Recommendationsof theEU-Japan Business Round Table
to the Leaders of the European Union and Japan
Rome, 28 & 29 April 2011

Working Party A
Trade Relations, Investment and Regulatory Cooperation

Working Party Leaders:

Co-ChairMr. Tommy KULLBERG
ChairmanEuropean Business Council (EBC)in JapanVice Co-Chair
Mr. Philippe DE BUCK
Director General
BUSINESS EUROPE

Co-Chair
Mr Hitoshi KAWAGUCHI
Senior Vice-President
NISSAN MOTORS Co., Ltd.
Vice Co-Chair
Shinji FUKUKAWA
Senior Advisor
Global Industrial and Social
Progress Research InstituteWorking Party A
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Recommendations from both
European and Japanese industries
to the EU and Japan
WP-A / # 01 / EJ to EJ

Strengthening the EU-Japan Economic RelationshipJapan and the EU together account for more than one-third of world GDP and 22.4%
of world trade. However, EU exports to Japan amount to less than 2% of Japan’sGDP, well below the level in the EU’s other key markets, indicating that Japan offers
the EU enormous untapped trade potential.
Under the existing 2001-2011 EU-Japan Action Plan, non-binding instruments, suchas the Regulatory Reform Dialogue, aimed at improving the respective businessenvironments and developing bilateral trade, have delivered only extremely limited
results. As a result, this huge growth potential in trade and investment remains
untapped.
In 2010, EU-Japan Business Roundtable recommended that negotiations on abalanced and mutually beneficial bilateral agreement should start as soon as the EU
and Japanese Authorities agree that the right conditions are met, in order to promote
an ambitious expansion of trade and investment between the EU and Japan. Working
Party A repeats this call for the removal of barriers to trade and investment byaddressing a broad range of trade issues, including harmonisation of standards andcertification procedures, mutual recognition of product certification and, whenpossible, and appropriate, the mutual acceptance of functionally equivalent
regulations. Other areas, such as competition rules, services, procurement,
investment rules, the protection of intellectual and industrial properties, andcooperation on raw materials should also be addressed.

WP-A / # 02 / EJ to EJ
against protectionism

Support of WTO Doha Development Agenda for fightAlthough the global economy is growing again, protectionist risks remain high. The
Working Party is concerned about global imbalances and sharp currency fluctuations
which are pushing countries to intervene in currency markets or through capital
controls in what appears to be a classical game of currency devaluation. High

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commodity prices are pushing countries to adopt highly interventionist policies tosecure food and raw materials supplies. Moreover, export restrictions are on the rise.
The G20 Summit in Korea in 2010 gave a new impetus to the Doha Round andtechnical negotiations have resumed in Geneva. WTO Director General Pascal Lamyhas called for the start of a “final countdown” in 2011 in view of the next WTO
ministerial conference on 15-17 December 2011 in Geneva. The impasse in thenegotiations must be overcome in order to achieve a rapid and ambitious conclusion.
The Working Party recommends that the EU and Japan intensify their efforts to jointly
push for a more ambitious outcome. Together with other partners (like the US) theyshould engage jointly with key emerging countries (in particular Brazil, India andChina) to secure market access on industry and services that reflects their growing
economic weight. It is important to note in this light that during the economic crisis,countries like China, India and Brazil have increased their competitiveness and trade
market share. Improved market access must be obtained in the Doha Round, and notin any future trade round.
The draft agreement on industrial goods (December 2008 texts on NAMA) should be
improved to support growth and development more. In the current modality,
emerging countries make too few commitments and receive too many exceptions.
Specific tariff and non-tariff sectoral agreements in goods (chemicals, machinery,electronics/electrical), agreements on services including elimination of foreign equity
limitations, and agreements on trade facilitation of clean technologies – (forrenewable energy and energy efficiency products – provided a sector can bedelimited in a clear and non-discriminatory manner) should all be part of a more
ambitious Doha outcome. Given their dependence on external raw materials supply,
the EU and Japan should also strongly make the case for strengthening disciplines
on export restriction. The EU and Japan should also move ahead with parallel tracks
for action within the WTO, for example on the trade facilitation package. An ambitious
and binding trade facilitation agreement would help significantly to facilitate trade forboth developed and developing countries and to reduce costs for importers andexporters.
In the current GPA revision by major trading partners, the EU and Japan should alsopress for the suppression of unjustified exemptions and derogations of GPA rules.
WP-A / # 03 / EJ to EJ
Applying international standards
cooperation in the promotion of new global standards

