The aim of this paper is to explore the impact of WTO/GATS on Japanese Higher Education and examine challenges for internationalization of universities in Japan. WTO/GATS recognize education as "service" and barrier has to be removed to trade fairly among countries. This idea is very different and new from the one in the past which recognize education either "private" or "public." First, this paper overview the trend of market of international students in the world and discuss the issue in Japanese higher education. Secondly, it examines the result of questionnaire research which was conducted to examine perception toward impact of WTO/GATT issue among presidents of Japanese universities and researchers on higher education. Finally, it examines issues and problems of Japanese universities from the perspective of "import" and "export" of higher education service.