ࡱ> q bjbjt+t+ (AAx~r#]>>>8.:EEEEEEE$I"8EE$< Ed \YV>E4trade policy regime: framework and objectives Trade Policy Objectives The overall aim of Japan's trade policy, which has remained unchanged since its previous Trade Policy Review, is to ensure the country's long-term prosperity and growth by promoting business activities in Japan and at an international level. To this purpose, Japan aims to further strengthen the multilateral trading system while, at the same time, linking and integrating with other countries and regions. With a strong preference for multilateral trade liberalization, Japan grants at least MFN treatment to all countries except Andorra and North Korea; it has traditionally avoided regional and bilateral preferential trade agreements. Japan supports the "open regionalism" approach of the Asia-Pacific Economic Cooperation (APEC) Forum, and participates in other regional fora such as the Asia-Europe meeting (ASEM) and the ASEAN+3. However, it was not party to any preferential trading agreement until recently; this changed with the signing of a bilateral free-trade agreement with Singapore in January 2002. Japan has also proposed an "initiative for a Japan-ASEAN Comprehensive Economic Partnership", which would encompass broader issues than conventional free-trade agreements, such as science and technology, human resource development, and tourism. Japan points out that although regional arrangements are being pursued, it has by no means abandoned multilateralism, and that regional and bilateral trade agreements are useful tools for market liberalization and economic structural reform, complementing multilateral efforts as long as they are consistent with ϲʹ rules. In this context, the authorities maintain that Japan's bilateral agreement with Singapore will be fully consistent with ϲʹ rules. Japan continues to grant preferential treatment to products from certain developing and least developed countries under the Generalized System of Preference (GSP) scheme. The GSP, which is currently valid until 2011, is extended to 149 countries and 15 territories; a list of 47 least developed countries qualifies for further preferential treatment (e.g. tariff-free and quota-free treatment). Trade Policy Formulation and Evaluation Trade policy formulation and administration In January 2001 the Government enacted a number of new laws to bring about administrative reform in Japan. The main goals of the reforms were: to establish a system with more effective political leadership; to restructure national administrative organs; to introduce greater transparency in administration; and to drastically streamline the Central Government (Box II.1). Despite the administrative reform measures taken, according to the authorities, trade policy formulation in Japan has not changed significantly since its previous Review. Trade-related issues remain the responsibility of a number of ministries, including the Ministry of Foreign Affairs (MOFA) and the Ministry of Economy, Trade and Industry (METI). Other ministries and agencies with responsibility for sectoral issues are also involved in trade policy formulation and implementation. The overall coordination of trade policies, including ensuring consistency, remains the final responsibility of the Cabinet, with input from advisory councils such as the Council on Economic and Fiscal Policy, which was created in the Cabinet Office as part of the administrative reforms. Trade and other policy issues are also debated in various Committees, including Standing Committees in the Diet and the Committees of the Liberal Democratic Party. Evaluation of trade-related policies In addition to the independent Board of Audit, Ministries evaluate their own trade-related and other policies. Under the reform programme introduced in 2001, each office and Ministry is required to evaluate the effects of its policies before and after implementation and to utilize the results of this evaluation in the planning and drafting of additional policies (ChartII.1). Some of these evaluations have been made publicly available and thus enhance public accountability. In addition to evaluations by individual ministries, the reform programme calls for the establishment of a ministry in charge of policy evaluation and other affairs (Somusho), which, along with the Committee for the Evaluation of Policies and Independent Administrative Institutions, will provide an independent assessment of the policies implemented by these ministries and other agencies. Box II.1: The main features of Central Government Reform As a result of a number of measures taken between 1999 and 2001, the Central Government decision-making structure has been changed. The four key objectives of the reform programme are: to strengthen the role of the Cabinet; to reorganize the Central Government; to increase transparency in administration; and to streamline the Government. An enhanced role for the Cabinet The changes made include: a reduction in the maximum number of Ministers of State from 20 to 14 (with an additional three to be appointed if necessary); clarification