International Joint Ventures and Merger & Acquisitions

How can Indian Manufacturers Sell Goods in Japan?

August 01, 2020

Japan follows a strict protocol for goods which are imported into the country from other nations.

Japan follows a strict protocol for goods which are imported into the country from other nations. There are certain obligations which must be adhered to and specific norms which need to be followed in order to get an approval for such exportation from India. Following are the details pertaining to the export procedure for Japan.

Regulations and Customs in Japan

Non Tariff Barriers

Japanese non-tariff barriers are highly common and used as a much know regulatory procedure for the control of foreign trade. Points like the exclusive Japanese standards, the importance of personal relationships while conducting any business as well as a solid regulatory policy with a preference for national products may inhibit the entrance of foreign products into the Japanese market. Moreover, even quotas exist for many marine products, organic chemical products, explosives, pharmaceuticals and medical products, animals and plants (in respect of the Washington Convention) which further hinder the ease of doing business with any Japanese organization. As in every country, an import license is an essential pre-requisite for all products which are subject to quotas, products that are deemed dangerous along with perishable goods.

Customs Duties and Taxes on Imports

Japan imposes a customs tariff which is considered amongst the lowest in the world (on average, 3%) which may be a redeeming factor while importing goods into the country since every other policy and scheme for foreign trade is highly restrictive in nature and imposes heavy inspection and standards for approval of the same.

Customs threshold (from which tariffs are required)

The threshold at present is JPY 10,000.

Customs Classification

Japan uses the Harmonised Commodity Description and Coding System more commonly referred to as the 'Harmonised System,' made by the World Customs Organisation for the purpose of providing stable customs procedures. This system consists of nearly 5,000 commodity groups and each one of them is identified by a six digit code and this system is incorporated by more than 200 countries.

Samples for Importing Samples

The samples sent are eligible for duty-free entry, provided they meet the following criteria:

  • The total customs value should be JPY 5,000 or less.
  • The words 'sample, not for resale' must necessarily be written over the commercial invoice package.
  • The goods must be marked or otherwise impaired so that they can only be used as samples and not be sold as the complete product in itself.

Import License Clearance Procedure

An individual who wishes to import products into Japan must first declare the same to the Director-General of Customs and therefore, acquire the requisite import permit after due examination is conducted if found necessary depending upon the category of such a product. These formalities begin with the lodging of an import declaration and conclude with the issuance of an import permit after the necessary examination and payment of the Customs duty and the excise tax required. This is the process adopted for ensuring that adequate measures are undertaken in order to fulfil the requirements present under the policy for the control of foreign exchange and other regulations concerned with the importation of goods.

Nowadays, more than 90 percent of such import procedures are currently computerised. Hence, all such steps and procedures involved for clearing customs and related services are available on the website of Japan Customs wherein the Customs Counsellor System assists companies with the required import procedures and processes to be followed for the same.

This process has been better explained in detail below:

Import Declaration (Customs Law, Articles 67 through 72)

(1) Completion and Submission of Import Declarations

This declaration has to be submitted through the process of lodging an import (Customs duty payment) declaration which clearly describes and states the quantity and the value of the goods along with all other any other required particulars which may be needed.

The requisite declaration must be made, in particular, after the specific goods have been taken into a Hozei area or any other specially designated zone. However, in the case of specific items which need the approval of the Director-General of Customs, this declaration must be made while they are aboard the ship or barge or before they are taken into a Hozei area or any other special designated area.

(2) Declarant

The necessary import declaration must be made, in principle, only by the individual who is importing these products. Mostly, a customs broker files the required declaration as a proxy for importers in order to facilitate this process better.

(3) Documents to Be Submitted (Customs Law Article 68)

The import (customs duty payment) declaration form (Customs form C-5020) is required to be prepared in triplicate and submitted to Customs along with the following documents:

  1. The Invoice
  2. The Bill of lading or Air Waybill
  3. The certificate of origin (where a WTO rate is applicable)
  4. A generalized system of preferences, certificates of origin (in Form A) (where a preferential rate is applicable)
  5. The packing lists, freight accounts, insurance certificates, etc. (where deemed necessary);
  6. All licenses, certificates, etc. required by laws and regulations other than the Customs Law (when the import of certain goods is restricted under such laws and regulations);
  7. A detailed statement on the reductions of, or exemption from the customs duty and the excise tax (when such reduction or exemption is applicable to the goods);
  8. A customs duty payment slips (when goods are dutiable).
It can be concluded that customs requires only those additional documents which are necessary for the ascertainment of all the important considerations for acquiring the permission.

