Japan Post: Retreat or Advance?

by Gary Clyde Hufbauer, Peterson Institute for International Economics
and Julia Muir, Peterson Institute for International Economics

January 2012

Legislation to reform Japan Post is again gathering steam in Tokyo. A new postal bill is taking shape, in the form of amendments to the existing Postal Privatization Law dating from the Koizumi era—all put forward under the larger banner of post-earthquake reconstruction finance and the government's efforts to minimize consumption tax hikes. The latest version of "postal reform" legislation envisages "privatization" of Japan Post through the sale of up to two-thirds of government shares, but the government would retain at least one-third, effectively maintaining its controlling position. The real question is whether the latest act in this long-running drama will represent true reform or in fact will camouflage an entrenchment of Japan Post's formidable monopoly powers. Hufbauer and Muir say the new bill is squarely "antireform" and if passed into law would create a major hurdle to Japan's membership in the Trans-Pacific Partnership (TPP). Japan Post's operations not only violate the General Agreement on Trade in Services but also are at odds with the drafts on state-owned enterprises now being circulated among the current TPP parties and aspirants. The authors conclude by outlining the elements for a true Japan Post reform bill, one that would represent a step forward rather than a step back.

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