Recommendationsof theEU-Japan Business Round Table
to the Leaders of the European Union and JapanTokyo, 5 November 2020
Working Party 1
Trade Relations; Investment and Regulatory Cooperation; Financial
Services, Accounting and Taxation

Working Party Leaders:

Co-ChairMr. Michael MROCZEK
President
European Business Council (EBC)in Japan

Co-ChairMr. Koichi YAJIMA
Senior Adviser
Marubeni Corporation

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 1: Trade Relations; Investment and Regulatory Cooperation; Financial Services, Accounting and Taxation
EU-Japan BRT 2020Recommendations Report
Page 1 of 25

List of Abbreviations
Abbreviation
AEOs
APA
ATP
BEPS
BPR
CAA
CbCR
CCCTB
CE
CLP
CMR
CoRAP
DDA
ECHA
EIOPA
EN
EP
EPA
EU
FDI
FSA
FTA
FTT
G8
G20
GATS
GDP
GHS
GoJ
GPA
GPS
HSE
ICTs
IEC
IPM
ISO
JAS
JELMA
JET
JETRO
JIS

Meaning
Authorised Economic Operators
Advance Pricing Agreement
Adaptation to Technical ProgressBase erosion and profit shifting
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
European Chemical Agency
European Insurance and Occupational Pensions
Authority
Européen de Normalisation de Normalisation(European Standards)
European Parliament
Economic Partnership Agreement
European Union
Foreign Direct Investment
Financial Services Agency
Free Trade Agreement
Financial Transaction Tax
Group of EightGroup of Twenty
General Agreement of Trade in Services
Gross Domestic Product
Globally Harmonized System of Classification andLabelling of Chemicals
Government of Japan
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
Japan Industrial Standard

Working Party1:Trade Relations; Investment and Regulatory Cooperation; Financial Services, Accounting and Taxation
EU-Japan BRT 2020Recommendations Report
Page 2 of 25

JR
KPIs
LED
LoA
MAFF
METI
NTM
NOL
OECD
OR
PPPR
PSE
R&D
REACH
RoHS
SDS
SIEF
SMEs
SVHC
UNECE
VAT
WCO
WHO
WTO
WP

Japan Railways
Key Performance Indicators
Light-Emitting Diode
Letter of Access
Ministry of Agriculture, Forestry and Fisheries
Ministry of Economy, Trade and Industry
Non TariffMeasure
Net Operating Loss
Organisation for Economic Co-operation andDevelopment
Only Representative
Plant Protection Products Regulation
Electrical Appliance and Material Safety Law
Research & Development
Registration, Evaluation, Authorization and Restrictionof Chemicals
Restriction of Hazardous Substances
Safety Data Sheet
Substance Information Exchange Forum
Small and Medium size Enterprises
Substance of Very High Concern
United Nations European Commission for Europe
Value Added Tax
World Customs Organisation
World Health Organization
World Trade Organization
Working Party

Working Party 1: Trade Relations; Investment and Regulatory Cooperation; Financial Services, Accounting and Taxation
EU-Japan BRT 2020Recommendations Report
Page 3 of 25

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 Economic
Partnership Agreement will stretch beyond the many European and Japanesecompanies already operating in each other’s home markets to all those, attracted to
the new opportunities it creates. Working Party 1 stresses that the implementation of
the agreement must address the specific concerns of European and Japanesebusinesses reflected in this and previous 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 secure a fair and competitive environment for business. They
have been identified based on the extensive first-hand operational experience ofWorking Party 1 members in the Japanese and European markets. This report setsout concrete recommendations addressing the following key issues:

Creation of a common regulatory environment, mutual recognition of regulations,standards and market authorisations to the extent possible, adoption ofinternational standards and enhancing regulatory cooperation

Elimination of unnecessary barriers and bureaucracyEnsuring fair competition and equal treatment of all companies, domestic andforeign – for both goods and services



Improving conditions for foreign direct investment
and finally,

Pursuing simpler, lighter and sensible tax systems, including theimplementation of the BEPS Actions without additional administrative burden

To highlight priority issues in the text that follows, one asterisk (*) indicates “priority”
recommendations. (e.g. WP 1/ # 01* / EJ to EJ)

Working Party1:Trade Relations; Investment and Regulatory Cooperation; Financial Services, Accounting and Taxation
EU-Japan BRT 2020Recommendations Report
Page 4 of 25

Recommendations from both
European and Japanese industries
WP-1 / # 01* / EJ to EJ
Post –EPA

Strengthening the EU-Japan Economic Relationship

The BRT praises both the European Commission, and its member States, and theJapanese Government for the successful conclusion and enforcement of the EU-Japan
EPA. In parallel, the BRT would like to emphasise that the parties should be more
ambitious in order to get the most out of the agreement and also to build on theagreement to further profit from synergies. The effective application of the EPA would
prove even more important in ensuring steadfast economic recovery of both sides
following the COVID-19 crisis, as well as sustainable connectivity, and quality
infrastructure. It is also important for the EU and Japan as like-minded countries tostrengthen our complementarity and competitiveness through the EPA so that
weaknesses in supply chains that have become apparent due to the COVID-19 crisis
can be addressed. Hence the BRT recommends the following:
Enhancing Regulatory cooperation
The BRT calls on the EU and Japanese Authorities to:Continue to further strive for free trade between the EU and Japan without
obstacles by pursuing regulatory cooperation, harmonisation and mutual
recognition of international regulations and testing procedures.
Regularly consult companies of all sizes to ensure the best implementation ofRegulatory cooperation.

The BRT believes that:Regulatory cooperation will help the EU and Japan to take the lead in setting global
standards and regulations, and will benefit not only companies but also theeconomies and society as a whole.
Stronger trade and further integration of our economies will also act as acounterweight to protectionist tendencies and developments.
Global solidarity, cooperation and effective multilateralism are required more thanever to defeat the virus as well as to ensure economic recovery. It is therefore
extremely important to further develop the EU-Japan relationship to show othercountries that such cooperative relationships are possible.

