Recommendationsof theEU-Japan Business Round Table
to the Leaders of the European Union and Japan
Brussels, 7 November 2023
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
BEPS
CbCR
CLP
CSS
DX
ECHA
EFSA
EN
EPA
EU
FDI
FTA
G7
G20
GHS
GPA
IEC
ISO
ITA
JAMA
METI
MPIA
ODA
OECD
PFAS
PFOA
PFOS
PSE
R&D
REACH
RoHS
SDS
SMEs
SPS
SVHC
UNECE
WHO
WTO
WP

Meaning
Authorised Economic Operators
Advance Pricing Agreement
Base erosion and profit shifting
Country by Country reporting
Classification, labelling and packaging
Chemical Strategy for Sustainability
Digital Transformation
European Chemical Agency
European Food Safety Authority
Européen de Normalisation de Normalisation(European Standards)
Economic Partnership Agreement
European Union
Foreign Direct Investment
Free Trade Agreement
Group of Seven
Group of Twenty
Globally Harmonized System of Classification andLabelling of Chemicals
Agreement on Government Procurement
International Electrotechnical Commission
International Organisation for Standardisation
Information Technology Agreement
Japan Automobile Manufacturers Association
Ministry of Economy, Trade and Industry
Multi-Party Interim Appeal Arbitration Arrangement
Official Development Assistance
Organisation for Economic Co-operation andDevelopment
Perfluoroalkyl and polyfluoroalkyl substances
Perfluoro Octanoic Acid
Perfluoro Octane Sulfonicacid
Electrical Appliance and Material Safety Law
Research & Development
Registration, Evaluation, Authorisation and Restrictionof Chemicals
Restriction of Hazardous Substances
Safety Data Sheet
Small and Medium-sized Enterprises
Sanitary and Phytosanitary
Substance of Very High Concern
United Nations European Commission for Europe
World Health Organization
World Trade Organization
Working Party

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Introduction
The EU-Japan partnership is based on longstanding cooperation which has beenstrengthened with the recent geopolitical tensions, including the war in Ukraine. As
close likeminded partners that share values and principles, the EU and Japan havestrong trade and investment ties. This year marks four years since the EU-Japan
Economic Partnership Agreement (EPA) entered into force. Over this period, it has
proven to be the bedrock of the EU-Japan economic relationship and in 2022, trade ingoods between the two reached a record level of 140 billion euros, and similarly for
trade in services that reached 52 billion euros.
Working Party 1 stresses that despite the overall smooth implementation of the EPA,
agreement must also address the specific concerns of European and Japanesebusinesses reflected in this and previous reports. With so much at stake, we urge theauthorities on both sides to swiftly 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•

Initiate discussions on how to facilitate the movement of people under pandemics•

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

Strengthening the EU-Japan Economic Relationship
Post-EPA

The BRT praises both the European Commission, and the Member States, and theJapanese Government for the successful enforcement of the EU-Japan EPA. In
parallel, the BRT would like to emphasise that the parties should be more ambitious inorder to get the most out of the agreement and also to build on the agreement in orderto profit further from synergies. The effective application of the EPA would prove evenmore important in ensuring the steadfast economic recovery of both sides following the
COVID-19 crisis, as well as progress in developing sustainable connectivity, andquality infrastructure. It is also important for the EU and Japan as like-minded countries
to strengthen our complementarity and competitiveness through the EPA so that
disruptions in supply chains that have become apparent due to the COVID-19 andclimate change crisis can be addressed. Hence the BRT recommends the following:
Enhancing Regulatory Cooperation
The BRT calls on the EU and Japanese Authorities to:
•

•

•
•
•

1

Continue to strive further for free trade between the EU and Japan without
obstacles by pursuing regulatory cooperation, harmonisation and mutual
recognition of international regulations and testing procedures. It is important that
this is done swiftly as to not lose the momentum that was built up during thenegotiations.
In the same vein, ensure that the EPA is continuously updated and that new
aspects are added as they become necessary. For instance, new technologies,
public health issues and cross-border flows of data, prohibition of data localisation
requirement, especially usage or location of computing facilities in a jurisdiction’s
territory as a condition for conducting business in that territory, and nondiscriminatory treatment of digital products. In addition to source code of software,requirements of the transfer or disclosure of, or access to an algorithm expressedin the source code should also be prohibited.
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 welcomes the broad agreement1 reached on data flows between the EU
and Japan at the EU-Japan High-level Economic Dialogue on 28 October 2023.
Such an agreement is vital for companies that are dependent on free data flows
between our two regions. This should cover both personal and non-personal data.
It is necessary, furthermore, that such an agreement is future proof.
https://ec.europa.eu/commission/presscorner/detail/en/IP_23_5378

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•Ensure that the EU-Japan Digital Trade Principles adopted in May 2023 are well
implemented.

The BRT believes that:•••

For regulatory cooperation to be successful, negotiators on both sides must be
given the appropriate mandate so that the results 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 markets with a minimum of delay. This in turn leads to more benefits forindustry and consumers, hence to society as a whole. The Japan-EU DigitalPartnership and the Digital Trade Principles are good tools that should be enforced
Global solidarity, cooperation and effective multilateralism are more in need thanever, to come through the pandemic as well as to ensure economic recovery. It istherefore extremely important to develop the EU-Japan relationship even more,
and in doing so to demonstrate to others that such cooperative relationships are
possible.

Encouraging the use of EU-Japan EPA, particularly by SMEs
The BRT calls on the EU and Japanese Authorities to:••

Ensure that not only large corporations but also SMEs can make best use of theagreement.
Proactively inform industry of the advantages of utilising the EPA. Call for theediting of practical guides for businesses that want to export or invest in the EU
and Japan, to inform on rules to be implemented (tariffs, rules of origin, services
regulations, single entry points, contact of licensing bodies, mobility of personnel
requirements, etc.).

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 ensure that trade between the EU and Japan reaches 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 invest jointly in 3rd countries,
notably in the regions of the Western Balkans, Eastern Europe, including Ukraine,
Central Asia, Indo-Pacific, as well as in Africa.
Hold discussions on joint investment not only at high level, but focusing on practicaland operational aspects, and companies on both sides should be able to takeadvantage of the resulting outcomes and implement them easily.
Make good use of the EU-Japan Partnership on Sustainable Connectivity andQuality Infrastructure to find synergies in investments and infrastructure projects.
To better coordinate and ensure that ODA projects are not favouring suppliers fromeither region.