andenhanced

1. The Working Party urges both authorities to adopt international product standards
and certification procedures where applicable, and, to promote harmonisation ofWorking Party A
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standards and certification procedures, mutual recognition of product certification
and, when possible, and appropriate, mutual acceptance of functionallyequivalent regulations governing the application process for importing andselling/using products in sectors such as Construction Materials, Organic
Products, Cosmetics, Medical Devices, Veterinary Products, Automobiles andProcessed Food.
2. The Working Party recognises the importance of global patent harmonisation andstreamlining of the patent system as a way to promote innovation, reduce costs
and boost legal certainty. The authorities of the EU and Japan should take thelead in these efforts.
3. Given the nature of the issue and the importance for business as well as forsociety in general, the two Authorities should make an effort to harmonise theregulations for energy conservation, relevant labelling rules, and carbon footprint
schemes.
4. Following the agreement on the mutual recognition of the AEOs (Authorized
Economic Operators) in June 2010 between the EU and Japan, the Authorities of
the EU and Japan should aim at introducing further regulatory cooperation inorder to give more concrete benefits to AEOs; for example, once an economic
operator is approved as an AEO in Japan, its status should be extended to its
subsidiaries in the EU, and vice versa.
5. The two Authorities should create a framework between the EU and Japan in thedevelopment of practical application of new technologies, such as RFID andbiometrics authentication technologies. This will enable and enhance cooperation
among companies in the EU and Japan, and will also promote new international
standardisation and lead to its dissemination.
6. The two Authorities should disseminate model ICT use that contributes to thesecurity and the operational efficiency of the supply chain. For example, RFID
tags, sensors, biometrics authentication technologies and UCR (Unique
Consignment Reference) numbers can build a more secure and visible
international supply chain.
7. The European Commission and the Japanese Government should support the
ICT for Energy Efficiency Forum, actively participating in it and disseminating its
outcome in order to encourage global collaboration.
8. The European Commission and the Japanese Government should collaborate on
achieving international harmonisation at CODEX in the description and standards
for food for specified health use/functional foods.

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WP-A / # 04 / EJ to EJ

Supporting timely development of business

1. Social security contributions (avoiding double contributions):
The Working Party welcomes the conclusion of more agreements between Japanand the EU member states in 2010 and that further agreements are underconsideration. However, Japan and the Member States of the EU should makefurther efforts to expand the network of Social Security Agreements. In addition, theyshould introduce an interim measure, by which a host country should either exempt
contributions to pension funds unilaterally or refund the contributions in full when
expatriates return to their home country.
2. Personal data protection regime:
The Working Party believes that the ultimate objective of personal data protection for
individual business is to adopt and implement a reliable and cost-effective personal
data protection system at the level of a corporate group, within which the flow of data
should be free across national borders. In order to achieve this, the national
legislation of each country should promote such a system rather than impede bycreating different requirements.

To realise such a business environment between the EU and Japan, the Governmentof Japan should make sure that the review currently underway in its Special
Commission about Personal Data Protection in the Consumer Commission, in which
the revision of the law itself may be considered, should pay due attention to theinternational aspects of personal data protection and, in particular, the issue of theabsence of the adequacy status with Japan under the EU Directive 95/46/EC. The
two governments should then launch the adequacy-finding procedure under the EU
Directive as soon as feasible.
In parallel with the above process, the authorities of the EU and Japan should launcha dialogue in order to seek an international framework by enhancing cooperation withthird countries and international organisations. It should eventually lead to the closeralignment of data protection regimes around the world that would enable global
businesses to transfer personal data by complying with one regime.
In addition, the authorities of the EU and Japan should improve legal certainty
surrounding the use of new technological tools such as cloud computing applications
and services. We believe that such improved legal certainty would support andWorking Party A
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enhance the application of new technological developments while maintaining thedegree of data protection currently provided.