of the Prime Minister's authority to make Cabinet proposals on "basic principles" (on external and national security policies, on administration and financial management, on the management of the economy and budgetary planning, and on the organizational and personnel affairs of administrative organs); clarification of the Cabinet Secretary's planning and drafting functions; additional positions in the Cabinet Secretariat; flexibility in the number of Special Advisors and Private Secretaries to the Prime Minister; and flexibility in recruiting individuals from inside and outside the Government. In addition, a Cabinet Office, headed by the Prime Minister, was established and is expected to provide further support for the Cabinet and Prime Minister. Further support to the Cabinet and Prime Minister is expected to be provided by the creation of new posts of State Secretary and Parliamentary Secretary in each Ministry and a realignment and rationalization of policy councils, including a reduction in their number from 211 to 90 and guidelines to make them more accountable and better managed. Restructuring of national administrative organs New laws have been enacted to establish ten ministries in addition to the Cabinet Office; to ensure efficient interaction between Ministries, an inter-ministerial coordination system has been created. Efforts have also been made to better evaluate government policies through the creation of a ministry in charge of policy evaluation (the Somusho), which along with the Committee for the Evaluation of Policies and Independent Administrative Institutions, will be responsible for evaluating government policy. Transparent Administration A system of independent administrative institutions (IAIs) has been created within ministries, allowing them (including institutions such as the National Museum, the National Science Museum, etc.) greater flexibility in meeting mid-term and annual objectives as agreed with the relevant minister. The budgets of the IAIs are to include two kinds of allocations, a lump-sum grant with flexible use (management grant), and facility expenses. The employees of the IAIs are expected not to be subject to the same rules as other public-sector employees. Each IAI will be evaluated by the IAI Evaluation Committees, established in the relevant ministry, and by the Somusho whose members will be selected from outside the public sector. Streamlining the Government This is aimed at "reviewing the undertakings of the State, to abolish, privatize, deregulate or delegate to local governments jobs not necessarily performed by the State and to promote more efficient implementation of those which the State must continue to administer, for example, by utilizing the private sector". The rationalization programme will include abolishing the Construction Machinery Engineering Centre in the Hokkaido Development Agency, privatizing food inspection, abolishing the Government's monopoly on industrial alcohol, and transferring the departments of standards implementation to the private sector. There are also plans to outsource certain government activities to the private sector, to deregulate and delegate to local governments, and to reform government enterprises (such as the transformation of the postal services into the newly established Japan Postal Services Public Corporation, and the bureaux of mint and printing into IAIs). There will also be a streamlining of the administration including a reduction in the number of Ministers' Secretariats, bureaux and divisions, and a reduction in the number of employees in national administrative organizations by 25% over the ten-year period beginning in 2000/01. Source: Headquarters for the Administrative Reform of the Central Government (2001), Central Government Reform of Japan, January.  Trade Agreements and Arrangements ϲʹ Introduction As a strong supporter of the multilateral trading system, Japan continues to participate actively in the ϲʹ. Japan has strongly backed efforts to launch new multilateral trade negotiations in the ϲʹ. At the ϲʹ Ministerial meeting at Doha in November 2001, Japan urged Members to launch a new round of trade negotiations under the comprehensive Work Programme. Japan believed especially that there was a firm need for clarification and improvement of the rules on anti-dumping in order to complement trade liberalization and safeguard the achievements of previous rounds of trade negotiations; agriculture and services, which were already being discussed as part of the built-in agenda, would also benefit from inclusion in such a broad-based round, although negotiations in agriculture, given its importance for "non-trade concerns" such as food security, rural development, and the environment should be balanced and acceptable for every country. While recognizing that other issues, such as investment, competition, trade facilitation, and transparency in government procurement, were new and some Members were reluctant to include them in the ϲʹ, Japan believed that Members should aim at starting negotiations on these four issues. Similarly, it believes