International Trade 2025 Comparisons

Japan has been a World Trade Organization (WTO) member since 1995 and a member of the General Agreement on Tariffs and Trade since 1955. Japan has also been a member of the WTO plurilateral agreements, including:

• the Agreement on Government Procurement (since 1996); and
• the Agreement on Trade in Civil Aircraft (since 1980).

Japan is also a member of:

• the Trade Facilitation Agreement (since 2017); and
• the Agreement on Fisheries Subsidies (since 2023).

As of 20 September 2024, Japan is a member of 20 free trade agreements (FTAs) and economic partnership agreements (EPAs), including:

• the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP);
• the Agreement between the European Union and Japan for an Economic Partnership (the “Japan-EU EPA”);
• the Japan-US Trade Agreement;
• the Japan-US Digital Trade Agreement; and
• the Regional Comprehensive Economic Partnership Agreement (RCEP).

See 1.2 Free Trade Agreements.

As of 20 September 2024, the following agreements are being negotiated:

• Japan-Turkey EPA;
• Japan-Columbia EPA;
• Japan-China-Republic of Korea FTA;
• Japan-Bangladesh EPA;
• Japan-GCC FTA; and
• Japan-UAE EPA.

Japan is a founding member of the Indo-Pacific Economic Framework (IPFE).

This is not relevant in this jurisdiction.

Customs Duty Rates

The principal laws governing customs duty rates in Japan are the following:

• Article 3 of the Customs Act;
• Articles 3, 3-2, 3-3 and 5 of the Customs Tariff Act; and
• Articles 2, 8 and 8-2 of the Temporary Tariff Measures Act.

The Customs Act stipulates general rules applicable to customs administration, including:

• rules related to determination, payment, collection and refund of customs duties;
• import/export clearances; and
• the bonded system.

Article 3 of the Customs Act prescribes that, in cases where a treaty provides special provisions for customs duties, such special provisions shall apply. Thus, the customs duties prescribed in EPAs directly apply based on this provision.

The Customs Tariff Act mainly covers matters related to customs duty rates, including:

• customs duty rates for individual items;
• reduction of and exemption from customs duties; and
• special tariffs (anti-dumping duties, countervailing duties, safeguard duties, etc).

This Act sets forth the general rates of customs duties in its Appended Table.

The Temporary Tariff Measures Act stipulates temporary rates for customs duties as an exception to the Customs Act and Customs Tariff Act, taking into account the surrounding industrial and economic circumstances. For example, Article 8 of the Temporary Tariff Measures Act stipulates a special reduction of customs duties that applies to imports of products produced by processing certain raw materials exported from Japan, if the final product is imported within one year (or a longer period determined by the Director General of the relevant regional customs) from the date of the export permission of the raw materials. In addition, Article 8-2 of the Temporary Tariff Measures Act stipulates the duties under the generalised system of preferences (GSP).

Rules of Origin

The principal laws and regulations governing rules of origin are the following.

Non-preferential rules of origin

• Article 7-2 of the Customs Act;
• Article 4-2 of the Order for the Enforcement of the Customs Act; and
• Articles 1-6 and 1-7 of the Ordinance for the Enforcement of the Customs Act.

Preferential rules of origin (EPA)

The rules of origin described in EPAs directly apply without being converted into domestic rules or regulations, pursuant to Article 3 of the Customs Act.

Preferential rules of origin (GSP)

• Article 8-2 of the Temporary Tariff Measures Act;
• Article 26 of the Order for the Enforcement of the Temporary Tariff Measures Act; and
• Articles 8 and 9 of the Ordinance for the Enforcement of the Temporary Tariff Measures Act.

Customs Classification

When considering customs classification, the Appended Table of the Customs Tariff Act (the “customs tariff schedule”) and notices that prescribe the interpretation of the schedule are generally referenced. The customs tariff schedule and other customs-related regulations (such as the Appended Table 1 of the Temporary Tariff Measures Act) were amended, effective from 1 January 2022, to revise them in accordance with HS 2022.

Customs Valuation

Customs valuation is principally governed by Article 3 of the Customs Act and Articles 3 and 4 through 4-9 of the Customs Tariff Act.

The Customs and Tariff Bureau, which is an internal department of Japan’s Ministry of Finance (MOF), is in charge of matters related to customs laws and regulations. Japan Customs are the local branch offices of the MOF, and the headquarters of regional customs are located in nine locations throughout Japan – ie:

• Hakodate Customs;
• Tokyo Customs;
• Yokohama Customs;
• Nagoya Customs;
• Osaka Customs;
• Kobe Customs;
• Moji Customs;
• Nagasaki Customs; and
• Okinawa Regional Customs.

In Japan, there are no legal instruments similar in nature to the EU’s Trade Barriers Regulation or to Section 301 of the US Trade Act of 1974.

However, as referential materials, Japan’s Ministry of Economy, Trade and Industry (METI) publishes:

• the Report on Compliance by Major Trading Partners with Trade Agreements (the “Compliance Report”); and
• prioritised subjects based on the Compliance Report.

Through these publications, the METI identifies trade practices in other jurisdictions that have negative impacts and that are suspected of being inconsistent with trade agreements (WTO, EPA, etc). While these publications are not connected to any legal actions (and are published for policy reasons), they demonstrate that the METI is concerned with such matters.

Moreover, a certain provision allows Japan to impose retaliatory duties without relying on rules under the WTO. In particular, paragraph 2 of Article 6 of the Customs Tariff Act exceptionally prescribes retaliatory duties on countries that have not ratified the WTO Agreement; these are applicable in cases where any goods exported from or through Japan are treated less favourably than goods exported from or through any other country. These retaliatory duties outside the WTO framework have not been applied to any goods since this paragraph was enacted.

The following measures have been introduced recently.

Extension of Reduction in Customs Duty Rates for Goods Manufactured From Raw Materials Previously Exported From Japan

The reduction of customs duties that applies to imports of products produced by processing certain raw materials exported from Japan under certain conditions (as described in 2.1 Authorities Governing Customs) was extended by three years. Previously, this tariff reduction was applicable to cases where the raw materials were exported on or before 31 March 2023. This was extended to cases where the raw materials are exported on or before 31 March 2026.

