Recommendationsof theEU-Japan Business Round Table
to the Leaders of the European Union and JapanTokyo, 8 & 9 April 2014
Working Party A
Trade Relations, Investment and Regulatory Cooperation

Working Party Leaders:

Co-ChairMr. Danny Risberg
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
BUSINESS EUROPE

Vice Co-Chair
Mr. Shinji FUKUKAWA
Senior Advisor
Global Industrial and Social
Progress Research InstituteWorking Party A: Trade Relations, Investment and Regulatory Cooperation
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List of Abbreviations
Abbreviation
AEOs
APEC
ATP
BPR
CAA
CBCR
CCCTB
CE
CLP
CMR
CoRAP
DDA
DC
ECHA
ELV
EN
EP
EPA
EU
FDI
FTA
FSA
G8
G20
GATS
GCP
GDP
GHS
GoJ
GPA
GPS
HSE
ICTs
IEC
IPM
ISO
JAS
JELMA
JET
JETRO

Meaning
Authorised Economic Operators
Asia-Pacific Economic Cooperation
Adaptation to Technical Progress
Biocidal Products Regulation
Consumer Affairs Agency
Country by Country reporting
Common Consolidated Corporate Tax Base
Conformité Européenne (European Conformity)
Classification, labelling and packaging
Carcinogenic mutagenic or reprotoxic
Community Rolling Action Plan
Doha Development Agenda
Direct Current
European Chemical Agency
End of Life Vehicle
Européen de Normalisation de Normalisation (European
Standards)
European Parliament
Economic Partnership Agreement
European Union
Foreign Direct Investment
Free Trade Agreement
Financial Services Agency
Group of EightGroup of Twenty
General Agreement of Trade in Services
Good Clinical Practise
Gross Domestic Product
The Globally Harmonized System of Classification andLabelling of Chemicals
Government of Japan
The Agreement on Government Procurement
Gross Product Strategy
Health Safety and Environment
intra-corporate transferees
International Electrotechnical Commission
Interface Public Members
International Organisation for Standardisation
Japan Agricultural Standard
Japan Electric Lamp Manufacturers Association
Japan Electrical Safety & Environment Technology
Laboratories
Japan External Trade Organisation

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JIS
JR
KPIs
LED
LoA
MAFF
METI
NOL
OECD
OR
PMDA
PPPR
PSE
QMS
R&D
REACH
RoHS
RTD
SDR
SDS
SIEF
SMEs
SVHC
TPP
TTIP
UNECE
VAT
VICH
WCO
WHO
WTO
WP

Japan Industrial Standard
Japan Railways
Key Performance Indicators
Light-Emitting Diode
Letter or Access
Ministry of Agriculture, Forestry and Fisheries
Ministry of Economy, Trade and Industry
Net Operation Loss
Organisationfor
Economic
Co-operation
andDevelopment
Only Representative
Pharmaceuticals and Medical Devices Agency
Plant Protection Products regulation
Electrical Appliance and Material Safety Law
Quality Management System
Research & Development
Registration, Evaluation, Authorization and Restrictionof Chemicals
Restriction of Hazardous Substances
Research and Technology Development
Special Drawing Rights
Safety Data Sheet
Substance Information Exchange Forum
Small and Medium size Enterprises
Substance of Very High Concern
Trans-PacificStrategic
EconomicPartnership
Agreement
Transatlantic Trade and Investment Partnership
United Nations European Commission for Europe
Value Added Tax
International Cooperation on Harmonisation ofTechnical Requirements for Registration of Veterinary
Medicinal Products
World Customs Organisation
World Health Organization
World Trade Organization
Working Party

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Introduction
Japan is the EU’s seventh largest trading partner and the EU ranks as Japan’s thirdlargest trading partner. While already significant, this trade relationship has
considerable upwards potential and the benefits of the EU-Japan FTA/EPA, currently
under negotiation, will stretch beyond the many European and Japanese companies
already operating in each other’s home markets to all those, attracted to the newopportunities it creates. Working Party A stresses that any agreement must address
the specific concerns of European and Japanese businesses reflected in this andprevious reports. With so much at stake, we are urging the authorities on both sides
to ensure that the necessary progress is made. Many reforms are required to securea fair and competitive environment for business and have been identified from theextensive first-hand operational experience of Working Party A members in theJapanese and European markets. This report sets out concrete recommendations
that address the following key issues:

Creating a common regulatory environment, mutual recognition of regulations,standards and market authorisations to the extent possible and adoption ofinternational standards

Elimination of both tariff and non-tariff measures as well as unnecessary
bureaucracyEnsuring fair competition and equal treatment of all companies, domestic &foreignEnsuring fairer and more open competition in services, and procurement
markets

Improving conditions for foreign direct investment. And finally,Further enhancing incentives for growth of SMEs and for investment in R&D

Working Party A members reiterate that the EU-Japan FTA/EPA bilateral agreement
must be balanced, comprehensive and ambitious in order to dismantle these barriers
holding back EU-Japan trade and investment and significantly promote growth both
economies.
To highlight priority issues in the text that follows, one asterisk (*) indicates “priority”
recommendations and, two asterisks (**) indicate “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 appreciates the effort made by the EU and Japanese authorities in the
FTA/EPA negotiations. With a strong conviction that the EU-Japan FTA/EPA will
boost trade and investment, promote job creation, and spur growth in both
economies, the BRT renews its call for the EU and Japanese authorities to step up
the their efforts to tackle and resolve the substance of the outstanding issues so thata comprehensive, ambitious, high-level and mutually beneficial FTA/EPA can beconcluded as soon as possible. The BRT reaffirms its commitment to make every
effort to support the early realisation of an EU-Japan FTA/EPA. BRT Members areready to make their industry expertise available to achieve this objective.
As two of the world’s largest and most advanced economies, the EU and Japan
should work together and play a leadership role in promoting global regulatory
cooperation and standards harmonisation which other so-called ‘mega’ agreements,
such as TPP and TTIP, also try to achieve. The aim should be to develop an open,
seamless business environment that will help create new growth opportunities notjust for the EU and Japanese economies but also for the rest of the world.
< Background >As major advanced economies and major global traders and investors, the EU andJapan 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 and cooperation and building a closer relationship. As both strive toovercome global financial instability and economic uncertainties, it is crucial thatthey join forces in tackling common challenges in order to attain a long-term, soundand stronger growth. The EU-Japan relationship should not be left behind

