Implementation of the Uruguay Round commitments is an international legal obligation of the members. As each country advances domestic procedures and firmly implements these commitments, it will increase the credibility of this young international organization, established only two years ago. Furthermore, it is extremely important that each country fulfill its obligations in order to expand the multilateral free trade system, which is the consensus of all members. The Japanese business community strongly calls upon the governments of all countries to firmly implement their Uruguay Round commitments. Similarly, we expect that each country's determination to implement its commitments will be clarified in the Ministers' Statement to be issued at the Singapore Ministerial Conference, and for the importance of those commitments to be reconfirmed.
Since the establishment of the WTO, there have been some cases such as Brazil's investment measures, Indonesia's automobile policies and others which seem to be inconsistent with WTO principles. We find it extremely regrettable that measures which are thought to be contrary to the Agreement have been taken. Although the final solution should be sought through WTO dispute settlement mechanism, we strongly hope to see prompt improvement realized in any barriers to business activities. Furthermore, we are concerned about the initiation of anti-dumping measures in Europe and the United States, the application of rules of origin in NAFTA and the EU, and other protectionist measures which are contrary to the spirit of the WTO. These measures create barriers to doing business and greatly damage the momentum of the WTO members to expand the multilateral free trade system. They must be corrected.
The Japanese business community welcomes the efforts to achieve deregulation made by Japan, a participant in the agreement reached through the negotiations in the financial services sector.
This Agreement establishes new standards of review to be applied only for dispute settlement related to anti-dumping actions. As a result, limitations are placed on the authority of dispute settlement panels and senior committees vis-a-vis decisions taken by domestic investigative authorities of each country. For example, in cases in which two or more interpretations exist for a clause in the Agreement, the interpretation selected by the domestic investigative authority is recognized. Another look at standards of review is to take place three years after the effectuation of the WTO Agreement, and consideration is to be given to the introduction of dispute settlement procedures related to other agreements. However, in order to prevent arbitrary application of anti-dumping measures by member countries and to ensure the sound functioning of the dispute settlement mechanism, we have expressed strong opposition to applying the standards of review to other agreements and call for their total abolition in the WTO Agreement on Anti-dumping Measures.
It is extremely unfortunate that Japanese corporations have been damaged as a result of arbitrary application of anti-dumping measures. Specific examples follow.
Furthermore, there are great differences in the content of dumping investigations conducted by each country and there is a tremendous burden of administrative expense necessary to meet the need to submit documents in a short period of time. We hope that international coordination of each country's anti-dumping rules will take place in the future in order to resolve these issues. We also hope that anti circumvention measures which is not mentioned in the current Agreement should be established promptly.
Looking ahead to the review of the WTO Dispute Settlement Understanding and Procedures scheduled to take place before the end of 1998, and with a view to responding to the increasing number of drafts, the Japanese business community hopes to see the following.
Japanese corporations face non-transparency in rules of origin and arbitrary application of those rules in regional economic integration, including NAFTA and the EU. There are many cases in which several regulations exist for each product. This creates a barrier to doing business. We hope that the harmonizing efforts in the WTO and the Customs Cooperation Council focusing on rules of origin will increase the transparency and objectivity of rules of origin determinations and thereby contribute to resolving this issue.
The differences of opinion between advanced countries and developing countries stand out in regard to this issue. For example, the WTO Agreement does not clarify in its text whether or not environmental protection meets the criteria for a general exception to free trade rules. The EU has indicated that it would like the text amended to include environmental protection, stating clearly that trade measures for the purpose of environmental protection are legal. On the periphery, there are some countries (developing and otherwise) which represent a clear difference of opinion on this matter; they oppose using trade measures to protect the environment, and assert that truly necessary trade measures should be implemented by way of waivers. The Government of Japan has proposed that a set of guidelines be added to supplement the main text in an effort to achieve a constructive solution to this matter, and Keidanren appreciates this effort. We also hope that the Government of Japan will further contribute to this debate by demonstrating how economic growth via free trade is vital to the promotion of environmental protection.
The issue of eco-labels is plagued with inconsistency borne of the differing implementation standards maintained by various countries and regions, and could easily become a trade barrier in some cases of implementation. The International Organization for Standards (ISO) is reviewing the international standardization of interpretations and methods of evaluation, and we recommend that the WTO respect and consider the results of this activity. Furthermore, there are examples of unilateral import restrictions which are applied to foreign goods based on Processes and Production Methods(PPM) regulations (domestic regulations introduced by various countries either as product regulations or labels focusing on reducing the environmental impact of particular items' production processes or manufacturing methods). Implementing unilateral trade restriction measures as a response to trans-border pollution resulting from production processes, or from global environmental pollution, is not recommended from the perspective of maintaining and developing the open trading system. A solution to this matter should be arrived at based on policy discussions guided by a fixed set of rules, and by multilateral environmental cooperation, while simultaneously respecting the fundamental most-favored-nation and domestic citizen treatment principles of the WTO Agreement.
The Agreement on Trade-Related Investment Measures (TRIMs) and the General Agreement on Trade in Services (GATS) under the WTO Agreement do not provide comprehensive rules on investments, and the time has come for member countries to consider the investment issue within the WTO paradigm of trade expansion.
The unresolved investment-related issues facing Japanese corporations include (1) income tax, pension, visa acquisition and other issues involved in the movement of company employees which is so important to the investment process, (2) investment measures, corporate taxes and other domestic measures of countries, (3) product safety, standards and approvals, and (4) guaranteed stability of fund transfers. All of these areas comprise barriers to promoting smooth economic interaction. While they cannot all be resolved within the WTO, it is necessary to discuss the issue of fostering a smooth investment environment with these issues in mind.
In the area of international investment, negotiations are underway in relation to the OECD Multilateral Agreement on Investment, in which Japan is a participant. These negotiations are expected to contribute to indicating the direction which international investment should take, but they are focused on discussions among advanced countries. From the perspective of future development for the entire world economy, we believe it would be valuable for a review of international trade and investment to begin within the broader membership framework of the WTO, by taking the opportunity of the Singapore Ministerial Conference to create a working group. Furthermore, Japan should seek the understanding and active participation of developing countries in the area of trade and investment while taking into account the MAI discussions.
As is apparent from points elsewhere in this document, through Japanese corporate activity and the corporate activity of other non-member countries, there are, unfortunately, many cases of regional economic integration straying from the spirit of the WTO. Keidanren requests that the integration schemes of these regional economic frameworks be revised to be consistent with the spirit of the WTO.
For years, countries have made efforts in the area of labor standards within the framework of the International Labour Organization (ILO). The results of such efforts should be respected, efforts to ensure that the ILO Convention is followed should be made, and international programs focused on the ILO should continue. Also, the Asia-Europe Meeting (ASEM) and other forums of international dialogue should be utilized to promote understanding and discussion regarding this issue, in order to eliminate the concerns of some European countries that their own domestic unemployment problems are the result of a sharp rise in imports from Asian and other countries.
Discussion of competition policy at the WTO should not be overly weighted on reviews of trade measures which use this as a justification, but should also include a consideration of what competition policy issues should be pursued by the WTO.
There are also many examples of healthy competition being blocked by the application of anti-dumping measures, making competition policy and anti-dumping measures inseparable. Anti-dumping measures should be made a priority issue in the consideration of competition policy.