Clarification of Who Should Be the Importer

Considering that there have been cases in which import declarations fraudulently indicated low prices of imported goods to evade payment of customs duties, the eligibility standards for “importers” (ie, those who should file import declarations) were amended as of 1 October 2023. After this amendment, an “importer” means:

• a party who imports the goods (normally, the consignee), where the goods are imported under an import transaction (ie, a purchase of goods by a party who has an address or office in Japan with the intent of having the goods arrive in Japan, as a result of which the goods actually arrive in Japan); or
• in other cases, a party who has the right to dispose of the imported goods (if there is another party who implements the purpose of the importation, that party is also included).

For instance, if a foreign operator retains a Japanese customs broker to handle the customs procedures with a view to selling the goods in Japan after the import permission, through fulfilment services operated by an e-commerce platform, that foreign operator (rather than the customs broker) must be the importer. In this scenario, the goods are still unsold at the time of the import declaration; therefore, the right to dispose of the goods belongs to the foreign operator.

Enhanced Efforts to Prevent National Security Threats

Considering the importance of security export control (see 4.1 Export Controls through 4.6 Sensitive Exports), Japan Customs has decided to strengthen its efforts to prevent exports that may cause security threats. This strategy includes:

• increased collaboration with relevant authorities in and outside Japan;
• sharing information with private entities; and
• enhancing reviews of customs declarations and post clearance audits.

In addition, the Economic Security Intelligence Centre was established in July 2022 at Tokyo Customs, for purposes of centralising information relating to security export control and conducting analysis. 

Considering that there have been many cases in which counterfeit goods or illegal drugs were purchased on e-commerce platforms and imported into Japan, the Order for Enforcement of the Customs Act was amended to require that import declarations include the following information.

• Whether the imported goods were purchased on an e-commerce platform and shipped by the seller (or another party designated by the seller). If the answer is in the affirmative, the name of the e-commerce platform (or other relevant information, where the name is unavailable) must be included.
• The place of delivery after the import permission.

These pieces of information would enhance the ability of customs officers to identify the importations of counterfeit goods and illegal drugs. This amendment will enter into effect on 12 October 2025.

Japan does not have a single comprehensive law authorising sanctions; sanctions are implemented through a patchwork of laws and regulations. While the majority of Japan’s economic sanctions programmes are derived from resolutions of the UN Security Council (UNSC), Japan also implements sanctions measures based on international co-operation with other countries, as well as unilateral sanctions measures against North Korea, which are not derived from UNSC resolutions or international co-operation.

The primary law in this area is the Foreign Exchange and Foreign Trade Act (FEFTA), under which the following types of transactions may be subject to sanctions and permission or approval of the Minister of Finance or the Minister of Economy, Trade and Industry (“Minister of METI”):

• international payments (eg, payments from Japan to a foreign state and payments between residents and non-residents);
• capital transactions (eg, contracts for money deposits, trusts, money lending and trading securities);
• trade in goods (eg, importation and exportation of goods); and
• service transactions (eg, trade intermediaries between foreign countries, transfer of technology and software, engineering, management consulting).

Other acts that implement sanctions include:

• the Act on Punishment of Financing for Offences of Public Intimidation, which implements the International Convention for the Suppression of the Financing of Terrorism and regulates the provision of funds and other benefits to terrorists;
• the Act on Special Measures Concerning Asset Freezing, etc, of International Terrorists Conducted by Japan Taking into Consideration United Nations Security Council Resolution 1267, etc, which restricts almost all transactions (including domestic) with terrorists and persons or organisations involved in WMD development programmes, or with those who support such programmes listed by the UNSC or the Japanese government; and
• the Act on Special Measures concerning Prohibition of Entry of Specified Ships into Ports, which implements measures to prohibit vessels of certain foreign nationalities from calling at Japanese ports.

Unless otherwise specifically mentioned, the explanations throughout the remainder of 3. Sanctions apply to sanctions regulated by the FEFTA.

As the primary act governing economic sanctions, the FEFTA sets out the types of transactions subject to sanctions, and the conditions under which sanctions may be imposed (see 3.1 Sanctions Regime and 3.3 Government Agencies Enforcing the Sanctions Regime). Further details of the rules are stipulated by subordinate regulations and notices as follows.

The Export Trade Control Order stipulates the areas and items subject to sanctions for the exportation of goods.

Other subordinate orders relating to the FEFTA (ie, the Foreign Exchange Order and the Import Trade Control Order) authorise the competent ministers to further designate specific areas, items and persons subject to sanctions on the importation of goods, service transitions, international payments and capital transactions. The competent ministers then publish notifications relating to the factors above, pursuant to such orders.

Under the FEFTA, the relevant government agencies that impose and enforce sanctions differ depending on the type of subject transactions and the conditions relied on to impose/enforce sanctions.

In particular, sanctions could be imposed/enforced if the Minister of Finance or of METI finds it necessary either:

• to fulfil Japan’s international treaty obligations and other international agreements (eg, UNSC resolutions); or
• as part of Japan’s contribution to international efforts to achieve international peace (eg, co-operation with the USA and EU).

In this circumstance:

• the Minister of Finance will be in charge of sanctions on international payments, capital transactions and service transactions; and
• the Minister of METI will be in charge of sanctions on trade in goods and service transactions.

Regarding service transactions, international payments and capital transactions subject to sanctions, either the Minister of Finance or of METI authorises the Minister of Foreign Affairs (MOFA) to designate individuals and entities subject to sanctions.

Sanctions could also be imposed/enforced if the Cabinet decides to take countermeasures necessary to maintain peace and security in Japan (eg, unilateral sanctions). In this circumstance, Cabinet decisions must be approved by the Diet and will be enforced by the Minister of Finance or of METI, depending on the types of subject transactions.

In most cases, the obligation to obtain permission or approval under the FEFTA applies to:

• residents, who are natural persons with a domicile or residence in Japan, or a legal entity with a principal office in Japan; and
• non-residents, who are natural persons or a legal entity other than residents.

Specifically, the persons below must obtain permission from the competent authorities when conducting a transaction subject to sanctions.

