Taking Action

The EBC Report on the Japanese Business Environment

2014

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

Taking Action
The EBC Report on the Japanese Business Environment
2014

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

Senior Vice-Chairman:
Michel Theoval

Vice-Chairman:
Carl-Gustav Eklund

Executive Operating Board:
Michael A. Loefflad (Austria)
Frederic Lucron (Belgium/Luxembourg)
Jonty Brunner (Britain)
Claus Eilersen (Denmark)Erik Ullner (Finland)
Albert X. Kirchmann (Germany)
Matthew G. Connolly (Ireland)
Paolo Mattioli (Italy)
Hiroshi Ishiwata (Netherlands)
Rune Nordgaard (Norway)
Takeshi Fujiwara (Sweden)
Andreas Bernhard (Switzerland)

Executive Director:
Alison Murray

Policy Director:
Bjorn Kongstad

Communications Manager:
Yoko Hijikuro

Communications & P.R. Officer:
Chantal Heiniger

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.

Taking Action
The EBC Report on the Japanese Business Environment
2014

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 28
industry committees, whose work aims to improve thelocal business environment in a wide variety of
economic sectors.

Editor and Principal Author: Bjorn Kongstad

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

Copyright © 2014 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 ........................................................................................... 4
Message from the Executive Director ............................................................................. 5
Introduction..................................................................................................................... 8
Business fundamentals
Financial reporting .................................................................................................. 12
Human resources..................................................................................................... 14Intellectual property ................................................................................................ 16
Retail & wholesale .................................................................................................. 18
Legal services ......................................................................................................... 20
Sustainable development ........................................................................................ 22
Tax .......................................................................................................................... 24
Financial services
Asset management .................................................................................................. 28
Banking ................................................................................................................... 30
Insurance ................................................................................................................. 32
Transportation and communications
Airlines ................................................................................................................... 36
Railways ................................................................................................................. 38
Telecommunications carriers .................................................................................. 40
Telecommunications equipment. ............................................................................ 42
Logistics & freight .................................................................................................. 44
Health science
Animal health .......................................................................................................... 48
Medical diagnostics ................................................................................................ 50
Medical equipment ................................................................................................. 52
Pharmaceuticals ...................................................................................................... 54
Vaccines .................................................................................................................. 56
Cosmetics & quasi-drugs ........................................................................................ 58
Consumer goods
Liquor ..................................................................................................................... 62
Food & agriculture .................................................................................................. 64
Industry
Automobiles ............................................................................................................ 68
Automotive components ......................................................................................... 70
Aeronautics ............................................................................................................. 72
Space ....................................................................................................................... 74
Defence & security ................................................................................................. 76
Construction ............................................................................................................ 78
Materials ................................................................................................................. 80
Energy ..................................................................................................................... 82
Appendices
Pinnacle Sponsors ................................................................................................... 86
Blue Star Sponsors .................................................................................................. 88
Special Sponsors ..................................................................................................... 91
Sponsors .................................................................................................................. 93
Supporters ............................................................................................................... 95
EBC Premier & Affiliate Members ........................................................................ 96
Executive Operating Board ..................................................................................... 97
Board of Governors ................................................................................................ 98Contents33

Message from the Chairman
Welcome to the 2014 EBC Report on the Japanese Business Environment.
This is the latest in a long line of annual reports, identifying the barriers
faced by European companies in Japan and recommending ways to makethis a more vibrant and welcoming place to do business. So why is thisreport in particular entitled Taking Action? The answer is that, in our view,the case for reform is clear; the challenges are understood; the Prime
Minister himself has set out a new strategy for growth. What is missing is
specific, detailed, determined implementation. Put simply, it’s time to walkthe talk.
Much has been made of Prime Minister Abe’s Growth Strategy, launched within weeks of his return to office anddesigned to pull Japan out of decades of economic stagnation and deflation. The initial focus was on boosting
GDP and raising inflation through short-term fiscal stimulus and monetary easing. Some 10.3 trillion yen was
earmarked for new infrastructure projects; plans were made to stimulate private investment; the Bank of Japanagreed to double its inflation target (to 2 percent) and to increase its purchase of government bonds. The shortterm results were remarkable: in the space of one year, the yen fell in value, export profits boomed, the stock
market rose, new jobs were created, inflation turned positive and GDP grew; even wages increased, at least insome larger corporations. Unfortunately, however, the era of sustained prosperity had yet to dawn.
Events in 2014 have demonstrated the fragility of Japan’s new-found economic success. Shortages of skilledworkers have held back investments in regional infrastructure as well as job creation; an increase in consumption
tax has dampened household spending; stock prices have proved vulnerable to both global and domestic
instability; and the rate of GDP growth has fallen. All is not lost, but it is obvious that fiscal stimulus andmonetary easing alone are not enough to mend the economy: Japan also urgently needs structural reform.
Finally, then, in June 2014 Prime Minister Abe turned the spotlight on policies to tackle over-regulation,
modernise the labour market and support investment in the private sector. His proposals range from lowering thecorporate tax rate, reducing energy costs, encouraging targeted immigration and increasing female participation in
the workforce, to improving corporate governance and boosting key industries, such as healthcare. Moreover, thecrucial role of trade in providing new and expanded markets for Japanese goods is recognised. To be frank, noneof these ideas is really new: many have been recommended year after year in EBC reports and featured inprevious Government programmes. It would be different this time, if they actually led to action.
The EBC acknowledges the many obstacles faced by the Prime Minister in his efforts to translate his strategy into
reality, not least the resistance from various industry sectors and interest groups and their allies within his own
party. Such resistance should not, however, be allowed to jeopardise reform: the interests of Japan’s future
prosperity must prevail.
The EBC is greatly encouraged that the Government has recognised the considerable contribution of potential new
trade agreements to its Growth Strategy. Current negotiations towards an EU-Japan Free Trade Agreement /Economic Partnership Agreement (FTA/EPA) offer an important vehicle for progress. Many of the issues on thetable point towards the action needed to reform the economy, lift trade relations to a new level and set both Japanand the EU on a path to greater prosperity. This report provides background to these issues and recommendations
for change, based on the considerable experience and expertise of EBC sectoral committees. Addressing theirconcerns is vital, not only to bringing the FTA/EPA negotiations to a swift and successful conclusion but also toensuring it can deliver the benefits foreseen in Europe and in Japan.
Prime Minister Abe has recognised that Japan’s economic future is in the balance: the challenges are many; theurgency is clear. Now is the time for taking action.

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

4

Chairman's message
4

Message from the Executive Director
The European Business Council in Japan (EBC) is pleased to present its
2014 Report on the Japanese Business Environment: Taking Action.
2014 has been a year of significant ups and downs for the Japanese
economy, which remains fragile and overly dependent on exports. While
the Government will almost certainly try to mask this with stimulus
measures at home, and possibly more quantitative easing, it cannot
continue to do so indefinitely. It needs urgently to address the structuraland regulatory obstacles that are holding back the economy.
As early as April 2013, Prime Minister Abe announced his intention to restructure industry, reform
regulation, modernise the labour market and strengthen trade relationships. However, intention is not thesame as action and in practice, very little changed for business on the ground. Announcements in June2014 served to add more specific measures, but still the rate of progress is too slow. Tellingly, foreign
direct investment (FDI) into Japan continues to languish, while last year, according to JETRO, Japanese
outward FDI reached a record high.
For the EBC, this is particularly frustrating. We have long believed that Japan has huge potential as aworld-leader in innovative, quality products, as a global financial centre, and as a regional transport hub.
For years now, our sectoral committees have been highlighting obstacles to reaching these goals andrecommending specific, concrete remedies, based on their considerable expertise and experience
operating in Japan and other markets. Yet far too few of their recommendations have been taken up to
make a difference: successive Governments have seemed more interested in talking than taking action.
Our earnest hope is that in 2015, things will be different. Prime Minister has reinforced his strategy for
growth with a commitment to strengthen Japan’s trade links. Negotiations towards an EU-Japan Free
Trade Agreement / Economic Partnership Agreement are in full swing. If sufficiently ambitious andcomprehensive, this FTA/EPA could remove barriers to competitiveness, unlock unfulfilled potential in
the EU-Japan trade relationship, and promote renewed and sustainable prosperity. Yet there is still a long
way to go and success depends on both sides remaining committed to the negotiations, to resolving all
the issues on the table and to following up with rigorous implementation. The EBC will continue tosupport the process and commends this report to both sides as a reminder of what must be achieved.
I would like to thank all those who have contributed to the report, especially the members of the EBC
Committees, and indeed all EBC member companies and stakeholders. I also wish to thank the EBC
Policy Director, Bjorn Kongstad, not only for collecting and coordinating the many disparate inputs tothis report but also for providing an insightful introduction to its findings.
The EBC greatly appreciates the continuing support of the Delegation of the European Union to Japanand the European national embassies in Tokyo. We also gratefully acknowledge all those EBC Members
whose generosity has made this publication possible and who are listed in the sponsors and supporters
sections at the end of the report.
The EBC report contains a wealth of valuable ideas to help Japan achieve long-term prosperity. We lookforward to an opportunity to discuss them soon with the Government and all those committed to buildinga brighter economic future. May 2015 truly be a year of taking action.

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

Executive Director’s message
55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
It is two years since Shinzo Abe returned to office as Prime Minister in a landslide victory for the Liberal
Democratic Party of Japan. Barely had the dust settled on his victory than he announced a flurry of measures to pull
the country out of its long cycle of stagnation and recession. His ambitious growth strategy, nick-named“Abenomics,” grabbed headlines around the world. It launched actions in three key areas or “arrows”: monetary
policy, fiscal stimulus and structural reform. So, two years on, the question is: is it on target?
Certainly, Abenomics has made an impact. The Government has pumped money into stimulus measures, including
major infrastructure projects, and the Bank of Japan has expanded money supply. By mid-2013 the value of the yen
had fallen, exports risen, and the stock market rallied. Money had begun to flow into the regions, creating jobs,
especially in the construction industry. There was evidence of improved business confidence and even wage rises insome quarters. It seemed that Abenomics was working.
Unfortunately, the impression did not last. Initial improvements, though notable, were not enough to change Japan’s
overall economic trajectory. A long-expected rise in consumption tax in April 2014, designed to help relieve
increasing Government debt, prompted a spike in sales in the first quarter, as canny consumers sought to pre-empt
price increases, followed by an inevitable slump. Wage rises were simply too patchy and weak to sustain higher
household spending. Meanwhile, uncertainty in overseas markets had begun to dampen demand for Japanese goods.
For a country so dependent on exports, the result was highly predictable: GDP growth went into reverse.
The truth is that stimulus packages and quantitive easing alone are not enough to change the long-term course of theJapanese economy. They offer short-term fixes, useful in terms of buying time for longer-term restructuring to takeeffect, but useless as a substitute for such restructuring.
To his credit, Prime Minister Abe acknowledges this. The third arrow of his economic strategy is all about
structural reform. Initially, the details were rather thin: a June 2013 announcement was long on intention - to boost
private sector competitiveness, reform labour markets, and promote growth industries - but short on concrete action.
What followed was months of consultations and studies on what might be done. On the positive side, these
discussions were refreshingly open to new inputs and ideas, and EBC Committees were pleased to be invited toparticipate, including on healthcare reform and measures to promote the medical industry in Japan. Clearly, any
major change must be well thought-out and it makes perfect sense to involve experienced experts. Still, the need forsignificant action remained.
The EBC therefore welcomed a second round of announcements from the Prime Minister in June 2014, giving moredetail of what precisely was to be done and tackling a number of the issues long highlighted by EBC Committees as
barriers to a truly competitive business environment. In particular, we noted proposals for:

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

Further reduction of the Corporate Tax rate, towards a level closer to that of other developed economies;
A new code of Corporate Governance for listed companies;
Measures to enable more skilled professionals from overseas to work in Japan;
Measures to boost female participation in the workforce;
Further reform of healthcare, expanding provision including preventative healthcare services;
Revision of the policy asset mix of the Government Pension Investment Fund;
Liberalisation of the agricultural sector.

Although the translation of these proposals into action is only just getting underway, they do at least offer real hopeof a step change in Japan’s business environment. Moreover, EBC Committees have already seen some
improvements on the ground, which will help to boost competition in the Japanese marketplace and attract foreign
investors. Among the examples included in this report:

8








The start of revision of the Household Goods Quality Labelling Act by
the Consumer Affairs Agency after the EBC advocated improvements
for a number of years. As one example, the JIS standard regulating
washing symbols have already been amended to now mirror theapplicable ISO standard.
Measures that will increase efficiency and transparency in the financial
services sector, clarifying the Financial Services Agency’s annual
inspection programme and, in some cases, providing pre-notification of inspections.
An “Action Plan for Speedy Examination of In Vitro Diagnostics” aiming to shorten the time period required
for regulatory approval of new products.
Clarification of the evaluation policy for quasi-drugs, through release of a model template for ordinary quasidrug application documents and a Q&A notice.
Introduction of a more scientifically informed approach to food imports, distinguishing between foods that
support the growth of Listeria monocytogenes and foods that do not.

These and other measures address the issue of competitiveness which has long dogged Japan. While the country has
many world-class innovative firms, it has often relied on booming export demand to keep them profitable and topostpone much needed, but possibly painful, productivity improvements. Moreover, it has consistently shieldedsome sectors from any competition at all. Recent policies driving down the value of the yen have merelycompounded the problem: Japanese exports have become cheaper, thus stimulating demand abroad and once again
allowing inefficient domestic companies to survive unchallenged. Yet, there is ample evidence that relying soheavily on external demand exposes Japan’s economy to too many risks beyond its own control: it can only follow
where other countries lead. This approach is not only high risk: it is also unnecessary.
So the time has come for Japan to take more control of its economic destiny. Granting the realities of global
markets, there is still much more that Japan could and should be doing in its drive for sustainable growth, fromcasting aside layers of unnecessary regulation and protectionist bureaucracy, to opening the door to real,
invigorating competition and foreign investment. This EBC report highlights some of the many sticking points andsuggests concrete reforms, based on the first-hand operational experience of EBC expert Committees. Their
recommendations include:
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Mutual recognition of standards, product certifications and marketing authorisations, and adoption ofinternational standards, for example in terms of medical equipment, environmental technology, consumer
products, cars, and food.
Lifting of barriers, such as high costs and unnecessary bureaucracy that prevent or delay products fromreaching the market – for example, in terms of tariffs on certain foods, and Japan-only product labelling
requirements.
Ensuring fair competition and fair and equal treatment of all companies, domestic and foreign, for example in
the airline, express delivery and insurance sectors.
Ensuring fairer and more open competition in services and government projects, for example by introducing
truly open tendering for public procurement contracts, and improved network access for foreign telecom
carriers.
Improving conditions for foreign direct investment, including requirements unique to Japan in the banking andasset management sectors.
Enhancing incentives for investment in R&D, including reimbursement schemes in the healthcare sector thatfully recognise and reward innovation.

The EBC recommendations go to the heart of Prime Minister Abe’s desire to revitalise the Japanese economy. They
are also central to current negotiations towards an EU-Japan Free Trade Agreement / Economic Partnership
Agreement (FTA/EPA). Mr Abe has acknowledged the key role played by international trade and investment in his
growth strategy and an agreement with the European Union is surely vital to its success. In 2013, the EU ranked as
Japan’s third largest trading partner, accounting for 10 per cent of its exports, and 9.7 per cent of its total trade.

Introduction29Moreover, there is evidence that this trade relationship has considerable upwards potential. To make sure thispotential is realised, the EBC urges the authorities in Japan and the EU to ensure that all the recommendations inthis report are taken up in the FTA/EPA negotiations, and to deliver a final agreement capable of setting theireconomies on a new path to success.
A more open, fairer, and more competitive business environment in Japan is not simply in the interest of European
firms. As Prime Minister Abe has recognised, it would contribute significantly to the country’s long-term economic
growth. The recommendations in this report provide not just inspiration but also specific details for how to move
forward. They offer Japan the prospect of a dynamic home market that is a platform for greater prosperity andcounterbalance to the vagaries of overseas markets. None of this will happen if all the Government does is talk.
Consultations, studies and negotiations are not enough. As this report makes clear, the future is in Japan’s hands.
Now is the time for taking action.

How this report is organised
Following this introduction, prepared by the EBC’s Policy Director, there are 31 chapters, each addressing theconcerns of a specific EBC sector / expert committee. The chapters summarise key issues and developments of thepast year, and are accompanied by concrete recommendations for regulatory reform.
We trust the information, ideas and recommendations in this report will prove to be a positive contribution to thethinking of the Government of Japan and all other authorities, including in the European Union, who genuinely
wish to see the EU-Japan trade relationship reach its full potential.

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Business
Fundamentals
Financial reporting
Human resourcesIntellectual property
Retail & wholesale
Legal services
Sustainable development
Tax

Dr. Dirk Hermans
Chair, Financial Reporting Committee(Director, Global Services Group, Deloitte Touche Tohmatsu LLC)
c/o Deloitte Touche Tohmatsu LLC
PCPM Bldg., 1-11-1 Marunouchi
Chiyoda-ku, Tokyo 100-6211
Phone 03-6213-1231
Fax 03-6213-1235

FINANCIAL REPORTING
Introduction
2014 saw encouraging reinvigoration of Japan’s attempts to introduce a single set of accounting standards that would
enhance the cross-border comparability of companies’ consolidated financial statements. Earlier, Japan had committed
to make the use of International Financial Reporting Standards (IFRS) mandatory for most domestic filers meeting
relevant criteria. However, Japan reversed that decision after the Great East Japan Earthquake, which led to a decreasein the number of companies adopting IFRS on a voluntary basis. Now, driven by the economic recovery of the past 12
months, Japan is once again talking about mandatory use of IFRS. Unlike the big bang approach taken in Europe that
required all listed companies to use IFRS in their consolidated financial statements from 2005, Japan appears to bemoving towards a more gradual approach. Encouraged by stronger results and the easing of the criteria for voluntaryuse, many Japanese multinationals are currently in the process of adopting IFRS.
The EBC’s Financial Reporting Committee is encouraged by this renewed drive towards the adoption of IFRS, which is
expected to enhance transparency in the financial reporting of Japan’s global corporations with Europeans and otherpeers. However, challenges remain for multinational companies headquartered in Europe that have significant
subsidiaries domiciled in Japan, because these subsidiaries will likely continue to report under local Japanese Generally
Accepted Accounting Principles (J-GAAP) as published by the Accounting Standards Board in Japan (ASBJ) for
statutory reporting purposes and reconcile to IFRS for group reporting by their parent. Any reduction in the need forreconciliation between local accounting standards and IFRS would decrease the administrative burden on thesesubsidiaries without compromising the quality or transparency of the reporting process. Therefore, the EBC
recommends that more efforts be made to reduce such reconciliations. There are many ways to achieve this objective;
they range from the use of full IFRS or endorsed IFRS in the separate financial statements of subsidiaries with foreign
parent entities, to further convergence of J-GAAP with IFRS. We acknowledge that any effort in this direction needs tobe carefully considered in the light of corporate and tax laws in Japan. The EBC will continue its efforts to identify theareas in which differences in accounting exist and which are especially burdensome in practice, as a basis for further
discussion.
The issuance of new key standards under IFRS poses significant challenges for the aforementioned convergence efforts.
In some cases they may reduce differences with J-GAAP, in others increase them. Often the compatibility of the newstandards with J-GAAP is unclear. The objective of the EBC is to promote the convergence of financial reporting
towards internationally accepted standards and to help clarify compatibility between different accounting frameworks.
We look to the local standard setting and regulatory bodies to support these efforts and so encourage foreign investment
in Japan.
Japanese subsidiaries of European multinationals also have to deal with local tax reporting, which requires adjustments
to comply with tax laws and regulations. Such subsidiaries often try to minimise these adjustments to limit costs andenhance transparency, within the boundaries of optimising their tax position. Alignment efforts are hindered where tax
and financial reporting requirements are incompatible. The EBC recommends that regulators avoid unfavourable tax
consequences (from time,cost and tax perspectives) when converging J-GAAP with IFRS and consider adjusting tax andcompany laws to facilitate financial reporting convergence where there are close ties between them.

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EBC Financial Reporting Committee
Member Companies
The views expressed in this document are those of the EBC
Financial Reporting Committee and the individuals participatingin the Committee only and do not represent the official views of
the organisations these individuals work for or any of theiraffiliates.

Key Issues and Recommendations

Sascha Mauries, Deloitte Tohmatsu Consulting
Dirk Hermans, Deloitte Touche Tohmatsu
Jan Kaiser, Ernst & Young ShinNihon
Mathew Pearce, Hongkong and Shanghai Banking Corporation
Markus Fuchs, KPMG AZSA
Toshiya Miura, Rockwood Lithium Japan■ Financial instruments
While the EBC notes many similarities between the accounting standards of financial instruments under IFRS and
J-GAAP, there is one area where further alignment is recommended. Under J-GAAP, certain securities such as
non-listed equity securities are generally recognised at historical cost. The EBC recommends that all investmentsin equity securities be measured at fair value, as in IFRS. Changes in fair value would be recognised in Other
Comprehensive Income for investments not held for trading, similar to the debt securities under J-GAAP and theavailable-for-sale category under IFRS. A comprehensive analysis should also consider new accounting guidance
under IFRS 9. The EBC believes that the valuation of all securities at fair value improves the relevance andtransparency of financial statements, providing stakeholders with an assessment of investment decisions ofmanagement in deploying the balance sheet. By aligning the accounting treatment under J-GAAP with IFRS, theEBC expects efficiency gains for issuers of financial statements who need to prepare financial statements underboth regimes. The EBC notes that the recently published exposure draft regarding Japanese Modified IFRS does
not seek an exemption for the measurement of investments in equity instruments.
Recommendation:
Japan should align J-GAAP with IFRS to require all equity investments to be accounted for at fair value.
■ Goodwill
J-GAAP and IFRS differ significantly in the guidance provided on how to account for goodwill arising in abusiness combination. While IFRS mandates the impairment-only approach, J-GAAP requires amortisation over a
maximum period of 20 years if the goodwill amount is not negligible, and otherwise no impairment is required.
The impairment-only approach has led to substantial criticism in Europe, with goodwill growing to significant
amounts, as it opens the door to potential earnings management. It remains to be seen if the standard setter for
IFRS, the IASB, will yield to this criticism and revert to systematic amortisation. The EBC appreciates thearguments that can be made to support both views and advocates that the ASBJ should work closely with the
IASB to come to a position that results in alignment of J-GAAP and IFRS in this area.
Recommendation:

The ASBJ should revisit the conceptual and practical merits of alternative subsequent accounting methods
for goodwill and work closely with the IASB to resolve the issue on a global basis.
■

Vacation accruals
IFRS requires vacation accruals to be recognised. J-GAAP does not, partly due to the labour market’s low rate ofvacation usage in Japan and the fact that such entitlements are generally not paid out when the employee leaves.
IFRS requires an entity to recognise vacation accruals because a liability is created when an employee has
provided service in exchange for employee benefits to be paid at a later date and an expense is incurred when theentity consumes the economic benefits from services provided by an employee.
Recommendation:
Japan should require recognition of vacation accruals under J-GAAP.

■

Property, Plant & Equipment (PPE)Many companies use tax regulation to determine residual value and useful life of PPE for J-GAAP reporting.
Depreciation methods must be reasonable and applied systematically every year. In practice, a significant numberof J-GAAP filers use the double-declining method, which avoids reconciling differences between financial andtax reporting and generally achieves greater tax deductions in earlier years. However, it creates differences with
IFRS, which generally prohibits using this method as default and uses residual life and useful life assumptions
that reflect usage patterns rather than tax tables. The EBC recommends the IFRS approach to provide readers offinancial statements with a more accurate reflection of usage patterns and related costs, and enable companies tomaintain existing tax advantages, even if this results in a new reconciling item with tax reporting.
Recommendation:
 Japan should align accounting for PPE under J-GAAP with IFRS while considering implications fortaxation.

