Import Policies

The NTE suggests that Japan retains high tariffs on certain products. However, as the tariff rates for these products are the outcome of the Uruguay Round agreement, and are all consistent with the WTO Agreement, this is an area where the U.S. is not eligible to criticize japan. The U.S. too retains high tariffs on products such as textiles and apricot preparations. Before the U.S. is going to criticize Japan, it should become sufficiently aware of the fact of its own high tariffs and redress these first.

Moreover, in addition to the tariff reductions under the Uruguay Round Agreement, Japan accelerated the implementation of Uruguay Round tariff reductions for the 697 products on April 1996 presented at the Asia-Pacific Economic Cooperation (APEC) Osaka Meetings. However, the U.S. has not so far accelerated such tariff reductions as Japan.

In regard to individual references, the NTE statement that zero for zero tariff concessions "are being phased in over six years" is actually contrary to the facts, as these were already implemented in the case of pharmaceuticals on 1 January 1995, while zero for zero eliminations for some other industrial products aside from pharmaceuticals will be completed in five years. It is also incorrect to say that these tariff concessions "will be complete on January 2, 2000," since in the case of whisky and brandy, tariffs will be completely eliminated on 1 April 2004.

(1) General Food Products

The NTE refers to "safeguard measures for beef and pork." There is a risk that these measures could be misinterpreted as Agreement on Safeguards safeguard measures or as Agreement of Agriculture special safeguards. The measures which Japan applies on beef and pork are emergency measures admitted in line with the result of Uruguay Round negotiations with a purpose of restoring tariff rates, which had been lowered by Japan voluntarily, to a level of binding rates.

(2) Wood Products

The United States indicates in the NTE that raw logs constitute more than half of the monetary value of US exports of wood products to Japan, and that tariffs remain an impediment to the expansion of US value-added exports. However, according to the trade data submitted by the United States at the 8th Meeting of the Japan-U.S. Wood Products Subcommittee last November, Japan is the United States' largest export market for value-added products (value-added exports to Japan in 1995 totaled US$1 billion), with value-added imports into Japan from overseas markets as a whole also rising steadily.

Japan is also reliant on overseas markets to supply 80% of its lumber. Thus, the Japanese market is quite sufficiently open, and it is our basic understanding that there are no special problems with regard to trade in wood products. Further, the Government of Japan is concerned about U.S. raw log export restrictions, and will continue to seek their removal.

(3) Fresh Horticultural Products

Each country is permitted to implement plant quarantine operations which are conducted based on scientific evidence to prevent the introduction of pests and plant diseases from other countries, and the United States also has instituted a number of phytosanitary measures, including prohibition of the import of many fresh horticultural products. Moreover, the import of Japanese Unshu oranges is still prohibited in Florida and four other states.

As there is a possibility, supported by data, that pest-disinfestation treatments which work with one variety may not work equally effectively on others, Japan continues to require comparison tests on the effectiveness of such treatments when lifting the ban on additional varieties. The NTE refers to the "presentation of scientific evidence that effective treatments against pests of one variety can be extended easily to new varieties." However, this is contrary to the facts, as data providing this evidence have been presented at none of Japan-US bilateral meetings to date by the United States.

Considering the request from the U.S., the dispatch of Japanese inspectors to the United States is being conducted with the consent of the United States to confirm appropriate implementation of the stipulated quarantine measures. The NTE also suggests a lack of transparency in Japan's fumigation policy. Japan, however, does not require fumigation for non-quarantine pests, which are those meeting certain criteria - for example, being widely distributed in Japan, and even of which are present, not subject to official control. Those non-quarantine pests were designated based on the FAO guidelines on Pest Risk Analysis, which is one of the international standards on phytosanitary measures. In addition, the specification of non-quarantine pests, including the listing thereof, is announced through vehicles such as the WTO SPS notices. The suggestion that Japan's fumigation policy lacks transparency is therefore inaccurate.

(4) Happoshu (Low-malt beers)

(i) The NTE suggests that while a low excise tax rate is applied for imported happoshu, the tariff rate is seven times higher than that for regular beer. However, the report from the Tariff Rate Advisory Council to the Minister of Finance concerning FY1997 tariff revisions included the establishment of a distinct tariff line and tariff rate for happoshu (the content of this report, which contains the above-mentioned tariff revisions, was announced to the public on 18 December 1996). The Law amending the Customs Tariff Law and the Customs Temporary Measures Law was passed in the Diet on 19 March and already entered into force as of 1 April. As stated in the report, the tariff rate for happoshu was set at the same level as the tariff rate for beer, which in FY1997 will be 9.4% or ¥6.4/liter, whichever is lower, with this being reduced in stages toward Free in FY2002.