WP-A / # 02** / EJ to EJ Call for effective and quick implementation of WTO‘Bali Package’ and work on a future WTO work program
Following extensive negotiations, the 9th annual WTO Ministerial Conference (MC9)held in Bali Indonesia in December 2013 was able to agree on a compromise called
the “Bali Package”, for some of the sectors covered by the Doha Development
Agenda (DDA) negotiations.
Such an outcome was made possible through continuous negotiations under a newbottom-up approach, which was applied since 2011, where partially agreeable
outcomes were aggregated and integrated rather than seeking a blanket agreement
on DDA negotiations. BRT welcomes the advancement in the DDA negotiation.
The agreement on trade facilitation can serve as a boost to global trade by reducing
costs of trade by 10-15%. Its objectives are to speed up customs procedures, makeWorking Party A: Trade Relations, Investment and Regulatory Cooperation
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trade easier, faster and cheaper, provide clarity, efficiency and transparency, reducebureaucracy and corruption, and use technological advances. The BRT calls upon
WTO members to quickly implement the trade facilitations agreement.
Moreover, at an informal meeting held in Davos, Switzerland, on January 25, 2014, a
number of WTO members expressed their views that: it is important to steadily and gradually operationalize the agreed items, based on
the MC9 outcome; for the remaining DDA items, the discussion of a work program to address suchitems should commence as soon as possible; and the WTO must not refrain from discussing potentially contentious issues
such as agriculture and market access for non-agricultural goods and services.
The BRT strongly supports the progress in these issues, and requests the authoritiesof the EU and Japan to further make efforts to vitalize and earn momentum in orderto move the DDA negotiations forward.
Additionally, the BRT suggests that the authorities of the EU and Japan should,
together with other WTO members, explore further topics that are essential for thesmooth functioning of global value chains.
< Recent Progress >The “Bali Package” agreed upon the 9th WTO Ministerial Conference is composedof three sectors: (1) trade facilitation; (2) a part of agriculture sector; and (3)development. Especially for trade facilitation, transparency improvement andexpediting customs processes will assuredly benefit both developed and developing
countries, and provide favourable and significant impacts upon trade promotion. In
addition, the agreement on trade facilitation is a set of multilateral rules that will cover
all member countries for the first time since the establishment of WTO. It should help
to energize and revitalize the inert Doha Round negotiations.
Moreover, the informal meeting held in Davos on January 25, 2014, assessed the“Bali Package” and addressed the future work program on the remaining issues of
Doha Round negotiations (DDA).

< Background >The BRT is a strong supporter of the multilateral trading system, whose corefunctions are trade liberalisation, rule-making and dispute settlement. However, toliberalize multilateral trade, the initial high-level ambition of the Doha Round,launched in 2001, has not been maintained, resulting in the current deadlock ofnegotiations which continue due to the lack of political will and the inability to bridge
the gap in the market access commitments between OECD and emerging country
members.
With the prospects of great uncertainty, the WTO must demonstrate its ability todeliver results for the business community. As the only international organisation
creating rules and setting standards on trade at the multilateral level, the WTO mustremain a leader in this area and take more and stronger action. The existing legal
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framework provides an excellent basis for such action but needs to be updated inorder to respond to a changing global economic landscape.

WP-A / # 03** / EJ to EJ Applying international standards
cooperation in the promotion of new global standards
1.

andenhanced

Towards a common regulatory environment
The BRT recommends that Japanese and European policy-makers should
increase their understanding of the existing and upcoming regulations of theother side. They should study the possible impact of new regulatory
developments on domestic and foreign business to avoid taking initiatives that
unwillingly create barriers to trade and investment. They should exchange
annual legislative work programmes at the earliest stage to prevent regulatory
divergence and the creation of new trade barriers. In addition, they should
agree to an early warning system for draft legislation to facilitate an effective
bilateral dialogue. To expand a common regulatory environment into the areasthat are already regulated, furthermore, the Japanese and European policy
makers should also develop a joint strategy to promote better regulation bylearning from each other’s experience and adopting a common system of good
governance. Throughout the process, the two authorities should have close
dialogue with businesses.
Where the FTA/EPA does not already create a harmonized regulatory
framework between the EU and Japan, the regulatory authorities in Japan andthe EU should review their domestic technical regulations and conformity
assessment procedures at regular intervals to determine the scope for further
regulatory harmonization. The outcome of these reviews, including scientificand technical evidence used, shall be exchanged between the regulatory
authorities and provided to industry upon request.

<Background>
The BRT believes that a common regulatory environment will be a key to theeconomic prosperity of the two economies. Once an FTA/EPA is concluded, it will be
important not only to ensure that new regulations do not nullify or impair the market
access benefits accruing to either party under the agreement or create new barriers
to bilateral trade, but also to expand and strengthen the relations between the two
economies so that the benefits of their cooperation will further increase and so thatthey will eventually be able to expand such a common regulatory environment toother bilateral and multilateral relations.

2.

International standards and harmonization of standards and certification
procedures
The BRT urges both authorities to adopt international product standards andcertification procedures where applicable, and, to promote harmonisation oftechnical requirements and certification procedures, mutual recognition ofWorking Party A: Trade Relations, Investment and Regulatory Cooperation
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product approvals and, when possible, and appropriate, in areas where
harmonised standards do not exist, mutual approval of the import, sale or useof products that have been approved on the basis of functionally equivalentrequirements in sectors such as Construction Materials, Organic Products,
Cosmetics, Medical Devices, Veterinary Products, Automobiles andProcessed Food.
3.

