Recommendationsof theEU-Japan Business Round Table
to the Leaders of the European Union and JapanTokyo, 3 & 4 April 2012
Working Party A
Trade Relations, Investment and Regulatory Cooperation

Working Party Leaders:
Co-Chair
Mr Duco Delgorge
ChairmanEuropean Business Council (EBC)in Japan

Co-Chair
Mr Hitoshi KAWAGUCHI
Senior Vice-President
NISSAN MOTOR Co., Ltd.

Vice Co-Chair
Mr. Philippe DE BUCK
Director General
BUSINESS EUROPE

Vice Co-Chair
Shinji FUKUKAWA
Senior Advisor
Global Industrial and Social
Progress Research InstituteWorking Party A: Trade Relations, Investment and Regulatory Cooperation
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List of Abbreviations
Abbreviation
AEOs
CCCTB
CE
CLP
EASA
ECE
ECHA
EN
ESG
FAQ
FSA
G20
GATS
GCP
GHS
GMP
GPA
ICT

Meaning
Authorized Economic Operators
Common Consolidated Corporate Tax
Base
Conformité Européenne (European
Conformity)
Classification, labelling and packaging
European Civil Aviation Authority
Economic Commission for Europe
European Chemical Agency
Européen de Normalisation deNormalisation (European Standards)
Environment, Social and GovernanceFrequently asked questions
Financial Services Agency
Group of 20:
General Agreement of Trade in Services
Good Clinical Practise
The Globally Harmonized System ofClassification and Labelling of Chemicals
Good Manufacturing Practise
The Agreement on Government
Procurement
Information and Communication
Technology

ICTs

intra-corporate transferees

IFR

Instrument Flight Rules

ISO
JAS
JCAB
JIS
JR
MRJ
NAMA
PFI
PMDA
QMS
REACH

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International Organisation forStandardisation
Japan Agricultural Standard
Japan Civil Aviation Board
Japan Industrial Standard
Japan Railways
Mitsubishi Regional Jet
Non-Agricultural Market AccessPrivate Finance Initiative
Pharmaceuticals and Medical Devices
AgencyQuality Management System
Registration, Evaluation, Authorization
and Restriction of Chemicals

RFID
RoHS
SIEF
SMEs
SVHC
TPD
UCR

Radio Frequency IDentification
Restriction of Hazardous Substances
Substance Information Exchange Forum
Small and Medium size Enterprises
Substance of Very High Concern
Transfer Pricing Documentation
Unique Consignment Reference

UNECE

United Nations European Commission for
EuropeWTO

World Trade Organization

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Recommendations from both
European and Japanese industries
WP-A / # 01 / EJ to EJ

Strengthening the EU-Japan Economic Relationship<Recommendation>
The BRT calls on the European Commission and the government of Japan toexpedite the remaining efforts necessary to complete their scoping activities on
ambitious terms. The BRT also urges the European Commission and the Council of
the EU to expedite their respective work on the mandates to authorise the European
Commission to negotiate an FTA/EPA and a political and cooperation agreementwith Japan on the basis of a successful scoping and keeping in mind the high level ofambition shown at the May 2011 EU-Japan Summit and supported by the BRT in its
September 2011 "Joint Statement Towards an EU-Japan FTA/EPA". An ambitious,
balanced and mutually beneficial FTA/EPA would have to be comprehensive andtackle major outstanding issues, such as tariffs, non-tariff barriers, public
procurement, investment, and harmonisation/mutual recognition of regulations andstandards, to develop and unlock the growth potential of EU-Japan economic
relations.
< Background >As major advanced economies and major global traders and investors, the EU andJapan can do more to unlock the enormous growth potential which their bilateral
economic relations can offer. They are now working on enhancing bilateral trade,investment and cooperation and building a closer relationship. As both strive toovercome global financial instability and economic uncertainties, it is crucial that theyjoin forces in tackling common challenges in order to attain a long-term, sound andstronger growth.

