Japan had been a member of GATT since September 10, 1955 and has been a WTO member since January 1, 1995.

The 7th multilateral trade negotiations from 1973 to 1979 were held in Tokyo, Japan. In the Tokyo round, the participating countries discussed the reduction of tariffs. Also, they reached an agreement regarding non-tariff issues, which interprets and clarifies existing GATT rules.

These days, Japan is one of the co-conveners of the WTO Join Statement Initiative on E-commerce. The members expect to reach a substantial conclusion of the agreement by the end of 2023 and Japan has been playing a major role in this negotiation process. Also, Japan is actively participating in negotiations regarding the WTO reforms including a dispute settlement issue.

The trade policy review is conducted every three years, and the 15th review was conducted in March 2023. In this review, Japan’s contribution to the WTO, such as leadership in the E-commerce negotiations and being a first contributor to the fund under the Agreement on Fisheries Subsidies, was highly appreciated by other member countries. Also, member countries, especially developing countries, emphasized the importance of Japan’s efforts in the form of development assistance, such as assistance for trade, generalized system of preferences to LDC, and assistance by JICA.

There are no WTO agreements to which Japan is not a party. Japan is a member state both to the Agreement on Governmental Procurement and the Agreement on Trade in Civil aircraft of Annex 4.

Japan has led the process of crafting high level rules including the liberalization of data flow as one of the co-conveners of the WTO Join Statement Initiative on E-commerce (“Data Free Flow with Trust (DFFT)”). DFFT was proposed by ex-Prime minister Shinzo Abe at the annual meeting in Davos. In Osaka G20 in 2021, the “Osaka Track”, a process to promote international policy discussions for international rule-making on E-commerce and data flow, was declared. In addition, at the G7 Digital and Tech Ministers’ Meeting in April 2023, they confirmed that they would advance international policy discussions to utilize the full potential of cross-border data flows under the banner of DFFT.

On January 20, 2023, the co-convenors of the JSI released a ministerial statement affirming their commitment to achieve a substantial conclusion by the end of 2023.

As for the Agreement on Fisheries Subsidies, Japan became the first contributor to the fund established under the agreement.

Since January 2019, Japan has engaged in four dispute settlement procedures as a complainant (i.e., Korea — Sunset Review of Anti-Dumping Duties on Stainless Steel Bars (DS553), Korea — Measures Affecting Trade in Commercial Vessels (Japan) (DS571/594), India — Tariff Treatment on Certain Goods (DS584), China — Anti-Dumping measures on stainless steel products from Japan (DS601).)

In addition, Japan had engaged in a dispute settlement procedure as a respondent. The case is Japan — Measures Related to the Exportation of Products and Technology to Korea (DS590), which Korea has withdrawn on March 23, 2023.

As for the current status and URL for each case, please see the table below:

Regarding the reform of the dispute settlement system of WTO, Japan has submitted a joint proposal with the EU on “procedures for the lifting of countermeasures,” for the “sequence (determining whether the losing state of a dispute has implemented the recommendations of the Dispute Settlement Body (DSB)”, and for “imposing sanctions on the losing state of the winning state for failing to implement the recommendations.”

Pursuant to the Appellate Body issue, Japan submitted with Australia and Chile in May 2019 a joint proposal including, for example, that “Members confirm that the Appellate Body shall (not review the panel’s fact-finding, but shall) review issues of law”, and “Members confirm that the Appellate Body shall not change the rights and obligations of member states.”

Also, on March 10, the Japanese Cabinet approved Japan’s participation in the Multi-Party Interim Appeal Arbitration Arrangement (MPIA) and notified WTO of its intent to join the MPIA. Therefore, Japan is now one of the parties to the MPIA.

Until recently, Japan had not so been active in regional integration. However, it has changed its policy because major trading partners have concluded economic integration agreements. The key recent FTAs and other agreements currently concluded by Japan and their publication dates are as follows:

Please note that the UK signed onto the CPTTP in July 2023. According to the UK government, it will enter into force by the end of 2024.

The signed FTA that has not yet entered into force is TPP12 covering trans-pacific countries. While Japan signed this agreement in January 2017, the US left it at almost the same time and thus TPP12 will not entry into force in the future. It was dissolved and incorporated into the CPTTP as mentioned above.

Regarding the strategy and the priority for negotiating FTAs, the criteria are (i) economic criteria (the extent to which trade and economic relations with Japan can be increased by the EPA/FTA, the economic scale and the level of development of the partner country, and the economic situation of the partner country), (ii) geographical criteria (especially strengthening the relations within the Asian region), (iii) political and diplomatic criteria, (iv) pragmatic criteria (proficiency of preliminary researches, percentage of sensitive items in trade, etc.), and (v) temporal criteria (Japan’s capacity of negotiating, relationship within the framework of WTO negotiations, etc). In particular, countries with close economic ties but relatively high trade barriers are given high priority, and South Korea is one of the important countries from such point of view.