A common chemicals regulation
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 establish a common list of restricted substances and a common
approach to the evaluation of risks and sharing of data. Such a common
regulatory environment will not only benefit industries through cost mitigation
but also benefit users and consumers through lower prices and consistent
protection. Furthermore, the two Authorities should develop a policy tosupport supply chain management in developing countries in cooperation withbusinesses.

4.

Common energy conservation regulation
Given the nature of the issue and the importance for business as well as forsociety in general, Japan and the EU should work together at the multilaterallevel to promote international harmonisation of energy conservation
regulations, relevant labelling rules, and environmental and carbon footprint
schemes.

5.

Expand the benefits of AEOs
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 import procedures where companies are given greater
freedom while also taking greater responsibility for their imports without anexcessive administrative burden. Authorities should also establish closer
contacts to learn from each other in order to improve and further facilitate
trade between the EU and Japan. The BRT is aware that the two authorities
are engaged in regular discussion, but no concrete benefits have emerged for
operators.

6.

Fight against counterfeited, pirated and contraband goods
The BRT would like to see the EU and Japan to step up efforts to fight against
counterfeited, pirated and contraband goods, both inside and outside the EU
and Japan. For example, they should better cooperate with each other andwith the third country authorities to secure the closure of sites trading in fakegoods.

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The BRT requests that the authorities of Japan should make all trade with fakegoods illegal by closing the loophole by which individuals are allowed to bringin or import counterfeits for person consumption.
The BRT reiterates its support of Regulation (EU) 608/2013 of the EP andCouncil of 12 June 2013 on Customs enforcement of Intellectual Property
rights which reflects to some extent the BRT’s key recommendations such as
simplifying the procedure. However, the BRT requests the authorities of the
EU that they should seek ways to mitigate the financial burden of theimporters of the authentic goods.
The BRT would like to see an enhanced role of the Observatory on
Counterfeiting and Piracy 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 importers of the authentic goods, including the provision of more
information on their products, the on-site 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 andraise the rate of its coverage.
7.

Adoption of UN-ECE regulations
In the automobile sector, the Japanese and EU Authorities should accelerate
their adoption of UN-ECE Regulations to lower the cost of regulatorycompliance for both European and Japanese automobile exporters byextending the benefits of mutual recognition. Also the Japanese and EU
Authorities should work together to establish internationally harmonised
technical requirements and testing procedures that will encourage the smoothmarket adoption of new environmentally friendly power-train technologies –clean diesel, electric vehicles, hybrid vehicles and fuel-cell vehicles.
< Background for 7 >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 typeapproval according to UN-ECE Regulations in one contracting country are
exempt from testing in any other signatory country where those regulations
have been adopted. Japan has now adopted UN-ECE Regulations in 35 of
the 47 areas included in Japanese type approval.

< General Background for 1-7 >Implementation of these recommendations will lead to a significant improvement in
the business environments of both the EU and Japan.

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

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

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The BRT welcomes the conclusion of social security agreements between Japan and
10 EU Member States. The BRT requests that, Japan and the Member States of the
EU should 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 a limited progress in the past year
< Background >As individual EU Member States and Japan conclude a bilateral social security
agreement, it will lessen the burden both on companies as well as their employees.
So far, social security agreements between Japan, and Germany, the United
Kingdom, Belgium, France, the Netherlands, Czech Republic, Spain, Ireland andHungary have entered into force. The agreement between Japan and Italy has
been signed. Furthermore, negotiations are underway between Japan, andLuxembourg and Sweden, and are at the preparatory stage between Japan, andthe Slovak Republic, Austria and Finland.
2.

Liberalisation of the movement of intra-corporate transferees in the frameworkof 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,
and the host country, stipulates the maximum number of expatriates. Within theagreed limit, the mother company is free to send intra-corporate transferees tothat country without further obtaining individual work permits.
When the mother company concludes such an agreement with several Member
States in which its subsidiaries or branches have operations, movement of intracorporate transferees between those countries does not require a new work
permit as long as the total number in each agreement is respected.

< Background >For the smooth and efficient running of international businesses, it is essential thatcompanies are able to dispatch key personnel, including directors without going
through red tape. Such transfers do not have any negative impact on the labour
market of the host country. On the contrary, they will expand employment in thehost country through the development of the business concerned. In addition,
expatriates themselves tend to pay high income taxes to the host country. The
requirement to obtain work and residence permits for intra-corporate transferees
between the EU Member States and Japan is usually a formality and it is rare thatthe application of an intra-corporate transferee is questioned and required tosubmit substantial reasons. However, the recent economic situation in someMember States has caused the authorities to be more reluctant to issue work
permits in general, which sometimes affects intra-corporate transferees bydelaying the issuance of work permits to them. As the burden on companies as
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well as employees and their family members is substantial, it does constitute an
obstacle to the swift development of business.
The European Parliament and the Council have reached an agreement on the final
text of a Directive on conditions of entry and residence of third-country nationals in
the framework of an intra-corporate transfer. This agreement will prove very useful
for Japanese companies sending their employees to the EU because, for example,
it will facilitate an assignment that involves several Member States and allow
accompanying family members to have access to the labour market. However,
unfortunately,, the new Directive will not be applied in the UK, Ireland andDenmark due to the opt-out of those Member States. Japanese nationals in theUK, where their number is the highest among the EU Member States, will notbenefit from this Directive. It is therefore imperative that such liberalisation isrealised within the framework of an EPA/FTA so that it will be applicable to all intracorporate transferees between the Member States of the EU and Japan.