WP-A / # 02 / EJ to EJ
Call for a breakthrough in WTO Doha Development
Agenda negotiation and statement of strong support for fight against
protectionism<Recommendations>
The BRT is a strong supporter of the multilateral trading system, whose corefunctions are: trade liberalisation, rule-making and dispute settlement. However, theinitial high level of ambition of the Doha Round, launched in 2001, has not been
confirmed resulting in the current deadlock of negotiations. A so-called “Plan B” wasabandoned in May 2011. Also the December 2011 8th Ministerial Conference in
Geneva could not overcome the current deadlock which has revolved both around alack of political will and the inability to bridge the gap of market access commitments
between OECD and emerging country members.
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With the prospects of great uncertainty, the WTO must demonstrate its ability todeliver results for the business community. It should focus more on its core functionsin the future, namely trade liberalisation and rule making. As the only internationalorganisation creating rules and setting standards on trade at the multilateral level, theWTO must remain leader in this area and take more action. The existing legal
framework provides an excellent basis but needs to be updated in order to respondto a changing global economic landscape.

Ambitious agreements on trade facilitation and non-tariff barriers should beconcluded quickly. This would provide a significant boost to international trade. In
addition, plurilateral sectoral agreements should be further negotiated. The WTO
should also work towards clearer WTO guidelines on the coherence between
bilateral / regional trade agreements and the WTO system. Finally, the WTO should
explore other topical issues, such as the relationship between trade and investment,competition, energy and raw materials.

By advancing on a case by case basis the WTO should demonstrate its ability todevelop new trade rules and help its members see the advantages of tradeliberalisation. This should then serve to allow the restart of more comprehensive
market access negotiations. Any weakening of the multilateral trade system should
be prevented by all means.

WP-A / # 03 / EJ to EJ
Applying international standards
cooperation in the promotion of new global standards

andenhanced<Recommendations>
1.
The BRT urges both authorities to adopt international product standards andcertification procedures where applicable, and, to promote harmonisation ofstandards and certification procedures, mutual recognition of productcertification and, when possible, and appropriate, mutual acceptance offunctionally equivalent regulations governing the application process forimporting and selling/using products in sectors such as Construction Materials,
Organic Products, Cosmetics, Medical Devices, Veterinary Products,
Automobiles and Processed Food.
2.

The BRT 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 shouldtake the lead in these efforts.

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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 Authoritiesof the EU and Japan should aim at introducing further regulatory cooperationin order to give more concrete benefits to AEOs. The BRT would in this regard
like to put emphasis on simplifications of import procedures where companies
are given a greater freedom while also taking greater responsibility for theirimports.

5.

The two Authorities should create a framework between the EU and Japan in
the development of practical application of new technologies, such as RFID
and biometrics authentication technologies. This will enable and enhancecooperation 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 collaborateon achieving international harmonisation at CODEX in the description andstandards
for foodfor
specifiedhealthuse/functional
foods.

9.

In the automobile sector, the Japanese and EU Authorities should accelerate
their adoption of ECE Regulations to lower the cost of regulatory compliancefor both European and Japanese automobile exporters by extending thebenefits of mutual recognition. Also the Japanese and EU Authorities should
work together to establish internationally harmonised technical requirements
and testing procedures that will encourage the smooth market adoption of newenvironmentally friendly power-train technologies - electric vehicles, hybrid
vehicles and fuel-cell vehicles.

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<Background for 9. >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 approvalaccording to ECE Regulations in one contracting country are exempt fromtesting in any other signatory country where those regulations have been
adopted. Japan has now adopted UNECE Regulations in 31 of the 45 areas
included in Japanese type approval.

<General Background for 1-9>
Implementation of these recommendations will lead to a significant improvement in
the business environments of both the EU and Japan.

WP-A / # 04 / EJ to EJ
1.

