Report drawn up on behalf of the Committee on External Economic Relations on Trade Relations between the EEC and Japan EP Working Documents, document 1 240/81, 3 June 1981

European Cornmunities

4,lt,tlrE

EUROPEAN

_PARLIAMENT

Wbrking

Documents

1981

- lgg2

D(rcLIMEI{T

t-zfiltt

Report

drawn up on behalf of the corhmittee on External Economic Relations

I

on;fmde Reladons between fte EEC and tapan

I

Rapporteur: Slr John STEWART{IIIRK

l7*

By

letter of

7 March 1980

the

Connnittee on External Economlc Relations requested

authorization

to

draw up

a

report

on

trade

relations

betrteen the EEC and ilapan.

By

letter of

23

April

1980,

the

President

of

the

European Paflianent authorised

the

CorunitteE

to

draw uP

a

report

on

this

matter.

on 24

Aprll

1980

the

Connittee on External Economlc Relationa appolnted

Sir,rohn

Ste\rart-c1ark Rapporteur.

on 11 llarch 1981 a t'Iotion

for

a Resolution (Doc. L'966/8Ol tabled by

Sir

Fred Warner and others

in

accordance.

with

Rule 14

of

the Rulee

of

procedure, on

current

EEC-Japan economic and

trading

relationgr

w88 reforred

to

the

Cornnittee.

Itre Conmittee considered the

draft

report

at

Lts

meetinge

of

L9 JaDuEq, 1981, 25 February 1981, 14

April

1981 and 13 ![ay

I98f,

when

it

rutenttoucly adopted

the

Motlon

for

a ResolutLon and e:tplanatory statement.

present:

_Sir

Fted Cathenrood, Chtfumani lttrs VYieczore&-Zdil'' Vice-Chattesn,

l.lr van Aerssen, Vlce-Chairmani'l,Ir S'eti1

,

Vice-Chtiiraian;"lsit'Jonn'Steitbrt-Clark,

Rapporteuri I'IrE Fourcader

!&

GalLuzzL,

!{r

E8nsch; Lord Eardar-Nicho1le

(deputizlng

for

Sir

Fred Warner);

l{r

Jonkeri Dlr Nicolaou, Lozrit O'Ea$an; !4r

pelikan;

tilr Radoux; l,!r Rieger;

Prinz

zu Sblm-Wittgenetein; &!r Seeler

and l,[r Welsh.

CONTENES

A.

B.

MOTION FOR A RESOI.TXf,IO{

E:KPI,ANAIrcRY STATEIIENT

Paqe

,&8

24

2A-31

32

I.

II.

III.

rv.

v.

vI.

VII.

VIII.

rx.

Preface

1rtre

gituation

in

.rapan Trade between

the

EEC and

Dolng businees

in

Japan

,rapan

The

role

of

goverrunent

in

relation

to

busLncse

Industrial policy

and mErketing strategy

Corununity

trade

policy with

,Iapan

Fossible responses by the -EEC

Surunary

of

conclusLone

10

10

t1

13

Japan€s€ trade

with

third

countries

Japanese and Conmunity investment

Etre CornmlEgion'

s

re-exanination of,

33

x.

xI.

35

39

ANNEX

:

!4otion

for

a Resolution (Doc. L-966/8O)

LIST OF If,ABEES

fable I

Cormrunity trade

wlth

lapan anal1rced by

main commodity classes

Paqe

!8-26

27

30 L4

I5 Table

II

Tab1e

III

Table IV

Table V

Table

vI

Balance

of

Payments

of

ilapan L972-1979 ,Iapan's trade

with

main Comnunity countriee

in

1979

in percentage

...

Inflation

rates

Relative wage rates

Export market shares

in

OECD

trade ...

A.

The Comnittee on External Economic Relations hereby euhdt*},to

the

European Parllament

the following

Uotion

for

a Resolution, together

with

explanatory statement:

MOTION FOR A RESOLUTION

on

trade

relations

between

the

EEC and .fatrnn

The European ParlLament,

-

concerned by

the persistent

and increasing

deficit in

the Community'e

balance

of

trade

wlth

JaPan,

-

aware

that thls deficit,

although comparatively small

ln

the

context

of

the

Communlty's

overall trade

flgrures

implies

a

severe

threat

to

the

Conununlty

in

certain specific

sectors, PartlcuLarly

in

I

manufacturing

industry,

'i

-

convinc€d

that

a

reductlon

of

the

present

trade

irnlcalance iilrutra

contribute

towards a

better overall

understanding between the

Conmunityand.Tapanwhichwouldgofurtherthanpuralycorutercial

considerations and

in

turn

lead

to

cloEer cooperation

in fields

euch

as development

aid,

security,

monetary

stability,

energy conservation'

and

the

suPPIY

of

raw materials,

-

recognislng

that it is in

ilapan's

interest to

work towarde greater

understandLng

with

the

conmunity

in

view

of

her

vulnerabllity

both

in

terms

of

nationa]-

security

and energy supplles,

-

recognising

that

the

problem

is

one whlch can

primarily

be

satlsfac-torily

resolved

by

increaelng

the

competitiveness

of

European products

vis-i-vis

the

Japanese

in all

markete and stressi-ng

therefore

the

need

for

greater

effort

by European industsy

in

tuts

reapect'

:

-

_-."X"*

r.agio;

trre r i st<

that

-protecEl onfgt GaffiFc

i-iA,

i

fr-fatien

E,

lndividual

lrtember States,

wtth re'sulEdit

Eerlous

'congeguGncea

not only for

EEC/Japan comnerclal

relations but also tor

*ifid'-Cmrnity

and world

trade,

and convinced

that thls

can be averted by

a greater

degree

of

understanding by iIaPan

of

the

probleme

that the

Present

trade deficit

Poseg both economically and

politieally for the

comnunltY,

-

welcomes

the

fact that

the

Council

of

Mlnistere

at their

rneeting of.

17 February 198J. have taken

poeltive

steps

to

create

a

Comunity

strategy

towarde itapan,

-

recognlaing

that

the

effective

ieeofutton

of tft.

pr"lfems created

by

the

deficit in

the balance

of

trade between

the

CormunLty and

,rapan can best be achleved by

the

formulation by

the

Comnission

of

a

vigorous common Corununity trade

pollcy

towards ilapan,

including

-a)

cloeer

cooperatlon

and:ffiuovd-,ffii@ai,,*fuauetry

b)

worklng together

to

eLiminate both

tariff

and non-tar16f

barr

iers,

c).

encouragementr"of

efforto,by

Hrbo1roan expdLtes

to

ssciii€'a

gleater

share

of

the

_'Iapanese rnarket,

d)

recitrrrocity

in

banklng and inveetment

facilities,

e)

quantiflable

self-restralnt in

exports by

ilalnn

ln

specific

sectors,

and

a

sub8tantLal increase

in lts

inporte

fron

the

Comnrnity,

,

-

realising that

unless

there

iE

an

effective

regolution

to

Liie

deficit

in

trade,

then pressures upon i,ledber State Governnentg could

force the

Councll

of

Minleters

to

take

stringent

action

against ifapan,

-

having regard

to

the l{otion

for

a Reeolut!.on tabled by

Slr

Fred TV}iRNER

and

othere

(Doc. L-965/AOI,

-

having regard

to tle

report

of

the

Conmittee on External Economic Relations (Doc. 1-24O/eLl,

1.

