Recommendationsof theEU-Japan Business Round Table
to the Leaders of the European Union and Japan
Paris, 29 & 30 April 2013

Working Party A
Trade Relations, Investment and Regulatory Cooperation

Working Party Leaders:

Co-ChairMr. Duco DELGORGE
ChairmanEuropean Business Council (EBC)in Japan

Co-ChairMr. Hitoshi KAWAGUCHI
Senior Vice-President
NISSAN MOTOR Co., Ltd.

Vice Co-Chair
Mr. Markus BEYRER
Director General
BUSINESSEUROPE

Vice Co-Chair
Mr. Shinji FUKUKAWA
Senior Advisor
Global Industrial and Social
Progress Research InstituteList of Abbreviations
Abbreviation
AEOs
CCCTB

HFC

Meaning
Authorised Economic Operators
Common Consolidated Corporate Tax
Base
Conformité Européenne (European
Conformity)
Classification, labelling and packaging
Economic Commission for Europe
European Chemical Agency
End of Life Vehicle
Européen de Normalisation deNormalisation (European Standards)
Frequently asked questions
Foreign Direct Investment
Financial Services Agency
Food safety Commission
General Agreement of Trade in Services
Good Clinical Practise
The Globally Harmonized System ofClassification and Labelling of Chemicals
Good Manufacturing Practise
The Agreement on Government
Procurement
HydroFluoroCarbons

HS

Harmonised System

ICT

Information and Communication
Technology

ICTs

intra-corporate transferees

ITA

Information Technology Agreement
International Organisation forStandardisation
Japan Agricultural Standard
Japan Civil Aviation Board
Japan Electric Lamp Manufacturers
Association
Japan Electrical Safety & Environment
Technology Laboratories
Japan External Trade Organisation
Japan Industrial Standard
Japan Patent Office
Japan Railways
Light-Emitting Diode

CE
CLP
ECE
ECHA
ELV
EN
FAQ
FDI
FSA
FSC
GATS
GCP
GHS
GMP
GPA

ISO
JAS
JCAB
JELAM
JET
JETRO
JIS
JPO
JR
LED

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MAFF
METI
OECD
OR
PMDA
PSE

Ministry of Agriculture, Forestry and
Fisheries
Ministry of Economy, Trade and Industry
Organisation for Economic Co-operation
and Development
Only Representative
Pharmaceuticals and Medical Devices
AgencyElectrical Appliance and Material Safety
Law

QMS

Quality Management System

REACH

Registration, Evaluation, Authorization
and Restriction of Chemicals

RFID
RoHS
RTD
SIEF
SMEs
SVHC
TPD
UNECE
UNGP
VAT
VICH
WCO
WTO

Radio Frequency Identification
Restriction of Hazardous Substances
Research and Technology Development
Substance Information Exchange Forum
Small and Medium size Enterprises
Substance of Very High Concern
Transfer Pricing Documentation
United Nations European Commission for
EuropeUnited Nations Guiding Principles on
Business and Human Rights
Value Added Tax
International Cooperation on
Harmonisation of TechnicalRequirements for Registration of
Veterinary Medicinal Products
World Customs Organisation
World Trade Organization

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Introduction
The global trade environment is changing. New major economic powerhouses haveemerged and are increasingly taking advantage of opportunities in world markets. While
major new bilateral deals are being struck between various countries to shore up theireconomies under these circumstances, the EU-Japan relationship has been in danger ofbeing left behind. BRT members have been concerned about this trend and studied thepotential for increasing trade and investment between the EU and Japan for years.
Although some progress has been made through various dialogues on trade andregulatory reform, they strongly believe that significant issues have remained
unaddressed. As a result, businesses on both sides are investing less than they should
and our economies are growing less than they could. Fundamental measures to resolve
pervasive issues limiting trade and investment will go a long way to improving the
economies of both regions, including: Mutual recognition of regulations, standards and market authorisations to the extent
possible and adoption of international standards
 Lifting of both tariff and non-tariff barriers as well as unnecessary bureaucracy Ensuring fair competition and equal treatment of all companies, domestic & foreign
 Ensuring fairer and more open competition in services
 Improving conditions for foreign direct investment
 Further enhancing incentives for growth of SMEs and for investment in R&D

The selection of recommendations for WP-A in this document reflects the need for suchfundamental measures to be tackled. A major recommendation is for the EU-Japan
FTA/EPA bilateral agreement to be sufficiently balanced, comprehensive and ambitious inorder to dismantle these barriers holding back EU-Japan trade and investment. If
negotiated speedily and fairly, it could strengthen the EU and Japan economically andposition them as leaders in the development of rules and standards at the global level andhelp to protect the principles of rule-based trade as the foundation for the ultimate goal of amulti-lateral trading system.
To highlight priority issues, one asterisk (*) identifies “priority” Recommendations, twoasterisks (**) identify “top priority” Recommendations. (e.g. WP A / # 01** / EJ to EJ)

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Recommendations from both
European and Japanese industries
WP-A / # 01** / EJ to EJ Strengthening the EU-Japan Economic Relationship
The BRT welcomes the decision to open negotiations on a deep and comprehensive Free
Trade Agreement between the EU and Japan, made by EU and Japanese leaders on
March 25, 2013, which has marked the opening of a bright new chapter in EU-Japanbilateral relations.
In the expectation that a deep and comprehensive FTA / EPA between the EU and Japan
will boost EU-Japan trade and investment and promote job creation and economic growthin both economies, the BRT urges both Authorities to conclude these negotiations as earlyas possible. To unlock the full growth potential of EU-Japan economic relations, the BRT
reiterates its call that the resulting EU-Japan FTA / EPA should be ambitious, balanced,
mutually beneficial, comprehensive, and tackle major outstanding issues such as tariffs,
non-tariff barriers, public procurement, investment, services, competition, IPR, regulatory
cooperation including harmonisation and the mutual recognition of regulations, standards
and market authorisations. In addition, addressing elimination of tariffs and non tariffbarriers in parallel in the negotiations is necessary to guarantee a successful outcome.
< Background >As major advanced economies and major global traders and investors, the EU and Japan
can do more to unlock the enormous growth potential which their bilateral economic
relations can offer. They are now working on enhancing bilateral trade, investment andcooperation and building a closer relationship. As both strive to overcome global financial
instability and economic uncertainties, it is crucial that they join forces in tackling common
challenges in order to attain a long-term, sound and stronger growth. The EU-Japan
relationship should not be left behind

WP-A / # 02** / EJ to EJ Call for a breakthrough in WTO Doha Development Agenda
negotiation and statement of strong support for fight against protectionism
With a view to the upcoming Bali Ministerial Conference, the BRT expects that in particular
an ambitious agreement on trade facilitation will be concluded. Further progress must be
achieved in other key areas, such as non-tariff barriers. This would provide a significant
boost to international trade.
The BRT also follows with interest the recently launched negotiations for an international
services agreement and expects its design will be anchored within the WTO system. The
WTO should also advance on plurilateral sectoral agreements, and work towards clearer
WTO guidelines on the coherence between bilateral / regional / multilateral trade
agreements and the WTO system. Finally, the WTO should explore other topical issues,
such as the relationship between trade and investment, competition, energy and raw
materials. The BRT counts that, under the new WTO Director General, expected to takeoffice in September 2013, WTO is to pursue an ambitious trade agenda that will also tackle
these issues which have a great impact on the business operations of companies today.
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By advancing on a case by case basis the WTO should demonstrate its ability to develop
new trade rules and help its members see the advantages of trade liberalisation. Thisshould then serve to allow the restart of more comprehensive market access negotiations.
Any weakening of the multilateral trade system must be prevented by all means.
< Recent Progress >No tangible progress has been seen for this recommendation. Negotiations are on-going,
including the informal ministerial meeting held in Davos, Switzerland in January 2013,
towards the Ninth Ministerial WTO Conference in Bali which will take place in December
2013.
< Background >The BRT is a strong supporter of the multilateral trading system, whose core functions
are trade liberalisation, rule-making and dispute settlement. However, to liberalize
multilateral trade the initial high level of ambition of the Doha Round, launched in 2001,
has not been maintained, resulting in the current deadlock of negotiations which continue
to revolve both around a lack of political will and the inability to bridge the gap of market
access commitments between OECD and emerging country members.
With the prospects of great uncertainty, the WTO must demonstrate its ability to deliver
results for the business community. As the only international organisation creating rules
and setting standards on trade at the multilateral level, the WTO must remain leader inthis area and take more action. The existing legal framework provides an excellent basis
but needs to be updated in order to respond to a changing global economic landscape.

WP-A / # 03** / EJ to EJ Applying international standards and enhanced cooperationin the promotion of new global standards
1.

The BRT urges both authorities to adopt international product standards andcertification procedures where applicable, and, to promote harmonisation ofstandards and certification procedures, mutual recognition of product certification
and, when possible, and appropriate, mutual acceptance of functionally equivalent
regulations governing the application process for importing and selling/using
products in sectors such as Construction Materials, Organic Products, Cosmetics,
Medical Devices, Veterinary Products, Automobiles and Processed Food.

2.

