Trade Regulations for Export to Japan

1. Trade Regulations for Export to Japan - Food & Drink - Swedish Trade Council, Tokyo 2005, January 31

2. CONTENTS / AGENDA • Executive Summary • Market Analysis • Trade Regulations in Japan • Tax • Cost • Appendix

3. EXECUTIVE SUMMARY • In recent Japan, imports of Maize, Meat, Vegetables, and Alcohol beverages are getting increased although as most commonly imported products are fishery products. • There are several regulations for food importation to Japan and mandatory inspections stipulated under each regulation are required. • Food Sanitation Law should apply to overall food importation. • Specific food items and additives are subject to separate requirements regarding specifications besides Food Sanitation Law. • Some types of foods are subject to import restrictions related with the Foreign Exchange and Foreign Trade Law. • Three types of taxes are due on imported products.

4. CONTENTS / AGENDA • Executive Summary • Market Analysis • Trade Regulations in Japan • Tax • Cost • Appendix

5. Food imports reached 12.4% of Japan’s total imports. Total food imports are 5.2 trillion JPY (4.31 BUSD) in 2001. MOST COMMONLY IMPORTED PRODUCTS ARE FISHERY, MEAT, AND CEREALS AND THEIR PREPARATIONS. Percentage of food imports in Japan’s total imports (JPY) (%) (10 BJPN) 14.8 14.3 13.6 12.4 12.1 1997 1998 1999 2000 2001 Source: Trade & Industry White Paper

6. Most increasing imported products top 10 in recent Japan (2003) MAIZE MARKS NO.9 IN THE RANKING OF THE MOST INCREASING IMPORTED PRODUCTS. (%) *Share of total imports Source: JETRO HP ”Current Japanese Economy and Trade Statistics”

7. Most increasing imported items and most decreasing imported items in recent Japan (2003) MAIZE AND MEAT ARE INCREASING MORE THAN 10% YOY (2002-03). Increasing Item Decreasing Item (%) (%) *Share of total imports Source: JETRO HP ”Current Japanese Economy and Trade Statistics”

8. CONTENTS / AGENDA • Executive Summary • Market Analysis • Trade Regulations in Japan • Tax • Cost • Appendix

9. TRADE REGULATIONS FOR FOOD IMPORTATION LIVESTOCK AND AGRICULTURAL PRODUCTS ARE REQUIRED TO PASS ANIMAL / PLANT QUARANTINE BESIDES FOOD SANITATION LAW. Source: JETRO HP ”Current Japanese Economy and Trade Statistics”

10. FOOD THAT FAIL TO COMPLY WITH THE FOOD SANITATION LAW MAY NOT BE IMPORTED INTO JAPAN. ［THE FOOD SANITATION LAW］ 2. Standards for manufacturing, processing, and preparation of foods in general (exerted) • Foods shall not be irradiated during manufacturing or processing (except when, for the purpose of manufacturing or processing process control, the food absorption line emits 0.10 gray or less of radiation, or when other separately defined circumstances apply). • Foods made from raw cow’s milk or raw goat’s milk shall be either heat pasteurized to a temperature of 62 degrees Celsius for 30 minutes, or be subjected to another heat pasteurization method with the same or equivalent effectiveness. Milk added to foods or used in food preparation must be cow’s milk, special cow’s milk, pasteurized goat’s milk, partially skimmed milk, skim milk, or processed milk. • When blood, blood cell, or blood plasma (only of livestock) is used in the manufacture, processing, or preparation of foods, the food must be heat pasteurized to a temperature of 63 degrees Celsius for 30 minutes, or be subjected to another heat pasteurization method with the same or equivalent effectiveness.

11. FOOD THAT FAIL TO COMPLY WITH THE FOOD SANITATION LAW MAY NOT BE IMPORTED INTO JAPAN. ［THE FOOD SANITATION LAW］ 3. Preservation standards for foods in general • When preserving a food by direct contact with ice, ice shall be used that shows a negative response to the coliform group (the testing method for detecting coliform group is also defined). • Antibiotics shall not be used in food preservation. • Foods shall not be irradiated for the purpose of preservation. • Specific food items (Appendix 1) and additives are subject to separate requirements regarding specifications of composition, bacteria count, coliform group count, preservation temperature, processing or manufacturing methods, etc. • The Ministerial Ordinance Concerning Compositional Standards etc. for Milk and Diary Products and the Specifications and Standards for Food and Food Additives, etc. is stipulated as specifications and standards on milk and diary products. Source: JETRO “Handbook for Imported Foods”