Supporting timely development of businessSocial security contributions (avoiding double contributions):<Recommendations>
The BRT welcomes the conclusion of social security agreements between Japan andcertain EU member states in the past, but regrets that no new agreements wereconcluded in 2011. Therefore, the BRT requests that, Japan and the Member Statesof the EU make further efforts to expand the network of Social Security Agreements.
In addition, they should introduce an interim measure, by which a host country should
either exempt contributions to pension funds unilaterally or refund the contributions infull when expatriates return to their home country.
< Background >While individual EU Member States and Japan have concluded bilateral social
security agreement, Japanese citizens in many Member States cannot use pension
premiums paid in those countries towards the pension in Japan and vice versa.
2.

Personal data protection regime:<Recommendations>
The BRT believes that the ultimate objective of personal data protection for anindividual 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.

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To realise such a business environment between the EU and Japan, the Governmentof Japan should make sure to build on the report of July 2011 of the Special
Commission about Personal Information Protection established in the Consumer
Commission with a view to realise a harmonised data protection regime between the
EU and Japan. Furthermore, the EU has launched the legislative process ofsignificantly modifying its Directive 95/46/EC. The two authorities should consult
closely with each other so that the two regimes should not become more diverse..
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. The BRT believes that such improved legal certainty would support andenhance the application of new technological developments while maintaining thedegree of data protection currently provided.
<Background>
Implementation of these recommendations will lead to a significant improvement in
the personal data protection regimes of both the EU and Japan.

WP-A / # 05 / EJ to EJ

Better Regulation<Recommendations>
The BRT recommends that Japanese and European policy-makers increase mutual
understanding of existing and upcoming regulations on each side and their impact onforeign business to exclude unwittingly taking initiatives that create barriers to trade.
Both sides should commit to exchanging annual legislative work programmes at theearliest stage to prevent regulatory divergence and new trade barriers. In addition,
the two sides should agree to an early warning system for draft legislation in order tomake the dialogue effective. The EU and Japan should also develop a joint strategy
to promote better regulation, learning from each other’s experience and adopting acommon system of good governance. Currently the views of businesses in Japanand the EU are not sufficiently taken into account in the regulatory process.
< Background >Better regulation, based on transparency, early public consultation, impact
assessment, public access to draft regulations or administrative measures, could
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lead to a reduction in the cost of regulatory compliance and the overall administrative
burden, which would be to the benefit of the Japanese and European economies asa whole.

WP-A / # 06 / EJ to EJ

Support for SMEs

<Recommendation>
The BRT calls on the EU and Japanese Authorities to develop measures to promote
and assist SMEs to explore and seize business opportunities in each other’s market.
Should negotiations for an FTA/EPA begin, specific consideration should be made toestablish measures for SMEs within the framework of negotiations.
< Background >SMEs are considered as new sources of growth and jobs in both Europe and Japanand “going international” is one factor for enhancing their growth potential. Promoting
SMEs’ internationalisation is becoming increasingly important as a policy priority inthe EU and Japan. In this context it should be noted that the market access problems
and other impediments underlined in the BRT recommendations can be even moredifficult to tackle or manage for SMEs. With this background the BRT considers it
important for the EU and Japanese Authorities to discuss and cooperate to introduce
support measures (e.g. grants, tax incentives), or improve existing measures (e.g.
through exchanges of best practices), to help EU and Japanese SMEs seize
business opportunities in each other’s market.