WP-A / # 05 / EJ to EJ
environment

Cooperation in the area of climate change and1. Collaboration to advance new technologies for more efficient energy use
Global warming is a global challenge that is high on the political agenda of both the
EU and Japan. Over the next decades the world will drastically have to change theway it produces and uses energy in order to save resources and contribute to limiting
global warming to 2° Celsius in this century. This will require a wide range of lowcarbon solutions. Much of the required emission savings need to come from more
efficient energy use in homes, business and transport. Many goods and services cancontribute to environmental improvements including the fight against climate change,and have the potential to create huge business opportunities. European andJapanese companies are at the forefront of developing technologies for low-carbon
solutions. The Working Party recommends that the EU and Japan should work
together, for example, through common standards and testing procedures, and by
fostering industry cooperation to advance these technologies and create larger
markets.
2. Integrated Approach for CO2 emission reduction
Although Japan and Europe still have relatively high per-capita emissions, theirrelative share in global greenhouse gas emissions is steadily decreasing. Both the
EU and Japan are adopting challenging targets to reduce the level of CO2 emissions.
For example, in the transport sector, in addition to better engine performance,various measures including improvement of road systems and traffic flow,
improvement of fuel quality, education of drivers toward eco-driving and fiscal
incentives to encourage the purchase of more fuel efficient cars are important. An
integrated approach that combines the efforts of all relevant parties involved,
including the auto industry, the fuel sector, policy makers and drivers, to achieve theobjective of CO2 reductions is the most balanced and realistic way to achieve thisgoal. Working Party A supports this approach, and urges the EU and Japanese
Authorities to cooperate in the transport and other sectors to achieve the highest
reductions possible at the minimum social cost.

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WP-A / # 06 / EJ to EJ

Better Regulation

The Working Party recommends that Japanese and European policy-makers
increase mutual understanding of existing and upcoming regulations on each side to
exclude unwittingly taking initiatives that create barriers to trade. Both sides shouldcommit to exchanging annual legislative work programmes at the earliest stage toprevent regulatory divergence and new trade barriers. In addition, the two sides
should agree to an early warning system for draft legislation in order to make thedialogue effective.
The EU and Japan should also develop a joint strategy to promote better regulation,
learning from each other’s experience and adopting a common system of good
governance. Currently the views of businesses in Japan and the EU are notsufficiently taken into account in the regulatory process. Better regulation, based ontransparency, early public consultation, impact assessment, public access to draft
regulations or administrative measures, could lead to a reduction in the cost of
regulatory compliance and the overall administrative burden, which would be to thebenefit of the Japanese and European economies as a whole.

