JOINT STATEMENT
60th U.S.-JAPAN BUSINESS CONFERENCE
Tokyo
October 3-4, 2023
Members of the U.S.-Japan Business Council and the Japan-U.S. Business Council (the “Councils”) held the 60th Annual U.S.-Japan
Business Conference on October 3-4 in Tokyo. The Councils jointly represent 134 companies from both the United States and Japan,
with sectors including the digital economy, financial services, healthcare, energy, infrastructure, travel, tourism, and transportation.
Although the World Health Organization declared an end to the Covid-19 pandemic in March, disruptions to the global economy
continue, exacerbated by Russia’s ongoing aggression against Ukraine. With these heightened security challenges, we are now at aturning point in history, where the past trend of globalization has come into question.
Under these circumstances, the Councils applaud the G7 Hiroshima Summit that was held in May this year, when the G7 nations
expressed their strong will to strengthen a free and open international order based on the rule of law and agreed on the imperativeof fostering economic resilience by deconcentrating and diversifying supply chains. The Councils welcome the agreement to deepen
partnerships not only among the G7 countries, but also with leaders of countries in the so-called Global South. Based on theoutcomes of the G7 Summit, as well as recalling that government-level cooperation between the United States and Japan has
expanded and deepened in a variety of areas under frameworks such as the U.S.-Japan Economic Policy Consultative Committee andJapan-U.S. Commercial and Industrial Partnership, the Councils commit that the business communities of the United States andJapan, as strong partners, will together actively confront the challenges facing the world.
The Conference convened senior business leaders from the United States and Japan, who shared common views on challenges, suchas addressing climate change and energy security with realistic and effective actions; strengthening the resiliency of semiconductor
supply chains; promoting innovation and appropriate governance in AI; and fostering innovation in the healthcare sector. The
Councils also believe that collaboration should be further strengthened in third country markets, including those in the Global South,
to foster more resilient, sustainable, diverse, and inclusive societies and promote a more transparent and rules-based international
economic order. To achieve these goals, the Councils committed to:

1. Encourage both governments to work together to ensure energy security in the Indo-Pacific region and to
make realistic energy transitions toward carbon neutrality.
With the Covid-19 pandemic and heightened geopolitical risks including Russia’s aggression in Ukraine, ensuring stable energy
supplies has become an urgent issue for many countries. At the same time, international cooperation to achieve carbon
neutrality remains a top priority. The business communities of both countries should promote the adoption of realistic solutions
to the so-called energy trilemma (ensuring energy security, equitable access to energy, and a sustainable global environment)with specific action plans. Therefore, the Councils recommend that both governments:

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Promote realistic steps to advance the energy transition and an optimal energy mix with currently available diverse
measures such as renewable energy (solar, wind, geothermal), LNG, hydrogen co-firing, ammonia co-firing, and effective
use of existing nuclear power plants depending on each region and industry, based on the concept of technology
neutrality focusing on the objective contribution to the reduction of GHG;
Strengthen cooperation including financial and non-monetary support for relevant industries among the U.S., Japan andother like-minded countries to promote technology innovation such as Carbon Capture, Utilization and Storage (CCUS),
innovative reactors and efficient production of sustainable aviation fuel (SAF) to achieve carbon neutrality by 2050;
Promote carbon-recycling products such as e-methane (synthetic methane) and eFuel (synthetic fuel), and bilaterally
coordinate CO2 counting bilaterally to promote those products.
Enhance the development of energy infrastructure in so-called Global South countries appropriate to the situation ineach country;
Request that the adoption of new regulations, such as the Carbon Border Adjustment Mechanism (CBAM) in the EU, betransparent and consistent with WTO rules; andFurther promote transition finance including formulating an appropriate evaluation framework that supports feasible
and realistic energy transitions.

2. Support government efforts to ensure the stable supply of semiconductors.
In the midst of the Covid-19 pandemic, the semiconductor supply chain was disrupted, with tremendous consequences in diverse
industries around the world. Semiconductors are an essential resource supporting the modern economy, and it is an urgent
challenge for both countries to ensure a stable supply in the face of heightened security risks. It is also important for economic
growth in both countries that they take the lead in semiconductor innovation, which plays a key role in promoting digitaltransformation. Therefore, the Councils recommend that both governments:
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Enhance cooperation to optimize secure and resilient supply chains, including diversification of procurement sources(including critical minerals), a sound science-based regulatory system to ensure access to necessary essential materials,
including chemicals, and support companies’ decisions to seek optimal placement of production bases;
Continue and strengthen the support for innovation promotion and supply chain optimization, and avoid the policy ofexcessive preferential treatment of domestic businesses that impede optimal supply chain resilience;
Identify future competitive technology area and formulate strategy for developing its competitiveness;
Strengthen cooperation between the public and private sectors of the U.S. and Japan to promote innovation in nextgeneration technologies such as high-density integration, optoelectronic integration and SiC power devices; andFoster cooperation between and among countries in the development and implementation of regulations for advanced
technologies.