R€quests

the councll

anatcli'd comiitdE;Fi.Fq

trrs.ElrryBewreqw*tiee

to:-erEIE€

--that

aII

negotlations

with

ilapan

will

be conducted

fkmly

and constructiv€Iy

and be based

not only

on an undergtandlng

of

the

needa

of

the

Cornnunity but

algo

of

those

of

Japan and

the

UgA'who together form the

world's

three most

sigrnificant trading

grouPs and on whoEe

effective

cooperation any

lasting

global trade

a,tEatrgenente'nust''d.enan41

2.

Ca1ls on the

council

and cosurriseLon-to ensure

that

any agaeement concluded

will

provide

for

reciprocal

measures on

the

part

of

_'Iapan

in

respect

of

_E!1y

concessLonE whictr may be granted by

the

cotruouBity

to

JaPani

3.

Urgee

the

Conunission

(a)

to

continue

itE effofts to

ensure

the

harmonlzation

of

trade policy

measur€s taken

by

individual

lllember Statos and algo

to

ensute

that

thd Conmunity

will

speak

"with

one

voice"

through

the

Coumis6ion

in itg

deal-ingrs- with' iDaPan't',

(b)

to

ensure,

with

respect to-the'Community's competitlon

policy,

that

the relevant

clauees

of

the Treaties

(Artic1es

E5'to

94)

sre

not

apPll€d

with

the

result

that

industry

within

the

Comnunlty

ie

penaliged

to

the advantage

of

lnduatry'from

t6#a-o6untriai,-

taotuding-56enr

-

c) -'

quantftffi

respect

of

the

export

of

sensitive, or potentially

sensitive,

products to' the Conurunity.

this wlll

have

to

be

a

continuouE process which w111

require

close cooperation,

at

community

IeveI,

not only

between Commigaion and Mernber

States

but

also

bettreen

the

Commisslon and retrxesentatlves of, European lndustry;

d)

to

make

crear

to

Japan t-nat

an .rrure

to .uao.

_rytwgz.ffi'

rnrst lead

to

countel-measulee on

behalf

of

the

Contmrnltyi

e)

to

be prepared, where

it

can be established

that non-tarlff

bartierE

to

trade

exist, to

6nt'roduce,

at

Conunrnity

level,

reciprocal

meaEures

withln the

framework

of

the

GA[[l

reconmends

in

thi.s

context

that

the

CormlgeLon Etrotrld be endor.ued

wLth adequate funds

to

instLtute a

Eervice

to

investLgate

allegations

of

concealed protectlonleml recognj.ELng

that

industry

itself

may

find difficulty ln

dealing

with

such protectLonism;

1o

ue prepared

t;-."."Pt

trre

n-eea

--.

existlng

regulationq and

dlrectives

regarding''type

approval'

of

manufactured

artlcles,

particularly

motor

vehicle

parts, mandatory

rather

than Permiseive;

h)

io

_take

Eteps

to

erisfie-{fraE-anf agreement

wlth

ilapan

wlll

lncludeprovlslons'ensuring':Iu1f,-fAcipr-6-dtfiifrffi6ffiF*oa-baiinvest-ment

facilitiee

bets€en

ttrc,ttro parincrsr

anf]arlffiFiffi-ri?g, -

''-\rheth€r, od=6-,frio1[-otr1ffi

ot-joEnf

sT

@{1*9;toafrnC@et

hite

---wrLtt€n agir€emente

to

enEtrt "

ttraffiffi'SIdffiGilf

oients .

or

_iraterLal g _uc€d

.h'

|rocttct1liln rizrf aiiltt6E\' iooili.S- ana-€EiE reeearch and devetrop€nt t€$dlteen

ire

fn{i'oaucid

a'a-a'rasurt

Ln-order

to

promore enp'Ioyaar6,-'pige{uleEt-tesi'daai cin4iffiS8ir^S$Snsion

tn

the

area

or

region doneinea''-:

-- '--'"'i - -*1

i1 'EoT6F-up

a

joint

EEC/JaPan Investment Bureau

to facilltate

and

to

encourage approprlate inveetment

fron either

eide.

Ttre r61e

of

such an Invegtment Bureau should includq

that

of

coordLnating and exLendlng

jolnt

undertakings between

Japanese and coriuunity countrleE

in third

countries;

to

1n

f)

s)

4. Urges

the

representatives

of

European

industry,

wherever approprLate

in

consultatlon

with

the

Comnisslon,

to

cooperate

closely

ln

such

fieldls

as marketing and ReEearch and Development and

rationalLzatlon

in

order

to

fLnd

not

onty the

best

means

of

penetratlng

the

Japanese rnarket

but

also

of

achLeving

vlable

competltlveness

with

reepect

to

both

Corumrnity and

third

country markets;

5. Aslcs

the

JaPanese

for their

_Part

-a) to

take

concrete steps

to

eliminate

non-tarlff

barrLers

to

trade, whether

intentional or

otho:vd-se;

to

facilitate-

iirvestmeni-and -Uan:<ing

f"cif itGJ

eountries

_i

-

"-for

Community

to

accept

the

necessity

for full

cooperation

with

the

cornmunlty

in

working towBrds monetary

stabllization

by

worklng towarde monetary cooperation between those l-nduEtrialieed countrLes

with

convertible currencles, including the

European

Monetary Syetem as a

bloc,

and

the

yent

-'-;-'-

:111 '?'J":1 :.

-

--'\:----to

cooperate \,rith

the

Member States

of

the

Conununity

in

working towards

the

reinvestment

of

the

proftts of

the

oil

producing

countdesi

to

cooperate

full-y with

the

conmtrnity

in

accepting

specific

quantifiable restraints

in

respect

of

certain particularly

sensitive

sectors

while

at

the

same time demonetrating

its

willingness

to

accept a reaEonable Level

of

importe

of

manu-factured goode from

tlre

Comrrunity;

f)

to

cooperate

with

the

Cornrntrnity

tn

order

to

coordinate

attL-tudes towarde the o€fi6t* EEC

tra{ing

pdrtnerdi

considers

that the links

between

the hrliarnent

and

the

.IaPanese

Diet

should be strengthened and

the

present exchanges Lntensified

not only in the llght of the

good understanding and

results

so

far

achieved

but also in

Order

to bring

about

a greater politicaL

awareness

of the

problems which

the

present

trade deficit

tr,ose,

b)

c)

.l)

e)

6.

f,tu-7.

Instructs

its

President

to

forward

this

reeolution

to

the

Commission and

the

Council and,

for

informatlon,

to

the

Government

of

Japan.

B.

D(PTAINTORY ETATEDIENT

r.

PR,ERACE

l'

B€fore analyslDg the EEc and irqran€se _{LndustrLar and}

_tradlng

_{sltua_}

tl'ons,

_{an attempt should be made}

_to

_doflne

_{the probrems}

of

our

two

Comnunltiee. We see tham

_as

_follqre:

Japan

a)

_leggg:seg

arapan hae

alnost

no

naturar

resourees

_of

_her

qrn.