The BRT recognises the importance of global patent harmonisation and streamliningof the patent system as a way to promote innovation, reduce costs and boost legal
certainty. With the introduction of a harmonised patent system in the EU, theauthorities of the EU and Japan should take the lead in these efforts, and work
closely in various international fora, such as “IP5”3.

Given the nature of the issue and the importance for business as well as for society
in general, the two Authorities should make an effort to harmonise the regulations forenergy conservation, relevant labelling rules, and environmental and carbon
footprint schemes. The two authorities should aim at harmonisation at aninternational level rather than bilateral level.

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4.

Following the agreement on the mutual recognition of the AEOs in June 2010
between the EU and Japan, the Authorities of the EU and Japan should aim at
introducing further regulatory cooperation in order to give more concrete benefits to
AEOs. The BRT would in this regard like to put emphasis on simplifications of importprocedures where companies are given greater freedom while also taking greater
responsibility for their imports without an excessive administrative burden. Authorities
should also establish closer contacts to learn from each other in order to improveand further facilitate trade between the EU and Japan. The BRT is aware that thetwo authorities are engaged in regular discussion, but no concrete benefits haveemerged for operators.

5.

Policies on the control of chemicals such as the EU’s REACH and RoHS andJapan’s Chemical Control Law have a significant impact on global supply chains.
The two authorities should not only implement effective regulations, but also consider
a common policy by establishing a common list of restricted substances, a common
approach to evaluation of risks and sharing of data so that cost for industries can be
mitigated. Furthermore, they should share a support policy of supply chain
management in developing countries in cooperation with businesses.

6.

The two Authorities should create a framework between the EU and Japan in thedevelopment of practical application of new technologies, such as RFID andbiometrics authentication technologies. This will enable and enhance cooperation
among companies in the EU and Japan, and will also promote new international
standardisation and lead to its dissemination.

7.

The two Authorities should disseminate model ICT use that contributes to thesecurity and the operational efficiency of the supply chain. For example, RFID tags,
sensors, biometrics authentication technologies and UCR (Unique Consignment
Reference) numbers can build a more secure and visible international supply chain.

8.

The European Commission and the Japanese Government should collaborate on
achieving international harmonisation at CODEX in the description and standards forfood for specified health use/functional foods.

9.

In the automobile sector, the Japanese and EU Authorities should accelerate theiradoption of UN-ECE Regulations to lower the cost of regulatory compliance for both
European and Japanese automobile exporters by extending the benefits of mutual
recognition. Also the Japanese and EU Authorities should work together to establish
internationally harmonised technical requirements and testing procedures that willencourage the smooth market adoption of new environmentally friendly power-traintechnologies – clean diesel, electric vehicles, hybrid vehicles and fuel-cell vehicles.
< Background for 9 >In 1998, Japan became the first country in Asia to accede to the UN-ECE 1958
Agreement on the Mutual Recognition of Type Approval for Vehicles etc., which
provides that vehicle components which have received type approval according toUN-ECE Regulations in one contracting country are exempt from testing in any
other signatory country where those regulations have been adopted. Japan has

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now adopted UN-ECE Regulations in 34 of the 50 areas included in Japanese typeapproval.
< General Background for 1-9 >Implementation of these recommendations will lead to a significant improvement in thebusiness environments of both the EU and Japan.

WP-A / # 04* / EJ to EJ
1.

Supporting timely development of businessSocial security contributions (avoiding double contributions):

The BRT welcomes the conclusion of social security agreements between Japan andcertain EU member states in the past, but regrets that no new agreements entered into
force during 2011 and 2012. Therefore, the BRT requests that, Japan and the Member
States of the EU make further efforts to expand the network of Social Security Agreements.
In addition, they should introduce an interim measure, by which a host country should either
exempt contributions to pension funds unilaterally or refund the contributions in full, not only
partially, when expatriates return to their home country.
< Recent progress >There has been little progress in the last couple of years< Background >While individual EU Member States and Japan have concluded bilateral social security
agreement, Japanese citizens in many Member States cannot use pension premiums
paid in those countries towards the pension in Japan and vice versa. This will lessen theburden both for companies as well as employees. So far, social security agreements
between Japan, and Germany, the United Kingdom, Belgium, France, the Netherlands,
Czech Republic, Spain and Ireland have entered into force. The agreement between
Japan and Italy has been signed. Furthermore, negotiation is underway between Japan,and Hungary, Luxembourg and Sweden, and is at the preparatory stage between Japan,
and the Slovak Republic, Austria and Finland.
2.

Liberalisation of the movement of intra-corporate transferees in the framework of an
FTA/EPAThe EU and Japan should realise far-reaching liberalisation of the movement of intracorporate transferees within the framework of an FTA/EPA. Such liberalisation should aim
at the following system:

A framework agreement between the mother company, which sends expatriates, andthe host country, stipulates the maximum number of expatriates. Within the agreed limit,
the mother company is free to send intra-corporate transferees to that country without
further obtaining individual work permits.
When the mother company concludes such an agreement with several Member Statesin which its subsidiaries or branches have operations, movement of intra-corporatetransferees between those countries does not require a new work permit as long as thetotal number in each agreement is respected.

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< Background >For the smooth and efficient running of international businesses, it is essential thatcompanies are able to dispatch key personnel, including directors without going throughred tape. Such transfers do not have any negative impact on the labour market of thehost country. On the contrary, they will expand employment in the host country throughthe development of the business concerned. In addition, expatriates themselves tend to
pay high income taxes to the host country. The requirement to obtain work andresidence permits for intra-corporate transferees between the EU Member States andJapan is usually a formality and it is rare that the application of an intra-corporatetransferee is questioned and required to submit substantial reasons. However, the recent
economic situation in some Member States has caused the authorities to be morereluctant to issue work permits in general, which sometimes affects intra-corporatetransferees by delaying the issuance of work permits to them. As the burden on
companies as well as employees and their family members is substantial, it does
constitute an obstacle to the swift development of business.
The European Commission presented in July 2009, a proposal for a Directive on
conditions of entry and residence of third-country nationals in the framework of an intracorporate transfer (COM (2010) 378 final). Even if it is adopted, it will not be applicable in
the UK, Ireland and Denmark because of opt-out of those Member States. Japanesenationals in the UK, where their number is the highest among the EU Member States,
therefore, do not benefit from this Directive. It is therefore imperative that suchliberalisation is realised within the framework of an EPA/FTA so that it will be applicable
to all intra-corporate transferees between the Member States of the EU and Japan.
WP-A / # 05* / EJ to EJ

Better Regulation

The BRT recommends that Japanese and European policy-makers increase mutual
understanding of existing and upcoming regulations on each side and their impact onforeign business to exclude unwittingly taking initiatives that create barriers to trade. Bothsides should commit to exchanging annual legislative work programmes at the earliest
stage to prevent regulatory divergence and new trade barriers. In addition, the two sides
should agree to an early warning system for draft legislation in order to make the dialogue
effective. The EU and Japan should also develop a joint strategy to promote better
regulation, learning from each other’s experience and adopting a common system of good
governance. Currently the views of businesses in Japan and the EU are not sufficiently
taken into account in the regulatory process.
< Recent progress >There is indeed increased communication between the authorities, but at the same time
much improvement can still be achieved.
< Background >Better regulation, based on transparency, early public consultation, impact assessment,
public access to draft regulations or administrative measures, could lead to a reduction in
the cost of regulatory compliance and the overall administrative burden, which would beto the benefit of the Japanese and European economies as a whole.

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WP-A / # 06* / EJ to EJ Support for SMEs
The BRT calls on the EU and Japanese Authorities to develop measures to promote andassist each other's SMEs within their own jurisdictions. Specific consideration should bemade to include such cross-support in FTA/EPA negotiations.
This would include:
1. Giving each other's SMEs the same general support and privileges as those given to
one's own SMEs.
2. Permanent local assistance in language, paperwork, hiring local personnel, legal andregulatory matters, as well as advice on financing and banking, etc.
3. Tax breaks and incentives, tax deduction for total research expenses, income tax
breaks for foreign experts, tax exemption for doctoral students, tax relief for R&D, tax
deduction for joint and entrusted researches based on industry-academicgovernment cooperation, as well as tax and other facilities and incentives forinvestors.
4. Helping graduates with international backgrounds find local jobs with the other side's
SMEs.
5. Creating a joint investment fund for both sides' SMEs.
6. Exchanging best practices and tried solutions in industrial policy for SMEs.
7. Expanding the SME-related programmes already run by the EU-Japan Centre forIndustrial Cooperation.
< Recent progress >The BRT welcomes the willingness of both sides' Authorities to raise cooperation on
cross-support for SMEs, as shown in their March 2013 Progress Reports, which mention
including such cooperation in the FTA/EPA.
< Background >SMEs are new sources of growth and jobs in both Europe and Japan. Their success inbilateral trade is a major factor in their development and also helps to update both sides'
industries though disseminating new products and technologies. However, market accessproblems and other impediments noted in other BRT recommendations are even harderto tackle or manage for SMEs. While the Japanese government, the European
Commission and most EU Member States have internationalisation programmes for theirown SMEs, existing help programmes for foreign companies are mostly geared towards
large foreign direct investments in established industries and are inadequate for SMEs
and for technological emulation. Aiming to provide local help to all potentially interested
foreign SMEs is not realistic, but increasing and sustaining local help to SMEs that haveestablished a local base is realistic in the context of a bilateral agreement. The BRT is ofcourse aware of the major work being done for both sides' SMEs by the European
Commission and the Government of Japan through the programmes run by EU-Japan
Centre for Industrial Cooperation.