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Recommendations from European industry to Japan
WP-A / # 07 / E to J
Harmonisation & mutual recognition of standards andproduct certifications; acceptance of international standards where applicable
Reluctance to accept EN and ISO standards or CE marking of products exported toJapan delays the introduction of new products to the market and increases importcosts. While accepting the need to safeguard consumer health and safety, theWorking Party urges Japan to promote the harmonisation of standards andcertification procedures, the mutual recognition of product certification and, whenpossible, and appropriate, the mutual acceptance of functionally equivalent
regulations governing the application process for importing and selling/using productswith particular consideration for consumer safety and health, so that products certified
for one market are automatically accepted in the other market. The Working Party
recommends the Japanese Government to place particular emphasis on:
Construction Products
The Government of Japan should work together with the EU Authorities towards
mutual recognition of all JAS/JIS and EN standards for all building materials.
Procedures for foreign testing institutes seeking accreditation under JAS/JIS
should be streamlined. Mere reference to ISO standards within JAS/JIS, has
proved not to be adequately helpful in facilitating the process.
Organic Products
The Government of Japan should work together with the EU authorities toachieve true mutual recognition of Organic Food Products labelling. Currently,
products which are certified as organic in Europe and meet the organic-JAS
regulations and are labelled organic in Japan must obtain a supplementaryorganic certificate from the Embassy of the country of origin every time they areimported into Japan. The working Party requests the abolishment of this need forsupplementary organic certificates.
Cosmetics
European cosmetics firms find it continuously difficult to expand their business inJapan due to the difference in standards for ingredients and permitted efficacy
claims between Japan and the EU and the Japan-specific product certification
procedures for so-called quasi drugs. The Working Party calls for common
regulations on the certification of medicated cosmetics, so-called quasi drugs(disclosure of approved ingredients, standard application times); common
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regulations on efficacy claims and advertisements; a common positive list ofallowable ingredients in cosmetics; and establishment of joint standards foralternatives to animal testing.
Railways
The combined Japan Railways companies run on more than two-thirds of therailways, whereas the remaining one-third is controlled by more than 80 private
carriers. This means that JR testing and acceptance standards serve as de-facto
requirements for railway equipment to be exported to Japan. Though standards
are not so different and data generated at European research facilities are
relevant for Japan, duplicate testing in Japan is required for the Japanese market.
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 ofrailway equipment provided by European organisations is accepted in Japan, andvice versa.
Medical Devices/Equipment
The EU’s export of medical devices to Japan is limited by the costly andcumbersome approval process. Development costs for EU medical device
producers are increased by requests for additional clinical trials from theJapanese authorities. Excessive Japanese standards and regulatory
requirements result not only in a significant device lag, but also together with theinsufficient reimbursement system, a device gap. The Working Party calls on thegovernment of Japan to intensify the work to simplify and harmonise theregulatory processes in the field of Medical Devices with that of the EU. Japanneeds to reduce the time and costs associated with introducing innovative newtreatments in the human healthcare market in Japan and to bring Japanese rules
in line with global standards.
The Government of Japan is therefore urged to create a more efficient productapproval process, in particular by:a) Shortening the medical equipment certification process: accepting clinical
trial data generated overseas and harmonising Good Clinical Practice (GCP)and Quality Management System (QMS) requirements with international
standards. The Working Party recommends that in the meantime, both
authorities should officially recognise that either ISO 14155:2003 (and as
subsequently amended) or Japan GCP is, in principle, generally acceptableto either party for all medical device clinical investigations and that, inprinciple, a QMS audit conducted by responsible authorities in Japan (PMDA
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or third party testing organisation) or by Notified Bodies in the EU isgenerally sufficient as evidence of compliance with quality management
system requirements when applying for market authorisation on either
market.
b) Eliminating differences between Japanese GCP and the GCP established by
the International Conference on Harmonisation.
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 Working Party:a) Urges the Government of Japan to take all measures available to speed up
product approvals and fully harmonise domestic regulations withinternational practices.
b) Requests Japan to work towards mutual recognition of European andJapanese marketing authorisations for veterinary products. This should startwith mutual recognition of GMP certification for veterinary medicines.
Harmonisation of regulations on animal vaccines, and ensuring productconformance under a unified GMP regime, should also be addressed.
Automobiles
In 1998, Japan became the first country in Asia to accede to the UN-ECE 1958
Agreement on the Mutual Recognition of Type Approval for Vehicles etc, which
provides that vehicle components which have received type approval according to
ECE Regulations in one contracting country are exempt from testing in any othersignatory country where those regulations have been adopted. Japan has now
adopted 40 out of a total of 127 ECE Regulations. The Government of Japan istherefore urged to accelerate its adoption of ECE Regulations to lower the cost of
regulatory compliance for both European and Japanese automobile exporters byextending the benefits of mutual recognition.
As new power-train technologies - electric vehicles, hybrid vehicles and fuel-cellvehicles – are developed, the Government of Japan should work with the EU toestablish internationally harmonised technical requirements that will encourage
the smooth market adoption of these new environmentally friendly technologies.
Compared with other countries, Japan imposes an excessively heavy tax on thepurchase and ownership of motor vehicles. As part of the proposedcomprehensive review of the taxation of automobiles which will take place in FY
2011, the Government of Japan should:

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Abolish the Automobile Acquisition Tax and Tonnage Tax.
Simplify the structure of the tax on automobiles and reduce the overall tax
burden on motorists in line with international best practice.
z Adopt and implement as early as possible internationally harmonised
standards for measuring fuel efficiency and exhaust emissions to assess
environmentally friendly vehicles.
zz“Kei” or mini-cars are those vehicles legally restricted to a maximum length of
3.4m, a width 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 andsubcompact cars, which do not enjoy the same prerogatives, even though theirperformance and specifications are similar. The Government of Japan shouldtake advantage of the review of the taxation system to put kei cars and othermotor vehicles on the same fiscal and regulatory footing.
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. The limited number of permitted foodadditives in Japan and unaligned standards between the EU and Japan increases
costs and prevents EU exporters from utilising scale effects. High conformity
costs are incurred because Japanese authorities do not accept evaluations madeby the EU or international bodies. The market potential for European exporters
would be greatly enhanced by:a) Harmonising Japanese regulations with international standards with respect
to re-dating, labelling and nutritional standardsb) Substantially increasing the list of permitted additives, in addition to
speeding up the approval processc) Introducing mutual recognition of conformity assessment procedures toeliminate the duplicate costs of evaluations.
9. Labelling rules
The Household Product Quality Law and accompanying voluntary labelling
guidelines, “hyojikitei”, prescribe in extreme detail how household products
should be labelled when sold in Japan. The Government of Japan should issue
clarifying orders to provide retailers with flexible alternatives for providing
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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.

