Recommendationsof theEU-Japan Business Round Table
to the Leaders of the European Union and Japan
Brussels, 27 & 28 April 2015
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
EU-Japan BRT 2015 Recommendations Report
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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 welcomes and supports the Authorities‟ determination to work foragreement in principle on a comprehensive and ambitious EU-Japan FTA/EPA
during 2015. The BRT restates its longstanding conviction that an EU-Japan
FTA/EPA will boost trade and investment, promote job creation and accelerate
growth in both economies, and that it will also help create new opportunities for
global economic growth. The BRT reiterates its call for the EU and Japanese
Authorities to step up their efforts to tackle and resolve the substance of outstanding
issues and to conclude a comprehensive, ambitious, high-level and mutually
beneficial FTA/EPA as soon as possible, and reaffirms its commitment to making
efforts to achieve this objective, such as making industry expertise available.
The BRT believes that an aim of a speedy conclusion must come together with ahigh level of ambition. Should a sufficiently high level of ambition seem difficult toachieve on the basis of the technical negotiations, the BRT urges, for the sake of oureconomies, political leaders at the highest level to intervene to resolve the deadlocks
and bring the negotiations to a timely and ambitious conclusion.
< 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
The agreement on Trade Facilitation signed in November 2014 can serve as a boost
to global trade by reducing costs of trade by 10-15%. Its objectives are to speed up
customs procedures, make trade easier, faster and cheaper, provide clarity,
efficiency and transparency, reduce bureaucracy and corruption, and use
technological advances. The BRT calls upon the authorities of the EU and Japan,
together with other WTO members to quickly implement the Trade Facilitation
Agreement.
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, as well as to facilitate timely conclusion ofplurilateral agreements such as expansion of the Information Technology Agreement(ITA) and Trade in Services Agreement (TiSA).
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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.
Furthermore, the BRT requests the authorities of the EU and Japan to exert theirutmost efforts to realise global free trade in goods and services under the auspices ofthe WTO, including environmental goods, so long as it does not discriminate unfairly
between products and sectors.
However, the tariff liberalisation should not be limited to finished goods but include
goods over the whole value chain to have a real impact and to take into account the
globalisation of the value chains.
< Recent Progress >The BRT welcomes the adoption of the Protocol of Amendment to insert theAgreement on Trade Facilitation (TFA) into the WTO Agreement (Protocol amending
the WTO Agreement) at the Special Session of the General Council of the World
Trade Organization (WTO) held in Geneva in November 2014. The BRT welcomesthe advancement in the DDA negotiation.
The informal WTO Ministerial gathering held in Davos on 24 January 2015 wasfurthermore a good opportunity for WTO members to discuss the future work
programme on the remaining issues of the DDA. A number of WTO members
expressed the following views:
 it is important to steadily and gradually operationalise 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 hopes the negotiation on other agenda items such as non-agricultural
market access (NAMA), agriculture, non-tariff barriers (NTBs) and export subsidies
will make progress now that the TFA has been passed.

< 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.
Especially given the great and increasing uncertainty in the world economy, 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 themultilateral level, the WTO must remain a leader in this area and take more andWorking Party A: Trade Relations, Investment and Regulatory Cooperation
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stronger action. The existing legal framework provides an excellent basis for suchaction. However, it needs to be updated in order to respond to a changing global
economic landscape.
WTO members made partial progress in the DDA at the 9 th WTO Ministerial
Conference in Bali in December 2013. The so-called“Bali Package” that was agreed
consists of three main components: (1) a trade facilitation agreement; (2) anagreement on the agriculture sector; and (3) agreements on development (a package
for least developed countries and flexibilities for public food stockholding
programmes).