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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<Recommendations>
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, the BRT
urges Japan to promote the harmonisation of standards and certification procedures,the mutual recognition of product certification and, when possible, and appropriate,
the mutual acceptance of functionally equivalent regulations governing the application
process for importing and selling/using products with particular consideration for
consumer safety and health, so that products certified for one market areautomatically accepted in the other market. The BRT 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.
The BRT also calls for Japan to lower its threshold for construction services
procured by sub-central Governments and public enterprises to 5,000,000 special
drawing rights.
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 BRT requests the abolishment of this need forsupplementary organic certificates. The BRT recognises the work of the Cabinet
Office in this regard and is looking forward to see the result of this work.
Cosmetics
European cosmetics firms find it continuously difficult to expand their business inJapan due to the difference in standards for ingredients and permitted efficacy
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claims between Japan and the EU and the Japan-specific product certification
procedures for so-called quasi drugs. The BRT calls for common regulations on
the certification of medicated cosmetics, so-called quasi drugs (disclosure of
approved ingredients, standard application times); common regulations on
efficacy claims and advertisements; a common positive list of allowable
ingredients in cosmetics; and establishment of joint standards for alternatives toanimal 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.
This has repeatedly been communicated by one JR company. Duplicate testingraises the costs of imports, making them less competitive than domestic products.
The Government of Japan and the EU authorities should work toward establishinga mechanism through which test data and certification of railway equipment
provided by European organisations is accepted in Japan, and vice 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 BRT 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 BRT 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 acceptable to either party
for all medical device clinical investigations and that, in principle, a QMS
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audit conducted by responsible authorities in Japan (PMDA or third party
testing organisation) or by Notified Bodies in the EU is generally sufficient asevidence 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 BRT: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.
c) Asks Japan to better facilitate the use of English in applications without theneed for a summary in Japanese.

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.
Labelling rules
The Household Product Quality Law and accompanying voluntary labelling
guidelines, “hyojikitei”, prescribe in extreme detail how household products should
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be labelled when sold in Japan. The Government of Japan should issue clarifying
orders to provide retailers with flexible alternatives for providing Japanese
consumers with globally sourced products while taking full responsibility for thequality and safety of the products. A simple example of an inflexible labelling rulethat has substantial labelling cost implications for European companies is that thedimensions of furniture must be expressed in millimetres and not centimetres,
although use of the latter is common practice in other countries using the metricsystem.
< Background >While some sectors have seen an improvement and “internationalisation”, several
sectors lag behind. This area is of great interest to European industry, which
would see significant benefits from not having to re-test its products.
Commercial aircraft<Recommendation>
Cooperation between Japanese and European aircraft certification authorities
should be upgraded. Specifically, EU-Japan cooperation should be upgraded at
the level of a full bilateral agreement. The use of English for all relevant
documents should be permitted.
< Background >There is a bilateral agreement between US and Japanese civil aviation authorities
that facilitates the mutual acceptance of the other party’s certification basis, while
there is only a working arrangement between Europe (EASA) and Japan (JCAB)
that proves extremely difficult to work with. Validation by JCAB of European Typecertified aircraft is a very lengthy process. In particular, validation of EASAcertified new optional equipments for helicopters whose Type Certificates are
already validated by JCAB should be almost automatic, but instead the Japanese
authority requires a review of all the technical documentation before approval.
This is often the cause of delivery delays of the products to Japan and may attimes preclude European manufacturers from fairly competing in public tenders,
due to stringent delivery requirements. Moreover, Japan is probably the only
country in the world where the Rotorcraft Flight Manuals must be translated into
the local language and approved by the local authority, again representing an
obstacle to helicopter imports.

Recently, Japanese civil aviation certification resources have been drained by alocal development project (i.e. MRJ) at the expense of imported products leading
to significant delays (and costs) in airworthiness clearance for European products.
Helicopters<Recommendation>
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Establish an increased level and better cooperation between Europe and Japanon the development of low altitude IFR routes and satellite based navigation
regulations for helicopters.
< Background >The US, Europe and Japan are working on developing their own regulations andinfrastructure without an adequate level of exchange of information andstandardisation. European and Japanese territories have more similarities thaneach has with the US, so that Europe and Japan should work more closely andwith a shared approach. Many European helicopters are already equipped withthe hardware to interface with ground based infrastructure already established toallow low altitude IFR routes and satellite based navigation, but that may proveuseless if there is no cross recognition of standards and regulations (software)
between the countries.

WP-A / # 08 / E to J

Automobiles<Recommendation>
The Government of Japan should put kei cars and other motor vehicles on the same
fiscal and regulatory footing.
< Background >“Kei” or mini-cars are those vehicles legally restricted to a maximum length of 3.4m, awidth 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 and subcompact cars, which do not
enjoy the same prerogatives, even though their performance and specifications are
similar

WP-A / # 09 / E to J

Ensuring free and open competition in services<Recommendations>
The BRT urges the Government of Japan to tackle the lack of free and open
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 financialgroups to structure their organisations in Japan in the same way as they do in therest of the world.
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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. Thismeans 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 as private 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 established to prevent cross-subsidies fromits 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 same requirements as private sector insurers.

b.