that Members should pursue further discussions on the issue of trade and the environment with a view to reaching a consensus on "how the perspectives of sustainable development and preservation of the environment can be reflected in the negotiations". In the ongoing negotiations in agriculture and services, Japan has made several proposals. Presenting these in the Special Session of the Committee on Agriculture, Japan argued that the discussions on further liberalization in agriculture should be based on five main points: consideration of the "multi-functionality" of agriculture; ensuring food security; redressing the imbalance in rules and disciplines applied to agricultural exporting countries and importing countries; consideration for developing countries; and consideration for the concerns of consumers and civil society. With regard to services, Japan noted that there appears to be a positive relationship between the number of commitments made by Members in the GATS, economic growth, and trade in services. Consequently, Japan, along with other Members, has argued that the MFN principle is one of the most important pillars of the ϲʹ; therefore, Japan believes that the MFN exemptions taken by several Members are a deviation from this essential principle and should be eliminated. However, given the diversity of Members' interests, discussions to liberalize services further should be included in a broad-based agenda of new negotiations, that responds to the interests of all Members. Japan is also a participant in the ϲʹ's Working Groups on Trade and Investment, Trade and Competition Policy, and Transparency in Government Procurement, and has submitted a number of proposals and discussion papers to these bodies and to the Council for Trade in Goods on the subject of trade facilitation. Notifications Like all members of the ϲʹ, Japan is required to notify its laws and measures under various ϲʹ Agreements. The status of selected notifications as of July 2002 is shown in Table II.1. Table II.1 Status of notifications to the ϲʹ, July 2002 ϲʹ AgreementDescription of requirementDocument symbol of most recent notification and dateAnti-dumpingArticle 16.4Anti-dumping actions takenG/ADP/N/85/JPN, 1 March 2002Article 16.5Domestic procedures and authorities competent to initiate and conduct investigationsG/ADP/N/14/Add.14, 26 April 2002Article 18.5Laws and regulations (and changes thereof)G/ADP/N/1/JPN/2/Suppl.3, 19June2002AgricultureArticles 10 and18.2Export subsidies (outlays and quantities)G/AG/N/JPN/74, 26 April 2002Article 18.2Domestic support (DS:1)G/AG/N/JPN/72, 19 February 2002Article Domestic support (DS:2)G/AG/N/JPN/62, 1 March 2001Article 18.2Information on tariff quotas administration (MA:1)G/AG/N/JPN/57, 14 September 2000Article 18.2Volume of imports under tariff quotas (MA:2)G/AG/N/JPN/66, 21 August 2001Article 5Volume based special safeguard (MA:3)G/AG/N/JPN/71, 18 February 2002Article 5Price based special safeguard (MA:4)G/AG/N/JPN/75, 12 June 2002Article 5Special safeguard (MA:5)G/AG/N/JPN/73, 26 April 2002Article 10Volume of food aid in the context of export subsidy commitments (ES:3)G/AG/N/JPN/67, 17 September 2001Article 16.2Measures concerning the possible negative effects of the reform programme on least developed and net food importing developing countriesG/AG/N/JPN/68, 17 September 2001Annex 5Tariff quotasG/AG/N/JPN/1/Add.1; G/AG/N/JPN/8/Add.1; G/AG/N/JPN/23/Add.2; G/AG/N/JPN/57/Add.1, 27 June 2001GATT 1994 (Article VI: Customs Valuation)Checklist of issuesG/VAL/N/2/JPN/1, 9 May 2000Table II.1 (cont'd)GATT 1994 (Art.XVII:4(a) Understanding on the Interpretation of ArticleXVII)Notification of products traded by state enterprisesG/STR/N/7/JPN, 6 August 2001Government Procurement (Article XXIV:6)Modifications to Appendix IGPA/W/186, 15 March 2002Import Licensing ProceduresArticles 1.4(a) and 8.2(b)Laws and regulations relevant to import licensingG/LIC/N/1/JPN/1, 27 February 1996; G/LIC/N/1/JPN/2/Rev.1, 26 February 1997Article 5.1Notification of licensing procedures and changesG/LIC/N/2/JPN/3, 27 April 2001Article 7.3Questionnaire; rules and information concerning procedures for the submission of applicationsG/LIC/N/3/JPN/2, 13 February 2002Subsidies and Countervailing MeasuresArticle 32.6Laws and regulations G/SCM/N/1/JPN/2/Suppl.2, 21November1997Article. 25.11Countervailing duty actions takenG/SCM/N/81/Add.1, 26 April 2002Article 25.1Subsidies programmesG/SCM/N/71/JPN, 29 May 2002Article 25.12Notification of domestic procedures and authorities competent to initiate and conduct investigationsG/SCM/N/18/Add.14, 26 April 2002SafeguardsArticle 12.6Laws and regulationsG/SG/N/1/JPN/3, 5 June 2001Article12.1(a)Initiation of investigation relating to serious injury or threat thereofG/SG/N/6/JPN/1/Corr.1, 22 January 2001Article12.1(b)Finding of serious injury or threat thereof caused by increased importsNo notificationArticle12.1(c)Decision to apply or extend a safeguard measureNo notificationArticle 12.4Notification of provisional safeguard measuresG/SG/N/7/JPN/1, 25 April 2001Article 12.5Notification of termination of safeguard