WP-A / # 03** / EJ to EJ Applying international standards andregulatory cooperation
1.

enhancing

General recommendations

The BRT strongly supports the joint development and application of internationallyharmonised technical requirements and procedures for the testing and approval of
products that are traded internationally.
The BRT recommends the authorities of the EU and Japan to enhance theirregulatory cooperation. The aim is to eliminate barriers to trade and investment inorder to promote business and to disseminate the experience of the EU and Japan to
the rest of the world.
To this end, the BRT encourages the authorities of the EU and Japan to work
together in the relevant fora to develop international product standards andcertification procedures. The BRT recommends that the authorities of the EU andJapan should apply such standards in as many sectors as possible.
Where international standards have not yet been developed, the BRT urges theauthorities of the EU and Japan, when possible, and appropriate, to accept themutual approval of the import, sale or use of products that have been approved on
the basis of functionally equivalent requirements.
Taking into account the benefit of common regulatory environment, the BRT
recommends that the EU-Japan FTA/EPA should include a framework to promoteregulatory cooperation and to ensure that the authorities of the EU and Japan nottake unnecessary measures which act as an impediment to trade and investment.
The BRT recommends that the policy-makers of the EU and Japan should increase
their understanding of existing and upcoming regulations of the other side. Where aharmonised regulatory framework between the EU and Japan has not yet beendeveloped, the regulatory authorities of the EU and Japan should review theirdomestic technical regulations and conformity assessment procedures at regularintervals to determine the scope for further regulatory harmonisation. The outcome

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of these reviews, including scientific and technical evidence used, shall be
exchanged between the regulatory authorities and provided to industry upon request.
The BRT recommends that the regulators of the EU and Japan should study thepossible impact of new regulatory developments on domestic and foreign business to
avoid taking initiatives that might unwittingly create barriers to trade and investment.
They should exchange annual legislative work programmes at the earliest stage toprevent regulatory divergence and the creation of new trade barriers. In addition,
they should agree to an early warning system for draft legislation to facilitate aneffective bilateral dialogue.
The policy-makers of the EU and Japan should develop a joint strategy to promotebetter regulation by learning from each other‟s experience and adopting a common
system of good governance. Throughout the process, the two authorities shouldhave close dialogue with businesses.
The BRT calls on the Leaders of the EU-Japan Summit to ensure that the FTA/EPA
provides a solid and comprehensive framework for regulatory cooperation to address
the sector-specific concerns of the business community. In addition, the BRT
welcomes the adoption of a Joint Document for Regulatory Cooperation at the EUJapan Industrial Policy Dialogue between METI and DG GROW on 17 March 2015.
As a long-standing advocate of regulatory cooperation, and recognising that this is a
key issue for the future, the BRT hopes that this joint initiative will reinforce andcomplement the upcoming FTA/EPA and set the frame for a solid, forward-looking
and long-lasting regulatory cooperation. The BRT is willing to support the EU andJapanese Authorities on regulatory cooperation matters.
<Background>
The BRT believes that regulatory cooperation will be a key to the economic
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 accessbenefits accruing to either party under the agreement or create new barriers tobilateral 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 regulatory cooperation to other bilateraland multilateral relations.
In the meetings of the BRT on 8-9 April 2014, the Japanese side proposed that theauthorities of the EU and Japan together with key players such as the BRT shouldlook at future issues coming out of a long-range vision for the relationship for, say,the next three decades.

Sector specific recommendations
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2.

Create 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 common policy on
emerging issues such as endocrine disruptor and nano materials. The two
authorities should also support supply chain management in developing
countries in cooperation with businesses.

3.

Create a common resource efficiency policy
The authorities of the EU and Japan should promote the concept of energy
efficiency including resource efficiency, using the right incentives,
standardised methodology, criteria and the format of environmental productdeclaration between the EU and Japan and cooperate with each other so thatsuch a policy will be internationally shared.
The two authorities should work together at the multilateral level to promoteinternational harmonisation of energy conservation regulations, relevantlabelling rules, and environmental and carbon footprint schemes.

4.

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.

5.

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 personal 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.
6.

Adoption of UN Regulations
In the automobile sector, the Japanese and EU Authorities should accelerate
their adoption of UN Regulations to lower the cost of regulatory compliance forboth European and Japanese automobile exporters by extending the benefitsof mutual recognition. Also the Japanese and EU Authorities should work
together to establish internationally harmonised technical requirements andtesting procedures that will encourage the smooth market adoption of newenvironmentally friendly power-train technologies – clean diesel, electricvehicles, hybrid vehicles and fuel-cell vehicles.
< Background for 6 >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 Regulations in one contracting country are exempt
from testing in any other signatory country where those regulations havebeen adopted. Japan has now adopted UN-ECE Regulations in 35 of the 47
areas included in Japanese type approval.