Current FTAs under negotiation are with Turkey, Columbia, and Japan-China-Korea. It is not sure when they will be concluded and enter into force.

• Japan and Turkey agreed to accelerate discussions toward an early conclusion of the Japan-Turkey EPA in the Japan Turkey summit held on September 20, 2022.
• Japan and Columbia had negotiations from December 2012 to September 2015, and they have been in discussions.
• In the twelfth meeting of the Ministry of Economy and Trade of Japan, China, and Korea, the acceleration of negotiations of a trilateral FTA was stated as a goal. In the eighth Trilateral Summit on December 24, 2019, the parties confirmed that negotiations on the Trilateral Free Trade Agreement would be accelerated, aiming to realize a comprehensive, high-quality and mutually beneficial Trilateral Free Trade Agreement with its own value.

Negotiations with the GCC (Gulf Cooperation Council), Korea, and Canada are currently suspended. In particular, FTA negotiations with the GCC have been suspended since 2009. However, in July 2023, the Kingdom of Saudi Arabia and Japan announced that they would restart FTA negotiations in 2024 and begin preliminary discussions to that end.

The five biggest export partner countries for Japan are the US, China, Korea, Taiwan, and Hong Kong.

The five biggest import partner countries for Japan are China, Australia, the US, UAE, Saudi Arabia.

Major exports are general machinery, transportation equipment such as automobiles, and electrical equipment. Major imports are mineral chemical fuels, electrical equipment, and chemical products.

As international events, these would be the approval of the MPIA by the government, the signing of the CPTTP by the UK, and the implementation of the EU Carbon Border Co-ordination Mechanism (EU CBAM) and the start of the transition period.

As domestic events, these would be the gradual enforcement of the Economic Security Promotion Act, the passage of the GX Promotion Act, and the release of ALPS treated water into the ocean at the Fukushima No.1 Nuclear Power Plant.

The Economic Security Law was enacted in May 2022 to enhance an economic policy for security in Japan. In 2023, the Cabinet approved a basic policy regarding the system for ensuring the stable provision of key infrastructure and the system for keeping patent applications confidential. These regulations are scheduled to be enforced in around the spring of 2024.

The GX Promotion Law, enacted in May 2023, provides for a carbon levy on high-emitting businesses and an emissions trading system which is similar to the system adopted by EU-ETS. A voluntary organization called “GX League” has begun practical activities for voluntary emissions trading recently.

In August 2023, the ALPS treated water from the Fukushima No.1 Nuclear Power Plant accident started to be released into the sea. In response to the release, China has suspended all imports of marine products originating from Japan since August 24, 2023.

The Japanese government released Guidelines on Respecting Human Rights in Responsible Supply Chains in September 2022.

The guideline was established based on the UN Guiding Principles on Business and Human Rights and other international regulations to help business enterprises’ understanding thereof and to promote their efforts by explaining the activities that business enterprises are requested to undertake to respect human rights of the enterprise itself, as well as those of its affiliates and suppliers, etc. The guideline mentions measures to prevent the violation of human rights such as forced labour.

This guideline also mentions that METI will create and publish materials to refer to the guideline in order to provide details on efforts to respect human rights in a more concrete and practical manner. The Japanese government released “Reference Material on Practical Approaches for Business Enterprises to Respect Human Rights in Responsible Supply Chains” in April 2023. The Reference Material provides in-depth explanations and case examples regarding “establishing a human rights policy” and “identification and assessment of adverse impacts on human rights (human rights risks).”

Moreover, measures against global warming in Japan include a system for calculating, reporting and disclosing greenhouse gas emissions based on the Act on Promotion of Global Warming Countermeasures, and each company voluntarily discloses its emissions. The Japanese government has established a guideline on how to calculate supply chain emissions. Also, it has established Carbon Footprint Guidelines for calculations and verification of carbon footprints, the compliance of which ensures the appropriate veracity of reported carbon footprints.

In some FTAs, such as with Viet Nam and Peru, the environmental issue is also specified in the basic principles of trade and investment promotion. In addition, the Japan-Switzerland EPA specifically provides the promotion of trade in environmental products and services. The Japan-EU EPA stipulates the recognition of the importance of promoting the development of international trade in a manner that contributes to sustainable development, taking into account the outcome documents on the environment and labour.

With respect to on-shoring, the Economic Security Promotion Act was enacted in May 2022. In this Act, Chapter 4 specifies a system regarding the development and support for important areas of advanced technologies, such as space, ocean, quantum, and AI. Under the Act, necessary information and/or funds will be provided for such areas.

This issue is not addressed in FTAs or other international agreements concluded by Japan.