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The BRT believes that:••••

This support is particularly important in developing countries where investment canhelp 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 roleon the global stage to ensure enhanced competitiveness.
The strengths on both sides should be more efficiently utilised and that where it ispossible to cooperate, this should be commenced earlier in the process.
The challenges of the current and future pandemics cannot be solved by the EU
and Japan exclusively within their own countries. Therefore, it is important to step
up EU and Japanese assistance to partner countries facing the impact of thepandemic, not only by providing short-term assistance but also by supporting themover the mid- to long-term.

Promoting the Free Flow of Data
The BRT calls on the EU and Japanese Authorities to:••

Pursue the negotiations to review and complete the digital trade chapter of the
EPA to the highest standards, including language on cross-border data flows, as
set in Article 8.81 of the EPA (three-year review clause) which reached the broad
agreement 2 between the EU and Japan at the EU-Japan High-level Economic
Dialogue on 28 October 2023.
Conclude these negotiations as soon as possible to ensure a strong legal basis to
the growing flow of data across the two borders. The agreement must be ambitious
and establish modern rules for cross border data flows while ensuring theprotection of personal data.

The BRT believes that:•

Data plays a key role in promoting and accelerating the digital economy. The freeflow of data under the secured conditions, namely Data Free Flow with Trust
between the EU and Japan will mutually be beneficial for creating business
opportunities and strengthening the competitiveness in both economies.

WP-1 / # 02* / EJ to EJ

Recommendations for an ambitious multilateral tradeagenda toward the next WTO Ministerial Conference

Under the mounting pressure of protectionism in a post-COVID world, and the on-goinggeopolitical crisis causing the wide-spread disruption of international order, the EU andJapan 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 revitalise the economic activities of thewhole world and promote further liberalisation. It is necessary, therefore, that the WTO
and its members ensure the relevancy of the multilateral trading system and further

2

https://www.mofa.go.jp/press/release/press4e_003322.html

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promote the reforms to improve the responsiveness to present and future challenges,
while taking into account the concerns expressed against trade and globalisation.
To this end, BRT welcomed the adoption of the Ministerial Declaration at the Twelfth
WTO Ministerial Conference held in Geneva which concluded on June 17th, 2022, andlooks forward to the Thirteenth Ministerial Conference in late February 2024.
The BRT calls on the EU and Japanese Authorities to:
•

•
•
•

•

•

•

Renew the moratorium on customs duties on electronic transmissions of the WTO
and find agreement to make it permanent, noting that the custom duty-free
distribution of electronic transmissions is at the core of technological innovation andthe digital economy. The WTO must not be the venue that would allow the principleof raising customs tariffs on trade in services.
Avoid continuing to waive the protection of intellectual property rights regarding
COVID-19 related therapeutics and diagnostics.
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. In this term, the BRT welcomes, and emphasises the importanceof, attempts made by the 12th WTO Ministerial Conference in recognising thesignificance and urgency of responding to the challenges and concerns expressedagainst WTO’s dispute settlement system, including the WTO Appellate Body,
while proclaiming their commitment to build a dispute settlement system accessible
to every member with perfect and superb functions, by 2024. The BRT also
welcomes Japan’s participation in the Multi-Party Interim Appeal Arbitration
Arrangement (MPIA) in March 2023. The BRT calls on both authorities to ensurethat interim plurilateral frameworks for dispute settlement, such as MPIA, function
effectively until a dispute settlement system accessible to every member withperfect and superb functions will be established.
Reaffirm the importance of a market-oriented trade environment. Regarding WTO
reform, supporting the continuation of trilateral cooperation among the US, the EU,
and Japan, especially on efforts to strengthen WTO rules on industrial subsidies
and technology transfer, and to improve compliance with notification obligations, aswell as ensuring that all WTO members contribute according to their real economic
power. The BRT also supports the development of rules on trade-related aspectsof electronic commerce.
Explore further topics that are essential for the smooth functioning of global value
chains together with other WTO members. These could include, for example,
industrial and green subsidies, the reduction of export restrictions, investment(facilitation) and competition. Also, the EU and Japan need to take the lead inbuilding an export compliance framework that creates a level playing field andalleviates business uncertainty.
Revitalise negotiations under the Joint Statement Initiatives, especially in the digitalarea and in climate and the environment. The participation of and progress madeby the EU and Japan on the Joint Initiative on Investment Facilitation for
Development is encouraging.

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••Implement in full the Disciplines that have been agreed on 2nd December 2021 in
Geneva on Domestic Regulation in Services in all relevant domestic regulation in
the EU and in Japan to further improve transparency and ease of doing services
trade and investment. Encourage the full implementation of the Reference Paper
by all signatories, for instance by putting into place a notification system to the WTO
Secretariat. Encourage other WTO countries to join the initiative. This is anagreement that shall benefit all WTO Members. The initiation of the certification
procedure of a large number of signatories, including of the European Union andJapan, is a positive step.
Lead the discussion on further expanding the product coverage and membershipcountries and regions for the Information Technology Agreement (ITA), as agreed
in December 2015, given the current global circumstances such as the COVID-19
pandemic and the on-going geopolitical crisis disrupting supply chains. The ITA
plays a significant role in maintaining and continuing negotiations on a plurilateralbasis, given the difficulty of reaching an agreement among all WTO Members.
Furthermore, the expansion of the ITA should enable citizens of Japan and the EU
to benefit from the evolving IoT technology and DX, including AI.

The BRT believes that:
•

•

•

•

The 13th WTO Ministerial Conference will be crucial in reaffirming the benefits of arules-based multilateral trading system and will have to deliver a package ofmultilateral and plurilateral outcomes that could equip governments and business
operators with modern and effective trade rules. At the same time, the upcoming
Ministerial Conference needs to further promote the discussion on the reform of the
WTO with the view to continue delivering concrete results for the future.
On e-commerce, the upcoming Ministerial Conference should seek to make real
progress towards an ambitious, comprehensive and commercially meaningful
outcome, including rules to ensure cross-border flow of data. The E-commerce
Agreement should prohibit data localisation measures, especially usage or locationof computing facilities in a jurisdiction’s territory as a condition for conducting
business in that territory, and requirements for disclosure of source codes,
algorithms, and proprietary information relating to cryptography ensuring the nondiscriminatory 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 role in international trade. Liberalisation
should also include environmental goods related to the Environmental Goods
Agreement (EGA), so long as it does not discriminate unfairly between products
and sectors and to expand these talks to environmental services, that are crucial tofight pollution and climate change. Moreover, in the follow up to the COVID-19
pandemic, the WTO should look into trade and health initiatives that will make theworld more resilient in future crises.
The decision to waive the protection of intellectual property rights regarding COVID19 vaccines fails to address the current challenges of access to vaccines and risks
undermining efforts to address future pandemics as companies will have lessincentives to invest in R&D.
From these perspectives, the BRT welcomes, and points out the importance of, the12th Ministerial Conference agreeing to renew the discussion of the work programfor e-commerce, and to make permanent the WTO moratorium on customs duties
of electronic transmissions.

