タイトル：Abe’s Third Arrow: How far will it fly? One key indicator to watch on June 14
スピーカー：Genri Goto (Founder and CEO, kenko.com)
ケンコーコム株式会社 広報室 ＴＥＬ：03-3584-4138 MAIL: email@example.com
【参考資料：スピーチ全文】Kenko.com CEO Genri Goto speech to FCCJ, 6/4/13, 12:30-1pm
Good afternoon everyone. And many thanks to the Club for this chance to speak about deregulation.
The prime minister tells us “deregulation” is the head of the third arrow of “Abenomics,” his bold effort to end 20 years of economic decline. Like many people, I believe the third arrow is the one that matters.
The stimulus measures so far are like the electric shock given to a heart attack patient.
So far it seems to be working. The economy is coming back to life and the mood is more positive. But just like a heart attack, if you don’t cure the cause, the patient will fall down again.
So to me the third arrow is like a triple bypass to clear out the bureaucrats, the vested interests and the politicians that have choked our economy for too long. This country badly needs it. Too much of Japan’s productive capacity is wasted on stupid paperwork. Too many resources are misdirected to support deadwood – even if it means strangling new companies at birth.
Abe-san is right: deregulation is the answer to Japan’s fundamental problems.
But what does “deregulation” really mean? And how can we do it?
Many foreign press reports I’ve seen give very few details – and that makes deregulation sound like something you can do with scissors – cut, cut, cut and you’re done.
Sure, Japan has many stupid regulations that achieve nothing and benefit no one, that exist only because of bureaucratic brain death.
So if we sent Toyota factory experts in to ask bureaucrats “why do we need an inkan shomeisho for that?” Maybe we could get them to admit, “just because that’s how we’ve always done it.” Maybe we can cut that stuff easily.
What’s harder to cut, are regulations designed to benefit someone in particular – to benefit vested interests with long and deep ties to politicians and bureaucrats.
These non-transparent relationships are widespread. They are the basis of political and bureaucratic power in Japan. And they are the biggest obstacle to our economic revival.
I know this because for the past four years I’ve been fighting a regulatory monster. It’s like some creature from a video game, so clever it can change white to black. And if you cut its head off, it just grows another one.
I’ve come here to tell you about our fight against this monster, because it shows how tough and how vital deregulation is. More than that, tomorrow, our fight will clearly show if Abe’s third arrow has any power.
But first, let’s go back to the beginning.
Back in the ‘90s, I set out to build an Asia-wide online drugstore, starting here in Japan. There was nothing in Japanese law to stop us, so we just did it – and Kenko.com went live in May 2000. In our first 10 years, we set an excellent record in consumer safety, and we grew on average 36 percent each year – to the point where our brick-and-mortar competitors began to notice our success.
As you may know, Japan has a national association to represent every activity you can imagine. They give money to political campaigns, and get their members to vote as a bloc. So politicians are indebted to them.
The same groups work closely with bureaucrats that regulate their business. In return for policy influence – and quite openly – they give amakudari jobs to retiring bureaucrats. And that’s the transparent part!
In our industry, there are separate associations for chain drugstores and independent pharmacists. They have branches in every town – so when Diet members go home they hear directly from local pharmacists.
And as I discovered, these associations have very close relations with health ministry officials.
In 2006, the Diet passed the “Revised Pharmaceutical Affairs Law,” which updated the regulations on Over-the-Counter drugs – OTC for short – for the first time since 1960.
The new law didn’t even mention online OTC sales, and did nothing to restrict them. The law set out basic principles that were to take effect in June 2009. In the interim, Ministry officials had to draft detailed regulations – known as “ministerial ordinances.”
This is where the tricks started.
When the Ministry created a “research panel” to draft the ordinances, no online drugstores were invited to participate. But they certainly did invite our brick-and-mortar competitors. In fact, they actually allowed them to write the ordinances.
We know this because our competitors boasted about how cleverly they wrote the regulations. And they really were clever; they managed to turn white into black.
They made it look like OTC was being opened up to convenience stores. And when the new rules were announced in February 2009, that was the news headline. But in practice they made it difficult for konbini to actually sell OTC… by requiring specially trained staff in-store at all times.
With online sales what they did was bend the requirement to warn about side effects. The law requires written notification only for items in certain categories. The ordinance cleverly extended this, requiring “face-to-face” warning for everything – even aspirin. They used this to claim online sales are unsafe because, of course, there is no face-to-face communication.
It’s easy to prove the face-to-face thing is ridiculous, because if you buy aspirin from a chain drugstore your only face-to-face contact is likely to be with a young, part-time cashier.
What happens if you buy a product that gets recalled? A chain drugstore could not find you.
Online, we offer full information on every product; and help you choose the right one by asking questions like: “Do you have allergies or high-blood pressure?” We need your name and address because we have to deliver. So if there’s a recall, we can contact you.