Encouraging the use of EU-Japan EPA, particularly by SMEs
The BRT calls on the EU and Japanese Authorities to:Ensure that not only large corporations but also SMEs can make best use of theagreement.
Working Party 1: Trade Relations; Investment and Regulatory Cooperation; Financial Services, Accounting and Taxation
EU-Japan BRT 2020Recommendations Report
Page 5 of 25



Proactively inform industry of the advantages of utilising the EPA.

The BRT believes that:

SMEs are an important and integral part of both the EU and Japanese economies.
At the same time, they tend to face bigger difficulties in utilising a complex system
due to lack of resources and sometimes even knowledge. Getting them on board
is essential to make the trade between EU and Japan reach its full potential.
Different treatment by the authorities with regard to the Rules of Origin will bedevastating for the utilisation rate of the agreement. It is therefore crucial that theauthorities minimise differences in treatment.

Joint investment in 3rd countries
The BRT calls on the EU and Japanese authorities to:Continue to support EU and Japanese industry to make joint investment in 3 rdcountries, notably in the regions of the Western Balkans, Eastern Europe, Central
Asia, Indo-Pacific, as well as in Africa.

The BRT believes that:This support is in particular important in developing countries where investment
can help the country in question to raise its standard of living significantly;
It is furthermore important that the EU and Japan continue to play a leading role in
the global scene to ensure enhanced competitiveness.
The challenges of the current pandemic cannot be solved by the EU and Japan
exclusively within their own countries. Therefore, it is important to step up EU andJapanese assistance to partner countries facing the impact of COVID-19, not only
by providing short-term assistance but also by supporting them over the mid- tolong-term.

Minimising the impact of Brexit
The BRT calls on the EU to:

Work together with the UK to safeguard and promote free and fair trade throughimplementing a comprehensive EU-UK FTA immediately after the transition period
which covers all trade of goods, services and investments including frictionlesstrade such as no tariff, effective regulatory alignment and minimum custom
procedures between EU and UK;
Ask the UK government to extend the existing stock exemption to goods “fully
manufactured and ready to place on the market before” 1 January 2022 to alignwith the UK grace period that ends 31 December 2021. Also encourage the UK
government to use the internationally recognized same standards to harmonize
both the EU and Japanese conformity assessment that would encourage thepromotion of business and innovation.
Maintain/restore a favourable business environment including unfetteredinvestment, smooth services, and financial transaction, harmonised regulation andstandards, and access to workforces with necessary skills.

Working Party1:Trade Relations; Investment and Regulatory Cooperation; Financial Services, Accounting and Taxation
EU-Japan BRT 2020Recommendations Report
Page 6 of 25



Listen to calls from across the industries to ensure that any new arrangements will
be implemented in a manner that does not cause disruption, and take necessary
measures as much as possible.

The BRT believes that:

Brexit is impacting not only the EU, Japan, and the UK separately but also the EUJapan relationship;
Engagement with industry to address concerns and improved information about
preparations could help to minimise potential disruption;
Fair and free trade among the EU, Japan and the UK will not only help businessactivities but also benefit the wider area of cooperation and mutual interests
including the welfare of consumers and society as a whole while also continuously
encouraging the rules-based international order, the rule of law and promotion of
democracy.

WP-1 / # 02* / EJ to EJ
Recommendations for an ambitious multilateral tradeagenda toward the next WTO Ministerial Conference in Kazakhstan
Under the growing pressure of protectionism in the world and the prevalence of tradedistorting practices which could become even worse after COVID-19 crisis, the EU andJapan must together defend with other WTO members the centrality of the WTO as
the guardian of the multilateral trading system, and the value of WTO agreements asa basis of fair rules to maintain order in global trade, to assure the mobility of people,
capital, goods and services so that we could restart our economies from the negative
impact of COVID-19 and to promote further liberalization. It is therefore crucial that the
WTO and its members take into account the concerns expressed against trade andglobalisation, while ensuring that the multilateral trading system remains relevant andis reformed to better respond to present and future challenges.
The BRT calls on the EU and Japan to:

Reinforce the negotiating pillar of the WTO to better disseminate the benefits ofglobal value chains. The EU and Japan must play a central role in this regard.
Safeguard the proper functioning of the enforcement pillar of the WTO, its
Appellate Body in particular. The current deadlock in the appointment of new
judges means that, since December 2019, the body has effectively stopped
functioning, which has resulted in a serious blow to the WTO’s ability to settle
disputes. The BRT welcomes the leadership of the EU in the development of
the “Multi-party interim appeal arbitration arrangement’ (MPIA) to the WTO as away to address the current problems in the Appellate Body. However, the BRT
also recognises the temporary nature of this solution and stresses the need for
WTO members to engage in a more constructive dialogue.
Reaffirming the importance of a market-oriented trade environment. Regarding
the WTO reform, supporting the continuation of trilateral cooperation among theUS, the EU, and Japan, especially efforts to strengthen WTO rules on industrial
Working Party 1: Trade Relations; Investment and Regulatory Cooperation; Financial Services, Accounting and Taxation
EU-Japan BRT 2020Recommendations Report
Page 7 of 25













subsidies and technology transfer, and to improve compliance with notification
obligations, as well as ensure that all WTO members contribute according totheir real economic power. Finally, the BRT supports the development of rules
on trade-related aspects of electronic commerce.
Explore further topics that are essential for the smooth functioning of global
value chains together with other WTO members. These could include, forexample, industrial subsidies, the reduction of export restrictions, investment(facilitation) and competition.
Revitalise plurilateral negotiations and create momentum for negotiations tomove forward for the Trade in Services Agreement (TiSA), or, alternatively,
explore other ways to achieve liberalization in the field of services.
Lead the discussion of further expanding the product coverage and membershipcountries and regions for the Information Technology Agreement (ITA), as
agreed in December 2015.
The current circumstances related to the COVID-19 pandemic have further
underlined the need to capture fast technological progress. In this regard the
expansion of the ITA should lead to the elimination of tariffs on IT products andpromote digital transformation.
Moreover, the ITA plays a significant role in maintaining and continuing
negotiations on a plurilateral basis, given the difficulty of reaching an agreement
among all WTO Members.
Also encourage to make the moratorium on customs duties of electronictransmissions of the WTO permanent, noting that the custom duty-free
distribution of electronic transmissions is at the core of technological innovationand the digital economy.