WP-A / # 08 / E to J

Ensuring free and open competition in services

The Working Party urges the Government of Japan to tackle the lack of free andopen competition in Japan’s services markets. In particular, the Government should:
Remove obstacles to integrating the operations of financial groups. In particular, theinitiated reforms of firewall restrictions should be implemented fully to allow
financial groups to structure their organisations in Japan in the same way as they
do in the rest of the world.
Regardless of the direction the Government of Japan decides to take on postal
reform, Japan has a duty to abide by its WTO obligations, including the national
treatment provision of the General Agreement on Trade in Services, or GATS.
This means establishing equivalent conditions of competition between the Japan
Post entities and EU and other private delivery companies, banks, and insurancecompanies. Specifically,a.

Kampo insurance business should be subject to the same capital,
solvency margin, tax and policyholder protection funding requirements asprivate 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 establishedto prevent cross-subsidies from its existing dominant position. It is also
imperative that Japan Post remains under the jurisdiction of the Financial
Services Agency (FSA). The above requests are well within the realm of
the Government Procurement Agreement (GPA). Similarly, the insurance
business of cooperative societies (kyosai) should be subject to the samerequirements as private sector insurers.

Japan Post and private postal delivery operators should be subject to the same
customs procedures and formalities. A level playing field for both Japan Post andprivate postal operators should be ensured in the requirements for dedicated airway
bills, obligatory customs, quarantine and security clearance and the funding of these
services, as well as in the issuance of parking tickets for delivery vehicle parking
infringements.
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WP-A / # 09 / E to J

Promoting foreign direct investment

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.
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 Government should also ensure that rules offundamental importance to foreign companies are not altered without prior notice andconsultation. In this context, the Working Party calls on the Government to use allmeans available, including revision of Article 821 of the Corporation Law, to ensure
legal certainty for foreign companies established as branches in Japan.
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.

WP-A / # 10 / E to J
goods

Fight against counterfeited, pirated and contraband

Japan allows the importation of fake goods as long as they are for personal use.
Accordingly, there is an inflow of counterfeit goods sold on the internet on sites
outside Japan, but which are catering to the Japanese market. These two factors
unfortunately lead to quite a large trade in counterfeit goods. The Government ofJapan needs to make all trade with fake goods illegal and to better cooperate withoverseas authorities to secure the closure of sites trading in fake goods.
Furthermore Japanese authorities should improve and simplify the procedure forright-holders to receive information on suspected merchandise. Today right-holders
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can only receive information and photographs for a maximum of ten (10) suspended
products (even if they are the same product), which means that right-holders are
obliged to check most items physically at the custom offices.

WP-A / # 11 / E to J

Government procurement

The Government of Japan should increase its effort to facilitate better access to the
public procurement market in Japan. Studies have shown that over 80% of the total
government procurement market in Japan is not covered by GPA (The Agreement on
Government Procurement).1 One way to combat this could be to lower the thresholdfor public tenders. Currently some sectors are exempted from the threshold of 5
million SDR (special drawing rights). Another example would be to better define the“operational safety clause” within the transport sector. The Working Party furthermore
requests Japan to set up a single access point to fully cover all tenders, as well as
facilitate the use of e-procurement.

WP-A / # 12 / E to J

Aeronautics, space and defence

1. Space-related matters
The Japanese Authorities are contemplating space operations legislation that would
require Japanese users of satellite launch services to obtain official approval before
they contract for a launch, and would also require them to only use reliable launchservice providers approved by the Japanese Authorities. If the Japanese Authorities
do promulgate such a system, we request that it be fair and consistent with worldpractice, i.e., as similar as possible to the regime established by the French Space
Operations Act of June 2008 and associated by-laws.
Japan's international procurement of space ground equipment is often broken up insmall lots that are, in fact, tailor-made for individual Japanese suppliers. Integrated
systems have better cost performance, are more reliable, and should not be
excluded.
2. Level Playing Field in Civil Aeronautics Markets
Europe's wide-body civil airliners have not made significant inroads in the Japanesemarket, and Japan's business aircraft have not made significant inroads in theEuropean market. The Authorities of Japan and Europe should encourage
1

