WITHIN REACH
The EBC Report on theJapanese Business Environment

2016

Within Reach
The EBC Report on the Japanese Business Environment
2016

The European Business Council in JapanThe European (EU) Chamber of Commerce in Japan

European Business Council in Japan
European (EU) Chamber of Commerce in JapanThe EBC is the trade policy arm of thefollowing European national chambers ofcommerce and business organisations inJapan:
Austrian Business Council
Belgium-Luxembourg Chamber of Commerce in Japan
British Chamber of Commerce in Japan
Danish Chamber of Commerce in Japan
Finnish Chamber of Commerce in Japan
French Chamber of Commerce and Industry in Japan
German Chamber of Commerce and Industry in Japan
Icelandic Chamber of Commerce in Japan
Ireland Japan Chamber of Commerce
Italian Chamber of Commerce in Japan
Netherlands Chamber of Commerce in Japan
Norwegian Chamber of Commerce in Japan
Polish Chamber of Commerce & Industry in Japan
Spanish Institute of Foreign Trade
Swedish Chamber of Commerce and Industry in Japan
Swiss Chamber of Commerce and Industry in Japan

Executive Operating Board
Chairman:
Danny Risberg

Vice-Chairman:
Carl-Gustav Eklund

Executive Operating Board:
Michael A. Loefflad (Austria)
Els Verhulst (Belgium/Luxembourg)
Jonty Brunner (Britain)
Claus Eilersen (Denmark)Erik Ullner (Finland)
Guy Bonaud (France)
Albert X. Kirchmann (Germany)
Matthew G. Connolly (Ireland)
Francesco Tiberio (Italy)
Hiroshi Ishiwata (Netherlands)
Rune Nordgaard (Norway)
Takeshi Fujiwara (Sweden)
Markus Gfeller (Switzerland)

Executive Director:
Alison Murray

Policy Director:
Bjorn Kongstad

Communications Manager:
Yoko Hijikuro

About the EBC:The European Business Council (EBC) is the trade
policy arm of the 16 European national chambers ofcommerce and business associations in Japan.
Established in 1972, the EBC works to improve the tradeand investment environment for European companies
doing business in Japan.
The EBC currently represents some 2,500 local
European companies and individuals who are membersof their national chambers of commerce. Around 350
company executives participate directly in the EBC’s 26
industry committees, whose work aims to improve thelocal business environment in a wide variety of
economic sectors.
The EBC speaks from a platform based on member
consensus, representing the common view ofcompanies from a major economic region in the world
and one of Japan’s most important trading partners.
The EBC works closely with the Delegation of theEuropean Union in Japan and the embassies ofEuropean countries to co-ordinate policy proposals andfacilitate European business in Japan.
For more information on the EBC and its activities,
please contact the EBC secretariat at the following
address:
Sanbancho POULA Bldg. 2F
6-7 Sanbancho, Chiyoda-ku, Tokyo 102-0075
Tel: 03-3263-6222
Fax: 03-3263-6223
E-mail: ebc@gol.com
Web: https://www.ebc-jp.com

Within Reach
The EBC Report on the Japanese Business Environment
2016

Editor and Principal Author: Bjorn Kongstad

Copyright © 2016 by the European Business Council in JapanAll rights reserved

Published by: The European Business Council in JapanThe European (EU) Chamber of Commerce in Japan
Sanbancho POULA Bldg. 2F, 6-7 Sanbancho, Chiyoda-ku, Tokyo 102-0075
Tel: 03-3263-6222 Fax: 03-3263-6223
E-mail: ebc@gol.com Web: https://www.ebc-jp.com

CONTENTS
Message from the Chairman ........................................................................................... 6
Message from the Executive Director ............................................................................. 7
Introduction................................................................................................................... 10
Business fundamentals
Human resources..................................................................................................... 14Intellectual property ................................................................................................ 16
Legal services ......................................................................................................... 18
Retail & wholesale .................................................................................................. 20
Tax .......................................................................................................................... 22
Financial services
Asset management .................................................................................................. 26
Banking ................................................................................................................... 28
Insurance ................................................................................................................. 30
Transportation and communications
Airlines ................................................................................................................... 34
Railways ................................................................................................................. 36
Telecommunications carriers .................................................................................. 38
Telecommunications equipment. ............................................................................ 40
Logistics & freight .................................................................................................. 42
Health science
Animal health .......................................................................................................... 46
Medical diagnostics ................................................................................................ 48
Medical equipment ................................................................................................. 50
Pharmaceuticals ...................................................................................................... 52
Vaccines .................................................................................................................. 54
Cosmetics & quasi-drugs ........................................................................................ 56
Consumer goods
Liquor ..................................................................................................................... 60
Food & agriculture .................................................................................................. 62
Industry
Automobiles ............................................................................................................ 66
Automotive components ......................................................................................... 68
Aeronautics ............................................................................................................. 70
Space ....................................................................................................................... 72
Defence & security ................................................................................................. 74
Construction ............................................................................................................ 76
Materials ................................................................................................................. 78
Energy ..................................................................................................................... 80
Appendices
Pinnacle Sponsors ................................................................................................... 84
Gold Star Sponsors ................................................................................................. 86
Blue Star Sponsors .................................................................................................. 87
Special Sponsors ..................................................................................................... 89
Sponsors .................................................................................................................. 90
Supporters ............................................................................................................... 92
Executive Operating Board ..................................................................................... 93
Board of Governors ................................................................................................ 94

Contents
3

3

A SPECIAL THANK YOU TO OUR PINNACLE SPONSORS,
GOLD-STAR SPONSOR, AND BLUE-STAR SPONSORS

Pinnacle

Gold-Star

Blue-StarAll sponsors are listed in the appendix of this report. We thank everyone for
their support.
454

Messages

Message from the Chairman
Welcome to “Within Reach”: the 2016 Report of the European BusinessCouncil in Japan (EBC).
Why “Within Reach?” Simply because, after nearly four years ofnegotiations, an EU-Japan Free Trade Agreement is finally looking not justtheoretically possible, but genuinely achievable. The EBC has been callingfor such an agreement for many years – ever since we realised that thetraditional EU-Japan regulatory dialogue would never deliver evensubstantial reform, let alone the true potential of the trade relationship. The
lack of progress frustrated the efforts of European companies keen to grow and invest in Japan, to the detriment
not only of those companies but also the Japanese market and the economy as a whole. We were not alone inwanting change: Japanese companies were also seeking solutions to the challenges they faced in their EU
operations. Ultimately, neither Japan nor the EU could afford to pass up the economic boost that increased trade
would bring – and so finally, in 2013, a decision was taken to launch negotiations towards an EU-Japan Free
Trade Agreement.
Since then, there have been numerous meetings and rounds of negotiations. Yet even now, there is no guaranteethat the negotiations will be successful. Significant hurdles remain across a range of issues highlighted in thisreport, and real determination is required to resolve them. We in the EBC are convinced that all issues on the tablemust be resolved to the satisfaction of both sides for a final agreement to deliver sustained benefits. We are also
clear that an agreement that lacks such ambition, that lacks balance, will ultimately lack support. And we are
realistic that the political momentum required to achieve consensus may not last forever. So we are urging theleaders of Japan and the European Union to focus now, before this crucial moment passes, on securing a truly
comprehensive EU-Japan Free Trade Agreement.
At the same time, we are unrelenting in our quest for reform of the many issues that lie outside the scope of theFree Trade Agreement but nevertheless hold back business, domestic and foreign, in Japan. Such issues include a
tax regime that too often discourages inward investment; a healthcare system that inflicts unpredictable pricerevisions on products vital to patient welfare; airport fees so excessive that they drive away business; labelling
requirements of no consumer benefit that serve only to inflate costs; and labour legislation that still rewards longservice ahead of performance. The individual chapters of this report, written by the EBC’s expert Committees,
give details of these and many other issues, and recommend changes that would set Japan on course for a more
open, competitive and thriving economy. In many cases, the changes needed are straightforward and, withgovernment support, easily implemented – so, once again, tantalisingly “Within Reach”.
The EBC has a strong commitment to Japan and the EU, and immense knowledge and experience of operating
businesses in these and other markets. We stand ready to offer whatever further information and ideas we can tohelp the EU and Japan foster new levels of mutual trade and economic growth. As the EU-Japan FTA negotiations
edge towards a conclusion, the benefits of a strong agreement - for business, for consumers, for the economy - arebecoming clearer. Now is the time for the authorities on both sides to focus hard on those benefits and ensure they
are achieved. So much trade, so much investment, so many jobs, so many companies depend on success. At last, it
is “Within Reach” – don’t let it slip away!

Danny Risberg
Chairman, European Business Council in Japan
European (EU) Chamber of Commerce in Japan(President & CEO, Philips Electronics Japan, Ltd.)

6

Chairman's message
1

Message from the Executive Director
The European Business Council in Japan (EBC) is pleased to present“Within Reach”, its 2016 Report on the Japanese Business Environment.
Negotiations towards a Free Trade Agreement between the European
Union and Japan have arrived at a crucial point: we understand that,while there are still numerous issues to be resolved, sufficient progresshas been made for there to be a realistic prospect of success. This is
excellent news for both the EU and Japan, whose economies stand tobenefit from a significant boost in mutual trade and investment. It is also
excellent news for companies. Here in Japan, European companies have for years wrestled with allmanner of tariffs and measures that undermine their efforts to develop and grow: this agreement could
finally remove many of them. Yet we remain cautious: there is still a risk of disappointment, of anagreement that fails to address key issues, or fails to balance the interests of both sides. Mindful of this,the EBC’s own expert Committees continue to work hard to support the negotiating process, providing
detailed information on the barriers faced in each sector and area of business. Their top priorities for thenegotiations are highlighted in the individual chapters of this report. It is essential that all these priorities
are discussed and resolved to achieve an agreement that is truly comprehensive, ambitious – and a
success.
At the same time, the EBC continues to urge the Japanese authorities to resolve the many important
issues outside the scope of the FTA negotiations that hold back business development in Japan. Some ofthese issues are exclusive to foreign businesses operating here and illustrate their continuing struggle toachieve a fair and level playing field for all. Other issues are common to all business in Japan, domestic
and foreign, and highlight the urgent need for regulatory reform to create a more globally integrated andcompetitive economy. The Committee chapters of this report give details of such issues alongsiderecommendations for how they should be resolved. We commend their proposals to all those committed
to enabling the Japanese economy reach its full potential.
I would like to thank each of the EBC’s expert Committees for their valued contributions to this report
and, indeed, to the work of the EBC. I would also like thank the EBC Policy Director, Bjorn Kongstad,for coordinating the inputs to this report and for providing a very helpful overview in his Introduction.
The EBC appreciates the support of our stakeholders, especially the European National Chambers ofCommerce and other business organisations represented in Japan. We also thank the Delegation of theEuropean Union to Japan and the European national embassies in Tokyo for their valuable insights andadvice. Finally, we gratefully acknowledge all those EBC Members whose generosity has made thispublication possible and who are listed in the sponsors and supporters sections of this report.
2016 has been another challenging year for business in Japan and the EBC remains committed to helping
create an environment that fosters growth and long-term prosperity. This report highlights many of the
key actions needed: if these are promptly and properly addressed, a brighter economic future is at last
“Within Reach”.

Alison Murray
Executive Director
European Business Council in Japan
European (EU) Chamber of Commerce in Japan

Executive Director’s message
2

7

Introduction

Mr. Bjorn Kongstad
Policy Director,
European Business Council in Japan
Sanbancho POULA Bldg. 2F
6-7 Sanbancho, Chiyoda-ku,
Tokyo 102-0075
Phone 03-3263-6222
Fax
03-3263-6223

INTRODUCTION
Occasionally in life there is a moment when, after much hard work, the realisation dawns that a once distant goal
is now within reach. It is a moment filled with optimism that success is near, and fear that a prize so evidently
achievable could yet be lost. It is at precisely such a moment that this EBC Report on the Japanese Business
Environment goes to press. Historic opportunities to boost the economy and enhance EU-Japan trade andinvestment are tantalisingly close to being realised, but could still so easily slip away. The EBC is in a uniqueposition to understand what is at stake and has devoted this report to highlighting what must be done to make surethese opportunities, at last within reach, are finally and firmly grasped.
The first opportunity is the EU-Japan Free Trade Agreement / Economic Partnership Agreement (FTA/EPA).
Many years of largely ineffectual Regulatory Reform Dialogue proved to both the EU and Japan that the huge
untapped potential in their mutual trade relationship could only be realised through a properly negotiated andbinding agreement. Work towards such an agreement was formally launched in April 2013, and now, someseventeen rounds of negotiations later, sufficient progress has been made to say that there is a real prospect of
success. This prospect must not be squandered.
The FTA/EPA negotiations cover many crucial aspects of the EU-Japan trade relationship, including tariffs, nontariff measures, services, investment, procurement, sanitary and phyto-sanitary measures, rules of origin,intellectual property and competition. As the EBC made clear from the beginning, any final agreement must be
this comprehensive to achieve its economic potential and win the support of both sides. From an EU businessperspective, we are therefore concerned that, as the final rounds of negotiations approach, every effort is made toensure that the Agreement will deliver:

Mutual recognition of standards, product certifications and marketing authorisations, and adoption ofinternational standards - for example in terms of automobiles, household products, automotive
components, medical diagnostics and telecommunications equipment.



Removal of barriers, such as unnecessary costs and bureaucracy, that prevent or delay products fromreaching the Japanese market – for example, tariffs on materials and foods, excessive regulation ofimported vaccines, and Japan-only product labelling requirements.



Fair competition and equal treatment of all companies in the Japanese market, domestic and foreign - forexample, in the airline, express delivery and insurance sectors.



Fair and open tenders for public contracts – for example, in Japan’s railway and construction sectors.



Better conditions for Foreign Direct Investment (FDI) in Japan – for example, improvements in the tax
treatment of R&D and in the rules for cross-border and triangular mergers.

This is not some fanciful wish-list drawn up by the EBC: it is a realistic assessment of what can and must be
achieved if an EU-Japan FTA/EPA is to fulfil its potential in terms of higher levels of mutual trade andinvestment and much-needed growth in both the EU and Japanese economies. It is also the minimum necessary
for an FTA/EPA to win the support of EU companies, whose efforts to grow in the Japanese market have for too
long been thwarted by unnecessary and unreasonable barriers to trade. There are numerous examples of suchbarriers in this report, as well as concrete recommendations on how they should be addressed. We urge theauthorities in both the EU and Japan to use the current momentum within the negotiations to seal an FTA/EPA
that will lift these barriers and so bring a new level of prosperity within reach.

10The second opportunity to boost the economy through enhanced trade andinvestment comes in the form of the Government’s Growth Strategy, or socalled Abenomics. Having initially focused primarily on short-term fixes tokeep the Japanese economy out of recession, through a combination ofmonetary policy and fiscal stimulus, last year the emphasis turned tostructural reform, which offers the possibility of much longer-term
improvements. Abenomics is now aiming to “boost productivity”, “drive
innovation and trade”, and “energise corporate activities” through a range of measures that will, amongst others,
enable Japan to maintain worldwide leadership in the technology industry, expand its healthcare market, reinforce
tourism, promote quality infrastructure investment, strengthen investor confidence, attract more foreigncompanies, increase investment in energy and address global warming.
Among the various initiatives launched so far, the corporate tax rate has been reduced, making Japanese
operations more internationally competitive; new Stewardship and Corporate Governance Codes have been
introduced, encouraging more investment; measures to improve childcare benefits and provision have beendeveloped, boosting female participation in the workforce; programmes have been created to increase inward
tourism; and limitations on the recruitment of skilled professionals from overseas have been eased. These andother reforms should make Japan a more attractive location for foreign business and could help Japan to release
its economic potential.
The EBC is concerned, however, that many reforms announced by the Government are undermined by otherexisting or even new policies that conflict with their aims. There is, as yet, almost no coordinated policy approachto ensure the reforms succeed. Among the many examples detailed in this report:

Through various initiatives, the Government has highlighted the need for both increased FDI and theimportance of attracting highly skilled workers. Despite these goals, Japan expanded the inheritance law
to include both domestic and global assets of foreigners from the first day as a resident of Japan. This isclearly a disincentive for talented individuals to come to Japan, making it difficult for companies trying
to secure the best possible human resources and impeding their efforts to invest.

Long after its much-vaunted privatisation of Japan Post, the Government still retains a majority
shareholding. As a result, the public continues to believe that the Government will underwrite thevarious Japan Post entities, giving them an unfair advantage in the market and so sapping the very
competition the policy was meant to encourage.



The Government is seeking to increase female participation in the workforce yet many metropolitan
areas cannot provide adequate care facilities for children. The Government has furthermore also
abandoned its target to fill 30% of all senior positions with women by 2020, and is now aiming for amere 7% in the public sector and 15% in the private sector.

Despite singling out Healthcare as a major growth industry for Japan, the Government persists in pricereimbursements for medical equipment that are so unpredictable that they deter companies fromdeveloping or launching new products. Similarly, additional and irregular repricing exercises forpharmaceuticals are threatening to undermine growth in the overall market.

Japan’s Energy Policy is aimed at ensuring both a stable energy supply and environmental sustainability,
yet the Government is failing to promote the development and use of renewables, such as wind and solar
energy, which could contribute to both these goals.

11

Introduction2

While the Government is keen to increase tourist travel to Japan, it is ignoring the problems airlines faceat its main international airports, such as high fees and inadequate infrastructure, which undermine thedevelopment of profitable routes.

Approvals for animal health products are still marred by long approval periods. Japan wants to limit the
impact on the farm industry of both an increasing number of free trade agreements and an ongoing
decline in the number of farmers, who are aging and not being replaced. Accordingly, the Government
cannot afford to delay the introduction of innovative animal health products that could benefit farmers
and make the agricultural sector more efficient.

All these factors are contributing to failure of the ambitious, fundamental structural reform component of
Abenomics to materialise as promised. No doubt it faces resistance at times from the bureaucracy, vested
interests, and a prevailing attitude of risk aversion. However, Prime Minister Abe is right now in a uniquely
strong position to overcome this resistance. Abenomics has had some success in overcoming deflation and theeconomy is growing, if only slightly. The Coalition Government has a commanding majority in both houses of
the Diet and enjoys high public approval ratings. There will not be a better time to push through reforms that areclearly needed and so nearly within reach. The EBC urges the Prime Minister and his Government to cometogether to seize this opportunity to transform the economic outlook of the nation for decades to come.
The EBC trusts that the ideas and recommendations in this report will prove a positive contribution to thethinking of the Government of Japan, the European Union and all others who genuinely wish to see the EU-Japan
trade relationship reach its full potential.

How this report is organised
Following this introduction, 29 chapters, each written by an EBC sector / expert committee summarise the key
issues and developments in the Japanese business environment over the past year, and are accompanied by
concrete recommendations for reform. Where appropriate, the committees have also highlighted their top
priorities for an EU-Japan FTA/EPA. The content of this report was compiled as of November, 2016.

123

Business
Fundamentals
Human resourcesIntellectual property
Legal services
Retail & wholesale
Tax

Mr. Steve Burson
Chair, Human Resources Committee(President, H&R Consultants K.K.)
c/o H&R Consultants K.K.
2F EXOS Ebisu, 1-24-14 Ebisu
Shibuya-ku, Tokyo 150-0013
Phone 03-5449-6061
Fax
03-5449-3267

HUMAN RESOURCES
Introduction
The EBC Human Resources Committee has for many years been concerned at Japan’s bleak demographic outlook. A
shortage of skilled labour, an ageing population and a declining birth rate together present significant challenges for the
long-term vitality of the economy in general and for business, both domestic and foreign, in particular. Given the low
unemployment rate, already only limited sourcing is possible from within the group of active job seekers. Moreover,
several forecasts suggest that the population of Japan may reduce by as much as half by 2050. The EBC sees only fourways to combat the effects of this decline: increasing productivity, introducing more women into the workforce,increasing the birth rate and/or increasing the number of immigrants. The EBC believes that policies in all four areas areneeded to secure a skilled and competitive workforce.
The EBC was pleased by initial signals that Prime Minister Abe’s Government was considering new ways to increase
the participation of women in the labour market: currently, although about 65% are active, the majority only work parttime. The Government’s plan included an overhaul of the current income tax break given to tax payers whose spouses
do not work or work only limited hours, to remove the incentive for spouses to work part-time. The Government also
called on companies to employ more women and increase the number of women in executive positions. The initial
target was to fill 30% of senior positions with women in both the government and private sectors by 2020, but this has
been revised down to 7% for the public sector and 15% for the private sector. Furthermore, Prime Minister Abe hastalked of improving support for working parents, which is clearly a step in the right direction, but requires concrete
follow-up. The Government needs, for instance, to offer more public child-care centres and private child-minding
services, and to support and encourage men to take child-care leave.
On a positive note, the EBC commends the Government and the Ministry of Justice for improving Japan’s attractivenessto foreign professionals through a new system covering re-entry permits and the extension of visa periods. This new
system is complemented by efforts to admit greater numbers of highly skilled workers. Together these measures will
benefit individual companies and the economy as a whole. There are indications that the Government is contemplating
introducing online visa applications, which would be a welcome step as the processes, including for extensions andchanges of visa status, are currently very time-consuming. In addition, a Government committee on labour has
suggested that Japan should accept more foreign manual workers, going beyond the current limitation to those engaged
in “specialised and technical fields”: a necessary step as some industries are in grave need of manual labour.
On the negative side, expansion of the inheritance tax to include all registered foreigners in Japan is reducing Japan’s
attractiveness from an employment perspective, thus making it more difficult for companies to bring talent to Japan.
Regarding pensions, Japan’s Defined Contribution Pension Law of 2001 enabled employers to offer more flexible andattractive pension schemes to employees. Given the current demographic trend and the inevitable stress this will placeon the Japanese social security system, it is imperative that further incentives are created to encourage individuals to
prepare financially for their own retirement. Currently, it is only possible to claim a tax deduction for private pension
contributions of up to 50,000 yen per year and this needs to change. Discussions on lowering the minimum period ofpremium payments required in order to receive a pension should be brought to a successful conclusion. Meanwhile,
Japan must ensure that its efforts to open up to more skilled foreign workers are not undermined by its pension
regulations. Amendments are still required to enable such workers to get a full refund of all mandatory Japanese pension
fund contributions when they finally leave the country, rather than the current limit of the last three years of premium
payments. The Government should also act quickly to conclude social security agreements with all remaining EU
Member States, as well as with Norway and Iceland, to lessen the burden on both employers and employees and to
avoid double payments. A comprehensive FTA/EPA between the EU and Japan should aim to streamline the process ofbrokering multiple bilateral agreements on social security pension reimbursement and also include equal treatment in
the area of social support. It also provides an opportunity to revise all visa and work permit requirements between the
EU and Japan, with a view to creating a seamless labour market.

14

EBC Human Resources Committee
Member Companies
DHL Global Forwarding
G&S Global Advisors
H&R Consultants
IKEA Japan
Mercedes-Benz Japan
Mitsubishi Fuso Truck and Bus

Key Issues and Recommendations■ Immigration policies
Yearly status report: good progress. With the amendment to the Immigration Control Act leading to effective
removal, in practice, of the re-entry permit, Japan has made considerable improvements to the visa process. There
are, however, some areas that can still be improved.
Recommendations:
The Government of Japan should:Introduce on-line applications;
Lower the requirement for industry experience from ten to five years for those who do not have a relevant
university degree;Expand the Technical Intern Training Programme;Automatically grant work permits to spouse visa holders so that multinational companies can attract the besttalent to postings in Japan;Extend the benefits, such as permission to sponsor a foreign maid or nanny, given to “highly skilled
professions” to permanent residency holders.

Look into the possibility of granting short-term work visas for manual labour.
■ Labour market regulations and diversity
Yearly status report: some progress. Japan’s future prosperity depends greatly on maintaining an adequate
workforce that can support its ageing population and drive its economy. By far the easiest way to increase theworking population would be to increase female participation. The EBC strongly urges the Japanese Government
to place more focus on workplace diversity and to support and encourage more female participation in theworkforce and more male participation in household and child-rearing activities.
Recommendations:
Remove the spouse special income tax credit (haigusha-tokubetsu-kojo).
Vastly increase and improve the infrastructure necessary to ensure sufficient child-care facilities, systems
and staffing to support female participation in the workforce and male participation in the home.
Encourage companies to set up child-care facilities by offering them identical or similar financial
contributions to those given to public day-care centres.
Introduce employment legislation that encourages the creation of a competitive workforce based on
performance and not on long-term employment. Adequate protection of employees is required, but
employers also need a legal framework within which to remove non-performing workers.
Allow longer periods during which over-time can be balanced.
 Allow for easier corporate restructuring, while setting up clear rules for compensation of regular employees whosejobs disappear.
■ Pensions
Yearly status report: gradual progress. Social security agreements have been concluded or are being negotiatedwith several European countries, to the benefit of their citizens, whose mandatory contributions to Japanesepension plans can now be refunded in full. For the nationals of countries without an agreement, however, refunds
remain capped at a maximum of three years. Meanwhile, the EBC is encouraged by the discussions on lowering
the number of years of pension premium payments required in order to receive a pension.
Recommendations:
Lower the number of years required to pay pension premiums in order to receive a pension.

Make contributions to foreign-based pension plans subject to the same tax relief as contributions to pension
plans in Japan.
Japan and EU Member States should swiftly conclude mutual social security agreements.

Human resources
215

Mr. Laurent Dubois
Chair, Intellectual Property Rights Committee(Representative, Union des Fabricants)
c/o Union des Fabricants
SK Bldg. 3F, 1-5-5 Hirakawacho
Chiyoda-ku, Tokyo 102-0093
Phone 03-3239-3110
Fax
03-3239-3224

INTELLECTUAL PROPERTY
Introduction
In Japan, luxury brand products reach consumers via one of two sales channels: either regular distributors or dealers inparallel imports. (The sale of parallel imported goods is not illegal in Japan.) While luxury brands strive to develop sales
through regular shops or internet sites, the need to protect the image of their products makes them reluctant to engage in
e-commerce using any other distributors. Nevertheless, online marketing and sales of their products in the form ofallegedly authentic “parallel imports”, mingled with counterfeits of both their brands and also top brand electric
appliances, are growing. As in many other countries, the top producer and exporter of counterfeit goods distributed inJapan is China, accounting for 91.1% of all fake goods flowing into the country.
In 2015, some 690,000 fake items were stopped at the border by Japan Customs. Given that it is impossible for Customs
to examine all imported goods, this number is probably only a fraction of the total volume of fakes. As the purchase ofcounterfeits for “personal use” is not forbidden in Japan, some fake items cannot be stopped even if detected.
Until recently, many Japanese consumers purchased fake items knowingly. However, the main issue today is how tohelp them avoid fraudulent websites (most of them managed overseas), which deceive them either into buying
counterfeits despite their wish to purchase the genuine brand, or into buying products that will never be delivered after
payment. Public awareness of intellectual property rights (IPR) is rising, and IPR has become integrated in Japan’s
consumer protection strategy. The Government is now studying the feasibility of blocking access to websites
fraudulently selling counterfeits.
Relevant ministries and agencies are making considerable efforts to protect IPR. For example, from 2007 onwards, theCustoms Bureau gradually eased the obligation for rights holders to visit Customs offices to check items suspected ofbeing counterfeits, and this requirement was removed completely in 2013. The Consumer Affairs Agency has set up a
Cross-Border Consumer Center to help consumers who have unwittingly purchased counterfeits. The Center publicises
on its website the names of online stores selling counterfeit items. Moreover, the National Police Agency protects
consumers by providing the global Anti-Phishing Working Group with information about websites selling counterfeit
products so that alerts can be displayed in web browsers.
Major online retailers Yahoo!, Rakuten and DeNA are also playing an important role in combating counterfeits. Yahoo!,for example, is endeavouring to clean up its auction service by regularly exchanging information with brands, via rightsholders’ associations, on counterfeits and criminal dealers. It has established its own information-gathering function andhas a team of 200 staff members conducting continuous independent checks based on the information obtained. Suchefforts allow Yahoo! to detect and, at the request of the concerned brand, eliminate a large proportion of posted fakeproducts. Rakuten is also actively cleaning up its shopping website. When a product posted on Rakuten is suspected ofbeing a counterfeit because, for instance, of a particularly low price or information received from a consumer, theoperator makes a test purchase of the item to verify its authenticity with the cooperation of the relevant brand. If theitem turns out to be counterfeit, the posting dealer is banned from the website with immediate effect.
Finally, concerted efforts are being made by different sectors in Japan to set up a framework to eliminate counterfeits.
Some of their approaches are more advanced than those applied in Europe or the USA. However, problems still remain.
Specifically, partnerships with internet service providers (ISPs) need to be developed to build a proper system to protect
consumers and control the sale of counterfeit items “for personal use”. The definition of “for personal use” needs to betightened and made legally binding. This should solve the issue of increasing sales of counterfeits on internet flea
markets.

