Recommendations to the Leaders of the EU and Japan EUJapan Business Dialogue Round Table 9-10 July 2001,
Brussels

The Members of the EU-Japan Business Round Table, having held their annual
session held in Brussels on 9 and 10 July and considering the importance of future
EU-Japan relations, hereby submit the following joint recommendations to theleaders of the EU and Japan.
"Partnership for New Growth"Creating an Open Environment for EU-Japan Trade and Investment

The development of the global economy and the economies of the EU and Japan, has,in recent years, been brought about by an economic structural transformation to aknowledge-based economy, where innovations including information andcommunication technologies (ICT) are the driving forces behind new growth. Inaddition, the power source of global economic development is the cooperative
tripolar relationship among Japan, the EU and the United States.
In this context, the economic relationship between the EU and Japan has yet tosufficiently realize its true potential. The BDRT pointed to the key role that structuralreforms can still play to enhance market efficiency and secure long-term sustainablegrowth. Such reforms should loom steadily on public agendas. As of today, andreflecting the first steps in economic structural reforms, deregulation, corporate
management reforms and business reorganization that have taken place in both
Japan and the EU in recent years, it can be seen that bilateral direct investment
between the EU and Japan is increasing, although still a far cry from levels to beexpected from partners of such magnitude and potential complementarity. This
increased direct investment is further promoting structural and corporate reforms inboth the EU and Japan. It remains of course the remit of our corporations to activate
and implement the necessary restructuring of the corporate sector, including
governance, best practice dissemination, management improvements to promote
more efficient resource allocation and more flexible adaptation to technological andengineering changes. Nevertheless, the Round Table considers that a positive
economic environment and structural reforms in both the EU and Japan would beinstrumental in promoting trade and investment, thus providing a good opportunity
to achieve a plus sum in a sustainable economic growth cycle in both regions. To thiseffect, it notes the importance of continued pro-active competition policies and strict
enforcement rules across all sectors of the economy by authorities in the EU andJapan, which constitute an encouragement to achieve self-sustaining economic
growth with positive effects on the world economy.

Points of the Round Table and its Recommendations
The Round Table submitted policy recommendations to the EU-Japan Summit, heldin July 2000, which defined the priority issues of how to promote further trade andinvestment exchange and laid out policy proposals indicating directions towards thesolution of these issues. There were also subsequent follow-up efforts to refine thecontent of the recommendations and in March 2001 an intermediate meeting wasconvened, at which evaluation was made of the Progress Reports published by theauthorities of both sides, which incorporated the current state of the advancement ofrecommendations submitted in 2000. Members expressed their appreciation for theimportance given by the authorities to these recommendations and called for anacceleration in the implementation of proposed measures.
In the 2001 recommendations, the Round Table first underlined that advances had
been made in the actualization and fulfilment of the contents of therecommendations, including the Mutual Recognition Agreement (MRA). It reiterated
its continuous support for both the EU and Japan's ongoing efforts toward structuralreform in the future.
The recommendations from the Round Table towards a "Partnership for New
Growth" call for the creation of an open environment to promote EU-Japan trade andinvestment, taking into account the progress made to date. In addition, the Round
Table issued a Policy Statement in which it strongly called for the launching of a newround of World Trade Organization (WTO) negotiations in the coming autumn.
Content of the Round Table Recommendations (Outline)
In order to realize in the near term an open and competitive market environment, theRound Table called for the Government of Japan and the EU to take the necessary
measures as soon as possible. In particular, investment in recent years has beencharacterized by more and more cross-border mergers and acquisitions ascorporations attempt to reorganize their global activities, and this has had an effecton the recipient countries of investment, promoting competition, and encouraging
the spread of new management techniques, as well as new technologies, which are all
expected to have a positive effect on the business environment.
In addition, as part of developments in the knowledge-based economic society
initiated by a blossoming of innovation in recent years, both the EU and Japan sharecommon challenges in their drive to create new businesses and markets in order tofacilitate new economic growth. To this end, it will be important to create anenvironment that promotes innovation, focusing on important strategic sectors suchas ICT, biotechnologies and the environment. In order to solve issues concerning theglobal environment, it is necessary for all countries around the globe to cooperate.
Regarding the Kyoto Protocol, the participation of the US government is vital. Toachieve this participation, the Round Table urges the authorities of Japan and the EU
to cooperate. Indeed, for Japan and the EU to pursue such policies into the future,
dialogue and exchange of information are of particular importance. Such activities
require an appropriate mutual posture to be fostered that will provide the foundationfrom which EU-Japan cooperation can flourish.

To this end, the Round Table would like to request the EU and Japanese authorities
to establish systems and rules that would function in synergy with corporate activities
in the new era in Japan, the EU and the global market, and to create an environmentthat would promote the further development of knowledge-based economies.
Specifically, we submit the following three-level approach.