investigationG/SG/N/9/JPN/1, 10 January 2002Sanitary and Phytosanitary MeasuresArticle 6, Annex BNotification of emergency measuresNo notificationArticle 7, Annex BNotification of changes in sanitary and phytosanitary measuresNo notificationTechnical Barriers to TradeArticle 15.2Laws and regulations (and changes)No notificationArticle 10.6Information about technical regulations, standards and conformity assessment proceduresNo notificationTextiles and ClothingArticles 2.8 and 2:11Notification of programmes of integrationG/TMB/N/377, 26 January 2001Article 3.1Restrictions maintained prior to entry into force of the ϲʹ AgreementG/TMB/N/425, 15 February 2002 G/TMB/N/425/Add.1, 14 June 2002Article 3.2(b)Notification of phase out of restrictions maintainedG/TMB/N/399, 11 May 2001TRIMsArticle 6.2Publications in which TRIMs may be foundG/TRIMS/N/2/Rev.9, 28 September 2001Article 5.1Investment measuresNo notificationTable II.1 (cont'd)TRIPSArticle 63.2Laws and regulationsIP/N/1/JPN/1, 1 March 1996; IP/N/1/JPN/1/Add.1, 12 July 1996; IP/N/1/JPN/C/1, 20 March 1996; IP/N/1/JPN/C/1/Rev.1, 25 February 1998; IP/N/1/JPN/C/1/Rev.1/Add.1, 7 August 1998; IP/N/1/JPN/D/1, 15 April 1996; IP/N/1/JPN/I/1, 19 April 1996; IP/N/1/JPN/L/1, 11 July 1996; IP/N/1/JPN/T/1/Rev.1, 5 September 1997Article 69Contact pointsIP/N/3/Rev.6, 1 March 2002Article 4(d)Notification of international agreements related to the protection of intellectual property and which entered into force prior to the entry into force of the ϲʹ AgreementIP/N/4/JPN/1, 29 February 1996General Agreement on Trade in Services (GATS)Article III:3Changes to laws and regulations affecting servicesS/C/N/179, 6 November 2001Article VIII:4Monopolies and exclusive providers of servicesNo notificationPlurilateral Agreement on Government procurementArticle XIX:5Statistics on government procurementGPA/40/Add.3, 10 December 2001Article XXIV:5(b)National implementing legislation (and changes)GPA/37, 20 June 2000Article XXIV:6(b)Modifications to Appendix IGPA/W/152, 20 September 2001; and GPA/W/152/Corr.1, 10 October 2001Source: ϲʹ documents. Disputes Japan's use of the ϲʹ Dispute Settlement Mechanism has increased over the years. Since its last Review, Japan has been involved in one dispute as a respondent and three disputes as a complainant (Table AII.1). In addition, Japan was involved as a third party in 12 cases during this period. Regional agreements APEC In keeping with its policy of supporting unilateral or multilateral trade and investment liberalization, Japan is a strong supporter of APEC's "open regionalism" goals. The Twelfth APEC Ministerial Meeting, in November 2000, reaffirmed the Bogor goals of free and open trade and investment and agreed that creative and efficient ways had to be found to prepare each APEC member for this eventuality. Particular emphasis was placed on the use of information and communications technology to accelerate economic growth and the goal of tripling the number of people in the region with individual and community-based access to the Internet by 2005 and of enabling all communities to have individual or community-based access by 2010. As an advocate of "open regionalism" moreover, APEC continues to support a fair, rules-based multilateral trading system and emphasized the need for a new ϲʹ round to be launched in 2001. At the APEC Ministerial Meeting, held in Shanghai in October 2001, Ministers recognized the importance of maintaining openness, given especially the international economic slowdown, and again stressed the importance of launching new multilateral trade negotiations. At the meeting, Japan proposed the "APEC Trade Facilitation Initiative", which would include: implementation of paperless trading within APEC, thereby reducing or eliminating the need for paper documents required for customs and other cross-border-trade administration; cooperation for adoption of a common framework for trade-related procedures among enterprises; implementation of standardized data and formats for customs clearance; and adoption of the revised Kyoto Convention on simplification and harmonization of customs procedures. Japan is also an active participant in the APEC subcommittees and has taken a number of initiatives in the Sub-committee on standards and conformance (SCSC) to align standards in member states with international standards, including cooperation with the Pacific Area Standards Congress in priority areas. Japan has been involved in organizing the training programme provided by the APEC/SCSC in 2001/02 and will be organizing the Peer Review Programme for National Metrology Institutes in 2002. ASEM The Asia-Europe Meeting (ASEM), which was first held in March 1996, aims to create a new Asia-Europe partnership to build a greater understanding, and strengthen dialogue, between the two regions. The Third ASEM meeting, held in Seoul in October 2000, established the Asia-Europe Cooperation Framework 2000. With regard to economic and financial issues, the Framework aims to focus efforts on strengthening dialogue and cooperation in order to facilitate sustainable economic