_she

_is

_dependent

fot

g5%

_of

_{her anergir}

_requireuent'

0* rmports.

The

oil

prr.ce

_rrsee

_have

affecred

_her

ro

a greater

_exr'nt

_tnan

_etrtrer

_{westerr-;;r;-]"'an"}

,ro.

JaPan's econoELe

groth

_{and develolrnant}

_aretherefore

_totalry

depend€nt on

lrporte'

she Le

the

largest lnportet

Ln the world

of

non-nanufaetur@d

goode and has

to

pay

_for

Ehese _{lnporEs by}

_exporte.

ManufrcturLng Le the

only

means

of

obtslninE tbeae exporte si.nee

there

18

littls

blse

ro

EEu.

b)

ggygrlr

Although alapanese _{lnduetry nay f,lourLeh, some eections}

_of

her co6mu_

nLty

are

etlu poor.

Eouar.ngr _standards

_strll

_tend

_to

_be

_lqr

and most roods

are lnadeguhte.

_staadards

_{of llving}

_have

_therefore

roqr

for

inprovernent.

c)

Vulnerabilltv

___-____-_-_G

'rapan

feels

vulnerabre

both

ln

terms

of

national

_seeurity

_and

_of

foreign

_{r.nfluenee ovEr whtch she has no}

_control.

on

the

_{defenee side,} as

the only

_{eountry whieh has been subJected}

_to

a

_{nucl.ar attack}

_{r.n war,}

irapan has vowed she

wIll

never produee

_nor

_{ourn nucrear}

_arttra.

_she

_is

eons@quent''y

_rurlrtar'ly

_{dependent on the}

united

_{states. rn}

_terms

_of

_o11

ehe has no way

of

eecaprng from

the

gri.p

_of

_the

_{opEC countrr.eE and}

eees

th€

comunr.et

threat

_to

_the

_{Gulf states}

_as

_affeeting

her

_{very survlval.}

Nevertheless, _{Japan has rtanaged Eo naintar.n econonic}

irorth

withqrt

a _{correaponding increese}

_ln

_{ol,l. eoneumptlgn. perhaps}

there

Le

a

1esson here

foi

the ueet.

The.ComunLtv

a)

gr9g9

2'

The

cbmu*,ty

_{hae been ebnecr,oue}

_of

_{a growing}

trade

Imbalance _with

Jrpan

for

ruany y€ara _,.owo

_but

_has

_prwed

_incapable

of

reducrng

_r.t.

_voruntary

-10-

_{PE G8.474}

agreenents, suDoLt tBeetl,ng8, mN nogotLat,ions, have

all

faired

to

makG

any

lnpact

on

the f,lgurea.

The

deflclt

hag

in fact

increaeed fron

1086n EUA

tn

1973

to

514?m EUA

ln

19?9 _'dhen

_the

_{irnport/export cover}

_ratto

uae

only

47.1*.

b) Induatrv

---rhe iraPBnese have coneEntrated

theLr

exports

ln

etrncifLc Bectors,

notabty

in

nanufacturlng

lnduetry.

Today 64%

of

her

total

_exports

_to

_th.

conmunlly

ls

ostlme

ted

eo

bc

in

maclrirrory anrt lrarrelxrrt ogrripmont, ;r.d

2W

ln

other nanufactured

goods.

_{Motor vohLeles, consunor electroniee} and esroeras

are three

66etors

in

whlch rlapancee exgrcrts ar€. paatLcularly

concentrated.

fn

consequenco, nany C@Bunlty

lndustries

_ln

_{thEee fLelde}

are witnoeelng

a threat

to thelr

very

exl,atenc6.

c)

_{$e-!:pge9E9_!31!9!}

Desplte

liberallaatLon

_of

_trade

_{restrl,cllone}

_{by ilapan,}

_a

_{lwer tariff}

rate

Lnto Japan _{than Lnto}

_the

_{corumunity under}

_cnrr

_{and a professed}

wtlllng-nesa

to

weleome foreLgn inveatnent, JEpan remaLns

_for

_nost

_comtrunlty

lnduetrlalisEe

and

traders

Bn Ltopenotrable

market.

Further Japanesg

EeaaurGs

_{to proteet}

_{Eh@ congumor and}

_lhe

_envLronnent

_are

seen as replaclng

trade

Ilbo:allzatLon

_by

_{the iqroeltton}

_of

_new

_non-tariff

_barrLere.

conBequently,

there

exlits

today

a

el.tuatr.on whr.eh, delnndlng upon whether you are ilaprnes€

or

EuropeBn, you.lrurvey

_the

_ecene

_ln

_hro

_dlstlnat

llghte.

The

baslc

cause

ie,

hmever, the

samo,

that is

the

need

for

survlval

in

a

world

neaaced by

slng

threat to

p€ac€.

II.

lgE

SIIInTTON IN JAP,AN

Polltlcel

'

receseion and

with

an

inerea-3.

iralrn

is srory

movl.ng

_{tmards a}

_{,oore indetrrndent}

_forelgn

_porlcy.

Presgureg

_oriet

_{Ln ilapan udrlch}

_are

_foreing

_Governnent

_to

_take

a

more

actlvo

r01e

ln

internatlonal

_{hffaire. hny}

_far-thlnking

_irapanese

see

the _{absolute neceeelty of,}

_a

_close

_lnrtnerehip

_between

_{the unlted}

states,

the

Eurotrnan

_comunlty

_{and iIatnn and reedgnise}

_that

_all

_three

socleties

have an

lnterEst

in

ualntgtntng

eloEe

pollglcal

_{cooperatl.qr and rlbsrall.sed}

lnter:natloral

_{trade. rt le}

_{recognLeed Ehat we have}

_srlnilar

baslc atns

ln

wantlng

to

_Presorv€ our democratLc systen

_to

_{avoid war and eoDtrlbute}

_to

a

moro

_eqtltabre

_{balanee bctrnen}

_the

_tnduatrial

_and

_the

deveroplng worrd.

PE 68.424

_/fln.

.t

-Politiear

and

eocial

understanding @nnot, hereiveg, ,be _brought

_atolt

,

'

gatLefactorlly

_{between Japan end}

_the

_Coiununity

,if,

trading

and ecoflomLe relut,Lona

are unsEtietaetory.,

Largely becauee of.

this.

therE

ls

b6tub6n

the

European cdnmunl,ty and

tl"

ilni.ted

stgtes,

on

the

ore hand, and Japah on

the

other, a laclt of

proper conprehenel.otr and courunlcatlon of,.6gch

oEhor'a LnteresLs, objectlvea and

aeplrat{one.

ith"rr ts

_a

_iact

_of

_rrrtual

understandlng

of

what 6aetr oountry expeete.frm, eh6

_{other siret the}

_long

rua

and

shat

ls

inportant

to

lndlviduble

Ln each

countay.

