U.S. Statement at the Trade Policy Review of Japan

Trade Policy Review of Japan

Statement by David Shark

U.S. Deputy Permanent Representative to the WTO

Geneva

February 15,  2011

– As Delivered –
Thank you, Chair.

On behalf of the United States, I welcome this opportunity to participate in Japan’s tenth Trade Policy Review. I also wish to welcome members of the Japanese delegation, led by Mr. Takehiro Kagawa, Deputy Director-General of the Economic Bureau in the Ministry of Foreign Affairs. We also would like to recognize the Secretariat’s commendable work in preparing its report, and thank the government of Japan for the time and attention it paid to preparing an informative report to help Members understand Japan’s trade policy considerations and developments since its 2009 Review. The United States would also like to welcome Ambassador Smidt and thank him for his time and his insightful contributions to the process of ensuring that Japan’s TPR is enlightening and productive.

Even as there has been much change in Japan, and in the global economy, since Japan’s last Trade Policy Review in 2009, certain fundamental factors remain unchanged. Japan remains a key player and partner in the international trading system. For the United States, Japan remains our 4th largest trading partner. Japan also has been vigilant in helping avoid a substantial slip backwards into protectionism within the global trading system. This is a concern where the United States and Japan continue to stand shoulder to shoulder.

As an energetic host of APEC in 2010, Japan has again demonstrated its readiness to promote steps that further advance the goals of open trade and investment both regionally and globally. In the same vein, Japan has made important contributions in advancing ambition in the industrial goods and services negotiations under the Doha Development Agenda.

There are also signs of new and important changes afoot. The United States in particular applauds the bold vision recently outlined by Prime Minister Kan and his Government to “open Japan” as a tool to promote Japan’s economic revitalization. This effort to address the unfinished business in Japan’s own process of trade and market liberalization is a welcome and laudable call to action.

At the same time, the Secretariat has pointed out that since Japan’s 2009 review, Japan “…has introduced few measures aimed at further liberalizing its trade and trade-related regime (p.vii).” A similar observation was made in the Secretariat’s 2009 review of the preceding two years. Expectations are therefore high that with Prime Minister Kan’s announcement, Japan will now move beyond the inertia that the Secretariat has noted over the past several years.

The concrete steps that are taken to “open Japan” are of great interest to the United States, as well as other Members. Some of Japan’s greatest contributions to promoting an open trade and investment regime across the globe reside in actions Japan is prepared to take itself – steps that effectively open Japan to the world. This includes a willingness to remove highly protective tariffs, particularly in the area of agriculture. It also means a preparedness to remove the myriad of non-tariff measures and other preferences that have the cumulative effect of distorting competition and creating significant barriers to trade and investment across a broad array of industry sectors.

The United States has high expectations that through this process of “opening Japan,” Japan will address serious market access concerns. One priority for the United States is the need for Japan to ensure a level playing field between the private sector and Japan Post in the insurance, banking, and express delivery sectors. I know this is a concern shared by other Members. Another priority area is for Japan to ensure that its import measures for agriculture products and food are scientifically-justified based on international standards, guidelines or recommendations in accordance with the WTO SPS Agreement. Specifically, it is important for Japan to bring its import measures into conformity with international standards and guidelines established by CODEX and, particularly for beef and beef products, the World Organization for Animal Health (OIE). Both concerns were identified in the last U.S. statement on Japan’s Trade Policy Review at this forum, but there has been no forward movement in either area.

Further improvements are also sought from Japan across additional areas as well. These include removing barriers to create truly open access to Japan’s automobile market, improving transparency in the regulatory process, and taking steps to ensure Japan’s information technologies and communications market is open and promotes fair competition. It is also important for Japan to take meaningful steps that improve access by foreign suppliers to Japan’s government procurement market. This means tackling issues such as the extensive use of single tendering, bid-rigging, and a lack of transparency in qualification requirements.

The Secretariat points to the fact that Japan continues to keep large sections of its agriculture sector protected from trade. To date, the United States has consistently indicated in the fora on Regional Trade Agreements its concern with the extent of Japanese tariffs that are not changed by Japan’s bilateral and regional free trade agreements. The practical effect of leaving such a large percentage of tariff lines untouched is to create weaker free trade agreements that, in many cases, leave Japan’s market less open than its agreement partner or partners. As a WTO matter, we wonder how Japan’s RTAs can be explained in light of GATT Article XXIV.

The United States is therefore encouraged that Japan has begun a domestic discussion on steps to help Japan maintain a viable agriculture sector that may better enable this sector to co-exist with substantially greater openness to international trade in agricultural products. Addressing this challenge successfully will enable Japan to show greater leadership on trade issues overall in bilateral, regional, and multilateral negotiations.

Japan is also looking forward to new opportunities for trade agreements. Of specific interest to the United States is Japan’s interest in the Trans-Pacific Partnership, a high-standard agreement that the United States and eight other Members are jointly pursuing. My Government has welcomed Japan’s interest in this important initiative, and we are aware of Japan’s domestic deliberations to consider its preparedness to seek participation. How Japan faces challenges such as those I have identified in the effort to “open Japan” are integral to Japan’s ability to achieve the type of high-standard FTA that the TPP partners are pursuing.

Other steps are also important. We welcome Japan’s support in APEC to build upon and expand the momentum created during Japan’s 2010 host year, and we look forward to having Japan as a partner in the effort to promote a more open trade and investment regime across the Asia-Pacific. We also urge Japan to take steps to implement, in the very near term, the 4th update of the WTO Pharmaceutical Agreement, thereby joining all the other participants to the Agreement, including the United States, that have recently implemented the new list of products afforded tariff free access. It is also vital that as Japan promotes new growth sectors, it does so in a manner that is fully open to international competition and does not provide preferential treatment to domestic interests in a manner inconsistent with the scope and spirit of Japan’s WTO commitments.

I would like to reiterate our appreciation for Japan’s active participation in the Doha Round negotiations. I would also like to emphasize that we continue to value our close work with the Japan government and our WTO partners to strengthen and build on the WTO’s rules-based and cooperative foundation. But more work is needed to reach a balanced and ambitious conclusion to the Doha Round. We expect Japan, in particular because of its significant fisheries sector, to contribute constructively in achieving an ambitious outcome in the Doha fisheries subsidies negotiations. To achieve a Doha outcome that results in the global economic growth necessary to spur development, all key players will need to make meaningful market-opening contributions.

In closing, the United States appreciates the efforts made by Japan in regional and multilateral fora to promote the expansion of global trade, as well as the support that Japan has shown to maintain an open global trading regime. The United States is also greatly encouraged by a new preparedness by Japan’s Government to examine ways it can further open its market, including in traditionally sensitive sectors. By taking bold decisions on this front, Japan will greatly contribute to the cause of open trade and also play a stronger leadership role in promoting free trade across all sectors.

The United States looks forward to a continued close partnership with Japan in all these areas.

Thank you