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On May 8, the Japanese Diet passed two bills submitted by the Ministry of International Trade and Industry (MITI) on February 18 in connection with further deregulation related to the Large-Scale Retail Store Law (LSRS law).1
The new legislation, an Amendment of the LSRS Law and a Special law on Import Boutiques, represents the second step in the Japanese government's efforts to adhere to the commitments it made, in the June 1990 U.S.-Japan Structural Impediments Initiative (SII), to reform the Japanese distribution system and, in particular, liberalize implementation of the LSRS Law, which is widely viewed as a structural impediment to the import of foreign goods. Both new bills are to come into effect within nine months of promulgation.
The first step consisted of MITI deregulation measures (the Measures) that took the form of numerous policy statements, circulars and interpretations, as well as a formal amendment to the LSRS Law's implementing regulations. The Measures, which were accomplished through so-called administrative guidance, became effective May 30, 1990.2
The U.S. government's position--and for that matter, the position of some consumer groups in Japan--has been that the LSRS Law works as an impediment to trade because it allows local merchants and, perhaps more to the point, already established large-scale retailers to exert influence to block local government approvals of openings of new large-scale stores.
With simpllfied approval procedures, the argument goes, there would be an influx of high-volume retailers, whether Japanese or foreign owned, many having direct links with foreign manufacturers. As a result, consumer spending would increase and so would the proportion of imports among consumer purchases.3
1990 Deregulation Measures
The deregulation Measures provide, among other things, for the following specific reforms:
* the coordination processing period for the opening of stores was shortened,
* rules related to floor space for import sales were relaxed,
* some de minimus increases in floor space were exempted from coordination procedures,
* regulation of hours and holidays was relaxed, and
* transparency was increased.
Coordination Processing Period
In potentially the most significant of MITI's regulatory reforms, the coordination processing period for the opening of stores was shortened to a total of 18 months. During this period, local advisory review boards and, at least since 1982, local associations of retailers...