
OECD, OECD Agriculture Policy Monitoring and Evaluation 2019. Viewed at:
27
https://www.oecd.org/agriculture/oecd-ag-policy-monitoring-2019/.
- 137 -
2012 2013 2014 2015 2016 2017 2018

Soybeans
SCT (JPY billion) 24 23 24 24 23 23 25
Milk
SCT (JPY billion) 454 397 456 428 350 306 439
Beef and veal
SCT (JPY billion) 196 202 194 177 169 153 174
Pork
SCT (JPY billion) 356 327 328 363 379 388 392
Poultry meat
SCT (JPY billion) 19 24 25 23 13 10 15
Eggs
SCT (JPY billion) 56 67 65 65 54 52 59
Refined sugar
SCT (JPY billion) 42 43 42 45 46 44 46
Note: Figures on SCTs were rounded up/down.

Source: OECD Producer and Consumer Support Estimates Database. Viewed at:
http://www.oecd.org/agriculture/topics/agricultural-policy-monitoring-and-evaluation/.
4.1.1.5.3 Specific products
4.1.1.5.3.1 Rice
4.39. Over the review period, Japan applied price-based SSGs on rice (Table 4.5). Fifteen tariff lines
(at the HS six-digit level) relating to rice and its worked and/or prepared products are subject to
TRQs (Table 4.6).
4.40. The Government's policy on rice evolved over the review period, with the abolition of the
Direct Payment for Rice and the administrative allocation of rice production volume targets, in 2018.
The payments made to rice farmers were linked to rice production volume targets assigned to each
prefecture and each individual farmer based on MAFF estimates of supply and demand. As indicated
by an external source, this policy change is expected to raise the competitiveness of the rice farm
sector, by enabling farmers to plan their production, unrestricted by volume targets; the
Government's role is now refocused on providing market information.28
4.41. The MAFF continues to provide direct payments to farmers who produce crops other than
table rice in the paddy field, to optimize the use of paddy fields29; according to the authorities, this
scheme aims to maintain the favourable environment of paddy fields, and thus prevent floods or soil
erosion, to cultivate water resources, and to preserve the natural environment through effective use
of paddy field. The budgetary cost of payments was JPY 320.0 billion in 2017 and JPY 305.9 billion
in 2018.
4.42. In September 2017, the Government introduced the Rice Overseas Market Expansion Project,
to mitigate the impact of decreasing domestic rice consumption on farmer's incomes. 30 , A
JPY 60 billion target was set for exports of rice and rice products for calendar year 2019, to be
achieved through enhanced links between three groups: (i) exporters working on the strategic
expansion of rice exports ("strategic exporters"); (ii) businesses working on the stable production
of rice for export, which include rice producers and collecting organizations/groups ("strategic
production areas for export"); and (iii) strategic exporters' target export destinations (China;
Chinese Taipei; Hong Kong, China; Macau, China; Singapore; Thailand; Viet Nam; Malaysia;
28
OECD, OECD Agricultural Policy Monitoring and Evaluation 2019. Viewed at:
https://www.oecd.org/agriculture/oecd-ag-policy-monitoring-2019/.
29
This programme was introduced in 2010.
30
According to official sources, Japan's rice consumption is decreasing by around 100,000 tonnes every
year. MAFF (2019), Annual Report on Food, Agriculture and Rural Areas in Japan. Viewed at:
- 138 -
Mongolia; the United States; Canada; the European Union; Switzerland; Australia; the Russian
Federation; the Middle East; and India). 31 Government assistance includes support to attend some
international exhibitions to promote Japanese rice products, and the organization of some matching
events between producers and exporters.
4.1.1.5.3.2 Other cereals, sugar beet, starch potatoes, buckwheat, and rapeseed
4.43. Wheat, meslin, triticale, barley and their processed products are subject to TRQs (30 tariff
lines at the HS six-digit level); fill rates are particularly low for barley (Table 4.6).
4.44. Under the Act on Farming Income Stabilization (Act No. 88, 2006)32, core farmers producing
wheat, barley, soy beans, sugar beet, starch potatoes, buckwheat, and rapeseed are eligible for
payments based on area planted in the current year, and on the quantity and quality of annual
output. Since the previous Review, payment rates have increased for all products, except for soy
beans and starch potatoes (for which payment rates have decreased). Area-based payments remain
unchanged (Table 4.11).33
Table 4.11 Payment rates for other cereals, sugar beet, starch potatoes, buckwheat, and
rapeseed, 2016 and 2019
(JPY per unit)
Product Payment rate 2019 Per unit
(payment rate in 2016)
Quantity-based payment
Wheat 6,940 (6,320) 60 kg
Two-row barley 5,490 (5,130) 50 kg
Six-row barley 5,720 (5,490) 50 kg
Naked barley 8,230 (7,380) 60 kg
Soy beans 9,040 (11,660) 60 kg
Sugar beet 7,390 (7,260) tonne
Starch potatoes 11,610 (12,840) tonne
Buckwheat 16,840 (13,030) 45 kg
Rapeseed 9,920 (9,640) 60 kg
Area-based payment 20,000 (20,000) 10 aeres
Note: The area-based payment rate for buckwheat is JPY 13,000 per 10 aeres.
4.45. The Act on Price Adjustment of Sugar and Starch (Act No. 109, 1965), last amended in 2018,
aims to ensure a stable supply of domestic sugar and domestic potato starch, inter alia, to provide
a secure income for farmers of these products; to stabilize domestic production; and to help the
sound development of other related industries. 34 The Agriculture and Livestock Industries
Corporation (ALIC) purchases imports of sugar, starch and high-fructose corn syrup, which it sells
to importers at a higher scheduled price. This levy (the difference between the import price and the
scheduled price) is used to pay domestic producers. According to the authorities, the levy amounts
to around JPY 60 billion per year.
4.1.1.5.3.3 Fruits and vegetables
4.46. The Basic Policy for Fruit Industry Promotion of 2010 was last revised in 2015. The next
revision to it will be issued in 2020. The objectives of the Policy include an emphasis on increasing
31
OECD, Innovation, Agricultural Productivity and Sustainability in Japan, OECD Food and Agricultural
Reviews. Viewed at: http://www.oecd.org/publications/innovation-agricultural-productivity-and-sustainability-
in-japan-92b8dff7-en.htm.
32
Act on Farming Income Stabilization. Viewed (in Japanese) at:
http://www.maff.go.jp/j/kobetu_ninaite/n_seido/seido_suikei/law/pdf/law.pdf. There were no amendments to
this Act over the review period.
33
They are also eligible for payments which compensate for up to 90% of any loss of income compared
with the average annual income for the preceding five years, excluding the highest and lowest years. The
income-related payments are provided from a fund to which the Government contributes 75%, and
participating producers 25%.
34
Act on Price Adjustment of Sugar and Starch. Viewed at:
http://www.japaneselawtranslation.go.jp/law/detail/?ft=1&re=02&dn=1&co=01&ia=03&x=13&y=14&ky=farmi
ng+income+stabilization&page=2.
- 139 -
domestic production, consumption, and processing of domestically produced fruits. 35 Under the
revised Policy, financial assistance is to be increased for converting production to more valuable
fruits (defined as profitable fruits or highly valued varieties) and for on-farm improvements. The
budget allocated to this assistance was JPY 5.6 billion in FY2019.36 Assistance to farmers that convert
their production to more valuable fruits (e.g. from less valuable oranges to more valuable
peaches/oranges/mangoes) remains JPY 230,000 per 10 are, while assistance to farmers that
convert their production to more valuable deciduous fruit tree (e.g. apples) is JPY 170,000 per 10 are.
Under the Policy, payments are made to support the planned fruits production programme, and
processing of fresh fruits if the market price declines or is foreseen to decline. For vegetables, farmer
price support payments are made based on the quantity of production of specific vegetables under
contract, calculated as the difference between 90% of the average of wholesale market price of the
past six years and the average of wholesale market prices for each vegetable season. Since the last
Review, there was no change in the price control support scheme.
4.47. Targeted farmers are listed in a Fruits Production Restructuring Plan for each production area,
based on the Plan of Fruit Industry Promotion of each prefecture. These farmers are also eligible for
assistance for a four-year period after replanting, when incomes decline while the new fruit plants
mature. According to the authorities, there is no budget for this measure. Between 2014 and 2018,
5,799 ha under fruit production were converted to more valuable varieties, which is equivalent to
11% of the total area of fruit farms.
4.48. No new policies/measures to support the fruit and vegetables sectors were introduced over
the review period.
4.1.1.5.3.4 Tobacco
4.49. The simple applied average tariff on tobacco was 7.2% in 2019. Tariffs range from zero to
29.8%, with the highest duty rate corresponding to pipe tobacco and water pipe tobacco. There were
no changes to tariff rates over the review period. As mentioned above, exports of tobacco products
declined significantly over the review period (Table 4.4).
4.50. The state trading enterprise, Japan Tobacco, which is part-owned by the Government
(Section 3.3.5), continues to be required to enter into purchase contracts with tobacco growers
under the Tobacco Business Act. It has a monopoly on the domestic manufacturing of tobacco and
imports of leaf tobacco. Since the previous Review, there were no changes to the Tobacco Business
Act.37 Contracts specify the area to be planted, the specific varieties of leaf tobacco, and the price
by variety and grade. For 2019, the total area is set at 6,886 ha (down 4.8% from 2018) and grower
prices are set at JPY 1,912.3 per kg (up 1.3% from 2018).38
4.51. Importers, wholesalers, and retailers of tobacco products are required to register with the
Minister of Finance, who must approve final retail prices. Lower excise tax rates applied to some
third-grade cigarettes produced by Japan Tobacco were raised, and are now in line with rates applied
to all other cigarettes (Section 3.3.1).
4.1.1.5.3.5 Livestock and livestock products
4.52. Under the Act on Dairy and Beef Cattle Production Promotion, the Minister of Agriculture,
Forestry and Fisheries is charged with developing a plan to facilitate the modernization of dairy and
beef cattle production. This plan is reviewed about every five years, indicating the policy direction
for the substantial development of dairy and beef cattle production and the stable supply of milk,
milk products and beef.
4.53. Administered prices continue to apply to calves, with the ALIC implementing a deficiency
payment system. The ALIC pays calf producers the difference between the guaranteed price and the
actual average price, unless the actual average price falls below a threshold level, which is called
35
MAFF (in Japanese). Viewed at: http://www.maff.go.jp/j/seisan/ryutu/fruits/pdf/point.pdf.
36
MAFF (in Japanese). Viewed at: http://www.maff.go.jp/j/seisan/ryutu/fruits/attach/pdf/index-61.pdf.
37
Tobacco Business Act. Viewed at:
https://elaws.e-gov.go.jp/search/elawsSearch/elaws_search/lsg0500/detail?lawId=359AC0000000068.
38
Japan Tobacco Inc., About report of the 53rd Board of Tobacco. Viewed at:
https://www.jti.co.jp/investors/library/press_releases/2018/1025_01.html.
- 140 -
the target rationalized price. When the actual average price falls below the threshold, in addition to
the ALIC payment, 90% of the fall will be paid by a collective fund from the ALIC, prefectural
governments, and producers. Administered prices for beef and pig meat were abolished in 2018
Table 4.12 Administered prices for calves, FY2019 (JPY)

Product Guaranteed price Target rationalization price
Japanese black calves 531,000 per calf 421,000
Japanese brown calves 489,000 per calf 388,000
Dairy breeds 161,000 per calf 108,000
Cross breeds 269,000 per calf 212,000
4.54. Coinciding with the entry into force of the CPTPP in 2018, Japan increased support for
domestic pork producers by expanding the Hog Growers Business Stabilization Measure (also known
as Marukin). The Marukin payment system for pork meat covers 90% of the cost gap. Pork producers
pay 25% of the grant amount from the reserve fund (down from 50% prior to the expansion of the
system).39
4.55. Under the Price Stabilization Fund for Eggs, payments are made to egg producers under
contract, calculated as 90% of the difference between the baseline price (JPY 185/kg in FY2019) and
the average trading price, multiplied by the quantity of eggs sold.40 The Government and producers
contribute to the fund. The budgetary cost for this measure was JPY 4.86 billion in 2017, 2018 and
2019.
4.56. The Feed Price Stabilization Programme operates to help to ease the influence of sudden
surges in compound feed prices upon farmers. Farmers pay JPY 500 per tonne of compound feed
into the fund operated by the compound feed industry. The fund is supplemented with the other
funds provided by the Government and the compound feed industry. Grains imported as raw material
for feedstuffs qualify for a reduced tariff, subject to measures to ensure they are not diverted for
human consumption. These measures include approval by the Government for import by the
processing plant, penalties for misuse of feed grains, and specified processing methods. The
legislative basis for this measure is Article 13 of the Customs Tariff Law.
4.57. The MAFF purchases and sells imported feed (barley and wheat) to stabilize feed supply,
demand and prices; this is done based on an annual Feed Supply and Demand Plan. This Plan is
based on past records, supply and demand trends, trade perspectives, and other relevant factors.
In 2019, it was used to purchase and sell 600,000 tonnes of feed barley and 480,000 tonnes of feed
wheat. The private sector freely imports these products, regardless of the Plan.
4.1.1.5.3.6 Dairy
4.58. Dairy producers benefit from several support programmes, in addition to the administered
prices for dairy calves destined for beef production (Table 4.12). Over the review period, various
dairy products were the subject of SSGs (Table 4.5).
4.59. TRQs apply to various dairy products; fill rates in FY2017/18 were low for skimmed milk
powder, prepared whey (for infant formula), and butter and butter oil (Table 4.6). Tariff quotas for
designated dairy products for general use are allocated to the ALIC (the ALIC does not import any
out-of-quota products).
4.60. Since 2018, a modified support system for milk entered into force.41 Under this system, the
MAFF decides the upper limit of the amount of raw milk for compensation payments; every producer
of raw milk for processed products is eligible for this payment. To ensure the stable continuation of
raw milk collection in disadvantaged areas, designated milk collection operators are eligible for
39
MAFF. Viewed (in Japanese) at: http://www.maff.go.jp/j/kanbo/eu_epa/attach/pdf/index-11.pdf.
40
Japan Poultry Association, Monthly standard transaction price and compensation price. Viewed at:
http://www.jpa.or.jp/stability/monthly.html.
41
For a description of the system previously in place, see WTO document WT/TPR/S/351/Rev.1,
20 June 2017
- 141 -
adjustment payments. The compensation payment uniform unit price was JPY 8.23 per kg of milk in
FY2018. The adjustment payment for raw milk collection in the same year was JPY 2.43 per kg of
milk. Under this scheme, JPY 33.6 billion was paid to dairy farmers in FY2018. Additionally, to
cushion producers against sudden price fluctuations, producers and the Government contribute to
the farm business stabilization fund (at rates which vary from one bloc to another but at a ratio of
1:3, respectively). The fund compensates producers of milk for processing whenever prices fall below
the average for the previous three years.
4.61. In Japan, butter is imported by the ALIC and by private businesses. Private businesses can
import butter subject to in-quota tariff rates, or by paying out-of-quota tariff rates. Imports by the
ALIC accounted for 93% of the total amount of imports of butter and butter oil in FY2018.
4.1.2 Fisheries
4.1.2.1 Features
4.62. According to the Food and Agriculture Organization (FAO) 42 , Japan has a coastline of
29,751 km, territorial waters of 377,801 km2, and an exclusive economic zone (200 nautical miles)
of 3.64 million km2, the sixth largest in the world. Fish is an essential part of the traditional diet,
and an important economic sector for many coastal communities. In 2016, Japan was the seventh
largest world producer of fish and fish products, and the second largest importer of these products.
Its exports are of lesser importance.
4.63. Overall, the contribution of fisheries and aquaculture to GDP remained at less than 0.2%, and
to total employment less than 0.3%, in 2017. During the period under review, fish production
(capture + aquaculture) declined steadily, a trend that followed a peak of 11.2 million tonnes in
1989 to reach 3.9 million tonnes in 2016 and 3.8 million tonnes in 2017.43 In 2017, capture fishing
represented 76% of the production, and aquaculture, 24%.44
4.64. Chart 4.5 provides the value of production by category for FY2017. The decline in the quantity
captured is not fully reflected in value terms, as there was an upward trend in prices during the
Chart 4.5
period Fisheries
under and aquaculture production, FY2017
review.45
Chart 4.5 Fisheries and aquaculture production, FY2017
Marine aquaculture
32.7%
Inland water fishery 1.2%
Total: Inland water aquaculture

Marine fishery
JPY 1,608 billion 6.2%
59.9%
42
FAO, Fishery and Aquaculture Country Profiles, Japan, April 2019. Viewed at:
http://www.fao.org/fishery/facp/JPN/en.
43
USDA, Foreign Agricultural Service, Gain Report No. JA9044, 4 September 2019. Viewed at:
https://gain.fas.usda.gov/Recent%20GAIN%20Publications/Japan%20Revises%20Fisheries%20Act%20Seekin
g%20Global%20Competitiveness_Tokyo_Japan_4-9-2019.pdf.
44
MAFF, FY2017 Trends in Fisheries, FY2018 Fisheries Policy, White Paper on Fisheries: Summary.
Viewed at: http://www.maff.go.jp/e/data/publish/attach/pdf/index-94.pdf.
45
MAFF, FY2017 Trends in Fisheries, FY2018 Fisheries Policy, White Paper on Fisheries: Summary,
pg. 12. Viewed at: http://www.maff.go.jp/e/data/publish/attach/pdf/index-94.pdf.
- 142 -
4.65. Fish consumption followed a declining trend similar to that of production, falling from 40.2 kg
per capita in 2004 to 27.3 kg in 2014 and to 24.6 kg 46 in 2016. Self-sufficiency ratios slightly
improved from 2016 to 2018 for fish production as a whole (from 53% to 55%) and for fish
production for human consumption (56% to 59%) but declined marginally for seaweed (from 69%
to 68%) (Table A4.1).
4.66. The number of full-time fishermen also declined, from 166,610 in 2015 to 153,490 in 2017.47
The average age increased, and about 60% of fishermen were 55 years old or older in 2017.48
4.67. Fishing vessels also aged during the period under review, with 59% of licensed vessels being
older than 20 years in FY2017.49
4.68. Almost all fish processing companies are small and medium-sized businesses, with
300 employees or fewer. Their number decreased during the period under review.50
4.69. The value of aquaculture production reached JPY 603.7 billion in 2017, an increase of 6%
compared to 2016. The main products of marine aquaculture (as opposed to inland aquaculture) are
Japanese amberjack, Nori seaweed, scallops, and red seabream. These aquaculture products are
the main contributors to Japanese exports of fish and fish products.
4.70. Foreign investment in the fishery sector in Japan is subject to a prior notification requirement
(Section 2.4.1). Some locally fished and processed fish and fish products are protected by GIs.
4.71. Imports of fish and fish products are about five times greater than exports, as evidenced by
Tables 4.13 and 4.14, which describe the value of imports and exports by main species, from 2014
to 2018. Both imports and exports of fish and fish products have grown every year in value terms
since 2015.
4.72. Exports of fish and fish products constitute just 0.3 % (a figure that remained stable during
the period under review) of total Japanese exports.
Table 4.13 Exports of fish and fish products, 2014-18

2014 2015 2016 2017 2018
Exportsa USD 1,875.6 1,905.0 2,031.5 2,040.5 2,327.1
million
% of total exports 0.3 0.3 0.3 0.3 0.3
Growth rate, % -5.4 1.6 6.6 0.4 14.0
Top ten exports by HS 6-digit:
030799 - Molluscs, n.e.s. in heading '000 54.5 78.3 61.1 39.6 65.0
0307, frozen, including flours, meals and tonnes
pellets USD 404.9 464.5 488.4 369.8 350.8
million
030354 - Mackerel frozen; excluding '000 105.1 185.3 210.6 232.0 248.8
fillets, livers and roe tonnes
USD 107.7 147.2 165.5 194.8 240.7
million
160561 - Sea cucumbers, prepared or '000 0.7 0.7 0.6 0.7 0.6
preserved tonnes
USD 196.0 179.3 167.4 184.9 190.9
million
46
USDA, Foreign Agricultural Services, Gain Report No. JA9044, 4 September 2019. Viewed at:
https://gain.fas.usda.gov/Recent%20GAIN%20Publications/Japan%20Revises%20Fisheries%20Act%20Seekin
g%20Global%20Competitiveness_Tokyo_Japan_4-9-2019.pdf.
47
USDA, Foreign Agricultural Services, Gain Report No. JA9044, 4 September 2019.
48
USDA, Foreign Agricultural Services, Gain Report No. JA9044, 4 September 2019.
49
50
- 143 -
2014 2015 2016 2017 2018

160559 - Mollusc preparations; n.e.s. in '000 2.4 2.4 3.6 2.5 6.5
heading 1605.5, prepared or preserved tonnes
USD 30.4 31.0 84.8 77.1 125.3
million
030489 - Fish fillets; frozen, of fish n.e.s. '000 5.6 6.9 7.0 7.9 7.7
in heading 0304.8 tonnes
USD 78.4 97.7 106.8 118.7 121.6
million
160420 - Fish preparations; fish minced, '000 9.9 11.3 12.2 12.6 14.2
n.e.s. in heading 1604, prepared or tonnes
preserved USD 81.7 85.3 106.0 105.3 119.4
million
030389 - Fish; frozen, n.e.s. in heading '000 61.0 66.0 46.5 59.0 63.7
0303, excluding fillets, livers, roe tonnes
USD 93.4 105.7 85.7 108.5 107.7
million
160552 - Scallops prepared or preserved '000 2.5 2.4 2.1 1.1 1.4
tonnes
USD 123.5 130.4 118.3 83.9 86.9
million
030791 - Molluscs; n.e.s. in heading '000 8.3 9.6 7.5 7.9 19.5
0307; live, fresh or chilled; incl. flours, tonnes
meals, pellets USD 30.7 38.8 38.8 42.5 79.9
million
030353 - Sardines, sardinella, brisling or '000 13.8 33.9 39.1 61.9 99.3
sprats; frozen; excl. fillets, livers and roe tonnes
USD 12.6 26.3 31.8 47.2 75.3
million
a Including HS codes 020840, 03, 051191, 1504, 1603, 1604, 1605, and 230120.
Note: The ranking of the top ten fishery products is based on the value of 2018 exports using the HS12
nomenclature.
Source: WTO calculations, based on the UNSD Comtrade database.
Table 4.14 Imports of fish and fish products, 2014-18

2014 2015 2016 2017 2018
Importsa USD 14,981.5 13,524.6 13,965.0 15,079.6 15,455.3
million
% of total imports 1.8 2.2 2.3 2.2 2.1
Growth rate, % -2.8 -9.7 3.3 8.0 2.5
Top ten imports by HS 6-digit:
030617 - Shrimps, prawns, '000 146.8 138.9 149.2 156.8 142.5
frozen tonnes
USD 1,833.3 1,466.9 1,560.6 1,679.2 1,503.7
million
030487 - Tuna, skipjack, stripe- '000 36.5 41.4 41.8 47.4 52.5
bellied bonito, frozen fillets tonnes
USD 550.0 622.5 616.6 704.3 796.4
million
160521 - Shrimp, prawns, '000 59.2 59.6 59.5 62.1 64.0

prepared or preserved tonnes
USD 719.9 643.8 628.9 658.3 679.5
million
030312 - Pacific salmon, frozen; '000 83.8 100.9 95.1 95.6 101.5
excluding fillets, livers and roe tonnes
USD 511.8 477.9 475.1 605.1 647.9
million
- 144 -
2014 2015 2016 2017 2018