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WP-1 / # 03* / EJ to EJ

Applying international standards and enhancing
regulatory cooperation

The BRT believes that regulatory cooperation is key to the economic prosperity of thetwo economies. Following the successful entry into force of the EU-Japan EPA in
February 2019, it is now even more important than ever to ensure not only that new
regulations do not nullify or impair the market access benefits which have beenachieved under the agreement nor create new barriers to bilateral trade, but also tofurther expand and strengthen the regulatory cooperation between the two economies.
This way the EU and Japan will be able to create a more favourable businessenvironment and hopefully also expand such cooperation to other bilateral andmultilateral relations.

General recommendations
The BRT calls on the EU and 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, theBRT believes that the work has to continue in order to deal with areas not coveredby the EPA as well as new areas and technologies.
Where international standards have not yet been developed, to accept the approvalof the import, sale or use of products that have been approved on the basis offunctionally equivalent requirements if it is possible and appropriate to do so.
Study the possible impact of new regulatory developments on domestic and foreignbusiness to avoid taking initiatives that might create barriers to trade andinvestment.
To establish a close dialogue with industry regarding the harmonisation ofregulations and standards by discussing concrete use cases and examples frombusiness experience.

The BRT believes that:
•
•
•

1.

The EPA creates a perfect platform for regulatory cooperation, and it is vital that
this is done without delay as to not lose momentum.
A similar mind-set as was shown during the negotiations is now needed in order toachieve regulatory harmonisation which is capable of being enforced.
Continued dialogue is necessary, but with goals clearly defined so 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.

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

The BRT believes that:••2.

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.
Before issuing regulations unilaterally, both Japan and the EU authorities
should carry out appropriate public consultation processes to finalise thembased on a multi-stakeholder approach.

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.
The areas where regulatory harmonisation should be pursued are the areasof material recycling/re-use and energy recovery which are essential forboth EU and Japan economies if they are to become circular.
Work together at the multilateral level to promote international
harmonisation of energy efficiency regulations, relevant labelling rules,
environmental and carbon footprint schemes, traceability tool for
information transfer in supply chain.

The BRT believes that:•3.

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.

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 is necessary, which offers benefits tocompanies that can show that they have the capacity to properly trace each
shipment.

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This will also benefit the authorities as they will be able to focus more on
dealing with illegal shipments and supporting those companies that haveless capacity regarding traceability.

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, hybrid and fuel cell vehicles, carbon-neutral fuels, as well
as autonomous and connected driving technologies.

The BRT believes that:•5.

A common regulatory framework will send a strong signal to the rest of theworld that harmonisation and the UNECE is the adequate forum.

Sanitary and phytosanitary regulation
The BRT calls on the EU and Japanese Authorities to:•

Use the EPA to further harmonise the SPS framework. This should be done
at a detailed level to avoid any divergence. The overarching principle shouldbe that if a product is approved in one market it should be regarded as
approved in the other market, without the need for additional testing or
market approvals.

The BRT believes that:•

6.

Harmonisation and mutual recognition are vital to achieving the goal ofincreasing exports of food and drink, which is a priority for both the EU andJapan and one on which considerable resources are expended.

Electrical goods
Both the EU and Japan have established systems to ensure the safety ofelectrical products for both professionals and consumers. The EU employs theCE marking system, while Japan utilises the PSE marking system.
Unfortunately, these systems are not completely harmonised, often resulting in
the need for re-testing in many cases.
The BRT calls on the EU and Japanese Authorities to:
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•Harmonise the systems as far as possible to avoid re-testing. The BRT
understands that there are some underlying differences that would make acomplete harmonisation difficult, such as differences in voltage, as well as
differences in plugs. However, the goal should still be the same.

The BRT believes that:•

With harmonisation companies will be able to introduce products faster andcheaper, and it would also help the authorities as they do not have to spend
resources re-approving and checking products.

WP-1 / # 04 / EJ to EJ

Avoiding double contributions on social security

The BRT welcomes the conclusion of social security agreements between Japan and
13 EU 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 an interim measure introduce regulation that either exempts employees andemployers from pension premiums or returns the paid amount of both theemployee and the employer when the person leaves the country.

The BRT believes that:•

With increased labour mobility and the need for companies to both transfer andrecruit globally the demand for social security agreements will increase.

WP-1 / # 05* / EJ to EJ

Achieve climate-neutrality

Because climate change is a global challenge, the BRT appreciates the fact that the
EU and Japan have the common goal of climate-neutrality by 2050. The EU’s effort toachieve the goal is well known as Fit for 55 Package initiatives and the REPowerEU
plan which fast-forward the green transition by revising, for example, the EU’s GHG
emission reduction from 40% to 55% by 2030.
However, the road to climate-neutrality has various paths, and diverse technology
options have a role to play in an effective transition to climate-neutrality. In addition,
discussions on CBAM being concrete measures have taken place before the EU andJapan share the vision and image of the way-forward.
In this regard, the BRT calls on the EU and Japanese Authorities to:••

Demonstrate strong leadership and encourage the cooperation of all Governments
in order to build transparent and fair international trade rules and systems related
to climate-neutrality, that are consistent with international rules such as WTO.
Discuss the way-forward to properly address the carbon leakage based on carbon
intensity and for Carbon Border Adjustment Mechanism (CBAM), which entered a

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Page 12 of 32•••transitional period on 1 October 2023, and eliminate disparities between domestic
products and imports in reporting and procedures under CBAM obligation.
Ensure close communication on the handling of carbon pricing to secureinternational harmonisation and WTO compliance.
Massively scale-up investment in renewable energy and power networks, andstreamline permit and regulatory processes while respecting a just transition, local
communities, and environmental standards.
Enhance regulatory cooperation in the field of green technologies such as offshore
wind power and the production of renewable hydrogen and ammonia in order tohelp to accelerate deployment of these technologies.

WP-1 / # 06 / EJ to EJ

Recommendation on BEPS Action Plan and Other Tax
IssuesThe BRT supports the creation of an internationally fair taxation framework and levelplaying field. At the same time, the BRT believes that taxation systems should be as
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.
Keep confidentiality of information concerning taxpayers as BEPS Action 13
demands.
Give specific consideration to the global trading business model broadly conductedby the financial services industry in terms of Permanent Establishment (“PE”) thatthe 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 other jurisdictions
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. Based on the statement
to address the tax challenges arising from the digitalisation of the economy agreed
by 138 members of the OECD/G20 Inclusive Framework on Base Erosion andProfit Shifting (BEPS), EU should work together to create a harmonised tax systemwith other member countries and regions of OECD/G20.

