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Japan's Highlight of 99 IAP Revision

1. Japan's Basic Stance for its IAP Revision

   (1) Japan presents in its IAP a comprehensive action plan in accordance with the Osaka Action Agenda, with the aim of achieving the goal of "free and open trade and investment" by 2010/2020, stipulated in the Bogor Declaration. Japan is of the view that revision of IAPs is the core of APEC's efforts for liberalization and facilitation and that IAPs should be revised continuously and progressively.

   (2) Japan, in the process of revising its IAP, welcomes other members' views and comments and consultation with other members concerned. Also, we will continue to deliver the voices and requests of several hundreds of private businesses, which would serve as valuable reference for member economies in their revision of the IAP.

2. Contents of Japan's IAP Revision in 1999

   (1) The main points of Japan's IAP revision this year are the items incorporated into "The Three-Year Program for Promoting Deregulation as Revised" (hereinafter "The Three-Year Program"), adopted by the Cabinet meeting on March 30. Through a drastic structural reform pertaining to Japan's society and economy, this program aims to create a free and fair socio-economic system that is fully opened to the international community and based on the rules of self-responsibility and market principles. It also aims to shift emphasis in public administration from ex ante facto regulations to ex post facto monitoring of compliance with general rules. To achieve these aims, deregulation shall be promoted along this Program during the three-year period between FY 1998 and FY 2000, while emphasizing the following points:

   (i) Regulations shall be abolished or otherwise relaxed under the principle that economic regulations shall be lifted and social regulations minimized.

   (ii) Regulatory arrangements shall be rationalized by, for example, the introduction of inspection by the private sector.

   (iii) Regulations shall be made simpler and clearer.

   (iv) International harmonization of regulations.

   (v) Speeding up of regulatory procedures.

   (vi) Transparency in procedures for formulating regulations.

   (2) Of the measures taken to further propel the structural reform of Japanese Economy, following measures are likely to be included in Japan's IAP revision:

Deregulation and Further Rationalization Measures for Trade and Investment Facilitation

Competition Policy

• In order to enhance the enforcement of Anitimonopoly Act (AMA), continued efforts have been made by the government, including reinforcement of the investigative functions of the Fair Trade Commission (FTC) in terms of resources. At the same time, AMA violations, which include violations with international dimensions, are being strictly, promptly and vigorously dealt with. In case where anti-competitive practices are employed based on or facilitated by the competition restricting administrative guidance, the FTC and other government ministries and agencies concerned have been promptly undertaking a review of such guidance.
• With regards to the promotion of deregulation, it is necessary to ensure that the deregulation leads to promote fair and free competition by both domestic and foreign entities, as well as to enhance the benefits of consumers. To achieve this objective, the FTC has been actively advocating competition policy by conducting surveys and making necessary proposals on business fields where entry is restricted by regulations such as demand-supply control regulations. For industries where deregulation has been implemented, the FTC has been conducting surveys on post-deregulatory conditions and making any necessary advice. The FTC has also been supporting voluntary efforts to make a compliance with the AMA on the part of businesses.
• In addition, the FTC has been conducting surveys on the entrance barriers instituted by local governments. Where necessary, the FTC has been submitting its proposals, and undertaking appropriate adjustments with the administrative agencies concerned.
• A bill was passed in the Diet in June, 1999 with the objective of repealing exemption systems (i.e., depression cartels and rationalization cartels), abolishing the Act concerning AMA Exemptions, and amending other laws.
• Studies are continued on the possible measures to further progress the private remedy system (private action system for injunctive relief and damage action system) for unfair business practices including AMA violations, aiming to reach a conclusion by the end of FY 1999.

Employment and Labor

• Regulations on fee-charging employment placement projects will be reviewed, and the following possibilities will be examined: widening the types of trade that can be dealt in the fee-charging employment placement projects; extension of the terms of validity of business licenses; relaxation of the requirements for business licenses; and relaxation of the regulations on commissions charged. (implemented as the amendment law comes into force)
• Discussions will be continued on the possible condition of permitting the concurrence between employment placement projects and worker dispatching undertakings. With the submission of a report from the Central Employment Security Council, measures deemed requisite will be promptly taken.
• Regulations on free employment placement projects will be reviewed, and the possibilities of extending the terms of validity and relaxing the requirements of the business license will be examined. (implemented as the amendment law comes into force)
• In regards to worker dispatching undertakings, an amendment bill has been was passed through the Diet which would apply a negative listing regulatory procedure to delineate eligible professions. As the amendment law comes into force, ministerial ordinance which will limit the negative listing in accordance with rational and objective standard will be prepared, and effective measures to widen the variety of trades practiced under worker dispatching undertakings will be implemented.

