Top > Regional Affairs > North America > The United States > Economy > The Government of Japan's Comments on the 1999 National Trade Estimates (NTE) Report > Deregulation

Deregulation

   The Government of Japan has been undertaking deregulation as the policy for the sake of its own country. Based on the Deregulation Action Program (FY1995-97) (Cabinet Decision in March 1995) and the Three-Year Program for Promotion of Deregulation (FY1998-2000) (Cabinet Decision in March 1998), the Government of Japan has steadily promoted its deregulation measures. The current program was recently revised on March 30, 1999, taking into consideration the follow-ups and the result of the examination of opinions and requests from inside and outside of Japan by the Deregulation Committee (reorganized and enlarged into the Regulatory Reform Committee in April 1999) under the Administrative Reform Promotion Headquarters.

   Japan and the United States have continued dialogue on deregulation under the quot;Enhanced Initiativequot; since the Denver Summit in 1997. In the second year, significant progress was made in the fields of Telecommunications, Housing, Medical Devices and Pharmaceuticals, Energy, Competition Policy and Transparency, and other government practices.

   Therefore, the allegation in the report that quot;progress has been modestquot; is not correct. Under the quot;Enhanced Initiativequot;, based on the principle of two-way dialogue, the Government of Japan has presented its requests to the Government of the United States and has been asking the Government of the United States to give a serious consideration to these requests. However, the progress by the Government of the United States has been scant. Taking this opportunity, the Government of Japan reiterates its hope that the Government of the United States respond in a sincere manner to Japan's requests on deregulation in the United States.

(1) Sectoral Deregulation

(i) Telecommunications

   The Government of Japan has been conducting deregulation in the field of telecommunications soundly, and the deregulation has produced positive results such as lower user rates and increase of new entry into the market. Each item mentioned in this part has been discussed during the Japan-U.S. Deregulation Dialogue. The Government of the United States is making the points without sufficient reason. For example, the Government of the United States expressed its concern about NTT's interconnection rates in terms of WTO Basic Telecommunications Agreement, based on the groundless view that NTT's interconnection rates are not cost-oriented.

(ii) Medical Devices and Pharmaceuticals

   The Government of Japan has announced that the approval processing period for new drug applications will be shortened from 18 months to 12 months by April 2000. The Government of Japan has already accepted foreign clinical data for the approval of new pharmaceuticals and medical devices. The reimbursement price for pharmaceuticals and medical devices is properly decided according to the rule based on the opinion expressed by the Central Social Insurance Medical Council (Chuikyo). It is groundless to state that quot;Japan's reimbursement system lacks full transparency.quot; The Government of Japan is now considering the reform of a pricing system for pharmaceuticals, but, in any event, it is impossible to adopt a market-based pricing system. It would make the national medical insurance unsustainable because the medical insurance system in Japan is basically different from that in the U.S. in that patient's share of expenses is kept comparatively low.

(iii) Housing

   Although the NTE Report refers to elimination of tariff on value-added wood products discussed in the 1998 APEC summit, tariff matter can not be considered in the context of deregulation measures. The report also points out that progress of the deregulation is slow. However, introducing such a major change naturally takes certain period of time. Argument in the report is too one-sided and inappropriate.

(iv) Financial Services

   Regarding the financial system reform, the implementation timetable up to 2001 has been announced, reflecting the intent to accelerate the process as much as possible. The reform has been promoted satisfactorily and by the enforcement of the Financial System Reform Law on December 1998, almost all the measures have been implemented. The Government of Japan intends to promote reforms continuously in accordance with the timetable.

(v) Energy

   Under quot;Three-Year Program for the Promotion of Deregulationquot;, the Government of Japan has been working on the deregulation of energy sector as its own problem from even before the establishment of the Energy Working Group with a view to improving efficiency while considering the public merits of the universal service, energy security and preservation of global environment. The partial liberalization of the power market was studied under such policy consideration. Given the EU countries liberalization timetable and difference in degree of liberalization among U.S. states, quot;only modest progressquot; is not an appropriate description. The Government of Japan promotes deregulation of energy-related equipment for itself and there is no fact that Japan has made an agreement with US Government. Also, there is no fact that the Government of Japan agreed to continue this dialogue.

(2) Structural Deregulation

(i) Anti-Monopoly Act and Competition Policy

   In accordance with the Policy Plan announced by the JFTC parallel to the revised Three-Year Deregulation Program, the JFTC will work actively on maintenance and promotion of fair and free competition at the various stages in relation to public systems such as regulation and private business practices, and the Bill concerning Restructuring AMA Exemption Systems that proposes repeal of depression cartel system and rationalization cartel system, abolition of the AMA Exemption Act, etc., was submitted to the Diet on February 16, 1999.

   Continued efforts shall be made to strengthen the enforcement of AMA, including such measures as to reinforce the power of the Fair Trade Commission in terms of its investigative and other resources. Strict and vigorous measures, including accusation for criminal prosecution, shall be taken against price cartels , bid rigging and other types of the AMA violations.

(ii) Distribution

(a) Large-Scale Retail Store
   With regard to guideline of quot;Daiten-Ricchi-Hoquot;, the Government of Japan is undertaking study for establishing concrete and clear guideline around the first half of 1999 with a view to ensure the appropriate implementation of the law. Even after the law was enacted, the Government will closely watch local governments' implementation of the law and if necessary, the Government will provide technical advice and recommendation based upon the Local Autonomy Law. Thus, there should be no ground for the U.S. concern.

   Since the contents of the recent amendment of the City Planning Law is to abolish the classification of Special Use Districts, there is no other amendments from present system. The amendment is not aimed to restrict opening of large retail store. Also, the Law provides for the designation process of Special Use Districts to follow procedural principles such as participation of interested parties and decision of neutral organization. Thus, it is unrealistic for the Law to be unreasonably implemented.

(b) With regard to truck business, warehouses and freight forwarder business, the supply/demand adjustment for entry system has not been adopted and the notification system has been used for the fare and fee. The U.S. assertion that these regulations limit competition and impose a burden on foreign companies is incorrect. The current situation of warehouse business is regarded as oversupply rather than shortage of storage space.

(iii) Transparency and Government Practices

(a) Progress has been made in such aspects as adopting Public Comment Procedure, simplifying and expediting approval process, and introducing Overall Greatest Value Methodology at the local government level.

(b) The Access to the Government Information Act is a domestic issue which should be decided independently by each nation based on its sovereignty of the people. The Access to the Government Information Act, including the provisions which mandates further drafting of provisions of information disclosure concerning Public Corporation are under deliberation at the Diet.

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