Trade Agreement between the United States of America and Japan

For the purposes of this Agreement:

- (a) 'customs duty' means any duty or charge of any kind imposed on or in connection with the importation of a good, and any surtax or surcharge imposed in connection with such importation, but does not include any:
- (i) charge equivalent to an internal tax imposed consistently with paragraph 2 of Article III of the GATT 1994;
- (ii) fee or other charge in connection with the importation commensurate with the cost of services rendered; or
- (iii) antidumping or countervailing duty;
- (b) 'existing' means in effect on the date of entry into force of this Agreement;
- (c) 'GATT 1994' means the General Agreement on Tariffs and Trade 1994 in Annex 1A to the WTO Agreement;
- (d) 'originating' means qualifying as originating in accordance with Annex I, with respect to Japan, or Annex II, with respect to the United States;
- (e) 'WTO' means the World Trade Organization; and
- (f) 'WTO Agreement' means the Marrakesh Agreement Establishing the World Trade Organization , done at Marrakesh on April 15, 1994.

1. For the purposes of this Annex:
2. (a) 'chapter' means a chapter of the Harmonized System;
3. (b) 'Harmonized System' or 'HS' means the Harmonized Commodity Description and Coding System , including its General Rules of Interpretation, Section Notes, Chapter Notes and Subheading Notes as adopted and implemented by Japan in its laws;
4. (c) 'heading' means the first four digits of the tariff classification number under the Harmonized System;
5. (d) 'subheading' means the first six digits of the tariff classification number under the Harmonized System; and
6. (e) 'year' means, with respect to Year 1, the period from the date of entry into force of this Agreement until the following March 31 and, with respect to each subsequent year, the 12-month period starting on April 1 of that year. 2. The nine-digit codes of the tariff classification number of Japan referred to in this Annex are based on the national nomenclature of Japan (Statistical Code List for Imports as of April 1, 2019). For greater certainty, they are subject to change in accordance with the laws, regulations or public notifications of Japan, and shall be referred to together with the correlation tables published in case of any change of national nomenclature of Japan. This Annex is made based on the Harmonized System, as amended on January 1, 2017. 3. Japan shall designate or maintain one or more inquiry points to address inquiries from interested persons concerning any matter with respect to the implementation or application of this Annex, and shall make information concerning the procedures for making such inquiries publicly available online.

1. For the purposes of implementing annual stages of tariff elimination or reduction pursuant to paragraph 1 of Article 5, the following applies:
2. (a) the reduction for Year 1 shall take place on the date of entry into force of this Agreement; and
3. (b) the subsequent annual reductions shall take place on April 1 of each following year. 2. For the purposes of this Section, 'base rate' means the initial rate of customs duty from which the elimination or reduction of customs duties will be implemented. 3. Unless otherwise provided for in this Section, for the purposes of the elimination or reduction of customs duties in accordance with this Section:
6. (a) in the case of ad valorem duties any fraction less than 0.1 of a percentage point shall be rounded down at least to the nearest one decimal place (in the case of 0.15 percent, the fraction shall be rounded down to 0.1 percent); and
7. (b) in the case of specific duties any fraction smaller than 0.01 of the official monetary unit of Japan shall be rounded to the nearest two decimal places (in the case of 0.005, the fraction shall be rounded to 0.01). 4. Notwithstanding paragraph 1, and paragraph 1(e) of Section A, if this Agreement enters into force after March 31, 2020, Japan shall apply this Section as if this Agreement had entered into force between the date of signature of this Agreement and March 31, 2020. 5. In future negotiations, the United States will be seeking preferential treatment with respect to agricultural goods.

1. This Sub-Section sets out:
2. (a) the originating agricultural goods that may be subject to agricultural safeguard measures;
3. (b) the trigger levels for applying such measures; and
4. (c) the maximum rate of customs duty that may be applied in each year for each such good. 2. Notwithstanding paragraph 1 of Article 5, Japan may apply a safeguard measure on specific originating agricultural goods as provided for in paragraphs 9 through 15. 3. If the conditions specified in this Sub-Section have been satisfied, Japan may, as an agricultural safeguard measure, increase the rate of customs duty on such an originating agricultural good to a level not to exceed the lesser of:

- (a) the most-favored-nation applied rate of customs duty in effect at the time the agricultural safeguard measure is applied;
- (b) the most-favored-nation applied rate of customs duty in effect on the day immediately preceding the date of entry into force of this Agreement; and
- (c) the rate of customs duty set out in this Sub-Section. 4. Japan shall implement any agricultural safeguard measure in a transparent manner. Japan shall, within 60 days of the date of imposing the agricultural safeguard measure, notify the United States in writing and provide the United States with relevant data concerning the measure. Japan shall, on the written request of the United States, respond to specific questions from, and provide information to, the United States, including by e-mail, teleconference, video-conference, or inperson, regarding application of the measure. 5. The conditions for application of the agricultural safeguard measures provided in paragraphs 9(b), 10(a)(iii)(B) and 10(a)(iv)(B), 12(a), 13(a), and 14(b) may be modified after consultation between Japan and the United States. The modified conditions shall be effective by written agreement between Japan and the United States. 6. For greater certainty, no agricultural safeguard measure may be applied or maintained on or after the date on which the rate of customs duty referred to in paragraph 3(c) is zero. 7. Where paragraph 4 of Sub-Section 1 applies, and if less than 12 months remain in the first year on the date of entry into force of this Agreement, during that year, Japan shall apply the trigger level established in the applicable provisions of this Sub-Section, multiplied by a fraction the numerator of which shall be the number of days between the date of entry into force of this Agreement and the following March 31, and the denominator of which shall be 365.

However, with regard to paragraph 14, '12 months' and '365' shall be deemed to read '4 months' and '121' respectively. For the purposes of determining the applicable trigger level in accordance with the previous sentences, any fraction of less than 1.0 shall be rounded to the nearest whole number (in the case of 0.5, the fraction shall be rounded to 1.0). 8. For the purposes of this Sub-Section:
2. (a) ' fiscal year' means the period from April 1 through the following March 31; and
3. (b) 'quarter' means a period:
4. (i) from April 1 through June 30;

- (ii) from July 1 through September 30;
- (iii) from October 1 through December 31; or
- (iv) from January 1 through March 31.

- (a) In accordance with paragraph 2, with respect to the originating agricultural goods provided for in the tariff items indicated with 'SG1*' or 'SG1**' in Column 'Staging Category' in the Schedule of Japan, Japan may apply an agricultural safeguard measure on those originating agricultural goods only if the conditions set out in subparagraph (b) are met. - (b) Japan may apply an agricultural safeguard measure under subparagraph (a) only if the aggregate volume of imports of those originating agricultural goods from the United States for the year exceeds the trigger level set out as follows:
- (i) the trigger level as provided in subparagraph (k) for Year 1;
- (ii) 242,000 metric tons for Year 2;
- (iii) beginning in Year 3 and running through Year 9, the trigger level for each year shall be 4,840 metric tons greater than the trigger level in the previous year;
- (iv) beginning in Year 10 and running through Year 14, the trigger level for each year shall be 2,420 metric tons greater than the trigger level in the previous year; and
- (v) beginning in Year 15 and continuing every year thereafter, the trigger level for each year shall be 4,840 metric tons greater than the trigger level in the previous year. - (c) Notwithstanding subparagraph (b), Japan and the United States shall consult, by the end of the first half of Year 4, and at any time upon request of either Party, with a view to modifying the conditions for application of the agricultural safeguard measure provided in this paragraph in Year 5 and thereafter. As a result of the consultation, the modified conditions shall be effective by written agreement between Japan and the United States. - (d) (i) For the originating agricultural goods provided for in the tariff items indicated with 'SG1*', the rate of customs duty referred to in paragraph 3(c) shall be:

- (A) 38.5 percent, for Year 1 and Year 2;
- (B) 30.0 percent, for Year 3 through Year 9;
- (C) 20.0 percent, for Year 10 through Year 13;
- (D) 18.0 percent, for Year 14; and
- (E) beginning in Year 15 and continuing every year thereafter:
- (1) one percentage point less than the rate of customs duty in the previous year, if Japan did not apply an agricultural safeguard measure under this paragraph in the previous year; or
- (2) the same as the rate of customs duty in the previous year, if Japan applied an agricultural safeguard measure under this paragraph in the previous year.

- (ii) For the originating agricultural goods provided for in the tariff items indicated with 'SG1**', the rate of customs duty referred to in paragraph 3(c) shall be:
- (A) 38.5 percent, for Year 1 and Year 2;
- (B) 32.7 percent, for Year 3;
- (C) 30.6 percent, for Year 4;
- (D) 30.0 percent, for Year 5 through Year 9;
- (E) 20.0 percent, for Year 10 through Year 13;
- (F) 18.0 percent, for Year 14; and
- (G) beginning in Year 15 and continuing every year thereafter:
- (1) one percentage point less than the rate of customs duty in the previous year, if Japan did not apply an agricultural safeguard measure under this paragraph in the previous year; or