Copenhagen Economics, “Assessment of barriers to trade and investment between the EU and Japan”, 2009
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competition and facilitate the entry of each other's aircraft on their respective
domestic markets on the basis of reciprocity. Customers' procurement decisions
should be made on a competitive basis, free from irrelevant influence. For the benefitof customers, shareholders, taxpayers and the general public, airlines and othermajor customers should be encouraged to diversify their sources of supply. In order
to avoid undue influence on the procurement decisions of commercial
airlines, cooperation in aeronautics should not be biased towards US industry, butshould be significantly increased between the EU and Japan.
3. Establishing EU-Japan dialogue on defence industry issues
Europe’s defence industries offer highly competitive defence products and services,which often come with transfer of cutting-edge technology. Moreover, its products
satisfy Japan’s fundamental requirement for full inter-operability with US equipment.
There is scope for significantly greater collaboration between the EU and Japan on
defence products and services.
Both Europe and Japan face the challenges of increasingly sophisticated threats,
while defence budgets are under increasing threat. It is therefore clear that greatercollaboration would bring substantial benefits to both sides. To encourage thedeepening of this collaboration, we propose:-

A Japan-EU defence industry policy dialogue with the aim of exchanging
views and experience about defence industry issues common to both, andidentifying any impediments to further collaboration-

Japan allocate to Europe some proportion of its funds for Japanese officials toundertake fact-finding visits to overseas defence industrial sites.

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Recommendations from Japanese industry to the EU
WP-A / # 13 / J to E

EU policy on company law

The European Commission adopted a proposal for a Council Regulation on thestatus for European Private Company in June 2008. According to the proposal, it
was to be applicable from 1 July 2010. The Council should adopt it without delay.
The statute should realize the following points.
•••

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

WP-A / # 14 / J to E

Japanese expatriates

1. The Commission presented in July 2009 a proposal for a Directive on conditionsof entry and residence of third-country nationals in the framework of an intracorporate transfer (COM (2010) 378 final). We believe such a directive to
expedite and facilitate the transfer of intra-corporate transferees (ICTs) is
important to increase the attractiveness of the EU for multinational businesses.
However, the proposal could be further improved to facilitate the transfer of ICTs
and their family members. We believe a Directive should include the following
measures:
1) The maximum duration of the transfer to the European Union should be 5
years for managers and specialists rather than 3 years currently set in the
proposal (Article 16.3);
2) It should be possible for ICTs to submit the application for a work andresidence permit after entering the assigned country based on the waiver ofvisa requirements;
3)

It should be possible for their spouses to be automatically granted the rightto work upon their arrival.

4) The application of integration measures to ICTs should be voluntary.
2. More than five years have passed since the due date of the transposition into thelaw of the Member States of the Directive 2003/109/EC on long-term residence
status. The first report required under the Directive was due by 23 January 2011.
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We look forward to hearing from the European Commission about the actual stateof its implementation in each Member State.
The Directive 2003/109/EC is not applicable in the UK, Ireland and Denmark.
Japanese nationals in the UK, where their number is the highest among EU
countries, therefore, do not benefit from this Directive. The UK government shouldtake action in order to enable them to benefit from the EU directive.

WP-A / # 15 / J to E

EU Patent and Patent Prosecution Highway

1. We welcome the launch of an enhanced cooperation procedure on thecreation of unitary patent protection authorised by the Council on 10 March
2011. We would like to urge the EU and its Member States to adopt andimplement an EU Patent together with the European and EU Patent Court assoon as possible. We expect that each EU member state which agrees thissystemwill
approveratification
since
the
beginning
2. The Patent Prosecution Highway (PPH) aims to facilitate, and enhance thequality of patent examination at a participating IP office, by utilizing andsharing the result of examination at another participating IP office. Therefore,
the PPH is highly beneficial for patent applicants as it will expedite andimprove examinations. The EPO has been conducting a trial of the PPH with
JPO and USPTO. The PPH has been implemented between JPO andUSPTO since 2008. We would like to urge the patent offices of the EU
Member States to participate in the PPH.