Key FTA/EPA Issues


16

Ensure that IPR issues are taken up in the FTA/EPA negotiations in sufficient depth to improve thecurrent situation
Create common rules to provide solutions to the problems described above

EBC Intellectual Property Rights
Committee
Member Companies
ChanelSonderhoff&Einsel Law and Patent Office
Union des Fabricants

Key Issues and Recommendations■ Strengthened and continuous actions to eliminate counterfeit products from online

malls in Japan and abroad
Yearly status report: some progress. While major auction websites have succeeded in reducing the proportion ofcounterfeit products on their sites to less than 1%, some shopping websites are still failing to take the necessary
measures and so the share of counterfeits of certain brands on their sites remains relatively high. The delay intaking action by shopping websites can be explained partly by the fact that most uploaded image data are notadequate for determining whether the items for sale are counterfeit or not, and it is often necessary to make test
purchases to verify authenticity. Additionally, thorough countermeasures against counterfeit products are yet tobe taken in respect of the internet flea markets launched recently by a number of emerging ISPs, wherecounterfeits may account for as much as 99% of the total merchandise being sold. Overall, initiatives against
counterfeit sales websites, fraudulent websites and spoof websites are progressing far too slowly. Measuresalready put in place by the relevant Japanese ministries and agencies include the freezing of bank accounts usedby the operators of such websites, publication of their URLs, and display of alerts via security software orbrowsers, but these have not yielded fundamental solutions to the problem. Given that public awareness of theneed to protect IPR and consumer interest are undoubtedly rising, now is the time to take bold and swift action tocombat the sale of counterfeit products.
Recommendations: Japan’s Specified Commercial Transaction Law should be amended to strengthen checks on branded goods
sold on the internet, with a view to eliminating counterfeit goods from shopping websites. In addition, theGovernment should encourage ISPs, distributors and rights-holders to establish their own anti-counterfeit
guidelines to promote private sector initiatives in this field.
 Radical measures should be taken against counterfeit sales websites, fraudulent websites, and spoof websites
hosted by foreign servers, for example: blocking access to them or removing them from search engines.
 The Government should encourage emerging ISPs operating internet flea markets to implement measuresagainst fake products.

■ Tighter definition of “for personal use”
Yearly status report: no progress. The fact that the importation and purchase of counterfeits for “personal use”
are lawful in Japan offers a loophole to dealers importing fake goods for commercial purposes. As a result, theCustoms Authorities waste manpower and time detecting counterfeits only to find they have no choice but togrant import permits. If this loophole cannot be closed, at the very least the definition of “personal use” should betightened. Dealers importing numerous counterfeit watches by postal mail several times a year, for example,
could be stopped simply by defining the minimum period of possession (such as one year) and the maximum
number of items that may be presumed to be “for personal use”. Given that the resale and transfer of fakeproducts remain lawful if they are for “personal use”, relevant laws and regulations must be improved to prevent
such dealers from being able to claim that the goods are for their personal use.
Recommendations: The importation and purchase of counterfeits, even for “personal use”, should be controlled under the law.
 If the importation and purchase of counterfeits “for personal use” cannot be prohibited by law, the definitionof such use should be tightened to address the current situation where importation of unlimited numbers offake products is permitted so long as they are declared to be “for personal use”.

Intellectual property
2

17Ms. Rika Beppu
Chair, Legal Services Committee(Partner, Hogan Lovells Houritsu Jimusho Gaikokuho Kyodo Jigyo, Tokyo)
c/o Hogan Lovells Houritsu Jimusho Gaikokuho Kyodo Jigyo , Tokyo
15F Daido Seimei Kasumigaseki Building, 1-4-2, Kasumigaseki
Chiyoda-ku, Tokyo 100-0013
Phone 03-5157-8200
Fax
03-5157-8210

LEGAL SERVICES
Introduction
The EBC’s recommendations in respect of legal services in Japan remain the same as last year, because no concretechanges have been made to date.
Further to the Regulatory Reform Plan issued by the Prime Minister’s Cabinet and approved on 24 June 2014, thefollowing deliberations took place in respect of regulations applicable to gaiben (foreign-qualified lawyers):
1. A Study Group was set up under the auspices of the Ministry of Justice to discuss the gaiben system. With theincrease in demand for international legal services, in 2015 this Study Group devoted six months each to (1)reviewing the requirement for foreign-qualified lawyers to have specific work experience in order to register as agaiben, (2) reviewing the current limitation on gaiben and bengoshi (Japanese lawyers) establishing a hojin(corporation) together.
The EBC, together with the American Chamber of Commerce in Japan and the Gaiben Association, was invited topresent its views on 1(1) and 1(2) mentioned above in May 2015 (the third Group session) and September 2015
(the sixth Group session), respectively. In July 2016, the Study Group, together with the Nichibenren (Japan
Federation of Bar Associations), issued its report, which makes the following recommendations.


The current three-year work experience requirement (two years of which must be experience gained
outside Japan) should be changed to either (i) three years (one year of which must be experience gained
outside Japan) or (ii) two years (one year of which must be experience gained outside Japan).

It should be permissible in law for gaiben and bengoshi to establish a hojin (corporation) together.

2. Transparency of the gaiben registration system: The Ministry of Justice began to consider this topic in 2015. A
forum has been set up for discussions between the Ministry of Justice and the Nichibenren, taking into accountopinions from registrants as necessary, with a view to making the registration process and timing more transparent
and to improving user-friendliness for registrants.
3. Making the gaiben registration process simpler: A separate forum has been set up for discussions between the
Ministry of Justice and the Nichibenren, taking into account opinions from registrants as necessary, with a view tomaking the registration process simpler and faster.
The EBC welcomes the recommendations made by the Study Group in July 2016 and eagerly awaits changes to the law
to reflect them. Going forward, the EBC will continue to recommend that any requirement for work experience prior toregistration as a gaiben should be abolished. The EBC will also take a close interest in the roll-out of therecommendations, not least because the Study Group’s credibility and ultimate success will depend on the process being
conducted fairly, with proper participation by foreign lawyers and due consideration given to the views of the foreign
legal community.

Key FTA/EPA Issues
18Japan should recognise foreign lawyers if they are recognised in their home jurisdiction, without thecurrent requirement for prior professional work experience in their respective home law

EBC Legal Services Committee
Member Companies
Allen &OveryARQIS Foreign Law Office
AshurstBaker & McKenzie
Clifford Chance Law OfficeFreshfields Bruckhaus Deringer

Hogan Lovells
Linklaters
Squire, Sanders & Dempsey L.L.P.
TMI Associates
White & Case LLPKey Issues and Recommendations■ Recognition and approval as a foreign lawyer in Japan
Yearly status report: reasonable progress, pending enactment of the July 2016 Study Group recommendations. In
order to become registered as a gaiben in Japan, a foreign lawyer must have three years of professional
experience in his/her respective home law, of which two must have been obtained outside Japan. This rule is instark contrast to the rules governing bengoshi who are not required to have any post-qualification experience
before being recognised. The EBC believes that this practice is not only discriminatory, but also makes little
sense, as foreign lawyers are already recognised by their jurisdiction of qualification. If there is to be such a rule,
what is important is the experience in home jurisdiction law, not where it is practised. The procedure for
admitting foreign lawyers as gaiben also still imposes undue costs on foreign firms and individuals. A
streamlined application form has, in general, shortened the process, but the requirement for approvals from both
the Ministry of Justice and committees at the Nichibenren and local bar associations inevitably gives rise todelays. After over 25 years of operation, the gaiben system is in need of a thorough overhaul. An overhaul of thesystem could resolve a number of the current frustrations.
Recommendations:
The rule requiring a specific number of post-qualification years of experience should be abolished. At thevery least, experience in home jurisdiction law should be recognised regardless of where it has beenpractised.
Continuing focus is needed on accelerating the application procedure for gaiben registration to the greatest
extent possible.
An overhaul of the existing system should be undertaken to enable changes such as the registration of firms,
rather than individuals, which would do much to eliminate frustrations with the existing system.
■ Branches
Yearly status report: reasonable progress, pending enactment of the July 2016 Study Group recommendations.
Legislation was finally passed in 2014, permitting a gaiben law firm to incorporate itself as a hojin, and thereby
become eligible to open more than one branch. However, the new legislation does not permit gaiben andbengoshi together to establish a hojin. The effect is to severely limit the usefulness of the new legislation.
Recommendation:
Amend the legislation to permit gaiben and bengoshi to establish a hojin together. Even better, abolish therestriction on branching, which is archaic and does not suit the needs of either domestic or international law
firms.
■ Limited liability
Yearly status report: no progress. The EBC continues to recommend the introduction of a limited liability
structure for lawyers in Japan, in line with the practice in many other countries, for the benefit not only of foreign
but also Japanese lawyers. For foreign lawyers, this could be achieved by permitting them to operate through abranch of their home entity, rather than as separate individuals.
Recommendation:

A limited liability structure should be made available in Japan for both foreign and domestic law firms, andforeign firms should be able to practise in Japan through branches of their international firms. This could beachieved by an overhaul of the existing gaiben system to permit foreign lawyers to operate in Japan throughbranches of their home entity.

Legal services
219Mr. Karl Hahne
Chair, Retail & Wholesale Committee(President & Representative Director, Hafele Japan K.K.)
c/o Häfele Japan K.K.
14-17 Kami-shinano
Totsuka-ku, Yokohama 244-0806
Phone 045-828-3117
Fax
045-828-3119

RETAIL & WHOLESALE
Introduction
Despite some signals of slowing down, the Japanese retail market remains one of the largest and most vibrant in theworld. After many years during which the presence of European retailers was more or less limited to the luxury sector,
the last decade has seen the rapid establishment of new European retailers in Japan, both in fast fashion and homeinteriors. Their success clearly benefits Japanese consumers by offering them greater choice, often better prices and,frequently, completely new products previously not available on the market. It also benefits the Japanese economy atlarge, by creating considerable employment and helping to revitalise cities that were previously in decline. Japaneseretailers and wholesalers themselves gain from the presence of European competition as it provides incentives to further
strengthen their global competitive edge.
Nevertheless, European wholesalers and retailers still face considerable barriers in the Japanese market that make it
difficult to take advantage of global-scale logistics. This creates higher costs and therefore higher prices for Japanese
consumers. Moreover, the process of developing and opening new retail outlets remains fraught with restrictions,inefficiencies and delays, added to which, there are related sales restrictions. The Government of Japan also continues toinsist on applying unique national rules and regulations to products that have already met European standards. Japan’s
reluctance to accept EN (European) and ISO standards or CE (conformité européenne) markings, for example, delays
the introduction of new products to the Japanese market and increases import costs. While sharing the Government’s
concerns regarding consumer protection, the EBC believes that European rules more than adequately address these same
concerns, ensuring safe and good-quality products, and their mutual recognition would create a level playing field for all
players. An example of the barriers encountered by European retailers and wholesalers is Japan’s unique labelling rules,
as specified by the Consumer Affairs Agency (CAA). Other examples include non-acceptance of non-SI units(International System of Units), food sanitation rules that are not truly related to safety standards, and non-recognitionof global standards and European approvals. Non-harmonised procedures for importing, certifying and labelling
consumer products are unnecessarily costly and complex. The EBC hopes that the HACCP (Hazard Analysis andCritical Control Point) system, which the Japanese Government has finally decided to roll-out in Japan, will be duly andtransparently implemented, without introducing requirements unique to Japan.
The EBC is also concerned about possible complications arising from the recent relaxation of Japan’s Antimonopoly
Law. This was done through the issuance of amended guidelines on prohibited vertical restraints, without any
accompanying bright-line rules. The result is that legal application of these guidelines has become very difficult. The
EBC hopes that the Japan Fair Trade Commission (JFTC) will remedy this situation by issuing clearer guidance thatwill facilitate compliance.
The EBC calls on the EU and Japanese authorities to ensure that, in the process of negotiating an EU-Japan FTA/EPA,
the barriers met by European retailers and wholesalers in Japan are removed. In particular, the EBC can see no reason
why products already certified for the European market should have to undergo testing and certification anew if they are
to be sold in Japan, or vice versa. The EBC therefore calls on the EU and Japan to move swiftly to establish a wider
mutual acceptance of standards and certification, which will benefit companies and consumers in both markets.

Key FTA/EPA issues




20

Harmonise or mutually recognise approvals, certifications and standards
Remove shoe quotas and/or implement a better quota management system
Harmonise and simplify competition law to better match the needs of businessEBC Retail & Wholesale Committee
Member Companies

Key Issues and Recommendations■

ChanelGiorgio Armani Japan
Groupe SEB Japan
H&M Hennes & Mauritz Japan
Häfele Japan
IKEA JapanLEGO JapanMETRO Cash & Carry Japan
Philip Morris Japan
Philips Lighting Japan
TÜV Rheinland Japan

Prohibitive import, testing and certification procedures
Yearly status report: no progress. The Government of Japan continues to insist on applying unique national rules
and regulations to products that have already met European / international standards to the detriment of trade.
Recommendations:Japan and the EU should mutually accept each other’s regulations governing the application process forimporting and selling/using products, to eliminate the need for re-testing. In particular, it should revise its
legislation applying to products with food contact.
Japan should accept inclusion of common non-SI units on measuring devices when SI units are also used.

■

Labelling
Yearly status report: no progress. Both the Regulatory Reform Council (RRC) in 2013 and the Prime Minister’s
Cabinet in 2014 decided on the need for reform of the Household Goods Quality Labelling Act.
Recommendation:

The CAA should accelerate reform of the Labelling Act as indicated in EBC’s recommendations to the RRC.

■

Shoe quotas
Yearly status report: no progress. Most shoe tariff lines are covered by quotas, enabling imported shoes to benefit
from a lower tariff. Quotas are allocated partly on the basis of historical import figures, while a proportion isreserved for “newcomers”. The current system lacks transparency and companies no longer involved in the shoebusiness retain quotas, which they unlawfully “sell” to others. This behaviour is illegal, but persists. The Japanese
Government’s position is, anachronistically, that such quotas are justified for “social reasons”.
Recommendation:
The quota system should be abolished and tariffs removed. In the interim, METI should monitor the situation
to reject applications from entities not trading shoes, release their quotas, and implement stricter penalties.

■

Limitations on selling liquor via telecommunication channels
Yearly status report: no progress. The retail sale of liquor across prefectural borders via any telecommunication
channel (including the internet) is restricted. However, old (grandfathered) liquor licences do not have thislimitation, giving an unfair advantage to holders of old licences versus new entrants.
Recommendations:Japan should abolish the telecommunication channel limitation within the liquor retail licence system.
Japan should stop the practice of grandfathering licences.

■

Unclear implementation of HACCP (Hazard Analysis and Critical Control Point)
Yearly status report: new issue. HACCP has been implemented in many countries, including in the EU. It is now
a Japanese policy target, but the timeline is unclear, creating uncertainty in the retail and wholesale industry.
Recommendation:
Japan should clearly state the scope, timeline, and steps that will be taken toward complete implementation.

■

Competition law / Anti-trust legislation
Yearly status report: no progress. Striking differences exist between Japanese Competition Law and global
business practices. Examples include the recognition of “market power” with minor share in vertical restraint, and“superior bargaining power” irrespective of dependence. The EBC believes that JFTC’s “yellow card” system,
where infringement notices can be issued without an explanation, lacks both a legal basis and transparency.
Recommendations:The “yellow card” system should be abolished.
Japanese Competition Law should be harmonised with global business practices with bright-line rules.

The Japanese Government should further clarify the recent notification on vertical restraints.

Retail & wholesale
221Mr. Hans-Peter Musahl
Chair, Tax Committee(Partner, Ernst & Young Tax Co.)
c/o Ernst & Young Tax Co.
Kasumigaseki Bldg. 32F., 3-2-5 Kasumigaseki
Chiyoda-ku, Tokyo 100-6032
Phone 03-3506-2087
Fax
03-3506-2200

TAX
Introduction
The EBC welcomes the Japanese Government’s aim to stimulate the economy and increase Japan’s attractiveness toinvestors by reducing the corporate tax rate. Reforms to date have reduced the overall effective rate from 35.6% to 31%
for large companies in metropolitan areas and to 35% for SMEs. The Government’s mid- to long-term intention is to
reduce the overall effective tax rate to 30% or just below. However, in contrast to this, the Government has postponed
for a second time its plans to help restore the country’s finances through an increase in the consumption tax rate from
8% to 10%. As a result, Japan still trails behind other countries, including EU Member States, in transitioning its tax
profile from a focus on taxing income to a focus on taxing consumption.
Nevertheless, public statements made by Prime Minister Abe in the course of the G7 Summit, in Ise-Shima in May
2016, indicated that Japan aims to take the lead in contributing to the growth of the world economy and to reboot
Abenomics to the greatest possible extent. Since none of its policies to date involve significant curbs on expenditure, thegrowing deficit in the Government budget will at some point have to be made up from increased tax revenues.
Consequently, the widening of the tax base that has occurred in recent years is set to continue. Tax Reforms for 2016
and beyond include measures such as increasing the minimum taxable income before Net Operating Loss (NOL)
utilisation from 20% to 50% by April 2017. Regrettably, despite specific policies such as the reduction in the corporate
tax rate, the Government’s overall approach will inevitably have a negative impact on the attractiveness of Japan topotential overseas investors.
This negative impact is reinforced by the Government’s increased focus on taxation of wealthy individuals with above
average income, imposing inheritance, gift and income tax rates as high as 55% or more. The EBC welcomes news in
August and October 2016 indicating that, in the case of short-term foreign residents, the Government may apply
inheritance tax only to their Japanese assets starting in fiscal year 2017. If this reform is enacted, foreign corporate
investors should look more favourably on Japan, although the main Asian investment hubs of Hong Kong andSingapore would, overall, remain more attractive tax jurisdictions for individuals, particularly for those wishing toreside long-term in the region.
Bilateral trade and investment between the EU and Japan would benefit significantly from mutual elimination of double
taxation and withholding tax on dividends, royalties and interest, as provided for in recent tax treaties between Japan andindividual EU Member States. An EU-Japan FTA/EPA should include a mandatory arbitration clause to ensure that
double taxation will effectively be resolved between Japan and individual EU Member States if the tax treaty text itself
does not avoid double taxation in effect. The FTA/EPA should also enable employers’ and employees’ contributions tosocial security systems within the EU and Japan to be treated as tax deductible on a mutual basis. The EBC welcomesthe conclusion and ratification of the long-awaited new tax treaty between Germany and Japan. However, Japan’s
treaties with 21 other European Union countries still have not been revised, leaving amongst others, Austria, the Czech
Republic, Denmark, Finland, Hungary, Ireland, Italy, Luxembourg, Poland, Portugal, Spain and Sweden with decadesold treaties.
In summary, while the EBC considers that some of the tax reforms undertaken so far by the Japanese Government areheading in the right direction towards encouraging and supporting inward investment, others are likely to work directlyagainst those goals. Consequently, the growth anticipated by the Government may be difficult to achieve. This situation
will persist as long as the significant fiscal deficit remains to be addressed and tax revenues are used as the supposedsolution to this problem.

Key FTA/EPA Issues


22

The FTA/EPA should include an arbitration clause to ensure that double taxation will be effectively
eliminated if the applicable tax treaty between an EU Member State and Japan does not resolve
double taxation

EBC Tax Committee
Member Companies

Key Issues and Recommendations

Bayer
Boehringer Ingelheim Japan
Deloitte Tohmatsu Tax
Ernst & Young Tax
Infineon Technologies Japan
KPMG Tax
Mercedes-Benz Japan
Mitsubishi Fuso Truck and Bus
PwC Tax Japan
Sanofi
Siemens Japan
Sonderhoff & Einsel■ Research and Development (R&D) tax incentives
Yearly status report: no progress. Innovation-intensive industries are a key driver of growth and employment.
R&D tax incentives are widely recognised as an effective instrument for encouraging R&D activities and related(foreign) investments. While Japanese rules give some tax consideration to R&D expenses incurred in Japan, thecurrent tax credit is generally too restrictive in scope (both in terms of access and benefit) to be a deciding factor
in a foreign company’s choice between potential R&D locations. Japan should consider revising its current R&D
tax policy in order to maintain and improve its international attractiveness as a location for R&D activities. In thisrespect, it should be noted that many other countries have in recent years introduced some form of “back-end”
Intellectual Property (IP) regime that applies to income earned after the creation and exploitation of IP.
Furthermore, the current R&D credit regime is not available to companies that are loss-making, and so is of little
benefit to many start-up companies.
Recommendation:

Revise the current R&D tax policy to maintain and improve Japan’s international attractiveness as a location
for R&D activities (taking account also of the specific position of start-up companies).
■ Corporate restructuring
Yearly status report: no progress. The current tax treatment of cross border and triangular mergers is, in practicalterms, a barrier to those market entrants who have no established business in Japan but aim to use their own
shares to acquire a Japanese company. Current rules do not permit tax deferral in respect of stock swaps between
foreign and domestic companies, even if the transaction is carried out using a Japanese special purpose company,
and this has a stifling effect on inward investment.
Recommendations:
Tax deferral should be permitted in respect of share-for-share exchanges, including those involving foreigncompanies with no previous operations in Japan.

Rules and regulations underpinning corporate restructuring laws should be further simplified and clarified toreduce costs and limit the tax authorities’ discretion to define key concepts.
■ Income and Inheritance Taxes
Yearly status report: some progress. With top rates of 55% and higher, Japan’s income, inheritance and gift taxes
are the highest in Asia and, indeed, in the world. Foreign nationals are subject to Japan inheritance and gift tax
from their first day of residence in Japan. The taxes apply even to property located outside of Japan. The 55% top
inheritance tax rate applies also to inheritance between close family members and starts at much lower thresholds
and allowances than in other countries. Japan’s current inheritance tax and gift tax regime is negatively impacting
Japan’s ability to attract foreign intellectual capital and foreign investment from multinational companies. The
EBC welcomes news in August and October 2016, indicating that, from 2017 onwards, in the case of short-term
foreign residents, the Government may only apply inheritance tax to their Japanese assets.
Recommendations:
Change the categories of foreign nationals who are subject to inheritance and gift tax laws to align with thecategories of foreign nationals who are subject to exit tax, so that only foreign nationals who can residepermanently in Japan are subject to Japanese inheritance and gift tax.
The plan to exclude overseas assets owned by foreigners residing short-term in Japan should be enacted in
the 2017 tax reform as an interim measure.
■ Transfer pricing
Yearly status report: no progress. The Japanese tax authorities continue to use domestic corporate tax rules
relating to donations to make assessments in relation to transfer pricing matters. This means taxpayers are unable
to access the mutual agreement procedures arising under Japan's tax treaty network.
Recommendation:All cross border transactions should be dealt with under transfer pricing legislation and not under domestic
corporate tax rules relating to donations.

Tax

23

■ Extended tax return filing periods
Yearly status report: no progress. Japanese tax filing rules cause very high tax compliance costs and put
unreasonable pressure on taxpaying companies, their staff and service providers to file tax returns no later than
two to three months after the end of the calendar or fiscal year. In Europe and elsewhere, an average period ofnine months is allowed, and sometimes up to one year. The extremely short filing periods in Japan compromise
the quality of tax filings and the working and family lives of those preparing the returns, while driving up
expenditure on overtime. Not surprisingly, international comparison of the cost incurred for tax compliance showsthat Japan has the highest level among developed countries.
Recommendation:

Tax filing periods should be extended to one year in order to reduce the current unduly high cost of tax
compliance. Any negative impact on public finances could be avoided as long as the tax rules continue toallow for prepayments and impose interest in the case of insufficient prepayments.
■

Accountability
Yearly status report: no progress. The overall lack of transparency and systematic accountability in the domestic
tax regime continues to impede the development of business in Japan.
Recommendations:
The tax authorities in Japan should be obliged to accept and process applications for tax rulings, and tax law
should provide for the right to request and obtain tax rulings. The system should be more user-friendly.
The Government should consider the merits of introducing a system offering Horizontal Monitoring, Risk
Rating, and Senior Accounting Officers, which have improved efficiency in the UK and The Netherlands.

■ Tax treaties
Yearly status report: progress. Japan recently concluded and ratified a new tax treaty with Germany. However, its
treaties with 21 other EU Member States still need to be renegotiated. The EBC welcomes treaties that include theexemption of withholding tax on royalties and qualified dividends and interest, and that contain arbitration
provisions.
Recommendations:
The Government should review all current tax treaties with EU Member States.
Any new or revised treaty should address the issue of withholding tax on royalties and qualified dividends
and interest, and contain arbitration provisions.

24Financial Services
Asset management
Banking
InsuranceMr. Nicolas Sauvage
Chair, Asset Management Committee(Representative Director, Amundi Japan Ltd.)
c/o Amundi Japan Ltd.
Hibiya Dai Bldg. 20F, 1-2-2 Uchisaiwai-Cho
Chiyoda-Ku, Tokyo 100-0011
Phone 03-3593-5900
Fax
03-3593-5932

ASSET MANAGEMENT
Introduction
In recent years, the Japanese authorities have been implementing a number of policies to encourage Japanesehouseholds to shift their financial assets from deposits to investments, including: Cultivating a sound environment within the investment community (investors, issuers and distributors) throughintroduction of a stewardship code, a corporate governance code, and a focus on fiduciary duty (customer-oriented
business management).
 Creating incentives to encourage long-term investment and regular saving plans and to overcome risk aversion
through introduction of the Nippon Individual Savings Account (NISA), Junior NISA, and long-term NISA, andexpansion of the Defined Contribution (DC) pension scheme coverage.
Action to encourage a shift from deposits to investments and policies to support this shift remain essential to overcome
the current situation where more than 50% of the financial assets of households are held in the form of bank deposits,
compared to only 5% invested in funds. This raises concerns, firstly, because excess deposits of savings are
unproductive for the Japanese economy. Even in the current situation where domestic banks are largely over-funded,
excess savings deposits are not being used effectively to boost the national economy through lending or investing.
Secondly, these excess deposits are also unproductive from the individual account holder’s perspective. Even if safe, thedeposits provide little or no return and cannot help households to prepare for the future. As Japan is facing
demographic-related challenges, with issues of long-term imbalances in the retirement system and persistent low
interest rates, long-term investing is more than ever a necessity.
The negative interest rate policy implemented by the Bank of Japan in February 2016 could have been seen as a trigger
for retail distribution networks to accelerate the shift from deposits to off-balance-sheet saving products. However, thishas not yet happened. Gross sales of retail funds (excluding Exchange-Traded Funds) dropped by more than 50% in2016 compared to 2015, and restoring confidence in fund investing remains the top priority for asset managementcompanies and distributors.
Indeed, volatility in the global market and the negative interest rate environment have created uncertainty, resulting inanxiety, among existing fund investors. They are also deterring potential new investors. In order to restore confidence infund investment, several issues need to be tackled. These include the successful delivery by the asset management
industry of moderate risk/moderate return products aimed at newcomers looking to invest. The EBC furthermore
believes that improving operational structure is critical, as highlighted in the first recommendation on the next page.
Another issue that should be improved is financial literacy. If the Japanese authorities decide to change the “default
option” for DC pensions from cash to diversified investments (multi-asset/target year-type products), that would provide
an important opportunity for financial education and increase familiarity with fund investing.
Finally, Japan’s asset management industry needs to continue its efforts to compete successfully in the global arena.
Attracting more talent from overseas and preparing well for the introduction of the Asian Regional Fund Passport(ARFP) are examples of areas to work on. The EBC remains committed to contributing to the sharing of best practiceand to constructive discussions aimed at the development of the Asset Management industry in Japan.

26

EBC Asset Management Committee
Member Companies

Key Issues and Recommendations

Allianz Global Investors Japan
Amundi Japan
AXA Investment Managers Japan
BNP Paribas Investment Partners Japan
Eastspring Investments
Henderson Global Investors (Japan)
HSBC Global Asset Management (Japan)
NN Investment Partners (Japan)
Pictet Asset Management (Japan)
PricewaterhouseCoopers Aarata
Robeco Japan
Schroeder Investment Management (Japan)
UBS Global Asset Management (Japan)■ Globalisation and efficiency of the operational platform
Yearly status report: progress. In June 2016, the EBC submitted recommendations based on the 2015 EBC reporton the business environment to the Financial Policies Monitor, a report vehicle set up by Japan’s Financial
Services Agency (FSA) and is encouraged by the proactive discussions that have resulted from this. However, theisolated and sometimes obsolete nature of the operational platform prevents Japan from becoming more globallycompetitive. Some of the issues are:- Japanese trust banks separate Japanese yen and overseas assets for custody services;- Japanese accounts have no overdraft facility;- The rate of Straight Through Processing (STP) at trust banks is low, and there are other issues related tosettlement instructions;- It is practically impossible to merge funds.
Such operational isolation could be a major issue for successful participation in the ARFP. Moreover, the EBC isconcerned about the amount of duplicate work required among stakeholders, especially between trust banks andasset managers, such as for Net Asset Value calculation or reporting functions. To improve operational cost
efficiency, Japan might draw on best practices in Europe relating to the respective roles of the asset managementcompany, the custodian and the fund administrator/valuation agent.
Lastly, all stakeholders in our industry now regard a review of the current fund governance as a key topic. For
example, how to facilitate the decision-making process related to the evolution of products, while still respecting
the primary interest of unit-holders, is a matter of concern. The EBC believes that discussions of such issues isimportant, including the possibility of broadening the utilisation of Company-type funds, like SICAV (Sociétéd'Investissement à Capital Variable) in Europe, to mainstream retail products.
Recommendations:Japan should address and reform inefficient market practices that have become de facto standards.

The EBC applauds the Japan Investment Trust Association for taking the lead in setting up a Committee todiscuss some of the issues related to the operational platform. This Committee, with all stakeholders,
including foreign-affiliated organisations, should proactively aim to produce tangible recommendations on
how to improve the globalisation and effectiveness of the operational platform for the asset management
industry in Japan.

■ Collective engagement
Yearly status report: new issue. Collective engagement is an effective way for minority shareholders to holdboards accountable and influence corporate behaviour when improvement is desired. Most stewardship codes, thePrinciples for Responsible Investment (PRI), and the ICGN (International Corporate Governance Network)
encourage collective engagement, but it has been omitted from the Japan stewardship code. It has been pointed
out that the Japanese Financial Instrument and Exchange Act makes collective engagement difficult in practice, as
the law requires investors acting in concert to submit a report of their holdings if the aggregate exceeds 5%.
While this issue is not exclusive to Japan, regulators in other parts of the world have tried to clarify whichcollaborative activities do or do not constitute “acting in concert”, to avoid undermining their corporate
governance frameworks. The latest Principles of Corporate Governance issued by the G20/OECD (theOrganisation for Economic Co-operation and Development) have even introduced a specific paragraph on theissue, recognising cooperation, under certain limitations, as part of basic shareholders’ rights.
Recommendation:
Due to the importance of collective engagement as a tool for constructive dialogue between corporates andinvestors, the EBC recommends that the FSA takes the necessary measures to facilitate collective
engagement and supports this approach in the next review of the Japanese stewardship code.

