Creation of business environments that strengthen

competitiveness

1. Promotion of deregulation that will contribute to greater

competitiveness

Japan must provide basic services on par with international

standards if it is to serve as an energetic location for business and
strengthen the competitiveness of its industries. To accomplish
this, we will steadily implement deregulation programs designed to
foster the sound functioning of market mechanisms and will
strategically respond to the erection of standards and certification
systems that are harmonized with international frameworks.

(1) Greater deregulation of basic industrial services

We will move steadily forward with the deregulation of energy,

distribution, and physical distribution pursuant to the "Action Plan
for the Reform and Creation of Economic Structures (Second
Follow-up)," the "Three-year Plan for Deregulation" and other
deregulation plans. We will also give greater priority to
deregulatory efforts that will contribute to stronger industrial
competitiveness.

(2) Enhancement of standards and certification systems in

harmony with international frameworks

2. Creation of infrastructure that contributes to

competitiveness

In light of the globalization of business activities, we will promote

the creation of infrastructure that meets international norms and
will strengthen corporate competitiveness.

(1) Prioritized, efficient infrastructure creation

We will engage in prioritized, efficient creation of infrastructure

that is truly required and will directly lead to stronger corporate
competitiveness. This includes physical distribution infrastructure
and information and telecommunications infrastructure.
(2) Promotion of PFIs

We will actively use Japanese-style PFIs (a technique in which

private businesses create industrial infrastructure) in the creation
of industrial infrastructure. This will be done in light of the need to
provide for 1) efficiency and effectiveness, 2) reductions of public-
sector fiscal outlays, and 3) the creation of new industries.

3. Building robust industrial financial systems

We will build robust industrial financial systems with the potential

for efficient and effective development in order to provide for the
medium- and long-term development of the Japanese economy.
These systems will be constructed taking into account the need for
businesses to be able to raise funds at appropriate times and in
appropriate manners, will be designed to provide a variety of
products and services for different combinations of risks and
returns, and will be make full use of information technologies. We
will ensure that corporate accounting and auditing systems
conform to international norms and will continue to administer
these systems in an appropriate manner so as to facilitate fund-
raising from overseas investors.

(1) Creation of environments for market-based indirect and

direct finance

We will review systems, promote the creation of information

infrastructure, and prepare the environment for an expansion of
direct finance in order to provide for a greater variety of risk/return
combinations that will enable companies to raise funds efficiently.
We will also study expansions to market-oriented indirect financing
(provision of funds raised by intermediaries on the markets).

(2) Fundamental reforms to income taxes on financial

instruments

We will provide neutral handling of financial instruments in the tax

code and will study neutral tax-handling that takes a
comprehensive view of financial and similar instruments as
"financial income." The purpose in this will be to supply the
financial markets with the abundant savings held by the household
sector.

4. Stronger competitiveness through business reforms

employing information technology

· Efforts are being made to improve productivity by applying

information technology to reforms in all aspects of business
activities. We will promote these efforts and will create an
environment conducive to increased effectiveness.

(1) Support for efforts to use information technology to

achieve more efficient business activities

1) Enhancement of electronic commerce rules

As information technology is used to reform business practices and

electronic commerce is introduced, there will be aspects in which
the rules for conventional economic transactions, including
traditional commercial practices and legal frameworks, will not be
suitable. We will move forward with the formulation of new
transaction rules in light of the discussions taking place in the
private sector and talks on the formulation of basic international
systems. These rules will cover areas such as counterparty
authentication, consumer protection and privacy, and security. We
will also support the establishment of evaluation systems in order
to foster trust among users.

2) Promotion of more efficient business activities through

investments in strategic computerization

It is essential that information technology be used to reform work

processes and organizations, both at individual companies and in
larger corporate groupings, if corporate competitiveness is to be
maintained and improved. To do this, we will create an
environment that supports corporate decision-making on
information technology and computers.

