TRADE POLICY REVIEW:

Concluding remarks by the Chairperson


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Trade Policy Review: Japan
  

The thirteenth Trade Policy Review of Japan has been a good opportunity for Members to discuss recent developments in the country’s economic, trade and investment policies and their implications for international trade. Such a fruitful dialogue would not have been possible without the constructive engagement of the Japanese delegation led by Mr. Tomochika UYAMA; their team in Geneva headed by Ambassador Junichi IHARA; our discussant, H.E. Ambassador Julian BRAITHWAITE from the United Kingdom; and all those Members who had participated in this exercise.

Japan is the world’s 4th largest importer and exporter of goods and services, and a highly valued trading partner for many WTO Members. Several delegations also pointed out that Japan played a leading role in manufacturing and innovation, and in many global value chains. It is therefore important that Japan has an economic environment that is conducive to trade.

During the period under review, Japan continued to face serious economic and demographic challenges: slow GDP growth, low inflation and budget deficits persisted, while imports and exports declined, against a backdrop of an aging and shrinking population. To address these challenges, Members encouraged Japan to continue pursuing the “three arrows” of Abenomics, in particular the structural reforms that would allow Japan to further liberalise trade and remove non‑tariff barriers. In response, the Japanese delegation assured Members of its government’s determination to revitalize its economy and generate a new momentum of growth. Members were pleased to note that reforms were under way in various sectors, including agriculture, and they commended Japan’s efforts to increase women’s participation in the workforce.

In his opening remarks, Ambassador Ihara pointed out that there was wide-spread uncertainty and growing mistrust in trade. In such difficult times, Members appreciated Japan’s firm commitment to the multilateral trading system and to trade liberalization. Many Members commended the prominent and constructive role that Japan had played in the multilateral and plurilateral negotiations within the WTO, notably as the chair that concluded the expanded Information Technology Agreement. Now that the Agreement has been submitted to the Diet in Japan, Members look forward to its early implementation. Many developing countries, including LDCs, appreciated Japan’s development assistance and preferential schemes including its duty-free, quota-free scheme, and support for aid for trade.

Beyond the WTO, Members noted Japan’s intention to actively pursue economic partnership and investment agreements which could complement the multilateral trading system in promoting free trade. Clarifications were sought on the way forward for preferential agreements including the Trans-Pacific Partnership and the Regional Comprehensive Economic Partnership Agreement.

Meanwhile, the inflow of foreign direct investment into Japan remained modest. While Members noted Japan’s recent initiatives to attract FDI, concerns had been expressed about certain market access issues, for example, the stringent regulatory framework which made it difficult for foreign and local pharmaceutic companies to form joint ventures. Similarly, while Members congratulated Japan on recent reforms to facilitate the participation of small and medium enterprises in government procurement, they also saw room for improvement in the bidding process, as well as the administrative procedures and practices, to allow for more transparency and foreign competition. In general, Members would like to see a more predictable investment regime, better corporate governance, and business-friendly regulations. In that connection, it is encouraging to hear from Mr. UYAMA that his Government aims at making Japan “the most business-friendly country in the world”.

Regarding specific trade policy measures, many Members acknowledged Japan’s efforts to streamline customs procedures, such as the Authorized Economic Operators programme. Members also commended Japan for its predictable tariff regime, which had a binding coverage of more than 98% and a negligible difference between the average bound and applied rates. Nonetheless, concerns were raised regarding the relatively high tariffs for agriculture products and some industrial goods. Members encouraged Japan to reduce tariff peaks, bind all its tariff lines, and further simplify its tariff structure. Commenting on SPS and TBT measures, some Members said their exporters were subject to high compliance costs, mainly because some of the Japanese requirements were more rigorous than international standards.

In the area of intellectual property, Members noted that companies had suffered significant economic loss due to infringement of their IP rights. They encouraged Japan to step up enforcement efforts to combat counterfeiting. Members also showed interest in Japan’s recent patent reform, the new trade secrets law, and the level of protection for geographical indications.

In terms of sectoral trade policies, agriculture was still the sector attracting the most attention. While some Members appreciated Japan’s recent initiatives to reform the cooperatives system and land tenure, Members also expressed concern about the many protective measures still in place, such as high tariffs, price and import controls, and high levels of domestic support, which could be trade-distorting and creating significant market access barriers. Members urged Japan to enhance the transparency of its agricultural policies by, inter alia, submitting timely notifications; and to press ahead with reforms which would liberalise trade in this sector.

Another sector highlighted in this review was the energy sector, where some Members commended Japan for promoting renewable energies in lieu of fossil fuels, and for deregulating its electricity and gas markets. As regards services, Members noted that the market was largely open, and were interested in the recent reforms in banking and telecommunications. Individual Members had expressed concerns about protective measures in specific sectors such as automotive, aircraft manufacturing, insurance, air and maritime transport, broadcasting, accounting and visa-related issues concerning professionals.

In his statement just now, Mr. Uyama has responded comprehensively to key issues raised by Members. Japan has also provided answers to almost all advance written questions raised by Members. We look forward to Japan’s replies to all outstanding questions in a month’s time, which will then mark the successful conclusion of this TPR.

Finally, I wish to close this meeting by referring to what Ambassador Ihara had said at the very beginning of the meeting, that the TPRM has its very effective soft power — the power to help Members evaluate and improve their own trade policies, and thereby strengthen the multilateral trading system. I hope Japan also finds its 13th TPR useful in this sense, and I look to Japan’s continuous support to the TPRM in the future.

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