The BRT believes that:The facilitation of negotiations for an agreement on e-commerce by 85 WTO
members is an important step in the right direction for the rule-making pillar of
the WTO and the BRT calls for an ambitious, comprehensive and commerciallymeaningful outcome, including rules to ensure cross-border flow of data.
The e-commerce Agreement should also prohibit data localization measures,
prohibit requirements for disclosure of source codes, etc., and ensure the nondiscriminatory treatment of digital products.
It is important to realise global free trade in goods and services under the
auspices of the WTO. This should include goods over the whole value chain tohave a real impact and to take into account the globalisation of the value chains.
Liberalisation should also include environmental goods related to theEnvironmental Goods Agreement (EGA), so long as it does not discriminate
unfairly between products and sectors.

WP-1 / # 03* / EJ to EJ Applying
regulatory cooperationinternational

standards

andenhancing

Working Party1:Trade Relations; Investment and Regulatory Cooperation; Financial Services, Accounting and Taxation
EU-Japan BRT 2020Recommendations Report
Page 8 of 25

The BRT believes that regulatory cooperation is key to the economic prosperity of thetwo economies. Given the successful entry into force of the EU-Japan EPA in February
2019, it will be extremely important than ever not only to ensure that new regulations
do not nullify or impair the market access benefits which have been achieved under
the agreement or create new barriers to bilateral trade, but also to further expand andstrengthen the regulatory cooperation between the two economies. This way the EU
and Japan will be able to create a favourable business environment and hopefully also
expand such cooperation to other bilateral and multilateral relations.
General recommendations
The BRT calls on the EU and the Japanese authorities to:









Building on the EPA, jointly pursue the harmonisation of rules, regulations andstandards. While the EPA has certainly provided great success in this regard,
the BRT believes that the work has to continue to deal with areas not coveredby the EPA as well as new areas and technologies.
Increase their understanding of existing and upcoming regulations of theotherside.
Where international standards have not yet been developed, when possible,
and appropriate, to accept the approval of the import, sale or use of productsthat have been approved on the basis of functionally equivalent requirements.
Study the possible impact of new regulatory developments on domestic andforeign business to avoid taking initiatives that might create barriers to trade andinvestment.
To establish a close dialogue with industry regarding the harmonisation ofregulations and standards by discussing concrete use cases and examples frombusiness experience.

The BRT believes that:




1.

The EPA creates a perfect platform for regulatory cooperation, but further efforts
are needed to keep the momentum up.
A similar mind-set as was shown during the negotiations is needed so thatenforceable harmonisation of regulations can be realised.
Continued dialogue is needed, but clear goals need to be defined as to avoid a
dialogue without results.

Create a common chemicals regulation
The BRT calls on EU and Japanese authorities to: Establish a common list of restricted substances and a common approachto the evaluation and sharing of data, and the hazard classification.

Working Party 1: Trade Relations; Investment and Regulatory Cooperation; Financial Services, Accounting and Taxation
EU-Japan BRT 2020Recommendations Report
Page 9 of 25

As a first step towards complete recognition set up a system where test
results carried out in either the EU or Japan to be recognised as carried out
in the other region.

The BRT believes that: The EPA provided a good platform with progress made for biodegradabilityof organic chemicals. However, more efforts are needed to harmonise or
mutually recognise the two systems.
 A common regulatory environment will not only benefit the industries
through cost mitigation but also benefit users and consumers through lower
prices and consistent protection.

2.

Create a common resource efficiency policy
The BRT calls on the EU and Japanese authorities to: Promote the concept of resource and energy efficiency, using the rightincentives, standardised test methodologies, criteria and a common format
of environmental products declaration between the EU and Japan andcooperate with each other so that such policies are internationally shared.
Areas, where regulatory harmonisation should be pursued, are the areas ofmaterial recycling and energy recovery which are essential for both EU andJapan economies if they are to become circular.
 Work together at the multilateral level to promote international
harmonisation of energy efficiency regulations, relevant labelling rules, andenvironmental and carbon footprint schemes.
The BRT believes that: Only through a common approach can many of the energy and environment
related issues be solved. It is therefore vital that the EU and Japan show
leadership in the field at ISO and IEC level.

3.

Expand the benefits of AEOs
The BRT calls on the EU and Japanese authorities to: Aim at introducing further regulatory cooperation in order to give more
concrete benefits to AEOs.
 Focus on introducing real advantages without increasing the administrative
burden for companies by granting more freedom, simplification andresponsibility to companies
The BRT believes that: A smoother logistical system where benefits are given to companies thatcan show that they have the capacity to properly trace each shipment.
 This is also beneficial for the authorities as the will be able to focus more on
illegal shipment and to support companies that have less capacity regarding
traceability.

Working Party1:Trade Relations; Investment and Regulatory Cooperation; Financial Services, Accounting and Taxation
EU-Japan BRT 2020Recommendations Report
Page 10 of 25

4.