• For trade in goods (eg, importation and exportation of goods) subject to sanctions, both residents and non-residents who export goods from Japan or import goods into Japan must obtain permission.
• For service transactions subject to sanctions, only residents are required to obtain permission when they intend to conduct service transactions with non-residents.
• For international payments subject to sanctions:
1. residents or non-residents who intend to make payments from Japan to a foreign state must obtain permission; and
2. residents who intend to make payments to or receive payments from non-residents must obtain permission.
• For capital transactions subject to sanctions, both residents and non-residents are required to obtain permission. Note that, even when conducted in a foreign state, a non-resident who intends to issue or offer securities subscriptions that are denominated or payable in Japanese currency may be required to obtain permission, if such issuance or offering is designated as one of the sanctioned activities.

The FEFTA also applies to actions taken in a foreign country by the representative, agent, employee or other worker of a legal entity with a principal office in Japan or of a person with a domicile in Japan, if such transactions are undertaken in connection with the assets or business of that legal entity/person.

The MOFA, authorised by either the Minister of Finance or of METI, designates sanctioned individuals and entities under the FEFTA (see 3.2 Legal or Administrative Authorities Imposing Sanctions).

Japan implements a general ban on imports and exports to/from North Korea and self-proclaimed Donetsk and Luhansk “republics”, and a general ban on imports from the Autonomous Republic of Crimea and the city of Sevastopol. Japan also implements a ban on exports of a wide range of products to Russia and Belarus, and on imports of certain products from Russia.

Japan prohibits North Korean nationals, vessels and aircraft from entering Japan, as part of its unilateral sanctions.

Japan does not apply secondary sanctions.

Penalties for violating the FEFTA and relevant regulations with respect to international payments, capital transactions and service transactions are as follows.

• Penalties imposed on natural persons: 
1. imprisonment for not more than three years; and/or
2. a fine of not more than JPY1 million or three times the value of the service, whichever is higher.
• Penalties imposed on legal entities: a fine of not more than JPY1 million or three times the value of the service, whichever is higher.

Penalties for violating the FEFTA and relevant regulations with respect to trade in goods are as follows.

• Penalties imposed on natural persons:
1. imprisonment for not more than five years; and/or
2. a fine of not more than JPY10 million or five times the value of the exported goods, whichever is higher.
• Penalties imposed on legal entities: a fine of not more than JPY500 million or five times the value of the exported goods, whichever is higher.

Please note that penalties will be imposed on a legal entity only if a violation by a natural person is committed in connection with the business or assets of the legal entity.

The FEFTA requires a person to obtain permission or approval for transactions subject to economic sanctions. However, generally such permission will not be granted, with certain limited exceptions, such as for humanitarian aid purposes.

Although there are no specific compliance guidelines for sanctions as of 28 October 2024, the MOF provides the guidelines for financial institutions or certain other service providers subject to the FEFTA regarding compliance with the FEFTA and the Act on Prevention of Transfer of Criminal Proceeds. The MOF also conducts foreign exchange inspections to check whether financial institutions and certain other service providers subject to the FEFTA are complying with the related acts.

Effective from 1 April 2024, financial institutions and certain other service providers subject to the FEFTA are obligated to establish an internal system to properly implement asset-freezing measures in accordance with the compliance standards prescribed under the FEFTA (eg, conducting risk assessments for violations of asset-freeze measures, maintaining a list of individuals or organisations subject to asset-freeze measures, etc).

Moreover, the FEFTA provides for a post-review system, under which the Minister of METI conducts post-reviews to clarify the cause and to prevent recurrence of incidents regarding payments, service transactions and imports/exports subject to sanctions, where it later becomes clear that they were not approved by the Minister METI and thus may violate FEFTA sanctions regulations.

Under the FEFTA, banks, other financial institutions and certain other service providers (eg, fund transfer service providers, crypto-asset exchange service providers) are prohibited from conducting transactions unless they have confirmed that international payments or capital transactions subject to sanctions have been permitted by the relevant ministers.

The Act on Prevention of Transfer of Criminal Proceeds also requires banks, other financial institutions and certain other service providers to notify the government of “suspicious transactions”, including transactions suspected of being related to specific crimes, terrorism and exports/imports that violate economic sanctions.

Japan does not have any blocking statutes, anti-boycott regulations or other restrictions that prohibit adherence to other jurisdictions’ sanctions.

Since February 2022, various sanctions measures against Russia and Belarus have been implemented by the Japanese government in response to Russia’s invasion of Ukraine, in co-ordination with the USA, the EU and the G7 member states. Economic sanctions based on these co-ordinated efforts are ongoing as of October 2024, and Japan is expanding the scope of the sanctions, in co-operation with these countries.

The Japanese government also has implemented asset-freezing measures in line with UNSC resolutions. To contribute to international efforts for peace aimed at resolving issues related to violent acts by Israeli settlers in the West Bank, Japan implemented additional asset-freezing measures in July 2024 targeting designated individuals.

The FEFTA and other related laws were amended in December 2022, in response to the result of the fourth round of multilateral evaluations and analysis of Japan’s compliance with the recommendation of the Financial Action Task Force (FATF). Financial institutions or certain other service providers subject to the FEFTA are obligated to establish an internal system to properly implement asset-freezing measures in accordance with the compliance standards prescribed under the FEFTA (effective from April 2024).

Other than those changes explained in 3.14 Key Developments Regarding Sanctions, as of 28 October 2024 no major changes are planned.

In Japan, the FEFTA provides the legal basis for export controls, as follows.

Article 48 of the FEFTA provides a framework for regulation of the exportation of goods, and delegates the list of specific goods subject to export control to the Export Trade Control Order (ETCO). The rules specified in the ETCO are further detailed by relevant Ministry Orders and notifications.

Article 25 of the FEFTA provides a framework for regulation of the transfer of technologies, and delegates the list of specific technologies subject to export control to the Foreign Exchange Order (FEO). The rules specified in the FEO are further detailed by relevant Ministry Orders and notifications.

See 4.1 Export Controls.

When a person/entity intends to export goods or transfer technologies subject to export control, such person/entity is required to obtain a licence from the Minister of METI.

In Japan, there are two main types of export controls for goods and technologies: “list control” and “catch-all control”. Items subject to these export controls, together with the person required to obtain a licence, are as follows.

Export Control on Goods

List control

The specific goods subject to list control are detailed in Appended Table 1 of the ETCO as categories 1 through 15, and correspond to goods regulated under the international regimes of which Japan is a member, such as the Wassenaar Arrangement and the Australia Group. If the goods to be exported qualify as controlled goods, a licence is required for exportation regardless of the destination.