It is quite regrettable that the NTE describes the tariff rate for happoshu as a trade barrier, despite the fact that the content of the report as it relates to the revisions was announced to the public in December, three months before the NTE itself was released.

(ii) The NTE also alleges that "unlike the excise tax categorization, which is determined by a set percentage of malt content, the criteria applied to distinguish between beer and sparkling brews is not clearly established." However, beer has always been clearly defined in terms of tariff classification as an alcoholic malt beverage in which malt is the main ingredient (i.e. malt content of 50% or more). The NTE comments are therefore not pertinent. In addition, to make the situation even clearer, Japan will take steps to make sure that importers and other related parties are thoroughly informed of the classification criteria by Customs.

(iii) It is further alleged that U.S. export sales of low-malt beer in Japan have come to a near-halt. According to Japan's trade statistics, however, 1996 imports from the United States of "other fermented beverages," the category under which happoshu has been classified, have increased approximately 3.7 times (7,145 kiloliters) compared to 1995 (1,908 kiloliters). The majority of the imports of "other fermented beverages" from the United States consists of imports of happoshu. There is therefore no factual basis to the U.S. comments. In making this kind of comment, reliable statistical data should be indicated and accurate remarks made.

(5) Rice

The NTE alleges that the utilization of imported rice for food donations is contrary to the spirit of Japan's WTO market access commitments.

Japan, abiding by the provisions of the WTO Agreement, has provided market access opportunities for imported rice, and has also made a variety of sales efforts. However, strong crops and other factors have resulted in an unexpectedly high stockpile of government rice, which includes imported rice. Under these circumstances, Japan received requests from countries suffering from food shortages for donations of rice, and having carefully considered the situation, Japan decided to utilize government rice, including imported rice, for food donations in FY1996. Upon making the decision to utilize government rice for food donation, Japan paid attention to abide by WTO principles such as ensuring national treatment for minimum-access rice and the prerequisites for the special treatment regarding rice. Therefore, U.S.side allegation is not correct.

(6) Import Clearance Procedures

(i) Japan has been actively pursuing the simplification and facilitation of customs procedures, from the viewpoint of intending to improve convenience and other advantages to importers and the Japanese people, using means such as simplifying documents required and computerization. Japan's import clearance procedures are now at a level unsurpassed by any country.

Japan's customs procedures are currently almost entirely conducted using a computerized system, and procedures for cargo with no problems are complete at the instant the declaration, including payment of tariffs and tax, be made. Furthermore, regarding the release of cargo, by using the pre-arrival examination system in which the similar procedures to declaration can be carried out before the cargo even arrives, prior notification of the results of document examination is also available. More convenience and facilitation is secured in Japan than in the U.S. by this procedure.

In addition, in the United States a "entry summary " then has to be filled out, separately after an "entry" be submitted and further time is needed until the amount of customs duty is determined. If this factor is included, therefore, Japan's customs clearance procedures can in fact be said to be faster and easier.

In particular, in regard to declarations using computerized systems, Japan's system is easier than that of the United States because in the case of Japan, a declaration can be completed by sending one package of data. On the other hand in the case of the U.S., a declaration requires the completion of separate "entry" and "entry summaries."

Note: In Japan, importers can actually pick up cargo with no problems for release even before permission by supplying bond, which means that two stage procedures, similar to the U.S. system, can be available.

Japan has repeatedly explained this at the Japan-U.S. working group meetings on deregulation, under Japan-U.S. Framework Talks, which are attended by officials of the U.S. Trade Representative, and it is quite regrettable that the United States does not comprehend the reality of Japan's excellent import customs procedures.

In addition, in regard to relationship on computer system between customs and other ministries, as the NTE appreciate its system, the Ministry of Health and Welfare's computer system for food sanitation procedures already started interface with Custom's computer system in February 1997 and the Ministry of Agriculture, Forestry and Fisheries' plant quarantine system in April 1997, while the interface with the Ministry of Agriculture, Forestry and Fisheries' animal quarantine system will also start operating in FY1997.

These systems* differ from the US system that simply display the examination results of other ministries. For goods which customs examination have been completed, customs procedures are automatically concluded and authorization is given after information on filing and the results of authorization of other Ministries procedures is sent electronically through these system. From the perspective of simplicity and facilitation, our system is epoch making in the world. In other words, this has taken the initiative on what Vice President Albert Gore calls the "single report system."

* With this system, customs brokers can make declarations to ministries concerned from the single terminal, and items common to these declarations to be used by Ministries concerned only need to be entered once.