Asset management27

c/o Bjorn Kongstad
Policy Director, EBC Secretariat
Sanbancho Poula Bldg 2F
6-7 Sanbancho, Chiyoda-ku, Tokyo 102-0075
Phone 03-3263-6222
Fax
03-3263-6223

BANKING
Introduction
Japan's relative prosperity has decreased considerably in recent years and, although Japanese consumers have continued
to save, their return on capital has been the lowest in the industrial world. On the other hand, Japan has weathered thevarious financial crises that have occurred during this period much better than many other countries; Japanese capital
markets were strong enough to raise substantial funds even during 2009 and 2010. Japan thus remains one of the largest
financial markets in the world with high savings rates. European banks have much to offer this market, bringing not
only global networks but also valuable expertise in cross-border M&As.
After some years of waning attractiveness as a financial centre, Tokyo has started to bounce back. For two years
running, the Economist newspaper has listed Tokyo fifth in its Global Financial Centre Index (GFCI), which ranks therelative competitiveness of such centres. No doubt much of this is due to “Abenomics”, which has had its biggest impact
on the stock market, with the Nikkei 225 index rising dramatically since the programme started in early 2013. It is,however, now crucial for structural reform to be introduced to convert this short-term gain into sustainable growth. So
far Prime Minister Abe’s reform plan for the financial sector has not impressed. While the banking sector has seen more
movement in capital, especially in the area of securities, lending and projects are still underperforming. The EBC
therefore believes a more radical approach is needed to create a financial environment that better reflects the real
economic status of Japan. It is, furthermore, important to point out that Japan cannot rely on monetary policies only. The
banking sector in particular needs to be able to recruit talented personnel, including from overseas, and to keep pacewith changes in the global industry, which Japan’s current rigid immigration and labour laws make difficult to achieve.
The EBC is particularly interested in the amendments to the mandate of the Government Pension Investment Fund(GPIF). We very much welcome the shift from almost exclusively low-yield investments to more advanced productswith chances of a higher return. Since a large amount of capital is tied to the Fund, we believe that such a shift will help
to revitalise the capital market in Japan and, therefore, also boost the banking sector. Furthermore, the introduction of a
new corporate governance code and the stewardship code should make Japan more attractive to investors. Early signs
indicate that corporations are now thinking more about return on equity and that consequently, yields have improved.
However, it is of the utmost importance that real changes be implemented, so that external directors are indeed truly
independent and the appointment process is made more transparent.
A new and pressing issue is fair disclosure. Fair disclosure lays the foundation for a market place where companyspecific information is properly distributed at the same time to all categories of investors, thereby protecting consumer
interests and helping to avoid insider trading. Unfortunately in Japan, disclosure of such information often occurs
through media channels some days before any official public announcement, even though such practices are notofficially sanctioned. The EBC, therefore, believes more effort is needed to clarify the responsibilities of all parties
involved, which would be in line with the Japanese Government’s policy on improving corporate governance.
While the firewall between different financial activities within the same financial group has been liberalised (forexample, enabling increased double-hatting) there is still a ban on information sharing. The EBC believes this is
unnecessary and a conflict management regime combined with appropriate inspection/supervision practices should
suffice. This would be in alignment with other principle-based regulations, which the Financial Services Agency (FSA)
has introduced for other regulatory frameworks.

28

EBC Banking Committee
Member Companies
BNP Paribas Securities
Commerzbank
Credit Agricole Corporate & Investment Bank
Deutsche Securities
Hongkong and Shanghai Banking Corporation
ING Bank
Intesa Sanpaolo

Key Issues and Recommendations■ Revitalisation of the financial market
Yearly status report: no progress. The introduction of the first two “arrows” of Abenomics (focussed on fiscal
stimulus and monetary easing) led to a flurry of activity in the financial market in Japan. Now, just a few years
later, this activity has subsided and the market is waiting for a more permanent improvement: long-term reformon the macro level is required. The EBC especially looks forward to implementation of the new mandate for the
GPIF and is, furthermore, cautiously optimistic about the newly introduced Stewardship Code guidelines, whichshould lead to improved transparency and lowered risk. It is, meanwhile, important that Japan does more to attract
talented human capital to Japan, especially since neighbouring markets are becoming more successful in thisrespect.
Recommendations:Japan should expand the mandate of the GPIF as announced and encourage the move in the GPIF from lowyield investments to investments with higher returns.
Japan should do more to incentivise talented people to come to Japan.
■ Fair disclosure regime
Yearly status report: new issue. Fair disclosure regimes are in place in most mature markets to ensure an open andfair market. However, this is not the case in Japan. Information is sometimes made known to select audiences
through so called “earnings previews”, weeks before it is made public through official channels. Japan needs toswiftly introduce a regime to deal with this situation. It is important that there is clarity regarding the
responsibilities of all parties. It should also be pointed out that fair disclosure is a fundamental component ofgood corporate governance.
Recommendations:
The Japanese authorities should address the problem of asymmetrical information and introduce a fairdisclosure regime.
The authorities should ensure that a robust sanction system is in place to disincentive the circulation ofpreview reports.
■

Banking agency system
Yearly status report: good progress. The banking agency system used to require Japanese branches of European
banks to apply for a special business licence each time they introduced any new banking services provided byanother banking entity, even if that entity was a branch of the same financial group located outside Japan. This
had a negative impact on cross-border services, in which the Japanese arm of a global financial group supports its
Japanese private or corporate clients in opening accounts abroad and introduces its Japanese clients to global cash
management. While the EBC appreciates the positive results achieved by the FSA in improving the system, byintroducing group approvals, more information is needed on the administrative procedures required to obtainthese approvals. It is of utmost importance that these procedures are easy to use and that the administrative
burden imposed on the applicant does not negate the actual benefits.
Recommendations:
The FSA should further clarify and streamline the application process for banking agency licences.

The FSA should make certain that the group approval system is easy to use, and that it will not impose aheavy administrative burden on the applicant.

■Information sharing
Yearly status report: new issue. While the firewall between different financial activities within the same financialgroup has been liberalised (for example, enabling increased double-hatting) there is still a ban on information
sharing. The EBC believes this is unnecessary and that a conflict management regime combined with appropriate
inspection/supervision practices should suffice.
Recommendation:
Remove the ban on information sharing within a financial group.

Banking229

Mr. Kazutaka Matsuda
Chair, Insurance Committee(Executive Officer, General Counsel,
Legal & Compliance, AXA Life Insurance Co., Ltd.)
c/o AXA Life Insurance Co., Ltd.
NBF Platinum Tower, 1-17-3 Shirokane
Minato-ku, Tokyo 108-8020
Phone 03-6737-7734; Fax 03-6737-5874

INSURANCE
Introduction
The Japanese insurance market is the second largest in the world after the USA. The market share of foreign affiliates inJapan is increasing, but they continue to encounter obstacles that can limit efficient development of their businesses.
Examples include reserving and solvency regulations that are inconsistent with international norms; the lengthy, nontransparent product approval process; the Government’s continuing majority ownership of Japan Post even beyond its
privatisation; and the separate regulatory framework applied to mutual aid cooperatives (kyosai). Future growth of theinsurance market in Japan will come from the ageing of the population, which will drive a need for products dealing
with extended retirement, changes to family structure and rising demand for medical products. The EBC welcomes the
Financial Services Agency’s (FSA) initiatives towards better regulation and hopes that they will move Japanese
regulation forward on this basis.
The EBC has, in previous reports, repeatedly drawn attention to issues concerning Japan Post. Japan Post Insurance(JPI) is currently conducting its life insurance business as part of Japan Post Holdings where, despite an Initial Public
Offering (IPO), the Japanese Government continues to hold a majority stake. Nevertheless, JPI is being allowed tolaunch new life insurance products. As long as the Japanese Government continues to hold a majority shareholding,Japan Post will continue to enjoy advantages in the market and competition will remain distorted. It is therefore vital for
the Government of Japan to comply with its obligations under the WTO General Agreement on Trade in Services(GATS).
In response to the global financial crisis, the International Association of Insurance Supervisors (IAIS) was tasked by
the G20 and the Financial Stability Board (FSB) to designate nine insurers as global systemically important insurers (GSIIs). The FSB/IAIS advocate that such insurance companies maintain certain minimum capital requirements, adopt amarket-based solvency measurement methodology such as Solvency II, implement certain risk management strategies,
and develop substantial resolution plans. They also propose that national insurance regulatory bodies in each country
increase information sharing with other regulators across borders. As the regulator of Japan’s financial market, the FSA
should adopt the appropriate proposed policy measures and additionally shift to a post-funded scheme for protecting
policy holders.
While the FSA has made efforts to speed up the approval process through both a more efficient procedure and increased
staffing, the EBC still believes that a “file-and-use” system should be introduced for quicker approval of standard
products. This would free up resources for the FSA to be able to better focus on more advanced products.
In parallel, the FSA should accelerate de-regulation of distribution practices based on a risk-based approach, which is inalignment with the trend towards consumers wanting better access to more convenient distribution channels targeting
their individual needs.
Overall, appropriate handling of issues such as the way Japan Post is privatised, bringing mutual aid cooperatives(kyosai) into the insurance framework, streamlining the product approval process, and applying clear and consistent
rules and regulations, would assist Japan’s economic growth. This would also benefit the domestic financial services
industry, consumers and Japan’s ability to retain foreign investment.

Key FTA/EPA Issues


30

The Government of Japan should swiftly carry out the IPO of Japan Post in accordance with its
original commitments, and ensure a level playing field - until 100% of the shares are held privately,
JPI’s product portfolio should not be expanded and its issue limit should remain the same
Kyosai should be brought under FSA supervision, be covered by the Insurance Business Law, and not
be allowed to expand their businesses until such provisions are in place - until this is achieved, kyosaiand their competent authorities should apply the same standards and regulations as the FSA

EBC Insurance Committee
Member Companies
AXA Life
Cardif, BNP Paribas
Credit Agricole Life
Deloitte Touche Tohmatsu
Manulife Life
Swiss ReKey Issues and Recommendations■ Harmonisation with global solvency and other regulatory standards
Yearly status report: progress. The EBC welcomes the update of the Solvency Margin methodology and positive
statements made by the FSA on establishment over the medium-term of a market-based methodology, consistent
with the principles of Solvency II. Further alignment of local regulatory requirements with the approach ofSolvency II is crucial for European insurers in Japan as it would enable them to use the same methodologies in all
territories and better develop group-wide risk management strategies. Such a move would both encourage andreward improved risk management within insurance companies – a goal shared by the FSA and insurers – andhopefully reduce the overall regulatory reporting burden on insurers conducting business in multiple jurisdictions.
Recommendations:
The Government of Japan should accelerate reforms aimed at attaining convergence between Japanese andglobal solvency standards by establishing a roadmap for convergence with Solvency II.

The market-based Solvency Margin calculation methodology should be further aligned with Solvency II.
Japan should continue to fully participate in the development by the FSB/IAIS of enhanced regulatory
measures for systemically important insurers and internationally active insurance groups.

In adopting FSB/IAIS proposed policy measures for the Japanese market, the Government should consider
the burden that such risk management reporting and capital adequacy requirements could impose on thesebusinesses and minimise any conflicting cross-border jurisdictional requirements.

The Government should clarify planned changes so that all parties concerned, including private insurers, canprepare for the new framework.

The Government should also consider reforming the Policyholder Protection Corporation when introducing
Japanese Solvency II.
■ Product approvals
Yearly status report: some progress. The EBC appreciates the FSA’s initiatives to improve the product approval
process, and the setting up of a regular dialogue between regulators and insurance companies. In 2014, the FSA
publically explained the product approval process and in July 2015 indicated its areas of interest and the data andinformation required for new product examinations. These actions help insurance companies to prepare for
product examination. However, the product approval process is still sometimes lengthy in comparison withforeign markets, causing product development delays and making effective business strategy planning difficult.
The EBC believes that faster product approval will be beneficial to not only insurers but also consumers.
Furthermore, while ensuring customer protection, the EBC encourages the FSA to introduce a “file-and-use”
system and to present a plan for its implementation.
Recommendations:
The FSA should commence studying how product approvals are conducted overseas. The EBC would bepleased to contribute expertise in order to make the research effort more efficient and effective.

The FSA should introduce a system allowing insurers to register products, instead of having to obtain preapproval. The FSA could retain the authority to conduct post-checks and issue withdrawal orders.
■ Fair competition in bank distribution
Yearly status report: limited progress. As the importance of bancassurance increases in providing benefits toJapanese consumers, the EBC is concerned about the strong influence that Japanese insurance companies haveover Japanese banks as their major shareholders. For example, in the area of group credit life insurance andrelated products, the EBC member companies have brought a series of innovations to the Japanese market in past
years, providing valuable protection for critical illness and disability to Japanese mortgage borrowers. Thisbusiness is now being copied by Japanese insurers, and while the EBC welcomes healthy competition in themarketplace to further benefit Japanese consumers, we expect the FSA to carefully monitor the situation to ensurethat competition is based on the quality of products and services and capacity to bring innovation and not merelyon the shareholding relationship between insurers and banks, which is irrelevant to the Japanese consumer.

Insurance
2

31

Recommendations:
The FSA should further liberalise bancassurance.

As a first step, the FSA should allow banks to sell insurance to any company employee, regardless of therelationship between the bank and the company, and to use bank data.
The FSA should carefully ensure that competition is based on fair comparison of offers, and is not biased by
pre-existing shareholding relationships.

■ Japan Post reform
Yearly status report: some progress. Even with the IPO implemented, the Government remains the majority
shareholder in Japan Post, and so the public continues to believe that it guarantees the various Japan Post entities.
The EBC considers this gives JPI an unfair competitive advantage, especially since JPI has indicated its intention
to expand its product portfolio.
Recommendations:
Until 100% of Japan Post’s shares are held privately, JPI’s product portfolio should not be expanded and its
issue limit should remain the same. Hence the Japanese Government should ensure a level playing field.

The Government should clarify how and in which area JP group companies work together and how they
select business partners to provide financial services, and ensure that good corporate governance is in placefor Japan Post Holdings, Japan Post Insurance and Japan Post Banks.

The Government should adhere to its commitments made under the WTO GATS.
■ KyosaiYearly status report: no progress. Currently kyosai are not subject to Japan’s Insurance Business Law. Instead,different ministries regulate the various kyosai depending on the sector in which the kyosai is active. For example,
JA Kyosai is regulated by the Ministry of Agriculture, Forestry and Fisheries.
Recommendations:
Kyosai should be brought under FSA supervision, be covered by the Insurance Business Law, and not beallowed to expand their businesses until such provisions are in place.

Until this is achieved, kyosai and their respective competent authorities should apply the same standards andregulations as the FSA.
The membership of kyosai should be further clarified and restricted, as originally intended, to a well-definedgroup, such as a certain profession.
■ Distribution practices
Yearly status report: some progress. Insurance sales by an incorporated insurance agency to members of its
parent and affiliated companies are restricted to so-called “third sector” products (Insurance Business Law
Enforcement article 234, 1998 MoF Notification No. 238). The EBC fully acknowledges the reasons for thisrestriction as discussed at the Administrative Reform Committee (1997) and the Insurance Council (1992). The
EBC, however, considers that the current rule could be a barrier for new entrants and may not be beneficial to
Japanese consumers.
Recommendation:

Taking into account emerging new technology and evolving insurance distribution, the FSA should review thesaid notification and related regulations, and present a roadmap for further deregulation for the benefit ofJapanese consumers.

32
3

Transportation &Communications
Airlines
Railways
Telecommunications carriers
Telecommunications equipment
Logistics & freightMr. Donald Bunkenburg
Chair, Airlines Committee(General Manager for Japan, Lufthansa German Airlines)
c/o Lufthansa German Airlines
3-1-13 Shibakoen, Minato-ku, Tokyo 105-0011
Phone 03-5402-5201
Fax
03-5402-5209

AIRLINES
Introduction
The volume of inbound air travellers to Japan continued to grow in 2016. As in previous years, the growth was led bypassengers from Asian countries. An increase in visitors from Europe was also evident, driven by a general rise ininterest in Japan as a tourist destination and a more favourable exchange rate, which makes land portions, such as thecost of accommodation, food, sightseeing, and so on, of leisure trips more affordable. Despite a stagnant economy,business travel, both inbound and outbound, also rose consistently.
However, the increase in overall inbound travel has not compensated for a severe decline in outbound leisure travelfrom Japan to Europe. This decline is due primarily to the recent terrorist attacks and to a general drop in consumption
by the Japanese. It has led to a reduction in scheduled frequencies, deployment of smaller aircraft and even total
withdrawal from the market.
If Japan is to reach the ambitious targets set by the Government for inbound tourism over the next few years, the total
number of airline seats will need to increase. Capacities will also have to be ramped up for the Tokyo Olympics in 2020.
The EBC urges the Government to take a two-pronged approach to reverse the current decline on European routes. The
first step should be to promote outbound leisure travel. The EBC appreciates the initiative to subsidise passport costs foryoung people to encourage them to travel. Stronger demand for outbound travel from Japan to Europe will benefit both
domestic and foreign businesses, including travel agencies and tour operators in Japan that earn commission on sales,
since their commission for European destinations tends to be higher than for other destinations.
The second step should be to reduce fees at Japanese international gateway airports. During prolonged periods of low
demand, airlines adjust capacity downwards, in order to reduce costs and achieve commercial objectives. It is in thelong-term interest of airports to ensure that airlines can continue operating at such times without incurring significant
losses. Lower fees would help significantly and allow them to maintain higher capacities for longer, facilitating aneasier capacity ramp up when demand returns. The EBC recommends re-evaluating and reducing the current highlanding fees, navigation charges, airport terminal rent, airport terminal common usage fees, and parking fees. Other
regional airport hubs in Asia have reduced such fees to ensure that airlines do not decrease or eliminate flights in the
short term.
The EBC continues to support the further opening of Haneda Airport (HND), with additional slots distributed fairly inorder for airlines to add new flights. The EBC also encourages the Japanese Government to expand the infrastructure forcatering and cargo facilities at HND. The current lack of proper infrastructure creates logistical impediments resulting inhigher costs for operating airlines. Moreover, the EBC requests the Japanese Government to further clarify theapplication of the so-called Shibari rule, which is the unofficial requirement for airlines to remain at Narita (NRT)
despite the expansion of flights at HND. This undermines the ability of European airlines to operate efficiently to andfrom Tokyo. It may even prevent the expansion of seat capacity and flights in total.
The EBC regrets that several other issues raised in previous EBC Annual Reports remain unresolved. One such issue isthe subsidising of the new low cost carrier (LCC) terminal at NRT. The EBC has yet to receive information on the cost
structure of this building or proof that the cost was borne by the LCCs rather than by the existing tenants. Anotherrelated issue is the effect of competitive distortions in the market caused by one carrier being given more favourable
financial conditions than others. When this happens, for whatever reason, the EBC believes the playing field should be
levelled by compensating all other carriers, domestic and foreign.
European airlines have taken numerous measures to lessen their impact on the environment, including the purchase of
new fuel- and noise-efficient aircraft, more efficient navigation technology, and bio-fuel testing. The EBC fully supports
the opening of new approach and departure patterns at HND in order to reduce fuel consumption and increase cost
efficiency. In addition, the EBC recommends abolishing the early “gear down” policy at NRT, which unnecessarily
increases not only fuel usage, but also noise for local residents.

34

EBC Airlines Committee
Member Companies

Key Issues and Recommendations

Air France
Alitalia - Compagnia Aerea Italiana
Austrian Airlines
British Airways
Finnair
KLM
Lufthansa
Scandinavian Airlines System
Swiss International Air Lines■ Revitalisation of outbound tourism
Yearly status report: limited progress. The Government continues to allocate substantial funds to promote Japanas a destination, yet the EBC believes the expected inbound travel volumes, including for the 2020 Olympics,
cannot be met by sustainable supply if outbound tourism is not also encouraged.
Recommendations:
The Japanese Government should continue to promote “exploring the world” initiatives with PR campaigns
and should work together with tour operators and travel agencies with a focus on Europe.
 The Government should continue its subsidisation of passport costs for young people in order to encourage
travel abroad.
■ High costs at Japanese airports
Yearly status report: no progress. Operating costs at Japanese airports continue to be high, with no real relief insight. As demand for outbound travel to Europe declines, airlines are struggling to sustain flight capacities.
Inbound travel volume can in no way compensate for the resulting deficit. The situation may get worse if the yen
rises against the euro and travel costs in Japan (including for hotel accommodation) increase, causing a negative
impact on inbound numbers. The risk is that airlines will continue to reduce capacity to/from Europe, making asudden capacity increase for the 2020 Tokyo Olympics difficult. Added to such cost issues, the Government
continues to require airlines to file their published fares and surcharges for approval, prior to sale - a timeconsuming and costly exercise which other major markets do not require.
Recommendations:
The EBC recommends that all airport fees be lowered. This will encourage airlines to maintain and growcapacity and frequencies, which will enable growth in traffic to and from Japan. The current airport fees are
too high, particularly in comparison with other airports in the region, which have in some cases lowered fees
to ensure that airlines retain capacity even in an uncertain market environment.
 The recent decision by the Japanese Government to reduce specific fees at domestic airports in Japan tofurther encourage travel should be used as a template to lower fees at international airports.
The EBC urges the Government to reconsider the value to consumers of insisting that airlines file publishedfares and surcharge for approval prior to sale.
■Airport infrastructure
Yearly status report: limited progress. The EBC encourages the continued opening up of HND airport slots. In
addition, improved “on or near airport” facilities for catering and cargo are needed.
Recommendations:The “early landing gear down” policy at NRT should be re-evaluated in consultation with local communities,
on environmental as well as cost grounds, as it results in higher fuel consumption and increases noise.

HND should be fully opened up to all international traffic, including flights to and from Europe, on a nondiscriminatory basis.
Immigration staff should be increased at international airports as waiting times continue to be high.

The new air corridors over Tokyo currently being studied should be approved and quickly introduced toenable an increase in slots and therefore passenger traffic. The reduction in fuel consumption through more
direct approaches would have a positive impact on the environment.
More space for catering and cargo suppliers should be allocated at HND, in order to increase efficiency andreduce costs for operators.
Additional car park facilities should be added at HND to alleviate waiting times for parking spaces. This
would improve quick access to the airport.

Airlines

35

c/o Bjorn Kongstad
Policy Director, EBC Secretariat
Sanbancho Poula Bldg 2F
6-7 Sanbancho, Chiyoda-ku, Tokyo 102-0075
Phone 03-3263-6222
Fax
03-3263-6223

RAILWAYS
Introduction
Japan has long been a nation with an extensive railway network, connecting Kyushu in the south with Hokkaido in thenorth. These two islands, separated by the main island of Honshu, are now also connected via high-speed rail after theextension of the Tohoku Shinkansen to join the Hokkaido Shinkansen. The Japanese railway sector has always been andcontinues to be dominated by domestic suppliers. Relatively few foreign players are present, a situation that is at its
most extreme in the rolling stock market, in which none of the major foreign players has any significant activities.
According to the Japan Association of Rolling Stock Industries, the value of rolling stock produced in Japan, including
for export, in fiscal year 2015 was 181.6 billion yen. The EBC considers that Japan represents a large market with goodpotential for European manufacturers and service providers, and would welcome more openness to imports.
More than five years have passed since the Tohoku Earthquake, yet many railways remain damaged. Some communities
are planning provisional replacement with Bus Rapid Transit (BRT), while others are still undecided on how to proceed.
The EBC Railways Committee, with its particular expertise in urban planning and rail technology, believes that a Light
Rail Transit (LRT) system should be introduced instead of BRT. The development of LRTs would contribute to thewell-being of people in an ageing and depopulated society. It would also revitalise commerce in the region.
In Japan, even if products have already been tested and certified according to international standards, they will not evenbe considered by Japanese railway operators without further extensive, yet unnecessary, testing. (The only exception tothis is products the operators have sourced themselves from specific manufacturers.) The EBC strongly requests theJapanese Government to combat this waste of time and resources by improving the legal environment to facilitatesmoother imports and exports. It is of the utmost importance that when considering harmonisation in the railway sector,
the Japanese and EU authorities ensure that the Japanese standards and specifications examined are those actually usedby the Japanese operators. It is, furthermore, important that standards and specifications are made publically available sothat European manufacturers have a genuine opportunity to meet and exceed these requirements. We believe that thetechnical working group set up in the framework of the EU-Japan FTA/EPA negotiations is a good start towards
achieving this goal, but more information from the working group needs to be shared with industry, and industry should
be more closely involved in this exercise.
The EBC welcomes the FTA/EPA negotiations and the progress achieved to date as regards railways. However, theEBC does not understand why the Japanese Government believes that safety concerns can be grounds for not using
public calls for tenders, as the Government and the railway operators would still be allowed to set their own safetyrelated standards. We therefore urge Japan to recognise that the EU and Japan have comparable safety standards and toagree on elimination of the Operational Safety Clause (OSC).

Key FTA/EPA Issues




36

Japan should recognise European approvals and test results
Japan should remove the Operational Safety Clause
As a party to the WTO Agreement on Government Procurement, the Government of Japan
should make certain that public procurement is carried out in accordance with its provisions

EBC Railway Committee
Member Companies
Goldschmidt-Thermit Japan
Infineon Technologies Japan
Knorr-Bremse Rail Systems Japan
Schunk Carbon Technology Japan
SoltonThales Japan
TÜV Rheinland JapanTÜV SÜD JapanKey Issues and Recommendations■ Introduction of open integrated railway systems
Yearly status report: limited progress. Product development in Japan is dominated by operators who appoint
manufacturers to develop new products according to pre-set specifications within a closed and verticallyintegrated system, instead of allowing manufacturers the freedom to find the most appropriate solution.
Recommendations:
The Government of Japan should promote and encourage open integrated railway systems, as a way to boost
competition in the domestic market and export prospects for Japanese manufacturers.

The EBC would welcome continued dialogue on this theme with Japanese government officials, research
institutes, the railway operators and industry.
■ Conformity assessment and mutual recognition of testing and certification
Yearly status report: no progress. In 2012, the Ministry of Land, Infrastructure, Transport and Tourism (MLIT)
established a Railway Certification Center under its National Traffic Safety and Environment Laboratory, withthe objective of certifying Japanese products for overseas markets. Japan is indeed an active participant in various
international standardisation bodies, but there is very little movement to apply common standards across its
domestic railway market. Moreover, Japan lacks a common conformity assessment scheme for this industry. The
EBC believes that it is crucial and mutually beneficial for Japanese operators to work together with the EBC
Railways Committee to define common requirements. With this important first step, a roadmap could define how
to move towards a common conformity assessment scheme.
Recommendations:Japan should establish a working group with the participation of the JR groups and other major Japanese
operators to identify minimum common requirements acceptable to all operators.

The Japanese authorities should take a more active role in setting up a conformity assessment scheme.
■ GPA - definition of the Operational Safety Clause (OSC) and its scope
Yearly status report: some progress. Japan and the EU are both signatories to the WTO’s Plurilateral Agreement
on Government Procurement (GPA). Within the agreement’s framework, Japan negotiated an OSC applicable toits transport sector, stipulating that procurement related to the operational safety of transportation is excluded,
resulting in very few calls for tenders in this sector. While Japan committed to define the OSC, as part of the delisting of the three JR companies, there is still doubt whether this will result in real change, as current information
indicates that Japan is formulating a very wide definition.
Recommendations:Japan should swiftly remove the OSC without any phase-out periods.

The Government of Japan should ensure that when planning new railway projects (such as LRT), local cities
abide by or use the GPA as guidance to set up a proper public procurement scheme, and do not apply the
OSC.
■ TendersYearly status report: slight progress. Japan has never had a system of tendering for railway-related projects. The
EBC, however, would like to commend JR East for its recent calls for tenders for rolling stock. The EBC believes
there is a clear business case for tendering and so hopes that Japanese operators will start to use tendering
procedures as the main method for procurement of railway-related products and services. We also hope thevoluntary code on publishing procurement plans, issued by the three major JR companies, will result in moretransparency and better access to technical specifications, as well as information on how to meet and exceed any
set requirements. The strict adherence of the three JR companies to their voluntary codes of conduct remains a
critical issue for EU suppliers and the Government needs to ensure full compliance with these codes.
Recommendation:

The Government of Japan should encourage other operators to follow the example of JR East and promote
the use of tendering, as this will improve competition in the Japanese market, benefiting both operators andpassengers.