< General Background for 1-6 >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):

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 theWorking Party A: Trade Relations, Investment and Regulatory Cooperation
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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 agreements between Japan, Italy andLuxembourg have been signed. Furthermore, negotiations are underway between
Japan and Sweden, and are at the preparatory stage between Japan, and the
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.
Both sides should facilitate access to the labour market for accompanying family
members without any limitations in regard to regular working hours.

< 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. However, theburden on companies as well as employees and their family members issubstantial, it does constitute an obstacle to the swift development of business.
The EU has adopted Directive 2014/66/EU of the European Parliament ad of theCouncil of the 15 May 2014 on the conditions of entry and residence of thirdWorking Party A: Trade Relations, Investment and Regulatory Cooperation
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country nationals in the framework of an intra-corporate transfer. By 29 November
2016, the directive should be transposed in the Member States The directive 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 and Denmark due to the opt-out of those Member States. Japanesenationals in the UK, where their number is the highest among the EU Member
States, will not benefit from this Directive. It is therefore imperative that suchliberalisation is realised within the framework of an EPA/FTA so that it will beapplicable to all intra-corporate 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 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-academic-government cooperation, as well as tax and other facilities
and incentives for investors.
4. Helping graduates with international backgrounds find local jobs with the otherside's SMEs.
5. A study of the feasibility of creating a joint investment fund for both Japaneseand 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 the most promising sources of growth and jobs in both Europe andJapan. Their success in bilateral trade is a major factor in their development andalso helps to revitalise both Japanese and EU industries by disseminating new
products and technologies. However, market access problems and various
impediments noted in other BRT recommendations are even harder to tackle ormanage for SMEs. While the Japanese government, the European Commission
and most EU Member States have internationalisation programmes for their own
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SMEs, existing help programmes for foreign companies are mostly geared towards
large foreign direct investments in established industries and are inadequate forSMEs. Once a European SME has established a footing in Japan, or a Japanesein the EU, using already available government support programmes, it should
continue to receive support from the host region. Such support cannot be expected
as a unilateral measure but would only be possible if agreed in a formal bilateralagreement. The BRT is aware of the major work being done for both Japanese andEuropean SMEs by the European Commission and the Government of Japanthrough the programmes run by EU-Japan 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. The Government of Japan should also work towards the international
harmonisation of Japan‟s technical requirements for commercial vehicles whichshould be included within the scope of the provision of any FTA/EPA.
< Recent progress >There are still nine areas where Japan does not accept a UN approval as
demonstrating compliance with its national type approval requirements. The
reference to commercial vehicles 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.
< 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
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between ISO and JIS/JAS in its progress report of April 2013, April 2014 and April
2015.
< 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 >While very little has been confirmed or decided, the BRT is pleased to see that theissue is reported to be discussed in the FTA/EPA negotiations. Additionally, there aresigns of movement in regards to the standard of use for fluoride in toothpaste andmouthwash.
< 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 operator.
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. While the BRT understands
that operators might have different performance requirements, the same safety
requirements and standards should preferably be used by all operators in Japan,
which currently is not the case as each individual operator can choose its own
standards and requirements. As a first step, test results and approvals by one
operator should be accepted by other operators.

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The BRT, however, recognises the latest development and positively views the firstcall for tender by a Japanese operator The BRT recommends Japan to make betteruse of the tendering system as this leads to more competition and bettertransparency, while not negatively affecting safety.
< Recent progress >While some progress has been made, the core issue still remains that there is nocommon conformity assessment scheme in Japan that all operators adhere to.
< 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.
< Recent progress >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.
b) Requests Japan and EU to work towards mutual recognition of European
and Japanese marketing authorisations for veterinary products. This should
start with mutual recognition of GMP certification for veterinary medicines.
MAFF and European agencies should accept GMP certification of the otherparty where the GMP requirements are similar or equivalent.

