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[Tentative Translation]

Keidanren's Basic Stance towards the Singapore Ministerial Conference of
the World Trade Organization(WTO)

II. Proposals for the Agenda of the Singapore Ministerial Conference and Basic View on Future Issues

  1. Implementation of Uruguay Round Commitments
  2. The Uruguay Round Agreement was the result of the tremendous efforts of all governments, including the Government of Japan, and of the many individuals who were involved in that process. The Agreement serves as the foundation of the WTO. That the Agreement could be reached despite the many serious difficulties encountered during the Uruguay Round negotiations, which lasted more than seven years, is a clear demonstration of the strong commitment by member countries to expanding the multilateral open trading system.

    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.

  3. Built-in Agenda
  4. The WTO Agreement which came into effect on 1 January 1995 as a result of the Uruguay Round Agreement consists of the Marrakesh Agreement Establishing the WTO and its Annex Agreements and Understanding. Included in these is a schedule for future negotiations and revisions of these, commonly known as the Built-in Agenda. Implementing the Built-in Agenda will have a positive effect on increasing the capacities of the multilateral open trading system centering on the WTO. We call upon the governments of all members to firmly abide by the schedule for negotiations and consultations in each sector. The view of the Japanese business community on the major sectors is outlined below in light of actual business activities.

    1. Services Sector
    2. As the importance of trade in services increases, the Japanese business community has great expectations for ongoing negotiations, as well as the commitment to negotiate on further liberalization expected to commence by the end of 1999.

      1. Basic Telecommunications
        The Negotiations on Basic Telecommunications failed to reach agreement at the end of April 1996, which was the deadline established for ongoing negotiations at the time of the conclusion of the negotiations on the Uruguay Round. As a result, the deadline for negotiations was moved forward to 15 February 1997. We call upon all governments to make efforts to achieve agreement by this deadline. These negotiations aim to expand liberalization in the basic telecommunications sectors of each country, and it is expected that they will contribute to creating conditions for competition in the Japanese telecommunications market and ensuring transparency of regulations while promoting greater competition. We call upon the Government of the United States to gain the understanding of domestic parties and to break away from mutualism and respond in line with the spirit of the WTO.

      2. Maritime Services
        We expect to see agreement in this sector after the reopening of the negotiation on services scheduled to commence before the end of 1999. The commitment of the United States in this sector is essential if we are to achieve agreement, and we call upon the Government of the United States to gain the understanding of domestic parties and to shift away from complacency.

      3. Financial Services
        The Tentative Agreement (Part II of the General Agreement on Trade in Services, and the attached country-specific commitment list and the Most-Favored-Nation Exemption List) reached in the services sector in July 1995 did not include the participation of the United States, and as such those commitments are to be reviewed by the end of 1997. With this in mind, we look to the ministers attending the Singapore Ministerial Conference for support in reopening the consultations and hope to see an agreement which includes the United States.

        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.

    3. Anti-dumping/Standards of Review
    4. We commend the WTO Agreement on Anti-dumping Measures in that it clearly stipulates the introduction of a method for a fair comparison of price and the new establishment of sunset clauses, and as such strengthens the overall regulations and ensures transparency, predictability and fairness. However, there remain areas in which arbitrary application can be made, and there is thus concern that some may resort to protectionist measures. We strongly hope that all governments will firmly carry out these agreements in keeping with the spirit of the Agreement and that they will take measures to provide for the necessary domestic legislation.

      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.

      • Anti-dumping tariffs continue to be imposed even in cases which were recognized as instances of dumping prior to the coming into effect of this agreement, which includes sunset clauses. Some of these cases have been going on for more than twenty years.
      • There have been diverse problems with cases in which exports from Japan to new members of the European Union have automatically been made the target of anti-dumping tariffs levied on exports to the European Union.

      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.

    5. Dispute Settlement
    6. We strongly commend the increases being made in the effectiveness and speed of the implementation of dispute settlement procedures and the efforts made by all members, including developing countries, to make use of dispute settlement procedures and to ensure enhanced credibility. The opening of a path toward solution through calm discussions at the WTO on issues which tended in the past to become politicized in bilateral trade negotiations is an extremely effective development for the maintenance and expansion of the multilateral free trade system.

      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.

      • The strengthening of senior committees, panels and secretariats through the allocation of more personnel.
      • The review of regulations including the abolition of standards of review which limit the authority of senior committees and panels. Furthermore, so that member countries can make greater use of the WTO dispute settlement mechanism, greater efforts should focus on creating an understanding of the law in developing countries.

    7. Harmonizing Rules of Origin and Issues to be Addressed Concerning the Application of Rules of Origin
    8. Since February 1995, work has been underway to harmonize rules of origin together with the Customs Cooperation Council (located in Brussels). We welcome these efforts. This endeavor is scheduled to be completed by February 1998. Currently, efforts are being made to harmonize non-preferential rules of origin (determining the MFN rate, levying anti-dumping taxes, applying quantitative restrictions, etc.). However, once that work is completed, the Japanese business community strongly hopes to see prompt initiation of efforts to harmonize preferential rules of origin (regional preferences, a general preference system for developing countries, etc.).