- (2) the same as the rate of customs duty in the previous year, if Japan applied an agricultural safeguard measure under this paragraph in the previous year. 2. (iii) If the condition set out in subparagraph (b) is met in one year and as a result an agricultural safeguard measure is in effect during the following year pursuant to subparagraph (e)(ii) or (e)(iii), the rate of customs duty referred to in paragraph 3(c) for the purposes of that agricultural safeguard measure shall, for the duration of that agricultural safeguard measure, be at the level applicable for the year in which the condition set out in subparagraph (b) is met. 3. (e) An agricultural safeguard measure referred to in subparagraphs (a) and (b) may be maintained:
4. (i) if the aggregate volume of imports exceeds the trigger level as provided in subparagraph (b) on or before January 31, until the end of the fiscal year in which the agricultural safeguard measure was applied;
5. (ii) if the aggregate volume of imports exceeds the trigger level as provided in subparagraph (b) during the month of February, for 45 days beginning from the day of the application of the agricultural safeguard measure; and
6. (iii) if the aggregate volume of imports exceeds the trigger level as provided in subparagraph (b) during the month of March, for 30 days beginning from the day of the application of the agricultural safeguard measure. 7.

(f) (i) For the purposes of this paragraph, the period during which an agricultural safeguard measure may be maintained shall commence no later than the day following the fifth business day after the end of the publication period in which the aggregate volume of imports of the originating agricultural goods exceeded the trigger level set out in subparagraph (b). 8. (ii) For the purposes of this paragraph, as an exceptional measure taken for the implementation of this paragraph, within five business days after the end of each publication period, the customs administration of Japan shall publish the aggregate volume of imports of the originating agricultural goods as provided in subparagraph (a) from the United States between:
9. (A) the beginning of the fiscal year and the end of the publication period; and
10. (B) for Year 10 through Year 14, the beginning of the quarter and the end of the publication period. - (iii) For the purposes of this paragraph, ' publication per iod' means:
- (A) the period from the first day of each month until the 10th day of that month;
- (B) the period from the 11th day of each month until the 20th day of that month; and
- (C) the period from the 21st day of each month until the final day of that month. - (g) (i) Notwithstanding subparagraph (b), if, during any year from Year 10 through Year 14, the aggregate volume of imports of the originating agricultural goods provided for in the tariff items indicated with 'SG1*' or 'SG1**' in Column 'Staging Category' of the Sch edule of Japan from the United States in any quarter exceeds the quarterly safeguard trigger volume set out in subparagraph (ii), Japan may increase the rates of customs duties for such goods in accordance with paragraph 3 for a period of 90 days. The 90-day period shall commence no later than the day following the fifth business day after the end of the publication period in which the aggregate volume of imports of such goods in the quarter exceeded the quarterly safeguard trigger volume. The rate of customs duty referred to in paragraph 3(c) if the condition set out in this subparagraph (g) is met shall be:
- (A) 20.0 percent, if the condition is met during Year 10 through Year 13; and
- (B) 18.0 percent, if the condition is met in Year 14. - (ii) For the purposes of this subparagraph (g), the quarterly safeguard trigger volume means 117 percent of one fourth of the trigger level set out in subparagraph (b)(iv) for the respective year.

- (iii) Notwithstanding subparagraph (b), if, during any year from Year 10 through Year 14, the aggregate volume of imports of the originating agricultural goods provided for in the tariff items indicated with 'SG1*' or 'SG1**' in Column 'Staging Category' of the Schedule of Japan from the United States exceeds the trigger level set out in subparagraph (b)(iv) for the respective year, and at the same time the aggregate volume of imports of the originating agricultural goods provided for in those tariff items from the United States in the quarter exceeds the quarterly safeguard trigger volume set out in subparagraph (ii), Japan may maintain an agricultural safeguard measure under this paragraph until the later of the end of the 90-day period provided for in subparagraph (i) or the date provided for in subparagraph (e). - (h) If, during any four consecutive fiscal years after Year 14, Japan does not apply an agricultural safeguard measure under this paragraph, Japan shall not apply any further agricultural safeguard measures under this paragraph. - (i) If the importation into Japan from the United States of the originating agricultural goods provided for in the tariff items indicated with 'SG1*' or 'SG1**' in Column 'Staging Category' of the Schedule of Japan has been wholly or substantially suspended for more than three years due to sanitary concerns, Japan shall not apply an agricultural safeguard measure under this paragraph on such goods from the United States for four years after the whole or substantial lifting of the suspension. If a natural disaster such as severe drought disrupts the recovery of production in the United States, the period in which Japan shall not apply an agricultural safeguard measure under this paragraph to such goods from the United States shall be five years. - (j) Japan shall not apply the tariff emergency measures on beef referred to in Article 7-5 of the Temporary Customs Tariff Measures Law (Law No. 36 of 1960) to the originating agricultural goods provided for in the items indicated with 'SG1*' in Column 'Staging Category' of the Schedule of Japan. - (k) The applicable trigger level for Year 1 for the purposes of subparagraph (b)(i) shall be determined by multiplying 242,000 metric tons by a fraction the numerator of which shall be the number of days between the date of entry into force of this Agreement and the following March 31 and the denominator of which shall be 365.