Financial Reporting
2

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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
future shortage of skilled labour, an ageing population and a declining birth rate present significant challenges fordomestic and foreign-owned businesses and for the long-term vitality of the Japanese economy. Several forecasts
suggest that the population of Japan will halve by 2050. The EBC sees only four ways to combat this decline: increasing
productivity, introducing more women into the labour force, increasing the birth rate and/or increasing the number of
immigrants. The EBC believes that policies in all four areas are needed to retain a skilled and competitive workforce.
Prime Minister Abe’s “third arrow” for economic growth includes policies that directly impact human resource capital.
EBC believes this to be a good start, but more needs to be done. Currently the low level of international experience
within many Japanese companies, exacerbated by their failure to capitalise on the knowledge and experience gained by
students who have studied abroad is a concern This unfortunately discourages students from pursuing opportunities togo abroad, at a time when global exposure is vital. The EBC understands that the Government is attempting to resolve
this situation, especially through internationalisation of the universities, and feels that significant changes will be
required for measures to be effective.
Of high priority is the desperate need to motivate and facilitate the return of Japan’s female population to the workforce.
Initiatives such as the “Short-Time Regular Employee System” (tanjikan-kinmu-no-seishain seido) have been
introduced, but are not generally well-known or utilised. As a result, many of Japan’s housewives remain unwilling toenter the workforce, in the mistaken belief that to do so would require a commitment to becoming a regular employee(seishain). This can only be described as a waste of available resources. Prime Minister Abe has raised the issue ofincreasing female participation in the labour market as part of his growth strategy. The EBC is also encouraged bysignals from the Government that it is considering an overhaul of the income tax break for tax payers with spouses who
do not work, or work only limited hours. This will remove the incentive for spouses to work only part-time.
Furthermore, the EBC believes that greater efforts should be made to support women and men in the workplace, forinstance by offering more public child care centres and also private child-minding services. More also needs to be done
to support and encourage men to take child care leave.
On a positive note, the EBC commends the Ministry of Justice and the Japanese Government on the changes they haveintroduced related to re-entry permits and extension of visa periods. The new system has improved the attractiveness ofJapan for foreign professionals. The Government is continuing to try to admit greater numbers of highly skilled persons.
On the pension side, Japan’s Defined Contribution Pension Law of 2001 enabled employers to offer more flexible andattractive pension schemes to employees. Discussions on lowering the minimum period of pension premium payments
are also encouraging. However, amendments are still required to enable the refund in full of all mandatory Japanesepension fund contributions to expatriate workers leaving Japan, abolishing the current limit of the last three years ofpremium payments. The Government of Japan should act quickly to conclude social security agreements with allremaining EU Member States as well as with Norway and Iceland to lessen the burden on both employers andemployees and to avoid double payments. A comprehensive FTA/EPA between the EU and Japan should aim to
streamline the process of brokering multiple bilateral agreements on social security pension reimbursement and also
include equal treatment in the area of social support. It would also provide an opportunity to revise all visa and work
permit requirements between the EU and Japan with a view to creating a more integrated labour market.

14

EBC Human Resources Committee
Member Companies
ABB
DHL Global Forwarding
G&S Global Advisors
H&R Consultants
IKEA Japan
Mercedes-Benz JapanKey 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.
Further revise immigration policy to encourage the entry of skilled labour to Japan. For example, in theabsence of an applicable university degree, lower the unnecessarily high requirement for ten years
experience “in the industry” to five years.
Expand the Technical Intern Training Programme to include vehicle mechanics.

Automatically grant work permits to spouse visa holders so that multinational companies can attract the besttalent to postings in Japan.
Create a new category for permanent-residence holders eligible for the benefits of “highly skilled
professionals”.
■ Work place 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)” which discourages “dependent
spouses” from earning more than 1.4 million yen annually, and consider other incentives that encourage
more participation in the workforce.
Raise awareness of the “Short-Time Regular Employee System (tanjikan-kinmu-no-seishain seido)” withincorporate Japan, and incentivise companies to use the system through tax breaks, benefits or other means.
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, while
discontinuing any consideration of extending child care leave.
Introduce employment legislation that encourages the creation of a competitive workforce based upon
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.
■ Pensions
Yearly status report: gradual progress. Social security agreements have been concluded or are being negotiatedwith several European countries to the benefit of citizens from these countries. For the nationals of countries
without an agreement, refunds of mandatory contributions to Japanese pension plans remain capped at a
maximum of three years. Regarding the minimum period of contributions before being eligible to receive apension, the EBC is encouraged by talks on lowering the current mandatory 25 years to 10.
Recommendations:
Swiftly implement the policy that 10 years of contribution should be sufficient to receive a pension.
Contributions made to foreign-based pension plans should be subject to the same tax relief as contributions
made to pension plans in Japan.

The Government of Japan and EU Members 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 products reach consumers via one of two sales channels: either regular outlets and distributors, ordealers in parallel imports. The sale of parallel imported goods is not illegal under current Japanese law. Consequently,
while luxury brands strive to protect the prestigious image of their products and are reluctant to engage in e-commerce
through their regular outlets and distributors, the online marketing and sale of their brands in the form of allegedly
authentic “parallel imports” is growing.
Today, an increasing respect for intellectual property rights and a slight weakening in demand for luxury brands meanthat fewer consumers are enticed into buying items that are obviously fake. However, more and more counterfeit luxury
products are flowing into the Japanese market via dealers from other Asian countries who disregard Intellectual
Property Rights (IPR).
The problems that Japan currently faces in this field are as follows:- An influx of counterfeits through websites targeting Japanese consumers and which are hosted by foreign servers
beyond the control of the Japanese judicial authority;- Sale of counterfeits purporting to be “parallel imports” and hence marketed as “authentic” brand items throughmajor online malls;- Sale of counterfeits via emerging online auctions without a proper framework for protection of IPR;
- Sale of counterfeits in Tsuruhashi, Osaka.
In 2013, some 628,187 fake items were stopped at the border by Japan Customs. However, given that it is impossible
for Customs to examine all imported items, it can be assumed that large numbers of counterfeit products still make itthrough the border. The top exporter of counterfeits to Japan is China, accounting for 91.9% of the known total.
The Japanese Government is making a considerable effort to protect IPR, including by implementing new laws andamending existing legislation. For example, gradual easing of the obligation for rights holders to go to Customs offices
to check each imported item suspected of being fake began with the Customs Circular Notice of 2007, and therequirement was totally removed by last year’s circular notice (albeit conditional on the number of items, distance
between the rights holders and the Customs office, etc.).
The operators of major online auctions and shopping websites, Yahoo, Rakuten and DeNA, also play an important rolein combating counterfeits. Yahoo, for example, is successfully policing its auction service through a team of 200 staff
members and a regular exchange of information on counterfeits and criminal dealers with major brands via rights
holders’ associations. Such information allows the operator to detect and eliminate a large part of uploaded data
identified as being related to fake products (about 1% of all posted items are counterfeits). Rakuten is also active in the“purification” of its auction website. When a product posted on Rakuten is suspected of being a counterfeit because, forinstance, of a particularly low price, the operator makes a test purchase of the item to verify its authenticity. If the itemturns out to be fake, the posting dealer is banned from the website.
Driven by a strong will to combat fraud against consumers, Japan is making concerted efforts to set up a framework foreliminating counterfeits. Some of its approaches are even more advanced than those applied in Europe or the USA.
However, a number of problems remain because of delays in reforming fundamental areas of regulation. Specifically,
Japan needs to strengthen control of parallel imports, to develop partnerships with foreign regulatory bodies and internet
service providers (ISPs), to build up a proper social system for protecting consumers and to control by law thepossession of counterfeits for personal use.
Finally, the EBC calls on the EU and Japan to ensure that IPR issues are taken up in their mutual FTA/EPA negotiations
with a view to improving the current situation and creating common rules that may provide solutions to some of the
problems described above.

16

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

Key Issues and Recommendations■ Influx of counterfeits through websites hosted outside Japan
Yearly status report: no progess. A number of (mainly Chinese) counterfeit dealers banned from major Japanesewebsites have their own websites in Japanese, hosted by foreign servers, enabling them to continue sellingcounterfeits to Japanese consumers. Even though such websites often exhibit typical features of sites sellingcounterfeits, including very low prices, unnatural Japanese language and inaccurate information on the dealer,
many online shoppers are unaware that these are fraudulent sites. Several countermeasures have already beentaken by Japanese regulatory bodies and executive authorities (such as confiscation of goods at Customs, thefreezing of bank accounts, alerts by security software and the publication of a list of fraudulent URLs on thewebsite of the Consumer Affairs Agency). Fundamental solutions are yet to be found given that the operators ofsuch websites are located overseas and beyond the control of the Japanese judicial authority.
Recommendations: A way should be found to eliminate counterfeit sales websites hosted by foreign servers, especially via
strengthened partnerships with foreign regulatory bodies and authorities. Japan should also work with otherjurisdictions to ensure all necessary action, including legal, can be taken against the operators of suchwebsites.
 More rigorous application of the Act on Specified Commercial Transactions is needed, as well as thoroughenforcement of the obligation for dealers to post their identification data. Consumers should be urged toverify the credibility of such data posted by dealers.
■ Sale of counterfeits via online auctions sites
Yearly status report: some progress. “Rakuten Ichiba”, the top online shopping mall in Japan, has put in place asystem of test purchase by the operator to check the authenticity of posted items. If an item turns out to be fake,the posting dealer is banned from the website. Although “Yahoo Shopping” and “DeNA” have followed
Rakuten’s example in this field, they are not yet fully effective because of the unrestricted admission for dealers(Yahoo) and the late introduction of the checking process (DeNA). Moreover, another major global online mall is
not paying enough attention to applicable laws, nor preparing any countermeasures against the posting of fakegoods. The rapid multiplication of auction websites accessible via smartphone applications, whosecountermeasures against fake products are often imperfect or even non-existent, also requires a prompt response
from the Japanese authorities.
Recommendation:
 While the control of online auctions is on the right track, further efforts must be made by Japanese ISPs andrelevant government ministries to develop closer partnerships and cooperation with rights holders, engage
ISPs currently not involved, and promote the discussion and implementation of specific actions.
■ Sale of counterfeits in Tsuruhashi, Osaka
Yearly status report: new issue. Most of the 30 stores lining the shopping street in the Tsuruhashi area of Osaka areselling counterfeit goods. Efforts by the Japanese police to ban such stores (with around 10 cases detected eachyear) have had little impact on the situation, as closed premises are often taken over by other counterfeit dealers.
Recommendation:As the current action has not led to elimination of counterfeit businesses from Tsuruhashi, the police should
launch a fullscale control operation under the Penal Code.
■ No regulations on the importation and purchase of counterfeits 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 commercially.
Recommendation:

The importation and purchase of counterfeits, even for “personal use”, should be controlled under the law.

Intellectual property
2

17Vacant
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

RETAIL & WHOLESALE
Introduction
The Japanese retail market is one of the largest and most vibrant in the world. After many years during which thepresence of European retailers was more or less limited to the luxury sector, the last ten years have seen the rapid
establishment of new European retailers in Japan, both in fast fashion and home interiors. 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. The success of European retailers in Japan also benefits the Japanese economy atlarge – it creates considerable employment and helps to revitalise many cities that were previously in decline. Japaneseretailers and wholesalers gain from the presence of European competition as it provides incentives to further strengthen
their global competitive edge. Concrete examples of this are Uniqlo and Nitori, which are today stronger than ever.
Despite recent successes, European wholesalers and retailers still face considerable barriers in the Japanese market. It
has proved difficult for foreign wholesalers and retailers to take advantage of global-scale logistics when entering theJapanese market. Secondly, the process of developing and opening new retail outlets remains fraught with restrictions,inefficiencies and delays. Added to this, there are related sales restrictions. Thirdly, although the EBC Retail &Wholesale Committee understands and shares the Government of Japan’s concerns regarding consumer protection, it
believes that European rules more than adequately address these same concerns, ensuring safe and good-quality
products. Hence, the Government’s insistence on applying Japan’s rules and regulations to products that have alreadymet European standards serves only to create barriers to trade. Examples of such barriers are Japan’s unique labelling
rules, non-acceptance of non-SI units (International System of Units), inflexible food sanitation rules that are not related
to the safety standards themselves, and non-recognition of global standards or European approvals. These barriers are
particularly damaging to companies with a global supply chain. Moreover, procedures for importing, certifying andlabelling various consumer products continue to be overly costly and complex, due again to Japan insisting on
additional product testing against specifically Japanese standards, even where products are already covered byinternational and European standards. It is encouraging that the Japanese authorities have recently shown that they areprepared to introduce more international standards in certain areas. The EBC believes that this will benefit not only
foreign retailers and wholesalers looking to enter or expand in the Japanese market, but also Japanese retailers
expanding into foreign markets, as their labelling costs will be reduced as well.
The EBC earnestly hopes that, in the process of the negotiations towards an EU-Japan FTA/EPA, many of the barriers
met by European retailers and wholesalers will be 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 inJapan, or vice versa. The FTA/EPA negotiations offer an excellent opportunity to establish definitively that there is nopractical purpose or benefit in such re-testing. The EBC therefore calls on the EU and Japan to move swiftly to establish
mutual acceptance of standards and certification, which will benefit companies and consumers in both markets.

18

EBC Retail & Wholesale Committee
Member Companies

Key Issues and Recommendations■

ChanelCopyrights Asia
Giorgio Armani Japan
Groupe SEB Japan
H&M Hennes & Mauritz Japan
Hafele Japan
IKEA JapanLEGO JapanMETRO Cash & Carry Japan
Philip Morris Japan

Prohibitive import, testing and certification procedures
Yearly status report: some progress. Japan’s reluctance to accept EN (European standards) and ISO standards orCE (conformité européenne) markings delays the introduction of new products to the Japanese market andincreases import costs. The EBC, while understanding the need to ensure the safety of the consumer, specificallyrequests the Japanese Government to revise its legislation applying to products with food contact and tomeasuring devices and the related import systems, to facilitate smoother 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.
Japan should clarify its rules relating to where testing for pre-registration (Hinmoku toroku) of food contact
products can be carried out. The EBC requests that test reports prepared by approved test laboratories
overseas be accepted.
Japan should accept inclusion of common non-SI units on measuring devices when SI units are also used.

■

Labelling
Yearly status report: progress. The Household Goods Quality Labelling Act regulates how household goods
within the scope of the Act are labelled. The EBC appreciates the work of the Regulatory Reform Office with the
Cabinet Office and looks forward to working closely with the Consumer Affairs Agency (CAA) to bring about
meaningful reform. The EBC also commends the Ministry of Economy, Trade and Industry (METI) for its workon harmonising care instructions for textiles and clothes, and hopes that implementation will be carried out
without deviation from the ISO standard.
Recommendations:
The CAA should without delay commence the task of reviewing and reforming the Labelling Act.
The CAA should adopt the new ISO-aligned JIS (Japanese Industrial Standard) wash and care instruction
symbols, as proposed by METI, without any additional requirements or deviations.

■Shoe quota
Yearly status report: no progress. Various shoe tariff lines are covered by quotas. By means of these quotas,
imported shoes can benefit from a lower tariff. The allocation is partially based upon historical import figures
while part of the total volume is dedicated to “newcomers”. The major problem with the current system is the lackof transparency and that companies not truly involved in the shoe business retain quotas, which they “sell” toother companies. This behaviour is illegal, but still persists.
Recommendation:

METI should improve monitoring of the situation to reject applications from entities that are not properly
trading shoes and release their quotas. It is also recommended that METI should implement stricter penalties
for companies taking unfair advantage of the system.

■

Limitations on selling liquor via telecommunication channels
Yearly status report: new issue. Although improvements were made to the liquor wholesale licence scheme someyears ago (albeit for in-store liquor sales only), the sale of liquor on the retail market remains heavily restricted,
even for sales to registered professionals. In particular, the restrictions limit sales conducted across prefecturalborders via any telecommunication channel (internet, fax, e-mail, etc.) and lead to higher transaction costs andinefficiencies. This especially hurts small businesses attempting to overcome limited resources by utilising theinternet to purchase liquor. It should, furthermore, be pointed out that very old licences do not have this limitation(grandfathered licences), which creates an imbalance between new and old licence holders.
Recommendations:Japan should abolish the telecommunication channel limitation within the liquor retail licence system.
Japan should, as an interim solution, immediately permit liquor sales through telecommunication channels,
including the internet, over prefectural borders to registered professionals (still categorised as retail under thelaw).

Retail & wholesale
219Mr. James Lawden
Chair, Legal Services Committee(Partner, Freshfields Bruckhaus Deringer, Tokyo)
c/o Freshfields Bruckhaus Deringer, Tokyo
36F Akasaka Biz Tower, 5-3-1, Akasaka
Minato-ku, Tokyo 107-6336
Phone 03-3584-8509
Fax 03-3584-8501

LEGAL SERVICES
Introduction
This year, the Government of Japan finally passed legislation permitting a gaiben (foreign lawyer) law firm toincorporate itself as a hojin (corporation), and so open more than one branch. This option has been available to bengoshi(Japanese lawyers) for about 10 years. It should become available to gaiben in 2015, once the Nichibenren (Japan
Federation of Bar Associations) and local bar associations have adopted the necessary rules. However, contrary to therecommendations of the final report of the Foreign Lawyers System Study Group in December 2009, the new legislation
will not permit gaiben and bengoshi to establish a hojin together. This limitation will severely restrict the usefulness ofthe new legislation.
In other respects, the EBC’s recommendations in respect of Legal Services in Japan remain the same as last year’s,
because nothing else has changed. However, the Cabinet’s Regulatory Reform Plan, approved on 24 June 2014, gives
hope that the Japanese system will be shaken up or at least subjected to a decent airing. The Plan suggests the following
in respect of the regulations applicable to gaiben:
1. Setting up a study group to discuss the gaiben system: this will be set up under the responsibility of the Ministry ofJustice within this fiscal year. With the increase in demand for international legal services, this study group willamong other things review the requirement to have certain work experience (i.e. the 3 year requirement) in order toregister as a gaiben, with the involvement of gaiben;
2. Transparency of the gaiben registration system: this will start to be considered this fiscal year under the
responsibility of the Ministry of Justice. With a view to making the registration process and timing moretransparent, and improving the user-friendliness for registrants, a forum will be set up for discussions between the
Ministry of Justice and the Nichibenren taking into account opinions from registrants as necessary; and3. Making the gaiben registration process simpler: this will start to be considered this fiscal year under the
responsibility of the Ministry of Justice. With a view to making the registration process simpler and faster, a forum
will be set up for discussions between the Ministry of Justice and the Nichibenren, taking into account opinionsfrom registrants as necessary.
The EBC will be taking a close interest in the roll-out of this Plan, not least because its credibility and ultimate successwill 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.
The EBC urges Japan and the EU to ensure that their bilateral FTA/EPA negotiations tackle both the issue of mutually
recognising the status of lawyers so as to alleviate the cumbersome registration process in Japan, and the need to
improve market access for firms with both gaiben and bengoshi with regard to setting up branches.

20

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

Hogan Lovells
Linklaters
Norton Rose
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: questionable progress. 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, out of which two have to beobtained outside Japan. This rule is in stark contrast to the rules governing bengoshi who are not required to haveany 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 acknowledged by their jurisdiction ofqualification. If there is to be such a rule, what is important is the experience in home jurisdiction law, not where
it is practiced. 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 to delays. After over 25 years of operation, the gaiben system is in need of a thoroughoverhaul. Changes in the system could solve 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 beenpracticed.
Continuing focus needs to be put on accelerating the application procedure for gaiben registration to thegreatest 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: some progress, but of limited application. Legislation has now finally been passed
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 and bengoshi 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, which only an overhaul of the existing system
could achieve.
Recommendation:

A limited liability structure should be made available in Japan for both foreign and domestic law firms, andforeign firms should be able to practice 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
221

Mr. John Mader
Chair, Sustainable Development Committee(Senior Project Manager, Lend Lease Japan)
c/o Lend Lease Japan, Inc.
Akasaka Enokizaka Mori Building 3F, 1-7-1 Akasaka
Minato-ku,Tokyo 107-0052
Phone 03-6866-5600
Fax 03-6866-5607

SUSTAINABLE DEVELOPMENT
Introduction
Harnessing the innovative potential of business across all industries to address the issues of sustainable development
and climate change is imperative to meet the challenge defined in the 1987 UN Brundtland Commission report, tobalance the needs of the present with those of future generations.
The EBC Sustainable Development Committee was formed by European companies from a variety of industries,
including food, energy, water and construction, each committed to contributing to sustainable development. Reflecting
their commitment, these companies have developed products that have already proven successful in Europe and othermarkets. These same products could also help Japan to achieve its goal of promoting a sustainable future. So to improveaccess to these products, the EBC recommends that the Government of Japan adopt a two-pronged approach. Firstbarriers that inhibit market entry should be removed. These often take the form of a non-tariff barrier: a lack ofacceptance of European standards that positively impact sustainable development. Second, standards and regulations
which create perverse incentives or discourage the use of sustainable products, whether imported or not, should also be
removed and replaced with a regulatory environment that promotes sustainable solutions.
The goals of EU sustainability policies are: put an end to the destructive link between economic growth and damage tothe environment; encourage businesses and the general public to use objects that have been produced responsibly; aim
to have public authorities buy products and services that do not damage the environment; expand the market intechnologies and innovations that are environmentally-friendly; and improve the welfare of animals both within the EU
and beyond. The EBC encourages the Government of Japan to take a much stronger stand on, and implement measures
to improve, sustainable development in all key areas - infrastructure, business practices, and consumer behaviour. To
take one example, in Japan, as in other advanced countries, buildings are the foremost producers of greenhouse gases,
accounting for up to 40% of greenhouse-gas emissions. The construction sector, therefore, provides a prime opportunity
to improve Japan’s sustainability. Reducing the energy consumption of buildings would make a major contribution to
reducing adverse impacts on the environment. Many private developers and building owners are keenly aware of theeconomic impact of reducing their energy consumption, and are taking action accordingly. Nonetheless, government
legislation that encourages or mandates the use of energy-saving equipment and energy-efficient materials would
provide an added boost.
One of the reasons the construction and real estate markets in Japan lag behind other countries in the widespread
adoption of sustainable solutions is the relatively lax regulatory environment. Examples include the still widespread useof single glazing (Europe has moved to double and even triple glazing) and the lack of mandatory strict insulation
standards for buildings and houses (reducing thermal losses is a requirement for building in Europe). Buildings should
be constructed in such a way that they do not require a lot of energy to heat and cool in the first place. Building
envelopes should be well-insulated and use components that mitigate heat gain in summer and heat loss in winter.
European manufacturers offer some of the best solutions on the market - including insulation, spectrally selective glass,and curtain wall systems that prevent thermal bridging.
In summary, many European companies operating in Japan are world leaders in sustainability, but they are often
confronted with a conservative business environment that is slow to embrace the opportunities of a more sustainablebusiness model. This stands in sharp contrast to Japanese consumers, who polls have shown are generally supportive ofsustainable initiatives. Put another way, consumers are open to change, but their sustainable choices are constrained.
European business is keen to promote a dialogue with Japanese society, government and business to encourage reforms
that would concretise Japan’s commitment to sustainability and benefit all businesses that view sustainability as a key
component of their future growth. Furthermore, the EBC encourages the Government of Japan to take a much stronger
stand on, and implement measures to improve sustainable development in all key areas - infrastructure, businesspractices, and consumer behaviour. In addition to individual reform initiatives, the EU-Japan FTA/EPA offers an
opportunity to promote sustainable development in a comprehensive fashion.

