Japan is arguably the second largest economy in the world today. Most large Japanese companies are heavily dependent on trade with the rest of the world, especially Asian countries; the volume of the trade for Japan within Asia is steadily increasing. Many Japanese companies have subsidiaries or manufacturing sites in Asia and have established highly integrated supply chain in this region.

In recent years, Japan has concluded several free trade agreements (“FTAs”) and economic partnership agreements (EPAs”). Tariff barriers are rapidly being eradicated, thus boosting trade between Japan and other Asian countries. On the other hand, the conduct of international trade is complicated by the rules of the FTAs/EPAs, particularly as companies may need to re-orientate their operations and/or supply chain in order to fully utilize the FTAs/EPAs. In addition, companies must continue to comply with the domestic export/import regulations. Violations of customs law may lead to administrative and criminal charges, and in the worst case scenario, cause heavy damage to corporate image and stock value.

Bryan Cave International Trade has extensive customs and trade expertise in Japan and the Asian region. Our consultants include former Customs officials and trade practitioners with years of experience working on customs and trade matters. We advise clients on their business strategies and operations in Japan and around the region, compliance with domestic laws and regulations governing exports, imports, in-bound investments, direct and indirect taxes, transfer pricing, valuation, classification, franchising, incorporation, and joint ventures, and the general conduct of business.

Export Control Advisory

In Japan, the Ministry of Economy, Trade and Industry (“METI”) imposes strict control on exports of certain items from Japan and implements such control rigorously in practice together with the Customs authority. Although Japan’s export control scheme adheres to international frameworks, such as the Wassenaar Arrangement, practical operation of the export control regime is often complicated, particularly with the language barrier. Non-Japanese companies often face challenges under this regulation relating to trade with and operations in Japan. 

Bryan Cave International Trade works with clients to ensure that they are fully aware of and compliant with Japan’s export control requirements. Our work in this area is largely to advise clients on managing and reducing their risk. Specifically, we assist clients in:

• Understanding the legal and regulatory framework of the Japanese export control regime, including the application of the Control List and Catch-All Control;
   
• Reviewing the goods or technologies regulated under Japanese export control law, particularly in relation to goods and technologies of concern to our clients;
   
• Ensuring compliance with export control requirements (e.g., classification, licensing system, licensing exemption, end-user screening);
   
• Ensuring compliance with customs requirements relating to export control (e.g., parameter sheets, non-license required declaration);
   
• Establishing internal effective and practical export control compliance program;
   
• Training relevant personnel to ensure that they understand the export control issues and how to manage them effectively;
   
• Engaging the relevant authorities on specific issues; and
   
• Monitoring changes and developments in the export control policy.
   

Customs Compliance & Other Regulatory Matters

Japan Customs has many established procedures and systems, put strictly into operation based on the rules. However, the language barrier is a major obstacle for foreign companies trying to understand the rules when operating in Japan. Furthermore, the rules are frequently changed, in line with the development of international frameworks. Bryan Cave International Trade’s strength lies in its team of customs specialists with vast experience dealing not only with Japanese customs matters but also with other regulatory matters.

Bryan Cave International Trade works with clients to:

• Review importations to ensure that information provided to Japan Customs is accurate, as well as to identify risk areas and cost saving opportunities. This includes a review of goods and document flows, correspondences, internal controls and systems, contracts and agreements, and transfer pricing policies;
   
• Review the tariff classification of their products, ensuring compliance with Japan-specific classification rules;
   
• Determine the declared value of imports for customs purposes. This includes advice relating to dutiable elements not included in the invoice price, as well as possible exclusion of certain costs, partially or wholly, from the transaction value resulting in lower customs value and thus, reduced payable duty/tax;
   
• Review and update transfer pricing policies from the perspective of indirect tax planning, assisting in risk analysis and business planning;
   
• Identify regulatory requirements affecting importation into Japan, such as licensing and notification requirements, and labeling requirements;
   
• Develop a reliable and practical internal system to ensure customs compliance; and; and
   
• Train relevant personnel, ensuring that they understand the customs issues and know how to manage them effectively.