Catch-all control

The goods subject to catch-all control are those that are not subject to list control, and fall within one of the chapters of the Harmonized System (HS) nomenclature specified in Appended Table 1 of the ETCO as category 16. In summary, the catch-all control covers any transaction of these goods when either of the following conditions is met.

• When the exporter confirms, by checking the end use and end users based on relevant documents/records and information from the importer or end user, that goods to be exported from Japan could be used to:
1. develop, manufacture, use or store weapons of mass destruction; or
2. develop, manufacture or use conventional weapons.
• When the Minister of METI considers that goods to be exported from Japan could be used for the above purposes, and provides notice of such to the exporter.

Note that the exact conditions listed in the first bullet point differ depending on the destination of goods and whether the concern is related to weapons of mass destruction or conventional weapons. In addition, the catch-all control described above does not apply when the destination of goods is a country listed in Appended Table 3 of the ETCO – so-called Group A countries, which used to be known as “white” countries. South Korea was removed from the list of Group A countries in August 2019, but was re-added to the list in July 2023.

Persons subject to the export licence requirement

Exporters, regardless of their nationality, who plan to export controlled goods should obtain a licence.

Export Control on Technologies

List control

The specific technologies (including programs/software) subject to list control are detailed in the Appended Table of the FEO as categories 1 through 15, and correspond to technologies regulated under the international regimes of which Japan is a member, such as the Wassenaar Arrangement and the Australia Group.

Catch-all control

The technologies subject to catch-all control are those that are not subject to list control, and pertain to the design, production or use of the goods that fall within one of the chapters of the HS nomenclature specified in the Appended Table of the FEO as category 16. In summary, the catch-all control covers any transfer of these technologies when either of the following conditions is met.

• When the transferor confirms, by checking the end use and end users based on relevant documents/records and information from the recipient or user of the technology, that technologies to be transferred could be used to:
1. develop, manufacture, use or store weapons of mass destruction; or
2. develop, manufacture or use conventional weapons.
• When the Minister of METI considers that technologies to be transferred could be used for the above purposes, and provides notice of such to the transferor.

Similar to exportations of goods, the exact conditions listed in the first bullet point above differ depending on:

• the location to which the technologies are transferred;
• the nationality of the recipient; and
• whether the concern is related to weapons of mass destruction or conventional weapons.

In addition, the catch-all control described above does not apply when the destination of the technology transfer is any of the Group A countries or a non-resident who has nationality in a Group A country.

Persons subject to the licence requirement

The following persons who plan to transfer controlled technologies should obtain a licence:

• a resident or non-resident who intends to conduct a transaction for the purpose of transferring a controlled technology to a foreign country;
• a resident who intends to conduct a transaction for the purpose of transferring a controlled technology to a non-resident (for more details, please see 4.12 Key Developments Regarding Exports); or
• a resident or non-resident who intends to export media that includes a controlled technology to a foreign country, or who electronically sends information containing a controlled technology for the purpose of having it received in a foreign country.

For the definitions of “resident” and “non-resident”, please see 3.4 Persons Subject to Sanctions Laws and Regulations.

The METI compiles a list of foreign end users that may be involved in developing, manufacturing, using or storing weapons of mass destruction (the “Foreign End User List”). Exporters/transferors need to check whether their end users fall within this Foreign End User List in determining whether their exports or technology transfers are subject to catch-all control. If the end user is listed in the Foreign End User List, exporters/transferors need to obtain a licence from the Minister of METI, except where it is obvious that the goods or technologies will not be used to develop, manufacture, use or store weapons of mass destruction.

See 4.4 Persons Subject to Export Controls. As mentioned in 4.1 Export Controls, the ETCO and FEO specify the export controls and contain lists of sensitive exports/technology transfers. The lists are made and updated according to the international export control regimes (the Nuclear Suppliers Group, the Missile Technology Control Regime, the Australia Group and the Wassenaar Arrangement) and the Chemical Weapons Convention; thus, the controlled items are basically identical to those specified by those regimes. For an exception to this alignment with international regimes, please see 4.12 Key Developments Regarding Exports.

See 4.4 Persons Subject to Export Controls.

Administrative sanctions and criminal penalties apply for those who export controlled goods or transfer controlled technologies without obtaining licences.

Specifically, a natural person or legal entity that violates the export control-related provisions of the FEFTA may face administrative sanctions, imposed by the Minister of METI, that prohibit any (or some) exports or technology transfers for a period of up to three years. It is worth noting that administrative sanctions have no statute of limitations, and there have been cases where administrative sanctions were imposed even when criminal penalties were not.

A natural person that violates the export control-related provisions of the FEFTA may face criminal penalties, which include up to seven years (ten years in the case of goods/technologies relating to weapons of mass destruction) of imprisonment and/or a fine of up to JPY20 million (JPY30 million in the case of goods/technologies relating to weapons of mass destruction) or five times the value of the goods/technologies that were exported/transferred, whichever is higher.

When a natural person (ie, representative or employee) commits a violation in connection with a legal entity’s business, the legal entity may also be fined up to JPY700 million (JPY1 billion in the case of goods/technologies relating to weapons of mass destruction) or five times the value of the exported goods or transferred technologies, whichever is higher.

If goods and technologies are subject to export control, they cannot be exported or transferred without obtaining individual licences for each transaction, or bulk licences. There are several types of bulk licences, depending on the specific details of the transactions, including their scheme, the types of goods/technologies covered by the transactions and their destinations.

Under the FEFTA, a party who exports controlled goods or transfers controlled technologies on a regular basis is obliged to comply with legally defined standards (ie, Compliance Standards for Exporters and Persons Conducting Similar Transactions) which set conditions related to in-house compliance mechanisms. Furthermore, as one of the conditions for obtaining certain bulk licences, a party is required to establish and register with the METI an in-house compliance mechanism, in which certain processes specified by the METI must be adopted.

There are several instances where a party is requested/obliged to report to the authority, including the following.

Where a party intending to export goods or transfer technologies realises, based on information from anyone other than the importer or end user of goods or the recipient or end user of technology, that the subject goods or technologies would be used to develop, manufacture, use or store weapons of mass destruction, it is required to report such finding to the METI. Upon receipt of such a report, the Minister of METI may send a notice to that party that it must apply for a licence for the relevant goods’ exportation or technology transfer.