22

EBC Sustainable Development
Committee
Member Companies
ABB
Lend Lease Japan
MasterMind
MIE PROJECTPermasteelisa Japan
Roquette Japan
Saint-Gobain JapanKey Issues and Recommendations■ Improved sustainable development awareness and behaviour
Yearly status report: no progress. Japanese consumers exhibit a high level of environmental consciousness, andJapanese businesses are among world leaders in manufacturing energy-efficient technologies, such as energyconserving equipment. However, there are few incentives to encourage consumers to demand environmentallyfriendly products or for businesses to invest in and produce more environmentally friendly products.
Recommendations:
The Government of Japan should raise public awareness regarding the benefits of sustainable development.

Better collaboration between Japan and the EU in setting environmental targets and agreeing on the actions
required to achieve these, should be a key part of the EU-Japan FTA/EPA.
■

Organic foodYearly status report: no progress. Organic food represents only about 0.4% of all food sold in Japan. This isabout 10 times lower than in Europe and possibly the lowest percentage among all developed countries. Japanese
agriculture is still overly reliant on chemical inputs, such as pesticides, fertilisers and hormones. This situation isundesirable from both an environmental and consumer perspective. As such, the EBC recommends that Japan
should take measures to encourage the production of more organic food by promoting the development of localorganic and sustainable agriculture. The EBC is pleased that supplementary certificates from EU embassies are nolonger needed. The requirement that every shipment of imported organic food must be accompanied by anindividual organic certificate, however, remains an administrative hurdle that discourages both imports andexports of organic foods.
Recommendations:
Abolish the need for individual organic certificates for every shipment. An annual certificate should suffice.

Expand the organic JAS (Japanese Agricultural Standard) to include animal-based products.

Abolish tariffs on organic food. (Organic food is already priced higher, so that tariffs make such food
exorbitantly expensive, further discouraging consumers from buying it and slowing the growth of theorganic food sector.)
Encourage more sustainable farming practices by reviewing and revising regulations that encourage or
require the use of pesticides and antibiotics.

■

Sustainable building design and construction materials
Yearly status report: some progress. Because the environmental impact of buildings collectively is so significant,standards and certifications governing building design, individual building materials and components,
construction practices, and operations and maintenance procedures should be reviewed and revised in order topromote lower emissions of greenhouse gases and other environmental impacts. The foremost goal should be to
reduce the energy consumption of buildings. To speed up implementation of sustainable building solutions, Japan
should reduce barriers to the import of foreign materials. The acceptance of foreign environmental standards
would remove the most significant non-tariff barrier in this area.
Recommendations:
Introduce incentives or requirements to increase the demand for sustainable and green buildings.

Adopt as soon as possible a mandatory high level insulation standard for buildings and houses with a total
floor area of less than 300m2.
Require achievement of a specific rating level under CASBEE (Japan’s Comprehensive Assessment System
for Built Environment Efficiency) before issuing a building permit.

Recognise ratings under foreign green building rating systems, such as LEED (US), BREEAM (UK), DGNB
(Germany) and Green Star (Australia), as equivalent to CASBEE ratings in respect of local green building
requirements.

Facilitate the testing and certification of European building materials with sustainable properties, or accept
foreign certifications as equivalent to comparable local standards.

Sustainable development
223

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 stimulus given to the Japanese economy by the reduction of the corporate tax rate to 35.6% asof April 2014, thus bringing the rate closer to international levels. The Government’s announcement that it aims tocontinue bringing down the effective corporate tax rate over the coming years to around 30% is also promising, as it
will improve Japan’s competitiveness for the benefit of both domestic and foreign companies. The benefits of reduced
tax rates should not be outweighed by the accompanying measures to broaden the tax benefits such as reduced tax
incentives and the further restriction of the loss carry forward. The magnitude of the challenges still ahead for theGovernment, however, cannot be exaggerated. The uncertain outlook of the world economy, in combination with theJapanese public’s lack of confidence in their social welfare system, have suppressed consumption below already low
levels. On the other hand, the increase in consumption tax to 8% in April 2014 has helped to restore the finances of andto some extent at least, confidence in the social welfare system. It will be crucial to see whether the Government will
follow through with the October 2015 consumption tax increase to 10%. Meanwhile, if, as announced, cross-borderservices are to be made more widely subject to consumption tax, it will be imperative for the tax authorities to provide
clear definitions of taxable events.
Aware of the severe fiscal constraints the Japanese Government is facing, the EBC’s recommendations address the factthat insufficient transparency and predictability in tax rules create uncertainty and lead to lower investment andeconomic activity. Unfortunately, attempts made so far by the Government to improve the transparency andpredictability of the tax regime have been inadequate and, as a result, the situation has not substantially changed.
Improvements made to the formal tax ruling system, Bunsho Kaito, did not lead to a significantly higher number of tax
rulings. We believe that addressing transparency issues thoroughly and as a matter of urgency would be the mostefficient way to promote business without having to spend extra money or undermine the tax base - hence tax revenue
would remain the same. The EBC also calls for the cost of tax compliance, inflated under currently inefficient tax filingrules, to be brought down and at the same time for the unreasonable pressure created by overly tight filing deadlines to be
reduced, which would be beneficial to working parents. Both targets could easily be achieved by relaxing outdated andunduly short Japanese tax filing periods, and again would have no negative impact on tax revenues.
When considering how to boost bilateral trade and investment, the EU and Japan should strive to mutually eliminate
double taxation and withholding tax on dividends, royalties and interest, as provided for in tax treaties concluded
between Japan and the UK, France, The Netherlands, Switzerland and the US. Any EU-Japan Free Trade Agreement /Economic Partnership Agreement (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 a tax treaty text itself does not
avoid double taxation in effect. The EU-Japan FTA/EPA should, furthermore, enable employers’ and employees’
contributions to social security systems within the EU and Japan to be treated as tax deductible on a mutual basis.
In short, the EBC considers that the tax reforms undertaken so far by the Japanese Government have been too piecemeal
and a new, more coherent approach is needed. The EBC encourages the Government to tackle its tax policy challenges
upfront and address the issues detailed on the following pages as a matter of priority.

24

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
PricewaterhouseCoopers
Sanofi
Siemens Japan
Sonderhoff & Einsel

Extended tax return filing periods
Yearly status report: new issue. 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 lives of those preparing the returns, while driving up expenditure on
overtime. In the case of tax professionals serving both companies with a calendar year end and others with aMarch 31 year end, their work/life balance is even more impaired. The inescapable long hours leave no time forhome life, a situation irreconcilable with being a working mother, thus forcing many women to either quit the job
or never return to their profession after having children. Companies have no choice but to comply with labourlaws and are held accountable for managing the overtime of their employees, so are forced to hire additional parttime staff on short-term contracts (a form of employment which is not necessarily in the public interest in Japan)
and to give preference to those willing to work excessive hours. Not surprisingly, international comparison of thecost incurred for tax compliance shows that 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.

■

Research and Development tax incentives
Yearly status report: no progress. While Japanese rules give tax consideration to R&D expenses incurred by
Japanese multinational enterprises, even when the R&D is undertaken overseas, no credit is given to foreign
investors conducting R&D in Japan, unless the related expenses are borne locally. This discrepancy is due mainly
to the focus of the tax rules on Japanese domestic enterprises that naturally take the cost of R&D at the level of
their Japanese headquarters, a practice uncommon among foreign subsidiaries in Japan. The announced cuts in
R&D tax incentives will reduce the relative financial disadvantage for overseas investors but the underlying
discriminatory treatment will remain.
Recommendation:
Research and Development conducted in Japan by a foreign investor should be eligible for tax benefits here,
even when the associated expenses are not borne by the investor’s Japanese subsidiary.

■

Accountability and confidentiality
Yearly status report: progress. As a result of changes made to the Bunsho Kaito system, taxpayers may now seek
written clarification of specific transactions. Yet despite this improvement, an overall lack of transparency andsystematic accountability in the domestic tax regime still impedes the development of business in Japan. European
firms continue to report cases of arbitrary and inconsistent treatment from the tax authorities. The press often
publishes news articles on audits, making reference to sources within the tax authorities. The EBC views any"leaking" of information protected by Japanese taxpayer confidentiality laws with extreme concern. An open
relationship, based on mutual trust and providing transparency and certainty is vital for investors to be willing toinvest and for governments to collect the applicable revenues and maintain the tax base in the most efficient way
possible. To this end, the Dutch and British governments have introduced systems in their tax collection processes
comprising Horizontal Monitoring, Risk Rating and Senior Accounting Officers, which in essence shift the tax
compliance and monitoring burden from the tax authorities to the taxpayer. In return, the tax authorities undertaketo provide timely advice and clearance regarding their position on disclosures, and to respond faster to anyquestions and take clear positions. Moreover, tax audits are carried out on a less frequent basis and are lessdetailed. The use of Horizontal Monitoring, Risk Rating and Senior Accounting Officers offers a far more
efficient way for taxpayers and tax authorities to work together. The overall approach provides certainty to thetaxpayer, while maintaining the same amount of tax revenue for the government.

Tax

25

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 Government should ensure that the press is not given access to confidential tax audit data. The tax
administration should be held accountable for secrecy duty violations, if any leakage comes from their side.
The Government should consider the merits of introducing a system offering Horizontal Monitoring, Risk
Rating, and Senior Accounting Officers.

■ Transfer pricing
Yearly status report: no progress. The Japanese tax authorities continue to use the domestic corporate tax rules
relating to donations to make assessments in relation to transfer pricing matters. This has been done ostensibly to
avoid the mutual agreement procedures arising under Japan's tax treaty network.
Recommendations:
The EBC recommends that all cross border transactions should be dealt with under transfer pricing
legislation and not under domestic corporate tax rules relating to donations.

Any changes to domestic transfer pricing legislation in response to the OECD’s ongoing Base Erosion andProfit Shifting (“BEPS”) initiative should be introduced in a manner that minimises the additional
administrative burden placed on tax payers.
■

Corporate restructuring
Yearly status report: 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.
Eliminating discriminatory treatment of foreign shares used as consideration in mergers with Japanese companies
is the most important policy step needed to facilitate foreign direct investments into Japan. Criteria that arecomplex and in practice difficult to meet in tax qualified restructurings are adverse to the natural goals of foreignaffiliated and domestic companies to reduce the number of peripheral legal entities and infrastructure costs.
Removing potential obstacles in administration, including tax, should therefore be the aim of tax policy makers.
Recommendations:
Current rules should be revised so as to permit a deferral of capital gains tax for shareholders receiving
shares from a foreign company with no previous operations in Japan.

Rules and regulations underpinning the corporate reorganisation laws should be further simplified andclarified to reduce both the cost and the discretion that the tax authorities retain in defining key concepts.

■

Tax treaties
Yearly status report: progress. Japan recently concluded new tax treaties with Switzerland and the UK. Japan isstill re-negotiating its tax treaty with Germany. The EBC welcomes treaties that include the exemption ofwithholding tax on royalties and qualified dividends and interest.
Recommendations:
The EBC encourages the Government of Japan to review current tax treaties with EU Member States.

The EBC requests that any new or revised treaty addresses the issue of withholding tax on royalties andqualified dividends and interest.

26

Financial Services
Asset management
Banking
InsuranceMr. Nicolas Sauvage
Chair, Asset Management Committee(President, Amundi Japan Ltd.)
c/o Amundi Japan Ltd.
Hibiya Dai Bldg. 13F, 1-2-2 Uchisaiwai-Cho
Chiyoda-Ku, Tokyo 100-0011
Phone 03-3593-5900
Fax 03-3593-5932

ASSET MANAGEMENT
Introduction
The professional investment management industry in Japan provides important benefits to society by helping investors
to prepare for their financial future. Due to the ageing of the population and to stubbornly low birth rates, the burden onsocial security and pension systems continues to swell. Moreover, the prolonged low interest rate environment,
precipitated by the global financial crisis of 2008, has driven public and private investment pools to seek higher returns
from financial products, both from within and from outside Japan. The EBC welcomes plans by the Japanese
Government to introduce changes to the mandate for the Government Pension Investment Fund. The demand forincreasingly sophisticated investment expertise has continued in 2014.
To meet the critical needs of users of investment management services, it is imperative that the Government of Japan
and, in particular, the Financial Services Agency (FSA) continue with reform measures designed to provide theinvesting public with appropriate products, both new and innovative, in a flexible, user-friendly investment management
framework that promotes growth and avoids hampering expansion. The EBC was, therefore, encouraged by the launchof Nippon Individual Savings Accounts (NISA), introducing many investors to the savings market. However, efforts arestill needed to reach investors who traditionally have never participated on the stock market or invested using a financial
instrument, especially the younger generation. We also believe that the maximum limit allowed per year in the NISA
scheme should be raised to further increase its attractiveness and give it the appropriate robustness.
The EBC is convinced that further development of a “free, fair and global” market is the only way forward for Japan to
become an international financial centre. The regulatory environment in Japan imposes unnecessary and costly burdens
on investment management service providers, which stifle innovation and yield inefficiencies in resource allocation, tothe detriment of Japanese consumers. It was, therefore, disappointing that despite the benefits of a planned merger
between the two existing industry associations, the Investment Trust Association, Japan (JITA) and the Japan Securities
Investment Advisers Association (JSIAA), the merger was derailed by a late-stage impasse brought on by the industry
associations themselves.
Japan has long lacked proper rules on corporate governance. The EBC is therefore delighted to see guidance on a
Stewardship Code published. We regard stewardship as integral to the investment process. Good stewardship is
important for understanding the sustainable value of the companies in which equity is held on behalf of investors andprovides a standard of behaviour that encourages protection of the assets of clients of asset management companies.
Well managed enterprises will deliver sustainable competitive advantage and long-term shareholder value.
Consequently, provision of insight into a company’s financial performance, the quality of its management structures, thesuitability of its internal controls and the ability of its board to manage operational performance, environmental andsocial risks and opportunities will affect the stock valuation and selection strategies.
The advances made by the EU in investment management, as well as in other areas of financial services, are recognised
as leading-edge and, by working together, Japan and the EU can extend the benefits of these advances to the Japanese
investing public. The EBC strongly recommends that the EU and Japan include such issues in the negotiations towards abilateral FTA/EPA.

28

EBC Asset Management Committee
Member Companies

Key Issues and Recommendations

Allianz Global Investors Japan
Amundi Japan
BNP Paribas Investment Partners Japan
Eastspring Investments
Henderson Global Investors (Japan)
HSBC Global Asset Management (Japan)
ING Mutual Funds Management
Pictet Asset Management (Japan)
PricewaterhouseCoopers Aarata
Robeco Institutional Asset Management
Schroeder Investment Management (Japan)■ Stewardship CodeYearly status report: new issue. In accordance with the guidance from “The Council of Experts Concerning theJapanese Version of the Stewardship Code”, published on 27th February 2014, Japanese equity investment
managers in Japan have issued and disclosed every individual company’s stewardship code. We regard
stewardship as integral to our investment process. Good stewardship is important for understanding thesustainable value of the companies in which equity is held on behalf of clients and provides a standard of
behaviour that encourages the protection of the assets of investors. Well managed companies will deliver
sustainable competitive advantage and long-term shareholder value, and the provision of insight into a company’s
financial performance, the quality of its management structures, the suitability of its internal controls and theability of its board to manage operational performance, environmental and social risks and opportunities willaffect the stock valuation and selection strategies.
Recommendations:
The Government of Japan should encourage boards and executives of equity issuing companies to fully
implement the Stewardship Code by considering and reviewing the strategy, operating performance, qualityof leadership and internal controls of the companies they direct in line with the Stewardship Code guidelines
in order to produce the returns sought by investors.

The Japanese authorities should ensure that the Corporate Governance Code, which is under discussion by“The Council of Experts Concerning the Japanese version of the Corporate Governance Code”, is effective
in progressing the corporate governance discussion amongst equity issuing companies.
■ Promotion of Japan as an international financial centre
Yearly status report: progress. The EBC applauds steps already taken by Japan to reach its stated goal of securing
its place as an international financial centre, which include measures to accommodate employees transferred toJapan from foreign countries, to reconcile differences in taxation schemes applicable to investment products, andto unify financial services regulation through the introduction of the Financial Instruments and Exchange Act(FIEA). However, real structural change is lacking. The bulk of capital still orbits around low interest government
bonds. The EBC believes that there is a need to re-balance the investment portfolio to better achieve the goal of
becoming an international financial centre.
Recommendations:Japan should prepare a more holistic plan for reform.
Japan should encourage diversification of portfolios to support more high return products.
Japan should swiftly introduce the new mandate for the Government Pension Investment Fund.
■ Nippon Individual Savings Accounts
Yearly status report: progress. The EBC believes that the introduction of NISA has been very beneficial to boththe industry and investors and has produced a considerable amount of new investments. The stated goal is toreverse lower savings rates among individuals and to provide an additional channel for long-term asset growth,through long-term and diversified investment in listed stocks and publicly-offered stock investment trusts.
However, the underpinning legislation as approved allows for investment contributions of only 1 million yen peryear for five years, each such contribution being tax exempt for five years. As with the Japan 401k scheme, such
limited contribution allowances provide limited benefit to individuals and even less incentive to the industry
participants expected to administer the scheme. The EBC supports the basic aim of the scheme and hopes that it
can be expanded in the near future, just as the system has evolved in the United Kingdom, the first country to
introduce Individual Savings Accounts.
Recommendations:
Increase the maximum amount that can be invested.
Continue to promote the scheme with a special focus on the younger generation and investors with noprevious experience.
Consider making the system permanent.

Asset management

29

Vacant
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 flagging attractiveness as as a financial centre, Tokyo has started to bounce back. The Economist
newspaper now lists Tokyo in sixth place, on its Global Financial Centre Index (GFCI), which ranks the competitivenessof 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’sreform 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 moreradical approach is needed to create a financial environment enabling Tokyo to become a true financial centre.
In this context, 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 moreadvanced products with chances of a higher return. Since a large amount of capital is tied to the Fund, we believe thatsuch a shift will help to revitalise the capital market in Japan and, therefore, also boost the banking sector.
Meanwhile, further effort is needed to provide an appropriate regulatory framework for cross-border transactions. The
banking agency system introduced in 2008 requires Japanese branches of European banks to apply for a special businesslicence each time they plan to introduce any new banking service that will be provided by another banking entity, even
if that entity is simply an overseas branch of the same financial group. This noticeably impacts cross-border services inwhich 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 services or other services provided out of nonJapanese branches. While the FSA has published a Q&A on who is covered by the banking agency system and who is
not, a lack of clarity persists.
Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations are core parts of the global regime totackle financial crime. This is a major issue for regulators and also for financial institutions. The standard setter for
global regulations is the Financial Action Task Force (FATF) and its recommendations are endorsed by the International
Monetary Fund. FATF has criticised Japan for not introducing a regime that complies with its recommendations,notably in a press release issued in June 2014. The Japanese Government has started to take legislative action in
response to this criticism. The biggest gap between Japanese and the global standards is the failure by the Japaneseregime to fully implement a risk-based approach throughout the processes of customer due diligence and customer
management. For example, identification of the ultimate beneficiary of ownership of a transaction (UBOs) andpolitically exposed persons (PEPs) have been left unaddressed in Japan, while at the same time formalistic KYC
requirements are rigidly applied without giving consideration to the underlying risk. The EBC welcomed recent
activities and progress in this area and encourages the Government in its efforts to introduce an anti-money laundering
regime compatible with international standards.

30

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

Key Issues and Recommendations■

Revitalisation of the financial market
Yearly status report: new issue. 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, two years later,
this activity has subsided and the market is waiting for a more permanent improvement: long-term reform on themacro 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, which should
lead to improved transparency and lowered risk.
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 swiftly implement the proposed Stewardship Code without diluting its content■

Transparency and regulatory efficiency
Yearly status report: progress. Duplicated inspections by the FSA, Securities Exchange and SurveillanceCommission (SESC), Tokyo Stock Exchange (TSE), Japan Securities Dealers Association (JSDA), Ministry of
Finance (MOF), and Bank of Japan (BOJ) have long imposed an excessive administrative burden on regulated
firms. The EBC encourages the Government to increase efficiency and transparency and so welcomed the FSA’s
decision to release its annual inspection programme, which clarifies the focus issues for the year, and to provide
pre-notification of inspections in certain cases.
Recommendations:
The extensive requirements for reporting to regulators and self-regulatory organisations should be reevaluated and reduced to a level consistent with sound, but not excessive, supervision.
Special consideration should be given to companies already regulated due to their designation as Global
Systemically Important Financial Institutions, in order to avoid an unnecessary administrative burden.

FSA rules and regulations should be applied consistently in accordance with current universal guidelines.

The FSA and other regulators should encourage innovation and competitiveness in financial services
markets by operating on the basis of published general principles for good governance.

■

Banking agency system
Yearly status report: progress. The banking agency system requires Japanese branches of European banks toapply for a special business licence each time they introduce any new banking services provided by anotherbanking entity, even if that entity is a branch of the same financial group located outside Japan. This noticeably
impacts 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 clarity improved when the FSA published a Q&A on who is covered by the banking agency system, further
efforts to provide a more appropriate regulatory framework for cross-border transactions is needed.
Recommendations:
The FSA should further clarify and streamline the application process for banking agency licences.

The FSA should introduce a system whereby branches of European banks in Japan do not have to apply for a
special business licence each time they introduce a new product.

The FSA should provide a more appropriate regulatory framework to facilitate cross-border transactions.

■

Anti-money laundering
Yearly status report: new issue. To date, foreign banks in Japan and Japanese banks with overseas operations,have in some cases had to operate two different systems to meet two different risk management requirements(Japanese and ex-Japan). This has cost implications for firms and introduces a risk of non-compliance. Noncompliance with global FATF rules can lead to blacklisting by FATF. We welcome and encourage theGovernment’s efforts to introduce an anti-money laundering regime compatible with international standards.
Recommendation:
Japan should promptly align its legislation with international standards to avoid deviating from FATF.

Banking2

31

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. While the market share of foreign
affiliates in Japan is increasing, they continue to encounter regulatory obstacles that can limit efficient development of
their businesses. Examples include the issue of privatisation of Japan Post, non-equal footing with mutual aid
cooperatives (Kyosai), reserving and solvency regulations that are inconsistent with, for example, European solvency
requirements, and the lengthy, non-transparent product approval process. Future market growth in Japan will come fromthe 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. Through a principles-based regulatory regime, where the regulator
strikes a careful balance between innovation and regulation, focusing on risk management and allowing flexibility, theinsurance market can adapt appropriately to deal with changes in policyholder needs and changing financial conditions.
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 White Papers repeatedly drawn attention to Japan Post and the preferential treatment it
receives. Japan Post Insurance (JPI) is currently conducting life insurance business under Japan Post Holdings. JPI is
now allowed to launch new life insurance products subject to regulatory approval under the amended Postal Service
Privatization Act even though privatisation has not been completed and a level playing field among JPI and private
insures has not been secured. The EBC repeats its position that JPI should fall under the same rules as private insurers
and that there should be more transparency as regards JPI’s access to and relationship with Japan Post’s network. The
EBC is following with interest recent developments regarding business alliances between JPI and private insurers.
However, the EBC wants to clearly point out that this does not completely resolve the issue and that it is vital for theGovernment 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) consigned by
G20 and the Financial Stability Board (FSB), designated nine insurers as global systemically important insurers (GSIIs). The FSB/IAIS are advocating that such insurance companies maintain certain minimum capital requirements,
adopt a market-based solvency measurement methodology such as Solvency II, implement certain risk management
strategies, and develop substantial resolution plans amongst other measures. Additionally, they are proposing thatnational insurance regulatory bodies in each country increase information sharing with other regulators across borders.
As the regulator of Japan’s financial market, the FSA would need to adopt many of the proposed policy measures before
they could become effective in Japan.
We also believe that a permanent, post-funded scheme should be established for the Policyholder Protection
Corporation (PPC). 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 clear and consistent
application of rules and regulations, would contribute to Japan’s recovery from the financial crisis. This would also
benefit the domestic financial services industry, Japanese consumers and Japan’s ability to retain foreign investment.
The FSA product approval process is lengthy in comparison with other financial markets and FSA availability islimited. This results in product development delays and makes effective planning difficult. Approvals, when granted, are
not flexible enough for the development of new products and features that are sensitive to volatile capital markets,particularly in response to the financial crisis. The EU-Japan FTA/EPA should eliminate all of these problems andcontain common rules on competition and regulation to ensure transparent, fair and equal rules for all issuers of
insurance. Furthermore, the agreement should include common rules for solvency calculations using market-based
techniques based on Solvency II, and common rules for improving the transparency and predictability of regulations
using a risk-focused approach.