Prohibited Products

Cannabis and Handguns, etc. are prohibited by law which have been defined under a separate list entirely wherein all such prohibited products are clearly listed down.

Verification with Other important Laws and Regulations

  • Several imported goods could affect the Japanese economy in a highly negative manner thereby destabilising its trade and exchange policies. This could greatly impact the Japanese industry, economy, and hygiene, or its public safety and morals as well. These products are given under "import restrictions" as provided by various domestic laws and regulations for control of the same.
  • For these kinds of goods which fall within the category of “restricted goods” the importer is required to have a special permit and an approval relating to the import of such goods. Furthermore, under the Customs Law, the requirements for inspection and other requisites must also be met.
  • Thus when the exporter wants to export products which fall under this category and therefore require a special permit and approval under the requisite laws and regulations other than the Customs Law, a certificate of application for the permit and approval under other laws and regulations must be submitted as per Article 70 of the Customs Law.

The Acts and Laws and Regulations Related to Banned Goods

These laws must be necessarily adhered to in case the product in question falls within the list of banned goods. The policies, rules and regulations pertaining to the act which applies to this product must be followed completely in order to receive the required approval.

  • The Law Concerning Wildlife Protection and Hunting
  • The Firearms and Swords Possession Control Law
  • The Poisonous and Harmful Substance Control Law
  • The Pharmaceutical Affairs Law
  • The Fertilizer Control Law
  • The Law Concerning Sugar Price Stabilization
  • The Explosive Control Law
  • The Law Concerning Screening of Chemical Substances and Regulation on their Manufacture, etc.
  • The High Pressure Gas Safety Law

Policies, Laws and Regulations Concerning Quarantine

These are the laws which must be adhered to and looked into in case of products which fall within this specific category.

  • The Food Sanitation Law
  • The Plant Quarantine Law
  • The Domestic Animal Infectious Control Law
  • The Rabies Prevention Law

Policies and Laws and Regulations Concerning Narcotics

When it comes to narcotics or any stimulants, the Japanese authorities are particularly strict to give out the requisite license. Exporters from India must ensure that all their products follow every given rule under the Act applicable for their product. Any flouting of any of the policies regarding the same, shall equal immediate refusal of permit with greater restrictions on further dealings with the same exporter.

  • The Cannabis Control Law
  • The Stimulant Drug Control Law
  • The Narcotics and Psychotropics Control Law
  • The Opium Law

An overview of the Japanese Trade Policy

Purpose of the Policy

The Trade Control Policy is implemented for the purpose of enabling proper development of foreign trade, and maintaining peace and safety in Japan as well as in the international community by exercising the minimum necessary control or coordination measures over free trade, while quickly and accurately taking into consideration regulation needs in internal and external policies pertaining to border control and consistency with internal conditions and appropriate measures regarding collateral, and establishing a proper trade control system.

Overview/Background of the Policy

It has been analysed that Japan requires to appropriately execute its trade control policy in adherence with the international rules with regards to unfair trade by other countries such as export dumping and as FTA/EPA negotiations accelerate. Currently, there exists an increased number of calls for the formulation and implementation of a system for issuing certificates of origin.

In order to handle such issues, the Ministry of Economy, Trade and Industry exercises the following policies:

(1) Trade Control based on the Foreign Exchange and Foreign Trade Law

The Government of Japan ensures that adequate exercise of proper trade control is established by way of appropriate implementation of policies and rules which are compliant with the Foreign Exchange and Foreign Trade Laws, like the screening for import/export permissions as well as the approval and on-site inspection and disposal of illegal exports.

Furthermore, the Japanese Government participate in the exchange of information with a lot of other countries with respect to the situation circumventing their import/export policies and collects and analyses the same in order to determine the most effective policy to be implemented within Japan

(2) Appropriate Implementation of Trade Remedies

The Japanese Government strictly prevents unfair damages to its market and establishes a system wherein appropriate measures are undertaken to maintain a fair trading environment through the exercise of trade remedy measures in compliance with the WTO Agreements and the Customs Tariff Act. It also researches and analyzes the laws, guidelines, specific cases and duty imposition processes to enable this procedure more effectively.

(3) Appropriate Maintenance of Internal Rules pertaining to Certificates of Origin

The Government of Japan adjusts and thoroughly establishes internal procedures for issuing these certificates of origin.

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