Railways37

Ms. Haruno Yoshida
Chair, Telecommunications Carriers Committee(President, BT Japan Corp.)
c/o BT Japan Corp.
ARK Mori Bldg. 24F., 1-12-32 Akasaka
Minato-Ku, Tokyo 107-6024
Phone 03-5562-6000
Fax
03-3586-8023

TELECOMMUNICATIONS CARRIERSIntroduction
The global economy is increasingly dependent on access to well-functioning networks. Whilst Japan has developed oneof the most sophisticated information infrastructures in the world, the EBC believes there are still some areas that can be
improved.
The notion of creating an independent electronic communications regulator has been widely discussed in Japan,
including in political debates. The EBC regards independence of the regulatory process to be good practice in order topromote decision-making that is objective, transparent and accountable, and to build trust and credibility within theindustry in order for different viewpoints and interests, including economic, social, and political objectives to be duly
considered. The EBC believes such independence should be reflected in the institutional organisation in Japan and in its
system of checks and balances. The resulting regulator should, furthermore, report directly to the Japanese Parliament.
Whilst recognising that the Ministry of Internal Affairs and Communications (MIC) has made tremendous progress inadvancing the Information and Communication Technology (ICT) industry, the EBC nevertheless believes there is aneed for an oversight body with a majority of independent members and due transparency of its proceedings anddecisions. This is particularly important in the light of Japan’s transition to the model of equivalence, nondiscrimination and functional separation. We believe that such a measure could provide more explicit assurances of fairtreatment to customers, incumbents and competitors.
The EBC has long argued that ensuring fair competition is essential if Japan is to remain a vibrant telecom market.
Creating an independent regulator is crucial, but only one of many elements that need to be put in place. There is also aneed for better transparency in the cost mechanism for interconnection charges. Moreover, universal service obligations
should reflect actual costs, thus helping to avoid unfair cross-subsidy. Japan has relatively high access prices comparedto neighbouring East Asian countries so it is important that a much more holistic approach is taken in order to maximise
competition in the market.
As large transfers of personal data between servers are becoming common and involve an increasing number ofcompanies as well as administrations both as users and as providers, authorities are looking into how big data should be
regulated. While by no means a new issue, the last couple of years have seen an immense increase in the volume of data.
The EBC fully understands the need for regulating this field, emphasising, however, that any regulation should bedesigned so as to fulfil the security requirements, while avoiding placing companies under an excessive complianceburden. The EBC believes that it is of the utmost importance for there to be flexibility and pragmatism and for new
rights and definitions to be clear. The process of formulating the regulations must be transparent and open to commentsfrom outsiders. Special care should be taken regarding the issue of international transfers of information, so thatcompanies can make full use of the advantages of cloud technologies. An appropriate balance should, therefore, be
struck between protecting and informing consumers and providing the right environment for companies to conductbusiness. As such, it is crucial that authorities do not work in isolation, but constantly communicate with each otherworldwide to learn from best practices.
The EBC Telecommunications Carriers Committee has high hopes of the benefits that an ambitious FTA/EPA between
Japan and the EU can bring, and strongly believes that telecom issues should be covered, including detailed
commitments and pro-competitive rules for the telecommunications and ICT services sector for business and end users.
These commitments should go beyond those made under the WTO Basic Telecoms Agreement of 1998 and its annexed
Reference Paper. They should, in particular, cover wholesale access regulation. The negotiations should also explore
whether there is a case for enshrining EU-Japan ICT policy and regulatory principles in the Agreement, given theexistence of EU-US and US-Japan ICT principles. It may also be instructive to consider if such broad principles can be
agreed in future regulatory harmonisation in important hi-tech related areas, such as cloud computing, transborder dataflows, data privacy, and cyber-security.

38

EBC Telecommunications CarriersCommittee
Member Companies
BT Japan

Key Issues and Recommendations■ Institutional reform
Yearly status report: no progress. The EBC believes that it is inappropriate for the Government of Japan to act asboth the regulator and a major shareholder in the Japanese telecommunications sector. Currently, however, MIC
continues to enjoy wide-ranging statutory powers of intervention and control. The issue of independence wasraised by the previous Government, but so far no discussion has taken place under the current Government. The
EBC recommends the creation an independent government committee as an independent regulatory authority,with a mandate to monitor regulation and business practice within the communications sector from a consumer
perspective.
Recommendation:
An independent, well-resourced and empowered telecommunications regulatory authority should beestablished with a pro-competitive mandate that measures its success in terms of a market that provides
choice and enables the rapid introduction of innovative new services as well as reliable and cost-effective
basic telecom/other services. To be independent, members should be selected from outside the Government
and the committee should report directly to Parliament, and not to the MIC.
■ Data protection for big data
Yearly status report: new issue. With vast amounts of personal data being sent between servers daily, authorities
have realised that there is a need to regulate this area. The EBC is keen to contribute to the policy debate,
believing that any changes should be straightforward and practical. Regulation should strike a careful balance
between protecting individual privacy and creating an environment that supports innovation of new products andservices driving economic growth and employment in Japan.
Recommendations:
New obligations on data processors should be clear and any definitions must provide clarity.

The authorities should avoid overly complex regulation that could inadvertently lead to increased cost and so
off-set the advantages of offering data processing.
Any new regulation should also provide a balanced approach to minimise the inherent conflict between
privacy for individuals and the need for companies to use information.
Special focus is needed on international transfers of data to make certain that data flows are not “stopped” atthe border, while at the same time introducing best practice to make certain that data are kept safe.
■ Fair competition
Yearly status report: some progress. The EBC believes it is of utmost importance to follow fair competition
principles based on global practices. These principles will ensure that future discussions on fair competition rules
will be successful.
Recommendations:
The Japanese Government should ensure the transparency and efficiency of the regulatory process, including
providing adequate time for consultation.

The Japanese Government should introduce open and simple licencing procedures with minimum service
and regulatory obligations.

Incumbent carriers should be obligated not to discriminate on price or other conditions between their own
businesses and those of competitors and to provide suitably separated published accounts.

There should be transparent control by the regulator of access to the radio frequency spectrum, to physicalrights of way and to the numbering plan.

There should be proactive regulatory oversight of the implementation of any schemes for “equal access” andnumber portability to support newcomers to the market.
To help avoid unfair cross-subsidisation, operators with significant market power should keep transparent,
publicly available, separate accounts.

Telecommunications carriers
239Mr. Yoshio Honda
Chair, Telecommunications Equipment Committee(General Manager, Standardization & Regulation,
Technology & Research, Ericsson Japan K.K.)
c/o Ericsson Japan K.K.
MOMENTO SHIODOME, 2-3-17 Higashi-Shimbashi
Minato-ku, Tokyo 105-0021
Phone 03-6721-3300; Fax 03-5408-9744

TELECOMMUNICATIONS EQUIPMENT
Introduction
Structural reforms under the Government of Japan’s ICT Strategy have supported the introduction of high-speed, largecapacity ICT infrastructure, the lowering of communications costs, and the development of e-commerce and egovernment. Internet access costs have decreased dramatically and access to broadband is now amongst the mostdeveloped in the world. With the Tokyo 2020 Olympics just around the corner, Japan is looking to showcase its latest
technology to the world. The Government has already announced its intention to have 5G up and running in time for the
Olympics and is currently investigating how it can support the growing need for more bandwidth for cellularapplications. This is not limited to more obvious telecommunication areas such as big data and the Internet of Things,
but also to areas such as healthcare and transportation related to both ground-based vehicles and drones.
The EBC appreciates the opportunity to contribute to the Ministry of Internal Affairs and Communications’ (MIC)
policy committees as an official participant and applauds the Government’s overall commitment to an industry-led,
global approach to standards and platform development. Important steps have already been taken to facilitate theproduct approval process, firstly by signing an EU-Japan mutual recognition agreement (MRA) for telecommunications
terminal equipment in 2001, and secondly, by introducing a Supplier’s Self Verification of Conformity (SVC) in 2004.
Despite these significant achievements, however, implementation to date has been disappointing. The number ofaccredited testing bodies designated under the MRA remains low and the SVC still applies mainly to wired
telecommunications terminals, with limited application to wireless/radio equipment. Although some additional products
have been added to the SVC’s scope, many products are still not covered.
There are approximately 7.4 billion mobile phone subscriptions globally and 3.7 billion of these are connected to mobile
broadband, with overall mobile data traffic doubling each year. Even in a mature market like Japan, with advanced dataservices and the introduction of Long-Term Evolution (LTE), smartphone penetration is already about 50% and isdriving mobile broadband growth - projected traffic usage in 2020 is 10GB/month per user. The various applications
used on smartphones, such as video and social networks, and machine-to-machine communication place different
demands on the network. After having successfully allocated the 700, 900 and 3,400MHz band to mobile telephony, theGovernment is now contemplating further allocations. The EBC very much supports this further expansion and hopesthat Japan will continue to implement spectrum bands that are harmonised with other markets.
In January 2016, the Japan Fair Trade Commission (JFTC) issued a revised set of Guidelines on IP (Intellectual
Property) and Competition analysis (“Guidelines for the Use of Intellectual Property under the Antimonopoly Act”). The
EBC is pleased to see that the revised final guidelines were modified and improved to bring them in line withinternational best practices for antitrust. This was achieved by employing a more flexible effects-based approach, similar
to the recommendation made by the EBC in 2015. We commend the JFTC for seeking public comments on the draft
guidelines, and for working with industry stakeholders to bring them in line with international best practices. Striking
the right balance between technology contributors and technology users is key to ensuring a healthy pro-competitive
standardisation ecosystem that benefits consumers. A case in point is the recent deviation by one standard-setting body,the IEEE, from a balanced approach, such that a number of technology contributors are now no longer willing to makelicensing commitments under its new policy.

Key FTA/EPA Issues


40

Introduce true mutual recognition of product certifications so that EU approvals can be used on theJapanese market and vice versa
Increase the scope of products that are covered by SVCs in Japan

EBC Telecommunications
Equipment Committee
Member Companies
Ericsson Japan
Nokia Solutions and Networks JapanKey Issues and Recommendations■ Establishing common technical standards and certification procedures
Yearly status report: some progress. The EU and Japan maintain different technical standards for the same
products, which, although not substantially different in their detail, lead to double testing and certification for
manufacturers. The current EU-Japan Mutual Recognition Agreement provides only for recognised certification
organisations to test for both markets. The EBC welcomed the introduction in 2004 by the Government of Japanof SVC, which is similar to the Suppliers’ Declaration of Conformity (SDoC) introduced in Europe. However, the
EBC is disappointed that this system is limited to wired telecommunications terminals in general and that theapplication has not been expanded to include other telecommunications equipment (except for 3G/LTE and WiFi
functions in mobile terminals), thus continuing to exclude radio base stations for mobile networks.
Recommendations:
The EU and Japan should mutually accept each other’s technical standards and certifications fortelecommunications equipment. This could be achieved through the FTA/EPA.

SDoCs issued by European producers should be accepted in Japan without any additional testing or
administrative requirements, not only for wired terminals, but also for specified radio equipment.

The application of SVC should be expanded to all equipment in the category “Specified Radio Equipment”.
■ Harmonisation of spectrum for IMT (IMT-2000, IMT-Advanced, and IMT-2020)
Yearly status report: some progress. The EBC acknowledges that Japan has been active in trying to identify aglobally harmonised spectrum for International Mobile Telecommunications (IMT) systems. This approach
would bring enormous benefits to the industry and consumers by eliminating the need to develop local variationsof new telecommunications equipment. The EBC is pleased that MIC has awarded the band between 3,480 and
3,600MHz to IMT-Advanced systems and that MIC is working to ensure allocation of the 1,700MHz, 2,300MHz,
2,600MHz and 3,400MHz bands to address the increasing demand for mobile broadband, in accordance with the2015 harmonised frequency plan and the report from the MIC Study Group on Radio Policy toward 2020. The
EBC is also pleased to see that candidate ranges for IMT-2020 (5G) have been identified.
Recommendations:
The Government of Japan should work jointly with other governments to achieve a globally harmonised
spectrum allocation on the bands of, for example, 700MHz, 1,700MHz, 2,300MHz, 2,600MHz, 3,4003,600MHz, 3,600-4,200 MHz, 4,400-4,900MHz, and 27.5 GHz-29.5GHz, as well as ranges mentioned inagenda item 1.13 of the World Radio Communication Conference in 2019 (WRC-19). For the 2,300MHz
band, consideration should be given to the concept of licensed shared access to the spectrum for incumbent
and prospective licensees.
The Government of Japan should engage actively in relation to agenda item 1.13 of WRC-19, in order to
identify new harmonised spectrum for IMT systems above 6GHz.
■ Future-proof radio regulation for mobile equipment
Yearly status report: new issue. Japan is promoting new wireless technologies for the Internet of Things (IoT), theIntelligent Transfer System (ITS) and 5G. Advanced wireless technologies can facilitate innovative use of ICT,and contribute to emerging industries and economic growth. The EBC believes that Japanese radio regulation is
insufficiently flexible and, by stipulating technical requirements based on specific technology on each frequency
band, may delay the launch of new wireless technologies. Japanese radio regulation creates an additional burden
by enforcing measurement of radio equipment on a regular basis to see that it meets requirements.
Recommendations:Japan should adopt a future-proof and flexible radio regulation for mobile equipment so that emerging
technologies, such as LTE-M and NB-IoT, can be swiftly deployed in Japan.
Japan should review the current radio regulation to avoid imposing undue requirements on radio basestations, especially AAS for Massive MIMO (Multiple Input – Multiple Output), which is used in relatively
small products. In particular, radio performance checks of equipment at antenna or equivalent monitor ports,
which are required on a regular basis (once per 5 years), should be carefully reviewed.

Telecommunications equipment
241

Mr. Gavin Murdoch
Chair, Logistics & Freight Committee(President & Representative Director, DHL Supply Chain Ltd.)
c/o DHL Supply Chain Ltd.
Gotenyama Trust Tower 8F., 4-7-35 Kita-Shinagawa
Shinagawa-ku, Tokyo 140-0001
Phone 03-5792-9518
Fax
03-5792-9653

LOGISTICS & FREIGHT
Introduction
European forwarding and express companies offer Japanese consumers the benefits of access to their worldwide
logistics operations, but still face serious and significant regulatory challenges. Moreover, they struggle with Japan’shigh cost base, inadequate infrastructure, restricted aircraft operation time windows, heavily congested ports and rigid
customs clearance procedures. They also have to deal with outdated restrictions on foreign-owned companies engaging
in the domestic freight forwarding business, and unfair competition caused by differences in the rules and regulations
applied to carriers despite providing the same service, resulting in inefficiencies and higher prices for users. The EBC
believes that the Government should take a holistic view on what is needed to make Japan a viable logistics hub forregional trade.
Japan has nine separate customs areas and no central customs authority. Currently a company is only allowed to lodge
customs declarations at a clearance operation physically located within the jurisdiction of the responsible customs
office. This makes it difficult for foreign logistics companies that lack multiple regional offices in Japan to expand theirgeographical coverage. It is against this background that the EBC welcomed various proposals tabled by the Ministry of
Finance (MoF) on improved flexibility. Real change, however, is not scheduled until 2017 when amendments to the
NACCS (Nippon Automated Cargo and Port Consolidated System) will be implemented. The EBC would also like topoint out the limited possibility of using English when working with NACCS.
Japan Post, currently restructuring, has plans to aggressively expand while still enjoying preferential regulatory
treatment. The EBC recognises the need for a universal service obligation to meet certain socio-economic goals.
However Japan Post is benefitting from unfair competitive advantages in the express delivery market, where its Express
Mail Service (EMS), a special value-added international express package, already accounts for 18% of the market. EMS
is not subject to the strict regulations applied to private sector express services (as detailed on the following page),hence its expansion threatens further to distort competition and will negatively affect not only foreign private operators
but also Japanese companies and individuals. It is important to note that EMS is not deemed part of the universal service
in Europe or the US. In Europe it is explicitly referred to as different from the universal postal service, while in the US it
belongs to the category of “Competitive Services”. The EBC believes that there are no obstacles to moving EMS outside
the scope of universal service in Japan, similar to the removal of yu-pak.
Companies expected the introduction of the Authorised Economic Operator (AEO) concept in Japan to lead tosimplification of many of the transport and customs processes they need to undertake. Unfortunately, the new system
has missed this target: instead of streamlining these processes, it has burdened companies with an increase inadministrative tasks and compliance requirements in order to achieve AEO status. The EBC believes that more
simplifications should be introduced similar to those proposed when the AEO concept was first presented.
Reforms aimed at improving Japan’s overall business infrastructure have not done much to remedy the challenges toshipping services. The Super Core Port initiative, announced by the Ministry of Land, Infrastructure, Transport andTourism (MLIT) as far back as November 2002, has yet to yield tangible improvements to the high cost structure ofJapan’s ports. The development of Japanese container terminals is being initiated by local authorities rather than bycentral Government, such that the anticipated economies of scale and efficiencies will remain difficult to achieve. Data
show Japan’s decline in port activity: Kobe Port, for instance, dropped in the Asian rankings from fourth place in 1980
to 59th place in 2015. Tokyo and Yokohama ports combined only ranked in 20th place globally in 2015 based oncontainers moved. Structural improvements are desperately needed if Japan wants to remain a vibrant shipping country.

Key FTA/EPA Issues
42

Ensure a level playing field between Japan Post and private express delivery companies
Ensure that the Japanese maritime related legislation does not discriminate between foreign anddomestic companies

EBC Logistics & Freight Committee
Member Companies

Key Issues and Recommendations

AGS Four Winds Japan
A.P. Moller-Maersk A/SCMA CGM JapanDHL Global Forwarding
DHL Japan
DHL Supply Chain
IKEA Japan
Lufthansa Cargo
Schenker/Seino
TNT Express Worldwide■ Customs clearance and declaration
Yearly status report: progress. Currently, Japan limits which customs procedures can be carried out in a region
where a company is not physically present or if a customs related licence is not issued for that region. The current
set-up makes it difficult for foreign logistics companies, and also small and medium-sized Japanese companies, toexpand the reach and coverage of their customs clearance businesses. Deregulation of customs jurisdictions,allowing remote filing of clearances at locations independent of the territory of the responsible customs office,would increase flexibility and improve capacity planning for customs brokerage operators. The EBC therefore
welcomes the proposals from the MoF to liberalise customs and introduce further improvements.
Recommendations:
The Government of Japan should: Commit to implementing the proposed policy on customs jurisdictions, especially on remote filing.
 Enable greater flexibility in terms of where quarantine shipments can be checked. Checks carried out inspecial bonded warehouses should be facilitated.
 Remove the caps on customs clearance charges and allow free and fair pricing to be set by the market.
 Streamline the reporting and administration requirements of the various customs authorities to provide more
standardised interpretation and application of customs rules and reporting requirements.
■ Level playing field with Japan Post’s EMS
Yearly status report: no progress. Currently, Japan Post is only required to declare EMS packages to customs
through the NACCS system when the goods they contain exceed 201,000 yen in value, while private sector
operators are required to declare all packages through NACCS (as de minimis up to 10,000 yen and Low Value
Dutiable up to 200,999 yen). Additionally, although the National Police Agency has declared that EMS is subject
to the Parking Law, in practice the Law is not applied to EMS-carrying vehicles. EMS shipments containing
materials such as quarantine-related goods, which are subject to control by various regulations (tahourei) otherthan the Customs Law, may be checked in postal facilities, whereas such packages transported by private sector
operators must be inspected at the first port of entry (usually an airport).
Recommendations: The Government of Japan should ensure a level playing field by (1) applying the same NACCS declaration
method to both EMS and private express deliveries, (2) applying the Parking Law equally to all parties, and(3) ensuring equal rules for submitting advance cargo information.
 The Government of Japan should allow private express delivery companies to transport all shipments
directly to their off-airport bonded warehouses in the first instance, and ideally allow inspections ofquarantine-related goods in those facilities.
■

Authorised Economic Operator (AEO)
Yearly status report: some progress. The current system of AEO has not led to the anticipated simplifications. On
the contrary, in many cases the administrative burden has increased. The EBC seeks a system giving companies a
simplified process and extended powers to handle matters without involvement of the authorities in every single
case, provided operators can demonstrate sufficient control over the flow, and that traceability is ensured.
Recommendations: The AEO concept should focus more on offering simplifications, provided the operator meets the agreed
criteria for tracing each product and adhering to the agreed process flow.
 The Government should introduce more benefits for imports handled by AEOs, including but not limited to: Enabling access to NACCS from servers outside of Japan
 Reducing the physical examination of shipments Allowing the use of digital archives
 Removing individual customs brokerage license and introducing company-based licences

Logistics & freight2

43

■ Port costs and development
Yearly status report: limited progress. Port costs in Japan are exceptionally high in comparison to other advanced
economies. High costs not only hinder European companies from operating to their maximum potential in Japan,
but also drive many Japanese companies to switch production to overseas and ship lower volumes throughJapanese ports. High port costs also undermine the competitive position of Japanese ports in Asia, for example in
the provision of trans-shipping services, since South Korea and China offer far more competitive services.
Furthermore foreign shipping lines are still not allowed to trans-ship their own overseas cargo on their own
vessels in Japan, thus encouraging them to trans-ship such cargo in other countries, further reducing business at
Japanese ports. While similar restrictions apply in Europe, it is nevertheless possible for a Japanese carrier to transport
its cargo across borders within the EU, for example from Germany to France, thereby meeting business requirements .
Recommendations:
The Government of Japan should address the high cost of the port operations structure within its Asia
Gateway Strategy Council.

Rules and regulations that prevent container lines from offering intermodal-through-transportation in Japan
should be reviewed and brought in line with international standards. The same applies to coastaltransportation of empty containers, where currently, special permits are required unless the country in which
the pertinent vessel is registered has a bilateral agreement with Japan.
Japan should remedy the problem of fixed operating hours of the ports, which today are limiting.

The Government of Japan should remedy the situation with congested traffic in and around the port of Oi.
Without prompt action the situation will probably worsen with the Olympics in 2020.
■ Promote competition in port operations
Yearly status report: limited progress. The Japan Harbour Transportation Association (JHTA) still wields
enormous discretionary power on the waterfront. Shipping lines wishing to make changes to their operations
require prior approval from the JHTA. The process lacks transparency and effectively prevents shipping lines
from seeking alternative, competitive services on the waterfront. If shipping lines want to operate a terminal
independently, they may apply for a licence. Whilst the MLIT has committed to process applications within twomonths of receipt, requirements such as minimum employment levels still prevent firms from developing truecompetition for port services in Japan. It is not yet possible for a foreign company to set up its own terminal
handling operations in Japan.
Recommendations:
The Government of Japan should promote competition by establishing a system allowing shipping
companies to change their operations without seeking prior approval from the JHTA, especially for routine
business matters.

The Government of Japan should allow foreign shipping companies to own their own handling facilities or,at the very least, be allowed to run port operations in a competitive manner.
■ Competitive bidding for stevedore services
Yearly status report: no progress. While changes to the Harbour Transport Law implemented in November 2000
enabled shipping lines to subcontract with multiple stevedore firms at confidential rates, in reality the concept of
independent and systematic competitive bidding has yet to be implemented.
Recommendations:Competitive bidding for stevedore services through open tenders should be promoted and regulated.

The prevailing “Grand Father Principle” that effectively prevents shipping lines from changing container
terminal service providers should be reviewed and eliminated.

44
3

Health Science
Animal health
Medical diagnostics
Medical equipment
Pharmaceuticals
Vaccines
Cosmetics & quasi-drugs

Mr. Friedrich Schaefer
Chair, Animal Health Committee(Representative Director, President,
Boehringer Ingelheim Vetmedica Japan Co., Ltd.)
c/o Boehringer Ingelheim Vetmedica Japan Co., Ltd.
ThinkPark Tower, 2-1-1 Osaki
Shinagawa-ku, Tokyo 141-6017
Phone 03-6417-2488
Fax
03-5435-2950

ANIMAL HEALTH
Introduction
As with human medicines, the Japanese animal health market is highly regulated. Marketing authorisations (MA) ofveterinary medicinal products (VMPs) are granted by the Ministry of Agriculture, Forestry and Fisheries (MAFF) andregistration dossiers are reviewed by the National Veterinary Assay Laboratory (NVAL). Moreover, for any animal drug
intended for use in food-producing animals, the Food Safety Commission (FSC) and the Ministry of Health, Labour andWelfare (MHLW) are also involved, establishing acceptable daily intakes and maximum residue limits, respectively.
According to industry research specialist, Fuji Keizai (2016), the Japanese animal health market (excluding pet food andprescription diets in the veterinary channel) was worth 114.1 billion yen on the basis of ex-wholesalers in 2015. The
market saw only marginal growth in the period 2011-2015, with a compound annual growth rate of just 1.9%. Morethan 60 companies in Japan manufacture and/or import VMPs to supply to customers. The market share of products
derived from multinational animal health companies is steadily increasing, reaching almost 50%, due to their continuous
investment in innovations for both veterinary pharmaceuticals and biological development. Meanwhile, over the lasttwo decades, the majority of Japanese human pharmaceutical companies have divested their animal health divisions tomultinational animal health companies, and nearly all domestic Japanese animal health companies operate only locally,
with just a minor level of exports. In particular, for veterinary pharmaceutical products, multinational companies are themain source of innovative products containing new chemical entities, whereas domestic companies tend to be reactive in
the area of generic developments, albeit adding some unique features in innovative formulations.
Japan’s participation in the Trans-Pacific Partnership (TPP) requires the elimination or reduction of tariffs and subsidies
for animal agricultural products (for example, pork, beef) imported from overseas, threatening the businesses of local
livestock producers. To ensure the sustainability of the livestock sector in Japan, prompt access to innovative VMPs atcompetitive costs is critical. Japan belongs to the trilateral (EU-Japan-USA) programme of VICH (International
Cooperation on Harmonization of Technical Requirements for Registration of VMPs), a veterinary equivalent of theInternational Conference on Harmonisation (ICH) for human medicines. VICH aims to harmonise registration
requirements for VMPs at the global level and this has helped to some extent in reducing the registration costs for
globally developed products. There are, however, still some requirements unique to Japan that prevent or delay access toinnovative and useful VMPs for animal owners, veterinarians and consumers. In the case of biological products, somespecification items are unique to Japan, including the requirement for a serological potency test on live vaccines.
Product specifications have to be established purely for the Japanese market and each batch of vaccine has to bereleased based on these unique specifications, often requiring duplicate testing at the manufacturing site. While studies
conducted overseas under Good Laboratory Practice (GLP) or Good Clinical Practice (GCP) are accepted by MAFF forinclusion in the registration dossier, there is still no mutual recognition of Good Manufacturing Practice (GMP) for
VMPs. This means that any overseas production facilities involved in the manufacture of VMPs for importation into
Japan, regardless of whether the products are active pharmaceutical ingredients or final products, have to be accreditedby MAFF, even though their GMP status has been approved by European authorities. The process involves a large
amount of redundant administrative paperwork despite the fact that MAFF recently revised the regulations and now
issues accreditation licences in Japanese and English, a move welcomed by the animal health industry.
For the last few years, MAFF has been making efforts to implement measures that will improve the predictability,
quality, and speed of the registration process. The EBC particularly welcomed the initiative announced on September
30th, 2016, allowing MAFF, MHLW and the FSC to simultaneously review MA applications for food-producing
animals, which is expected to shorten the overall MA review period. While review periods are improving significantly,
there are still delays in the review process for some product segments. Accordingly, customer access to innovative andcost-effective VMPs in Japan suffers relative to the speed at which they are available overseas. For example, the long
review process required before granting permission for use of Genetically Modified Organisms (GMOs) in thelaboratory and in the field results in serious delays to the availability of innovative VMPs in Japan.

46

EBC Animal Health Committee
Member Companies
Boehringer Ingelheim Vetmedica Japan
Merial Japan
Virbac JapanKey Issues and Recommendations■ Seed-lot system and national assay of vaccines
Yearly status report: limited progress. The seed-lot system enables the production of vaccines using a working
seed virus/bacteria derived from an established master seed virus/bacteria. Thanks to MAFF’s initiative to
introduce the seed-lot system in 2008, some animal vaccines no longer require a national assay for batch release.
The EBC appreciates the on-going efforts made by MAFF to include eligible protozoa, fish and geneticallyengineered vaccines in the seed-lot system. However, some European vaccines cannot enjoy this benefit due toadditional unique testing requirements, such as in-process testing, that do not exist in the internationallyrecognised seed-lot system. One example is the requirement for a serological potency test, using target orlaboratory animals, on live vaccines produced in accordance with the seed-lot system. Despite the fact that thesafety of vaccines for dogs and cats is tested in the target animals, an additional Abnormal Toxicity Test using
laboratory animals is required, which creates not only animal welfare concerns but also an increased cost burden
for customers.
Recommendations:
The requirement for a serological potency test on live vaccines in the seed-lot system should be eliminated.

The requirement for an Abnormal Toxicity Test on vaccines for dogs and cats should be eliminated.
■

Restrictions on Genetically Modified Organisms (GMOs)
Yearly status report: limited progress. Japan enacted the Cartagena Act in 2003, implementing the Cartagena
Protocol on Biosafety to the Convention on Biological Diversity. This also applies to veterinary live vaccines thatutilise GMOs. Unlike conventional inactivated or modified live vaccines, two specific permits are required whenusing GMOs as the basis for vaccines: type 2 and type 1. Type 2 is granted for GMOs to be used in a laboratory
setting to ensure that proper containment measures are taken, whereas Type 1 is intended for GMOs to be used orinvestigated in a field or other open space (such as in clinical trials), once the relevant GMOs are confirmed tohave no adverse effects on biological diversity. Currently, it is not possible to apply for both permits at the sametime. Instead, this must be done sequentially—first type 2 and then type 1. It is not possible to commence theclinical trial until Type 1 permission is granted, and it is not uncommon for companies to spend more than three
years just completing the review by MAFF and satisfying the external expert panel for GMOs, as required toobtain the two permissions. Unsurprisingly, as a result, compared to the EU and the USA the number of GMO
live vaccines for animals in Japan is very limited, thus restricting the access of Japanese customers (farms, petowners) to innovative technologies.
Recommendation:For veterinary live vaccines utilising GMOs that have already been approved in the EU or USA, the review
for Type 1 and Type 2 permissions should either be conducted in parallel or combined, in order to shorten
the period before companies can start clinical trials in Japan.

