Lyon Summit Information Logo The Minister for Foreign Affairs of Japan
Lyon Summit Information

The Deregulation Action Program

Approved by the Cabinet
March 31, 1995
(Provisional translation)

1. Objectives

Having formulated the Deregulation Action Program (hereinafter referred to as "the Program") for the period of fiscal 1995-1999, the Government of Japan will systematically implement deregulatory and related measures, with the fundamental objectives of making the national economy internationally open and making it a free economy based on the market mechanism and the emphasis on the individual self-responsibility. Deregulation will be promoted from the viewpoints of: (1) improving the quality of life of the Japanese people by expanding the range of available choices in response to diverse consumer needs, reducing price differentials between Japan and other countries; (2) expanding domestic demand, facilitating imports, and increasing business opportunities, and contributing by such means to the elimination of external economic frictions; and (3) reducing burden imposed on the Japanese people and simplifying administrative work.

2. Basic Guidelines for Deregulation and Related Matters

(a)Under the five-year Program, deregulatory and related measures will be carried out as specified in the separate document. In each of the major administrative sectors, the promotion of the Program will form part of the comprehensive implementation of related policy measures. Measures will be implemented in each sector from the viewpoints indicated below.
Further, with regard to the deregulatory and related measures contained in the above mentioned separate document, it has been decided that for those items covered by past Cabinet decisions and due to become effective in or after April 1995, as well as for new items, the time frame for implementation is to be specified and the contents of the measures is to be concretely defined.

(i) Housing and Land
Relaxation and other adjustment of related regulations will be promoted in order to encourage the effective utilization of land, facilitate the supply of high-quality housing and land for building use, and reduce housing construction costs, etc., and thereby move toward the realization of an appreciably enhanced quality of residential life.

(ii) Information and Telecommunications
Relaxation and other adjustment of related regulations will be promoted in order to extend the benefits of information technology to the whole of Japanese society and create new business, etc., in response to the rapid progress of new technologies, their expanding potential uses, and associated opportunities.

(iii) Distribution-related
Relaxation and other adjustment of related regulations will be promoted from the viewpoints of seeking to provide greater benefits to consumers by expanding business opportunities, creating new businesses, and reducing price differentials between Japan and other countries, etc., while also seeking to reduce distribution costs, improve passenger transportation services, and ensure Japan's competitiveness in the area of international transportation, etc. These measures will each contribute to the realization of an economic structure which is suited to a truly enhanced quality of life for the nation's people and which is also responsive to changes both at home and overseas.

(iv) Standards, Certifications, Import Processing, and Related Matters
Review of the systems of standards and certifications will be promoted in order to realize a national economy that is internationally open; the review process will include international harmonization of specifications and standards and introduction of a system for the mutual recognition of certification. Also, import procedures will be further simplified and expedited.

(v) Financial Services, Securities, and Insurance
Relaxation and other adjustment of related regulations will be promoted in order to vitalize markets and to facilitate the provision of new products and services which meet users' needs and the development of new business.

(vi) Energy
Relaxation and other adjustment of related regulations will be promoted in order to make the energy-supply system more flexible and efficient while securing a stable energy supply.

(vii) Employment and Labor
Relaxation and other adjustment of related regulations will be promoted from the viewpoint of invigorating Japan's economy and furthering international harmony while seeking to ensure the welfare of workers and stability of employment.

(viii) Matters Related to Pollution, Wastes, and Environmental Protection, and to Dangerous Articles, Disaster Prevention, and Public Security
Relaxation and other adjustment of related regulations will be promoted on a basis of the ongoing improvement of levels of technology, etc., while seeking to protect the lives, persons, and property of the Japanese people and to maintain and preserve the environment.

(b)The Program will be reviewed continuously, taking into account changes in social and economic conditions and other relevant factors. The basic approach to be taken in the review process is, in the case of economic regulations, that of freedom from regulation in principle, with regulation as the exception; and in the case of regulations that are social in nature, that of maintaining the minimum regulations required to serve legitimate policy objectives. In the review process, the following basic guidelines will be adopted:

(i) Where market entry, establishment of new plant, and other matters are regulated in competitive industries from the viewpoint of adjustment of supply and demand, drastic reviews of these regulations, including their possible abolition, will be conducted while taking into account the contents and nature of operations and other issues in the industries concerned.

Other regulations pertaining to market entry, establishment of new plant, and such matters will be kept to the minimum required, in order to ensure that access is not unfairly restricted.

