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APEC RULES OF ORIGIN - JAPAN

2.7 JAPAN: NON-PREFERENTIAL RULES OF ORIGIN


2.7.1 OUTLINE OF NON-PREFERENTIAL RULES OF ORIGIN REGIME

Japan's current non-preferential rules of origin are divided into the following two categories:

  1. those used for the application of GATT rates, for control of the goods with false marking of origin, for compiling trade statistics and for issuance of certificates of origin of the goods to be exported; and
  2. those used for the import control of goods.

2.7.2 BASIC PRINCIPLES OF NON-PREFERENTIAL RULES OF ORIGIN

In the rules of category 1, the country of origin is defined as "in cases where two or more countries are involved in the production of the goods, the country in which the last substantial transformation which confers a new character to the goods has taken place." Furthermore, "the substantial transformation which confers a new character to the goods" is provided therein as follows:

(i) manufacturing or processing, as a result of which change the HS heading number of a good from that of all the non-originating materials used in the production of the good;

(ii) certain designated manufacturing or processing which do not come under the category (i) above.

Notwithstanding the provisions of (i) and (ii) above, some designated operations are provided as not being "the substantial transformation which confers a new character to the goods" (minimal operations or processes).

In the rules of category 2, the country of origin of goods is defined as follows:

(i) a country or an area in which the good was produced, manufactured or processed; or

(ii) the country of origin of the main part in the case of goods consisting of two or more parts whose origin differs from each other.


2.7.3 LEGISLATION AND OTHER RULES/DOCUMENTS Legislation and Other Rules

Japan's non-preferential rules of origin are embodied in the following legislation:

  1. Those for the application of GATT rates

    2. This rule is provided in the Article 68-3-4 of the Customs Directive of General Provisions for Implementing the Customs Law, issued by the Director-General of the Customs and Tariff Bureau of Ministry of Finance (hereinafter referred to as the "Article 68-3-4 of the Director-General's Directive").

  2. Those for compiling trade statistics

    3. Import statistics are compiled on the basis of country of origin of goods. In this case, the country of origin of goods is determined in accordance with the Article 68-3-4 of the Director-General's Directive as provided in Article the 7-2 of the Customs Directive on merchandise trade issued by the Director-General of Customs and Tariff Bureau of Ministry of Finance.

  3. Those for import control of goods with false marking of origin

    4. Article 71 of the Customs Law provides that no import permit shall be given to any foreign goods showing directly or indirectly a false marking. Rules of origin for determining whether marking of origin is false or not are provided in the Customs Directive titled "Treatment of Imported Goods with False Marking of Origin" issued by the Director of Import Division of Customs and Tariff Bureau on 28 March 1973.

    This Directive sets forth that the Article 68-3-4 of the Director-General's Directive is applied, mutatis mutandis, in determination of country of origin. However, it additionally provides that the scope of simple assembly of parts, which are regarded as not being the substantial transformation which confers a new character to the goods, is limited to assembly of parts where involved are only simple assembly operations such as by means of simple fixing devices (e.g., screws, bolts and nuts), by riveting and by welding.

    Whereas this also provides that assembly which improves the quality or performance of goods is excluded from the simple assembly of parts. Such kinds of assembly may include that of complete knockdown of electronic calculators or watches. In this case, the country in which calculators or watches were assembled is regarded as the country of origin of such goods. And thus true marks of origin thereof shall be, for example, "assembled in country A".

  4. Those for certificates of origin

    5. Japanese Chamber of Commerce applies, mutatis mutandis, the Article 68-3-4 of the Director- General's Directive when it issues certificates of origin.


  5. Those for import control

    6. Article 52 of the Foreign Exchange and Foreign Trade Control Law provides that import control ma be introduced to ensure the sound development of international trade and domestic economy based on a cabinet order.

    Under this provision, Articles 3 and 4 of the Import Control Order introduce three kinds of import control scheme (i.e., import quota, import approval and prior confirmation), and grant the authority to decide and publish the scope of goods to be controlled and necessary requirements including country of origin to the Minister of International Trade and Industry

    Necessary requirements mentioned above are provided in the Import Notice on the Items of Goods Which Are Required to Obtain Import Quota, Country/Area of Origin or Shipment Which Are Required to Obtain Import Approval and Other Necessary Matters Concerning Import of Goods.

    Under the schemes of import approval and prior confirmation, import of specified goods from specified countries of origin is under control. Rules of origin used for these controls are provided in the Import Circular (No. 34-10) as follows.