Animal health247

Mr. Shuichi Hayashi
Chair, Medical Diagnostics Committee(Vice President and Head of In Vitro Diagnostics,
Roche Diagnostics K.K.)
c/o Roche Diagnostics K.K.
Roche Bldg., 2-6-1 Shiba, Minato-ku, Tokyo 105-0014
Phone 03-5443-5293
Fax
03-5443-5267

MEDICAL DIAGNOSTICS
Introduction
Healthcare in Japan is suffering as the social security system comes under increasing pressure from the effects of anageing society, declining birth rate, and burgeoning national healthcare costs. To remedy this situation, the Japanese
Government needs to initiate reforms to the way the system operates while also re-evaluating its purpose. The urgent
need to enhance the quality of medical care and optimise medical costs calls for serious consideration of the value andcontribution of medical diagnostics. It is crucial that both medical care providers and medical system operators are fully
informed and engaged in the related discussion.
Discussion about the role of medical diagnostics is not new. Since 2007, research papers have been published, andproposals and recommendations have been made both at study sessions on medical diagnostics and at periodical
meetings on the medical reimbursement system, conducted jointly by the Japanese Promotion Council for Laboratory
Testing (JPCLT), the in vitro diagnostic (IVD) drug industry associations, and the Ministry of Health, Labour andWelfare (MHLW). Greater recognition of what is referred to in periodical medical reimbursement price revisions as theneed for “quality enhancement of clinical diagnostics and faster examination” led to IVD fees rising continuously
between 2008 and 2014. In the 2016 medical reimbursement price revision, Global Standard Examination Management
Additions were introduced. Whether a facility qualifies for these additions depends on its ability to demonstrate“Approved technological competence based on global standards” and on the quality of examination. This has had apositive effect on the medical diagnostics sector.
Cooperation between the medical diagnostics industry and the pharmaceutical industry, and consultation with theGovernment are progressing on the increasingly important topics of personalised health care and companion
diagnostics. The end objective is the introduction of relevant approval processes and the establishment of an insurance
reimbursement system linked to drugs. Clinical application of advanced technologies, such as next-generation
sequencing, is rapidly advancing. A system to evaluate the accuracy and quality of tests made available with thesetechnologies is required. Against this background, streamlining and reform of the current medical system is essential for
expanding personalised treatment, maintaining and improving the quality of medical diagnostics and medical care, andensuring that clinical diagnostics continue to play their value-added role. Other major improvements needed to enhance
the quality of medicine and deliver the latest medical care to patients include providing prompt access to new IVDs andbasing reimbursement fees for IVDs on their latest clinical value.
The EBC Medical Diagnostics Committee continues to advocate the value of medical diagnostics in cooperation with
the JPCLT and other IVD industry groups, such as the American Medical Devices and Diagnostics Manufacturers’
Association (AMDD) and the Japan Association of Clinical Reagents Industries (JACRI).

Key FTA/EPA Issues

48

As far as possible, Japan should align the unique regulations that it applies to medical diagnostics
with global rules - alternatively, Japan should accept the results of IVD examinations conducted
overseas
Create guidelines for diagnostic pharmaceuticals that use next-generation sequencing or otheradvanced technologies, to accelerate the introduction of these products to Japan

EBC Medical Diagnostics
Committee
Member Companies
Roche Diagnostics
Sysmex bioMerieux

Key Issues and Recommendations■

Quick access to new IVDs
Yearly status report: slight progress. The Action Plan for Speedy Examination of IVDs, announced by MLHW in
March 2014, confirmed the following actions, which are currently being implemented:
1. Establishing a scheme to enhance the quality of the approval and examination process
2. Setting a standard examination period
3. Increasing the number of examiners
4. Conducting a study on ways to improve the management of processes and facilitate achievement of objectives.
Recommendations:
MHLW should set year-by-year milestones and concrete actions for its 5-year plan.

MHLW should enhance the quality of examinations by enriching the examiner training system.

MHLW should hold periodical working-level meetings with participants from both the public and private
sectors; verify the progress of the scheme to enhance the quality of the approval and examination process;and monitor the timely achievement of term objectives.

■ Approval examination and safety measures
Yearly status report: progress. The EBC, jointly with JACRI and the IVD Committee of the AMDD, presented
the following recommendations in a periodical opinion exchange meeting (28 July 2016) with MHLW’s
Pharmaceutical and Food Safety Bureau, to discuss the approval examination and safety measures.
Recommendations:
MHLW should improve the operation of the current control system and promptly issue notifications on
generic names. This should remedy delays in practical applications.

Delays in starting pre-approval tests are lengthening examination periods and creating bottlenecks. MHLW
should shorten the examination period by reviewing its contents and improving the process.

The Government should work with the EBC and other industry organisations until guidelines for clinicalperformance testing have been established. For example, the industry has been endeavouring to establish a“specimen bank” for the stable supply of specimens used in clinical performance tests. During this process,the Japan Agency for Medical Research and Development proposed the use of specimens maintained bypublic bio banks in Japan. The Japanese Government’s cooperation in establishing and realising theenvisaged system has been much appreciated.

■

Medical reimbursement of IVDs
Yearly status report: progress. Since April 2016, the EBC has been given the opportunity to express its opinion in
the Central Social Insurance Medical Council (Chuikyo) on insurance coverage for IVDs (E2 and E3). Buildingon this, the EBC together with JACRI and the IVD Committee of the AMDD have set up a “Joint Task Force to
Negotiate with Chuikyo”, for the purpose of discussing IVD medical reimbursement and sending requests to theSpecial Committee of Chuikyo.
Recommendation:
MHLW should create a scheme for new innovation in IVDs to be correctly and promptly covered bynational health insurance. This scheme should be thoroughly discussed in the Chuikyo.

Medical diagnostics
249

Mr. Danny Risberg
Chair, Medical Equipment Committee(President & CEO, Philips Electronics Japan, Ltd.)
c/o Philips Electronics Japan, Ltd.
Philips Bldg., 2-13-37 Konan
Minato-ku, Tokyo 108-8507
Phone 03-3740-5001
Fax
03-3740-5012

MEDICAL EQUIPMENT
Introduction
Healthcare in Japan is generally of a high standard, as might be expected in a country enjoying the highest average life
expectancy in the world and one of the lowest infant mortality rates. In the 2015/2016 fiscal year, the national cost of
medical care reached 41.5 trillion yen, up by 1.5 trillion yen from the previous year, reflecting a society that is rapidly
ageing and placing increasing demands on health services. In addition to solving the resulting problem of healthcare
financing, Japan must build a healthcare system that, as far as possible, extends healthy life expectancy or "life with norestrictions in daily life" by offering high-quality medical care providing for disease prevention, early diagnosis andearly treatment. Investing in innovative, efficient medical equipment can help Japan achieve this goal, creating
opportunities for patients to enjoy a substantially higher quality of life for longer, and so also reducing total expenditure
on medical care over time.
Innovative European medical equipment, materials and services can help Japan to meet its healthcare challenges. In
particular, effective accident and emergency care, telemedicine and nursing care using IT medical technology should be
introduced as soon as possible. In order to achieve a swift introduction, Japan should align its regulations and processes
with international standards, allow for the use of European approvals and data, and improve the predictability of thereimbursement system. Moreover, information on the Japanese medical care system should be provided internationallyin multiple languages to encourage more European businesses to participate in the Japanese market. Japan should
continue to introduce measures to improve the Foreign Direct Investment (FDI) environment as this has proved to be areal driver for investments in the domestic market.
In 2015, progress was made in a number of areas, including:Establishment of plans and measures to develop the medical equipment industry. Thanks to the action plans
implemented, the Government and industry can now exchange constructive opinions, resulting in the setting up andexecution of concrete measures.



Improvement in the speed of the approval and examination process, and progress in the promotion of research anddevelopment activities.



Introduction of concrete measures, improving the environment for FDI.

The EBC Medical Equipment Committee will continue to work closely with the Japanese Government, specifically the
Ministry of Health, Labour and Welfare (MHLW) and the Pharmaceuticals and Medical Devices Agency (PMDA), as
well as the related industry associations to establish an environment that allows innovative European medical equipment
to be delivered adequately to patients in Japan.

Key FTA/EPA Issues






50

Work toward speedier medical equipment examination
Improve clinical evaluation
Mutually approve and internationally align QMS (the Quality Management System)
Treat software programmes as medical equipment in new legislation and align with global standards
Revise the need for a construction licenceEBC Medical Equipment Committee
Member Companies

Key Issues and Recommendations■

B. Braun Aesculap Japan
Biotronik Japan
ColoplastDornier MedTech Japan
Draeger Medical Japan
Edaptechnomed
ElektaHollisterIntegralIntuitive SurgicalJapan Lifeline
Japan MDC

JIMRO
Laerdal Medical Japan
Lima Japan
LivaNova Japan
Medis Medical Imaging Systems
Medtronic Japan
Molnlycke Health Care
Nippon Becton Dickinson
Nippon BXINobel Biocare Japan
Novocure
Otto Bock JapanPENTAS
Philips Electronics Japan
Radiometer
Siemens Healthcare
Smith & Nephew Wound Management
Teijin Pharma
TKB
VitalAire Japan
Vorpal Technologies
Wako Shoji

Speedier medical equipment examination
Yearly status report: some progress. The Government’s new 5-year plan has started and the main theme still
remains enhancement of the technical expertise of applicants and examiners.
Recommendation:
 Further cooperation is needed between Government and industry, as well as an increased budget for PMDA.

■

Clinical evaluation
Yearly status report: progress. The guidelines for creating clinical evaluation reports and clinical evaluation
consulting materials have been published.
Recommendation:
MHLW should clarify the standard for deciding whether or not clinical trials are needed.

■

Mutual approval and alignment of QMS
Yearly status report: progress. As a result of the new QMS Law, rationalisation of QMS has begun. Althoughsome problems remain, the EBC expects that progress will be made toward the final goal of globalisation ofstandards, through close cooperation between Government and industry.
Recommendations:
MHLW should reconfirm the role of the periodical survey by product group, and rationalise the QMS
investigation prescribed in Chapter 3, Production and Marketing of the QMS ministerial ordinance.

MHLW should disseminate the QMS ordinance (contents and methods) in English with the Medical Device
Single Audit Program (MDSAP) rationalisation in mind.

■

Reimbursement prices
Yearly status report: some progress. Progress has been seen in the evaluation of materials innovation and in amore detailed classification of functions. While some progress is also noted in the inclusion of improved
technology in C2, the C2 application process needs further discussion in respect of the evaluation of diagnostic
and therapeutic devices.
Recommendations:Japan should not introduce yearly revisions of reimbursement prices.

Regarding the proposed cost effectiveness evaluation system, the Government should clearly define thescope of application and proceed with the plan very carefully.

As for medical materials, functions should be classified in more detail, and innovation should be rewarded.
The EBC continues to oppose the repricing system and the introduction of repricing for market expansion.
Regarding medical technology, Japan should clarify the contents of the C2 application and the relevant
process. The EBC also recommends a new medical reimbursement system for this category.
Home medical equipment, including improvement thereof, should be adequately evaluated.

■

Construction licences
Yearly status report: no progress. Currently, a company selling medical equipment that needs to be physicallyconstructed must have a construction business licence, even if outsourcing the construction work. Recent slighteasing of this requirement has had no real effect.
Recommendation:
The requirement for a construction licence should be further eased.

■

Improvement of environment for IT medicine
Yearly status report: slight progress. Globally, discussions on health data handling are increasing.
Recommendation:

The Japanese Government should set up a discussion forum, including all stakeholders, to work out areimbursement scheme designed to promote the effective use of telemedicine and big data.

Medical equipment
Unrestricted2

51

Dr. Carsten Brunn
Chair, EFPIA Japan(President & CEO, Bayer Yakuhin, Ltd.)
c/o Bayer Yakuhin, Ltd.
6-5, Marunouchi 1-Chome
Chiyoda-ku, Tokyo 100-8265
Phone 03-6301-3066
Fax
03-6301-3060

PHARMACEUTICALSIntroduction
Although overall healthcare costs in Japan are rising as the population ages, and use of innovative pharmaceuticals is
growing significantly, total pharmaceutical spending is well under control. This is because increased use of generics is
creating the financial headroom to continue to fund the pro-innovation parts of the system.
Japan’s total spending on healthcare in the 2015/16 fiscal year increased 3.8% on the previous year, rising by 1.5 trillion
yen to 41.5 trillion yen. A study by EFPIA Japan forecasts that the Japanese pharmaceutical market will be broadly flatover the next decade, growing at an average annual rate of just 0.13% to 2025. The current pricing system forpharmaceuticals, and measures such as the encouragement of greater generic prescribing, are together expected tocontinue to prove sufficient in controlling the drugs bill. Furthermore, the new target for generic penetration of 80% by
earliest timing between 2018 and 2020 will provide even greater savings to the Government.
The innovation premium, known officially as the “premium to promote the development of new drugs and eliminate“off-label use”, was launched formally on a trial basis in 2010 to promote the development of new drugs in Japan. In theregular reform of the drug pricing system every two years, the premium was extended for further two-year trial periods.
According to a survey of EFPIA member companies, the effect of the introduction of the premium has been a sharp
increase in the number of new drug development projects in Japan – precisely the desired result.
Drug price revisions are conducted in two-year cycles, linked to the revision of medical service fees. Where an increasein consumption tax necessitates an interim drug price revision, EFPIA believes that revision should be confined to an
adjustment to reflect the tax increase. Other additional and irregular repricing exercises, such as the market expansion
repricing rule or the special repricing implemented in late 2015, will lead to negative growth in the overallpharmaceutical market. This would conflict with the Government’s designation of healthcare as a strategic growthindustry and reduce the incentive to invest in Japan from overseas.
Another issue is that, for the first 12 months after a drug is launched, it can only be prescribed for a maximum of 14days, after which a further prescription is required. As a result, many physicians will not prescribe a drug until the
product has been on the market for at least a year. Given that Japan has robust safety measures, including the Drug Risk
Management Plan introduced in 2013, this 14-day rule for new drugs is outdated and acts only as a barrier, preventing
patients from accessing the treatments they need.
The Government introduced a form of cost-effectiveness health technology assessment (HTA) in Japan from April 2016
on a trial basis. Unfortunately, the European experience shows that HTA can become yet another barrier preventing
patient access to medicines and can create a major administrative burden for government and industry. EPFIA hopesthat Japan learns from this experience.
Japanese Good Clinical Practice (GCP) in clinical trials is now steadily aligning with global standards, although action
is still needed to reduce differences between Japanese medical institutions in the efficiency of the clinical trials they
conduct. At the same time, there has been no progress in extending the scope of the existing Mutual Recognition
Agreement (MRA) for EU and Japanese Good Manufacturing Practice (GMP). The current limitation of the MRA tosolid oral preparations leads to duplicate trials and inspections for all other products, incurring additional costs for theindustry and ultimately the healthcare system.

52

EFPIA Japan
Member Companies

Key Issues and Recommendations

Abbott Japan
Actelion Pharmaceuticals Japan
AstraZeneca
Bayer Yakuhin
Bracco-Eisai
Chugai Pharmaceutical
CSL Behring
Ferring Pharmaceuticals
Galderma
GE Healthcare Japan
GlaxoSmithKline
Guerbet Japan

Ipsen Pharma Japan
Janssen Pharmaceutical
LEO Pharma
Lundbeck Japan
Merck Serono
Nihon Servier
Nippon Boehringer Ingelheim
Novartis Pharma
Novo Nordisk Pharma
SanofiShire JapanUCB Japan■ Pricing system
Yearly status report: negative progress. It is still possible to say that Japan enjoys an environment that is broadly
supportive of innovative new medicines, given measures such as the 2010 launch of the innovation premium.
However, not only do barriers to innovation still exist, deterring investment, but changes in the past 12 months,
such as the special repricing and the launch of HTA, have reduced the attractiveness of the Japanese market.
Recommendations:
The innovation premium, which provides appropriate reward for innovative new medicines, should becontinued without any additional conditions. With international competition intensifying, the premium isnecessary to ensure continued investment in Japan and the early delivery of new medicines to Japanesepatients.

Although there has been some discussion of annual repricing or irregular price revisions for relatively
expensive drugs, drug price revisions should be conducted no more frequently than every two years, linked
to the revision of medical services fees.
The market expansion rule, including the huge sales repricing introduced in 2016, should be abolishedbecause it penalises success and acts as a disincentive towards investment in innovation. In particular,
products whose prices were set using the comparator method should be made exempt from this rule as amatter of priority.

The 14-day rule should be abolished or revised. The safety environment has changed substantially since its
introduction many years ago, and it serves now only as a barrier, preventing patient access to drugs.
■ Cost-Effectiveness Health Technology Assessment (HTA)
Yearly status report: no progress. Health Technology Assessment (HTA) was introduced in Japan from April
2016 on a trial basis. The European experience has been that HTA can become yet another barrier preventing
patient access to medicines and create a major administrative burden for government and industry.
Recommendations:
EFPIA published its views on HTA in July 2015, recommending that the Government should:Involve all stakeholders in meaningful discussions at all stages of the process;
Set priorities for the initial trial introduction of HTA;
Focus on achieving better outcomes, not solely on costs;
Ensure no negative impact on patient access to pharmaceuticals nor on the physician’s freedom to prescribe;
Reward innovation and minimise the administrative burden for both Government and industry.
■ International harmonisation (clinical trial environment / MRA)
Yearly status report: some progress. There is scope to improve the efficiency of clinical trials in Japan. In
addition, limitations in the GMP mutual recognition agreement between the EU and Japan have led to an increasein delays and costs due to duplication of inspections and tests.
Recommendations:Japan should carry out specific actions to further promote enhanced efficiency in clinical trials, inaccordance with the Government’s own “Report concerning Enhancement of Efficiency in Clinical Trials(2011)” and the “2012 Action Plan for the Five-Year Program toward the Revitalization of Clinical Studies
and Trials (2012)”.
The existing EU-Japan MRA for EU and Japanese GMP should be extended to cover all 28 EU Member
States and expanded to include non-solid oral preparations. This will eliminate duplicate inspections andexaminations and hence reduce costs.

Pharmaceuticals
253

Dr. Jun Honda
Chair, Vaccine Sub-committee, Biologics Committee, EFPIA Japan(Senior Expert, GlaxoSmithKline K.K.)
c/o GlaxoSmithKline K.K.
6-15, Sendagaya 4-chome
Shibuya-ku, Tokyo 151-8566
Phone 03-5786-5159
Fax
03-5786-5260

VACCINES
Introduction
Access to vaccines in Japan started to improve rapidly from 2008 onwards, following the sequential introduction ofseveral new vaccines. (Before then, Japan had suffered from a significant vaccine gap.) By October 2016, many
vaccines had been designated an integral part of “routine immunisation”, i.e. among the suite of vaccines strongly
recommended, as well as funded, by the Government, making the rotavirus and mumps vaccines the only remaining
WHO-recommended (World Health Organization) vaccines excluded from Japan’s routine immunisation programme.
The only other gap remaining derives from shortcomings in the development of combination vaccines, which would
alleviate the congested immunisation schedule for infants. For example, the combined MMR vaccine (mumps, measles
and rubella), and the 5- or 6-in-1 combination vaccine (where hepatitis B and/or Hib vaccines are added to the 4-in-1
DTaP-IPV -diphtheria, tetanus, pertussis and inactivated polio) are still not available in Japan.
At the end of 2015, Japan experienced vaccine supply issues, due to a mix of Good Manufacturing Practice (GMP)
violations and natural disasters, and these had a major impact on both the medical front and on the manufacturers
concerned. Vaccines with limited supply sources were the most affected, serving as a reminder that vaccine supply is an
important topic on the risk management agenda. It should be noted that regulatory requirements in Japan create abottleneck in the secure supply of vaccines: for example, it takes more than 6 months for vaccines to reach the market
after import, which in effect cuts down their shelf life.
A further challenge is that in recent years there have been procedural issues with the introduction and development ofvaccines. The process for recommending inclusion of vaccines in the routine immunisation programme is not clear andthe outcome can be difficult to predict, thus increasing the risk for manufacturers considering the development ofvaccines in Japan. Uncertainty is further increased by recommendations such as that first made in June 2013 and still inforce as of September 2016, that use of the human papillomavirus vaccination should be suspended, even though it has
been medically and scientifically proven that there is no causal relationship between various symptoms and thevaccination. If companies are to develop vaccines smoothly in Japan, an infrastructure must be created that will allow
the regulatory authorities to make decisions based on scientific judgements. More specifically and importantly, womenin Japan should not be deprived of the opportunity to prevent cervical cancer, and so the current situation should be
promptly rectified.
As shown above, while the vaccine gap in terms of the vaccine product portfolio is moving towards closure, it has
become more evident that the “structural vaccine gap” still needs attention from a procedural and a policy perspective.
In short, scope remains to improve vaccination policies and eliminate unnecessary regulations in order to greater
incentivise manufacturers both within and outside Japan to invest in the development and manufacture of better
vaccines that will contribute to the well-being of the Japanese public.

Key FTA/EPA Issues




54

Securing a stable supply of vaccines
 Vaccine suppliers should be diversified to include multiple domestic and global manufacturers,
securing stable supply routes
 Long-term supply purchase agreements and stockpiling by the government should also be
considered
Promotion of international harmonisation of regulatory requirements
 The Mutual Recognition Agreement (MRA)/ Memorandum of Understanding (MOU) should be
expanded to include vaccines, and national testing procedures should be streamlined to greatly
reduce the time it takes to supply vaccines
 Quality requirements should be harmonised and the introduction of vaccines accelerated

EFPIA Japan
Member Companies

Key Issues and Recommendations

Abbott Japan
Actelion Pharmaceuticals Japan
AstraZeneca
Bayer Yakuhin
Bracco-Eisai
ChugaiPharmaceutical
CSL Behring
Ferring Pharmaceuticals
Galderma
GE Healthcare Japan
GlaxoSmithKline
Guerbet Japan

Ipsen Pharma Japan
Janssen Pharmaceutical
LEO Pharma
Lundbeck Japan
Merck Serono
Nihon Servier
Nippon Boehringer Ingelheim
Novartis Pharma
Novo Nordisk Pharma
SanofiShire JapanUCB Japan■ Incorporation of WHO-recommended vaccines into routine immunisation andpromotion of development of combination vaccines
Yearly status report: some progress. As from October 2016, hepatitis B vaccine has been included in Japan’sroutine immunisation programme, and the Immunisation Vaccine Subcommittee of the Health Science Council isconsidering recommending that the remaining rotavirus and mumps vaccines be included as well. They have also
proposed that the early development of combination vaccines should be treated as an issue of high priority.
Recommendation:
The remaining approved and WHO-recommended rotavirus and mumps vaccines should be included inroutine immunisation without further delay. In addition, combination vaccines that are not available in Japan
should be promptly introduced and/or developed.

■

Securing a stable supply of vaccines
Yearly status report: new issue. Concerns have arisen that Japanese public health could be adversely impacted byissues such as problems with manufacturing processes or the occurrence of natural disasters that lead to an unstablesupply of vaccines. Such an outcome was only narrowly avoided in 2015. Sporadic epidemics can also be a trigger
for a disruption of supply. For important vaccines like those in the routine immunisation programme, diversifying
supply sources to multiple manufacturers, both domestic and global, would allow a stable vaccine supply in Japan.
Also, long-term supply purchase agreements and stockpiling should be considered.
Recommendations:
Diversify vaccine suppliers to multiple domestic and global manufacturers, securing stable supply routes.

Investigate long-term supply purchase agreements and stockpiling by the Government.

■

Elimination of the “structural vaccine gap”
Yearly status report: no progress. At a time when effective vaccines from overseas are being introduced and thenumber of vaccines included in routine immunisation is increasing, the relative inadequacy of Japan’s vaccine
policies is increasingly apparent and leading to the emergence of a new “structural vaccine gap”. An infrastructure
should be established to enable the regulatory authorities to evaluate and recommend vaccination from a safety
perspective based on scientific judgments, so that people will not be left unprotected from preventable infectious
diseases. Also, it is difficult to predict whether the regulatory authorities will recommend that a particular vaccine
should become part of the routine immunisation programme or not, and companies are hesitant to develop vaccines
in Japan because of this uncertainty. As a result, there is a risk that the product portfolio vaccine gap will reappear.
Recommendation:
The routine immunisation process should be streamlined and an environment created where clear policy
decisions can be made based on sound medical and scientific evidence.

■ Promotion of international harmonisation of regulatory requirements including

Mutual Recognition Agreement (MRA) and Minimum Requirements for Biological
Products (MRBP)
Yearly status report: no progress. The number of EU Member States covered by the EU-Japan MRA on GMP was
expanded in April 2016, but vaccines remain outside its scope.A great deal of time and effort is needed to introduce
and supply vaccines due to excessive pharmaceutical regulations. For example, because of the procedures for
conducting national testing, or the lack of clarity in MRBP related to timing of reviews, revision procedures, andcriteria for listing, it can take more than 6 months before a vaccine is released onto the market after importation.
Recommendation:

The MRA should be expanded to include biopharmaceuticals and vaccines, thereby reducing redundantquality testing items and accelerating the time from import to release.
Quality requirements for vaccines should be revised based on state-of-the-art science and technology,
harmonised with other regions. The current MRBP should be abolished and its contents consolidated andintegrated into the Japanese Pharmacopeia.

Vaccines55

Dr. Nobuyuki Hagiwara
Chair, Cosmetics & Quasi-drugs Committee(Head, Regulatory Affairs, Johnson & Johnson K.K.
Consumer Company)
c/o Johnson & Johnson Family of Companies
First Chiyoda Bldg. 15F, 3-5-2 Nishi-Kanda
Chiyoda-ku, Tokyo 101-0065
Phone 03-4411-6118; Fax 03-4411-7149

COSMETICS & QUASI-DRUGSIntroduction
The EU Cosmetic and Quasi-Drugs sector works to ensure the quality, efficacy, safety, and environmental sustainabilityof its products in the market by investing in the research and development of new ingredients, monitoring global
developments in science, providing information to consumers, and meeting or exceeding strict post-marketingsurveillance and control requirements in accordance with Good Vigilance Practice (GVP) and Good Quality Practice(GQP). The sector produces a wide variety of innovative and safe cosmetic and quasi-drug products that contribute toconsumers’ quality of life (QOL), for example by helping them stay clean and healthy, protecting them against thedamaging effects of extreme weather, preventing dental cavities, and improving their appearance. These outcomes fit
well with the efforts being made by the Japanese Government to promote self-care and, where appropriate, selfmedication, so that people in Japan can enjoy the best possible health and avoid placing unnecessary strain on thenational healthcare budget. There are many cosmetic and quasi-drug products that can assist in these efforts.
Shipments of cosmetics in Japan were worth a total of 1,507 billion yen in 2015. In the same year, Japan imported
cosmetics valued at about 244 billion yen, of which some 82 billion yen related to cosmetics from the EU. European
cosmetic and quasi-drug products account for such a large share of imports because Japanese consumers recognise theirvalue. The import process was made somewhat easier in 2016, when the Ministry of Health, Labour and Welfare(MHLW) abolished import notifications, and eased the rules relating to Partial Change Approval for prescription drugs,
so that it is now possible for the applicant to decide the timing of a product change. The EBC applauds MHLW for theseactions.
However, European companies still face challenges in bringing cosmetic and quasi-drug products to Japanese
consumers in an efficient manner, due to Japan’s lack of regulatory transparency, the low degree of harmonisation
between its product standards and those used in other parts of the world, and its unnecessarily complex approval andmanufacturing requirements. As a result, the launch of many European cosmetic products in Japan is severely delayed,even when the same products are already in global use and have clinically proven efficacy. Some quasi-drugs even need
to be reformulated because their global version uses new active ingredients or excipients for which approval is too timeconsuming or difficult to obtain in Japan. Moreover, information on which active and inactive ingredients andexcipients have already been approved is very limited. The EU and Japan also maintain different rules governing which
ingredients are allowed in cosmetics. Even if an ingredient does not require regulatory approval in Japan when used in acosmetic, the use of the same active ingredient in a quasi-drug often requires a lengthy approval process.
The EBC believes that the EU and Japan have an opportunity to lead the way in the cosmetics and quasi-drugs market,
by bilaterally negotiating faster registration of quasi-drugs, expanding efficacy claims, and harmonising ingredients thatare allowed for cosmetics and quasi-drugs. The EU-Japan FTA/EPA is an important vehicle for this process. In addition,
the EBC would welcome greater leadership by the EU and Japan in the International Cooperation on Cosmetic
Regulation (ICCR), which meets to discuss how to promote multilateral regulatory coordination and harmonisation tominimise barriers to trade, while maintaining the highest level of global consumer protection.

Key FTA/EPA Issues

56

In addition to abolishing import notifications, MHLW should accept electronic submission of
applications and notifications and fully introduce electronic import procedures
In order to promote the use of fluoride in oral care products, approval standards for medicatedtoothpastes should be revised and international harmonisation of toothpastes and mouthwashes
should be realised as soon as possible

EBC Cosmetics & Quasi-Drugs
Committee
Member Companies
Bluebell Japan
ChanelClarins
ELGC
Johnson & Johnson
LVMH Cosmetics
Nihon L'Oreal K.K.

Key Issues and Recommendations■

Reform of the quasi-drug approval system
Yearly status report: slight progress. Having created examination guidelines for medicated shampoos andconditioners in 2014, MHLW asked the Japan Cosmetic Industry Association (JCIA) to draft an industry standard
with a view to creating examination guidelines for medicated soap. In response, the JCIA has started to study
examples of approved medicated soap. At the same time, in August 2015, the Director of MHLW’s Evaluationand Licensing Division issued a notification concerning an “Investigation on Review of the List of Excipients for
Quasi-drugs (Request)”. Based on the notification, for the first time ever since the list was created in 2008, theupper values of existing ingredients and ingredients additionally listed in the Japanese Standards of Quasi-Drug
Ingredients are now being reviewed. The Pharmaceuticals and Medical Devices Agency (PMDA) collected
information from businesses on the raw material specifications of already approved excipients and published theresults in a book entitled “Standards of Excipients for Quasi-drugs” in 2014. Additional information was solicitedfrom businesses in 2015 and again in 2016, but so far, responses have been limited. Consequently, the book still
covers only the small number of 27 ingredients. Furthermore, since April 2016 the PMDA has been provisionallyasking applicants to attach a check list confirming the contents of their application documents and this procedure
will be formally adopted in 2017, placing an additional burden on applicants. Although the quasi-drug review
system has been improved, there is unfortunately no commitment in the above-mentioned notification to shorten
the review period.
Recommendations:
MHLW should shorten the review period for the quasi-drugs for which review guidelines have been created
and which are believed to be identical to already-approved quasi-drugs.
A code should be assigned to standards for ingredients used in already-approved quasi-drugs, and this codeshould then be used in applications for approval of other quasi-drugs that share the same ingredients, toobviate the need for repeatedly reviewing the standards for those same ingredients. This would enhance
efficiency and shorten the review period.