32

EBC Insurance Committee
Member Companies
AXA Life
Cardif, BNP Paribas
Credit Agricole Life
Deloitte Touche Tohmatsu
Manulife Life
Swiss ReKey Issues and Recommendations■ Japan Post reform
Yearly status report: some progress. With the introduction of the bill on postal reform, JPI has been given
preferential treatment that is not extended to other market players. The EBC regrets this situation as it leads not
only to distorted competition, but also to a further expansion of what is already the world’s largest financial
institution. JPI has already introduced a limited number of products and has indicated an interest in expanding its
product portfolio. As a signatory to the WTO General Agreement on Trade in Services (GATS), the Governmentof Japan is obliged to ensure all market players enjoy equal treatment.
Recommendations:
The Government of Japan should swiftly carry out the privatisation process in accordance with its previous
commitments.

The Government should, furthermore, better explain obligations under the universal service requirement.

The Government should set up guidelines for the Japan Post Network on how it selects which products tomarket and sell.

The Government of Japan should adhere to its commitments made under the GATS.
■

KyosaiYearly status report: no progress. Kyosai are mutual aid cooperatives providing insurance products. Undercommitments made by the Government of Japan, these organisations should be governed by the same rules andregulations as foreign insurance companies, but this is currently not the case, as kyosai are not subject to theInsurance Business Law. Instead, different ministries regulate the various kyosai depending upon the sector inwhich the kyosai is active. For example, the Ministry of Agriculture, Forestry and Fisheries regulates the
agricultural kyosai. The EBC would also like to point out that the original purpose of kyosai of supporting only awell-defined group like farmers or police officers has in many cases been abolished and today more or less any
person, irrespective of affiliation, can sign up for a policy. For example, Tomin kyosai only requires the customer
to live in Tokyo and the Central Union of Agricultural Cooperation (JA) can to a certain extent sell to non-JA
members.
Recommendations:
Kyosai should be brought under FSA supervision and be covered by the Insurance Business Law and should
not be allowed to expand their businesses until such provisions are in place.

Kyosai should only be allowed to sell insurance to the members of their own well-defined group.

■

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 the 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.
The Government of Japan should continue to fully participate in the development by the FSB/IAIS ofenhanced regulatory measures for systemically important insurers and internationally active insurancegroups.

In adopting any or all of the FSB/IAIS proposed policy measures for the Japanese market, the Governmentof Japan should consider the burden that such risk management reporting and capital adequacy requirements
could impose on these businesses and minimise any conflicting cross-border jurisdictional requirements.

Insurance
2

33

■

Product approvals
Yearly status report: some progress. The FSA product approval process is overly lengthy and FSA’s resources
are limited. This results in product development delays and makes effective planning for insurance companies
difficult. Furthermore, approvals, when granted, are not flexible enough to enable adaptation to ever-changing
markets. In the long term, a “file-and-use” system should be introduced so that reputable companies do not haveto start from scratch when introducing a product that is already on the market. The EBC is however encouraged tosee that FSA acknowledges the need for strengthened resourcing.
Recommendations:
The FSA should improve and clarify its product approval process to avoid uncertainties. One way forward
could be to set up a task force, with members from both the authority and industry, the latter comprising both
domestic and foreign companies.

The FSA should, furthermore, introduce a simplified approval system for products that are either fully or
partially on the market already.

■Bancassurance or bank sales channel
Yearly status report: limited progress. It is common practice for insurance companies to use banks, and especiallythe physical network of the banks, to better market and sell various insurance policies. Although the market has
been liberalised, some areas of the market cannot be accessed through this sales channel – notably sales of
insurance to employees of companies with less than 50 employees where the company is a borrowing customer ofthe bank. While the EBC understands that the rationale behind this policy is to prevent banks from using theirsuperior bargaining power to force clients to buy unnecessary or inappropriate insurance policies, we would liketo point out that such behaviour is already prohibited by anti-trust law and the banks’ codes of conduct. The EBC,
furthermore, remains unaware of any major complaints from consumers about banks mis-selling insurance
policies.
Recommendation:

The FSA should further liberalise bancassurance to make it possible for banks to sell insurance to any
company employee regardless of the relationship between the bank and the company.

■

Policyholder Protection Corporation (PPC)
Yearly status report: some progress. While the framework for PPC has long been discussed, very little has
happened, and the system is still pre-funded. This situation exists even though the funds have not been used forseveral years. In addition, neither the total amount of the funds nor the annual assessment have been adjusted tobetter mirror the current more stable situation of the insurance market. The EBC would prefer a system that is
post-funded to remove the risk of moral hazard among companies. We would also like to remind the authorities
that some European insurers are already designated as Global Systemically Important Insurers (G-SIIs) withfurther requirements of enhanced supervision and higher loss absorption (HLA).
Recommendations:
The FSA should amend PPC so that it becomes a post-funded system and at the same time introduce
provisions for the system to better mirror the current market situation regarding the total funding and annual
assessment.

The EBC requests that the Japanese authorities take into consideration the situation of the G-SIIs whenamending the PPC system.

34
3

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

AIRLINES
Introduction
The Japanese aviation sector continues to be of global significance, with about 5% of global traffic flying in and out ofJapan. More than ever, air transportation is critical as a catalyst for economic growth. However, Japan still ranks low interms of the quality of its air transport infrastructure, placed just 46th in World Economic Forum (WEF) rankings.
International flights connect Narita and Haneda Airports with only 88 cities, while Seoul, Hong Kong and Singapore
each have more than 130 international routes. The Japanese Government intends to increase the combined number ofannual slots at both airports from the current 747,000 to 830,000 prior to the Olympic Games in 2020 by introducing
new flight routes above Tokyo. Unfortunately, domestic demand for leisure travel has fallen recently, following asubstantial weakening of the Japanese currency and an increase in the rate of consumption tax from April 2014, together
leading to increased package tour prices and cautious consumer spending behaviour. While inbound travel from Europe
has increased, it cannot compensate for weaker demand from the bigger Japanese market. Revitalisation of outboundleisure traffic from Japan to external markets, especially to Europe, is therefore of great importance. The capacities
planned by the Government for the Olympics can only be provided if outbound demand can support them, not least on
Japan-Europe routes.
The EBC again urges the Government of Japan to reduce charges at Japanese airports, especially for those airports
offering vital links to and from international markets, so that the Government’s ambitious growth targets can beachieved. To date, the scope and pace of change have been disappointing. Airlines have long been required to pay
prohibitive landing fees, navigation charges, airport terminal rent, airport terminal common user charges, and cargohandling fees, as well as indirectly paying security fees, which should be borne by the Government and not by theairlines. According to the WEF’s competitiveness ranking for Travel and Tourism, Japan ranks 113th in terms of airport
and ticket charges. The new Narita Airport fee structure introduced in 2013 has not succeeded in producing any
substantial cost reductions for users. Landing fees were indeed lowered, but rents and baggage handling system costs
were increased. As a consequence, the real beneficiary of the changes has been Narita Airport, which shows healthy
profits on its balance sheet.
The EBC is closely following the construction and opening of the new terminal at Narita for Low Cost Carriers (LCC).
We are still seeking a transparent explanation of the cost structure for this terminal and reassurance that the complete
cost will be borne by the users of this specific terminal, the LCC themselves. No cross subsidy should take place
between existing terminals financed and used by the incumbent airlines and the new project. Airport user charges at
Haneda exceed even those applied at Narita although the infrastructure for users is totally inadequate. For example, theinfrastructure for catering and cargo cannot meet demand and creates substantial hidden costs for airlines. Given theplans to develop further capacity for international flights to take off and land at Haneda, we urge the Government toearmark the necessary space to accommodate production/storage facilities for vital airline suppliers. Furthermore, while
welcoming the opening up of Haneda Airport for intercontinental flights following completion of its new runway andinternational terminal in 2010, the EBC again urges the Government to ensure that access is provided on equal terms to
all carriers. Healthy competition is a prerequisite for establishing a functioning market driven by an economic rather
than political rationale. In order to avoid unhealthy and unsustainable excess capacity, the Government should engage indeveloping flexible solutions that do not require carriers serving Haneda Airport to also maintain flights at Narita.
Finally, the EBC urges the Government to consider carefully the competition implications of the government-supported
bail-out process and recapitalisation of Japan Airlines (JAL). The Enterprise Turnaround Initiative Corporation (ETIC)
has guaranteed various commercial transactions so that JAL can survive and be restructured in a controlled fashion.
However, the protection umbrella organised by the Government, such as long-lasting tax breaks (9 years) and access tovaluable slots at Haneda Airport, has impacted competition not only within the Japanese airline industry, but also with
European carriers which, due to the strict framework applied within EU bail-out legislation, do not benefit from any
comparable advantages. The Japanese Government should, therefore, closely monitor the competitive situation andensure that European airlines can enjoy a fair and level playing field.

36

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■ High costs
Yearly status report: limited progress. The revised Narita Airport fee structure did not produce the expected
substantial cost reduction for users – the lowering of landing fees was accompanied by an increase in rental andbaggage handling system costs. In the meantime, Narita has announced that it will give discounts to airlines
serving the airport for the first time or increasing capacity. Such an approach would greatly disadvantage
incumbent carriers, which have for years paid high prices. In addition, Japan’s Airport Development Special
Accounts have had the effect of subsidising unprofitable airports by taxing major airports, which are the very
facilities used by European airlines. The EBC believes this approach is unfair and also unsustainable. If Narita is
to remain competitive with other hubs in Asia, reduction in airport costs by as much as 50% will be necessary.
Recommendations:
Airport fees should be lowered if Japan is serious about becoming a true tourist destination in Asia.

The authorities should ensure that no differentiation in fees is made between new and incumbent airlines.
The authorities should ensure that the announced lower fee for LCCs is not subsidised by mainline carriers.
The perimeter security control at Narita should be abolished and replaced by a more efficient and passengerfriendly process, and the consequent savings shared with the airlines, who currently pay for this.

Airport Development Special Accounts should be abolished to pave the way for the lowering of fees.
The Japanese Government should proceed with privatising airport management, as in Osaka, giving the new
managers sufficient flexibility to achieve higher cost efficiency and lower charges for airlines.
■

Airport infrastructure
Yearly status report: limited progress. As of summer 2014, 30,000 new daytime slots for international routes had
been assigned at Haneda. Some operational restrictions on the utilisation of the airport had been removed.
Recommendations:Japan should establish a plan for efficient use of all available airport infrastructure, including identification
and assignment of space for airline suppliers in the Catering/Cargo sector to reduce costs for airport users.

Haneda Airport should be fully opened up to all international traffic, including flights to/from Europe, on a
non-discriminatory basis.

A reduction of night curfew hours at Narita Airport should be considered due to the much lower noise levelsof modern airplanes and their reduced environmental impact.
The expensive early gear down policy should be abolished after careful explanation to the local community.

Haneda Airport should accept all aircraft types.

■ Revitalisation of outbound tourism
Yearly status report: limited progress. Japan is allocating substantial efforts and funds to promoting Japan as an
inbound destination. However the capacity increase required between Europe and Japan for the 2020 Olympics
can only be provided if there is an increase in the volume of Japanese customers travelling outbound to Europe.
Recommendations:
The Japanese Government should facilitate and promote outbound travel, especially to Europe.
The cost of first passport issuance should be reduced and travel encouraged, especially for younger people.
■ JAL Restructuring
Yearly status report: limited progress. The Government should carefully consider the competition implications of
the government-supported bail-out process and recapitalisation of JAL.
Recommendations:
The Government of Japan should make sure that competition is not distorted by the effects of long-term tax
breaks as well as guaranteed loans for Japan Airlines.

During the next round of slot allocations at Haneda Airport, European airlines should be treated favourably.

Airlines37

Mr. Shigetoshi Kawahara
Chair, Railways Committee(Managing Director, Goldschmidt-Thermit Japan Co., Ltd.)
c/o Goldschmidt-Thermit Japan Co., Ltd.
Ema Tanaka Bldg 2F, 2-5-2, Iidabashi
Chiyoda-ku, Tokyo 102-0072
Phone 03-3511-3305
Fax 03-3511-3390

RAILWAYS
Introduction
Japan, being an island nation, is not connected to any neighbouring countries by rail. The EBC Railways Committee
believes that this presents challenges for its railway industry, depriving it of the competitive stimulus and commercial
opportunities that direct connections with neighbouring countries provide. Examples of such direct connections aboundin Europe, from the rail and road tunnel linking the island nation of the U.K. to France to the integrated network of highspeed TGV and ICE train services running between France and Germany. In Istanbul, Turkey, a railway has even been
built under the Bosphorus to connect the trans-continental networks of Asia and Europe. None of these connections
would exist without the countries involved recognising the opportunities integration can offer and investing the time andeffort to harmonise their rules and regulations and thus make it possible. Creating an open framework for ensuring thesafety and conformity of railway products and services has greatly benefited Europe, from the perspective of
manufacturers, operators and users alike. The EBC commends this approach and hopes that the railway sector in Japan
will itself choose to take a similar route, mirroring the sea and air related sectors here, which have chosen to benefit
from a global market and moved towards adopting more open and comprehensive legislation for approvals andrecognitions.
More than three years have passed since the Tohoku Earthquake, yet many railway tracks still remain damaged and willtake another year or more to be rebuilt. The EBC Railways Committee, with its particular expertise in urban planningand rail technology, believes that a Light Rail Transit (LRT) system should be introduced. While some rail-boundoperations have been replaced by bus services, the roll-out of LRT would contribute to the long-term revitalisation,commercial development and well-being of people in what is currently an ageing and depopulated region.
The total value of rolling stock produced in Japan in 2013 was 197 billion yen, up 14.6% from the previous year. The
figure includes new production, remodelling and repairs. In comparison, the value of rolling stock imported from abroad
was extremely low, amounting to only 7.1 billion yen. The value of railway-related parts production in Japan in 2013
was 252 billion yen, up 7.4% from the previous year, whereas the value of imported parts was just 6.8 billion yen.
Although production increased in 2013, the level of imports remained more or less the same as in 2012. The EBC is stillof the opinion that Japan represents a large market with good potential for European manufacturers and service
providers, and we would welcome more openness to imports.
In Japan, unless products are sourced from specific manufacturers, traditionally they are not considered by Japanese
railway operators without further extensive yet unnecessary testing, even if already tested and certified according tointernational standards. The EBC strongly requests the Japanese Government to improve the legal environment tofacilitate smooth imports and exports, while minimising wasted costs and time.
The EBC welcomes the EU-Japan FTA/EPA negotiations and the progress made to-date. We note that Japan requested
the removal of three JR companies from the list covered by the World Trade Organisation’s (WTO) Plurilateral
Agreement on Government Procurement (GPA), and that this request was approved when the EU removed its
reservation. One of the conditions for accepting this request is that there must be transparency in respect of materials
procurement. Moreover, the definition of the Operational Safety Clause (OSC) has always been an important part of thisprocess. The EBC still does not understand why the Japanese Government believes that safety concerns can be grounds
for not following the guidelines of the GPA, as Japan and its operators would still be allowed to set their own safetyrelated standards. The EBC therefore looks forward to improved clarity regarding the definition of the OSC, andrequests the Japanese Government to continue its efforts to enhance the transparency of materials procurement. We urge
the EU and Japanese negotiators to recognise that the EU and Japan have comparable safety standards and to agree on
the elimination of the OSC during the second year of the FTA/EPA negotiations and to eliminate all remaining nontariff barriers in the sector.

38

EBC Railway
RailwaysCommittee
Committee
Member Companies
Alstom Power Japan
HalfenHoffmann Elektrokohle
Goldschmidt-Thermit
Japan
Jitex Consulting
Hoffmann
CarbonGroup
Japan
MATISA Japan
Ingerosec
Nihon Getzner Rail Systems Japan
Knorr-Bremse
Solton Getzner
Nihon
Thales Japan
SoltonWebastoThalesJapan
GCS 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 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 make certain that the new definition of the OSC is not a catch-all, but will lead to real change
and that government entities covered by the GPA truly follow the agreement.

The Government of Japan should ensure that when planning new railway projects (LRT), local cities abide
by or use the GPA as guidance to set up a proper public procurement scheme, and 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 call for tenders for diesel 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 hopethe voluntary 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 the 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.

Railways39

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.

40

EBC Telecommunications CarriersCommittee
Member Companies
BT Japan
T-Systems JapanKey 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. MIC started reviewing fair competition rules in 2014, having alreadyfinished its initial research and public comment procedure. There are many items on the agenda including crucial
topics such as the functional separation of NTT. The EBC believes it is of utmost importance to follow faircompetition principles based on global practices. These principles will ensure that future discussions on faircompetition 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
241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. In 2006, the e-Japan Strategy devised by the ICT Strategic Headquarters set out to further
improve the country’s hyper-speed network infrastructure, competition policy, e-commerce, and e-government, and in2009 the same organisation set up the “i-Japan Strategy 2015” with the goal of providing broadband to everybody,
everywhere and at any time. An additional goal is to improve health-care and education through ICT, as well as tocreate new industries. In June 2013, the Cabinet approved “the world’s most advanced IT nation creation declaration”
and with it intensified Japan’s efforts to realise an IT-based society.
The EBC appreciates the opportunity to contribute to the Ministry of Internal Affairs and Communications’ (MIC)
policy committees as an official participant and respects the Government’s overall commitment to an industry-led,
global approach to standards and platform development. Important steps have been taken to facilitate the productapproval 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 of accredited
testing bodies designated under the MRA remains low and the SVC still applies only to wired telecommunications
terminals, with limited application to wireless/radio equipment. Although some additional products have been added toits scope, many products are still not covered by the SVC.
In the area of spectrum allocation, in 2012 Japan allocated both the 700 and 900 MHz bands for mobile telephony by aprocess requiring each applicant company to submit information on its planned use of the bands in terms of investments
in both infrastructure and availability to consumers, upgrades and so on. The EBC is pleased to see that the bands mirror
mobile telephony best practice in other large markets, such as the EU and the US.
There are approximately 6.8 billion mobile subscriptions globally and 2.4 billion of these are connected to mobile
broadband, with overall mobile data traffic doubling each year. In a mature market like Japan, with advanced dataservices and LTE introduction, smartphone penetration is about 50% and is driving mobile broadband growth and a
projected traffic usage of 10 GB/month per user in 2020. There is a paradigm shift from a traditional telecom model to a
networked society model, where applications and users can demand variable speeds and latencies. The various
applications used on smartphones, such as video and social networks, and machine-to-machine communication, place
different demands on the network. In order to address the strong traffic growth, Japan created an action plan andstrategy in 2010 with the aim of securing an additional 300 MHz by 2015 and by 2020 to have secured another 1,500
Mhz worth of bandwidth for mobile communication.
The EBC believes that to facilitate trade between the EU and Japan, the current duplication of product certifications fortelecommunications equipment sold on both the European and Japanese markets should be eliminated. The FTA/EPA
between the EU and Japan should establish true mutual acceptance in which telecommunications equipment products
certified for either the European or Japanese market would automatically be approved in the other. The current
framework provides only for recognised certification organisations to test for both markets. Mutual acceptance oftechnical standards and certifications for all telecommunications equipment would be a natural part of the FTA/EPA.

42

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 Japanese certification process is also different from that of Europe.
The EBC welcomed the introduction of SVC by the Government of Japan at the beginning of 2004, which issimilar to the Suppliers’ Declaration of Conformity (SDoC) introduced in Europe. However, the EBC isdisappointed that this system is limited to wired telecommunications terminals in general and that the application
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.
Application of SVC should be expanded to all equipment in the category of “Specified Radio Equipment”.
■

Harmonisation of spectrum for IMT (IMT-2000 and IMT-Advanced)
Yearly status report: some progress. The EBC acknowledges that the Government of Japan has been active intrying to identify a globally harmonised spectrum for International Mobile Telecommunications (IMT) systems.
This would bring enormous benefits to the industry and consumers by eliminating the need to develop local
variations of new telecommunications equipment. Therefore, the EBC was pleased to note that in 2010, MIC
presented a plan to allocate the 300 MHz band to wireless broadband including IMT by 2015, and awarded
licences for the 700 MHz and 900 MHz bands in 2012 with the possibility of achieving harmonised spectrum
allocation and arrangement for IMT systems. The EBC also notes that MIC has completed a study report on thetechnical requirements for IMT-advanced especially in the band between 3,400 MHz and 3,600 MHz. MIC is
working towards partially awarding this band before the end of 2014.
Recommendations:
The Government of Japan should work jointly with other governments to achieve a globally harmonised
spectrum allocation for IMT systems, in line with the findings of the World Radio Communication
Conference in 2007. This should include the bands of 700 MHz, 2,300 MHz and 3,400-3,600 MHz.
The Government of Japan should work actively in accordance with agenda item 1.1 of the World Radio
Communication Conference in 2015, in order to identify new harmonised spectrum for IMT systems.

■

Licensed shared access of spectrum
Yearly status report: new issue. The EBC acknowledges that the Government of Japan has begun studying thelicensed shared access of spectrum between incumbent and prospective licensees, to address the increasing
demand of spectrum for mobile broadband. The EBC supports this initiative, while noting that the sole use ofspectrum by a single operator is prioritised as it ensures the Quality of Service (QoS) to end-users.
Recommendations: The Government of Japan should further study the concept of licensed shared access to find how this shouldbe implemented in Japan.
 The Government of Japan should identify potential frequency bands and relevant incumbent radio systems,
where licensed shared access can be used.

Telecommunications equipment
243

Mr. Mark Slade
Chair, Logistics & Freight Committee(President/Representative Director, DHL Global Forwarding Japan K.K.)
c/o DHL Global Forwarding Japan K.K.
12F Riverside Sumida, 1-19-9 Tsutsumi-dori
Sumida-ku, Tokyo 131-0034
Phone 03-6731-4220
Fax 03-5247-5573

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 even when providing exactly the same service, resulting in inefficiencies and higher prices for users.
The EBC believes that Japan needs to put more emphasis on addressing these problems, which are becoming worse
every year.
Currently, Japan has nine separate customs areas and no central customs authority. A company is only allowed to lodge
customs declarations if its clearance operation is physically located within the jurisdiction of the responsible customs
office. This makes it difficult for foreign logistics companies, which lack multiple regional offices in Japan, to expand
their geographical coverage. Within the Tokyo region there are two different customs territories: Tokyo, covering theTokyo area, Narita and Baraki port and Yokohama, responsible for the rest of the region. It is against this backgroundthat the EBC has welcomed various proposals tabled by the Ministry of Finance (MoF) on customs liberalisation andimproved flexibility. Real change is not scheduled until 2017, but the EBC would like to see earlier implementation,
perhaps through pilot projects.
Japan Post, which is currently restructuring, has plans to aggressively expand while still enjoying preferential regulatory
treatment, thereby posing a serious threat to the functioning of the free market and the ability of competitors to provide
services to the Japanese public. The EBC recognises the need for a universal service obligation to meet certain socioeconomic 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 thefollowing 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 treatment applied to “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 in order to provide their services.
Unfortunately, the new system has missed this target: instead of streamlining these processes, it has burdened
companies with an increase in administrative 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 firstpresented.
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 ports and terminals is being initiated by local authorities rather
than by central Government, such that the anticipated economies of scale and efficiencies will remain difficult toachieve. Data show Japan’s decline in port activity: Kobe Port, for instance, has now dropped in the Asian rankingsfrom fourth place in 1980 to 53rd place in 2014. Tokyo too has shown a decrease in freight traffic compared to other
Asian ports. Structural improvements are desperately needed if Japan wants to remain a vibrant shipping country.

