29 March 1995
has reduced the number and scope of restrictions on exports. Back
Japan's elimination of a number of voluntary export
restraints with the United States and the European Communities, its increased use of
international standards and its growing trade and investment in Asia should help Japan
shift from "its past emphasis on bilateralism in trade relations" to one which
confirms its greater integration in the multilateral trading system. A new report by the
WTO Secretariat on Japan's trade policies and practices also notes that firm progress in
domestic deregulation, combined with the implementation of the Uruguay Round Agreements,
should ensure improved access to Japan's market.
The report states that Japan has reduced the number
and scope of restrictions on exports. Also, a number of "voluntary" export
restraints (VERs) on machine tools, automobiles and steel to the United States and on
machine tools to the EC were eliminated in 1993 or early 1994. Other long-standing
restraints on pottery, chinaware and cutlery exports to the United States were to expire
at the end of 1994 while the monitoring arrangement on car exports to the European Union
is to be eliminated in 1999. Furthermore, since 1992, 17 of 28 export cartels have been
abolished while many others have been reduced in scope. Export cartels related to VERs, to
the protection of quality or intellectual property or to import monopolies in partner
countries are to be reviewed with the objective of their elimination by 1999, states the
Japan has also increased its use of international
standards. Not only has the number of Japanese standards corresponding to international
norms doubled since 1992, but Japan is gradually increasing the scope of permission for
foreign testing, certification and factory approval. The report states that mandatory
testing remains in place for food, pharmaceuticals, electrical goods and products covered
by consumer safety laws.
As concerns the geographical pattern of Japan's
external trade and outward direct investment, the report states that trade and investment
have shifted since 1992 and that Asia's share of exports, imports and foreign investment
has grown considerably. Growth has been particularly rapid in bilateral trade flows with
China and the ASEAN group. The report states that this reflects the rapid growth of
Southeast and East Asian economies and the transfer of production from Japan to the Asian
zone by certain manufacturers seeking lower costs. The Americas' share of Japan's imports
has remained stable, while their share of Japan's exports is down marginally. The shares
of exports to and imports from Europe have fallen.
Market access commitments made during the Uruguay
Round call for Japan to increase the scope of its industrial tariff bindings, reduce
industrial tariffs on a trade-weighted basis by some 56 per cent and, under the Agreement
on Agriculture, to agree to convert all agricultural non-tariff measures, except on rice,
to tariff quotas. The report states that out-of-quota duties will range up to more than
600 per cent.
The simple average tariff on industrial products is
estimated to fall to some 4.6 per cent under Uruguay Round reductions. On an
import-weighted basis, the average will decline from some 3.9 to 1.7 per cent. Tariffs and
other non-tariff measures will be eliminated on a most-favoured nation basis on all
pharmaceuticals, construction and medical equipment and beer. With some exceptions tariffs
will also be eliminated on steel, distilled spirits, furniture, agricultural equipment,
paper, pulp and toys.
In regard to government procurement policies, the
report states that during the last two years, Japan has introduced an "Action Plan
for greater fairness and transparency" in government procurement. The share of
foreign suppliers under the Government Procurement Code has risen and, since 1990, the
scope of single tendering has increased. The United States accounts for the largest share
of contracts awarded to foreign suppliers, followed by European Union member countries.
Notes to Editors
1. The WTO Secretariat's report, together with a
report prepared by the Government of Japan, will be discussed by the WTO Trade Policy
Review Body (TPRB) on 4 and 5 April 1995. The review of Japan is carried over from the
1994 programme of trade policy reviews. The review will be a joint meeting of the TPRB and
the GATT 1947 Council. This is the third review of Japan since the launching of the trade
policy reviews in December 1989.
2. The WTO Trade Policy Review Body conducts a
collective evaluation of the full range of trade policies and practices of each WTO member
at regular periodic intervals and monitors significant trends and developments which may
have an impact on the global trading system.
3. The two reports, together with a record of the
Council's discussion and of the Chairman's summing up, will be published in due course as
the complete trade policy review of Japan and will be available from the WTO Secretariat,
Centre William, Rappard, 154 rue de Lausanne, 1211 Geneva 21.