3. Support government efforts to build optimal AI governance to maximize the social benefits of AI
applications.
Technological innovation in AI, including generative AI, is advancing rapidly. It is important for both the U.S. and Japan topromote the development and utilization of AI technologies that enhance the productivity of a wide range of economic activities.
There is also an urgent need to mitigate social risks such as invasion of privacy and the dissemination of misinformation andconfidential information, and job displacement. Therefore, the Councils recommend that both governments:••••

Strengthen bilateral and public-private collaboration on policymaking to achieve both optimal governance, including theimprovement of the interoperability, and promotion of appropriate uses of AI with a human-centric perspective in orderto maximize the social benefits of the technology;
Promote the Hiroshima AI Process adopted at the G7 Summit for the development of international rules aimed fortrustworthy AI as the basis for promoting safe AI usage, including industry consultation and sharing technical expertiseon AI development and utilization;
Develop the standardization necessary for the formulation of international rules and foster trust among the countries
concerned as the basis for the standardization;
Strengthen the technical and investment aspects of cybersecurity to address emerging risks associated with theadvancement of AI; and•Address and bridge the digital divide to ensure the broadest possible participation in the 21st century’s digital economy.

4. Encourage government initiatives to promote innovation and ensure stable supply for healthcare goods that
support health and welfare.
In both countries, which face the challenges of an aging population and widening economic disparities, the provision ofaccessible, advanced medical and care services is a fundamental necessity to ensure the wellbeing of the people. It is importantthat both countries promote cooperation in ensuring stable supplies of medical goods and access to advanced medical care, as
well as improving convenience and efficiency through the utilization of digital technology. Therefore, the Councils recommendthat both governments:
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Enhance closer coordination between government agencies in the U.S. and Japan to promote innovation in healthcare
and nursing care;
Collaborate to diversify supply chains, including inputs to ensure a stable and secure supply of pharmaceuticals andmedical devices;
Establish rules and infrastructure for efficient utilization of healthcare and nursing care data;
Reform pricing schemes in Japan to enhance the predictability of investments in innovative therapies such as
regenerative medicine, gene therapy, digital therapeutics, and drug discovery innovation; andPromote harmonization of regulations in order to promptly approve safe and effective pharmaceuticals and medical
devices.

5. Pursue policies to further deepen partnerships with countries in the Indo-Pacific region.
Global markets have been increasingly fragmented in recent years. The pandemic itself, policy responses to it, and Russia’s
aggression in Ukraine disrupted supply chains in different ways, leading to various problems such as the global energy crisis andfood shortages. Under these circumstances, promoting a Free and Open Indo-Pacific (FOIP) requires cooperation among many
countries in the region. To strengthen U.S.-Japan leadership in promoting FOIP, the Councils recommend that bothgovernments:(1) Strengthen partnerships with the Global South•

Build partnerships for shared prosperity in the Indo-Pacific region based on the rule of law and with respect for eachnational and regional culture.

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Support U.S.-Japan private sector collaboration and partnerships to bring greater prosperity to the Global South.

(2) Promote quality infrastructure investment•

Promote investment through international frameworks such as the Partnership for Global Infrastructure and Investment(PGII) based on ensuring investment governance, such as the G20 Principles for Quality Infrastructure Investment; and•Comply with international rules for sound third-country infrastructure investment based on mutual benefit.

(3) Maintain and strengthen a free and open international economic order•

Focus on promoting IPEF to achieve realistic outcomes to develop trade frameworks for shared prosperity in the IndoPacific region at an early stage, while recognizing the importance of the return of the U.S. to the CPTPP and considerationsof WTO reform;•

Enhance U.S.-Japan cooperation to address trade-distorting actions and market-distorting measures such as pervasive andharmful industrial subsidies, all forms of forced technology transfer and abuse of intellectual property rights;•

Coordinate U.S. and Japan joint efforts to ensure strong supply chain resilience with major trading partners, including theEU, by working cooperatively to ensure sound science, risk-based regulations to secure access to essential raw materials for
manufacturing priority industries such as defense, semiconductors, decarbonizing technologies, health products, among
others.

•Address economic coercion in cooperation between the U.S. and Japan as well as with other countries in the Indo-Pacificregion; and•Promote Data Free Flow with Trust (DFFT) in the Indo-Pacific region as a basis for strengthening economic linkages,
including rule-making in frameworks such as IPEF, and promotion of practical projects to accelerate data distribution.

6. Recognize the pivotal role of the financial services sector in addressing shared challenges and strengthening
the global economy.
The Councils encourage efforts by both governments to support the growth of a healthy financial system, realize a sustainable
society, advance international cooperation in finance, promote digital financial innovation, and secure a brighter future. Therefore,
the Councils recommend that both governments:•

Aim for regulatory coherence, a level playing field, and careful consideration in the review of financial regulation andsupervision to maximize the prudential deployment of private capital.

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Encourage efforts to support financial inclusion of developing countries, such as by promoting sustainable finance, blended
finance initiatives, and innovation of financial structures through multilateral development banks.

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Pay close attention to the financial needs of small and medium sized enterprises and adapt regulations to meet thoseneeds.

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Promote digital financial innovation in areas such as data connectivity and AI.

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Pursue policies to support Japan’s development as an international financial center and as a nation facilitating asset
management. The Councils applaud Prime Minister Kishida’s recent announcement of new initiatives to bolster Japan’s
asset management sector.

Our sector-specific recommendations for the digital economy, financial services, energy and infrastructure, healthcare innovation,and travel, tourism, and transportation can be found in the supplements that follow.

1. Strengthen and promote a rules-based global trading system.

2. Advance digital transformation (“DX”) through closer U.S.-Japan cooperation.

A. Foster investment in key technologies and supply chain resilience.

B. Promote the free flow of data across borders.

3. Develop and promote a safe and reliable next-generation information and communications technology(“ICT”) infrastructure.

