I OVERVIEW OF TRADE REMEDIES

'Trade remedies' generally refers to the three remedy tools approved under the WTO Agreements regarding unfair trading, etc., and they are, namely, anti-dumping duty measures, countervailing duty measures and safeguard measures. The aim of these measures is to protect domestic industries and to provide them with remedies against unfair imports from a foreign country or for other special reasons, and they involve designating, inter alia, the product, supplier and supplying country and imposing additional custom duties or restricting the quantity of imports allowed.

In particular, anti-dumping duty measures and countervailing duty measures are established for the purpose of eliminating injury to domestic industry caused by unfair import from a foreign country. To utilise these measures, the domestic producer (companies and organisations, etc.) must file a petition to the Japanese government requesting the imposition of a duty. The government will conduct an inspection based on this petition and if the statutory requirements are satisfied, a custom duty will be imposed pursuant to laws and regulations.

The following sections will describe these three trade remedies as they are applicable to Japan, as well as recent changes to the system.

II LEGAL FRAMEWORK

i Anti-dumping duty measures

Anti-dumping duty measures are special customs duty measures imposed on a certain product when the export price of the product is lower than the price at which it is sold in the exporting country (dumping), and such dumping is causing injury to the domestic industry in the importing country. In order to counter this, a dumping margin is added to the domestic selling price in order to render the dumped price a 'fair' price. The amount of anti-dumping duty cannot exceed the difference between the export price and the domestic selling price of the product.

The anti-dumping duty is a trade relief remedy sanctioned under the WTO Agreements (the General Agreement on Tariffs and Trade (GATT) Anti-Dumping Agreement). In Japan, this remedy is set forth in the Customs Tariff Act and the Cabinet Order regarding Anti-dumping Duty (the AD Order), etc. and is also subject to WTO Agreements (the GATT Anti-Dumping Agreement) as well as these domestic laws and regulations. In addition, there are the Guidelines for Anti-dumping Duty Proceedings (the AD Proceedings Guidelines) and an 'Anti-dumping Duty Petition Handbook' that exist to supplement domestic laws and regulations.

The measures

Requirements

Anti-dumping duty measures can be invoked when the following requirements apply pursuant to Article 8 of the Customs Tariff Act:

  1. It must be determined that dumping has occurred (i.e., the product must be imported at a price lower than the normal price in the exporting country).
    In principle, the normal price is calculated based on the price at which the product is sold to consumers in the exporting country (exporting country domestic selling price) (Article 2, Paragraph 1 of the AD Order). The exporting country domestic selling price used must be the price used in transactions with individual purchasers.
    However, if there exists no exporting country domestic selling price or if it is deemed inappropriate to apply the exporting country domestic selling price, one of the following prices is used (Article 2, Paragraphs 1 and 2 of the AD Order):
    • the selling price for export of like products that are exported from the supplying country of the relevant product to an appropriate third country (the third-country export price); or
    • the production cost of the relevant product plus management fee, sales expenses, general expenses and regular profit for products similar to the relevant product produced in the country of origin (the constructed normal price).

    In addition, Japan has appointed China (excluding Hong Kong and Macao) and Vietnam as non-market economy nations. If a producer of a product imported from either nation cannot clearly demonstrate that the market economy conditions prevail (in its market), then the normal price may be calculated by using the exporting country domestic selling price, third-country export price or the constructed normal price of a same type of product exported from a country that is at a similar stage of economic development comparable to the country of origin of the relevant product (Article 2, Paragraph 3 of the AD Order).

  2. The dumping must be causing or potentially cause material injury to the Japanese industry, or there must exist a fact that the establishment of Japanese industry is materially hindered by the dumping.
    'Japanese industry' means Japanese producers that produce at least 50 per cent of Japan's total production of the same type of product deemed as having been dumped (excluding certain producers such as those who have a direct or indirect controlling relationship with the suppliers or producers of the relevant imported product).
  3. Third, there must be a causal relationship between the dumping and injury caused to the Japanese industry. If the injury to the Japanese industry is caused by factors other than the dumping, such as an increase of imports of a non-dumped product or a decrease in demand, etc., then anti-dumping duty measures cannot be invoked.
  4. Lastly, the measures must be necessary to protect the Japanese industry. For example, if the exporter makes a promise to revise the export price or the applicant withdraws its petition or other changes in circumstances occur, rendering it unnecessary to protect the Japanese industry after a petition for anti-dumping duty measures has been filed or investigation by an authority is initiated, then anti-dumping duty measures cannot be invoked.