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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 arbitrationin their bilateral tax treaties which the commitment was made by 25 countries
including Japan and 24 EU Member States as a mechanism to guarantee theresolution of treaty-related 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 / # 07* / EJ to EJ

Economic Security

Globalisation is entering a new phase in which international trade is becoming
increasingly interlinked with security considerations. The BRT recognises the security
aspects of international trade and investment but believes that, if not applied
proportionally and in a targeted way, state intervention, and in particular unilateralmeasures, can have a strongly negative impact on ordinary commerce or stifle growthand innovation. International cooperation and coordination on economic security canmake measures more effective and help isolate security issues from general economic
interests.
The EU and Japan are like-minded partners to cooperate on these issues, given they
are similarly highly developed economies, with strong high-tech industries, andsimultaneously heavily reliant on a rules-based international trade system.
The BRT, therefore, welcomes the section on economic resilience and economic
security in the Joint Statement of the 29th EU-Japan summit on 13 July 2023, as wellas the Joint Statement adopted by the G7 in Hiroshima on 20 May 2023. The BRT also
takes note of the Memorandum of Cooperation on submarine cables for security
resilient and sustainable global connectivity on the occasion of the EU-Japan DigitalPartnership Council in Tokyo on 3 July 2023, as well as the Memorandum of
Cooperation on semiconductors.
The BRT calls on the EU and Japanese Authorities to:•Stand together and coordinate responses to economic coercion, preferably in
G7 format, as sign of strength and solidarity for most effective deterrence.

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•

Fully implement the EU-Japan Economic Partnership Agreement to reduce
trade barriers to encourage companies to diversify their supply chains into eachother markets and reduce strategic dependencies.

•

In order to secure diverse import and export partners, Japan and the EU should
maintain and strengthen the free trade system on a regular basis, for instance,
expand the scope of goods covered by ITA and its member countries and regions.

•

Cooperate on export controls and restrictions to define shared security risks andease the regulatory burden for companies by coordinating whenever possible onexport control lists to minimise having to re-do administrative processes.

•

Regarding screening of foreign direct investments (FDI), discuss latest
regulatory developments, exchange best practices and relevant information on FDI
into each other markets while safeguarding business confidentiality.

•

Involve businesses in the shared risk assessments, as proposed in the jointstatement of the 29th EU-Japan Summit, that will address answers on economic
security.

•

Monitor and exchange expertise on non-market economic practices.

•

Continue discussion on economic resilience and economic security at a highpolitical level, preferably in the context of the High-level Economic Dialogue.

WP-1 / # 08* / EJ to EJ

Human rights and supply chain

Both the EU and Japan have instituted policies requiring industry to respect humanrights in their supply chain. This applies not only to the direct suppliers but also further
up- and/or downstream. The BRT believes that this work is very important and fully
supports the efforts of the authorities. Human rights are and should be at the forefrontof every responsible business in both the EU and Japan.
However, it is important that there is no divergence in the adopted legislations of our
two regions. Such divergence creates more burden especially for companies within the
supply chain and make it difficult for companies to achieve the ultimate goal: a supply
chain in line with human rights.
It is also of importance that clear guidance is issued on how to achieve compliance sothat companies are more successful in their efforts in regard to human rights, bothinternally and the external relations with customers and clients.
The BRT calls on the EU and Japanese Authorities to:•Commence discussions on coordinating the policies on human rights in the supply
chain to avoid divergence of requirements by guaranteeing that any adopted or
future legislation and according guidance is set-up and implemented according toprovided international standards such as the UN Guiding Principles on Businessand Human Rights and the OECD Guidelines.

•

Issue guidance on how to be compliant with the requirements, and also what
documentation might be needed. It is important to introduce measures that aretransparent, highly predictable, and feasible for private companies.

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Recommendations from
European industry to Japan

WP-1 / # 09* / E to J

Harmonisation & mutual recognition of standards andproduct certifications; acceptance of international
standards where applicable

Industry still faces standards and products certifications that are not harmonised withinternational standards or regulations. Furthermore, some overseas approvals, despite
having been 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 harmonised 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 EU-Japan EPA was a great catalyst
for speeding up the harmonisation process in Japan, the BRT believes that this cancontinue to be achieved.
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 the Japanese Authorities to:
•
•
•

•

Abolish its remaining unique regulations, including the standards for exhaust gases
Promote further harmonisation 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 harmonisation efforts.

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Railways
Japan lacks a unified conformity assessment scheme, and does in principle notrecognise overseas schemes or approvals. Consequently, this situation often
necessitates the re-testing of products and services that have already been deemedsafe in Europe. Although Japan does engage in international standardisation efforts,
there are no clear indications that Japanese operators are actively implementing thesestandards or test methods.
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
Harmonise or mutual recognise regulations surrounding the need to test forradioactivity. We would like to note that the Europe decided to remove the needfor radioactivity testing for products from Japan, while some products EU foodproducts still have to be tested for the Japanese market.

The BRT believes that:•

With more recognition of European approval and test results, Japanese consumers
will benefit from more and cheaper European products.

Electrical products
In Japan, compliance with the relevant legislation, often referred to as the Denan Act,is required for electrical products. Unfortunately, this legislation is rather intricate, lacks
full harmonisation, and imposes significant administrative burdens.
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The BRT calls on Japan to:•••

Introduce more harmonisation with IEC standards.
Simplify the legislation to provide clarity on the specific approvals required forindividual products. For instance, requirements for lamp fixtures can differ
depending on whether they are standalone or built-in types.
Eliminate the requirement for paper originals and facilitate the use of digital
certificates.

The BRT believes that:•

By recognising European approvals and test results to a greater extent, Japanese
consumers will enjoy access to a wider range of European products at more
affordable prices.

WP-1 / #10* / E to J

Self-verification and risk assessment

Risk assessment and self-verification become more and more common as production
cycles become shorter. This in order to offer a way to shorten the time to introduce a
product to the market and at the same time ensuring that proper responsibility is taken
by companies. While self-verification is used in Japan too, government or third-party
approval is often the norm. Examples of products could be base stations, food contact
materials, non-invasive medical equipment, electrical products etc.
The BRT calls on the Japanese Authorities to:•

Expand the use of self-verification while ensuring that proper care is taken toprotect the safety of human life, as well as animals and plants.