44

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
Panalpina World Transport
SAS Cargo Group A/S
Schenker/Seino
TNT Express Worldwide■ Customs clearance and declaration
Yearly status report: some progress. Currently, Japan limits which customs procedures can be carried out in aregion 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 Japanesecompanies, to expand 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 recent proposals from the Ministry of Finance (MoF) to liberalise customs andintroduce further improvements.
Recommendations:
The Government of Japan should: Commit to implementing the proposed policy on customs jurisdictions. The EBC also asks for early
implementation, perhaps in the shape of pilot projects.
 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.
 Introduce a single national customs area, or as a first step, merge Tokyo and Yokohama ports, as well as
Osaka and Kobe ports.
■ 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
when the goods they contain exceed 200,000 yen in value, substantially higher than the value applied toequivalent packages handled by private sector operators. 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) other than the Customs Law, are not checked by government offices at the first port ofentry (usually an airport), in stark contrast to the thorough checking of packages arriving with private operators.
Recommendations: The Government of Japan should ensure a level playing field by (1) applying the same threshold for customs
declarations 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 use their own facilities to clear
quarantine-related goods.
■

Authorised Economic Operator (AEO)
Yearly status report: some progress. The current system of AEO has unfortunately not led to the simplifications
that many operators had hoped for. On the contrary, in many cases the administrative burden has increased. The
EBC seeks a system that gives companies a simplified process and extended powers to handle matters without the
involvement of the authorities in every single case, provided that the operator can demonstrate sufficient control
over the flow, and that a traceability mechanism is in place.
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 of Japan should introduce more benefits for imports handled by AEOs, including but notlimited to: Deregulating customs clearance beyond the local customs jurisdiction territories; Reducing the physical examination of shipments.

Logistics & Freight245

■ 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 overseas and ship lower volumes through Japanese
ports. High port costs also undermine the competitive position of Japanese ports in Asia, for example in theprovision 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.
■ 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.

46
3

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

Dr. Toyotsugu Nakai
Chair, Animal Health Committee(Head of Research and Development,
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 03-6417-2388
Fax 03-5435-2950

ANIMAL HEALTH
Introduction
The animal health product market in Japan is worth approximately 100 billion yen, and ranks 6th in the world. In thepast, it has been an important market for European companies. Japan has, however, lost its attractiveness in recent years
due to low growth rates and the high cost of doing business. The Japanese animal health market is, like that of Europe or
the USA, highly regulated. Japan belongs to the trilateral (EU-Japan-USA) programme of the VICH (International
Cooperation on Harmonization of Technical Requirements for Registration of Veterinary Medicinal Products), a
veterinary equivalent of the International Conference on Harmonisation (ICH) for human medicines. VICH aims toharmonise registration requirements for animal health products 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 that are
unique to Japan and often prevent or delay access to innovative and useful animal health products for animal owners,
veterinarians and consumers. This is unnecessary, since these products will have gone through a rigorous review process
in Europe and the USA prior to registration, thus assuring their efficacy, safety and quality. Japan’s regulatory
requirements for innovative veterinary medicinal products based on biotechnology are especially stringent and,
therefore, products readily available in Europe are often not available here. More rapid access to new animal vaccinesand medicines is necessary for the Japanese livestock industry to remain competitive with foreign producers. This issue
will become more acute in the future should Japan’s participation in the EU–Japan FTA/EPA and the Trans-PacificPartnership free trade zone (TPP) require the elimination or reduction of tariffs and subsidies for animal agriculture. If
producers in Japan cannot maintain competitiveness, Japan will continue to become increasingly dependent on imported
animal products.
Marketing authorisation of a veterinary medicinal product is granted by the Ministry of Agriculture, Forestry and
Fisheries (MAFF). For an animal drug intended for use in food-producing animals, the Food Safety Commission (FSC)
and the Ministry of Health, Labour and Welfare (MHLW) are also involved in establishing the acceptable daily intake
and maximum residue limit, respectively. The review process for food-producing animal health products is complex andoften inefficient, lacking good coordination and taking a very long time before a product becomes available to livestock
producers.
In the case of biological products, most of the specification items are unique to Japan, including the requirement for aserological potency test on live vaccines. Product specifications have to be established purely for the Japanese market
and each batch of vaccine has to be released based on these unique specifications, often requiring duplicate testing at the
manufacturing site.
While studies conducted overseas under Good Laboratory Practice or Good Clinical Practice are accepted by MAFF forinclusion in the registration dossier, there is still no mutual recognition of Good Manufacturing Practice (GMP) for
veterinary medicinal products. This means that any overseas production facilities involved in the manufacture ofveterinary medicinal products for importation into Japan, whether those products are active pharmaceutical ingredientsor final products, have to be accredited by MAFF, even though their GMP status is authorised by European authorities.
This process involves a large amount of redundant administrative paperwork.
For the last few years, MAFF has been implementing various measures to improve the predictability, quality, and speedof the registration process and while these are improving to some extent, there are still delays in the review process forsome product segments. The EU-Japan FTA/EPA should aim for mutual recognition of European and Japanesemarketing authorisations for veterinary products, starting with mutual recognition of GMP certification for veterinary
medicines.

48

EBC Animal Health Committee
Member Companies
Bayer Yakuhin/Animal Health Division
Boehringer Ingelheim Vetmedica Japan
Merial Japan
Novartis Animal Health
Virbac JapanKey Issues and Recommendations■ Product approvals
Yearly status report: progress. Products already approved in the EU, especially veterinary biological products,
have to undergo further rigorous controls and tests before being approved in Japan. Requirements for additional
animal testing without an obvious scientific rationale create serious animal welfare concerns. In the case of thegeneric application of veterinary pharmaceutical products, bio-equivalency studies conducted overseas are notacceptable by MAFF for inclusion in the registration dossiers. The applicant is still required to answer questionsof little relevance to the safety and efficacy of the product. Since three different regulatory authorities (MAFF,
FSC and MHLW) are involved, and part of the registration is not globally harmonised, the registration of foodproducing animal products can take an extremely long time.
Recommendations:
The Government of Japan should use all measures available to speed up product approvals, including mutual
recognition of product registration schemes, and fully harmonise domestic regulations with international
practices. VICH guidelines should completely replace obsolete Japanese guidelines.
In view of animal welfare concerns, requirements for additional animal studies should be minimised where
similar studies are already available in other countries.

Reviews of food animal products by MAFF, MHLW and FSC should be conducted in parallel to shorten theoverall review period for veterinary medicinal products for food-producing animals.
■ 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 the MAFF initiative to
introduce the seed-lot system, some animal vaccines no longer require a national assay for batch release.
However, some European vaccines cannot enjoy this benefit due to additional unique testing requirements, suchas in-process testing that does not exist in the internationally recognised seed-lot system. Japan requires aninactivation test on the finished product only for imported inactivated vaccines and not for similar domestically
produced inactivated vaccines, thereby creating a discriminatory non-tariff barrier to trade. Despite the fact thatthe safety of vaccines for dogs and cats is tested in the target animals, an Abnormal Toxicity Test using laboratory
animals is required, which raises animal welfare concerns.
Recommendations:
Requirements for eligibility to be included in the seed-lot system should be aligned with internationallyrecognised requirements, and no new unique-to-Japan requirements should be added.
The requirement for an inactivation test on the finished product for inactivated vaccines should be
eliminated.

The requirement for an Abnormal Toxicity Test on vaccines for dogs and cats should be eliminated.

Recombinant, protozoa, and fish vaccines should also be eligible for inclusion in the seed-lot system.
■ MAFF/NVAL proposed action items
Yearly status report: progress. On December 3, 2012, MAFF and the NVAL (National Veterinary Assay
Laboratory) presented to the Japan Veterinary Products Association Committee on Technical Issues andRegulatory Affairs a list of ten action items for policy change targeted as measures to improve marketing
authorisation procedures. Five of the ten action items had been implemented by Aug. 2014.
Recommendation:
 Although, in the opinion of the EBC, this list does not comprehensively represent all of the required reformareas, we support this initiative and request the regulators to continue to identify additional reform
opportunities. Furthermore, we request MAFF and the NVAL to consult closely with the industry before any
detailed policy change occurs to ensure harmonisation with similar policy in other major countries.

Animal health249

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 provision in Japan suffers as a result of the increasing pressure on the social security system from the effects
of an ageing society, reduced birth rate, and burgeoning costs. To remedy this situation, the Japanese Government needs
to reform the way the system operates while also re-evaluating its actual purpose. In particular, given the current movetoward enhancing the quality of medical care, while at the same time optimising medical costs, a serious discussion isneeded on the value and contribution of medical diagnostics. It is crucial that both medical care providers and medical
system operators properly understand and evaluate the major role that medical diagnostics can play in medical care, sothat their full contribution to medicine can be realised.
Since 2007, the problems, challenges and future direction of the reimbursement system for medical diagnostics havebeen under discussion. Research papers on the topic have been published, and proposals and recommendations havebeen made, both at study sessions on medical diagnostics and at periodic 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 and Welfare (MHLW). The EBC appreciates thefact that, as a result of these activities, IVD fees improved continuously between 2008 and 2014, reflecting greater
recognition of what is referred to in periodical medical reimbursement price revisions as the need for “quality
enhancement of clinical diagnostics and faster examination”. While IVD fees fell by 1.4% in 2014 in real terms, thus
wiping out the 0.4% increase in the 2012 revision, there has been a significant overall improvement compared with therevisions before 2008, when members of the EBC Medical Diagnostic Committee reported drastic cuts. Furthermore,category E3 qualification requirements for reimbursement were revised this year, as long advocated by industry groups,
and the EBC welcomes this improvement. As a result, “Clinical meaning and enhanced convenience” has now been
added to E3 (whereas previously only “New Items” and “Addition of Samples” were approved). Effective
implementation of this new rule is expected to contribute to more appropriate evaluation of clinical diagnostics.
Medical diagnostics provide 70% of the information required for deciding on a treatment strategy, yet account for only
about 4% of total healthcare costs. These facts demonstrate both the significant role and the extraordinary value of
medical diagnostics in providing the necessary information for medical care to progress from prediction to accurate
diagnosis, treatment and monitoring. If new applications for medical diagnostics are to be discovered, it is vital tounderstand the relationship between the value they can add and the medical reimbursement system, as well as to create
an environment where appropriate diagnostics are available at the right time and place, and at an appropriate price. Boththe public and private sectors need to start in-depth discussions on this important issue, to enable the quality ofhealthcare and patients’ quality of life to be improved.
It is obvious that medical technology and related environments are becoming increasingly advanced and complex, as
seen in the examples of personalised treatment using companion diagnostics. The development of personalised
treatment depends not only on the development of the primary drug itself, but also on the development from an earlystage of companion diagnostics to predict the effectiveness and side effects of the drug. The development of companion
diagnostics, the associated approval process and relevant reimbursement system are all currently under discussion, in
response to requests from industry organisations. The EBC believes a system should be set up promptly to enablewidespread personalised treatment in Japan.
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 Japan Association of Clinical Reagents Industries (JACRI) and
The American Medical Devices and Diagnostics Manufacturers’ Association (AMDD). We believe that streamlining
and reform of the current reimbursement system will be essential for maintaining and improving the quality of medical
diagnostics and therefore also the quality of medical care.

50

EBC Medical Diagnostics Committee
Member Companies
Abbott Japan
Ortho-Clinical Diagnostics
Roche Diagnostics
SML (Sceti Medical Labo)
Sysmex bioMerieux

Key Issues and Recommendations■

Quick access to new IVDs
Yearly status report: progress. To improve healthcare in Japan it is important to ensure prompt access by the
medical sector to effective IVDs. Examiners and applicants have agreed to cooperate and jointly study measures
to shorten the time period required for regulatory approval of new products. As a result, the Action Plan for
Speedy Examination of IVDs was announced by the MHLW in March 2014, confirming the following actions:
1. Establishing a scheme to enhance quality in 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 management of the process and achievement of objectives.
Recommendations:
The MHLW should promptly start concrete actions such as increasing the number of examiners.
The MHLW should enhance the quality of applications by setting up a consultation system that is easy for
applicants to use.
The MHLW should enhance the quality of examinations by upgrading the examiner training system.
The MHLW should hold periodical working-level meetings with participants from both the public andprivate sectors; verify the progress of the scheme; and monitor the timely achievement of term objectives.

■

Reimbursement system based on clinical value
Yearly status report: slight progress. The EBC Medical Diagnostics Committee has jointly produced a Position
Paper on IVD reimbursement with JACRI and the IVD Committee of the AMDD. The paper, entitled“Reimbursement System Based on Clinical Value – Meeting the Diversifying Medical Needs” was submitted to
the MHLW on 20 June 2014. The paper argues that clinical reagents should be classified into categories reflecting
recent advanced inspection technology and diversified clinical needs, with clear-cut operational rules set for each
respective category. Furthermore, to accommodate the needs of future patients and lessen the strain on thehealthcare budget, Japan needs to be more active in promoting IVDs in non-hospital environments. Japan has
already moved in this direction by approving sample measuring rooms where patients can conduct a blood test bythemselves with a fingertip puncture, which is now possible thanks to technological innovations. Quantitative
inspection techniques using simple medical equipment have also been developed. However Japan needs still tomake certain that such self-checks meet the necessary quality levels.
Recommendations:Japan should set up a new category in the reimbursement system called Investigational Use Only (IUO)(provisional name) for situations where a reagent’s clinical validity is not yet confirmed, but analyticaladequacy is recognised. Once classified into this category, the relevant reagents should be approved
officially to enable their use in clinical practice.
Guidelines for conducting clinical performance tests should be established to standardise the use of IVDs at
medical institutions. The development time could be greatly shortened by introducing a system that ensuresfair and rapid clinical performance tests.
Japan should, furthermore, promote the use of IVDs in home care, nursing care, community healthcare, andself-care. A fair reimbursement price must be set, both to support diagnostic quality and to help foster better
point-of-care testing coordinators.
Japan should also increase the range of equipment and reagents used in self-checks.

Recent technological innovation allows patients to undertake safe blood sampling with a fingertip puncture.
The EBC requests that such tests be included in the scope of over-the-counter clinical reagents.

Medical diagnostics
251

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 2012, the national cost of medical care reached39.2 trillion yen, up by 0.6 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 mustbuild a healthcare system that extends as much as possible healthy life expectancy or “life with no restrictions in dailylife” by offering high-quality medical care (providing for disease prevention, early diagnosis and early treatment).
Investing in innovative, efficient medical equipment can help Japan reach this goal, by presenting individual patientswith the opportunity of enjoying a substantially higher quality of life for longer, and so also reducing total expenditure
on medical care over time.
Many Japanese regulations and processes relating to healthcare differ from international standards. European
manufacturers hoping to introduce their medical equipment to the Japanese market must find extra resources, time andmoney for the additional tests required to satisfy Japan’s unique regulations and requirements. At the same time, Japan's
current reimbursement system neither recognises nor fully evaluates innovations in medical equipment. It offers no
predictability in regard to the reimbursement price and thus hinders assessment of marketability. Quite a number ofEuropean manufacturers are discouraged from launching their products on the Japanese market and back away frominvestment in innovation because of these non-tariff barriers, depriving patients of access to innovative medical
equipment.
Nevertheless, there has been some positive progress from 2013, including: Enactment of a Law on Quality, Effectiveness and Safety of Pharmaceuticals and Medical Equipment(Pharmaceuticals and Medical Equipment Law), effective from November 2014.
 Improvement of the approval and examination process in terms of speed.
 Partial easing of duplicated regulation in respect of PSE (the Electrical Appliance and Material Safety Law) for
medical equipment.
 Improvement in the Quality Management System (QMS) for medical equipment and increased alignment of clinicalevaluation (Good Clinical Practice / GCP) with international standards.
Furthermore, negotiations towards an EU-Japan Free Trade Agreement / Economic Partnership Agreement (FTA/EPA),
which started in April 2013, are moving forward. The EBC continues to request that the EU and Japan take thisopportunity to agree improvements in the medical equipment approval process and alignment with international
standards.
The Japanese Government considers health and medical care as a priority area in its growth strategy, and is allocating
budget accordingly. The EBC believes that European businesses can, if allowed, make a major contribution to thisstrategy and so hopes that any financial incentives will not be exclusively directed to Japanese businesses. Many
excellent medical equipment and technologies are developed outside Japan. Collaboration between foreign companies
with advanced technologies and Japanese enterprises promises to spur growth, and help Japanese companies to reach
their strategic goal of true globalisation.
The EBC Medical Equipment Committee will continue to work closely with the Japanese Government, the Ministry of
Health, Labour and Welfare (MHLW) and the Pharmaceuticals and Medical Device Agency (PMDA) as well as relatedindustry associations to establish an environment that allows excellent European medical equipment to be deliveredsmoothly to patients in Japan.

52

EBC Medical Equipment Committee
Member Companies

Key Issues and Recommendations

B.Braun Aesculap Japan
Baxter
Biotronik Japan
ColoplastDentsply IH
Dornier MedTech Japan
Draeger Medical Japan
Edaptechnomed
ElektaHollister
Intuitive SurgicalJapan Lifeline
Japan MDC
JIMRO
Laerdal Medical Japan
Lima Japan
Maquet Japan
Medis medical imaging systems
Molnlycke Health Care
Nippon Becton Dickinson
Nippon BXINobel Biocare Japan

Otto Bock Japan
Philips Electronics Japan
Radiometer
Siemens Japan
Smith & Nephew Wound Management
Sorin Group Japan
Teijin Pharma
TKB
VitalAire Japan
Wako Shoji■ Speedier medical equipment examination
Yearly status report: some improvements. The Japanese Government’s action plan implemented between April
2009 and March 2014 to improve medical equipment examination processes was largely successful, but the lackof predictability in approval times remains a problem. The EBC will collaborate with the government to achievetargets advocated in the new 5-year plan, “Collaboration Plan for Speedy Examination of Medical Equipment.”
Recommendation: The Government should implement structural reform of the PMDA in a timely manner to achieve the newtargets. Furthermore, the technical expertise of PMDA examiners should be increased.
■ Clinical evaluation
Yearly status report: slight progress. Alignment of Japan's GCP with ISO14155 has advanced the process ofclinical evaluation considerably. However, further improvements are required in actual implementation.
Recommendations:
The Government should clarify the notification on clinical evaluation (Notification 0804001, August 4,2008) specifically as regards judging whether clinical evaluation is necessary.

The Government should publish guidelines as soon as possible for creating clinical evaluation reports.
■ Mutual recognition and alignment of QMS
Yearly status report: slight progress. When Japan’s Pharmaceuticals and Medical Equipment Law was enacted,
rationalisation of the QMS survey was mutually agreed and differences between the QMS Ministry Ordinanceand ISO13485 were identified. However, detailed rules for implementation based on ISO13485 have not yet been
disclosed and relevant information has not been disseminated to overseas interested parties.
Recommendations:Japan should rationalise the QMS implementation rules between overseas headquarters of foreign companies
and Japanese sellers and send relevant information to overseas interested parties.
Japan should set up a system conforming exactly to the QMS concept (ISO13485).
■ Reimbursement prices
Yearly status report: no progress. The reimbursement price of some new medical equipment is lower in Japan
than the average corresponding price in foreign countries, which discourages manufacturers from investing in theJapanese market. The current reimbursement scheme should be reviewed to increase incentives for manufacturers
to develop and market new products and to ensure a stable supply.
Recommendations:
The Government should provide a more detailed division of functions into subcategories, introduce multiple
prices for medical materials in the same category, and abolish the repricing system.

The Government should ensure predictability of reimbursement price applications for Category 2 products.
Japan should properly recognise and value innovation and the cost of home-use medical equipment.
■ Designation of construction supervisor
Yearly status report: no progress. A company selling medical equipment requiring construction of facilities tohouse it must have a licenced construction supervisor on its board. This rule applies even if the construction is
outsourced.
Recommendation:
Appointment at board level of a construction supervisor should not be required if a medical equipment
company outsources construction.
■ Patient registration system
Yearly status report: new issue. The Patient Registration System concept is currently the subject of a study by agovernment-appointed panel that has no representatives from the medical equipment industry.
Recommendation:Interested parties from the medical equipment industry should be represented in the expert panel.

Medical equipment
253

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
Japan's national expenditure on medical care in fiscal year 2013 was an estimated 39.3 trillion yen, up 0.8 trillion yen(2.2%) from the previous year. Overall medical expenditure relative to GDP stood at 10.3%, exceeding the OECDaverage (9.3%) for the first time, and approaching levels in countries with similar medical insurance systems, such as
France and Germany. The proportion of total medical care expenses accounted for by drug expenditure has remained
relatively stable over the last 10 years at about 20%. Relative growth in drug expenditure has been kept in check, inspite of an ageing population and progress in medical technologies. In April 2013, the Government of Japan announced
a “Roadmap to Promote the Use of Generics”, and intends to increase the share of generics among replaceable drugs
from approximately 45% in March 2013 to 60% in March 2018. This target is expected to be achievable. Meanwhile theGovernment is suggesting that the drug pricing system should be revised every year, which is something that EFPIA andthe EBC oppose on the grounds that it risks undermining the stability of the overall healthcare pricing system as well as
investment in Japan’s pharmaceutical industry, which has been identified as a key area in the current administration’s
growth strategy.
A new system was introduced on a trial basis in 2010 to promote the development of new drugs and eliminate
unapproved off-label use. Although there have been discussions on whether the new system should be made permanent,
it remains only a trial. Early data from European R&D-based pharmaceutical companies indicate that, since the trial
started, the number of new drug development projects and investments in Japan has increased significantly. Given thattrial implementation over the first four years has been effective, and the new system properly recognises the value ofinnovation, we believe it should be made permanent. While introducing this new system, consideration should also begiven to eliminating arbitrary re-pricing measures that cut the prices of drugs whose sales significantly exceed initialexpectations (as well as the prices of comparable drugs), and thereby undermine efforts to promote innovation.
Despite government policies to promote new drug development, patient access to innovative drugs is hindered by theblanket restriction of prescription lengths to a maximum of 14 days for all new drugs in the first year after their launch.
Until this restriction is lifted, physicians will, in many cases, continue to put off prescribing new drugs. In practicalterms, this usually means a delay of one year in patient access to drugs that are already in extensive use abroad.
Although the period in Japan between the approval of drugs and their reimbursement is the shortest in the world, and thedrug lag is gradually decreasing due to recent improvements in the approval and examination process, a review of therestriction on the prescription period is not even on the Government’s agenda. However, the safety of new drugs inJapan is now underpinned by the post-marketing surveillance system, and by the introduction of a Risk Management
Plan (RMP) in fiscal year 2013. Accordingly, EFPIA and the EBC believe that the time has come to revise the blanket
restriction of prescription lengths for all new drugs.
Following a revision in December 2012, Japanese Good Clinical Practice (GCP) in clinical trials is now steadilyaligning with global standards. However, action is still needed to address differences between Japanese medical
institutions in terms of the efficiency of the clinical trials they conduct, impacting the capacity to optimise trial costs andexpand the number of cases. 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 to solid oral preparations leads to duplicate trials and inspections for all other products, incurring additional costs
for the industry and ultimately the healthcare system. EFPIA and the EBC call on the EU and Japan to work together toeliminate such unnecessary costs.
Finally, as the consumption tax rate was raised in Japan to 8% in April 2014, and a further increase to 10% in 2015 isbeing considered, the Government should now move the focus of debate from the pricing of individual drugs to thefunding of the entire healthcare system, as part of its “Comprehensive Reform of Social Security and Tax”. EFPIA and
EBC members are ready and willing to contribute to this debate through meetings with the Government.

