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Office of the Press Secretary

For Immediate Release May 3, 1999
                 Second Joint Status Report under the
             U.S.-Japan Enhanced Initiative on Deregulation 
                         and Competition Policy


Deregulation of the transportation, telecommunications, energy, financial, aviation and other sectors in the United States since the mid-1970s' has fundamentally repositioned our economy to be the most competitive economy in the world today. Deregulation means changing the way government operates, including the ways it regulates and provides incentives to investment. Support for pro-competitive practices is essential to secure new investment, new technology development, entrepreneurship and the creation of new economic opportunities that Japan needs to turn around its economy and restore growth. As Prime Minister Obuchi recently observed of the challenge before Japan today, "We realize that unless we adopt a more flexible economy driven by the market, Japan is doomed to economic and technological decline."

The U.S.- Japan Enhanced Initiative launched in June 1997 in Denver created a bilateral process to address regulatory and anti-competitive barriers for both foreign and domestic firms in Japan. In May 1998 in Birmingham, England the United States and Japan announced a First Joint Status Report under the Enhanced Initiative detailing a package of measures to substantially deregulate Japan's telecommunications, housing, medical devices, pharmaceuticals, distribution, and financial services sectors. Since Birmingham, teams of American government experts overseen by Deputy United States Trade Representative Richard Fisher have met throughout the year with Japanese experts from a number of Japanese Ministries coordinated by Deputy Foreign Affairs Minister Koichi Haraguchi to further the process and push the envelope of Japanese deregulation and restructuring.

New deregulation measures unveiled today will substantially expand last year's program in these sectors, advance deregulation of Japan's energy sector, and address cross-cutting competition policy and transparency issues. The Initiative is an important component of the Administration's strategy to further open the Japanese market and is designed to complement ongoing bilateral enforcement efforts with respect to such issues as steel, insurance, flat glass, autos & auto parts, government procurement; and our multilateral agenda in APEC and the WTO to reduce Japanese trade barriers. Recognizing the importance of continued deregulation in Japan, both governments also agreed to continue their work under the Enhanced Initiative for a third year.

New deregulation commitments announced today include the following key measures, details of which are available in a comprehensive fact sheet from USTR.


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


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

Medical Devices and Pharmaceuticals

These are important high-growth areas of Japan's economy where U.S. companies have captured 12% of Japan's $64 billion pharmaceutical market and 30% of Japan's $20 billion medical device market. Incredibly, however, 80% of the latest, most effective drugs available in other developed markets are not available in Japan today. Japanese government policy has discouraged medical advancement by stifling competition. Japan will inaugurate new competition in these areas by:

Financial Services

Japan's "Big Bang" reforms of its financial sector (which built upon the undertakings in the U.S.-Japan 1995 agreement) should substantially improve the ability of foreign financial services providers to reach customers in most segments of the Japanese financial system. New reform commitments announced today will expand opportunities by:


The cost of energy to Japanese businesses and consumers is among the highest in the industrialized world, and reflects an over-regulated industry. As a result of this year's discussions, Japan will be:


With respect to cross-cutting regulatory issues which impede foreign and domestic competition in Japan, a number of critical new measures have been agreed upon. Japan's closed and inefficient distribution system has provided pernicious market access barriers to foreign competition in many sectors including glass, paper, and film. Japan's new commitments which address distribution issues and bottle-necks entail:

Competition Policy

The United States believes that competition ought to be the central organizing principle of the Japanese economy and active deregulation is critical to making this principle a reality. Instead of competition-restricting regulations, market forces should govern business activities in Japan, in keeping with the Obuchi Government's goal of achieving "a more flexible economy driven by the market." Furthermore, vigorous Antimonopoly Act enforcement is critical to preserve and expand the benefits of deregulation. Robust competition policy and deregulation work hand-in-hand in fostering free and open markets. In the area of competition policy, Japan will be:


Foreign firms have long been disadvantaged by the lack of transparency in the Japanese regulatory system. As outsiders to the system, foreign firms lack access to the timely, detailed information regarding regulatory matters commonly enjoyed by their Japanese competitors. As a consequence, the United States has long pressed the Japanese Government to make its administrative procedures and practices more open and transparent. With respect to transparency and other government practices, Japan will be:


The measures announced today should have a significant impact in opening the Japanese telecommunications, housing, medical devices/pharmaceuticals, financial, energy, and retail sectors to competition. The proof of the pudding depends on Japanese implementation of these agreed upon changes and procedures. As the Initiative continues into its third year, the United States and Japanese Governments' will closely monitor implementation.