By any measure, online is not only as safe as a conventional drugstore. It’s much safer. But this story is not about safety. It’s about corrupt relations between bureaucrats and the companies they regulate.
Clearly, they meant to drive us out of business. But I’m stubborn, and I decided to fight them all the way. So in May 2009 we sued the Ministry, alleging they had unlawfully violated our constitutional rights – abusing their ordinance power to put us out of business.
The initial case took a year and lots of legal bills, and it was a bitter disappointment when the Tokyo district court rejected our suit in April 2010. But we appealed, and two years later, we won. The Appeal Court overturned the lower court verdict.
Still, the Ministry didn’t accept it. They took the case all the way to the Supreme Court – which meant another long, costly battle.
Finally, on January 11th the Supreme Court unanimously ruled in our favor, saying that the ordinances were excessive and illegal. And they completely rejected the face-to-face thing – because it was not included in the original legislation.
That should’ve been end-of-story. You’d think a Supreme Court verdict would be enough to wipe out any monster! But not this one. Right after the Supreme Court ruled, the Ministry said they would continue to look for ways to restrict online OTC.
Over the last five months, the Ministry has held 11 “consultative roundtables” aimed at drafting rules for online OTC sales. The final one was last Friday – and it ended in deadlock.
Throughout the process, it was me versus the bureaucrats and the brick-and-mortar people. Their agenda was not to create workable rules – it was to make the rules unworkable. They kept looking for ways to reintroduce the face-to-face thing.
You’ll like this part…
Quite seriously, they claimed face-to-face was important because – and I’m not kidding – it allowed them to “smell the patient.”
Okay, so I can’t smell my customers over the internet. But I have all their names and addresses. Drugstore chains have no idea who their cash customers are.
So before going to your local drugstore, just remember: spray on some deodorant.
Through all of this nonsense, I kept insisting that the Constitution and the Supreme Court verdict must be respected. But they dismissed these. By the end they were furious at me, and they said, “You should compromise… because that’s the Japanese way. Aren’t you Japanese?”
I replied: “Yeah, sure I’m Japanese, but I’m ganko, I’m stubborn. And I believe Japan will be stronger if our society is built on principles and transparency, instead of compromise.”
I’m sure they never dreamed we’d win the Supreme Court case. Within a week of our victory they called a meeting of all the LDP members on their payroll, and ever since they have been lobbying like mad.
So it must have really upset them in March when the Cabinet Office announced that deregulating online OTC would be among the measures included in the Third Arrow. Ever since, behind the scenes there’s been a fierce fight to keep any reference to online pharma out of the government’s Growth Strategy Plan – which will be released tomorrow.
This document is important, because it’s the blueprint for the Third Arrow. Abe-san will present it at the G8 summit two weekslater, it will be a focal point of the election campaign, and it’s the basis for Japan’s offer in the TPP negotiations.
Once we see the plan, we’ll be able to see how far the third arrow will fly, and if it has any force behind it.
This week, two advisory panels working on the arrow gave their recommendations to Cabinet. There’s no way our opponents can change those recommendations. So they only have today to try and knock us out. And that will be tough because we are backed by a Supreme Court verdict. Inaba-san, the Reform minister, recently noted that the Supreme Court rejected “face-to-face.”
If the plan does not include a clear commitment to liberalize online OTC sales we’ll know right away: The bureaucrats and the old guard won. We’ll know that the third arrow has no power.
However, I expect the plan will support liberalization… but of course that won’t be the end of the story. Abe-san still has to drive the plan– and stick to his decision despite huge pressure.
Will he be able to resist that pressure? That’s the question that will determine how far the third arrow flies. If our fight disappears, you will know for certain that the arrow has fallen.
I want to tell the global media about this situation, because I believe Japan’s trading partners have an important role to play: to insist on the need for deregulation and to demand that Japan follow through on third arrow initiatives. That moment will come in the TPP process.
The enemies of reform are hoping TPP gets caught up in emotional debate over agriculture. But pushing Japan on agriculture is like pushing an open door – our farmers are aging so fast that change will come no matter what.
What the monster fears more than anything is for our trading partners to focus on the the real source of its power: the ways our bureaucrats manipulate regulations to keep new entrants out of the market – both foreign companies and Japanese start-ups.
If our TPP partners just ask for more market access, then the negotiations may fail. But if they insist on reforms to create a level playing field for everyone – foreign or Japanese – many Japanese will support them. And everyone will win.
Finally, I would like to thank the FCCJ again for lending me this podium. In 2010 after we launched our lawsuit against the ministry, none of the domestic media would even cover a story that would be front-page news anywhere else. But your Club gave me the chance to come here and speak. For that I will always be grateful.
As this story continues, feel free to contact me. But now I look forward to your questions.