4. The reports cover development in all aspects of
Japan's trade policies, including domestic laws and regulations, the institutional
framework, trade-related developments in the monetary and financial sphere, trade
practices by measure and trade policies by sector. Attached are the summary observations
from the Secretariat's report. Full reports will be available for journalists from the WTO
Secretariat on request.
5. Since December 1989, the following reports have
been completed: Argentina (1992), Australia
(1989 & 1994), Austria (1992), Bangladesh (1992), Bolivia (1993), Brazil (1992),
Cameroon (1995), Canada (1990, 1992 & 1994), Chile (1991), Colombia (1990), Egypt
(1992), the European Communities (1991 & 1993), Finland (1992), Ghana (1992), Hong
Kong (1990 & 1994), Hungary (1991), Iceland (1994), India (1993), Indonesia (1991 and
1994), Israel (1994), Japan (1990 & 1992), Kenya (1993), Korea, Rep. of (1992), Macau
(1994), Malaysia (1993), Mexico (1993), Morocco (1989), New Zealand (1990), Nigeria
(1991), Norway (1991), Pakistan (1995), Peru (1994), the Philippines (1993), Poland
(1993), Romania (1992), Senegal (1994), Singapore (1992), South Africa (1993), Sweden
(1990 & 1994), Switzerland (1991), Thailand (1991), Tunisia (1994), Turkey (1994), the
United States (1989, 1992 & 1994), Uruguay (1992) and Zimbabwe (1994).
Secretariats report: summary Back to top
TRADE POLICY REVIEW BODY: JAPAN
Report by the Secretariat Summary Observations
Japan in World Trade
The development of Japan's trade policies since its
last Trade Policy Review has occurred against a background of change in the economy, with
a sharp downturn over the period 1991-93 and the beginnings of a recovery in 1994. During
the period, the Government introduced several fiscal stimulus packages, followed a
generally accommodating monetary policy and actively pursued structural change, including
a measure of trade liberalization and deregulation. Japan's trade and investment pattern
has also evolved over the period; the merchandise trade surplus, while continuing to rise
in U.S. dollar terms, peaked in 1992 as a percentage of GDP, falling in 1993 and 1994. The
direction of both trade and investment has moved towards Asia in the past three years.
Growth in GDP fell from 4 to 0.1 per cent in the
years 1991-93; domestic private investment, as a share of GDP, declined sharply in 1991,
falling less rapidly in the next two years. Private consumption also slowed markedly and
there was, simultaneously, increasing unemployment and growing retention of surplus
labour. Wholesale prices declined and inflation, as measured by the consumer price index,
fell to around 1 per cent. Falling import prices, with yen appreciation, appear not to
have been fully passed through to the consumer.
The current account surplus measured in U.S. dollars
rose to record levels in 1993 but declined in yen (peaking in the last quarter of 1993)
and as a share of GDP. Following a surplus in 1991, when there was substantial recall of
funds by Japanese investors, the long term capital account resumed its "normal"
pattern of deficits in 1992 and 1993. The real effective exchange rate of the yen has
appreciated substantially. The marked difference between yen and dollar valuations of the
trade and current account surpluses have contributed to differing appreciations of the
situation and, perhaps, to trade friction during the period.
Various packages of fiscal and monetary stimulus
were introduced during the period. Low interest rates and subsidized housing credits
helped to stimulate construction and, to some extent, private consumption. Led by domestic
demand, recovery is expected to accelerate in 1995.
Although there has been no fundamental change in the
law governing inward investment into Japan, a substantial package of promotion measures
was introduced during 1992, when the previous prior-notification system was changed to an
ex post reporting system, various tax incentives were introduced for foreign investors,
and other support measures were strengthened. These measures were further reinforced in
1994. These stimuli have yet to be translated into a substantial inflow of new investment,
although the overall inflow has quadrupled since the mid-1980s.
The geographical pattern of Japan's external trade
and outward direct investment has shifted in the last three years. Asia's share of
exports, imports and foreign investment has grown considerably, with particularly rapid
growth in bilateral trade flows with China and the ASEAN group. This reflects the rapid
growth of Southeast and East Asian economies and the transfer of production of certain
manufactures from Japan to the Asian zone, in search of lower costs. The Americas' share
of Japan's imports has remained stable, while their share of Japan's exports is down
marginally; the shares of exports to and imports from Europe have fallen.
