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Office of the Press Secretary

For Immediate Release May 3, 1999


U.S.-Japan Enhanced Initiative on Deregulation and Competition Policy

Today, President Clinton and Prime Minster Obuchi of Japan unveiled new measures under the U.S.-Japan Enhanced Initiative on Deregulation and Competition Policy. Launched in June 1997, this initiative created a bilateral process to address regulatory and anti-competitive barriers for both foreign and domestic firms in Japan. Since then, both the United States and Japan have agreed on new measures to substantially deregulate Japan's telecommunications, housing, medical devices, pharmaceuticals, distribution, financial services and energy sectors. The two sides have also agreed to address competition policy and transparency issues.

The Enhanced Initiative is an important component of the Clinton Administration's strategy to further open the Japanese market, and is designed to complement on-going bilateral enforcement efforts with respect to such issues as steel, insurance, flat glass, automobiles, and government procurement. It also reinforces our effort to reduce Japanese trade barriers through the World Trade Organization and Asia Pacific Economic Cooperation forum.

New deregulation commitments announced today include the following key measures:


Japan has committed to specific new measures to more effectively introduce competition into its $130 billion telecommunications sector by:

Ensuring that interconnection rates -- the rates charged competitors of

NTT to access the majority of Japanese customers -- are set below retail rates;
Defining measures that will make NTT DoCoMo's (cellular service

provider) interconnection rates are more fairly priced by being purely based on costs;
Providing a new interconnection "clearinghouse" for new entrants in the

Japanese market which will dramatically speed market entry; Permitting and developing detailed terms and conditions that will allow

carriers to enter into flexible network arrangements, thus allowing businesses to build out their networks more rapidly and efficiently; Improving methods to ensure that new entrants have fair and

non-discriminatory access through interconnection arrangements, including access to international cable landing stations; and Opening-up Cable TV to one hundred percent foreign investment.


Currently, U.S. manufacturers supply only $1.5 billion of Japan's $42 billion residential building materials industry. New commitments by Japan under the Initiative should create new opportunities for American businesses by:

Accelerating the introduction of performance-based standards for

three-story, multi-family wood housing in urban residential areas from Japan Fiscal Year 2000 to May 1, 1999; Adopting open public comment procedures in the formulation and

implementation of revisions to Japan's Building Standards Law; Working cooperatively to build acceptance of U.S.-style building

materials and methods in Japan through a series of jointly sponsored seminars; and
Ensuring that imported building materials are not discriminated against

from use in any of its government housing programs

Medical Devices and Pharmaceuticals

Japan has pledged to inaugurate new competition in the areas of medical devices and pharmaceuticals by:

Agreeing to recognize the role of the market, as well as the value of

innovation, as it continues to study pharmaceutical pricing reform;

Assuring that the U.S. pharmaceutical industry will have meaningful

input into Japan's reform process;

Creating new approval processes for pharmaceuticals and expanding these

procedures to cover medical devices;

Improving the transparency of its medical device reimbursement system by

issuing requirements in writing and allowing firms to engage in pre-filing consultations with Japanese regulators; and

Promoting the liberalization of nutritional supplements by treating such

products as foods for regulatory purposes.

Financial Services

New commitments announced today by the Japanese government will expand opportunities for international financial service providers to reach customers in Japan by:

Liberalizing use of securities derivatives; Easing the registration process for new securities companies; Promoting a more vigorous asset-backed securities market; Sharply expanding the scope of financial activities and products allowed

to banks and securities firms, including mutual fund products; Introducing stock options;
Fully liberalizing brokerage commissions; Substantially widening the scope of activities allowed to banks and bank

Allowing investment advisory companies to grant discretionary authority

to other fund managers;
Simplifying the transfer of assets between fund managers; and Strengthening accounting and disclosure rules, including a switch to

consolidated accounting.


Japan has agreed to take the following steps to deregulate its energy sector:

Amending its Electric Utility Industry Law to shift from a permit and

approval system to a notification system for construction or upgrading of all power generating facilities; Simplifying regulations and launching work to harmonize various Japanese

standards with international standards for energy-related equipment, such as turbines, compressors, and standby generator sets; Working toward the harmonization of its standards regarding self-serve

gas pumps with international standards and to make other related regulatory changes; and
Easing the costly and time-consuming process required to obtain approval

for installing self-service gasoline pumps.


Japan's new commitments to address distribution issues and bottle-necks entail:

Establishing nationally applicable guidelines regarding environmental

factors, such as traffic and noise, for use by large-scale retail store operators;

Expediting customs clearance processing, and completing a study on

linking the Customs Administrations' and Transportation Ministry's computer systems, while supporting multilateral efforts to promote the use of harmonized, simplified and streamlined cargo processing systems; and

Introducing a maritime container cargo system to expedite the clearance

of goods arriving by ship.

Competition Policy

In the area of competition policy, Japan has committed to increased deregulation and new market reforms, including:

Launching proactive steps under competition policy advocacy by creating

a model Antimonopoly Act Compliance Program for private firms; Using various means, including public hearings, to actively expand

public involvement and address deregulation and competition policy issues;
Reviewing business entry regulations and "supply/demand adjustment"

regulations and, where appropriate, propose removing such regulations;
Reviewing competition-restricting regulations on the central and local

government level and, in appropriate cases, propose abolishing or revising such regulations;
Actively filing criminal accusations with the Prosecutor's Office in

anticartel cases; and
Amending its Bidding Instructions to make clear that firms bidding on

public works contracts cannot consult with competitors about prices in bidding on public works projects.


With respect to transparency and other government practices, Japan has committed to:

Creating formal Public Comment Procedures for Formulating, Amending or

Repealing Regulations (a cornerstone of the U.S. regulatory system for more than 50 years);
Advancing legislation to establish an Information Disclosure Act; and Reduced the standard processing period for the issuance of licenses,

permits and approvals; Providing for use of fair methodologies in local government procurement

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