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Recommendations from
European industry to Japan
WP-A / # 07** / E to J
Harmonisation & mutual recognition of standards andproduct certifications; acceptance of international standards where applicable
Reluctance to accept EN and ISO standards or CE marking of products exported to Japan
delays the introduction of new products to the market and increases import costs. While
accepting the need to safeguard consumer health and safety, the BRT urges Japan topromote the harmonisation of standards and certification procedures, the mutual recognitionof product certification and, when possible, and appropriate, the mutual acceptance offunctionally equivalent regulations governing the application process for importing andselling/using products with particular consideration for consumer safety and health, so that
products certified for one market are automatically accepted in the other market. The BRT
recommends the Japanese Government to place particular emphasis on:
Construction Products
The Government of Japan should work together with the EU Authorities towards mutual
recognition of all JAS/JIS and EN standards for all building materials. This isunfortunately still rather common in the flooring sector as well as for roofing sheets.
Mere reference to ISO standards within JAS/JIS, has not proved to be adequately
helpful in facilitating the process.
The Government of Japan should, furthermore, better support local and regional
authorities to ensure that transparent and consequent interpretations are made in
regards to technical regulations and guidelines.
< Recent progress >There has been some progress, however much work still remains. We furthermore
note that the Japanese government did not respond to the issue of discrepancy
between ISO and JIS/JAS in its progress report of April 2013.
< Background >The Japanese construction sector has long been a very “domestic” market. Even in
the aftermath of the 2011 Tohoku earthquake and tsunami, there is little evidence that
this situation is changing.
Cosmetics
The BRT calls for common regulations on the certification of medicated cosmetics, socalled quasi drugs (disclosure of approved ingredients, standard application times);common regulations on efficacy claims and advertisements; a common positive list ofallowable ingredients in cosmetics; and establishment of joint standards for alternatives
to animal testing.
< Recent progress >There has been limited progress.

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< Background >European cosmetics firms find it continuously difficult to expand their business inJapan due to the difference in standards for ingredients and permitted efficacy claims
between Japan and the EU and the Japan-specific product certification procedures for
so-called quasi drugs.
Railways
Though standards are not so different and data generated at European researchfacilities are relevant for Japan, duplicate testing in Japan is required for the Japanesemarket. This has repeatedly been communicated by one JR company. Duplicate
testing raises the costs of imports, making them less competitive than domestic
products. The Government of Japan and the EU authorities should work toward
establishing a mechanism through which test data and certification of railway
equipment provided by European organisations is accepted in Japan, and vice versa.
The BRT furthermore recommends Japan to establish a system whereby standards
and requirements are available openly so that European companies will have a better
understanding of what is needed in order to offer goods and services that meet or
exceed the safety measures in the Japanese market.
The BRT, however, recognises the latest development and positively views the firstcall for tender that was recently published. The BRT recommends Japan to makebetter use of the tendering system as this leads to more competition and bettertransparency, while not negatively affecting safety.
< Recent progress >There has been some progress. The Government of Japan did not address thisissue in the progress report from April 2013.
< Background >The combined Japan Railways companies run on more than two-thirds of therailways, whereas the remaining one-third is controlled by more than 80 private
carriers. This means that JR testing and acceptance standards serve as de-facto
requirements for railway equipment to be exported to Japan. Unfortunately applied
standards and requirements have not been openly published leading to a lack of
information on exactly what requirements need to be fulfilled.
Medical Devices/Equipment
The Government of Japan is urged to create a more efficient product approval process,in particular by:a) Shortening the medical equipment certification process: accepting clinical trial data
generated overseas and harmonising GCP and QMS
requirements withinternational standards. The BRT recommends that in the meantime, both
Authorities should officially recognise that either ISO 14155:2003 (and as
subsequently amended) or Japan GCP is, in principle, generally acceptable toeither party for all medical device clinical investigations. Both Authorities should
also officially recognise that, in principle, a QMS audit conducted by responsible
authorities in Japan (PMDA or third party testing organisation) or by NotifiedBodies in the EU is generally sufficient as evidence of compliance with quality
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management system requirements when applying for market authorisation oneither market.
b) Eliminating differences between Japanese GCP and the GCP established by theInternational Conference on Harmonisation.
< Recent progress >While there is still a need for improvements, some progress has been made.
< Background >The EU’s export of medical devices to Japan is limited by the costly andcumbersome approval process. Development costs for EU medical device
producers are increased by requests for additional clinical trials from the Japanese
authorities. Excessive Japanese standards and regulatory requirements result not
only in a significant device lag, but also together with the insufficient reimbursement
system, a device gap. The BRT calls on the government of Japan to intensify thework to simplify and harmonise the regulatory processes in the field of medical
devices with that of the EU. Japan needs to reduce the time and costs associatedwith introducing innovative new treatments in the human healthcare market in
Japan and to bring Japanese rules in line with global standards.
Veterinary Products
Animal health products already approved in the EU have to undergo further rigorous
controls and unnecessary tests before being approved in Japan, which increases costs
and causes delays. Accordingly, the BRT:a) Urges the Government of Japan to take all measures available to speed up
product approvals and fully harmonise domestic regulations with international
practices.
b) Requests Japan to work towards mutual recognition of European and Japanesemarketing authorisations for veterinary products. This should start with mutual
recognition of GMP certification for veterinary medicines. Harmonisation ofregulations on animal vaccines, and ensuring product conformance under a unified
GMP regime, should also be addressed.
c) Asks Japan to better facilitate the use of English in applications without the needfor a summary in Japanese.
< Recent progress >Limited progress has been made. On December 3, 2012 the MAFF presented to theJapan Veterinary Products Association a list of 10 action items for change. These
items are welcomed by the industry however still fall far short of the definitions ofharmonisation described above. In addition, timelines are not yet available for
implementation of these items, nor has MAFF made clear the extent of further
collaboration with industry to establish the details of such changes.
< Background >While Japan participates in the VICH, the implementation of international andharmonised standards is often slow and Japan-unique elements are added. MAFF
has to a certain extent facilitated the use of English, but have at the same time
added a requirement to add a summary in Japanese, as mentioned above.

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Processed Food
For processed food, the combination of differences between EU and Japanesestandards and technical requirements as well as cumbersome border procedures resultsin high costs for EU exporters. High conformity costs are incurred because Japanese
authorities do not accept evaluations made by the EU or international bodies, and the
FSC is constantly asking for tests to be carried out in Japan. The market potential for
European exporters would be greatly enhanced by:a) Substantially increasing the list of permitted additives, in addition to speeding up
and fundamentally revising the approval processb) Introducing mutual recognition of conformity assessment procedures to eliminate
the duplicate costs of evaluations.
< Recent progress >There has been no concrete progress< Background >The limited number of permitted food additives in Japan and unaligned standards
between the EU and Japan increases costs and prevent EU exporters from utilisingscale effects.
LED lamps and luminaries
Lack of harmonisation of international electrical safety standards, such as IEC, andJapanese standards and technical requirements, such as PSE/JIS/JET results in highcosts and effectively prohibits entry to the Japanese market for EU companies.


The current standard for LED lamps prepared by the Japanese ministry (i.e.
METI) and Japanese lighting industrial association (i.e. JELMA) is not compatible
with standards used by manufacturers of other countriesIn terms of fluorescent lamps (tube LED), the Japanese lighting industrial
association (JELMA) appoints Japanese test facilities as the only laboratories
permitted to test

The Japanese government continues to support their own standard of remotecontrol for LED lamp and luminaries

The BRT requests Japan to harmonise with international standards and technicalrequirements in order for Japan to avoid being left behind in the global market. The
market for LED lamps and luminaries is rapidly expanding and these products are
expected to play an important role in saving energy on a global basis.
< Recent progress >This is a new issue.
< Background >Japan has its own standards and technical requirements, such as PSE and JIS, anddelays in setting standards such as J-deviation increases costs and prohibits EU
companies and exporters from entering the Japanese market. In addition, lack ofWorking Party A: Trade Relations, Investment and Regulatory Cooperation
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harmonisation of standards of remote control prohibits EU companies from entering
the Japanese market.
Labelling rules
The Government of Japan should issue clarifying orders to provide retailers with flexible
alternatives for providing Japanese consumers with globally sourced products while
taking full responsibility for the quality and safety of the products. A simple example ofan inflexible labelling rule that has substantial labelling cost implications for European
companies is that the dimensions of furniture must be expressed in millimetres and not
centimetres, although use of the latter is common practice in other countries using themetric system.
< Recent progress >The Consumer Affairs Agency will during 2013 look into the Household Labelling Law.
However, so far, nothing concrete has been presented. This issue was not touched
upon in the GoJ progress report of April 2013.
< Background >The Household Product Quality Law and accompanying voluntary labelling guidelines,“hyojikitei”, prescribe in extreme detail how household products should be labelledwhen sold in Japan.
WP-A / # 08** / E to J