< Recent progress >In recent years, MAFF has implemented various measures to improve thepredictability, quality and speed of the registration process leading to a significant
improvement. Furthermore, on 25 December MAFF revised regulations presented,
both in Japanese and English, on the issuance of accreditation licences. This change
accommodated a request by JVPA. However, since harmonisation is still notcomplete and non-recognition of GMP certificates is common, improvement is stillneeded.
< Background >Japan participates in the VICH, which aims to harmonise registration requirements
for animal health products at the international level. This has helped to some extent
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to reduce the registration cost for globally developed products. However, there arestill requirement that are unique to Japan.
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 and enzymes, inaddition to speeding up and fundamentally revising the approval processb) 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. We note that the progress report of 2014 mentions
that the GOJ is considering setting “a standard time frame” for approval procedure
upon establishment of the Food Additive Design Consultation Center. We are verymuch looking forward to know more about this.
< 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 luminaries issued by the Japanese ministry(i.e. METI) is not compatible with standards used by manufacturers of othercountries

The BRT requests Japan without delay to harmonise with international standards andsafety/technical requirements in order for Japan to avoid being left behind in the
global market. The market for LED lamps and luminaries is rapidly expanding andthese products are expected to play an important role in saving energy on a global
basis.
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While the Japanese Government has agreed to harmonise JIS with IEC, theauthorities have also said that this will take more than five years. Needless to say thisis not acceptable. Japan has issued a list of products where IEC test report can beused (“appendix 12”). This list does not include LED lamps and some LED luminaries.
< 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.
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 is 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 is said to be working on a revision,
but has so far not presented anything concrete. This issue was not touched upon in
the GoJ progress report of April 2013. In parallel to this, Japan has announced that it
will align its regulation on washing instruction with the ISO standards.
< 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 / # 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 change in the taxation of kei-cars from FY2015 is a welcome first step towards
reducing the discrepancy in the burden of taxation on compact cars and kei carsbut it
does not go far enough. In the FTA negotiations, the GOJ should commit to further
fiscal and regulatory changes so that European compact cars can compete on equalterms with kei-cars in the Japanese market.
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< 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
similar

WP-A / # 08** / E to J Fuel Cell Vehicles
Pending agreement and implementation of Phase II of the UN Regulation for HFCV‟sconcerning the material requirements for hydrogen storage systems, the Japaneseand EU Authorities should introduce flexible arrangements to allow
manufacturers/importers to demonstrate that HFCV‟s meet each other‟s requirements
and approval procedures< Background >Phase I of the UN Regulation for HFCV‟s is expected to go into force in the summerof 2015. Both the EU and Japan intend to implement this regulation. But even when
Japan has implemented Phase I, HFCV tanks imported into Japan would still need tomeet Japanese unique national requirements concerning metal materials. Whereas
the EU uses a performance-based approach to approve hydrogen compatible
materials, Japan‟s approach is more prescriptive, in effect limiting the choice ofmaterials to very few specific types of stainless steel and aluminium.

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.
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
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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 >While the issue is being discussed in the FTA/EPA negotiations, the WP A is notaware of any concrete improvements. Furthermore, on issues directly related toJapan Post very little change in either direction has been seen during the last year.
< 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

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 >Japan Customs have announced a plan to deregulate customs clearance beyond the
local customs jurisdiction territory by 2017.

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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.

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. The different interpretations of customs law inaddition to different HS code classification create costs for the importer This also
makes it difficult for European logistics companies, which lack multiple regional
offices in Japan to expand their regional coverage as licensing is per region, ie. thelicense given by Tokyo Customs is not valid in Yokohama.

WP-A / # 11* / 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). With the upcoming changes, companies in Japan will be able
to carry forward 50% (from 2017) of their losses for ten years. This is well behind the
NOL in neighbouring countries, countries with which Japan competes for investments.
In addition, Japanese rules on inheritance tax makes foreigners liable for inheritancetax covering all global assets from day one of being registered in Japan. While many
countries have removed the inheritance tax Japan is moving in the opposite direction.
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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 UNCTAD in 2012 inward stocks was only 3.5 % of GDP.

WP-A / # 12** / 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 or removing 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.
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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.



Making certain that the recent changes to the Operation Safety Clause indeed
leads to more open calls for tenders in accordance with the WTO agreement
on government procurement.

< Recent progress >The BRT has seen some changes in particular for the three JR Honshu companies
and is therefore looking forward to see what the changes in the OSC will bring.