.?o _{f,l,nd a'}

solutLon,

improued

trhdlng

relaticns

i{:ugt cone about and welnuropeane

muet, mrhd

a

greateu

effort to underEtqnd

the:eulture,

t"irt"

and

thinklng patterns

of

the

JapFnese. I

satisfactory

tradlng

errangenente ehodld, ue,

.:

the

firet

btep

teardc

lnproved relati,ons betxrcdn

the

imunlty

and oa$9n

in

srrch

_i".""

as eircrEy

and ,raw materiare

pollcyl

devillolment.

poltcy

arril d.f,Errae Lgsues

cu!.tureaaUEggluEglgrl!&E

l.

i

"l

4.

The

hablt

dmongst ,fapeneEe

of

_{extrerne def,efeqce}

_of

_{behdvlbur and}

formsllty

emongot thoge who are

not thaLr

closeifrl.ends aae]asgelstas

makes

it

very

dtfflcult for

both itapanese and flretgmore

to

uirderstand one

another.

xn dealLng

wlth

the

ilapanege

{t {i

tnnportant,

to

tcrl;;-both the

nature and

_{ltultatlore of}

_the

_{courteay"exSireesed. ,?g,gal,n the}

respoet

of

the

ilapaneso

a

_{fcelgnir ls}

_{Errp€ated,to}

_roturn

_yirltenese.

_To

be

guiet

and

putisnt, but

_ar

the

lrrne ,tln@

to

be, dtrong

ln

attitude

and

eharActer.

The JaPanebe l.n

thelr

reaetlon

to

ori€ Lnother t{trgeen gr6(Ip

acknarledge eubrtisaf,on

to

th€

atrongar ana aaJsbtment

_{to.th€ weaker.}

_It.

Ie of

the

uttnost lfiportance

_tb

_reeogmlse

_{t,he iOle}

_of,

dourtesyl-i.on and

strengtti.

.

,

,+

:-1.

gggg!9gr

Europ€ans

with

_hlqh

_{etandards of, gourEesy iho\rld bo abl.b}

_to

_uridrrsEtnd

the tradltLons

of

eurture

and polltendss whLch aCe, so nuch ar pFrE _otr. l

sueeesefufly dedling

wlth

the

.Ialenese.

_{. I}

_!

,'.

.

Li. Patience

)

:

Egually, a prqPorsity

tn

Europe

for

takLag rqobe

trr* ui

_d"riclouit

I'

maklng ae eomlrared

to

_orr

tuirlaan

_frlends,

_{can,.Fbl'usaa'to aaw4cU$t'.} ..

The ilapanose

ar€ not

Eceustmed

to

qulsk

declslori nahinE

"nal

.gr,#;;t

Bnd _{buoiness dea'ls can}

_rardly

_{be forced,thrguEh qglElcly.,}

-

t2

_-'

.t

!

rrr.

!9gg$g!9999

If

trntlence

ls

a

virtue,

peraiatence

_le

_{€ven nore so}

_in

_relaEione

rlth

the ilaPanose. lfhether

lt

be perelstence

_in

_eoring

_to

_speclfic

_tred6

agreenents

or

persLetetrce

_for

entry

Lnto

e

narket

_{- thls ie}

a

vl.tal

elemcnt

for

guccess.

_{'Ehe ilap,anese thenselvee have shmrr}

_{thle quallty}

_tn

galning

_entry

_to

_{th€'Aner{can, European andl}

_no,

_the

_{chinese narkets.}

lv.

AesLmilatLon

;;. ;"*""". ,.

ro

greBt lengrhs

ro

undersrand and assr.nflare rho

langruagee,

tradlng

uethods, sconmLc

factorer

strengths and weakneaaes

of

colrtttors, ln

product

_{speclfloatLors,}

_{narketing methods}

_etc.

_tfhether

ln

doing buslnees

ln

uapan

or

Ln negotl.atlng

wlth

tirem coneerning

lbnet-ratr.on

of thcir

products

_lnto

_the

_Cormunl.ty,

_{a close}

_{aectoral knorledge}

la

neceesary both

of

our'q,n

Lndustry and

that

of

the

Japanese.

9.

_---

Strenqth

As

a

Cm!flrnJ'ty

re

have

to

recogniee

that in

negotiatlng

with

the

ilapaneso, we

shall'onry

garrt what we regul.re whether

in

comtni

to

agree-mente oa

voltmtary

aedtrLctlons

of

entry

of

goodo

lnto

_tha

_{coruuntty or}

eaeing

entry

of

our

C,n products

into

irapan,

lf

we can

negotlate

from

a

postt!.on

_{df atrength.}

_strength

_neede

_to

_{be derlved}

_frou

_unLty

_of

approch whether

_ln

the

caee

of

the

Cormunity

or ln

Lnduetry and fiom a

knoledge

of

where

the

Japanese themeelves are

vulnerable.

One has

to

recogmise

that to

a maJor

extent,

statenents made

in

general terme conceE-nl'ng export

restral'nt,

lmport

llberallzatLon,€tc,

are

uselees unless they

are

aeccnpanied

by

epecific

undertaklngs on the

part

of

the

Japaneee whl.eh can be meaeured

both

in

guantity

and

ln tine

and which

_{lf not complied.ryith}

wlrr

be repald

by

salutary

measures. we

shall return

to thie,

but

lt

ig

I'mportant

at

the

outset'that

the necEse!.ty

for

negotiatlqr fron

etrength

J.s rccognlsed ss belrgr

of

paramount importance.

rII.

INEDE BEIIilEEN

TE

EEC ATqD JAPAN

5.

The arapanege share

in

Fotal

worrd

trade,

excludlng intra-EgC trade,

is no

around

9%.

Thi'e

coq$res

wLth 16%

fot

the

us

and 23%

for

the

EEc.

rn

1979 ccmnunl.ty Lnportc

fror

irapan.e€re

crly

4.5%

of totar

_{extrE_}

cornunLty lotrrcrte,

yet orporta,to

ilapan wore a meagre 2.4% of,

the

cqmuntty,s

total

export,s

to third

countrLes.

'e

J6!ra$'s gro6s

dqtestlc

product

_in

1929 rdas _{732.9.bn tuA}

_wlth

_sn

annual grereH _88t€

_of

over

6#.

Thie

iE

abour

the

ilse of

the

cffiine€

GDP

of

the

uK and Gernany. .rapon,s €xpotrts

ate

an estfunaGod 10%

6f

tt€h GDP.

rtrir

lE

uelr

be

lar'aho

p"oporttorrs exportod

_by

_{Franeei @rrueny end}

the

United Klngdou, whieh

ate

t7oA. 22% d,nd 23S

_{raspectlvelgr but}

_well aborre

th€

usA whooe

vdgt

domGstic mdrk€t keepg exports dern

t6

g"/

_of

_@Dp.

Tho

fact

that

90%

of

Japan'e GDP rsmairrs

at

home

is

sigmlfl.cEnt, uh6n conslderiaE

th€

c&0munlty's ef,f,orts

to

inlcroase i,tis expo,fts ,.nto thEt

c,ountry.

6.

