Purpose - This study attempts to examine obstacles to international services trade in tertiary education. It specifically analyzes Japan’s international trade in education from three different angles: (i) status of international transactions of tertiary education services; (ii) the restrictions on international education services transactions as well as domestic regulations in education sectors; and (iii) the relevancy of domestic regulations in the education sector.
Design/methodology/approach - The paper first argues that obstacles to international education services transactions usually take the form of domestic regulations rather than direct restrictions, using the case study of Japan. Japan is an interesting case to assess since it has a strong desire to regulate the education sector and has been conducting regulatory reforms recently. The paper then considers the relevancy of domestic regulations in Japan's education sector by comparing them against regulations in other sectors where governments also have a strong desire to maintain regulatory powers, such as in legal and banking services.
Findings - While it looks that the Japanese education sector is free from restrictions on international services transactions, domestic regulations are the serious obstacles to trade. Japan’s education industry has two principal problems regarding domestic regulations: (i) unclear demarcation between the government and University Council; (ii) an emphasis on the restriction on new entrant rather than a smooth solution of "bankruptcy".
Practical implications - As far as the business operations of foreign universities in Japan are concerned, the emphasis of regulations should be placed on the smooth solution of "bankruptcy" of these universities rather than the restriction of their entry similar to the case of banking sector. It should be also noted that the demarcation between the government and University Council in exercising power is ambiguous. Thus, both parties should maintain transparency in the decision-making process.
Originality/value - Surprisingly, there are only a few studies that analyze Japan’s tertiary education system in terms of the obstacles to international services transactions. This paper is one of the first attempt to examine the status of international transactions of tertiary education services and the restrictions on international education services transactions. It then considers the relevancy of domestic regulations in the education sector in comparison with banking and legal services sectors..