For the purposes of determining the applicable trigger level in accordance with the previous sentence, any fraction of less than 1.0 shall be rounded to the nearest whole number (in the case of 0.5, the fraction shall be rounded to 1.0).

- (a) In accordance with paragraph 2, with respect to the originating agricultural goods provided for in the tariff items indicated with 'SG2' in Column 'Staging Category' in the Schedule of Japan ('SG2 goods'), Japan may apply an agricultural safeguard measure only if the following conditions are met:
- (i) in Year 1, if the aggregate volume of imports of those SG2 goods from the United States exceeds the trigger level as provided in subparagraph (f);
- (ii) in Year 2 and Year 3, if the aggregate volume of imports of SG2 goods from the United States for the respective year exceeds 116 percent of the largest annual aggregate volume of imports of SG2 goods from the United States during any of the preceding three fiscal years;
- (iii) in Year 4 and Year 5:
- (A) Japan may apply an agricultural safeguard measure under this paragraph on SG2 goods from the United States imported at a price equal to or greater than the threshold price for those SG2 goods, if the aggregate volume of imports of those SG2 goods from the United States for the respective year exceeds 116 percent of the largest annual aggregate volume of imports of those SG2 goods from the United States during any of the preceding three fiscal years; or
- (B) Japan may apply an agricultural safeguard measure under this paragraph on SG2 goods from the United States imported at a price less than the threshold price for those SG2 goods, if the aggregate volume of imports of those SG2 goods from the United States and corresponding imports of goods that can be classified in the tariff items indicated with 'SG2' in Column 'Staging Category' in the Schedule of Japan from the parties, that are also original signatories, of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership , done at Santiago on March 8, 2018 ('CPTPP'), qualifying as originating under the CPTPP in accordance with its provisions, for the respective year exceeds the trigger level set out as follows:
- (1) in Year 4: 90,000 metric tons; and
- (2) in Year 5: 102,000 metric tons; and
- (iv) in Year 6 through Year 10:

- (A) Japan may apply an agricultural safeguard measure under this paragraph on SG2 goods from the United States imported at a price equal to or greater than the threshold price for those SG2 goods, if the aggregate volume of imports of those SG2 goods from the United States for the respective year exceeds 119 percent of the largest annual aggregate volume of imports of those SG2 goods from the United States during any of the preceding three fiscal years; or
- (B) Japan may apply an agricultural safeguard measure under this paragraph on SG2 goods from the United States imported at a price less than the threshold price for those SG2 goods, if the aggregate volume of imports of those SG2 goods from the United States and corresponding imports of goods that can be classified in the tariff items indicated with 'SG2' in Column 'Staging Category' in the Schedule of Japan from the parties, that are also original signatories, of the CPTPP, qualifying as originating under the CPTPP in accordance with its provisions, for the respective year exceeds the trigger level set out as follows:
- (1) in Year 6: 114,000 metric tons;
- (2) in Year 7: 126,000 metric tons;
- (3) in Year 8: 138,000 metric tons;
- (4) in Year 9: 150,000 metric tons; and
- (5) in Year 10: 150,000 metric tons,

where for the purposes of subparagraphs (iii) and (iv), threshold price means:

- (C) for the originating agricultural goods provided for in the tariff items 020312.023, 020312.024, 020312.025, 020319.023, 020319.024, 020319.025, 020322.023, 020322.024, 020322.025, 020329.023, 020329.024, 020329.025, 020630.093, 020630.094, 020630.095, 020649.093, 020649.094, or 020649.095: 399 yen per kilogram; and
- (D) for the originating agricultural goods provided for in the tariff items 020311.020, 020311.031, 020311.032, 020321.020, 020321.031, or 020321.032: 299.25 yen per kilogram.

- (b) For SG2 goods, the rate of customs duty referred to in paragraph 3(c) shall be:

- (i) for SG2 goods provided for in the tariff items 020311.040, 020312.022, 020319.022, 020321.040, 020322.022, 020329.022, 020630.099, or 020649.099:
- (A) in Year 1 and Year 2: 4.0 percent;
- (B) in Year 3 through Year 5: 3.4 percent;
- (C) in Year 6 through Year 8: 2.8 percent; and
- (D) in Year 9 and Year 10: 2.2 percent;
- (ii) for SG2 goods provided for in the tariff items 020312.023, 020312.024, 020312.025, 020319.023, 020319.024, 020319.025, 020322.023, 020322.024, 020322.025, 020329.023, 020329.024, 020329.025, 020630.093, 020630.094, 020630.095, 020649.093, 020649.094, or 020649.095, the lesser of:
- (A) the difference between CIF import price per kilogram and the First Safeguard Standard Import Price; and
- (B) the first alternative rate,

where for the purposes of this subparagraph (ii):