Method of imposing anti-dumping duty measures

A cabinet order is enacted to invoke anti-dumping duty measures in each individual case (Article 8, Paragraph 2 of the Customs Tariff Act). The relevant cabinet order designates the product in question, the supplier and supplying country subject to the anti-dumping duty measures and the period for which the duty is imposed.

The anti-dumping duty is imposed on the relevant product, supplier and supplying country designated by the cabinet order for the designated period of time in addition to the tariff rate normally imposed on the relevant product, to the extent that the sum does not exceed the difference between the normal price and the export price to Japan (dumping margin).

Implementation period

Anti-dumping duty measures are implemented for a maximum of five years; however, this period may be extended if reviewed as appropriate during said period (Article 8, Paragraphs 1 and 27 of the Customs Tariff Act).

Initiation of investigation, case example of invocation

In Japan, there have been nine anti-dumping investigations, which is a relatively small number compared with those of other countries.2

In the past five years, two cases were subject to anti-dumping investigation. Those were: (1) an investigation on potassium hydroxide originating in Korea and China (petition date: 3 April 2015, invocation date: 9 August 2015); and (2) an investigation on toluene diisocyanate originating in China (petition date: 17 December 2013, invocation date: 25 April 2015).3

ii Countervailing duty measures

Countervailing duty measures are special duty measures imposed for the purpose of countervailing the effect of subsidy from the exporting country's government where the export of the subsidised product is causing injury to the domestic industry of the importing country.

The countervailing duty system is one of the trade remedies approved under the WTO Agreements (the GATT Agreement on Subsidies and Countervailing Measures). In Japan, investigation proceedings are governed by the Customs Tariff Act (Article 7) and the Cabinet Order on Countervailing Duty (the CVD Order). In addition, the Guidelines for Countervailing Duty Proceedings (the CVD Proceedings Guidelines) exist to supplement the WTO Agreements, domestic laws and regulations and to support the smooth operation of the system.

The measures

Requirements

Countervailing duty measures can be invoked when the following requirements apply pursuant to Article 7 of the Customs Tariff Act:

First, it must be determined that import of the subsidised product has in fact occurred. An import of a subsidised product is deemed to have occurred if the following matters are demonstrated, in particular:4

  1. It is demonstrated that the subsidy was achieved through any of the following:
    1. a government practice involving a direct transfer of funds (e.g., grants, loans, and equity infusion), potential direct transfers of funds or liabilities (e.g., loan guarantees);
    2. government revenue that is otherwise due is forgone or not collected (e.g., fiscal incentives such as tax credits);
    3. a government provides goods or services other than general infrastructure, or purchases goods; or
    4. a government makes payments to a funding mechanism, or entrusts or directs a private body to carry out one or more of the type of functions illustrated in (a) to (c) above which would normally be vested in the government and the practice, in no real sense, differs from practices normally followed by governments;
  2. It is demonstrated that a benefit is conferred by the measures described in (A) above.
  3. It is demonstrated that the measures described in (A) above are specific. The specificity, as used herein, is determined under the following criteria:
    1. if the authority granting the subsidy (the granting authority), or the legislation pursuant to which the granting authority operates, explicitly limits access to a subsidy to certain enterprises (an enterprise or industry or a group thereof governed by the granting authority), the subsidy is deemed to be specific;
    2. if the granting authority, or the legislation pursuant to which the granting authority operates, establishes objective criteria or conditions governing the eligibility for, and the amount of, a subsidy, specificity shall not exist, provided that the eligibility is automatic and that such criteria and conditions are strictly adhered to. Such criteria or conditions must be clearly spelled out in the law, regulation or other official documentation, so as to be capable of verification. 'Objective criteria or conditions' mentioned above means criteria or conditions that are neutral, that do not favour certain enterprises over others, and that are economic in nature and horizontal in application (e.g., number of employees, size of enterprise);
    3. if, notwithstanding any appearance of non-specificity resulting from the application of the principles laid down in (a) and (b), there are reasons to believe that the subsidy may in fact be specific, other factors may be considered. Such factors are: use of a subsidy programme by a limited number of certain enterprises, predominant use by certain enterprises, the granting of disproportionately large amounts of subsidy to certain enterprises, and the manner in which discretion has been exercised by the granting authority in the decision to grant a subsidy. In applying the provision of this paragraph (c), account is taken of the extent of diversification of economic activities within the jurisdiction of the granting authority, as well as of the length of time during which the subsidy programme has been in operation; and
    4. a subsidy that is limited to certain enterprises located within a designated geographical region within the jurisdiction of the granting authority is deemed to be specific.