030749 - Molluscs; cuttle fish and '000 26.8 23.9 22.2 125.3 102.7
squid - frozen, dried, salted or tonnes
smoked USD 190.5 154.9 160.1 693.3 636.3
million
030390 - Fish; frozen, livers and '000 54.6 54.7 47.7 57.7 59.0
roe tonnes
USD 435.4 361.6 402.8 585.8 599.5
million
030489 - Fish fillets; frozen, of '000 100.4 101.8 103.9 107.4 106.6
fish n.e.s. in heading 0304.8 tonnes
USD 545.4 494.2 512.0 530.9 551.8
million
030614 - Crustaceans; frozen, '000 34.7 33.7 34.3 27.9 25.6

crabs, smoked, cooked or not tonnes
before or during smoking USD 500.4 487.3 569.1 500.9 530.7
million
030499 - Fish meat, excluding '000 148.7 145.7 139.2 131.9 132.9
fillets; frozen, n.e.s. in heading tonnes
0304.9 USD 559.2 520.9 515.7 486.7 523.5
million
160419 - Fish preparations, n.e.s '000 90.7 90.3 88.0 87.6 93.0
in heading 1604 tonnes
USD 481.4 448.2 446.2 446.1 498.8
million
a Including HS codes 020840, 03, 051191, 1504, 1603, 1604, 1605, and 230120.
Note: The ranking of the top ten fishery products is based on the value of 2018 imports using the HS12
nomenclature.
4.73. Chart 4.6 indicates the shares of the main partners for imports and exports for FY2017. China,
the United States, Chile and the Russian Federation are the top partners for imports, while Hong
Kong, China is by far the main partner for exports, with a share of more than 30%.
C hart 4.6 Trade of fish and fishery products, by main partners, 2017
Chart 4.6 Trade of fish and fishery products, by main partners, 2017
Imports Exports
China
Other
17.9% Hong Kong, China
18.5%
Other 30.9%
27.9%
Korea, Rep. of
United States
5.9%
9.3%
Chinese Taipei
Korea, Rep. 6.0%
of 5.1% Chile
8.9%
Thailand
Indonesia 6.1%
5.1% China
Russian Federation
Viet Nam 13.6%
Norway 7.0%
6.3%
5.9% Viet Nam United States
Thailand
6.7% 12.6%
6.2%
Total imports: JPY 1,775.1 billion Total exports: JPY 274.9 billion
Source: MAFF.
Source: MAFF.Viewed
Viewedat:
at:http://www.maff.go.jp/e/data/publish/index.html#Annual.
http://www.maff.go.jp/e/data/publish/index.html#Annual.
- 145 -
4.1.2.2 Policy and institutional issues
4.74. Japan's latest overall strategy is defined by the New Basic Plan for Fisheries, which was
formulated in 2017 and sets a self-sufficiency ratio for FY2017 of 70%. The aim of the strategy is to
enhance fisheries' sustainable resource management, to make fisheries a growing industry through
increased productivity, and to maintain fisheries communities and increase their revenues. Actions
and programmes to that effect include export promotion initiatives to identify and help potential
exporters; encouragement to local producers to make their own plans to find and exploit potentially
available resources; incentives for resources management and sustainability; incentives for young
fishermen; training and education programmes; research programmes; and relaxation of the
conditions of employment of foreign workers in the sector.
4.75. Overall responsibility for national fisheries policies lies with the Fisheries Agency in the MAFF,
while prefectural governments are responsible for local issues, such as management of local fisheries
resources. Regarding important policy decision-making, the Fisheries Policy Council (at national
level), the Regional Fisheries Coordination Committees (at regional level), and the Sea Area
Coordination Committees (at prefectural level) are consulted for their opinions, depending on the
nature of the issue.51
4.1.2.3 Regulatory developments
4.76. The main laws concerning the fisheries sector include: the Fisheries Act (last amended in
2018) 52 (the Basic Law on the Fisheries Policy of 2001 (last amended in 2014); the Fisheries
Cooperative Association Law (last amended in 2016); the Law to Ensure Sustainable Aquaculture
Production of 1999 (last amended in 2014); the Act on the Exercise of the Sovereign Right for
Fishery, etc. in the Exclusive Economic Zone of 1996 (last amended in 2014); the Act on Preservation
and Control of Living Marine Resources of 1996 (last amended in 2007); the Act on the Protection
of Fishery Resources of 1951 (last amended in 2015), the 2014 Inland Water Fishery Promotion Act,
and the 8 December 2018 amendment of the 1949 Fisheries Act.
4.1.2.4 Stock management
4.77. On 8 December 2018, the Government promulgated the first substantial revision of the
Fisheries Act since its inception in 1949. The revised Act will enter into force at the latest on
14 December 2020. The revision consists of three main elements:
• firstly, new firms, in particular private-sector firms, will be allowed to enter the fishing
industry and to obtain fishing rights when fishing waters are not fully utilized. The allocation
procedure consists of the following steps: first, the prefectural governor has the obligation,
every five years, to consult and gather the opinions of all stakeholders, including potential
new entrants, and to develop a new fishery rights plan if s/he considers it would increase
the fishery production in the waters of the prefecture. The plan for the next five years is
finalized and publicized after consultation with the Fisheries Adjustment Commission. The
governor then grants a licence to qualified applicants, in order of priority and eligibility
defined by the plan. All beneficiaries of fishing rights are associated with voluntary resource
management plans. Previously, the prefectural governments prioritized local fisheries
operators and cooperatives, when granting these fishing rights;
• secondly, a system of Individual Quotas (IQs) within the Total Allowable Catch (TAC) was
introduced. Conceptually, in the absence of such IQs, fishers are implicitly encouraged to
fish as much as they can, as quickly as they can, which may lead to an overfishing. The IQs
are not transferable, except from one vessel to another belonging to the same owner. In
addition, the TAC system, which applied to only seven species, was extended to blue fin tuna
in 2018, to ensure compliance with the relevant conservation management measure taken
by the Western and Central Pacific Fisheries Commission. The TAC system is expected to be
extended to cover most catches; and
51
Other relevant organizations include the Fisheries Cooperative Associations and the Fisheries
Research Agency (WTO, 2015).
52
For elements on the content of this latter amendment, see Section 4.1.4.1.
- 146 -
• finally, the revision tightens the control of poaching of marine resources, such as abalone,
sea cucumbers and glass eel, by raising the maximum fine from JPY 2 million to
JPY 30 million.
4.1.2.5 International agreements
4.78. Japan has bilateral agreements with Australia, Canada, China, Chinese Taipei, France, Kiribati,
the Republic of Korea, Marshall Islands, Morocco, the Russian Federation, Solomon Islands, Senegal,
and Tuvalu. The agreements with Australia, Canada, and France do not provide for access by
Japanese fishing vessels, and the agreements with China, the Republic of Korea, and the Russian
Federation are mutual access agreements allowing reciprocal access to each country's EEZs. Under
the agreements with China and the Republic of Korea, the parties have not yet reached agreement
about operational conditions for mutual fishing access.53
4.79. In addition, there are numerous private-sector-based agreements which provide for access
to the waters of other countries and territories (Cabo Verde, Côte d'Ivoire, Equatorial Guinea, Fiji,
Gabon, The Gambia, Guinea, Guinea-Bissau, Madagascar, Mauritania, Mauritius, Micronesia,
Mozambique, Nauru, Palau, Papua New Guinea, Saõ Tome and Principe, Seychelles, Sierra Leone,
St. Helena, and Tanzania).
4.80. Japan is a member of the following Regional Fisheries Management Organizations (RFMOs):
Indian Ocean Tuna Commission; Western and Central Pacific Fisheries Commission; Inter-American
Tropical Tuna Commission; International Commission for the Conservation of Atlantic Tuna;
Commission for the Conservation of Southern Bluefin Tuna; General Fisheries Commission for the
Mediterranean; South East Atlantic Fishery Organization; Convention on the Conservation and
Management of Pollock Resources in the Central Bering Sea; North Pacific Anadromous Fish
Commission; Commission for the Conservation of Antarctic Marine Living Resources; Northwest
Atlantic Fisheries Organization; South Indian Ocean Fisheries Agreement; North Pacific Fisheries
Commission; and Commission for the Conservation of Antarctic Marine Living Resources.
4.81. Japan is also a member of the following fisheries and fisheries-related agreements: Asia-
Pacific Fishery Commission, Fishery Committee for the Eastern Central Atlantic, Southeast Asian
Fisheries Development Centre, and North Pacific Marine Science Organization.
4.82. In December 2018, Japan announced its withdrawal from the International Convention for the
Regulation of Whaling, and its intent to resume commercial whaling from July 2019. This withdrawal
became effective on 30 June 2019.
4.83. In May 2017, Japan acceded to the Agreement on Port State Measures to Prevent, Deter and
Eliminate Illegal, Unreported and Unregulated Fishing. Accordingly, it implements measures such as
restricting port calls for fishing vessels listed in the RFMOs illegal, unreported and unregulated (IUU)
vessel list and the prohibition of landing of fish harvested by IUU fishing.
4.1.2.6 Border and domestic support measures
4.84. During the review period, tariff protection to the fisheries sector remained virtually
unchanged. In FY2019, the average MFN tariff rate on the 528 lines (493 in FY2016) (at HS nine-
digit level) covering fish and fish products was 6.1% (6.2% in FY2016) and the range was between
zero and 15% (same in FY2016). Of these lines, 4.7% (4.3% in FY2016) are duty-free, and 0.2%
(same in FY2016) are subject to non-ad valorem rates (Section 3.1.4.1). 66 tariff lines are fully
unbound, and 19 partially bound. This represents around 12.5% of fish and fishery products under
the WTO definition. Japan applies import licensing procedures and quotas on certain species
(Section 3.1.6.2).
4.85. Fish and fish products benefit from the Japanese systems of export support and promotion.
MAFF, 2018 White Paper on Fisheries (summary), pg. 19. Viewed at:
53
http://www.maff.go.jp/e/data/publish/attach/pdf/index-94.pdf.
- 147 -
4.86. Japan reshuffled the presentation of its subsidy schemes in its notification. In its previous
WTO notification in 201754 (covering FY2014 and 2015), it notified only two national programmes:
the Fisheries Modernization Fund Interest Subsidy and the Fund for the Measure to Recovery Fishery
Resources. Table 4.15 contains the support programmes for fisheries as notified by Japan to WTO
in July 2019.55 The total amount of subsidies rose significantly. It was JPY 73.2 billion for FY2016
and JPY 68.7 billion for FY2017, compared with JPY 1.7 billion for FY2014 and JPY 1.3 billion for
FY2015. According to the authorities, this increase can be explained by the fact that, for the sake of
transparency in the ongoing negotiations on fisheries subsidies, Japan notified programmes which,
in its view, may not constitute subsidies under Article 1 of the SCM Agreement or may not be
"specific" under Article 2 of the same Agreement.
Table 4.15 Fisheries subsidies notified in July 2019 for FY2016 and FY2017
Name of the Level and form Policy objective pursued Beneficiaries Duration and
programme of the subsidy amount
Programmes for - National To support fishermen and Fishermen and FY2016 (April
development - Grants, etc. other organizations to associations 2016-March 2017):
and adaptation develop and adapt new thereof JPY 445 million;
of new technologies related to FY2017 (April
technologies and fisheries, such as 2017-March 2018):
conservation of information and JPY 604 million
fishing grounds communication
technology, to mitigate or
prevent damage by
harmful marine species
and red-tide, and to
remove marine wastes
Support for - National To enable fishermen and Fishermen and FY2016 (April
establishment of - Grants and other organizations to associations 2016-March 2017):
environmentally loans conduct sustainable fishing thereof JPY 64.9 billion;
and practices under the FY2017 (April
economically government's fisheries 2017-March 2018):
sustainable plans and resource JPY 580 billion
fisheries management measures,
thereby establishing
environmentally and
economically sustainable
fisheries, and ensuring a
stable supply of seafood to
its nationals. Such
supports include the
mitigation of damages on
fishermen by natural and
economic disasters, and
the promotion of structural
reform of fisheries sectors
Promotion for - National To promote regional Fishermen and FY2016 (April
regional - Grants and development by associations 2016-March 2017):
development funds supporting fishermen and thereof JPY 6.9 billion;
through other organizations to FY2017 (April
fisheries conduct on-site fisheries- 2017-March 2018):
related activities, such as JPY 9.0 billion
clean-up and maintenance
of the coastal marine
ecosystem, national border
surveillance, the
revitalization of fishing
communities in remote
islands, and the
recruitment and
settlement of new
fishermen
Support for - National To support aquaculture Fishermen and FY2016 (April
aquaculture, - Grants, etc. and inland fisheries, and associations 2016-March 2017):
inland fisheries, to promote fish stock thereof JPY 922 million;
enhancement
54
WTO document G/SCM/N/315/JPN, 9 June 2017.
55
WTO document G/SCM/N/343/JPN, 19 July 2019.
- 148 -
Name of the Level and form Policy objective pursued Beneficiaries Duration and
programme of the subsidy amount
and fish stock FY2017 (April
enhancement 2017-March 2018):
JPY 972 million
Subsidy for - Local Grant Japan Caviar, Inc. FY2016 (April
inland water (Miyazaki 2016-March 2017):
aquaculture prefectural JPY 5.7 million;
government) FY2017 (April2017-
March 2018):
JPY 4.5 million
Source: WTO document G/SCM/N/343/JPN, 19 July 2019.
4.2 Mining and Energy
4.2.1 Mining
4.87. Mining represented 0.1% of GDP in Japan in 2016 and in 2017. This is due to the fact that
the country has few mineral resources, most of which are already depleted and/or have become
economically uncompetitive (e.g. coal). Some mining activities remain for precious metals, and there
could be some perspectives from rare earths that have not yet materialized. In 2017, the sector
employed about 20,000 persons, i.e. 0.1% of total employment.
4.88. Table 4.16 provides an overview of the mining sector, in terms of number of establishments,
number of persons employed, and value added by main type of products, for 2016, the last year for
which this type of statistics were available. Table 4.17 describes the main mineral productions from
2015 to 2018, and the share of the mining sector in total GDP and total employment.
Table 4.16 Basic indicators on mining, 2016

No. of No. of Value of Value
establishments persons production added
employed (JPY (JPY
billion) billion)
Total mining 1,826 18,683 430.9 200.3
Establishments engaged in administrative 177 2,341
or ancillary economic activities
Metal mining 6 213 35.7 30.7
Coal and lignite mining 17 581 20.3 ..
Stone quarrying, sand and gravel pits 1,389 11,956 250.6 104.9
Ceramic mineral mining 194 3,265 120.2 52.8
Other 43 327 4.0 ..
.. Not available.
Source: Statistics Bureau of Japan, Statistical Yearbook 2019. Viewed at:
https://www.stat.go.jp/english/data/nenkan/index.html.
Table 4.17 Mining production, 2015-18
2015 2016 2017 2018

Gold (g) 7,698,924 6,455,414 6,369,413 6,453,023
Silver (kg) 4,616 5,076 3,408 3,596
Silica stone (t) 8,988,066 9,068,044 9,261,063 9,631,453
Lime stone (t) 142,916,418 139,331,640 141,633,594 142,211,511
Dolomite (t) 3,365,928 3,222,885 3,359,444 3,439,941
Silica sand (t) 2,834,790 2,762,208 2,694,788 2,524,141
Mining as % of GDP 0.1 0.1 0.1 ..
Mining as % of total employment 0.1 0.1 0.1 ..
.. Not available.
Source: Statistics Bureau of Japan, Statistical Yearbook 2019. Viewed at:
https://www.stat.go.jp/english/data/nenkan/index.html.
- 149 -
Japanese imports of mineral products (except energy products) represented 6.5% of total
Japanese imports in 2018 (Table 4.18).
The average level of tariff protection for mining products (group ISIC 2) is 0.1%. All but four
tariff lines56 are duty-free.
Table 4.18 Major mining imports

Import value, USD million
Description HS codes 2016 2017 2018 Main origina
Copper ores and 2603 7,430.9 7,969.9 9,823.4 Chile (39.4%); Indonesia (16.0%);
concentrates Australia (13.9%)
Iron ores and 2601.11; 7,348.5 9,650.8 9,305.7 Australia (49.6%); Brazil (31.1%)
concentrates 2601.12
Aluminium and 7601.10; 4,306.8 5,660.5 6,324.7 Russian Federation (18.9%); Australia
alloys, unwrought 7601.20 (18.8%); United Arab Emirates
(12.0%)
a Based on 2018 import figures.

The State appears not to be involved in the ownership of mines, and does not provide specific
subsidies or support to the mining sector. There are no programmes to help the reconversion of
areas affected by the closure of mines.
Policy and institutional developments
Japan's policy objective is to secure a stable supply of natural resources. The law and
regulations on mining are under the purview of the METI, which delegated this responsibility to the
Agency for Natural Resources and Energy. Onshore permit requests must be made at local bureaux
of the METI, while offshore permit requests must be made at the METI itself. The Japan Oil, Gas and
Metals National Corp. (JOGMEC), which was formed in 2004 through the merger of the Japan
National Oil Co. and the Metal Mining Agency of Japan, is charged with implementing the policies set
by the METI. The JOGMEC, an incorporated administrative agency of the Government, contributes
to a stable supply of metal resources which are indispensable for Japanese industry, is responsible
for a wide range of fields, including surveying, exploration, development, production, stockpiling,
recycling, and environmental protection.57
Regulatory and operational developments
The main legislation regarding mining remains the Mining Act (Law No. 289 of
20 December 1950), whose last significant amendments date back to 2012 and 2017. Prior approval
from the Minister of Economy, Trade and Industry is required for seismic exploration,
electromagnetic exploration, and intensive sampling exploration. Exploitation permits ("digging
rights") are also subject to authorization by the METI.
To apply for an exploration permit or a digging right permit, individuals must be of Japanese
nationality and companies must be constituted under Japanese law. However, these companies can
be fully or majority foreign-owned.
Prior to the 2012 amendments to the Mining Act, applicants were granted mining rights on a
first-come-first-served basis. The amendments defined two classes of minerals: specified minerals
and non-specified minerals.
The specified minerals designated under the Mining Act are:
• oil and combustible natural gas;
56
Namely, HS 271121 natural gas in gaseous state: 4.5%; HS250900 chalk: 1.4%; HS 2513190
emery; natural corundum, natural garnet and other natural abrasives: 1.1%; and HS250100 salt and pure
sodium chlorite: JPY 0.5/kg.
57
JOGMEC, Metals. Viewed at: http://www.jogmec.go.jp/english/metal/index.html.
- 150 -
• gold ore, silver ore, copper ore, lead ore, bismuth ore, tin ore, antimony ore, mercury ore,
zinc ore, iron ore, iron sulfide ore, manganese ore, tungsten ore, molybdenum ore, nickel
ore, cobalt ore, uranium ore, thorium ore and barites, which constitute hydrothermal
deposits located subsea or beneath the sea;
• copper ore, lead ore, zinc ore, iron ore, manganese ore, tungsten ore, molybdenum ore,
nickel ore and cobalt ore, which constitute sedimentary deposits located subsea or beneath
the sea; and
• asphalt.
Areas either containing or likely to contain specified minerals can be deemed a "specified
area" by the METI. The METI accepts applications from interested developers for specified areas for
a period of no shorter than six months, after which time the METI selects what it deems to be the
most suited developer for the area.
Non-specified minerals include all minerals not listed as a specified mineral. A first-come-first-
served selection system still applies for them, provided the applicant can demonstrate financial
solvency and the technical capability to carry out development of the site.
For both types of minerals, exploration must start within six months, and the holder of a
prospecting right can extend his right by two years twice. For the production/exploitation/digging
right, a separate application must be made. The applicant must submit, to this effect, an explanatory
document outlining the location, depth, thickness and any other information regarding the mineral
deposit discovered under the prospecting right. Criteria used by the METI to grant or refuse the right
are similar to those for exploration. Work must start within six months, and the permit can be
withdrawn if the operations are interrupted for more than one year.
To prevent environmental pollution caused by mining activities, support continues to be

provided since 1973, with no expiry date, to cover a portion of the mine pollution control costs under
a Loans for Mine Pollution Control scheme (FY2016 (settlement of accounts) JPY 189 million; FY2017
(settlement of accounts) JPY 807 million).58
Energy
Japan has very few fossil fuel resources, and depends on imports for almost all its energy
consumption except for nuclear-generated electricity and renewables energies. The energy
self-sufficiency ratio was 20% in FY2010 before the Fukushima accident, but fell to 8% in FY2016.
Partial restoration of the share of nuclear power, increased energy efficiency, and the development
of renewable energies are the three avenues through which Japan plans to reduce its dependency
on imported fossil fuels. The aim is to reach an energy self-sufficiency ratio of 24% by FY2030.
Chart 4.7 describes the energy mix of Japan in FY2017, and plans for FY2030.
58
- 151 -
Chart 4.7 Primary energy supply
Chart 4.7 Primary energy supply, FY2017 and FY2030 (planned)
FY2017 FY2030
C oal
C oal
25%
25%
N uc lear
1%
Renewables
11% N uc lear
1 0 % -11%
O il
33%
Renewables
O il N atural gas
1 3 % -14%
39% 23%
N atural gas
23%

The 2030 energy mix factors in Japan's commitments (Nationally Determined Contribution)
for the reduction of greenhouse gases submitted to the United Nations Framework Convention on
Climate Change under the Paris Agreement; these include a reduction by FY2030 of 26% of
emissions compared to FY2013. This 2030 planned energy mix also includes an energy-saving
target, through additional energy-efficiency measures, of about 30 million kl crude oil equivalent by
2030, with 2013 as the benchmark, leading to a total consumption of 330 million kl, compared to
360 million kl in 2013 and 350 million kl in 2017.59 It also plans a zero-emissions ratio target (the
proportion of the electricity mix that does not emit greenhouse gases, i.e. renewables and nuclear)
of 44% (renewable 22%-24%; nuclear 22%-20%), up from 12% in 2013 (renewable 11%, nuclear
1%), and from 19% in 2017 (renewable 16%, nuclear 3%).
As indicated above, the share of renewable energy (excluding nuclear) in the Total Primary
Energy Supply is expected to grow from 11% in FY2017 to 13%-14% in 2030, according to the 2018
Strategic Energy Plan. Chart 4.8 provides the actual and planned relative shares of the various
renewable energies in those totals.
Chart
Chart 4.8 Relative
Relative shares ofthe
shares of thevarious
variousrenewable
renewable energies
energies for for FY2017
FY2017 and and FY2030
(planned) FY2030 (planned)
FY2017 FY2030
Woody biomas s
13% Woody biomas s
H ydropower
G eothermal 19% H ydropower
49%
energy 1 % 39%
Wind
4% G eothermal
energy
5%
Wind
7%
Solar
33%
Solar
30%

59
Government of Japan, 5th Strategic Energy Plan, July 2018. Viewed at:
https://www.meti.go.jp/english/press/2018/pdf/0703_002c.pdf.
- 152 -
The main policy development during the period under review was the adoption, in July 2018,
of a fifth Strategic Energy Plan (SEP), replacing the 2014 SEP issued in the aftermath of the great
east-Japan earthquake and the nuclear accident of Fukushima; stated objectives were the reduction
of nuclear power and fossil fuel dependencies, and the expansion of renewable energies.
While the new Plan confirms the basic principles of Japan's energy policy (Energy security,
Economic efficiency, Environment sustainability and Safety (3E+S)), it revises the 2014 Plan in view
of the four years of implementation experience, and sets objectives for 2050; the previous Plan had
a 2030 horizon. The Plan comprises two elements: a long-term energy supply and demand outlook
for 2030 issued via a 2015 decision of the METI ("energy mix"); and the design of scenarios for 2050
with the aim of achieving energy transition and decarbonization through technological innovation.
The New SEP sets as a goal for 2050 the realization of the "hydrogen society", hydrogen
being an efficient energy source, with no greenhouse gas emissions. Japan, therefore, plans to
pursue the research already undertaken in this area. The Ministerial Council on Renewable Energy,
Hydrogen and Related Issues, a special coordination body, created in April 2017 to deal with
renewable energy issues, adopted, in December 2017, the Basic Hydrogen Strategy to that effect
(for more elements on the subsidy programme for fuel cell vehicles, see Section 3.3.1.2).
Another significant development was the adoption by the Cabinet, in May 2018, of the Basic
Plan on Ocean Policy, which contains a component on the development of offshore mineral energy
and mineral resources. In this context, the Government revised the Plan for the Development of
Marine Energy and Marine Mineral Resources in February 2019. This Plan contains, inter alia, support
measures for resource mapping and technology development for better production of marine energy
and deep-sea mineral resources, to an amount of JPY 37.89 billion for the duration of the Plan. This
covers not only oil and natural gas but also methane hydrate gas.
The 2018 SEP indicates that the Government will propose measures aimed at utilizing solar
power for residential consumption and as a distributed power source to carry out local production
for local consumption. The support measures taken since application of the SEP include an annual
JPY 2.8 billion subsidy scheme to support the construction of net zero energy houses equipped with
storage batteries or electric vehicle charging/discharging facilities, and an annual JPY 2 billion
subsidy scheme for companies constructing local micro grids i.e. energy systems which can be
operated independently from large-scale electric power systems in case of blackout. The Government
is also subsidizing the acquisition of storage batteries for residential and small factory use, based on
a target/maximum eligible price system whose scales are described in Chart 4.9. Measures are also
expected to be taken to ensure the proper recycling of used solar panels.
Chart4.9
Chart 4.9Target
Target costsofofenergy
costs energy storage
storage systems
systems in
inhouseholds
households, FY2016-2020
10,000
JPY/kWh
25
10-year battery energy

storage system life time
20
15-year battery energy

storage system life time
15
10
5
FY2016 FY2017 FY2018 FY2019 FY2020

- 153 -
For larger-scale solar production, the feed-in tariff (FIT), introduced in July 2012, contributed
to the growth of solar generation capacity from 0.9 GW in 2012 to 34.4 GW in 2017. However, the
fifth SEP, approved by the Cabinet on July 2018, states that the FIT has become too financially
burdensome60, and plans to replace it by an auction system and sales on the wholesale market
(Section 4.2.2.2).
Regarding wind energy, the SEP acknowledges the environmental constraints, the scarcity
of suitable locations available onshore, the grid connection, and the high costs of production. It sets
an ambitious cost objective of JPY 8 to JPY 9/kWh in 2030, and plans to develop this energy
essentially offshore, and to introduce a bidding system to limit costs.
Geothermal, hydropower and biomass are envisaged by the Plan as essentially local sources
of energy produced by small-scale facilities. The Government is to provide assistance to these types
of project and to the building of distribution systems combining small-scale energy renewable
sources.
The basic legislation on energy efficiency is the 1979 Act on the Rational Use of Energy
(Energy Saving Act), last amended in 2013, which sets a non-binding target of a 1% per year
improvement in energy efficiency, an objective met during the last five years by the majority of
energy-intensive businesses. While this legislation did not change during the period under review,
numerous initiatives were taken regarding energy efficiency, in the form of additional secondary
regulation, notably regarding the setting of efficiency norms for the various sectors, including
construction, voluntary actions by private actors and government, and private-sector research
programmes, e.g. on AI, IoT, and big data applied to energy; smart grids; smart meters; optimal
design of electrical appliances; and insulation and construction materials. It is also expected that
the structural reforms of the gas and electricity market (see below) will have an effect on energy
efficiency and, in particular, on the management of electricity peak demand.
The Government is in the process of adapting and expanding the efficiency monitoring
process of the Energy Saving Act and its correlative schemes of sanctions and support mechanisms.
A specific government effort is directed towards medium and small enterprises in that regard, via
local support offices. During the period under review, the benchmark programme, which sets targets
for energy consumption per unit of productions, etc. was extended to 16 industrial sectors.
The Agency for Natural Resources and Energy and its Advisory Committee for Natural
Resources and Energy in the METI are responsible for energy policy, planning, and legislation, as
well as regulation of the industry. The Nuclear Regulation Authority in the Ministry of the
Environment is responsible for the supervision of nuclear power plants.
According to Japan's latest notification to the Committee on Subsidies and Countervailing

Measures, during the review period, several schemes provided support, in form of subsidized loans
and/or grants, to energy-related activities aimed at implementing the country's energy policy
objectives regarding supply, stockpiling, renewable energy, energy efficiency, and environmental
protection (Table 4.19).61
Table 4.19 Domestic support to energy-related projects, 2020

Scheme Budgetary outlays Duration
Loans for Purchasing Petroleum and FY2016 (settlement of accounts) JPY 517.9 billion; Since 2004, no
Liquefied Petroleum Gas (LPG) for FY2017 (settlement of accounts) JPY 335.2 billion expiry date
Stockpiling by Private Companies
Provision of Equity Capital and Loans FY2016 (settlement of accounts) JPY 244 million; Since 2004, no
to Joint Stockpiling Companies FY2017 (settlement of accounts) JPY 156 million expiry date
Subsidy for loans to develop domestic FY2016 (settlement of accounts) JPY 168 million; Since 2008, no
oil and natural gas FY2017 (settlement of accounts) JPY 138 million expiry date
Subsidy for Loans to Purchase None None
Petroleum and LPG to be Stored
Subsidy for projects concerning the FY2016 (final results) JPY 3.7 billion; FY2017 (final Since 2008, no
stable supply of petroleum from oil- results) JPY 3.8 billion expiry date;
producing countries
60
Government of Japan, 5th Strategic Energy Plan, July 2018, pg. 52. Viewed at:
61
- 154 -

