Recommendationsof theEU-Japan Business Round Table
to the Leaders of the European Union and JapanTokyo, 4 November 2021
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. Kuninori KUROISHI
Senior Advisor
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
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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

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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

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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 sets out
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•

Making certain that essential personnel can still access each other’s markets while
adhering to proper health protocols•

Further deepen and support initiatives leading to more collaboration on third
markets•

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)

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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.
In the same vein, ensure that the EPA is continuously updated and that new aspect
are added as they become necessary. For instance, new technologies, publichealth issues, cross-border flow of data, etc.
Immediately consult with industry in order to set up working groups in sectors thatwould benefit from closer regulatory cooperation
Regularly consult companies of all sizes to ensure the best implementation ofRegulatory cooperation.

The BRT believes that:•••

For regulatory cooperation to be successful, negotiators on both sides must be
given the appropriate mandate so that the result of the talks can be properly
implemented and enforced. There is a need for a follow-up to ensure this.
Through regulatory cooperation new technologies can be shared and introducedon both market with a minimum delay. This in turn leads to more benefits forindustry and consumers, hence society as a whole.
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.
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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.
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.

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.
Make certain that the discussions are concrete and that the results are easy forcompanies on both sides to implement and take advantage of. It is imperative thattalks among the authorities are not too high-level.
To better coordinate and make certain that ODA projects are not favouring
suppliers from either region.

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 strengths on both sides should be more efficiently utilised and that possible
cooperation should be commenced earlier in the process.
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:•

Towards the termination of extended Northern Ireland Protocol grace period, wecall the EU and the UK authorities to continue the dialogue in order to minimize
any potential risks between the EU and the UK, such as the EU retaliation to theWorking Party1: Trade Relations; Investment and Regulatory Cooperation; Financial Services, Accounting and Taxation
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••UK in breaching the substantive provisions of the Protocol on Ireland and Northern
Ireland, suspension or termination of the tariff-free trade.
Maintain/restore a favourable business environment including unfetteredinvestment, smooth services, and financial transaction, harmonised regulation andstandards, and access to workforces with necessary skills.
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 Geneva
Under the growing pressure of protectionism in a post-Covid 19 world, the EU andJapan should support strengthening and reforming the WTO. Together with other WTO
members, the EU and Japan should work to ensure the centrality of the WTO as theguardian of the multilateral trading system, and the value of WTO agreements as abasis 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 BRT welcomes the leadership of the EU in thedevelopment of the “Multi-party interim appeal arbitration arrangement’ (MPIA)
to the WTO as a way to address the current problems in the Appellate Body.
However, the BRT also recognises the temporary nature of this solution andstresses the need for WTO members to engage in a more constructive dialogue.

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•

•

•

•

•

•

•

•

Reaffirm the importance of a market-oriented trade environment. Regarding the
WTO reform, supporting the continuation of trilateral cooperation among the US,
the EU, and Japan, especially efforts to strengthen WTO rules on industrial
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. The BRT also 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.
The EU and Japan should take the lead in developing an export control
framework with consideration for predictability and the level playing field inbusiness sector to resolve the situation where unilateral trade measures are
reducing the stability of the business environment.
Revitalise plurilateral negotiations. Encourage the conclusion of the Joint
Statement Initiative on Domestic Regulation in Services during the Geneva’s
WTO Ministerial. This is an agreement that shall benefit all WTO Members.
Make significant progress and conclude, if possible, the negotiations on ecommerce and investment facilitation.
Encourage making 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.
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.

The BRT believes that:•

The upcoming 12th WTO Ministerial Conference is crucial in reaffirming thebenefits of a rules-based multilateral trading system. It shall deliver a packageof multilateral and plurilateral outcomes that will equip governments andbusiness operators with modern and effective trade rules. At the same time, it
shall also promote the discussion on the reform of the WTO with the view todelivering concrete results by the next Ministerial Conference.

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•

Notwithstanding the complexity of the negotiations under the Joint Statement
Initiative on e-commerce, the upcoming Ministerial Conference should not only
be a stock-taking exercise. It should seek to make real progress towards anambitious, comprehensive and commercially meaningful outcome, including
rules to ensure cross-border flow of data. The e-commerce Agreement should
prohibit data localization measures and requirements for disclosure of source
codes as well as ensure the non-discriminatory treatment of digital products.
Incorporating the value chain perspective when negotiating the liberalisation of
goods and services under the auspices of the WTO is critical. This will effectively
ensure a real impact, as global value chains play an increasingly important rolein international trade. Liberalisation should also include environmental goods
related to the Environmental Goods Agreement (EGA), so long as it does notdiscriminate unfairly between products and sectors. Moreover, in the follow up
to the COVID-19 pandemic, the WTO should look into trade and healthinitiatives that will make the world more resilient in future crises.