    The country of origin of a good is either:

    (a) a country or an area in which the good was produced, manufactured or processed;

    (b) the country of origin of the main part in the case of goods consisting of two or more parts whose origin differ from each other; or,

    (c) the country of origin of the good before being processed according to trusted processing contract where the right of ownership does not transfer.

Other Publicly Available Documents

Information is also available in the following:

2.7.4 RESPONSIBILITY FOR CORRECT DETERMINATION OF ORIGIN

Japan employs duty-assessment system on a declaration basis and hence importers have responsibility for the correct declaration of imports. Even after they receive an import permit, they are not free of such responsibility and Customs may, as necessary, conduct post-entry examinations.

Customs determines the country/area of origin of a good at the stage of clearance of a good.

The Ministry of International Trade and Industry (hereinafter referred to as MITI) determines the country/area of origin of a good when it gives approval before import declaration.

MITI determines the country/area of origin of a good when it undertakes the prior confirmation. Customs determines the country/area of origin of a good at that time.

In principle, the country/area of origin of a good is determined on the basis of an importer's declaration. Customs, as necessary, verify the declaration through the examination of submitted relevant documents and inspection of marking of goods.

In application of GATT rates, verification is conducted in accordance with the provisions of Article 68-3-6 of the Customs Directive of general provisions for implementing the Customs Law, issued by the Director-General of the Customs and Tariff Bureau of Ministry of Finance. This provision is contained in the Compendium of the Laws and Orders Concerning Tariff Affairs ("Kanzei-Roppou" published by the Japan Tariff Association).

2.7.5 RULES OF ORIGIN

Article 68-3-4 of the Director-General's Directive and the Customs Directive "Treatment on Imported Goods with False Marking of Origin" issued by the Director of Import Division of Customs and Tariff Bureau on 28 March 1973.

In Article 68-3-4 of the Director-General's Directive, country of origin is defined as the country in which the goods are wholly obtained or produced; or, in case where two or more countries are involved in the production of the goods, the country in which the last substantial transformation which confers a new character to the goods has been conducted.

Terms used in above-mentioned definition are provided as follows:
  1. Goods wholly obtained or manufactured in the origin country/area the following goods are provided as wholly obtained or produced ones:

    (a) Mineral products extracted in that country including its continental shelf

    (b) Plants and plant products harvested in that country

    (c) Live animals born and raised in that country

    (d) Products derived from live animals in that country

    (e) Products obtained by hunting, trapping or fishing in that country

    (f) Marine products obtained in the high seas by that country's vessels

    (g) Products produced aboard a vessel of that country from the products referred to in subparagraph (f) above

    (h) Mineral products obtained in the high seas by vessels or other structures of that country excluding the products covered by subparagraph (a) above

    (i) Used products, collected in that country and fit only for the recovery of raw materials

    (j) Scrap and waste derived from manufacturing operations carried out in that country

    (k) Goods produced in that country only from products referred to in subparagraphs (a) through (f) above

  2. Goods partly manufactured in the origin country/area and partly outside it

    3. (a) (i) In case where two or more countries are involved in the production of the goods, the country of origin is defined as the country in which the last substantial transformation which confers a new character to the goods has been conducted, and furthermore "the substantial transformation which confers a new character to the goods" is provided as follows:

    (a) manufacturing or processing, as a result of which change the HS heading number of a good from that of all the non-originating materials used in the production of the good (the criterion of change in tariff classification);

    (b) certain designated manufacturing or processing which does not come under the category a. above (the criterion for manufacturing or processing).

    (a) (ii) Notwithstanding the provisions of a(i) above, the following operations are provided as not being "the substantial transformation which confers a new character to the goods" (minimal operations or processes).

    1. Classifying, sorting and repackaging
    2. Sticking or affixing labels or marking on products or package c. Sticking into a bottle, box or other similar containers
    3. Mere assorting e. Mere cutting;
    4. Drying, freezing, soaking in brine or other similar processing for transporting or preserving purposes
    5. Mere mixing
    6. Mere assembling of parts
    7. Any combination of two or more actions described above

  3. Rolling of unexposed photographic sheet films

    4. (b) (i) The Criterion of Change in Tariff Classification

    (b)(ii) The Criterion for Manufacturing or Processing Operations mentioned below are additionally designated as "the substantial transformation which confers a new character to the goods" although they are not accompanied by changes in tariff classification.