Automobiles

The Government of Japan should put kei cars and other motor vehicles on the same fiscal
and regulatory footing.
< Recent progress >There has been no progress.
< Background >“Kei” or mini-cars are those vehicles legally restricted to a maximum length of 3.4m, awidth of 1.48m, a height of 2m, and to an engine displacement of 660cc and below. Kei
cars benefit from lower automobile related taxes, automobile liability insurance andmotorway tolls and are subject to less stringent overnight garaging requirements. The
continued existence of the privileges enjoyed by kei cars is an anachronism which
distorts the competition with compact and subcompact cars, which do not enjoy the same
prerogatives, even though their performance and specifications are similar
WP-A / # 09** / E to J

Ensuring free and open competition in services

The BRT urges the Government of Japan to tackle the lack of free and open competition in
Japan’s services markets. In particular, the Government should:
Remove obstacles to integrating the operations of financial groups. In particular, theinitiated reforms of firewall restrictions should be implemented fully to allow financial groups
to structure their organisations in Japan in the same way as they do in the rest of the world.
On the matter on postal reform, the BRT is disappointed with the decisions taken so far by
the Japanese Government. Japan has a duty to abide by its WTO obligations, including theWorking Party A: Trade Relations, Investment and Regulatory Cooperation
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national treatment provision of the GATS. This means establishing equivalent conditions ofcompetition between the Japan Post entities and EU and other private delivery companies,
banks, and insurance companies. Specifically:a.

Kampo insurance business should be subject to the same capital, solvency margin,
tax and policyholder protection funding requirements as private sector insurers.
Limits are needed on expansion of Japan Post’s services, including the introductionof new products as well as caps on postal life insurance, until competitive safeguards
have been established to prevent cross-subsidies from its existing dominant position.
The BRT is particularly concerned by the recent approval of the new or modified
products offered by Japan Post Insurance. It is also imperative that Japan Post
remains under the jurisdiction of the FSA. The above requests are well within therealm of the GPA. Similarly, the insurance business of cooperative societies (kyosai)should be subject to the same requirements as private sector insurers.

b.

Japan Post and private postal delivery operators should be subject to the same
customs procedures and formalities. A level playing field for both Japan Post andprivate postal operators should be ensured in the requirements for dedicated airway
bills, obligatory customs, quarantine and security clearance and the funding of these
services, as well as in the issuance of parking tickets for delivery vehicle parking
infringements.

< Recent progress >There has been no progress, but rather backward movement.
< Background >Since the Big Bang in the late 1990’s, Tokyo has seen its role diminish in the global
arena. This is partially due to the very few changes undertaken since that time. The
preferential treatment extended to Japan Post and its subsidiaries still exists, and has
unfortunately been expanded without private companies having access to the same
benefits.

WP-A / # 10** / E to J

Freight and logistics

Further to the WP-A / # 03 / EJ to EJ, the BRT recommends Japan to revise its AEO
system to introduce real benefits for operators regardless of whether they are forwarders,customs brokers or importers. Furthermore, the administrative load needs to be lessenedfor companies to be truly attracted to the AEO status.
The AEO concept should focus more on offering simplifications if the operator meets theagreed criteria for traceability and adheres to the agreed process flow. Examples of this
could be:- Deregulated customs clearance beyond the local customs jurisdiction territories- Reducing the physical examination of shipments- Being able to use alternative documentation for showing “direct shipment” under free
trade arrangements< Recent progress >This is a new recommendation.
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< Background >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.

WP-A / # 11* / E to J

Promoting foreign direct investment

The Government of Japan should create a business environment that will foster investmentof foreign firms in the domestic economy. To this end, and in line with the treatment applied
to stock swaps involving purely domestic companies, it should consider allowing tax
deferrals for capital gains stemming from direct cross-border mergers and re-organisations.
The Government should also ensure that rules of fundamental importance to foreigncompanies are not altered without prior notice and consultation. In this context, the BRT
calls on the Government to use all means available, including revision of Article 821 of the
Corporation Law, to ensure legal certainty for foreign companies established as branches inJapan.
Moreover, while such improvement of the generic investment environment is a precondition,
regulatory reform is the best motivator for foreign companies to enter the Japanese market.
In the sectors where the formal barriers to foreign investment were removed some time ago,such as automotives and machinery, foreign investment is relatively high. By contrast, two
sectors where investments are low are the financial and medical fields. Japan’s regulatoryenvironment in these sectors remains much more difficult than the rest of the world to allow
for foreign companies to set up any larger operation than the minimal level needed to serve
the existing client base. Mutual recognition of market certifications would be an importantfirst step to improving investments in the medical field. Mutual acceptance of principles
governing the financial services industry and the mutual acceptance of the home regulator
as the core regulator would go a long way to improving the investment environment in thefinancial sector.
< Recent progress >While Japan has established incentive programmes for FDI, they are often limited inscope and application procedures are very inflexible.
< Background >Despite its position as the world’s second largest economy, Japan’s level of inward FDI
as a proportion of GDP remains one of the lowest among all OECD countries. Even withthe reorganisation of JETRO and the efforts starting with former Prime Minister Koizumi
to increase FDI to Japan, only very small improvements have been seen. According to
WTO FDI in 2011 was only 3.9 % of GDP.

WP-A / # 12* / E to J

Fight against counterfeited, pirated and contraband goods

The Government of Japan should make all trade with fake goods illegal and to better
cooperate with overseas authorities to secure the closure of sites trading in fake goods.
Furthermore, Japan should remove the loophole by which individuals are allowed to bring inor import counterfeits for person consumption.

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< Recent progress >There has been some progress, especially in regard to the number of photographs sent
to right holders in connection with suspicious goods. However, it is still legal to importfake goods for personal consumption.
< Background >Japan allows the importation of fake goods as long as they are for personal use. This isnotably in explicit contradiction with Article 15 of the Universal Postal Convention thatprohibits the insertion of counterfeit and pirated articles in all categories of items (letters,
packages and parcels). Accordingly, there is an inflow of counterfeit goods sold on theinternet on sites outside Japan, but which are catering to the Japanese market. These
two factors unfortunately lead to quite a large trade in counterfeit goods.

WP-A / # 13* / E to J

Patents and trademarks

1. Trademarks
It should be the responsibility of the owner of an earlier trademark to defend that trademark,if there is concern about a similar more recent trademark. The owner of the earlier markwould usually issue a letter of consent to overcome the official complaint. In Japan this is
not accepted. Trademarks considered by the Trademark Office to be too similar cannot coexist, even if the affected owners see no problem with such a co-existence. In mostcountries this procedure was already abolished.
< Recent progress >This is a new recommendation.
< Background >The Japanese Trademark Office checks new trademark applications ex-officio for the
existence of relative grounds for refusal in the form of similar earlier registeredtrademarks. The applied standards are so strict that even brands are considered as ahindrance, which could in fact co-exist even from the perspective of the affected owners.
2. Patents
The JPO should consider supplementary experimental evidence to support generic drug
patent claims.
< Recent progress >This is a new recommendation.
< Background >Currently, for many types of applications the JPO will only grant protection for
embodiments disclosed in the application as filed. In addition, paediatric extension ofpharmaceutical patents is not available in Japan.

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WP-A / # 14** / E to J

Government procurement< General Recommendations >The Government of Japan should increase its efforts to facilitate better access to the public
procurement market in Japan. This could be achieved by lowering the threshold for publictenders and better defining the “operational safety clause” within the transport sector. Japan
should also include more cities in the GPA as currently only ten cities are included.
< Background >Studies have shown that over 80% of the total government procurement market in Japanis not covered by the GPA.1 Currently some sectors are exempted from the threshold of 5
million SDR. Government Procurement was included in the so-called paragraph 34
discussions, where Japan promised to set up a data base where all tenders, national andregional would be posted. However, significant improvements are required to bring
Japanese public procurement closer to the levels of the EU.
< Specific Recommendations > In the bidding process in public tenders for helicopters>a. More balanced competition should be ensured by comprehensive evaluation
systems that also take aircraft performance into account.
b. Single year budget procurement constraints should be relaxed.
< Background >a. Although cheaper is not necessarily better, almost all Japanese government tenders
still have an evaluation system merely based on price competition.
b. Procurement by some governmental agencies (such as fire fighting and disaster
relief) is still tied to this constraint. In some cases the time between the bid award
and the requested delivery is less than six months, which is much too short forhelicopter manufacturing, considering also the hurdles of local certification upon
import. This condition has been relaxed in the past few years (for police procurement
for instance).
Procurement of integrated systems of space ground equipment should be
encouraged< Recent progress >There has been little progress.
< Background >Japan's international procurement of space ground equipment is often broken up in small
lots tailored for Japanese companies. Integrated systems have better cost performanceand are more reliable.
It should, however, be mentioned that a call for tenders was published for the railway
sector during 2012, the first ever case of its kind.