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

standards

andenhancing

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.
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.
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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 the hazard information of substances and acommon approach to the evaluation and sharing of data, and the hazard
classification.
• 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.

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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.

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

5.

Sanitary and phytosanitary regulation
The BRT calls on the EU and Japanese authorities to:• Use the EPA to better harmonise the SPS framework. This should be doneon a detailed level to avoid any divergence. The overarching principle
should be that if a product is approved in one market it should approved in
the other market without the need for additional testing or market approvals.
The BRT believes that:• Harmonisation and mutual recognition is vital if the aim of increasing theexport of food and drinks, which is something both the EU and Japan
spends considerable resources to achieve, should be fulfilled.

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6.

Achieve carbon neutrality
The BRT believes and calls on the EU and Japanese authorities to:• We support the European Commission’s goal of Carbon Neutral by 2050,
as well as the Fit for 55 Package initiatives to achieve the new CO2 target
by 2030. However, the road to Carbon Neutrality has various paths, anddiverse technology options have a role to play in effective transition to
Climate Neutrality.
• Since climate change issue is a global challenge, we would like all theGovernments to cooperate, with a strong leadership of EU and Japan, tobuild some harmonized, transparent and fair international trade rules andsystems related to Carbon Neutrality.

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
and employers from pension premiums or returns the paid amount of boththe employee 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
and recruit 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
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;

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•
•
•

•
•

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.

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,
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 Commence negotiations on bilateral/regional
agreements on personal movement under the COVID-19 pandemic
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.

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The BRT calls on authorities to:•••

Immediately start negotiations to allow short-term businesspeople to travel
between EU and Japan.
Make certain that companies can without hinderance bring in new top
management, such as CEOs, and specialist, such as engineers. This is ofutmost important in order to properly run the subsidiaries.
Draft an action plan on how to deal with future pandemics with focus on
travel restrictions.

The BRT believes that:•

It is important that companies can continue to provide vital services and that
adequate personnel, both CXOs and specialist, can enter the regions. This
while adhering to the proper health protocols set up by the authorities.

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Recommendations from
European industry to Japan
WP-1 / # 07* / 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:
•
•
•

•

Abolish its remaining unique regulations, including the standards for exhaust gases
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
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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.
Should promote more off-the-shelf solutions instead of creating Japan specificsolutions that are difficult to implement elsewhere.

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

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 / #08* / 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. Examples of products could be base stations, food contact
materials, non-invasive medical equipment etc.
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.

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WP-1 / # 9* / E to J Automobiles
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 / # 10* / 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 / # 11* / 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.
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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 / # 12 / 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:•

If Japan is to re-open and return and exceed pre-COVID levels in regard to visiting
tourists, due to limited numbers on slots on Haneda, aircraft such as the above
mentioned will be vital.

WP-1 / # 13* / 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 and non-residents. This is/was true forboth the EU and Japan.
Today, new visas are not issued in Japan except in some exceptional circumstances.
This means that business, both foreign and domestic, are limited in their businessactivities as they are unable to have essential personnel, both top management andspecialist enter Japan. This puts great stress on the companies as they are not able toconduct expansions, new project, or properly support its clients, or properly run thecompany in the case of top management.

As of late, Japan has introduced the possibility for vaccinated people to have thequarantine decreased from 14 to ten days.
The BRT calls on Japanese authorities to:••

Implement a system where short-term and long-term European businesspeople
can be issued visas.
As a short-term solution, the exemption process should be expanded and mademore transparent.

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•Introduce further liberalisations for vaccinated people.

The BRT believes that:••Japan risks losing potential FDI that is dependent on essential personnel being
able to enter the country
The Japanese market risks being downgraded as resources, senior management
and experts will not and cannot be dedicated to Japan.

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Recommendations fromJapanese industry to the EU
WP-1 / # 14 / J to E

Chemical Regulations

CSS(Chemical Strategy for Sustainability)
The BRT calls on the EU Authorities to:Legislate on risk assessment basis depending on exact exposure situation anduse amount by each sector, when assessing health/environmental impact of eachchemical substance which are used by multiple sectors.

The BRT believes that:

Establishment of a 'One substance, one assessment' process under action planof CSS will possibly lead excessive restriction for specific sector on hazard
assessment basis, especially in case that the use amount by each industry islargely different.

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:

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•

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
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, which could also occur in the future registration under
the UK REACH, Turkish KKDIK Regulation (Turkish REACH) and Taiwan Toxic
Chemical Substances and Substances of Concern Control Act.

The BRT calls on the EU authorities to:•Once a substance evaluation has been completed under REACH, its conclusions
have to be respected and should not be revised/overturned unless new findings
or data become available.

The BRT believes that:•

If the conclusion of a substance evaluation officially finalized in the REACH
process is later challenged and overturned, despite the absence of new scientificinformation, by a Member State due merely to differences in their ways ofthinking, the dependability and predictability of regulatory decisions will severely
be impaired.

