December 18, 2019

Dear Assistant U.S. Trade Representative Beeman:

With regard to the procurement of supercomputers in the public sector, I am pleased to inform you of the following.

The Government of Japan has decided to revise the “Procedures to Introduce Supercomputers” attached to the letter from Ambassador Nobuo Matsunaga to Ambassador Clayton Yeutter dated August 7, 1987 (the “Procedures”), implemented in August 1987, and previously revised:

1. In June 1990 as communicated to Ambassador Carla Hills in a June 15, 1990 letter from Ambassador Ryohei Murata.
2. In March 1995 as communicated to Ambassador Michael Kantor in a March 31, 1995 letter from Ambassador Takakazu Kuriyama.
3. In April 1999 as communicated to Ambassador Charlene Barshefsky in an April 30, 1999 letter from Minister Plenipotentiary Hideaki Kobayashi.
4. In March 2000 as communicated to Ambassador Charlene Barshefsky in a March 31, 2000 letter from Ambassador Shunji Yanai.
5. In March 2005 as communicated to Ms. Wendy Cutler in a March 30 letter from Minister Junichi Ihara.
6. In March 2014 as communicated to Mr. Michael Beeman in a March 26 letter from Minister Kanji Yamanouchi.

Section I (3) of the Procedures sets out a theoretical peak rating threshold for coverage of the Procedures of 50 trillion floating point operations per second (TERAFLOPS) and over and provides that the coverage be reviewed as necessary.

In order to reflect technological advances in the supercomputer market, this coverage threshold needs to be raised. Accordingly, we have amended Section I (3) of the Procedures to read as follows: “These Procedures will apply to the introduction of supercomputers with theoretical peak ratings of 2 quadrillion floating point operations per second (PETAFLOPS) and over. This coverage will be reviewed as necessary.” The new threshold will become effective December 23, 2019. It will govern all procurements of supercomputers by the entities listed in ANNEXES I and II of the Procedures that are initiated on or after December 23, 2019.

As a consequence of this change, the procurement of computers with the theoretical peak ratings of below 2 petaflops initiated on or after December 23, 2019, will be covered by the 1992 “Measures Related to Japanese Public Sector Procurement of Computer Products and Services” (the “Measures”), provided that other applicable conditions are met under the Measures.

Additionally, in order to ensure the Procedures remain relevant given technological advances, the Government of Japan will also amend the coverage threshold to the following levels:

• 2.4 petaflops on December 23, 2020
• 2.88 petaflops on December 23, 2021

After December 23, 2021, the threshold will remain at the 2021 level until a future exchange of letters between Japan and the United States to revise the threshold. The Government of Japan and the Government of the United States will review the coverage threshold in 2022 to determine whether it is appropriate to continue raising the threshold by 1.2 times a year, or by some other number as appropriate based on international supercomputer rankings.

Because the supercomputer market is dynamic, it will be necessary to review the Procedures as technology develops.

Sincerely,

[Iida Shinichi]

Iida Shinichi

Minister for Economic Affairs

Mr. Michael Beeman

Assistant U.S. Trade Representative for Japan, Korea and APEC Affairs

Office of the United States Trade Representative

Washington, D.C. 20508

December 18, 2019

Iida Shinichi

Minister for Economic Affairs

Embassy of Japan

Washington, D.C. 20008

Dear Minister Iida:

I am pleased to acknowledge receipt of your letter today which reads as follows:

“With regard to the procurement of supercomputers in the public sector, I am pleased to inform you of the following.

The Government of Japan has decided to revise the “Procedures to Introduce Supercomputers” attached to the letter from Ambassador Nobuo Matsunaga to Ambassador Clayton Yeutter dated August 7, 1987 (the “Procedures”), implemented in August 1987, and previously revised:

1. In June 1990 as communicated to Ambassador Carla Hills in a June 15, 1990 letter from Ambassador Ryohei Murata.
2. In March 1995 as communicated to Ambassador Michael Kantor in a March 31, 1995 letter from Ambassador Takakazu Kuriyama.
3. In April 1999 as communicated to Ambassador Charlene Barshefsky in an April 30, 1999 letter from Minister Plenipotentiary Hideaki Kobayashi.
4. In March 2000 as communicated to Ambassador Charlene Barshefsky in a March 31, 2000 letter from Ambassador Shunji Yanai.
5. In March 2005 as communicated to Ms. Wendy Cutler in a March 30 letter from Minister Junichi Ihara.
6. In March 2014 as communicated to Mr. Michael Beeman in a March 26 letter from Minister Kanji Yamanouchi.

Section I (3) of the Procedures sets out a theoretical peak rating threshold for coverage of the Procedures of 50 trillion floating point operations per second (TERAFLOPS) and over and provides that the coverage be reviewed as necessary.

In order to reflect technological advances in the supercomputer market, this coverage threshold needs to be raised. Accordingly, we have amended Section I (3) of the Procedures to read as follows: “These Procedures will apply to the introduction of supercomputers with theoretical peak ratings of 2 quadrillion floating point operations per second (PETAFLOPS) and over. This coverage will be reviewed as necessary.” The new threshold will become effective December 23, 2019. It will govern all procurements of supercomputers by the entities listed in ANNEXES I and II of the Procedures that are initiated on or after December 23, 2019.

As a consequence of this change, the procurement of computers with the theoretical peak ratings of below 2 petaflops initiated on or after December 23, 2019, will be covered by the 1992 “Measures Related to Japanese Public Sector Procurement of Computer Products and Services” (the “Measures”), provided that other applicable conditions are met under the Measures.

Additionally, in order to ensure the Procedures remain relevant given technological advances, the Government of Japan will also amend the coverage threshold to the following levels:

• 2.4 petaflops on December 23, 2020
• 2.88 petaflops on December 23, 2021

After December 23, 2021, the threshold will remain at the 2021 level until a future exchange of letters between Japan and the United States to revise the threshold. The Government of Japan and the Government of the United States will review the coverage threshold in 2022 to determine whether it is appropriate to continue raising the threshold by 1.2 times a year, or by some other number as appropriate based on international supercomputer rankings.

Because the supercomputer market is dynamic, it will be necessary to review the Procedures as technology develops.”

I welcome the Government of Japan’s decision to amend the Procedures to take account of advances in supercomputer technology and to keep the Procedures under continual review. I am pleased to confirm that it is also the view of the Government of the United States that the threshold in Section I (3) of the Procedures needs to be raised. I understand, therefore, that Section I of the Procedures and coverage under the Measures are amended as described in your letter, and confirm the view of the United States that further review will take place in 2022.

Sincerely,

[Michael Beeman]

Michael Beeman

Assistant U.S. Trade Representative for Japan, Korea and APEC Affairs

Office of the United States Trade Representative

Washington, D.C. 20508