      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.

    9. Intellectual Property Rights
    10. The Japanese business community views with great importance appropriate protection of intellectual property rights and commends the fact that Trade-Related Aspects of Intellectual Property Rights (TRIPS) is included in the WTO Agreement. We hope that TRIPS will be implemented as soon as possible by each member in order to ensure stability and legitimacy of transactions and promote diverse investment and technology transfers.

    11. Agriculture
    12. The Agreement on Agriculture includes the implementation of promises on market access, domestic support and export subsidies by the end of the year 2000. Furthermore, negotiations on continuing special measures on rice are to be initiated by the end of 1999. With this in mind, we must promote increased levels of domestic understanding for the Agreement on Agriculture, and in light of the ongoing process of internationalization seek to establish agricultural sectors able to withstand international competition by promoting new agriculture policies that are oriented toward effecting agricultural reform. Specifically, we must promptly conduct a review of the Agricultural Basic Law and the Agricultural Land Law, and at the same time promote diverse structural reform measures aiming to increase productivity, liberalize and abolish restrictions placed on the production and distribution of agricultural products, thereby implementing a review of the price support measures for agricultural products.

  5. Trade and the Environment
  6. Economic growth is essential for the appropriate promotion of environmental preservation, which is an issue of global importance facing us today. Protection of the environment is also a fundamental condition of sustained growth. The multilateral open trading system underpins economic growth, and in this respect has a mutually supportive relationship with environmental protection policies. From this perspective, it is important that a balance be maintained between the WTO Agreement and Multilateral Environment Agreements (MEAs) so that the environmental policies of various countries and measures adopted in MEAs do not become sources of excessive trade interference.

    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.

  7. Additional Liberalization
  8. Tariff reduction is a traditional WTO role derived from the GATT era and has contributed significantly to the promotion of free trade. The efforts for further liberalization in the UR agreement via additional tariff reductions should be continued. Current efforts are focused on the following areas.

    1. Pharmaceuticals
    2. Since 1995, Japan, the United States, Canada, other advanced countries, and the EU have had an agreement to eliminate (reduce to zero) tariffs on pharmaceuticals. There is also an agreement to hold government-level meetings to revise this agreement once every three years. With the active research and development taking place in this field, it is constantly necessary to revise the list of applicable items, making additions and expanding coverage. We encourage the efforts of the governments of various countries in this regard. It is also important that in these negotiations the opinions of private organizations from various countries including Japan be submitted and that governments provide information to the private sector.

    3. Chemicals
    4. Efforts by Japan, the United States, Canada, other advanced countries, and EU to harmonize tariffs on chemicals have been proceeding since 1995. In addition to the four main participants in this effort, Switzerland and others are also taking part, and there is an interest in further expanding this group to include Korea, Australia and other countries. It is imperative that efforts be made to gain the understanding and participation of Southeast Asian countries which are experiencing significant growth in this area. The contributions of private organizations from various countries including Japan are valuable in this field, and governments must work in turn to provide information to the private sector.

    5. Information Technology Agreement (ITA)
    6. It is hoped that the Information Technology Agreement (ITA), which is being discussed with the aim of reaching an agreement to eliminate mutual tariffs on information-related equipment between the four main economies, will be expanded to include other countries, especially in Southeast Asia where growth in this area is significant. Efforts to achieve broader participation in the ITA should be made before the Singapore Ministerial Conference.

  9. New Issues
    1. Trade and Investment
    2. In recent years, with the globalization of corporate economic activities, trade and investment have become increasingly interconnected.

      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.

    3. Regional Economic Integration
    4. Japan's business community has shown keen interest in the increasingly apparent trend toward the regional economic integration and other changes in the nature of regional economies. While regional economic agreements can expand economic interaction among member countries and contribute to the development of the world economy, they must be made consistent with the WTO. It is also vital that a revision be made of the fundamental rules on what WTO-consistent regional economic integration means. A WTO review should be a natural requirement for regional economic integration, and the WTO should strengthen its monitoring of such integration.

      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.

    5. Trade and Labor Standards
    6. The politicization of differences among various countries on the issue of trade and labor standards within the WTO raises concerns about the WTO being able to function properly. There is good reason for concern over the possibility that trade measures taken to protect labor standards could compromise the multilateral open trading system. The issue of trade and labor standards should not be brought up at the Singapore Ministerial Conference.

      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.

    7. Trade and Competition Policy
    8. As a result of the steady efforts of GATT/WTO member countries, there has been a considerable removal of "water-side" barriers. Today there is a need to adjust the domestic laws and policies of countries to foster the development of the multilateral open trading system (given the difficulty in distinguishing between "domestic" and "foreign," as pertaining to economic laws, as a result of the deepening economic interdependence among nations). Competition policy is, therefore, a key issue for the future.

      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.

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