WP-1 / # 11* / E to J

Wind power

The development of wind energy is essential for Japan to reach its CO2 emissions
targets and to achieve net-zero emissions by 2050. Modern and cost-efficient windturbines now contain sophisticated technology that works well with established power
grids of all kinds, ranging from large transmission systems to isolated local grids. The
6th Strategic Energy Plan announced last year is the Japan’s roadmap toward carbon
neutrality by 2050. Under this plan, the renewable energy is regarded as the prime
source of power and the government declared its commitment to prioritise theenhancement of the renewables. In this context, the government is targeting to makethe renewables represent 36 – 38% of power generation by 2030 and to install 5.7 GWof offshore wind farms by 2030.
The BRT calls on the Japanese Authorities to:•

Implement a drastic reform on the offshore wind farm certification process. The
current setup has been inducing lengthy and unpredictable process which serves
as a bottleneck for earlier financial closure and subsequent COD.
➢ Duration for certification: The certification process should be completed in 1 1.5 years which is typical in Europe. It currently takes 3 - 4 years in Japan➢ Language: English language should be allowed in all communications.

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➢ Document-based review process➢ Expand the use of international certifications and standards••

Japan should expand/upgrade the already-selected marshalling ports (Akita,
Noshiro, Kashima and Kitakyushu) and/or develop additional marshalling ports andmake them ready preferably by 2027 so that all or most of the round 2 and 3
projects would be able to start their offshore installation campaign from 2028 andto make the wind farms operational by 2030.
Enable the use of foreign registered vessels, as well as foreign crew on said
vessels for projects related to offshore wind.

WP-1 / # 12* / 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 the Japanese Authorities to:•

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

WP-1 / # 13* / 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 the 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.
Make it possible to have more than 100 entries on import declarations.

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.

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WP-1 / # 14 / E to J

Aeronautics

Haneda D runway weight restrictions are an obstacle to the use of European-madeaeroplanes and an obstacle to further development of international traffic at Haneda.
These weight restrictions should be re-examined to allow the operations of new andlarger aeroplanes such as Airbus-made A380 and A350.
The BRT calls on the 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 / #15 / E to J

Equity compensation

Narrow exemptions of securities registration and prospectus requirement in Japan is
an obstacle to the introduction of equity compensation plan by an EU company to its
directors and employees residing in Japan. The securities registration requirement also
leads to statutory disclosure requirement in Japan which is costly and burdensome for
the EU company operating in Japan.
One of the current securities registration exemptions for equity compensation only
applies to an EU company’s 100% owned child or grandchild company while its othergroup companies are not eligible for the exemption. Another securities registration
exemption applies only if a plan is available for less than 50 directors and employees
in total.
These exemptions should be re-examined so that an EU company can attract, retain,
and motivate its directors and employees in Japan more effectively.
The BRT calls on the Japanese Authorities to:•

Re-examine the exemptions of securities registration and prospectus requirement
for equity compensation to allow more cases of EU companies in Japan to be
exempt from securities registration and prospectus requirement in the case of
equity compensation granted to its directors and employees in Japan.

The BRT believes that:•

Although they affect companies in all sectors, the current rules will affectdigitalisation efforts as they make it hard for companies to recruit high-tech experts.

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WP-1 / #16/ E to J

Human resources

Japan is experiencing a sever lack of labour. This is true both for blue- and white-collar
workers. Unfortunately, due to demographic challenges there is few signs that this will
improve in the short term or the long term. The BRT would therefore like to suggest
some regulatory changes that could address some of the shortcomings.
The BRT calls on the Japanese Authorities to:••••

Abolish the ban on day-labour dispatch. Currently, it is not possible to dispatch day
workers due to the annual income requirement of five million yen.
Introduce legislation to protect the human rights of sexual minorities. This would
make Japan a more attractive labour market for overseas talents.
Revise the rules and thresholds for when tax, health insurance, and pension
payments to incentivise part-time workers to transition into full-time workers.
Eliminate the requirement for “Disclosure of information on margin ratio of
temporary staffing agencies by business location.” This could disincentivise staffing
companies from investing in their dispatched workers, as greater investment in
human capital can lead to higher margins on paper.

The BRT believes that:•Japan should explore all possible changes to address the labour shortage, which
is one of the most significant obstacles for both domestic and foreign companies tocontinue thriving in the country.

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

Chemical Regulations

CSS (Chemical Strategy for Sustainability)
The BRT calls on the EU Authorities to:••

The action plans including the revision of the REACH/CLP regulations underconsideration to achieve the goal of “zero pollution” without hazardous substancesin the Chemical Strategy for Sustainability (CSS) published by the EU Authority as
one of the strategies of the European Green Deal, should be promoted based on
appropriate risk (hazard x exposure) assessment of chemical substances.
The BRT requests that this action plan will ensure that chemical substances, which
can be used safely through appropriate risk management and are indispensable
for realising a sustainable society, are not excluded from the market.

The BRT believes that:
•

•

•
•

The EU Authority is considering proceeding the restriction and ban of chemical
substances based on hazard rather than on risk, which is not in line with theprinciple of the REACH regulation, because the restriction and ban of chemical
substances need to be more extensive and accelerated than before in order toachieve “zero-pollution” without hazardous substances.
On the other hand, chemical substances are indispensable for all kinds of products
and technologies, and if chemical substances are restricted or banned withemphasis on hazard, many related products and technologies without alternative
substances will disappear, which could have serious negative impacts on society.
While the EU Authority’s “zero-pollution” philosophy is understandable, chemical
substances should be used with appropriate risk management, and the idea ofrestricting or banning chemical substances by focusing on hazard is unacceptable.
In the EU Taxonomy, which was enacted to promote sustainable investment in theEU, “pollution prevention and control” was set as one of the environmental goals,
and a hazard-oriented “List of substances of concern” was created to replace thesesubstances with safer alternatives in order to reduce pollution. The manufacturingof these substances will significantly be discouraged, and the BRT is concernedthat chemicals that are essential to realise a sustainable society and whose
pollution can be avoided through appropriate risk management will be excluded
from the market without scientific discussion.

The BRT calls on the EU Authorities to:
When assessing the health/environmental impact of each chemical used in multiple
sectors, risk assessment should be made based on the exact exposure situation andthe amount used in each sector, and regulations should be imposed in the laws
governing each sector.

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The BRT believes that:

Establishment of a ‘One substance, one assessment’ process under action plan of
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
1.

The BRT calls on the EU Authorities to:In recent years, restrictions or regulations have been considered and/or proposed
to uniformly prohibit the manufacture, marketing, and/or use of many substancessuch as PFAS and microplastics etc. using a “grouping approach”. The proposed
restrictions should be applied after risk assessment based on scientific findings foreach individual substance.
When a broad range of substances are to be restricted all at once, definitions andconditions applicable to a wide variety of uses and supply chains will becomecomplicated, leading to confusion among businesses, Therefore, detailed
guidelines should be published from the stage of considering legislation.



