Recommendations of the EU-Japan Business Dialogue Round Table
to the Leaders of the EU and JapanTokyo - 7, 8 and 9 July 2002

“A new Stage of EU-Japan Business
Promoting Foreign Trade and Investment
while Reforming and Restructuring Domestic Markets ”
The EU-Japan Business Dialogue Round Table is currently holding its annual meetingin Tokyo from 7-9 July in the presence of Minister Hiranuma, Senior Vice-Minister
Uetake, and Commissioners Liikanen and Lamy.

Contribution to the Action Plan
The Members of the Round Table and the representatives of companies invited as‘Observers’ noted the wish, expressed by both the European and Japanese Authorities,
to intensify and increase their bilateral relations. The Action Plan for EU-Japan
Cooperation adopted in December 2001 is the concrete demonstration of this.
The Plan comes at a crucial juncture, when Japan and the EU face new problems andchallenges, and they are undergoing significant structural changes. The Members of
the Round Table are conscious that the degree of success in their objectives of theAction Plan will directly influence the scale of the development of economic relations
between the two regions.
This Action Plan will deepen and broaden bilateral co-operation in several sectors,
notably in economic and technological areas. The position of Japan and the EU as
major players in the global economy, and measures they take to help less-developed
countries and to promote sustainable development, will serve to strengthen theirmutual links and will have a positive result at world level.
The EU-Japan Business Dialogue Round Table welcomes the launch of a new Round ofWTO negotiations which should bring about further trade liberalisation andstrengthening of WTO rules, and which is underpinned by commitments to strengthen

1substantially measures to increase capacity in developing countries. It confirmed thenecessity of further cooperation between the EU and Japan in all aspects of the Doha
Development Agreement.
The negotiations, which are entirely consistent with the multilateral objectives of theAction Plan, will also contribute towards sustainable development and environmentalprotection. In order to ensure the effectiveness of actions against global warming, it isindispensable to establish a global approach in which all countries participate.
Exchanges of experience and joint studies can but be of use to the two sides. The
economic, trade and technological aspects of the Action Plan concern the private sector
directly, since their success depends directly on the evolution of economic relations.
The EU-Japan Business Dialogue Round Table has designed its work programme totakeaccountofprogressalreadyachieved

bytheimplementation

of

its

Recommendations to the Authorities in 2000 and 2001. It notes with satisfaction theprogress made in most sectors to realise its Recommendations, but believes that one
should not underestimate the risk that delays in certain sectors pose to theachievement of key objectives.
The Round Table therefore urges the respective Authorities to speed up the process,especially in regulatory reforms and increased transparency.
The Members are fully aware of the crucial role they can and must play in order to give
real substance to the objectives of the Action Plan. From this viewpoint, the Round
Table proposes to proceed to the assessment of the relevance of what it achieved in thepast, and to identify relevant points for the successful implementation of the Action
Plan agreed by the EU and Japanese Authorities.

Strengthening the EU-Japan Business Relationship
There is a need to improve market accessibility and open further the markets to foreigncompetition, in particular foreign investment through deregulation, and to ensuresmooth cross-border corporate activities between Japan and the EU. Specifically,
special attention should be given to increasing transparency and to promoting foreign
investment on an equitable and non-discriminatory basis.

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The EU-Japan business relationship, however, has yet to reach its full potential. Our
challenge is now to strengthen our relations and bring them to a new stage.
In this context, the EU-Japan Centre for Industrial Cooperation is expected to continue
to support the EJBDRT and, more importantly, to adapt its activities to address thenew challenges.
Our Recommendations in the last two years have been centred on the trade andinvestment between EU and Japan, involving market accessibility issues. Quite
recently there has been visible progress in the number of locally established companies
on both sides, as well as the degree of their market presence. As the businessdevelopment of these companies is the key to the growth of EU-Japan business, theregulatory reforms of domestic markets and the improvement of the domestic systems
including corporate laws and taxation will be of increasing importance.
The Round Table stresses the necessity that from now on the EU and Japanese
Authorities comprehensively implement both domestic and foreign measures. The aim
being for a growth cycle where reforms in domestic markets promote further trade andforeign investment.
In the field of Information and Communications Technologies, the EU and Japan haveunquestionably world class industries. The Round Table strongly encourages theAuthorities to build upon this invaluable strength both for the benefit of future
economic growth and to ensure long-term strategic technology leadership at world-widelevel. In this context, the Round Table stresses the urgency to set up a policy
environment favourable to the provision of innovative media-rich services on various
telecommunications broadband networks and the need for a technology environment
based on openness and interoperability.
This will represent the start of a new stage.
Reflecting these new developments, the Key Points of the Joint Recommendations of
the Round Table currently being held are presented in the following Appendix.

3APPENDIXKey Points in the Joint Recommendations
Listed below are the key points of the Joint Recommendations of the EU-Japan
Business Dialogue Round Table currently being held, which will be further
completed reflecting the outcome of the discussions at the meeting. We submit these
Recommendations to the attention of the Leaders of the EU and Japan for intensive
actions towards providing precise and concrete answers before our next Annual
Meeting in 2003.
The Joint Recommendations include cross-cutting issues that are of interest to allindustries, irrespective of their sector of activity, as well as sectoral issues identified as
the most urgent ones to boost economic activities between the two regions.