growth. The key priorities include: intensifying dialogue between economics ministers and senior officials on trade and investment (SOMTI) to strengthen the multilateral trading system and trade and investment flows between Asia and Europe through further enhancement of the trade facilitation and investment promotion action plans (TFAP and IPAP); intensifying dialogue between finance ministers to improve the international financial architecture and to prevent the re-occurrence of financial and economic crises; and enhancing dialogue in the field of science and technology and on key issues relating to the sustained development of the two regions and the global economy. The ASEM meeting also agreed to intensify efforts to increase trade and investment flows between the two regions. In this context, participants asked for further efforts to be undertaken to strengthen existing mechanisms, such as the IPAP, and to develop others in order to strengthen trade and investment ties between Asia and Europe in an open and transparent manner. Japan has been a participant in the TFAP and has served as a facilitator in the priority areas of public procurement and customs procedures. Japan held an ASEM seminar on government procurement in March 2001 to contribute to the TFAP's concrete goals for 2000-02. A seminar was also held on digital opportunities as part of the programme on addressing the digital divide between countries, endorsed by the third ASEM meeting. ASEAN+3 Although not a member of the Association of South-East Asian Nations (ASEAN), Japan, along with China and the Republic of Korea holds regular meetings with ASEAN under the ASEAN+3 framework of cooperation. The high level meetings are held annually; the Fourth and Fifth ASEAN+3 summits were held in November 2000 and November 2001. Others Japan participates in a number of regional initiatives, including cooperation in metrology and measurement standards through the Asia Pacific Metrology Programme and the Asia Pacific Legal Metrology Forum; it also participates in the APLAC (Asia Pacific Laboratory Accreditation Cooperation) to assist in capacity building for developing countries in the Asia-Pacific region. More generally, Japan provides technical assistance for developing countries, particularly in the AsiaPacific region. Bilateral agreements JapanU.S. bilateral relationship The U.S.Japan Enhanced Initiative on Deregulation and Competition Policy (Enhanced Initiative), established under the JapanU.S. Framework for a new Economic Partnership (Framework), in June 1997, has continued efforts by both Japan and the United States to deregulate and increase competition in their respective economies. The Enhanced Initiative has been reorganized and incorporated to a new framework, the U.S.Japan Economic Partnership for Growth, which was established on 30 June 2001. The Partnership aims to "promote sustainable growth by addressing issues such as sound macroeconomic policies, structural and regulatory reform, financial and corporate restructuring, foreign direct investment and open markets"; the Partnership also provides a structure for cooperation and engagement on bilateral, regional, and global economic and trade issues. The structure consists of several fora: the U.S.Japan Subcabinet Economic Dialogue will meet at least once a year to set the direction of the Partnership; the Private Sector/Government Commission, which will include interactions between the private sector and government officials; the Regulatory Reform and Competition Policy Initiative will focus on sectoral and cross-sectoral issues relating to regulatory reform and competition policy; the Financial Dialogue, which will address key macroeconomic and financial sector issues; the Investment Initiative to address regulations and legislation relating to improving the environment for foreign direct investment; and the Trade Forum to address trade and traderelated issues raised by either government. In October 2001, the Automotive Consultative Group (ACG) was established by the Governments of Japan and the United States. The ACG will address trade and trade-related issues, including those relating to regulatory matters and competitive procurement practices in both U.S. and Japanese automotive industries. The ACG will also address relevant policy issues that arise as a result of the changes in the sector, including globalization and technological advances, as well as increasing concerns regarding global environmental issues. JapanEuropean Union bilateral relationship Since its previous Review, Japan has continued to pursue bilateral cooperation with the European Union. At the Tenth JapanEU Summit in Brussels, in December 2001, Japan and the European Union adopted an "Action Plan for EU-Japan Co-operation" to strengthen their bilateral relationship by providing the foundations to build the "Decade of JapanEurope Co-operation", which was declared at the Ninth Summit in Tokyo in July 2000. The Action Plan includes strengthening the economic and trade partnership through, inter alia, implementing the Mutual Recognition Agreement, which