4. Accelerate the initiative to promote the use of artificial intelligence (“AI”).

5. Strengthen U.S.-Japan leadership in promoting the use of emerging technologies.
A. Deepen bilateral and multilateral cooperation on quantum technology.

B. Continue public-private dialogue on immersive technologies.

C. Promote an open, interoperable, and secure Internet through globally recognized cyber risk
management frameworks.

Every country sees a growing need to increase energy security in today’s uncertain geopolitical environment due torecent events such as the Russian invasion of Ukraine. Furthermore, climate change represents one of the greatest
challenges facing the world and requires urgent and sustained action toward carbon neutrality.
The U.S.-Japan Business Council and the Japan-U.S. Business Council (hereafter “the Councils”) believe that the U.S.
and Japan must be key players in navigating the world to a well-balanced future - decarbonizing the power sector andensuring secure and stable energy supply.
To achieve carbon neutrality by 2050 and enhance energy security, international collaboration and public support fromdeveloped economies to growing economies such as legislation, regulatory reform, and incentives are essential. The
world also needs to take various energy transition routes, including circular economy approaches to support
decarbonization, factoring just transition considerations so that it leaves none behind as there is no one-size-fits-all
approach to the energy transition.
In addition, the Councils remain committed to U.S.-Japan cooperation to realize a Free and Open Indo-Pacific (FOIP) forthe prosperity and security of the region. The Councils also see Southeast Asian countries as important stakeholders toachieve FOIP.

Improving Systems Toward Upgrading Energy Security
The Councils welcome many of the energy and climate provisions of the Inflation Reduction Act (IRA) such ashydrogen and carbon capture, which supports the U.S. in achieving a carbon neutral society by 2050. We recognizethat the Act needs further actions to make sure its incentives can be maximized as quickly as possible to benefit
society: providing clear regulation, streamlining a cumbersome permitting system, and investing in enabling
infrastructure.
The Councils also welcome the launch of the Japan-United States Energy Security Dialogue which strengthens thetwo countries’ bilateral partnership on energy security. Recent geopolitical events and skyrocketing energy prices
have reminded us that securing a stable energy supply is essential as well as pursuing decarbonization to protect
daily life.
We further acknowledge the role liquefied natural gas (LNG) can play to alleviate global energy supply constraints
and hence promote exports of U.S. LNG to take this role. As the Japanese government and International Energy
Agency Secretariat’s recently released LNG Strategy for the World report warns, “If investment into natural gas/LNG
is insufficient, a supply tightness could occur before a demand decline, putting global energy security at
risk...Therefore, it is important to recognize that the world may risk facing prolonged periods of supply shortages if
actual demand turns out to be higher than forecasts or expectations.”
Meanwhile, the lack of consistency and transparency in measurement and reporting of methane emissions creates
challenges for the LNG market. We support the U.S. Department of Energy’s development of the global frameworkfor differentiated natural gas to verify emissions throughout a global supply chain. The Councils recommend the two
governments to consider the following measures for the U.S. and Japan to lead efforts to enhance energy security
and resilience for a stable worldwide energy supply:

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Support the development and deployment of infrastructure to increase the capacity and efficiency ofexporting U.S. LNG to the Indo-Pacific while accelerating the deployment of clean energy technologies in
the region;
Boost activities on the Coalition for LNG Emission Abatement toward Net-zero (“CLEAN”) for the initiative
taken by its buyers, together with its producers, to reduce methane emissions in the value chain.
Increase energy supply through governmental frameworks among like-minded countries and support
investments in energy infrastructure to diversify supply chains and sources of energy, instead of depending
on a single source;
Utilize nuclear power and promote the new generation of safer reactors which can contribute to theenhancement of energy security as one of the important sources of safe, resilient, and green baseload
power supply;
Develop clear regulations and guidelines based on the IRA, such as domestic sourcing requirements, carbon
intensity and key definitions to implement the law; and,Expand the IRA philosophy which includes incentives to reduce carbon emissions to other countries such as
Japan to boost decarbonizing projects globally.

Securing A Realistic Transition That Works for All
The Councils are aware that the energy transition is far more complicated than simply turning off fossil fuels andswitching on renewables. It requires a balancing act between decarbonizing our society and ensuring secure andstable energy supplies for each country. Every country has a different resource situation and requires a phased
approach toward carbon neutrality.
There is no one-size-fits-all approach to achieving the energy transition with stable energy supply, but we havevarious solutions such as low carbon fuels such as e-methane/e-natural gas, carbon capture systems, nuclear
power, and hydrogen in addition to employing natural energy resources such as solar, wind, geothermal, pumped
storage hydropower, and batteries where possible.
The U.S. and Japan continue efforts to achieve a carbon neutral world with the “Japan-U.S. Energy Security
Dialogue” as the center of U.S.-Japan cooperation in this area. The Councils urge the two governments to support
the following for the U.S. and Japan to overcome the energy trilemma: ensuring energy security, providing energy
equity – international access to affordable, clean energy - and achieving environmental sustainability:
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Maintain implementation of the U.S. Department of Energy and Japan’s Ministry of Economy, Trade andIndustry Memorandum of Cooperation in the field of carbon capture, utilization and storage, conversion andrecycling, and carbon dioxide removal. Continue commitment on switching to natural gas including LNG, astable cleaner baseload power supply, and methanol from other fuels with higher emissions; and deploying
cutting edge technologies such as dual-fuel gas turbines capable of combusting both natural gas andhydrogen, and eventually just hydrogen;Ensure a clear and sustainable rules-based approach so that each country has predictable policies toward
reducing emissions or introducing a price for carbon, and develop mechanisms for emissions trading andenvironmental value trading, so-called Corresponding Adjustment, across countries;
Activate incentives for carbon capture, utilization, and storage (CCUS) and other decarbonization pathways
for cleaner utilization of existing infrastructure, decarbonization of hard-to-abate sectors such as theindustrial and transportation sectors and production of cleaner fuels including blue hydrogen/ammonia, efuel, and sustainable aviation fuel;Coordinate on development of key regulatory and standards processes to encourage investments indecarbonization and build demand for lower-carbon products and manufacturing inputs;
Promote cross-sectoral cooperation, such as the recent consortium announcement between U.S. andJapanese companies, to develop an entire hydrogen value chain from production to transportation, storage
and utilization, and mobilization of all technologies related to hydrogen, ammonia, and e-methane/e-natural
gas to quickly realize a hydrogen society.