Subsidy for promoting business FY2015 supplementary budget (settlement of February 2013
reorganization and resilience of accounts) JPY 6.9 billion; FY2016 (settlement of to end-FY2019
petroleum industrial complexes accounts) JPY 10.1 billion; FY2017 (settlement of
accounts) JPY 120 billion
Subsidies for developing the local FY2016 (final results) JPY 3.0 billion; FY2017 (final Since 2010, no
energy-supply bases results) JPY 2.4 billion expiry date
Subsidies for Measures to Promote FY2016 (final results) JPY 0.4 million; FY2017 (final Since 1985, no
Conversion into Natural Gas Taken by results) JPY 0.3 million expiry date
Local City-gas Suppliers
Subsidies for Small and Medium-scale FY2016 (final results) JPY 875 million; FY2017 (final Since 1985, no
Subsidies for Interest on Loans to results) JPY 802 million expiry date
Introduce Specific Facilities Suitable
for Natural Gas
Subsidy for demonstration project for FY2016 (settlement of accounts) JPY 2.6 billion; April 2012-
high-efficiency gas turbine technology FY2017 (final results) JPY 2.1 billion March 2020
Subsidy for R&D for practical FY2016 (settlement of accounts) JPY 830 million April 2008–
application of the advanced ultra- March 2017
super critical technology for a thermal
power plant
Hydropower Development FY2016 (final results) JPY 262 million; FY2017 (final April 1986–
results) JPY 184 million March 2025
Geothermal Energy Programme FY2016 (final results) JPY 285 million April 1986–
March 2017;
Grant for the Technical Development FY2015 (final results) JPY 100 million; FY2016 (final April 1996-
of a Full-MOX ABWR Plant System results) JPY 50 million March 2017
New Energy and Industrial FY2016 (final results): Energy Systems (JPY 6.3 April 2009-
Technology Development billion); Energy Conservation and Environment (JPY March 2021
Organization Project Activities 4.9 billion); Industrial Technology (JPY 16.4 billion);
New Industry Creation and Discovery of Technology
Seeds (JPY 4.5 billion);
FY2017 (final results): Energy Systems (JPY 8.5
billion); Energy Conservation and Environment (JPY
5,.4 billion); Industrial Technology (JPY 13.9 billion);
New Industry Creation and Discovery of Technology
Seeds (JPY 4.4 billion, fixed completion date); Subsidy
for "Ene-farm", etc. introduction support operating
cost subsidy for expansion of use of fuel cell (FY2016
(settlement of accounts) JPY 8.0 billion, FY2017
(settlement of accounts) JPY 6.7 billion
Subsidy for Major Oil Spill Response FY2016 (final results) JPY 820 million; FY2017 (final Since 1990, no
Programme results) JPY 659 million expiry date
Source: WTO document G/SCM/N/343/JPN, 19 July 2019.
Hydrocarbons
4.2.2.1.1 Coal
Production of coal was 0.68 million tonnes of oil equivalent (MTOE) in 2017 (i.e. 0.16% of
Japan's Total Primary Energy Supply (TPES)), while imports accounted for 114.78 MTOE. Imports of
coal increased after the Fukushima nuclear accident (from 23% of the primary energy supply in
2010 to 25% in 2017, and from 28% of the power generation in 2010 to 32% in 2017). This was
due to the fact that coal constitutes a relatively cheap source of energy for power generation.
However, it emits a considerable amount of greenhouse gases, which runs counter to the reduction
objectives undertaken in the context of the Paris Convention. The Government intends to keep coal
as a major source of energy, since it is expected to represent 25% of the total primary energy source
in 2030 and 26% of electricity production, while encouraging the adoption of technologies reducing
emissions, such as Integrated Gasification Combined Cycle, Ultra Super Critical pressure, and Carbon
Capture Utilization and Storage.
Coal and coal products (except for three product lines at rates of 2.5%, 3.2% and 3.9%)
continue to enter Japan duty-free. The main sources of imports in 2018 were Australia, Indonesia
and the Russian Federation.
The JOGMEC contributes to the coal industry in various ways, including conducting geological
surveys, developing technologies, and providing financial support and information, in order to secure
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a stable coal supply in Japan.62 The State also supports coal exploration through the JOGMEC, with
a budget of JPY 890 million for FY2019.
The State is not involved in coal mines or coal processing facilities ownership. There are no
domestic support schemes for coal mines, nor social programmes to help the reconversion of areas
affected by the closure of coal mines.
Japan's regimes of importation and distribution of coal did not change since its previous
Review. They are entirely in private hands, and are open to foreign capital and ownership. In
practice, coal imports often come from mines developed abroad by Japanese companies (with mining
rights), notably in Australia. To help ensure coal supply, the Government is promoting the acquisition
by Japanese companies of coal mines abroad, for example, in Indonesia.
There are no preferential/subsidized tariffs/prices for coal purchase and sale in Japan
4.2.2.1.2 Oil
Production of crude oil was 0.44 MTOE in 2017 (i.e. 0.1% of Japan's TPES), while imports
accounted for 158.45 MTOE. Local production of oil products was 164.1 MTOE (a figure in decline),
while imports were 44 MTOE in 2017.
The share of oil and oil products in the TPES was 43.0% in 2015, 41.5% in 2016, and 39.0%
in 2017. It is planned to decrease this to 33% by 2030. Its share in power generation, which was
9% in 2017, is also planned to be decreased, to 3% by 2030. These planned decreases are largely
voluntary, and can be explained by the geopolitical uncertainties surrounding this source of energy
and the subsequent wide price variations it registers, as well as the plan to switch to fewer or no
greenhouses gas-emitting sources of energy.63
Crude oil continues to enter Japan duty-free, and oil products remain subject to MFN tariff
rates ranging from zero to 7.9% (a type of lubricating oil). The main sources of imports in 2018
were Saudi Arabia, the United Arab Emirates, and Qatar.
Similar to metals (Section 4.2.1.1), to ensure stable supplies of oil and natural gas
(Section 4.2.2.1.3), the state agency JOGMEC contributing in a wide variety of areas, including
survey, research, development, production and stockpiling.64 It provides equity capital to Japanese
companies for oil and natural gas exploration and production (E&P) projects, to mitigate the risks
for them. Upon discovery of commercial oil or gas reserves, the JOGMEC also provides liability
guarantees for oil and natural gas E&P projects conducted by Japanese companies, to support their
finance. Support for certain oil and gas supply activities continues to be provided under certain
subsidy schemes (see above). The State owns a part of shares of some Japanese oil exploration and
production companies.
Japan's regimes of importation and distribution of crude oil and oil products did not change
since its previous Review. They are entirely in private hands, and are open to foreign capital and
ownership. The number of filling stations and refineries is declining. There is no maritime pipeline
linking Japan to its neighbours; all oil (and gas) is entirely imported by sea.
There are no preferential/subsidized tariffs/prices for oil in Japan.
4.2.2.1.3 Gas
Production of natural gas was 2.56 MTOE in 2017 (i.e. 0.6% of Japan's TPES), while imports
accounted for 98.21 MTOE. The share of natural gas in Japan's TPES was 23.3% in 2015, 23.9% in
2016, and 23.0% in 2017. It is expected to decrease to 18% by 2030. Its share in power generation,
which was 40% in 2017, is also planned to decrease to 27% by 2030.However, its relative share in
fossil fuels will increase. Ongoing and future technological developments regarding gas include
62
JOGMEC, Coal. Viewed at: http://www.jogmec.go.jp/english/coal/index.html.
63
Government of Japan, 5th strategic Energy Plan, July 2018, pp. 25-26. Viewed at:
64
JOGMEC, Oil and Natural Gas. Viewed at: http://www.jogmec.go.jp/english/oil/index.html.
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co-generation systems, the use of natural gas as a source of hydrogen, and combined cycle thermal
power generation using biogases.
Liquefied gas continues to enter Japan duty-free but natural gas in gaseous state
(HS 271121) remains subject to a 4.5% import duty. The main sources of imports in 2018 were
Australia, Malaysia, and Qatar.
Similar to metals and oil, to ensure stable supplies of natural gas, the state agency JOGMEC
contributes in many areas (Sections 4.2.1.1 and 4.2.2.1.2). Several domestic support schemes for
gas supply activities continue to be provided under certain subsidy schemes (see above). The State
owns a part of shares of some Japanese oil exploration and production companies. Local
governments are involved in city-gas companies and own some liquefied natural gas (LNG)
terminals.
In 2017, 65% of natural gas was imported by seven electricity companies for power
generation. City-gas companies imported the remainder, with one third of their sales to individual
consumers and more than half to industry. The city-gas industry is fragmented into many vertically
integrated regional companies, the four largest having a combined market share of 71%. Under the
provisions of the Foreign Exchange and Foreign Trade Act, foreign entities wishing to invest in gas
utilities must notify their intention to the competent authorities, including the METI. The authorities
state that permission may be denied on grounds of, inter alia, public order.65 Foreign investments
have effectively taken place in this sector.
There are no preferential/subsidized tariffs/prices for gas in Japan.
Following the amendment of the 1954 Gas Business Act in April 2017, the full deregulation
of the gas retail market was enforced on 1 April 2017. As a consequence of this reform, the share
of new entrants rose in volume, from 8% to 14% between April and July 2019, the number of
registered retail firms rose to 54 (as at April 2018), among which 18 directly served individual
households. The number of consumers switching from one company to another rose from 60,000 in
March 2017 to 840,000 in March 2018. The next stage of the reform, the legal separation of the
pipelines business division from large gas suppliers, is scheduled for April 2022.
Electricity
By depriving Japan for several years of about 10% of its power-generation capacity, the
Fukushima nuclear incident and the subsequent closure of all nuclear power plants for some years,
disrupted, and continues to disrupt, the electricity sector. This is illustrated in Chart 4.10, which
shows, for 2016 and 2017, a repetition of the cycle of high prices experienced immediately after the
nuclear accident and, hence, the persistence of a structural problem regarding the prices of power
generation.
The chart shows a parallel evolution of crude oil prices and electricity prices. This explains
why Japan is planning to reduce the share of oil in power generation from 9% to 3%. It also
illustrates why the Government wants to restore the share of nuclear energy in the power generation
mix by 2030 to 22%-20%. So far, nine reactors have been authorized to restart, and six more are
planned to be authorized in the coming months. This restored a 1% share of nuclear energy within
Japan's total TPES for FY2017.
65
The Minister of Finance and the minister in charge of the industry involved may order the suspension
of a proposed investment if they consider it may "endanger national security, disturb the maintenance of public
order, or hamper the protection of public safety", or "adversely and seriously affect the smooth management of
the Japanese economy". They may also recommend that the parties concerned alter their investment plans.
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Chart 4.10 Electricity and oil prices trend

Chart 4.10 Electricity and oil prices trend
(JPY/kWH) Crude oil import price (JPY/kl)
26 80,000
24 70,000
25% up 60,000 Average prices for households

22 16% up
50,000 Average prices for industry
20 Crude oil import price
40,000
18
30,000
16 38% up
20,000
21% up
14 10,000
12 0
FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017

Chart 4.11 describes the power-generation mix for FY2017, and the planned one for 2030.
Chart 4.11 Power-generation mix
Chart 4.11 Power-generation mix, FY2017 and FY2030 (planned)
FY2017 FY2030
C oal
N uc lear
32%
Geothermal 0.2%
2 0 % -22%
N uc lear Geothermal 1%-1.1%
3% Biomass 2.1%
Wind 0.6% Biomass 3.7%-4.6%
C oal Wind 1.7%

O il Solar PV 5.2% 26%
9%
Renewables Renewables Solar PV 7%
16% 2 2 % -24%
Hydro 7.9%
Hydro
O il 8.8%-9.2%
3%
L iquefied natural gas L iquefied natural gas

40% 27%

During the period under review, Japan pursued the preparation of the third stage of the
deregulation of the electricity market, initiated in 2013; the first two stages (the establishment of
the Organization for Cross-regional Coordination of Transmission Operators in April 2015, and of the
Electricity Market Surveillance Commission in September 2015 on the one hand, and the
deregulation of the retail market in April 2016 on the other hand) were described in the previous
report.
As illustrated in Chart 4.12, the next step, the legal unbundling of transmission and
distribution of vertically integrated regional utilities, is scheduled for April 2020, and the preparation
of this next reform and the follow-up of the first two stages of the reform are ongoing.
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Chart 4.12 Electricity system reform

Chart 4.12 Electricity system reform
Deregulation of entry into Ensuring neutrality in transmission and
retail electricity market distribution; deregulation of electricity rates
Implementation: April 2016 Scheduled: April 2020
1) Formulation of plans for cross-regional supply and demand

2) Formulation of plans for improvement of interconnected lines and cross-regional transmission lines
3) C ross-regional supply and demand/grid operation
4) Supply and demand adjustment in times of supply shortages
C ustomer freedom to select electric utilities and supplier freedom to set electricity rates
Full deregulation of extended to small-customer sector (including households)
retail sales
(liberalization of entry into Period of transitional Elimination of rate Establishment of requisite systems for
retail electricity market) measures for eliminating regulations customer protection (last-resort service,
universal services, etc.)
rate regulations (end of transitional measures)
Review of competition conditions
1) Regulation of transmission and distribution (wheeling service feeds, conduct of business, etc.)
2) Wholesale/retail market transaction monitoring, competition condition review, and rule development
3) Operations related to stable electric power supply, including issuance of supply orders and implementation of
appropriate rolling blackouts in emergencies
Market monitoring
Elimination of regulations
on wholesale market
Full-scale implementation
1) Obligation to secure supply capacity
Creation of new system for
2) Establishment of capacity market for future supply capacity transactions
securing supply capacity
3) System for power source procurement bidding in anticipation of future shortages
Creation of hour-ahead market Market-based cross-regional supply and demand adjustment

Creation of
balancing market Regulation of transmission
and distribution and
monitoring of neutrality
assurances
Review, development and issuance of rules as preconditions for Legal separation of

transmission and Realization of
improving neutrality in transmission and distribution operations competitive market
distribution from the
vertically integrated business environment
Preparation for system transition
Sourc e: J apan E lectric Power I nformation C enter (J E PIC), The Electric Power I ndus try in Japan 2019. V iewed at:
Source:httpsJapan Electric
://www.jepic Power Information Center (JEPIC), The Electric Power Industry
.or.jp/en/data/epijpdf.html in Japan 2019. Viewed
at: https://www.jepic.or.jp/en/data/epijpdf.html.
Following the 2016 liberalization of the retail market, and up to May 2019, the share of new
power producers and suppliers of electricity in total retail sales rose from 5.0% to 14.2%. Entry into
the retail market requires government approval. In addition, under the provisions of the Foreign
Exchange and Foreign Trade Act, foreign entities wishing to invest in electric utilities (including retail
operations) must notify their intention to the competent authorities, including the METI. The
authorities state that permission may be denied on grounds of, inter alia, public order. The number
of new entrants rose considerably, from 109 operators registered in October 2013 to 614 in
September 2019. New options for consumers have appeared, such as bundled packages with gas
and other services, loyalty schemes, and the provision of CO2-free electricity.
A parallel evolution took place on the wholesale market, the Japan Electric Power Exchange,
created in 2003, where the power traded on the spot market rose from 3% in 2016 to 15% in 2017.
The METI envisages the creation of additional new markets to fluidify the adjustment of demand and
supply, namely a baseload power market, a capacity market, a balancing market, and a no-fossil-
value market but no decision has been taken yet in that regard.
While consumers can now choose among a variety of services offered by the operator they
selected, the prices for specific retail services remain regulated for the time being, so long as
competition has not fully produced its effects.
Regarding pricing and support scheme issues, the METI announced, in August 2019, a major
reform of the FIT system, adopted in 2012, to promote greater development of renewable energy.
Under the 2012 system, solar and wind energy is purchased at predetermined prices. A large part
of the purchase costs incurred is passed on to final consumers (households or businesses) via their
electricity bill. As stated by the fifth SEP, the cost of this system had become too burdensome; the
cost of these preferential purchases reached JPY 3.6 trillion in FY2019, JPY 2.4 of which passed on
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to final consumers. The new system will replace the predetermined price with a system of
competitive bidding on the wholesale market, as prices will be referenced based on market
conditions. The reform is under consideration. The main idea is to move power sources that are
expected to be competitive to a new system, in view of their integration into the power market. For
other power sources used, the basic framework of the FIT system will be maintained for the time
being. In addition, the reform is aimed at optimizing the renewable energy sector, by ensuring safety
and by disposing of waste solar panels appropriately, and by developing a transmission network
suitable for mainstreaming renewable energy.
The exemption of 80% of the FIT for energy-intensive consuming industries is still in place;
but it will be re-examined after the FIT tariff reform.
4.3 Manufacturing
4.145. Manufacturing (20.8% of GDP in 2018) accounts for the majority of merchandise exports,
and remains driven by transport equipment, machinery (general purpose, production and
business-oriented), food product, chemical, and basic metal activities. The import content of exports
varies across manufacturing industries, indicating a degree of global value chain (GVC) integration
of certain industries. During the review period, certain manufacturing policy developments, including
AI, robotics and related plans interlinked with services activities, were undertaken. Since the
previous Review, the average MFN applied tariff for manufacturing products dropped, and TRQs
continued to apply on 62 manufactured items; peak rates (AVEs) affect footwear (219.4%) and silk
(97.9%). A few industrial items were subject to anti-dumping duties. Domestic support continued
under several non-industry-specific schemes, involving tax and non-tax incentives; activity-specific
incentives were available, inter alia, to the bekko (tortoiseshell) and ivory crafts industries, the
leather and leather goods industries, the manufacture of traditional craft products, care robot
equipment, sochu manufacture, and fuel-cell vehicles and connected industries.
4.3.1 Features
4.146. Manufacturing's share of GDP increased from 19.9% in 2014 to 20.9% in 2015, and then
dropped slightly to 20.8% in 2016 and 2017 (Table 1.2); its share in employment dropped slightly
from 15.5% in 2014 to 15.2% in 2017. Its employment share was much lower than its share in GDP,
which implies that labour productivity in manufacturing remains much higher than in agriculture.66
Furthermore, the productivity of SMEs in manufacturing remains a concern to the authorities
(Sections 1.2.1, 1.2.4.1 and 1.2.4.4). In 2016, there were more than 217,600 establishments (with
four or more persons employed) in the manufacturing sector. The major contributors to GDP and
employment remain the transport equipment, machinery (general purpose, production and
business-oriented), food product, chemical and basic metal activities.67 In 2018, Japan remained the
world's third largest automobile manufacturing country (after China and the United States), had the
largest electronics goods industry, and is often ranked among the world's most innovative countries,
leading several measures of global patent filings.68 Facing increasing competition from China and
the Republic of Korea, manufacturing in Japan continues to focus primarily on high-tech and
precision goods, such as optical instruments, hybrid vehicles, and robotics. During the review period,
the share of manufacturing in total exports declined slightly; it accounted for 86.8% of total
merchandise exports in 2018 (87.2% in 2015), mainly automotive products (21.5%), non-electrical
machinery (15.1%) and chemicals (10.7%). The import content of exports varies across
66
According to Japan Productivity Center estimates, the monthly labour productivity index stood at
98.1 (2015=100) in February 2019, or 2.0 percentage points less than the same month the year before;
during the same period, the labour productivity growth rate went up in 6 out of the 21 industries in the survey.
For example, fabricated metals (+1.5 percentage points), and transport equipment (+1.2 percentage points)
were consistently positive for five months, mainly because auto exports to Europe were strong. Japan
Productivity Center, Productivity Statistics. Viewed at: https://www.jpc-net.jp/eng/stats/.
67
Statistics Bureau/Ministry of Internal Affairs and Communications, Statistical Handbook of Japan
2018, Table 6.1. Viewed at: https://www.stat.go.jp/english/data/handbook/pdf/2018all.pdf#page=80.
68
World Atlas, Countries With The Most Diverse Economies. Viewed at:
https://www.worldatlas.com/articles/countries-with-the-most-diverse-economies.html; and International
Organization of Motor Vehicle Manufacturers, 2018 Production Statistics. Viewed at:
http://www.oica.net/category/production-statistics/2018-statistics/.
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manufacturing industries, but is high for the top exporters, illustrating the role that imports plays in
supporting exports, and indicating the degree of GVC integration of these industries.69
4.3.2 Policy and institutional developments
4.147. During the review period, there have been certain manufacturing policy developments,
including futuristic plans interlinked with services activities. As a response to concerns, inter alia,
relating to inadequate qualitative changes in human resources, quantitative labour shortages,
awareness of transformations such as the digitalization of the economic society, and the recognition
of a need for continuous reform, a 2017 White Paper explained the actions to be taken by the
manufacturing industry, including: measures for the maintenance and enhancement of workplace
productivity; the development and securing of digital human resources; and measures for improving
value added, in response to new environmental changes.70
4.148. A 2017 New Industrial Structure Vision (Future Vision towards 2030s) is aimed at identifying
and overcoming systemic challenges to society by taking advantage of technological innovations,
including the IoT, Big Data, AI, and robots, and directing such achievements toward economic
growth.71 The Vision considers Japan's advantages and disadvantages anew, designs mid- to long-
term approaches to gain global markets and strategies, and presents a compilation of breakthrough
projects, forecasting specific reforms of related systems. By accurately identifying the trends
associated with these technological innovations and making bold changes to its economic and social
systems, Japan considers that it can play a leading role in ushering in this new interconnected future,
which the Government has dubbed Society 5.0 (Section 2.1).72 Under the 2017 Connected Industries
policy initiative, which set a goal for Japanese industries to create new value through connecting
things, people, technologies, organizations, and other societal elements, the authorities are
committed to efforts for achieving the Vision.73 Its specific strategies include a supply-chain (smart
supply chains, enhanced sophistication, and efficiency in manufacturing/production) strategy, which
was integrated into the Connected Industries initiative. Regarding manufacturing, per se, the METI
is developing Connected Industries in strategic fields, such as Automated Driving and Mobility
Services, Bio Technologies and Materials, Smart Life, Plant/Infrastructure Safety Management, and
Manufacturing and Robotics. Concerning food products, the MAFF developed the 2018 Strategy for
Food Industries, which highlights challenges and specifies the vision to be shared for the coming
decade.
4.149. A 2017 Artificial Intelligence Technology Strategy, focused on three priority areas of
Society 5.0, namely health, mobility and productivity, foresees three phases: expanding use of
data-driven AI in each service domain; general use of AI and data across services; and the formation
69
Across many OECD countries, there is a strong correlation between higher import content of exports
and a higher share of their domestic value-added being exported (export orientation), illustrating the strong
complementarity of imports and exports. In the case of Japanese manufacturing industries, this is less obvious,
reflecting a greater role for domestic, rather than imported, supply of inputs. OECD, International trade,
foreign direct investment and global value chains, 2017. Viewed at: http://www.oecd.org/investment/JAPAN-
trade-investment-statistical-country-note.pdf.
70
METI, FY 2017 Measures to Promote Manufacturing Technology (White Paper on Manufacturing
Industries). Viewed at: https://www.meti.go.jp/english/press/2018/0529_001.html.
71
METI, A Final Report on the New Industrial Structure Vision was compiled. Viewed at:
https://www.meti.go.jp/english/press/2017/0530_003.html; and New Industrial Structure Vision. Viewed at:
https://www.meti.go.jp/english/publications/pdf/vision_171222.pdf.
72
Society 5.0 was proposed in the 5th Science and Technology Basic Plan in 2016 as a future society
that Japan should aspire to. It follows the hunting society (Society 1.0), the agricultural society (Society 2.0),
the industrial society (Society 3.0), and the information society (Society 4.0). It is considered a centrepiece of
the Government's growth strategy, which means that science, technology and innovation policy has become a
mainstream political agenda. Japan's regular budget for science and technology, which had remained unstable
over FY2002 to FY2017 at around JPY 3.6 trillion (USD 33 billion), rose to JPY 3.8 trillion (USD 35 billion) in
2018 then to JPY 4.2 trillion (USD 38 billion) in 2019, thus providing a boost to investment in the development
and application of digital technologies. Japan aims to achieve Society 5.0 through the full utilization of
technological innovation, including IoT, AI and Big Data derived from the fourth industrial revolution. Cabinet
Office, Society 5.0. Viewed at: https://www8.cao.go.jp/cstp/english/society5_0/index.html; and UNESCO,
Japan pushing ahead with Society 5.0 to overcome chronic social challenges. Viewed at:
https://en.unesco.org/news/japan-pushing-ahead-society-50-overcome-chronic-social-challenges.
73
Under the Connected Industries initiative, the authorities would identify priority fields and invest
policy resources in those specific fields, promote cross-sectoral policies, thereby allowing domestic industries to
gain a foothold in the competitive global "real-data" markets. METI, Connected Industries' Tokyo Initiative
2017. Viewed at: https://www.meti.go.jp/english/press/2017/1002_004.html.
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of ecosystems through a complex merger of these services. The AI Strategy 2019 is aimed at
specifying the environment and measures conducive to effective future utilization of AI for the
purposes of contributing to the solution of global issues through realization of Society 5.0, and
overcoming the issues facing Japanese society. This Strategy establishes an integrated policy
package for AI that encompasses educational reform, R&D, and social implementation, in order to
contribute to the world, overcome challenges, and ultimately improve Japan's industrial
competitiveness. The Ministry of Internal Affairs and Communications provided support to implement
this Strategy through the Research and Development of Next-generation Artificial Intelligence
Technologies scheme, the Research and Development and Social Implementation of Multilingual
Speech Translation System, and the Research, Development and Demonstration of Sophisticated
Conversation Agent Technologies scheme (Section 4.3.4).
4.150. A Robot Strategy and its five-year action plan by sector (manufacturing, services, nursing
and medical fields; infrastructure, disaster response, and construction fields; agriculture, forestry,
fishery; and food industry) toward the realization of the Robot Revolution has been in place since
2015.74 It is based on three pillars: fundamental enhancement of robot-creation ability; utilization
and dissemination of robots across the country; and development and dissemination around the
world of the Robot Revolution. This Strategy provides support for R&D of robotics, international
standardization and training system integrators of robotics, and assistance to each sector. The
authorities indicated that there is no aggregate budgetary cost for implementing this policy.
4.151. The METI remains, inter alia, responsible for policy development on industry and trade
matters (Section 2.2). Upon consultation with the Minister of Economy, Trade and Industry and the
Industrial Structure Council, an independent body outside of METI and composed, inter alia, of
industry representatives and academics, carries out investigations into, and deliberations on,
important policy matters, particularly with regard to improving the economic strength of the private
sector and promoting smooth international economic relations.75 The Artificial Intelligence Research
Center (AIRC), inaugurated in May 2015 under the National Institute of Advanced Industrial Science
and Technology, and the Council for Artificial Intelligence Technology Strategy, set up in April 2016,
remain in place. The AIRC has mainly pursued social implementation of the AI Strategy 2019 by
focusing on bridging its practical application side to companies with superior AI technology.
4.3.3 Border measures
4.152. The average MFN applied tariff for manufacturing products dropped from 3.5% in FY2016 to
3.3% in FY2019 (HS definition, Table 3.1). TRQs continued to apply on 62 manufactured items
(HS basis) (Section 3.1.4.1), of which 32 were under HS Chapter 41 (raw hides and skins, and
leather), 5 were under HS Chapter 50 (silk), and 25 were under HS Chapter 64 (footwear). Footwear,
and raw hides and skins remain subject to TRQs, and thus benefit from the highest tariff protection,
with average MFN applied tariffs of 27.3% and 10.5%, respectively, at HS level; peak rates (AVEs)
were on footwear (219.4%) and silk (97.9%). On leather footwear, in FY2017, FY2018 and FY2019,
the out-of-quota tariff rates were either 30%, or JPY 2,400 or JPY 4,300 per pair, whichever is
higher; according to the authorities, in FY2017 and FY2018, their TRQ utilization rate was 66% and
71.7%, respectively. Regarding some raw hides and skins, and leather, in-quota rates stood at 12%
(bovine, equine) or 16% (sheep, goat), and the out-of-quota rate at 30%; according to the
authorities, their average quota utilization rates were 35.8% in FY2017 and 32% in FY2018. In
FY2018, the fill rate of silk-worm cocoons and raw silk, which are subject to a zero in-quota rate and
out-of-quota rates of JPY 2,523/kg and JPY 6,978/kg, respectively, stood at 55.8%.76 Compared to
the previous TPR, as at end-2018, a few more industrial items, mainly chemicals (electrolytic
manganese dioxide, toluene diisocyanate, potassium hydroxide, polyethylene terephthalate, and
carbon steel butt-welding fittings), were subject to anti-dumping duties (Section 3.1.7.1).77
74
METI, Japan's Robot Strategy was Compiled, January 2015. Viewed at:
https://www.meti.go.jp/english/press/2018/0529_001.html; and New Robot Strategy. Viewed at:
https://www.meti.go.jp/english/press/2015/pdf/0123_01b.pdf.
75
METI, Industrial Structure Council. Viewed at:
https://www.meti.go.jp/english/policy/economy/industrial_council/index.html.
76
WTO document G/AG/N/JPN/238, 15 May 2019.
77
WTO document G/ADP/N/322/JPN, 4 February 2019.
- 162 -
4.3.4 Domestic support measures
4.153. During the review period, domestic support continued under several programmes
(Section 3.3.1). The sector's non-industry-specific schemes included measures under the Subsidy
Program for Global Innovation Centers, tax incentives for strengthening local business facilities,
incentives regarding special zones, incentives based on the 2013 Industrial Competitiveness
Enhancement Act, incentives under the 2018 Act on Special Measures for Productivity Improvement,
the tax incentive system based on the Act on Strengthening a Framework for Regional Growth and
Development by Promoting Regional Economy Advancement Projects, tax incentives for R&D, the
tax incentive for wage and productivity improvement, incentives related to disaster recovery, and
incentives of local governments for foreign-affiliated companies (e.g. subsidization of rent expenses,
and incorporation/registration and other fees). 78 According to JETRO information, the sole
activity-specific incentive is the Connected Industries Taxation System, involving special
depreciation or tax deductions for software, apparatuses, equipment, machinery, and devices. Other
activity-specific support includes that under the fuel-cell vehicles initiative (Section 3.3.1.2).
According to the 2017 WTO notification to the Committee on Subsidies and Countervailing Measures
covering FY2015/16, the activity-specific support schemes for manufacturing included the bekko
(tortoiseshell) and ivory crafts industries, the leather and leather goods industries, and the
manufacture of traditional craft products.79 According to its latest WTO notification covering the
period 2016/17, activity-specific support schemes for manufacturing included leather and leather
goods, traditional craft products, R&D for care robot equipment, and sochu manufacture are in place
either at central or local government level (Table 4.20).80
4.154. Under the AI Strategy 2019 (Section 4.3.2), the Research and Development of
Next-generation Artificial Intelligence Technologies scheme (FY2017-19), with a budget of
JPY 408 million (FY2017) and JPY 200 million (FY2018), aims to promote R&D for the realization of
next-generation AI technologies that can select, extract, classify and learn features and meanings
in real time from small data and random data by imitating features of the brain. The Research and
Development and Social Implementation of Multilingual Speech Translation System (FY2017-19),
with a budget of JPY 1,257 million (FY2017) and JPY 700 million (FY2018), aims to promote R&D
and social implementation of the Multilingual Speech Translation System developed by National
Institute of Information and Communications Technology, to remove language barriers, and to
realize free and global communication. The Research, Development and Demonstration of
Sophisticated Conversation Agent Technologies scheme (FY2018), with a budget of JPY 200 million
(FY2018), aims to encourage the formation of a service development community, promoting the
utilization and application of sophisticated conversation technologies, by developing conversation
agent core technologies and making them broadly and commonly available. The METI assists
companies to establish data-sharing platforms in order to utilize data in cooperative areas, and to
develop internationally competitive AI systems that leverage such shared data, to cultivate
connected industries, at an annual budgetary cost of JPY 3 billion.
Table 4.20 Domestic support to some manufacturing-related projects