We will also create an environment that is able to reduce

production and distribution costs and supply consumers with goods
that meet their needs. To do this, we will promote the use of
information technology to strengthen supply systems by providing
integrated management of production, distribution, and
consumption processes, and will also promote the use of jointly
developed, standardized technologies.

3) Promotion of small business computerization

Computerization has an important role to play in business reforms

at smaller companies. We will therefore create an environment
that supports the computerization of this sector.

(2) Achievement of greater efficiency in non-financial

sectors through the use of financial and information
technologies

Financial institutions in Japan and other parts of the world are

introducing new financial and information technologies in an effort
to provide more attractive financial services. The use in non-
financial sectors of these financial and information technologies
will enable companies to improve their fund-raising and risk
management abilities and contribute to more competitive
products. We will study enhancement that will facilitate this.

5. Creation of rules for economic transactions suited to a

competitive business environment

We will improve the productivity of the Japanese economy by

formulating rules for economic transactions that will allow
businesses to maximize their capabilities in the achievement of an
optimal allocation of resources through sound, competition-based
market mechanisms. In doing this, we will endeavor to assure the
quality of the goods and services supplied, will create an
environment that enables consumers to make appropriate
judgements, and will create safety nets for consumers.

(1) Creation of standards and certifications systems

harmonized to international frameworks
We will create an implementation system that will accurately
reflect the intentions of reviews to domestic standards and
certification systems and thereby reenergize business activities by
providing for greater safety and lower burdens as companies
respond to technological advances. In addition, we will promote
international harmonization of standards and certification systems,
and strengthen efforts to build MRAs (mutual recognition
agreements) and other systems for international cooperation in
order to improve access to the markets of Japan and other
countries and facilitate trade.

We will also use an integrated approach to create environments

that will foster the private standards and certification systems that
have previously been the role of public-sector actors.

(2) Promotion of strategic standardization efforts

(3) Formulation of transaction rules that encourage new

entrants

1) Review of business practices

We must encourage the reform of business practices that could

potentially impair the sound functioning of market mechanisms,
including impediments to new entrants and to distribution and
physical distribution efficiency. We must also create environments
in which companies that have previously not done business are
able to begin transactions with confidence. This will require strict
enforcement of the Antimonopoly Law and also studies of current
business practices and encouragement for improvements.

2) Efforts by private-sector businesses to form self-

sustaining competitive systems

We will build systems that enable parties damaged by business

practices that impede new entrants or by unfair competition that
utilizes improper means to subvert the business activities of others
to seek relief under their own initiative and responsibility.

(4) Enhancement of intellectual property systems

(5) Creation of transactional environments conducive to
effective competition in the electric power and gas
industries

(6) Formulation of rules for economic transactions adapted

to the development of computer technology

(7) Formulation of rules for consumer transactions

We will study the formulation of rules for consumer transactions

that take account of current conditions and will also study the
environmental enhancements that will ensure that these rules are
effective. These rules will take account of the progress being made
in deregulation, the diversification of goods and services, the
globalization of transactions, and other changes in the consumer
environment, and will emphasize areas such as electronic
commerce and programs for over-indebted consumers, including
the protection and use of personal credit information.

Programs to strengthen and supplement the international

economic system

It is important that we continue with efforts to build open, rule-

based international economic systems so that countries are able to
continue with policy efforts designed to achieve sustainable
structural reforms and that these efforts produce reliable results.
The new round of World Trade Organization (WTO) negotiations
provides an excellent opportunity to strengthen the international
economic system in this manner, and Japan must, in conjunction
with Europe, North America, and Asia, and take a leading role in
the new round of negotiations. Our efforts in these negotiations
should be based on cooperation between government and
business, and should contribute to structural reforms in the
domestic economy. We must also supplement efforts to
strengthen the international economic system with stronger
linkage and integration at the regional level. These efforts will
enable Japan to meet expectations for further opening of its trade
and investment systems, and will be beneficial to the discharge of
the important role that Japan has to play in the international
economic system.