WP-A / # 05* / EJ to EJ Support for SMEs
The BRT calls on the EU and Japanese Authorities to develop measures to promote
and assist each other's SMEs within their own jurisdictions. Specific consideration
should be made to include such cross-support in FTA/EPA negotiations.
This would include:
1. Providing each other's SMEs the same general support and privileges asprovided to one's own SMEs.
2. Establishing permanent local assistance in language, paperwork, hiring local
personnel, legal and regulatory matters, as well as advice on financing andbanking, etc.
3. Providing tax breaks and incentives, tax deduction for total researchexpenses, 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-academic-government cooperation, as well as tax and otherfacilities and incentives for investors.
4. Helping graduates with international backgrounds find local jobs with the otherside's SMEs.
5. Creating a joint investment fund for both Japanese and European SMEs.
6. Exchanging best practices and tested solutions in industrial policy for SMEs.
7. Expanding the SME-related programmes already run by the EU-Japan Centre
for Industrial Cooperation.
< Recent progress >The BRT welcomes the willingness of both Authorities to increase cooperation on
cross-support for SMEs.
< Background >SMEs are new sources of growth and jobs in both Europe and Japan. Their
success in bilateral trade is a major factor in their development and also helps torevitalise both Japanese and EU industries by disseminating new products andtechnologies. However, market access problems and various impediments noted in
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other BRT recommendations are even harder to tackle or manage for SMEs. While
the Japanese government, the European Commission and most EU Member
States have internationalisation programmes for their own SMEs, existing help
programmes for foreign companies are mostly geared towards large foreign direct
investments in established industries and are inadequate for SMEs. Aiming toprovide local help to all potentially interested foreign SMEs is not realistic, but
increasing and sustaining help to SMEs that have established a local base isrealistic in the context of a bilateral agreement. The BRT is aware of the major
work being done for both Japanese and European SMEs by the European
Commission and the Government of Japan through the programmes run by EUJapan Centre for Industrial Cooperation.

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Recommendations from
European industry to Japan
WP-A / # 06** / E to J
Harmonisation & mutual recognition of standards andproduct certifications; acceptance of international standards where applicable

Reluctance of the Government of Japan to accept imported products approved inaccordance with EN and ISO standards or CE marking delays the introduction of
innovative new products to the market and increases import costs. While accepting
the need to safeguard consumer health and safety, the BRT urges Japan to promote
the harmonisation of standards and certification procedures, the mutual recognitionof product certification and, in areas where harmonised standards do not exist , themutual approval of the import, sale or use of products that have been approved on
the basis of functionally equivalent requirements, so that products certified for one
market are automatically accepted in the other market. The BRT recommends theJapanese Government to place particular emphasis on:

Automobiles
The Government of Japan should adopt the relevant UN Regulations in all areas
where Japan requires certification for passenger cars but does not currently accept a
UN approval as demonstrating compliance with Japan’s national requirements, sothat a vehicle certificated in the EU can be sold in Japan without modification or
further testing.
< Recent progress >This is a new recommendation

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.
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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,
so-called quasi drugs (disclosure of approved ingredients, standard application
times); common regulations on efficacy claims and advertisements; a common
positive list of allowable ingredients in cosmetics; and establishment of joint
standards for alternatives to animal testing.
< Recent progress >There has been limited progress.
< 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 proceduresfor 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 theJapanese market. This has repeatedly been communicated by one JR company.
Duplicate testing raises the costs of imports, making them less competitive thandomestic 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. These requirements andstandards should preferably be used by all operators in Japan, which currently is not
the case as each individual operator can choose its own standards andrequirements. As a first step, test results and approvals by one operator should be
accepted by other operators.
The BRT, however, recognises the latest development and positively views the firstcall for tender by a Japanese operator The BRT recommends Japan to make better
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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 this issue
in the progress report from April 2013.
< Background >Japanese safety standards and regulations are not publically available. There is,therefore, no possibility for foreign manufacturers to know exactly what requirements
must be fulfilled. Furthermore each operator can in principle have their own testing
requirements as there is no legislation on exactly what safety 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 requirementswith international standards. The BRT recommends that in the meantime,
both Authorities should officially recognise that either ISO 14155:2003 (andas subsequently amended) or Japan GCP is, in principle, generally
acceptable to either 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 testingorganisation) or by Notified Bodies in the EU is generally sufficient asevidence of compliance with quality management system requirements
when applying for market authorisation on either market.
b) Eliminating differences between Japanese GCP and the GCP established by
the International Conference on Harmonisation.
< Recent progress >Progress has been made with the passing of the new Pharmaceutical Affairs Law inthe area of QMS, and we expect to see further alignment with ISO13485. There is,however, still a need for improvement regarding GCP.
< Background >The EU’s export of medical devices to Japan is limited by the costly and cumbersome
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 the work to simplify andharmonise the regulatory processes in the field of medical devices with that of the
EU. Japan needs to reduce the time and costs associated with introducing innovative
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new treatments in the human healthcare market in Japan and to bring Japaneserules 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 withinternational practices.
b) Requests Japan to work towards mutual recognition of European andJapanese marketing authorisations for veterinary products. This should startwith mutual recognition of GMP certification for veterinary medicines.
Harmonisation of regulations on animal vaccines, and ensuring productconformance under a unified GMP regime, should also be addressed.
c) Asks Japan to better facilitate the use of English in applications without theneed for 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. Changes in four of the above mentioned ten action
items have been implemented, however timelines are not yet available for
implementation of the remaining six.
< 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 addeda requirement to add a summary in Japanese, as mentioned above.

Processed Food
For processed food, the combination of differences between EU and Japanesestandards and technical requirements as well as cumbersome border procedures
results in 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 process

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Page 16 of 36b) Introducing mutual recognition of conformity assessment procedures toeliminate the duplicate costs of evaluations.
c) Introduce deadlines for all parts of the application process. While there are
guidelines on timelines these only cover part of the application process.
Accordingly, it is difficult for an applicant to know how long the application
will take.
< Recent progress >There has been no concrete progress, although the issue is under discussion in the
EU-Japan FTA/EPA negotiations.
< 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 inhigh costs 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 notcompatible 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 standardof remote control 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 >No concrete progress has been made.
< 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 ofharmonisation of standards of remote control prohibits EU companies from entering
the Japanese market.
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Labelling rules
The Government of Japan should issue clarifying orders to provide retailers withflexible alternatives for providing Japanese consumers with globally sourced products
while taking full responsibility for the quality and safety of the products. A simple
example of an inflexible labelling rule that has substantial labelling cost implications
for European companies is that the dimensions of furniture must be expressed inmillimetres and not centimetres, although use of the latter is common practice inother countries using the metric system. There are also examples where theinformation required on the labels are too technical for the consumer to understand.
< Recent progress >This issue was brought up in the Regulatory Reform Council where both
representatives for European companies as well as domestic companies argued for arevision of the Household Labelling Law. The CAA has so far not presented anything
concrete. 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 belabelled when sold in Japan.