- (C) 'First Safeguard Standard Import Price' means a price equal to 524 yen per kilogram multiplied by the sum of 100 percent and the rate of customs duty set out in subparagraph (i) for the respective year; and
- (D) 'first alternative rate' means:
- (1) in Year 1 through Year 3: the rate of customs duty specified in the Schedule of Japan for the tariff items 020312.023, 020319.023, 020322.023, 020329.023, 020630.093, or 020649.093;
- (2) in Year 4 through Year 8: 100 yen per kilogram; and
- (3) in Year 9 and Year 10: 70 yen per kilogram; and
- (iii) for SG2 goods provided for in the tariff items 020311.020, 020311.031, 020311.032, 020321.020, 020321.031, or 020321.032, the lesser of:

- (A) the difference between the CIF import price per kilogram and the Second Safeguard Standard Import Price; and
- (B) the second alternative rate,

where for the purposes of this subparagraph (iii):

- (C) 'Second Safeguard Standard Import Price' means a price equal to 393 yen per kilogram multiplied by the sum of 100 percent and the rate of customs duty set out in subparagraph (i) for the respective year; and
- (D) 'second alternative rate' means:
- (1) in Year 1 through Year 3: the rate of customs duty specified in the Schedule of Japan for the tariff items 020311.020 or 020321.020;
- (2) in Year 4 through Year 8: 75 yen per kilogram; and
- (3) in Year 9 and Year 10: 52.5 yen per kilogram.

- (c) Any agricultural safeguard measure applied under this paragraph may be maintained only until the end of the fiscal year in which the trigger level was exceeded. - (d) Japan shall not apply or maintain any agricultural safeguard measure under this paragraph after the end of Year 10. - (e) Japan shall not apply the tariff emergency measures on pork referred to in paragraph 1 of Article 7-6 of the Temporary Customs Tariff Measures Law (Law No. 36 of 1960) to SG2 goods. - (f) The applicable trigger level for SG2 goods from the United States for Year 1 for the purposes of subparagraph (a)(i) shall be determined by multiplying 112 percent of the largest annual aggregate volume of imports of SG2 goods from the United States during any of the preceding three fiscal years by a fraction the numerator of which shall be the number of days between the date of entry into force of this Agreement and the following March 31 and the denominator of which shall be 365. For the purposes of determining the applicable trigger level in accordance with the previous sentence, any fraction of less than 1.0 shall be rounded to the nearest whole number (in the case of 0.5, the fraction shall be rounded to 1.0).

1. For the purposes of this Section:
2. (a) 'fungible goods or materials' means goods or materials that are interchangeable for commercial purposes and whose properties are essentially identical;
3. (b) 'Generally Accepted Accounting Principles' means those principles recognized by consensus or with substantial authoritative support in the territory of a Party with respect to the recording of revenues, expenses, costs, assets, and liabilities; the disclosure of information; and the preparation of financial statements. These principles may encompass broad guidelines for general application, as well as detailed standards, practices, and procedures;
4. (c) 'good' means any merchandise, product, article, or material;
5. (d) 'indirect material' means a material used in the production, testing, or inspection of a good but not physically incorporated into the good; or a material used in the maintenance of buildings or the operation of equipment, associated with the production of a good, including:
6. (i) fuel, energy, catalysts, and solvents;
7. (ii) equipment, devices, and supplies, used to test or inspect the good;
8. (iii) gloves, glasses, footwear, clothing, and safety equipment and supplies;
9. (iv) tools, dies, and molds;
10. (v) spare parts and materials, used in the maintenance of equipment and buildings;
11. (vi) lubricants, greases, compounding materials, and other materials, used in production or used to operate equipment and buildings; and
12.

(vii) any other material that is not incorporated into the good but the use of which in the production of the good can reasonably be demonstrated to be a part of that production;

- (e) 'material' means a good that is used in the production of another good;
- (f) 'non -originating good' or 'non -originating material' means a good or material that does not qualify as originating in accordance with this Section;
- (g) 'originating good' or 'originating material' means a good or material that qualifies as originating in accordance with this Section;
- (h) 'packing materials and containers for shipment' means goods used to p rotect another good during its transportation, but does not include the packaging materials or containers in which a good is packaged for retail sale;
- (i) 'preferential tariff treatment' means the customs duty rate applicable to an originating good, pursuant to Section B;
- (j) 'production' means operations including growing, cultivating, raising, mining, harvesting, fishing, trapping, hunting, capturing, collecting, breeding, extracting, gathering, manufacturing, processing, or assembling a good;
- (k) 'transaction value' means the price actually paid or payable for the good when sold for export or other value determined in accordance with the Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade 1994 , set out in Annex 1A to the WTO Agreement; and
- (l) 'value of the good' means the transaction value of the good excluding any costs incurred in the international shipment of the good. 2. (a) Except as otherwise provided in this Section, Japan shall provide that a good is originating if it is:
- (i) wholly obtained or produced entirely in the territory of one or both Parties as established in subparagraph (b);
- (ii) produced entirely in the territory of one or both Parties, exclusively from originating materials; or
- (iii) produced entirely in the territory of one or both Parties by one or more producers using non-originating materials provided the good satisfies all applicable requirements of Sub-Sections 2 and 3,

and the good satisfies all other applicable requirements of this Section.