It must be determined that the import of a product that was directly or indirectly subsidised for the production or export thereof in a foreign country caused or could potentially cause material injury to the Japanese industry (limited to the Japanese industry producing the same kind of product as the imported product so subsidised), or there must exist a fact that the establishment of Japanese industry is materially hindered by such import.
Japanese industry' means Japanese producers that produce at least 50 per cent of Japan's total production of the same type of product as the imported product (excluding certain producers such as those who have control over the suppliers or importers of the relevant imported product) (Article 2, paragraph 1 of the CVD Order).
The above-mentioned fact is determined based on whether or not the following matters are demonstrated:5

  1. that there has been an increase in import of the subsidised product, either in absolute terms or relative to production or consumption in Japan; provided, however, that if the subsidised product is supplied by more than one country, such increase must be demonstrated for each supplying country;
  2. that, due to import of the subsidised product, there has been a decrease in price of a Japanese like product or there has been a prevention of price increase which otherwise would have occurred had such subsidised product not been imported; and
  3. the impact of import of the subsidised product caused to the Japanese industry (including decrease in sales, profit, production, market share, productivity, investment earning rate or operation capacity, or adverse effect on capital flows, inventory, employment, wage, growth, fund raising capacity or investment).

A causal relationship between the import of the subsidised product and the injury to domestic industry must be demonstrated. If the injury is caused by other factors, such as increased import of a non-subsidised product or a decrease in demand as a whole, such factors will be naturally taken into account when accessing the causal relationship between the subsidised import and the material injury to domestic industry.

Lastly, invocation of duty measures must be necessary to protect the Japanese industry.
The requirements described in (i) through (iii) above are requirements based on previous facts the evidence of which is subject to analysis during the investigation proceedings; however, even if such requirements are met based on previous facts, it may become unnecessary to protect the Japanese industry due to a change of circumstances occurring after the petition or initiation of investigation by authority. In particular, when a promise is accepted, the export price would normally rise until the subsidy is offset, in which case it is no longer necessary to protect the Japanese industry, therefore no duty will be imposed. Also, even if no promise is accepted, if, for example, the petitioner has withdrawn the petition, it is no longer necessary to protect the Japanese industry, and therefore no duty will be imposed, in principle.6

Method of countervailing duty measures

A cabinet order must be enacted in order to invoke countervailing duty measures in each individual case (Article 8, Paragraph 1 of the Customs Tariff Act). The relevant cabinet order designates the product in question, the exporter, producer, exporting country or country of origin of the product and the period for which the duty will be imposed.

The countervailing duty is imposed in addition to any normally imposed tariffs (agreed tariff rate, basic tariff rate, temporary tariff rate or preferential tariff rate) in an amount no more than the amount of the relevant subsidy.