WP-A / # 07** / 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 >The changes in the taxation of kei-cars proposed for FY2014 are a welcome first step
but they do not go far enough. In the FTA negotiations, the GOJ should commit tofurther fiscal and regulatory changes so that European compact cars can compete on
equal terms with kei-cars in the Japanese market.
< 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
and motorway 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
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WP-A / # 08** / 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.
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 the national treatment provision of the GATS. This means establishingequivalent conditions of competition between the Japan Post entities and EU andother 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 introduction of new products as well as caps on postal life insurance, until
competitive safeguards have been established to prevent cross-subsidies fromits existing dominant position. The BRT is particularly concerned by the recent
approval of the new or modified products offered by Japan Post Insurance. It isalso imperative that Japan Post remains under the jurisdiction of the FSA. The
above requests are well within the realm of the GPA. Similarly, the insurance
business of cooperative societies (kyosai) should be subject to the samerequirements 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 Postand private 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. However the State Minister for Financial Services orally
stated that Japan Post Insurance should not introduce any new or modified products.
< 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 / # 09** / E to J

Freight and logistics

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1. 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, theadministrative load needs to be lessened for companies to be truly attracted to
the AEO status.

The AEO concept should focus more on offering simplifications if the operator meetsthe agreed criteria for traceability and adheres to the agreed process flow. Examplesof 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 >There has been no progress.
< 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.

2. The BRT recommends that Japan introduces a comprehensive system of
remote filing and at the same time, strengthens alignment of the various
customs areas to avoid discrepancies between the regional customs
authorities. This would improve the situation not only for European companies,
but also for small- and medium-sized Japanese companies,

A long-term solution could be to consolidate the various jurisdictions. A first stepwould be to consolidate Tokyo and Yokohama, and Osaka and Kobe.

< Recent progress >This is a new recommendation.
< Background >Currently Japan has nine separate customs area and no real central customs
authority. This leads to discrepancies between the treatments of imported goods
depending on the port of entry. This also makes it difficult for European logistics
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companies, which lack multiple regional offices in Japan to expand their regional
coverage as licensing is per region, ie. the license given by Tokyo Customs is not
valid in Yokohama.

WP-A / # 10* / E to J

Promoting foreign direct investment

The Government of Japan should create a business environment that will foster
investment of foreign firms in the domestic economy. To this end, and in line with thetreatment applied to stock swaps involving purely domestic companies, it should
consider allowing tax deferrals for capital gains stemming from direct cross-bordermergers and re-organisations.
The BRT furthermore would like to point out the disadvantageous rules for Net
Operation Loss (NOL). Currently Japan only allows carry forward for nine years while
the norm in Europe is unlimited. The situation is also more favourable in this respect
in Japan’s neighbouring countries, countries that Japan is competing with for FDI.
There are unfortunately also talks within the ruling party of shortening the nine-year
period.
Moreover, while such improvement of the generic investment environment is aprecondition, 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 regulatory environment 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 existingclient base. Mutual recognition of market certifications would be an important firststep to improving investments in the medical field. Mutual acceptance of principles
governing the financial services industry and the mutual acceptance of the homeregulator as the core regulator would go a long way to improving the investment
environment in the financial sector.
< Recent progress >While Japan has established incentive programmes for FDI, they are often limited inscope and application procedures are very inflexible. There are also some indications
that Japan is contemplating shorting the period.
< 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 with the 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.

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WP-A / # 11** / E to J

Procurement< General Recommendations >The Government of Japan should increase its efforts to facilitate better access to the
procurement market in Japan. This could be achieved by lowering the threshold for
public tenders and better defining the “operational safety clause” within the transport
sector. Japan should also include more cities in the GPA as currently only nineteen
cities are included.
Japan should, furthermore, make more information available in English. The BRT isaware of the recent initiatives by JETRO, but the complete information is rarely
available in English. In addition the BRT requests the use of English when submitting
tender proposals to be allowed or at least partially allowed, especially for thetechnical specifications.
In addition the BRT asks that Japan streamlines the requirements on pre-registration
and also recognises overseas experience and qualifications when setting up
requirements for the bidders.
< 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.
Procurement of integrated systems of space ground equipment should be
encouraged.

The share of open tendering as a means for procurement by the Japaneseutilities should be increased substantially.

< Recent progress >There has been little progress.
< Background >Studies have shown that over 80% of the total procurement market in Japan is notcovered by the GPA.1 Currently some sectors are exempted from the threshold of 5
million SDR. Some changes have been seen, such as the establishment of a national
data base on calls for tenders, and the first ever open call for tender in the railway
sector. However, significant improvements are required to bring Japanese
procurement closer to the levels of the EU.

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 / # 12** / J to E

Europe 2020 and the Single Market Act

The BRT expresses our continued support for Europe 2020 and in particular, theSingle Market Act - the initiative of the European Commission to relaunch the single
market. In addition, The BRT looks forward to deeper cooperation between Japaneseand European industries and research institutes under Horizon 2020, the EU’s RTD
program for 2014-2020. The BRT also supports the European Commission’s call for
immediate action for a European Industrial Renaissance.
1)
2)

3)

The BRT would like to repeat the importance of the single market for the EU
and the Europe 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 toemphasise the importance 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 of chemical materials as a priority.

< Recent Progress >Europe 2020 is evolving and progress has been made on Single Market Acts I and
II. The realisation of the true single market of chemical materials is progressing
albeit slowly.
< Background >For global businesses to flourish, the regulatory environment should be, as muchas possible, consistent throughout the world. In this context, a level playing field inthe single market is of key importance.
The BRT believes that a policy with social objectives such as environmental policy
and social policy cannot be formed independently from economic and industrial
policies. It is important to achieve synergy between these different policies. For
example, in order to realise more energy efficient economy, innovative andcompetitive products and processes 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 sustainable social infrastructures for the aging society
such as social security systems depend on the business activities that create
growth and jobs.