WP-A / # 16 / J to E
goods

Fight against counterfeited, pirated and contraband

We would like to see the EU to take further necessary steps such as a possible
proposal for modification of the Enforcement Directive with a view to step up efforts inall the EU Member States to fight against counterfeited, pirated and contraband
goods, both inside and outside the EU. We would also like to urge the EU to makesure to implement Council Regulation (EC) No. 1383/2003 of 22 July 2003
concerning customs action against goods suspected of infringing certain intellectual
property rights and the measures to be taken against goods found to have infringed
such rights. At present, several Member States have not implemented it. It seems
that the customs authorities in those countries are unable to take the decision to ban
counterfeit goods. All the EU Member States should implement this regulation.
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Due to a lack of resources, only a small part of the goods that are passing throughthe EU customs are checked by the authorities. A substantial part of counterfeit
goods are passing through the customs as a result. With an increased cooperationby the manufacturers and importers of the authentic goods, including the provision of
more information on their products and the on-site training of officials, the customs
authorities should make inspection more efficient and raise the rate of its coverage.
The importers of the authentic products have to pay for the storage, transportationand destruction costs of counterfeit goods. Some companies may, as a result,renounce the fight against counterfeit goods. However, counterfeit products raise
more and more health and safety issues. In addition, there is also an obligation for
the Member States to destroy counterfeit goods detained by the customs and,especially, not to release them on the EU market. The EU, through the Member
States, should introduce financial support or offer free assistance.

WP-A / # 17 / J to E

Competitiveness of the EU economy

1. Europe 2020 and the Single Market Act
We express our continued support for Europe 2020. In particular, we support theSingle Market Act - the initiative of the European Commission to relaunch the single
market.

••••We would like to repeat the importance of the single market for the EU and theEurope 2020 strategy.
We believe that the single market can offer even more growth and jobs when
its full use is realised.
We agree to the Commission’s statement that the lack of regulatory
convergence internationally is a major obstacle to international trade. We
believe that the EU should go further than deregulations and should aim tobuild an area of common regulatory environment internationally.
The EU should make utmost efforts to realise the 50 proposals in the Single
Market Act by 2012.

2. Revision of high customs tariffs on audio-visual products and passenger cars
The EU is protecting some sectors of its industries by maintaining high customs
tariffs, for example 14% for audio-visual products and 10% for passenger cars,even though these industries are at the forefront of international competition andWorking Party A
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need stimuli for competition rather than protection. Such protection will not help
enhance international competitiveness of those sectors. Furthermore, it is only theirusers and consumers in the EU who unfortunately have to pay the resulting higher
prices. The European Commission and the member states should abolish or
drastically reduce these high customs tariffs.
3. Customs Classification
We believe that customs classification should be done in accordance with theHarmonized System Convention rules. However, we also believe it to be a fact thatthe rules do not provide a clear method of classification for such products aselectric-electronics products, where the technical convergence of IT and non-IT
products has emerged. This situation makes interpretation and classification moredifficult and complicated than ever, and has undermined transparency,
predictability and promptness for businesses. It is requested that the
EU acknowledges the concerns and difficulties the businesses are facing, andbased on the ｐanel reports by WTO issued on information technology dispute lastAugust, to take steps to increase predictability and improve transparency upon
importation of the IT products. The improvement of the said situation will indeed
contribute to the ICT industry development.
In the Netherlands, the Supreme Court ruled that toner cartridges should beclassified as chemical products and thus subject to 6% customs duty. In HNclassification, it is a part of copiers and thus subject to 0% customs duty. The
discrepancy should be resolved without delay.
4. Taxation
4.1

Common Consolidated Corporate Tax Base

We welcome the proposal for CCCTB (Common Consolidated Corporate Tax
Base) proposed on 16 March 2011. We hope for its swift adoption. CCCTB should
realise the following points to improve the competitiveness of the EU economy.
•••

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.

4.2 Merger Directive

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The scope of the Merger Directive (90/434/EEC) should be expanded to include
the transfer of real estates and other intangible assets in reorganisation.
Furthermore, the shareholding requirements should be abolished.
4.3 EU TPD
To provide sufficient incentive to the compliance with the EU TPD, the EU and theMember States should commit themselves to exemption from penalties (i.e.
penalties related to non-compliance with documentation requirements, penalties
related to transfer pricing adjustments and interest related to adjustments) if acompany submits an EU TPD acting in good faith and in a timely manner.
The EU and its Member States should not treat companies in good faith andcompanies that try to evade taxation in the same way as the imposition of penalties
even when EU TPD is prepared in good faith could lead to undesirable distortionsin the single market by forcing companies to adopt artificial transfer price in order toavoid penalties.
5. Competition Policy
There are guidelines in the determination of the amount of fines in case of an
infringement of the competition rules. We would like to see more clarity in thedetermination of the amount of fines so that businesses will not be unduly deterred
and that the ‘Lisbon Strategy’ will be achieved.
6. REACH
The EU regulation of Registration, Evaluation, Authorisation and Restriction ofChemicals (REACH) has been put into effect since June, 2007. Since the entry into
force of REACH, many of those tasks, including the provision of information on
REACH to companies and the general public, have been transferred to theEuropean Chemicals Agency (ECHA).
We successfully reached and passed the first deadline of registration thanks to all
stakeholders’ contribution last year. From this great achievement, we have learnt
so many things, such as importance and difficulty of information exchange throughsupply chains. We recommend that the EU government takes further actions foreducation and capacity building in developing countries for compliance with
REACH. We also request consideration by the EU government to establishingcertain lead-times or grace periods for compliance in cases involving developing
country parties in supply chains.

