Regulatory Developments Foreign companies interested in importing cut flowers into Japan have seen very slow improvement in the business. The Government of Japan has gradually addressed some of the barriers to trade in cut flowers: airport procedures have been slightly improved through extended inspection schedules, inspection fees have been reduced, the number of plant quarantine inspectors has increased, and a number of pests have been added to the non-quarantine list. Nevertheless, the lack of adequate temperature-controlled warehouse facilities and fumigation capacity is a recurring problem. Equally, while the list of non-quarantine organisms was expanded in 2005, many non-harmful organisms that are widespread in Japan remain subject to costly fumigation requirements. Restrictive Japanese plant quarantine regulations are by far the largest barrier to trade in cut flowers. In theory, zero-tolerance is applied only to organisms that are considered to be harmful on the basis of the Sanitary and Phytosanitary chapter of the GATT Uruguay Round Agreement. In 1996, the risk assessment chapter was added to Japan's Plant Quarantine Law, but this revision has not had any beneficial effect on cut flower imports, as the Japanese Government has not made a practical distinction between harmful and non-harmful organisms. In April 2005, in response to demands from the EBC and the EU, the Japanese Government increased the number of organisms on the non-quarantine list. However only 3 organisms - thrips tabaci, tetranuchus urticae and Panonychus ulmi - out of the 9 requested have been added to the list. Insects such as mites and aphids have not been included, even though they are widespread in Japan. Moreover, it still takes much too long for shipments to be made available for inspection, for customs procedures after arrival, and for the shipment to be distributed after clearance. In 2003, the Japan Fair Trade Commission called for the elimination of price fixing and other collusive practices between the only two companies providing fumigation services at Narita Airport, but the announcement was not followed by any concrete measure let alone a fall in prices. The EBC continues to request that a system of ad random inspection replace the current re-inspection of pre-inspected flowers at ports of entry, but no action has yet been taken. Trends in the cut flower industry are quasi-irreversible and imports will increase in light of natural market forces and demographics. The aging population of Japanese growers, the small scale of the average nursery and the high costs of operating in Japan, make it extremely difficult for Japanese growers to compete on a global scale. While fully respecting the need to guarantee safe imports, the interest of Japanese consumers in having a larger and better-priced selection of quality flowers on the market must also be considered. The Japanese government should provide a proper infrastructure to facilitate the import of quality flowers. This should be done by upgrading the capacity of plant quarantine inspection offices, increasing cooling capacity, improving handling of the products at port of entries, and bringing the list of non-quarantine pests in line with international standards. An imported flower that has not been fumigated and kept at cool temperatures during the clearance process is a better flower for all consumers in Japan to enjoy. Prospects for EU-Japan Economic Integration Alongside Europe and the United States, Japan is one of the leading consumers of flowers, yet domestic growers control an exceptionally high market share of nearly 90%. In most other industrialised countries, over 85% of the flowers consumed are imported. In Japan, excessively strict plant quarantine regulations, a lack of cargo handling capacity at Narita Airport and a lack of competition between fumigation companies, make the importing of perishable goods costly, risky and difficult. Swift and decisive Government action is urgently needed to ensure a fair and efficient market that would lower prices and bring a wider selection of high-quality flowers to Japanese consumers. Priorities
Key Issues and Recommendations ■ Plant quarantine regulations Yearly status report: some progress. In March 2006, the non-quarantine list was expanded to include thrips. Further steps should be taken to ensure impartiality and thoroughness in quarantine inspections. The process lacks transparency as importers are often ordered to fumigate without being systematically and thoroughly advised about which pests have been found in their shipments. Recommendation:
■ Capacity problems at Narita Yearly status report: no progress. Inspection capacity has improved somewhat in recent years, and processing fees charged for holidays and overtime have been lowered. While there are cooler temperature-controlled warehouses available from May through October, capacity is limited and prices remain high. The facilities are not able to deal with the current volumes of cut flowers and other perishables coming into the airport. Recommendation:
■ Fumigation costs Yearly status report: no progress. Prices for fumigation have not been reduced and remain approximately five times higher than at airports in countries with similar restrictions, such as New Zealand. Recommendation:
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