1

Copenhagen Economics, “Assessment of barriers to trade and investment between the EU and Japan”, 2009
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Recommendations fromJapanese industry to the EU
WP-A / # 15** / J to E

Europe 2020 and the Single Market Act

The BRT expresses our continued support for Europe 2020 and in particular, the Single
Market Act - the initiative of the European Commission to relaunch the single market. In
addition, The BRT looks forward to the adoption of Horizon 2020, the EU’s RTD program for2014-2020 and to increased international cooperation between businesses in the EU andJapan.
1)
2)

3)

The BRT would like to repeat the importance of the single market for the EU and theEurope 2020 strategy.
The EU should make utmost efforts to realise all of the commitments that it has
made under Single Market Act I and II. The BRT would like to emphasise theimportance of the following priorities for the single market.
- Intellectual property rights- Consumer empowerment- Services- Networks- The digital single market- Taxation- Business environment
The BRT requests that the EU should add the realisation of the true single market ofchemical materials as a priority.

< Recent Progress >Europe 2020 is evolving and progress has been made on Single Market Act I. Single
Market Act II was launched in November 2012. The realisation of the true single market
of chemical materials is a new recommendation.
< Background >For global businesses to flourish, the regulatory environment should be, as much as
possible, consistent throughout the world. In this context, a level playing field in the
single market is of key importance.
The BRT believes that a policy with social objectives such as environmental policy andsocial policy cannot be formed independently from economic and industrial policies. It is
important to achieve synergy between these different policies. For example, in order torealise more energy efficient economy, innovative and competitive products andprocesses provided by industries will be essential not only in the manufacturing sector
but also in the transport and household sectors. It goes without saying that sustainablesocial infrastructures for the aging society such as social security systems depend on thebusiness activities that create growth and jobs.
Furthermore, the international coordination of regulatory policies and close cooperation
amongst governmental and other institutions involved in policy-making process isimportant to realise a level playing field globally.

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WP-A / # 16** / J to E
and passenger cars

Revision of high customs tariffs on audio-visual products

The authorities of the EU should abolish or drastically reduce high customs tariffs, forexample, 14% for audio-visual products and 10% for passenger cars. In the absence of aprogress in global trade negotiations, such reduction should be realised through bilateralnegotiations, notably, through an EPA/FTA between the EU and Japan.
< Recent Progress >It can be said that a progress has been seen for this recommendation because the EUJapan bilateral negotiations on an EPA/FTA have been launched.
< Background >The EU is protecting some sectors of its industries by maintaining high customs tariffs
even though these industries are at the forefront of international competition and needstimuli for competition rather than protection. Such protection will not help enhanceinternational competitiveness of those sectors. Furthermore, it is only their users andconsumers in the EU who unfortunately have to pay the resulting higher prices.

WP-A / # 17** / J to E

Customs Classification

17.1. IT products
The BRT requests that the authorities of the EU should acknowledge the concerns anddifficulties that businesses are facing and that, based on the panel reports of the WTO on
information technology dispute issued in August 2010, the authorities of the EU should takesteps to increase predictability and improve transparency upon importation of the IT
products, in particular, in the framework of recently launched negotiations on expanding thecurrent product coverage of the ITA.
< Recent Progress >It can be said that a progress has been seen for this recommendation because
negotiations on expanding the ITA have been launched.
< Background >The BRT believes that customs classification should be done in accordance with theHarmonized System Convention rules. However, the BRT also believes it a fact that therules do not provide a clear method of classification for such products as electricelectronics products, where the technical convergence of IT and non-IT products has
emerged. This situation makes interpretation and classification more difficult andcomplicated than ever, and has undermined transparency, predictability and promptness
for businesses. The improvement of the said situation will indeed contribute to thedevelopment of the ICT industry.
17.2. Packaged IGBT device
The BRT requests the authorities of the EU to implement without delay in all the Member
States the ruling made by the HS Committee of WCO at its 50th Session in September
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2012 on a packaged insulated gate bipolar transistor (IGBT) device to classify it in heading
85.41 (subheading 8541.29).
< Recent Progress >This is a new recommendation< Background >The HS classification of a packaged IGBT device in heading 85.41 was disputed by thecustoms authorities of a Member State of the EU. The case was brought to the HS
Committee of WCO in June 2011. In September 2011, the HS Committee decided toclassify it in heading 85.41. However, the EU requested re-examination. In September
2012, the HS Committee re-examined the case and decided to classify it in heading
85.41 (subheading 8541.29). The ruling has been considered applicable since 1
December 2012. It appears that the customs authorities concerned have not yet
implemented the ruling. The EU and all of its Member States are the members of WCO.

WP-A / # 18** / J to E

Chemical Regulations

18.1 REACH
1. Concerning REACH, the BRT recommends as follows: The BRT asks the authorities of the EU to soon unify the interpretation of the Article
as stipulated in the Guidance document so that actors in the supply chain can avoid
the fragmented compliance requirement in EU market.
 In Denmark, despite the objection by the ECHA (European Chemicals Agency),
phthalates are banned in its new national law published in its official journal on 30
November 2012. The authorities of the EU should take action against Denmark.
< Recent Progress >Some progress has been seen for the recommendation on the interpretation of the Article.
The recommendation on phthalates is a new recommendation..
< Background >REACH, though it is a Regulation, has not realised a single market in the EU because its
interpretation is diverse. The authorities of the EU should realise a single market throughthe clarification of interpretation that is accepted throughout the EU.
The interpretation of “Article” applied to 0.1% threshold for SVHC (Substance of VeryHigh Concern) is still disharmonized among EU member states. The Guidance on
Requirements for Substances in Articles in REACH regulation states that the 0.1%
threshold should apply to an article as a whole produced or imported. Six member
states, however, insist that the threshold should apply to the parts of complex articles
based on the “Once an article – always an article” concept.
2. The Authorities of the EU should prepare a practical guidance to facilitate theimplementation of REACH. In particular: Although the number of SVHC increases steadily, the ECHA is not involved in its
dissemination. It is left to industry. The authorities of the EU should facilitate thedissemination of such information in supply chains through the publication of
guidance.
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 The BRT requests that the authorities of the EU should issue a clarification on the
obligation of ORs under the Article 8 of REACH and its implication under the EU
competition law.
 The disseminated dossier information that is purchased from Lead Registrant in
ECHA home page for HSE (health safety and environment) purposes (such as GPS- Global Product Strategy - and SDS - Safety Date Sheet) should be madeaccessible for free and made available worldwide.
 In the evaluation of a substance allocated to a Member State in the framework of
CoRAP - Community Rolling Action Plan, a private business is often requested toprovide information on the substance which it holds. However, it is sometimes
requested at a short notice and/or a not-well-organised manner, which is noteffective. The authorities of the EU should publish the best practice for the Member
States so that private businesses can help them more efficiently and effectively.
< Recent Progress >No progress has been seen for the recommendation on SVHC.
The others are new recommendations.
< Background >REACH includes requirements that are practically very difficult to implement forbusinesses.
Concerning the obligation of ORs, the Article 8 of REACH states that the OR ‘shall keep
available and up-to-date information on quantities imported and customers sold to, as
well as information on the supply of the latest update of the safety data sheet’. However,in practice, there is a risk of infringing the EU completion law if OR collects customer-ofcustomers-information, such as customer names and imported volumes, especially fromindirect supply routes, because under the EU competition law such supply chain
information (i.e. market information) may be considered critical and sensitive. In addition,
it remains unclear whether or not the competent authorities of each Member State will
accept the use of a third-party trustee in the collection of such information in order toavoid possible infringement of the EU competition law. The reason is that Article 8 only
relates to OR and there is no other indication in REACH that such OR obligation could beoutsourced to a third party. The authorities in Germany appear to interpret that the use ofa third-party trustee is not allowed. Furthermore, the use of the service of a trustee
requires a significant additional cost. As the EU manufactures do not have to collectinformation on the quantity of imports, this only affects ORs – i.e. non-EU manufactures,
which creates unfair market conditions.
3. The BRT recommends that the authorities of the EU should summarise and publish
issues and concerns coming out of the latest registration – such as difficulty to identify
Lead Registrants and no transparency of the cost for LoA (Letter of Access), and theirsolutions in time for the following joint submission.
< Recent Progress >Some progress albeit very limited and unsatisfactory for businesses has been seen for
the recommendation.