- (b) Japan shall provide that for the purposes of subparagraph (a), a good is wholly obtained or produced entirely in the territory of one or both Parties if it is:

- (i) a plant or plant good, grown, cultivated, harvested, picked, or gathered there;
- (ii) a live animal, other than that falling under chapter 3, born and raised there;
- (iii) a good obtained there from a live animal, other than that falling under chapter 3;
- (iv) an animal, other than that falling under chapter 3, obtained by hunting, trapping, fishing, gathering, or capturing there;
- (v) a mineral or other naturally occurring substance, not included in subparagraphs (i) through (iv), extracted or taken from there; and
- (vi) a good produced there, exclusively from goods referred to in subparagraphs (i) through (v), or from their derivatives. 3. (a) Except as provided in subparagraph (c), Japan shall provide that a good that contains non-originating materials that do not satisfy the applicable change in tariff classification requirement specified in Sub-Sections 2 and 3 for the good is nonetheless an originating good if the value of all those materials does not exceed 10 percent of the value of the good and the good meets all the other applicable requirements of this Section. - (b) Subparagraph (a) applies only when using a non-originating material in the production of another good.

- (c) Subparagraph (a) does not apply to:
- (i) non-originating materials of headings 04.01 through 04.06, or nonoriginating dairy preparations containing over 10 percent by dry weight of milk solids of subheading 1901.90 or 2106.90, used in the production of a good of headings 04.01 through 04.06 other than a good of subheadings 0402.10 through 0402.29 or 0406.30 (for greater certainty, milk powder of subheadings 0402.10 through 0402.29, and processed cheese of subheading 0406.30, that are originating as a result of the application of the 10 percent de minimis allowance in subparagraph (a), shall be an originating material when used in the production of any good of headings 04.01 through 04.06 as referred to in this subparagraph or the goods listed in subparagraph (ii));
- (ii) non-originating materials of headings 04.01 through 04.06, or nonoriginating dairy preparations containing over 10 percent by dry weight of milk solids of subheading 1901.90, used in the production of the following goods:

- (A) infant preparations containing over 10 percent by dry weight of milk solids of subheading 1901.10;
- (B) mixes and doughs, containing over 25 percent by dry weight of butterfat, not put up for retail sale of subheading 1901.20;
- (C) dairy preparations containing over 10 percent by dry weight of milk solids of subheading 1901.90 or 2106.90;
- (D) goods of heading 21.05;
- (E) beverages containing milk of subheading 2202.91 or 2202.99; or
- (F) animal feeds containing over 10 percent by dry weight of milk solids of subheading 2309.90;
- (iii) non-originating materials of heading 08.05 or subheadings 2009.11 through 2009.39, used in the production of a good of subheadings 2009.11 through 2009.39 or a fruit or vegetable juice of any single fruit or vegetable, fortified with minerals or vitamins, concentrated or unconcentrated, of subheading 2106.90, 2202.91, or 2202.99;
- (iv) non-originating materials of chapter 15, used in the production of a good of heading 15.07, 15.08, 15.12, or 15.14; or
- (v) non-originating peaches, pears, or apricots of chapter 8 or 20, used in the production of a good of heading 20.08. 4.

Japan shall provide that a fungible good or material is treated as originating based on the:
- (a) physical segregation of each fungible good or material; or
- (b) use of any inventory management method recognized in the Generally Accepted Accounting Principles if the fungible good or material is commingled, provided that the inventory management method selected is used throughout the fiscal year of the person that selected the inventory management method. 5. (a) Japan shall provide that, in determining whether a good is wholly obtained, or satisfies a change in tariff classification requirement as set out in Sub-Sections 2 and 3, accessories, spare parts, tools, and instructional or other information materials, as described in subparagraph (c), are to be disregarded. - (b) Japan shall provide that a good's accessories, spare parts, tools, and instructional or other information materials, as described in subparagraph (c), have the originating status of the good with which they are delivered. - (c) For the purposes of this paragraph, accessories, spare parts, tools, and instructional or other information materials are covered when:
- (i) the accessories, spare parts, tools, and instructional or other information materials are classified and delivered with, but not invoiced separately from, the good; and
- (ii) the types, quantities, and value of the accessories, spare parts, tools, and instructional or other information materials are customary for that good. 6. (a) Japan shall provide that packaging materials and containers in which a good is packaged for retail sale, if classified with the good, are disregarded in determining whether a good is originating. - (b) Japan shall provide that packing materials and containers for shipment are disregarded in determining whether a good is originating. 7. Japan shall provide that an indirect material is considered to be originating without regard to where it is produced. 8. (a) Japan shall provide that an originating good retains its originating status if the good has been transported to the importing Party without passing through the territory of a non-Party.