Subsidy for the Leather and FY2015 (settlement of accounts) JPY 285 million Since 1971, no
Leather Goods Industries (general budget); expiry date
FY2016 (settlement of accounts) JPY 262 million;
FY2017 (settlement of accounts) JPY 261 million;
FY2018 (settlement of accounts) JPY 298 million
Leather and leather goods FY2015 supplementary budget (settlement of March 2016, no
industry - "strengthening fund" accounts) JPY 13.3 billion continuation
subsidy
Subsidy for Supporting the FY2015 (final results) JPY 286 million; No time-limit
Manufacture of Traditional Craft FY2016 (final results) JPY 298 million;
Products FY2017 (final results) JPY 310 million;
FY2018 (final results) JPY 295 million
78
JETRO, Subsidy Program for Global Innovation Centers. Viewed at:
https://www.jetro.go.jp/en/invest/incentive_programs/info.html.
79
WTO document G/SCM/N/315/JPN, 9 June 2017.
80
- 163 -

Subsidy for Promoting the FY2015 (final results) JPY 699 million; No time-limit
Manufacture of Traditional Craft FY2016 (final results) JPY 700 million;
Products FY2017 (final results) JPY 700 million;
FY2018 (final results) JPY 700 million
Subsidy for Research and FY2015 JPY 2.55 billion; April 2015-March
Development for Care Robot FY2016 JPY 2.0 billion; 2018
Equipment FY2017 JPY 1.64 billion
Finance Measures for Credit 4/2016-3/2017 (fund's running profit) JPY 9 No time-limit
Guarantee of Sake million;
Manufacturers 4/2017-3/2018 (fund's running profit) JPY 11
million
Finance Measures for Single 4/2016-3/2017 JPY 559 million; Since 2010, no
Distilled Shochu Manufacturers 4/2017-3/2018 JPY 541 million expiry date
(formally known as Finance
Measures for Shochu B
Manufacturers)
Subsidy for Research and FY2017 (settlement of accounts) JPY 381.8 No time-limit
Development of Next-Generation million;
Technology (local government) FY2016 (settlement of accounts) JPY 420.5 million
Subsidy for Promoting the FY2016 (settlement of accounts) JPY 43.3 million; • Akita
Manufacture of Traditional Craft FY2017 (settlement of accounts) JPY 47.4 million prefecture:
Products (local government) from FY2011
to FY2017.
• Fukui
prefecture:
from FY2011
to FY2017.
• Kagawa
prefecture:
from FY2016
to FY2018.
• Other
prefectures:
no time-limit
Source: WTO document G/SCM/N/343/JPN, 19 July 2019; and data provided by the authorities.
4.4 Services
4.4.1 Financial services
4.155. Japan is one of the main financial services markets in the world, and has a fully developed
and mature financial services sector which represented 4.2% of its GDP in 2017 and 2.4% of total
employment in 2018. Its financial asset base is equivalent to 1,420% of its GDP 81, and it is the
largest creditor country, with net foreign assets amounting to USD 3.1 trillion, i.e. the equivalent of
62% of its GDP at the end of 2018. Boxes 4.1 to 4.4 provide an overview of the main statistical
indicators of the sector and of its various subsectors.
Box 4.1 Main economic indicators of the financial services sector, 2016-18
Share of financial services in GDP

2016: 4.2%
2017: 4.2%
Share of financial services in total employment

2016: 2.5%
2018: 2.4%
Financial services (except insurance and pension services) credit

2018: JPY 1,272.6 billion
Insurance and pension services credit
2018: JPY 270.6 billion
Financial services (except insurance and pension services) debit
81
Compared with 1,124% in the U.S. Economist Intelligence Unit, Industry Report series, Financial
Services Japan, second quarter 2019.
- 164 -
Insurance and pension services debit

Capital stock of financial services providers abroad: (March 2018)

Total amount of capital stock of foreign-controlled banks operating in Japan: JPY 20.0 billion
Total amount of capital stock insurance companies operating in Japan: JPY 32,283 billion
Ratio of capital stock of foreign-controlled banks to total amount of capital stock of banks operating in
Japan: 0.1%a
Ratio of capital stock of foreign-controlled insurance companies to total amount of capital stock of insurance
companies operating in Japan: 8.5%
Significance of the financial services arm of Japan Post

− deposits in Japan Post Bank amounted to JPY 180.9 trillion, i.e. the equivalent of 33% of GDP. It is the
largest pool of savings in the world. In April 2019, the deposit cap was doubled, with a limit of
JPY 13 million each for ordinary savings accounts and fixed-term deposit accounts
− market share of Japan Post insurance: 20.2% as at end-March 2018
a This figure only takes into account the capital of foreign banks operating as subsidiaries, whereas
the dominant form of operation of foreign banks in Japan is the use of branches, which do not have
capital, per se, only quasi-capital, parked in Japan, of at least JPY 2 billion per branch.
Box 4.2 Main indicators of the banking sector, 2015-18
Banking services
Number of banks
End-March 2015: 195 banks (of which, foreign-controlled banks: 4; branches of foreign banks: 54)
End-March 2018: 195 banks (of which, foreign-controlled banks: 3; branches of foreign banks: 56)
Recent consolidation (since 2016)

May 2018: Kiraboshi Bank, Ltd. (merger of Tokyo Tomin Bank, Ltd., Yachiyo Bank, Ltd. and ShinGinko
Tokyo, Ltd.)
Concentration/share of the various types of banks in the total balance sheet for banks
(JPY 100 million)
End-March 2015: total balance sheet: 10,165,870 (foreign-controlled banks: 56,041; branches of foreign
banks: 471,876)
End-March 2018: total balance sheet: 12,658,092 (foreign-controlled banks: 7,699; branches of foreign
banks: 509,923)
Lending activities (credit volumes)
End-March 2018: JPY 580,873.3 billion (foreign-controlled banks: 548; branches of foreign banks: 8,830)
Securities activities: (securities holding in bank accounts)

End-March 2018: JPY 27,004.6 billion (foreign-controlled banks: 22; branches of foreign banks: 919)
Non-performing loans as a % of total bank assets: 1.1% (end-March 2018)
Box 4.3 Main indicators of the insurance sector, 2015-18
Insurance
Number of insurance companies

2015: 94 (life: 42 (of which branches of foreign insurance companies, 3); non-life: 52 (of which branches of
foreign insurance companies, 22))
2018: 93 (life: 41 (of which branches of foreign insurance companies, 1); non-life: 52 (of which branches of
foreign insurance companies, 22))
Recent consolidation (since 2016)

January 2018: AIG General Insurance Company, Ltd. (merger of AIU Insurance Company, Ltd. and Fuji Fire
and Marine Insurance Co., Ltd.)
Total balance sheet of the insurance sector

End-March 2018: JPY 414,085 billion (of which life insurance: 92.1%; non-life: 7.9%)
Concentration: (cumulative market share of the top five companies, end-March 2018)
Life insurance (%):
- 165 -
Japan Post Insurance: 20.2

Nippon Life Insurance Company: 17.4
Meiji Yasuda Insurance Company: 10.1
Dai-ichi Life Insurance Company: 9.5
Sumitomo Life Insurance Company: 8.3
Non-life insurance (%):

Tokio Marine & Nichido Fire Insurance Co. Ltd.: 29.5
Sompo Japan Nipponkoa Insurance Inc.: 23.4
Mitsui Sumitomo Insurance Company Ltd.: 21.6
Aioi Nissay Dowa Insurance Co. Ltd.: 10.6
AIG General Insurance Company, Ltd.: 2.9
Penetration (premiums as share of GDP, end-March 2018)

Life insurance: 5.9%; non-life insurance: 1.9%
Box 4.4 Main indicators of the pension fund and stock exchange and securities sectors
Pensions funds
Number of pension funds

2016: 19,039
2017: 19,223
Total assets
2016: JPY 94.4 trillion
2017: JPY 96.2 trillion
Stock exchange and securities:
Capitalization of the companies listed

2015: JPY 589,788,804 hundred million (111.00% of nominal GDP; 114.09% of real GDP)
2018: JPY 582,670,408 hundred million (106.15% of nominal GDP; 109.06% of real GDP)
Gross value of publicly issued bonds

2015: JPY 2,002,202 hundred million (issued by non-Japanese residents in the Japanese domestic market
payment basis) JPY 41,775 hundred million)
2018: JPY 1,790,826 hundred million (issued by non-Japanese residents in the Japanese domestic market
payment basis) JPY 25,701 hundred million)
Securities turnover on the Stock Exchange (secondary market)

(JPY hundred million).
2018: domestic shares: 795,524,801; foreign shares: 223,739; domestic bonds: 0; foreign bonds: 0;
structured products and options: 3,218,020,844; investment funds: 67,914,443
4.156. The Financial Services Agency (FSA) remains the supervisory body of all financial services
in Japan. It underwent a structural reform in 2018/19. In September 2018, it published a document
entitled "For Providing Better Financial Services in the Era of Transition"82, where it indicated its
willingness to promote the development of banks and other financial institutions. Its activities were
reorganized in three bureaux, namely the Strategy Development and Management bureau, the
Policy and Markets bureau, and the Supervisory bureau, which absorbed most of the functions of
the ex-Inspection Bureau. The intent of the supervisory approach is to put more emphasis on the
business potential of borrowers rather than on their collateral or credit guarantees, and to prompt
Japanese banks to utilize a "risk appetite framework" in light of the difficult environment born out
of prolonged negative interest rates, worldwide political and economic uncertainties, and the
emergence of online banking, e-payments and fintech.
4.157. In May 2017, the FSA revised its 2014 Stewardship Code for Institutional Investors, aimed
at enhancing corporate governance and improving investment returns. The main revisions were the
strengthening of asset managers' governance, the management of conflicts of interest, and the
clarification of the roles of asset owners, including pension funds. By subscribing to this voluntary
82
FSA, For Providing Better Financial Services in the Era of Transition, September 2018. Viewed at:
https://www.fsa.go.jp/en/news/2018/20180926/Summary_Financial_Services_Policy2018.pdf.
- 166 -
Code, investorscommit, in particular, to disclosing how they exercise their stewardship activities. By
August 2019, it had been adopted by 256 investors, among which 117 were foreign.
4.158. In a longer-term perspective, the FSA set up a panel of experts in November 2017, i.e. the
Study Group on the Financial System, in charge of developing a new approach to regulation.
Regulation is by financial function rather than by type of actor, since, for instance, banks are
diversifying in asset management and insurance, while fintech, including Internet and telecom
companies, venture into e-payments and banking. This panel identified four key functions that
should be regulated, regardless of the type of actor involved in them, namely: payment and
settlement, lending, investment, and risk transfers. The aim is to maintain consumer protection, and
to encourage financial innovation.
4.159. The regulatory regime of financial services has been described in great detail in several
recent TPR reports83, and did not see any major regulatory changes during the period under review.
4.4.1.1 Regulatory evolutions in the banking sector
4.160. For banking services, there were no changes regarding preferential and bilateral policies,
licensing procedures and conditions, prudential regulation and the banking deposit insurance
scheme, or the market access regime for foreign banks, as noted in the annual OECD Services Trade
Restrictiveness Index.84
4.161. The regulatory changes made during the period under review include the following areas:
the privatization process of Japan Post Bank (JPB), regional bank consolidation, measures to ensure
compliance with the Basel Committee's Core Principles for Effective Banking Supervision, anti-money
laundering, e-payments, fintech, and crypto-currencies. The privatization process of JPB is
dependant on that of the mother company, Japan Port Holdings (JPH). In September 2017, the
Government sold a 23.6% share of JPH, in addition to the 19.5% it had already sold in November
and December 2015. This leaves the Government with a 56.9% share of JPH. A third sale, which
would cover a maximum of 23.5% of the shares (since, by law, the Government must own at any
time one third of JPH shares) has not been decided yet. All the proceeds of these sales were affected
to reconstruction projects in areas affected by the 2011 earthquake and tsunami.
4.162. JPH sold some of the shares of JPB in 2015, and currently holds 89% of its shares. 2% of
JPB now in private hands shares belong to foreign investors. JPH also sold some of the shares of
Japan Post Insurance Co Ltd. (JPI) in 2015 and 2019, and currently holds 64% of its shares. 2.3%
of JPI now in private hands shares belong to foreign investors. When JPH will have sold 50% or more
of the shares of JJPB, the new business implemented by JPB will no longer be subject to approval,
but simply to the notification system. However, it will remain possible for the authorities to order
additional supervisory measures. Regional banks are encouraged by the Government to diversify
their business away from mortgage-lending activities (a segment of low profitability due to low
interest rates and shrinking demand by an ageing population), and to provide loans to regional
revitalization projects. The Government amended regulations on the 5% cap on regional banks'
equity holdings in small companies. More specifically, the revision deregulated restrictions on the
investment ratio (the "5% rule") in relation to regional revitalization, and to smooth business
succession for local companies. In November 2018, the Prime Minister issued a directive to the
Cabinet to facilitate, through legislative and regulatory improvements, mergers among regional
banks, to consolidate the sector.
4.163. Regarding measures to implement the Basel Committee's core principles, in December 2017,
the final Basel III (also commonly known as "Basel IV") standards were expanded to cover a wider
range of capital requirements by 2022. A progress report issued by the Basel Committee in
April 2019 indicated that Japan had adopted 14 of these standards, was in the process of adopting
3 more, was late in adopting 2 of them, and was planning to adopt 9 more by 2022. In addition, the
draft rule of large exposure requirement was published in June 2019, and will be adopted from April
2020. Japan also transposed, in 2018, the Basel's Committee recommendations on the capital
83
WTO documents WT/TPR/S/310, 19 January 2015; and WT/TPR/S/351, 18 January 2017.
84
OECD, Access the Data. Viewed at: https://qdd.oecd.org/subject.aspx?Subject=STRI.
- 167 -
treatment of Interest Rate Risk in the Banking Book. For more on these standards and their state of
implementation, see Table A4.3.
4.164. The three largest Japanese banks (Mitsubishi UFJ Financial Group, Sumimoto-Mitsui Financial
Group, and Mizuho Financial Group) are subject to additional capital requirements, since they are
among the 29 world-wide systematically important financial institutions; the latest list was published
in November 2018. The rule imposing that their total loss-absorbing capacities must amount to 16%
of their risk-weighted average was published and implemented in March 2019, and this requirement
will be raised to 18% in March 2022. The rule will also be applied to Nomura Holdings in March 2021,
and will be raised to 18% in March 2024.
4.165. Regarding anti-money laundering measures, in February 2018, the FSA released Guidelines
on Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) and, in August 2018
and October 2019, it released AML reports to review the status of the efforts and to improve financial
institution's risk management in the AML/CFT area, and to prepare for the 4th Round Mutual
Evaluation by the Financial Action Task Force (the FATF 4 th Round Mutual Evaluation is in progress
and the Mutual Evaluation Report will be adopted in June 2020). In these AML documents, the FSA
considers that status has been improved but continuous efforts could still be made in this area.
4.166. Regarding e-payments, Japan has been relatively slow to switch to cashless payments, and
credits cards, for instance, are much less used than by other OECD countries. However, this is now
changing very rapidly, due to e-payments (notably by mobile phones) and more marginally to
crypto-currencies. The Government set an objective of 40% of cashless payments by 2025.
4.167. Examples of smartphone-based e-payment apps using QR codes include Line Pay by a
messaging company, which launched its code payment service in June 2018; J-Coin Pay, launched
by Mizuho Bank in cooperation with 56 banks in March 2018 and which has a target of 6.5 million or
more users in five years; Rakuten Pay, developed by an Internet company; and PayPay, a joint
venture between a mobile operator, Softbank, and an Internet company, Yahoo!Japan. Some foreign
operators, such as Paypal, have registered, and operate in Japan.
4.168. The Government is developing a regulatory framework for e-payment services, in order to
protect consumers and boost innovation. The Banking Act was amended on 26 May 2017 to add a
new chapter on electronic payment services (Chapter VII-5). This Chapter created a registration
procedure office to operate such services. Foreign corporations and foreign individuals can register
but must designate an agent in Japan. The definition of Electronic Settlement Intermediary Services
Providers (ESISPs) encompasses both Payment Initiation Services Providers and Account
Information Service Providers, and includes provisions regulating their business conduct. In
particular, if such a provider seeks to be connected with a banking IT system to start fund
remittances or gain access to information related to deposit accounts, it must enter into an
agreement with said bank regarding matters such as security of information and the allocation of
responsibilities in case of damages regarding the customer. Banks must publicly disclose to the
ESISPs their standards of connectivity by March 2018, and try to establish a voluntary open
Application Programming Interface system by 2020
4.169. In order to develop fintech, the FSA eased, in May 2016, the restrictions on banks' ownership
of finance-related IT companies. However, such acquisitions remain subject to FSA approval. In
September 2017, the FSA established the FinTech Proof of Concept (PoC) Hub. The main aim of the
Hub is to support innovative projects improving user convenience and/or productivity of companies.
For each selected PoC project, the FSA will set up a special working team, in cooperation with
relevant authorities and/or industry associations, as necessary. A special working team will support
a project, by giving advice on issues related to compliance and supervision, etc., that participants
of the PoC project would like to clarify The newly formed (July 2018) Strategic Development and
Management bureau of the FSA is in charge of this programme.
4.170. In April 2017, the FSA implemented the revised Payment Services Act, which introduced the
registration system for exchange service providers of virtual currency for legal tender, and
established the legal framework, such as security requirements and segregation rules between the
operators' assets and the users' assets. After the Coincheck site was illegally accessed in
January 2018, the FSA conducted a number of on-site inspections and business improvement orders,
to try to improve their internal management structure and AML capabilities.
- 168 -
4.171. Following the crash of the bitcoin value (from USD 20,000 in December 2017 to USD 4,000
in December 2018) and two major thefts at virtual exchanges involving USD 500 million and
USD 60 million, the FSA announced, in December 2018, its intention to strengthen applicable rules
and to ensure user protection. This act was passed by the Diet in May 2019, and will be implemented
by June 2020. The new Payment services act replaces the term "virtual currency" by "crypto-asset",
to underline its speculative character, requires service providers to pre-notify the authority of plans
to change a line of virtual currency products, and contains provisions forcing virtual currency
exchanges to secure funds for repayments to customers in the case of theft or business failure.
4.172. In a parallel move, in October 2018, the FSA granted self-regulatory status to the Japan
Virtual Currency Exchanges Association, to make this institution responsible for safeguarding
customers assets, issuing operational guidelines, and preventing money laundering. Japan
proactively contributed to the establishment of a Contact Group (CG) within Financial Action Task
force, to promote AML measures of virtual assets; a first face-to-face meeting of the CG was held in
mid-June 2019.
4.4.1.2 Regulatory evolution in other financial services sectors
4.173. There were no significant regulatory changes during the period under review for insurance
and pension funds.
4.174. Regarding stock markets, on 24 May 2017, the Financial Instruments and Exchange Act was
amended, to subject high-speed traders to a registration requirement. Foreign high-speed traders
are also subject to this registration requirement. The conditions for registration do not include the
establishment of an office in Japan but require the designation of a representative or an agent in
Japan.
4.175. In January 2019, in the framework of corporate governance reform, Japan adopted a new
rule which requires companies to disclose the method used for the verification of cross-shareholding,
and which expands the coverage of mandatory individual disclosure of cross-shareholding (from 30
to 60 shares), a provision applicable for financial reports covering periods ending March 2019 and
after.
4.176. The commitments undertaken by Japan during the period under review regarding financial
services in the CPTPP and in the EU-Japan EPA include some elements which differ from those already
undertaken in its previous FTAs. The CPTPP contains GATS plus commitments on insurance
intermediation, such as brokerage and agency, on securities-related transactions with financial
institutions and other entities in Japan, and on sales of a beneficiary certificate of an investment
trust or an investment security, through securities firms in Japan. The EPA with EU contains specific
definitions, exceptions and disciplines on new financial services, self-regulating organizations,
payment and clearing systems, transparency, and rules on insurance services provided by postal
entities.
4.4.2 Telecommunication services
4.177. Box 4.5 details the main economic indicators of the telecommunications sector.
Box 4.5 Main economic indicators of the telecommunications sector
Penetration rates (2018)

Fixed-telephone subscriptions per 100 inhabitants: 49.9
Mobile-cellular subscriptions per 100 inhabitants: 139.2
Fixed (wired)-broadband subscriptions per 100 inhabitants: 32.1
Mobile broadband subscriptions per 100 inhabitants: 188.9
Households with a computer per 100 inhabitants: 76.4
Households with Internet access at home per 100 inhabitants: 98.5
Individuals using the Internet per 100 inhabitants: 84.6
Main actors
Number of companies providing telecom services (April 2019):
- 327 carriers (owning networks and circuits) are registered by the Ministry of Internal Affairs and
Communications (MIC)
- 169 -
- 19,491 carriers (without networks) have submitted notifications
Compared to the situation at the beginning of the period under review (March 2016), the net number of
registered carriers increased by 20, and that of carriers subject to the notification regime increased by 2,323
Names and market shares of the leading companies for fixed telecom services (December 2018):
NTT East and NTT West (combined market share for fixed telecom services, 23.2%); KDDI (17.9%); Optage
(3.8%); Softbank (2.9%); various wholesalers using NTT East and West networks (31.7%)
Name and market shares of the leading companies for mobile telephones services (December 2018):
NTT DoCoMo (38.1%); KDDI group (including Okinawa Cellular) (27.5%); SoftBank group (22.9%)
Name and market share of broadband Internet services (March 2018):

NTT group (e.g. OCN) (24.9%); KDDI group (e.g. Biglobe) (30.7%); pure Internet service providers (e.g.
So-net, @nifty) (13.1%)
Foreign ownership participation in telecom companies:

− Except for NTT, there are no restrictions for Japan's telecommunications carriers. For NTT, the limitation
stands at less than one third of foreign ownership
− Foreign ownership shares of listed telecom companies are not available, except for NTT, where it stood
at 28.1%, as at June 2019
State ownership: NTT 35.9%
Establishment of new companies, mergers or closures since the last Review:

"Rakuten Mobile" joined the telecommunication market as the fourth Mobile Network Operator in May 2018
Source: Information provided by the authorities; and, for penetration figures, the ICT/EYE ITU database.,
viewed at: https://www.itu.int/itu-d/apis/clients/res/pdf/country_profile/report_JPN.pdf.
4.178. The telecommunication regime has been described in several past TPR reports 85, and did not
undergo any significant changes during the period under review. In particular, there were no changes
regarding the mobile interconnection regime, facility sharing, local loop unbundling, spectrum
management, or accounting rates.
4.179. Regarding number portability, a major change occurred. The enforcement, in May 2019, of
the "telecommunication Number Plan (public notice No. 6 of the Ministry of Internal Affairs and
Communications (2019))" required telecommunications operators to take the necessary measures
to enable number portability among them by the end of January 2025.
4.180. Regarding the fixed interconnection regime, the leading companies (NTT West and NTT East)
are now obliged to include their optical fibre lines, as well as their Internet Protocol core network
"Next Generation Network", as designated facilities into their interconnection offer. Regarding
licensing, operators providing name conflict resolution mechanisms in the context of the attribution
of first rank Internet domain names such as ".jp" are, since May 2016, subject to a notification
regime.
4.181. The universal service regime was updated through an amendment to the method of
calculation of compensation; it must now take into account the transition from analogue fixed
telephones to optical IP telephones. The amount of compensation received by the universal services
providers (NTT East and NTT West) was JPY 6.8 billion in 2015, JPY 6.76 billion in 2016,
JPY 6.92 billion in 2017, and JPY 6.5 billion in 2018.
4.182. Apart from those minor technical amendments to the regime, and of the deployment of
5G-LTE networks and of experimental programmes on the IoT and on AI, the government policy
regarding telecommunications during the period under review was essentially focused on two issues:
consumer protection, and the lowering of costs linked to the use of mobile handsets.
4.183. Consumer protection rules were enhanced and strengthened by an amendment of the
Telecommunication Business Act, promulgated in May 2016. New obligations were introduced, such
85
WTO documents WT/TPR/S/351, 18 January 2017, pp. 111-113; WT/TPR/S/310, 19 January 2015,
pp.101-103; and WT/TPR/S/W/276, 15 January 2013, pp. 95-98.
- 170 -
as the issuing of documents after the signing of a contract, the initial contract cancellation system,
the prohibition of mis-statement, the prohibition of continued solicitation, and the provision of
guidance to agents. The Ministry of Internal Affairs and Communications (MIC) has been actively
monitoring the implementation of these new rules, notably through regular meetings of the
Consumer Protection Rules Monitoring Study Group, established under the aegis of the ICT Safety
and Security Study Group.
4.184. Regarding SIM locking, the MIC revised its guidelines in January 2017 to shorten the time
required for SIM unlock after the purchase of mobile terminals. In the case of instalment payment,
the time was shortened to 100 days after the day of purchase; in the case of lump-sum payment,
SIM unlock was made possible on the day of purchase. In August 2018, the MIC further revised its
guidelines to require operators to accept requests for the SIM unlocking of used terminals. This
amendment was to apply from 1 September 2019.
4.185. As evidenced by its ranking in Table 4.21, telecommunications prices in Japan remain
relatively high by international standards, especially for data access via fixed and mobile broadband.
Table 4.21 Telecommunication prices, 2017