(ii) With regard to price regulations pertaining to public utility charges, measures will be implemented based on "Regarding the Future Handling of Public Utility Charges" (approved by the Cabinet, November 18, 1994), in order to secure reasonably-priced, high-quality services while keeping regulation to the minimum required. Together with promotion of an enhanced competitive environment and more efficient management, etc., these measures will consist of studying the proper form to be taken by price-setting processes and implementing diversified and flexible rate structures, while taking into account the contents and nature of operations and other issues in the industries concerned.

(iii) Regulation to protect consumers will be confined in scope and contents to the minimum required to serve legitimate policy objectives, in light of ongoing advances in technology, diffusion of knowledge among consumers, and increasing availability of information.

Regulation from viewpoints of safety and environmental protection will also be confined to the minimum required.

(iv) Except in those cases where special necessity is recognized, regulatory impediments to the entry of foreign firms, foreign manufactured products, etc., to Japanese markets will be eliminated by harmonizing regulations with international norms.

(v) Systems of standards, certification, and labeling will be harmonized with international norms pertaining to their criteria, contents, methods, and other matters. In addition, the acceptance of foreign inspection data, the introduction of a system for the mutual recognition of certification, and a shift to in-company confirmation will be implemented in principle.

(vi) With regard to public inspection and testing requirements at the time of import, sale in Japan, or use in Japan, the same provisions as in (v) will be applied to standards for inspection and testing. In cases where an item is subject to overlapping requirements under multiple laws and ordinances, in principle standards will be harmonized and double inspection and testing will be eliminated.

(vii) The standards of consideration and inspection applied in processing permissions and authorizations, etc., and the documents, data, and other items required for applications and associated procedures will be set out clearly, and the standard processing period will be clearly stated.

3. Methods of Implementation of the Program

(a) Review and Revision of the Program
Review of the Program will be completed by the end of each calendar year, and revision will be completed by the end of each fiscal year, on the basis of opinions and requests received from interested parties both domestic and foreign, the results of monitoring by the Administrative Reform Committee, and other information. In the revision process, the Administrative Reform Promotion Headquarters will solicit requests from interested parties both domestic and foreign. Further, in cases where existing systems or applications thereof are to be retained after opinions and requests have been received, the necessity or grounds for their retention will be made clear.
The Administrative Reform Committee is expected, as a third-party organ, to prepare the required mechanism and fully exercise its function of making proposals to the Government.
A thorough follow-up will be conducted with regard to the state of implementation of all measures stipulated in the Program. The functions of administrative inspection will be actively employed in this process, and the results will be reported each fiscal year to the Administrative Reform Committee.
Each ministry and agency will implement measures stipulated in the Program and will also put in place a mechanism for review in each fiscal year.

(b) Ensuring Transparency of the Revision Process
Efforts will be made to ensure transparency of the revision process by allowing an adequate amount of time for the process, publishing the contents of deliberation, etc. A channel will be established in each ministry and agency to receive opinions and request from interested parties both domestic and foreign.

(c) Examinations of the Issuance of New Regulations, Etc.
Under the basic policy of keeping the issuance of new regulations to the minimum required, each ministry and agency will examine whether the issuance of new regulations is appropriate in the department or bureau which has overall coordinating functions, such as the ministerial secretariat.
Also, the Cabinet Legislation Bureau of the Management and Coordination Agency, and the Budget Bureau of the Ministry of Finance will conduct rigorous examinations based on matters under their respective jurisdictions prior to the issuance of new regulations.
Newly issued regulations will, in principle, be reviewed after a fixed period of time. In cases where a new system is created by law and new regulations are issued thereunder, except where deemed inappropriate in light of the intent or objectives of said law, a provision will be included therein to the effect that each ministry and agency will review the said regulations after a fixed period of time. Further, in cases where the system or applications thereof are to be retained as a result of this review, the necessity or grounds for their retention will be announced.

(d) Programs to Enhance Public Awareness and Understanding of Deregulation
Together with public relations programs concerning deregulation, programs to enhance public awareness and understanding of deregulation will be actively promoted in order to contribute to the establishment of a national economy which is both internationally open and free in accordance with the emphasis on the individual self-responsibility and the market mechanism.

(e) White Paper on Deregulation
A "White Paper on Deregulation" (provisional title) will be prepared and published in a timely manner each fiscal year in order to provide information concerning regulation in a form readily understandable to the Japanese people. This information will include the present state of public regulation, the state of implementation of deregulation, an outline of the Program, the impact and effectiveness of deregulation in relation to the lives of the Japanese people, etc.