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Furthermore, the international coordination of regulatory policies and close
cooperation amongst governmental and other institutions involved in policy-making
process is important to realise a level playing field globally.
The European Commission calls on the Council and the Parliament on 22 January
2014 to adopt proposals on energy, transport, space and digital communications
networks, as well as to implement and enforce legislation to complete the internalmarket. Furthermore, it states that industrial modernisation must be pursued byinvesting in innovation, resource efficiency, new technologies, skills and access tofinance, accelerated by the use of dedicated EU funds. It promotes a morebusiness-friendly Europe through actions to simplify the legislative framework andimprove the efficiency of public administration at EU, national and regional levels.
Other key issues include easier access to third country markets throughharmonisation of international standards, open procurement, patent protection andeconomic diplomacy.

WP-A / # 13** / J to E
Revision of high customs tariffs on audio-visual
products and passenger cars
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 absenceof a progress in global trade negotiations, such reduction should be realised throughbilateral negotiations, 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
EU-Japan 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 competitionand need stimuli for competition rather than protection. Such protection will not
help enhance international competitiveness of those sectors. Furthermore, it is only
their users and consumers in the EU who unfortunately have to pay the resulting
higher prices.

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

Chemical Regulations

14.1 REACH
1. Concerning REACH, the BRT recommends as follows: The BRT asks the authorities of the EU to proceed swiftly against theMember States which do not follow the interpretation of Article as stipulated
in the Guidance document so that actors in the supply chain can avoid thefragmented compliance requirement in the EU market.
 The BRT requests the authorities of the EU to introduce one consistent policyin the EU concerning phthalates for indoor use. The BRT would also like to
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make remarks that it will even be better if the policy is harmonised between
the EU and Japan.
< Recent Progress >Some progress has been seen for the recommendation on the interpretation of the
Article. Progress on phthalates is limited and unsatisfactory.
< 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 asingle market through the clarification of interpretation that is accepted throughout
the EU.
The interpretation of “Article” applied to 0.1% threshold for SVHC (Substance ofVery High Concern) is still disharmonized among EU member states. The
Guidance on Requirements for Substances in Articles in REACH regulation statesthat the 0.1% threshold should apply to an article as a whole produced or imported.
Five Member States and Norway, however, insist that the threshold should apply tothe parts of complex articles based on the “Once an article – always an article”
concept.
In Denmark, despite the objection by the ECHA (European Chemicals Agency),
phthalates for indoor use are banned in its national law published in its official
journal on 30 November 2012. Its implementation has been postponed for two
years. In addition, although Denmark had proposed its EU-wide ban by submitting
dossiers in accordance with Annex XV of REACH, the proposal was rejected bycommittees of the ECHA in June and December 2012. This kind of disaccord could
negate the benefits of the Single Market.
2. The Authorities of the EU should prepare a practical guidance to facilitate theimplementation of REACH. In particular: The number of SVHC increases steadily. The ECHA publishes its list on its
website. However, especially for SMEs in supply chains, such information isdifficult to digest. The authorities of the EU should take an initiative tofacilitate the setting up of a database into which upstream suppliers could
input data and with which downstream manufactures could consult.
 The BRT requests that the authorities of the EU should issue a clarificationon 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 made accessible for free and made available worldwide.
 In the evaluation of a substance allocated to a Member State in theframework of CoRAP - Community Rolling Action Plan, a private business isoften requested to provide information on the substance which it holds.
However, it is sometimes requested at a short notice and/or a not-wellorganised manner, which is not effective. 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.
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< Recent Progress >No progress has been seen for the recommendation on SVHC.
< 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 ‘shallkeep 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-of-customers-information, such as customer names andimported volumes, especially from indirect supply routes, because under the EU
competition law such supply chain information (i.e. market information) may beconsidered critical and sensitive. In addition, it remains unclear whether or not thecompetent authorities of each Member State will accept the use of a third-party
trustee in the collection of such information in order to avoid possible infringementof 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 be outsourced
to a third party. The authorities in Germany appear to interpret that the use of athird-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 tocollect information 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 andpublish issues and concerns coming out of the latest registration – such asdifficulty to identify Lead Registrants and no transparency of the cost for LoA(Letter of Access), and their solutions in time for the following joint submission.
The authorities of the EU should, instead of relying upon agreement among theparticipants of SIEF, actively monitor and, if necessary, initiate corrective
measures in order to realise transparency of the cost for LoA and the equity incost sharing.
< Recent Progress >Some limited progress has been made due to the introduction of data sharing
dispute mechanism but more active involvement of the authorities of the EU isdesirable.
< Background >New challenges are already foreseen in the SIEF operation as the result of 2013
registration deadline, and a further 2018 deadline, namely, less data available,
inexperienced Lead Registrants, mostly SMEs in the supply chain, and heavy
financial burden. The BRT is concerned that the SIEF activities will stagnate due tosuch concerns.
The ECHA’s testing proposals and evaluation of registered dossiers, and theMember States’ evaluation of substances would result in renegotiation of cost
sharing in a SIEF. LoA revenue from latter registrants would have to be distributed
amount former registrants. To realise transparent and equitable cost sharing, theauthorities of the EU would have to monitor and intervene more actively.
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14.2 Appropriate approach to Endocrine disruptor
The BRT requests that the authorities of the EU should regulate endocrine disruptors
not by using the categorisation like CMR (carcinogenic, mutagenic or reprotoxic), but
by using the risk assessment based on sound science because endocrine disruption
is not the endpoint of toxicity. The hazard assessment should be conducted by
identifying adverse effect based on the endocrine mode of action defined by theWHO, and characterising with taking into account of potency, lead toxicity, severity
and irreversibility.
< Recent Progress >Some progress has been made as the result of ongoing discussion.
< Background >Currently, the authorities of the EU are reviewing the current legislations such as
REACH, PPPR (Plant Protection Products regulation) and BPR (Biocidal Products
Regulation), and they are contemplating a policy measure.
14.3 RoHS
The BRT requests that SVHC, authorisation or restriction under REACH andexemption under ELV/RoHS should not lead to duplicated regulation.
The number of restricted hazardous substance is going to increase. The authoritiesof the EU should continue to involve the industry in the process of identifying
additional substance.
< Recent Progress >Some progress has been made. The European Commission has given priority to
the issue.
< Background >First of all, the BRT appreciates the action of the European Commission which isalready involving the industry. REACH and RoHS are independent with eachother. However, they regulate chemical substances. Both of them impose
restrictions and exemptions thereof. Although currently the BRT is not aware ofany discrepancy as to the restricted or exempted chemical substances between
the two regulations, the BRT is nonetheless concerned about the risk of duplication
due to the complexity of the two regulations.
14.4 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.
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< 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 does not take some of GHS classification but introduces the EU’s own
classification. As a consequence, the exporters to EU are forced to be compliant
with both GHS and CLP.
14.5. 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 andestablish a harmonized 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 >Some progress has been made:As to the definition, the European Commission has carried out public consultation.
As to the reporting scheme, the European Commission is currently in consultation
with the Member States. However, some Member States, such as France andBelgium, are going their own ways. A unified reporting scheme is critical for industry.
As to measurement method, although the Joint Research Centre issued a report in2012 titled ‘Requirements on measurements for the implementation of the European
Commission definition of the term „nanomaterial’, there remain the issues ofpracticality and cost. .
< 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 a national level. It would oblige their manufacturers and importers
make multiple reporting in different formats, which would not only be inefficient but
also create confusion in their supply chains.