In Japan, the legal regime governing trade sanctions is stated under the Foreign Exchange and Foreign Trade Act. The purpose of this Act is to enable the proper development of foreign transactions and the maintenance of peace and security in Japan and in the international community through the minimum necessary control or coordination of foreign transactions.

If a person intends to carry out the export or import of specific kinds of goods to/from specified regions, permission or approval from METI is required.

With respect to the crisis in Ukraine, the Act and relevant rules specifies the regulation of payments, capital transactions, and export and payments to Russian banks, and exports to Russia are restricted under these rules and regulations.

In Japan, trade remedies including anti-dumping duties, countervailing duties and safeguard measures are used. The largest number of investigations has been conducted on anti-dumping duties, with 13 investigations having been initiated so far, one of which is currently under investigation. There are many investigations on materials and chemical products such as hot dip galvanized iron wire and potassium carbonate. In 2006, countervailing duties were imposed on Hynix DRAMs, and in 2001, safeguard measures were imposed on three agricultural products: green onion, raw bamboo shoots and rush.

Based on the WTO Agreement, the Customs Tariff Act stipulates the requirements for anti-dumping duty measures (Article 8), countervailing duty measures (Article 7) and safeguard measures (Article 9). The investigation procedures for each of these measures are also provided for in the Act, and in the Cabinet Orders on Anti-Dumping, Countervailing Duties and Emergency Tariffs, etc.

For these measures, the Ministry of Economy, Trade and Industry (METI), the Ministry of Finance (MOF) and other relevant ministries in relation to the industry regarding the subject products hold a conference and make decisions to initiate investigations. Such investigations are carried out by an investigation team constituted by METI, MOF and other relevant ministries.

In practice, the Office of Trade Remedy Affairs, Tariff Policy and Legal Division, Customs and Tariff Bureau of MOF and the Office of Special Customs etc. Investigations, Trade Control Department, Trade and Economic Cooperation Bureau of METI investigate cases and also provide consultation services to domestic manufactures. The results of an investigation are reported at the above-mentioned conference and thus it becomes one of the important sources of evidence for these decisions.

(a) Application procedure

Domestic producers may submit an application for anti-dumping measures and/or countervailing duty measures to the authorities with sufficient evidence to prove substantial damage to domestic industries (“sufficient evidence” can be “evidence based on reasonably available information”). On the other hand, the government has discretion to conduct an investigation as for safeguards measures.

Once MOF, METI and other relevant ministries in relation to the industry decide to initiate an investigation, a questionnaire is sent to the applicant. During the investigation, additional evidence and explanations might be requested Thereafter, following a provisional decision and disclosure of material facts to interested parties, a final decision on taxation is taken to impose anti-dumping customs duties and/or countervailing duties. On the other hand, as for safeguards measures, consultations are held with interested countries, and if it becomes necessary to implement such measures, compensatory negotiations are conducted with the interested countries and final safeguard measures are implemented.

(b) How to participate by foreign producers

When a decision is taken to initiate an investigation, MOF must notify interested parties, including exporters and producers, in writing, including the name of the applicant, the goods involved in the investigation, the period of investigation and the matters to be investigated, and publish the notice in the Official Gazette.

Interested parties may inspect the answers to the questionnaire except for confidential information, and may submit evidence and express their opinions on the questionnaire. As for anti-dumping duty measures, they may also seek cross-witness examinations with interested parties who have conflicting opinions. On the other hand, as for safeguard measures, public hearings may also be held in which interested parties can participate.

Exporters in relation to anti-dumping duty measures and countervailing duty measures may offer a price commitment after a provisional decision.

No specific circumvention or evasion of trade remedies are stipulated under Japanese law.

However, in the case of countervailing duty measures against Hynix DRAM, it was decided that the latter would be subject to the measures if a part of the manufacturing process, which requires huge equipment costs, is carried out in South Korea. This means that even if the remaining processes were transferred to another location, they are not treated as exempt from countervailing duties. This decision was made taking into account the issue of circumvention or evasion of trade remedies.

Moreover, in general, a fraudulent exemption from customs duties may result in a post-investigation (Customs Act, Article 105) or investigation and disposition of criminal cases (Customs Act, Chapter 11). Furthermore, there are penalties under the Customs Act for evading customs duties by deception or other fraudulent acts (Article 110(1)).

Under Japanese law, the substantive legal requirements for the application of remedies are “where there is a fact that the import of goods … sold at an unfair discount … causes substantial damage … to Japanese industry …, and it is considered necessary to protect the Japanese industry” (Customs Tariff Act, Article 8(1)). In other words, the requirements are (i) existence of an unfair trade, (ii) substantial damage to the Japanese industry, (iii) causation between (i) and (ii), and (iv) the need to protect the Japanese industry.