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New challenges are already foreseen in the SIEF operation toward 2013 registration
deadline, namely, less data available, inexperienced Lead Registrants, mostly SMEs inthe supply chain, and heavy financial burden. The BRT is concerned that the SIEF
activities will stagnate due to such concerns.
18.2 Appropriate approach to Endocrine disruptor and combined effect
The BRT requests that the authorities of the EU should regulate endocrine disruptors not byusing the categorisation like CMR (carcinogenic, mutagenic or toxic for reproduction), but
by using the risk assessment based on sound science because endocrine disruption is not
the endpoint of toxicity but the mode of action to the adverse effects.
< Recent Progress >This is a new recommendation.
< Background >Currently there is no regulation on Endocrine disruptor and combined effect. The
authorities of the EU are contemplating a policy measure.
18.3 RoHS
The BRT requests that SVHC, authorisation or restriction under REACH and exemption
under ELV/RoHS should not lead to duplicated regulation.
< Recent Progress >This is a new recommendation.
< Background >REACH and RoHS are independent with each other. However, they regulate chemical
substances. Both of them impose restrictions and exemptions thereof. Although currently
the BRT is not aware of any discrepancy as to the restricted or exempted chemical
substances between the two regulations, the BRT is nonetheless concerned about therisk of duplication due to the complexity of the two regulations.
18.4 CLP Regulation
 The BRT requests that, to alleviate burden on exporters, the authorities of the EUshould accept GHS classification and labelling at the custom clearances.
 The BRT requests, in addition, that the authorities of the EU should take GHS into
consideration from ATP (Adaptation to Technical Progress) stage.
< Recent Progress >Some progress albeit very limited and unsatisfactory for businesses has been seen for
the recommendation.
< Background >CLP Regulation (Regulation (EC) No 1272/2008 on classification, labelling andpackaging of substances and mixtures) affects not only the EU manufactures andimporters but also exporters outside the EU. While CLP is comparable to UN GHS, CLP

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does not take some of GHS classification but introduces the EU’s own classification. As aconsequence, the exporters to EU are forced to be compliant with both GHS and CLP.
18.5. Nanomaterial
1. Definition
The BRT requests that the authorities of the EU should implement the prospective policy
tools on nanomaterials by taking into consideration the degree of exposure ofnanomaterials released from a product.
2. Reporting scheme
The BRT requests that the authorities of the EU should take an initiative and establish aharmonized reporting system at the EU level.
3. Standardization of measurement method
The BRT requests that the authorities of the EU should standardise a practicalmeasurement method of nanomaterials. Such a measurement method should be simple
and internationally harmonised.
< Recent Progress >These are new recommendations.
< Background >The European Commission Recommendation on the definition of nanomaterial(2011/696/EU) was published on 18 October, 2011.
Several EU Member States plan to enact their own nanomaterial reporting schemes at anational level. It would oblige their manufacturers and importers make multiple reportingin different formats, which would not only be inefficient but also create confusion in their
supply chains.
Different measurement methods are used in the measurement of nanomaterials to meet
regulatory requirements such as notification. As a result, there is a risk that the results ofmeasurement by different actors are not comparable.
18.6

HFCs

The BRT recognises the following issues and requests the authorities of the EU to takethem into account during the deliberations of the legislative proposal.
 The charging of refrigerants on site, due to pre-charge ban, could result in frequent
leaking of HFC gases into the air even if carried out by qualified people because of lessthan ideal work environment. The charging of refrigerants in factories should be allowed.
 The pace of the reduction of the use of HFCs is too steep. It should be revised bytaking account of safety (replacement refrigerants could be inflammable), performance(lower performance would result in less CO2 reduction) and cost (cost for users andcost for the society in general).
 In order to realise a single market in chemical materials, there should be one rule onbanned chemical materials that is applicable throughout the EU. If Member States
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have the discretion of banning additional chemical materials, it would lead to market
fragmentation.
< Recent Progress >These are new recommendations.
< Background >The European Commission issued a proposal for a Regulation of the European
Parliament and the Council on fluorinated greenhouse gases in November 2012.

WP-A / # 19** / J to E

Japanese expatriates

1. Intra-corporate transfer
The BRT believes that a Directive on conditions of entry and residence of third-country
nationals in the framework of an intra-corporate transfer should include the following
measures:
1)

2)

3)
4)

The maximum duration of the transfer to the European Union should be 5
years for managers and specialists rather than 3 years currently set in the
proposal (Article 16.3);
It should be possible for ICTs to submit the application for a work andresidence permit after entering the assigned country based on the waiver ofvisa requirements;
It should be possible for their spouses to be automatically granted the right towork upon their arrival.
The application of integration measures to ICTs should be voluntary.

The BRT is concerned about the lack of its progress in the legislative process. The BRT
recommends that the EU and Japan should include this issue in the negotiations on an
EPA/FTA between the EU and Japan as referred to in the item 2 of WP-A / # 04 / EJ to EJ
Supporting timely development of business.
< Recent Progress >No progress has been seen for this recommendation.
< Background >The European Commission presented in July 2009 a proposal for a Directive on
conditions of entry and residence of third-country nationals in the framework of an intracorporate transfer (COM (2010) 378 final). The BRT believes such a Directive to expedite
and facilitate the transfer of intra-corporate transferees (ICTs) is important to increase theattractiveness of the EU for multinational businesses. However, the proposal could befurther improved to facilitate the transfer of ICTs and their family members.
2. Long-term residents
The BRT supports the intention of the Commission to increase its efforts to ensure that the
Directive 2003/109/EC concerning the status of third-country nationals who are long-term
residents is correctly transposed and implemented across the EU.
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The authorities of the UK should take action in order to enable non-EU nationals resident in
the UK to benefit from the Directive 2003/109/EC.
< Recent Progress >No progress has been seen for this recommendation.
< Background >The European Commission published in 2011 a report on the application of Directive
2003/109/EC (Com (2011) 585). The BRT has noted that the numerous issues werepointed out in the report in the implementation of the Directive including the weak impactof the Directive in many Member States.
The Directive 2003/109/EC is not applicable in the UK, Ireland and Denmark. Japanesenationals in the UK, where their number is the highest among the EU Member States,
therefore, do not benefit from this Directive.

WP-A / # 20 / J to E

Fight against counterfeited, pirated and contraband goods

The BRT would like to see the EU to take further necessary steps with a view to step up
efforts in all the EU Member States to fight against counterfeited, pirated and contraband
goods, both inside and outside the EU.
The BRT reiterates its support of a proposal for a Regulation concerning customs
enforcement of intellectual property rights of 24 May 2011, COM(2011)285, which reflects
some of the BRT’s key recommendations such as simplifying the procedure and mitigating
the financial burden of the importers of the authentic goods. The EU should further seek
ways to mitigate their financial burden.
The BRT would like to see an enhanced role of the Observatory on Counterfeiting andPiracy in line with the Regulation adopted by the European Parliament and Council on 19
April 2012.
The BRT suggests that with an increased cooperation by the manufacturers and importersof the authentic goods, including the provision of more information on their products, the onsite training of officials and the training of officials on the more effective use of the WCO’s
IPM (Interface Public Members), the customs authorities should make inspection more
efficient and raise the rate of its coverage.
< Recent Progress >Some progress has been seen for this recommendation.
< Background >Due to a lack of resources, only a small part of the goods that are passing through the
EU customs are inspected by the authorities. A substantial part of counterfeit goods are
passing through the customs as a result. With an increased cooperation by the
manufacturers and importers of the authentic goods, including the provision of more
information on their products and the on-site training of officials, the customs authorities
should make inspection more efficient and raise the rate of its coverage.

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The importers of the authentic products have to pay for the storage, transportation anddestruction costs of counterfeit goods. Some companies may, as a result, renounce thefight against counterfeit goods. However, counterfeit products raise more and more
health and safety issues. In addition, there is also an obligation for the Member States todestroy counterfeit goods detained by the customs and, especially, not to release themon the EU market. The EU, through the Member States, should introduce financial
support or offer free assistance.

WP-A / # 21 / J to E

Unitary Patent

The BRT welcomes the adoption of the two Regulations that implement enhanced
cooperation in the area of the creation of unitary patent protection. The BRT urges theMember States to ratify the international agreement that will create the unitary patent court
as swiftly as possible.
< Recent Progress >A good progress has been seen for this recommendation.
< Background >The unitary patent package consists of the following:
1. a Regulation creating a European patent with unitary effect ('unitary patent');
2. a Regulation establishing a language regime applicable to the unitary patent;
3. an international agreement among Member States setting up a single andspecialised patent jurisdiction (the 'Unified Patent Court').
The two Regulations were adopted in December 2012 by the 25 Member States
participating in the enhanced cooperation in the area of the creation of unitary patent
protection. These Regulations will enter into force once 13 Member States including
Germany, France and the UK ratify the international agreement.

WP-A / # 22 / J to E

Taxation22.1 Common Consolidated Corporate Tax Base
The BRT welcomes the proposal for CCCTB (Common Consolidated Corporate Tax Base)proposed on 16 March 2011. The BRT hopes for its swift adoption. CCCTB should realise
the following points to improve the competitiveness of the EU economy.
1)
2)
3)

Non-taxation of unrealised gains on goodwill within a group of companies that form
CCCTB
Non-application of arms-length principle within a group of companies that form
CCCTB.
Off-setting of profits and losses within a group of companies that form CCCTB.

< Recent Progress >No progress has been seen for this recommendation.