We will also foster common understandings and appropriate

coordination in deepening discussions of the directions to be taken
in dealing with the risk and crisis inherent in the monetary and
financial aspects of the international economic system. These
efforts will move forward under the leadership of the three major
poles of Japan, North America, and Europe.

(1) Strategic response in preparation for the next round of

WTO negotiations

In the next round of WTO negotiations, we must make active

contributions to the building of international economic systems
that are open and based on rules. There is a wide array of issues
with which we must deal, including services, industrial taxation,
the investment agreement, and the antidumping agreement.

(2) Efforts in specific areas to strengthen linkage and

integration at the regional level

To supplement the strengthening of the international economic

system undertaken in the new round of WTO negotiations, we must
move steadily forward in linking and integrating with other
countries and regions in Asia and other parts of the world. This
includes the signing of investment treaties and efforts in the
standards and certification area.

Specifically, we should follow the early signing of the Japan-South

Korea Investment Treaty with further enhancements to the
investment treaty network, including Vietnam, Mexico, and other
major investment candidates in Asia and Latin America. For free
trade agreements, we will begin by deepening the understandings
between Japan and South Korea by using joint research and
seminars conducted with South Korea to spur greater private-
sector interest. We will also endeavor to use APEC and AMEICC to
bring down market barriers in the Asian region and build efficient
supply structures that will strengthen the integration of the Asian
region, and we should seek further strengthening of the ties
between Japan and ASEAN.

(3) Strengthening of relations with North America and

Europe

We will strengthen bilateral efforts with the United States and

Europe as a supplement to the strengthening of international
economic systems through the new round of WTO negotiations. As
part of this, we will support private-sector dialog with the United
States and Europe.

(4) Promotion of participation in the international economic

system

We will promote participation in the new round of WTO

negotiations by strengthening bilateral efforts to promote support
for the sustainable growth of developing countries in Asia and for
reforms in Russia and other marketizing countries.

Promotion of new economic cooperation policies

Economic cooperation policies have often changed according to

the demands of the time: postwar reparations, contributions to the
international community, solution of global-scale problems.
Economic cooperation policies in the future will involve an organic
mixture of official development assistance (ODA) and other
government funding and trade insurance, and will be positioned as
a part of strategic foreign trade policies. The purposes of these
programs will be to form a virtuous circle between the rebuilding
and revitalization of foreign economies and the development of
Japan's economy and industry, to secure stable supplies of
resources and energy, and to respond to international
environmental problems.

(1) Promotion of technical cooperation for the

enhancement of overseas business environments
Japan has deep trade and investment ties with the Asian region
and other areas of the world and therefore requires environments
in these countries that are conducive to business. We will promote
technical cooperation, including the acceptance of trainees and the
dispatch of experts, to promote the creation of intellectual
property systems and to assist in reforms to the economic
structures of developing countries in areas such small business
assistance. These efforts will contribute to the encouragement of
developing countries to participate in the WTO and in the new
round of negotiations.

(2) Expansion of business opportunities for Japanese

companies

We will endeavor to make further use of the special yen loan

system authorized under the "Emergency Economic Program" of
last November and will promote the identification of superior
projects in order to expand the business opportunities open to
Japanese companies that will contribute to the rebuilding and
rebirth of Asian economies. We will also encourage Japanese
companies to make active use of economic cooperation
administered by international development finance institutions and
others.

(3) Enhancement of trade insurance systems in light with

corporate needs

We will develop more attractive products in line with the needs of

user corporations in order to promote international trade and
investment.

(4) Promotion of international energy policies

Programs for energy supply risks

Stable and efficient energy supplies form the basis for business
activities and national life, and dealing with the risks associated
with energy supplies is tantamount to supplying a "safety net" for
business and life. This makes it essential that we endeavor to build
systems that will answer the demand for stable supplies,
environmental protection, and efficiency.

