JAPAN-U.S. REGULATORY REFORM AND COMPETITION POLICY INITIATIVE 2007
JAPAN'S RECOMMENDATIONS TO THE UNITED STATES

October 2007

On October 18th, Japan presented the United States with its regulatory reform recommendations for the seventh year of the "Japan-U.S. Regulatory Reform and Competition Policy Initiative". The following are some key points of the recommendations (PDF):

1. Anti-dumping Measures

Operate the anti-dumping mechanism of the United States in a careful manner that is fully consistent with the WTO Agreement, including the abolishment of "zeroing", which has been established as a violation of the WTO Agreement.

2. Distribution and Customs Procedures

(1) Ensure that the requirement of scanning all U.S.-bound container cargo before loading at foreign ports ("100% Scanning" provision), enacted this August, will not hinder international commerce as a whole.

(2) Ensure that Japan's "Shochu" (a distilled spirit) be sold for consumption on the premises where sold under the treatment equal to the one provided for Korea's "Soju" in California and New York.

(3) Enable exports of distilled spirits to the United States in 720-mililiter and 1800-mililiter containers, which are commonly used in Japan.

3. Consular Affairs

Resume revalidation procedures of U.S. visas within the United States. Increase the number of U.S. consulates in Japan that conduct interviews for visa applicants.

4. Investment-related Regulations

Ensure maximum transparency and fairness of the implementation of the Exon-Florio amendment (Section 721 of the Defense Production Act of 1950), which can limit foreign direct investments that might threaten national security of the United States.

5. Patent System

Shift from the current first-to-invent system to the first-to-file system. Improve the patent system, which is different from international standards and places excessive burdens on patent applicants.

6. Government Procurement

(1) Correct discriminatory practices against foreign products in government procurement under the Federal Buy American Act and other rules that have been stipulated for the same purpose.

(2) Take necessary action to ensure that regulations concerning the construction of U.S. military bases do not pose barriers to Japanese construction companies.

7. Export-related Procedures

Exempt Japanese importers (re-exporters) from application to U.S. re-export controls, as Japan already enforces strict export control. Require U.S. exporters to provide Japanese importers (re-exporters) with sufficient information on items of U.S. origin.

8. Standards

(1) Ensure thorough adoption of the metric system, an international standard unit system, throughout the United States.

(2) Recognize the equivalent status of the Organic Certification System of the Japanese Agricultural Standard (JAS) to the U.S. National Organic Program so as to enable Japanese organic products to be sold as organic in the United States.

(3) Mitigate the quarantine conditions for Japanese Unshu oranges to the same level of phytosanitary measures applied to Florida-produced citrus fruits.

(4) Strengthen feed regulations and continue sufficient surveillance as measures against Bovine Spongiform Encephalopathy (BSE).

9. Standardization of State-based Regulation

(1) Harmonize regulations that differ from one state to another in relation to mercury, energy efficiency, recycling of waste electronic equipment, and labeling of hazardous materials, through such means as federal laws.

(2) Harmonize and unify requirements for obtaining licenses for construction businesses, as the requirements vary from state to state. Introduce a national examination for construction business licenses under the aegis of the National Association of State Contracting Licensing Agencies (NASCLA).

(3) Harmonize and unify state-based insurance regulations.

10. Extraterritorial Application

Refrain from applying U.S. sanction acts to enterprises of third countries.

11. Competition Policy

Continue the review of anti-trust exemptions at both the federal and state level, and abolish the limitations and exemptions that are not considered rational.

12. Legal System/Legal Service

Accept foreign lawyers as foreign legal consultants (FLCs) in every state. Reconsider the period of practicing experience that is required for accepting foreign lawyers as FLCs in every jurisdiction, as well as the method used for calculating this period.

13. Maritime Transportation Business

Eliminate the practice by the Federal Maritime Commission (FMC) of imposing unfair reporting requirements on foreign carriers under the Merchant Marine Act of 1920. Eliminate provisions that allow unilateral restrictions on foreign carriers setting freight rates.

14. Financial Services

(1) Eliminate the reinsurance collateral requirement on foreign insurance companies. Abolish the Trusteed Surplus Requirement for foreign insurance companies.

(2) Exempt U.S. companies issuing Samurai bonds (yen-denominated bonds issued by international organizations, non-Japanese governments, and non-Japanese companies) from withholding tax duties by applying the handling policy under the "Foreign-targeted Registered Obligation".

15. Telecommunications

(1) Eliminate restrictions on foreign investment in the licensing of radio stations. Eliminate the ambiguous certification and licensing criteria foreign carriers need to enter into the U.S. telecommunications market, and clarify its implementation standards.

(2) Expedite the State Department's procedures for export licenses and approval of technical assistance agreements concerning commercial satellites, while minimizing the items of undisclosed information to foreign satellite communications companies.

16. Information Technology

Improve the United States' inadequate system concerning copyright, such as protection of live performances and the moral rights of authors and performers.

17. Medical Devices and Pharmaceuticals

Provide regular meetings between the U.S. Food and Drug Administration (FDA) and Japanese and other foreign pharmaceutical companies regarding regulations on pharmaceuticals and medical devices in the U.S.

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