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Different measurement methods are used in the measurement of nanomaterials tomeet regulatory requirements such as notification. As a result, there is a risk thatthe results of measurement by different actors are not comparable.

WP-A / # 15** / J to E

Taxation

15.1 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 thatform 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.
< 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 andaccounting.
The relation between intra-group transactions and taxation is an important element
in decision making in a business. It is highly desirable that companies withinternational business should be allowed to compute the income of the entire groupaccording to one set of rules and establish consolidated accounts for tax purposesin the EU.
15.2 Merger Directive
The scope of the Merger Directive (90/434/EEC) should be expanded to include thetransfer 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 realestates. The amendments to the Directive (2005/19/EC), however, do not include
provisions related to this issue.
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By extending the scope of the Directive to the transfer of real estates and otherintangible 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 ofcontributed assets for a number of years even if those holding companies cease tofunction as an operating company. 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 riskof 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 the shareholding of Japanese parent in it is below 25%.
15.3 The fundamental reforms of VAT regime under consideration
The BRT welcomes the strategy of the European Commission to fundamentallyrevise the VAT system and to establish a simpler, more efficient and robust VAT
system tailored to the single 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 theEU.
< 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 forcentralisation with the aim of reducing overall costs and increasing efficiency.
Although the VAT system in the EU is a common system, in reality, differencesamong Member States are significant mainly due to derogations. Presently,
therefore, the centralisation 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
be rectified 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 leaveaccounting staff in local operations or employ a number of accounting staff withcountry specific knowledge in a central location. In either case, cost-effective
centralisation of accounting functions is unlikely to be realised.

WP-A / # 16** / J to E

Company Law / Corporate social responsibility

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16.1 Conflict minerals<Recommendations>
The BRT acknowledges that the proposal for a Regulation has taken up certain
feedback from businesses such as promoting internationally recognised frameworks,
taking a voluntary approach of self-certification and publication of a list of responsible
smelters and refiners. The BRT recognises that, although self-certification by
responsible importers is voluntary, administrative burden will be substantial for
responsible importers that choose to self-certify. The BRT suggests thatadministrative burden should be reduced as much as possible in order to facilitate
the take up of self-certification.
Concerning Incentives laid down in the Joint Communication, the BRT requests a
clarification on the definition of equivalence to the OECD Due Diligence Guidance interms of Procurement and on the benefits and duties of a company that signs theLetter of Intent as to industry commitments. The BRT also requests good internal
coordination in implementing Procurement Incentives.
<Recent progress>
This is a new recommendation.
<Background>
The European Commission submitted on 5 March 2014 a Proposal for a Regulationof the European Parliament and of the Council setting up a Union system for supply
chain due diligence self-certification of responsible importers of tin, tantalum andtungsten, their ores, and gold originating in conflict affected and high-risk areas(COM(2014)111). The proposed Regulation is accompanied by a joint
Communication by the European Commission and the High Representative to theEuropean Parliament and the Council: Responsible sourcing of minerals originatingin conflict-affected and high-risk areas - Towards an integrated EU approach(JOIN(2014) 8).
16.2 Country by country reporting (CBCR)<Recommendations>
The BRT recommends that the authorities of the EU should carefully consider therisks of excessive disclosure requirements that could unduly hamper multinational
enterprises’ business activities.
<Recent progress>
This is a new recommendation.
<Background>
The final text of a Directive amending Directive 2013/34/EU as regards disclosure of
non-financial and diversity information by certain large companies and groups
requires the European Commission to report on CBCR by 21 July 2018: the reportshall consider, taking into account developments in the OECD and the results ofrelated European initiatives, the possibility of introducing an obligation requiring large
undertakings to produce on an annual basis, a country-by-country report for each
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Member State and third country in which they operate, containing information on, asa minimum, profits made, taxes paid on profits and public subsidies received.
The European Council made reference on 22 May and 20 December 2013 toextending CBCR to large companies and groups.
The EU law already requires financial institutions to disclose annually, specifying, by
Member State and by third country in which they have an establishment, profit or loss
before tax, tax on profit or loss, and public subsidies received from 2015. The EU
law also requires large undertakings and all public-interest entities active in theextractive industry or the logging of primary forests to prepare and make public areport on payments made to governments from 2016.
Within the context of the G8 and the G20, the OECD has been asked to draw up a
standardised reporting template for multi-national undertakings to report to tax
authorities where they make their profits and pay taxes around the world.
16.3 Non-financial disclosure<Recommendations>
The BRT appreciates that the final text agreed by the European Parliament and theCouncil addresses a number of concerns raised by businesses including the BRTsuch as making non-financial KPIs non-binding, allowing reporting at a consolidated
level and limiting the scope of entities that the new rules become applicable. The
BRT looks forward to consultation by the European Commission during their
preparation of non-binding guidelines on methodology for reporting non-financial
information, including non-financial key performance indicators.
<Recent progress>
There has been a good progress.
<Background>
The European Commission submitted a proposal for a Directive (COM(2013) 207) in
April 2013. The European Parliament and the Council reached an agreement in
February 2014 on the final text of a Directive amending Directive 2013/34/EU as
regards disclosure of non-financial and diversity information by certain large
companies and groups. According to the final text:Large undertakings which are public-interest entities exceeding on their balance
sheet dates the criterion of average number of employees during the financial
year of 500 shall include in the management report a non-financial statement
containing information to the extent necessary for an understanding of theundertaking’s development, performance, position and impact of its activity,
relating to, as a minimum, environmental, social and employee matters, respectfor human rights, anti-corruption and bribery matters.