54

EFPIA Japan
Member Companies

Key Issues and Recommendations■

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

Guerbet Japan
Janssen Pharmaceutical
LEO Pharma
Lundbeck Japan
Merck Serono
Nihon Servier
Nippon Boehringer Ingelheim
Novartis Pharma
Novo Nordisk Pharma
SanofiShire JapanUCB Japan

National Health Insurance drug pricing system
Yearly status report: slight progress. In 2010, a new National Health Insurance (NHI) drug pricing system wasintroduced on a trial basis to promote the development of new drugs and eliminate unapproved off-label use. Thishas succeeded in stimulating drug development activities, as exemplified by a recent remarkable increase in thenumber of new drug development projects and investment in Japan. However, there has been no change to thecontradictory policy of reducing the prices of drugs that have exceeded initial sales forecasts, making the result ofinvestments highly unpredictable.
Recommendations:
The Government of Japan should make the new drug pricing system permanent so that innovation is■

rewarded. The new system helps stimulate more continuous investment in drug development in Japan, andenables the provision of innovative new drugs, which are much needed if the Japanese pharmaceuticalindustry is to survive in the face of fierce global competition.
The policy of reducing the prices of drugs that exceed initial sales predictions hinders innovation andincreases uncertainty for business, and should be eliminated. In particular, drugs that have been priced basedon comparable drugs should be excluded from the scope of the pricing system.

Access to new drugs
Yearly status report: no progress. A blanket maximum prescription length of 14 days is imposed on new drugs in

the first year after their launch onto the market. This restriction causes excessive caution among doctors anddelays patient access to the latest drug therapies. Once new drugs are on the market in Japan, their safety is
upheld by the post-marketing surveillance system, combined with the introduction of a Risk Management Plan
(RMP), which together constitute one of the most advanced safety monitoring systems in the world.
Recommendation:
The prescription of new drugs is limited to 14 days in accordance with the stipulations of the Rules forProfessionals in Charge of Healthcare Services under Health Insurance Programs (Ryotan-kisoku). These
stipulations are unique to Japan and should be revised to improve patient access to new drugs, taking accountof the introduction of new and enhanced safety monitoring systems.

■

Clinical trial environment / MRA
Yearly status report: limited progress. Japanese Good Clinical Practice (GCP) in clinical trials has been graduallyinternationally aligned, not least through revisions made in December 2012. However, action is still needed toaddress differences between Japanese medical institutions in terms of the efficiency of the clinical trials they
conduct, impacting the capacity to optimise trial costs and expand the number of cases. At the same time, the scopeof the existing Mutual Recognition Agreement (MRA) for EU and Japanese Good Manufacturing Practice (GMP)
still covers only 15 of the 28 EU Member States. Furthermore, limiting the MRA to solid oral preparations leads
to duplicate trials and inspections for other products, incurring additional costs for the industry and delaying
market introductions.
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 Good Manufacturing Practice (GMP) should be extended
to cover all 28 EU Member States and expanded to include non-solid oral preparations. This will eliminate
the potential for a drug lag due to duplicate inspections and examinations, and will reduce GMP costs.

Pharmaceuticals
255

Dr. Shunjiro Sugimoto
Chair, Vaccine Committee, EFPIA Japan(Vice President, Biologicals, GlaxoSmithKline.K.K)
c/o GlaxoSmithKline
6-15, Sendagaya 4-chome
Shibuya-ku, Tokyo 151-8566
Phone 03-5786-5327
Fax 03-5786-5260

VACCINES
Introduction
In 2014, the Ebola outbreak in West Africa prompted Japan’s Ministry of Health, Labour and Welfare (MHLW) to issue
alerts to overseas travellers and to prepare for possible suspected infections in Japan. Furthermore, domestic cases ofdengue fever have been reported for the first time in about 70 years, causing the MHLW to hold an emergency meetingand exterminate mosquitoes spreading the infection. The vaccines against these infections are still under development
and the EBC and EFPIA hope for progress in this endeavour. Meanwhile the domestic situation has improved rapidly as
regards existing infectious disease vaccines in the past several years, after sequential introduction of new vaccines. In
July 2014, the meningococcal vaccine was approved, and from October 2014, varicella vaccine and adult pneumococcal
vaccine were included in the routine immunisation system. Whether or not to include the mumps vaccine, hepatitis B
vaccine and rotavirus vaccine in the routine immunisation system is currently under discussion.
Improvements in the routine immunisation system indicate that Japan is catching up with the EU and US in the number
of approved antigen types. On the other hand, protection by vaccines remains insufficient in Japan. In 2013, it wasreported that a rubella epidemic had caused a temporary vaccine shortage. Japan stopped recommending thepapillomavirus vaccine in June 2013, and this decision remained in effect as of September 2014. In addition, many ofthe pediatric combination vaccines necessary to protect Japanese infants from infections remain unapproved and are notin use, even though infants represent the future of Japan. In other countries, the congested immunisation schedule for
infants has been alleviated thanks to the approval of a variety of such combination vaccines that have now been in use
for more than 10 years. Japan is indisputedly lagging behind in this area. The DTaP-IPV (Diphtheria, Tetanus andPertussis – Inactivated Polio Vaccine) combination vaccine was approved in Japan only in 2012, 15 years behind
Europe. The MMR vaccine (Mumps/Measles/Rubella) and the 5- or 6-in-1 combination vaccines, produced by adding
hepatitis B and/or polio vaccines to the DTaP-IPV 4-in-1 combination vaccine, which are already widely used overseas,
were still not in use in Japan as of September 2014.
The Immunization/Vaccine Subcommittee of the Health Science Council was established in 2013, and underneath it
three additional subcommittees were formed for basic immunisation policy; research, development andmanufacturing/logistics; and adverse reactions. The Subcommittee was set up to handle the above combination vaccines
as vaccines of high development priority, and the situation is described in the “Basic Plan Related to Vaccination”
announced by the MHLW in March 2014. In addition, in the subcommittee for adverse reactions, adverse reactions tohuman papillomavirus vaccine were discussed, and in June 2013, the MHLW made a decision “to suspend
recommending human papillomavirus vaccination, while keeping it in the routine immunisation” which sends anambiguous message to healthcare professionals and vaccine recipients. This measure is still in effect today, althoughsuch long-term suspension of a recommendation for this vaccine is extremely rare throughout the world. Furthermore,
as of September 2014, it was not clear how long the suspension would last. We believe that one of the main reasons
behind the suspension is a lack of understanding and insufficient awareness of the benefits of vaccines, not only among
the population and the mass media, but also within the regulatory authorities and the Government.
The EBC and EFPIA request the Japanese Government to promote dialogue at an early stage and implement the reform
necessary to encourage Japanese and foreign vaccine manufacturers to invest in developing and producing vaccines(especially paediatric combination vaccines) that contribute to improving preventive medicine in Japan. For thispurpose, the EBC and EFPIA request the competent authorities to include in the routine immunisation those vaccines
still outside its scope and which, therefore, are more expensive for the vaccinee (mumps vaccine, hepatitis B vaccine
and rotavirus vaccine), to promote further vaccine combinations, to revise clinical and nonclinical guidelines for
infection-preventing vaccines in Japan and to implement vaccination policy based on scientific rationales and reflecting
the benefits to vaccine recipients.

56

EFPIA Japan
Member Companies

Key Issues and Recommendations

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

Guerbet Japan
Janssen Pharmaceutical
LEO Pharma
Lundbeck Japan
Merck Serono
Nihon Servier
Nippon Boehringer Ingelheim
Novartis Pharma
Novo Nordisk Pharma
SanofiShire JapanUCB Japan■ Periodic review of MRBP (Minimum Requirements for Biological Products)
Yearly status report: no progress. A revised MRBP, including major changes to the sections on test items andmethods, was issued in September 2013. However, since then, there has been no move to review its contents, otherthan the addition of new vaccine products. The MRBP is unclear in regards to predefined timing, procedures forrevision and criteria for listing. Furthermore, neither the administrative process nor the necessary periodic revision
has been completed.
Recommendation:

The MHLW should regularly revise the quality requirements for vaccines to reflect state-of-the-art science andtechnology and to harmonise Japan’s approach with other regions. Accordingly, the current MRBP should be
abolished, and its contents consolidated and integrated into the Japanese Pharmacopeia.

■

Elimination of redundant quality testing for imported vaccines
Yearly status report: no progress. A Summary Lot Protocol (SLP) was introduced in 2012 to ensure rigorous
control of vaccine quality. Thus, from a scientific point of view, the continuing requirement to subject imported
vaccines to all the quality test items and national testing after import is questionable.
Recommendation:

The Government should provide a scientific and technical rationale to justify mandatory retesting and omit
retesting where no such rationale can be demonstrated.

■ Expansion of target countries and scope of items in EU-Japan Mutual Recognition

Agreement (MRA)
Yearly status report: no progress. The top priority for the EU-Japan MRA negotiations should be its expansion to
include the remaining EU Member States currently not covered by the agreement. The MRA should also be
expanded to include biopharmaceuticals and vaccines, which currently, are not even being discussed. By thus
shortening import times, Japanese preventive medicine will improve.
Recommendation:
Japan and the EU should work together to expand the MRA or add an MOU (Memorandum Of
Understanding) to cover all EU Member States and include biopharmaceuticals and vaccines.
■

Incorporate WHO-recommended vaccines into routine immunisation and promote
development of combination vaccines
Yearly status report: progress. The Immunization Law was revised on 1 October 2014, and both the varicella andadult pneumococcal vaccines were included in the routine immunisation system. Also mumps vaccine, hepatitis B
vaccine and rotavirus vaccine were positively discussed in the Immunization Vaccine Subcommittee of the Health
Science Council with the aim of including them in the routine immunisation system. In addition, prompt
development of combination vaccines was proposed as an issue of high priority.
Recommendation:

The MHLW should ensure that the remaining mumps vaccine, hepatitis B vaccine and rotavirus vaccine areincluded in the routine immunisation system without further delay. In addition, combination vaccines should
be promptly developed.

Vaccines
2

57

Mr. Bruce J. Ellsworth
Chair, Cosmetics & Quasi-drugs Committee(Senior Director, Corporate Government Affairs & Policy
Johnson & Johnson Family of Companies)
c/o Johnson & Johnson Family of Companies
First Chiyoda Bldg. 15F., 3-5-2 Nishi-Kanda
Chiyoda-ku, Tokyo 101-0065
Phone 03-4411-5885; Fax 03-4411-5085

COSMETICS & QUASI-DRUGSIntroduction
European companies produce a wide variety of innovative and safe cosmetic and quasi-drug products that consumers
value and enjoy. The products improve their daily lives in many ways, helping them to keep their bodies clean andhealthy, protecting them against the damaging effects of extreme weather, preventing dental cavities and the spread ofharmful microorganisms, and improving the way they look. EU cosmetics companies work to ensure the quality,
efficacy, safety and environmental sustainability of their products by investing in the research and development of new
ingredients and technology, conducting clinical studies, monitoring global developments in scientific knowledge,
providing information to consumers and meeting or exceeding strict post-marketing surveillance and control
requirements in accordance with Good Vigilance Practice (GVP) and Good Quality Practice (GQP).
Japan is the second largest market for cosmetics in the world with sales of 2,290 billion yen in 2012. Japan imported
cosmetics valued at about 214 billion yen in 2013, of which cosmetics from the EU accounted for about 81 billion yen.
European cosmetic and quasi-drug products comprise a large share of imports because Japanese consumers recognise
their value. However, European companies face challenges in bringing cosmetic and quasi-drug products to them in an
efficient manner due to Japan’s lack of regulatory transparency, the low degree of harmonisation between its productstandards and those used in other parts of the world, and its unnecessarily complex approval and manufacturing
requirements. As a result, the launch of many European cosmetic products in Japan is severely delayed, despite the factthat the same products are already in global use and have clinically proven efficacy. Some quasi-drugs even need to bereformulated because their global version uses new active ingredients or excipients for which approval is too timeconsuming or difficult to obtain in Japan.
For example, information is very limited in Japan on which active and inactive ingredients have already been approved.
The EU and Japan maintain different rules governing which ingredients are allowed in cosmetics, expressed
respectively in terms of negative and positive lists. Even if an ingredient does not require regulatory approval in Japan
when used in a cosmetic, the use of the same active ingredient in a quasi-drug often requires a lengthy approval process.
Moreover, approval of products meeting existing approval standards is delegated to the prefectural authorities, butdifferent prefectural offices often have inconsistent interpretations of how the approval standards should be met.
Globalisation has brought unprecedented benefits to consumers world-wide, in terms of new product benefits, greater
variety, higher quality and lower prices. However, in any country where the product approval process deviates frominternational standards and practices as it does in Japan, there is an inevitable and significant increase in the complexityof that process and its associated cost. Increasing transparency, streamlining the approval process, and promoting
greater regulatory harmonisation between Japan and the EU would make it easier to bring more high-value-added
products to Japanese consumers in a timely manner.
The EBC believes that the EU and Japan should lead the way by bilaterally negotiating faster registration of quasidrugs, expanding efficacy claims and aligning their respective positive and negative lists for cosmetics and quasi-drugs.
The EU-Japan FTA/EPA should be an important vehicle for this process. The EBC also strongly supports greater
leadership by the EU and Japan in the International Cooperation on Cosmetic Regulation (ICCR), an international groupof cosmetic regulatory authorities from the United States, Japan, the EU and Canada. ICCR meets to discuss how topromote multilateral regulatory coordination and harmonisation in order to minimise barriers to trade, while maintaining
the highest level of global consumer protection.

58

EBC Cosmetics & Quasi-drugs
Committee
Member Companies
Bluebell Japan
ChanelClarins
ELGC
Johnson & Johnson Family of Companies
LVMH Cosmetics
Nihon L'Oreal

Key Issues and Recommendations■ Reform of the quasi-drug approval system
Yearly status report: progress. The Ministry of Health, Labour and Welfare (MHLW) released a model templatefor ordinary quasi-drug application documents in 2013, and a Q&A notice for quasi-drug applications in 2014 toclarify their evaluation policy. In addition, the Ministry also published 25 raw material specifications on alreadyapproved excipients. These actions helped to improve the transparency of the quasi-drug review system. The
MHLW also released a new pricing policy to charge higher evaluation fees for quasi-drugs which contain newactive ingredients to enable the hiring of more evaluators. Thanks to these improvements, a shortening of theevaluation period can be expected.
Recommendations:
The MHLW should establish clear processes for the periodical updating of lists of approved active andexcipient ingredients and for expansion of raw material specifications on excipients, in order to increase thetransparency of the quasi-drug review system.
The MHLW should allow the use of excipients in cosmetics without restrictions or limits, as long as there areno special notes regarding safety or usage restrictions for each ingredient.
The MHLW should establish approval standards for all quasi-drug categories to expand the number of quasidrugs evaluated by the prefectural authorities. This would help shorten the new product evaluation period.
We also recommend that the MHLW establish a system to review the standards periodically.
■ Harmonise quasi-drug & cosmetic ingredients
Yearly status report: New issue. The fluoride concentration levels permitted in oral care products in Japan are notaligned with the higher levels permitted in other developed countries. 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 permitted in Europe. Japan does not accept fluoride in mouthwash products although mouthwash with fluoride
concentrations of 226 ppm is sold at drugstores and supermarkets throughout Europe and the United States. The
use of fluoride to prevent dental cavities has been shown to be effective and safe in scientific studies conductedaround the world. Moreover, the EU and Japan maintain different rules governing which ingredients are allowedin cosmetics, expressed respectively in terms of negative and positive lists.
Recommendations:Japan should revise the Medicated Dentifrice Approval Standard by raising the fluoride concentration
allowed in toothpaste sold as a quasi-drug to 1,500 ppm and in mouthwash sold as a quasi-drug to 226 ppm.
Japan should resolve the inconsistency between Japan and the EU in the maintenance of positive andnegative lists for all quasi-drug and cosmetic ingredients.
■ Promotion of self-medication advisory role of pharmacists and general practitioners
Yearly status update: New issue. Self-medication is the selection and use of medicines by individuals to treat
recognised illnesses or symptoms. It includes the use of non-prescription medicines sold over the counter (OTC)
and as quasi-drugs. If more people were to visit general practitioner doctors and pharmacists for advice and use
OTC and quasi-drugs to manage minor health problems on their own, then specialist doctors at major hospitals
would have more time to focus on other patients with more serious conditions. This would improve health andhelp reduce total healthcare spending.
Recommendation:
Japan should promote self-medication where it is safe and appropriate to do so by creating financial
incentives for patients and pharmacists.

Cosmetics & quasi-drugs
259

■ Expansion of efficacy claims for cosmetics and quasi-drugs
Yearly status report: No progress. A scheme for specifying the efficacy of cosmetics was presented in the“Notification on Enforcement of Pharmaceutical Affairs Law” in 1961. Subsequently, 55 efficacy claims were
defined for cosmetics in the “Notification on Revision of the Scope of Efficacy Claims for Cosmetics” issued in
2000. In 2011, the efficacy claim of “making fine wrinkles due to dryness less noticeable” was added to the list.
Yet the scope of efficacy claims approved in Japan is still narrower than in other countries, which hinders theentry of foreign-made cosmetics based on the latest research and technology to the market.
Recommendations:Japan should expand and harmonise the scope of positive efficacy claims for cosmetics and quasi-drugs with
the EU, including the claim of “preventing photo-ageing caused by exposure to ultra violet light.”
To align with EU regulation, the MHLW should abolish the efficacy claim list and allow companies tocommunicate product efficacy within the definition of cosmetic based on verifiable data.
■ Electronic notification for cosmetics and quasi-drugs
Yearly status report: New issue. Foreign cosmetic companies seeking to import cosmetics and quasi-drugs into
Japan must submit two different notifications with significant duplicate information. The MHLW requires paperform submission of an Import Notification for all cosmetics to be imported for sale in Japan, prior to any of theimport-designated products proceeding through Japan Customs. The reviewed notification must also be submitted
to Japan Customs at the time of the customs clearance processing. This procedure is time-consuming andduplicative. In many other countries in the world companies are allowed to use an electronic notification system.
Recommendation:

The MHLW should simplify the Import Notification procedures for importing foreign-manufactured
cosmetics and quasi-drugs by establishing an electronic system for the import notification process. It should
be designed in such a way that not only will the current burdensome paper-based notification process be
eliminated, but the number of necessary supporting documents can be reduced.
■ Elimination of non-tariff barriers for cosmetic and quasi-drug imports
Yearly status report: No progress. Once a partial change request has been approved for a cosmetic or quasi-drug,no previously approved versions are allowed through the customs quality check and onto the market. Given the
difficulty in predicting approval timing and shipping time, sea freight importers expecting a partial change
request approval must hold large amounts of current stock in Japan to guarantee a stable supply. To avoid these
extra costs, many importers avoid partial change requests. They instead apply for approval of partial changes as
if relating to completely separate products. This forces companies to maintain multiple approvals for productsthat appear identical to the end-customer.
Recommendation:
After partial change approvals are granted, there should be a grace period during which the previous versionof imported products can continue to undergo customs quality checks and be sold.
■ Establishing of alternatives to animal testing
Yearly status report: No progress. Cosmetic and quasi drug manufacturers are still expected to submit safety data
based on animal testing in Japan and validated alternatives are limited. The use of alternatives to animal testing
was officially recommended in a February 2011 MHLW Administrative Circular. MHLW guidance on replacing
the skin sensitisation test took effect in May 2013, corresponding to Organisation for Economic Co-operation andDevelopment (OECD) guidelines 442A and 442B. Japan participates in activities of the International Cooperation
on Alternative Test Methods in the International Cooperation on Cosmetic Regulation.
Recommendations:Japan should accelerate the establishment of validated alternatives for animal testing of ingredients andproducts based on safety endpoints that are harmonised with those used in the EU.
Japan should abide by its international commitment to protect humans, animals and the environment.

60
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 2013, at 251 billion yen (according to Japan Customs), accounted for a mere 4% 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.
In compliance with World Trade Organisation (WTO) rulings, the Government of Japan reduced the gap in liquor tax
rates between domestically produced distilled liquor (shochu) and imported liquors. By 2002, Japan had eliminatedtariffs on whisky, brandy, vodka, rum, liqueurs and gin. Despite this, Japan still does not comply with all relevant WTO
rulings and international standards. The Ministry of Finance (MOF) has made clear its long-term goal of classifying
wine and Japanese sake in the same category, ignoring fundamental differences between the two products. The EBC isconcerned that this would be in contravention of the 1998 WTO ruling, which prescribes that the overriding determinant
when setting tax categories for alcoholic beverages should be the level of substitutability in terms of production andconsumption. In contrast to Japan, the EU, US and Australia have all implemented the WTO ruling so that spirits, beer,wines and intermediate products are placed in separate general categories, complemented by specific categories forcountry-typical products.
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 use of lot codes (traceability information) is not compulsory under the Food Sanitation Law, although it isrecommended in the administrative guidelines of the Ministry of Health, Labour and Welfare (MHLW). By contrast, theEU 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 import products with lot
codes that have been erased, tampered with or covered up. While the EBC appreciates the notice issued by the National
Tax Agency (NTA) in September 2014 stating the NTA’s concern regarding the presence of liquor products with erased
lot codes in the market, the EBC continues to urge the Japanese Government to take proactive measures to protect thehealth and safety of Japanese consumers.
Finally, the lack of accurate Geographical Indicator (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.

62

EBC Liquor Committee
Member Companies
Diageo Japan
Heineken Kirin
MHD Moet Hennessy Diageo
Pernod Ricard JapanKey Issues and Recommendations■ Traceability
Yearly status report: minimum 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, if the National Tax
Agency notice has an insufficient effect.
■ 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: new issue. 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: no progress. The list of additives approved by the Japanese authorities for inclusion in liquor
is outdated and differs greatly from the lists of other industrialised countries. In addition, the process for having
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: no 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 Indicators
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

63

Mr. Olivier Convert
Chair, Food & Agriculture Committee(Managing Director, Roquette Japan K.K.)
c/o Roquette Japan K.K.
2F Kasuga Business Center 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 even more than 100%. Ordinary butter is an example of this.
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. The fact that some 46 such additives have now been
approved, as requested by the EU, US and Australia in 2002, is therefore particularly welcome. Meanwhile, Japan has
still given only limited acceptance to scientific evaluations by international bodies, such as JECFA (FAO/WHO Joint
Expert Committee on Food Additives) and the Codex Alimentarius Commission (CODEX), resulting in additional
approval procedures in Japan that are both unnecessarily time-consuming and overly costly. The issues surrounding
food enzymes are more or less the same as for food additives.
The EBC is encouraged by improvements in the regulatory approach to Listeria monocytogenes, introducing a
distinction between foods in which listeria can and cannot grow. The efforts of the Ministry for Health, Labour andWelfare (MHLW) in this respect should be applauded and the EBC expects the new standard to be introduced asplanned by the end of 2014.
One area that has not been discussed previously in the EBC’s annual report is Maximum Residue Levels (MRLs). Some
EU products cannot be imported into Japan due to the non-harmonisation of MRLs between the EU and Japan. In
addition to this, Japan uses a positive list of products and levels, 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.
Last but not least, despite Japan’s recent recognition of organic certifications issued by the new EU Member States, andthe EU’s recognition of organic certifications issued by Japan, the Organic-JAS (Japan Agricultural Standard) Mark stillcannot be used for many EU certified organic products. Moreover, Japan lacks comprehensive legislation for several
categories of agricultural products (such as honey). Due to the complexity of obtaining the Organic-JAS Mark and thelimitations in product scope, the market share of organic food in Japan lags far behind that in other developed markets.
The EBC is very keen to work closely with all related 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. European food products in subsectors that are not hampered by hightariffs or non-tariff barriers are very popular in Japan, clearly indicating the demand for European food. Under the EUJapan FTA/EPA, tariffs should be abolished, standards harmonised and market authorisations of both regions mutually
recognised. The EBC Food Committee believes this can be achieved without compromising food safety. Furthermore,such an agreement will lead to more choice in supermarkets, stimulating healthy competition in the food andagricultural sectors of both zones, and to European food becoming more accessible, something we know Japanese
consumers would appreciate.