Bec$en 19?3 and '1979

the

trade balence betwedn

the

Cdflrtufii.ty an6 and Japan

deteriotated

eoneLderably.

ouring

thiti

portod

the

Conarunitly,e

defl,ci.t

irretet,sed

by

37o%

f,rm

lrog6m EIIA

to

5,147m EUAr

rrr

1973 tH6 cover

rats

ses

6ts, ifl

lgzg

it

had reduced

to

onLy

_47i1,

_td

_{trggo th€}

posi.tion contlnugd,,to worsen and

by

ttre end

of

AuguBt che confrunity

deficlt

wlth

ilrpi'n

hed exeeeded

thdr

for

the hhotc

of

197g.

Thls

ls

wetl

lltrustf,eted

by

rh€

f,ollffilng

Btetigttrcss-[&BI{E..I

quour tpq flT

qm.p qq+reqP

_*-

arlr opaurt orcs5

8oerGar gqDDf6ltrt tC tD. hutlg &ttclttl, &i.b &,tlatlnr lufftstrld

(t1 r-' fuC6.r! !! ftdlstfr _'

lrr d.fin

lsrl

$odr tcwcatca

alid l.a$5s{* ct o&ala [trrrtuil'tt )rA.irrda dl{tua- odrt tuuttstrr.lr, driri*r, iAPa

ltl Ep.6^fr EGt.trt

l&.

Brt. sdl. trP. Erp. Erl. tdD. E*9. fuI.

u.

Sfy. l{lo

tr!

Lgr4

tn,

1t?6 L$t l9?8 19?9 bsrr

b,.

ioir

sil

,otl ,ds t79 2tO6 2t72 Z'IN ,rl9 t@ ,72'

4i,,r2 )

i-Imd

-lGo{

*r*t

, il67t

.iral -{fr! -tt47 t7O23 -!Lcl ll3 t0, It6 131 89 It ?3 3t C' 2ti

lu

a',1 zre s72 497 330 99 t3J 19, 16 ,6t iar tldt ,L4 t4' ze4 r09 rao 37' 194 4n t6t t036 6tB 6t! ?t8

$,

2tt! 3tl r32 309 tl!, 401 .83

Itt 6

^Ur1 eelg tai2 {t!e !t610 ctxt 31.1' rd64 3rc dr6

, t8t ,eg 9{9

,.7

12?e I 63t t6 l-mO pltOl "ld.8 .1c07 ,tt6d {906 ,6ddg '74t1 ,i^.r

is,

i6d$ lgrt ,3{t 1r't9 ,al9 ,c6c

rr6t I

I to*i $n c6t 1t7 3il idd

rtrt

tila

t,

sti -*tt +?gd rllle .t{tJ -lf?l .tIdi

tIr.

46'

..fr.i

Jan-.ruc tlig gan-rum _fd[o

)72' i7ta, 236 ,r5q 26t ird 410 )a* tt7 2EA UL 416 224 ai^

-14-

pE 6s.474

_/f{n.

?.

Indleatlons are

that

the trade

funbalanee beLveen

the

EEC and Japan

for

1980 as a whole

wtll

htve substsntlalry

exceedad 6r000n

EIIA.

The uatn reaeong

fot thls

adverie

eltuation

c&n

be

found

in

the

irapanese €conony

ltself. In

1978 Ehere was

I

healthy expansLon

of

dmestle

dernand

ln

ilapan.

ThLe waa ehcouraged

by

increased

publie

spendlng, enCourage-loent

of

private

_{spendlngl an €:rpanslonist nonetary}

_polley

_and

_by

_imnrolait

terEg

of

loports resulting

f,ron

a

sharp rLse

in

the

yen.

Biports

increased

ln

1978

by

2o%o

whllat

_{Lnporte lncreased}

by r4.5%.

_{GNp lnereased by}

5.6% over

the

prevlous

_!lg!a

_{agoinet an}

_Lnfration

_rate

_of

_onry

g.w.

trAELE

II

Balance

of

Palments of, aIatnn US $

ntlllon

tfit lttt tna m, rrt

tub@td

I

ErDcrr

tEEo

Thdc Ulrcl

Slrrlo.trd rEtl.'r Gill

fhog661616t

thElt I

&cc{@r hcurr @l tndrr (Erlr

Cuntd Lhlg - '--'

TAt

lio ir

-7n

&l

-tt 4t0 .A

-?O -2J.4l

6ca. -136 -0Ot

*

,*1, 79r$ 62g,t

t7 3u

-6 39t -2.Ot -t7n_tl,

-t94 !0,l3

lot 232

99rtl

I 84t

-t0599 -4 3tt

-4?,il

20tt

-7tt

-87,d, ct6t4

,t 038

u596 -t62 -2cop

-ra|

_m

-210

16 r!.

.

Sourc€r OECD SurveyB l9ZZ and l9B0

rn

1979

the

situatLon changed

radicalry.

Although gnowth

_in

cNP

contlnued

eatr.afactorlry

at

6% and Lnf,latLon

rae under.control,

there

ras a

substantiEl

f,all in

the balanee

of

palments.

Rapldly extrundLng

lndustrlal

production and hme dernand boosted

lnports

and redueed

lncentLvea

to extort.

A aharp rLee

in

Ere prLee

of

imported ensrgy,

parttcularly oLI,

atso

_ilrpd

a

slgmlfioant part.

8.

Tho above

table

whLch

reiere

to

calendar years doaE

not

eh6ql

that

ln

the

flnanclal

year ended

3l

lrlarch l98O ilapanese

trade

shcred

a

reeord

deficit of

913.4

bllllon.

rn

thle

perlod

l.nports

of

crude oL!. alone

accounted

for

armost 940

bllllon,

an increaee

of

66.4% on

the

prevLoue

y6ar.

ReeultLng

frm

thLe

sltuatl.on

there uas

a

sharp decrlne

ln

the yen agaLnet

the

us

dorrar.

The

f,arr

of

the

yen and

the

attEndant rlekg

of

l.nflatLon

caused

ths

irapanese

to

revlse

their

monetery

pollelee in

1979.

Behreen

Aprll of

_that

year and !{areh 1990,

the

Bank Rate was

ralaed

four tines

to

9*.

w

6a.474

_/trLrr.

!

,, l

9'

eo

a

leBult

Of

the

_eecoad

t*trol.un crLsis,

the \rapan€B' _GoeErtrasnt

lald den, ln

_{Dece&€if 1979,} nEw _{eeonqric gui.derlnes whlch lnr!.ude6}

_ut

eqrort drlve

aad

a

el0ner r.ncr.ase

_r^

r"*i.".

_{Ehr.s rssul"tod}

trtr e#Irortr

'

lnereaelng by 23.2%

ln

_{volurns corqrarJ-ng February r98o}

_to

tbb8utry

lg?0.

'

rhl,s

haa,

of

cguroe, bEen

faeilttited

_{by the}

_{constderable delrec1"gtoh}

'

_of

_ths

_{yen whleh reotored}

Eo rlapaneise _exporters

_ths

_prJ.ce

_coqnttt{v6*

as88

thoy

r.ost

at

the

end

of

_{1g?gr ratgety}

_{d,n coleequeace oE Ghll}

lacreaee

_tn

_exportsl

_{.rapan'a naDufaeturlng output}

roBa thaoughc*rt-lsgh.

partleuiarry

_{notebre sbs Ehe}

rncreasc r.n produatr.@ _{aruil e*gnrt}

of

carar-lorrles

and

motorcycleb.