Little change has taken place in the institutional
framework for Japan's trade policies since the last review. Consistency of domestic and
external policies is sought through Cabinet deliberation and a number of inter-ministerial
organizations. The Government has announced plans to strengthen the Office of Trade and
Investment Ombudsman (OTO), provide for more frequent meetings of the Trade Conference
(which establishes the broad orientation of trade policies and includes foreign
participation) and in September 1994 created the Japan Investment Council - also with
foreign participation - to examine investment policies.
Japan has ratified the Marrakesh Agreement
establishing the World Trade Organization and is an original member of the WTO. In
addition to gains from enhanced market access for exports and better intellectual property
protection, Japan is expected to benefit from strengthened trade rules under the WTO,
particularly with respect to anti-dumping, trade-related investment measures (TRIMs) and
Trade Policy Features and Trends
Recent economic policy aims to re-orient the economy
towards greater reliance on domestic, rather than export demand; thus, since 1992, under
the 12th Five-Year Economic Plan, there has been increased focus on structural measures
such as deregulation and trade liberalization. Successive deregulation packages in April
and September 1993 and February and June 1994 sought to reduce the scope of, and clarify
government regulations, especially in distribution, while new import promotion guidelines
were issued in October 1993.
In the Uruguay Round, Japan undertook to increase
the scope of industrial tariff bindings from 97 to 99 per cent of tariff lines; to reduce
industrial tariffs on a trade-weighted basis by some 56 per cent; and, under the Agreement
on Agriculture, to convert all agricultural non-tariff measures, except on rice, to tariff
quotas, with out-of-quota duties ranging to over 600 per cent. Rice imports are not
currently subject to tariffication; the question of the continuation of special treatment
agreed in the Uruguay Round is to be negotiated in the year 2000. Japan has made
substantial commitments in all areas of services except certain basic telecommunications
and international maritime transportation, on which negotiations are continuing.
Other measures taken during the review period
include the prolongation in 1991 of Japan's GSP scheme for ten more years (and its
extension to a number of European countries in transition); the relaxation of rules of
origin for GSP and the promulgation in 1993 of the Administrative Procedures Law, to bring
more clarity into "administrative guidance" procedures. Japan has never removed
any developing country from the coverage of its GSP scheme.
Type and incidence of trade policy instruments,
including sectoral effects
There have been no major changes in Japan's tariff
structure since the last review. The simple average rate was 7.1 per cent in 1993. Some 2
per cent of tariff lines bear rates greater than 30 per cent, while nearly 60 per cent are
rated at 5 per cent or below. Tariff peaks occur in footwear, clothing and leather
products, food products and beverages, rising to 174 per cent (the ad valorem equivalent
of a specific rate) on some sugar products. Substantial tariff escalation occurs in a
number of sectors, mainly from raw materials to semi-processed goods, particularly in food
products and food manufacturing.
The simple average tariff on ISIC-based
"industrial" products is estimated to fall to some 4.6 per cent under Uruguay
Round reductions; on an import-weighted basis, the average will decline from some 3.9 per
cent to 1.7 per cent. Under the July 1993 agreement among the "Quad" members
(Canada, the European Union, Japan and the United States), brought into the Uruguay Round
results, tariffs and NTMs will be eliminated on an m.f.n. basis on all pharmaceuticals,
construction and medical equipment, and beer; with some exceptions, tariffs are also to be
eliminated on steel, distilled spirits, furniture, agricultural equipment, paper and pulp,
and toys, while an agreement was reached to "work" towards tariff cuts of up to
50 per cent on ceramics, glass, textiles and clothing.
Various tariff reductions were made in 1993 and 1994
either autonomously or under existing agreements, including on beef (although
authorization for an emergency surcharge of 25 per cent remains in force), potato flakes,
corn grits for cornflake making, sugar and auto parts, while the tariff quota system on
heavy fuel oils was abolished. Most specific and mixed duties are to be replaced by ad
Port and customs procedures have been accelerated,
leading to a reduction of one third in clearance time from arrival at the port; Japan is
working towards further acceleration of such procedures through an extension of
computerization. The number of Foreign Access Zones (FAZ) is growing.