Japan Post and private postal delivery operators should be subject to thesame customs procedures and formalities. A level playing field for both Japan
Post and private 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.

< Background >Since the Big Bang in the late 1990’s, Tokyo has seen its role diminish in the global
arena. This is partially due to the very few changes undertaken since that time.

WP-A / # 10 / E to J

Promoting foreign direct investment<Recommendations>
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 BRT calls on the Government to use all means
available, including revision of Article 821 of the Corporation Law, to ensure legal
certainty for foreign companies established as branches in Japan.

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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.
< Background >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.
Even with the reorganisation of JETRO and the efforts starting with former Prime
Minister Koizumi to increase FDI to Japan, only very small improvements have been
seen.

WP-A / # 11 / E to J
goods

Fight against counterfeited, pirated and contraband<Recommendations>
The Government of Japan should make all trade with fake goods illegal and to better
cooperate with overseas authorities to secure the closure of sites trading in fakegoods.
Furthermore Japanese authorities should improve and simplify the procedure forright-holders to receive information on suspected merchandise. Today right-holders
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.
< Background >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.

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WP-A / # 12 / E to J

Government procurement< General Recommendations>
The Government of Japan should increase its efforts to facilitate better access to the
public procurement market in Japan. This could be achieved by lowering thethreshold for public tenders and better defining the “operational safety clause” within
the transport sector. Japan should also include more cities in the GPA as currently
only ten cities are included.
< Background >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
Currently some sectors are exempted from the threshold of 5 million SDR (special
drawing rights). Government Procurement was included in the so-called paragraph34 discussions, where Japan promised to set up a data base where all tenders,
national and regional would be posted. However, significant improvements are
required to bring Japanese public procurement closer to the levels of the EU.
<Recommendation>
In the bidding process in public tenders for helicopters:a. More balanced competition should be ensured by comprehensive evaluation
systems that also take aircraft performance into account.
b. Single year budget procurement constraints should be relaxed.
< Background >a. Although cheaper is not necessarily better, almost all Japanese government
tenders still have an evaluation system merely based on price competition.
b. Procurement by some governmental agencies (such as fire fighting anddisaster relief) is still tied to this constraint. In some cases the time between
the bid award and the requested delivery is less than six months, which ismuch too short for helicopter manufacturing, considering also the hurdles of
local certification upon import. This condition has been relaxed in the past few
years (for police procurement for instance).
<Recommendation>
Procurement of integrated systems of space ground equipment should be
encouraged.
< Background >Japan's international procurement of space ground equipment is often broken up insmall lots tailored for Japanese companies. Integrated systems have better cost
performance and are more reliable.

1

Copenhagen Economics, “Assessment of barriers to trade and investment between the EU and Japan”, 2009
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WP-A / # 13 / E to J

Aeronautics, space and defence

1. Level Playing Field in Civil Aeronautics Markets<Recommendation>
The Authorities of Japan and Europe should encourage competition and facilitate theentry of each other's aircraft on their respective domestic markets on the basisof reciprocity. Airlines and other major customers should be encouraged to diversify
their sources of supply. Cooperation in aeronautics should not be biased
towards US industry, but should be significantly increased between the EU andJapan.
< Background >Europe's wide-body civil airliners have not made significant inroads in Japan, andJapan's business aircraft have not made significant inroads in the EU. Customers'
procurement decisions are best when made on a competitive basis, free from
irrelevant influence. Unbiased cooperation will help avoid more undue influence on
the procurement decisions of commercial airlines. Diversification of supply sources
will benefit customers, shareholders, taxpayers and the general public.
2. Approval of Satellite Launch Service Providers<Recommendation>
The approval by Japanese Authorities of foreign launch service providers through theenvisioned approval system of Japanese commercial satellite launch projects should
be fair and consistent with commercial world practice as recognised andformalised by the French Space Operations Act of June 2008 and associated by-laws.
< Background >Japanese Authorities contemplate Space Operations legislation that would require
Japanese users of satellite launch services to obtain an official approval before they
contract for launch, and that would also require them to only use reliablelaunch service providers approved by Japanese Authorities. We have no issue withsuch legislation if it cannot be used to make competition in Japan difficult for EU
launch service providers.
3. Legitimate use of Private Finance Initiative Projects<Recommendation>
The Authorities should explicitly ban their own use of Private Finance Initiative (PFI)
projects to protect local satellite makers and launch service providers.