Japan's Price expressed in
Type of service worldwide Unit USD in purchase
ranking power parity
Mobile-cellular basket 45 ITU basket 28.22
Mobile-cellular prices (on-net) 81 Per-minute local call 0.00a
Mobile-cellular prices (off-net) 81 Per-minute local call 0.00a
Mobile-cellular prices to fixed 81 Per-minute local call 0.00b
telephones
SMS 81 Local SMS 0.03b
Fixed-broadband prices 80 Residential monthly 33.2
subscription
Mobile broadband basket, 93 Handset-based (500 MB) 49.39
prepaid
Mobile broadband basket post- 77 Computer-based (1 GB) 49.39
paid
a NTT DOCOMO provides post-paid "Kake-hodai Plan" for basic monthly charge of JPY 2,700/USD 25
(for Smart phones) with free domestic calls.
b NTT DoCoMo provides a post-paid Kake-hodai Plan for a basic monthly charge of JPY 2,700/USD 25
(for smartphones) with free domestic calls. This is the price of an SMS on the post-paid Kake-hodai
Plan provided by NTT DoCoMo.
Source: ITU, Measuring the Information Society, Report 2018, Volume 1, viewed at
https://www.itu.int/en/ITU-D/Statistics/Pages/publications/misr2018.aspx.
4.186. The Government is actively pursuing a policy aimed at lowering the costs linked to the use
of mobile handsets, and has taken, or is planning to take, several measures to that effect.
4.187. First, the Telecommunication Business Act was revised in May 2019 ("A law to amend part
of Telecommunication Business Act" Act No. 5, 2019), to establish a prohibition on the discount of
connection fees and mobile phone handsets when selling connection and handsets as a set, from
September 2019. The discount on mobile phone handsets when selling connection and handsets as
a set, and that on mobile phone handsets for new customers, was to be limited to JPY 20,000 (this
limitation is listed in the ministerial ordinance delegated by the law that stipulates the specific
amount of benefits offered if benefits are provided for customers). The law also stipulates that the
difference between the price plan with time constraint and the one without time constraint is limited
to JPY 170 per month. This rule applies to the three main mobile telephone operators (NTT DoCoMo
Inc., SoftBank Corp., and KDDI Corp.) as well as to Rakuten, the e-commerce firm that entered the
mobile telephone market. These measures are meant to completely separate the connection fee
from the price of mobile phone handsets, and to ban excessive customer capture.
4.188. The Government also plans to place a cap on benefits that are offered by mobile phone
companies to long-term subscribers, notably by limiting the benefit offered per year for the extension
of a contract to one free month of connection.
- 171 -
4.189. In addition, the Government announced, in June 2019, that it will require mobile phone
operators to drastically cut cancellation fees for users who quit in the middle of a two-year contract,
so as to promote competition and lower the country's relatively high communication charges. Under
the plan approved by the communications ministry's panel, Japan's four main mobile phone
operators and the Mobile Virtual Network Operators will be obliged to cut cancellation charges by
90%, to JPY 1,000 (USD 9) or less, from the current JPY 9,500, enabling users to switch companies
more easily. To introduce this measure, in September 2019, the ministry revised the Regulations for
the Enforcement of the Telecommunications Business Law.
4.190. Under the GATS, Japan made commitments on all telecommunication subsectors, be they
basic or value added, subscribed to the GATS disciplines of the reference paper, and listed only
two restrictions, both for NTT and KDDI: a limitation on foreign ownership of 20%, and a nationality
requirement for the majority of the board. This situation related to NTT and KDDI is echoed in the
subsequent bilateral or regional agreements, but the foreign ownership limitation was scheduled at
a less restrictive, status quo level of one third, which correspond to the applied regime.
4.4.3 Postal, courier and express services
4.191. The MIC is the regulatory authority for postal services, while the Ministry of Land,
Infrastructure and Transport (MLIT) regulates express service activities under the Consigned Freight
Forwarding Business Act. There is no independent regulator for postal matters.
4.192. Since 2000, postal services providers have been reorganized, in three steps. First, the Postal
Services Agency, which was an external agency of the Ministry of Public Management, Home Affairs,
Posts and Telecommunications, was replaced in April 2003 by a new public corporation named Japan
Post. This public corporation remained 100% government-owned, its staff retained civil servant
status, and it continued to provide both postal and financial services including savings and insurance.
In a second stage, in October 2007, postal services were privatized under the Postal Service
Privatization Act (Law No. 97 of 2005), the Japan Post Group was established, and its employees
lost their civil servant status. The Japan Post Group was composed of five entities, namely JPH;
Japan Post Service; Japan Post Network (i.e. the post offices); JPB; and Japan Post Insurance, two
of which (Japan Post Service and Japan Post Network) dealt with postal services stricto sensu. In a
third stage, in October 2012, the two latter entities merged under the name Japan Post Company
Limited.
4.193. In 2018, the Japan Post Company Limited employed over 193,000 persons, and had a
network of 24,000 post offices, over 180,000 mailboxes, revenue of JPY 3,887.4 billion, and a profit
of JPY 85.4 billion. Japan Post Co. is the only sub-entity of the Japan Post Group that has not been
the object of an initial public offering/listing, and it remains 100% JPH-owned. The other sub-entities
were subject to an initial public offering/listing of 10% of their capital in November 2015.
4.194. Box 4.6 summarizes the somewhat complex domestic regime of postal, courier and express
services.
Box 4.6 Postal, courier and express domestic regime
1. Special correspondence 4. Parcels of more than 4 kg

Definition: one, or a combination, of the following mail Definition: as in title
items:
Legal status: open to competition
• mail items that have dimensions (height + width
+ thickness) totalling over 73 cm or a weight over Operators: express and parcel operators
4 kg; (first-class and second-class freight
• mail items that are to be delivered within three forwarders)
hours; and
• mail items that have a delivery charge that
exceeds the amount specified by a ministerial
ordinance of the MIC (JPY 800).
Legal status: liberalized
Operator(s): 538 private operators
- 172 -
2. General correspondence
Definition: postal items whose height, width and thickness
are, respectively, under 40 cm, 30 cm and 3 cm, and whose
weight is under 250 g (usually letters) sent within Japan and
which are to be delivered within three daysa
Legal status: liberalized
Operators: Japan Post, since no private providers applied for

a licence
3. Correspondence postal items 5. Non- 6. Parcels of
Definition: correspondence less than 4 kg
− second-class mail: postcards (2-6 g) postal items Definition: as in
− first class mail: residual category (other than 2nd, 3rd and Definition: title
4th classes including express mail services) within a limit − third class mail:
of 4 kg periodicals, Legal status: open
magazines and to competition
Legal status: part of a reserved area/universal service of newspapers
Japan Post within a limit of Operators: Japan
1 kg; Post competes with
Operator: Japan Post − fourth class mail: express and parcel
items which operators (first-
require special class and second-
consideration, class freight
e.g. for the blind forwarders)
Legal status: part of

reserved area/
universal service of
Japan Post
Operator: Japan Post
a However, the minimal limit for special correspondence are dimensions totalling over 73 cm or
weighing over 4 kg. Thus, items totalling less than those dimensions or weighing between 250 g and
4 kg fall into the general correspondence category.
Note: Jurisdiction of the MIC: 1+2+3+5
Jurisdiction of the MLIT: 4+6
Scope of the Correspondence Delivery Act: 1+2
Scope of the Postal Act: 3+5
Scope of the notion of correspondence: 1+2+3
Scope of non-correspondence: 4+5+6
Activities of Japan Post: 2+3+5+6
Universal service/reserved area of Japan Post: 3+5
Activities of Japan Post in competition with the private sector: 6
Activities outside the universal service/reserved area where Japan Post is the sole provider: 2.
Source: Compiled by the Secretariat.
4.195. The universal service, as defined by the Postal Act No. 167 of 1947 and last amended in
2002 (to change the approval of the rates by the MIC from a prior notification system to a post facto
notification system), comprises the totality of postal items defined as such by the relevant
international conventions, including Express Mail Services. There is no universal service fund.
4.196. The de jure monopoly of the Japan Post Company Ltd. includes letters (when containing
"correspondence", see below) and postcards (between 2 and 6 g) and the following postal items:
smart letters (i.e. up to A5 size and 1 kg throughout Japan at a fixed rate), letter packs (up to A4
size and 4 kg throughout Japan at a fixed rate) and express mail services items.
4.197. As illustrated in Box 4.6, the notion of "correspondence" determines the borderline with
parcels, which are open to competition and are under the jurisdiction of the MLIT 86. It is defined by
Article 4, paragraph 2 of the Postal Act (Law No. 165 of 1947) as "any document expressing the will
or intent of the sender to a specific recipient or informs such a recipient of factual information".
86
Except for periodicals (3rd class mail) and material for the blind (4th class mail), which are not a form
of correspondence but are nevertheless part of the universal postal service and of the reserved area of Japan
Post, and are under the jurisdiction of the MIC.
- 173 -
Hence, for instance a résumé sent to a company is a written correspondence, but the same résumé
sent back by the company is not. Article 76 of the Postal Act stipulates that the sender and the
delivery company sending correspondence items could face up to three years' imprisonment or a
fine of up to JPY 3 million for infringement.
4.198. The Act on Correspondence Delivery by Private Business Operators (Law No. 99 of 2002)
liberalized, since 1 April 2003, "correspondence delivery services", and opened them de jure to
private postal operators. Correspondence delivery services are divided into two sub-categories, with
different scopes, licensing procedures and licensing conditions: "general correspondence services"
and "special correspondence services".
4.199. General correspondence services, or "basic services", cover postal items whose height, width
and thickness are, respectively, under 40 cm, 30 cm and 3 cm, and whose weight is under 250 g
(usually letters), sent within Japan, and which should be delivered within three days. The conditions
for application require complete territorial coverage, the installation of "correspondence collection
boxes" (i.e. mailboxes) evenly throughout the country, according to the populations of
municipalities, a six-days-a-week delivery frequency, the guarantee of secrecy of correspondence,
and an adequate business plan. There were no applications and hence no licences delivered so far
for the exercise of those services.
4.200. Special correspondence services, or "high-value services", are defined as one, or a

combination, of the following mail items:
• mail items that have dimensions (height + width + thickness) totalling over 73 cm or a
weight over 4 kg;
• mail items that are to be delivered within three hours; and
• mail items that have a delivery charge that exceeds the amount specified by a ministerial
ordinance of the MIC (JPY 800).
4.201. The requirements for application for a licence are quality-based. The applicant company
must guarantee the protection of secrecy of correspondence, and present an adequate business
plan. Needs are assessed on the basis of the estimate of business revenues. There are geographical
limitations on delivery within three weeks. Permission to operate is given by the MIC, and is
perpetual. As at July 2019, 538 operators were licensed, none of them foreign. Their total sales
amounted to JPY 19.3 billion in FY2018.
4.202. Japan did not make any commitments regarding postal and express services either under
the GATS or in the positive listing agreement with Singapore. However, it bound special
correspondence services in most of its positive listing agreements with India, Brunei Darussalam,
Thailand, Malaysia, Viet Nam, Indonesia and the Philippines, with a standstill commitment in the
latter five. In its negative listing agreements, Japan reserved future measures for postal services,
both for investment and cross-border trade in the services chapters for national treatment, senior
management and boards of directors, and local presence.
4.203. Express carriers, including international express carriers such as Fedex, UPS, DHL and TNT,
fall under another regulatory regime, the Consigned Freight Forwarding Business Law" (Law No. 82
of 1989), applicable since 1990 and last amended in 2008. This Law is administered by the MLIT.
4.204. In its latest amendment, the Law distinguishes between two types of freight forwarders:
first-class and second-class.
4.205. First-class freight forwarders are freight forwarders deploying transport intermediation
activities within a single mode of transport (maritime, air, rail, or road) and which do not engage in
the door-to-door collection and delivery of cargo. First-class freight forwarders are subject to a
simple registration procedure for entry, and to an ex-post-facto reporting system for fares (charges
and fees).
- 174 -
4.206. Second-class freight forwarders organize multimodal activities, and ensure door-to-door
services. They are subject to a permission regime, which implies the preliminary approval of the
general business plans as well as the approval of the collection/delivery plans for cargo.
4.207. In terms of conditions of access for foreign operators in these two classes, the Law creates
three distinct regimes, depending on the type of transport activities undertaken:
• for freight forwarding using air transportation between points within Japan, a nationality
requirement is imposed on both natural and legal persons (whether constituted under
foreign law or under Japanese law, and with less than two thirds of Japanese nationals on
the board and with voting rights);
• for freight forwarders using international air transportation, permission or registration

(depending on the class concerned) is subject to a reciprocity test; and
• for freight forwarders using maritime transportation, permission or registration (depending

on the class concerned) is also subject to a reciprocity test.
4.208. UPS, Fedex, DHL and TNT operate in Japan. To the extent that they are allowed to operate
(i.e. except for freight forwarding using air transport between points within Japan, and once the
reciprocity test is satisfied for the other two subsectors), foreign express operators enjoy full national
treatment.
4.209. However, express carriers, domestic, foreign or Japan Post Co Ltd, do not compete under
exactly the same regulatory conditions, in terms of customs valuation methods and de minimis
thresholds, location of customs clearance, traffic fines, loading and unloading of shipments, and
advance cargo information87. According to the authorities, these differences in treatment are normal
by international standards, can be explained by the different nature of the items shipped and their
different transport chains, and do not constitute discrimination against express carriers.
4.210. Japan did not undertake any commitments on freight forwarding under the GATS. It reflected
its applied regime for freight forwarding in some of its FTAs. This is the case of seven positive listing
agreements with India, Brunei Darussalam, Thailand, Malaysia, Viet Nam, Indonesia and the
Philippines, with a standstill commitment in the latter five. As far as negative listing agreements are
concerned, Japan bound its existing regime by lodging reservations for existing measures (hence,
subject to standstill and ratchet); this is reflected in its agreements with Mongolia, Switzerland,
Australia, Chile, the European Union, Mexico, Peru, and the CPTPP partners.
4.4.4 Transport services
4.4.4.1 Maritime transport
4.4.4.1.1 Market overview
4.211. In 2017, Japan relied on maritime transport for 72.3% of its imports and for 70.2% of its
exports, in value. In addition, coastal shipping, which is reserved for the national flag, is an important
economic sector, with 2,500 companies employing 65,000 persons, among which 28,000 seafarers,
and with business revenue of around USD 11 billion in 2016.
4.212. The total Japanese fleet (i.e. the Japanese-flagged fleet 88 and the foreign-flagged but
Japanese-controlled fleet) remains the second largest in the world, after the Greek fleet.
Nationally-flagged vessels are, for the most part, deployed on cabotage traffic. The internationally
deployed fleet (mostly composed of foreign-flagged, Japanese-controlled vessels) employed 2,000
Japanese seafarers and 56,000 foreign seafarers, and had business revenue of USD 39 billion in
87
Global Express Association, Overview of de minimis value regimes open to express shipments world
wide. Viewed at: https://global-express.org/assets/files/Customs Committee/de-minimis/GEA overview on de
minimis_28 March 2018.pdf; the Customs Act (Law No. 61 of 1954, as amended), Article 76; the Plant
Protection Act (Law No. 151 of 1950, as amended), Articles 6 and 8; the Act on Livestock Infectious Diseases
Control (Law No. 166 of 1951, as amended), Article 38; the Road Traffic Act (Law No. 105 of 1960, as
amended), Article 4; and the Act on Postal Matter Shipping Consignment (Law No. 284 of 1949), Article 16.
88
Due to ownership restrictions, there are no Japanese-flagged vessels controlled by foreign interests.
- 175 -
2016. In 2018, the Japanese fleet carried about 8.7% of the global seaborne trade, in volume. The
share of Japan's fleet in the world total is higher for bulk traffic89 than for in-liner shipping, as the
container-carrying capacity of ONE, the new single operator born out of the merger in March 2018
of the three historical operators (Mitsui OSK; K-line; and NYK), accounted for only 7% of the capacity
in 2018, and ranked number six among liner shipping operators.
4.213. As at 1 January 2019, the total fleet was composed of 987 nationally-flagged vessels over
1,000 gross registered tonnes (GRT) totalling 38.99 million dead weight tonnes (DWT), i.e. 1.9% of
world tonnage capacity, and of 2,844 foreign-flagged, Japanese-controlled vessels over 1,000 GRT
and totalling 186.72 million DWT of capacity, i.e. 9.5% of world tonnage.
4.214. Ports in Japan essentially serve external trade. Although the volume of containers
transhipped to foreign destinations in Japan declined significantly in recent years (from 265,000
twenty-foot equivalent units (TEU) in 2012 to 131,000 TEU in 2017), the total container handling
volume was on the rise (from 21,226,000 TEU in 2012 to 22,822,000 TEU in 2017). In this 2017
total, cabotage container handling represented a volume of 4,428,000 TEU, i.e. 19.3 %.
4.215. Table 4.22 provides in more detail the main economic indicators of the maritime transport
sector, in terms of fleet and traffic.
Table 4.22 Maritime transport, main economic indicators

Vessels (number) Tonnage (DWT)
Fleet (vessels over 1,000 GRT)
(Million tonnes) (% of world
as at 1 January 2019
tonnage)
National flag 987 38.99 1.9%
Of which foreign-controlled 0 0 0%
Beneficially owned fleet under foreign flags 2,844 186.72 9.5%
Volume ('000 tonnes, Value (JPY billion) % of Japan's
except for containers: 2017 international
'000 TEU), 2017 trade (all modes
Merchandise trade of transport)
FY2017
Imports Exports Imports Exports Imports Exports
c.i.f. f.o.b.
International maritime freight trade 962,595 289,649 54,536 54,986 72.3 70.2
Of which containers 9,207 9,187 31,138 33,963 41.3 43.4
Of which transhipped 75 56 .. .. .. ..
Of which dry bulk 407,898 66,426 10,177 6,604 13.5 8.4
Of which liquid bulk 372,725 19,964 13,221 1,078 17.5 1.3
.. Not available.
Source: Information provided by the authorities; and UNCTAD.
4.4.4.1.2 Regulatory developments
4.216. The Maritime Bureau in the MLIT is responsible for maritime shipping policy and national
legislation. It also represents Japan at the International Maritime Organization, which sets the
worldwide standards for safety, security and environmental norms for maritime transport.
4.217. The main laws covering the maritime transport of goods are: the Basic Act on Maritime Policy
of 2007; the Carriage of Goods by Sea Act of 1992; the International Carriage of Goods by Sea Act
of 1957; the Maritime Traffic Safety Act of 1972; the Port and Harbour Act of 1950 (as amended);
the Port Regulations Act of 1948; and the 1933 Ship Safety Act (as amended).
4.218. During the period under review, the main regulatory developments essentially concerned
FTAs, ports, and the support regime of the Japanese fleet. The competition and applied market
access regimes remained unchanged.
4.219. Regarding the support regime, in 2017, the "roll-over relief" system, i.e. the deferred
taxation of capital gains in the case of the sale of old vessels replaced by new vessels, was extended
until the end of FY2019. In 2019, the additional depreciation applicable to Japanese-flagged vessels
89
This includes the carriage of crude oil and refined petroleum products ("liquid bulk") and of coal, iron
ore, grain and phosphates ("dry bulk").
- 176 -
fulfilling certain conditions, notably of an environmental nature, through either the declining-balance
method or through the straight-line method, was raised from 18% to 20%.
4.220. In May 2018, the Cabinet adopted the third quinquennial Basic Plan on Ocean Policy 90, which
sets three objectives regarding the merchant fleet, corresponding to three different segments of
maritime transport, namely international freight transport, domestic/coastal freight transport, and
domestic passenger transport.
4.221. First, regarding the ocean-going fleet, the objective is to strengthen the international
competitiveness of Japan's merchant fleet, and to secure maritime transport systems centred on
Japanese-flagged ships (whose number should be multiplied by 1.2 by the end of the Plan in 2023)
and Japanese crews (the objective being to multiply the number of seafarers by 1.5 by the end of
the Plan in 2028). This objective is meant to be achieved by prolonging, until March 2023, the
tonnage tax system instituted in 2008.
4.222. While the rates of the tonnage tax remain unchanged 91 , its scope of application was
expanded to include "deemed-Japanese-flagged vessels" i.e. a foreign-flagged-vessel operated by a
Japanese shipping firm and owned by an overseas subsidiary of a company established under
Japanese law, which may change its flag to the Japanese one immediately in case of issuance of an
"order of navigation"(e.g. in case of natural disasters). In accordance with the Maritime Transport
Act, the tonnage tax rates applicable to those vessels are 1.5 times higher than those applicable to
Japanese-flagged vessels.
4.223. The Plan does not modify the existing International Ship Regime (ISR), whereby a Japanese-
flagged vessel may receive a reduction of registration and licence taxes and property taxes, provided
it fulfils certain conditions; namely, it must be of more than 2,000 GRT, be an ocean-going vessel
whose non-Japanese seafarers hold a certificate issued by the MLIT, or be of a roll-on/roll-off or LNG
carrier type. Companies may apply for the ISR scheme if they are established under Japanese law,
regardless of the nationality of their shareholders.
4.224. The second objective of the third Basic Plan on Ocean Policy is to strengthen coastal shipping
operators, to develop advanced coastal ships, and to secure a sufficient number of national
seafarers, in line with the June 2017 MLIT Plan for the Future of Coastal Shipping. The Plan sets the
target of increasing the average coastal tonnage of cabotage vessels from 715 tonnes in FY2015 to
858 tonnes in FY2025. The Coastal Shipping Tentative Measures Programme/Scrapping Incentives,
instituted in FY199892 and the Coastal Shipping Joint Ownership Scheme under the Japan Railway
Construction, Transport and Technology Agency (JRTT)93, instituted in 1957, remain unchanged. The
Basic Plan on Ocean Policy also foresees the maintenance of the present cabotage regime, i.e. the
reservation of the national flag, save exceptions foreseen in the Friendship Commerce and
Navigation treaties with Denmark, the United Kingdom and Norway, or under reciprocity conditions.
4.225. Regarding passenger transport, the Plan recognizes that domestic passenger ships and
ferries are an indispensable transportation infrastructure for regional communities, and they
promote tourism in Japan. It foresees the continuation of the policy of subsidizing remote island sea
routes. Of the 295 remote island sea routes in service at the end of FY2018, 120 were subsidized.
According to the authorities, the Government subsidizes these projects to maintain regional public
transport. The total value of subsidies in FY2018 was JPY 20 billion.
4.226. The competition regime remained the same during the period under review. The last review
of the anti-trust immunity provided by the Marine Transportation Act was concluded, with no
90
The Basic Plan on Ocean Policy. Viewed at:
https://www8.cao.go.jp/ocean/english/plan/pdf/plan03_e.pdf.
91
Namely, for vessels less than 1,000 net tonnes (NT), JPY 120/100 NT; for vessels over 1,000 and up
to 10,000 NT, JPY 90/100 NT; for vessels over 10,000 and up to 25,000 NT, JPY 60/100 NT; and for vessels
over 25,000 NT, JPY 30/100 NT.
92
The project of provisional measures for coastal shipping was introduced in May 1998 to revitalize the
coastal shipping business. To deal with excessive tonnage, it adjusts the available tonnage by the scrap-and-
build method.
93
Since 1959, the JRTT provides support to coastal shipping by sharing the cost and ownership of
vessels, with JRTT taking 70%-90% of costs and ownership. The domestic shipping company pays a usage fee
to the JRTT for the period of joint ownership, which is 7-15 years.
- 177 -
changes, in 2015. No further review is planned. The scope of this immunity, defined in Article 28-4
of the Act, provides immunity "to conclude an arrangement or agreement or to conduct a concerted
act concerning the fares or charges and other transportation conditions, routes, allocation of ships
as well as sharing of shipping between a ship operator and other ship operators on routes between
ports in Japan and a territory other than Japan". In practice, this immunity covers agreements such
as conferences, discussion agreements, stabilization agreements, vessel-sharing agreements and
consortia (including alliances) in liner shipping, and tramp pools in bulk shipping. The benefit of this
immunity is conditioned by a filing requirement, as Article 29-(2) of the Marine Transportation Act
stipulates that "any ship operator shall, if he/she intends to engage in the act provided for in Article
28 item (4) or to alter the content thereof, notify beforehand the Minister of Land, Infrastructure,
Transport and Tourism to that effect".
4.227. The applied market access regime remained unchanged. Japan does not discriminate against
foreign participation in international maritime services, and accords national treatment.
4.228. The applied regime was only partially bound. Japan's commitments under the GATS are
relatively limited (access to/use of port services, pushing and towing services, maritime agency
services, salvaging, watering and fuelling services), due to the outcome of the 1995-96 maritime
transport negotiations. Commitments undertaken in the context of FTAs vary widely; the more liberal
commitments are in negative listing agreements (with Australia, Chile, the European Union, Mexico,
Peru, Switzerland, and the CPTPP partners) and in recent positive listing agreements containing
standstill clauses (with Indonesia, Malaysia, Mongolia, the Philippines, and Thailand); these
commitments were described in detail in one of the previous reports. 94 While Japan replicated its
previous maritime commitments in negative listing agreements signed since 2013 (namely with Peru
in 2012, Australia in 2015, CPTTP partners in 2018, and the European Union in 2019), the only
positive listing agreement signed since then (with Mongolia in 2016) contains a supplementary
commitment binding an autonomous liberalization of the applied regime, i.e. the suppression of the
economic needs test for cargo handling and container depot station activities.
4.229. Regarding ports, there were significant regulatory developments during the period under
review. First, the third Basic Plan on Ocean Policy adopted by the Cabinet in May 2018 includes a
port component. The objective is to maintain and expand key maritime routes, with port calls in
Japan, with anti-seismic infrastructures adapted to large container ships, large bulk carriers and car
transporters, through freight collection, freight creation, and enhanced port competitiveness. The
Plan also foresees the development of international logistics terminals, and of domestic terminals
tailored to the transportation needs of key industries, such as automobile recycling in ports; and the
creation of specific bunkering facilities for LNG-fuelled ships will also be encouraged, including abroad
(e.g. in Singapore).
4.230. During the period under review, Japan also actively pursued its policy of according
concessions to an increasing number of container and bulk terminals. Privately managed container
terminals are now present in nine harbours, compared to three mentioned in the previous report.
Although this activity is opened to foreign investment, all operators selected so far are of Japanese
nationality.
4.231. Table 4.23 provides an overview of concessions accorded recently.
Table 4.23 Overview of the ports' recently accorded terminal concessions