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< Background >Many Japanese companies are implementing integration and rationalisation of their
European business organisations in order to remain competitive in the Single Market.
Examples are the centralisation of such functions as sales support and accounting.
The relation between intra-group transactions and taxation is an important element indecision making in a business. It is highly desirable that companies with international
business should be allowed to compute the income of the entire group according to one
set of rules and establish consolidated accounts for tax purposes in the EU.
22.2 Merger Directive
The scope of the Merger Directive (90/434/EEC) should be expanded to include the transfer
of real estates and other intangible assets in reorganisation. Furthermore, the shareholding
requirements should be abolished.
< Recent Progress >No progress has been seen for this recommendation.
< Background >In the communication COM (2001)582, the European Commission referred to its intention
to extend the scope of the Merger Directive to tax on the transfer of real estates. The
amendments to the Directive (2005/19/EC), however, do not include provisions related tothis issue.
By extending the scope of the Directive to the transfer of real estates and other intangible
assets in reorganisation, companies could reduce the cost of reorganisation and increase
competitiveness.
The Merger Directive (90/434/EEC) provides for the deferral of corporate tax in thequalified cross-border restructuring of business. In certain EU Member States, companies
are required to hold shares that they have received in exchange of contributed assets fora number of years even if those holding companies cease to function as an operatingcompany. There appears to be no ground in the Directive to support such measures.
In addition to the cost of maintaining these empty companies, it increases the risk of
double taxation. Dividends paid by the subsidiaries do not qualify for Japanese foreign
dividend exclusion for the portion distributed through the empty holding company if theshareholding of Japanese parent in it is below 25%.
22.3 EU TPD
To provide sufficient incentive to the compliance with the EU TPD, the EU and the Member
States should commit themselves to exemption from penalties (i.e. penalties related to noncompliance with documentation requirements, penalties related to transfer pricing
adjustments and interest related to adjustments) if a company submits an EU TPD acting ingood faith and in a timely manner.
< Recent Progress >No progress has been seen for this recommendation< Background >The EU and its Member States should not treat companies in good faith and companies
that try to evade taxation in the same way as the imposition of penalties even when EU
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TPD is prepared in good faith could lead to undesirable distortions in the single market byforcing companies to adopt artificial transfer price in order to avoid penalties
22.4 The fundamental reforms of VAT regime under consideration
The BRT welcomes the strategy of the European Commission to fundamentally revise the
VAT system and to establish a simpler, more efficient and robust VAT system tailored to thesingle market as described in Com (2011) 851.
The BRT hopes that the new regime will be realised swiftly and in such a way that abusiness group could easily and cost effectively centralise VAT administration in the EU.
< Recent Progress >Some progress albeit limited has been seen for this recommendation.
< Background >Many Japanese companies are implementing integration and rationalisation of their
European business organisation in order to remain competitive in the Single Market.
Accounting functions including VAT administration are often targeted for centralisation
with the aim of reducing overall costs and increasing efficiency.
Although the VAT system in the EU is a common system, in reality, differences among
Member States are significant mainly due to derogations. Presently, therefore, thecentralisation of VAT administration carries a high financial risk.
For example, if centralised accounting staff with limited country specific knowledge
makes a mistake in a repetitive transaction, the accumulated amount that should berectified could become high over a relatively short period. In addition, a penalty may be
imposed. To avoid such a high risk, businesses have to either leave accounting staff inlocal operations or employ a number of accounting staff with country specific knowledge
in a central location. In either case, cost-effective centralisation of accounting functions isunlikely to be realised.

WP-A / # 23 / J to E

On the legislative proposal on non-financial disclosure

The BRT supports the initiatives taken by the European Commission to involve
stakeholders and facilitate dialogue in order to improve the transparency of businesses withregard to non-financial information disclosure.
The BRT recommends that a principle-based approach which enables businesses ofdifferent sizes, sectors and organisational structures, to choose the reporting framework
which best represents their company values should be adopted.
The BRT strongly favours an EU-wide approach in light of the global context concerning
non-financial information disclosure.
The BRT recommends the possibility for companies to report either at group or atconsolidated level under the future EU regulatory framework for non-financial disclosure.
< Recent Progress >The European Commission published a proposal for a Directive on 16 April 2013
(COM(2013) 207).

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< Background >The BRT believes that corporate reports are a vital communication tool only whenintended users and their material interests are clearly defined. Materiality is the key, andthe BRT strongly believes that what is material to a company is company-specific. Key
Performance Indicators (KPIs) are useful for businesses to measure internal
achievement, however, due to the subjective character of materiality, the BRT isconcerned that making the use of specific and harmonised quantitative KPIs mandatory
in the EU would have negative rather than positive effects on the whole of the nonfinancial information disclosure process.
The perspective of multi-national businesses whose activities stretch across not only
different European countries but also across different regions in the world should betaken into account. In order to avoid any confusion or unnecessary administrative burden,
it is equally important that the content of the forthcoming legislation takes into account of
the development of Global Reporting Initiative and International Integrated Reporting
Council.
The possibility for companies to report either at group or at consolidated level should also
be offered equally to businesses headquartered outside the EU which have entities in the
EU. Such approach would create a solid foundation for the integration of non-financial
information into the management structure of companies and would be more practicalthan a disclosure requirement at entity level.

WP-A / # 24 / J to E

Consumer protection

The BRT welcomes the adoption of the Directive 2011/83/EU of the European Parliamentand of the Council of 25 October 2011 on consumer rights. The BRT also welcomes the factthat the two of our recommendations are accommodated in the new directive.
The new directive, however, still maintains the discretion of the Member States to set a
guarantee period longer than 2 years set in the Directive 1999/44/EC, which the BRT
believes could constitute an obstacle in the single market. The BRT would like to ask theEuropean Commission to review the advantage and disadvantage of this discretion to set a
guarantee period longer than 2 years in the future review.
< Recent Progress >No progress has been made for this recommendation< Background >The BRT believes that, to maximise the benefit of the single market, any legislation that
affects cross-border transactions should be harmonised to the extent that businesses andconsumers do not have to be concerned about difference in implementation among theMember States.

WP-A / # 25 / J to E

Market Surveillance under the New Legislative Framework

The BRT supports the general direction the European Commission and the Member States
are taking for harmonising market surveillance. This is an important step for fair movementof products. The BRT requests the European Commission and the Member States todisclose all the relevant information regarding the progress of this process and theimplementation of the market surveillance in each Member State. The BRT also requests
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the European Commission and the Member States to give industry an opportunity forcontributing to developing the framework of harmonised market surveillance.
The BRT requests that the European Commission should consult stakeholders more widely– preferably through public consultation when draft guidance for the New Legislative
Framework is ready.
< Recent Progress >Some progress has been seen for this recommendation. The recommendation on New
Legislative Framework is new.
< Background >In 2008, the Regulation 765/2008/EC, setting out the requirements for accreditation andmarket surveillance relating to the marketing of the products, and the Decision
768/2008/EC, a common framework for the marketing of products, were adopted. The
Regulation has been applied as from 1 January 2010.
The Regulation and Decision address and complement missing elements, namely,
accreditation and market surveillance, in the existing sectoral legislations. The existinglegislations are being amended based on the Decision when they are reviewed. The
objectives of the so-called New Legislative Framework are to introduce harmonised andtransparent market surveillance and accreditation for all economic operators. The
Decision provides definitions, the obligations of economic operators, traceability
provisions and safeguard measures. National authorities were to develop their market
surveillance programmes and communicate them to the Commission by 1 January 2010.
The European Commission is in the process of preparing the guidance for the New
Legislative Framework and intends to publish it by the summer of 2013.

WP-A / # 26 / J to E

Competition Policy

The BRT requests the authorities of the EU to pay due attention to the correctness andrelevance of the addressee when they send a ‘simple request for information’ or a ‘request
to supply information by decision’.
The BRT also requests the authorities of the EU to allow a sufficient time for the addressee
to prepare a reply as well as to be flexible in allowing extension of the time limit to respondto the request.
< Recent Progress >These are new recommendations.
< Background >According to the article 18 of Council Regulation (EC) No 1/2003 of 16 December 2002
on the implementation of the rules on competition laid down in Articles 81 and 82 of theTreaty and the article 11 of Council Regulation (EC) No 139/2004 of 20 January 2004 on
the control of concentrations between undertakings, the European Commission may, bysimple request or by decision, require any undertakings and associations of undertakings
to provide all necessary information even if they are not directly involved in the case inquestion. The articles 23 and 24 of the first Council Regulation and the articles 14 and 15
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of the second Council Regulation stipulate fines and penalties for not complying withsuch requests.
The European Commission services in charge often send a request to an entity of thegroup that is not capable of responding to a request. It seems that, when the head office
is located outside the EU, the European Commission services in charge do not makesure that the request is sent to the addressee that is responsible for responding to such arequest. By the time such a request is forwarded to those responsible for handling sucha request, there sometimes is not enough time to prepare a response. Furthermore, theEuropean Commission services in charge are not flexible in allowing extension of timelimit when a request for an extension is made by the company required to respond.

WP-A / # 27 / J to E

Environmental footprint

The BRT requests as follows:
Comparability or Harmonization of Global Methodologies: To support comparability
objectively, the EU should respect discussion on LCA (Life Cycle Assessment) (e.g. cLCA –carbon-Life Cycle Assessment), method under ISO, IEC (International ElectrotechnicalCommission) (ISO14040-14044, ISO26000 (GRI), ISO14025 etc.), etc. with consideration
to global harmonization.
Database: The EU should allow mutual recognition of databases not only in the EU but alsowith those outside the EU and participate in the international development of database.
Sector rules: In setting sector rules, the EU should issue guidelines on the scope of
products and industrial sector in addition to the EU methodologies of OEF (Organisation
Environmental Footprint), PEF (Product Environmental Footprint). Furthermore, sector
definitions should be sufficiently narrow to allow a meaningful comparison of data.
< Recent Progress >These are new recommendations.
< Background >The European Commission is preparing initiative on environmental footprint of products
and organisations.