< 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 / # 13** / J to E

Europe 2020 strategy

The BRT expresses its continued support for Europe 2020 strategy.
The BRT believes that the Europe 2020 strategy has made policy makers focus on
the issues that are essential for the EU and the Member States. In addition, theEuropean Semesters have made the economic and fiscal policies of the Member
States increasingly coherent. If continued, the EU and its Member States should be
able to realise important gains in a medium term.
In order to achieve smart, sustainable and inclusive growth, the BRT believes thatfurther and continuous improvement of the Single Market is the most important andrelevant areas to be addressed. The Single Market, in other words, is the mostvaluable source of the smart, sustainable and inclusive growth of the EU.
The BRT would like to emphasise the importance of the following priorities for the
single market that will lead to the smart, sustainable and inclusive growth of the EU.
-

Further improvement and realisation of the true single market of chemicalmaterials
Business environment
TaxationIntellectual property rights
Consumer empowerment
Services
Networks
The digital single market

In improving the Single Market, the EU and its Member States should not only aim at
the harmonisation of national rules at the EU level. They should also aim at better
regulation by eliminating duplicative legislative framework and at the liberalisationand deregulation.
As to the type of instruments appropriate to use to achieve smart, sustainable andinclusive growth, the BRT has observed that policy coordination at the EU levelseems to work better in recent years than before the crisis. The EU should seek an
optimal mix of such an approach and harmonisation through Directives/Regulations.
The BRT would like to emphasise, however, that the EU should make a policy
through Regulations in the areas in which the uniform application of policy throughout
the EU is crucial.
As it is estimated that in the next 10-15 years, 90% of the world‟s growth will comefrom outside the EU, the BRT would like to emphasise that an internationally open
European Single Market is essential for the smart, sustainable and inclusive growthof the EU.

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The BRT supports the deepening of EU-Japan trade relations through an ambitious
FTA/EPA and fair market access that will contribute substantially to industrial growthand job creation.
The strength of the European economy is, furthermore, built on a set of values thatwill lead to a sustainable economic development. Corporate social responsibility is apivotal contributor to the EU‟s objectives of sustainable development and highly
competitive social market economy. Considering the relationship with Japan, forexample, the BRT believes that fostering responsible business should be at the heartof the EU-Japan economic and political partnership.
< Recent Progress >The European Commission is carrying out the mid-term review of the Europe 2020
strategy.
< Background >The Commission proposed in 2010 the Europe 2020 strategy. It was launched as
the EU‟s strategy for smart, sustainable and inclusive growth. Its aim was toimprove the EU's competitiveness while maintaining its social market economy
model and improving significantly its resource efficiency.
The European Commission carried out a public consultation in 2014 to gather theviews of all stakeholders to help it develop the strategy for the 2015-2020 period.

WP-A / # 14** / J to E
Revision of high customs tariffs on audio-visual
products and passenger cars
The authorities of the EU should immediately eliminate 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 >A progress has been seen for this recommendation because the EU-Japanbilateral negotiations on an EPA/FTA are underway.
< 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.

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

Chemical Regulations

15.1 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.
< Recent Progress >Some progress has been seen for the recommendation on the interpretation of the
Article. The issue of phthalates has been resolved by the withdrawal of ban in theMember State.
< 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, phthalates for indoor use was 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 bysubmitting dossiers in accordance with Annex XV of REACH, the proposal was
rejected by committees of the ECHA in June and December 2012. Denmark
subsequently has withdrawn the ban. Harmonisation at the EU level will restart.
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 started a new website
on PACT-RMOA and publishes the result of the assessment of SVHC as
carried out, which is an improvement though SMEs might still find difficult todigest. The authorities of the EU should further improve the care for SMEs.
 Although PACT-RMOA has increased the transparency of the identification of
SVHC, the process of contributions by industries should be further developed.
 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.
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 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.
< Recent Progress >Progress has been seen for the recommendation on SVHC by the introduction of
PACT-RMOA.
< 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.
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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.

15.2 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 including public
consultation.
< 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.