12. NEARLY ALL FOODS MAY BE FREELY IMPORTED WITH THE COMPLETE PROCEDURAL REQUIREMENT. SOME EXCEPTIONS ARE・・・ ［THE FOREIGN EXCHANGE AND FOREIGN TRADE LAW］ • Import quota items (Import Notice No.1) • The importer must first apply to the Ministry of Economy, Trade and Industry for an import quota allocation, after which import license must be obtained. • Non-liberalized items • Generally referred to as IQ (Import Quota) items. As of April 1, 2002 there were 8 food products on HS classification basis in the Customs Tariff Schedules of Japan that were subject to import quotas. • 2) Wild plant and animal species and their derivatives protected by the Washington Convention (Convention on International Trade in Endangered Species of Wild Fauna and Flora) and the products made from their species. 2. Import approval items (Import Notice No.2) Certain imported products originated in or shipped from specific areas must obtain import approval from the Minister of Economy, Trade and Industry in order to enter Japan. 3. Prior confirmation items Some items require confirmation from the Minister of Economy, Trade and Industry prior to importation. Source: JETRO “Handbook for Imported Foods”

13. Principal Quarantine and Inspection FOOD SANITATION INSPECTION AND CUSTOMS INSPECTION ARE MANDATORY FOR ALL FOODS IMPORTATION. Principal Quarantine and Inspections Procedures are determined for the type of products as below. indicates required inspections Source: JETRO “Handbook for Imported Foods”

14. WHAT PROCEDURES YOU SHOULD FOLLOW? Foreign Countries Ship Aircraft Processed Foods Fishery Products Meats, Ham, Sausage Food Additives Fruits and Vegetables Foreign Cargo Animal Quarantine Plant Quarantine OK OK Food Sanitation Notification and Inspections JAPAN OK Customs Inspection (Tariff Rates) Tariff, Consumption Tax Collected Cargo removed from bonded area = Imported Domestic Cargo Food Sanitation Law Nutrition Improvement Law JAS Law Measurement Law Other Laws Time of Sale Source: JETRO “Handbook for Imported Foods”

15. CONTENTS / AGENDA • Executive Summary • Market Analysis • Trade Regulations in Japan • Tax • Cost • Appendix

16. THREE TYPES OF TAXES ARE DUE ON IMPORTED PRODUCTS. 1. Tariffs A tariff is a tax imposed on imported products. The taxable basis is either the customs value (=the price of the food itself + insurance + freight charges) or the volume. For more complete information, consult the Customs Tariff Schedules of Japan. * The Customs Tariff Schedules of Japan is published by the Japan Tariff Association (TEL: 03-3263-7221) 2. Liquor Tax Products treated as alcoholic beverages under provisions of the Liquor Tax Law are subject to liquor tax on a volume basis when imported. 3. Consumption Tax Consumption tax (5%) is imposed on the sum of the customs value and any applicable tariff (or liquor taxes, in some cases). In principle, neither tariffs nor consumption tax are due when the customs value is under 10,000 yen, whether the item is being imported for business or personal purposes. * Alcoholic beverages are also exempt from tariffs and consumption tax if the value is under 10,000 yen, but they still are subject to liquor taxes. Source: JETRO “Handbook for Imported Foods”

17. CONTENTS / AGENDA • Executive Summary • Market Analysis • Trade Regulations in Japan • Tax • Cost • Appendix

18. CUSTOMS BROKERS ARE COMMONLY USED FOR CUSTOMS PROCEDURES. • Freight and insurance charges • Cost associated with payment • - Cost for transfers, L/C (Letter of Credit) and account settlement • Cost associated with customs clearance • - It is common to use the service of a customs broker (Appendix 3) to handle procedures required at Customs. This involves the following cost items. • 1) Procedural proxy services • Food sanitation inspection procedures • Import declaration prorocedures • Animal or plant quarantine procedures (required for some items) • 2) Port cargo handling operations (ship unloading, landing, etc.) • 3) Storage facility costs, etc. • Import taxes (see page.18) • Transportation cost within Japan Source: JETRO “Handbook for Imported Foods”

19. CONTENTS / AGENDA • Executive Summary • Market Analysis • Trade Regulations in Japan • Tax • Cost • Appendix

20. Appendix 1 Foods with Separate Defined Standards Source: JETRO “Handbook for Imported Foods”

21. Appendix 2 Trade Regulation – Related Organization Source: JETRO HP ”Current Japanese Economy and Trade Statistics”

22. Appendix 3 Customs Brokers Association Source: JETRO ”Handbook for Imported Food”

23. Appendix 4 Japanese Associations – Food (General) Source: JETRO ”Handbook for Imported Food”

24. Appendix 5 Japanese Associations – Beverages Source: Promar Japan ”U.S. Food Exporter’s Guide to Japan”

25. Appendix 6 Japanese Associations – Distribution Source: Promar Japan ”U.S. Food Exporter’s Guide to Japan”

26. Appendix 7-1 Imported foods & drink companies in Japan Source: STC Tokyo database

27. Appendix 7-2 Imported foods & drink companies in Japan Source: STC Tokyo database

28. Appendix 8 Swedish restaurants in Japan Source: STC Tokyo database