The BRT believes that:•

Attempts to group similar substances and make them subject to regulation may beeffective in speeding up their evaluation and preventing “Regrettable substitution”.
However, comprehensive regulation by grouping substances based solely on
chemical structure, without considering the properties and risk of individual
substances, lacks scientific rationality, and will lead to the loss of useful substancesthat can be used safely through appropriate risk management.

2.

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 high concern
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 and clear
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 from outside
and prepare them, so they have to ask upward of supply chains for various kinds

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of monomer information necessary for registration. It becomes a heavy burden for
non-EU companies and acts as a kind of non-tariff barrier.
3.

The BRT calls on the EU Authorities to:•

In the CSS, the European Commission stated that it will establish criteria for
Essential Use so that the use of hazardous chemical substances is allowed only
when their use is essential for the health, safety, or the functioning of society, andthere are no acceptable alternatives from the standpoints of human health and theenvironment. In introducing Essential Uses into REACH in the future, the conceptof socioeconomics in addition to protecting the environment and human healthshould be incorporated, and even after implementation, careful consideration
should be given to whether a particular use of a chemical substance is an essentialuse.
In the reform of authorisation and restrictions, risk-based and socio-economic
assessments should remain.
In expanding the application of the generic risk management approach (GRA) to
professionals, use of these chemicals by professionals should be permitted if safe
handling can be confirmed through appropriate risk assessment of the work
environment, safety considerations from the design stage, and measures such as
personal protective equipment and safety training.

••

The BRT believes that:
•
•

•

•

Balancing the risk assessment based on the latest scientific methods and social
usefulness of chemicals is the fundamental concept in chemicals management.
It should not be important whether it is an essential use or not, but whether therisks can be managed and the magnitude of the benefits, and it is difficult to define
essential use in terms of not only current substance and use information, but also
foreseeable future social utility.
Clarification and simplification of authorisation as well as maintenance ofrestrictions are considered the best proposals.
While we acknowledge that the GRA is often effective in consumer applications,
we believe that proposals to extend it to specialist applications could result in theloss of opportunities for specialist use of substances that are useful to society.

4.

The BRT calls on the EU Authorities to:•

In the integration of the REACH registration tonnage range 1-10t/year and 10100t/year, the increase in hazard information is an excessive demand including
animal tests and maximum consideration should be given to reducing the burden.
The BRT believes that:•The EU committee is refining REACH mainly to simplify the system for the following
reasons: 1) Authorisation puts a heavy burden on businesses and authorities; 2)
Restriction process takes too much time. However, the BRT believes that decisions
based on scientific risk assessment and cost-benefit assessment are more
important for building a sustainable society than expediting legal procedures or
reducing the burden. In addition, it is important that the items listed in the REACH
revision be designed based on current scientific standards and in consideration ofinternational harmonisation of chemical management systems.

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•

•

•

Increased hazard information will not necessarily lead to protection of theenvironment or health. It would also have a significant impact on businesses in low
tonnage areas.
In reducing the risks associated with unintended exposure to mixtures, we consider
it hasty to conclude that mixture assessment factors are the most appropriate
approach in the short and medium term, simply because there is no globally
accepted methodology for evaluation of combination effects.
With regard to the provision of information on the environmental footprint of
substances (e.g. impact on climate, natural resources, biodiversity), it isconsidered premature to incorporate such methodologies into REACH in theabsence of standardised methods and global harmonisation.

5.

The BRT calls on the EU Authorities to:•

There are many and well-reliable chemical data in the REACH, and the EU
authorities have a privilege to take an initiative on the international actions for data
sharing. Given this situation, they should encourage the REACH registrant to sharethe data with the applicants in the other chemical regulations outside of EU, forinstance, 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 utilise thephysical and hazardous data of REACH registration for the chemical regulations in
the other nations. In addition, from the viewpoint of animal welfare, it is important
to avoid unnecessary animal studies by utilising them as much as possible.
However, it is not clear with whom to negotiate for data sharing, and there are no
rules for appropriate cost sharing, which may result in confusion in future
registration under the UK REACH, Turkish KKDIK Regulation (Turkish REACH)
and Taiwan Toxic Chemical Substances and Substances of Concern Control Act.

6.

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 ordata become available.
The BRT believes that:•

If the conclusion of a substance evaluation officially finalised 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 of thinking,the dependability and predictability of regulatory decisions will severely be
impaired.

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

•

•
•

•

The Commission Delegated Regulation introducing new hazard classes in the CLP
Regulation has entered into force in April 2023. To ensure compliance throughout
the supply chain and avoid confusion/difficulty in the logistics scene, the early
publication of the guidance document is essential. Depending on the timing of theguidance document availability, the application of the regulation should be delayed
accordingly.
Regarding new hazard classes, until their introduction in the UN GHS is finalised
after thorough discussions at the UN GHS and the consistency between newhazard classes in the CLP Regulation and in UN GHS is confirmed, HarmonizedClassification, which is the official classification in EU leading to the application ofregulations, should be withheld and only self-classification by the industry should
be used.
The definition of new hazard classes should be discussed and determinedscientifically in public.
The use of PBT substances with minimised risk should be allowed, as material
durability is an important material property for sustainability. And PMT/vPvM
concept should be introduced as a criterion to select substances to be monitored,
instead of substances to be limited to use.
We believe that it is still premature to adopt endocrine disruption because there
are neither internationally agreed evaluation method nor judgment criteria. It is also
noted that endocrine disruption is a mode of action, not a hazard.

The BRT believes that:
•

•
•

•

New hazard classes (ED, PMT/vPvM, etc.) have been introduced in the CLP
Regulation by the delegated act, but at present the classification criteria are notclear. The BRT is concerned that confusion may arise due to the classificationdifficulties or different interpretations when classification decisions are made by theauthority and the industry.
The draft guidance document on classification is scheduled to be issued in mid2024, which means that there is not enough time to comply before the legal
deadline (earliest, 1 May 2025).
New hazard classes (ED, PMT/vPvM, etc) have been introduced in the CLP
Regulation independently prior to their introduction in the UN GHS. In the future,
based on the proposal of the EU, discussions will be held in the UN GHS on
whether or not these hazard classes should be introduced in the UN GHS and theirclassification criteria, which may result in inconsistency between the CLP
Regulation and the UN GHS.
In such a case, in order to maintain international consistency, which is a basic
principle of the UN GHS, and to avoid confusion in international logistics scene, itwill be necessary to modify the CLP criteria in accordance with the UN GHS criteria.
However, reversing regulations, such as designation as SVHC that was madebased on the results of the official CLP classification, may cause a great deal ofconfusion conversely.