Expanding Development and Deployment of Innovative Technologies
The Councils emphasize that disruptive innovation which supports an orderly energy transition is necessary toachieve the carbon neutrality targets set for 2050 by both the U.S. and Japanese governments. Also, no single
technology can achieve this target, and an “all-of-the-above” approach is required. The Councils recommend thetwo governments to promote the following policies to accelerate development and utilization of innovativetechnologies:
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Support continued implementation of the Memorandum of Cooperation between the Ministry of Economy,
Trade and Industry of Japan and the U.S. Department of Energy concerning collaboration in the field ofcarbon capture, utilization and storage / conversion and recycling, and carbon dioxide removal.
Implement digital technologies in the energy and infrastructure sector, including power grids, for
improvement of efficiency, utilization of limited resource, and promotion of smart, modern, and resilient
infrastructure;
Develop risk-based standards incorporating private sector consultation to enhance cyber security resilienceand readiness against cyber-attacks on critical infrastructure;
Utilize AI and IoT technologies to decarbonize value chains such as hydrogen and CO2 and optimize anenergy management by power grids;
Support private sector efforts to develop new technologies such as more efficient energy storage andcarbon capture (direct air capture) technologies, innovative advanced nuclear technology, and new types ofclean fuels to prepare as many technology options for the energy transition as possible and to drive cost
reduction for affordability;
Establish a CO2 value chain, which is one of the key pillars toward carbon neutrality and decarbonizing
hard-to-abate sectors, by promoting development of business models utilizing captured CO2 and creating acircular economy for CO2 which has e-methane/e-natural gas as a solution;
Set rules for CO2 accounting to facilitate the import and export of products made of captured CO2; and,
Coordinate harmonization of standards for cross border CO2 shipping.

Cooperating With Southeast Asian Countries in Order to Achieve a Free and Open Indo-Pacific
The Councils believe the cooperation of the U.S., Japan, and Southeast Asian countries in the Indo-Pacific region isessential to realizing a Free and Open Indo-Pacific (FOIP) that brings prosperity and security to the region. Throughenhancing the Japan-U.S. Clean Energy Partnership (JUCEP), the U.S. and Japan can support like-minded countries
in the region to promote high quality infrastructure for energy transition and energy security with consideration of
the different circumstances of each country. The Councils urge the two governments to support the following
recommendations:
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Expand U.S.-Japan cooperation with Southeast Asian countries to sustainably switch coal power plants to
LNG, use renewable natural gas with CCUS systems, and then convert such infrastructure tohydrogen/ammonia infrastructure with minimum modification for further emissions reduction in the longrun;
Mobilize financing to accelerate the development of low-carbon and clean energy technologies via the“Clean Energy, Decarbonization, and Infrastructure” pillar of the Indo-Pacific Economic Framework (IPEF) in
the region. Simultaneously, utilize the “Supply Chain” pillar to secure the supply chain of energy
infrastructure equipment and critical minerals, and freedom of navigation;
Continue to actively engage in global development efforts including the Mineral Security Partnership that
includes government partners from 12 countries including Japan and the United States to stabilize mineral
supply chains;
Utilize all existing frameworks for public-private dialogue established by the U.S. and Japanese
governments to support private energy and infrastructure business projects in the region. This could takemultiple forms, including by providing business matching opportunities for private companies, encouraging
mobilization of private capital and reducing regulatory barriers in Southeast Asian countries;

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Encourage circular economy approaches to promote innovative sustainable business models in which
products are crafted and consumed in a way that maximizes their value throughout their entire life cycle,
and reduces their impact on natural resources, waste generation, and carbon emissions;
Develop common principles and life cycle assessment (LCA) tools to evaluate circularity and environmental
impact of the different alternatives, and additionally support the waste hierarchy by rethinking traditional,
linear “take-make-dispose’ way of doing business to adopt new ways of working that maximize the value
and use of our resources;
Pilot increased investment in waste management through available channels such as U.S. and Japanesedevelopment funding, and others as a means to create economic value for waste plastic (as feedstock) inthe developing economies in Indo Pacific region; along with new job creation – while also establishingenvironmental solutions;
Encourage greater investment in recycling technology, including the deployment of advanced recycling
which is a more suitable technology to address the complexity in developing economies in the region; and,
Promote greater public awareness on new low carbon alternatives increasing public acceptance on the roleof CCS, hydrogen and low emissions fuel as part of the “all-of-the above” solution to achieve a carbon
neutral society by 2050.