While general requirements for reports are not applicable to every transaction, the Minister of METI has broad authority to request reports, as necessary, from parties involved in exportation of goods or technology transfers, such as those who plan to implement or have implemented potentially relevant transactions.

When bulk licences are granted, exporters of goods or transferors of technologies are required to make periodic reports, depending on the types of goods they export.

Clarification of the Scope of Deemed Exports

Previously, a transfer of technologies from one resident to another resident within Japan was not considered a transaction for the purpose of transferring a controlled technology to a non-resident, which is subject to Japanese export control (please see 4.5 Restricted Persons). However, as the development of cutting-edge technologies involves rigorous participations of foreign people residing in Japan, concerns have developed about the risk of leakage of sensitive information through a resident who is under the strong influence of a foreign country.

In order to address this risk, the METI’s notification regarding technology transfers was amended to clarify that transfers of a controlled technology from a resident to another resident are deemed to be transactions for the purpose of transferring the technology to a non-resident, when the recipient qualifies under any of the following categories:

• a person who is under the control of a foreign government or a foreign entity by contract (such as an employment contract);
• a person who is receiving substantial economic benefits from a foreign government; or
• a person who is acting in Japan pursuant to the instructions of a foreign government.

This amendment entered into effect on 1 May 2022.

Additional Adoption of Export Control on Advanced Semiconductor-Related Equipment

After the amendment that became effective on 23 July 2023, the Ministry Order specifying the details of goods and technologies subject to list control was further amended, effective on 8 September 2024. In this new amendment, certain goods (such as quantum computers and scanning electron microscope equipment), as well as programs designed for the design or production of those goods (in the case of quantum computers, certain components thereof) and technologies necessary for the design or production of those goods (again, in the case of quantum computers, certain components thereof), were added to the scope of list control.

In the case of scanning electron microscope equipment, programs designed for processing images taken by those microscopes were also added. In addition, the specifications in the definitions of the goods added to the scope of list control through the 23 July 2023 amendment have been refined to be more precise. This amendment was made by many states that participate in the Wassenaar Arrangement, although it was not the result of an agreement thereunder, due to disagreement by some states. 

Restructuring of Catch-All Control

The Subcommittee on Security Trade Control, established under the Trade Committee of the Industrial Structure Council of the METI, issued its intermediary report (the “Intermediary Report”) in April 2024. This report suggests a restructuring of catch-all control to the effect that catch-all control for conventional weapons should apply to exports destined for Group A countries to a limited extent (among other restructuring measures). Specifically, the METI may issue a notice to the exporter to require a licence application, when a relevant product or technology is ultimately likely to reach a high-risk destination, even if the initial destination is a Group A country. This is a change from the current system, in which exports to Group A countries are categorically excluded from the catch-all control (see 4.4 Persons Subject to Export Controls).

Establishment of Public-Private Dialogue for Sensitive Technology Transfers

In September 2024, the METI proposed establishing a public-private dialogue for export controls on certain sensitive technology transfers. The proposal included a requirement that a party that intends to transfer relevant technologies through investment in a foreign entity, production outsourcing or other business activities, in a manner that would enable a production or design of products in a foreign state, report an outline of the intended transfer to the Minister of METI in advance.

In the September 2024 proposal, this requirement applies to technologies relating to ten products in the electronics, advanced fibre, integrated circuit and electron microscope industries. Upon receipt of a report from a transferor, the METI will engage in discussions with the transferor, with a view to ensuring that the technology at issue will not be diverted to the design, production, etc, of nuclear or conventional weapons.

However, when concerns about potential diversions remain unresolved, the METI may issue a notice to the transferor obligating the transferor to apply for a licence. Generally, this notice should be issued within 30 days of the transferor’s report. This new report-and-dialogue system will not apply to technology transfers to Group A countries. The scheduled implementation date for this new system is two months after the publication of the final text of the relevant regulations, which is 30 December 2024.

The principal laws governing anti-dumping duties (AD), countervailing duties (CVD) and safeguards (SG) (collectively, “trade remedies”) are the following:

• investigation and imposition of AD are provided in Article 8 of the Customs Tariff Act and the Cabinet Order on Anti-Dumping Duty;
• investigation and imposition of CVD are provided in Article 7 of the Customs Tariff Act and the Cabinet Order on Countervailing Duty; and
• investigation and imposition of SG are provided in Article 9 of the Customs Tariff Act and the Cabinet Order on Emergency Duty, etc – while these provisions cover SG based on the WTO rules, Japan may also impose bilateral SG based on FTA/EPA.

Various government agencies would be involved in the decision-making process – in particular, the Ministers of Finance and METI, and any other minister responsible for the specific industry that is subject to the trade remedies.

In Japan, investigations of trade remedies would generally be initiated at the request of members of domestic industries; however, the relevant laws also allow the investigating authority to self-initiate an investigation.

There has only been one case in which the initiation of the investigation was requested by the relevant minister – namely, the SG case against leeks, raw shiitake mushrooms and tatami mats. This investigation was conducted in 2000–01. For review proceedings, which will be initiated and conducted once trade remedies are imposed, please see 5.9 Frequency of Reviews.

In Japan, there are no time restrictions for initiating investigations (both for initial impositions and for re-impositions) and for the initial imposition of trade remedies, and domestic industries can request initiation of an investigation on an ad hoc basis. However, there is a time restriction on re-imposing SGs.

Specifically, when an SG is re-imposed on products that were subject to a previous SG (ie, an SG that has expired or been terminated), re-imposition of an SG is allowed only after a period of time equivalent to the period during which the previous SG was taken or a period of two years (whichever is longer) has elapsed from the day on which the previous SG expired or was terminated. AD and CVD have no time restrictions for re-imposition.

For review proceedings, which will be conducted once trade remedies are imposed, please see 5.9 Frequency of Reviews.

In Japan, non-domestic companies are allowed to participate in the investigation as relevant parties. For review proceedings that will be conducted once trade remedies are imposed, please see 5.9 Frequency of Reviews.

Process for Imposing AD

The typical steps and timelines for imposing AD are as follows.

The investigating authority reviews the petition submitted by the domestic industry, and decide whether sufficient facts are presented to initiate the investigation. This review typically takes two months.