15.3 RoHS
The BRT recommends that the identification and assessment of substances for
RoHS inclusion should be done based on a robust and consistent methodology bytaking account of the most appropriate risk management option. Going forward,
the principles of "REACH and Directive 2011/65/EU (RoHS) - A Common
Understanding should be duly applied and implemented to avoid overlap in
regulation.
The BRT requests that all new regulatory initiatives should provide the necessarylevel of legal certainty, transparency and predictability to allow for timely
implementation with regard to restriction, substitution and exemption requests.
< Recent Progress >Some progress has been made.
Upon the European Commission's initiative, a working group has been established todevelop guidance on the methodology for the identification and assessment ofWorking Party A: Trade Relations, Investment and Regulatory Cooperation
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substances for inclusion in the list of restricted substances.
A
Common Understanding paper has also been issued by the European
Commission which sets out scenarios on how to manage future regulatory action on
the same chemical substances under REACH and RoHS.
< Background >To identify and assess substances for potential inclusion in the list of restricted
substances under RoHS, the Commission has been working on a methodology. The
methodology should be further fine-tuned to provide clarity on the process andcriteria for substance review, offering a robust and consistent approach for all futureevaluations. The assessment of a substance does not necessarily lead to a
recommendation for inclusion in the list of restricted substances under RoHS as also
other risk management options may be considered.
Both REACH and RoHS regulate the use of chemical substances. The processes ofauthorisation, restriction and exemptions partially overlap between the tworegulations, adding to the complexity and burden for industry. The Common
Understanding specifies how these processes should be managed in the mostefficient and effective way while safeguarding the protection of human health and theenvironment.

15.4 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 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.

15.5. 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.
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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 reporting scheme, the European Commission has carried out public
consultation.
As to the reporting scheme, some Member States, such as France, Belgium and
Denmark, have introduced their own regulation. A unified reporting scheme is evenmore 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.
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.

15.6. Biocide Product Regulation
The BRT asks the authorities of the EU to evaluate, in due course, the effectivenessof measures for treated articles under the Biocide Product Regulation (BPR) in
reducing the risks posed to humans, animals and the environment by biocidal
products, and ensure that such measures are fit for purpose.
<Recent Progress>
This is a new recommendation.
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The BPR (Regulation (EU) No 528/2012 of the European Parliament and of theCouncil of 22 May 2012 concerning the making available on the market and use of
biocidal products) requires that treated articles may not be placed on the market
unless all active substances contained in the biocidal products with which the articles
are treated or which they incorporate are approved. This requirement places large
burden and costs on industry, in addition to existing legislation mechanisms to restrict
and control hazardous chemicals (e.g. REACH, RoHS), resulting in possible
cessation of technologies, and consequent impact on competitiveness for
manufacturers or importers placing goods on the EU market. The BRT is concernedthat this is disproportionately impacting on non-EU manufacturers and importers
because such active substances to be regulated are often sourced from SMEs andcompanies with limited sales to the EU which cannot afford to undertake therequirements of the BPR, resulting in a loss of functionality, and in turn limiting thetechnologies and potential innovations reaching the EU market. As a result the BRT
recommends an assessment of the impacts of this regulation via an evaluation ofsocio-economic versus human and environmental benefits for treated articles
measures under the BPR.

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

Ecodesign

Relation of different product categories in Ecodesign
The BRT asks the authorities of the EU to uphold the Energy Related Products (ErP)
principle of setting Minimum Energy Performance Standard (MEPS) at the level ofLeast Life Cycle Cost (LLCC) so that consumers can buy affordable and efficient
products.
The BRT also asks that the authorities of the EU should carry out comprehensive
impact assessments for components integrated into products so that optimum
efficiency is pursued at the level of the final product not at the component level where
there is no tangible benefit to the consumers.
The BRT suggests that “repair as produced” principle should be applied as is thecase in the RoHS Directive.
<Recent Progress>
This is a new recommendation.
<Background>
When an impact assessment for components integrated into products is not carriedout like it is the case for instance with the revision of Lot 11 (fans), the benefits forenvironment and energy efficiency could be misleading. The lack of proper impact
assessment would leads to unaffordable products that no one would buy which inturn would not contribute to the reduction of energy use. Additionally, this would
cause the setting of unrealistic MEPs leading again to unaffordable final products forthe consumer. ErP implementing measures should focus on removing the least
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efficient products on the market and not set MEPs based on the 10% of most efficient
products which is covered by the Ecolabel regulation.
Using once again the Lot 11 (fans) example, when a product needs to be repaired, if
spare parts needed do not meet the current regulation, the product cannot be
repaired and a new product has to be bought, which is not resource efficient. If
regulation on a product takes spare parts into account, the product life can beextended by repair.

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

Taxation17.1 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.

17.2 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.
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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.
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%.