The Financial Services Working Group of the Japan-U.S. Business Council and the U.S.-Japan Business Council
endorse collective actions in five areas: Maintaining a Healthy Financial System, Realizing a Sustainable Society,
Advancing International Cooperation in Finance, Promoting Digital Financial Innovation, and Securing a Brighter
Future.

1. Maintaining a Healthy Financial System
Level Playing Field
The Councils embrace innovation and the healthy introduction of new financial products and services both byincumbent players and new entrants.
At the same time, the lines between traditional and new financial products — as well as between traditional
financial institutions and tech-focused newer entrants — are becoming increasingly blurred. We urge supervisory
authorities to be vigilant as technologies rapidly advance. For competition and innovation to thrive in finance under
the principle of a level playing field, it is essential that governments and authorities evaluate a product’s potential
impacts on consumers and the financial system when assessing the appropriate regulations and standards to apply.

Regulatory Coherence
Regulatory fragmentation has been exacerbated by strategic, environmental, and technological developments thathave motivated national governments to act before international best practices can be established. In thisenvironment, it is critical that the U.S. and Japanese governments align on the development of appropriate
regulations that are coordinated, strike the right balance between global consistency and local relevance, and move
us toward financial regulatory coherence. The Councils believe an institutionalized approach should be
implemented, as in the formation of other bilateral financial regulatory fora. Such a step would be a natural
progression and a work product that can be produced by the ministerial Japan-U.S. Economic Policy Consultative
Committee (the Economic "2+2") and the "Japan-U.S. Competitiveness and Resilience (CoRe) Partnership" createdby the leaders of the two countries at their meeting in January 2022.

Careful Consideration in the Review of Financial Regulation and Supervision
The stress of regional bank failures in the U.S. in March 2023 highlighted the vulnerabilities of selected individual
financial institutions, but the global financial system has shown itself to be more resilient due to the regulatory
reforms implemented following the Global Financial Crisis in 2008, as reaffirmed at the recent G7 Finance Ministers
and Central Bank Governors' Meeting 2023. Both Councils support the efforts of international financial regulatory
agencies such as the FSB to carry out ongoing analysis of recent events to derive their causes and implications.
Measures towards the improvement of future regulation and supervision should be carefully calibrated in theirbreadth and scope based on this analysis.

2. Realizing a Sustainable Society
Appropriate Evaluation of the Initiatives of Financial Institutions
The importance of transition finance was reaffirmed at the G7 Hiroshima Summit, and there is a growinginternational understanding of its significance. Financial institutions are expected to support companies’ efforts
towards decarbonization through transition finance and similar initiatives. However, there is a concern that theefforts of financial institutions that are actively supporting decarbonization through transition finance are notcurrently evaluated under a consistent set of rules for measuring and disclosing financed emissions. Bothgovernments should establish a framework for appropriately evaluating investments and loans aimed at achieving
net zero emissions.

Promotion of Blended FinanceIn order to further attract private investment towards the realization of Green Transformation, it is of utmost
importance for public institutions, including multilateral development banks (MDBs), export-import banks, aid
programs, and others, to establish a Blended Finance framework through measures such as assuming risks thatcannot be fully covered by the private sector, including debt guarantees. Both governments should strive to create
an environment and legal framework conducive to the promotion of Blended Finance.

Reporting and Disclosure
Both countries’ financial regulatory agencies should engage in a public-private dialogue to consider disclosure andreporting standards related to sustainable financing activities, and climate-related risks and opportunities. The goal
should be to establish a globally harmonized framework for reporting and disclosure that balances investor needs
for transparency and informed decision-making with the need for financial institutions and reporting entities to haveflexibility within the framework. Such flexibility is critical in view of the uncertainties and subjective interpretation
inherent in any analysis of the assessment and impact of climate change and sustainable financing activities.

Supporting Small and Medium-Sized Enterprises
Small and medium-sized enterprises (SMEs) constitute the backbone of our economies, responsible for the vast
majority of jobs, tax payments, innovation, and resiliency. But in the new era of geopolitical stress, energy
transitions, digital transformation, market volatility and attendant regulatory fragmentation, SMEs are experiencing
unsustainable burdens. Both governments should make it a priority to foster the diversification of SME financing
instruments and channels to enable them to build resilience and undertake crucial investments, such as those indigitalization and decarbonization. This should also include non-financial support which is key to strengthen SMEawareness about the steps towards net zero and provide the necessary tools that can enable them to embark andstay on the journey.

3. Advancing International Cooperation in FinanceSupporting the Global SouthThe Councils welcome efforts by both governments to support financial inclusion of developing countries (often
called the Global South). Efforts such as the Partnership for Global Infrastructure and Investment (PGII) and the G20
Principles for Quality Infrastructure Investment are necessary to help the Global South meet its development needs.
We are pleased to see the inclusion of private sector perspectives and participation in these efforts and urge thetwo governments to continue to integrate private sector input going forward. The Councils believe that theinitiatives to promote sustainable finance and blended finance mentioned in Chapter 2 of this statement areimportant in supporting the Global South. In addition, aligning the global interpretation of Basel III capital rules andcountry regulations, sharing expertise of the development banks and financial institutions, and streamliningdocumentation and standardizing contracts would remove significant barriers that currently prevent or delay banks’ability to provide capital to infrastructure investments associated with MDBs and their related organizations.
Both Councils urge their respective governments to take measures to prevent debt crises from forming in emerging
economies. Such events delay the implementation of the aforementioned initiatives and introduce instability tofinancial markets across the world.