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< Background >Using PFI is a legitimate way for a government agency to procure space-based
services in a budget-efficient manner. Authorising domestic candidate companies toinclude their own commercial payloads (so-called hosted commercial payloads) in thesatellites that they will procure to provide the services is also legitimate. But barring
foreign suppliers from bidding for the satellite and the launch service on the grounds
that the government procures a government-only space-based service is
not legitimate because the presence of the hosted commercial payload makes it acommercial satellite. If this practice is not explicitly banned, much of the commercial
satellite
andlaunchservices markets
mayvanishpiecemeal
into
supposedly government programmes. (Note: We do not dispute the practice of
launching purely government satellites by a local government launcher.)
4. Establishing EU-Japan dialogue on defence industry issues<Recommendations>
In the defence sector:- Japan and EU countries should define a list of capabilities and technologies
for which there exist opportunities for cooperation-

Japan is encouraged to develop its dialogue with NATO armament agencies
and to improve access to NATO standard technologies-

A Japan-EU defence industry policy dialogue with the aim of exchanging viewsand experience about defence industry issues common to both, and identifying
any impediments to further collaboration<Background>
Europe’s defence industries offer highly competitive defence products andservices, 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 andJapan on defence products and services.
Both Europe and Japan face the challenges of increasingly sophisticatedthreats, while defence budgets are under increasing threat. It is therefore clearthat greater collaboration would bring substantial benefits to both sides.

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Recommendations from Japanese industry to the EU
WP-A / # 14 / J to E

Europe 2020 and the Single Market Act

The BRT expresses our continued support for Europe 2020 and in particular, theSingle Market Act - the initiative of the European Commission to relaunch the single
market.
1) The BRT would like to repeat the importance of the single market for the EU
and the Europe 2020 strategy.
2) The EU should make utmost efforts to realise the 12 priorities in the Single
Market Act by the deadline of 2012. The BRT would like to emphasise theimportance of the following priorities for the single market.
- Intellectual property rights- Consumer empowerment- Services- Networks- The digital single market- Taxation- Business environment

WP-A / # 15 / J to E
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, eventhough these industries are at the forefront of international competition and needstimuli for competition rather than protection. Such protection will not help enhanceinternational competitiveness of those sectors. Furthermore, it is only their users andconsumers in the EU who unfortunately have to pay the resulting higher prices. The
European Commission and the member states should abolish or drastically reducethese high customs tariffs.

WP-A / # 16 / J to E

Customs Classification

The BRT believes that customs classification should be done in accordance with theHarmonized System Convention rules. However, the BRT also believes it to be a fact
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that the 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 theconcerns and difficulties the businesses are facing, and based on the panel reports
by WTO issued on information technology dispute in August 2010, to take steps toincrease 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.

WP-A / # 17 / J to E
goods

Fight against counterfeited, pirated and contraband

The BRT 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. The BRT would also like to urge the EU to
make sure 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.
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
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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 / # 18 / J to E

Unitary Patent

The BRT welcomes the launch of an enhanced cooperation procedure for thecreation of unitary patent protection authorised by the Council on 10 March 2011.
The BRT would like to urge the EU and its Member States to adopt and implement a
unitary patent protection for the greatest possible number of Member States and aunified patent litigation system as soon as possible.