Adoption of UN Regulations and promotion of regulatory cooperation in
the automobile sector
The BRT calls on the EU and Japanese authorities to: Continue to work and promote the UNECE as a forum for global
harmonisation of the vehicle regulations.
 Furthermore, accelerate their adoption of the UN Regulations to lower thecost of regulatory compliance for both European and Japanese automobile
manufacturers by extending the scope and benefits of mutual recognition.
 Work together to establish internationally harmonised technical standards
and testing procedures that will encourage the development and smoothmarket adoption of environmentally friendly and safety vehicle technologies,
such as electric, clean diesel, hybrid and fuel cell vehicles, as well as
autonomous and connected driving technologies.
The BRT believes that: A common regulatory framework will send a strong signal to the rest of theworld that harmonisation and the UNECE is the adequate forum

WP-1 / # 04 / EJ to EJ

Avoiding double contributions on social security

The BRT welcomes the conclusion of social security agreements between Japan and
13EU Member States. Negotiations or preliminary talks are under way between Japanand some additional EU Member States.
The BRT calls on the EU Members States and Japan to:

Swiftly conclude bilateral agreements so that double pension payments are
avoided.
As in interim measure introduce regulation that either exempts employees andemployers from pension premiums or returns the paid amount of both theemployee and the employer when the person leaves the country.

The BRT believes that:With increased labour mobility and the need for companies to both transfer andrecruit globally the demand for social security agreements will increase.

WP-1 / # 05* / EJ to EJ Recommendation on BEPS Action Plan, Financial
Transaction Tax and Other Tax Issues
The BRT supports the creation of an internationally fair taxation framework and levelplaying field. At the same time, the BRT believes that taxation system should be
simple and transparent as possible and should not create excessive administrative
burden on businesses.
BEPS Action Plan
Working Party 1: Trade Relations; Investment and Regulatory Cooperation; Financial Services, Accounting and Taxation
EU-Japan BRT 2020Recommendations Report
Page 11 of 25

The BRT calls on the EU and Japanese Authorities to:










Ensure that the implementation of BEPS Actions do not create additional
administrative burden on businesses;
Request to file CbCR only to MNE’s top parent company but not to MNE’s
subsidiaries in accordance with the OECD suggested protocol;
Aim at facilitating the conclusion of bilateral and multilateral APAs;
Not to implement the European Commission’s proposal for Public CBCR as it
breaches the confidentiality of information on taxpayers;
Keep confidentiality of information concerning taxpayers as BEPS Action 13
demands;
Give specific consideration to the global trading business model broadly
conducted by the financial services industry in terms of Permanent Establishment(“PE”) that the tax authorities in European Countries give utmost consideration
before making any tax assessment based on the determination that a trader
booking into an offshore booking entity under the global trading business should
qualify as dependent agent.;
Give utmost consideration to the implementation requirements in otherjurisdictions before implementing new tax rules, which may or not be BEPS
Action 13 and 7 related;
Avoid unnecessary uncertainty for compliant taxpayers and unintended double
taxation as was agreed by OECD/G20 countries in 2013.

Financial Transaction Tax
The BRT calls on the EU and Japanese authorities to:

Minimise the negative impact of the Financial Transaction Tax, especiallyregarding the possibility of reduced volume of financial transactions and decreased
liquidity.
Take great care to ensure that funding costs do not increase and that legitimate
hedging activities is not hindered.
Carefully consider the ongoing discussion on the scope of transactions covered in
the intended regulation, the country of taxation and the tax rate in one harmonised
tax regime so as to develop and integrate capital markets in the EU.

The BRT believes that:

While clear and transparent regulations are not an issue, the Financial Transaction
Tax risks decreasing the liquidity in the market which will be a negative effect tonot only the financial institutions but other companies and consumers as well.

Other Tax Issues
The BRT calls on the EU and Japanese Authorities to:Include all EU Member States and Japan in the mandatory binding MAP
arbitration in their bilateral tax treaties which the commitment was made by 20
countries including Japan and 13 EU Member States (Austria, Belgium, France,
Germany, Ireland, Italy, Luxembourg, the Netherlands, Poland, Slovenia, Spain,

Working Party1:Trade Relations; Investment and Regulatory Cooperation; Financial Services, Accounting and Taxation
EU-Japan BRT 2020Recommendations Report
Page 12 of 25

Sweden, and the UK) as a mechanism to guarantee the resolution of treatyrelated disputes within a specified timeframe;
Pursue simpler, lighter and sensible tax systems which will lead to growth andinnovation, and furthermore, reduce time and cost for both businesses to comply
and tax authorities to enforce;
Eliminate double taxation and modernise tax treaties between EU Member States
and Japan to ensure that royalty, interest and dividend payments are exemptedfrom withholding taxes to the greatest possible extent.
Cooperate to establish a reasonable global framework regarding digital taxation
currently discussed in the OECD in order to avoid economic confusions.

WP-1 / # 06* / EJ to EJ

Recommendation on Rules of Origin

With the entry into force of the EU-Japan Economic Partnership Agreement rules oforigin will play a vital role. Producers will have to fulfil these rules for the product tobenefit from the preferences given by the agreement.
The BRT calls on the EU and Japanese authorities to:When importing goods from the EU to Japan, since the use of the “Before Permit
System (BP)” requires prior permission and requires to submit the necessary
documents within 3 months after the permission, it places much constraints on theuse of the system. Also, when importing goods from Japan to the EU, if we apply
for customs refund by applying preferential tariffs after import based on the “Union
Customs Code (UCC)”, in some cases, the documents screening by the EU
member states’ customs is remarkably strict and remarkably prolonged, so it isdifficult to enjoy the preferential tariffs based on the EU-Japan EPA. Therefore, werequest that the both governments would improve the operation of approval
process and documents screening to be more flexible and speedy as well as toextend the system usage period so that importers in both Japan and the EU caneasily and quickly use the systems of both countries and enjoy the benefits.