entered into force on 1 January 2002. The MRA covers conformity assessment procedures in telecommunications terminal equipment, radio equipment, and electrical products; good laboratory practice (GLP) for chemicals; and good manufacturing practice (GMP) for medicinal products. The Action Plan also calls for strengthening cooperation in information and communications technology. Efforts to be undertaken in this regard include cooperation in: technical, regulatory, and data protection issues; multilateral trade and economic issues, including through the ϲʹ and regional economic and trade policy; and development and poverty alleviation. JapanSingapore Economic Agreement The JapanSingapore Economic Agreement for a New Age Partnership (JSEPA) was signed by the Prime Ministers of Japan and Singapore on 13 January 2002. After a Joint Study Group meeting in 2000, the formal negotiations between the two countries started in January 2001. According to remarks made by the Prime Minister of Singapore at the signing ceremony, the JSEPA will go beyond a conventional free-trade agreement, focusing also on key growth areas such as information and communications technology, science and technology, financial services, tourism, and human resource development. The JSEPA is expected to be applied in the latter half of 2002: once it is in force, the overall simple applied preferential tariff average will be 4.7% including AVEs, and 2.6% excluding AVEs. Many agricultural products have been excluded from the JSEPA. Other areas covered by the agreement include rules of origin, customs procedures, mutual recognition, investment, movement of natural persons, intellectual property, government procurement, competition, services, and paperless trading. Others Since its previous Review, Japan has also made efforts to strengthen bilateral economic relations with other countries, notably Korea, Mexico, Chile, Australia, and ASEAN countries. The "21st Century JapanKorea Economic Relations Study Team", which was set up in December 1998, has since released a joint research report. On the basis of this report and a symposium held in May2000, the Prime Minister of Japan and the President of the Republic of Korea agreed to establish a JapanRepublic of Korea FTA Business Forum in September 2000. The Forum held two meetings, in September 2001 and in January 2002, and released a recommendation that requested the twogovernments to proceed immediately with a comprehensive economic partnership agreement. On the basis of this recommendation, Japan and Korea agreed to establish an industry-government-academia research group (the JapanKorea FTA Joint Study Group) on a JapanROK FTA in March2002. The JapanMexico Joint Study Group on the Strengthening of Bilateral Economic Relations is studying ways to strengthen the bilateral economic relations, including the possibility of a JapanMexico FTA. The final report of the study group is expected to be published in July 2002. In June 2000, a joint study report on a JapanChile FTA was released by the JapanChile FTA Study Group, which comprised academics and leading figures from industry. The report states that an FTA between Japan and Chile would provide an effective means of further strengthening economic relations between the two countries, and that maximum efforts should be made to conclude a JapanChile FTA as soon as possible. The Prime Ministers of Japan and Australia agreed in May 2002 that the two governments would launch high-level consultations to explore all options for deeper economic linkages. Preferential treatments Generalized System of Preferences Japan's Generalized System of Preferences (GSP) scheme grants preferential tariff treatment to certain developing countries under the Temporary Tariff Measures Law. The Government has the authority to voluntarily designate, withdraw, suspend, and limit beneficiaries or products that receive preferential treatment under the GSP scheme. In 2001, Japan extended the effective period of GSP to 31March 2011 and introduced various measures, such as expanding the product coverage of tariff-free and quota-free treatment for goods originating in the LDCs. As a result, all textile and clothing products from LDCs are duty free and quota free. In 2002, Japan added Senegal to the list of LDC beneficiaries. The current GSP scheme grants preferential treatment to 149 developing countries and 15territories for 221 agricultural and fishery products at the HS nine-digit level and many industrial products. The depth of tariff cuts varies depending on products; in case of sensitive industrial products, there are 81 product groups (1,181 items at the HS nine-digit level) to which various preferential rates apply (0%, 20%, 40%, 60%, or 80% of MFN rate) up to specified ceilings; once preferential imports of the good exceed their ceiling, such preference is suspended. The ceilings are open for utilization by all beneficiaries except the LDCs' beneficiaries; however, if preferential imports from one particular beneficiary exceed one fifth of the total value or volume of the ceiling, the preferential treatment