Certain fishery products are subject to import
quotas, with a number of tariffs also remaining unbound. Surveillance of imports of silk
cocoons and fabrics from Hong Kong and China remains in force; Japan is to present a
phase-out programme to the new Textiles Monitoring Body on silk imports from the Republic
of Korea. Surveillance is also in force on some other products, including tuna, marlin,
seaweed, species controlled under CITES, and certain types of coal. State trading remains
in operation for salt, tobacco products (although trade in raw tobacco has been
liberalized), industrial alcohol and opium. The only remaining import cartel covers
imports of silk from China.
The number of Japanese standards corresponding to
international norms has doubled since 1992, and Japan is gradually increasing the scope of
permission for foreign testing, certification, and factory approval. Mandatory technical
regulations (in some cases applying otherwise voluntary standards) are in force on food,
pharmaceuticals, electrical goods and products covered by the Consumer Products Safety
Japan introduced an Action Plan for greater fairness
and transparency in government procurement in late 1993 and early 1994. The share of
foreign suppliers under the Government Procurement Code has risen; since 1990, the scope
of single tendering has increased. The United States accounts for the largest share of
contracts awarded to foreign suppliers, followed by EU members.
The scope of import promotion measures was expanded
in 1994. While perhaps responding to political needs and perceptions, the selective nature
of some such measures, applied to duty-free imports only, may increase the effective
protection of less competitive items.
Under Uruguay Round provisions, Japan is reducing
the number and scope of restrictions on exports. A number of "voluntary" export
restraints (on machine tools, automobiles, and steel to the United States and on machine
tools to the EU) were eliminated in 1993 or early 1994; other long-standing restraints on
pottery, chinaware and metal flatware (cutlery) exports to the United States were to
expire at the end of 1994. The monitoring arrangement on car exports to the European Union
is to be eliminated in 1999. Seventeen of 28 export cartels have been abolished since
1992; many others have been reduced in scope. Remaining export cartels, related either to
VERs, to protection of quality or intellectual property, or to import monopolies in
partner countries, are to be reviewed with the objective of their elimination by 1999.
Changes have also taken place in the application of
Japan's competition law under the Antimonopoly Act. Retail Price Maintenance is to be
abolished, except on literary works, by end-1998; the number of permitted
("exempted") cartels has declined rapidly and remedial actions (cease and desist
orders and surcharges) have increased. Similarly, the requirement to notify, ex post,
contracts between Japanese and foreign firms has been narrowed in scope and the number of
such notifications has fallen.
Considerable concern remains about the effects on
foreign access of horizontal and vertical groupings (kigyo-shudan and keiretsu) in the
Japanese economy. In this field, promotion of competition among suppliers or linked firms
may not be inconsistent with barriers to access. The strength of the Antimonopoly Act in
respect of horizontal groupings is questioned. There appears to be some evidence that
keiretsu linkages are weakening, either through greater links with foreign plants
(although these may include Japanese subsidiaries), deregulation, or in the retail field
through greater competition and discounting.
Japan imposed a definitive anti-dumping duty on
ferro-silico-manganese from China in February 1993; anti-dumping investigations were begun
against cotton yarn from Pakistan in February 1994. This marks a change in Japanese
practice, which had hitherto always avoided such measures. There is evidence that Japan
has applied some of the new Uruguay Round guidelines in taking these actions. Japan has
still never used countervailing action or GATT Article XIX safeguard measures.
Trade Policies and Foreign Trading Partners
Since the last Trade Policy Review, Japan has taken
steps in the direction of greater integration into the global economy. Principal among
these have been domestic deregulation and ratification of the Uruguay Round.
Deregulation seeks to make the economy more outward-
rather than export-oriented, promoting greater reliance on domestic demand. Firm
continuation of this process, both supporting and supported by emergence from the
recession, could ensure improved access to the Japanese market.
Japan's implementation of the Uruguay Round
Agreements will also improve access to its market over time. However, it is not clear that
the results will ameliorate the existing imbalance between industry and certain
highly-assisted parts of agriculture. Further liberalization in agriculture would promote
overall domestic efficiency.