■ Harmonisation of quasi-drug and cosmetic ingredients
Yearly status report: slight progress. The EU and Japan maintain different rules governing which ingredients areallowed in cosmetics. Furthermore, the fluoride concentration levels permitted in oral care products in Japan are
not aligned with the higher levels permitted in other developed countries. The effectiveness of fluoride in
preventing tooth decay is scientifically verified: it is important for the health of the mouth and the entire body andis therefore key to self-care. Japan permits a maximum of 1,000 parts per million (ppm) of fluoride in toothpaste
sold as a quasi-drug, while concentrations of fluoride of up to 1,500 ppm are allowed in Europe. Mouthwash withfluoride concentrations of 226 ppm is sold at drugstores and supermarkets throughout Europe and the UnitedStates, whereas Japan approved the use of fluoride in mouthwash for general consumption in 2015, but only as adrug requiring guidance.
Recommendation:
MHLW should revise the medicated dentifrice approval standard in line with international norms, raising theupper limit of fluoride concentration allowed in medicated toothpaste (a quasi-drug), and allowing the use offluoride in mouthwash (another quasi-drug) as soon as possible.
■ Expansion of efficacy claims for cosmetics
Yearly status report: no progress. Fifty-five efficacy claims were defined as permissible for cosmetics in Japan in
the “Notification on Revision of the Scope of Efficacy Claims for Cosmetics” issued in 2000. In 2011, a further
efficacy claim of “making fine wrinkles due to dryness less noticeable” was added to the list. The Japanese
Cosmetic Science Society and Japan Cosmetic Industry Association are now studying the efficacy claim of“prevention of ultraviolet ray-derived photoaging” which may lead to a further expansion. Yet the scope of
efficacy claims approved in Japan is still narrower than in other countries, which hinders entry to the Japanesemarket of foreign-made cosmetics based on the latest research and technology. There is also a need, as part of the

Cosmetics & quasi-drugs
257

Government’s efforts to encourage self-care, to develop a proper method of distributing information to consumers
on scientifically-proved efficacy, such as the effectiveness of warmth in improving atopic skin and the efficacy ofsunscreen products in preventing skin cancer.
Recommendation:
Japan should expand the scope of its positive efficacy claims for cosmetics to harmonise with that of the EU.

■ Simplified procedures for cosmetic and quasi-drug imports
Yearly status report: significant progress. MHLW announced the abolishment of import notifications effectivefrom January 2016. This has significantly simplified import procedures. At the same time, however, the Nippon
Automated Cargo and Port Consolidated System (NACCS)-based online procedures were abolished, and customs
clearance now depends on presentation of a Production (Production and Sale) Permit and paper copies of the
Notification on Manufacture and Sale of Cosmetics and other documents. This is a step backwards in terms ofaccelerating online procedures.
Recommendation:

A system of online (rather than paper-based) procedures, involving for example the effective use of NACCS,
should be established for handling documentation to support customs clearance of imported cosmetics andquasi-drugs.
■ Online notifications and applications for approval of cosmetics and quasi-drugs
Yearly status report: no progress. In its Basic Policy on IT Utilisation, the Japanese Government declared its
intention to handle administrative procedures, such as applications, online rather than face-to-face or by document
processing. For prescription drugs, applications for approval, along with supporting clinical investigation reports
and other materials, will soon be accepted in electronic form via the Internet. However, for cosmetics and quasidrugs, notifications and applications must still be submitted on floppy discs or in paper form, which are outdated
methods compared to those used by many other countries. The systems used by prefectural authorities, thePMDA, and Customs are not linked, and separate procedures are required for notifications and applications forthe manufacture and sale of cosmetics and quasi-drugs, notifications of export goods, and presentation ofmaterials for import customs clearance.
Recommendation:

An online notification and application system should be established for submitting Notifications on the
Manufacture and Sale of Cosmetics and Applications for Approval of Quasi-Drugs. This system should belinked to the customs clearance system to provide a one-stop service for application procedures.
■ Establishment of alternatives to animal testing
Yearly status report: no progress. Animal testing for the purpose of studying the safety and efficacy of cosmetics
is completely banned in the EU and the trend towards a ban is spreading to other countries and areas. However, inJapan, cosmetics manufacturers are still expected to submit safety data based on animal testing when applying for
approval of quasi-drugs using new raw materials. Social pressure to abolish animal testing and shift to alternative
methods is increasing. A notification issued by MHLW in 2011 supports the active use of alternative methods
replacing animal testing when preparing applications for approval of quasi-drugs, but available alternative
methods are limited in regard to phototoxicity, skin sensitisation, and eye irritation tests.
Recommendation:
Japan should as soon as possible formally approve the proposed alternative methods, based on the
Organisation for Economic Cooperation and Development (OECD)’s test guidelines, by issuing relevant
MHLW Guidelines, so that these alternative methods are available when preparing applications for approvalof quasi-drugs.

58
3

Consumer Goods
LiquorFood & agriculture

Mr. James Paton
Chair, Liquor Committee(President, MHD Moet Hennessy Diageo K.K.)
c/o MHD Moet Hennessy Diageo K.K.
13F Jimbocho Mitsui Bldg.
1-105 Kandajimbocho, Chiyoda-ku, Tokyo 101-0051
Phone 03-5217-9723
Fax
03- 5217-9751

LIQUOR
Introduction
Europe is the leading exporter of liquor and wine worldwide. The Japanese liquor market is one of the largest in theworld with estimated annual sales of 6 trillion yen and growing wine consumption. Despite such figures, in terms ofvalue, foreign imports in 2015, at 291 billion yen (according to Japan Customs), accounted for a mere 5% of the total
Japanese liquor market, including beer and beer-like products. The main reasons for this are clear. While theGovernment of Japan has implemented a notable reduction in taxes on liquor, the country still lags behind the rest of theworld in applying international standards for product definition and in eliminating non-tariff barriers to market access.
Japan continues to impose tariffs on both sparkling wine (182 yen/litre) and still wine (125 yen/litre), which are aroundfive and three times higher, respectively, than the levels imposed in the EU. The EBC cannot understand the grounds forsuch high tariffs nor why there is a difference between the tariffs imposed on sparkling and still wine. Japan has almost
no production of sparkling wine, yet it carries a higher tariff than still wine.
Japan’s tax system for beer is equally baffling. Instead of taxing beer based on alcohol content or as a heterogeneous
liquor group, beer in Japan is taxed on malt content, divided into basically three categories, with “real beer”, which has
a malt content of more than 67%, attracting the highest rate. All European beer, apart from a few exceptions, isclassified as real beer. The tax system thus has the unfortunate effect of making arguably lower quality beer cheaper andso more accessible. As a result, low malt beer, or happoshu, and 0% malt-based beer make up almost 40% of theJapanese beer market. The EBC believes that the tax system should be made independent of malt content so that highquality beer is not taxed more heavily than low malt or 0% malt based beer.
In Japan, the display of producer lot codes (traceability information) is not compulsory under the Food Sanitation Law,although it is recommended in the administrative guidelines of the Ministry of Health, Labour and Welfare (MHLW).
By contrast, the EU makes it obligatory to display lot codes on food and beverage products as such codes fulfil an
important role in any effective and efficient product recall or withdrawal process. Despite the fact that most importers of
EU liquor products ensure that lot codes are in good order when the products are marketed and put into distribution in
Japan, it is common practice for some opportunistic traders, prioritising business profit over consumer safety, to importproducts with lot codes that have been erased, tampered with or covered up. The EBC urges the Japanese Government
to take more proactive measures to protect the health and safety of Japanese consumers. While the EBC appreciates thenotice issued by the National Tax Agency (NTA) in September 2014 stating the NTA’s concern regarding the presenceof liquor products with erased lot codes in the market, the EBC continues to urge the Japanese Government to takeproactive measures to protect the health and safety of Japanese consumers.
Finally, the lack of accurate Geographical Indication (GI) definitions in Japan’s Liquor Tax Law is of great concern to
the EBC. In the long term, this lack may hinder the ability of European businesses to compete in the Japanese market.
The EBC therefore calls on the EU and Japan to adopt common definitions within the context of the EU-Japan
FTA/EPA.

Key FTA/EPA Issues





60

Japan should permanently and swiftly eliminate tariffs on all liquor related products
Japan should recognise European GIs without further need for an application process
Japan should swiftly approve additives that are in common use among other industrialised countries
Wine definitions in Japan should conform to international specifications as defined in the EU and the
US and endorsed by the International Federation of Wines and Spirits

EBC Liquor Committee
Member Companies
Diageo Japan
Heineken Kirin
MHD Moet Hennessy Diageo
Pernod Ricard JapanKey Issues and Recommendations■ Traceability
Yearly status report: minimal progress. Lot codes (traceability information) fulfil an important role in any
effective and efficient product recall or withdrawal process. In the case of a serious health threat, delays to suchprocesses could endanger consumers: a rapid, targeted and efficient response is vital in order to protect them andpreserve their confidence in the supply chain. The National Tax Agency has finally issued an industry notice
outlining concerns regarding erasing, tampering with and covering up lot codes, a practice that prioritises
business profit over consumer safety. However, the notice has no binding force to halt the import and sales of any
such products with lot codes that have been erased, tampered with or covered up.
Recommendation:

The Government of Japan should issue legislation, reinforced by penalties, that forbids the wholesale orretail of liquor bottles whose lot codes have been erased, tampered with or covered up.
■ Tariff on wine and white spirits
Yearly status report: no progress. Japanese wine duty is arbitrarily high in comparison with the duty applied tobeer, brandy and whisky, which was reduced to zero in 2002 (in accordance with agreements reached at the 1998
WTO panel). The temporary zero tariff on white spirits, rum, gin, vodka and liqueurs should be made permanent.
Recommendations:
The EBC urges Japan to completely remove all tariffs on wine.
The EBC urges Japan to change the applicable tariff lines for white spirits to become permanently zero.
■ Liquor tax on beerYearly status report: no progress. The liquor tax on beer in Japan is based on malt content. This unfortunately
puts real beer with a malt content of over 67% at a disadvantage and has created a situation where arguably lower
quality beer is more favourably priced. This is very clear when looking at the market share of low malt beer, or
happoshu, and 0%-malt based beer, which together account for almost 40% of the Japanese beer market.
Recommendation:
Japan should revise its liquor tax system for beer to make it independent of malt content.
■

Additives
Yearly status report: minimal progress. The list of additives approved by the Japanese authorities for inclusion inliquor is outdated and differs greatly from the lists of other industrialised countries. In addition, the process forhaving additives declared safe is both very costly and time-consuming.
Recommendation:
Japan should swiftly approve additives that are in common use among other industrialised countries.

■ Wine definition
Yearly status report: minimum progress. The Japanese definition of wine is too broad. The loose wine definition
opens the door for different products to be sold as “wine”, misleading Japanese consumers and creating unfair
competition for European wines, which meet the internationally accepted definition.
Recommendation:
Wine definitions in Japan should conform to international specifications as defined in the EU and the US andendorsed by the International Federation of Wines and Spirits.
■ Geographical Indications
Yearly status report: no progress. GI terminology in Japan is not compatible with the EU-origin concept and rules
and threatens to undermine European products in the Japanese market.
Recommendation:

The Government of Japan should reconsider the GI rules in its Liquor Tax Law and introduce amendments
in line with widely accepted EU definitions.

Liquor2

61

Mr. Olivier Convert
Chair, Food & Agriculture Committee(Managing Director, Roquette Japan K.K.)
c/o Roquette Japan K.K.
2F. KDX Kasuga Bldg., 1-15-15 Nishikata
Bunkyo-ku, Tokyo 113-0024
Phone 03-3830-1510
Fax
03-3830-1525

FOOD & AGRICULTURE
Introduction
In general, Japan’s regulatory environment favours the import of raw materials for use by the domestic food processing
industry, but hampers the import of packaged food, whether processed or not. The relative scarcity of imported
packaged food in Japanese supermarkets compared to supermarkets in other developed countries bears witness to this. It
can indeed be found in regular supermarkets, but the assortment is, with few exceptions, limited to only a fraction of thepotential. The situation is better in upscale and gourmet specialist shops, where price matters less. However, there is no
reason why imported European food should be either so expensive or exclusively upscale.
There are two main factors behind the current situation. The first and most important is tariffs. Food is purchased
everyday and therefore price is a key decision factor for consumers when choosing what to buy. European packaged
food is at a clear disadvantage as it is subject to tariffs that can represent a large proportion of the price, and in somecases the tariff is effectively more than 100%. Ordinary butter is an example of this. EBC puts high emphasis on thisissue and expects radical changes so that the Japanese market becomes more accessible for European products.
The second factor is the large number of non-tariff barriers that have a serious impact on the amount of food imported
from Europe, in terms of both volume and variety. For example, Japan remains “out of sync” with other countries, inthat the majority of food additives and enzymes declared safe by the Food and Agriculture Organisation (FAO) and theWorld Health Organisation (WHO) are still not approved in Japan. In addition, there are no timelines or deadlines
specified in Japan’s process for approving food additives making it difficult to know how long it will take for approval
to be obtained. There are also cases where applicants have to submit test results that were not initially requested, further
prolonging the approval process. The issues surrounding food enzymes are more or less the same as for food additives.
Another key non-tariff barrier is Maximum Residue Levels (MRLs). Some EU products cannot be imported into Japandue to the non-harmonisation of MRLs between the EU and Japan. Moreover, Japan uses a positive list of products andlevels, and any product not on the list must have a residue level of 0.01 ppm or less - an unsubstantiated low level - even
if the base input material has a higher level.
The EBC is very keen to work closely with all relevant parties in the Government of Japan and the European
Commission to help bring about effective and positive change to support the goal of providing consumers in Japan witha much wider variety of safe, high-quality food. Under the EU-Japan FTA/EPA, tariffs should be abolished, standards
harmonised and the market authorisations of both regions mutually recognised. The EBC Food & Agriculture
Committee firmly believes this can be achieved without compromising food safety. Furthermore, it will lead to morechoice in supermarkets, stimulating healthy competition in the food and agricultural sectors of both zones, and toEuropean food becoming more accessible, something we know Japanese consumers would appreciate.

Key FTA/EPA Issues




62

Tariffs including quotas and tariff quotas
 All products of interest to European companies, even if sensitive, should be included in thenegotiations
 Dismantling periods should be as short as possible
 Any tariff quota system should be easy to use
Additives and enzymes Japan should approve additives and enzymes that are recognised internationally The approval system in Japan should be swifter and more transparent
 Legally binding deadlines for each part of the approval process should be introduced

EBC Food & Agriculture Committee
Member Companies

Key Issues and Recommendations

ARYZTA Food Solutions Japan
Corbion Japan
Danisco Japan
Danone JapanDSM Japan
IKEA Japan
Japan Europe Trading
MIE PROJECT
Nestle Japan

Norwegian Seafood Export Council
Perfetti Van Melle Japan Services
Pick
PinguinLutosa Japan
Puratos Japan
Roquette JapanSAVENCIA FROMAGE & DAIRY JAPONSKW East Asia
Valrhona Japon■ Tariffs & quotas
Yearly status report: no progress. Japan continues to impose high import duty rates on many foods and foodingredients. Severe inflation in the cost of ingredients and transport, coupled with high import duties, make some
imported foods prohibitively expensive. Examples include butter (with an import duty rate of 35% plus 1,159
yen/kg), cheese (26-40%), chocolate for professional use (29.8%), confectionery (25%), syrup (24% plus sugar
tax related to quota), fruit juice and fruit puree for babies (21.3%), and herbal tea (15%). Quotas also exist, forexample for dairy products and sugar, and the quota management system adds complexity when importing foodcontaining such ingredients.
Recommendations:
The Government of Japan and the EU should abolish tariffs on food products as part of the EU-Japan
FTA/EPA.

The quota management system should be simplified.
■ Food additives and enzymes
Yearly status report: slow progress. Differences in the lists of approved additives and enzymes are still common
between Japan and other major markets. While the EBC has seen progress in Japan’s approval of additives, theapproval process still remains an obstacle, with long application periods lacking any deadlines, difficulties indetermining exactly what supporting documents are required, and an overall lack of transparency. Both foreignand domestic companies would benefit from a system where each step of the approval process has clear deadlines
set out in legislation to be followed by the authorities.
Recommendations:
The Ministry of Health, Labour and Welfare (MHLW) together with the Food Safety Commission (FSC)
should introduce legally binding deadlines for each part of the approval process. Furthermore, repeatedrequests for additional information should be avoided.

MHLW and the FSC should ensure that standards of use in Japan are not in conflict with international
standards of use.
The EU-Japan FTA/EPA should guarantee that food enzymes in wide use in the EU and accepted as safe by
FAO/WHO Joint Expert Committee on Food Additives will be approved for immediate use in Japan.

MHLW should put the same focus on enzymes as it has on food additives and actively approve enzymes thatare well established in other major markets.
■ Maximum Residue Levels
Yearly status report: new issue. While a large number of agro-chemicals approved and in common use in Europe
are approved in Japan, Japanese regulation on MRLs is far stricter. Japan uses a positive list. However, the maindifference between the EU and Japan can be found in how they treat pesticide MRLs in processed products thatare not explicitly listed. When a derived product is not explicitly mentioned in Europe, the pesticide MRL for the
input (raw) material is used (for instance the MRL for deltamethrine in maize is 2ppm, hence the MRL in maize
starch-derived products would also be 2ppm). In Japan, however, derived products that are not on the positive list
have a default MRL of 0.01ppm, even if the original product has a higher MRL (for instance the MRL ofdeltamethrine in maize is 1.0ppm, but that in a maize starch-derived product not listed would be 0.01ppm).
Recommendations:
The EU and Japan should work together to harmonise MRL levels and, in cases not regulated, follow the
CODEX levels.
Japan should introduce the concept of using the level set for the base product for derived products that are
not on its positive list.
The EU and Japan should harmonise their respective lists of approved agro-chemicals.

Food & agriculture263

■ Beef and processed food including beef and by-products (casings, gelatines)
Yearly status report: progress. While the approval process for many years was slow, in the last few years, thenumber of EU Member States approved for export of beef to Japan has increased. There are however still
Member States waiting to gain such approval. The EBC would like to point out that several Member States aredesignated as having “negligible BSE (Bovine Spongiform Encephalopathy) risk” - the same status as Japan.
Recommendations:Processed food containing beef, bovine gelatines, or products made with beef casings, should also beapproved for import as they are widely used in the European food industry, which has already establishedhigh safety standards.

The Ministry of Agriculture, Forestry and Fisheries (MAFF) and MHLW should speed up the approval
process for EU Member States that have already submitted data.
■ Malt and quota management system
Yearly status report: no progress. Japan has a tariff quota system for brewing-malt to balance the demand fromdomestic beer manufacturers for cheap malt and the perceived need to protect domestic barley farmers and malt
manufacturers. To make use of the quota, a company must manufacture beer or import malt exclusively for theuse of a particular brewery. In addition, a company can only apply for the quota twice a year, meaning that any
imports using the quota must be based on forecasts and not on actual short-term demand.
Recommendations:Japan should, as part of the FTA, abolish the tariff on malt so that the need for European suppliers to use thequota would cease.

If this is not achieved, Japan should amend the system to allow importers to make use of the systemthroughout the year, and to be able to store the malt without the requirement for use in brewing at a specified
brewery.
■ Cured meat and single needle injection requirement
Yearly status report: no progress. Meat can be cured in several ways. One method is to inject a saline solution
into the meat using a needle. In Europe and in most other countries, this curing method uses multi-needle
injection, where the meat is “stamped”. This approach is much more efficient and limits the time the meat is
exposed. However, the approach is not allowed in Japan for meat that is unheated or for meat that will be
consumed without further preparation: in such circumstances, only a single-needle method can be used. The EBC
is not aware of any sanitary reasons for not approving multi-needle injections and, in contrast, considers themulti-needle process to be more sanitary as it is faster, thereby reducing the time of meat exposure before
packing.
Recommendation:
Japan should, without delay, allow multi-needle injections for cured unheated meat.

64
3

Industry
Automobiles
Automotive components
Aeronautics
Space
Defence & security
Construction
Materials
EnergyMr. Anthony Millington
Chair, Automobile Committee(Director General,ACEA Tokyo Office)c/o European Business Council in Japan
Sanbancho Poula Bldg 2F
6-7 Sanbancho, Chiyoda-ku, Tokyo 102-0075
Phone 03-3263-6222
Fax
03-3263-6223

AUTOMOBILES
Introduction
The Japanese passenger car market remains sluggish. In the first eight months of 2016, the overall market, including
kei-cars, declined by 3.8% over the same period in 2015. Foreign brands, mainly from Europe, have however held theirown in difficult market conditions, rising by 1% up till the end of August. The European share of the domestic
passenger car market remains constant at just below 6%.
Non-tariff measures (NTMs) continue to add to the cost of doing business for European importers of both passenger
cars and commercial vehicles. The EBC Automobile Committee, therefore, welcomes the importance given to theelimination of non-tariff measures in the automobile sector in the EU-Japan FTA negotiations. However, much work
remains to be done to reach agreement in principle before the end of 2016, yet there has been little recent progress.
Some 70% of the NTMs affecting EU automotive exports to Japan are still being addressed. Additional efforts areneeded so that a vehicle type approved in Europe can be sold in Japan without the need for modification of its
specifications or further testing and/or certification.
This can be achieved by:
1. The harmonisation of the technical requirements between Japan and the EU on the basis of internationally agreed
UN Regulations.
Both Japan and the EU are signatories of the UN-ECE (United Nations Economic Committee for Europe) 1958
Agreement on the harmonisation of technical requirements and certification procedures. However, there are still
areas of the Japanese type approval process covered by a UN Regulation where Japan does not accept a UN
certificate as demonstrating compliance with Japan’s national requirements. These include such key areas as theemission of pollutants, CO2 emissions, and fuel consumption.
2. The elimination of other unique Japanese requirements for both passenger cars and commercial vehicles in areas
not covered by UN Regulations. The FTA should include an annex that will commit the EU and Japan to cooperateso as to prevent future regulatory action by the two sides creating new barriers to trade.
Technical harmonisation alone will not be sufficient. Currently, the unique Japanese system of classifying vehicles shuts
European compact cars out of some 40% of the passenger car market. As noted in previous annual reports, Japan’s
specifications for mini-cars, known as kei-cars, reduces the market opportunities for foreign compact cars. Furthermore,
kei-cars receive preferential tax treatment and other regulatory privileges that undermine the competitiveness ofimported cars with similar performance and pre-tax price.
The EBC Automobile Committee urges the Japanese government to take further steps, as recommended by Ministry of
Economy, Trade and Industry (METI), to narrow the discrepancy between the level of taxation of kei-cars and compact
cars.

Key FTA/EPA Issues




66

Complete the harmonisation of technical requirements on the basis of UN Regulations
Eliminate other unique Japanese requirements for passenger cars and commercial vehicles notcovered by UN Regulations
Take further measures to make it possible for European compact and subcompact cars to compete on alevel footing with kei-cars

EBC Automobile Committee
Member Companies
ACEA
Audi JapanBMW Japan
FCA Japan
Jaguar Land Rover Japan
Mercedes-Benz Japan

Nicole Racing Japan
Porsche Japan
Scania JapanUD Trucks
Volkswagen Group Japan
Volvo Car JapanKey Issues and Recommendations■ Harmonisation of technical standards and certification procedures
Yearly status report: some progress. The EBC Automobile Committee welcomes Japan’s adoption of additional
UN Regulations and the cooperation between Japan and the EU to introduce an International Whole Vehicle TypeApproval (IWVTA) system. Its full implementation would mark an important step towards the mutual recognitionof vehicle certification between Japan and the EU.
Recommendations:
The Government of Japan should: Complete the adoption of existing UN Regulations in areas where Japan retains unique national
requirements.
Work closely with the EU Member States and the European Commission to extend the scope of theInternational Whole Vehicle Type Approval system so that it covers all the requirements of the Japanesetype approval system.
■ Tax reform
Yearly status report: little progress. Compared with other countries, Japan imposes an excessively heavy tax on
the purchase and ownership of motor vehicles.
Recommendations:
The Government of Japan should: Abolish Automobile Acquisition Tax and Tonnage Tax when consumption tax is increased to 10%.
 Simplify the structure of the taxation of automobiles and reduce the overall tax burden on motorists in linewith international best practice.
 Adopt and implement in step with the EU internationally harmonised standards to measure fuel efficiency
and exhaust emissions used to assess tax incentives for environmentally friendly vehicles.
■ Kei-cars
Yearly status report: little progress. The continued existence of regulatory and fiscal privileges for kei-cars
distorts competition with compact cars.
Recommendation: The Government of Japan should put kei-cars and other motor vehicles on the same regulatory and fiscal
footing.
■ High-Pressure Gas Safety Act
Yearly status report: little progress. The operation of the High-Pressure Gas Safety Act impedes the introduction
into the Japanese market of imported vehicles using environmentally friendly technologies, such as fuel cell and
CNG (Compressed Natural Gas) vehicles.
Recommendation: The Government of Japan should take the necessary steps to harmonise with the EU the technicalrequirements for the use of these technologies with the minimum administrative burden.
■

Commercial vehicles
Yearly status report: little progress. Japan’s regulations concerning the maximum width, length and axle load forbuses, the method of calculating gross vehicle weight and the endurance testing requirements for emission control
devices for heavy-duty vehicles, and other unique technical requirements restrict the business opportunities for
European commercial vehicle exporters.
Recommendation: The Government of Japan should harmonise its requirements with the EU.

Automobiles
267Mr. Richard Kracklauer
Chair, Automotive Components Committee(President, ZF Japan Co., Ltd.)c/o ZF Japan Co., Ltd.
Palazzo Astec 7, 8F, 2-8-1 Higashi-Shimbashi
Minato-ku, Tokyo 105-0021
Phone 03-4590-7700
Fax
03-4590-7770

AUTOMOTIVE COMPONENTS
Introduction
Japanese vehicle manufacturers are today more open to doing business with foreign companies, both because it makes
financial sense and spreads their risk via a second supplier. This trend is very much welcomed by the EBC.
The process of globalisation and intense competitive pressures have together caused the outsourcing of automobile
component development and supply to emerge as a clear trend in the European automobile industry. The European
system now offers low risks, reasonable prices and flexibility. In the past, European component manufacturers that hadenjoyed success with Japanese transplants in Europe were seldom able to build on this base to become suppliers of theparent company in Japan. However, European firms are finding that, as a result of recent changes in the Japanese
automobile manufacturing sector, new opportunities are surfacing. An increasing number of companies are now
dedicating resources to attracting business in Japan, investing in local infrastructure and improving technicalcompetence, with the goal of promoting more direct contact and closer relationships with Japanese clients. Against thisbackground, the EBC greatly values the ongoing, regular dialogue between European component manufacturers andJapanese carmakers as a vital mechanism for sharing information and promoting understanding. It is hoped that thiswill, over time, foster increased opportunities for mutually beneficial business development. With the recent
international mergers and other changes in the automotive components sector, the EBC believes that this trend will
become even stronger.
As it stands, however, many Japanese firms are still uneasy about divulging proprietary information to outsiders andcontinue to favour traditional suppliers for product design and production. It is standard business practice for Japanese
automobile manufacturers to request an exact product instead of setting up a framework of open standards to fulfil. This
reflects their lack of transparency and reluctance to consider new inputs, defying the global trend towards single
platform development and volume production. Japan still has some way to go to become a truly global market.
The EBC recognises that the Japanese authorities have been making efforts toward regulatory harmonisation related totyres. For new vehicles, one example was the decision taken by the Ministry of Land, Infrastructure, Transport andTourism (MLIT) in October 2015 to implement the UN/ECE (United Nations Economic Committee for Europe) R11702 regulation (rolling sound emission, wet traction, and rolling resistance) for the Japanese market. This regulation willenter into force for passenger tyres in 2018, light truck tyres in 2019 and truck/bus tyres in 2023. The EBC welcomes
this decision.
However, it should be noted that the tyre market consists of both new vehicle (original equipment) and replacement
markets. For the replacement market, the timeline for the implementation of the above-mentioned UN/ECE R117-02
regulation remains undecided. There are, furthermore, roadblocks to market access in the replacement market because of
the peculiarities of the Japanese distribution environment, which is fragmented, only partially integrated, and difficult
for foreign companies to access.
Accessing consumers via garages, repair shops, and tyre shops is a critical factor for success in the Japanese replacement
market. A recent survey of market concentration by the Japan Fair Trade Commission (JFTC) shows that domestic
brands still account for most of the market: around 90% in all tyre segments (truck/bus, light truck and passenger tyres).
The EBC would welcome any action aimed at limiting exclusive distribution and facilitating access to the fragmented
distribution market.