The Commission shall prepare non-binding guidelines on methodology forreporting non-financial information, including non-financial key performanceindicators, general and sectorial, with a view to facilitate relevant, useful andcomparable disclosure of non-financial information by EU undertakings. In doing
so, the Commission shall consult relevant stakeholders. The Commission shall

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publish the guidelines no later than 24 months after the entry into force of thisDirective.

WP-A / # 17* / J to E

Product Safety/Market Surveillance

17.1 Product safety and market surveillance package proposal
The BRT requests the authorities of the EU to proceed prudently in the deliberationof the Product Safety and Market Surveillance Package, in particular, Article 7 of the
proposal for a Regulation on consumer product safety by which the indication of thecountry of origin would become mandatory. The BRT believes that the mandatory
indication of the country of origin would not necessarily improve safety for consumers
but that it would place substantial administrative burden on manufacturers and/or
importers. The BRT therefore believes the mandatory indication of the country oforigin should not be included in the Package.
<Recent progress>
This is a new recommendation.
<Background>
The European Commission proposed on 13 February 2013 the Product Safety andMarket Surveillance Package – A proposal for a Regulation on market surveillance of
products (COM(2013)75) and a Proposal for a Regulation on consumer productsafety (COM(2013)78). The package is now at a final stage of deliberations in theCouncil. The Article 7 of a Proposal for a Regulation on consumer product safety
requires manufacturers and importers to ensure that products bear an indication of
the country of origin of the product.

17.2 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 forfair movement of products. The BRT requests the European Commission and theMember States to disclose all the relevant information regarding the progress of thisprocess and the implementation of the market surveillance in each Member State.
The BRT also requests the European Commission and the Member States to giveindustry an opportunity for contributing to developing the framework of harmonised
market surveillance.
The BRT would like to thank the Directorate General of the European Commission
concerned for the involvement of the industry and requests that the it should continue
to consult stakeholders 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.
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< Background >In 2008, the Regulation 765/2008/EC, setting out the requirements foraccreditation and market surveillance relating to the marketing of the products, andthe 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
existing legislations are being amended based on the Decision when they arereviewed. The objectives of the so-called New Legislative Framework are to
introduce harmonised and transparent 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 in 2014.

17.3 Consumer protection
The new Directive, 2011/83/EU of the European Parliament and of the Council of 25
October 2011 on consumer rights, 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 the European Commission to review the advantage and disadvantage ofthis 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 legislationthat affects cross-border transactions should be harmonised to the extent thatbusinesses and consumers do not have to be concerned about difference in
implementation among the Member States.

WP-A / # 18* / J to E
Access of third countries goods and services to theEU’s Procurement Market
The BRT believes and recommends the following:
1. Non-legislative policy measures should be adopted to achieve the objective of
opening procurement markets internationally;
2. Any measures should incorporate an effective mechanism to prevent the EU fromarbitrarily excluding third-country goods and services from its 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.
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4. The authorities of the EU and its Member States should increase their efforts tofacilitate better access to the respective public procurement markets.
5. The authorities of the EU and its Member States should make more information
available in English. The BRT requests the use of English when submitting
tender proposals to be allowed or at least partially allowed, especially for thetechnical specifications and communication.
< Recent Progress >No progress has been made for this recommendation.
< Background >The reform of the legislative framework of procurement is one of the twelve priority
actions set out in the Single Market Act adopted in April 2011. As part of thisreform 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 Regulationthat would enable the EU to close its market unilaterally. The BRT is concerned
because, by exercising the proposed unilateral measures, the EU could send asignal to its trading partners that the EU is closing its procurement market
discreetly, which could trigger a chain reaction of protectionist measures all over
the world. Should it happen, the EU’s intention and objective of opening
procurement markets internationally would not be achieved.

WP-A / # 19* / 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 ofalternative fuels infrastructure, and understands that the detail of the contents has
been in discussion in Trialogue session to be finalized in middle of April.
The BRT requests the authorities of the EU, however,1)
To delete the disproportionate emphasis on specific technology.
2)
To confirm that the Directive will not exclude the fast charging technologies
other than Type “Combo2” from becoming an authorized recharging system in theEU, and will not remove them from the European market.

< Recent Progress >Under the Trialogue session.
< 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 ParliamentWorking Party A: Trade Relations, Investment and Regulatory Cooperation
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and the Council, it would require the implementation of common technicalspecifications 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, for interoperability purposes, withconnectors 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 forinteroperability of 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 is premature to refer to any specific technologies as a part ofEuropean 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 in the market in near future may be specified as is the case in the current
proposal. The fact is that there are more than 50,000 electric vehicles equippedwith a fast charging technology on the road in Europe today. Dual chargers thatcan serve the existing electric vehicles as well as future ones will be important not
only for the convenience of the drivers of the existing vehicles but also for themarket to develop.

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