WP-A / # 19 / J to E

Taxation19.1 Common Consolidated Corporate Tax Base
The BRT welcomes the proposal for CCCTB (Common Consolidated Corporate Tax
Base) proposed on 16 March 2011. The BRT hopes for its swift adoption. CCCTB
should realise the following points to improve the competitiveness of the EU
economy.
1) Non-taxation of unrealised gains on goodwill within a group of companies thatform CCCTB
2) Non-application of arms-length principle within a group of companies thatform CCCTB.
3) Off-setting of profits and losses within a group of companies that form
CCCTB.
19.2

Merger Directive

The scope of the Merger Directive (90/434/EEC) should be expanded to include thetransfer of real estates and other intangible assets in reorganisation. Furthermore,
the shareholding requirements should be abolished.
19.3 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
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transfer pricing adjustments and interest related to adjustments) if a company
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 distortions inthe single market by forcing companies to adopt artificial transfer price in order toavoid penalties.
19.4 The fundamental reforms of VAT regime under consideration
The BRT welcomes the strategy of the European Commission to fundamentallyrevise the VAT system and to establish a simpler, more efficient and robust VAT
system tailored to the single market as described in Com (2011) 851.
The BRT hopes that the new regime will be realised swiftly and in such a way that abusiness group could easily and cost effectively centralise VAT administration in the
EU.

WP-A / # 20 / J to E
financial disclosure

On the forthcoming legislative proposal on non-

The BRT supports the initiatives taken by the European Commission to involve
stakeholders and facilitate dialogue in order to improve the transparency ofcompanies with regard to non-financial information disclosure.
The BRT believes companies of different sizes, business sectors and organisational
structures should be given the opportunity to choose the best reporting framework to
express their company values. In line with the interpretation of materiality put
forward by the IASB’s Practice Statement for Management Commentary, the BRTstrongly believes that what is material to companies is company-specific. The BRT
is, therefore, in favour of a principles-based approach and have reservations about
the EU endorsing any particular reporting scheme or a small number of quantitative
Key Performance Indicators (KPIs).
From the perspective of an association of multi-national companies whose activities
stretch across not only different European countries but also different regions in theworld, the BRT strongly favours the harmonization of future requirements of nonfinancial information disclosure not only within the EU but also internationally.
Different disclosure requirements regarding scope and content across the 27 EU
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Member States would create an additional administrative burden for European or
multinational companies operating in different countries and regions.
The BRT believes that under a new EU regulatory framework for non-financial
disclosure, companies should be allowed to report on a group or consolidated level.
Such an approach would create a solid foundation for the integration of non-financial
information into the management structure of a company and would be morepractical than a disclosure requirement at legal entity level. Furthermore, disclosure
beyond consolidated group level, for example, disclosure concerning its supply chain
or value chain, should not be mandatory because mandatory inclusion would makedisclosure too burdensome for companies.

WP-A / # 21 / 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.
1) Widely accessible, easy to set up and inexpensive to run2) Allowing a great deal of flexibility to founders and shareholders to organize
themselves in the way that is best suited to their activities: and3) As uniform throughout the EU as possible.

WP-A / # 22 / J to E

Chemical Regulations

22.1 REACH
The BRT requests harmonization of regulation proposal in accordance with theprocess of REACH, especially on combined exposure of chemicals which is
submitted by Member States and on denominator of concentration which could be
different from Article in REACH in some Member States.
European Chemical Agency (ECHA) has been running a campaign, “Act Now !
REACH 2013” to urge prospective registrants to undertake the preparation of thejoint submission in the tonnage band 100 – 1,000 t/year by the next registration
deadline, 31 May 2013.