Key FTA/EPA Issues


68Continue to implement UN regulations, without exempting commercial vehicles

EBC Automotive Components
Committee
Member Companies
A.Raymond Japan
ArcelorMittal Japan
Nihon Michelin Tire
Seric
ThyssenKrupp Japan
Vodafone Automotive JapanZF Japan

Key Issues and Recommendations■ Globalisation of the automobile industry
Yearly status report: progress. The EBC welcomes the opportunity that globalisation presents for innovative
European firms to strengthen their relationship with Japanese automobile manufacturers in developing new
products and sharing technical expertise. Japanese automobile manufacturers are increasingly making use offoreign tie-ups to develop their business and respond to competitive pressures both at home and abroad.
Nevertheless, European automotive component and system manufacturers continue to face numerous challenges
in promoting European technical expertise to automobile manufacturers in Japan. In this respect, the traditional
Japanese practice of working with affiliated companies presents obstacles and leads to the distortion ofcompetition. Free and open competition would lead to more innovative and better quality products, somethingthat would benefit Japanese manufacturers and consumers. Japan-specific requirements are common, and it is not
unusual for specifications to differ between domestic and overseas production, even within the same company. It
is, therefore, of crucial importance that Japan harmonises its regulatory framework to better accommodate theglobalisation of the automotive components sector.
Recommendations:
Encourage the Japanese automobile industry to focus more on the technical, commercial and logistics
aspects of automobile production in the procurement of components and systems. Increased purchasing on a
global basis and more emphasis on single platform development would improve the cost-effectiveness of theJapanese industry.
Foster free and open competition and avoid excessive reliance on affiliated companies.

Recognise foreign test results to avoid the necessity of re-testing for the Japanese market.
■ Promoting information exchange
Yearly status report: limited progress. Face-to-face meetings between the European Association of Automotive
Suppliers and Japanese car manufacturers were established in 1995 to promote information exchange between
European and Japanese companies. These meetings have proven to be a highly effective venue for discussing
issues of mutual concern relating to products, platforms, global strategies and other important matters affecting
the industry. The next meeting schedule is currently under negotiation between the European Association ofAutomotive Suppliers and the Japan Automobile Manufacturers Association. The EBC encourages top-level
Japanese industry participation. The EBC also sees considerable potential value in the Japan Society ofAutomotive Engineers’ (JSAE) Automotive Engineering Exhibition and the annual congress/paper presentation
scheduled for 24-26 May, 2017 in Yokohama.
Recommendation:
Continue face-to-face meetings between leading representatives of European suppliers and the Japanese
automobile industry. Such meetings have led to greater understanding between European component
manufacturers and Japanese car manufacturers. The EBC also recommends that the scope of these meetings
is expanded in future to include Japanese venues.
■ TyresYearly status report: progress. The EBC appreciated the action taken by MLIT to implement the UN/ECE R11702 regulation in Japan, which for new vehicle applications (original equipment) will be completed, step-by-step,by 2023. However, the EBC notes that there are still difficulties in gaining access to replacement market sales
channels in this sector.
Recommendations: Further accelerate regulatory harmonisation for not only new vehicles but also the replacement market.
 Limit exclusive distribution and facilitate access to the fragmented distribution market.

Automotive components
269

Mr. Stephane Ginoux
Chair, Aeronautics, Space, Defence & Security Committee(President, Airbus Japan KK)
c/o Airbus Japan KK
Roppongi Hills Mori Tower, 19F
6-10-1 Roppongi, Minato-ku, Tokyo 106-6119
Phone 03-5775-3300
Fax
03-5775-0123

AERONAUTICS
Introduction
In recent years, Japan’s cooperation strategy has been evolving steadily. With the US as its preferred partner since thepost-war days, the country is opening up to more balanced political and economic ties with other regions, among them,the EU. Even though it may take some years, the ongoing FTA/EPA negotiations and conclusion of the Trans-PacificPartnership Agreement (TPP) negotiations indicate a shift to more worldwide cooperation in the future.
Politics have long influenced the aeronautical industry in Japan, sometimes favouring the long-term relationship with
the US over business realities. The Airbus A350 selection by Japan Airlines (JAL), and selection of the A320 neo and
the A380 by ANA are signs that traditional Japanese corporations may now be thinking differently. The private sector is
expected to make business decisions based on economic grounds rather than politics, creating opportunities for Europe
and Japan to develop new commercial and industrial ties. The military sector also seems increasingly open to consider
cooperation with European manufacturers. The EBC is actively supporting this evolution.
Historically dominated by US manufacturers since the beginning of the 1950s, the Japanese commercial aircraft andhelicopter market is among the largest in the world. The EBC welcomes the decision by the two major Japanese airlines
to choose European products. This is clear evidence that Europe can lead the way when it comes to high technology,
quality, customer services, and cost-effectiveness.
There are several examples of successful cooperation between our industries. Kawasaki Heavy Industries (KHI) and
Airbus Helicopters on the BK117 helicopter co-development programme, collaboration between various Japaneseindustries and Rolls-Royce on the Trent engines, and other cooperations between Safran and Leonardo with theirrespective Japanese partners, are encouraging examples of successful collaboration between the European and Japanese
aeronautics industries. The Government of Japan and European Governments have signed various bilateral agreementsthat have led to increased engagement and project discussions. The EBC expects positive results deriving from concrete
programmes of EU-Japan co-development.
EBC strongly believes that shifting from a policy of sole domestic development to one of international co-development
will create superiority in the technological field, and expand Japan’s market in both volume and range of products.
Proactive collaboration with successful European companies would enable Japanese corporations to strengthen theirpositions in commercial aeronautics. By joining a wider range of projects, Japanese firms would be able to expand theirinternational business opportunities and further develop their technological base. The EBC feels that there areconsiderable opportunities for large-scale joint development programmes between Japanese and European industries,
especially in the field of transport aircraft, and urges Japan’s Government and aerospace players to support suchinitiatives.
As part of the Aviation Strategy adopted on December 7th 2015, the European Commission "recommended that the EU
negotiates further bilateral aviation safety agreements with important aeronautical manufacturing nations such as
Japan". In March 2016, the 28 EU Member States authorised the Commission to do so on behalf of the entire European
Union. The Commission will be supported by the European Aviation Safety Agency, which is recognised throughout
the world as the EU's aviation safety and aircraft certification body, to negotiate with its Japanese counterpart, the Japan
Civil Aviation Bureau. The EBC is encouraging this initiative which will remove the duplication of oversight activities
and support mutual safety recognition between the EU and Japan.

70

EBC Aeronautics, Space, Defence &Security Committee
Member Companies

Key Issues and Recommendations

AgustaWestland Japan
Airbus Japan
Arianespace
BAE Systems
Dassault Systems
Rolls Royce
SafranThales Japan■ Promoting partnerships with the EU
Yearly status report: progress. The aeronautics market is becoming more and more global, and Europe has strong
technological advantages. For example, European companies have experience in the area of high-end
technologies that are environmentally friendly. Procurement decisions should be made taking into consideration
both competitive and technological advantages. European manufacturers of commercial aircraft, engines,
components, and navigational equipment offer state-of-the-art technology at internationally competitive prices.
The EBC consistently requests Japan to modernise its air traffic management system. Some of the European
companies are recognised worldwide as setting state-of-the-art standards, yet they face great difficulty in evenbeing considered in the process for new equipment procurement in Japan such as for the air traffic management
system. The EBC deplores this situation, which may be keeping Japan from benefiting from the latest advances insafety standards.
Recommendations:
The EBC encourages Japanese firms to diversify their sources of supply and consider the advantages ofEuropean products in the aeronautics field for the benefit of their customers, the general public, andshareholders.

The EBC urges the Japanese authorities to facilitate greater use of equipment from foreign manufacturers
who can help them address the need for improvements in air transport safety.
■ Supporting BASA negotiation between EU and Japan
Yearly status report: progress. In March 2016, the European Commission was authorised by the 28 member
states to open negotiations with a view to concluding a Bilateral Air Safety Agreement (BASA) between theEuropean Aviation Safety Agency and its Japanese counterpart, the Japan Civil Aviation Bureau. Such an
agreement will enhance air safety worldwide and enable cooperation in the aviation safety domain, including
certification, testing and maintenance of aeronautical components, air operations, flight crew licensing, air traffic
management and airports. It will also reduce the transaction cost of exporting aircrafts, while ensuring high levelsof safety in partner countries and helping to harmonise product standards worldwide.
Recommendation:

The EBC encourages the EU and Japan to start negotiations with the goal of finalising a Bilateral Air Safety
Agreement as soon as possible in order to develop business opportunities between the EU and Japan byremoving administrative hurdles.
■ Promoting the use of large aircraft at Haneda Airport
Yearly status report: limited progress. After the successful Rio 2016 Olympics, the Tokyo 2020 Olympics is lessthan four years away, and with the number of foreign visitors to Japan already close to 20 million for 2015, the
new target set by the Japanese Government is up to 40 million visitors in 2020. Accordingly, it is crucial for
Haneda Airport, now the preferred airport in Tokyo, to be able to accommodate the increase in traffic. The EBC
welcomes the decision to allow Lufthansa to operate the Boeing 747-8i at Haneda, but the airlines should also beallowed to operate the Airbus A380. With ANA planning to use the A380 aircraft between Tokyo and Honolulu
from 2019, Haneda must be available for such an operation. The decision to allow day-time A380 operations at
Haneda will increase the number of passengers using Haneda without having to provide additional landing andtake-off slots. An added advantage is that the A380 has the lowest noise footprint among the new generation
aircraft.
Recommendation:

The EBC urges the Japanese authorities to engage potential A380 operators in a discussion on the use ofHaneda by the A380 aircraft as soon as possible.

71

Aeronautics
2Mr. Stephane Ginoux
Chair, Aeronautics, Space, Defence & Security Committee(President, Airbus Japan KK)
c/o Airbus Japan KK
Roppongi Hills Mori Tower, 19F.
6-10-1 Roppongi, Minato-ku, Tokyo 106-6119
Phone 03-5775-3300
Fax
03-5775-0123

SPACE
Introduction
The Space Policy Commission and the National Space Policy Secretariat (NSPS) established in the Cabinet office now
set Japan’s space policies across all ministries and agencies. A new “Basic Plan on Space Policy” was adopted in
January 2015. Space is treated as an important industrial and commercial sector, and now officially as a national
security asset. Japan’s high sovereign debt contributes to making an effective unification of space policies a necessity.
In an attempt to maintain a healthy domestic space industry, Japan’s administration actively seeks growth in export
markets, although the industry is still mostly geared towards domestic government contracts.
The Ministry of Economy, Trade and Industry (METI) actively helps all-Japanese industry consortia to supply satellite
systems to emerging countries through Official Development Assistance (ODA) funding. The packages often include
satellites, launch services, operations, data analysis, maintenance, training, technology transfers, and other services.
Contrary to EU policy, Japan's ODA is tied, which means that contracts must be awarded to its domestic industry,
resulting in a distorted market that basically excludes foreign manufacturers and service providers. In August 2015, theCabinet Office launched a joint government-industry task force on the export of space-related products.
The private satellite market (roughly one commercial satellite per year) is ostensibly open. Satellites with business andpractical applications of former government monopolies have been procured through international tenders since 1990.
These now only relate to the Multi-functional Transport Satellite (MTSAT) and broadcasting satellite (BSAT) series.
Direct bids in government tenders are generally not possible for foreign companies. No-tender government programmes
include the science and technology satellites of the Japan Aerospace Exploration Agency (JAXA), some programmes
under METI, and the defence-purpose remote-sensing Information Gathering Satellites (IGS). The NSPS’s priority is
the Quasi-Zenith Satellite System (QZSS), a Japanese positioning, navigation and timing satellite system. A defence
communications satellite programme is also underway. Japan's willingness to cooperate in satellite development
programmes still rarely extends to European companies.
Ariane launchers are successful in Japan and can play a broader role in cooperation. Arianespace and Mitsubishi Heavy
Industries have made it possible for commercial customers to shift satellites from Ariane 5 to H-IIA and vice-versa to
avoid launch delays due to possible technical mishaps. However, talks between the Japanese and European spaceauthorities towards a mutual back-up of government launch missions have been stalled for a decade.
A continuing risk in Public-Private Partnership (PPP) projects is that satellites with both government and commercial
payloads could be declared “governmental” as far as building and launching them is concerned. Foreign satellite makers
and launchers could thus be excluded from Japan’s commercial market in a piecemeal fashion.
Japanese investment in ground equipment has been spurred by its move into security and defence applications. Japan's
space activities increasingly require ground equipment for image processing and interpretation, and for applications inagriculture, fisheries and geophysics. In addition, homeland security-type applications enhance defence capability.
Protectionist procurement methods are still being used in this area to the disadvantage of foreign suppliers.
The EBC generally supports Japan’s space-related administrative reforms as they have made the jurisdiction moreconsistent and intelligible. While respecting Japan's space policies, however, the EBC believes that fewer all-Japaneseconsortia, less tied ODA and more work with Europe would bring gains in terms of budgetary savings, national security,
technology, and commercial success. We hope that the current FTA negotiations will induce Japan to prove that its
claims of an open market are credible.

72

EBC Aeronautics, Space, Defence &Security Committee
Member Companies

Key Issues and Recommendations

AgustaWestland Japan
Airbus Japan
Arianespace
BAE Systems
Dassault Systems
Rolls Royce
SafranThales Japan■ General environment
Yearly status report: protectionist risk. The upcoming approval system for new satellite projects and the handlingof future PPP projects bring with them new risks of protectionism. The EBC advocates increasing, not reducing,mutually beneficial trade and cooperation. More openness to European industry would benefit Japan. In addition,
Europe provides many technologies free from “black-box” technology concealment policies.
Recommendations:Satellite projects with both government and commercial aspects should not be declared “governmental” forthe purpose of excluding the participation of foreign industry.

The EBC urges more Japanese cooperation with European space agencies. Space agencies on both sides
should compare their projects at an early stage and take greater advantage of cooperation opportunities.
Japan should also encourage more cooperation between the Japanese and European space industries onsatellite platforms and ground systems.

The EBC recommends Europe-Japan coordination and cooperation in space-related ODA worldwide.
■ Satellites
Yearly status report: no progress. Japan mostly ignores Europe’s satellite technology. The space agencies of bothsides cooperate and share data in science and research, but have almost no industrially meaningful cooperation.
Recommendations:
The EBC advocates closer space agency cooperation in satellite technology development and applications,with pro-active promotion and execution of industrially and commercially meaningful cooperation projects.

The Government of Japan should increase cooperation with Europe through the procurement of high-quality
satellite systems or equipment in fields related to national security. This includes the joint development ofhigh-quality sensors or their production by Japanese industry under licensing arrangements.

Government procurement methods, terms and conditions should not put European makers at a disadvantage.
■ Launchers
Yearly status report: no progress. Although Europe and Japan almost simultaneously started the development of
their respective next generation launchers, they have very little cooperation in that area. A plan for a balanced
mutual backup agreement to reduce delays in launching government satellites was evaluated positively by Japan’s
space authorities in 2002, but no agreement is in sight as political leadership is missing on this issue.
Recommendations:
Government satellite programmes increasingly require timely launches. The EBC urges Japan and Europe tobring about an effective, formal back-up cooperation between Japanese and European satellite launchers.
Europe and Japan should also consider cooperating on the development of non-critical components for theirrespective new generation launchers. The creation of Airbus Safran Launchers (ASL) and a new launcher
development organization in Europe make it easier to realise industry-led cooperation on development.
■ Ground equipment
Yearly status report: no progress. As Japan's international procurement activities in this area generally exclude
entire systems and remain limited to subsystems and components, foreign suppliers are placed at a disadvantage.
Recommendation:
Japan's international procurement of ground equipment should include whole systems. The procurement
process for standard ground processing products should not place European suppliers at a disadvantage.

Space
2

73

Mr. Stephane Ginoux
Chair, Aeronautics, Space, Defence & Security Committee(President, Airbus Japan KK)
c/o Airbus Japan KK
Roppongi Hills Mori Tower, 19F
6-10-1 Roppongi, Minato-ku, Tokyo 106-6119
Phone 03-5775-3300
Fax
03-5775-0123

DEFENCE & SECURITY
Introduction
Japan is the world’s third largest economy and an important ally for the EU, US and NATO (North Atlantic Treaty
Organization), sharing common values and interests in the Asia Pacific region and globally.
The security environment surrounding Japan remains complex. China continues to actively assert its claims on the
Senkaku Islands and this combined with North Korea’s missile development and ability to launch such weapons
constitute an uncertain environment. In addition, political tensions remain with the Republic of Korea (Takeshimaislands) and Russia (Northern Island chain). Because of these circumstances, Japan realises that it must reach beyond
the US if it is to play a greater role on the global stage and has started to broaden cooperation with other maritime
powers, such as Australia and India. Significantly, the Liberal Democratic Party (LDP) has followed through on the goalof the previous ruling party, the Democratic Party of Japan (DPJ), to form stronger defence and security ties with
Europe.
The signing of a bilateral agreement for defence cooperation between UK and Japan took place in July 2013, andbetween France and Japan in March 2014. A similar agreement between Germany and Japan will be finalized before theend of 2016. The EBC is pleased by these developments and hopes the respective agreements can be put to use without
delays. Throughout 2014, the Japanese government clearly indicated that Japan cannot afford to develop all the defence
capability it desires through its own defence budget and expects the domestic defence industry to participate ininternational co-development projects, notably with European counterparts. In 2016, numerous bilateral events between
EU and Japanese defense organisations have been conducted demonstrating renewed interest by Japanese defense
organisations in developing cooperation with their EU counterparts.
The EBC has welcomed these changes and the opportunity to meet representatives from the Ministry of Defence(MoD), Ministry of Foreign Affairs (MOFA), Ministry of Economy, Trade and Industry (METI) and the Defence
Production Committee of the Japan Business Federation (Nippon Keidanren) to discuss the guidelines and explore theimplications for EU-Japan industrial partnerships. A series of forums continued through 2016, organised between METI
and various European bodies, including the EBC, GIFAS (Groupement des industries françaises aéronautiques etspatiales) and ADS (Aerospace Defence Security) to push forward the industrial dialogue.

74

EBC Aeronautics, Space, Defence &Security Committee
Member Companies

Key Issues and Recommendations

AgustaWestland Japan
Airbus Japan
Arianespace
BAE Systems
Dassault Systems
Rolls Royce
SafranThales Japan■ Procurement
Yearly status report: some progress. The EBC anticipates that the Japanese government’s desire to move towards
collaborative defence programmes with Europe and the progress in bilateral agreements with individual European
nations will result in amendments to the defence equipment acquisition process and improvements intransparency of the decision-making. The EBC believes that the recommendations listed below will also benefit
the Japanese industry as it prepares to enter the world of defence exports.
Recommendations: Japan should improve transparency towards foreign suppliers by making the Statement of Requirements(SOR) for procurement processes more widely available and placing more emphasis on life cycle costs(LCCs).
 The MoD should consider adopting the latest NATO and civil standards for the initial research anddevelopment phase of each defence project to strengthen competition and reduce development risks.

The Government of Japan should repeal unlimited liability in the terms and conditions of public tenders,since this puts foreign bidders at a considerable disadvantage vis-à-vis Japanese contenders.
 The MoD should also implement a multiyear contract scheme for weapon acquisition in order to obtain thebest conditions in terms of prices and local content from foreign manufacturers.
 The Japanese Government should present and explain the organisation and functioning of the new ATLA
(Acqusition, Technology & Logistics Agency) to the European industry.
■ Industrial partnerships
Yearly status report: progress. During the last couple of years, a series of Japan-Europe Defence Forums,
organised with the support of METI, European bodies (EBC, GIFAS and ADS) and the Nippon Keidanren, haveencouraged a closer dialogue between the Japanese and European defence industries. Revitalisation of theJapanese defence industry may depend on the diversification of its alliances as well as on joining new
development programmes for dual use technology. In this respect, the European defence and aerospace industry isoffering a number of new opportunities for joint development.
Recommendations: Japan and the EU Member States should move forward promptly with more substantial, collaborative
industrial defence programmes and avoid running the risk of under-utilisation of the existing agreements.
 Defence agreements with EU member countries are crucial for future defence collaboration and the EBC
strongly recommends finalising and concluding all on-going discussions in order to foster industrial
partnerships.
 Intellectual property rights must at all times be respected if partnerships are to be successful.
 For Japanese authorities in charge of industrial policy, public funding should be provided to support thosetechnologies that address both civil as well as military markets.
■ Defence exports
Yearly status report: some progress. The European defence industry has a large share of the global defence
market through both direct sales and cooperation with foreign governments and industries. European defence
companies are eager to work with the Japanese defence industry to develop programmes that have a broader
market application and are capable of export by the partnership. However there is a need for further relaxation in
the Three Principles on Arms Export in order to finalise a ‘white list’ of countries to which Japan may agree toexport.
Recommendation: The Japanese Government should continue to define its defence export policy.

Defence & security75Mr. John Mader
Chair, Construction Committee(Senior Project Manager, Lendlease Japan, Inc.)
c/o Lendlease Japan, Inc.
Akasaka Enokizaka Mori Bdg. 3F
1-7-1, Akasaka, Minato-ku, Tokyo 107-0052
Phone 03- 6866-5610
Fax
03- 6866-5607

CONSTRUCTION
Introduction
Ongoing fiscal stimulus measures, continuing reconstruction efforts following the 2011 earthquake and the more recent
April 2016 earthquake, and anticipated demand from building projects for the Olympics will ensure continued demand
for residential and non-residential construction. Furthermore, Japan's housing market has received a boost fromgovernment measures, including the negative interest rate, and the Residential Property Price Index was up 2.3% in May
2016 according to figures from the Ministry of Land, Infrastructure, Transport and Tourism.
However, various challenges continue to inhibit Japan's construction sector and only minimal year-on-year growth to a
total of 51.8 trillion yen is expected in construction spending for fiscal year 2016 and thereafter. In fact, construction

spending has levelled off during the past few years suggesting that the construction industry is and will continue to beunable to meet the growing demand. Lack of sufficient construction labour is often cited as the cause of the capacity
limitation, but increased demand for construction materials, leading to higher prices also plays a role. Moreover, current
procurement and implementation methods may be exacerbating the problem on large public projects with tightschedules.
Ultimately, the key to unlocking new growth potential will be new regulations and technologies related to sustainability
and energy efficiency. Given that over 30% of energy in Japan is consumed by buildings, a proportion that continues toincrease, the activities of the construction and property industries are coming under close scrutiny. Energy remains along-term challenge in the aftermath of the Tohoku earthquake and the Fukushima nuclear plant accident, resulting in anenvironment in which supplies are tight and more expensive. In response, authorities, businesses, and consumers haveshown a renewed interest in sustainability and energy efficiency. Tighter regulation is now needed to drive change andyield measurable results.
Many regulatory initiatives are made at municipal level via the administrative guidance process. This places local
authorities in a difficult position when required to make fair and technically informed decisions on compliance. In somecases, the local authorities make decisions without the knowledge necessary to interpret legislation correctly andsometimes without reference to international standards. This hampers the efforts of companies, both domestic andespecially foreign, to keep track of all the relevant guidelines. Furthermore, much of the documentation is available onlyin Japanese, which reduces transparency and makes it difficult for foreign companies to recognise opportunities or
ensure compliance, even when they have the relevant technical capacity.
The EBC encourages the Japanese Government to prioritise policies that promote sustainable practices and advocatesstandardisation of regulations and application of global equivalencies and internationally recognised assessment
techniques, as alternatives to the current mix of local and proprietary incentives or quasi-mandatory administrative
guidance.

Key FTA/EPA issues





76

Harmonisation and mutual acceptance of building material standards
to enable construction product convergence, so that EN standards (European Standards) and CEmarking (Conformité Européenne) can be used interchangeably with JIS/JAS (Japan Industrial
Standards/Japan Agricultural Standards) standards
Mutual acceptance of contractor qualifications
Transparency and strict enforcement of rules for construction procurement

EBC Construction Committee
Member Companies
ClestraLendlease Japan
MasterMind
Saint-Gobain JapanKey Issues and Recommendations■ Harmonisation of building material standards and contractor qualifications
Yearly status report: no progress. Reform of overly prescriptive regulations and rationalisation of unnecessarily
complex procedures for obtaining mandatory approvals is needed so that innovative designs, technology,
materials and methods, like those offered by European firms, can be more readily applied in Japan. Little progresshas been made in aligning EU and Japanese standards and testing methods, so re-testing and re-certification are
still required, raising the cost of imports and making them less competitive than domestic supplies.
Recommendations:Japan and the EU should work towards mutual recognition of JAS/JIS and EN standards for building
materials and ensure that this is covered in negotiations towards a comprehensive FTA/EPA. CE marking of
construction products should suffice as a guarantee of their high quality and safety when sold in Japan.

The Japanese authorities should recognise relevant foreign experience as equivalent to domestic experience
when granting a general construction licence (kensetsugyo kyokasho).
■ Promotion of environmentally friendly construction
Yearly status report: some progress. Improved building insulation is one of the simplest and most effective ways
to reduce energy use and CO2 emissions. Improved insulation also reduces operating costs, thus increasing returns
on investment. The energy efficiency of most Japanese buildings is far below international standards and bestpractices. Japan has introduced regulations requiring higher performance from new buildings, thus the natural
next step is to improve the energy efficiency of the existing building stock. Long-term incentives geared tostimulating building renovations should be considered. Renovation opportunities range from simple component
replacements (double-glazed windows; high-efficiency air conditioners; better insulated walls, floors and ceilings;
windows with lower thermal transmission values) to the application of new technologies for on-site energy
recovery, water treatment, and other conservation measures.
Recommendations:
The Government of Japan should continue to strengthen regulations aimed at promoting energy efficiency inbuildings as an easy way to set a more ambitious target for cutting carbon emissions (the current target is to
cut greenhouse gas emissions by just 26% by 2030). The best available technologies and transparent
methods for measuring performance should be applied.

The Government of Japan should mandate much stricter insulation standards for buildings. Rating tools suchas CASBEE (the Comprehensive Assessment System for Built Environment Efficiency) and schemes suchas the Energy Efficiency Standard for Houses and the PAL/CEC (Perimeter Annual Load/Coefficient forEnergy Consumption) assessment for larger office buildings are a step in the right direction.
■ Transparency and accessibility of information and regulations
Yearly status report: no progress. Currently much of the interpretation of national construction-related legislationand guidelines is left to the discretion of local authorities, creating scope for unnecessary variation between
authorities and uncertainty for potential suppliers. Moreover, the decisions of many local authorities may bequestionable due to the lack of knowledge needed to interpret the legislation correctly.
Recommendation:

The national authorities who regulate the construction market should take appropriate action to rationalise
the current patchwork of local regulations and support local authorities by clarifying the legal framework.
■ Immigration regulation
Yearly status report: some progress. Both the continuing reconstruction of the Tohoku region and anticipateddemand from building projects for the Olympics will put further strain on the already tight construction labour
market. Under the Japan Revitalization Strategy, foreign trainees are now allowed to stay an extra 2 years inJapan (bringing the total to 5 years) and women are being encouraged to enter the work force.
Recommendation:
Japan should continue efforts to increase women’s participation in the labour market and liberalise
immigration policy so that construction companies can use overseas skilled labour on fixed-term contracts.

Construction
277

Mr. Carl-Gustav Eklund
Chair, Materials Committee(Representative Director, President, Hoganas Japan K.K.)
c/o Hoganas Japan K.K.
Akasaka Shasta East 6F, 4-2-19 Akasaka
Minato-ku, Tokyo 107-0052
Phone 03-3582-8280
Fax
03-3584-9087

MATERIALS
Introduction
Japan has developed vast knowledge and expertise in processing and recycling materials and is at the forefront of manytechnologies, such as those used to produce rechargeable batteries for hybrid vehicles, nanotechnologies for
manufacturing semiconductors, and various products related to environmental technology. These advanced technologies
depend on the availability of key raw materials and Japan’s ability to secure a stable, high-quality supply. It is,therefore, of the utmost importance that Japan adopts a strategy based on security of supply at competitive prices, which
can only be achieved by allowing overseas suppliers unrestricted access to its domestic market. A shift in strategy
among Japanese companies has already taken place to minimise risk and dependency on unstable sources, leading themto diversify purchases despite existing tariffs. Ultimately, however, their competitiveness is compromised because thesetariffs have to be passed on to their customers.
Tariffs damage competitiveness and threaten the future of Japan’s domestic industry. Tariffs on processed nickel
significantly increase local procurement costs, at a time when companies in sectors such as stainless steel production are
facing stiff challenges from overseas competitors, particularly in South Korea and China. The same situation applies tofused aluminium oxide (artificial corundum) and to silicon carbide, both of which are widely used in the refractory andabrasive industries and in electric components. Imported fused aluminium oxide and silicon carbide are both subject to a
3.3% tariff, even though domestic production can only fulfil, at best, 10% of annual demand. The same is true formanganous manganic oxide, essential for the battery industry, as Japan’s level of production is below 10% of demand.
Tariffs are a barrier to increasing trade between Europe and Japan. So are non-tariff barriers, in the form ofadministrative burdens, regional differences in registration procedures and inconsistent use of classifications, which all
make doing business in Japan unnecessarily costly and difficult for foreign companies. The benefits of eliminating
tariffs and of harmonising and simplifying classifications and procedures would be felt not only by European suppliers,
but even more by Japanese industry, making it more competitive.
Chemicals normally fall within the competency of the Ministry of Economy, Trade and Industry (METI), which is
involved in the task of harmonising the rules regulating chemicals. However, some years ago, the Ministry of Health,Labour and Welfare (MHLW) initiated a discussion on how to label chemical products that could be harmful to people
handling them. Unfortunately, MHLW’s work seems to have been conducted in isolation and its new system, which
entered into force on 1 July 2016, lacks logic. As an example, products that are not registered in Japan, despite having a
CAS (Chemical Abstract Service) number, could now be labelled as harmful since MHLW’s warning labels are based
either on the product’s chemical components (rather than on the final substance), or on the most similar substancealready registered in Japan. Additionally, it remains unclear whether or not the results of testing conducted in Europe
under REACH (Registration, Evaluation, Authorisation, and Restriction of Chemicals) can be used. There isfurthermore very little information in English to help European companies to understand and follow MHLW’s rules.