The BRT believes that:

To enjoy the maximum benefits of the EU-Japan EPA, it is important for Japan andthe EU to make the systems on both sides more easy to use.

WP-1 / # 07* / EJ to EJ

Retrospective application of the EPA

Many importers have struggled to utilise the preferential treatment offered by the EPA
due to the customs authorities asking for either additional information or problems withthe statement with regard to multiple shipments. As the agreement has no provisions
for retrospective application the opportunity for the importer to ask for preferential
treatment despite having origin has been limited.
The BRT calls on authorities to:

Working Party 1: Trade Relations; Investment and Regulatory Cooperation; Financial Services, Accounting and Taxation
EU-Japan BRT 2020Recommendations Report
Page 13 of 25Allow for the retrospective application of the agreement so that products that doindeed have origin in the EU or Japan can make use of the agreement as wasalways intended.

WP-1 / # 08 / EJ to EJ
Commence negotiations on bilateral/regional
agreements on personal movement under the COVID-19
With the COVID-19, countries around the world have introduced restrictions on who
can enter the country. In many cases non-resident have not been able to enter certain
countries, but there have also been restrictions to that only nationals that enter a
specific country. Japan has started negotiating with mainly neighbouring countries, andsome agreements have already entered into force. Unfortunately, there are currently
no negotiations going on between EU, or EU Member States, and Japan. Without thepossibility to travel between the two regions, trade and investments will suffer.
The BRT calls on authorities to:

Immediately start negotiations to allow short-term businesspeople to travel
between EU and Japan.
Draft an action plan on how to deal with future pandemics with focus on travel
restrictions.

Working Party1:Trade Relations; Investment and Regulatory Cooperation; Financial Services, Accounting and Taxation
EU-Japan BRT 2020Recommendations Report
Page 14 of 25

Recommendations from
European industry to Japan
WP-1 / # 09* / E to J
Harmonisation & mutual recognition of standards andproduct certifications; acceptance of international standards where applicable
Industry still faces standards and products certifications that are not harmonised withinternational standards or regulations. Furthermore, some overseas approvals, despite
having being issued in accordance with EN and/or ISO, are not recognised by theJapanese authorities. This leads to delays in the introduction of innovative new
products to the market and increases import costs. While accepting the need tosafeguard consumer health and safety, the BRT urges Japan to promote theharmonisation of standards and certification procedures, the mutual recognition of
product certification and, in areas where harmonized standards do not exist, the mutual
approval of the import, sale or use of products that have been approved on the basisof functionally equivalent requirements, so that products certified for one market areautomatically accepted in the other market. The BRT recommends the Japanese
Government to place particular emphasis on:
Automobiles
The EPA agreement in principle ensures that “both Japan and the EU will fully alignthemselves to the same international standards on product safety and the protectionof the environment, meaning that European cars will be subject to the samerequirements in the EU and Japan, and will not need to be tested and certified again
when exported to Japan”.
However, in this area a big gap has to be seen between the ambition of the Agreement
and the reality. This is due to the transition periods of up to 7 years, several exemptions
and specific provisions in some areas. All in all, the Agreement does not significantly
change the current status to an improved situation.
It has to be feared that under the current provisions of the Agreement, improvements
will be seen only gradually and slowly. Especially in the important area ofemissions/fuel consumption, the discrepancy is expected to last.
The BRT calls on Japanese authorities to:






Shorten the transition periods,
Promote further harmonization in areas currently not covered by the agreement,
Change optional to mandatory conditions regarding the approval of EU certificates,
especially in the area of emissions/fuel consumption to ensure that – as intended
by the EPA – vehicles will not need to be tested and certified again when exported
to Japan,
Use the Automotive Working Group to increase the benefits in this area by
speeding up the envisaged changes and widen the harmonization efforts.

Railways
Working Party 1: Trade Relations; Investment and Regulatory Cooperation; Financial Services, Accounting and Taxation
EU-Japan BRT 2020Recommendations Report
Page 15 of 25

The BRT calls on Japan to:

To be more involved in introducing a national system for conformity assessment
and to encourage mutual recognition of testing and certification. The BRT believes
that a working group led by the Japan authorities including both domestic andforeign companies from all railway related sectors should be established.
Take extra care that standards and testing required by Japanese operators arecommunicated in a transparent manner so that European suppliers can meet andexceed these requirements.

The BRT believes that:

A national testing scheme would lower the costs for suppliers and would at thesame time make it easier for the authorities to make certain that railway relatedcompanies fulfil the proper safety requirements.

Processed food
While the EPA offers lower tariffs, the regulatory situation for companies still remains
the same. This means that companies have to spend significant resources and money
to fulfil requirements that are often unique to Japan.
The BRT calls on Japan in collaboration with the European authorities to:

Recognise European approvals and test methods
Harmonise with internationally approved food additives and enzymes
Abolish the system where some products receiving benefits under the EU-Japan
EPA have to be imported by ALIC.

The BRT believes that:With more recognition of European approval and test results, Japanese consumers
will benefit from more and cheaper European products.

WP-1 / #10* / E to J

Self-verification and risk assessment

Risk assessment and self-verification become more and more common as production
cycles become shorter. This in order to offer a way to shorten the time to introduce a
product to the market and at the same time ensuring that proper responsibility is taken
by companies. While self-verification is used in Japan too, government or third party
approval is often the norm.
The BRT calls on Japanese authorities to:Expand the use of self-verification while ensuring that proper care is taken toprotect the safety of human life, as well as animals and plants.

