ANSWERS TO THE QUESTIONS FROM CANADA ON THE

JAPANESE WOOD USE POINTS PROGRAM

The following submission, dated 1 October 2013, is being circulated at the request of the Delegation of Japan.

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1.  Before getting into responses to the questions, we would like to make factual clarifications on the background provided in Canada's questionnaire ( G/C/W/681 ) .

1.1  As announced on the website of Forestry Agency of Japan and the secretariat of the Wood Use Points Program, wooden houses which are started to be built during the period between 1 April 2013 and 31 March 2014 are eligible under the program.

1.2  Applications for the Wood Use Points will be accepted from 1 July 2013, until 31 July 2014. The future course of the program after the above mentioned period has not been decided yet.

1.3  Canada mentioned in its questionnaire (1.2) that, with the initial budget allocation of ¥41 billion, this program could potentially impact construction of more than 135,000 new houses. Japan, however, considers that the number of houses eligible under this program is likely to be much smaller, as the budget includes the administrative costs of the program.

Question a: What is the objective of the Wood Use Points Program?

Answer:

The objective of this program is, through promoting wood use, to contribute to proper management and conservation of forest, prevention of global warming and promotion of a recycling-oriented society, as well as to serve for the development of rural areas. Wood eligible under the program includes foreign wood.

Question b: What impact does Japan envisage that there might be on imported wood products as a result of Wood Use Points Program?

Answer:

Through this program, constructions and sales of wooden houses are expected to be promoted, and public awareness on the value of wood would be enhanced. Consequently, the demands for both domestic and imported wood would be expanded.

Question c: How will the Wood Use Points Program be consistent with Japan's WTO commitments, specifically the commitment to accord "… treatment no less favourable than that accorded to like products of national origin in respect of all laws, … or use" as provided for by Article 3.4 of the GATT?

Answer:

The program does not make any distinction based on the origin of wood. The same criteria and procedures are applied to both domestic and foreign wood, and therefore the program ensures that foreign wood and domestic wood are given equal opportunities. The criteria, as such, are objective ones, and whether or not the criteria are met will be assessed based on objective, available data inside and/or outside Japan for both domestic and foreign wood. Japan, therefore, believes that the program would not prejudice the conditions of competition in the market place concerning the treatment of imported products.

Question d: There is a lack of transparency associated with the eligibility criteria related to construction methods related to wood materials. The examples provided on the Japan Forestry Agency web site only identify Japanese tree species and specific construction products. Does Japan intend to publish clearer eligibility criteria and include examples of potentially eligible non-Japanese tree species and examples of a variety of potentially eligible construction products, such as oriented strand board?

Answer:

The eligibility criteria related to construction methods are provided in the information sheet entitled "on Implementation of the Wood Use Points Program" (29 March 2013) which is made public on the website of Forestry Agency of Japan (http://www.rinya.maff.go.jp/j/press/riyou/pdf/130329-03.pdf) . Construction methods will be designated as eligible if they are recognized to meet the criteria, based on the examination by the Committee on Fund Management and Administration as well as the recommendation from the Prefecture Council. A clearer guidance on the criteria and procedures will be published in October.

At present, certain tree species and construction methods are illustrated as examples in the information sheet and the website, as these tree species and construction methods have already been confirmed to meet the criteria, based on objective data. Other tree species and/or construction methods that fulfil the criteria and the procedures, regardless of foreign or domestic origin, will be designated as eligible.

It is difficult to identify in advance all the potential tree species and construction materials that could be designated as eligible since there are varieties of species and materials, and each application will be examined under the same criteria and procedures but only on an individual basis. Several applications for tree species have already been submitted from both Japan and foreign countries and are currently under examination by the Committee. The approved tree species will be published without delay.

Question e: Why does the Wood Use Points Program require that wood products originate specifically from "growing forest resources", instead of accepting wood from all sustainably managed forests, including stable forest resources?

Answer:

In order for wood to be eligible under the program, the wood has to be, certified sustainable wood. In addition, the wood must be of tree species fulfilling the criteria that their resources are increasing in volume on a country basis. These conditions are required to effectively and efficiently achieve the objective of the program, which is, to contribute to proper management and conservation of forest, prevention of global warming and promotion of a recycling-oriented society.

Question f: What is the scope of products/services that can be purchased through the redemption of points acquired through this program? Will the list of eligible products/services vary from prefecture to prefecture? Can points be redeemed for imported products? Is the redemption of points limited to private citizens or can other entities also redeem points?

Answer:

Wood Use Points can be redeemed for goods and services, including agricultural, forestry and fishery products, excursion and gift certificates, which are selected nationwide through public application process. The Points can also be used for donation to forestation and wood use activities and to the areas affected by the Great East Japan Earthquake, and for payment of additional wooden construction. There is only one list used nationwide, and no prefecture-specific lists exist. Imported goods can also be eligible for redemption, if they are selected as a result of the public application process. Anyone who orders construction work of a house that meets the criteria under the program can apply for the Points, and in most cases the applicants are expected to be private citizens.

Question g: Can Japan please confirm that the Wood Use Points Program requires exporters to provide an economic impact assessment of their wood products in the Japanese marketplace? If yes, can Japan explain what information is being sought? Is this requirement also imposed on Japanese producers?

Answer:

An applicant for designation of a tree species is required to provide: (i) data regarding its resource in volume; and (ii) information indicating that the use of the species will have certain positive effects on the economy of rural areas in Japan. This is because one of the objectives of the program is to contribute to the development of rural areas through promoting wood use, and in order to achieve the objective effectively and efficiently, assessment of the effect on the rural economy is necessary. This requirement is imposed on all applicants regardless of their nationalities. There can be various ways to prove the fulfilment of the requirement and various types of information to support them.

For example, applicants can submit the information which indicates contribution of the wood to the economy of rural areas in any form, such as growth in employment or in sales in related industries through procurement or processing of the wood or construction of wooden houses.

Question h: We understand that, in order for wood products to be accepted to the program, it must be demonstrated, by species, that the wood products come from a "growing resource". Please clarify, if the terminology "growing resource" is with respect to the specific region in which the species grows, or if it is to be considered across all forest regions, even if the species does not exist in other forest regions.

Answer:

As tree species whose volumes are increasing on a country basis are eligible under this program, forest data at a national level is required. In a case where a certain species does not exist in other forest area in a country, and it is possible to demonstrate that the species does not grow in other areas and the data of resource in volume of the area concerned represents the whole country, such data can be regarded as one explaining the increase in resource volume of the whole country. In a case where it is difficult to prove the increase in resource volume of a certain tree species by a single data, applicants are allowed to submit a combination of several existing data to prove it.

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