The amount of subsidy is calculated according to the following method:7

  1. Calculation principle: in principle, the subsidy amount is calculated in accordance with the following:
    1. the conversion currency must be denominated in the local currency; and
    2. the relevant product must be sold during the period subject to investigation. The 'date of sale' normally means the day on which substantive sale terms are determined; however, the date of sale is determined for each case individually.
  2. Basic thinking behind the calculation method: the CVD Proceedings Guidelines set out the basic thinking behind the calculation of typical subsidy amounts as they relate to grants, discharge of debts, equity infusion, loans, loan guarantees, provision of goods or services, investment transfer of debts and extension of maturity dates. Subsidies are calculated from the receiver's point of view, but the calculation method for each subsidy amount is determined appropriately through individual investigation based on the nature and terms and conditions thereof.
  3. Adjustments upon calculation: The following adjustments are made when calculating the subsidy amount.
    1. Deduction of expenses: expenses necessary for subsidy petition, and export duties for offsetting subsidies, etc. are deducted from the subsidy amount.
    2. Allocation of subsidy amount:
      1. If it is deemed that the subsidy is generating a continuous benefit over a period for more than one year (starting from the year in which the subsidy was granted), the relevant subsidy amount is allocated over a reasonable period, in which case, interest arising from such benefit is added.
      2. The necessity of such allocation is determined separately considering the nature and terms and conditions, etc. of the particular subsidy.
  4. Calculation of countervailing duty rate: when imposing a countervailing duty by way of an ad valorem duty, the duty rate is calculated by dividing the subsidy amount of the product subject to investigation by the CIF price (the trade price, including the cost of freight and insurance to Japan) of the relevant product imported during the period subject to investigation. 
Implementation period

Countervailing duty measures are implemented for a maximum of five years; however, this period may be extended if reviewed as appropriate during said period (Article 7, Paragraphs 1 and 27 of the Customs Tariff Act).

Initiation of investigation, case example of invocation

In Japan, there has only been one countervailing duty case to date: this was the Hynix DRAM (Korea) case (imposition of countervailing duties was determined on 27 January 2016 at a rate of 27.2 per cent for the period from 27 January 2006 to 31 August 2008 and 9.1 per cent from 1 September 2008 to 23 April 2009, and withdrawn on 23 April 2009).

iii Safeguard measures

'Safeguard measures' generally refers to the imposition of customs duties or restrictions on quantity of imports allowed in order to avoid injury to the importing country's domestic industry caused by a sharp increase in imports of a particular product where such measures are recognised as urgently necessary for the national economy.

Safeguard measures are trade remedies approved under the WTO Agreements (the GATT Agreement on Safeguards). In Japan, quantity restriction measures are regulated under the Foreign Exchange and Foreign Trade Act, the Import Trade Control Order, and the Regulations to Govern Emergency Measures to be taken in Response to an Increase in the Importation of Goods, while customs duty measures are provided for in the Customs Tariff Act (Article 9) and the Cabinet Order Relating to Emergency Duties. These domestic laws and regulations are also supplemented by the 'Establishment of the Guidelines for Procedures relating to Emergency Measures to be taken in response to an Increase in the Importation of Goods' and the 'Guidelines for Procedures relating to Emergency Duty, etc.'.

The measures

Requirements for invocation

Emergency duty measures (or safeguard measures) can be invoked when the following conditions apply pursuant to Article 9 of the Customs Tariff Act:

Increase in imports

As the most fundamental requirement for imposition of emergency duty, there must be an increase in the imports of a particular kind of product due to a price decrease in a foreign country or some other unforeseen development of circumstances (Article 9, Paragraph 1 of the Customs Tariff Act).

'Unforeseen development of circumstances' is the domestic legislative equivalent of the wording 'a result of unforeseen developments' as used in Article 19 of the GATT 1994, under which it is agreed that 'unforeseen developments' means the development of circumstances arising after negotiation of related tariff concessions that it 'would not be reasonable to expect that the negotiators of the country making the concession could and should have foreseen at the time when the concession was negotiated'.8

The increase in imports may be due to either natural or artificial causes, and may include cases where the absolute import quantity decreases or remains the same but the percentage of imported product increases. However, if, for example, there is a price decrease in a foreign country and the domestic industry takes countermeasures against such low-priced imported product by marking down its own domestic product price, then emergency duty measures cannot be imposed if there is no increase in the absolute quantity or shares of import, as there exists no increase in imports in any sense.

Serious injury to domestic industry or threat thereof

Even if there is an increase in the imports of a particular product, emergency duty measures cannot be imposed if there is no serious injury to Japanese industry.

