WORLD TRADE
G/STR/Q1/JPN/15
17 October 2011
ORGANIZATION
(11-5110)
Original: English
Working Party on
State Trading Enterprises
STATE TRADING
Questions Posed by AUSTRALIA Concerning the New and
Full Article XVII Notifications of JAPAN1
The following communication, dated 10 October 2011, is being circulated at the request of
the delegation of Australia.
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Rice, Wheat and Barley
Reason and Purpose (Section 2(a), p.5)
Japan has stated that the rationale for the Rice, Wheat and Barley STEs in the promotion of
national life and the economy. Australia notes that the Japanese Cabinet Office, recently reported
recently that (Second Report on Regulatory and Structural Reform (21 July 2011, p.11)):
"Competition between businesses which are trying to purchase quality products at low prices is
obstructed by the low level of liberalisation evidenced in state trading, through which private
companies purchase wheat, barley, dairy products ... By allowing private companies to give greater
scope to their originality and ingenuity, competition between these companies will be enhanced,
which in turn will benefit Japanese consumers … [Further,] the elimination or simplification of
Japan's state trading system would contribute to greater administrative efficiency". Does Japan have
any plans to implement changes to its STE program in line with the Cabinet Office report?
Description of the Functioning of the State Trading Enterprise (Section 3(a), p.5)
Could Japan explain how the STE collects part of the out-of-quota- tariff on out-of-quota
imports of rice, wheat and barley? How much of the over-quota tariff (and/or non-tariff duty) accrues
to the STE and how is this calculated? Could Japan detail how it considers the factors in
Article XVII (b) of the GATT when collecting these mark-ups?
How Export Prices are determined (Section 3(e), p.6)
Could Japan explain how Japanese companies can be exempted from paying mark-ups on
imported wheat if they export the same volume of wheat overseas? Does this (re)exported wheat need
to be the same imported product, or can it be domestic product? Can it also include processed wheat
products (such as noodles)? If so, how are these grains versus processed volumes calculated and what
conversion factors are used?
1
G/STR/N/13/JPN.
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Brief Description of Market Structure (Section 3(h), p.6)
Could Japan explain the government's connection to the National Rice, Wheat and Barley
Improvement Association? Why are tenders of domestically produced wheat transacted to within plus
or minus seven per cent of a "standard" or fixed price set by the Association?
Supporting Table I (p.13)
The marks-ups for imported wheat and barley are listed in this table as 17 yen/kg and
7 yen/kg, respectively. Are these actual applied mark-ups for all tenders? Or monthly or quarterly
"target" mark-ups for individual tenders under the General Import?
Australia understands that the STE was not able to extract mark-ups from import wheat under
the General Import during the period September 2007 to April 2008. Could Japan explain why this
fact is not reflected in the table, which lists mark-ups throughout that period as 17 yen/kg?
Since all state-traded barley is traded through Simultaneous Buy Sell (SBS) tenders, where
the purchase and resell price fluctuate with global prices, how can the mark-up remain at a constant
7 yen/ kg as depicted in the table? Is this a "target" or minimum mark-up figure?
Milk Products
Description of the Functioning of the State Trading Enterprise (Section 3(a), p.8)
ALIC appears to accrue rent on both in-quota and out-of-quota imports. Could Japan clarify
the process through which ALIC collects part of the tariff (and/or non-tariff duty) on over-quota
imports of designated dairy products? If ALIC's rent on out-of-quota imports is automatically fixed at
the bound rate, does this imply that ALIC generates more rent per kilogram from out-of-quota than inquota trade?
How the Resale Prices of Imported Products are determined (Section 3(f), p.8)
Could Japan explain why SBS tenders have been introduced for whey for stock feed use,
dairy spreads and butter oil, but not for other designated dairy products such as milk powders? Why
have SBS tenders for butter only been introduced on an ad hoc or "emergency" basis? What is the
rationale for this application?
Brief Description of Market Structure (Section 3(h), p.8)
In light of recent increased butter imports by the STE, could Japan explain why the
government prevented the activation of the volume safeguard for butter (through issuing Government
Ordinance No.306, 30 September 2011)? In the past, when the butter volume safeguard was similarly
triggered by the STEs own imports, the government did not prevent the activation of the safeguard,
even in the fact of domestic supply shortages. Why does the Government allow the activation of the
safeguard in certain situations but not in others?
Supporting Table I (p.17)
Could Japan explain why no mark-ups are listed for any of the dairy products in Table I?
Could Japan provide the mark-ups as applied for this STE?
G/STR/Q1/JPN/15
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Other
Could Japan clarify the procedure through which importers of "designated sugar" (for
example, raw sugar with a polarimetric reading of below 98.5 degrees) are required, under
Article 5(1) of the Sugar and Starch Price Adjustment Law (2007)2, to sell their imports to ALIC?
Could Japan also clarify the procedure through which ALIC then resells the same designated
sugar back to the same importer under Article 8(1) and (2) of the Sugar and Starch Price Adjustment
Law (2007). This latter section stipulates, "To conduct the resell, when ALIC purchases the
designated sugar as stipulated in Article 5(1), it may attach the condition that the seller must
repurchase the designated sugar".
Could Japan clarify why this particular arrangement for sugar (which requires certain
importers to sell and then repurchase their products to and from ALIC at different prices) is not
notified?
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"Those who make an import declaration … of raw sugar, other types of sugar or mixed sucrose
containing glucose or other sucrose, as stipulated in the Cabinet Ordinance ("designated sugar" hereafter) shall
sell the imported designated sugar to ALIC in the event that the average import price of the import
declaration … is below the Rationalisation Target Price." Sugar and Starch Price Adjustment Law (2007),
Article 1, section 5. Article 3(2) of the same law defines the "Rationalisation Target Price", which is set by the
Minister of Agriculture, Forestry and Fisheries, as an "imported sugar price below which the promotion of sugar
resource production and the sound development of domestic sugar refinery industry could be adversely affected,
and thus the impact of which needs to be buffered".
2