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U.S. Statement at the WTO Trade Policy Review of Japan
March 8, 2017

Statement by the U.S. Representative
March 8, 2017

– As Delivered –

Thank you, Chair.

On behalf of the United States, I am honored to participate in Japan’s thirteenth Trade Policy Review.  I would like to welcome the Japanese delegation, led by Mr. Tomochika UYAMA. We thank the Japanese delegation for collaboration at the WTO on a daily basis, and thank you also for Japan’s work to provide answers to our written question.  I would also like to recognize the Secretariat’s excellent work in the preparation of its report, as well as the efforts of the Government of Japan in explaining Japan’s trade policy considerations and developments since the last Japan Review.  And we appreciate the remarks by our discussant, Ambassador Braithwaite.

Japan is a vital strategic and economic partner to the United States, and a key nation in world trade.  As the Secretariat Report notes, Japan is the world’s fourth-largest exporter and importer of goods and services.  President Trump and Prime Minister Abe held their first official meeting in Washington DC last month and in their Joint Statement affirmed their strong determination to strengthen the U.S.-Japan economic relationship.  They noted that “the United States and Japan represent 30 percent of the world’s GDP and share an interest in sustaining a strong global economy, ensuring financial stability, and growing job opportunities.”  The leaders “emphasized that they remain fully committed to strengthening the economic relationships between their two countries and across the region, based on rules for free and fair trade.”  Also, they “reaffirmed their intent to continue cooperation in regional and global fora.”

Within the WTO, the United States highly values its close working relationship with the Government of Japan.  In the two years since the last Trade Policy Review, Japan has continued to undertake structural reforms to boost domestic growth to the benefit of Japan and the entire global trading community.  The United States applauds these efforts.  But, unfortunately, Japan’s economic performance has remained sluggish, with real GDP contracting by 0.03% in 2014 and expanding only by 0.5% in 2015, as noted in the Secretariat’s Report.  Likewise, despite efforts to attract foreign investment, in 2015 the stock of inward foreign direct investment remained at about four percent of GDP, which continues to be low compared to other major developed economies.  The Japanese government has set a goal of doubling inward foreign direct investment by 2020 that, while certainly ambitious, may prove difficult to achieve.

Meaningful structural reforms in Japan will help address global trade imbalances.  In this regard, the U.S. goods trade deficit with Japan was $68.9 billion in 2016, second only to China.  This ongoing goods deficit remains of serious concern to the United States.

Prime Minister Abe has highlighted a number of areas for reform, including ones relating to corporate governance, medical care, and labor markets.  We remain hopeful that the Abe administration will continue to undertake ambitious domestic regulatory reforms to create new economic opportunities and further open Japan’s economy.

Although Japan’s industrial tariffs are generally low, significant non-tariff barriers remain. As a result, the United States continues to look to Japan to take new, bold steps to increase transparency, reduce unnecessary regulation, and remove other non-tariff barriers to trade.

In particular, the United States has expressed strong concerns for years about the overall lack of access to Japan’s automotive market for U.S. automotive companies, due to non-tariff barriers.  A variety of non-tariff barriers impede access to Japan’s automotive market (such as issues relating to certification; unique standards and testing protocols; and hindrances to the development of distribution and service networks).  These non-tariff barriers have had the long-term effect of excluding and disadvantaging U.S. manufacturers in the Japanese market.  The United States urges Japan to remove non-tariff barriers that impede U.S. manufacturers’ ability to compete on a level playing field with their Japanese competitors, both in the area of automobiles and beyond.

Another priority for the United States is agriculture.  Although Japan is the fourth-largest single-country market for U.S. agricultural products, substantial market access barriers still remain.  Prime Minister Abe has pursued serious reforms aimed at increasing the efficiency and competitiveness of this sector.  Nevertheless, as the Secretariat Report observes, Japanese agriculture remains highly protected, with some of the highest import tariffs in this sector, and imports of certain key agricultural products are carried out by state trading enterprises.

Finally, the United States urges Japan to ensure transparent and fair opportunities for foreign companies to compete for government procurement contracts.  According to the Secretariat Report, in 2014 foreign participation in Japan’s government procurement remained only about three percent in value.

Notwithstanding the particular concerns we have raised, the United States acknowledges and welcomes Japan’s broad support for expanding global trade and supports concrete measures by Japan to contribute to this goal by undertaking further, aggressive structural reform and further market opening at home.  The United States looks forward to continued close cooperation with the Government of Japan in working towards these goals.

Thank you.