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Appropriate approach to endocrine disruptors
The BRT calls on the EU Authorities to:•

When nominating a substance as an SVHC for suspected potential for endocrine
disruption, the reasons for the proposal should be presented with scientificevidence.
The Authorities of the EU should promote the action to make subjects about the
low dose effect by endocrine disruptor clear with a tangible deadline.
While the amendment to the CLP Regulation (Commission Delegated Regulation(EU) 2023/707) defines endocrine disrupting chemicals in a similar way to WHO(2012), there is a wide range of interpretations concerning the terms, “intact
organism” and “adverse effect” among assessors. CLP guidance that isscientifically valid and accessible, especially to assessors, should be developed assoon as possible.

••

The BRT believes that:•

There have been cases of alleged endocrine disruptors being designated as
SVHCs despite no clear scientific conclusion. For example, 3-benzylidene
camphor, designated an SVHC in January 2019, was deemed an endocrine
disruptor of concern for its adverse effects on humans and environmentalorganisms in general just because it has been found to have endocrine adverse
effects on a small number of species. On the other hands, in reality, markets tend
to eliminate the substances listed on the SVHC list before actual hazard level
becomes clear, in case of the possibility to be added them to authorisation in the
future.
Issues related to dose and adverse effects with respect to endocrine disruption,such as whether or not a threshold for adverse effects from endocrine disruption
exist and is measurable, remain open to scientific conclusion.
Despite the clear distinction in the definition of “endocrine activity” in the CLP
Regulations, some assessors make conservative judgments with ambiguous
toxicological rationale, assuming that if “endocrine activity” is observed, then“adverse effect” is also existed. The evaluation of chemicals on a risk basis should
be based on scientific knowledge.
Attempts at open discussion on establishing risk-based assessment methods
based on scientific knowledge, such as the “Opinion on the impact of nonmonotonic dose responses on EFSA’s human health risk assessments” publishedin October 2021, are highly appreciated.

•••

Fluorochemicals
The BRT calls on the EU Authorities to:•

The proposed restrictions submitted to ECHA by five countries including Germany
in January this year indicate the direction to ban the use or placing on the market
of all PFASs as a whole. However, PFAS includes various substances withdifferent characteristics. After risk assessment of the effects on human health or
the environment for each individual substance, based on scientific knowledge,

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•

•

•

•
•

•

necessary regulations should be considered only when there is an unacceptablerisk to human health or the environment.
Even if restrictions are implemented, target substances and applications should
be carefully selected based on careful assessment of socioeconomic impacts andavailability of alternative substances, with maximum respect for opinions in public
consultation.
Necessary measures should be taken to allow exclusion from the restrictions or
extension of the grace period if socioeconomic impacts become apparent after
the introduction of the restrictions or if development of alternative substances orsocial implementation cannot be fully expected within the grace period.
A threshold of 25 ppb has been proposed for all PFAS, which is set at a very low
level and a value based on the risk assessment of PFOA and PFOS, which haveclear hazards, but an appropriate threshold should be set based on the risk
assessment for each individual substance.
Internationally recognised analytical methods should be specifically specified to
be able to determine if a wide range of PFAS contained in chemicals and articles
are above or below threshold values.
The use of manufacturing equipment and fixtures made of PFAS (e.g., PTFE) in
manufacturing plants is essential from the standpoint of ensuring manufacturingsafety, so their use should not be banned in manufacturing plants where theequipment and its operation are controlled. In addition, PFAS that may beunintentionally contained in chemicals in trace amounts as by-products orcontaminants should be exempted from the restriction.
The introduction of restrictions should proceed after careful consideration of thebalance between the impact on supply chains and international trade and theneed to achieve policy objectives and exhaustive discussions through the
WTO/TBT Committee and other procedures, based on the premise of ensuringconsistency with the Agreement on Technical Barriers to Trade (WTO/TBTAgreement) and other international rules.

The BRT believes that:•••

For most PFASs there are insufficient data to adequately assess their effects onhuman health and the environment, and their persistent and high persistence
properties make them hazardous. However, it has not been proved that theseproperties have adverse effects on human health or the environment.
Note that Article 68, paragraph 1 of REACH also stipulates that new restrictions
shall be introduced, or existing restrictions shall be amended, where there is anunacceptable risk to human health or the environment arising from the
manufacture, placing on the market, or use of substances. However, we do notbelieve that most PFASs present unacceptable risks.
PFASs possess various properties not found in other substances, such as heat
resistance and chemical stability, and have therefore been used as essential
materials in a wide range of applications including energy, semiconductor
manufacturing, automotive components, machinery and devices of all kinds,
telecommunications, healthcare, construction, cosmetics, and household goods.
If the manufacture, placing on the market, and use of PFASs were to be uniformly
banned, economies and societies could be severely impacted. In addition, there
is concern that this will be a major barrier to the future implementation of theEuropean Green Deal and to ensuring energy security and economic security.

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•

•

•

•

•

The exemptions and alternative periods for the proposed restrictions are also not
appropriate. The Proposed Restriction allows a five-year derogation in the caseof PFASs for which alternative substances are in the development phase or are
not available in sufficient quantities, a 12-year derogation in the case of PFASs
for which alternative substances have not yet been identified, and time-unlimited
derogations, but only for a limited number of uses. Many of the alternatives are
only available in their intended application, and few alternatives have been shown
to be as available as PFAS in terms of required function, service life, supply,
recyclability, or disposability. A grace period of 5 or 12 years with inadequate
alternative technologies cannot be justified. On the other hand, even in thedevelopment stage, there are uncertainties in the realisation of social
implementation, and the time required is longer than expected.
The method of establishing exemptions for each application is not realistic,
because the types of PFAS used and the situations in which they are used are
too different, which ultimately leads to the creation of a huge number ofsubcategories. For example, it is impossible to comprehensively regulate resists
used in semiconductor manufacturing, resins used in encapsulants, films used indisplays, and light-emitting devices under a single category “electrical andelectronic materials”. A more realistic approach would be to clarify thecharacteristics of each PFAS and regulate them, taking into account exposure orenvironmental releases.
Also, the “repair as produced” principle should be introduced. Repairs of products
need the same spare parts as those used in the first production of each product.
Re-design of spare parts often also requires re-design of the products, because
otherwise the original performance (i.e. safety and durability) cannot be
guaranteed. In order to ensure the repairability and continuation of the lifetime of
products, a full exemption for spare parts is needed. The reuse of used parts/useddevices should also be exempted. If not, a large amount of waste is expected tobe generated.
The proposed restriction also has the problem that the situation of manufacturing
sites handling chemicals, such as semiconductors, pharmaceuticals andcosmetics, as well as the chemical industry, has not been fully considered. For
manufacturing processes that handle various types of chemicals, the use of
manufacturing equipment and fixtures such as lining pipes and packing made of
PFAS (PTFE, etc.), which has superior corrosion resistance, heat resistance, etc.
to other materials, is essential for ensuring manufacturing safety. It is not realistic
to ban these products, and because they are essential, no progress has been
made in considering alternatives.
As product supply chains expand globally, there is concern that the introductionof restrictions will have a significant negative impact on the supply chains andinternational trade of products in which PFAS are used. The content of therestrictions appears to create more obstacles to international trade thannecessary to achieve the policy objectives and is inconsistent with Article 2.2 of
the WTO/TBT Agreement, which states that “Technical regulations shall not be
more trade-restrictive than necessary to fulfil a legitimate objective, taking
account of the risks non-fulfilment would create.” We believe that the introductionof restrictions, including from the perspective of consistency with international
obligations, including the Agreement, should not be undertaken without careful
scrutiny of the balance between the impact on supply chains and international
trade and the need to achieve policy objectives.
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RoHS
The BRT calls on the EU Authorities to:•