- (b) Japan shall provide that if an originating good is transported through the territory of one or more non-Parties, the good retains its originating status provided that the good:
- (i) does not undergo any operation outside the territories of the Parties other than: unloading; reloading; separation from a bulk shipment; storing; labelling or marking required by the importing Party; or any other operation necessary to preserve it in good condition or to transport the good to the territory of the importing Party; and
- (ii) remains under the control of the customs administration in the territory of a non-Party. 9. (a) Japan may require an importer who makes a claim for preferential tariff treatment under this Agreement to submit a declaration that the good qualifies as an originating good at the time of importation. - (b) The requirements for a declaration referred to in subparagraph (a) are specified in the laws, regulations, or procedures of Japan and are published or otherwise made available in a manner as to enable interested persons to become acquainted with them. 10. (a) Japan may request information from an importer who makes a claim for preferential tariff treatment under this Agreement for the purposes of verification of the claim. Japan may accept such information provided directly from the exporter or producer. - (b) Japan may deny a claim for preferential tariff treatment if:
- (i) it determines that the good does not qualify for preferential tariff treatment;
- (ii) pursuant to subparagraph (a), it has not received sufficient information from the importer to determine that the good qualifies for preferential tariff treatment; or
- (iii) the importer fails to comply with the requirements of this Section.

1. This Sub-Section and Sub-Section 3 shall apply to the goods which are classified in the following:
2. (a) chapters 1 through 2;
3. (b) chapters 4 through 15;
4. (c) headings 16.01 through 16.03;
5. (d) chapters 17 through 21;
6. (e) heading 22.02;
7. (f) heading 22.04;
8. (g) tariff item 220600.100;
9. (h) tariff item 220710.199;
10. (i) heading 22.09;

- (j) chapter 23;
- (k) subheadings 2905.43 through 2905.45;
- (l) heading 33.01;
- (m) headings 35.01 through 35.02;
- (n) headings 35.04 through 35.05;
- (o) subheading 3809.10; and
- (p) subheadings 3823.11 through 3823.70. 2. For the purposes of product-specific rules of origin set out in this Sub-Section and SubSection 3, the following abbreviations apply:
- (a) 'CC' means production from non -originating materials of any chapter, except that of the good, or a change to the chapter, heading, or subheading from any other chapter; this means that all non-originating materials used in the production of the good must undergo a change in tariff classification at the 2-digit level ( i.e. a change in chapter) of the Harmonized System. - (b) 'CTH' means pr oduction from non-originating materials of any heading, except that of the good, or a change to the chapter, heading, or subheading from any other heading; this means that all non-originating materials used in the production of the good must undergo a change in tariff classification at the 4-digit level ( i.e. a change in heading) of the Harmonized System. - (c) 'CTSH' means production from non -originating materials of any subheading, except that of the good, or a change to the chapter, heading, or subheading from any other subheading; this means that all non-originating materials used in the production of the good must undergo a change in tariff classification at the 6-digit level ( i.e. a change in subheading) of the Harmonized System. 3.

For the purposes of interpreting the product-specific rules of origin set out in this SubSection and Sub-Section 3:
- (a) the requirement of a change in tariff classification shall apply only to nonoriginating materials;
- (b) if a product-specific rule of origin excludes certain materials of the Harmonized System, it shall be construed to mean that the product-specific rule of origin requires that the excluded materials be originating for the good to be originating;

- (c) if a good is subject to alternative product-specific rules of origin, the good shall be originating if it satisfies one of the alternatives;
- (d) if a good is subject to a product-specific rule of origin that includes multiple requirements, the good shall be originating only if it satisfies all of the requirements; and
- (e) if a single product-specific rule of origin applies to a group of headings or subheadings and that rule of origin specifies a change of heading or subheading, it shall be understood that the change in heading or subheading may occur from any other heading or subheading, as the case may be, including from any other heading or subheading within the group. 4. For the purposes of chapters 6 through 14, an agricultural or horticultural good grown in the territory of a Party is originating even if grown from seed, bulbs, rhizomes, rootstock, cuttings, slips, grafts, shoots, buds, or other live parts of plants that are imported from a non-Party. 5. For the purposes of heading 18.06, 'cacao content' consists of ingredients that come from the cocoa bean, that is the total chocolate liquor or cocoa powder (cocoa solids) and cocoa butter. The percent cacao content means the total percentage of such ingredients by weight of the good. 6. For the purposes of heading 18.06, 'confectionery' is a good which is put up for retail sale and principally intended to be eaten without any further preparation.