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EBC Food & Agriculture Committee
Member Companies

Key Issues and Recommendations■

Beltrade
Bresse Bleu Japon
CSM Japan
Danisco Japan
Danone JapanDSM Nutrition Japan
Hiestand 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 JapanSKW East Asia
TÜV Rheinland Japan
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 improved.

■

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 and difficulties in determining exactly
what supporting documents are required. Currently the process is both time- and money-consuming as well as
being highly non-transparent and lacking deadlines set in the legislation. Both foreign and domestic companies
would benefit from a system where each step of the approval process has clear deadlines to be followed by theauthorities.
Recommendations:
MHLW together with the Food Safety Commisison (FSC) should introduce legally binding deadlines foreach part of the approval process. Furthermore, repeated requests 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. Current examples where conflict exists are sulphur dioxide and sorbic acid (potassium
sorbate).

The EU-Japan FTA/EPA should guarantee that food enzymes in wide use in the EU and accepted as safe by
JECFA 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 pesticides approved and in common use in Europe areapproved in Japan, Japanese regulation on MRLs is far stricter. Japan uses a positive list. The main difference
between the EU and Japan can be found in how they treat pesticide MRLs in processed products that are notexplicitly listed. When a derived product is not explicitly mentioned in Europe the pesticide MRL for the input(raw) material would be used (for instance the MRL for deltamethrine in maize is 2ppm, hence the MRL in maize
starch-derived products would also be 2 ppm). In Japan, however, derived products that are not in the positive list
would have a default MRL of 0.01 ppm even if the original product has a higher MRL (for instance the MRL ofdeltamethrine in maize is 0.05 ppm, but that in a maize starch-derived product not listed would also be 0.01 ppm)
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.

Food & agriculture
2

65

■

Beef and processed food including beef and by-products (casings, gelatines)
Yearly status report: progress. During 2013-2014, France, The Netherlands, Ireland and Poland were granted
approval to export beef to Japan. Several other EU Member States have started the approval process, but progress
is very slow. The EBC would like to point out that several Member States are designated as having “negligible
BSE (Bovine Spongiform Encephalopathy) risk”. This is the same status applying to Japan.
Recommendations:
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.
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.

■

Listeria monocytogenes
Yearly status report: progress. The EBC has long called for the introduction of the so called double standard
approach, distinguishing between foods that support the growth of L. monocytogenes and foods that do not.
During 2014, Japan finally announced a regulation that will hopefully take care of this problem. EBC welcomesthe new regulation and hopes for its swift implementation.
Recommendation:
Japan should implement the new standard on listeria as announced.

■

Yearly analysis (additives, bacteriological) at Customs
Yearly status report: no progress. At present, certain foods and all drinks imported into Japan require analysis on
an annual basis. Yet, as food safety standards in the European Union are as high as in Japan, there should be noneed for Customs to conduct additional analyses of EU food imports. Such analyses cost time and money and do
not help in improving consumer safety, especially since they are often also carried out on a random basis. This is
an area of great concern to food importers as it results in unnecessary costs and delays, which can lead to wastefuldisposals. In cases where testing of imported foods at Customs is justified, such as products that are new to themarket, the EBC recommends that a swift appeal system be established before disposal of a product that isdeclared “unsafe”.
Recommendations:Japan should eliminate the need for a yearly analysis at Customs of EU foods (additives, microbiological).
Japan should introduce a swift appeal system whereby independent official analyses, including those fromthe producer, that indicate a product is safe can be used as justification for a retest.
Japan’s various Customs offices and quarantine stations should share information on what products havepassed the tests in order to avoid duplicate inspections.

■

Organic food – Full equivalence between the EU and Japan
Yearly status report: slow progress. The market for organic food is still very small in Japan, estimated at a mere
0.4% of the total food market. Part of the reason for this is the regulatory environment where the scope ofOrganic-JAS still does not include meat or animal-based products or honey, although these are covered byorganic labelling both in the EU and the US. This means that, for instance, chocolate with a content of more than
5% of organic honey or milk cannot be labelled Organic-JAS. Furthermore, although supplementary certificatesfrom EU embassies are no longer needed, the requirement for an individual organic certificate to accompany
every shipment is an unnecessary administrative burden for both importers and exporters.
Recommendations:
MAFF should declare full equivalence between Organic-JAS and Organic-EU.
Japan should expand the scope of Organic-JAS to include meat, animal-based products and honey.
Japan should abolish the need for individual organic certificates for every shipment. An annual certificate
should suffice.

66
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 ACEA Tokyo Office
Ark Mori Bldg, 30F
1-12-32 Akasaka, Minato-ku, Tokyo 107-6030
Phone 03-3505-6341
Fax 03-3505-4871

AUTOMOBILES
Introduction
European automobile importers have ridden a rollercoaster in 2014. Sales have fluctuated wildly. In anticipation of theincrease in consumption tax from 5 to 8% from 1 April, sales of European cars in the first quarter swept upwards by
35%. In the second quarter, the pattern was reversed and sales plummeted by 16%, as GDP contracted by 7.1% anddemand for consumer durables slumped. Sales began to recover in the third quarter, but are still below the 2013 level.
Notwithstanding these gyrations, European imports at 204,000 units in the first nine months of 2014 took 5.6% of thedomestic passenger car market, slightly down on their 2013 market share.
Non-tariff barriers continue to hold back European sales in Japan by adding to the cost of doing business for European
importers of both passenger cars and commercial vehicles. The EBC Automobile Committee therefore welcomes the
progress in the first year of the EU-Japan FTA negotiations to eliminate the non-tariff barriers identified in the Scoping
Exercise, which preceded the launch of the negotiations. Further efforts are, however, needed to achieve the objectivethat a vehicle type approved in Europe can be sold in Japan without the need for modification of its specifications orfurther 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 stillnine areas covered by a UN Regulation where Japan does not accept a UN certificate as demonstrating compliancewith Japan’s type approval requirements.
2. The elimination of other unique Japanese requirements for both passenger cars and commercial vehicles in areas
not covered by UN Regulations
Technical harmonisation alone will not be sufficient. Currently, the unique Japanese system of classifying vehicles shuts
European compact cars out of 39% 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, making uncompetitive imported cars with asimilar performance and pre-tax price.
The EBC Automobile Committee welcomes the tax changes for FY 2014 and beyond as a first, tentative step towards
the correction of this anomaly. But even when these changes are implemented, the basic tax levied on a kei-car will still
be some 60% lower than that paid by a comparable compact car.
The EBC Automobile Committee therefore hopes that in the FTA negotiations, Japan and the EU will:Complete the harmonisation of technical requirements on the basis of UN Regulations
Eliminate other unique Japanese requirements for passenger cars and commercial vehicles not covered by UN
Regulations
 Take further measures to make it possible for European compact and subcompact cars to compete on a levelfooting with kei-cars

68

EBC Automobile Committee
Member Companies
ACEA
Audi JapanBMW Japan
Fiat Group Automobiles Japan
Jaguar Land Rover Japan
Mercedes-Benz Japan
Nicole Automobiles

Peugeot Citroen Japon
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 in 2016 an International Whole
Vehicle Type Approval (IWVTA) system. Its implementation would mark an important step towards the mutual
recognition of 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 EU Member States and the European Commission to implement the International Whole
Vehicle Type Approval system and to adapt the Japanese type approval system accordingly.
■

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 the 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.
 Conduct a comprehensive review of the taxation on fuels from the perspective of environmental policy.
 Adopt and implement in line 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.
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: some progress. The High Pressure Gas Safety Act impedes the introduction into the Japanesemarket of new environmentally friendly technologies, such as fuel cell and CNG (Compressed Natural Gas)
vehicles, already in use in the EU and elsewhere.
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: new issue. Japan’s regulations concerning the maximum width, length and axle load forbuses, the method of calculating 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
269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 from a monetary
perspective and for spreading their risk via a second supplier.
At the same time, 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 manufacturersthat had enjoyed success with Japanese transplants in Europe had seldom been able to build on this base to become
suppliers of the parent company in Japan. However, European firms are finding that, as a result of recent changes in theJapanese automobile manufacturing sector, new opportunities are surfacing and 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.
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,
which reflects their lack of transparency and reluctance to consider new inputs, thus defying the global trend towards
single platform development and volume production. The EBC feels that Japan’s failure to use international technology
makes its industry overly inward-looking, a situation unfortunately reinforced by the lack of English use. Japan still hassome way to go to become a truly global market.
Japan is a member of Working Party 29 on transport issues within the United Nations Economic Commission for Europe(UNECE) and has recognised regulations related to tyres: Regulation no. 30 (Passenger Car), 54 (Light Truck, Truck &Bus) and 75 (Motorcycle). There have, however, been a number of slight discrepancies between Japan’s regulations andthose of UNECE, one of which being Japan’s regulation corresponding to UNECE Regulation No. 54, which wasstricter in the scope of its application. The Ministry of Land, Infrastructure, Transport and Tourism (MLIT) resolved thisissue by widening the Jishin 1533 (2013) scope of new vehicle tyre approval to include not only tyres that conform to
the Japan Automobile Tire Manufacturers Association’s (JATMA) Year Book, but to Regulation No. 54 standards aswell. The EBC greatly welcomed this action. It is vital that Japan continues to address such discrepancies and supports
further regulatory harmonisation at the global level. In addition to the above mentioned regulations EBC would also liketo point out that Japan has not implemented UNECE Regulation number 106 on tyres for agricultural vehicles.
Finally, the EBC notes the almost oligopolistic situation in the Japanese tyre market, in particular for commercial
vehicles. Brand-exclusive networks make it very difficult for outsiders to penetrate the market, leading to lesscompetition, higher prices and less consumer choice. In particular, this is the case for light trucks and the segment called
truck & bus. EBC strongly recommends that the Japan Fair Trade Commission (JFTC) monitors this sector.

70

EBC Automotive Components
Committee
Member Companies

Key Issues and Recommendations

A.Raymond Japan
ArcelorMittal Japan
Bosch
Cobra Japan
Nihon Michelin Tire
Seric
ThyssenKrupp JapanZF Japan■ 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:
The EBC urges 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.

The EBC recommends the application of free and open competition and the avoidance of excessive relianceon affiliated companies.
Japan should 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 an extremely 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 27 – 29 May, 2015 in Yokohama.
Recommendation:

The EBC strongly supports the continuation of face-to-face meetings with leading representatives from theJapanese automobile industry. Such meetings have led to a greater understanding between European
component manufacturers and Japanese car manufacturers. The EBC also hopes that the scope of thesemeetings will be expanded in future to include Japanese venues.

■

Tyres
Yearly status report: progress. The EBC appreciated the action taken by MLIT to improve market access in Japanfor European tyres, especially with the issuance of Jishin 1533 (2013). Despite this positive change and eventhough the Japanese authorities deem European tyres to be safe, some differences still exist between UNECE andJapanese regulations for tyres of commercial vehicles, which can lead to uncertainties about what is reallyallowed. EBC also notes the difficulties in gaining access to sales channels in this sector.
Recommendations:
The EBC urges Japan to further accelerate worldwide harmonisation of technical standards and regulations.

The EBC recommends that JFTC monitors the tyre sector to improve access to sales channels.

Automotive components
271Mr. Stephane Ginoux
Chair, Aeronautics & Space Committee(President/CEO, Airbus Japan KK)
c/o Airbus Japan KK
Roppongi Hills Mori Tower, 19F
6-10-1 Roppongi, Minato-ku, Tokyo 106-6619
Phone 03-5775-3300
Fax 03-5775-0123

AERONAUTICS
Introduction
In recent years, Japan’s cooperation strategy has been evolving steadily. A preferred US partner since the post-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 and TPP negotiations are indicating 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 by
ANA are signs that traditional Japanese corporations may now be thinking differently. The private sector is expected tomake business decisions based on economic grounds rather than politics, creating opportunities for Europe and Japan todevelop new commercial and industrial ties. The military sector also seems increasingly open to consider cooperation
with European manufacturers. The EBC will actively support 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 Japanese major 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, and the collaboration between
KHI/Mitsubishi Heavy Industries (MHI)/IHI and Rolls-Royce on the Trent engines are encouraging examples ofsuccessful collaboration between the European and Japanese aeronautics industries. The Ministry of Economy, Tradeand Industry (METI) and the Directorate General for Civil Aviation of France (DGAC), after having signed a
Memorandum of Understanding, are now targeting a concrete program/project. Thanks to this encouraging development
both governmental organisations arranged several workshops during the year. The EBC expects positive results derivingfrom 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.

72

EBC Aeronautics & Space Committee
Member Companies
AgustaWestland Japan
Airbus Japan
Airbus Helicopters Japan
Arianespace
BAE Systems
Rolls-Royce Japan
Thales JapanKey Issues and Recommendations■ Promoting partnerships with the EU
Yearly status report: progress. The aeronautics market is becoming more and more global, and Europe has strong
competitive advantages. For example, European companies have experience in the area of high-end technologies
that are environmentally friendly. Procurement decisions should be made not only on a competitive basis, but alsowith future technological advantages in mind. European manufacturers of commercial aircraft, engines,
components, and navigational equipment offer state-of-the-art technology at internationally competitive prices.
However, even with the decision of JAL to use European products in the future, the European share in theJapanese market for commercial aircraft and related equipment is still considerably smaller than its average shareworldwide.
EBC consistently requests Japan to modernise its air traffic management system. European companies arerecognised worldwide as setting state-of-the-art standards, yet they face great difficulty in even being consideredin the process for new equipment procurement in Japan. The EBC deplores this situation, which may be keeping
Japan from benefiting from the latest advances in safety 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 also 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.
■

Promoting industrial cooperation
Yearly status report: limited progress. Cooperation in commercial aircraft development in Japan is still biased infavour of North America. However, METI has supported international co-development of aircraft with Europe.
European companies also need METI to support similar cooperation as in the case of the Boeing 787 programme.
The EBC is convinced that there are mutually beneficial opportunities for cooperation between European andJapanese firms. METI’s support for the Trent 1000 engine, the agreement on supersonic technologies, and thedevelopment of Structural Health Monitoring (SHM) technologies should pave the way for more aeronautics
cooperation. Furthermore, the scale of Japanese financial support for such activities with European companies
remains significantly lower than for activities with US companies.
The EBC expects further agreements or Memoranda of Understanding (MOU) between the EU and Japan, similar
to the MOU between METI-DGAC. The EBC also welcomes initiatives at company level, such as thecooperation agreement on composite material technologies signed in June 2009 between Airbus and the Japan
Aerospace Exploration Agency (JAXA).
Recommendations:
The EBC strongly believes in the mutual benefits of increased industrial cooperation between Japan andEurope, particularly in the field of commercial aircraft, engines, components, and navigation systems. New
challenges lie ahead in the search for innovative solutions to meet future needs in the civil aviation sector.
The EBC considers these challenges as an opportunity to enlarge the scope of cooperation between Japanand Europe and encourages METI and relevant government-affiliated institutions to openly promote andfund collaboration with European companies.
Europe is supporting ambitious research programmes to tackle environmental issues, from noise toemissions. The EBC believes the environment to be one of the fields where further links between European
and Japanese academia, technology clusters, and industry at large could yield significant cooperation andbusiness opportunities, which should be examined further by both sides.

The EBC would also welcome invitations from the Japanese aerospace industry for European companies toparticipate in domestic programmes or technology developments.

EBC strongly recommends Japanese heavy industries to consider international joint development
programmes for building aircraft or helicopters from scratch.

73

Aeronautics
2Mr. Stephane Ginoux
Chair, Aeronautics & Space Committee(President & CEO, 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
After a decade of reforms, the Space Policy Commission and the Office of National Space Policy (ONSP) establishedwithin the Cabinet office now set Japan’s space policies across all ministries and agencies. A “Basic Plan on Space
Policy” was adopted in January 2013. Space is now regarded as an important industrial and commercial sector, also
critical for national security. 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 inexport markets, although the Japanese industry is still mostly geared towards domestic government contracts.
The Ministry of Economy, Trade and Industry (METI) has been pro-actively helping 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 otherservices. 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 excludes foreign manufacturers and service providers.
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.
Bidding for government tenders is 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 ONSP’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 could play a broader role in cooperation. Arianespace and Mitsubishi
Heavy Industries already allow 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 space authorities
towards a mutual back-up of government launch missions have been stalled for years.
A new domestic space law now under study would require Japanese satellite operators to seek government approval foreach new satellite project. There is a risk that this law may be abused to discourage the procurement of foreign satellites
and/or launch services. Indeed, even the simple fact of having to apply and wait for an approval that is not assured
would mean a significant business risk for the satellite operators in this time-sensitive business.
In addition, a continuing risk for Public-Private Partnership (PPP) projects is that satellites with both government andcommercial payloads could be declared “governmental” as far as building and launching them is concerned. Foreignsatellite 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 reform as it has made its jurisdiction more consistent and intelligible. While
respecting Japan's space policies, however, the EBC believes that fewer all-Japanese consortia, less tied ODA and morework with Europe would bring gains in terms of budgetary savings, national security, research and development, andcommercial success. We hope that the current FTA negotiations will induce Japan to prove that its claims of an open
market are credible. As of now, however, what we can see is a growing risk of new protectionism.

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EBC Aeronautics & Space Committee
Member Companies
AgustaWestland Japan
Airbus Japan
Airbus Helicopters Japan
Arianespace
BAE Systems
Rolls-Royce Japan
Thales JapanKey Issues and Recommendations■ General environment
Yearly status report: growing protectionist risk. The approval system for new satellite projects now under study
and the handling of future PPP projects bring with them new risks of protectionism. The EBC advocatesincreasing, 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:
The EBC hopes that the domestic space law now under study will not subject Japan's satellite operators toregulatory risks, burdens, difficulties or delays when acquiring foreign satellites or launch services.

Satellite projects with both government and commercial aspects should not be declared “governmental” andtherefore exclude the participation of foreign companies.

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.

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 now almost simultaneously start the developmentof their respective next generation launchers, they have very little significant cooperation in that area. A plan for abalanced 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:
New government satellite programmes will require more timely launches. The EBC urges Japan and Europe
to bring about 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.

■

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

75

Mr. Stephane Ginoux
Chair, Defence & Security Committee(President & CEO, 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.
Perhaps the biggest change in 2014 was the Cabinet decision on re-interpretation of article 9 of the constitution. The
decision opens the possibility for Japanese participation in collective defence, which means that Japan could come to theaid of an ally under certain circumstances. While armed Japanese forces have been deployed before under a United
Nations mandate, weapons could only be used in self-defence. With the new policy, weapons could also be used to carryout the task. Due to this change, strains will be placed on the Japanese Self-Defence Forces to upgrade their equipment
and further steps will be required to ensure that the equipment is interoperable with that of allied countries. EBC
believes that the European defence material manufacturers are perfectly placed to meet this demand.
In addition to the above mentioned changes, in December 2011, the former Government led by the DPJ announced
revised guidelines for Overseas Transfer of Defence Equipment. These guidelines permit the overseas transfer ofdefence equipment under certain conditions, by allowing comprehensive exemption measures under the Three
Principles on Arms Exports. The announcement of the revised guidelines was followed in April 2012 by a Joint
Statement on the UK-Japan Defence relationship, agreed between Prime Minister Cameron and then Prime Minister
Noda in an attempt to forge closer links between Japan and the UK. The UK-Japan relationship was formalised in July
2013 with the signing of a bilateral agreement for defence cooperation.
The agreement between the UK and Japan was followed by an agreement between France and Japan in July 2014. The
EBC welcomed this development and hopes the agreement can be put to use without delays. Germany is also moving
forward to promote cooperation ties in defence research and technology, and equipment. Throughout 2014, the Japanese
government has released a series of clear messages that Japan cannot afford to develop all the defence capability it
desires through its own defence budget.
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 has continued through 2014, 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.

76

EBC Defence & Security Committee
Member Companies
AgustaWestland Japan
Airbus Japan
Airbus Helicopters Japan
Arianespace
BAE Systems
Rolls-Royce Japan
Thales JapanKey Issues and Recommendations■ 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 itself 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 NATO standards for the initial research and development phase of eachdefence 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.
■ 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. The Japan-UK bilateralagreement, the agreement with France, and hopefully, future agreements with other European countries will
provide the vehicles to encourage collaboration between the industries. For example, pilot joint projects were
implemented in 2013 and 2014 following the agreement with the UK. Revitalisation of the Japanese defence
industry may depend on the diversification of its alliances as well as on joining new development programmes fordual use technology. In this respect, the European defence and aerospace industry is offering a number of newopportunities 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.
 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 define a ‘white list’ of countries to which Japan may agree toexport.
Recommendation: The Japanese Government should develop a better defined defence export policy.

Defence & security77Mr. Guido Tarchi
Chair, Construction Committee(Representative Director, Permasteelisa Japan K.K.)
c/o Permasteelisa Japan K.K
Bancho Kaikan 4th Floor
12-1 Gobancho, Chiyoda-ku, Tokyo 102-0076
Phone 03-5275-8420
Fax 03-5275-8411

CONSTRUCTION
Introduction
The Abe Cabinet’s policy with the most direct impact on the construction market was the fiscal stimulus. This has
generated the expected expansion in investment in construction. Construction spending in Japan peaked in 1992 at 82
trillion yen and then dropped to its historical low in 2010 at 41 trillion. By April 2013, just four months after theelection of the new cabinet, construction spending shot up to 48.7 trillion yen, a year-on-year increase of 10.2%. In thecurrent fiscal year 2014 ending in March 2015, 48.5 trillion in construction spending is expected, essentially the same asin fiscal 2013.
The fact that the increase in construction spending has levelled off so soon despite the massive amount of fiscal stimulus
suggests that the construction industry is unable to meet the sudden increase in demand from public investment. Lack ofsufficient construction labour is often cited as the cause of the capacity limitation, but increased demand for and rising
prices of construction materials also play a role. Current procurement and implementation methods may be exacerbating
the problem on large public projects with tight schedules.
In the earthquake-stricken Tohoku region, certain municipalities found they were unable to use their available budget toaward reconstruction projects. In response, procurement methods were reconsidered in some instances. In August 2013,
for the first time in Japan, a public construction contract was awarded using the construction management (CM) systemwith a Guaranteed Maximum Price (GMP) using the open-book system. This gave the general contractor the freedom toselect specialist vendors without a call for tenders. Doing so greatly shortened the overall construction schedule. If the
project is successful, a wider application of this type of contract can be expected for public works projects in future.
Fiscal stimulus and new procurement methods aside, ultimately the key to unlocking new growth potential will be newtechnologies. One such area is sustainability. Given that over 30% of energy in Japan is consumed by buildings, a
proportion that continues to increase, the activities of the construction and property industry will fall under close
scrutiny. Energy consumption remains a long-term problem because the Tohoku earthquake and the Fukushima nuclear
plant accident have given rise to an environment in which energy supplies are tight and their prices rising. In response,
suppliers, authorities, businesses and consumers have shown a renewed focus on sustainability and energy efficiency.
Many regulatory initiatives are made at municipal level via the administrative guidance process. This places the local
authorities in a difficult position when required to make fair and technically informed decisions on compliance. In somecases, decisions are made even though the local authorities lack the necessary knowledge to interpret the legislation
correctly and sometimes do so without reference to international standards. This makes it difficult for companies, both
domestic and especially foreign, to keep track of all the relevant guidelines. Much of the documentation is available
only in Japanese. This reduces transparency and hampers access to information by European companies, making it
difficult for them to recognise opportunities or deliver goods and/or services in compliance with the latest regulations,even if they have the relevant technical capacity. The EBC encourages the Japanese Government to prioritise policies
that promote sustainable practices and advocates standardisation 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.
The EU-Japan FTA/EPA should include mutual acceptance of standards and certifications to enable construction
product convergence, so that EN standards (European Standards) and CE-marking (Conformité Européenne) can beused interchangeably with JIS/JAS (Japan Industrial Standards/Japan Agricultural Standards) standards. The FTA/EPA
should also promote improved transparency, ensure that rules for government procurement are strictly enforced, andrecognise the important role construction plays in promoting a sustainable society.