Privately Type of Managing company(ies)/ nationality Volume Date & duration
managed cargo (TEU, of contract
terminals 2017)
Keihin (some) Container Yokohama-Kawasaki International Port 3,055,994 04.03.2016
Corporation/Japanese Indefinite duration
Kobe･Osaka Container Kobe-Osaka International Port 5,251,000 28.11.2014
(some) Corporation/Japanese Indefinite duration
Nagoya･Yokkaichi Container Nagoya-Yokkaichi International Port 693,447 01.09.2017
Niigata (some) Container Niigata World Trade Terminal Company 169,002 07.03.2014
Limited/Japanese Indefinite duration
94
WTO document WT/TPR/S/276, 15 January 2013, Table A.IV.4, pp. 142-148.
- 178 -
Privately Type of Managing company(ies)/ nationality Volume Date & duration

managed cargo (TEU, of contract
terminals 2017)
Sakai Semboku Container Sakai Semboku Wharf 30,374 21.12.2015
Mizushima (some) Container Mizushima Port International Logistics 167,036 20.01.2014
Center Corporation/Japanese Indefinite duration
Hiroshima (some) Container Hiroshima Port & Harbor Administration 254,098 02.02.2017
Center Co., Ltd/Japanese Indefinite duration
Hakata (some) Container Hakata Port Terminal 850,179 20.02.2014
Corporation/Japanese Indefinite duration
Ibaraki Port Container Ibaraki Port Authority 29,827 08.06.2000-
Hitachinaka Corporation/Japanese 08.06.2020
District (some)
4.4.4.2 Air transport
4.232. Japan has a well-developed air transport sector, with approximately 100 million international
passengers, 223 million domestic passengers 95 , and 1.4 billion tonnes of international cargo in
2018.96 There are 114 airports in operation in the country, and the top five accounted for more than
half of all traffic, and the top two for over one third: Narita International Airport accounted for 33.7%
of international passengers; and Tokyo International Airport (Haneda) for 30.3% of domestic
passengers. Users of low-cost airlines (LCCs) have been increasing; 20% of international passengers
were reported to be using LCCs in 2018.97
4.233. During the period under review, the regime of air transport services remained largely
unchanged, except for slots, airport concessions and bilateral air transport agreements.
4.234. As far as services explicitly covered by the GATS are concerned, computer reservation
services, and selling and marketing of air transport services are not regulated by any sector-specific
legislation; they abide by general company law and the general legal framework for competition. In
both instances, there are no provisions limiting market access; these services were the object of
extensive commitments under the GATS and in all of Japan's FTAs.
4.235. Aircraft repair and maintenance services, another type of air auxiliary service explicitly
covered by the GATS, are regulated by the Aircraft Manufacturing Industry Act, which does not
impose any obligation to repair nationally-flagged planes locally. This act conditions establishment
of new entrants to an economic needs test whose criterion is that "the capability of manufacturing
or repairing aircraft or specific equipment does not become notably excessive". This criterion is
formulated in a non-discriminatory manner. Several permissions were granted during the period
under review. The number of US Federal Aviation Administration-(FAA) and European Agency for
Safety in Aviation (EASA) -certified repair stations (11 in both instances) remained unchanged during
the period under review.
4.236. The commitments for aircraft repair and maintenance under the GATS and under the
positively listed FTAs of Japan reflect the applied regime, i.e. the existence of an economic needs
test. That situation is echoed in all of Japan's negatively listed FTAs.
4.237. Regarding air transport services not explicitly covered by the GATS, the regime of ground
handling services also remained unchanged during the review period. Self-handling and mutual
handling are allowed at all airports, as is third-party handling. Differentiated situations may result
from bilateral agreements, due to reciprocity considerations. The CPTPP and the Japan-EU EPA both
include ground handling services in their scope but, in both instances, these services are the object
of Annex II type reservations, carving out future measures from MFN obligations.
95
East Japan Civil Aviation Bureau, Usage status of jurisdiction airport. Viewed at:
https://www.cab.mlit.go.jp/tcab/statistics/01.html; and Osaka Airlines Bureau, Usage report. Viewed at:
https://ocab.mlit.go.jp/about/total/report/.
96
Civil Aviation Bureau, Data. Viewed at: http://www.mlit.go.jp/koku/15_hf_000030.html.
97
MLIT online information.
- 179 -
4.238. Domestic air freight forwarding is reserved for Japanese nationals, while access to
international freight forwarding activities is subject to approval based on a reciprocity test. Aerial
work is reserved for national operators, and foreign investment in this sector is subject to a
notification procedure, and is limited to one third of the voting rights.
4.239. Regarding commercial air transport stricto sensu, charters are subject to authorization by
the MLIT; the authorization is liberally granted except in cases of lack of reciprocity. There is no
specific policy for all-cargo flights. Foreign participation in nationally established airlines is limited to
one third of the voting rights, including for holding companies. Domestic traffic is reserved for
nationally established airlines.
4.240. Table 4.24 provides an overview of Japanese airlines, in terms of fleet, turnover and
shareholders, in 2018.
Table 4.24 Overview of airlines, 2018

Airline Number of Turnover Shareholders
aircraft (JPY bn)
ANA Holdings 292 1,971.7 No shareholder with more than 5%
JAL 231 1,383.2 Only one shareholder with more
than 5%: the Master Trust Bank of
Japan (Trust Accounts), Ltd: 5.37%
Nippon Cargo Airlines 11 97.9 Owned 100% by Nippon Yusen
Low-cost carriers
Peach Aviation 20 54.7 ANA Holdings: 67.0%;
First Eastern Investment Group:
17.9%; INCJ: 15.1%
Vanilla Air 14 32.9 ANA Holdings: 100%
Jetstar Japan 21 57.0 JAL and Quantas: 33% each;
Mitsubishi, Century Tokyo Leasing:
16.7% each
Spring Airlines Japan 4 9.1 Spring Airlines: 33.0%;
Others: 67.0%
Air Asia Japan 2 .. Air Asia Investment: 33.0%;
Others: 67.0%
.. Not available.
4.241. The main regulatory changes adopted during the period under review concern three areas,
namely: slots and congested airports, airports privatization/concessions, and bilateral air transport
agreements.
4.242. In anticipation of the Olympic Games in 2020, the number of slots available at Tokyo airports
(Haneda and Narita) were considerably increased, passing from 680,000 in 2015 (Haneda 410,000,
Narita 270,000) to approximately 1,000,000 in 2020 (Haneda 490,000, Narita 500,000). In addition,
Fukuoka was added to the list of congested domestic airports (in addition to Haneda, Narita, Itami
and Kansai), where a notification from a domestic airline to the MLIT is needed before adding a
frequency.
4.243. Regarding airport privatization/concession, Japan amplified considerably its policy, initiated
in 2013, with the Act on Operation of National Airports Utilizing Skills of the Private Sector, which is
part of a wider Private Finance Initiative governed by annual plans. Table 4.25 provides an overview
of this concession process.
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Table 4.25 Overview of airport concession process

Airport concerned Date of concession (or Bidder selected Duration of Observations
stage of concession concession
process)
Osaka Airports December 2015 Vinci Airports and Orix 45 years
(Kansai and Itami)
Sendai Airport December 2015 Tokyo Group consortium 30 years
Osaka's Kobe Airport April 2018 Vinci Airports and Orix 42 years
Fukuoka Airport 1 April 2019 Fukuoka Airport HD 30 years
Corporation (Nishi Nippon
Railway Corporation;
Mitsubishi Corporation;
Kyushu Electric Power
Corporation; and
Singapore's Changi Airport
International
Takamatsu Airport 1 April 2018 Mitsubishi Estate 35 years
Shirahama Airport April 2019 Minchori Holdings-led 10 years
consortium
Shimojishima January 2018 Mitsubishi Estate Permanent Special
Airport purpose vehicle
to develop and
operate
passenger
terminal
facilities
Mount Fuji Shizuoka April 2019 Mitsubishi Estate and 20 years
Airport Tokyo Corporation
Nagasaki Airport Survey to determine the Not yet selected Not decided
viability of privatization,
was to be completed by
March 2019
One Hokkaido January 2020 (New Hokkaido Airport Group 30 years
(seven airports) Chotose Airport)
October 2020 (Asahikawa
Airport)
March 2021(Wakkanai
Airport, Kushiro Airport,
Hakodate Airport, Obihiro
Airport, Memanbetsu
Airport)
Hiroshima Airport − Guidelines for the 30 years
tender published in May
2019;
− Selection of a preferred
negotiation rights
holder in June 2020 -
agreement in August
2020;
− Full-scale private
operations to
commence from April
2021
Kumamoto Airport April 2020 MSJA-Kumamoto 33 years
Consortium
Source: CAPA- Centre for Aviation, viewed at https://centreforaviation.com/analysis/reports/japans-airport-

privatisation-picks-up-pace---and-interest-418151 and complementary information provided by the
authorities
4.244. Regarding bilateral air transport agreements, during the period under review, Japan
concluded or amended four bilateral agreements, namely with India, Papua New Guinea, Cambodia,
and Lao PDR. These agreements essentially added new frequencies without liberalizing further other
clauses. Table A4.2 details the characteristics of all air services agreements in force for Japan, coded
according to the WTO QUASAR methodology98, which provides an assessment of their degree of
liberalness.
98
For more elements on this methodology, see WTO document S/C/W/270/Add.1, 30 November 2006.
- 181 -
4.4.5 Environmental services
4.245. Following standard practice for TPR reports, and for the purpose of this Section,
environmental services should be understood as covering sewage services, refuse disposal services,
sanitation services, cleaning services of exhaust gases, noise-abatement services, nature and
landscape protection services, and other environmental protection services. 99 Fresh water
distribution services/water utilities are also covered in this Section, as this type of service is
technically bundled with sewage services, and uses, at least partly, the same infrastructure as
sewage services.
4.246. This list covers basically three types of services. The first group is constituted by services
linked to the provision of basic public services, with natural monopoly characteristics (water
utilities/distribution, sewage, consumer waste disposal and sanitation services, such as snow- and
ice-clearing services). These services are regulated by various acts, described below, which entrust
municipalities, or grouping of municipalities, with the provision of these services to the general
public. However, they were modified in recent years, to allow the creation of PPPs, whereby
municipalities can delegate the management of those services to the private sector. A second group
is composed of services that are delivered mainly by private companies (industrial waste
management, cleaning services of exhaust gases, and noise-abatement services). These sectors are
regulated at both national and local levels, essentially on questions of safety and norms. Finally,
nature landscape and protection services constitute the third group, which is regulated at both
national and local levels; the bulk of the regulation consists of environmental norms. The Ministry of
the Environment is the main regulator of the environmental services sector. The MLIT is the main
regulator of the sewage sector.
4.4.5.1 Water distribution services and waste water treatment/sewage services
4.247. The main policy objective of Japan's water distribution and waste water treatment/sewage
services is to ensure access to water for everyone (Box 4.7).
Box 4.7 Market overview of water distribution and waste water treatment/sewage
services
Japan's share of the global market (2010) 8%, or USD 247.6 billion
Number of firms (2015) 2,123
Revenue of private water companies (2015) USD 21 billion
Main private national companies Kurita Water Industries, Organo Corporation, Hitachi Ltd.,
METAWATER Co., Ltd.
Level of regulation National

Main regulations Water Supply Law; Local Public Enterprise Act; Sewage
Water Act
Main objectives of the regulations Provision of access to water for everyone
Source: Development Bank of Japan, Report (2015). Viewed (in Japanese) at:
https://www.dbj.jp/pdf/investigate/etc/pdf/book1508_02.pdf; and United States International Trade
Commission (USITC), Environmental and Related Services (2013). Viewed at:
https://www.usitc.gov/publications/332/pub4389.pdf.
4.248. From a regulatory point of view, water distribution services and sewage services are not
vertically integrated in Japan, and hence obey to two distinct legal regimes.
4.249. Water distribution is regulated by the Water Supply Law Act No. 177 of 1957, which
attributes to the municipalities the competence of providing water. Some smaller municipalities may
99
The Services Classification List contained in document MTN/GNS/W/120, which was used by most
Members to schedule their commitments under the GATS, covers the following subsectors: sewage services;
refuse disposal services; sanitation and similar services; and "other" environmental services, which includes
the remaining elements listed in the provisional version of the UN CPC, namely: cleaning of exhaust gases
(CPC 94040), noise-abatement services (CPC 94050), nature and landscape protection services (CPC 94060),
and "other environmental protection services not elsewhere classified" (CPC 94090).
- 182 -
group together, in "bulk water supply businesses", to share the large-scale investments needed.
This type of investment is subsidized at the national level, to an amount varying between one third
and one half of the total investment.
4.250. Municipalities and bulk water supply businesses can, in turn, delegate part or all of the
operation and management of the water distribution system to private firms, under various
contractual arrangements. About 65% of the municipalities use one of these contractual
arrangements.100
4.251. Table 4.26 describes the various forms of delegation to the private sector of the management
of water distribution.

management and operation of water distribution
Typical duration and number
of water distribution networks
Type of contract Description
and private companies
involved
Subcontracting (limited or Limited: subcontracting one of the Usually 2-5 years
extensive) following functions: facilities
design, water quality inspection, 1,714 distribution networks
facility maintenance inspection, (involving 622 private companies)
meter reading
Extensive: subcontracting several

or all of the functions listed above
Technical subcontracting Subcontracting technical duties, 2-5 years
such as operational management
of water purification plants or 191 distribution networks
water quality control (involving 46 private companies)
Design Build Operate (DBO) Commissioning to a private 5-20 years
company the design, construction
and operation of facilities, 6 distribution networks (involving
the funding of the design and of 7 private companies)
the construction remain public
Private Finance Initiative (PFI) The private contractor provides 20 years
the funding for the design,
construction, operation,
maintenance and repair of the 12 distribution networks
facilities (involving 8 private companies)
Concession The administration of the facilities Up to 20 years
and their operation are entrusted
to a private enterprise, while the No case so far, as this form of
local government remains the contract was only introduced in
owner of the facilities. 2018 (see below)
The private partner collects the
fee from the customers The Osaka municipality declared
its intention to have recourse to
this new legal instrument
Source: MHLW, Report, 2019. Viewed (in Japanese) at:

4.252. The main recent regulatory development was an amendment of the 1957 Water Supply Law,
Amendment 92/2018, dated 12 December 2018, allowing municipalities to grant, through a
concession contract, the full management of water distribution to private companies for a duration
of up to 20 years. This amendment applies f the annual Public Private Partnership (PPP)/Private
Finance Initiative (PFI) plan of 2018.101
100
Japan Water Works Association online information (JWWA). JWWA Report on Current Issues in Water
Business (2015). Viewed at: http://www.jwwa.or.jp/houkokusyo/pdf/suidoujigyou/report_01.pdf (in
Japanese).
101
PPP/PFI. Viewed (in Japanese) at: https://www8.cao.go.jp/pfi/actionplan/pdf/actionplan29_2.pdf.
- 183 -
4.253. There are no legal rules banning foreign companies from taking part in any of the contractual
arrangements listed in Table 4.26.
4.254. Japan did not undertake any commitments regarding water distribution under the GATS nor
in its positive listing FTAs (i.e. Brunei Darussalam, India, Malaysia, Mongolia, the Philippines,
Thailand, Singapore, and Viet Nam). For negative listing FTAs, Japan systematically listed an Annex
1 reservation (subject to standstill and ratchet obligations) for an existing measure on an a priori
notification procedure for investments in the water supply and waterworks industry (sector classified
under JSIC 3611). This covers the agreements with Australia, Chile, Mexico, Peru, Switzerland, the
European Union, and the CPTPP. In the case of the European Union and of the CPTPP, the text of
the reservation is more developed that in other agreements.102
4.255. Waste water treatment/sewage services are regulated by the Sewage Water Act No. 79 of
1958, which attributes the competence of providing sewage services to municipalities. Municipalities
can, in turn, delegate part or all of the management of sewage systems and facilities to the private
sector under various forms of contractual arrangements; no less than 90% of sewage treatment
facilities operation are delegated to the private sector.103
4.256. Table 4.27 provides an overview of the various forms of public-private contractual
arrangements in use, ranked by decreasing number of municipalities using them.

management and operation of sewage treatment facilities
Number of
Type of contract Description municipalities
involved
Extensive subcontracting Subcontracting works, such as patrolling, inspection,
survey, cleaning, repair of the facilities, chemical/fuel 252
procurement, and repair, to the private sector
DBO Subcontracting the design, construction, operation and
maintenance of the facilities/system; the funding of it 20
remains public
PFI The private contractor provides the funding for the
design, construction, operation, maintenance and repair 7
of the facilities
Concession The administration of the facilities and their operation
are entrusted to a private enterprise, while the local 2
government remains the owner.
The private partner collects the fees from the consumers
to recoup its investment and its operational costs
Source: MLIT, PPP/PFI situation in the sewerage (as at April 2018). Viewed (in Japanese) at:
http://www.mlit.go.jp/common/001300117.pdf.
4.257. There are no legal provisions barring foreign companies to enter into such contractual
arrangements. Japan has a full commitment for the relevant mode of delivery (mode 3) for sewage
services under the GATS and in all its FTAs so far, be they positively or negatively listed.
4.4.5.2 Waste management services
4.258. The main policy objective of waste management services is to limit the volume of waste
disposal, reduce the consumption of natural resources, and promote the sustainable use of resources
(Box 4.8).
102
WTO RTA-IS data base. "1. The prior notification requirement and screening procedures under the
Foreign Exchange and Foreign Trade Law apply to foreign investors who intend to make investments in water
supply and waterworks industry in Japan. 2. The screening is conducted from the viewpoint of whether the
investment is likely to cause a situation in which national security is impaired, the maintenance of public order
is disturbed, or the protection of public safety is hindered. 3. The investor may be required to alter the content
of the investment or discontinue the investment process, depending on the screening result."
103
MLIT, PPP/PFI situation in the sewerage (as at April 2018). Viewed (in Japanese) at:
http://www.mlit.go.jp/common/001300117.pdf.
- 184 -
Box 4.8 Market overview of waste management services
Market size of waste management JPY 14,296 billiona

services (2017)
Turnover of the general/municipal waste USD 26 billion
management industry (2012)
Turnover of the industrial waste USD 3 billion

management industry (2012)
Number of firms (2011) 110,000 licensed firms
Volume of waste produced (2016) 430.2 million tonnes
Customers Public sector and waste-generating private enterprises
Assets and annual sales of the top Japan- Dowa Eco-System Co., Ltd, annual sales: JPY 99 billion
based waste management firms
Exports and imports Export of waste management and recycling services:

JPY 603 billion
Import of waste management and recycling services:
JPY 418 billion
Main private companies Solid waste: Dowa Eco-system Co., Ltd, Daiseki Co., Ltd and
JFE Kankyo Corporation
Hazardous waste: Ebara Corp., Kubota
Level of regulation National law
Main regulations Basic Environmental Law; Basic Law for Establishing the
Recycling-based Society; Waste Management and Public
Cleansing Act; Act on the Promotion of Effective Utilization of
Resources; Law Concerning Special Measure Against
Polychlorinated biphenyl (PCB) Waste
Main objectives of the regulations Achieving a circular economy by limiting the volume of waste
disposal; reducing the consumption of natural resources; and
promoting sustainable use of resources
a JPY 14,296 billion is the total amount of the three categories in the report "Estimation of the Market
Size of the Environmental Industry on a Commission Basis in Fiscal 2017", published in 2019. The
three categories are facilities for waste management and recycling, services for waste management
and recycling, and production of recycled materials.
Source: Ministry of the Environment (2012). Viewed (in Japanese) at:
https://www.env.go.jp/recycle/report/h24-05.pdf; and
http://www.sanpainet.or.jp/service/doc/144750_3.pdf; and Ministry of the Environment Report,
2011 Industrial Waste Disposal Business Survey Report. Viewed (in Japanese) at:
https://www.env.go.jp/press/y0310-03/mat02.pdf;
https://www.env.go.jp/press/files/jp/109313.pdf; and
http://www.env.go.jp/recycle/waste_tech/ippan/h28/data/disposal.pdf.
4.259. Waste management is regulated by the Waste Management and Public Cleansing Act
(Act No. 137 of 1970), which attributes the collection, treatment and recycling of "general waste" to
municipalities, and the treatment of industrial waste to the industry that produced it. In both
instances, municipalities and industries have recourse to private companies. Hazardous waste is
subject to a specific legal regime, the Special Management Waste Regulations, involving recourse to
licensed services providers abiding by strict qualification norms. In addition, companies using
polychlorinated biphenyl must use one of five chemical disposal sites managed by the public Japan
Energy Service Corporation (JESCO).
4.260. For municipalities, the forms of PPPs available are Design Build Operate; Build Transfer
Operate, a scheme where the private partner operates the facility but transfers its ownership to the
public partner immediately after construction; Build Operate Transfer, which is similar except that
the transfer of property takes place after the end of the period of operations by the private partner;
and Build Own Operate, where the private partner retains ownership of the facility it has built and
operated.
- 185 -
4.261. Private providers entering into such arrangements must obtain a licence from the prefectural
government. There are no legal provisions barring foreign firms to enter the waste and recycling
market. Japan has full commitments for the relevant mode of delivery (mode 3) for waste
management services under the GATS and in all its FTAs so far, be they positively or negatively
listed.104
4.4.5.3 Air and noise pollution abatement services
4.262. Japan is one of Asia's largest producers and consumers of goods and services related to air
and noise pollution abatement. The domestic market is characterized by intense competition among
indigenous firms. Large Japanese suppliers account for about 80% of the air pollution abatement
market
4.263. The main policy objective of air and noise pollution abatement services is to protect citizens
(Box 4.9).
Box 4.9 Noise pollution abatement services
Market size (2013) Air pollution abatement services: USD 71.0 billion
Noise pollution abatement services: USD 8.2 billion
Main private companies Ebara, Hitachi Zosen, Horiba, Hotaka Engineering, and Mitsubishi
Heavy Industries
Level of regulation National and local
Main regulations Air Pollution Control Law; Law Concerning Special Measures Against
Dioxins; Pollution Release and Transfer Registry Law; Basic
Environment Law; Noise Control and Vibration Control Law; Aircraft
Noise Prevention Law
Main objectives of the regulations Protection of citizens
Source: USITC, Environmental and Related Services (2013). Viewed at:

4.264. The national Government and prefectures provide environmental investment incentives
through tax support, low interest loans, subsidies, and grants.
4.265. Japan has a full commitment under mode 3 for air and noise pollution abatement services
under the GATS and under all its FTAs so far, be they positively or negatively listed.105
4.4.5.4 Remediation, and nature and landscape protection services
4.266. The landowner is responsible for remediation of the soil. Steel companies, as well as large
construction and water treatment firms, have reportedly established themselves firmly in the soil
remediation market. Japanese remediation firms have cultivated alliances with foreign firms in order
to benefit from proven methods and technologies.106
4.267. The main policy objective of remediation, and nature and land protection services is to
protect the health of citizens by preventing pollution and by purifying the pollution that has already
occurred (Box 4.10).
104
Japan's commitments under mode 3 in GATS and other FTAs cover CPC 9401-9409. However, Japan
inscribed a limitation in its GATS Schedule for refuse disposal services (CPC 9402) with respect to the number
of licences that may be conferred to service suppliers of waste oil disposal at sea from vessels. Furthermore,
Japan inscribed a reservation under mode 3 in the horizontal section of its Schedule, with respect to R&D
subsidies.
105
Japan's commitments on nature and landscape protection services (CPC 9406) in its GATS Schedule
with respect to national treatment do not extend to R&D subsidies.
106
USITC, Air and Noise Pollution Abatement Services: An Examination of U.S. and Foreign Markets
(2005), Table 4.1, pp. 4-20. Viewed at: https://www.usitc.gov/publications/332/pub3761.pdf.
- 186 -
Box 4.10 Regulatory overview of remediation, and nature and landscape protection
services
Japan's share of the global remediation and 13% of USD 37.7 billion
industrial services market (2010)
Revenue, number of firms, and employment in Entire remediation services market were valued at USD 4
remediation and industrial services (2010) billion, site assessment and soil remediation segments were
valued at USD 600 million
Main private companies Kurita Water Industries, Ebara Corporation, Organo

Corporation, Shimizu Corporation, Obayashi Corporation,
Taisei Corporation
Level of regulation National Government
Main regulations Soil Contamination Countermeasure Law; Basic

Environmental Law; Ambient Environmental Quality
Standards; Environmental Quality Standards for Soil
Main objectives of the regulations Protection of health of citizens by preventing pollution and
the purification of pollution that has already occurred
Source: USITC, Environmental and Related Services (2013). Viewed at:

4.268. Japan has a full commitment for remediation, and nature and landscape protection services
under the GATS and under all its FTAs so far, be they positively or negatively listed.
4.4.6 Distribution services with a specific focus on e–commerce
4.269. With the advent of e-commerce, the distribution services107 sector is rapidly evolving, while
its regulatory framework remains stable since 2000, at least regarding physical outlets. Distribution
services is one of the largest service sectors in Japan, as the addition of wholesale and retail
represented 14% of the GDP in 2017. In terms of employment, in 2017, wholesale employed more
than 3.9 million persons (5.6% of total employment) and retail more than 7.6 million (11.6%).
4.270. The main foreign distributors present in Japan with fully owned physical outlets are Walmart
(United States, through its subsidiary Seyu, with 334 outlets), Metro (Germany, 10 wholesale
outlets), H and M (Sweden, 91 outlets), Costco (United States, 26 wholesale outlets), and Ikea
(Sweden, 9 outlets).
4.271. The presence of many other foreign distributors is ensured through agency agreements
rather than franchising agreements. The purpose of an agency agreement is to set out the terms
and conditions of the relationship between the business which wants to sell an item (the Principal)
and the intermediary who agrees to sell it on their behalf (the Agent). When a sale is made by the
Agent, the law deems that a contract is formed between the Principal and the end-customer. For
example, Marubeni, the Japanese mega trading company, operates as a commercial Agency for
Merrell, the Michigan-based footwear giant; hence, Marubeni operates as the Agent, and Merrell as
the Principal. Franchising remains significant in certain subsectors, e.g. grocery, where the foreign-
owned 7-eleven company has a network of 21,000 franchisees all over Japan.
4.272. E-commerce physical merchandise sales (as opposed to services sales and digital sales of
films, games, software, etc) reached JPY 8,600.8 billion for B2C, and JPY 94 trillion for B2B. The
penetration of e-commerce is much stronger in the B2B segment (29.6% of wholesale sales in 2017,
up 9.0% compared to 2016) than in B2C (5.8% of the sales in 2017, up from 5.4% in 2016 and
4.7% in 2015). However, for B2C, the situation varies from item to item: for home appliances, office
supplies, books, DVDs and CDs, this proportion was over 25%, while, for food, beverages and
automobiles, it was less than 5%.
107
In this Section, distribution services is to be understood as the distribution of physical goods as
defined in the GATS standard nomenclature, the Central Product Classification (CPC) Provisional version, items
611 to 6432, and WTO document MTN/GNS/W120, 10 July 1991, Section IV. It does not include Consumer to
Consumer (C2C) sales of physical goods via Internet platforms (e.g. Ebay).
- 187 -
4.273. In 2017, Japan was the third largest B to C e-commerce market in the world. The leading
actors are Amazon, a foreign company (with a market share of 35% in 2016) followed by Rakuten,
a domestic company (30%), and Yahoo! Shopping Lohaco, a joint venture between the Japanese
company Softbank and the US company Altaba (17%). 60% of purchases take place via a mobile
application ("m-commerce", e.g. the Mercari app) but only 15% comes from abroad.108 Japanese
e-commerce providers are also trying to attract foreign customers, as exemplified by the recent
acceptance of the Union Pay credit card by Amazon Japan, to attract Chinese customers.
E-commerce is frequently combined with physical outlets via delivery at conveniences stores
("kombini"). Clothing items are the most popular items sold (with specific sites such as Uniqlo and
the market place Zozotown), followed by beverages and foods, books, computers and games,
electronics, and cosmetics.
4.274. The regulatory framework of physical distribution services was described in great detail in a
previous report (WT/TPR/S/276, pp. 106-109) and did not undergo any substantial changes since
then. Establishment of large-scale stores remain regulated by the 2000 "Act on the Measures by
large-scale retail stores for the preservation of the living environment", which does not include an
economic needs test but foresees procedures to establish and operate large-scale stores so as to
protect the living environment (e.g. noise impact assessment - notably for parking - traffic impact
assessment, etc). In addition, since 2007, local governments can decide on the location of
large-scale stores based on city planning considerations. Specific licensing procedures implying an
economic test exist for liquor distributors, central wholesale markets, and the sale of pharmaceutical
products. There are no other GATS-type restrictions in the applied regime for distribution services.
4.275. Similarly, there are no GATS-type restrictions on e-commerce. There is no specific general
regulatory framework for e-commerce. The main relevant laws deal with consumer protection and
e-payments. The most significant among them is the Act on Special Provisions to the Civil Code on
Electronic Consumer Contracts and Electronic Acceptance Notice (Act No. 95 of 29 June 2001). This
Act provides special provisions to the Civil Code (Act No. 89 of 1896) in cases where there are certain
mistakes in the elements comprising an electronic consumer contract, or where an electronic
acceptance notice is dispatched by a consumer under a contract made at a distance. 109 The
Consumer Contracts Act (Act No. 61 of 12 May 2000) permits a consumer to rescind his/her intention
to offer or accept a contract when s/he has misunderstood, or was distressed by, certain acts of the
business operator. It also nullifies any clauses (in whole or in part) that exempt business operators
from liability for damages, or that otherwise unfairly harm the interests of consumers.
4.276. The Payment Services Act (Act No. 59 of 24 June 2009) regulates payment services,
including prepaid payment instalments, fund transfers, and exchange services for virtual currency.
It was amended in 2017 to subject e-payment providers to a registration procedure (Section 4.4.1).
The METI issued the Interpretative Guidelines on Electronic Commerce and Information Property
Trading in March 2002. The latest amendment was made in June 2017. The Guidelines were created
with a view to enhancing predictability for concerned parties, and facilitating trade by clarifying how
the Civil Code and other relevant laws are applied to various legal issues relating to electronic
commerce and information property trading.
4.277. The trade regime bound by Japan under GATS and its FTAs was described in great detail in
a previous report. 110 The GATS commitments do not cover the distribution of petroleum and
petroleum products, rice, tobacco, salt, alcoholic beverages, or products sold at public wholesale
markets. Positive listing agreements echo these sectoral limitations, while negative listing
agreements do not contain such restrictions for petroleum and petroleum products, rice, salt, and
tobacco. Japan replicated its previous distribution commitments for negative listing agreements
signed since (namely with Peru in 2012, Australia in 2015, CPTTP partners in in 2018, and the
European Union in 2019), and for the only positive listing agreement signed since, that with
Mongolia, with a standstill obligation.
108
Export.gov, Japan – eCommerce. Viewed at: https://www.export.gov/article?id=Japan-E-Commerce.
109
Thomson Reuters Practical Law, Digital business in Japan: overview. Viewed at:
https://uk.practicallaw.thomsonreuters.com/5-621-
1305?transitionType=Default&contextData=(sc.Default)&firstPage=true&bhcp=1.
110
WTO document WT/TPR/S/276, 15 January 2013, Table AIV.9.
- 188 -
4.4.7 Legal services
4.278. Legal services accounted for around 0.1% of GDP in 2017. There are over 36,000 lawyers
(bengoshi), employed mostly in small-scale firms. The Attorney Act of 1949 grants them the
exclusive right to provide legal services, unless explicitly stated otherwise. However, their right to
appear in court is shared under certain conditions with some other legal professions, such as judicial
scriveners.
4.279. There are also a number of other types of legal practitioners, namely:
• judicial scriveners (shihohoshi), who handle, inter alia, registration and deposit in an
official repository with the legal affairs bureau of the Ministry of Justice, and who prepare
documents to be submitted a court or public prosecutor office;
• tax attorneys (zeirishi), who prepare tax returns, represent clients before the tax
authority, and provide consultation services on tax matters;
• patents attorneys (benrishi), who represent clients on all matters relating to patent rights,
utility model rights, design rights and trademark rights at the Japan Patent Office and
before the METI;
• maritime procedure agents (kaijidairishi), who deal with maritime formalities;
• administrative scriveners (gyoseishoshi), who handle documents to be lodged with

administrative agencies; and
• notaries.
4.280. Table 4.28 indicates the number of individuals and firms exercising these various legal
professions.
Table 4.28 Number of individuals and firms exercising legal professions