1. Improvement of Business Environments in the EU and Japan - To
Promote Mutual Direct Investment and Trade
1-1 Improvement of Business Environments between the EU and Japan
1-1-1 Removal of barriers in mobilizing management resources between the EU andJapan
Action Plan/Agenda and early implementation of the MRA (MutualRecognition Agreement) and the expansion of its sectors (ex. medical devices).
Reduction of all remaining explicit barriers to trade and investment suchas quotas and other restriction and further reduction of tariffs.
Promoting the efficient allocation of human resources.
Removing double payments of social security cost.
1-1-2 Harmonisation of regulatory environment between the EU and Japan
Increasing transparency and efficiency.
Promoting deregulation and establishing the principle of non-discriminatory
treatment for foreign and local corporations.
1-2 Improvement of Business Environment in the EU
Improvement of corporate law system and regulatory environment
1-2-1 Council Regulations on the statute for a European Company and othercorporate laws
Early implementation of Council Regulations on the statute for a European
Company and participation of private limited-liability companies in theestablishment SE through merger.
Review of the procedure of the investigations into associations of undertakings
based on a Council Regulation on the control of concentrations between
undertakings.
1-2-2 Taxation

Early realisation of a Council Directive concerning arrangement for taking into
account by enterprises of the losses of their permanent establishments andsubsidiaries situated in other Member States.
1-3 Improvement of Business Environment in Japan
1-3-1 Improvement of corporate law system and regulatory environment
Strengthening regulation on corporate governance by amending thecommercial code in a non-discriminatory manner.
Increasing efficiency in the product approval process.
Increasing competition in the market (Telecommunication etc.).
1-3-2 Taxation
Action Plan for the early introduction of a consolidated tax system.
Securing the tax system to allow tax-neutral M&A and corporate restructuring on aglobal basis.
2. Establishment of International Rules Promoting Global BusinessActivities
2-1 International Accounting Standards (IAS)The advantages of a single set of international accounting standards, which
will result from the work of the International Accounting Standards Board, will
be evident in its universal application.
The work of the recently established International Accounting Standards
Board commands wide support in the EU, in Japan and internationally.
It will be mandatory for listed companies in the EU to comply with IAS in theirreporting by 2005. As a consequence, it will be particularly important that theEU and Japan work together to ensure that International AccountingStandards are applied at the earliest possible date.
2-2 Transfer Price Taxation
Introducing standard rules based on the fundamentals of the common
practices and a principle of international transaction, particularly worldwide
introduction of an effective Advanced Pricing Agreement (APA) system.
2-3 Taxation for e-Commerce
Promoting worldwide fair taxation system reflecting the discussion at the OECD.

3. Creating Environment for the Development of Knowledge-based
Economy - Promoting New Growth
3-1 Development of ICT Industry/e-Commerce: an Essential Component
for Growth3-1-1 Broadband Internet(fixed and mobile) will constitute one of the main engines to restart growth in
the technology sector. The EU and Japan have already recorded a remarkablesuccess by adopting a common standard, IMT-2000, for mobile Internet. IMT2000 is becoming a worldwide success for 3G.
It is now recommended to extend this success to other fields of Broadband andInternet, such as xDSL, optics and Next Generation Networks (NGN), which
will constitute the basic architecture of the network of the future carrying
voice, data and video.
3-1-2 Acceleration of eEurope/eJapan initiatives with focus on:-the rapid implementation of the new regulatory framework promoting faircompetition.
-increased cooperation on network and information security including (1)accelerated deployment of authentication techniques including electronic
signatures based on interoperable "key trust" infrastructures and mutually
recognised Certificate Policies, and (2) close cooperation on standardisation of
information security and digital rights management system to ensure robust
IPR copyright protection.
3-1-3 Encouraging governments towards ICT based development model fordeveloping countries to minimize Digital Divide
3-1-4 Cooperation for International Standardization-New Internet protocol and Broadband Access technologies.
-To address the WTO/TBT Committee in order to ask the observers in thisCommittee how they comply with the principles adopted during the second
triennial review of the TBT Code in October 2000.
-To transmit to the EU-J BDRT the results of the EU-ASEM study of the stateof implementation of various international standards, so that the EU-J BDRT
can see whether there is any need for further action in this regard.
3-2 Strengthening policy dialogue toward promoting innovation
3-2-1 Establishing bases for innovation (EU-Japan cooperation between industry andacademy, exchanges between EU-Japan research institutes).

3-2-2 Promoting technological innovation and industrialisation of biotechnology,
ICT, environment (Smart Card, etc.).
3-2-3 Reforming employment system (regulation, career development, mobility).