Japan Summary
As the world's second largest economy, Japan has recently been implored and encouraged by the WTO Director General to assume a greater leadership role alongside the United States and European Union in guiding multilateral trade talks. Japan has historically tended to join with the EU and the US in championing free trade but has since late 2001 come to disagree with one or both of its western counterparts on key issues such as antidumping laws and agricultural policy. Despite its apparent moves to protect its export industries, Japan considers it to be in its best interest to strengthen the World Trade Organization, preventing the global economy from being divided into regional blocs. While the US aims to conclude a free trade pact in the Americas and the EU continues to expand, Japan remains excluded from a viable regional trade framework.
Competition, Antidumping, Trade in Services
The Japanese government considers antidumping provisions to be unjustified trade restrictions, harmful both to its own economy and to those of developing countries. This issue has been Japan's most severe disagreement with the United States, with the Japanese accusing the Americans of protectionism, especially toward steel as of Fall 2001, and the US singling out Japan as "the world's largest dumper." Japan has taken a leading role in pushing for a comprehensive review of WTO rules on antidumping policy, calling for a new emphasis on consumer interest. Japanese exporters argue that importing countries tend to ignore the consumers' interest when they levy antidumping tariffs to protect domestic industries.
Japan has also been faced with a number of important competition issues as other countries challenge the seriousness of its intent to live up to international obligations under the WTO's General Agreement on Trade in Services (GATS). Points of contention include Japanese subsidies to fishery industries, as well as the unfair tax advantage provided to its largest domestic provider of insurance at the expense of U.S. and other foreign life insurance companies.
Agriculture
Several WTO member-country officials have objected to Japan's and the EU's alleged efforts to retain protection for their own farmers by slowing the pace of the agricultural negotiations on the organization's built-in agenda. Japan and the EU posit that agriculture, unlike manufacturing industries, plays 'multifaceted' social functions that justify protecting
the nation's domestic agricultural industries. Japan supports liberalization of farm trade via a more flexible "Uruguay Round" formula of combining minimum and average tariff
cuts -- Agreements on sensitive crops could thereby be negotiated independently and need not in themselves derail a larger trade agreement. The US and other agricultural exporting countries, however, want to see a sharp reduction of import tariffs on all farm products. Since the deadline for agreement on the outline of new trade liberalization in agriculture will fall in advance of other negotiation deadlines, Japan must first consent to liberalizing its agricultural trade, and later seek concessions from others on issues like non-agricultural products and kicking off talks on investment rules. A national consensus needs to be formed as soon as possible on what should be liberalized and what should be protected.
Environment
Japan has been cautiously supportive of WTO efforts to negotiate environmental standards, but has come to side with the EU on the position that multilateral trade measures aimed at protecting the environment and endangered species do not run counter to WTO rules. Japan will propose authorizing the Convention on International Trade in Endangered Species of Wild Fauna and Flora, as well as the Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposal. Furthermore, it will recommend a case-by-case approach to examine the compatibility of measures under the Montreal Protocol on Substances that Deplete the Ozone Layer and regional fisheries agreements.
Investment Rules
Japan has strongly called for the establishment of multilateral investment rules under the WTO. India and many developing nations, however, are opposed to backing such a proposal, concerned that investment regulations would embroil them in WTO dispute settlement cases that could force them to adopt drastic legal reforms. A declaration issued at the end of the Doha meeting in November 2001 stopped short of launching talks on investment rules; however, the WTO ministers are scheduled to decide by explicit consensus on 'modalities' of negotiations for international investment rules next fall at the fifth WTO ministerial meeting in Cancun.
Conclusion
Having formerly posed many restrictions on foreign companies, the Japanese government has begun to relax its trade policies after several years of recessionary pressures including deflation, jittery consumers and weakening exports. It will risk jolting the economy again as it takes on the challenge of cleaning up bank loan books notoriously ridden with bad debts. On November 6, 2002 Japan's trade policy and practices will be subject to the rotational WTO Trade Policy Review process in which all member-countries subject the representatives of the examinee country to questions and criticism regarding perceived non-compliance with the world trade regime in letter and in spirit.
Last
updated October 2002
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