A Call for Formulation of the Effective Deregulation Promotion Plan toward the Post-Regulated Society

November 17, 1994
Keidanren
(Japan Federation of Economic Organizations)

I. Basic Idea

1. Role of the Effective Deregulation Promotion Plan

   
   We are now in the period of reform. The government-led centralized socioeconomic system, that supported economic growth and prosperity of Japan since the Meiji era, is to end its historical role and task. To pave a new path of development toward the twentyfirst century and build the country that fulfills the international responsibility and places much emphasis on the consumers and customers, new socioeconomic system is required. Now is the time to realize promptly the post-regulated society, that is based on freedom of choice and buttressed by the principle of the self-responsibility.

   It will inevitably cause a great pain to achieve the reform of the socioeconomic system. It is, however, also impossible to reverse the roll of the wheel of the history. It is required to promote the deregulation intensively according to plan and ease the conflict in transition period. This historical role is expected for the current Deregulation Promotion Plan.

2. Three principles in the Deregulation Promotion Plan

   
   The Deregulation Promotion Plan should take the basic idea for deregulation by The Advisory Group for Economic Structural Reform, that states "Economic regulation should be eliminated in principle and social regulation should be kept to a necessary minimum based on the principle of the self-responsibility." In addition to this, the plan should meet the following principles.

   (1) Zero-base principle
   The government should carry out a review of all regulations and public intervention/involvement based on the zero-base principle and clarify the processes and target toward abolition or reduction in the Deregulation Promotion Plan.

   (2) Sunset principle
   When new regulations are introduced, it is obligatory to incorporate an article stipulating abolition or review after a certain period of time (a maximum of five years).

   (3) Due-process principle
   In the process of Diet discussion of the bills that introduce new regulations, it should be mandatory to listen to the views of related industries and parties concerning the bills and their impact on the industries. In addition, when the government issues a piece of administrative legislation, such as a cabinet or ministerial ordinance or an official notice, it should publicly disclose the draft text in advance and public hearings on the draft text should be convened obligatorily. Furthermore, obligation to hold the public hearings should be guaranteed by enactment of the Administrative Legislation Procedures Law (provisional name).

II. Basic Request for Deregulation

1. Economic regulation should be reduced by half within five years

   
   
   1. It is necessary to show the whole shape of the deregulation plan for the public in clear manner to promote the deregulation steadily. Therefore, the Deregulation Promotion Plan should set the numerical target to reduce economic deregulation by half within five years. The government should at least make utmost effort to promote deregulation in the areas of table 1 written by the Advisory Group as examples in accordance with the following direction and reduce it by half within five years. In the same time, the government should take necessary steps to formulate the structural reform policies for employment and small and medium sized companies, with the appropriate management of the economy. Keidanren makes more effort to make a consensus with related industries concerning specific regulation matters. It is urgently required to establish the assessment method to evaluate deregulation in order to make the numerical target more effective.

   2. Direction of deregulation
      1. Entry regulation from the standpoint of demand-supply adjustment
         This regulation should be promptly eliminated. Entry requirement other than demand-supply adjustment should be minimized for the regulation that has been decided to be abolished.

      2. Regulation on new installation and expansion investment of facility
         This regulation should be promptly eliminated. In particular, deregulation should be promoted in the case to require the structural improvement and eliminated step by step.

      3. Import regulation
         This regulation should be promptly eliminated in principle. In the case that effective date of regulation is set by the international agreement, this regulation should be eliminated upon termination of effective date.

      4. Price regulation
         Elimination should be fundamental. If some regulation is necessary, it should be limited as necessary minimum to the public goods and services. Price range system or price ceiling system should be introduced as the regulatory manner.

      5. Regulation on finance, security and insurance industries
         Regulation should be kept minimum from standpoint of financial order. Deregulation makes it possible to promote offer of new financial products and services and mutual entry to different areas and improvement of access to the more various and effective services for customers in financial raising and operation.

      6. Other regulation
         Economic regulation should be promptly eliminated in principle.

2. The government should delete all designated products from the list of Resale Price Maintenance System by the year of 1998 and abolish the exemption cartels of Anti Monopoly Law based on individual law in principle.

   In order to spread the effect of deregulation over the society and ease the conflict caused by deregulation, it is indispensable to promote free and fair competition by active use and implementation of the Anti Monopoly Law and competition policy. From this standpoint, the government should delete all designated products from the list of Resale Price Maintenance System by the year of 1998 and abolish the exemption cartels of Anti Monopoly Law based on individual law in principle.

III. Main Items of Our Request

1. Transportation
   Review of auto-inspection system, Review of fare system in the passenger train system.

2. Distribution
   Gradual abolition of Large Retail Store System, Liberalization of the retail price of cigarettes.

3. Agriculture
   Appropriate implementation of New Food Law (promotion of new entry to food collection and retail business etc.), Review of price support system (wheat, dairy products, pork etc.).

4. Trade
   Zero tariff on auto-parts, Abolition of the exemption of export control regulation from the Administrative Procedure Law.

5. Competition Policy
   Permission of setting up pure holding company, Abolition of share-holding restriction by financial institutions.

6. Public Procurement
   Simplification and Unification of application procedure of entry requirement to public procurement, Abolishment of designated supplier system by local authorities.

7. Energy
   Consideration of permission of self-service in the gas station, Simplification of application for permission in co-generation.

8. Finance and Insurance
   Review of public finance system such as postal saving and insurance, Deregulation of new office by financial institutions, Deregulation of pension fund management.

9. Security
   Deregulation of equity security financing by public offering at the market price, Registration at over the counter market and issuance of commercial paper.

10. Public-purpose Institutions
    Restraint of establishment of public-purpose institutions by government initiative. Simplification of permission for setting up public-purpose institutions by private initiative.

11. Others
    Other deregulation requests for Land/Housing, Safety, Environment and Waste Management, Telecommunication, International Finance, Taxation, Statistics, Economic Law and Accounting, Research and Development.