The Authorities of the EU should keep harmonised and consistent in the operationof 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 andbecame 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 Dossier should be
evaluated considering that the relevant knowledge and tools, such as the OECD
test guidelines and grouping tools, have not been fully available for the registrants.
The EU Commission has issued a Recommendation on the definition of
nanomaterial, and the relevant definition in each law will be revised in the future.
In the revision, sufficient attention should be paid to the international harmonisation.

The BRT believes that:•••

The test methods or tools of nanoforms which REACH ANNEX requests are underdeveloping.
In Commission Recommendation of 10.6.2022 on the definition of nanomaterial,
nanomaterials were defined on the basis of length, diameter and aspect ratio. In
applying this definition to the respective legislation, the impact caused by the newnanomaterial designation will need to be carefully considered in the future.
It is expected that different individual sectors will update their internal definitions
according to the revised definition after the new recommendation is implemented.
The originality of the sector should be accepted, because the surrounding
situations are totally different depending on sectors.

WP-1 / # 18 / J to E••

Business in Europe: Framework for Income Taxation(BEFIT)

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.

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WP-1 / # 19 / J to E

Sustainable European Future

Policy on Corporate Sustainability and Responsible Business Conduct (RBC)
The BRT calls on the Authorities of the EU to:•••

Ensuring policy coherence to achieve EU’s objectives of sustainable development
and a competitive social market economy and create an enabling environment toencourage the uptake of both individual and collective actions to maximise positive
impacts while mitigating negative ones.
Support inclusive dialogue with all stakeholders as a powerful tool to advancetowards a sustainable future. BRT recognises that the Committee on TSD under
the EPA will be a platform for the EU and Japan on sustainability. This committee
should have an open and transparent nature and involve broad participation fromthe real economy across all sectors. It would be particularly beneficial to exchange
best practices between Japan and the EU, and to gather views on the future policy
trajectory in the two regions and globally.
Involvement of all stakeholders is critical to ensuring that regulation is effective,
proportionate, workable and supported by credible evidence. The benefits of fullstakeholder participation are widely recognised as they bring everyone’s expertise,perspectives and ideas into the policy-making process.

Disclosure and transparency (EU corporate sustainability reporting)
The BRT believes that:•

Corporate sustainability reporting is a communication tool of company’s value
creation process between the company and its stakeholders, as well as an internalmanagement tool which enables companies to develop and evaluate their longterm business model and strategy. Therefore, it is our position that sustainability
reporting should never become a tick-box exercise used by companies solely as acompliance tool. On the other hand, sustainability reporting standards must not
impose excessive administrative burdens on companies, as this would hamper thebroader efforts in creating and realising innovations essential for the achievementof the European Green Deal.

The BRT calls on the Authorities of the EU to:•••

Promote the international interoperability when creating EU sustainability reporting
standards to avoid double reporting for companies. EU reporting standards need
to be aligned with ISSB’s global base approach and allow companies to report only
the ESRS’s additional requirements, on top of what is already being reported
based on international frameworks.
Clarify the equivalence mechanism of EU standards and recognise ISSB asequivalence standards.
Take reasonable consideration of the burden imposed on companies as well as
the usability of data for users.
➢ Adopt the prioritisation and phase in approach for making reporting more
effective and more reliable.

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•➢ Recognise that companies have to deal with taxonomy disclosure
requirements at the same time which is new and entails complex structured
requirements.
Emphasise dialogue as an equally valuable means for companies to strengthen
the trust of their investors and stakeholders and leverage the improvement ofcompanies’ internal practices by incorporating dialogue into the PDCA
management cycle. It is a powerful tool in fostering a culture of risk management
and innovation, whereby companies across different cultures can exchange views
on potential future risks as well as explore collaborative opportunities.

Corporate Sustainability Due Diligence and forced labour
The BRT underlines the need to acknowledge the diversity of stakeholders’ interests,
as stakeholder engagement is vital to incorporate sustainable corporate governancein practice. BRT supports the EU’s ambition to enhance due diligence in corporate
management processes and recognises the importance to encourage a ‘culture of noharm’.
The BRT calls on the Authorities of the EU to:
•
•

•

•

•

•

•

Make due diligence obligations implementable and bring a high level of legal
certainty for companies.
Ensure that the EU framework is aligned with international standards – including
the UN Guiding Principles for Business and Human Rights (UNGPs) and theOECD Guidelines for Multinational Enterprises (OECD MNE Guidelines).
International harmonisation is of paramount importance, as companies’ operationand value chains are not limited to within the EU, but also deeply rooted in third
countries.
Ensure internal market harmonisation of legal requirements on due diligence. Thisis necessary to avoid fragmentation of the EU single market and ensure a levelplaying field. If the EU wishes its model to be used as a reference elsewhere in
the world, it cannot rely on the limited harmonisation provided by the directive thatwould potentially lead to 27 different frameworks.
Urge the governments to work with industries and other countries to solve thefundamental issues of supply chains. BRT asks the Commission to build up acredible database as well as to establish guidelines, and a helpdesk wherecompanies can rely on expertise.
Provide companies sufficient preparation and time to be equipped and resourced
to comply with the new requirements. BRT believes that it would be more realistic
if the application of such new requirements are gradually phased in, with regularreview to ensure the effectiveness of the new requirements.
Avoid blacklisting countries with EU self-classification rule, which is against WTO
rules, in terms of forced labour legislation as it will discourage (often irresponsibly
operating) companies to engage in high-risk markets, not solving root cause offorced labour issues throughout the global supply chain.
Avoid requiring proof at customs clearance that products imported into the EU areforced labour free as such proof can hardly be prepared by companies alone.

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