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Other Barriers

(1) Aerospace

   The reason why Japanese corporations became major suppliers of parts and components to foreign aircraft assemblers is that they steadily improved their technology through international joint development projects with foreign aircraft assemblers. Thus, it is incorrect to state that significant transfer of U.S. aerospace technology to Japan is the main reason for this.

   The Japan Defense Agency procures some aircrafts that are manufactured with licensing production with the full consent of the U.S. Government.

(2) Autos and Auto Parts

   Japan has faithfully implemented all measures contained in "Measures by the Government of Japan and the Government of the United States of America Regarding Autos and Auto-Parts (the "1995 Measures")" adopted in 1995. Global reorganization of the auto and auto parts industries is going on with capital and business alliances that transcend national borders and the environment surrounding the auto and auto parts industries has changed drastically with globalization. In this milieu, the Government of Japan believes that the 1995 Measures that focus on bilateral trade and procurement have outlived its significance. If the Government of the United States has any concrete concerns on this issue, the Government of Japan is prepared to have discussions at any time.

(3) Civil Aviation

   Competition has been enhanced under the 98MOU and the Government of Japan also highly appreciates that the 98MOU serves the intended purpose of liberalization. Bilateral talks are underway with the objective of fully liberalizing the civil aviation relationship. This is not the same as achieving "Open Skies." In order to achieve full liberalization, it is essential to rectify the imbalance of share of slots at Narita that have been created due to unequal rights for carriers of both countries in the past (US carriers take up 34% of the slots compared with 13% for Japanese carriers' operations to the US). The US has already made clear their understanding that Japan will make its own decisions on ways to utilize Haneda Airport in accordance with Japan's own airport policy.

(4) Narita Airport

   At Narita Airport, when the 2200-meter temporary parallel runway presently under construction comes into operation in early summer of 2002, that runway is anticipated to mitigate the shortage of runway capacity. Terminal 1, used mainly by US carriers, provides the function and scale equivalent to those of Terminal 2. Renovation of Terminal 1 has been taking place in coordination with all carriers, including those from the US. In addition, reduction in landing fees is quite difficult because Narita Airport Authority needs to be profitable as an independent cooperate body and it is currently operating at a loss. Landing fee at Narita is agreed through negotiation with International Air Transport Association.

(5) Direct Marketing

   The Door-to-Door Sales etc. Act and the Installment Sales Act were amended last November to ensure greater consumer protection. The Door-to-Door Sales etc. Act was re-titled as "The Law on Specific Commercial Transaction" as a result of the amendment. These laws will come into force in June 2001. The Law on Specific Commercial Transaction includes measures to strengthen consumer protection in electronic commerce.

(6) Electrical Utilities

   This issue concerns procurement activities in the private sector and is therefore outside the scope and responsibility of government. Power utility companies adopt, in principle, a process of competitive estimate submission by several companies for procurement. These companies maintain a transparent and competitive procurement process that is open to foreign companies.

(7) Flat Glass

   The Government of Japan has steadily implemented the 1995 Measures Regarding Flat Glass. The Japanese flat glass market of today is open and fair. Therefore, it is unnecessary and inappropriate for the government to be involved. We should leave it to market mechanism. The Japan Fair Trade Commission is committed to effectively enforcing and strictly applying the Antimonopoly Act within its authority if any violation is found in the market. The Government of Japan hopes that U.S. companies will make further efforts to enter the Japanese market. The Government of Japan is prepared to hear any specific concern that the Government of the U.S. may have regarding Japan's flat market. The Government of Japan believes that it is important to deepen mutual understanding based on facts.

(8) Paper and Paper Products

   The report refers to "weak enforcement of Japan's Antimonopoly Law" and "existence of exclusionary business practices." However, the Government of Japan is of the view that no such problems exist in the Japanese paper market. Therefore, it is unnecessary and inappropriate for the government to be involved. We should leave it to market mechanism.

(9) Consumer Photographic Film and Paper

   Regarding the issue of access to the Japanese film market that was put to the WTO Panel, the Panel ruled that market practices in the Japanese film market were not contrary to Japan's obligations under GATT. As is evident from the example given in the report about Eastman Kodak company's announcement to form a joint venture with a Japanese company, the Japanese market is open. The Government of Japan is of the view that there is no particular problem that needs to be addressed.

(10) Sea Transport and Freight

   The unilateral sanctions that the FMC (Federal Maritime Commission) took against Japanese carriers in 1997 violate the Treaty of Friendship, Commerce and Navigation between Japan and the United States (the Treaty). Japan will continue to asset that the sanctions violate the Treaty. The amendment to the Port Transportation Law aims to promote competition among businesses and improve efficiency of port transport businesses. Therefore, the description in the report is inappropriate.

(11) Motorcycle

   It is difficult for tandem riders to maintain a proper balance and it is extremely dangerous when tandem riders go on National Expressways and Motorways. In addition, there are reckless riders in Japan. For these reasons, there is a strong recognition among the public that the tandem riding is not safe. Therefore, it is difficult to lift the ban on tandem riding on National Expressways and Motorways. The 6th report of the OTO Promotion Council pointed out that lifting the ban on tandem riding on National Expressways and Motorways is difficult under the current situation.

(12) Steel

   Much of growth in Japan's steel exports to the U.S. in 1998 resulted from Japanese mill's response to increased demand situation in the U.S. market. In the previous meetings of the Japan-U.S. Steel Dialogue, the Government of Japan has explained that METI has never engaged in coordination of output, pricing and market allocation goals of Japanese steel companies and that Japanese distribution channels do not restrict steel imports. It is inappropriate for the report to take up only the arguments of the U.S. steel companies without any substantiating facts. Anti-competitive activities and market access barriers do not exist in the Japanese steel market and Japanese steel companies are making desperate efforts by forming alliances with other Japanese and non-Japanese companies to survive in the competitive international steel market.

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