WP-1 / # 11* / E to J

Automobiles

Working Party1:Trade Relations; Investment and Regulatory Cooperation; Financial Services, Accounting and Taxation
EU-Japan BRT 2020Recommendations Report
Page 16 of 25

Kei cars and other motor vehicles continue to be subject to different treatments in termsof tax, insurance and parking rules. Although METI and JAMA have suggested
reducing the level of discrepancy in taxation to the order of 1:2, for the time being, thediscrepancy in the base level of taxation of kei cars and subcompact cars at 1:3.3
remains unacceptably wide.
The BRT calls on Japanese authorities to:

Put kei cars and other motor vehicles on the same fiscal and regulatory footing.

WP-1 / # 12* / E to J

Freight and logistics

Further to the WP-1 / # 03 / EJ to EJ, the BRT recommends that Japan revises its AEO
system to introduce real benefits for operators regardless of whether they are
forwarders, customs brokers or importers. Furthermore, the administrative load needs
to be lessened if companies are to be truly attracted to the AEO status.
The BRT calls on Japanese authorities to:Allow a bonded warehouse to act as a port of first entry with regard to products
covered by quarantine related regulations.
Promote Electronic Delivery Order for ocean freight
Take the lead in trying to digitalise the logistics industry as currently many
Japanese companies, including large companies, are still using fax and paper
orders.
Allow smartboxes to be part of the container. Only in Japan does this has to be
declared as part of the cargo, hence it has to be declared for import.

The BRT believes that:

A more seamless and flexible transport sector will have a positive impact on thegeneral flow of trade and better facilitate the improved market access offered by
the EPA.

WP-1 / # 13* / E to J

Retrospective application of the EPA

Many importers in Japan have struggled to utilise the preferential treatment offered by
the EPA due to Japan Customs asking for additional information. This information has
in many cases either been confidential, the importer has not had possession of suchinformation due to other reasons or imports were time sensitive and therefore theimporter did not want to take the risk of a delay due to missing information requests.
Unfortunately because of this some companies have opted for importing the products
outside of the agreement paying the WTO tariff. With the announcement made by
Japan Customs stating that the submission of additional information is not obligatory it
should now be possible to import the very same products. While the EU has a traditionof retrospective application Japan has not.
Working Party 1: Trade Relations; Investment and Regulatory Cooperation; Financial Services, Accounting and Taxation
EU-Japan BRT 2020Recommendations Report
Page 17 of 25

The BRT calls on Japanese authorities to:Allow for the retrospective application of the agreement so that products that doindeed have origin in the EU can make use of the agreement as was always
intended.

WP-1 / # 14 / E to J

Aeronautics

Haneda D runway weight restrictions are an obstacle to the use of European-madeaeroplanes and an obstacle to further development of international traffic at Haneda.
These weight restrictions should be re-examined to allow the operations of new andlarger aeroplanes such as Airbus-made A380 and A350.
The BRT calls on Japanese authorities to:Re-examine the weight restrictions to allow the operations of new and larger
aeroplanes such as Airbus-made A380 and A350. This should be in line with theapproval of the 747-8i which is in the same category as the A380 (code F aircraft).

The BRT believes that:With the increasing number of tourists coming to Japan, which will increase thanks
to both the Rugby World Cup and the 2020 Olympics, in combination with thedifficulties of increasing the number of slots, larger aircraft would play an importantrole in overcoming these challenges.

WP-1 / # 15 / E to J

Financial reporting

Differences in financial reporting often force companies to draw up multiple financial
reports. This is, in particular, the case for multinationals
The BRT calls on Japanese authorities and the ASBJ to:

Give greater priority to attaining alignment of JGAAP with IFRS, thereby reducing
the need for cumbersome reconciliations.
Consider adjusting tax and company laws to facilitate financial reporting
convergence where there are close ties between them. That way companies cankeep existing tax accommodations while obtaining the aforementioned benefits offinancial reporting alignment.

Working Party1:Trade Relations; Investment and Regulatory Cooperation; Financial Services, Accounting and Taxation
EU-Japan BRT 2020Recommendations Report
Page 18 of 25

The BRT believes that:This will contribute to reduced costs, improved data transparency and accuracy,
and at the same time strengthen the attractiveness of the Japanese financial
market by improving the comparability of Financial Statements.

WP-1 / # 16* / E to J

Travel restrictions and quarantine under COVID-19

With the spread of COVID-19 at the beginning of the year, countries around the world
introduced entry restrictions for non-nationals. This is/was true for both the EU andJapan. Today both the EU and Japan allows for residents to enter the region. In
addition, most EU countries also allow short-term visitors, including businesspeople.
to enter the EU. Japan will from 1 October 2020 allow businesspeople to apply for avisa to enter Japan.
However, non-Japanese residents in Japan are unfortunately treated differently fromJapanese nationals. Before leaving Japan, foreign residents need to register the
departure. This is not a requirement for Japanese nationals. Furthermore, when goingoverseas non-Japanese residents need to get a negative COVID-19 test result in thatcountry before returning to Japan. In addition, this test result must be issued less than
72 hours before the departure for Japan. The BRT sees no medical reason for thisdifference in treatment.
Currently, Japan is implementing a 14-day quarantine for travellers when returningfrom a foreign country. This is equally applicable to both nationals and non-nationals.
However, for short-term businesspeople that will be allowed to enter from 1 October
2020, these 14 days will severely impact their possibility to carry out their task as for
14 days they have to isolate. Japan already allows for exceptions from this rule, under
its bilateral arrangements. The BRT sees no problem in extending this possibility tobusinesspeople from Europe.
The BRT calls on Japanese authorities to:

Immediately remove the difference in treatment of Japanese nationals and nonJapanese residents with regard to COVID-19.
Implement a system where short-term European businesspeople can be exemptedfrom the quarantine rules similar to the arrangement done under the bilateralagreements.