If these requirements are satisfied, the government can impose a duty “not exceeding an amount equal to the difference between the ordinary price of the goods and the price at which they were sold at an unfair discount…” (Customs Tariff Act, Article 8(1)), and this means that a lesser duty rule is applied in this regard.

In addition, as mentioned above, anti-dumping duties can be imposed if it is “necessary to protect the Japanese industry” and, in the investigation procedure, “industrial users or major consumers’ associations of the goods concerned” are also allowed to express their opinions (Cabinet Order on Unfair Duties, Article 12-2, Paragraph 1). These factors clearly show that the need to protect the public interest is also examined.

Under Japanese law, no special appeal procedure is stipulated for trade remedy measures. As with other administrative measures, a claimant will file the case with the court under the Administrative Case Litigation Act either on the final decision or upon the taking of individual taxation measures by the authorities.

In 2006, Japan handed down a countervailing duty decision on semiconductors manufactured by SK Hynix, a South Korean company, whereupon South Korea requested consultations and a panel was established at the WTO. The report by the Appellate Body found that some of Japan’s measures did not comply with the WTO Agreement, and Japan changed the amount of the countervailing duty in 2008 based on the WTO’s recommendations.

Japan has only been a respondent country in the above-mentioned case of trade remedy measures. On the other hand, when Japan is a claimant, the counterparty is often China, South Korea or the US.

The Customs and Tariff Bureau of the Ministry of Finance is responsible for enforcing customs laws and regulations.

In detail, the Office of Trade Remedy Affairs is in charge of special customs duties and carries out investigations on them.

The Customs Clearance Division is in charge of assessment and the collection of customs duties, the calculation of the taxable value, and the licensing and approval of imports and exports of goods.

The Post Clearance Audit, Investigation and Intelligence Division is responsible for investigation, disposition and information-related affairs of criminal cases under customs laws and regulations.

Taxpayers and other interested parties may request in writing that they be informed of the classification for the purpose of the application of the Appended Table of the Customs Tariff Act (the Tariff Schedule), the applicable rate of customs duty, the basis for duty assessment pertaining to import goods, etc., and Customs must reply to the inquiry in accordance with Article 7(3) of the Customs Act, which is known as the advance instruction system.

A request for re-examination may be made to the Director-General of Customs (Customs Act, Article 89(1)). This request for reinvestigation must be made within three months from the day following the day on which the notification of the customs decision is received (Administrative Complaint Review Act, Article 54(1)). Further request for review may be made to the Minister of Finance within one month from the day following the date of service of the decision (Administrative Complaint Review Act, Article 18(1)).

A dissatisfied party may file with the court after the above review. This must be done within six months from the day on which a certified copy of the decision is served (Administrative Case Litigation Act, Article 14(1)).

It can be found on the Japan Customs’ website.

See https://www.customs.go.jp/english/tariff/2023_04_01/index.htm

a.
Japan introduced the AEO programme for exporters in March 2006.

b.
Japan has introduced MRAs with countries such as China, Taiwan, Hong Kong and South Korea.

c.
There are no tariff suspension measures on any goods imports. On the other hand, there is a tariff quota system as described in (d) below.

d.
Japan has a tariff quota system under which duty-free or low tariff rates are applied within a certain quantity range to ensure the supply of cheap imports to consumers (Customs Tariff Act, Article 9-2).

There are five types of bonded areas where goods can be stored, processed or displayed while customs duties are withheld: (i) designated bonded areas, (ii) customs warehouses, (iii) customs factories, (iv) customs display areas and (v) integrated bonded areas.

(i) Designated bonded areas are designed to simplify and expedite customs procedures and allow for the loading, unloading, transport and temporary storage (in principle, one month) of foreign goods (Customs Act, Article 37).

(ii) Customs warehouses are designed to facilitate trade and the development of transit trade, and are capable of loading, unloading, transporting and storing foreign goods (in principle for two years) (Customs Act, Article 42).

(iii) Customs factories are for the promotion of processing trade and are capable of processing and manufacturing foreign goods (Customs Act, Article 56).

(iv) Customs display areas are intended to facilitate the operation of international expositions and exhibitions of foreign goods organised by public authorities, etc., and are capable of displaying and using foreign goods (Customs Act, Article 62-2).

(v) Integrated bonded areas are areas where the various functions of each of the above bonded areas can be used comprehensively (Customs Act, Article 62-8).

There are no scrutiny and transparency arrangements before and during negotiations for a trade agreement.

The Cabinet must obtain the approval of the Diet before or after concluding treaties (The Constitution of Japan, Article 73(3)). Although the Cabinet may conclude administrative arrangements without Diet approval, trade treaties are not considered as administrative arrangements and thus they require the approval of the Diet. The government usually submits a signed treaty to the Diet, and if it is passed by both Houses of the Parliament, it thereby is ratified by the country.

There are no such procedures in Japan.