for that beneficiary is suspended. Preferential treatment is suspended on a monthly basis when ceilings are reached. Preferential treatment under the GSP scheme is granted on the condition that goods fulfil Japan's GSP rules of origin (Chapter III(2)(ii)). Imports of certain products from the designated LDCs under the GSP programme are eligible for tariff-free and quota-free entry (i.e. suspension of preferential imports over the ceilings is not applied). There are currently 47 LDC beneficiaries. In accordance with a "graduation" rule introduced in 1998, countries or territories currently beneficiaries under the GSP programme may be excluded under certain conditions. Under the rule, 19 beneficiaries have become ineligible for the GSP treatment since 2000, while five countries and a territory have become eligible. According to Japan's FY2001 tariff schedule, 3,389tariff lines at the HS nine-digit level are eligible for preferential treatment for non-LDC beneficiaries, while 4,460 tariff lines are eligible for the special preferential treatment for the LDC beneficiaries. The main beneficiary of GSP is China, unchanged since the previous Review.  MOFA (2001).  There are currently 12 Ministries instead of 22 at the time of the previous Review in 2000. These are: the Prime Minister's Office; the Cabinet Office; Ministry of Agriculture, Forestry and Fisheries; Ministry of Economy, Trade and Industry; Ministry of Education, Culture, Sports, Science and Technology; Ministry of the Environment; Ministry of Finance; Ministry of Foreign Affairs; Ministry of Health, Labour and Welfare; Ministry of Justice; Ministry of Land, Infrastructure and Transport; and the Ministry of Public Management, Home Affairs, Posts and Telecommunications. The METI, which was changed from the Ministry of International Trade and Industry (MITI) in January 2000, is charged with "boosting the economic vitality of the private sector, promoting the smooth development of external economic relations and ensuring a stable energy supply as part of the broad responsibility of facilitating economic and industrial development" (METI, 2000).  It is reported that, under a well established convention, the Liberal Democratic Party committees debate (and can veto) major policies before they are submitted to the Cabinet for approval (Asahi Shimbun [Online]. Available at: www.asahi.com/english/business/K2002022200547.html [22 April 2002]).  In January 2001, the Government introduced a government-wide policy evaluation system to improved the transparency of the Government, to strengthen its accountability to the public, and to improve the quality of public administration. Furthermore, in order to make the Policy Evaluation System more effective and increase public confidence in the system, the Government implemented, on 1April2002, the Government Policy Evaluation Act; all ministries are now conducting their own policy evaluations.  From January 2001, the National Public Safety Commission, National Police Agency, Defence Agency, and the following ministries, published their policy evaluation reports in connection with the FY2002 Budgetary Request and FY2001 Supplementary Budget: Public Management, Home Affairs, Posts and Telecommunications; Education, Culture, Sports, Science and Technology; Health, Labour and Welfare; Agriculture, Forestry and Fisheries; Economy, Trade and Industry; Land, Infrastructure and Transport; and Environment. In addition, the Cabinet Office, Defence Agency, and ministries of Foreign Affairs; Finance; Agriculture, Forestry and Fisheries; and Land, Infrastructure and Transport are to make their policy evaluation results know to the public.  Headquarters for the Administrative Reform of the Central Government (2001).  Based on ϲʹ documents WT/MIN(01)/ST/9, 10 November 2001, and WT/MIN(01)/ST/26, 10November 2001.  ϲʹ document WT/MIN(01)/ST/9, 10 November 2001.  See, for example, ϲʹ document G/AG/NG/W/116, 20 February 2001; Japan's negotiating proposal is contained in ϲʹ document G/AG/NG/W/91, 21 December 2000.  See for example, "Proposal by Japan on the Negotiations on Trade in Services" [Online]. Available at: www.mofa.go.jp/policy/economy/wto/propos0012.html [18 January 2002].  The Annex on Article II exemptions of the GATS states that "in principle such exemptions shall not exceed a period of ten years".  "Proposal by Japan on the Negotiations on Trade in Services" [Online].  In the Working Group on Trade and Investment for example, Japan has highlighted the importance of transparency in international investment rules and has suggested that the ϲʹ may play a useful role in increasing international transparency by acting as a notification point for Members' policies (ϲʹ document WT/WGTI/W/87, 5 July 2000). In the Working Group on Trade and Competition Policy, Japan has urged that developing countries adopt competition policy legislation, which will assist them in meeting their growth and development goals. In this context the Government of Japan had provided technical assistance in a number of areas and has suggested several areas in which assistance could be provided by ϲʹ Members to developing countries (ϲʹ document WT/WGTCP/W/145, 11 September 2000). Using its own post-war development as an example, Japan has argued that the early introduction of competition policy contributed significantly to Japan's development and therefore developing countries need not fear that the introduction of competition policy laws would harm their development goals (ϲʹ document WT/WGTCP/W/157, 3 January 2001). In the Council for Trade in Goods, Japan introduced some of the issues concerning customs procedures in the context of facilitating trade (ϲʹ document G/C/W236, 24October2000).  