ITA helps California Company Overcome Trade Barrier That Threatens Its Business Operations in Japan

(ITA) The International Trade Administration’s (ITA) Market Access and Compliance (MAC) Unit recently helped a California-based U.S. construction firm overcome a foreign trade barrier that risked the company’s operations in Japan’s multi-billion dollar construction market.

Why it Matters: Without ITA’s assistance, the firm would have been unable to renew its construction license and continue its Japanese operations. Successful resolution of this issue avoided a potential precedent that could have affected other American construction firms’ ability to operate in the Japanese market.

The Problem: The Japanese government asked the California-based construction firm to produce a U.S. government-backed certificate confirming the legal/mental competence of the firm’s board of directors before the GOJ would renew its construction license. Without the license, the firm was told that it could not operate in Japan. The requirement raised questions under the World Trade Organization (WTO) rules about unfairly disqualifying qualified bidders.

The Solution: ITA specialists determined that the Japanese requirement may have been inconsistent with existing WTO rules and bilateral trade arrangements. Rather than utilizing the often costly and time consuming formal WTO mechanisms, MAC leveraged its deep relationship with the Japanese Government. The ITA team explained how the U.S. legal system differs from Japan’s and confirmed that the United States does not issue the kind of certificates being requested. The Japanese Government has since waived the requirement for this certificate. Due to direct U.S. Government involvement, the company has continued its operations in the Japanese construction market without interruption. ITA is not aware of any other American company facing a similar requirement.

Working closely with U.S. companies, MAC creates, expands, and defends market access for U.S. goods and services overseas. “We promote policy that develops a more favorable business climate for U.S. companies in global markets; we employ commercial diplomacy to resolve trade barriers; and we leverage our bilateral and multilateral trade agreements to ensure our trading partners live up to their commitments so that our businesses can compete on a level-playing field.” - Assistant Secretary for Market Access and Compliance, Michael C. Camuñez.