Japan will benefit from the strengthened trade rules
agreed in the Uruguay Round, including the improvements in dispute settlement. This
combination of domestic and external developments should help to move Japan from its past
emphasis on bilateralism in trade relations, allowing it to confirm its greater
integration in the multilateral trading system.
report Back to top
TRADE POLICY REVIEW BODY: JAPAN
Report by the Government
The Japanese economy has been in a state of
recession since May 1991. The growth rate of real GDP was 4.3 per cent in 1991, 1.1 per
cent in 1992, and -0.2 per cent in 1993. Given this situation, and to achieve a steady
recovery led by domestic demand, the Government of Japan established its "New Package
of Economic Measures" in April 1993, "Immediate Economic Measures" in
September 1993, and "Comprehensive Economic Measures" in February 1994, and has
steadily implemented them. Due partly to these efforts, the Japanese economy has been
heading for a gradual recovery since bottoming out in October 1993. Meanwhile, Japan's
current account surplus came to approximately ą14.6 trillion in 1993, a slight decline
from the previous year. However, on a dollar basis, the 1993 surplus was larger than that
in 1992 as a result of the J-curve effect from the stronger yen. In view of this
development, Japan incorporated steps for import promotion into the series of economic
measures mentioned above. It also further strengthened the import promotion policies
already being implemented, through such measures as the establishment of the Government
Actions for Import Promotion of March 1994 (see attachment 1). Japan has also implemented
various measures to strengthen its competition policy and promote deregulation. As a
result, and due to other factors, such as a further appreciation of the yen and an
increase in the volume of imports, Japan's current account surplus in 1994 displayed an
overall tendency to contract.
In terms of deregulation, Japan has put together
three deregulation packages since September 1993, which cover over 1,000 items. Moreover,
policies to promote deregulation in the future have also been established through setting
up the Deregulation Action Program, strengthening of investigation concerning the
establishment of new regulations, and creating a Deregulation White Paper. In the area of
competition policy, Japan has demonstrated that it considers the active development of
competition policies to be a key issue, through such decisions as the "Outline of
External Economic Reform Measures", a Cabinet decision made in March 1994, its
report, "Regarding the Policy for Promoting Deregulation Hereafter", approved by
the Cabinet in July 1994. Accordingly, Japan is taking a variety of steps, including
stricter administration and stronger enforcement of the Antimonopoly Act, a push for
review of governmental regulations and the exemptions from the Antimonopoly Act, and
surveys on the actual state of transactions, among others. Japan is thus committed to
pressing on with reforms to create a society more open to the international community.
Starting in 1988, Japanese exports (on a customs
clearance basis) increased for five straight years in yen terms, then started to decline
in 1993, and dropped further in the first quarter of 1994, compared to the corresponding
period of the previous year. They showed certain increases, however, in the second and
third quarters. Imports (on a customs clearance basis) have fallen for three straight
years in yen terms since 1991, mainly due to the drastic drop in import prices. Although
imports continued to decrease on a year-on-year basis through 1994, they showed an upward
trend in the second and third quarters, which may largely be accounted for by the
increased volume of imports. The manufactured product import ratio is rising: it reached a
record 52 per cent in 1993, and has continued to rise significantly since the beginning of
1994. Japan is continuing to make efforts to improve market access for agriculture,
forestry and fishery products, as well as to expand imports of these products. In fact,
Japan has become the largest net importer of agricultural products in the world, and its
food self-sufficiency rate of 46 per cent is the lowest among the developed countries.
Given these circumstances, the concerns of Japanese citizens about food security are quite
high (see attachment 2).
The maintenance and strengthening of a free and
non-discriminatory multilateral trading system is Japan's fundamental policy. Japan has
consistently supported the General Agreement on Tariffs and Trade (GATT) since it became a
contracting party to the Agreement. It believes that the global economy has prospered
under the open, multilateral trading system under the GATT. As a result of the Uruguay
Round, a new multilateral trading system has been set up with the establishment of the
World Trade Organization (WTO) that covers such new areas as trade in services and
trade-related intellectual property rights. Japan strongly hopes that world trade will
further expand under the WTO, thereby leading to greater global prosperity. Japan is
determined to make a positive contribution toward these ends.
