In yet another appeal to the Japanese government to play by the
rules Frank Keating, president and CEO of the American Council of
Life Insurers, has pointed to an a situation of unfair competition
emerging in Japan’s life insurance market which holds potentially
serious implications for US-Japan relations.
The focus of Keating’s concern is Japan Post Insurance (JPI),
Japan’s postal life insurance entity, which accounts for 35 percent
of all life insurance policies sold in Japan. Though a 10-year
process of privatising JPI began in October 2007, it remains
wholly-owned by Japan’s government. On paper at least Japan’s
government is committed to fair play.
“Japan Post Insurance must meet the same obligations and
standards as those of private financial institutions when they sell
new or altered financial products,” it stressed in a report on
privitisation of Japan Post in 2008.
However, things are not working as the report would suggest,
“Despite this commitment, it has recently come to ACLI’s
attention that JPI is seeking to offer products that would directly
compete with so-called ‘third sector’ products that have been
successfully offered by US companies – without first meeting the
same regulatory and licensing standards that apply to US and all
other private market competitors,” said Keating in a statement.
He continued: “What is more, if its request is approved, JPI
will have preferential access to the 24,000 government-owned post
office outlets that form Japan Post Network. Such an outcome would
be inconsistent with the long standing commitments of the
Government of Japan.”
Keating pointed out that securing “a level playing field” in
Japan’s life insurance marketplace before new products are launched
by JPI is not simply about competitive fairness for US and other
foreign life insurers operating in Japan.
“It is a matter of compliance with Japan’s international
requirement to provide national treatment, a concept embedded in
Japan’s commitments under the World Trade Organisation’s General
Agreement on Trade in Services and its bilateral agreements with
and other commitments made to the United States,” stressed
He concluded that Japan’s government has “a very serious choice
to make” with regard to JPI’s product offering.
“It can opt to continue the constructive regulatory dialogue and
steady progress that has marked the last several years, or it can
take a reversing path towards industrial targeting that is sure to
seriously damage US-Japan trade relations,” warned Keating.