    1. Crushing ores and uniforming the size of them with respect to natural abrasives
    2. Refining of sugars, oils and fats, waxes or chemicals which may change or specify the usage of them
    3. Manufacturing of the goods of Section 6 and 7 of the Tariff Schedule accompanied by chemical transformation
    4. Dyeing, coloring, mercerization, resin finishing, embossing and other similar processing with respect to leather, yarn and fabrics
    5. Manufacturing of twist yarn from single yarn
    6. Manufacturing listed below with respect to the goods of heading No. 68.12 or 70.19 of the Tariff Schedule

      - manufacturing of yarns from fibers;

      - manufacturing of fabrics from yarns; and

      - manufacturing of clothing and other products from fibers, yarns or fabrics

    7. Manufacturing of the products of headings Nos. 71.01 through 71.04 of the Tariff Schedule from the unworked goods of the headings within that group
    8. manufacturing of alloys
    9. manufacturing of metal lump from scrap and waste of metals; and
    10. manufacturing of metal foil from metal plates, sheets and strip
    11. Manufacturing of products of Chapter 71 (only of precious metals), Chapters 74 through 76 or Chapters 78 through 81 in the shape of ingots, rods, wires or in the shape of goods described in headings Nos. 72.03, 72.05 through 72.17, 72.28 or 73.01 through 73.26 of the Tariff Schedule, excluding the manufacturing of products in the shape of goods described in headings Nos. 72.03, 72.05 through 72.17, 72.28 and 73.01 through 3.26 of the Tariff Schedule with which the goods before the manufacturing and the goods after the manufacturing fall in the same heading if the words "iron or steel" in these headings are replaced with the raw material metal used to manufacture the goods
    12. Manufacturing of products of heading No. 96.01 or 96.02 from worked products of the same heading

    (b) (iii) The Ad Valorem Percentage Criterion is not employed.

    (b) (iv) Any Other Special Provisions

    The country/area of origin of exposed photographic films etc. (heading Nos. 37.04-37.06) is deemed to be the country to which the person who produced the goods belongs.

    In case where two or more kinds of raw materials, some of which are important constituents that give a specific character to the manufactured goods and others of which are not, are used in manufacturing and where the manufacturing with respect to the raw materials forming important constituents falls under either of subparagraph(s) 2(a)(i)a. or (2)(b)(ii) a.-l. above, such manufacturing shall be deemed to be the manufacturing of subparagraph(s) 2(a)(i) a. or (2)(b)(ii) a.-l.

    Import Circular (No.34-10)

    In Import Circular (No.34-10), the country/area of origin of a good is defined as follows:

    1. A country or an area in which the good was produced, manufactured or processed;
    2. The country of origin of the main part in the case of goods consisting of two or more parts whose origins differ from each other; or,
    3. The country of origin of the good before being processed according to trusted processing contract where the right of ownership does not transfer. Further detailed provisions are provided only for certain goods such as woven fabrics of silk.

    2.7.6 OTHER CONDITIONS AND REQUIREMENTS

    No other conditions and requirements are provided.

    2.7.7 REVIEW PROCEDURES

    Any person may file a protest if he/she is not satisfied with a disposition concerning the determination of origin taken by a Director-General of Customs in accordance with the provision of Article 89 of the Customs Law. Furthermore, any person may make an appeal to the Minister of Finance if he/she is not satisfied with the decision made by the Director-General of Customs against his/her filing a protest in accordance with the provisions of the Administrative Dissatisfaction Review Law.

    2.7.8 CONTACTS

    Deputy Director in charge of Sub-Committee on Customs Procedures,
    International Trade Organizations Division,
    Customs and Tariff Bureau, Ministry of Finance
    1-1, Kasumigaseki 3-Chome
    Chiyoda-ku, Tokyo 100
    Japan

    Tel: 81-3-3581-3825
    Fax: 81-3-5251-2123

    Any person who is to import a good may request an issuance of an advance classification ruling to the below-mentioned Customs through the submission thereto of an inquiry document containing the necessary information for determination of origin. Specific provisions on procedures are provided in Article 7-16 of the Customs Directive of General Provisions for Implementing the Customs Law, issued by the Director-General of the Customs and Tariff Bureau of Ministry of Finance. This provision is contained in the Collection of Customs Directives of General Provisions for Tariff Affairs ("Kanzei-Kankei-Kihon-Tsuutatsu-Shuu published by the Japan Tariff Association).

    Tokyo Customs, Office of Customs Counselor, Tel: 81-3-3472-7001

    Osaka Customs, Office of Customs Counselor, Tel: 81-6-576-3001

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