From an international perspective, the dependency of Asia on

outside sources of energy is on the increase, as is Japan's
dependence on the Middle East in its crude oil imports. We must
strengthen our cooperative relationships with relevant countries in
light of these facts and the changes being seen in the Asian
energy environment.

From a domestic perspective, we must reduce dependence on

fossil fuels in order to protect the environment, must promote the
development and use of nuclear power taking full safety
precautions, and must place priority on the development of new
energy sources and means of conserving energy. We must also
build a system for the efficient supply of energy by appropriately
enhancing the business environment, providing for transparent
and fair trading, and further enhancing the competitive base so as
to promote real and appropriate competition in the energy field.
Finally, we must engage in institutional reforms that will prepare
Japan for emergencies.

These programs will stabilize life in Japan and enable the people of
Japan to enjoy stable, efficient, and sustainable supplies of energy.

(1) Promotion of international energy policies

In light of the growing demand for energy in the Asian region and
other parts of the world, the widening scope of international efforts
to conserve the environment, and the rising dependence of Japan
on the Middle East in its petroleum imports, we will promote the
formulation of common awarenesses and cooperation in energy
and environment issues with other Asian countries. We will also
pursue multifaceted, strategic relations with oil-producing
countries in order to secure stable supplies of petroleum
resources.

(2) Further strengthening of nuclear power program

Further development and use of nuclear power is necessary for
conservation reasons, and it is important that safety be assured,
and that waste products be appropriately managed and disposed
of in order to increase the confidence of the public and facilitate
the location of new plants.

To assure safety, we will study the lessons of the past, including

the recent Tsuruga case, and will endeavor to enhance the regular
inspection regime accordingly. We will also endeavor to instill a
greater awareness of safety among all individuals involved in
nuclear power generation. Furthermore, we will utilize the
reorganization of central government ministries and agencies to
engage in fundamental reforms of the safety assurance system.

We will study changes to the legal system to enable certain,

reliable processing of high-level radioactive waste in order to
provide appropriate management and disposal of waste products.

(3) Promotion of energy conservation and new energy

development

1) Promotion of energy conservation

We will promote energy conservation with incentives to local

governments to introduce energy-conservation equipment,
support for private-sector energy conservation, and
enhancements to energy conservation education. We will
provide assistance for the use of energy conservation
technologies in home and business activities and products to
promote the development and commercialization of energy
conservation technologies.

2) Promotion of new energy development

We will promote the full-fledged introduction of new energy

sources by strengthening the linkage between the central
government and local governments, NGOs, and local residents,
and by studying enhancements to the business environment for
new energy suppliers. We will promote the development and
 commercialization of fuel cells and other technologies in order
to make new energy sources available.

(4) Appropriate business environments for real competition

in the electric power and gas industries

We will formulate and administer transactional modalities that are

in conformance with individual industry laws and the Antimonopoly
law, and will develop and administer market surveillance and
disputes settlement systems in order to achieve effective
competition in the markets in conjunction with recent institutional
reforms in preparation for the liberalization of the electric power
and gas industries.

(5) Assurance of stable petroleum and natural gas supplies

We have deregulated and experimentally listed commodities on

exchanges in order to improve market functions for petroleum
refining and distribution. In the future, we will make further use of
these programs to promote further rationalization and greater
efficiency. We will also use the Industrial Activation and Rebuilding
Law to promote additional strengthening and structural
improvement.

We will provide a base for fair competition by reviewing and

improving the checking systems for quality assurance and
stockpiling obligations, and will continue to work in coordination
and cooperation with the Fair Trade Commission to bring greater
transparency and fairness to petroleum distribution.

We will make institutional reforms designed to assure effective and

efficient stockpiling for times of emergency and to abolish demand
adjustment regulations. The goal for these reforms will be 2001.

