Does Japan Need a Trade Barriers Regulation?

Date March 25, 2005
Speaker Marco C.E.J. BRONCKERS(Partner, Wilmer Cutler Pickering Hale and Dorr LPP)
Moderator YAMASHITA Kazuhito(Senior Fellow, RIETI)
Materials

Summary

Transcript 2

It is not my intention to clearly tell Japan whether or not it needs a trade barriers regulation (TBR). However, I was a bit puzzled and intrigued when I realized that of the four major trading powers in the world-the United States, the EU, China and Japan-it is only Japan that does not have such procedures, and I wondered why that should be the case.

A TBR is a procedure that allows private companies and industries to go to their government or to a specific agency within their government to report a market access barrier abroad and ask the government to deal with it, subject to due process standards that the company is entitled to. This is the type of complaint procedure that has existed in the United States since 1974. In the EU, there has been something similar since 1984, and since 1994 it has been known as the Trade Barriers Regulation. Most recently, China has adopted similar procedures, which were revised as of March 1.

Some of the considerations from a government perspective in establishing a certain procedure include a number of operational concerns and one major policy concern. In terms of operational concerns, the first is that private interests in the international trading system should be accommodated and to make sure that the private sector feels encouraged in their commitment to further trade liberalization in their home market. So it could be said to be a gesture of goodwill on the part of the government to the private sector. It is also a way to channel the disposition of such a complaint more efficiently from a governmental management perspective. It could also be a way in which just one agency coordinates internally the process of investigating these complaints and one agency that communicates with trading partners about resolving the complaint. However, there is also a cost from the government perspective. If such a procedure is in place, there will also be less discretion on the part of government to deal with such private complaints.

The Japanese government has been reluctant about implementing such a procedure, although the private sector has become increasingly vocal in its requests to the government to establish one. The Nippon Keidanren paper published last year formalized the idea.

So is there another consideration that Japan, from a governmental perspective, could take on board? When the United States put its policy in place in 1974 and when the EU put their procedure in place in 1994, in both instances it meant that the United States and EU were signaling to their trading partners that they were going to be more offensive in their pursuit of trading rights. This stance was quite characteristic of the U.S. in trade negotiations. However, it was significant for the EU, when it established the Trade Barriers Regulation, to say that they were also going to be on the offensive, as it was quite a change in the EU position. So that raises an interesting question as far as Japan is concerned.

My impression is that for a long time, even after the establishment of the WTO, Japan was not necessarily the most assertive or aggressive member of the WTO community. It did not allow other countries to play with its interests, but it was not always in the front line in asserting its interests and rights. There may have been some remnants of the 1960s, '70s, and '80s, in the early days of GATT, when the general impression was that Japan was never going to be very aggressive in enforcing rights, because Japan was benefiting from the system. However, that has changed. It is no longer true that Japan is seen to be the beneficiary par excellence of the world trading system. So that could no longer be a reason for Japan to be more modest in its claims than it used to be.

The recent announcement of the Japanese government last February to the EU would seem to indicate that Japan is going on the offensive. Japan has gone on record saying that if the EU adopts the legislative project on the treatment of chemicals in the way it has been drafted, it will challenge the EU in the WTO. This may be one case, but if one adds up Japan's role in the trading system, it is possible to say that Japan is close to signaling that it also will assert its rights when it feels that they are being infringed. The question arises of whether there any better way to signal this assertiveness to domestic industries than adopting a Japanese trade barriers regulation? That is really the question at hand.

*This summary was compiled by RIETI Editorial staff.