One of the aims of the Uruguay Round was to
strengthen the dispute settlement system. Japan's basic policy is that trade-related
disputes should be resolved within the multilateral framework, based on multilateral
rules, under the WTO. Japan intends to work continuously to improve and reinforce these
rules. On the other hand Japan is conducting bilateral negotiations with the United States
and the EU, among others, recognizing that these negotiations will promote free trade and
economic activities. Japan believes that the entire world will share in the fruits of
these negotiations on the Most-Favoured-Nation treatment basis, thus contributing to the
development of the overall global economy. Japan also believes that the promotion of
cooperative economic relations with the nations of the Asia Pacific region through such a
forum as the Asia Pacific Economic Cooperation (APEC) will foster the growth of an open
regional economic community in the area. Japan feels that this will stimulate world trade
and thereby contribute to the development of the global economy.
In recent years, there has been an increase in the
number of and an expansion in the scope of regional arrangements as has been seen in, for
example, the establishment of NAFTA and the enlargement of the EU to include Austria,
Finland and Sweden. Such regional agreements together account for a considerable portion
of world trade. Japan is of the view that this trend toward regional integration might
weaken the free, non-discriminatory, and open multilateral trading system under the
GATT/WTO, and is deeply concerned that it might lead to trading blocs being formed within
the global economic community. From this perspective, Japan has insisted that these
regional trade arrangements must not infringe on the rights under the GATT/WTO of the
countries not parties to these arrangements, and that the arrangements should be open so
as to supplement and reinforce the multilateral free trading system under the GATT/WTO and
contribute to the further liberalization and stimulation of world trade.
Import Promotion Policies
Since October 1992, Japan has been strengthening its
import promotion policies through successive economic policy programs devised in April and
September 1993 and in February 1994, as well as the FY 1994 Government Actions for Import
Promotion of March 1994, established as part of the External Economic Reform measures.
These policies have led to the implementation of taxation and financing measures that
promote imports, supporting efforts made by foreign companies and governments to increase
exports to Japan, and the improvement of the import promotion infrastructure.
Import expansion policies established and
strengthened since October 1992 are as follows:
Extension and expansion of the System of Tax
Incentives for Manufactured Product Imports.
- Relaxation of requirements for application
concerning the import increase rate (FY 1993 tax reform).
- Enabling sales subsidiary companies of foreign
manufacturers to use tax deductions or credit, etc. (FY 1993 tax reform).
- Extension of the period of validity (April 1,
1995-March 31, 1997) (FY 1995 tax reform).
- Addition of products eligible for this system
(medical products and vehicle parts) (FY 1995 tax reform).
Expansion of policy financing.
- Establishment of a financing system at the Japan
Development Bank to strengthen the Financing for Improvement of the Import Infrastructure,
thereby further strengthening the already-existing Financing for Improvement of the Import
- Expansion of Manufactured Product Import Financing
at the Export-Import Bank of Japan.
- Implementation of temporary interest-reduction
measures for this financing and loans provided by the Small Business Finance Corporation
and the People's Finance Corporation to facilitate import sales.
Expansion of import promotion activities by the
Japan External Trade Organization (JETRO).
- Opening of the Business Support Center, which
provides free office space, etc. to support foreign business people coming to Japan to
- Opening of the Integrated Import Promotion Center
and local Import Promotion Centers to promote the display and sales of imported goods in
regions and major cities other than Tokyo.
- Promotion of housing imports, through establishing
permanent exhibition zones for imported houses, etc.
Promoting the establishment of Foreign Access Zones
Since March 1993, the following 13 regions have
received approval under the Local Import Promotion Plans to establish Foreign Access
Zones, which include ports and airports as well as their surrounding areas. A greater
increase in imports can be expected in these Zones, through the creation of concentrated
facilities and projects to promote imports within these regions.
- Regions approved in March 1993:
Kansai International Airport Area (Osaka
Prefecture); Osaka Port Area (Osaka city); Kobe Port Area (Kobe city); Matsuyama Port Area
(Ehime Prefecture); Kitakyushu Port Area (Kitakyushu city); Nagasaki Airport Area
- Regions approved in March 1994:
Kawasaki Port Area (Kawasaki city); Yokohama Port
Area (Yokohama city); Hiroshima Airport Area (Hiroshima Prefecture); Shimonoseki Port Area
(Yamaguchi Prefecture); Oita Port Area (Oita Prefecture); Shin-Chitose Airport Area
- Region approved in December 1994:
Komatsu Airport Area (Ishikawa Prefecture)
As a result of these projects and policies to
promote importation, there has been a steady increase in imports into Japan. Dollar-based
imports in FY 1993 were up 4.8 per cent over the previous fiscal year.