APEC members are: Australia, Brunei Darussalam, Canada, Chile, China, Chinese Taipei, HongKong China, Indonesia, Japan, Korea, Malaysia, Mexico, New Zealand, Papua New Guinea, Peru, the Philippines, Russia, Singapore, Thailand, the United States, and Viet Nam.  APEC (2000a) and APEC (2000b).  APEC (2001).  ASEM brings together the 15 EU Member States and ten Asian countries (Brunei Darussalam, China, Indonesia, Japan, Korea, Malaysia, the Philippines, Singapore, Thailand, and Viet Nam). Other than the summit meetings (held in March 1996, April 1998, and October 2000), there are regular meetings between Foreign Ministers (February 1997, March 1999, and May 2001), Finance Ministers (September 1997, January 1999, and January 2001), and Economic Ministers (October 1997, October 1999, and 2001). Other groups that meet regularly under the ASEM forum include a senior officials' meeting on trade and investment (SOMTI) and the Business Forum, which brings together private sector representatives from the two regions. "Asia-Europe Cooperation Framework 2000" [Online]. Available at: www.mofa.go.hp/policy/ economy/asem/asem3/framework.html [16 January 2002].  Chairman's Statement at the Third Asia-Europe Meeting, Seoul 20-21 October 2000 [Online]. Available at: www.mofa.go.jp/policy/economy/asem/asem3/statement.html [16 January 2002].  At the Fourth ASEAN+3 Summit meeting held in November 2000, Japan outlined three principles for enhancing open regional cooperation in East Asia, notably by building partnership, through open regional cooperation, and through comprehensive dialogue and cooperation (Prime Minister Mori's Statement at the ASEAN+3 Summit meeting in Singapore, November 24 2000 [Online]. Available at: www.mofa.go.jp/region/asia-paci/asean/conference/asean3/state0011.html [17 January 2002]).  According to the authorities, there is no legally binding bilateral agreement between Japan and the UnitedStates.  U.S.Japan Economic Partnership for Growth [Online]. Available at: www.mofa.go.jp/region/n-america/us/pmv0106/joint_e.html [15 January 2002].  In this context, four sectoral working groups on telecommunications, information technology, energy and medical devices/pharmaceuticals, and a cross-sectoral working group have been established.  "An Action Plan for EUJapan Cooperation", European UnionJapan Summit, Brussels, 2001 [Online]. Available at: www.mofa.go.jp/region/europe/eu/summit/action0112.html [15 January 2002].  Remarks by Prime Minister Goh Chok Tong at the signing ceremony of the JapanSingapore Economic Agreement for a New Age Partnership, on 13 January 2002, Singapore Government Press Release [Online]. Available at: http://app.internet.gov.sg/data/sprinter/pr/weekly/ 2002011305.htm [14 January 2002].  Unless otherwise indicated, this section on GSP is based on Ministry of Foreign Affairs document, "Japan's GSP" [Online]. Available at: www.mofa.go.jp/policy/economy/gsp/index.html [11 January 2002].  In order to qualify for preferential treatment under the GSP, the country or territory must: be a developing economy; have its own tariff and trade system; request preferential tariff treatment; and be prescribed by a Cabinet Order as a country or territory benefiting from GSP treatment.  In terms of tariff preferences for non-LDC beneficiaries, the tariff preferences for agricultural and fishery products are specified in the form of a positive list; all industrial products are granted the tariff preferences except certain goods (consisting mainly of petroleum) in a negative list, and certain goods provided only special tariff preferences for LDC beneficiaries.  The ceilings, which are applied on the basis of fiscal year, are defined as the value or volume of imports to which general tariff preference was applied in the previous fiscal year, multiplied by 1.03.  The process of "graduation" begins with the "partial graduation" process. A particular good of a beneficiary is to be excluded from the GSP scheme if the beneficiary is classified as a "high income country" category in the World Bank Atlas and imports of the particular good from the beneficiary exceed 25% of Japan's total imports of the good and 1billion in value. In addition, a beneficiary becomes ineligible for the GSP scheme if it is classified as a "high income country" category in the World Bank Atlas over three consecutive years. WT/TPR/S/107 Trade Policy Review Page  PAGE 24 Japan WT/TPR/S/107 Page  PAGE 23 Page II. 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