17.3 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 also
welcomes the publication by the Commission of options for simpler and more robust
future VAT regime.
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 leave
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accounting 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 / # 18** / J to E

Company Law / Corporate social responsibility

18.1 A new strategy on CSR Policy
The BRT recommends:(1) Policy discussion should not be lost in the argument about definition and about
the dichotomy between voluntary or mandatory approaches
Following the Communication of the European Commission in 2011 „A renewed EU
strategy 2011-14 for Corporate Social Responsibility‟ (COM(2011) 681), which has
clearly defined CSR and which has been widely welcomed by stakeholders, now it istime for every stakeholder to take its own part and build a future action. The BRT,
therefore, proposes the European Commission to lead policy discussion on
promoting actions to maximise positive impacts and mitigate negative impacts.
(2) Highlight the aspect of innovation and provide open platform
In order to enhance the competitiveness of companies in Europe and also toenhance the uptake of CSR, it is extremely important to articulate the proactive
character of CSR that will lead to „innovation and opportunities‟. The European
Commission should take a proactive role and lead this discussion by creating an
open platform.
Dialogue is a powerful tool to understand other societal actors‟ thoughts andmotivations. It is often more useful in building lasting trust than forced transparency
in the form of disclosure. Innovation is more likely to be triggered by open exchanges
among stakeholders, partner countries or regions, with their governments and with
suppliers.
(3) Take a process based approach with flexibility“Rule-based” approach or “tick box” approach cannot solve all the challenges that weface in today‟s world. A Compliance mind-set stops us to think further. CSR is ajourney. Therefore, a process based approach with flexibility can shape a dynamic
business environment which fosters innovation and competitiveness.
(4) Create incentives for companies with leadership for change
Identifying, preventing and mitigating the negative impact of businesses is extremely
important and, when done effectively, companies gain competitiveness in the end. In
tackling difficult issues like human rights inside and outside companies, the firstmovers would face challenges more often than the followers. The BRT would
welcome a mechanism where the first movers receive more recognition whereby
efforts to improve both positive and negative side of CSR are praised, not penalised.
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(5) Articulate policy linkages across the European Institutions
CSR is increasingly integrated into other EU policies such as company law, trade
agreements, and public procurement. Such policy linkages should be more clearlypresented by the European Institutions, so that companies can engage in early
discussion and more effectively integrate CSR throughout relevant functions.
<Recent progress>
This is a new recommendation.
<Background>
The Communication of the European Commission in 2011 „A renewed EU strategy
2011-14 for Corporate Social Responsibility‟ (COM(2011) 681) was an importantmilestone. Not only did it provide a modernised definition of CSR as the“responsibility of enterprises for their impacts on society”, but it further set out the
expectation that companies should have a process to integrate social, environmental,
ethical, human rights and consumer concerns into their business operations and core
strategy in close cooperation with their stakeholders. Furthermore, it made clear thatthe development of CSR should be led by enterprises themselves.
In preparation for a policy revision, the European Commission carried out public
consultation in 2014 and sought stakeholders‟ views on the impact of its CSR
strategy over the past three years and on the role that it should play in the future. The
EU Multistakeholder Forum on CSR was held in February 2015 as the final milestoneof the Commission‟s multi-stakeholder review process. The Commission will draft a
new strategy on CSR.

18.2 Conflict minerals
The BRT acknowledges that the proposal for a Regulation has taken up certain
feedback from businesses such as the promotion of internationally recognised
frameworks, the voluntary approach of self-certification and the publication of a list of
responsible smelters and refiners.
The BRT also acknowledges that two expert groups have been formed to define thelist of minerals and metals within the scope of the Regulation and to clarify themeaning of conflict and high risk areas. The BRT requests that their work should be
carried out in a transparent manner.
Without a well-established traceability scheme such as the iTSCi (ITRI Tin Supply
Chain Initiative), it would be extremely difficult to implement the conflict-freeaccreditation for smelters. The BRT thus requests that hasty expansion of thegeographical scope without reliable implementation of the existing traceability
scheme should be avoided. In order to effectively stimulate responsible sourcing, theBRT suggests that incentives focusing on upstream operations should be further
considered.
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The BRT further requests that clear criteria for the certification of Responsible
Importers, Smelters and Refiners should be set under a reliable, well-governed andfunctioning certification system. In order to avoid confusion in certifying importers, theBRT calls for the EU to set clear criteria for importers to become „responsible‟. Suchcriteria should make use of the existing criteria such as CFSI (Conflict Free Sourcing
Initiative) ‟s Conflict Free Smelter Program and LBMA (London Bullion Market
Association).
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>
There has been little progress. The proposal is currently under deliberation in theEuropean Parliament.
<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).
The informal meetings of experts have been established among the European
Commission, the Member States, the European Parliament, and experts to create ahand book to set the criteria of the „Conflict affected and high risk areas‟, and tocreate Guidelines for the competent authorities to be prepared for a harmonised
accreditation.