Mining and Industrial Sector
As a result of a series of steps to reduce or
eliminate customs duties, Japan's average tariff rate for mining and industrial products
stands at 3.8 per cent (1988; GATT rate basis), lower than the 5.5 per cent rate for the
United States and the 5.6 per cent rate for the European Community. As a result of the
Uruguay Round, the average Japanese tariff rate will decline by 61 per cent compared with
that before the Uruguay Round, a much larger reduction than those made by the United
States and the EU (both between 30 per cent and 40 per cent). Thus, Japan's average tariff
rate will be set at 1.5 per cent. This is less than the rates for the United States and
the EU (both between 3 per cent and 4 per cent). With Japan's liberalization of imports on
coal in April 1992, no mining and industrial products are currently under an import quota
system, making Japan's market one of the most open in the world. Thanks to such efforts,
"border measures" in Japan, such as customs duties and quantitative import
restrictions, are the least restrictive in the world today. Nevertheless, Japan is
promoting further improvements while also taking steps to expand imports. Efforts are also
being made to promote the smooth progress of industrial structural adjustment so that the
Japanese economy may be brought into greater harmony with the economy of the world at
large. With a view toward promoting a balanced expansion of trade, Japan does not impose
such "border measures" as import restrictions, even in connection with domestic
industries that have suffered a decline in relative competitiveness due to changes in the
economic environment. Rather, following the market mechanism, Japan has attempted in such
cases to encourage the movement of labour and capital to more highly competitive
Japan has achieved important results over the past
ten years from measures designed to promote the opening of its markets and the expansion
of imports. These included results produced by the 1985 Action Program for Improved Market
Access, the introduction in 1990 of a taxation system designed to promote manufactured
imports, and a comprehensive import expansion program, unequalled in other developed
countries, which eliminated tariffs on more than one thousand items. From 1985 to 1993,
Japan's imports of merchandise increased dramatically from 40.2 billion dollars to 125.2
billion dollars (both on a customs clearance basis). As a result, the percentage of
manufactured products in Japan's total imports jumped from 31.0 per cent to 52.0 per cent
over the same period.
In the past, Japan has implemented voluntary export
restraints (VERs) on the basis of bilateral negotiations in such areas as automobiles and
steel. However, most of these VERs are no longer in place and the remaining VERs are to be
abolished or otherwise brought into conformity with the WTO Agreement.
Agriculture, Forestry and Fisheries Sectors
As the internationalization of the Japanese economy
progresses, Japan has made every possible effort to improve market access for
agricultural, forestry and fishery products despite the difficulties surrounding domestic
industries of these fields. As a result, the number of items subject to import
restrictions was reduced from 103 in 1962 to 12 in 1994 (22 items under the Harmonized
System tariff-line basis).
Japan did its utmost for the Uruguay Round
negotiations on agriculture. As a result of the negotiations, Japan will replace import
restrictions on all items except for rice with tariffs. As for rice, despite very
difficult domestic conditions, Japan will provide minimum-access opportunities.
Upon accepting the Uruguay Round Agreement on
Agriculture, Japan plans to implement several measures within the framework of the
Agreement in order to adjust its agricultural sector and rural areas to the new
international environment. These include the improvement of the agricultural
infrastructure, the measures to promote the transfer of rights on agricultural lands, and
the measures to promote development of hilly and mountainous areas.
Japan's food self-sufficiency rate fell below 50 per
cent on a calorie basis in FY 1992, to 46 per cent. This is the lowest level among the
industrialized nations. Given this situation, concerns of Japanese citizens on food
security are quite high.
Along with the above-mentioned efforts to improve
market access for agricultural, forestry and fishery products, Japan is also working to
expand imports. In 1993, Japan imported US$61.3 billion worth of agricultural, forestry
and fishery products, while it exported US$2.8 billion worth of these products. This
deficit of US$58.6 billion makes Japan the largest net importer of agricultural, forestry
and fishery products in the world. Moreover, as part of its domestic policy, Japan has
been making efforts to control the production of specific agricultural products that tend
to be over-produced, in order to prevent possible confusion of world markets by their
exportation. Back to top