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Notification of substances in articles under Article 7 (2) of REACH will be startingfrom June 2011. We are making our best effort to comply with the regulation. We
request the EU to organize consistent implementation of REACH at Community
level, especially in notification, based on the ECHA’s guidance document underpreparation now.
Under draft RoHS Directive which is currently being reviewed (as of Feb. 2011), it
is obligatory to put CE mark on the subject products. The current legislation which
requires CE mark, entails technical documents. But this does not cause major
problems because the data which was measured for a specific product, can also
be used for all the products within a certain error range. However, the draft
Directive requires data on the basis of homogeneous materials, and it will benecessary to measure and record each time the lot of the each parts' materials
change. It is almost impossible to take such procedure for the products which arecomposed of many parts. Therefore, we wish to express that the technicaldocuments in RoHS should aim at the systems of compliance rather than the data
themselves, in order to avoid unreasonable obligation to the industry and to
implement legislation practically.
7. Consumer protection
Although there is a uniform concept in guarantee with household consumer goodsin the EU, there still exists significant difference in practice among the Member
States especially in the Scandinavian countries.
Further harmonisation ofregulations on guarantee will help realise an economy of scale, which would benefit
consumers.
The review of Consumer Acquis (namely the four existing consumer protection
Directives comprising (i) Sale of consumer goods and guarantees (99/44/EC), (ii)
Unfair contract terms (93/13/EC), (iii) Distance selling (97/7/EC) and (iv) Doorstep
selling (85/577/EC)) is being carried out in the context of Consumer Rights
Directive. In the new Directive, the following issues should be taken into
consideration:• Guarantee should be limited to 2 years.
• The decision whether to replace with a new product or to repair a defective
product should be made by Trader rather than consumers.
• It should be consumers that bear the burden of proof that there was a defectfrom the beginning after 6 months of purchase even if the guarantee is stillvalid.
8. Environment, Social and Governance (ESG) information disclosure
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We fully support the direction taken by the European Commission on CSR,
particularly the increased attention to the impact that EU policies have beyond its
borders and to the role it plays in coordinating with other nation states toencourage companies to use their potential for achieving the common goals ofsustainable development. We strongly support the recent efforts to improvetransparency by facilitating all-inclusive stakeholder dialogue on Environment,
Social and Governance (ESG) disclosure.
We however express concern over the potential obligation imposed on companiesof different size, business sector and organisational structure to quantify and reportin accordance with only one set of quantitative key performance indicators. The
drivers behind value creation are company specific and can be hardly expressed in
one-size-fits-all parameters.
We therefore recommend that the European Commission should:•••

create a non prescriptive approach to ESG disclosure;create an EU-wide approach in the global context; andencourage and motivate information users such as investor communities andanalysts to understand non financial aspects of companies and integrate themin their evaluations.

9. Market Surveillance under the New Legislative Framework
In 2008, the Regulation 765/2008/EC, setting out the requirements for accreditationand market surveillance relating to the marketing of the products, and the Decision
768/2008/EC, a common framework for the marketing of products, were adopted.
The Regulation has been applied as from 1 January 2010.
The Regulation and Decision address and complement missing elements, namely,
accreditation and market surveillance, in the existing sectoral legislations. The
existing legislations are to be 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.
We support 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. We request the European Commission and theMember States to disclose all the relevant information regarding the progress ofWorking Party A
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this process and the implementation of the market surveillance in each Member
State. We also request the European Commission and the Member States to giveindustry an opportunity for contributing to developing the framework of harmonised
market surveillance.

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