Similarly to anti-dumping duty and countervailing duty, 'Japanese industry' here means producers that produce a substantial proportion of the total domestic production (roughly at least 50 per cent), as a proportion of either all domestic producers of like products and directly competing products, or those producers of the relevant product itself. The purpose of this requirement is to ensure that emergency duty measures are imposed only when a substantial portion of the relevant industry is injured rather than to protect individual entities that failed to compete with foreign import products.

However, unlike anti-dumping duties and countervailing duties, the scope of 'Japanese industry' is not limited to producers of 'like goods' but extends to 'Japanese industry involved in the production of products which compete directly with such imported product in their uses', and is therefore more broadly defined. This is based on the idea that in the event of unfair conduct such as dumping or subsidy, the scope of 'Japanese industry' must be limited in order to strictly assess the facts regarding unfair conduct; however, in the case of emergency duty measures, which are triggered by injury resulting from fair trade, the requirements regarding the scope of injury needs to be stricter, but once those requirements are met the remedies are more broadly available to domestic industry, including competing industries.

'Serious injury' means a greater level of injury than the 'material injury' required in the case of anti-dumping duty or countervailing measures, and in practice, it is determined on a case-by-case basis. Also, serious injury does not actually need to have been realised; the threat of serious injury can be sufficient if it is clearly imminent.9

Causal relationship between the increase in imports and serious injury to domestic industry

Even if there is an increase in imports of a specific product and serious injury to the domestic industry has been established, emergency duty measures will not be imposed unless a link can be shown between the injury and the increase in imports.

Urgent necessity for the national economy

Another requirement that must be met before emergency duty measures can be invoked is that there must be an urgent necessity for the national economy.

Emergency duty measures, which are taken against fair trade, offer protection to domestic industry, but at the same time they are disadvantageous to domestic consumers of the product. Therefore, before these measures are invoked, it must be carefully assessed from the viewpoint of the national economy whether the protection of the relevant industry is truly necessary based on Japan's industry policies, and whether the invocation of such measures is necessary at that point in time.10

Method of emergency duty measures

A cabinet order must be enacted to invoke emergency duty measures in each individual case. The relevant cabinet order designates the product in question and the period for which the duty will be imposed.

Emergency duty measures are implemented by way of imposition of customs duty or restriction on import volume to the extent necessary to prevent or remedy serious injury and to facilitate adjustment. Emergency duty measures are applied to the entire world indiscriminately. When imposing volume restrictions, the cap must be at least the average import volume for the past three years, in principle.

Emergency duty measures may be imposed on all specified products imported during the specified period of time or on the part of the specified products exceeding a certain quantity or value, in addition to normal customs duty, in an amount equal to or less than the amount corresponding to the difference between the customs value of the products and the appropriate wholesale price in Japan of like products or similar products, minus the amount of normal customs duty. If the specified products are subject to tariff concessions under the WTO Agreements, emergency duty may, by withdrawing such concessions or modifying such concessions within a certain tariff rate, be imposed at a certain tariff rate or the rate so modified with respect to all of the specified products imported during the specified period of time or the part of such specified products exceeding a certain quantity or value.

Implementation period

Emergency duty measures are implemented for a maximum of four years; however, if it is deemed that Japanese industry will continue to suffer serious injury owing to increased imports of the specified product even after the end of such period and it is deemed that the Japanese industry is in the process of structural adjustment, then the implementation period may be extended up to a total of eight years (inclusive of the aforementioned four years)(Article 9, Paragraphs 1 and 10 of the Customs Tariff Act).

Initiation of investigation, case example of invocation

In Japan, there has only been one emergency duty measures case to date (a safeguard investigation regarding Welsh onions, shiitake mushrooms and tatami mats).

In the above-mentioned case, an investigation was initiated in December 2000 upon request by the Minister of Agriculture, Forestry and Fisheries. In April 2001, Japan invoked temporary safeguard measures for a period of 200 days setting a tariff quota and imposing additional tariffs on imports of Welsh onions, shiitake mushrooms and tatami mats that exceeded the quota. However, these temporary measures did not lead to the invocation of definite measures, and instead were terminated in November 2001.