Economic Security
Both Councils understand that finance represents a critical infrastructure, and that it is necessary for the public andprivate sectors to work together to ensure cybersecurity and other measures to provide safe and sustainable
services. When considering various economic security regulations, both governments should coordinate
appropriately to ensure national security while taking care not to hinder free economic activity.
Furthermore, in view of the growing complexity of financial sanctions that prohibit transactions with specifictargets, both governments should consider implementing close communication between the public and private
sectors to enhance the effectiveness of sanctions and reduce the compliance risks of financial institutions.

4. Promoting Digital Financial Innovation
Central Bank Digital Currency (CBDC)The Councils appreciate that both governments and central banks are deliberating CBDC policy to harness thebenefits of innovation while addressing potential risks to the financial system. The Councils encourage bothgovernments to evaluate the need for CBDCs before actually issuing them by identifying whether there is a
shortcoming with other payment initiatives that a government or central-bank-issued CBDC would be able toaddress more effectively than private alternatives.

Data Connectivity
The Councils recommend both governments prioritize data connectivity for financial services and promote publicprivate collaboration to pursue high-standard rules in the digital economy. We welcome the establishment of theInstitutional Arrangement for Partnership (IAP) to operationalize Data Free Flow with Trust (DFFT) and appreciatethat particular attention will be paid in the IAP to areas such as data localization and regulatory cooperation in
financial services.

Innovation
The Councils recognize the importance of the continued efforts by both governments to resolve regulatory andoperational issues to promote digital financial innovation. Particularly, with the emergence of decentralized finance(DeFi), cryptocurrencies, non-fungible tokens (NFTs), and other digital assets, the development of legal frameworks
has become crucial in balancing the utilization of digital financial innovation with the stability of the financial
system and the protection of users. Therefore, the financial regulatory authorities of both countries should continue
to provide timely, clear, and integrated guidance to market participants in this field.

AI/Generative AI
The use of AI in financial institutions continues to advance and global interest in generative AI is rapidly increasing.
Both Councils welcome the agreement reached at the G7 Digital and Technology Ministers' Meeting to promote themutual operation of AI governance and the adoption of trustworthy international AI technology standards throughinternational discussions. Both national governments need to collaboratively review the various systems andguidelines related to the use of AI and the policies for dealing with associated risks to ensure that any AI-specificregulations complement and align with existing sector-specific regulations to avoid duplicative efforts or conflicting
requirements that could increase risk. We also recommend both governments focus on the development of humanresources for the development and application of AI.

5. Securing a Brighter Future
Personal Financial Assets
The Councils recommend both governments adopt a policy framework, such as through tax incentives or subsidies,
which supports adequate individual asset formation. We also recommend both governments to strengthen public
and private collaboration in enhancing the incentives for the building of personal financial assets, including throughinsurance, private pension funds, and financial planning. The Councils support the GOJ’s “Doubling Asset-based
Incomes Plan” under Prime Minister Kishida’s economic policy, which will help large personal financial assets to be
more effectively invested. We recommend that the GOJ consider and implement strategies to optimize the allocationof financial assets across the investment spectrum in Japan, from corporate and public pensions to defined
contribution plans and individual savings.

Insurance
The Councils recommend that both governments ensure that the insurance sectors are able to meet the evolving
financial protection needs of consumers, to include maintaining the wide availability of long duration insurance andsavings products. We encourage regulators to facilitate the insurance sectors’ appropriate provision of moreinnovative insurance products that meet changes in customer needs while ensuring sufficient customer protection.
We also recommend that both governments establish appropriate capital standards for insurers at the global,
national, and jurisdictional levels.

Financial Literacy
As individuals take a more active role in managing their personal investments, increasing financial literacy becomeseven more important. The Councils recommend public-private collaboration on increasing technology and financial
literacy, particularly for vulnerable populations, as well as on financial education for youth.

Japan’s Development as an International Financial Center
The opportunity for Japan to reestablish its prominence as a global and regional financial center has never been
greater. Japan possesses all the necessary attributes to become a top global financial center and attract far larger
amounts of foreign investment than at present. The efforts of the Japanese government and authorities tostrengthen their outreach to overseas businesses by holding promotional events, such as so-called “Japan Weeks,”
is highly appreciated. The Councils urge the GOJ to implement policies to establish Japan more prominently as aninternational financial hub for the world and Asia and as a nation facilitating asset management. This includes
policies for attracting foreign financial specialists to Japan, encouraging financial firms to invest in technology, anddiversifying the asset management industry to cultivate globally competitive talent. The Councils believe that thefinancial sectors of both countries can play a role in fostering these initiatives and contribute to the growth offinancial business in Japan.
The Councils welcome progress has been made on the negotiations of the IPEF. We hope that its Pillar III (Clean
Economy), if enacted, would be a catalyst for Japan becoming an International Financial Center, especially onsustainable finance.