Profession Number of individuals Number of firms
Judicial scriveners (shihohoshi) 22,740, of which 113 foreigners 706 employing 27 foreigners
Tax attorneys (zeirishi), 78,028 3,963
Patents attorneys (benrishi) 11,507 295
Maritime procedure agents 2,130 ..
(kaijidairishi)
Administrative scriveners 47,901 ..
(gyoseishoshi)
Notaries 500 ..
.. Not available.
4.281. The situation varies regarding the exercise of those various legal professions by foreign
individuals and foreign firms.
4.282. For lawyers/bengoshi, there is no nationality requirement to be eligible to practice as a

bengoshi. However, to do so, one must qualify through a six to seven-year cursus, pass the national
bar exam, and undertake a 12-month apprenticeship sanctioned by a final graduation examination
apprenticeship. There is no obligation to have followed undergraduate studies in Japan, so long as
the individual concerned has attended 16 years of official school, followed by 3 to 4 years of
undergraduate studies. These conditions are common to all graduate schools in Japan. However, law
schools can impose additional conditions. An individual can also skip one or two years of law school,
and present himself as a free candidate to the bar examination. This possibility is opened to both
Japanese nationals and foreigners.
4.283. There is no specific track or procedure for requalification of foreign lawyers, already qualified
abroad, in Japanese law. The whole cursus must be followed. In addition, a commercial presence in
Japan is required. That may explain why foreign lawyers almost never practice as bengoshi.
- 189 -
4.284. Based on the Act on Special Measures concerning the Handling of Legal Services by Foreign
Lawyers (Law No.66 of 1986), foreign lawyers may engage in legal services in relation to home-
country law and international law, if they register with the Japan Federation of Bars Association.
They can do so if they meet the following requirements: be qualified as a lawyer in their home
country, and have practiced three years in their home country or abroad (this delay is reduced to
two years for pure advice activities). In addition, Registered Foreign Lawyers may establish a
Registered Foreign Lawyer Corporation.
4.285. Foreign firms can also associate themselves with Japanese law firms. When an individual
bengoshi associates himself with a Foreign Law Joint Enterprise, s/he may engage in bengoshi
activities, even if Registered Foreign Lawyers hold a majority in the association/joint venture.
Registered Foreign Lawyers and Registered Foreign Lawyer Corporations may employ bengoshi and,
as at end-2019, 15 foreign firms employed a total of 62 bengoshis.
4.286. In view of these small figures, Registered Foreign Lawyers and Registered Foreign Lawyer
Corporations' activity is, therefore, concentrated on consultancy regarding their home-country law,
third-country law, and international law. About 50 foreign law firms operate in Japan, originating
from Australia, China, France, Ireland, Italy, the Netherlands, Switzerland, the United Kingdom, and
the United States.
4.287. Legal advisory services are defined negatively, and do not include:
• legal representational services for juridical procedures in courts and other government
agencies, and the preparation of legal documents for such procedures;
• the expression of legal opinions concerning laws other than laws of the jurisdiction where
the service supplier is qualified as a lawyer (hereinafter referred to as "the jurisdiction");
• legal representational services for the preparation of notarial deeds; and
• activities concerning a legal case whose primary objective is the acquisition, loss or change
of rights concerning real property in Japan, or of industrial property rights, mining rights
or other rights arising upon registration thereof with government agencies in Japan.
4.288. Registered Foreign Lawyers and Registered Foreign Lawyer Corporations can also practice
international law, provided that the international law is in force in their jurisdiction. Association with,
and employment of, a bengoshi is permitted. Representation in arbitration is permitted.
4.289. Foreign law firms can establish under two different legal forms, namely: stand-alone foreign
law firm or Registered Foreign Lawyer Corporation. Each of these may form a joint enterprise with
an individual bengoshi or a Japanese law firm. Only Registered Foreign Corporations can have
branches.
4.290. The use of a foreign firm name is unrestricted, provided that it is followed by a reference to
"Gaikoku-Ho-Jimu-Bengoshi-Jimusho" (Office of Registered Foreign Lawyer).
4.291. For administrative scriveners (gyoseishoshi), the exercise of the profession is limited to
natural persons, and is not tied to a nationality requirement. However, a full qualification cursus
must be undertaken in Japan, and a commercial presence is required.111
4.292. For maritime procedure agents (kaijidairishi), the exercise is also limited to natural persons,
and is not tied to a nationality requirement, but a commercial presence is not required.
4.293. Judicial scrivener (shihohoshi), patent attorney (benrishi), and tax attorney (zeirishi)
activities can be undertaken by both natural persons and legal ones. An individual wanting to
exercise these activities must be fully qualified in Japan, and there are no nationality requirements.
A commercial presence must, however, be established in the district where this person will exercise
111
Administrative Scrivener Law (Law No. 4 of 1951).
- 190 -
(except benrishi). Firms willing to exercise this activity are required to establish a corporation under
the laws and regulations of Japan ("Shiho-Shoshi-Hojin", etc).112
4.294. Only individuals can be appointed as notaries by the Ministry of Justice, and they must be
of Japanese nationality. This profession is therefore closed to foreign individuals.113
4.295. The GATS commitments for Japan limit the exercise of legal professions (bengoshi, zeirishi,
benrishi, kaijidairishi) to natural persons, except for legal advisory services, and require a
commercial presence. Negative listing agreements, including those recently signed with CPTPP
partners and with the European Union, basically bind the applied regime described above, including
exercise by firms, when allowed, and in all legal professions except notaries. Positive listing
agreement commitments vary but are somewhat larger than the GATS, as they include, in certain
instances, standstill obligations and additional commitments regarding the allowance of arbitration,
the unlimited use of brand name, and the employment of partnership with bengoshi.
112
Judicial Scrivener Law (Law No. 197 of 1950) (Chapters 3, 4, 5 and 7); Patent Attorney Law
(Law No. 49 of 2000) (Chapters 6 and 8); Certified Public Tax Accountant Law (Law No. 237 of 1951)
(Chapters 3, 4, 5-2, 6 and 7); and Enforcement Regulation on Certified Public Tax Accountant Law (Ministerial
Ordinance of the Ministry of Finance No. 55 of 1951).
113
Notary Law (Law No. 53 of 1908) (Chapters 2 and 3).
- 191 -
5 APPENDIX TABLES
Table A1.1 Merchandise exports by group of products, 2014-18

2014 2015 2016 2017 2018
Total exports (USD billion) 690.2 624.9 644.9 698.1 738.2
(% of total)
Total primary products 6.5 6.0 5.4 5.6 6.0
Agriculture 1.5 1.7 1.6 1.6 1.6
Food 0.7 0.8 0.9 0.9 0.9
Agricultural raw materials 0.9 0.8 0.7 0.7 0.7
Mining 5.0 4.3 3.8 4.1 4.3
Ores and other minerals 0.8 0.7 0.6 0.7 0.7
Non-ferrous metals 1.9 1.8 1.7 1.7 1.8
Fuels 2.3 1.8 1.5 1.6 1.8
334 - Petroleum oils, other than crude 1.9 1.5 1.2 1.3 1.4
Manufactures 87.6 87.2 87.3 86.6 86.8
Iron and steel 5.4 4.9 4.1 4.2 4.2
6732 - Flat-rolled products of iron or non-alloy steel, 0.4 0.4 0.3 1.1 1.1
not clad, plated or coated, not further worked than
hot-rolled (other than those of subgroup 673.1)
Chemicals 10.4 10.1 10.0 10.2 10.7
5112 - Cyclic hydrocarbons 1.0 0.9 0.7 0.7 0.8
5822 - Other plates, sheets, film, foil and strip, of 0.9 0.8 0.8 0.8 0.8
plastics, non-cellular and not reinforced, laminated,
supported or similarly combined with other materials
Other semi-manufactures 4.7 4.7 4.6 4.4 4.4
Machinery and transport equipment 58.0 58.7 59.8 58.8 58.7
Power generating machines 1.8 1.8 1.8 1.8 1.7
Other non-electrical machinery 14.0 13.8 14.3 14.9 15.1
7284 - Machinery and mechanical appliances 2.7 2.8 3.4 1.5 1.4
specialized for particular industries, n.e.s.
7232 - Mechanical shovels, excavators and shovel- 1.1 1.0 1.1 1.2 1.3
loaders, self-propelled
Agricultural machinery and tractors 0.3 0.3 0.3 0.3 0.3
Office machines and telecommunication equipment 9.5 9.6 9.3 9.4 8.9
7599 - Parts and accessories (other than covers, 0.3 0.3 0.2 1.4 1.3
carrying cases and the like) suitable for use solely or
principally with the machines of subgroups 751.1,
751.2, 751.9 and group 752
7763 - Diodes, transistors and similar semiconductor 1.0 1.0 1.0 0.9 0.9
devices; photosensitive semiconductor devices
(including photovoltaic cells, whether or not
assembled in modules or made up into panels); light-
emitting diodes
Other electrical machines 6.4 6.5 6.7 6.4 6.5
7725 - Electrical apparatus for switching or 1.1 1.1 1.2 1.2 1.1
protecting electrical circuits, or for making
connections to or in electrical circuits (e.g. switches,
relays, fuses, surge suppressors, plugs, sockets,
lamp-holders, junction boxes) for a voltage not
exceeding 1,000
7786 - Electrical capacitors, fixed, variable or 0.6 0.7 0.7 0.7 0.8
adjustable (pre-set)
7781 - Batteries and electric accumulators, and parts 0.6 0.6 0.7 0.7 0.7
thereof
Automotive products 21.0 21.9 22.5 21.5 21.5
7812 - Motor vehicles for the transport of persons, 12.8 13.8 14.2 13.4 13.4
n.e.s.
7843 - Other parts and accessories of the motor 4.7 4.6 4.9 2.4 2.3
vehicles of groups 722, 781, 782 and 783
7821 - Motor vehicles for the transport of goods 1.5 1.5 1.4 1.3 1.2
7132 - Internal combustion piston engines for 0.6 0.7 0.7 0.7 0.7
propelling vehicles of division 78, group 722 and
headings 744.14, 744.15 and 891.11
7783 - Electrical equipment, n.e.s., for internal 0.7 0.7 0.7 0.7 0.7
combustion engines and vehicles; parts thereof
- 192 -
2014 2015 2016 2017 2018

Other transport equipment 5.2 5.1 5.3 4.9 4.9
7932 - Ships, boats and other vessels (other than 1.8 1.8 2.0 1.7 1.7
pleasure craft, tugs, pusher craft, special-purpose
vessels and vessels for breaking up)
7139 - Parts, n.e.s, for the internal combustion 1.0 0.9 0.9 0.9 0.9
piston engines of subgroups 713.2, 713.3 and 713.8
Textiles 1.0 1.0 1.0 0.9 0.9
Clothing 0.1 0.1 0.1 0.1 0.1
Other consumer goods 8.0 7.9 7.9 7.9 7.8
8746 - Automatic regulating or controlling 0.7 0.7 0.7 0.7 0.8
instruments and apparatus
Other 5.9 6.8 7.3 7.8 7.2
9710 - Gold, non-monetary (excluding gold ores and 0.7 0.9 1.3 1.5 1.0
concentrates)

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Table A1.2 Merchandise imports by group of products, 2014-18

2014 2015 2016 2017 2018
Total imports (USD billion) 812.2 625.6 606.9 671.5 748.2
(% of total)
Total primary products 48.8 38.7 36.3 39.2 40.9
Agriculture 10.1 11.9 12.2 11.8 11.1
Food 8.5 10.1 10.4 10.1 9.5
Agricultural raw materials 1.6 1.8 1.8 1.7 1.6
Mining 38.7 26.8 24.1 27.4 29.8
Ores and other minerals 4.5 4.2 3.8 4.1 4.1
2831 - Copper ores and concentrates 1.2 1.2 1.2 1.2 1.3
2815 - Iron ore and concentrates, not agglomerated 1.7 1.3 1.0 1.2 1.0
Non-ferrous metals 1.9 2.2 2.0 2.2 2.4
6841 - Aluminium and aluminium alloys, unwrought 0.8 0.8 0.7 0.8 0.8
Fuels 32.3 20.5 18.3 21.1 23.3
3330 - Petroleum oils and oils obtained from 16.1 7.2 8.4 9.5 10.8
bituminous minerals, crude
3431 - Natural gas, liquefied 9.1 7.3 5.0 5.2 5.7
3212 - Other coal 2.3 2.5 2.4 3.3 3.3
334 - Petroleum oils, other than crude 3.1 2.3 1.5 1.9 2.4
3421 - Propane, liquefied 1.0 0.7 0.5 0.7 0.7
Manufactures 49.8 59.5 61.9 59.1 57.4
Iron and steel 1.1 1.1 1.1 1.2 1.2
Chemicals 7.9 10.2 10.7 10.0 10.2
5429 - Medicaments, n.e.s. 1.4 2.4 2.4 1.9 1.9
5157 - Other heterocyclic compounds; nucleic acids 0.5 0.7 0.7 0.6 0.6
Other semi-manufactures 3.7 4.3 4.4 4.0 3.9
Machinery and transport equipment 24.0 28.2 29.5 28.8 27.7
Power generating machines 1.0 1.3 1.5 1.5 1.6
7149 - Parts of the engines and motors of heading 0.4 0.5 0.6 0.7 0.7
714.41 and subgroup 714.8
Other non-electrical machinery 3.6 4.5 4.5 4.7 4.9
Agricultural machinery and tractors 0.1 0.1 0.1 0.1 0.1
Office machines and telecommunication equipment 11.3 12.8 13.0 13.0 12.0
7643 - Transmission apparatus for radio-telephony, 2.0 2.3 2.5 3.5 3.2
radio-telegraphy, radio-broadcasting or television
7522 - Digital automatic data-processing machines, 1.1 1.1 1.0 1.0 0.9
containing in the same housing at least a central
processing unit and an input and output unit
7599 - Parts and accessories (other than covers, 0.4 0.4 0.4 0.7 0.7
carrying cases and the like) suitable for use solely or
principally with the machines of subgroups 751.1,
751.2, 751.9 and group 752
7763 - Diodes, transistors and similar semiconductor 1.2 1.1 0.9 0.7 0.6
devices; photosensitive semiconductor devices; light-
emitting diodes
Other electrical machines 3.9 4.7 4.9 4.5 4.2
7731 - Insulated (including enamelled or anodized) 0.8 1.0 1.0 1.0 1.0
wire, cable (including co-axial cable) and other
insulated electric conductors; optical fibre cables
made up of individually sheathed fibres
Automotive products 2.6 3.1 3.5 3.4 3.3
7812 - Motor vehicles for the transport of persons, 1.3 1.4 1.7 1.7 1.6
n.e.s.
7843 - Other parts and accessories of the motor 0.9 1.2 1.3 1.0 1.0
vehicles of groups 722, 781, 782 and 783
Other transport equipment 1.5 1.8 2.0 1.6 1.6
Textiles 1.1 1.3 1.3 1.2 1.2
Clothing 3.8 4.6 4.6 4.2 4.0
8453 - Jerseys, pullovers, cardigans, waistcoats and 0.6 0.7 0.7 0.6 0.6
similar articles, knitted or crocheted
- 194 -
2014 2015 2016 2017 2018

Other consumer goods 8.1 9.8 10.3 9.6 9.1
8722 - Instruments and appliances used in medical, 0.5 0.7 0.7 0.7 0.7
surgical or veterinary sciences (including sight-
testing instruments but excluding electro-diagnostic
and radiological instruments and apparatus)
Other 1.4 1.8 1.8 1.7 1.7

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Table A1.3 Merchandise exports by destination, 2014-18

2014 2015 2016 2017 2018
Total exports (USD billion) 690.2 624.9 644.9 698.1 738.2
(% of total)
Americas 24.7 25.8 25.7 24.7 24.4
United States 18.9 20.2 20.2 19.3 19.1
Other America 5.8 5.6 5.5 5.4 5.3
Mexico 1.5 1.7 1.7 1.6 1.6
Canada 1.2 1.2 1.3 1.4 1.3
Europe 11.3 11.5 12.5 12.4 12.4
EU-28 10.4 10.6 11.5 11.1 11.4
Germany 2.8 2.6 2.7 2.7 2.8
United Kingdom 1.6 1.7 2.1 2.0 1.9
Netherlands 1.9 1.9 1.8 1.8 1.7
France 0.9 0.8 1.0 0.9 1.0
Belgium 0.8 0.8 0.9 0.8 0.9
EFTA 0.6 0.6 0.6 0.9 0.6
Other Europe 0.3 0.4 0.4 0.5 0.4
Commonwealth of independent states 1.6 1.0 1.0 1.0 1.2
Russian Federation 1.3 0.8 0.8 0.9 1.0
Africa 1.5 1.4 1.2 1.1 1.1
Middle East 4.1 4.2 3.7 3.0 3.0
United Arab Emirates 1.4 1.4 1.2 1.0 1.1
Asia 56.7 56.1 55.9 57.8 57.9
China 18.3 17.5 17.6 19.0 19.5
Other Asia 38.4 38.6 38.2 38.7 38.3
Chinese Taipei 5.8 5.9 6.1 5.8 5.7
Hong Kong, China 5.5 5.6 5.2 5.1 4.7
Thailand 4.5 4.5 4.2 4.2 4.4
Singapore 3.0 3.2 3.1 3.2 3.2
Australia 2.1 2.1 2.2 2.3 2.3
Viet Nam 1.7 2.0 2.0 2.2 2.2
Indonesia 2.1 1.8 1.8 1.9 2.1
Malaysia 2.0 1.9 1.9 1.8 1.9
Philippines 1.4 1.5 1.6 1.6 1.5
India 1.2 1.3 1.3 1.3 1.5
Memorandum:
APEC 77.8 77.8 77.6 78.8 78.3
Source: UNSD Comtrade database.

- 196 -
Table A1.4 Merchandise imports by origin, 2014-18

2014 2015 2016 2017 2018
Total imports (USD billion) 812.2 625.6 606.9 671.5 748.2
(% of total)
Americas 13.9 16.2 16.7 16.5 16.4
United States 9.0 10.9 11.4 11.0 11.2
Other America 4.9 5.3 5.3 5.5 5.2
Canada 1.4 1.5 1.5 1.6 1.6
Chile 1.0 1.0 0.9 0.9 1.0
Europe 10.8 13.0 14.1 13.2 13.2
EU-28 9.5 11.4 12.4 11.6 11.7
Germany 3.0 3.2 3.6 3.5 3.5
Italy 1.1 1.2 1.4 1.5 1.5
France 1.4 1.5 1.7 1.5 1.5
United Kingdom 0.8 1.0 1.1 1.1 1.1
EFTA 1.2 1.5 1.6 1.5 1.3
Switzerland 0.9 1.2 1.3 1.2 1.0
Other Europe 0.1 0.1 0.1 0.1 0.2
Commonwealth of independent states 3.2 2.8 2.1 2.4 2.4
Russian Federation 3.0 2.5 1.9 2.1 2.1
Africa 2.1 1.8 1.2 1.2 1.2
Middle East 18.4 9.1 9.9 10.9 12.5
Saudi Arabia, Kingdom of 5.8 0.4 3.2 4.1 4.5
United Arab Emirates 5.1 3.8 2.9 3.1 3.7
Qatar 4.1 2.6 1.8 1.6 2.0
Asia 51.6 57.1 56.1 55.7 54.2
China 22.3 25.7 25.8 24.5 23.2
Other Asia 29.3 31.5 30.3 31.2 31.0
Australia 5.9 5.6 5.0 5.8 6.1
Chinese Taipei 3.0 3.7 3.8 3.8 3.6
Thailand 2.7 3.3 3.3 3.4 3.3
Indonesia 3.2 3.2 3.0 3.0 2.9
Viet Nam 1.9 2.4 2.7 2.8 2.8
Malaysia 3.6 3.4 2.9 2.9 2.5
Philippines 1.3 1.4 1.5 1.4 1.4
Singapore 1.0 1.3 1.2 1.3 1.3
Memorandum:
APEC 65.4 72.5 71.4 71.0 69.7
Source: UNSD Comtrade database.

- 197 -
Table A3.1 Taxation rates, November 2019

Tax Rates (JPY)
NATIONAL TAXES
Income tax Progressive rates up to a maximum of 45%
Corporation tax 23.2%
Inheritance tax/gift tax Applied on properties and gifts, with progressive rates up to a
maximum of 55%
Consumption tax 10%
Liquor tax JPY 20,000/kl–JPY 370,000/kl. In some cases, there is a JPY 10,000-
11,000 additional amount of tax per 1% of alcohol
Tobacco taxesa JPY 6,622/1,000 cigarettes
Gasoline tax and local gasoline JPY 53,800/kl
tax
Liquefied petroleum gas tax JPY 17.50/kl
Aviation fuel tax JPY 18,000/kl
Petroleum and coal tax Crude petroleum or petroleum products, JPY 2,800/kl;
natural gas or petroleum gas, JPY 1,860/tonne;
coal, JPY 1,370/tonne
Promotion of power-resources JPY 375 per 1,000 kWh of electric power sold
development tax
Motor vehicle tonnage tax Applied to passenger cars less than 13 years old. JPY 2,600/year–JPY
4,100/year for every half tonne
International tourist tax JPY 1,000/departure overseas
Registration and licence tax Sale of real property – 2% of value
Acquisition of pledge/mortgage for real property – 0.4% of loan amount
Incorporation of stock company – 0.7% of capital amount (applied to
values over JPY 150,000)
Registration of capital increase regarding stock companies – 0.7%
(applied to values over JPY 30,000)
New licence registration for bank businesses and financial instrument
business operators – JPY 150,000/licence
New licence registration for lawyers, doctors and licensed tax
accountants – JPY 60,000/licence
Stamp tax JPY 200–JPY 480,000. Applies to: deeds of content concerning transfer
of real property; deeds of contracts concerning contracting work;
promissory notes and bills of exchange; and share certificates, bond
certificates, etc.
PREFECTURAL TAXES
Inhabitant tax on corporations Per capita rate: JPY 20,000–JPY 800,000 (according to the amount of
capital). Corporation tax rate: 1% of the amount of the corporation tax
liabilities
Inhabitant tax on individuals Per capita rate: JPY 1,500; income rate 4% of the total sum of ordinary
income in the previous calendar year; interest rate 5% on the interest
amount; stock dividend rate: 5% of specified dividends received;
capital gains rate: 5% of amount of capital gains from special stocks
Local enterprise tax Enterprise (with capital of JPY 100 million or less): 7% of net income
Enterprise (with capital exceeding JPY 100 million): 1% of net income
1.2% of value-added; 0.5% of the capital amount
Electricity, gas supply and insurance companies: 1% of gross receipts
Local consumption tax 17/63% of the amount of national consumption tax (8% as at
September 2019)
Real property acquisition tax 4% of the assessed value of the acquired real estate (3% for residence
and land)
Prefectural tobacco tax JPY 930 per 1,000 cigarettes
Golf links tax JPY 800 per person per day
Automobile acquisition tax 2%-3% of the acquisition value of automobiles or light motor vehicles
Delivered Diesel Oil Tax JPY 32,100/kl
Automobile tax Rates vary according to category and cylinder volume
Mine Lot Tax Mine lot with mining right not for placer mining: JPY 200-JPY
400/ha/year. Mine lot with mining right for placer mining: riverbed, JPY
600/1,000 m2 of extension/year; non-riverbed, JPY 200/ha/year
Hunting Tax JPY 5,500-JPY 16,500
Water Utility and Land Profit Tax Voluntary tax rate, based on price or area of land or house ("voluntary"
refers to the fact that the tax rate is established according to the
ordinance of each relevant municipality)
MUNICIPAL TAXES
Inhabitant tax on individuals Per capita rate (JPY 3,500); income rate: 6% of the total sum of
ordinary income in the previous calendar year
Fixed property tax 1.4% of the assessed value registered in the fixed property tax ledger
- 198 -
Tax Rates (JPY)

Light motor vehicle tax Rates vary according to category and cylinder volume
Municipal tobacco tax JPY 5,692/1,000 cigarettes
Mine production tax 1% of mineral price
Special land possession tax 3% of the land acquisition price on acquisition; 1.4% of the land
acquisition price on possession.
Bathing tax JPY 150 per person per day
Establishment tax JPY 600/m2
City planning tax 0.3% of the assessed value registered in the fixed property tax ledger
Water Utility and Land Profit Tax Voluntary tax rate, based on the price or area of the land or house
Common Facilities Tax Voluntary tax rate that the municipality establishes through regulations,
taking into consideration the profit situation of common facilities
Residential Land Development Voluntary tax rate, based on the area of the residential land
Tax
National Health Insurance Tax Voluntary tax rate
a Comprises a tobacco tax and a special tobacco tax.