III TREATY FRAMEWORK

i Overview

The multilateral trade agreements that Japan is currently negotiating are the Trans-Pacific Partnership Agreement (the TPP Agreement) and a Japan–EU Economic Partnership Agreement (EPA).

ii TPP Agreement

The TPP Agreement is a trade agreement that was initially negotiated among 12 countries: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam. The TPP Agreement is an ambitious agreement billed as a high-level, comprehensive and balanced treaty. Negotiations of the terms of the TPP Agreement were basically concluded as of the ministerial conference in Atlanta in October 2015, but the United States declared its withdrawal from the TPP Agreement in January 2017. In May 2017, the 11 countries, excluding the United States, began negotiations on an agreement as a legal framework to realise the contents of the TPP Agreement and, following that, a final agreement was reached. The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (TPP11) was signed by the 11 countries on 8 March 2018. The said Agreement, except for some clauses, is an agreement to realise the contents of the TPP Agreement and maintains the high standards of the TPP Agreement.

The TPP Agreement contains provisions that allow temporary emergency measures (transitional safeguards) in order to prevent significant damage to domestic industries resulting from a sharp increase in imports of a product, and also contains anti-dumping duty and countervailing duty clauses.

The transitional safeguards under the TPP Agreement mean that if there is a sharp increase in imports of a product originated in another Member State resulting from the reduction or abolition of tariffs under this treaty, that causes or is likely to cause material damage to the domestic industry that produces the same type of product or products that are directly in competition therewith, then that Member State will be permitted to temporarily suspend the tariff concessions under the TPP Agreement, or even raise the tariff to a certain level for a certain transition period.

The anti-dumping duty and countervailing duty measures preserve all rights and obligations under the relevant WTO Agreements, while also setting out non-obligatory provisions on specific procedures to promote transparency and due process, such as verification of information between the relevant parties.

The TPP11 did not review the above trade remedies. However, the TPP11 stipulates that: 'If the entry into force of the TPP Agreement is imminent or if the TPP Agreement is unlikely to enter into force, the Parties shall, on request of a Party, review the operation of this Agreement so as to consider any amendment to this Agreement and any related matters' (Article 6 of the TPP11).

For this reason, in the case of 'If the entry into force of the TPP Agreement is imminent or if the TPP Agreement is unlikely to enter into force', it is necessary to pay attention to the possibility of a review of the above trade remedies in the future.

iii Japan–EU EPA

Since March 2013, Japan had been negotiating with the EU on an EPA, and, in December 2017, the parties reached agreement in each field except for a settlement system for investment disputes. For trade remedies, emergency measures (transitional safeguards), etc., in the event of an increase in imports of a product originated in another Member State resulting from a reduction or abolition of tariffs, have been established based on this agreement, and Japan and the EU shall finalise and sign the agreement in 2018, aiming for its entry into force before spring of 2019.

IV RECENT CHANGES TO THE REGIME

There have been no major legislative changes recently except for the amendment of the relevant laws discussed in Section V.

V SIGNIFICANT LEGAL AND PRACTICAL DEVELOPMENTS11

i Relaxation of requirements for petitions for anti-dumping duties, etc.

As described below, the requirements for petitions for anti-dumping duties and countervailing duties have been relaxed, and it has become easier to use the system.

The petitioner was previously required to submit a damage assessment of a significant part of the domestic industry (approximately 50 per cent of the total output) at the time of petition. However, by virtue of an amendment to the AD Order and the CVD Order, a petitioner has only to submit a damage assessment to the extent reasonably available.

The petitioner was previously required to confirm at the time of petition that the support for the petition for imposition of duties exceeded the opposition (the requirement at the investigation initiation). However, by virtue of an amendment to the AD Order and the CVD Order, in the case where the same cannot be confirmed at the time of petition, it is now possible for the competent ministry for the relevant industry to confirm with Japanese producers its support for the petition for imposition of duties after the petition.

The determination was previously made at the time of confirmation of the requirements for petition/investigation initiation, including importer-producers (those engaged in both domestic production and import of the goods subject to investigation). However, by virtue of an amendment to the AD Order and the CVD Order, the determination is now made excluding such importer-producers, etc.

