EU-Japan Business Dialogue Round Table
Tokyo Meeting 17-18 July 2000
Joint Recommendation
The importance of the EU-Japan Summit of 19 July 2000 for the future developmentof EU-Japan relations has led the Members of the EU-Japan Business Dialogue
Round Table to issue the following Joint Recommendation to the Chairmen of thatSummit.

"Developing a New Paradigm in the Business Relationship
Between the EU and Japan"
A Report from the EU-Japan Business Dialogue Round Table
to the EU-Japan Summit Meeting

Whilst business relations between the EU, Japan and the United States are both theengine of the world economy and the main factor in its stability; economic relations
between the EU-Japan are yet to realise their true potential.
We, the EU-Japan Business Dialogue Round Table, see however, a new opportunity
for achieving that potential emerging before us, with the recent development of aknowledge-based society and globalisation, as well as corporate innovations inmanagement and structure. We are confident, that by seizing this opportunity, wewill be able to develop a new paradigm in our business relationship and advance theEU and Japanese economies.
In this context, the EU-Japan Business Dialogue Round Table, a forum of 44 CEOs of
leading European and Japanese companies, met in Tokyo on 17-18 July 2000 andissued specific recommendations for action by their governments in order to improvethe business climate and promote further trade and investment between Europe andJapan.
"The Members also issued a strong policy statement supporting the multilateralsystem and the launch of a comprehensive WTO New Round, as well as further
liberalisation and the elimination of obstacles to trade and investment".
Need to Improve the Business Environment in the EU and Japan.
Currently the globalisation of business activities is accelerating, a trend which isclearly seen in the increase of direct foreign investment world-wide. Multinational
companies investing in foreign countries will demand an improved businessenvironment in the EU and Japan, which will also drive these countries to reformtheir economic structures. This development is also being accelerated by the IT
revolution and the rapid emergence of e-commerce.
The regulatory framework of these countries, however, is not fully able to comply andrespond to today’s corporate needs. The most crucial policy issue we face today is theupdating and opening-up of the business environment surrounding us, whilst
ensuring real competition and an open market.
An improved environment will attract more foreign investment, which will in turnlaunch the advancement of structural reforms and result in a more attractive businessenvironment. This positive cycle will contribute to economic growth and help deepen
our bilateral economic relationship.
Recommendation towards the Mutual Prosperity of the EU and Japan
We largely believe that the future of economic relations between Europe and Japan is
now strongly influenced by the evolution of foreign direct investment. We therefore
urge public authorities to take the necessary steps, in the shortest possible timescale,in order to ensure the rapid establishment of an open environment favourable to thedevelopment of bilateral direct investment. We would also encourage the expansionof the exchange/training programmes for EU-Japan businessmen in order to provide
them with a better understanding of market conditions and mentalities.
To achieve this goal, the following three-level approach is recommended:
1. Improvement in Business Environments of EU-Japan-To Develop Mutual Direct Investment and TradeThere is a crucial need for the early adoption of rules and systems suitable for global
corporate activities in the current age, including consolidated tax systems, corporate
regulatory reform, a transparent regulatory environment and trade facilitation,
standardisation, MRAs, etc.
2. Establishment of International Rules-Promoting Global Business ActivitiesGovernment initiatives and support are needed to establish international rules insuch areas as the achievement of a world-wide accounting standard (IAS) andtransfer pricing taxation.
3. Development of IT Industry / Electronic Commerce-Building a New Era EconomyNew digital technologies are creating a new and promising future, building a network
society whose impact is far greater than we anticipated.

We aim to realise a global unified and secure electronic commerce environment,
developed through cooperation between industry and government. Successful
development of electronic commerce is strongly dependent on competitive access totelecommunications infrastructure at cost-oriented prices and on secure e-commercetransactions. Electronic commerce-related policy issues, such as Business Model
Patents and taxation, must be resolved by international consensus. The present GBDe
activity in areas such as notice and takedown, IPR protection and Trustmark, receives
our full support.
Furthermore, we attach great importance to the development for this sector of all
kinds of cooperation between the EU and Japan.
The mutual prosperity of our economies will be achieved only through cooperation
between government and industry. Therefore, we call for the support of responsible
authorities to realise our recommendations.
Key Points in the Joint Recommendation
1. Improvement of Business Environments in EU-Japan-To Develop Mutual Direct Investment(1) Early Adoption of Rules / Systems Suitable for Corporate Activity•

Early introduction of consolidated tax system.
This system is necessary in the EU and Japan for the removal ofbarriers to M&A and local corporate restructuring•Corporate regulatory reform-In the forthcoming changes of the Japanese commercial code, targets
for corporate governance (protection of investor rights etc.) should be
developed by the Government-Unification / harmonisation of business rules / systems in the EU
market are called for to facilitate EU-wide operations (e.g. the adoptionof the Statute on European Companies)•

Labour and immigration laws
Revision is needed to enable companies to allocate efficiently humanresources- Improvement of the application procedures for work permits and visas- Promotion of social agreements to avoid double payments of social security
costs.

(2)Increase Transparency and efficiency of the Regulatory Environment•Increase efficiency in the product approval process•

Increase competition in the market (Telecommunications etc.)(3)Trade Facilitation•

Conclusion of the EU-Japan MRA (Mutual Recognition Agreement) as soon aspossible. After the implementation of this agreement, other sectors (such as
medical equipment) could be considered for inclusion in future MRAs.
2. Establishment of International Rules-Promoting Global Business Activities-(1)Government Initiatives to Establish International Rules•

IAS (International Accounting Standards) should be accepted soon for crossborder listings in capital market.

•Transfer price taxation: Introduction of standard rules based on thefundamentals of transfer price practice common to international transactions,and a worldwide introduction of an effective APA (advanced pricingagreement) system .

•Patents: We invite EU and Japan authorities to study together, in close
cooperation with the private sector and IPR experts, Intellectual Property
Rights issues including the problem of ‘first-to-invent’ vs. ‘first-to-file’ policies.

(2)Promotion of International Standardisation/Harmonisation and ofStandardisation Projects by the Private Sector Initiative
ex. Next-generation mobile communications system (IMT-2000)
3. Development of IT Industry / Electronic Commerce-Building a New Era Economy1. Access to infrastructure
Encouraging governments to examine their local access policies covering both
unbundling of the local loop and time-based interconnection charges to ensure
speedy development of electronic commerce.
2. Support of the GBDe’s activities
Ensuring that GBDe policy recommendations are fully taken into account bygovernments to solve pending issues in such areas as Notice and Take-down
procedures, Trustmark and ADR procedures for consumer confidence and IPRprotection.

3. Patents (Business Model Patents)
Establishment of international systems to avoid non-beneficial disputes onpatent infringement; harmonisation of patent examination and approval
procedures, and patent databases.
4. Taxation
Taxation rules for e-commerce should arise out of international consensus at
the OECD in order to ensure neutrality, simplicity, fairness and consistency.