Once the investigation is initiated, the investigating authority sends a questionnaire to the interested parties. The investigating authority may also send a follow-up questionnaire. In general, responses to the questionnaire should be provided within three months from the initiation of the investigation.

When requested by interested parties, the investigating authority will conduct a simultaneous examination process that allows one interested party to raise questions to another interested party in a meeting. In general, this process is held around five months from the initiation of the investigation.

The investigating authority conducts on-site verifications of the submitted information. In general, this process is held around six months from the initiation of the investigation.

A preliminary determination is published around eight months from the initiation of the investigation. If it is deemed necessary, provisional measures could be taken based on this determination.

Disclosure of essential facts, which will be the basis for the final determination, is made around ten months from the initiation of the investigation. Interested parties can provide comments to the disclosure.

A final determination is typically published within one year from the initiation of the investigation, but can be extended for up to six months.

Process for Imposing CVD

The typical steps and timelines for imposing CVD are similar to those of AD as explained above.

Process for Imposing SG

The typical steps and timeline for imposing SG are as follows.

Once the investigation is initiated, the investigating authority will send a questionnaire to the interested parties. After responses to the questionnaire are provided, a public hearing is held.

A preliminary determination could be published, and, if it is deemed necessary, provisional measures could be taken based on this determination.

A final determination is published within one year (but can be extended) from the initiation of the investigation.

The investigating authority publishes the following reports during the investigation of trade remedies.

• Preliminary findings: a finding explaining a preliminary determination and the facts that form the basis for provisional measures. This finding would be published as a notice (kokuji) in the Official Gazette.
• Final findings: a finding explaining a final determination and the facts that form the basis for definitive measures. This finding would be published as a notice (kokuji) in the Official Gazette.

In addition, when conducting an investigation of AD/CVD, the investigating authority also provides the disclosure of essential facts to the interested parties in writing (see 5.6 Investigation and Imposition of Duties and Safeguards). This finding explains the facts that will form the basis for the final determination.

This matter is not relevant in this jurisdiction.

Review of AD

There are several review processes for AD measures, as detailed below.

New shippers review

A new shipper may request initiation of an investigation to calculate their individual dumping margin. The investigation should be completed promptly and within one year, but can be extended for up to six months.

Interim review

Interested parties may request initiation of an investigation to review the AD measure once the measure has been in force for one year. The review will examine whether there are any changes in circumstances relating to dumping, injury of domestic industry, and their causation. The investigation should be completed within one year, but can be extended.

Sunset review

Domestic industry members may request initiation of a sunset review up to one year before the end of the AD measure. The review will examine whether the AD measure should be extended. The investigation should be completed within one year, but can be extended.

Review of CVD

There are several review processes for CVD measures, as detailed below.

Review for exporters not subject to the initial investigation

Exporters not subject to the initial investigation may request initiation of an investigation to calculate their individual duty rate. The investigation should be completed promptly and within one year, but can be extended for up to six months.

Interim review

Interested parties may request initiation of an investigation to review the CVD measure once the measure has been in force for one year. The review will examine whether there are any changes in circumstances relating to subsidies, injury of domestic industry, and their causation. The investigation should be completed within one year, but can be extended.

Sunset review

Domestic industry members may request initiation of a sunset review up to one year before the end of the CVD measure. The review will examine whether the CVD measure should be extended. The investigation should be completed within one year, but can be extended.

Review of SG

Domestic industry members may request initiation of a review, which will examine whether the SG measure should be extended. The investigation should be completed within one year, but can be extended.

See 5.9 Frequency of Reviews.

Preliminary and final determinations for imposing trade remedies are likely capable of being appealed to the district court, but there are no precedents for this in Japan.

This matter is not relevant in this jurisdiction.

The Japanese government is planning to amend its AD/CVD legislation to introduce an anti-circumvention system allowing the extension of existing AD/CVD measures to imports that circumvent the existing measures. The amendment is planned to be made in 2025.

In Japan, the FEFTA together with its subordinate regulations, the Cabinet Order on Inward Direct Investment and the Order on Inward Direct Investment are the primary legal instruments regarding foreign investment regulation.

In the FEFTA, “foreign investors” making “foreign direct investments” (acquisitions of shares, equity, bonds, etc, of Japanese companies) or “specified acquisitions” (acquisitions of shares or equity in non-listed Japanese companies from another foreign investor) must file either a prior notification (ie, pre-closing notification) or post-investment report, generally depending on whether the investments are made in relation to “designated business sectors”.

See 6.3 Transactions Subject to Investment Security Measures and 6.4 Mandated Filings/Notifications for the definitions of foreign investors, foreign direct investments and designated business sectors.

When a prior notification is filed according to the FEFTA, the MOF and ministers who have jurisdiction over the target business will conduct a review. The standard waiting period is 30 days, which could be shortened to two weeks or extended to up to five months.

Aside from the FEFTA, sector-specific laws and regulations – such as the Civil Aeronautics Act, the Broadcast Act and the Radio Act – also regulate certain foreign investments by limiting the ratio of shareholding by foreign investors.

The MOF is primarily responsible for implementation of the FEFTA. When a prior notification is filed according to the FEFTA, the Minister of Finance and ministers who have jurisdiction over the target business (eg, the Minister of METI) will conduct a review; if they find that the investment is likely to impair national security, etc, they may recommend, and ultimately order, modification or discontinuation of the investment.

In general, if a foreign investor is making a foreign direct investment or specified acquisition, the investor is required to file either a prior notification or post-investment report.

A prior notification is also required if the nationality or country of location of the foreign investor is neither Japan nor a white-listed country. The white list comprises 173 countries, including China and Russia, but does not include countries such as North Korea and Somalia. Certain types of transactions that involve parties related to Iran are also subject to a prior notification obligation. However, since investors are usually concerned about regulation regarding a foreign direct investment in the designated business sectors, the following focuses on the regulation of these types of investments.

The term “foreign investor” is defined in Article 26, paragraph 1 of the FEFTA, and includes, but is not limited to, the following persons:

• (a) an individual that is a non-resident;
• (b) a legal entity or other organisation established pursuant to foreign laws and regulations, or a legal entity or other organisation with its principal office in a foreign state; and
• (c) a company in which the sum total number of votes held directly or indirectly by persons as set forth in items (a) and (b) above make up at least 50% of the number of votes of all shareholders or all members.