-or

th€

hotE

_front,

_{despr.te rarge whoresare prr.ee rno"ae""g,}

retair

galee _{rose vdgorouoly J.n}

_early

lgg0,

but

the

_{J'p.rres. ..rr.rilEoht}

rerct.d

to

the nholesare pr,f.ee _exprosion

_by

_inpoelng

_credit

rcstric_.

tl0ne

and ra,'sr.ng th6 bank

rate agai,n.

Econontc

_{gru,th rn Jalrn}

_Maw

EE

a

result

gven _{noto 6xport depondent.}

:

10. rt

rc

very

elear

_thrt

the

_{measuros whr.ch the arapanase have}

_ttka

to proteet

_theli

_ooonolhy

_fron

_the

_effects

of, cqunodrty f,acsergeo navc

beea

gucceaefirl;

_{Thera Ls every sl.gn}

_that

_fgg.

_wfU

;;T;;*

to

a

helthy

surplue

_{wlth the}

_{lndustrtatr.sed countrr.6s}

_srth

wbu

irrprn

r'8

tladrnE.

rhtq

wr'x.r. _{be due}

to

_{substsnttalry}

_lnereaoed

QonroEt.

-wrtli a

ddciE'E'Eo

_{or: suatuu}

_(tgo-'fn-

_x.&grrrs:'

Eowerrer,-ffitE-rr.t.orit:

cGso aboUt

only

one year

aftcr

irapen agrced, under pr€gsut:o

_lron

_tilc,

'Enltea states

and

the

EEC,

to lrnlt

_the

_arnount

_{of it'}

_Q*tosts.

11. trt

r.sr thes€f,ofej-'evident

_that

_the

_{Eurotrrean corununr,ty}

must a60pt

a

_{strong, creer}

_{and eoordtnated}

_{polrcy tn}

_reEard

to

irapan _{so 18}

_to

ensurE

that

ilapan doea

_{not rn the fliture}

_assert

_ita

_aEcendancy

over

nuch

of

our

induetry.

To e1r.G,

_thls

_sr.tuatron

_to

_{eo,ntinue ae}

Lt ffi

,

enlcte

_{rs to}

_a110

_the

_alepaneeo

_to

_use

_c@unity

uarkets

_{to protcct}

l.

he oa

Gcon@y _{and her'oun}

_tndustry.

_contrnur.ng

rneffectrro

_{coJiao_}

Esaaur€a can

only

Lead

to

inrreased uneinprolment

_ln

_th6

_{cqtl,ntty ud}

the

dectuatLon

_of

neny ,of, Lte ,Lmportant _lndustrLes.

12'

Euroetat

etatr'etrss,

_{whieh conelderatr,ons}

_of

_space

Ghe

it

t4naatbte

_tb

_roproduee

_hero,

_denongtratc

.i

that for

Gt€rmBny

_tho

_transport

_{and rnachlnery}

a€ctor represenEed _by

far

the

hlgheet p€tcsnt8g6

_{of ite total}

_exports

_to

ilapan, _{nuch hLgtcr}

than

th€ proportion

_of

_{other &renber}

_states,

exportel

but

_{stlrl lte}

€aports

_{ln this}

_aector

_only

_amounted

_ta

3l.S%

of ite

_Lnporte.

_Italy,

m

thG

othcr

hand, takee 45%

of its totar

_lnports

_fr.,.

J.pan trlr th*s

It

I

sector

compared

to

60%

for

Ge::many, 63%

for

_{France and 70%}

_{for Britain.}

rtaly

also

has

a

much

lorer

deficlt in lts

_trade

_{with Japan.}

_considering

the

hlgh preponderance

_of

_vehicle

_lmport,a

_into

_the

_{cornnunity, except}

_iftto

rtaly

whieh Lmposes

restrictions

_{on imports}

_of

_cars

_{from outslde}

_the

_comunlty,

lt rold

seen

that

ehb reeeLves _{conslderabre advantages}

_frm

_tlrese

_{reetrlctlons.}

Ttre

poaltion

_of

_the

_{unLted Klngdom}

_ts

_particurarly

_serious.

she has

a

rarger share

of

the

comnunity's

_deficit

_{with.rapan than any}

_other

_country.

_rn.,

Paaticular her

exports

in

the

transport

and machinery

_{sector are only}

_13.2%

of

her

imports.

Thls may be due

to

sme

extent

to

the

op€nnes.

of

the

IIK narket compared

_to

_that

_of

_{eqne other rrtember}

_state'.

slBUeruRE _{OF TRApE}

13.

The

bulk

of

the

cqflmunlty,s _{r.mporte from Japan}

has

a*ays

eonsr.sted

of

manufaetured _{produetsl and eince}

rg73 has aecounted

_for

_over

go%

_of

the

total'

Durlng

_thls

_{period there}

_{hae been}

a marked lncrease

_in

_the category

_of

_{machlnery and}

_transport

eguipment up

from

46.4%of

_total

Communlty _imports

_ln

₁₉₇₃

_to

64.7%

Ln

LgZg.

_This

_is

_{1argely due}

_to

Lrrcreaeed _exports

_of

_cars

_and

motorcyeles whlch now

constitute

_a

_major probrem

_rn

_EEc/,lapan

_rerations

(see

_section

_{of this}

_report

Eelating to

motor

vehiclee,

_{paragrraph 5g}

_et

_seq.

).

Durlng

_{the past}

_six

_{yeare there}

has

also

been

a

_further

_shift

_tqrards

high

varue,

hrghly _{automated manufaetured products}

at

the expense

_of

produete

_of

_more

_{labour intenslve}

industries.

Japan

_{is at}

_present

systemati-carly

rncreaerng

_its

_{speeiallzation}

_in

manufaeturea _goocrs

_with

_priorr.ty

being glven

_to

_eleetronics,

data proeeseing and .lut.onatLon

_(robots).

_These

are

seetors

_in

_rhich

_{\rapan has arready estabrished}

a

considerable _read on

the

EEC.

,^-_.--rr--

,

fn

contrast

to

,Japanese exports, thoee

_f,rm

_the

_{conrnunlty have}

_{not greatry}

ehanged

_in

_content

_since

₁₉₇₃

(Tabre _r)

_{' rn}

_{1979 maehlnery}

and

transport

eguipment aceounted

_for

_27.6%

of

comnunlty exports as

against

2g-4%

'n

1g73.

AIso most rerevant

ls

the

fact that tn

rgTg community _exports

_of

_maehlnery

and

transport

eguip,nent

to

.fapan _{were eguLval,ent}

_to

_only

20%

ot

_{JapAnese exports}

_of

the

same goods

to

the

cqununity-

_{This eubstantial}

_gap

_in

the

seetor

_of

_{hlgh varue added}

produets

_ie

_syuptoratlc

_of

the difference

_in

_{eompetitivenese}

between the

EEc _{and irapan}

_in

_high

_technorogy

produets.