Below are responses to particular NTE allegations.

(a) The NTE alleges Japanese import clearance procedures as remaining slow and cumbersome by industrialized-country standards. However, as indicated above, this is an entirely wrong perception, and quite regrettable.

(b) The NTE refers to slow processing by inspection authorities other than Customs. However, the time for the examination and inspection of imported products such as food, to confirm that these products are in line with the Food Sanitation Law, as well as for inspection of imported animals, livestock and plants on the basis of the Domestic Animal Infectious Diseases Control Law and the Plant Protection Laws, is, the Japanese Government believes, no more than what is needed.

(c) Reference is also made to "non-uniform applications of customs regulations and rulings throughout Japan," but in fact, Japan ensures integrated operation of the application of customs regulations and rulings on the basis of published notices. The United States has been making the same claim at Japan-U.S. working group meetings on deregulation under the Japan - U.S.framework talks, but has provided no specific remarks or offered any proof.

(d) The NTE also points out that there is a "need for smoother implementation of the pre- arrival clearance system to encourage importers to use this procedure on a more routine basis." However, Japan's " Immediate Release System" does not require individual approval, and, a preliminary declaration is made using the pre-arrival examination system before cargo arriving. All cargo which does not need physical examination is able to use this system. The number of cases of utilization of the pre-arrival examination system, the prerequisite for use of the Immediate Release System, increased by about four times between April and December 1996 compared with the same period in 1995, and the number of cases using the Immediate Release System are expanding along with this. Therefore, the problem indicated in the NTE does not exist.

(e) The United States notes in the NTE that "the Japanese Government should take all possible steps to realize its goal of reducing processing time to less than 24 hours." In regard to this "goal," however, in the final report on the Japan-U.S. Structural Impediments Initiative talks, it is stated that "the aim was set to shorten customs clearance time (the time required for the process from import submission through import authorization) by 1991 to under 24 hours in order to ensure speedy pick-ups of ordinary import cargo by Japan's distribution system."

This aim was already achieved in 1992, and according to the most recent 1996 survey, a most adequate facilitation customs clearance has been reached, with sea cargo clearing in an average of 10.2 hours and air cargo clearing in an average of 1.8 hours*. The U.S. should inquire into the above passage in the SII Final Report.

* This survey was conducted to gather the necessary objective data, including an analysis of the amount of time taken overall for import procedures, and measurement of the effect of cumulative deregulation. The survey period was one week, with data surveyed and analyzed over four thousand declarations cases by random selection. Since 1991, Japan has implemented a total of four such surveys of overall import clearance time and published the results. The survey looks at average time required, and the results (sea cargo clearing in an average of 10.2 hours and air cargo clearing in an average of 1.8 hours) include, for example, cases where cargo has been held in bonded areas without payment of customs duty due to the circumstances of the importers, and cases where a large amount of time has been needed for physical examination. Therefore in the majority of cases, cargo is cleared just immediate after the declaration.

As far as the Government of Japan is aware, no similarly specific and fair survey has been carried out recently by any industrialized country including the U.S. other than Japan. Japan conducts such regular objective surveys and releases the results in order to ensure appropriate and smooth import clearance procedures, and to improve these. As this is extremely important, Japan would urge the United States to conduct the same kind of survey also and to publish the results. After that, the U.S. will be eligible to make a comment on the basis of comparisons with Japan's procedures about this issue.

As is shown above, the issues alleged by the NTE display a lack of adequate understanding of Japan's import clearance procedures. It is quite regrettable. Accordingly, Japan hopes that the United States will form a correct understanding of Japan's import clearance procedures on the basis of our comments above-mentioned. Japan would also like the USTR to remove these issues from next year's NTE.

(ii) As for the suggestion of "higher user fees at the Narita and Kansai Airports," current airport utilization fees at the New Tokyo International Airport (Narita) were set after consultations with the International Air Transport Association (IATA), based on an appropriate cost price given effective operation. It has not been raised at all since revision in 1984, and given the expected increase in costs due to factors such as the construction of a parallel runway to deal with the future increase in international carrier demand and to improve environmental protection measures in line with this, fee reduction would be difficult.

After consultations with the IATA and the Board of Airline Representatives in Japan (BOAR), utilization fees for Kansai International Airport were established when the airport was opened at a level (¥2400/ton) well under what it would have been appropriate to charge on a cost price basis, despite the enormous amount spent on construction. As of July 1995, arrival and departure charges for international lines were reduced by ¥100 a ton as a result of the Government of Japan's purchase of airport security facilities with a view to ensuring international competitiveness. It would be difficult to reduce these charges any further.

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