(e) customs duties on originating goods provided for in the items in staging category E shall be eliminated in ten equal annual stages, and these originating goods shall be duty-free in year ten; - (f) customs duties on originating goods provided for in the items in staging category F shall be reduced to 50 percent of the base rate on the date of entry into force of this Agreement, and duties on these originating goods shall remain at the resulting duty rates;
- (g) customs duties on originating goods provided for in the items in staging category G shall be reduced by three percentage points on the date of entry into force of this Agreement, and shall be further reduced to 50 percent of the base rate in year two. Duties on these originating goods shall remain at the resulting duty rates;
- (h) customs duties on originating goods provided for in the items in staging category H shall be reduced by three percentage points on the date of entry into force of this Agreement, and shall be further reduced by three percentage points in year two. Duties on these originating goods shall be reduced to 50 percent of the base rate in year three, and shall remain at the resulting duty rates;
- (i) customs duties on originating goods provided for in the items in staging category I shall be reduced to 50 percent of the base rate in two equal annual stages, and duties on these originating goods shall remain at the resulting duty rates;
- (j) customs duties on originating goods provided for in the items in staging category J shall be reduced to 50 percent of the base rate in three equal annual stages, and duties on these originating goods shall remain at the resulting duty rates; and
- (k) customs duties on originating goods provided for in the items in staging category K shall be reduced to 50 percent of the base rate in five equal annual stages, and duties on these originating goods shall remain at the resulting duty rates. 5. For purposes of this Schedule, 'year one' means the year this Agreement enters into force as provided for in Article 9. 6. For purposes of this Schedule, the annual stage of tariff reduction in year two shall take effect on the date that is one year after the date of entry into force of this Agreement. Beginning in year three, each annual stage of tariff reduction shall take effect on the date that is one year after the date of the previous tariff reduction. 7. Customs duties on automobile and auto parts will be subject to further negotiations with respect to the elimination of customs duties.

1. For the purposes of these Rules of Origin and Origin Procedures, set forth in paragraphs 2 through 19:
2. (a) 'Harmonized System' means the Harmonized Commodity Description and Coding System , including its General Rules of Interpretation, Section Notes, Chapter Notes, and Subheading Notes as adopted and implemented by the United States in its law;
3. (b) 'preferential tariff treatment' means the rate of d uty applicable to an originating good, pursuant to the Tariff Schedule of the United States; and
4. (c) 'value of the good' means the value determined in accordance with Articles 1 through 8, Article 15, and the corresponding interpretative notes of the Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade 1994 , set out in Annex 1A of the WTO Agreement, adjusted, if necessary, to exclude any costs, charges, or expenses incurred for transportation, insurance, and related services incidental to the international shipment of the merchandise from the country of exportation to the place of importation. 2. For a good listed in the Tariff Schedule of the United States, the United States shall provide that a good is originating from Japan, except as otherwise provided in these Rules of Origin and Origin Procedures, if it is:
6. (a) wholly obtained or produced entirely in one or both of the Parties, as defined in paragraph 3;
7.

17. For the purposes of interpreting the Product-Specific Rules of Origin set forth in paragraphs 18 and 19 and the table below:
2. (a) 'chapter' means a chapter of the Harmonized System;
3. (b) 'heading' means the first four digits in the tariff classification number under the Harmonized System; and
4. (c) 'subheading' means the first six digits in the tariff classification number under the Harmonized System. 18. For the purposes of interpreting the Product-Specific Rules set forth in this paragraph, paragraph 19, and the table below:
6. (a) the specific rule that applies to the good is set out in Column 2 and adjacent to the national tariff line of the good at the 8-digit level;
7. (b) the requirement of a change in tariff classification applies only to non-originating materials;
8. (c) where a specific rule of origin is defined using the criterion of a change in tariff classification, and it is written to exclude tariff provisions at the level of a chapter, heading, or subheading of the Harmonized System, it shall be construed to mean that the rule of origin requires that materials classified in those excluded provisions be originating for the good to qualify as originating. Such materials shall be considered originating if they are wholly obtained or produced entirely in the United States or Japan, or if they have been substantially transformed in the United States or Japan from any materials from or produced outside the Parties, as provided in U.S. law;
9. (d) when a heading or subheading is subject to alternative specific rules of origin, the rule will be considered to be met if a good satisfies one of the alternatives; and
10. (e) when General Rule of Interpretation (GRI) 2(a) of the HTSUS is referred to as an exception to a change in tariff classification, this means that such change will not be acceptable for purposes of meeting the change in tariff classification requirement if the change results from the assembly of parts into an incomplete or unfinished good which is classifiable in the same manner as a complete or finished good pursuant to GRI 2(a) of the HTSUS.