A foreign direct investment includes the following actions:

• an acquisition of shares or voting rights in a listed company, which makes up 1% or more of the total number of issued shares or voting rights in that company;
• an acquisition of shares or equity in a non-listed company (except when acquired from another foreign investor, which is a specified acquisition);
• consent given for a substantial modification of a company’s business purpose, and consent given for a proposal to appoint the foreign investor or its affiliate as a director or an auditor (certain thresholds with regards to holding of shares or voting rights and other conditions may be applicable);
• the lending of money to a legal entity having its principal office in Japan (excluding lending by a person engaged in the banking business, etc, and lending made in Japanese currency by certain foreign investors), for a term exceeding one year, which makes the outstanding balance of the accumulated lending from the foreign investor to the legal entity more than JPY100 million and meets certain other investment size thresholds; or
• a takeover of a business from a resident that is a legal entity through the transfer of the business, absorption-type split, or merger.

In general, if a foreign investor is making a foreign direct investment or specified acquisition in relation to designated business sectors, prior notification is required.

Designated business sectors are designated in the relevant public notices as those that are related to national security, the maintenance of public order and the protection of public safety, etc. More specifically, these designated business sectors are those relating to:

• weapons;
• aircraft;
• nuclear facilities;
• space;
• dual-use technologies;
• pharmaceutical manufacturing of communicable diseases;
• specially controlled medical devices manufacturing;
• metal mining and refining, etc, of critical minerals;
• construction service business, etc, that improves or maintains port facilities on designated remote islands;
• fertiliser (eg, potassium chloride) imports;
• permanent magnets and the materials therefor;
• machine tools and industrial robots;
• semiconductor manufacturing equipment;
• storage batteries and the materials therefor;
• ship parts (eg, engines);
• metal 3D printers and metal powder production;
• cybersecurity;
• electricity;
• gas;
• telecommunications;
• water supply;
• railways;
• oil;
• heat supply;
• broadcasting;
• public transportation;
• security services;
• agriculture;
• forestry and fisheries;
• leather manufacture;
• air transportation; and
• maritime transportation.

In August 2024, various business sectors were added as designated business sectors. See also 6.8 Key Developments Regarding Investment Security for this change.

With respect to foreign direct investments in non-designated business sectors, in general, post-investment reports are required (for acquisitions of shares, equity, etc, only investments of 10% or greater shareholding require post-investment reports).

The MOF publishes a list that categorises Japanese listed companies into companies engaging in business activities in:

• core designated business sectors;
• non-core designated business sectors; and
• non-designated business sectors.

This list was most recently updated in September 2024, and can be found on the MOF’s website.

See 6.5 Exemptions for the explanation on core designated business sectors and non-core designated business sectors.

If a foreign investor, except for whom a review is deemed particularly important (eg, government entities and state-owned enterprises without MOF accreditation), acquires shares, equity, voting rights, etc, the prior notification obligation is exempted under the following conditions.

Listed Companies

If the investments are made in listed companies in relation to designated business sectors, a financial institution is exempted from the prior notification requirement if the investment meets the following conditions:

• (a) the investor and its closely related persons will not become a board member of the investee company;
• (b) the investor will not propose any transfer or disposition of the investee company’s business activities in the designated business sectors at the general shareholders’ meeting; and
• (c) the investors will not access non-public information about the investee company’s technology in relation to business activities in the designated business sectors.

If a foreign financial institution does not file a prior notification in accordance with this exemption, a post-investment report is required when the investor acquires 10% or more of the shareholdings.

If the investor is a general investor (ie, a foreign investor who is not a foreign financial institution), there are two different types of exemption systems for investments made in core designated business sectors and non-core designated business sectors from among the designated business sectors.

Among the designated business sectors, the business sectors that are most likely to affect national security are designated as core designated business sectors. They include all businesses relating to:

• weapons;
• aircraft;
• nuclear facilities;
• space;
• dual-use technologies;
• pharmaceutical manufacturing of communicable diseases;
• specially controlled medical devices manufacturing;
• metal mining and refining, etc, of critical minerals;
• construction service business, etc, that improves or maintains port facilities on designated remote islands;
• fertiliser (eg, potassium chloride) imports;
• permanent magnets and the materials therefor;
• machine tools and industrial robots;
• semiconductor manufacturing equipment;
• storage batteries and the materials therefor;
• ship parts (eg, engines); and
• metal 3D printers and metal powder production.

They also include a portion of the business relating to:

• cybersecurity;
• electricity;
• gas;
• telecommunications;
• water supply;
• railways; and
• oil.

In August 2024, various business sectors were added to the core designated business sectors. See 6.8 Key Developments Regarding Investment Security for this change.

If a general investor is investing in core designated business sectors, the prior notification exemption applies to investments of less than 10% shareholding, provided that the investment meets exemption conditions (d) and (e) below as well as conditions (a), (b) and (c) above:

• (d) the investor will not attend the investee companies’ executive board meetings or committees that have the authority to make important decisions regarding activities in core designated business sectors; and
• (e) the investor will not make written proposals to the executive board of the investee company or board members requiring their responses and/or actions by certain deadlines regarding business activities in core designated business sectors.

If a general investor is investing in non-core designated business sectors, the prior notification exemption applies if the investment meets the exemption conditions (a), (b) and (c) above.

If a general investor does not file a prior notification in accordance with the exemptions above, the general investor must file a post-investment report when the shareholding ratio reaches 1% and 3% for the first time and when it reaches 10% or more for each transaction.

Non-Listed Companies

When investments are made in relation to non-listed companies in non-core designated business sectors, exemption from the prior notification obligation applies if the investment meets conditions (a), (b) and (c) above. No exemption system is available for investments made in core designated business sectors. Even if an investor does not file a prior notification in accordance with this exemption, the investor must file a post-investment report.

If the MOF and the minister(s) with jurisdiction over the target business find, upon review of the prior notification, that the investment at issue is likely to impair national security, etc, they may recommend and ultimately order modification or discontinuation of the investment. However, to date, there has only been one case of such an order being disclosed by the authorities.

Failure to file a prior notification or provision of false information in the prior notification, violation of the waiting period, and failure to comply with the order to modify or discontinue the investment are subject to criminal penalties of up to three years’ imprisonment, a fine of up to three times the value of the investment, or JPY1 million (whichever is higher), or both (FEFTA, Article 70).

