Japan sees chance for social welfare pact with U.S.

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Now that Japan has struck social welfare deals with Britain and Germany, the next — and by far the most important — target for such a treaty is on the radar screen: the United States.

“We want to open full-scale negotiations with the U.S. on concluding a social welfare treaty as soon as possible,” a senior government official involved in the matter said, requesting anonymity.

The Japan-Britain social welfare treaty, signed at the end of February, is expected to be approved by the Diet early next month, clearing the way for it to take effect during the current fiscal year, which started April 1.

The pact is aimed at preventing double collection of public pension premiums from Japanese citizens working in Britain and British citizens working in Japan.

Under the pact, such Japanese and British citizens will no longer have to make double pension-premium payments in both countries because they will be subject to either Japan’s or Britain’s mandatory public pension plan. Japan signed a similar treaty with Germany in April 1998.

Such social welfare pacts are a great boon not only for Japanese working abroad but also for their employers. Under the Japanese public pension system, the premium payment burden for corporate workers is equally shared, in principle, by themselves and their employers. But in the case of corporate employees working abroad, their pension premiums are often paid completely by their employers.

The social welfare treaty with the U.S. would benefit Japan much more than the ones with Britain or Germany because the U.S. receives by far the largest number of Japanese corporate employees.

According to the Foreign Ministry’s Consular and Migration Policy Division, about 43,000 employees of private Japanese companies, except for those employed by media organizations, stayed in the U.S. as of October 1998, the latest date for which figures were available. The comparable number was some 9,000 for Britain and 5,000 for Germany.

“Although Japan and the U.S. have held an informal exchange of opinions for many years on each other’s pension systems, the U.S. has so far been reluctant to conclude a social welfare treaty with Japan,” said another government official, who is also involved in the matter.

“That’s because the U.S., saddled by its huge federal budget deficit, did not want to lose revenue from the pension premium payments from Japanese working there,” the official said on condition that he not be named.

“But now that the U.S. federal budget has swung to a surplus, the country is becoming more flexible about concluding a social welfare treaty with Japan,” he said. “The time has come for us to open full-scale negotiations with the U.S. on such a pact.”