Deregulation
The Government of Japan is taking actions to abolish or to relax regulations under the principle that economic regulations shall be lifted and social regulations minimized, in promoting the Three-Year Programme for Promoting Deregulation. There is no ground with the description "Japanese economy remained burdened by unnecessary, costly, and excessive regulations that cover about 40 percent of all economic activity in Japan". The Government of Japan put emphasis on the removal of entry barriers affecting foreign companies and foreign products into the Japanese markets in promoting deregulation.
It is true that the Governments of the United States and Japan have been engaged in dialogues on those agenda listed in the NTE report, under the Enhanced Initiative on Deregulation and Competition Policy. However, measures listed in the NTE report are described in Joint Status Report of Enhanced Initiative only because the Government of Japan decided to take these measures voluntarily for its own sake. Those are not the measures that the Government of Japan is going to implement as results of "agreements" with the United States.
(1)Sectoral Deregulation
(i)Telecommunications
The Government of Japan has been conducting deregulation and promotion of competition in the field of telecommunications soundly, which have produced substantial results such as increase of new entry into the market, lower rates and diversified and highly-developed services. The Government of Japan has been faithfully implementing its WTO commitments. For example, cost-oriented interconnection rates has been realized as the Reference Paper of the General Agreement on Trade in Services stipulates, and the Government of Japan also submitted a bill to amend the Telecommunications Business Law to the Diet to implement LRIC methodology. There are one-sided and unilateral description in the report which are not based on facts, on the issues such as interconnection and policy for the regulation of prices, although Japanese side has sufficiently explained to U.S. side about its concerns during the U.S.-Japan deregulation dialogue. It is not appropriate for U.S. side to include such expressions in the report.
(ii) Medical Devices and Pharmaceutical Products
The Government of Japan has taken the measures that the approval processing period for new drug applications from April 2000 will be shortened to 12 months, and is making efforts to eliminate redundant work and facilitate the smooth operation of the medical device approval process. It has already accepted foreign clinical data for the approval of new pharmaceuticals and medical devices.
The Government of Japan recognized the value of innovation of pharmaceuticals and medical device, and will make best efforts at reforming the pricing system within the circumstances of the National Health Insurance System in Japan, as is referred to in the Second Joint Status Reports.
The U.S. Government also recognized that by-function category for medical devices will be based on clinical benefit. Therefore, it is inevitable that some devices will be reimbursed higher than they are and that some will be reimbursed lower. The prices of medical devices to be recategorized will be reviewed twice in FY2000 just because the MHW will implement by-function system reforms as well as develop reimbursement process simultaneously in October 2000, taking into consideration the request of the U.S. Government. The Government of Japan recognizes the importance of making an appropriate evaluation of innovative functional differences in medical devices development. In March 2000, Chuikyo adopted the policy outline that,if a new device is evaluated clearly different in clinical benefits from the existent devices, a new by-function category for it will be created.
(iii)Housing
Local governments, which operate the public sewer system, have authority over connections of food waste disposers with the sewer system. It is outside the purview of the Ministry of Construction, and, therefore, the Ministry of Construction does not take any position on the connection of food waste disposers with the sewer system in Japan.
(iv)Financial Services
Regarding the financial system reform, the implementation timetable up to 2001 was announced in 1996, reflecting the intent to accelerate the process as much as possible. Until now, the reform has been promoted as planned and almost all the measures have been implemented by the enforcement of the Financial System Reform Law and others.
(v)Energy
Under "Three-Year Program for the Promotion of Deregulation", 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 protection of global environment. In the gas sector, regulatory reform including expansion of the scope of liberalization of retail supply to large-scale customers and regulation on transmission was implemented in November 1999, while in the electricity sector, regulatory reform including partial liberalization of retail supply and regulation on transmission was implemented in March 2000. As regards the deregulation of energy-related equipment, the Government of Japan promotes it with its own initiative and there is no factual basis for a claim that Japan has concluded an agreement with U.S. Government in this regard.
(2)Structural Deregulation
(i) Antimonopoly Law and Competetion Policy
JFTC is making efforts to strengthen the enforcement of the Antimonopoly Law, such as the reinforcement of its investigative functions, and taking strict and vigorous measures against price cartels, bid rigging and other types of violations of the Antimonopoly Law, including accusing for criminal prosecution. For promoting deregulation, JFTC is actively conducting surveys and making recommendations on business sectors where entry is restricted by supply and demand balancing regulations, from the viewpoint of competition policy. With regard to the sectors where entry restrictions are relaxed, JFTC is conducting surveys and making necessary proposals regarding the post deregulation conditions of these sectors. JFTC is also promoting competition policy by supporting firms' voluntary efforts for Antimonopoly Law compliance. These efforts by JFTC will be continued in an unchanged way after the government reorganization of ministries and agencies in January 2001. The description in the NTE report that the consultative mechanism of the Industrial Revitalization Law could have been construed as an AML exemption, is against fact, which is based on a misunderstanding. Government of Japan repetitively explained to the U.S. Government on this point in the Japan-U.S. deregulation dialogues.
(ii)Distribution
Large-Scale Retail Store
The Ministry of International Trade and Industry (MITI) will establish official contact points by June 1, 2000 to receive and facilitate resolution of complaints from any interested party regarding application of the Daiten-Ricchi Ho (the Law). MITI has also explained to relevant local governments to the purpose and content of the Law and will continue to provide necessary information. Thus, there should be no ground for the U.S. concern by implementing these measures.
(iii)Transparency and Government Practices
To improve the transparency of the government, to strengthen the government's accountability to the public and to improve the quality of public administration, the Government of Japan will introduce a government-wide policy evaluation system at the same time as the reorganization of ministries and agencies in January 2001. Regarding the Public Comment Procedure, the Management and Coordination Agency (MCA) will follow-up the implementation of the procedure and publish its findings. As for administrative procedures and practices, the Government of Japan will continue to promote compliance with the Administrative Procedure Law, and to enhance transparency and clarity in the administrative procedures and administrative guidance pertaining to application processes.
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