1.

2.

The Japanese Trademark Law gives all legal rights to
the first applicant for a trademark regardless of
whether that applicant has used or ever plans to use
the trademark being registered. The only legal ground
for protest requires a claimant to prove that his
trademark is "widely recognized among consumers" of
Japan as referring to his goods. Japanese parties
sometimes apply for trademarks of U.S. firms with no
intention of using them. They sometimes demand
royalty payments or have offered to sell American
firms the right to use their own trademarks.

Comment: Japanese law, like that of many other
countries, gives rights to the first applicant.
However, it prohibits registration of a trademark
widely recognized among consumers as indicating goods
relating to the business of another person or a
trademark similar thereto, and which is used on such
goods or goods similar thereto;". The Department of
Commerce, through the U.S. Embassy in Tokyo, has
brought to the attention of the Japanese authorities
attempts to register in Japan well-known American
trademarks, as well as descriptive or generic
trademarks. Such complaints are handled on a
case-by-case basis.

The GOJ sometimes uses administrative guidance to restrict imports by "suggesting" that importers buy a similar product from a domestic supplier.

Comment: Administrative guidance, by its very nature, is very difficult to prove. In addition, the GOJ sometimes uses positive administrative guidance to encourage imports. Cases involving the allegation of the use of administrative guidance by the GOJ to restrict imports must be dealt with on a case-by-case basis as they come to our attention.

V. CHARGES ON IMPORTS

A.

B.

Prior Import Deposits (Not required by Japan)

Surcharges, Port and Statistical Taxes (No current
complaints)

C.

D.

Discriminatory Taxes

1.

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Japan's internal taxes such as road taxes on automobiles, both prefectural and national, are higher on larger cars than on small cars, and thus tend to discriminate against the generally larger U.S.-built cars, although the taxes are applicable to both domestic and foreign cars.

Comment: The effect of Japanese internal taxes on autos as a deterrent to U.S. sales in Japan appears slight in relation to the effects of high dealer costs and markups in Japan. See V F2 for further discussion of the Commodity Tax system.

Discriminatory Credit Restrictions

1.

In the past, the Japanese Government significantly
limited the extent to which importers could make use
of credit in their payments for imports through the
imposition of restrictive time limits under the
"Standard Method of Settlement." Non-standard methods
of payment require advance approval of the Ministry of
International Trade and Industry.

Comment: Japan has agreed to extend the duration of
standard settlement. As a result, both advance
payment within one year before receipt of imported
goods and deferred payment within six months after
customs clearance will now be freely allowed.
Deferred payment for capital goods, durable consumer
goods, and goods under a consignment contract may be
made freely as long as the payment is made within one
year of customs clearance. Japan has also stated that
it will aim at further liberalization of the "Standard
Method of Settlement," including its eventual
elimination.

E. Variable Levies (No current complaints)

F.

Border Tax Adjustments

1.

Japan's internal specific excise tax as applied to high-priced whiskies, brandies and other alcoholic beverages (both domestic and foreign) has an ad valorem equivalent which is significantly higher than that applied to low-priced liquors. This discriminates de facto against imports, which tend to fall into the higher price category, while Japanese whiskies tend to fall into the lower price categories.

2.

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Comment: The Liquor Tax, like the Commodity Tax, is progressive. We have tried unsuccessfully from time to time to get Japan to reduce the gap in the tax incidence as between imported and domestic liquors.

Japan's Commodity Tax, which applies to 17 types of
so-called luxury items, is assessed equally on imports
and domestic goods. It is progressive according to
the value of the product subject to tax. Large
automobiles, large refrigerators, large TV sets, and
large boats are taxed at higher rates than their
smaller counterparts.

Comment: As stated above, this tax is assessed
equally on imports and domestic goods. It is
consistent with GATT Article VI: 4. Exports are exempt
from the tax. Over the years we have obtained a
reduction in the commodity tax on large automobiles
(from 40% to 30% to 20%) but in recent negotiations
Japan has been unwilling to reduce the tax to 15%, the
rate presently applicable to small automobiles.

G. Emergency Action (No complaints)

FOREWORD

This pamphlet is one of nine in a new publication series summarizing issues that resulted from the most recent round of Multilateral Trade Negotiations (MTN) held under the General Agreement on Tariffs and Trade (GATT), called the Tokyo Round. Other titles in this series are:

• Agreement on Customs Valuation

• Agreement on Government Procurement • Agreement on Import Licensing Procedures • Agreement on Subsidies and

Countervailing Measures

• Agreement on Technical Barriers to Trade • Agreement on Trade in Civil Aircraft

• Framework on Conduct of

International Trade

• Tokyo Round Tariff Reductions

U.S. DEPARTMENT OF COMMERCE

International Trade Administration
Office of Trade Policy

June 1980