Key FTA/EPA Issues
78

Japan should remove all tariffs on industrial raw materials
The EU and Japan should work together to harmonise and mutually recognise EU REACH and theJapanese Chemical Substance Control System

EBC Materials Committee
Member Companies
Alteo-Alumina
Elkem Japan
Eramet International
Hoganas Japan
Imerys High Resistance Minerals Japan
Kerneos
Plansee Japan Ltd

Key Issues and Recommendations■ Tariff issues
Yearly status report: no progress. Currently, Japan retains tariffs on some metals. These metals are in many cases
essential for Japan’s core industries, including the vehicle, battery and more traditional steel industries. Tariffs
constrain the competitiveness of Japanese manufacturing, a sector already under pressure from low-cost
countries. Removal of import tariffs is, therefore, imperative for Japan to retain its competitive edge. For the
stainless steel industry, where 40% of the production cost lies in the cost of nickel, the tariff plays a major role indetermining competitiveness. The same can be said for the battery and photovoltaic sectors, where it makes little
sense to penalise companies with an additional cost added through a tariff. The EBC believes that further
investment could be made in these sectors if input materials could be imported duty-free. This is of particularconcern for silicon carbide and manganous manganic oxide as domestic production of these materials accounts
for only 10% of demand. Moreover, supplies of industrial materials to Japan are occasionally subjected toarbitrary tariff classifications and revisions. Regional Customs offices do not apply classification rules on aconsistent basis and the appeal mechanism is both time-consuming and costly, without any guarantee that theoutcome will be in line with international practice. This is a problem not only for products entering the market for
the first time, but also for well-established products subject to arbitrary classification reviews.
Recommendations:
Under the EU-Japan FTA/EPA, the Government of Japan should remove import tariffs from all industrial
raw materials, including: nickel products and aluminium, such as semi-fabricated and flat-rolled aluminium, fused aluminium oxide, silicon carbide, and manganous manganic oxide, and non-organic chemicals and polymers.

The Government of Japan should rationalise its tariff classification regime and develop a comprehensive
strategy to improve consistency between regional Customs offices in classification rulings, and to strengthenand simplify dispute resolution mechanisms.
■ Chemical Substance Control Law
Yearly status report: some progress. With both the EU and Japan now having introduced chemical substanceregistration systems, producers, exporters and importers are faced with re-testing, double submissions and anincreased administrative burden to fulfil the respective regulations. On top of this, the EBC is also concerned thatin some cases, in order for a European product to be tested and approved for sale in Japan, commercially sensitive
information has to be handed over to Japanese competitors. This gives the competitors an undeserved advantage,
and creates unfair competition.
Recommendation:
Japan and the EU should harmonise their registration systems or mutually recognise test results andsupporting documents to avoid re-testing and unnecessary administrative burdens.
■ Workers’ safety labelling for chemicals
Yearly status report: new issue. When products are not registered in Japan despite having a CAS number, MHLW
does not consider the actual nature of the substance but applies a warning label based either on the individualcomponents or on the most similar substance that is already registered in Japan. This can lead to compounds being
unnecessarily labelled as dangerous. There is, furthermore, a lack of information in English on this legislation.
Recommendations:
MHLW should give due consideration to compounds not currently registered in Japan that nevertheless havean international CAS number.

MHLW should provide proper information on how importing companies should comply with its regulations,
including in English.

Materials

79Mr. Taku Niioka
Chair, Energy Committee(Manager, Business Development Dept.
Power Grids Division, ABB K.K.)
c/o ABB K.K.
ThinkPark Tower 22F., 2-1-1 Osaki, Shinagawa-ku, Tokyo 141-6022
Phone 03-4523-6000
Fax
03-4523-6190

ENERGY
Introduction
Japan’s utility industry used to be run by ten regional Electrical Power Companies (EPCOs) that had a virtual monopoly
on power generation, transmission and distribution in each area. In March 2000, partial liberalisation was introduced in
respect of retail power supply for extra high voltage users. The Ministry of Economy, Trade and Industry (METI) opted
for a limited model of liberalisation, where vertical integration of electricity generation, transmission and distribution
was maintained in order to secure a stable supply. In 2011, the consequences of the Great East Japan Earthquake and thesubsequent Fukushima nuclear accident revealed weaknesses in this model, due to limited grid interconnection between
the EPCOs, low competition and strong price control, and a lack of flexibility to integrate renewable energy.
As the first step to address these issues, the Organization for Cross-regional Coordination of Transmission Operators(OCCTO) was formed in April 2015, and subsequently, in September that year, an Electricity Market SurveillanceCommission (EMSC) was established under METI to monitor and regulate the market. A second step was taken in April
2016, when full retail liberalisation was introduced as part of the Electricity Market Reform planned by METI’s Agency
for Natural Resources and Energy (ANRE). The third step, legal unbundling of the transmission and distribution sector
from the EPCOs, is scheduled for 2020. The EBC believes that fair and transparent processes will enable healthy
competition in the electricity market.
Following the 1970s oil crisis, Japan set out to reduce its dependency on imports of gas, oil and coal through increased
use of nuclear energy, such that by 2010, nuclear energy accounted for 26% of the power generation energy mix.
However, after May 2012, all of Japan’s nuclear plants were shut down and a programme of safety reviews andupgrades was initiated, which is still ongoing. Two reactors, Sendai 1 and 2, were the first to be back on grid in August
2015, followed by Takahama 3 and 4 (now idle due to an injunction by Otsu District Court), and Ikata 3 in August 2016.
Japan’s Basic Act on Energy Policy sets the following goals:
 Securing of a stable energy supply
 Environmental sustainability
 Use of market mechanisms, which should, however, remain consistent with the first two basic goals.
In April 2014, the Government completed a review of the energy mix and adopted a new Basic Energy Plan,
confirming: Nuclear power is an important source of base load electricity, "which will be reduced as much as possible" but "acertain amount will be preserved with regards to security of supply, and costs".
 The target for renewables is “to go beyond previous targets set in past plans’’.
 The closed-fuel cycle policy will continue.
In July 2015, METI approved a new energy mix target for 2030, designed to meet goals in terms of safety, energy
security, economic efficiency and the environment. The target mix consists of 20-22% nuclear, 27% liquid natural gas,
26% coal, 8.8-9.2% hydro and 13.4-14.4% other renewables. Subsequently, in June 2016, the Feed-In Tariff (FIT) Rulechanged. Moreover, an amendment to the Act on Special Measures Concerning Procurement of Electricity from
Renewable Energy Sources by Electricity Utilities (the "FIT Amendment Act") was promulgated and will have asignificant impact on projects that did not have a grid connection agreement by 31 July 2016, as new projects after thatdate will be subject to a three-year development deadline.
The EBC believes that the ties between the EU and Japan in this area should be further strengthened to facilitatecommercial exchange, achieve consensus on common standards, support reaching the CO2 emissions targets of COP21,
and facilitate access to energy at the lowest possible cost. The Government’s energy mix target for 2030 will be
reviewed to check if the reduction target in greenhouse gas (GHG) of 26% in 2030 is feasible, from the base year 2013.
However, the current investment plan to add new coal-fired power plants might lead to stranded assets.

80

EBC Energy Committee
Member Companies
ABB
Areva Japan
Asia Focus
EDF Japan
Phillips Lighting Japan
Schneider Japan
Total Japan
TÜV Rheinland JapanKey Issues and Recommendations■

Stability of supply versus cost
Yearly status update: some progress. Stability of supply will remain the Japanese Government’s top priority forthe economy. Fossil fuels are and will most likely remain the key pillars of the energy mix, even if the cost ofimports threatens the competitiveness of Japanese industry in the global market.
Recommendations:
Accept international standard products and solutions, to reduce EPCO Capital Expenditure (CAPEX) andOperational Expenditure (OPEX).

Increase the transparency of EPCO procurement in line with the World Trade Organisation’s guidelines.
Encourage development of renewable energy, which must be carried out ambitiously with realistic targets,
aimed at increasing the safety and reliability of the energy supply.

Since nuclear energy will remain a core constituent of the Japanese energy mix, ensure that its long-termsustainability is based on a reliable approach to all safety issues, and the smooth implementation of aback-end policy for recycling of spent fuel and final disposal of radioactive waste. It will also be necessary
to address the issue of the ageing of existing plants (including considering plant lifetime extension and/or
replacement of ageing reactors, and decommissioning).

Since fossil fuels will remain the most significant source of electricity in the energy mix and in order toreduce greenhouse gases, favour the use of natural gas over coal for future investments in power generation.

■

Transmission and Distribution
Yearly status update: progress. Japan’s transmission network is centred on the production sites, with the maintransmission at 500kV. Only three convertor stations connect the 50Hz and 60Hz networks. The limited
interconnections between EPCOs and between the 50Hz and 60Hz networks represent a real risk to security ofsupply. In contrast, European and US grids have extensive plans for use of High Voltage Direct Current (HVDC),
which offers more flexibility in energy flows from one region to another and easier integration of
non-conventional energy sources into the overall energy supply.
Recommendations: While preparing for legal unbundling in 2020, implement regulations that will ensure security of supply andfair market mechanisms.
 Strengthen the authority of the OCCTO and EMSC to deliver increased interconnection capacity between
Transmission and Distribution System Operators (TDSOs), achieving fair electricity transactions andencouraging mergers between TDSOs.
 Ensure electricity interconnections are developed at national and international levels based on HVDC,
Frequency Converters (50-60Hz), Flexible Alternate Current Transmission Systems (FACTS), and Battery
Energy Storage Solutions (BESS) to achieve resilience throughout the grid.

■

Nuclear energy and nuclear safety
Yearly status update: some progress. In the wake of the Fukushima nuclear accident, Japan reformed its nuclear
safety regulator. The Nuclear Regulatory Authority (NRA) was established in September 2012 and, in July 2013,
it introduced new nuclear safety standards and nuclear safety regulations for nuclear power plants. These wereextended to other nuclear facilities in December 2013. The NRA is currently checking the safety of all Japanese
power plants, to determine whether they conform to the new regulations and if they can be authorised to restart ornot. As of May 2016, ten electric power companies had applied to the NRA for safety evaluations of a total of 25
reactors.
Recommendations:
Increase cooperation and transparent exchange with international organisations such as the International
Atomic Energy Agency (IAEA) and World Association of Nuclear Operators (WANO) to improveworldwide nuclear safety levels.

Develop complete interim and final waste repositories for spent fuel and radioactive waste.
Adapt the legal framework to clarify the process for nuclear reactor restarts.

Energy281■Wind energy
Yearly status update: no progress. Wind energy could help Japan to reduce its reliance on imported fossil fuels
and reach its CO2 emissions targets. Modern wind turbines now contain sophisticated technology that works wellwith established power grids of all kinds, ranging from large transmission systems to isolated local grids.
Recommendations:
Facilitate the development of on-shore as well as off-shore wind farms by reducing unnecessary regulations
that add to their cost. This can be achieved by revising environmental impact assessment requirements that
unreasonably extend the time frame for wind farm development.

Learn and benefit from the technical standards activities for wind energy being carried out by theInternational Electro-technical Commission (IEC). Adopt internationally accepted certification standards andaccept international accreditation for wind turbines and their componentry as technical requirements rather
than existing local certification laws/regulations. This would both facilitate increased investment andJapanese technology exports.

■

Solar energy
Yearly status update: some progress. The principal impediments to sustainable growth of utility andcommercial-grade solar energy are: the cumbersome procedure for obtaining special permits for land re-zoning
for non-agricultural use, and the difficulties in obtaining reasonable interconnection commitments from regional
electric utilities and project financing for utility-scale photovoltaic (PV) projects. Additional challenges thatJapanese utility companies may soon encounter are managing cost effective solutions to integrate de-centralised
and intermittent renewable generations into the existing power grid.
Recommendations:
Adopt internationally accepted certification standards for solar modules, system components and design
qualifications rather than enforcing existing “Japan-only” components and certification standards.

Adopt an accreditation scheme to support the acceptance of test results, reports and certificates from any
accredited certification body, whether domestic or foreign, based on available international standards.

Create incentive and standardisation programmes for the EPCOs to contract PV project construction to an
emerging class of engineering and design companies, with the aim of reducing grid connection costs andlead times.

Encourage further grid interconnections, utilise existing pump storage power generation plants, battery
storage, and consider new technologies, such as conversion to hydro for further PV integration.

■

Energy efficient lighting
Yearly status update: progress. The increasing global demand for light, in a world beset by resource constraints
and climate change, has created a need for increased energy efficiency in lighting products. Lighting currently
represents approximately 20% of global electricity consumption and the lighting industry will need to adapt tochanging environmental regulations and the requirement for reductions in CO2 emissions. The key benefits of
LED over conventional lighting technologies are lower consumption and a longer lifespan. In addition, theintegration of LED technology, lighting controls and software allows for new functionalities and services, which
create a new market. Attractive and innovative lighting has become available as a result of the shift fromconventional to LED lighting, as well as the expansion from individual products to connected lighting systems
and services. Progress in extending the Internet of Things into lighting, and its innovation-driven strategy provide
quality energy-efficient lighting and enable people to enjoy new lighting experiences and benefits through apps
and cloud-based services for smart cities, smart retailing, smart offices and smart homes.
Recommendations:
Accelerate the introduction of digital lighting.

Encourage connectivity in lighting.

82
3Appendices
Pinnacle Sponsors
Gold Star Sponsors
Blue Star Sponsors
Special Sponsors
Sponsors
Supporters
Executive Operating Board
Board of Governors

PINNACLE SPONSORS

84
1

PINNACLE SPONSORS

Pinnacle sponsors
2

85

GOLD STAR SPONSOR

86
3

BLUE STAR SPONSORSBlue star sponsors
487BLUE STAR SPONSORS

88
5

SPECIAL SPONSORS

Airbus Japan K.K.

Cardif, BNP Paribas

LVMH Moet Hennessy Louis Vuitton Japan K.K.

Special sponsors
689

SPONSORS

Austrian Business Council
Boehringer Ingelheim Vetmedica Japan Co., Ltd.
Coloplast K.K.
Credit Agricole Life Insurance Company Japan Ltd.
DHL Supply Chain Ltd.
Hoganas Japan K.K.
ING Bank N.V.
Japan Europe Trading Co., Ltd.
Johnson & Johnson K.K., Consumer Company

90
7

SPONSORS

Laerdal Medical Japan K.K.
Lendlease Japan, Inc.
Lufthansa German Airlines
Nestle Japan Ltd.
Nippon Becton Dickinson Company, Ltd.
Roche Diagnostics K.K.
Swiss Business Hub Japan
Vodafone Automotive Japan KK

Sponsors
8

91

SUPPORTERS

B. Braun Aesculap Japan Co., Ltd.

METRO Cash & Carry Japan K.K.

Danish Chamber of Commerce in Japan

Nicole Racing Japan Co., Ltd.

Danone Japan Co., Ltd.

Nihon Michelin Tire Co., Ltd.

Delegation of the European Union toJapan

Puratos Japan Co., Ltd.
Radiometer K.K.

Embassy of the Czech Republic
Scandinavian Airlines System
Finnish Chamber of Commerce in Japan
Schenker-Seino Co., Ltd.
German Chamber of Commerce andIndustry in Japan
Imerys High Resistance Minerals Japan
K.K.

Solton Co., Ltd.
Takase Corporation
ZF Japan Co., Ltd.

Intesa Sanpaolo s.p.A.
Ireland Japan Chamber of Commerce

92
9

EXECUTIVE OPERATING BOARDEBC Chairman
Danny Risberg
President and CEO, Philips Electronics Japan, Ltd.
Philips Bldg., 2-13-37 Konan, Minato-ku, Tokyo 108-8507
Tel: 03-3740-5000; Fax: 03-3740-5012

EBC Vice-Chairman

EBC Treasurer

Carl-Gustav Eklund

Erik Ullner (Finland)

Representative Director, President
Hoganas Japan K.K.
Akasaka Shasta East 6F, 4-2-19 Akasaka
Minato-ku, Tokyo 107-0052
Tel: 03-3582-8280; Fax: 03-3584-9087

President, EU Japan Consulting & Associates Co., Ltd.
5-49-12-2F, Matsubara
Setagaya-ku, Tokyo 156-0043
Tel: 03-6379-4931

EOB Members
Michael A. Loefflad (Austria)

Matthew G. Connolly (Ireland)

Representative Director & President, Wuerth Japan K.K.
MT Bldg., 33 Sanmaichou, Kanagawa-ku
Yokohama-shi, Kanagawa 221-0862
Tel: 045-488-4186; Fax: 045-488-4187

Managing Director
EIRE Systems K.K.
Suruga Bldg., 3-24-1 Shiba, Minato-ku, Tokyo 105-0014
Tel: 03-5484-7935; Fax: 03-5484-7934

Els Verhulst (Belgium/Luxembourg)

Francesco Tiberio (Italy)

CEO
E.L. Consulting & Trading Co., Ltd.
257-12 Naganuma-cho, Inage-ku
Chiba-shi 263-0005
Tel: 043-250-7004; Fax: 043-250-7004

MM Powertrain Japan, Chief Technical Officer
Magneti Marelli Japan K.K.
Shinyokohama Square Bldg. 13F.
2-3-12 Shinyokohama, Kohoku-ku, Yokohama 222-0033
Tel: 045-478-0391; Fax: 045-478-0095

Jonty Brunner (Britain)

Hiroshi Ishiwata (Netherlands)

Regional General Manager, Japan & Korea
British Airways plc
Toranomon 37 Mori Bldg 9F
3-5-1, Toranomon, Minato-ku, Tokyo 105-0001
Tel: 03-5401-5726; Fax: 03-5401-5745

President and Representative Director
ASML Japan Co., Ltd.
Gotenyama Trust Tower Bldg. 4F
4-7-35 Kitashinagawa, Shinagawa-ku, Tokyo 140-0001
Tel: 03-5793-1801; Fax: 03-5793-1838

Claus Eilersen (Denmark)Rune Nordgaard (Norway)

c/o Danish Chamber of Commerce in Japan
c/o Royal Danish Embassy
29-6 Sarugaku-cho
Shibuya-ku, Tokyo 150-0033
Tel: 03-3780-8729; Fax: 03-3476-4234

Vice President, Norwegian Chamber of Commerce in Japan
c/o Innovation Norway in Tokyo
5-12-2 Minami-Azabu
Minato-ku, Tokyo 106-0047
Tel: 03-3440-9935; Fax: 03-3440-2620

Guy Bonaud (France)

Takeshi Fujiwara (Sweden)

Representative Director, General Delegate Safran Japan
Safran Turbomeca Japan
Loykrathong Toranomon Bldg. 3F
4-1-9 Toranomon, Minato-ku, Tokyo 105-0001
Tel: 03-5408-1083; Fax: 03-5408-1085

Vice President, Hospital Care Division
B. Braun Aesculap Japan Co., Ltd.
JEI Hongo Bldg.
2-38-16 Hongo, Bunkyo-ku, Tokyo 113-0033
Tel: 03-3814-2948

Albert X. Kirchmann (Germany)

Markus Gfeller (Switzerland)

Representative Director, Chairman of the Board
Mitsubishi Fuso Truck and Bus Corporation
1-1-2 Kashimada, Saiwai-ku, Kawasaki
Kanagawa 212-0058
Tel: 044-330-7071; Fax: 044-330-5831

President & CEO
G&S Japan K.K.
The Plaza F Building 801
5-35-15 Narita-Higashi, Suginami-ku, Tokyo 166-0015
Tel: 03-6323-6975; Fax: 03-6321-4816

Executive Operating Board
10

93

BOARD of GOVERNORSATIONAL CHAMBERSEBC Chairman
Danny Risberg
President and CEO, Philips Electronics Japan, Ltd.
Philips Bldg., 2-13-37 Konan, Minato-ku, Tokyo 108-8507
Tel: 03-3740-5000; Fax: 03-3740-5012

EBC Vice-Chairman

EBC Treasurer

Carl-Gustav Eklund

Erik Ullner

Representative Director, President
Hoganas Japan K.K.
Akasaka Shasta East 6F, 4-2-19 Akasaka, Minato-ku,
Tokyo 107-0052
Tel: 03-3582-8280; Fax: 03-3584-9087

President, EU Japan Consulting & Associates Co., Ltd.
5-49-12-2F, Matsubara
Setagaya-ku, Tokyo 156-0043
Tel: 03-6379-4931

Austria(ABC)

President

Representative

Peter Aldrian
Managing Director, Head of Business Unit
SemiconPLANSEE Japan Ltd.
Ark Hills Sengokuyama Mori Tower
1-9-10 Roppongi, Minato-ku, Tokyo 106-0032
Tel: 03-3568-2451; Fax: 03- 3568-2450

Ingomar Lochschmidt
Commercial Counsellor, Head of Commercial
Section, Austrian Embassy
3-13-3 Motoazabu
Minato-ku, Tokyo 106-0046
Tel: 03-3403-1777; Fax: 03-3403-3407

Belgium/
Luxembourg(BLCCJ)

President

Senior Representative

Fabrice D. Tilot
President, Triple-A Management, Ltd.
Isobe Bldg. 7F.,13 Samoncho
Shinjuku-ku, Tokyo 160-0017
Tel: 03-3225-8402; Fax: 03-3341-4550

Sophie Bocklandt
Dai 10 Daitetsu Bldg. 5F
23 Arakicho
Shinjuku-ku, Tokyo 160-0007
Tel: 03-6457-8662; Fax: 03-6457-8663

Britain(BCCJ)

President

Executive Director

David Bickle
Director, Business Tax Services
Deloitte Tohmatsu Tax Co.
Shin Tokyo Bldg. 5F, 3-3-1 Marunouchi
Chiyoda-ku, Tokyo 100-8305
Tel: 03-6213-3743; Fax: 03-3101-8751

Lori Henderson
Ark Hills Front Tower RoP
2-23-1, Akasaka, Minato-ku
Tokyo, Japan 107-0052
Tel: 03-6426-5739; Fax: 03-6426-5749

Denmark(DCCJ)

President

Executive Directors

Stefan Linde Jakobsen
President & Representative Director
Coloplast K.K.
11F., 2-1-30 Kudan Minami
Chiyoda-ku, Tokyo 102-0074
Tel: 03-3514-4141; Fax: 03-3514-4187

Nanami Mie Brandt & Serena Iida
c/o Royal Danish Embassy
29-6 Sarugaku-cho
Shibuya-ku, Tokyo 150-0033
Tel: 03-3780-8729; Fax: 03-3476-4234

Finland(FCCJ)

President

Executive Director

Pekka Laitinen
Representative Partner, Septem Partners
Ark Hills Executive Tower 612
1-14-5 Akasaka, Minato-ku, Tokyo 107-0052
Tel: 080-5172-5984; Fax: 03-3582-1229

Clas G. Bystedt
Forest View Meguro 101
5-11-17, Shimomeguro
Meguro-ku, Tokyo 153-0064
Tel: 03-5725-9596; Fax: 03-5725-9597

94
11

BOARD of GOVERNORSATIONAL CHAMBERS
France(CCIFJ)

President

Germany(AHK)

President

Director General

Bernard Delmas
Nicolas Bonnardel
Representative Director Chairman
Iida Bldg.
Nihon Michelin Tire Co., Ltd.
5-5 Rokubancho,
Shinjuku Park Tower 13F., 3-7-1
Chiyoda-ku, Tokyo 102-0085
Nishi-Shinjuku, Shinjuku-ku, Tokyo 163-1073 Tel: 03-3288-9622; Fax: 03-3288-9558
Tel: 03-5990-5700 ; Fax : 03-5990-5620
Nikolaus Boltze
Representative Director & President
ThyssenKrupp Japan K.K.
Akasaka Garden City 17F.
4-15-1 Akasaka, Minato-ku, Tokyo 107-0052
Tel: 03-6441-0643; Fax: 03-3224-1240

Chief Executive Officer / Delegateof German Industry & Commercein JapanMarcus Schurmann
Sanbancho KS Bldg. 5F, 2-4 Sanbancho
Chiyoda-ku, Tokyo 102-0075
Tel: 03-5276-8723; Fax: 03-5276-8736

Iceland(ISCCJ)

President

Secretariat

Bolli Thoroddsen
Managing Director, Takanawa Partners
c/o Embassy of Iceland
4-18-26 Takanawa
Minato-ku, Tokyo 108-0074
Tel: 03-3442-1975

Halldor Elis Olafsson
c/o Embassy of of Iceland
4-18-26 Takanawa
Minato-ku, Tokyo 108-0074
Tel: 03-3447-1944; Fax: 03-3447-1945

Ireland(IJCC)

President

Executive Secretary

Gerard Mulligan
Senior Operating Officer, Head of TechnicalAccount Management, Asia,
Thomson Reuters Markets KK
30F. Akasaka Biz Tower
5-3-1 Akasaka, Minato-ku, Tokyo 107-6330
Tel: 03-6441-1701; Fax: 03-6441-1464

Ayumi Miyano
Ireland House 4F.
2-10-7 Kojimachi
Chiyoda-ku, Tokyo 102-0083
Tel: 03-3263-8520; Fax: 03-3265-2275

Italy(ICCJ)

President

Secretary General

Kuniko Fujinami Weeks
President and Representative Director
A.Testoni Japan Co., Ltd.
No.5 Taiyo Bldg.,
7-10-8 Ginza, Chuo-ku, Tokyo 104-0061
Tel: 03-3575-8021; Fax: 03-3575-8023

Davide Fantoni
FBR Mita Bldg. 9F
4-1-27 Mita
Minato-ku, Tokyo 108-0073
Tel: 03-6809-5802; Fax: 03-6809-5803

Netherlands(NCCJ)

President

Office Manager

Hans van der Tang
President, Japan Advisory Inc.
3-8-1-221 Nishiwaseda
Shinjuku-ku, Tokyo 169-0051
Tel: 03-5272-8286; Fax: 03-4496-6163

Etsuko Yamanaka
MBE 145, 3-28 Kioicho
Chiyoda-ku, Tokyo 102-8557
Tel & Fax: 044-740-1558

Norway(NWCCJ)

President

Executive Director

Keita Koido
President, Leroy Japan K.K.
Shinagawa Grand Central Tower 5F,
2-16-4 Konan, Minato-ku, Tokyo 108-0075
Tel: 03-6712-1672; Fax: 03-6712-1673

Michal Berg
c/o Innovation Norway in Tokyo
5-12-2 Minami-Azabu
Minato-ku, Tokyo 106-0047
Tel: 03-3440-9935; Fax: 03-3440-2719

Board of Governors
1295

BOARD of GOVERNORSATIONAL CHAMBERS
Poland(PCCIJ)

ChairmanOperation Manager

Piotr R. Suszycki
Chairman, Polish Chamber of Commerce &Industry in Japan
7F, Casa Nihombashi Bldg.
2-9 Kobune-cho,, Chuo-ku, Tokyo, 103-0024
Tel: 03-3665-1991; Fax: 03-6203-8165

Taiko Niimi
7F, Casa Nihombashi Bldg.
2-9 Kobune-cho
Chuo-ku, Tokyo, 103-0024
Tel: 03-3665-1991; Fax: 03-6203-8165

Representative
Spain
María del Coriseo González-Izquierdo(Spanish
Economic and Commercial Counsellor,
Institute for
Head of the Economic & Commercial OfficeForeign Trade) Embassy of Spain
3F.,1-3-29 Roppongi
Minato-ku, Tokyo 106-0032
Tel: 03-5575-0431; Fax: 03-5575-6431

Sweden(SCCJ)

President

Executive Director

Thomas Ostergren
Representative Director, General Manager
Holding Japan, Atlas Copco K.K.
Sumitomo Fudosan Shiba Bldg. 4, 11F.
2-13-4 Shiba, Minato-ku, Tokyo 105-0014
Tel: 03- 5765-7806; Fax: 03- 3455-0369

Hans Rhodinerc/o Embassy of Sweden
1-10-3-303 Roppongi
Minato-ku Tokyo 106-0032
Tel: 03-5562-5140; Fax: 03-5562-5160

Switzerland(SCCIJ)

President

Office Manager - Liselotte Schneider
Executive Secretary - Alberto Zanonato

Michael Mroczek
Attorney at law (Switzerland)
Okuno & Partners
Kyobashi TD Bldg. 8F
1-2-5 Kyobashi, Chuo-Ku, Tokyo 104-0031
Tel: 03-3274-3807; Fax: 03-3272-2245

Committee
Chairmen
Representative

Steve Burson
President, H&R Consultants K.K.
2F EXOS Ebisu, 1-24-14 Ebisu
Shibuya-ku, Tokyo 150-0013
Tel: 03-5449-6061; Fax: 03-5449-3267

Committee
Chairmen
Representative

Carl-Gustav Eklund
Representative Director, President
Hoganas Japan K.K.
Akasaka Shasta East 6F, 4-2-19 Akasaka
Minato-ku, Tokyo 107-0052
Tel: 03-3582-8280; Fax: 03-3584-9087

Committee
Chairmen
Representative

James Paton
President, MHD Moet Hennessy Diageo K.K.
Jinbocho Mitsui Bldg. 13F
1-105 Kandajimbocho,
Chiyoda-ku, Tokyo 101-0051
Tel: 03-5217-9723; Fax: 03-5217-9751

Burex Kojimachi 209
3-5-2 Kojimachi
Chiyoda-ku Tokyo 102-0083
Tel: 03-6256-9012; Fax: 03-6256-9013

96
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The European Business Council in JapanThe European (EU) Chamber of Commerce in Japan
Sanbancho POULA Bldg. 2F,
6-7 Sanbancho, Chiyoda-ku, Tokyo 102-0075 Japan
Tel: 03-3263-6222 Fax: 03-3263-6223
E-mail: ebc@gol.com Web: https://www.ebc-jp.com