1. Improving the business environment between the EU and Japan
Facilitating the free flow of goods and services:
Maximise and accelerate the elimination of explicit barriers to trade and investment
such as tariffs, quotas and other quantitative restrictions. Abolish discriminatory
regulations governing foreign investment.
Further promote the alignment of national standards and conformity assessment
procedures with international standards and guides in order to eliminate theunnecessary duplication of product testing and approval. Foster the implementationof the Mutual Recognition Agreement.
Infrastructures should enable companies to be competitive and to conduct businessactivities efficiently. Our target is to create conditions enabling further optimisation of
the distribution of manageable resources such as goods, money, labour, and information.
Facilitating the efficient allocation of human resources:
Re-evaluate visa and work-permit delivery procedure so that firms are better able toallocate human resources between their European and Japanese operations.

1Eliminate double payments of tax and social security costs.
Facilitating increased flows of mutual direct investments:
Strengthen the tax and legal systems to facilitate cross-border corporate restructuring
and tax-neutral M&A activity.
Intensifying the cooperation between regulatory bodies in order to accelerate thederegulation and re-regulation processes, in particular to foster the implementation ofvoluntary standards.
Enhancing the importance of broad band and multimedia for the general growth of theeconomies:
The convergence between telecommunications, media services and information
technology is reshaping the entire global communications market.
The Round Table urges European and Japanese policy makers to ensure a regulatory
and competitive environment which has the following objectives:−to increase dramatically the level of service available to enterprises andresidences: higher speed, more content, greater interactivity.

−

to make the whole environment truly open and competitive at the level of thetransport network, receiver equipment and conditional access.

−to ensure that the regulatory framework for traditional media is not extended tonew services.

−to speed up implementation of the new internet protocol IPv6.

−

to protect Intellectual Property Rights through technological measures and DRM.

−

to promote the proliferation of the Smart Card System.

−

to develop New Multimedia Services.

Furthermore, there is a need to launch promptly public initiatives to stimulate these
new multimedia services and foster consumer demand, and to provide support for theestablishment of a business environment, where there is no / not at present
commercially sustainable business cases to deploy broad band infrastructure andcontent services.

2European and Japanese industry and Governments must encourage the developmentof an open and interoperable technology environment. Initiatives such as the Open
Mobile Alliance (which aims at promoting open, global standards, protocols andinterfaces) paves the way towards seamless application interoperability and allows
industry to compete through innovation and differentiation.

2. Improving the business environment in Japan
Regulatory reform:
Regulatory transparency should be strengthened to make it easier for companies topredict the consequences of business decisions, plan for regulatory developments andefficiently allocate resources to comply with regulatory requirements. In particular,
written replies from Administrations should become the rule.
The product approval process should be improved to facilitate the introduction of
innovative new products at competitive prices.
Within the changes currently under process in the Pharmaceutical Affairs Law, anotification system based on risk classifications should be introduced for In Vitrodiagnosis.
Further and faster deregulation and re-regulation are needed to promote a truly
competitive market environment. In particular, judicial reform based on the Final
Report of the Judicial Reform Council should be implemented to remove barriers suchas the prohibitions of the freedom of association between foreign and Japanese lawyers,
and requirements for written advice for foreign lawyers when advising on third-countrylaw.
Legal and tax reform:
The legal and tax systems should be modernised to promote corporate activity andfacilitate further investment in an era of increasing globalisation.
So far as tax reform is concerned, we note that consolidated taxation has recently
been introduced but point out that, in our view, companies are unlikely to benefit from3the initiative because of the imposition of a 2% surcharge. We recommend that thispenalty is removed before the review period ends two years hence.

3. Improving the business environment in the EU
Facilitating EU-wide business development:
Rules and regulations governing economic activity within the EU should be further
harmonised to reduce the burden companies face doing business in the Single
European Market.
The smooth implementation and further improvement of the European Company
Statute are required to enable EU-wide unification of management and businessrestructuring.
The legal framework governing corporate structures in EU Member States should beextended to allow for an EU-wide company structure (Societas Europaea) for both stockand limited liability corporations.
An EU-wide consolidated tax system should be introduced to reflect the expansion of
EU-wide business activities and the introduction of an EU-wide company structure.
In the context of the current tax policy discussions in the EU, careful consideration
should be given to avoiding any measure which could hamper foreign investment.
ICT Environment:
Early and harmonised implementation of the EU’s New Telecommunication Directiveat the EU Member States’ level should be sought.
Many of the provisions currently applying to television broadcasting programmes inEurope, such as production quotas and advertising constraints, cannot be applied tonew content services.

44. Establishment of International Rules
Since the last meeting of the EU-Japan Business Dialogue Round Table, the EU has
decided that listed companies may use the International Accounting Standards (IAS)from 2005. The Government of Japan is undertaking a thorough review of theapplication of IAS. We warmly welcome both these developments.
We believe that it is necessary to continue the careful examination of the IAS in orderto make it a truly useful international standard. For this to be achieved, IAS mustreflect the actual needs of investors and corporate managers world-wide.
It is welcome news that the Government of Australia accepts the Financial Reporting
Council’s decision to adopt the IAS on 1 January 2005, the same date as
implementation of IAS by the European Union. Following the recent problems in theUSA, the reforms in accounting standards now in urgent review can be expected toconform to the IAS and to be implemented soon. We hope that the Government ofJapan will reflect on these developments as it reviews the application of the IAS inJapan.

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