Promoting Foreign Direct Investment (FDI) Into JapanThe Councils welcome Prime Minister Kishida’s efforts to raise FDI via the Cabinet Office’s “Action Plan for
Attracting Human and Financial Resources from Overseas” and appreciate the GOJ’s efforts to implement measuresin the Plan promptly. We are pleased to support their undertakings especially in areas such as the formation ofAsia’s largest startup hub and improving the business environment. The Councils look forward to maintaining an
open line of communication with the Cabinet Office on inbound FDI issues and stand ready to provide advice andsupport.

1. Innovation Ecosystem

1.1 Innovation in Healthcare
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1.2 Evaluation of Innovation
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2. Digital Transformation
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Appendix to the Joint Statement Supplement of the USJBC-JUBC Healthcare Innovation Working Groupfor the 60th U.S.-Japan Business Conference:
Leveraging Digital Technologies to Improve Healthcare Outcomes:
A Call to Action and Framework for U.S.-Japan Collaboration

Proposed Framework for U.S.-Japan Cooperation on Digital HealthKey Action Items for a Recommended U.S.-Japan Work Plan on Digital Health

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Given the global instability driven in part by Russia’s invasion of Ukraine and the ongoing U.S.-China tensions, it is
crucial that the U.S. and Japan continue to strengthen and expand their partnership with the Indo-Pacific region andthe rest of the world. The travel, tourism, and transportation industries ("TTT industries") play a significant role indeepening mutual understanding between nations and are a key element in promoting peaceful relations between
nations. The TTT Working Group reaffirms the importance of dialogue, peace, tolerance, and sustainable development.
The COVID-19 pandemic severely impacted the travel, tourism, and transportation industries beginning in 2020.
However, according to the United Nations World Tourism Organization (UNWTO), by the first quarter of 2023 thenumber of tourists worldwide has recovered to 80% of pre-COVID-19 levels. Amid the rapid recovery of tourism andtravel, there is renewed momentum to revitalize these industries prior to upcoming major international events,
including the Osaka-Kansai Expo in 2025. In order to continue this recovery and further promote tourism, there is also
an urgent need to address issues such as the shortage of human resources, which has worsened as a result of the
COVID-19 pandemic.
The Japan-U.S. Business Council and the U.S.-Japan Business Council (referred as “the Councils" below) recognize theneed for both nations to join hands with the global industries as they make the following recommendations to thegovernments of the U.S. and Japan to ensure continued sustainable growth. We believe that our efforts will contributenot only to the recovery of the industry, but also to the social and economic growth of both countries, creating new
business models, promoting innovation and digital technology, and confronting human resource shortage issues.

1. Lessons Learned from the Pandemic and Preparing for the Next Crisis
As we look past the effects of the COVID-19 pandemic, it is crucial that we make use of the lessons and experience
gained to strengthen management systems during future crises and build a society that is more resilient against
any future infectious disease outbreaks.
It is undeniable that the decision-making process of easing border restrictions in Japan lagged far behind its G7
counterparts during the pandemic. Going forward, it is essential to evaluate and apply disease prevention measures
based on science, as well as to carefully consider the timing of implementing those measures. The economic effectof measures taken in Japan during the past three years should be closely examined so that countermeasuresagainst future outbreaks are less disruptive and better aligned with those of economic partners.
The Government of Japan must also urgently analyze the collaboration among ministries, as well as between thegovernment and experts who provide data-driven advice on countermeasures. We welcome the launch of the
Cabinet Office’s pandemic response agency on September 1, 2023, and hope that its implementation will improve
the predictability of business in future crises. Lastly, it is critical to seek out and encourage valuable public-private
partnerships to solve critical infrastructure needs during a pandemic or state of emergency, such as temporary
private lodging and accommodation.

Initiatives to Revitalize Mutual Interaction
As rising inflation continues to have a profound impact on society, it is essential that we promote international
travel to stimulate consumption and facilitate economic recovery in Japan. Active air travel between Japan and the
U.S. will invigorate business in both countries and support medium to long-term economic growth in Japan and the
U.S. by promoting leisure tourism, study abroad programs, and cultural exchange. In both countries, it is essential tostimulate both inbound and outbound exchanges. Strategic initiatives by both governments are essential for growth,such as the easing of visa requirements for visitors to Japan, innovating on digital nomad visas, and efforts toincrease the percentage of Japanese citizens holding passports.

2. Increasing Quality Tourism and Addressing the Shortage of Human Resources
To further expand the travel, tourism, and transportation industries, it is essential that we focus on improving thequality of tourism, including by increasing tourist consumption versus pure arrival numbers and attracting visitors toregional areas. The Councils support local government marketing campaigns and digital promotion efforts, andindustry exhibitions to raise awareness of less recognized destinations and activities.

Developing a Balanced Tourism Industry
The concentration of demand in specific regions and seasons affects not only the quality of service and traveler
satisfaction, but also productivity and the working environment for the industry. The Councils recommend policies
to promote off-peak tourism in addition to measures to encourage flexible vacation options for international
travelers. Consumer preferences are shifting, with an increased desire to visit new and emerging destinations, andthe TTT industries can help drive greater dispersal of tourism throughout Japan in partnership with local
governments. Additionally, while countermeasures against the negative aspects of tourism are necessary, it isimportant to raise awareness and educate people about the economic benefits of tourism and the benefits ofvalues-based connections between local people and tourists.

