Insurance Talks
Q. The insurance talks between U.S. and Japan was confusing. It was reported that on the one hand the U.S. claimed that Japan should not open part of its insurance market, on the other hand the U.S. insisted that Japan should open the other parts of the market. What is the result of the talks?
A. After months of intensive talks, Japan and the United States successfully concluded the consultations on December 15, 1996. Please refer to the "Supplementary Measures by the Government of Japan and the Government of the United States regarding Insurance."
Supplementary Measures by
the Government of Japan and the Government of
the United States Regarding Insurance
December 24, 1996
Washington, D.C.
Representatives of the Government of Japan and the Government of the United States met from December 1995 through December 1996 regarding the interpretation and application of the Measures by the Government of Japan and the Government of the United States Regarding Insurance, dated October 11, 1994 ("Measures"). As a result of these consultations, each Government has decided to implement these supplementary measures described herein ("Supplementary Measures") as an integral part of the Measures.
The two Governments note that on November 11, 1996, the Prime Minister of Japan instructed the Ministry of Finance to prepare and undertake fundamental reform and deregulation of Japan's financial system including the insurance sector by the year 2001. The Government of the United States welcomes this initiative and looks forward to its implementation. The two Governments share the view that implementation of the Measures and the Supplementary Measures is intended to be consistent with the Prime Minister's initiative to reform Japan's financial system.
 Kunihiko Saito Ambassador of Japan |
 Charlene Barshefsky United States Trade Representative -- Designate |
December 24, 1996
The Honorable Kunihiko Saito
Ambassador of Japan
Embassy of Japan
Washington, D.C.
Dear Ambassador Saito:
I would like to state my Government's interpretation of section II (3) of the Supplementary Measures by the Government of Japan and the Government of the United States Regarding Insurance.
As you know, this section deals with the difficult question of how to make the decision as to whether primary sector deregulation has been implemented and, accordingly, whether the "reasonable period" will begin regarding the duration of the measures to avoid radical change in the third sector.
Your concern has been that the United States not maintain a "veto" over the starting of the reasonable period, because you need confidence that the measures to avoid radical change in the third sector will terminate by 2001, provided that the Ministry of Finance has implemented primary sector deregulation as stated in the Supplementary Measures, in order to conform with the Prime Minister's "Big Bang" initiative for deregulation of Japan's financial markets.
Our concern is to be certain that the primary sector deregulation in fact has been implemented as described in the Supplementary Measures before the reasonable period begins. From our view, it is unacceptable and contrary to international norms for any country including Japan to have the unilateral right to interpret measures that are the result of bilateral negotiations.
We believe that the text of the Supplementary Measures satisfies both our concerns, in the following way.
First, it sets clear, specific, and objective criteria for evaluating whether the requisite primary sector deregulation has been implemented. Because the criteria are clear, specific, and objective, we do not anticipate any disagreement on the question as to whether they have been met, especially considering the Government of Japan's strong stated commitment to financial services deregulation.
Second, in order to avoid any possible misunderstanding with respect to the implementation of primary sector deregulation, we believe it will be essential for our two Governments to consult every six months, or at any time upon request of either government. Of course, as you know, the Measures provide for such consultations and the Supplementary Measures are an integral part of the Measures.
If, as we approach the time of the decision point (i. e., July I, 1998), we disagree as to whether the criteria have been met, our view is that we should consult intensively up until the time of the decision point to try to reach a common view. If we could not reach a common view by the decision point, section II (3) would preserve each side's right to act in conformity with its view as to whether the criteria had been met. Accordingly, the text would not give legal precedence to either side's conclusion.
I believe that this as an appropriate and honorable solution to this issue that respects the position of each Government.
Sincerely, Charlene Barshefsky U.S. Trade Representative -- Designate |
EMBASSY OF JAPAN
WASHINGTON, D.C.
December 24, 1996
Dear Ambassador Barshefsky:
I am in receipt of your letter dated December 24, 1996, and am happy to state that my Government shares the views expressed in the aforementioned letter.
Sincerely, Kunihiko Saito Ambassador of Japan |
The Honorable
Charlene Barshefsky
Acting United Sates Trade Representative
Office of the United States Trade Representative
600 17th Street, NW
Washington, D.C. 20506
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