78

EBC Construction Committee
Member Companies
ClestraForbo Flooring
Lend Lease Japan
Mastermind
Permasteelisa Japan
Saint-Gobain Hanglas

Key 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
complicated procedures for obtaining mandatory approvals is needed so that the innovative designs, technology,
materials and methods of European firms can be more readily applied in Japan. Little progress has been made inaligning standards and testing methods, so re-testing and re-certification are still required, raising the cost ofimports 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. The energy efficiency of most Japanese buildings is far below
international standards and best practices. Improved insulation also reduces operating costs, thus improving
returns on investment. Japan has introduced regulations requiring higher performance from new buildings, thus
the natural next step will be to improve the energy efficiency of the existing building stock. 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 a way to fulfil its international commitment to cut carbon emissions. 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 (Comprehensive Assessment System for Built Environment Efficiency) and schemes such as
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. This creates great uncertainty. Moreover, the decisionsof many local authorities may be questionable due to the lack of knowledge needed to interpret the legislation
correctly.
Recommendation:

The national authorities responsible for regulating the construction market should take appropriate action torationalise the patchwork of local regulations that exists today and to further educate local authorities byclarifying 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 further strain the already tight construction labour market.
Japan should swiftly amend its immigration policy so that construction companies can recruit skilled labour fromabroad.
Recommendation:

The Japanese Government should liberalise its immigration policy so that construction companies can use
overseas skilled labour on fixed-term contracts.

Construction
279

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 many
sensitive technologies, such as those used to produce rechargeable batteries for hybrid vehicles, nanotechnologies for
manufacturing semiconductors, and various products related to environmental technology, among others. Theseadvanced technologies depend on the availability of key raw materials and Japan’s ability to secure a stable, highquality supply. It is, therefore, of the utmost importance that Japan adopts a strategy based on security of supply atcompetitive 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 them to diversify purchases despite existing tariffs. Ultimately, however, their competitivenessis compromised because these tariffs have to be passed on to their customers.
Japan, one of the main consumers of industrial materials in the world, would benefit greatly from better access to thereliable sources of high-quality products at market-based prices that European companies can offer. However, Japan has
been reluctant to reduce tariffs on industrial materials on a unilateral basis before formal negotiations on tariff
reductions are concluded under the auspices of the World Trade Organisation (WTO). With the breakdown of the Doha
Round, Japan has started to reconsider this policy. The unilateral lifting of tariffs on high carbon ferro-chromium (tariff
code 720241000), a key ingredient in the manufacturing of all stainless steels, was a welcome step of major importance.
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 as Japan’s level of production is below 10% of the demand. Manganous manganic oxide isessential for the battery industry.
Tariffs are not the only barrier to increasing the business potential between Europe and Japan. Non-tariff barriers in theform of administrative burdens, regional differences in registration procedures and inconsistent use of classifications
make doing business in Japan unnecessarily costly and difficult for foreign companies. The benefits of eliminating
tariffs and of harmonisation and simplification would be felt not only by European suppliers, but even more by Japaneseindustry, making it more competitive.
During manufacturing processes, waste products are generated and at the end of a product’s life, a recycling process is
usually initiated. The by-products from the metallurgical, smelting and refining industries as well as end-of-life
products, whether from industrial or end-user origin, are stockpiled, dumped or recycled. Japan’s Waste Management
and Public Cleansing Law, enacted in 1970, addressed the importance of preserving and recycling materials to the
maximum amount possible for the sake of protecting the living environment and saving resources. Japan took the lead inrecycling and many countries have in the meantime followed its example. A global industry has developed andcompanies in Japan and Europe are now world leaders in this field. The law in Japan has, however, been very restrictivewith respect to importing and exporting waste for recycling. While this may be understandable to prevent any “waste”
from being exported or imported for unethical or environmentally unfriendly processing, it has also hindered Japanesecompanies seeking the environmentally sound recycling schemes offered by European recycling companies. The EBC
advocates that free movement be allowed as long as it complies with international laws (such as the Basel convention)and that best available technology is applied, even if this means that goods are exported with a negative value. Under
current legislation, the conditions for export are too restrictive.
The EBC believes that the EU-Japan FTA/EPA should address these issues by including the removal of tariffs on allmaterial related products, both raw materials as well as processed products.

80

EBC Materials Committee
Member Companies
Elkem Japan
Eramet International
Hoganas Japan
Imerys Fused Minerals Japan
Umicore JapanKey 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 industry. The 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.
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 particular concern for silicon carbide andmanganous manganic oxide as domestic production of these goods accounts for only 10% of the demand.
Supplies of industrial materials to Japan are occasionally subjected to arbitrary tariff classifications and revisions.
Regional Customs offices do not apply classification rules on a consistent basis and the appeal mechanism is bothtime-consuming and costly, without any guarantee that the outcome 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-establishedproducts subject to sudden 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 Japan, sensitive confidential information has to be handed over to competitors, in order for a
product to be tested and approved. This gives an unfair advantage to the competitor, upsets the level playing fieldand creates unbalanced 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.

■

Waste Management and Public Cleansing Law
Yearly status report: new issue. The EBC believes the very stringent restrictions of the Waste Management andPublic Cleansing Law that limit import and export of waste products for recycling purposes (by-products,
industrial waste and end-of-life products) should be abolished to allow for free movement and trade of theseproducts. This should be allowed irrespective of their value on the condition that international trans-borderconventions are respected and good practices (environmental and ethical) are applied. In order to ensure proper
handling, the EBC envisages an efficient and non-time consuming approval process.
Recommendation:
Japan should apply international conventions to the import and export of waste products for recycling
purposes and abolish its current restrictions on this trade.

Materials

81Mr. Frenk Withoos
Chair, Energy Committee(Vice President, ABB K.K.)
c/o ABB K.K.
Cerulean Tower, 26-1, Sakuragaoka-cho
Shibuya-ku, Tokyo 150-8512
Phone 03-5784-6079
Fax 03-5784-6277

ENERGY
Introduction
The Japanese utility industry is run by ten regional private power companies that have a virtual monopoly on power
generation, transmission and distribution in each area. In March 2000, partial liberalisation of the power retail supply for
extra high voltage users was introduced. The Electricity Industry Committee, an Advisory Committee for Natural
Resources and Energy, a consultative body to the Ministry of Economy, Trade and Industry (METI), decided upon alimited model of liberalisation, where the vertical integration of generation, transmission and distribution wasmaintained in order to secure a stable supply of electricity. In the area of price setting, the “cost+” model has been in use
since well before the partial liberalisation, and has been reviewed various times, but remains unchanged.
Japan is highly dependent upon imports for gas, oil and coal. Following the oil crisis of the 1970s, Japan set out toreduce this dependency through increased use of nuclear energy. The 2010 power generation energy mix consisted of:
26% nuclear, 11% renewables, 57% fossil fuel and 6% combined heat and power. However, after the March 2011
Tohoku disaster and related Fukushima nuclear accident, most of Japan’s nuclear plants were shut down with only
Kansai’s Ohi No. 3 and No. 4 reactors online until September 2013. Accordingly, nuclear power accounted for less than
1% of Japan’s total electricity generation in FY2013 and, as of 2014 none are operating with the result that Japan’s
dependence on imported fossil energy resources has increased again.
Japan’s Basic Act on Energy Policy sets the following goals:
1. Securing of a stable energy supply
2. Environmental sustainability
3. Use of market mechanisms, which should, however, remain consistent with the first two basic goals.
After the March 2011 nuclear disaster, Japan’s utility model was placed under review. A METI committee on industry
reform proposed splitting off power generation from transmission operations and creating a nationwide entity to manage
major power lines. Currently, Japan’s transmission network is centred around the production sites, with the maintransmission at 500kV. Three convertor stations connect the 50Hz and 60Hz networks. In contrast, European and US
grids are based on the mesh concept with 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.
Besides the overall model, the energy mix was also placed under review, a process which is still ongoing. The current
LDP Government has decided that “the former DPJ administration’s policy of abandoning nuclear power had to bereconsidered to help revive the economy”. It has said, in particular, that it plans to spend up to 10 years in determining
the most appropriate future energy mix. In April 2014, the Government 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 "a certain amount will be preserved with regards to security of supply, and costs".
 No specific targets for each source of energy; the target for renewables is “to go beyond previous targets set
in past plans’’.
 The closed-fuel cycle policy will continue.
In July 2012, a new Feed-In Tariff (FIT) scheme for renewable energy sources came into effect. This requires theutilities to buy power derived from solar, wind, geothermal, hydropower and biomass sources at a fixed tariff and allows
them to pass on the cost to consumers. The aim is to further promote investment in the renewable energy field as part of
the “Green Growth Strategy” laid out by the Government’s Energy and Environment Council.
The EBC calls on the EU and Japan to include energy in the framework of discussions towards a mutual FTA/EPA inorder to further strengthen the ties between Japan and the EU in this area.

82

EBC Energy Committee
Member Companies
ABB
Alstom Power Japan
Areva Japan
GHT (Group Hi Tech)Infineon Technologies Japan
Schneider Electric Japan
TÜV Rheinland JapanTÜV SUD Japan
VestasKey Issues and Recommendations■

Stability of supply versus cost
Yearly status update: some progress. Stability of supply must remain the first priority for the Japanese economy.
However, the “cost+” model may not be providing adequate incentives to the utility companies to reduce costs
and increase efficiency. Fossil fuels are and will most likely remain the key pillars of the energy mix, but the costof imports is currently very high and exacerbated by the yen exchange rate, a situation which threatens thecompetitiveness of Japanese industry in the global market.
Recommendations:
The utility companies should accept international standard products and solutions, which can drasticallyreduce both Capital Expenditure (CAPEX) and Operational Expenditure (OPEX).
Transparency in procurement should be increased in line with the World Trade Organisation’s guidelines.

Among the fossil fuels, the use of natural gas should be increased and gas-fired thermal power plants should
be preferred for future investments in power generation, in order to reduce greenhouse gases.

Nuclear energy could also remain a core constituent of the Japanese energy mix, as it plays an important rolein providing industry and citizens with competitively priced electricity. Its long-term sustainability depends
on a reliable approach to all safety issues and a clear confirmation of the closed fuel cycle policy (waste
volume reduction, storage and re-use). It will, however, be necessary to deal with the ageing of existing
plants, improve facility utilisation rates, and properly manage the nuclear fuel cycle.
The development of renewable energies must be carried out with ambitious, albeit realistic targets, aiming at
increasing the safety and reliability of the energy supply.

■

Deregulation and unbundling
Yearly status update: some progress. The current regulatory situation does not provide the transparency and cost
efficiency required. Security of supply is also not guaranteed given the limited interconnections between utility
companies as well as between the 50Hz and 60Hz networks. However, the EBC commends Japan for passing thebills necessary to establish the OCCTO (Organization for Cross-regional Coordination of Transmission
Operators) and commence “full retail competition”. The EBC believes that fair and transparent processes will
enable healthy competition in the electricity market.
Recommendations:
Separate the ownership of generation from that of transmission to allow the required investments in thetransmission grid, while providing transparency and efficiency in terms of cost.
Give enough authority to the OCCTO to realise increased interconnection capacity between TDSOs(Transmission and Distribution System Operators).

Utilise more generation options based on different technologies, such as the Integrated Coal Gasification
Combined Cycle (IGCC), Carbon Capture and Storage (CCS) and renewable energy.
 Ensure that the redevelopment of nationwide electricity interconnections is based on High Voltage Direct
Current (HVDC), Frequency Converters (50-60 Hz), Flexible Alternate Current Transmission System(FACTS) and Battery Energy Storage Solution (BESS) for transmission and distribution to support
centralised and decentralised energy sources.

■

Nuclear energy & nuclear safety
Yearly status update: some progress. In the wake of the Fukushima nuclear accident, Japan has reformed its
nuclear safety regulator, which is now an entity with enhanced independence. Since it was established in
September 2012, the NRA (Nuclear Regulatory Authority) has worked on new nuclear safety standards andnuclear safety regulations, which were published and enforced for nuclear power plants in July 2013 and for othernuclear facilities in December 2013. The new safety standards introduce major changes and new rules, and will be
used by the NRA to check the safety of all Japanese power plants, and confirm whether they can be restarted ornot. As of September 2014, ten electric power companies had applied to the NRA for safety evaluations of a totalof 20 reactors. The EBC believes it is of the utmost importance for the new safety rules to be properly
implemented by the Japanese power utilities.

Energy283

Recommendations:Continuously increase the level of safety of nuclear energy under supervision of the NRA.

Further develop the nuclear expertise of the regulator and utilisation of independent technical expert support
in technical reviews.
Conduct detailed safety reviews at all individual plants with support from international nuclear experts andinspectors and implement all recommendations before any restart.

Use international standards and procedures as minimum safety requirements, such as the nuclear asset andoperation safety management system used in Germany and France.
Share best practices and establish common safety requirements through international cooperation.
Start-up the Rokkasho Reprocessing Plant as soon as the safety review is concluded and develop a practicalworking system to deal with final disposal of waste, which is still a pending issue.
■

Wind energy
Yearly status update: no progress. Wind energy is a proven way for Japan to reduce its reliance on imported fossil
fuels, and to make use of one of its own local energy sources. Furthermore it could help Japan reach its emissions
targets without the pollution or safety risks of many other fuel sources. It is, therefore, unfortunate that Japan still
does not properly promote the use of on-shore as well as off-shore wind farms. Modern wind turbines now containsophisticated technology that works well with established power grids of all kinds, such as large transmission
systems or isolated local grids. The EBC recommends that the Japanese Government takes note of the work ontechnical standards for wind energy being carried out by the International Electro-technical Commission (IEC).
Recommendations:
Reduce the number of unnecessary regulations that add to the cost of wind farm development, a cost that
ultimately is paid by the Japanese population.

Revise environmental impact assessment requirements applicable to wind farm development to a more
appropriate level that enables wind farm development within a reasonable time frame.

Adopt internationally accepted certification standards and accept international accreditation for windturbines and their componentry as technical requirements rather than existing local certification
laws/regulations. This is vital both to facilitate increased investment and improve the potential for Japanesetechnology 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 uses; and difficulties in obtaining reasonable interconnection commitments from regional
electric utilities, and project financing for utility-scale PV (photovoltaic) 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:Streamline the process to re-classify farm land so that it can be used for renewable power generation.

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.

Increase Government support for the adoption by national and regional banks of transparent standard criteria
for debt financing.
Create incentive and standardisation programmes for the power utilities to contract PV project construction
to an emerging class of engineering and design companies, with the aim of reducing grid connection costs
and lead times.

84
3

Appendices
Pinnacle Sponsors
Blue Star Sponsors
Special Sponsors
Sponsors
Supporters
EBC Premier & Affiliate Members
Executive Operating Board
Board of Governors

PINNACLE SPONSORS

86
1

PINNACLE SPONSORS

Pinnacle sponsors
2

87BLUE STAR SPONSORS

88
3

BLUE STAR SPONSORSBlue star sponsors
489BLUE STAR SPONSORS

90
5

SPECIAL SPONSORS

Airbus Japan K.K.

Bresse Bleu Japon – Valrhona Japon

H&M Hennes & Mauritz Japan KK

LVMH Moet Hennessy Louis Vuitton Japan K.K.

MHD Moet Hennessy Diageo K.K.

Special sponsors
6

91

SPECIAL SPONSORS

Novo Nordisk Pharma Ltd.

Pernod Ricard Japan K.K.

Schroder Investment Management (Japan) Ltd.

92
7

SPONSORSABB K.K.
BNP Paribas
Boehringer Ingelheim Vetmedica Japan Co., Ltd.
DHL Global Forwarding Japan K.K.
DSM Japan K.K.
Hoganas Japan K.K.
ING Bank N.V.
Japan Europe Trading Co., Ltd.
KPMG Tax Corporation
Lend Lease Japan, Inc.

Sponsors
8

93

SPONSORS
Lufthansa German Airlines
Nestle Japan Ltd.
Nihon Michelin Tire Co., Ltd.
Puratos Japan Co., Ltd.
Roche Diagnostics K.K.
Roquette Japan K.K.
Royal Netherlands Embassy
Sorin Group Japan K.K.
Swiss Business Hub Japan
Swiss Chamber of Commerce and Industry in JapanTKB Corporation

94
9

SUPPORTERS
Air France
Bayer Yakuhin, Ltd./Animal Health Division
Delegation of the European Union to Japan
Embassy of the Czech Republic
German Chamber of Commerce & Industry in Japan
Imerys Fused Minerals Japan K.K.
Ireland Japan Chamber of Commerce
Laerdal Medical Japan K.K.
Lundbeck Japan K.K.
METRO Cash & Carry Japan K.K.
Radiometer K.K.
Sanofi K.K.
Scandinavian Airlines System
Solton Co., Ltd.
Swedish Chamber of Commerce & Industry in Japan
Takase Corporation
ThyssenKrupp Japan K.K.
ZF Japan Co., Ltd.

Supporters
1095

EBC PREMIER & AFFILIATE MEMBERSEBC Premier Member
Chanel K.K.

EBC Affiliate Members
Akoni KK
Asian Tigers Premier Worldwide Movers Co., Ltd.
Custom Media K.K.
GE Japan Corporation
Hapag-Lloyd (Japan) K.K.
Konigstedt Ltd.
Oakwood Premier Tokyo Midtown
Paradigm
Vaisala K.K.
VOX Global Japan K.K.

96
11

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 Senior Vice-Chairman

EBC Vice-Chairman

EBC Treasurer

Michel Theoval (France)

Carl-Gustav Eklund

Erik Ullner (Finland)

President, GHT - Group Hi Techa division of PMC Co., Ltd.
PMC Bldg. 6F., 1-23-5 Higashi-Azabu
Minato-ku, Tokyo 106-0044
Tel: 03-3585-2262; Fax: 03-3585-1134

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

Chief Representative, Konigstedt Ltd.
1355-1 Torinosu, Hochi
Karuizawa-machi, Kita Saku-gun
Nagano-ken 389-0113
Tel: 0267-44-6775; Fax: 0267-44-6772

EOB Members
Michael A. Loefflad (Austria)

Paolo Mattioli (Italy)

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

President
Marposs K.K.
Marposs Bldg., 5-34-1 Minami Magome
Ohta-ku, Tokyo 143-0025
Tel: 03-3772-7011; Fax: 03-3772-7093

Frederic Lucron (Belgium/Luxembourg)

Hiroshi Ishiwata (Netherlands)

General Manager
Tokyo Hilton Bay
1-8, Maihama, Urayasu-shi, Chiba 279-0031
Tel: 047-355-7100; Fax: 047-350-1241

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

Jonty Brunner (Britain)

Rune Nordgaard (Norway)

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

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: 03-3440-2719

Claus Eilersen (Denmark)Takeshi Fujiwara (Sweden)

President & Representative Director
Novo Nordisk Pharma Ltd.
Meiji Yasuda Seimei Bldg.
2-1-1 Marunouchi, Chiyoda-ku, Tokyo 100-0005
Tel: 03-6266-1000; Fax: 03-6266-1807

c/o Swedish Chamber of Commerce and Industry in Japan
Embassy of Sweden
1-10-3-603 Roppongi
Minato-ku Tokyo 106-0032
Tel: 03-5562-5140; Fax: 03-5562-5160

Albert X. Kirchmann (Germany)

Andreas Bernhard (Switzerland)

President & CEO, Head of Daimler Trucks Asia
Mitsubishi Fuso Truck & Bus Corp.
890-12 Kashimada, Saiwai-ku, Kawasaki, Kanagawa 212-0058
Tel: 044-330-7071; Fax: 044-330-5831

Vice-President Kanto
Swiss Chamber of Commerce and Industry in Japan
Swiss House 1F, 2-11-1 Nagata-cho
Chiyoda-ku, Tokyo 100-6190
Tel: 03-6205-4453; Fax: 03-6205-4454

Matthew G. Connolly (Ireland)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

Executive Operating Board
12

97

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 Senior Vice-Chairman

EBC Vice-Chairman

EBC Treasurer

Michel Theoval

Carl-Gustav Eklund

Erik Ullner

President, GHT - Group Hi Techa division of PMC Co., Ltd.
PMC Bldg. 6F., 1-23-5 Higashi-Azabu
Minato-ku, Tokyo 106-0044
Tel: 03-3585-2262; Fax: 03-3585-1134

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

Chief Representative, Konigstedt Ltd.
1355-1 Torinosu, Hochi
Karuizawa-machi, Kita Saku-gun
Nagano-ken 389-0113
Tel: 0267-44-6775; Fax: 0267-44-6772

Austria(ABC)

President

Representative

Peter Aldrian
Managing Director
PLANSEE Japan Ltd.
Akasaka Twin Tower 8F, 2-17-22 Akasaka
Minato-ku, Tokyo 107-0052
Tel: 03-3568-2451; Fax: 03- 3568-2450

Michael Otter
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
12F Ark Mori Building
1-12-32 Akasaka
Minato-ku, Tokyo 107-6012
Tel: 03-4360-8361; Fax: 03-4360-8454

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 & Kim Knudsen
c/o Royal Danish Embassy
29-6 Sarugaku-cho
Shibuya-ku, Tokyo 150-0033
Tel: 03-3780-8729; Fax: 03-3476-4234

98
13

BOARD of GOVERNORSATIONAL CHAMBERS
Finland(FCCJ)

President

Executive Director

Marko Saarelainen
President, Honka Japan, Inc.
Kozuki Capital East 4F., 1-2-7 Kita-Aoyama
Minato-ku, Tokyo 107-0061
Tel: 03-3709-4169; Fax: 03-3709-4168

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

France(CCIFJ)

President

Director General

Germany(DIHKJ)

President

Bernard Delmas
Nicolas Bonnardel
President & CEO Representative Director
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

Executive Director / Delegate ofGerman Industry & Commerce inJapan
Manfred Hoffmann
Sanbancho KS Bldg. 5F, 2-4 Sanbancho
Chiyoda-ku, Tokyo 102-0075
Tel: 03-5276-9811; Fax: 03-5276-8733

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

Noriko Sato
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

Gianluca Testa
VP Regional Manager Asia
Alitalia - Compagnia Aerea Italiana S.p.A.
Akasaka Garden City 2F.
4-15-1 Akasaka, Minato-ku, Tokyo 107-0052
Tel: 03-3568-1412; Fax: 03-3568-1512

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

Board of Governors
1499

BOARD of GOVERNORSATIONAL CHAMBERS
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

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

Spain(SpanishInstitute for
Foreign
Trade)

Representative

Sweden(SCCJ)

President

General Manager

Stefan Gustafsson
Managing Director, IFS Japan K.K.
Sumitomo Fudosan Shiba Bldg. 4-gokan 9F.
2-13-4 Shiba, Minato-ku, Tokyo 105-0014
Tel: 03-5419-7900; Fax: 03-5419-7909

Stefan Ojersjo
c/o Embassy of Sweden
1-10-3-603 Roppongi
Minato-ku Tokyo 106-0032
Tel: 03-5562-5140; Fax: 03-5562-5160

Switzerland(SCCIJ)

President

Executive Secretaries

Martin Fluck
Country Manager, Japan
Oakwood Premier Tokyo Midtown
9-7-4 Akasaka
Minato-ku, Tokyo 107-0052
Tel: 03-5412-3131; Fax: 03-5412-3130

Arisa Wada & Yui Tawa
Swiss House 1F
2-11-1 Nagata-cho
Chiyoda-ku, Tokyo 100-6190
Tel: 03-6205-4453; Fax: 03-6205-4454

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

100
15

BOARD of GOVERNORSATIONAL CHAMBERS
Committee
Chairmen
Representative

Otto F. Benz
General Manager Japan
Lufthansa German Airlines
3-1-13 Shiba-Koen
Minato-ku, Tokyo 105-0011
Tel: 03-5402-5201; Fax: 03-5402-5209

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

Board of Governors
16

101

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