Source: Information provided by the authorities; Ministry of Finance, Learning More About Taxes (June,
2018). Viewed at: https://www.mof.go.jp/english/tax_policy/publication/tax008/index.htm.
- 199 -
Table A3.2 Tax credit for R&D expenses

Category Before amendments After amendments
Gross R&D A credit against national corporate tax is FY2017 Tax Reform
cost base allowed. Credit amount: 6%-14% according to the
increase or decrease in R&D costs.
Credit amount: 8% to 10% of the gross R&D Limitation of credit: 25% of corporate tax
cost (excluding special R&D costs). before credit.
*When R&D costs account for more than
Limitation of credit: 25% of corporate tax 10% of the average sales, additional 0%-
before credit. 10% tax credit is to be applied.
FY2019 Tax Reform
Credit amount: if the R&D costs exceed
10% of the average sales amount, the
credit amount is increased by "(ratio of R&D
costs - 10%)*0.5".
Limitation of credit: 40% for a certain scope
of start-ups conducting R&D.
Special Credit amount: FY2019 Tax Reform
R&D cost- 30% of the gross special R&D cost for joint Scope of special R&D cost: certain types of
based R&D with a university or public research research commissioned to private
credit 20% of the gross special R&D cost for the companies and R&D start-ups have been
joint R&D with other non-public corporations added.
A credit against local inhabitant's tax is also Credit amount: 25% for certain types of
allowed for SMEs. research conducted jointly with, or on
commission by, R&D start-ups (20% for
Limitation of credit: 5% of corporate tax certain types of research commissioned by
before credit (separately from other gross private companies).
R&D cost credit).
Limitation of credit: 10% of corporate tax
before credit (increased from 5%).
Gross R&D A credit against national corporate tax and FY2017 Tax Reform
cost-based local inhabitant's tax is allowed. Credit amount: 12%-17% of the gross R&D
credit for Credit amount: 12% of the gross R&D cost cost.
SMEs (excluding special R&D costs).
Limitation of credit: 25% of corporate tax before credit.
before credit. *Additional 10% tax credit is to be applied
(when the increase rate is more than
5%).
Increment Credit amount: a credit against national FY2017 Tax Reform
al R&D corporate tax is allowed for the higher of (i) (i): abolished.
cost base and (ii) but subject to the limitation of 10% of (ii): applicable period was extended for
and high tax liability before the credit. 2 years.
R&D (i) 5% to 30% of incremental R&D costs; or
intensity (ii) R&D costs in excess of 10% of the FY2019 Tax Reform
base average sales, times the "tax credit ratio" (ii): abolished.
(ratio is a mechanical calculation depending
upon the relationship between the amount of
R&D costs and average annual sales).

before credit.

- 200 -
Table A3.3 Provisions of the IP chapters of the CPTPP and EU-Japan EPAa
CPTPPb EU-Japan EPA
Patents • Definition of "inventive step" • Extension of patent protection for
• One-year grace period for public pharmaceutical and agricultural chemical
disclosure of inventions products to compensate for non-working
• Revocation/cancellation/nullification while awaiting marketing approval
permitted only on grounds that
would have justified patent grant
refusal
Industrial • Protection to be available for parts • Protection to be made available for parts of
designs of articles, or at least particular a product
regard given to parts of articles • Protection to be provided by registration
• Exclusive right to make, sell, import, or
export articles bearing identical or similar
design
• Minimum term of protection of 20 years
Product • Exclusive use of the unregistered
appearance appearance of a product for a minimum
term of 3 years
Trademarks • Minimum term of protection for • Manufacture, importation, and presentation
registered trademarks of 10 years of labels or packaging bearing an identical
• Protection must be available for or similar sign to a registered trademark is
sound marks, and visual deemed infringement
perceptibility may not be a
precondition of registration
• Trademarks include collective and
certification marks
• GIs to be capable of protection
under the trademark system
• Enhanced protection for well-known
marks
• Remedies for bad faith registration
of a domain name identical or
confusingly similar to a trademark
Geographical • Administrative procedures for • Mandatory establishment of a system for
indications protection or recognition of GIs the registration and protection of GIs
(GIs) • Grounds for opposition and • Mutual recognition and protection of
cancellation designated GIs
• Guidelines for determining whether • Extension of higher-level protection in
a term is the term customary in the TRIPS Article 23.1 for wine and spirit GIs to
common language all registered/designated GIs
• The protection or recognition of GIs
through international agreements
Trade secrets • Minimum 10 years protection for • Protection of undisclosed data submitted for
and data undisclosed data submitted to marketing approval for a certain period, for
protection regulatory authorities, in order to pharmaceutical products utilizing new
secure marketing approval for active ingredients
agricultural chemical products • Protection of undisclosed data submitted for
marketing approval, for a minimum of 10
years for agricultural chemical products
utilizing new chemical entities
Copyright and • Exclusive right of authors to • Minimum term of protection for literary and
related rights communicate works to the public artistic works = author's life + 70 years
by wired and wireless means, • Minimum term of protection for producers
including making works available of phonograms = 70 years after publication
on demand • Minimum term of protection for broadcasts
• Exclusive distribution right to = 50 years after first transmission
authors, performers, and producers • Exclusive fixation and reproduction rights
of phonograms of their works, for performers of their performances, not
performances fixed in phonograms, limited to sound recordings
and phonograms, respectively • Exclusive distribution rights for authors,
• Exclusive right of performers to performers, and producers of phonograms
authorize/prohibit the of their works, performances fixed in
broadcast/communication to the phonograms, and phonograms, respectively
public of unfixed performances • Exclusive rights of authors, performers, and
producers of phonograms to communicate
works, fixations of performances, and
phonograms to the public by wired and
- 201 -
CPTPPb EU-Japan EPA

wireless means, including making works
available on demand
• Exclusive right of performers to
authorize/prohibit
broadcasting/communication to public of
unfixed or non-broadcast performances
Enforcement • Substantively examined patents • Officials to be empowered to enforce GI
and trademarks entitled to protections ex officio
presumption of validity • Copyright presumed to be held by an
• Copyright presumed to be held by individual whose name appears in the usual
an individual whose name appears manner on a work
in the usual manner on a work • Appropriate remedies for bad faith
• Authorities empowered to act ex registration or holding of a domain name
officio to initiate border measures identical to, or confusingly similar to, a
against suspected counterfeit trademark
trademarked and pirated • Appropriate civil procedures and remedies
copyrighted goods that are for the acquisition, use, or disclosure of a
imported, in transit, or destined for trade secret, and protections for trade
export secrets subject to civil judicial procedures
• Criminal procedures and penalties • Suspension of the release of imported or
for unauthorized copying of films exported goods suspected of infringement,
that causes significant harm to the upon request by a right holder; authorities
rights owner also empowered to act ex officio
• Civil and criminal measures for
unauthorized and wilful access,
misappropriation, and disclosure of
a trade secret
• Provisions for damages upon
infringement
a This Table does not represent a legal analysis of the agreements, and is offered for background
reference only.
b Certain provisions of the CPTPP were suspended, following the US departure from the agreement,
when it was known as the Trans-Pacific Partnership. Suspended provisions are not included in this
Table.
Source: New Zealand Foreign Affairs & Trade, CPTPP. Viewed at: https://www.mfat.govt.nz/en/trade/free-
trade-agreements/free-trade-agreements-in-force/cptpp/comprehensive-and-progressive-
agreement-for-trans-pacific-partnership-text-and-resources/; and European Commission, EU-Japan
EPA. Viewed at: http://trade.ec.europa.eu/doclib/press/index.cfm?id=1684.
- 202 -
Table A3.4 Summary of laws protecting IPRs, 2019

Form Main legislation Coverage Duration
Patents Patent Act Any invention of a 20 years from the filing date
(Last amended: 2019) product/method that is of the patent application
industrially applicable, novel (extendable to a maximum of
compared with the prior art 25 years upon request)
base, and characterized by the
highly advanced creation of
technical ideas utilizing the laws
of nature
New plant Plant Variety Protection Any plant variety of agricultural, Duration of breeder's rights
varieties and Seed Act forestry or aquatic plant, of plants (except perennial
(Last amended: 2015) meeting the following plants) is 25 years, while that
requirements: of perennial plants is
(i) distinctness; 30 years from the date of
(ii) uniformity; variety registration
(iii) stability;
(iv) novelty; and
(v) suitability of denomination
Utility models Utility Model Act Any creation of a device that is 10 years from the filing date
(Last amended: 2019) related to the shape or of the application
structure of an article or
combination of articles, and is
industrially applicable
Industrial Design Act Any design that is industrially 20 years from the filing date
designs (Last amended: 2019) applicable; shapes, patterns, of application (25 years as of
colours, or any combination of 2020)
an article (including a part of an
article), which creates an
aesthetic impression; functional
or aesthetic graphic images;
spatial designsa
Trademarks Trademark Act Any character, figure, sign, 10 years from the date of
(Last amended: 2019) three-dimensional shape, registration
sound, colour, or any
combination of them, used by a
business entity in connection
with its goods or services
Geographical Act on Protection of the Agriculture, forestry and Indefinite (registrations of
indications Names of Specific fisheries products and GIs are effective as long as
Agricultural, Forestry foodstuffs, meeting the the prescribed requirements
and Fishery Products following requirements: are met)
and Foodstuffs (i) products produced in a
(Last amended: 2018) specific place, region or
country; and (ii) products for
which quality, reputation or
other given characteristic is
essentially attributable to the
place of production
Trade secrets Unfair Competition A trade secret: a production
Prevention Act method, sales method, or any
(Last amended: 2018) other technical or operational
information useful for business
activities that is controlled as a
secret and is not publicly
known.
Data for limited provision:
technical or business
information accumulated in a
reasonable amount, managed
by electronic or magnetic
means, and provided to specific
persons on a regular basis
- 203 -
Form Main legislation Coverage Duration

Copyright and Copyright Law Any work: a production in the A work: author's life plus
related rights (Last amended: 2018) literary, academic, artistic or 70 years from the beginning
musical domain, in which of the calendar year after the
thoughts or sentiments are year in which the author dies
creatively expressed. A performance: 70 years
Any performance: acting from the beginning of the
dramatically, dancing, giving a calendar year after the year
musical performance, singing, in which the performance
giving a speech, giving a takes place
recitation, or by any other A phonogram: 70 years from
means for acting of a work. the beginning of the calendar
Any phonogram: the fixation of year after the year in which
sounds on a material object, the phonogram is published
such as a phonograph disc or A broadcasting/cablecasting:
recording tape. 70 years from the beginning
Any broadcasting/cablecasting: of the calendar year after the
the transmission to the public of year in which the
wireless/wired communications, broadcasting/cablecasting
with the objective of allowing takes place
the public to simultaneously An anonymous or
receive transmissions of the pseudonymous work:
same content 70 years after the work is
made public
A work whose authorship is
attributed to a corporation or
other organization: 70 years
after the work is made public
A cinematographic work:
70 years after the work is
made public
Circuit layout Act on the Circuit Any layout design of circuitry 10 years from the date of
of Layout of elements and the lead wires registration
semiconductor Semiconductor connecting such elements in
integrated Integrated Circuits semiconductor integrated
circuits (Last amended: 2014) circuits
a Protection for spatial designs, graphic images that are aesthetic rather than functional, and graphic
images that are not recorded or displayed on an article, will become available in 2020.
Source: WTO document WT/TPR/S/351/Rev.1, 20 June 2017, Table 3.31; and information provided by the
authorities.
- 204 -
Table A4.1 Self-sufficiency at the product-specific level on a volume basis, 2014-18

(%)
2014 2015 2016 2017 2018
Rice 97 98 97 96 97
Wheat 13 15 12 14 12
Barley 9 9 9 9 9
Tuber 78 76 74 74 73
Sweet potatoes 94 94 94 94 95
Potatoes 73 71 69 69 67
Pulses 10 9 8 9 7
Soybeans 7 7 7 7 6
Vegetables 79 80 80 79 77
Fruit 42 41 41 40 38
Unshu 104 100 100 100 100
Apples 56 59 60 57 60
Meat 55 (9) 54 (9) 53 (8) 52 (8) 51 (7)
Beef 42 (12) 40 (12) 38 (11) 36 (10) 36 (10)
Pork 51 (7) 51 (7) 50 (7) 49 (6) 48 (6)
Poultry 67 (9) 66 (9) 65 (9) 64 (8) 64 (8)
Eggs 95 (13) 96 (13) 97 (13) 96 (12) 96 (12)
Milk, milk products 63 (27) 62 (27) 62 (27) 60 (26) 59 (25)
Fish 55 55 53 52 55
Fish for food 60 59 56 56 59
Seaweed 67 70 69 69 68
Sugar 31 33 28 32 34
Oils/fats 13 12 12 13 13
Fungi 88 88 88 88 88
All grains (incl. for feed) 29 29 28 28 28

Grains for food 60 61 59 59 59
Calorie base 39 39 38 38 37
Production-value base 64 66 68 66 66
Feed 27 28 27 26 25
Notes: 2018 data are estimates.

Figures in parentheses are those adjusted with feed sufficiency.
- 205 -
Table A4.2 Bilateral air transport agreements, 2019
Withholdingb
a
Designation
d
Cabotage
Capacity
c
Pricing
Partner
Coop
Date
ALIe
Stat
5th
7th
Egypt 10.05.62 Y N N Y S SOEC DA OR Y 11
Iraq 20.03.78 Y N N N M SOEC DA B1 Y 14
Brazil 14.12.56 Y N N N M SOEC DA B1 Y 14
Bangladesh 12.02.80 Y N N N S SOEC DA PD Y 6
Fiji 10.03.80 Y N N N M SOEC DA PD Y 10
India 26.11.55 Y N N N M SOEC DA OLf Y 16
Greece 12.01.73 Y N N N S SOEC DA OR Y 8
Hong Kong, 28.02.97 Y N N Y M SOEC ZP FD Y 26.5
China
Belgium 20.06.59 Y N N N M SOEC DA B1 Y 14
Italy 31.01.62 Y N N N S SOEC DA B1 Y 10
France 17.01.56 Y N N N M SOEC DA B1 N 15
Austria 07.03.89 N N N N M SOEC DA PD Y 4
Australia 19.01.56 Y N N Y M SOEC ZP FD Y 26.5
Israel 23.04.99 N N N N S SOEC DA PD Y 0
Ethiopia 25.03.96 Y N N N M SOEC DA PD Y 10
Sri Lanka 22.02.84 Y N N N M SOEC DA PD Y 10
Chinese Taipei 09.07.75 Y N N Y M SOEC ZP FD N 27.5
Canada 12.01.55 Y N N Y M SOEC ZP FD Y 8
Finland 23.12.80 Y N N N M SOEC DA PD Y 10
Hungary 23.02.94 N N N N M SOEC DA PD Y 4
Indonesia 23.01.62 Y N N Y M SOEC ZP FD Y 26.5
Bahrain, 04.03.98 Y N N N M SOEC DA PD Y 10
Kingdom of
Brunei 29.11.93 Y N N Y M SOEC ZP FD Y 26.5
Darussalam
Denmark 26.02.53 Y N N N M SOEC DA B1 Y 14
Myanmar 01.02.72 Y N N N S SOEC DA B1 Y 10
Germany 18.01.61 Y N N N S SOEC DA B1 Y 10
Jordan 13.04.94 Y N N N M SOEC DA OR Y 12
Korea, Republic 16.05.67 Y N N Y M SOEC ZP FD Y 26.5
of
Kuwait, State of 06.10.62 Y N N N M SOEC DA PD Y 10
Lebanon 02.06.67 Y N N N M SOEC DA B1 Y 14
Macao, China 10.02.10 Y N N Y M SOEC ZP FD Y 26.5
Malaysia 11.02.65 Y N N Y M SOEC ZP FD Y 26.5
Mexico 10.03.72 N N N Y M SOEC DA PD N 9
Mongolia 25.11.93 N N N N M SOEC DA PD Y 4
Nepal 17.02.93 Y N N N M SOEC DA PD Y 10
Netherlands 17.02.53 Y N N N M SOEC DA B1 Y 14
New Zealand 18.01.80 Y N N N M SOEC DA B1 Y 14
Norway 23.02.53 Y N N N M SOEC DA B1 Y 14
Oman 24.02.98 Y N N N M SOEC DA PD Y 10
Pakistan 17.10.61 N N N N S SOEC DA PD Y 0
Papua New 30.03.97 N N N N M SOEC DA FD Y 12
Guinea
Philippines 20.01.70 Y N N N M SOEC DA B1 Y 14
Poland 07.12.94 Y N N N M SOEC DA PD Y 10
Qatar 04.03.98 N N N N M SOEC DA PD Y 4
Russian 21.01.66 Y N N N S SOEC DA PD Y 4
Federation
Saudi Arabia, 18.08.08 N N N N M SOEC DA PD Y 4
Kingdom of
Singapore 14.02.67 Y N N Y M SOEC ZP FD Y 26.5
South Africa 08.03.94 Y N N N M SOEC DA PD Y 10
Spain 18.03.80 Y N N N M SOEC DA PD Y 10
Sweden 20.02.53 Y N N N M SOEC DA B1 Y 14
Switzerland 24.05.56 Y N N N S SOEC DA OR Y 8
Thailand 10.06.53 Y N N N M SOEC DA B1 N 15
Turkey 08.03.89 Y N N N M SOEC DA PD Y 10
United Arab 03.03.98 N N N N M SOEC DA PD Y 4
Emirates
United Kingdom 29.12.52 Y N N N M SOEC DA B1 Y 14
United States 11.08.52 Y N N Y M SOEC ZP FD N 29
Uzbekistan 22.12.03 N N N N M SOEC DA PD Y 4
- 206 -
Withholdingb
a
Designation
d
Cabotage
Capacity
c
Pricing
Partner
Coop
Date
ALIe
Stat
5th
7th
Viet Nam 09.06.11 Y N N Y M SOEC ZP FD Y 26.5
China 20.04.74 Y N N Y M SOEC DA PD N 10
Cambodia 14.01.15 Y N N Y S SOEC DA FD Y 17
Lao People's 16.01.15 Y N N Y S SOEC DA FD Y 17
Democratic
Republic
a "S"= Single; "M"=Multiple.

b "SOEC"=Substantial Ownership and Effective Control.
c "DA"=Double Approval; "ZP"=Zone Pricing.
d "PD"=Pre-Determination; "B1"= Bermuda 1 i.e. post facto Determination; "OR"=Country of Origin;
OL: Other Liberal, "FD"=Free Determination.
e "ALI"=Air Liberalization Index (0=no liberalization at all; 50=full liberalization).
f Japan side: the limitation of frequency to/from all airports in Japan excluding Haneda Airport has
been removed.
India side: the limitation of frequency to/from Mumbai, Delhi, Kolkata, Chennai, Bengal and
Hyderabad has been removed.
Source: WTO Secretariat; and information provided by the authorities.
- 207 -
Table A4.3 State of implementation of the Basel regulatory framework

Basel standards Basel Committee Status Remarks
on Banking
Supervision
(BCBS) deadline
Countercyclical Jan. 2016 4 Final rule on Countercyclical
capital buffer (CCyB) Adoption buffer was implemented in
completed March 2016
Margin requirements Sep. 2016 4 Final rule published in March
for non-centrally Adoption 2016 and in force from
cleared derivatives completed September 2016
Capital requirements Jan. 2017 4 Final rule was implemented in
for Central Adoption March 2018
CounterParties completed
(CCPs)
Capital requirements Jan. 2017 4 Final rule was implemented in
for equity Adoption March 2019
investments in funds completed
Standardized Jan. 2017 4 Final rule was implemented in
Approach for Adoption March 2018
Measuring completed
Capital Counterparty Credit
Risk (SA-CCR)
Securitization Jan. 2018 4 Final rule was implemented in
framework Adoption March 2019
completed
Total Loss-Absorbing Jan. 2019 4 Final rule was implemented in
Capacity (TLAC) Adoption March 2019
holdings completed
Revised standardized Jan. 2022 1
approach for credit
risk
Revised Internal Jan. 2022 1
Ratings Based (IRB)
approach for credit
risk
Revised Credit Jan. 2022 1
Valuation Adjustment
(CVA) framework
Revised minimum Jan. 2022 1
requirements for
market risk
Revised operational Jan. 2022 1
risk framework
Output floor Jan. 2022 1
Existing (2014) Jan. 2018 4 Final rule on the disclosure

exposure definition Adoption requirements of leverage ratio
completed was implemented in March
2015. Final rule on the
Leverage minimum level of leverage
ratio was implemented in
March 2019
Revised (2017) Jan. 2022 1
exposure definition
Global-Systemically Jan. 2016 4 Final rule requiring public

Important Banks (G- Adoption disclosure of 12 indicators for
Systemically SIB) requirements completed assessing G-SIBs was
Important Banks implemented in March 2014
(SIB) Final rule on higher loss
absorbency requirements for
G-SIBs was implemented in
March 2016
Domestic- Jan. 2016 4 Final rule on identifying D-
Systemically Adoption SIBs and covering higher loss
Important Banks (D- completed absorbency requirements for
SIB) requirements D-SIBs were implemented in
March 2016
Leverage ratio buffer Jan. 2022 1
- 208 -
Basel standards Basel Committee Status Remarks

on Banking
Supervision
(BCBS) deadline
Interest Rate Interest rate risk in 2018 4 Final rule published in
Risk in the the banking book December 2017 and in force
Banking Book from March 2018
(IRRBB)
Monitoring tools for Jan. 2015 1
intraday liquidity Adoption not
Liquidity management started
(draft
regulation not
published)
Net Stable Funding Jan. 2018 2 Draft rule published in June
Ratio (NSFR) Adoption in 2018
process (draft
regulation
published)
Large Supervisory Jan. 2019 1 Draft rule published in the

exposure framework for Adoption not form of administrative
measuring and started guideline in March 2019, pilot
controlling large (draft operation scheduled beginning
exposures regulation not on 31 March 2019
published) Guideline will be replaced with
enforceable final rule after the
pilot operation
Revised Pillar 3 Dec. 2016 4 Final rule published in

requirements Adoption December 2017 and in force
(published 2015) completed from March 2018
CounterCyclical Dec. 2017 4 Final rule on disclosure of
Capital Buffer Adoption Liquidity Coverage Ratio
(CCyB), Liquidity, completed (LCR) published in February
Remuneration, 2015 and in force from June
Leverage ratio 2015
(revised) Final rule on disclosure of
remuneration was
implemented in March 2018
Final rule on disclosure of
Disclosure CCyB and Leverage ratio was
implemented in March 2019
Key metrics, IRRBB, Jan. 2018 4,2 Final rule on disclosure of key
NSFR Adoption in metrics was implemented in
process (draft March 2018. Final rule on
regulation disclosure of IRRBB published
published) in December 2017 and in
force from March 2018
Draft rule on disclosure of
NSFR published in June 2018
Composition of Dec. 2018 4,1 Final rule on disclosure of
capital, Risk Adoption in Composition of capital, RWA
Weighted Assets process (draft overview and G-SIB indicators
(RWA) overview, regulation was implemented in
Prudent valuation published) March2019
adjustments, G-SIB
indicators
TLAC Jan. 2019 4 Final rule was implemented in
Adoption March 2019
completed
Market risk Jan. 2022 1
Note: Number code: 1 = draft regulation not published; 2 = draft regulation published; 3 = final rule
published (not yet implemented by banks); 4 = final rule in force (published and implemented by
banks).
Source: Basel Committee on Banking Supervision, Sixteenth progress report on adoption of the Basel
regulatory framework, May 2019.
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WT/TPR/S/397/Rev.

(20-7890) Page: 1/208

Trade Policy Review Body

TRADE POLICY REVIEW

REPORT BY THE SECRETARIAT

Document WT/TPR/G/397 contains the policy statement submitted by Japan.

Note: This report was drafted in English.

3.1.4 Tariffs ....................................................................................................................55

3.3.3.2.4 Act on Livestock Infectious Diseases Control ..........................................................89

4.1.1.5.3.6 Dairy ........................................................................................................... 140

4.4.7 Legal services ....................................................................................................... 188

Table 1.1 Selected macroeconomic indicators, 2014-18 ..........................................................16

Table 2.3 Selected features of RTAs in force ..........................................................................42

Table 4.5 SSGs, FY2017/18 ............................................................................................... 130

Box 2.1 Investment framework ............................................................................................49

Box 4.8 Market overview of waste management services ...................................................... 184

Table A1.1 Merchandise exports by group of products, 2014-18............................................. 191

Table A3.1 Taxation rates, November 2019 ......................................................................... 197

9. Amendments to the legislation on anti-dumping and countervailing measures aimed to ease

1.1 Main Features of the Economy

1.1. Japan's highly-developed, high-income and market-oriented economy, with a population of

Table 1.1 Selected macroeconomic indicators, 2014-18

2014 2015 2016 2017 2018

1.2 Recent Economic Developments

1.2.1 Growth, income, and employment

Table 1.2 Basic economic indicators, 2014-17

2014 2015 2016 2017a

a Latest available data as at end-November 2019.

OECD, Unemployment rate. Viewed at: https://data.oecd.org/unemp/unemployment-rate.htm.

1.2.3 Main macroeconomic policy developments

1.2.3.1 Monetary and exchange rate policy

1.2.3.2 Fiscal policy

1.2.4 Structural policies

1.2.4.1 Tax reform

1.2.4.3 Competition policy and corporate governance

1.2.4.4 Labour market policies

1.2.5 Balance of payments

Table 1.3 Balance of payments, 2014-18

2014 2015 2016 2017 2018

Source: IMF e-library data.

1.3 Developments in Trade and Investment

1.3.1 Trends and patterns in merchandise and services trade

Other transport equipment

Other semi-manufactures Non-electrical machinery Other semi-manufactures

Total: USD 624.9 billion Total: USD 738.2 billion

Total: USD 625.6 billion Total: USD 748.2 billion

Source: UNSD, Comtrade database (SITC Rev.3).

Source: UNSD, Comtrade database (SITC Rev.3) .

Total: USD 624.9 billion Total: USD 738.2 billion

Other United States Other

Other America Other Asia Other America

Total: USD 625.6 billion Total: USD 833.2 billion

Source: UNSD, Comtrade database.

Table 1.4 Trade in services, 2014-18

Source: IMF e-library data.

1.3.2 Trends and patterns in foreign direct investment (FDI)

2014 2015 2016 2017 2018

2014 2015 2016 2017 2018

2014 2015 2016 2017 2018

Note: End-period figures.

2 TRADE AND INVESTMENT REGIMES

2.1 General Framework

2.2 Trade Policy Formulation and Objectives