System for Corporate Structure

• Amendments on the Commercial Law establishing the system of Stock Exchange/Transfer has passed the Diet in August 1999. The amendments will be implemented within 6 months of promulgation.
• In order to allow an increase in diversity of structural reform in the business sector, the government will commence a discussion on the system for corporation division and aim for a conclusion at an early stage, bearing in mind the rights of stockholders and creditors.

Finance/ Securities/ Insurance

Following financial reforms will be implemented on October 1, 1999:

Communications

• As for interconnection rates, a bill necessary for the amendment of the Telecommunications Business Law will be submitted to the Diet in the spring of 2000, in order to implement Long-run Incremental Cost Methodology (LRIC) as early as possible. LRIC will be implemented in CY 2000 if all due procedures are completed expeditiously. Prior to the introduction of LRIC-based rates, the Government of Japan will, within the scope of its existing authority, promote the reduction of interconnection rates as much as possible.
• The regulations on foreign investment and non-Japan officers for the Cable Television were abolished in June, 1999.

Transportation

• On the general level, demand-supply adjustment regulations will be abolished. Bills abolishing regulations on passenger railway industry, chartered bus industry, domestic passenger ship industry and domestic air transport industry was enacted in June 1999. Of the previously mentioned bills, the bills relating to the passenger railway industry, chartered bus industry and domestic air transport industry will be implemented in FY 1999, a bill dealing with the domestic passenger ship industry will be implemented in FY 2000.

Energy

• The government will decide partial liberalization of retail supply of electricity which means extra high voltage customers (customers consuming over 2.000 kW, taking power at 20,000 V or above) can choose their supply other than electric utility company. For measures that would enhance the benefits of the customers such as lowering of prices, notification procedures will replace certification procedures. Additionally, to secure an effective competition, the government will prepare a set of fair and equitable rules which will enable non-electric utility companies (new entrants) to utilize the existing transmission line (wheeling rule). (These measures will be implemented in March, 2000)
• The government will broaden the scope of large volume suppliers by reducing the minimum supplying quantity from 2 million cubed meters per year down to 1 million cubed meters per year. In order to promote competition in the industry, the government will also arrange a set of fair and equitable rules which will enable suppliers other than major gas companies to utilize the existing gas conduit infrastructure (wheeling rule). (These measures will be implemented in October, 1999)

Import-Export Procedure/Customs Procedure

• To realize paperless environment and one-stop services for import-export procedures, EDI system will be adopted for import-export permits and approvals under the Foreign Exchange and Foreign Trade Law, as well as for administrative procedure or entrance at major harbors by the end of FY 1999.

Standards and Conformity Assessment Systems

• Within the previously mentioned "The Three-Year Program", it is stated that Ministries and Agencies concerned shall endeavor to complete their reviews within the period of this Program. While aiming at reducing direct government intervention to necessary minimum levels, they shall promote the following: revisiting the scope of standards/certification involving the state; switching over to new systems based on self-confirmation and self-maintenance; achieving greater international harmonization of standards; changing over to performance-based standards; and eliminating duplicate inspections.
• For eleven laws under the authority of MITI such as the Consumer Product Safety Law, the regulatory measures will be transferred from governmental certification to self-declaration and third-party certification, and other reviews will be made. (They will enter into force successively from 2000)
• Regarding JAS (Japanese Agricultural Standards), Japan revised JAS Law with a view to bestowing on testing organizations overseas a function as JAS registered grading organizations (RGO) and / or JAS registered certification organizations (RCO) in July, 1999.
• Japan will actively participate in developing the guideline for genetically engineered foods by CY 2003, through hosting the newly established ad hoc Intergovernmental Codex Task Force on Foods derived from Biotechnology.

Medical/Pharmaceutical

• The approval processing period for new drug applications will be shortened to 12 months by April 2000, with steady and continuous improvement between now and then. To further accelerate the introduction of innovative new pharmaceuticals, period of time required for an approval will be duly curtailed , particularly for priority pharmaceuticals.

Mobility of Business People

• Japan has revised the Immigration Control and Refugee Recognition Act to extend the maximum period of re-entry permission from current 1 year to 3 years and the revised Act will come into effect in February 2000.
• Japan is planing to extend the current maximum period of stay 1 year to 3 years for the status of residence such as "Intra-company Transferee" (as of October 1, 1999).

Actions towards achieving the goal of Free and Open Trade and Investment

Japan firmly commits itself to the multilateral trading system. It reiterates its resolution to support the launch of comprehensive multilateral trade negotiations from year 2000, including those on industrial goods and investment rule-making. Japan will take the initiative on the modalities of the coming negotiations with close consultations with other WTO members.

As was mentioned in the Statement of the Japan Investment Council (Chaired by Prime Minister Keizo Obuchi) issued in April 1999, the Japanese Government committed that no effort would be spared to further promote inward direct investment, based on the recommendations by the Council's Expert Committee.

Japan is steadily implementing the Information Technology Agreement (ITA) as well as actively participating in the discussions on ITA II.