Where there has been a failure to file a notification or a filing of a false notification by a foreign investor, and the case is deemed likely to impair national security, etc, the foreign investor may be subject to divestiture or another action order.

No fees are required for submission of notifications required by the FEFTA.

Effective from 16 August 2024, the scope of core designated business sectors and designated business sectors was modified to include various business sectors, such as those relating to:

• equipment associated with the manufacture of semiconductors (machinery, appliances, parts, supplies and materials used mainly for the manufacture of semiconductors);
• advanced electronic components (electronic components such as multi-layer ceramic capacitors and the materials therefor);
• machine tool components (machine tool components such as ball screws, linear guides and linear scales);
• marine engines (diesel engines for civil marine use that are four-stroke and have a continuous maximum output of 735 kw or more);
• fibre optic cables (quartz-based optical fibres and fibre optic strands); and
• multifunctional machines (machines and appliances that have the ability to send and receive data and that have multiple functions such as copying and scanning).

One purpose of this amendment, as with the April 2023 amendment, is to align with the Japanese government’s initiatives for securing a stable supply of critical commodities under the ESPA (see also 7.1 Subsidy and Incentive Programmes for Domestic Production). Another reason is to address the risk of technology leaks and diversion of commercial technologies to military use.

As of 28 October 2024, no major changes have been published.

The ruling Liberal Democratic Party’s Headquarters for Economic Security has published recommendations and submitted them to the Japanese government regarding several initiatives to prevent technology leaks. The proposed initiatives include investment security measures, some of which may be implemented in the coming years – eg, for foreign investors who are categorically recognised as posing a high risk to national security, restrictions on the use of the prior notification exemption system should be considered, from the perspective both of investor attributes and of the business characteristics of the Japanese company in which the investment will be made.

The supplementary provisions to the 2020 amendment to the FEFTA state that, five years after the amended law comes into effect, necessary measures should be taken if deemed required. In accordance with these provisions, a review should be conducted to consider any necessary revisions to the FEFTA.

In recent years, the Japanese government has been introducing various programmes to promote domestic production. For example, the Japanese government has been providing subsidies to companies establishing domestic production facilities through the following scheme, to ensure supply chain resilience and to support green transitions in key strategic sectors (eg, semiconductors, batteries, green steels, green chemicals):

• the Act on the Promotion of Ensuring National Security through Integrated Implementation of Economic Measures (ESPA);
• the Act amending the Act on Promotion of Development, Supply and Introduction of Specified Advanced Information and Communications Technology Utilization Systems, and the Act on the New Energy and Industrial Technology Development Organization;
• the post-5G information and communications system infrastructure reinforcement research and development project; and
• the Strategic Domestic Production Promotion Tax Incentive.

There are no standards or other technical requirements in Japan aimed at reducing imports and/or encouraging domestic production. The Japanese government has adopted technical regulations and standards in various fields to ensure the safety and quality of products, including the following:

• the Food Sanitation Act establishes technical regulations for foods, food additives and food contact materials in order to avoid harm to human health;
• the Act on Securing Quality, Efficacy and Safety of Products Including Pharmaceuticals and Medical Devices establishes technical regulations to secure the safety, efficacy and quality of medicines and medical devices in order to avoid harm to human health;
• the Electrical Appliances and Materials Safety Act establishes technical regulations for certain electrical appliances, in order to maintain the safety of such products;
• the Telecommunications Business Act establishes technical regulations for telecommunications facilities, in order to ensure that telecommunications services are provided smoothly and without connection defects;
• the Radio Act establishes technical regulations for radio equipment, in order to ensure the fair and efficient utilisation of radio waves;
• the Road Transport Vehicles Act and the relevant regulations designate types of automotive equipment and parts, and establish technical requirements in order to ensure the safety of motor vehicles;
• the Act on Japanese Agricultural Standards establishes technical regulations and standards for foods and agricultural products in order to certify the quality and the uniqueness of the products; and
• the Industrial Standardisation Act establishes standards for industrial products, in order to ensure quality and interoperability between the products.

There are no sanitary or phytosanitary requirements in Japan aimed at reducing imports and/or encouraging domestic production. The Japanese government has adopted various sanitary and phytosanitary requirements to ensure food safety and to prevent incursion of animal and plant illnesses caused by imported products, including the following:

• the Act on Domestic Animal Infectious Diseases Control stipulates cargo that is prohibited from importation and cargo that must be quarantined in order to prevent the infiltration and spread of infectious livestock diseases;
• the Plant Protection Act stipulates cargo that is prohibited from importation and cargo that must be quarantined in order to prevent the infiltration and spread of invasive animals and plants injurious to native flora; and
• the Food Sanitation Act establishes import notification procedures and inspection procedures for imported foods and related products to ensure the safety of those products.

The government of Japan has adopted certain price support measures to support and encourage domestic production of certain agricultural products, including subsidy programmes adopted by the Agriculture & Livestock Industries Corporation (ALIC). ALIC’s programmes apply to products such as beef and veal, pork, milk, vegetables and sugar. Further details are explained in ALIC’s brochure.

There are no state trading, state-owned enterprises or privatisation measures in Japan specifically aimed at reducing imports and/or encouraging domestic production. Nevertheless, the Japanese government has adopted state trading systems for the following products:

• leaf tobacco;
• opium (for medical use);
• rice, wheat and barley; and
• dairy products.

Further details on the state trading systems adopted by the Japanese government can be found in the notification made by the Japanese government to the WTO (G/STR/N/18/JPN); see on state trading.

Since December 1995, the Japanese government has been a member of the Agreement on Government Procurement (GPA), which prohibits discrimination between domestic and imported products of GPA member origin. Moreover, to date the Japanese government has adopted a policy to treat GPA members and non-GPA members equally. As such, in Japan, no “buy national/local” requirements are applied to government procurement.

There are no geographical indication (GI) protection measures aimed at reducing imports and/or encouraging domestic production. In Japan, GIs are protected under the Act on Protection of the Names of Specific Agricultural, Forestry and Fishery Products and Foodstuffs (the “GI Act”). The number of foreign GIs protected under the GI Act is increasing, reflecting the amendment of the Japan-EU EPA. Explanation of the GI Act and a list of GI products can be found on the Japan Geographical Indications website.

This is not relevant in this jurisdiction.