WASHINGTON – U.S. Trade Representative Susan Schwab today commended the progress Japan is making in reforming its economy while urging continued steps forward. Japan’s ongoing process of economic reform has contributed to its recent economic growth and spurred new U.S.-Japan business ties. This progress is listed in the fifth annual Report to the Leaders, which documents achievements under the U.S.-Japan Regulatory Reform and Competition Policy Initiative launched by President George W. Bush and Prime Minister Junichiro Koizumi in June 2001.

"Under the stewardship of Prime Minister Koizumi, Japan has made important progress in reforming its regulatory environment. These reforms have achieved real results, and I urge Japan to continue on this path of reform in light of the benefits it has brought to Japan’s economy. I look forward to strengthening our work in this area," Schwab said.

Schwab added, "We have pressing issues in other areas where we also need to see tangible progress. In particular, the fact that we have not yet seen an actual resumption of exports of U.S. beef to Japan since trade was suspended in January remains a real concern. I look forward to the resumption of trade in beef in the very near future."

This year’s Report cites a range of measures being taken by Japan to help improve market access, enhance transparency, lower barriers to business, speed regulatory decisions, and strengthen the competitive environment.

The Report identifies additional steps being taken to help establish a level playing field between Japan Post and private financial and express delivery companies. Ambassador Schwab emphasized, "It remains vital that the process by which new Japan Post products are reviewed and approved is fully transparent and that criteria providing for a level playing field are met before approvals are made."

Important issues relating to medical devices and pharmaceuticals are also addressed in the Report, including regulatory improvements and reimbursement pricing. Schwab said, "We look to Japan to ensure that its reimbursement pricing system rewards the development of innovative pharmaceuticals and medical devices and that its regulatory system expedites the introduction of such products to patients."

A special emphasis is also placed in this year’s Report on the resolve of both governments to work together in pursuing specific measures to combat the problem of counterfeiting and piracy of intellectual property.

Background

This 76-page Report to the Leaders is the fifth annual report under the Regulatory Reform Initiative, and was finalized on the eve of the Summit meeting between President George W. Bush and Prime Minister Junichiro Koizumi in Washington, DC.

Each year, the two governments exchange reform recommendations that are thoroughly discussed through working and high-level meetings. Based on these recommendations, the governments prepare a joint report on the results of the work under the Initiative.

Highlights of steps that have been taken or commitments for future steps made by Japan include:

• Raising the range of drug premiums, and dedicating more staff resources to help speed reviews of applications for new pharmaceuticals and medical devices for sale in Japan;

• Implementing, from May 2007, new provisions that permit the use of triangular mergers using foreign shares and other modern merger techniques, and to put into place related tax measures before that date;

• Introducing a new leniency system to encourage companies to report cartels and bid rigging agreements to Japan’s antimonopoly enforcement agency;

• Taking steps to further open the bank sales channel for insurance products, with plans for complete liberalization by the end of 2007;

• Reducing fees that NTT East and West charge competitors for access to its fixed network;

• Undertaking new measures to promote the introduction of innovative IT solutions for medical records and processing of medical receipts;

• Putting new rules into place to open Japan’s regulatory decision-making process to greater opportunities for input by interested parties;

• Implementing new measures to adopt a more internationally-accepted plant quarantine system;

• Ensuring that companies that are conducting their operations in a lawful manner will not be adversely affected by Article 821 of the Corporate Code relating to quasi-foreign companies;

• Enacting the Financial Instruments and Exchange Law in June 2006, under which investment advisors, investment trust management companies, and securities companies will be supervised as financial firms under one unified cross-sectoral law;

• Introducing measures to help level the playing field between commercial insurance providers and a large category of previously unregulated insurance cooperatives; and

• Beginning initial operations of a web-based "One-Stop Service" to ease the process of applying to register new motor vehicles, with full online service by 2008.