The above-mentioned amendment entered into force on 1 April 2017.

ii Relaxation of requirements for group petition for anti-dumping duties, etc.

For group petitions for anti-dumping duties and countervailing duties, the petition was previously required to be filed by a group the majority of which were Japanese producers of the product related to the petition. However, by virtue of an amendment to the AD Order and the CVD Order, group petitions for imposition of duties are now possible if at least two members of the petitioning group are Japanese producers of the relevant product. (The amendments were to Articles 5 and 10 of the AD Order and Articles 3 and 7 of the CVD Order.) The amendments came into effect on 1 May 2016.

iii Amendment of the AD Proceedings Guidelines and CVD Proceedings Guidelines

Japanese ministries, including the Ministry of Economy, Trade and Industry and the Ministry of Finance, reviewed the then current requirements for investigation initiation under the anti-dumping duty system and countervailing duty system, which were stricter than those under international rules, and amended the related guidelines as a result.

Specifically, with regard to the investigation initiation requirement under the anti-dumping duty systems, etc. (status of support), it was required that 'the production of the Japanese producer(s) who support the petition' exceed the total production of 'opposers', 'position unknown' and 'import producers'. However, due to the amendment, which brings Japanese rules into line with international rules, 'position unknown' is now excluded from the calculation of the status of support. (The amendments were to Section 5(3) of the AD Proceedings Guidelines and Section 4(3) of the CVD Proceedings Guidelines.) The amendments came into effect on 1 April 2011.

VI TRADE DISPUTES12

On 15 March 2016, the Japanese government made a request to the World Trade Organization to hold consultations with Korea under the WTO Agreements on grounds that Korea's anti-dumping duty measures on valves for pneumatic transmissions from Japan, imposed by Korea from 19 August 2015, were in breach of the Anti-Dumping Agreement because of flaws in Korea's determination of injury and causal relationship as well as flaws in its investigation procedures. Despite consultations held on 28 April 2016, Japan and Korea failed to bridge the gap between them. Japan requested WTO adjudication by a panel, and on 4 July a panel was established.

Further, on 29 March 2016, based on the final decision that the domestic industry in India had suffered or was likely to suffer significant damage owing to an increase of steel imports, India commenced definitive safeguard measures following the government's provisional safeguard measures, which had been in place since 14 September 2015. The additional tax rate is 20 per cent for the first year and gradually decreases to 18 per cent, 15 per cent and 10 per cent at six-month intervals afterwards.

In December 2016, Japan made a request to India to hold consultations from the position that such safeguard measures were suspected of breaching the WTO Agreement. However, despite bilateral consultations held in February 2017, the two countries did not reach a resolution based on the WTO Agreement, and in March 2017 Japan requested WTO adjudication by a panel, with a panel established in the following April.

Japan will seek a resolution to the foregoing two issues in accordance with the WTO rules.

VII OUTLOOK

Japan, originally acknowledging itself as a trading nation, has been hesitant in utilising anti-dumping and other trade remedy measures; however, with the rise of other Asian nations and the WTO dispute resolution rules becoming well established, the number of investigations and disputes handled has increased. The above two cases are examples of the recent trend.


Footnotes

1 Yuko Nihonmatsu and Fumiko Oikawa are partners at Atsumi & Sakai.

2 Page 14 of the 'Trade Remedy Investigations', issued FY2015 by the METI Office for Trade Remedy Investigations, Trade Control Department, Trade and Economic Cooperation Bureau (www.meti.go.jp/policy/external_economy/trade_control/boekikanri/download/trade-remedy/new-pamphlet.pdf).

4 Page 4 of the CVD Proceedings Guidelines, Agreement on SCM 1.1(a).

5 Page 4 of CVD Proceedings Guidelines.

6 Pages 444–445 of the 'Special Tariff Konmentaru'.

7 Pages 6–9 of the CVD Proceedings Guidelines.

8 Page 729 of the 'Special Tariff Konmentaru'.

9 Pages 729–730 of the 'Special Tariff Konmentaru'.

10 Page 731 of the 'Special Tariff Konmentaru'.