Working Party 1: Trade Relations; Investment and Regulatory Cooperation; Financial Services, Accounting and Taxation
EU-Japan BRT 2020Recommendations Report
Page 19 of 25

Recommendations fromJapanese industry to the EU
WP-1 / # 17 / J to E

Chemical Regulations

REACH
The BRT calls on the EU authorities to:European Commission is planning to review the REACH regulations, and it
includes the establishment of the registration rules for polymers. Polymer
registration rules should be applied only for the polymers which have highconcern for human health and the environment, and not applied for the low
concern polymers, same as the other nation rules.
For that reason, the EU should adopt the PLC (Polymer of Low Concern) concept
in international alignment (harmonisation) and develop scientifically valid andclear criteria for the identification of PLCs to be exempted from registration
requirements.
The abolition of the current constitution monomer registration rules for imported
polymers, instead of the introduction of the new polymer registration rules.

The BRT believes that:

The monomers registration rules are not impartial system, because it is obliged
only for companies which import polymers from outside of EU, and not necessary
for polymer procurement from EU inside. In many cases, non-EU chemical
manufacturers do not produce polymers by themselves but purchase fromoutside and prepare them, so they have to ask upward of supply chains forvarious kinds of monomer information necessary for registration. It becomes aheavy burden for non-EU companies, and acts as a kind of non-tariff barriers.

The BRT calls on the EU authorities to:

There are many and well-reliable chemical data in the REACH, and the EU
authorities have a privilege to take an initiative on the international actions fordata sharing. Given this situation, they should encourage the REACH registrant
to share the data with the applicants in the other chemical regulations outside ofEU, for instance, by the preparation of the rules or guidance designated for theinternational data sharing.

The BRT believes that:

For protection of human health and the environment, it is significant to utilize thephysical and hazardous data of REACH registration for the chemical regulationsin the other nations. In addition, from the viewpoint of animal welfare, it isimportant to avoid unnecessary animal studies by utilizing them as much as
possible. But in reality, troubles happen in some cases now. For example, in
Korea, when the negotiations between the REACH registrant and therepresentative for registration of K-REACH are in difficulty, Korean companies

Working Party1:Trade Relations; Investment and Regulatory Cooperation; Financial Services, Accounting and Taxation
EU-Japan BRT 2020Recommendations Report
Page 20 of 25

are eventually forced to do the test by themselves and it causes the problems. It
is not clear with whom we should negotiate, and there are no rules forappropriate cost sharing.
The BRT calls on the EU authorities to:

The authorities of the EU to mitigate the negative effect of the withdrawal of theUK from EU on the implementation of REACH.
The BRT requests to the authorities of the EU to settle the transitional measures
to prevent the expiration of the OR change in case of no-deal Brexit which UK
exits the REACH regulation at the same time.

The BRT believes that:

As the UK has left the EU, the chemical regulation in the UK after the transition
period is unclear.

Appropriate approach to endocrine disruptors
The BRT calls on the EU authorities to:

The substance which may have a potential for endocrine disrupting effect shouldbe evaluated and eventually nominated as SVHC with special care as much as
possible.
The Authorities of the EU should promote the action to make subjects about the
low dose effect by endocrine disruptor clear with a tangible deadline.

The BRT believes that:

Some substances, like “3-BENZYLIDENE CAMPHOR” concluded as SVHC fromJanuary 2019, are concluded as SVHC based on the endocrine disrupting
potential for human and environment, by the reason that the potential can beobserved in some kinds of creatures, although the subjects mentioned asfollowing are not reached a clear scientific conclusion. On the other hands, inreality, markets tend to eliminate the substances listed on the SVHC list before
actual hazard level becomes clear, in case of the possibility to be added them toauthorization in the future.
The subjects about potency of endocrine disruptors are not reached clear
scientific conclusions yet, like it can be settled any thresholds of endocrine
disruption or not, and the thresholds can be measured or not.

Fluorochemicals
The BRT calls on the EU authorities to:Regarding the restriction proposal for PFAS by the reason of “persistence” alone,it should be considered that treatment with fluorotelomer-based products makes
materials/products more durable resulting in less waste and thereby contributes
to the EU’s environmental initiative: circular economy and that restricting PFAS
Working Party 1: Trade Relations; Investment and Regulatory Cooperation; Financial Services, Accounting and Taxation
EU-Japan BRT 2020Recommendations Report
Page 21 of 25

group as a whole which has more than 4,700 materials would result in the double
regulation that could lead to the supply chain confusion.
The BRT believes that: Introducing new and amending current restrictions shall be done strictly based onart 68 of REACH only in case of an unacceptable risk to human health or theenvironment.
 Due to the fact that currently neither analytical methods nor the certified
references for all kinds of PFAS are available, the restriction of PFAS group as awhole will cause a big confusion in supply chain management.
RoHS
The BRT calls on the EU authorities to:

The Authorities of the EU should keep harmonized and consistent in theoperation of RoHS and REACH, and aim to do prior confirmation and adjustment
to prevent confusion in the correspondence of supply chain, like the past case of
the SVHC concentration criteria in the article which the multiple interpretations
existed and became problems.

Nanomaterial
The BRT calls on the EU authorities to:With respect to the REACH ANNEXES which newly specify the necessary
subjects for registration dossier about nanoforms, the compliance of the Dossiershould be evaluated considering that the relevant knowledge and tools, such as
the OECD test guidelines and grouping tools, have not be fully available for theregistrants.

The BRT believes that:

The test methods or tools of nanoforms which REACH ANNEX requests areunder developing.

WP-1 / # 18 / J to ECommon Consolidated Corporate Tax Base (CCCTB)

The BRT urges the authorities of the EU to adopt the second step CCCTB
proposal swiftly after the adoption of the first step CCTB proposal because the
BRT thinks that the substantial benefits to businesses are mostly in the second
step.
The BRT hopes that, in the deliberations of the proposals of CCCTB in theCouncil, the Member States will keep the tax system simple and sensible, andfocus on fostering growth and investment.
The BRT would like to suggest that, if the Member States should find it difficult toagree on the CCTB/CCCTB proposals, they should move on to the enhanced
cooperation procedure swiftly so that CCCTB would be first implemented by theMember States that support them.