(f) Assessment of the Actual State of Regulation
In order to ascertain the exact state of regulation, surveys and research will be undertaken to assess the actual state of public regulation, to study indicators related to the burden of notifications and reports, etc.

(g) Active Utilization of the Office of Trade and Investment Ombudsman (OTO)
The functions of the OTO will be actively utilized in order to promote deregulation measures which contribute to improved market access.

4. Active Development of Competition Policy

Together with deregulation, the active development of competition policy will also be pursued from the viewpoint of making Japan's markets more competitive and open by further promoting fair and free competition in the national economy. to this end, in addition to rigorous and appropriate enforcement of the Antimonopoly Act in order to eliminate practices which restrict competition, the following measures will be taken:

(i)To ensure that, after deregulation, regulation is not replaced by administrative guidance which restricts competition, the ministries and agencies concerned will carry out the necessary coordination in advance with the Fair Trade Commission, based on the intent of the "Antimonopoly Act Guidelines Concerning Administrative Guidance."

(ii) Violations of the Antimonopoly Act by industry associations will continue to be vigorously pursued. At the same time, in order to thoroughly prevent all violations of the Antimonopoly Act by practice of industry associations, including violations related to public regulation, a revised draft of the "Guidelines Concerning the Activities of Trade Associations under the Antimonopoly Act" (the "Trade Association Guidelines") will be published expeditiously, and the final guidelines will be formulated by the end of 1995 after deliberation taking into account opinions receive from all interested parties. Steps will also be taken to familiarize industry associations with the contents of the new guidelines.

(iii) The systems permitting the exemptions of the Antimonopoly Act for cartels and others under individual laws will be reviewed with a view to their abolition in principle by the end of fiscal 1998. The specific findings of this review will be obtained by the end of fiscal 1995. Further, necessary studies will be continued with regard to other Antimonopoly Act exemptions for cartels and others.

(iv) With regard to the resale price maintenance system, surveys will be conducted on the situation after the range of the items designated for Antimonopoly Act exemptions is reduced. The required procedures for revocation of designation will be implemented during 1998 for all designated items under the system, and the revocation will be put into effect by the end of 1998. Also, with regard to the works protected by copyright for which Antimonopoly Act exemptions on the resale pricing have been authorized, the scope thereof is to be limited and clarified by the end of 1998.

(v) The system for notification of mergers, transfers of business rights, etc., the system for reporting of stock holdings, and the system for notification of concurrent directorships will be reviewed from the viewpoints of their intent and objectives, easing the burden on companies, ensuring harmonization with international practices, etc. Items for review will include the possibility of introducing or raising cut-off points below which requirements do not apply.

(vi) The international contract notification system will be reviewed to determine what form it should take from the viewpoints of economic globalization and easing the burden on business operators, and steps will be taken for the relaxation of requirements by the end of fiscal 1996.

(vii) The maximum amounts of capital and net assets that a company may have without becoming subject to the regulation of total stock holdings applied to large non-financial companies are to be raised by the end of 1995.

(viii)The Fair Trade Commission will commence study of the regulation of holding companies, based on the existing prohibition's intent to prevent excessive concentration of controlling power over company management, and with the viewpoints of making Japan's markets more open as well as of further stimulating business activities of entrepreneurs, while taking into consideration the issues of Keiretsu, corporate families, etc. The Commission's study, which is intended to bring about deeper debate on this question, is to reach a conclusion within three years.

(ix) On regulation of premiums, a review will be conducted during fiscal 1995, along the lines of revoking the Fair Trade Commission's notifications pertaining to premium sales by department stores as well as premiums by manufacturers, and raising the caps on premium value for each type of premium offer. Accordingly, deregulatory measures will be instituted, and steps will be taken to clarify the contents of regulations in fiscal 1995.

(x) The structure of the Fair Trade Commission will be strengthened in terms of organization, staff, etc., from the viewpoint of ensuring fair competition through the full implementation of competition policy as deregulation process being promoted.

5. Matters Subject to Negotiation with Foreign Governments

With regard to matters that are subject to negotiation with foreign governments, action will be taken in a timely manner upon the conclusion of negotiations, and the results of negotiations will be added to the Program during revisions thereof.

6. Reviews of Regulation by Local Authorities

From the viewpoint of promoting deregulation consistently at both the national and the local levels, it is anticipated that local authorities will also carry out reviews of regulation based on the intent of this Program.

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