CLP Regulation
The BRT calls on the EU authorities to:•

The introduction of new hazard classes (Endocrine Disrupter, PBT/vPvB,
PMT/vPvM, etc.) to the CLP Regulation should be done after their integration into
UN GHS.

The BRT believes that:•

Introducing new hazard classes to the CLP Regulation prior to their introduction
to UN GHS will go against the basic principle of UN GHS, i.e. global
harmonization, and impair international consistency.
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Appropriate approach to endocrine disruptors
The BRT calls on the EU authorities to:• The substance which may have a potential for endocrine disrupting effect should be
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 lowdose 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 forhuman and environment, by the reason that the potential can be observed in somekinds of creatures, although the subjects mentioned as following are not reached a clear
scientific conclusion. On the other hands, in reality, markets tend to eliminate thesubstances listed on the SVHC list before actual hazard level becomes clear, in case of
the possibility to be added them to authorization in the future.
• The subjects about potency of endocrine disruptors are not reached clear scientificconclusions yet, like it can be settled any thresholds of endocrine disruption or not, andthe thresholds can be measured or not.
• Activities such as those related to “EFSA Scientific Committee Opinion on biologicalplausibility of non-monotonic dose responses and their impact on the risk assessment”
for which public consultation started from 4 December 2020 are welcomed, andcontinued open discussions for the establishment of risk-based evaluation methods
based on scientific knowledge will highly be appreciated.

Fluorochemicals
The BRT calls on the EU authorities to:• With regard to the publication of the " Registry of restriction intentions(RoI)" for the
restriction of PFAS, the EU authorities should take full account of the socio-economic
assessment to determine the level of regulation, as PFAS is expected to contributesignificantly to the realization of the European Green Deal policy and the sustainablegrowth of the EU economy in the future due to its features such as chemical andweather resistance.
• Regarding the PFAS regulations, the fact that "substances containing at least 1 aliphatic
substance -CF2- or -CF3," which was presented as a scope of evidence at the time of“Call for Evidence” in May 2020, is included in the scope of the proposed restriction in
RoI of July 15, 2021, is considered to be the de facto definition of PFAS. The EU
government should ensure that the definition of PFAS is finalized following a fullscientific discussion.

The BRT believes that:

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• While it is understood that the grouping approach for PFAS restriction is an initiative
based on the precautionary principle, we believe that it should be applied at a levelthat allows both human health and environmental risks and social contributions to beadequately assessed, and that it is necessary to relax restrictions on the use anduse of PFAS where the contribution is judged to outweigh the risk.
•
We believe that the introduction of grouping approach for restriction should beapplied carefully to ensure that it does not result in double regulation with existing
regulations. (e.g. PFAS, which are subject to strict controls under the F-Gas
Regulation (Regulation (EU) No 517/2014) in order to meet the greenhouse gas
reduction target of the EU Green Deal (at least 55% below 1990 levels by 2030)).
• Many of virtually unregulated PFASs as of today are not communicated throughthe supply chain, the transition period for restrictions should be considered so as
not to cause market disruption.
• There is a concern that the lack of effective measurement and evaluation
methods for PFAS may cause significant disruption 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.
Attention should duly be paid to the international harmonization in the revision of
the definition of nanoforms.

The BRT believes that:••

The test methods or tools of nanoforms which REACH ANNEX requests areunder developing.
In the public consultation concerning the CLP of Multi-Walled Carbon Tubes(MWC(N)T) opened on 5 July 2021, a grouping of MWC(N)T based on thelength, diameter, and aspect ratio has been proposed. Grouping according to
specific shapes, however, is not considered appropriate since there have not yet
been enough scientific discussion on it.

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WP-1 / # 15 / J to E
(BEFIT)••

Business in Europe: Framework for Income Taxation

The BRT hopes that the Member States will keep the tax system simple andsensible, and focus on fostering growth and investment.
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 / # 16 / 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 with ensuring policy
coherence and create an enabling environment to encourage the uptake of bothindividual 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. It would be particularly beneficial toexchange best practices between Japan and the EU, and to gather views on the
future policy trajectory in the two regions and globally.
Take account of past positive 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, one of the technical working groups set up by DG GROW and METI
within the EU-Japan Industrial Policy Dialogue for the past years and the EUJapan business- dialogue on CSR.