Working Party1:Trade Relations; Investment and Regulatory Cooperation; Financial Services, Accounting and Taxation
EU-Japan BRT 2020Recommendations Report
Page 22 of 25

The BRT encourages the EU to aim at making the Best Practice corporate tax
system in the world to which countries around the world would aspire.

WP-1 / # 19 / J to E

Sustainable European Future

Policy on the Sustainable Development Goals (SDGs) and Corporate Social
Responsibility (CSR) / Responsible Business Conduct (RBC)
The BRT calls on the authorities of the EU to:








Maintain the ambition to integrate the SDGs into all policy areas, a move which iswelcomed by the BRT.
Ensure policy coherence and create an enabling environment to encourage theuptake of both individual and collective actions to maximise positive impacts
while mitigating negative ones.
Support dialogue as a powerful tool to advance towards a sustainable future.
BRT welcomes the launch of the Committee on TSD under the bilateral EPA.
This committee should have an open and transparent nature and involve broad
participation from the real economy both from Europe and from Japan. It would
be particularly beneficial not only to exchange best practices between Japan andthe EU, but also to gather views on the future policy trajectory in the two regions
and globally.
Take account of past experiences. BRT recognises that the Committee on TSD
will be a platform for the EU and Japan on sustainability. The Committee should
build on the outcomes and experience of the EU-Japan CSR Working Group, oneof the technical working groups set up by DG GROW and METI within the EUJapan Industrial Policy Dialogue for the past 6 year and its EU-Japan business tobusiness dialogue on CSR.
Have a balanced approach and take care not to reinvent the wheel. A“sustainable future” should be understood not only in terms of environmental
aspects but also other aspects articulated in the SDGs. Many frameworks andcollaboration platforms on sustainability involving companies and stakeholders
following EU sustainability policy exist. We should build on and focus on thesecollective achievements in CSR/RBC and the SDGs for further innovation andcollaboration to achieve a sustainable European future.

Disclosure and transparency
The BRT calls on the authorities of the EU to:

Develop a thorough impact assessment on the disclosure. Careful assessments
and analyses of the costs, impacts and benefits for all stakeholders, including
financial companies and non-financial companies, are critical to define, from theonset, an appropriate and balanced scope
Maintain a principle-based approach to non-financial reporting: autonomy onmateriality decision-making and promoting quality of non-financial information.
 Emphasise dialogue as an equally valuable means for companies tostrengthen the trust of their investors and stakeholders and leverage theWorking Party 1: Trade Relations; Investment and Regulatory Cooperation; Financial Services, Accounting and Taxation
EU-Japan BRT 2020Recommendations Report
Page 23 of 25



improvement of companies' internal practices by incorporating dialogue into
the PDCA management cycle. Dialogue is a powerful tool in fostering aculture of risk management and innovation, whereby companies acrossdifferent cultures can exchange views on potential future risks as well as
explore collaborative opportunities;
 Envisage non-financial reporting as a meaningful channel for companies andinvestors to discuss/exchange on value creating processes, but not as anadministrative tool cultivating a compliance mindset. Disclosure of information
is an important means for companies to communicate about the value theycreate and has a potential to generate trust among stakeholders. However,materiality differs for each company, depending on the nature of its business,the perspective of top management and corporate culture and to whom. Dueto the different ways materiality can be defined, companies should be given
flexibility to decide upon what they report to best demonstrate the company’svalue creation and retain discretion in determining the content and recipientsof the information.
 Recall that not all non-financial information is quantitative, and not all
quantitative data are self-explanatory. Information related to social aspects
often needs narrative information. Focusing too much on comparability will
undermine stakeholders’ understanding of the real value of non-financial
information.
 Acknowledge that linking non-financial disclosure requirements to the EU
Taxonomy is just one way of demonstrating the efforts towards environmental
sustainability. BRT is concerned about excessive reliance on the EU
Taxonomy which is a developing mechanism.
Promote a global approach and avoid imposing EU-only monitoring/reporting
mechanism upon companies regarding their contribution towards sustainability.
Monitoring is a meaningful tool if it is focused on the impacts and improvementsthat are important to companies. Companies ought to be incentivised to integrate
non-financial reporting into their daily businessResponsible supply chain management
The BRT calls on the authorities of the EU to:

Promote internationally recognized frameworks in the EU that take a risk-based
approach instead of adopting the EU-specific conditions. A globally coherent
framework is a pre-condition to enable companies to take a global approach aswell as meaningful local actions. Such frameworks include the UN Guiding
Principles on Business and Human Rights and the OECD Guidance forMultinational Enterprises.
Take leadership in closing the governance gap between countries and regions inorder to effectively address the fundamental problems on the ground. The BRT
recognises that the efforts of industry alone cannot ensure responsible sourcingof products and services from such regions. Although the world is experiencing
unprecedented challenges from the COVID-19, it is crucial that national
governments get involved and collaborate and thus EU diplomacy has animportant role to play. The BRT supports dialogue and engagement withstakeholders. It is the best method to drive collaboration across different culturesand systems and to create value for business and society.

Working Party1:Trade Relations; Investment and Regulatory Cooperation; Financial Services, Accounting and Taxation
EU-Japan BRT 2020Recommendations Report
Page 24 of 25

Create an environment where companies are encouraged to nurture responsible
supply chains. The EU should recognise company efforts to make progress innurturing competitive, value-creating supplier networks and to put in placeenabling management processes, as opposed to a punishing framework.

Working Party 1: Trade Relations; Investment and Regulatory Cooperation; Financial Services, Accounting and Taxation
EU-Japan BRT 2020Recommendations Report
Page 25 of 25