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New challenges are already foreseen in the SIEF operation toward 2013 registration
deadline, namely, less data available, unexperienced lead registrants, mostly SMEs
in the supply chain, and heavy financial burden. The SIEF activities will stagnate
due to such concerns.
In this respect, EU Competent Authorities (CA) should enhance its promotion andsupport to allow the registrants to make the joint submission successful and in time.
Especially, we request CA to engage in arbitration to solve the disputes, for example,
in the cost sharing and the lead registrant nomination, among SIEF members.
The interpretation of “Article” applied to 0.1% threshold for SVHC (Substance of VeryHigh Concern) is still disharmonized among EU member states. The Guidance on
Requirements for Substances in Articles in REACH regulation states that the 0.1%
threshold should apply to an article as a whole produced or imported. Six member
states, however, insist that the threshold should apply to the parts of complex articles
based on the “Once an article – always an article” concept.
The BRT asks EU to soon unify the interpretation of the Article as stipulated in the
Guidance document so that actors in the supply chain can avoid the fragmented
compliance requirement in EU market.
22.2 RoHS
The BRT requests an early issuance of a compliance guidance of revised RoHS
(RoHS II) and FAQ (frequently asked questions) which should be prepared,
beforehand, in collaboration with industrial associations including Japanese ones.
22.3 CLP Regulation (Regulation (EC) No 1272/2008 on classification, labelingand packaging of substances and mixtures)
CLP regulation affects not only EU manufactures and importers but also exporters
out side EU. While CLP is comparable to UN GHS, CLP does not take some of
GHS classification but introduces EU own classification. As a consequence, theexporters to EU are forced to be compliant with both GHS and CLP. To alleviate aburden of exporters, we request flexibility in a way that EU accepts GHS
classification and labelling at the custom clearances.
22.4. Nanomaterial Definition
The commission recommendation on the definition of Nanomaterial (2011/696/EU)
was published on 18 October, 2011. We request EU to state that a product in which
the Nanomaterials are embedded shall be out of the definition scope. Moreover, weWorking Party A: Trade Relations, Investment and Regulatory Cooperation
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expect EU to implement the prospective policy tools on nanomaterials taking into
consideration the degree of exposure of nanomaterials released from the product.
Several EU member states intend to enact its own nanomaterial reporting scheme atnational level.
This intention incurs the manufacturers and importers ofnanomaterials to make multiple reporting in each format, which shall cause
inefficiency and confusion in the supply chain.
To avoid such drawbacks, we urge EU commission to take an initiative to elaborate aharmonized reporting system in EU level.

WP-A / # 23 / J to E

Competition Policy

There are guidelines in the determination of the amount of fines in case of an
infringement of the competition rules. The BRT would like to see more clarity in thedetermination of the amount of fines so that businesses will not be unduly deterred
and that the ‘Europe 2020’ will be achieved.

WP-A / # 24 / J to E

Consumer protection

The BRT welcomes the adoption of the Directive 2011/83/EU of the European
Parliament and of the Council of 25 October 2011 on consumer rights. The BRT also
welcomes the fact that the two of our recommendations are accommodated in the
new directive.
The new directive, however, still maintains the discretion of the Member States to set
a guarantee period longer than 2 years set in the Directive 1999/44/EC, which the
BRT believes could constitute an obstacle in the single market. The BRT would liketo ask the European Commission to review the advantage and disadvantage of thisdiscretion to set a guarantee period longer than 2 years in the future review.

WP-A / # 25 / J to E
Framework

MarketSurveillance

under

the

New

Legislative

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

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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 theCommission by 1 January 2010.
The BRT supports 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. The BRT requests the European Commission and theMember States to disclose all the relevant information regarding the progress of thisprocess and the implementation of the market surveillance in each Member State.
The BRT also requests the European Commission and the Member States to giveindustry an opportunity for contributing to developing the framework of harmonised
market surveillance.

WP-A / # 26 / 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). The BRT believes 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. The BRT believes a Directive should include thefollowing 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 right towork upon their arrival.
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4) The application of integration measures to ICTs should be voluntary.
2.

Long-term residents

The BRT welcomes the report from the Commission on the application of Directive
2003/109/EC concerning the status of third-country nationals who are long-term
residents (Com (2011) 585). The BRT has noted that the numerous issues pointed
out in the report in the implementation of the directive including the weak impact of
the Directive in many Member States.
The BRT welcomes the intention of the Commission to increase its efforts to ensurethat the directive is correctly transposed and implemented across the EU.
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.

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