In the development of petroleum and natural gas, we will make

steady improvements in the administration of the mining
investment and loan program in light of the findings from reviews,
and will study development policies that will contribute to more
stable and efficient supplies as warranted by changes in the
international petroleum environment.
In addition, we will study full, comprehensive support, including
institutional support, for the development of pipeline networks for
natural gas, a material for which supplies are relatively stable and
which also features less CO2 output per unit energy.

(6) Efforts for a smooth completion of domestic coal

policies

We will continue with efforts to smoothly complete current

domestic coal policies within the current policy deadline of the end
of fiscal 2001. We will also formulate a "Five Year Plan for Coal
Technology Transition" designed to secure stable supplies from the
Asia-Pacific Region on which Japan is fully dependent for its coal. In
addition, we will pursue technical cooperation with relevant
countries, including the creation of training programs for foreign
coal engineers using domestic coal.

Creation of a recycling society

Environmental concerns are, as noted above, one of the areas that

could lead to "frontier creation." At the same time, this is an area
that is broadly and deeply involved in everyday life and ordinary
business activities, including waste disposal issues and global
warming concerns. We will create an environment that utilizes
appropriate divisions of labor among economic actors to build
environmental concerns into all aspects of economic activities and
spur the transition to economic and social systems in which
environment and economy are integrated.

(1) Promotion of waste disposal and recycling programs

(2) Promotion of efforts to deal with global warming

(3) Creation of systems to manage toxic substances etc.

(4) Creation of recycling society in the 2005 Japan Expo

The 2005 Japan Expo will be held to underscore the "new
relationship between man and his environment" in the twenty-first
century, and will feature general experiments and verification of
the recycling society. We will be involved in the incorporation of
basic concepts, the basic design of the Expo, the formulation of the
implementation design, and registration with the BIE (the
international Expo secretariat).

1. Integrated systems for policy administration and

evaluation

We must build integrated systems for policy administration and

evaluation, including technical evaluation, in order to improve the
quality (effectiveness, efficiency) of programs and discharge
government explanation obligations. These systems will cover
both the policy formulation stage and the period after
implementation begins. To accomplish this, the Ministry of
International Trade and Industry will study rules for the
implementation of policy evaluations in policy administration, and
will endeavor to gather and strengthen insights and capabilities in
policy evaluation.

(1) Introduction of policy evaluation system and

accumulation of evaluation examples

We will study the formulation of rules for the implementation of

policy evaluation in Ministry of International Trade and Industry
policy administration in order to introduce a flexible, simple policy
evaluation system that can be applied to all programs and form
the center point in policy administration systems. We will also
endeavor to accumulate evaluation examples in order to increase
the quality of the evaluations performed by the government itself.

(2) Enhancement of technical evaluations

(3) Introduction of evaluation systems for specific

administrative areas
We will endeavor to introduce policy evaluation systems designed
for specific administrative areas, including economic cooperation,
industrial water supplies, and regulation.

(4) Review of existing policies

In conjunction with the introduction of policy evaluation systems,

we will review existing policies and programs in light of changes in
economic and social conditions, effectiveness of implementation,
and efficient of government administration. Our goal in this will be
to improve the effectiveness and efficiency of policies and
programs.

2. Information disclosure

The disclosure of information will increase the public's

understanding of programs and will promote higher quality policies
through the outside monitoring of government agencies and
programs. We will therefore create systems suited to the demands
of appropriate information disclosure.

3. Use of computerization to bring greater speed and

efficiency to government

We will use information technology to improve

application/notification procedures and other government services,
and to bring greater efficiency to administrative work within the
Ministry and with other ministries and agencies. We will also make
greater use of information systems to support policy drafting and
planning so as to improve the speed and efficiency of government
administration.

4. Reorganization in preparation for the Ministry of

Economics and Industry

We will embark on a reorganization of Ministry organizations in

preparation for the transition to the Ministry of Economics and
Industry scheduled to take place in January 2001 pursuant to the
"Guidelines for the Promotion of Central Government Agency
Reform" (April 1999, decision of the Central Government Reform
Promotion Headquarters)