---vs"s€s

seEween

Ene

,r

Country

Germany

France

UK

rtaly

Others

Tota 1:

T+BLE

III

.fapan's trade

wlth

main Community countries

in

1979

in

percentage:

%

of

Trade 32.8

15. t

23.4

8.4

20.3

I00.0

-18-%

qf Deflcit

27.3

16.0

?9.1 1.5 25.9

100.0

l{hat has

to

be done

L4.

There

is

clearly

a

growing awaren€se

ln

the

rnstltut,iong

of

the

Comunity,

in

national

governments

of

the

Cornmunity and

not least

_in

Capan

lteelf,

_that

the groring

defLcit with

the

EEC muet be tackled.

on

the

poeitlve

sLde we ean

point

out

that, irapan's customs

_tar{ff

reduetionq under GATI have been

the

higheet

of all

partleipant

'eountriea,

I

i.e.,

50%is agai.nst 30%

in

the

ease

of

the

United State8 and25%

for

the

Corununity. The Japanese average

tariff

rate

is

37" and 5.5%

for

produoto

originatlng

in

the

EEC.

Nonethelese,

posltlve

sEeps muat be taken

by the

comnunity and

bueLnessmen

to reetify

the

currenq unsatiefaetory

trading

eituatlon.

This

report

endeavours

to

nake eome

lrcsitive

reemmendations aE

to

hol

businesa

relatlons

ean be

better

establiehed by Community

_flrms

with

.Iapan and as

Eo how

the

Japanese themselvea can make the way

oaeier.

The situaEion both

with

regard

to

trade

with

and investment by itapaneee eorppnieo

in

the

European Communlty Ls then examined.

IV.

DOING BUSINESS IlT .'APAN

15.

The ilapaneee

citizen is

inherently

nationaliatlc

and,

with

Eme e:neetrF

tions,

wilL

aluost

always

prefer to

buy

a

ilapanese

rather

than

a

foreiqln

product.

By doing eo he sees hlmeeLf ae eupporting

his

country.

rn

additionr

he tende

to

be coneeious

of detall

and appree!.ative

of

guality.

A menufaetured product

wllr

se1l much more

easily

if it

_{hae one or}

a

number

of

the

follelng

_{characterietiee:}

I

-

_De

_jure,

_de

_f,acto

_{reductions are}

_e8timated

_by

uNrcE

ae

being

25?

c.

It ie

not

yet

ln

producElon

in

Japan,

It

possesses features

or

advanced technological specifications

not

ineorporatad Ln ,Iapanese eguivalent products;

ft

can be regarded as

a

status

symbol.

Manufacturere wishing

to sell in

Japan must be

able to

ensure

consiE-tent quality,

good

delivery

and

a Eirst class

back-up

service.

Exporters

have

to

be prepared

to

send

their

executives on repeated

visits to

.7apan

with the expectatlor of

prolonged stays and some eventual residence

in

Japan.

Often

visite of the

Chief Execut,j.ve

himself are

necessary

to

establlsh

busLness.

15.

Foreign businesgmen mugt make assiduoue

efforts to

understand not

only thelr

eustomers and Ehelr markets,

but also the

goverrun€nt machinery

app€rtainlng

to their buslneee.

There

are thirteen principal !{inistrLes

and

nine

State Agenoies

in ilapan.

These tend

to

be independent and

will

often

hold

different

viewe about

industry, trade

and finance

in

regard to both domestic and

foreign lnterests. It is

important

therefore

that

businessmen

find

out t

_hich

Governmbnt Departments

are

important

to tlreir

obtaining access

to the

Japanese

markete.

They should then make

direct

contact aad

try to

deal

wlth the

seetions and

individuals

wit,hin these

departtmnts who ar6 most dLreet,ly concerned. Acgualntance

with the right

GoverrulAnt

offLcials

on

a

p€rsonal

basls is

important

if the effort

neceEsary

to

solve probleme

is to

bear

fruit.

Information and help are mueh more

likely to

cqrre from

officials in the right Mlnistry

rrho have been

'cultivated'

than dl-rect reguests

wlthout

a

building of prior relationships.

In addition to

patience and

persistence,

already mentioned, the

building

of

personal

relationships,

howerrer formal these may

be, is vital to

succeas.

L7.

One must

also

remember

that

bhe Japanese normally

fietd

high

quality

negotiating

teams who

are

eontrreterit and extensively

briefed.

They reguire

ansrders

to

numerous guestions and ask these again and again on each

subse-quent

visit.

Everything

is

recorded; no meetings

are held

on

a

one-to-one

basie.

ilapanese decision makJ-ng

is

reached by consensus, eoneeguently many people may be involved

in the negotiating process. This gives

the Japanege the advantage

of

having mqre time

to

evaluate

the foreigner

and double eheck

his facts

and

figures. It resulte in far

more drawn out

negotiations than

are

uged

in

the Yilest,

but flts ln well with the

neeessity

for

group decision

taking

and

freguently for

backstage consultations

between ilapanese busineEs and admlnist,ration

officials.

It is,

however,

a

fundamental

fact

that

a

business

will

sueced

ln

,rapan

onJ.y

if it

plays the

game according

to

Japanese

rules

and

with

an

unders-tanding

of

the

system.

a. b.

- 19-

PE 68.+t+

_/fLn.

fhe

Dietrlbution

Svatem

lg.

one

of

the

most

dlf,flcult

aspeete of,

the

,rapanese market

_{ie ite}

distrlbut{gn

system.

By Wegtern standardg

it ls

moet

inef,fLcient.

The

JapaneEe consum€r hae

to

pay

a very

high

price

for

belng supplied vLa a

serles

of

layers

of

wholeealers which servl,ce thousands

of

eroalI 6hotr>

kee;rers throughout the

country

(there

_aro

_{some department etores}

_ln

_oatrnn

but

almost no suPernarkets and

retail

chaine ao we kncn*

theru).

fhrEher,

the blgger wholesalers and department Etores are

usually'controlled

by

Japanese manufaeturers

or

banks who

effectively

_{hlnder the}

_sale

_of

_foreign

goodd.

It ls,

therefore,

neeoosary

to

find

a

my

round

the

problo6 _t{her€ver possl.ble, glven

the

extreme

dlfficulty of

gettlng

to

gripg

with

the ,itrapqBeee

dlatribution eyeten.

As an example,

r

European

electricar

apprLance

nanufacturer succeeded

ln

_eelling

_{eoffee makerE through ooffee shopo and}

electrl.e

Ehavers through barber ehops, whLlst almoet

totatry faillng

_in

the

riornal

digtrlbutiql

chain.

A

further polnt

is

that

whilst lt

iE

nost

lmportant

_to

earry out

a

eonstant and

detailed

market researeh,

in

praetiee

_{it is dlfficult to}

_do

so beeause

of

the dlstrlbuEion

syeten.

19.

H@Ever,

whattrr

re Ilke Lt

or

not,

thLa

distribution

system exi.ets and exporter8

to

iraPan raust

live

with

lt.

llhe rnail.n _hope

is

thdt

_{there are} signs

that

the

syetem

le

beglnnlng

to

ehange under pr€sour6

fr@

ilgpanpga

consumerg themeelves.

There

i.s

therefore nuch which bueinessmen from

tt

e Community ean thenselvee do l-n

establishing

the:i,r businesses

in

Japan.