Disclosure and transparency (EU corporate sustainability reporting)
The BRT believes that:• The EU Taxonomy is rolled out to speed up sustainable investments, with
reporting obligations on economic activities set out in the Corporate Sustainability
Reporting Directive (CSRD). The EU Taxonomy is a framework legislation whereimportant parts are later added on via delegated acts. This leads to insecurity on
the demands and details, and future changes to come. There are limited
possibilities to give feedback on delegated acts. Since Japanese companies in
Europe will fall under the scope as of 2023 (reporting year 2024) this is an
important issue. With the EU Taxonomy, a link between environmental and social
governance is made. Especially on the environmental part, a complex anddetailed structure is developed, which will need specialised workforces on bothsides. The current possession of knowledge on the impact of the Taxonomy
remains insufficient, within companies and financial service providers alike.
Resources will be needed to ensure financial and non-financial actors are able tomeet the requirements set out by the Taxonomy and the CSRD.
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The BRT calls on the authorities of the EU to:
•

•

•

•

•

Ensure the alignment with international and existing frameworks whendeveloping the EU corporate sustainability reporting standards (under the
CSRD), as many companies’ operations have a global footprint, and an equally
global value chain. BRT further calls on the EU to take a more proactive role inthe development of international standards, in recognition that sustainability is a
global issue that should be treated in the most inclusive way possible from the
beginning.
Take reasonable consideration of the burden imposed on companies. BRT urges
the EU to acknowledge that a fair degree of flexibility is of pragmatic importanceto enable companies to provide proper and relevant sustainability information; forexample, the flexibility to report on an entity level for Taxonomy disclosures,
while maintaining CSRD disclosures at the group level
Take a step-by-step approach to implement the corporate sustainability
information disclosure requirements.
➢ Implement requirements that are based on international standards first, while
facilitating the above-mentioned flexibility for social and governanceelements, as these are less advanced in current international discussions.
➢ Provide sufficient preparation time to companies: CSRD requirements should
happen not earlier than two years after the EU corporate sustainability
standards established.
Reporting must not solely be a practice of providing legally required information,it has been a communication tool for companies to share corporate values while
generating trust among stakeholders and the wider public.
➢ Emphasise dialogue as an equally valuable means for companies tostrengthen the trust of their investors and stakeholders and leverage theimprovement 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.
➢ Recall that not all corporate sustainability information is quantitative, and not
all quantitative data are self-explanatory; social aspects often need narrative
information. Focusing too much on comparability will undermine
stakeholders’ understanding of the real value of non-financial information.
Acknowledge that linking of corporate sustainability information disclosure
requirements to the EU Taxonomy is just one way of demonstrating the efforts
towards environmental sustainability. BRT is concerned about excessive relianceon the EU Taxonomy, as it is still in development and there is hence a lack oflegal clarity at this point.

Sustainable Corporate Governance
BRT underlines the need to acknowledge the diversity of stakeholders’ interests, as
stakeholder engagement is vital to incorporate sustainable corporate governance inpractice. Aspects such as human rights, environmental, and climate change
considerations, should be taken into account alongside financial aspects. However,BRT believes that requirements related to corporate governance should not be solely
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regulated by law, as companies’ decision-making is significantly affected byinvestors’ interests.
The BRT calls on the authorities of the EU to:•••

For corporate governance & director’s duty
➢ Sustainability priorities are business-specific as well as related to corporate
culture, therefore a binding management style with a one-size-fits-all
approach would risk undermining companies’ long-term flexibility and thecase-by-case approaches that are crucial for business growth.
➢ Legally enforceable duty of care obligations risk becoming a compliance tool
rather than a stimulus for proactive and strategic management.
➢ Duty of care shall be applied to the company, not the director; as potential
harms might go beyond the latter’s mission.
For due diligence duty
➢ BRT prioritises the alignment of the EU legislation with internationalrecognised framework in order to avoid fragmentation between regions, suchas UN Guiding Principles on Business and Human Rights and the OECD
Guidance for Multinational Enterprises, which take a risk-based approach.
➢ The reasonable extent of accountability of companies: Provide a distinction
between a company’s liability and its responsibility to carry out due diligence.
The responsibility should focus on the undertaking of due diligence acrossthe value chain; with liability applying in severe cases where conducting suchdue diligence would have prevented the harm. Transparency andpredictability should be ensured when establishing trade control measures on
the grounds of human rights abuses.
➢ Prioritise guiding companies by placing a primary focus on incentivising
companies and providing the education and capacity building. The EU should
also recognise company efforts, as well as existing industry schemes tomake progress in nurturing competitive, value-creating supplier networks andto put in place enabling management processes.
➢ Elaborate on the legal clarity required for the integration of environmental due
diligence.
Take leadership in closing the governance gap between countries and regions inorder to effectively address the fundamental problems on the ground. It is
important to work hand in hand with other countries to tackle systemic issues
such as poverty and corruption. The BRT recognises that the efforts of industry
alone cannot ensure responsible sourcing of products and services from suchregions. Although the world is experiencing unprecedented challenges from the
COVID-19 pandemic, it is crucial that national governments get involved andcollaborate, and in this regard, EU diplomacy has an important role to play.

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