18.3 Country by country reporting (CBCR)
The BRT recommends that, in considering whether to introduce CBCR or not, theauthorities of the EU should carefully assess the risks of excessive disclosure
requirements that could unduly hamper multinational enterprises‟ business activities.
<Recent progress>
There has been little progress.
<Background>
The Directive 2014/95/EU of the European Parliament and of the Council of 22
October 2014 amending Directive 2013/34/EU as regards disclosure of non-financial
and diversity information by certain large companies and groups requires theWorking Party A: Trade Relations, Investment and Regulatory Cooperation
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European Commission to report on CBCR by 21 July 2018: The report shall also
consider, taking into account developments in the OECD and the results of related
European initiatives, the possibility of introducing an obligation requiring large
undertakings to produce on an annual basis, a country-by-country report for each
Member State and third country in which they operate, containing information on, asa minimum, profits made, taxes paid on profits and public subsidies received.

By the Directive 2013/36/EU of the European Parliament and of the Council of 26
June 2013 on access to the activity of credit institutions and the prudential
supervision of credit institutions and investment firms, amending Directive
2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC, 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 the extractive
industry or the logging of primary forests to prepare and make public a report 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.

18.4 Non-financial disclosure
The BRT appreciates the fact that the Directive 2014/95/EU of the European
Parliament and of the Council of 22 October 2014 addresses a number of concerns
raised by businesses including the BRT such as making non-financial KPIs nonbinding, 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 theEuropean Commission during the preparation of non-binding guidelines on
methodology for reporting non-financial information, including non-financial key
performance indicators. The BRT requests that its preparation should be carried out
in a transparent manner.
<Recent progress>
There has been a little progress.

The European Parliament and the Council reached an agreement in February 2014
on the final text of the Directive. The Directive was formally adopted on 22 October
2014 and published in the Official Journal on 15 November 2014.
<Background>
The European Parliament and the Council adopted the Directive 2014/95/EU on 22
October 2014. According to the text of the Directive:

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

Large undertakings which are public-interest entities exceeding on their balance
sheet dates the criterion of the average number of 500 employees during thefinancial year 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 sectoral, with a view to facilitating relevant, useful andcomparable disclosure of non-financial information by undertakings. In doing so,
the Commission shall consult relevant stakeholders. The Commission shall
publish the guidelines by 6 December 2016.

WP-A / # 19* / J to E

Product Safety/Market Surveillance

19.1 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>
There has been little progress. The proposal is under deliberation in the European
Parliament and the Council.
<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.

19.2 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 thisWorking Party A: Trade Relations, Investment and Regulatory Cooperation
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process 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 it should continue toconsult 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.
< 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 published the guidance for the New Legislative
Framework in 2014.

19.3 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.
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WP-A / # 20* / 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.
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 >There has been little progress.
< 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. Although theEuropean Commission has stated in its Work Programme 2015 its intention towithdraw and modify a proposal for a Regulation on the access of third-country
goods and services to the EU public procurement market (COM (2012) 124), it still
intends to establish legislative rules on the access of third countries goods andservices to the EU‟s internal market in public procurement and procedures
supporting negotiations on the access of the EU good and services to the public
procurement markets of third countries.
The BRT has a serious concern about such legislation that would enable the EU toclose its market unilaterally. The BRT is concerned because, by exercising such
unilateral measures, the EU could send a signal to its trading partners that the EU
is closing its procurement market discreetly, which could trigger a chain reaction ofprotectionist measures all over the world. Should it happen, the EU‟s intention andobjective of opening public procurement markets internationally would not be
achieved.

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