WP-A / # 28 / J to E

On business and human rights

Concerning the European Commission’s Communication on a renewed EU strategy 201114 for Corporate Social Responsibility (COM(2011)681, the BRT recommends that theauthorities of the EU should:
1)
2)
3)

Avoid polarisation and focus on the UNGP’s “principled pragmatism”;
Consider different understanding of ‘human rights’ and acknowledge the needto communicate effectively;
Disseminate practical advice on how to prioritise actions to conduct due
diligence on adverse human rights impacts;
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4)5)

Avoid increasing the burden on companies through a “tick-box exercise”; andEncourage a ‘knowing and showing’ mindset and highlight companies’
positive contribution.

< Recent Progress >These are new recommendations.
< Background >1) Avoid polarisation and focus on the UNGP’s “principled pragmatism”
The BRT welcomes that the European Commission’s Communication recognises the UN
Guiding Principles on Business and Human Rights (UNGP) as one of the internationallyrecognised standards. The BRT believes that the concept set by the UNGP enables
businesses to be engaged in the issue of business and human rights more pragmaticallythan previously possible because it is more process focussed rather than performance
focussed. The UNGP’s “principled pragmatism” helps businesses to develop their own
capacity to know themselves internally and show externally how they meet the
responsibility to respect Human Rights. The BRT welcomes the Commission’s support forthis approach. Any other approach, or creating a different European standard, would
create a confusing situation and be an unnecessary burden for businesses.
2) Consider different understanding of ‘human rights’ and acknowledge the need tocommunicate effectively
Although human rights should be universally understood and equally applied to all
people, the use of the word “human rights” can have a different connotation within the
different business sectors around the world in relation to national, cultural, historical andcompany contexts. There is a danger that, in such cases, the terminology issue
predominates over the substance and that a constructive dialogue between all thebusiness partners is hindered unnecessarily.
The BRT believes that a good understanding of such national, cultural, historical andcompany differences as well as the recognition of the dynamics between different
business partners is a key to an effective communication about the relevance of humanrights to businesses at an operational level. The BRT encourages the European
Commission to provide support for businesses on how to deal with these differences andon how to communicate effectively. The BRT underlines the potential mutual benefit ofan opportunity that would allow the exchange of information between the European
Commission and businesses headquartered outside Europe on this topic.
3) Disseminate practical advice on how to prioritise actions to conduct due
diligence on adverse human rights impacts
Businesses are increasingly challenged by the complexity of responding to several
strengthened external expectations on the management of their supply chain. As the
UNGPs wider acceptance may increase the focus on the issue of business and humanrights in the near future, the BRT is concerned that it might lead to an increase of
unreasonable accusations against businesses. The UNGP recognises that, forbusinesses with a large number of entities in their value chain, it may be unreasonably
difficult to conduct due diligence on adverse human rights impacts across all of them. The
UNGP also advises that businesses identify the areas where the risk of such adverse
human rights impacts are the most significant and prioritise these in their human rights
due diligence process. The BRT suggests that the EU should acknowledge this point ofWorking Party A: Trade Relations, Investment and Regulatory Cooperation
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view, and disseminate a practical advice on how to prioritise actions to fulfil these
responsibilities and to respond to increasing social expectations.
4) Avoid increasing the burden on companies through a “tick-box exercise”
Many individual or collective initiatives have already been taken by businesses to ensurethat their supply chain is socially responsible, such as the implementation of appropriate
business processes. Though businesses are usually evaluated in terms of performance
rather than in terms of having the right processes in place, the BRT recognises that
focussing on performance only will not always enable them to ensure that, for example,
there are no instances of child labour.
With the right processes in place, businesses can increase their assurance that their
suppliers have a method to avoid adverse human rights impacts. The BRT recommends
that the European Commission avoids creating another framework that would lead to atick-box exercise and is in favour of a flexible approach that can makes it easier forbusinesses of different backgrounds to adopt and adapt the UNGP.
5) Encourage a ‘knowing and showing’ mindset and highlight companies’ positive
contribution
The BRT would welcome a mechanism where first movers receive more recognition as
they face more risks. Strengthening the competitiveness of business should also betaken into account. The BRT believes that it is extremely important for the EU to moveaway from a ‘naming and shaming’ mindset and encourage a ‘knowing and showing’
mindset as it is also important to think about the long term competitiveness ofbusinesses. This will create a beneficial incentive for more businesses to actively meettheir responsibility to respect human rights and allow the strengthening of a win-win
relationship between society and companies. It is also extremely important that the EU
recognises and highlights the positive impact of companies on human rights rather than
only focusing on the negative impacts and compliance.

WP-A / # 29 / J to E

EU policy on company law

The Council should adopt a proposal for a Council Regulation on the statute for European
Private Company without delay. The statute should realize the following points.
1)
2)
3)

Widely accessible, easy to set up and inexpensive to run
Allowing a great deal of flexibility to founders and shareholders to organize
themselves in the way that is best suited to their activities: andAs uniform throughout the EU as possible.

< Recent Progress >No progress has been seen for this recommendation.
< Background >The European Commission issued a proposal for a Council Regulation on the statute forEuropean Private Company in June 2008. The proposal has not been adopted nearly five
years later. The European Private Company is for private companies while the European
Company Statute is for public companies. The European Company Statute has enabled
the establishment of a European Company (SE) since October 2004 but it has been

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criticised as cumbersome and complex, unsuited to the needs of SMEs', which are 90%of companies in the EU.
WP-A / # 30 / J to E
Access of third countries goods and services to the EU’s
Public Procurement Market
The BRT believes and recommends the following:
1. Non-legislative policy measures should be adopted to achieve the objective of opening
public procurement markets internationally;
2. Any measures should incorporate an effective mechanism to prevent the EU fromarbitrarily excluding third-country goods and services from its public procurement
market and to ensure legal stability and predictability for businesses; and3. Any measures should contain clear and transparent criteria for the scope andconditions of their application based on an appropriate and balanced analysis.
< Recent Progress >This is a new recommendation.
< Background >The reform of the legislative framework of public procurement is one of the twelve priority
actions set out in the Single Market Act adopted in April 2011. As part of this reform
programme, the European Commission announced on 31 March 2012 a proposal for a
Regulation on the access of third-country goods and services to the EU public
procurement market. (COM (2012) 124).
The BRT has a serious concern about the measures in the proposed Regulation thatwould enable the EU to close its market unilaterally. The BRT is concerned because, by
exercising the proposed unilateral measures, the EU could send a signal to its trading
partners that the EU is closing its public procurement market discreetly, which could
trigger a chain reaction of protectionist measures all over the world. Should it happen, theEU’s intention and objective of opening public procurement markets internationally would
not be achieved.

WP-A / # 31 / J to E

The deployment of alternative fuels infrastructure

The BRT supports the plan to expedite the deployment of alternative fuels infrastructure as
described in a proposal for a Directive on the deployment of alternative fuels infrastructure.
The BRT requests the authorities of the EU, however,1)
To delete the technical specification for the connectors of Direct Current (DC) fastrecharging points for electric vehicles from Annex III of the proposal since European
standard has not been finalized yet and it is premature to refer to any specific technologies
as a part of European standards.
2)
To add dual chargers in with the existing DC fast charging technology as an option inorder to ensure the convenience of the existing electric vehicle drivers in the EU and thedevelopment of the electric vehicle market.

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< Recent Progress >This is a new recommendation< Background >The European Commission adopted a proposal for a Directive of the European
Parliament and of the Council on the deployment of alternative fuels infrastructure(COM(2013)18) on 24 January 2013. When adopted by the European Parliament and theCouncil, it would require establishing a minimum number of recharging points for electricvehicles by each Member State, with 10% of them being publicly accessible. It would also
require the implementation of common technical specifications for the interfaces between
recharging points and vehicles. In Annex III 1.2 of the proposal, it stipulates that Direct
Current (DC) fast recharging points for electric vehicles shall be equipped, forinteroperability purposes, with connectors of Type "Combo 2" as described in the relevant
EN standard, to be adopted by 2014.
As stated in the preamble (26) of the proposal, technical specifications for interoperabilityof recharging and refuelling points should be specified in European standard. However,such a standard is yet to be finalized for DC fast recharging points. Therefore, it ispremature to refer to any specific technologies as a part of European standards.
Furthermore, the future Directive should make dual chargers with the existing DC fast
charging technologies an option because a technical specification to become available inthe market in near future may be specified as is the case in the current proposal. The fact
is that there are more than 10,000 electric vehicles equipped with a fast charging
technology on the road in Europe today. Dual chargers that can serve the existing electricvehicles as well as future ones will be important not only for the convenience of thedrivers of the existing vehicles but also for the market to develop.

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