Having sal.d ttpis,

hmever,

lt is

up

to

the

Jr'rpanese

to

ensure Lhat they provide

filrther

assiqLance

to

foreigmers and,

ln particular,

go

further

than they have

untll

nor

Ln dlsmantLing

the

eonsLderabtre

barriers

to

trade rrhich exi-st.

rtle

nl*t

eeetLon of,

thts

r€port, examines what these bar.r-j.er.s ar€.

Earri€rio

to

trade

20.

r'rcm

the

nid

l95os

to

the

early

1970s, irapan adopted

a

vi.grorousl-y

protectr-onist

attLtude

to trade.

lmports,

particularly

of

manufactured

goodg, were

either

dl.s€ouraged by dLscriminatory

tax

barriers or

by

effec-tlv€

_Fon-tariff

barriers.

companies were regul-red

to

buy from LoeaL suppl.lsps and

publlc

procuremerlt,

_PoLicies,

_partLcularly

_in

_sensitive

_{seqtors guch}

ae

tel.acommunicatLons _and

_railway

_eguipment,

_only

_a&oitted

_rocar

_oupprlers.

Tday

many

of

the

technical

barriers

have been removed and

tariffs

have been lowered

signlficantly

_{under GATT. sone}

_effort,s

_{have been nade to}

simplify

inspection

forraallties,

e.9., in

the

automobile

sector,

and

in

relation

to

pharmaceutical products and

electrieal

and gas appliances.

2L.

Deepite

this there

can be

littIe

doubt

that non-tariff barriers

do remain which

effectively

increase

the difficulty in entering the

market.

The main

non-tariff

barriers

can be

a)

Cuetoms

b)

Product Testing

e)

Ilealth

and Safety Standards

d)

Labelling

e)

Admlnlstratlve Guidance

f)

Governnent Procurement Polieies

a)

customs

found

ln the

follcruing areas:

Difficulties

with

Customs procedures are perhaps the most widely

experienced and moat resented

of non-tariff barriers.

Freguent eompJ-aints are made

that

Customs

officials

tend

to

be

rigid

and

arbitrary in

applying

regulations.

Customs

preedures are

complex and time consumLng.

Explana-tions

for

Cuetons decislons

are often not

made and no

effective

appeal

systern

exlsts.

22. It is

important

that

Community businessmen should be encouraged to

chroniele

difflculEies

met aE custqne

points

and

to

submit these

to

the

communlty

offices

in

Tokyo

for investiqation.

The Japanese should cooperate

fully in

invest.lgating complaiats made. A

elear

grriclc should

also

be

ptrbllshed Co

help

importers understand what Customs elearance reqrriremcnts

are. It

should be drawn up

with

the

direct

involvement and consensue

of

the

custons

authoritles

themseLves. The Japanese Government should be asked co

Lnstitute

aome form

of

trainlng

for

CuEtoms

officials

ro

help

them

to

adopt

a less

traditional

time consuming and

restrietive

approach

in thelr

dealings

with

i-mporters and

the appllaation

of

Customs

rules.

b) Product _Eee!1lg

23.

Standards

of guality

and

safety

can reasonably expect

to

be

set

by

any

nation

anxloue

to

make

eertain that

goods eominq on

to lts

markets do

trol

<'augo

harm.

As

far

flg

_l)osstlrlo,

hrx"rover, lrrlcrnat iorr.rl l;l.an<lnr.dg ltcr.rl tcl be adopted

to facilitate

worrd

trade.

The Japanese seem

to

pursue a

policy in the testlng

and

eertLficatlon of

produets which

is

deslgned to

tlelay,

confuse and dLscourage

importers.

Testing proeedures tend

to

be

eomplex and Lmplernented

in

such a way

as to

place

the

import-ing

manufae-turer at a distlnct

digadvantage compared

to loeal

Japanese producers.

whilst

ful1y

reeognlsing

_that

_{the Japanese have}

_a

_ri-grrt

_{to insist}

on

consls-tent

and good

quarity

products,

_{it is}

_entirely

_wrong

_to

_broek

_entry

by

deriberatery compricated

testrng

_{proceduree and}

_{diserimindtion}

_in

_favour

of

local

produets.

Once again, as wi.th Cuetois, produet

_{eertification,}

_{standards and} proeedures

_of

testLng need

to

be

slmplifled

so as

to

assLst,

not

hlnderr

those

foreign

manufaeturers who are abre

to

meet

the

gualLty stEndards

regul'red.

Japanese and

foreign

compahiss must be afforded

_simllar

treat-ment

ln

the type,

nethod and

l0cation.of

_testlng.

_one

_{further polnt is}

that

product

testlng

ehould

not regulre

manufaeturers

_to

_diserose

lnfor-mation on methods

_of

_{ttadufaetrlre and ecdnposition crf}

produets wlthout complete

justification.

c)

gesM_!sg_gessgs_gtesggsg!

24'

once

again, the

Japene8e

_are

_{fully entitled to}

_ensure

_that

stdnaldtdg

comply

with

the

reasonabLe expectatl.ons

_{of society. rf}

_{JapaneEe ears Ere} made

to

emissr-on _{standards whlch reduce}

_pollution,

_then

_foreign

rmporter.

need

elso to

_conply'

_However,

_{it le}

_altogether

ehother matte,r

_for

_health and

safety

standards and proeedures

_to

_{be designed}

_to

_miliEate

_against

forelgn

producers

_rrlthout

_{there being any}

_discernible

danger

to

the

heaLth

or

safety

of

JallEneae consum€rs.

_{Further, the}

_Japanese

_authorlties

must recognise

_thet

_thelr

_system

_of

_{advLeory committ,ees}

in

each

Minlstry

_whieh

are

required

to

vet

standarde,

_freguently

_{and unneeessarily}

cause delays. There

is

a

need

for

_a

_clear

_{and coneise}

_bulletin

_to

_{be issued}

to

expralh

the

eontent

_of

and redsons

for

etandards

_{shich are}

_set.

_{Gulderlnes Ehourd} be gLven

_to

importers and auEhorrbies

_arike

_on

_the

_proeedures

_to

be follovred

for

submitting _{and teetLng}

_of

_produets.

The Japanese having

stated

thelr

wlllingness

_to

move _{tovrarde the}

aceeptance

_of

_{lntbrnatLonal standards muet}

be seen

to

b6

actlng

aeeordirtg

to their

promises.

_{The ccnrmrsslon,e ihvolvement}

_is

essentiar

tci make

ebrtain

_{that this is}

_takrng

_praee.

_rndeed,

_the

commidsioh _{ehould moke}

greatdf

uge

of lts

_{qrn reguratory power}

_to

_pregcrlbe

striritar

enforeedbre

standards

_for

sueh _{products as motor vehr.eles and components}

whr.eh are

sold

on EC markets.

d) Labellino

25.

_{Although an apparently}

produets Eor the ilapanese

_is

in

t-he case

of

foods, small

unimportant

_subject,

_{the matter}

a major

_{irritant to}

_importers. items

often

have

to

be unpaeked

of

labelling

For instance,

tndtvldually