Strengthening Support for Human Resource Recovery and Development
While tourism demand is recovering rapidly, the lack of human resources in the industry has been exacerbatedduring the pandemic following an employee exodus from travel-related industries, including surrounding fields suchas transportation. This situation is hindering a full business recovery.
Key drivers to secure and maintain a stable workforce include flexibility in work hours and location, the ability torespond in real time to fluctuations in labor demand, diversified sources of talent which include foreign national
workers in both nations, and innovation through digital transformation and other means. There is an urgent need toanalyze how national and local governments can provide support and regulatory reform to improve productivity,
working conditions, and access to workers. Strategic policies could help remove barriers to operate, encourage
innovation and the shift to digitalization, provide access to desperately needed workers to fill long-unfilled job
openings, and incentivize sustainability measures by reducing associated financial burdens.
Urgent action is required for hotels, including ryokans and private lodgings, airports, and logistics sites, where
personnel shortages are limiting operations of facilities that are critical for economic recovery. Furthermore, ashortage of drivers in public transportation, with taxis being the primary example, is causing concerns about smoothmobility, and it is presumed that this is resulting in significant economic losses. We welcome the recent initiation of
government discussions to solve the issues of truck and taxi driver shortages and we urge both governments topursue expanded legal pathways to help alleviate chronic workforce challenges in these industries.

Promoting the Use of Transportation and Travel Apps
Apps and other digital tools related to transportation and tourism have great potential for eliminating language
barriers for travelers, attracting visitors to new destinations, and improving worker productivity. The Councils
encourage the adoption and utilization of end-to-end digital ecosystems, such as robotics, automation, AI, andvirtual reality technology. Increased usage of digital technology can also cast light on consumption trends and otherfactors that will hopefully lead to further business development in the future.
The installment of cashless payment at tourist attractions and transportation systems will boost convenience foroverseas travelers and reduce the burden on human resources. It will also promote tourism to less-traveled domestic
destinations and help revitalize local economies.
However, some applications used in Japan are not user-friendly for foreign travelers because they do not support
English, or do not accept international credit cards or electronic payment methods of any kind. The Government ofJapan can help by promoting the importance of considering an international audience in modern technology
development. Additional consideration should also be given to introducing or improving ride-sharing and new
mobility systems for secondary transportation issues.
Data utilization and collaboration are expanding, including the spread of next-generation transportation using
automated driving, Mobility as a Service (MaaS), as well as efforts toward the practical application of flying cars.
It is important to promote collaboration with different transportation systems and other industries to expand thescope of where mobility can contribute, and to create new value beyond the boundaries of mobility. It is also
important to create systems through collaboration between the government and the private sector to contribute tosolving a wider range of issues.

3. Sustainability in Travel, Tourism, and Transportation
The Councils believe that it is important to use the lessons from the COVID-19 pandemic to catalyze sustainablegrowth in the travel, tourism, and transportation sectors. Digitalization, reducing the carbon footprint of operations,and promoting low-carbon technology development should continue to be prioritized.

Support for Low-Carbon Initiatives
The Councils look forward to continued support from the governments of the U.S. and Japan for the business
community’s efforts to achieve carbon neutrality, including the development of energy-saving technologies andprocesses in the mobility sector, the commercialization of sustainable fuels, and the development and introductionof next-generation aircraft using advanced technologies.
In the automotive industry, it is important to pursue a variety of technology options that meet the conditions of eachregion to achieve global carbon neutrality. Additionally, by exporting U.S.- and Japan-developed technologies tothird countries, the U.S. and Japanese governments, along with the private sector, will contribute to sustainability
initiatives around the world. Rebuilding and creating resilient supply chains, including securing critical minerals, isalso important for sustainable efforts. Through multilateral channels such as the Indo-Pacific Economic Frameworkfor Prosperity (“IPEF”) and bilateral agreements between the U.S. and Japan, concerted efforts are being made tostrengthen supply chains. We look forward to continued leadership and effective support from the U.S. andJapanese governments to ensure the expansion of the utilization of diverse low-carbon technologies.
The promotion of clean, sustainable fuels is also necessary to promote a low carbon value chain and sustainableeconomic growth. In the aviation industry, Sustainable Aviation Fuels (SAF) are considered to be the key to reducecarbon emissions in the near-term as well as long-term for long-haul international flights.
In the U.S., states like California are accelerating efforts to encourage investment in SAF development by providing
state-specific incentives in addition to federal incentives. The Councils encourage the U.S. to extend the SAF
blenders tax credit beyond two years, promote research of lifecycle carbon intensity of feedstocks, and expand state
efforts on SAF. The Councils also encourage similar efforts in Japan to maximize the development and use of SAF in
country.
Policy mechanisms that lower operational costs for the SAF industry in addition to capital investment assistance arenecessary for Japan to build an internationally competitive SAF market. Incentives that apply to consumers, such asairlines, and to other supply chain elements beyond manufacturing are essential to lower prices and spawn asuccessful SAF market in Japan. Such policies coupled with capital investment assistance would help Japanestablish leadership in the global SAF market and thus stay on the leading edge of sustainable travel, tourism, andtransportation in support of economic growth.

Promoting Inclusive Development
We hope that the U.S. and Japanese governments will continue to redesign systems so that all stakeholders
involved in the travel, tourism, and transportation sectors can enjoy the benefits of the technologies and services
described in this proposal. We believe it is increasingly critical to build inclusive policies that support employment
opportunities regardless of nationality, race, religion, gender, age, disability, or any other status. In addition, we
hope that both governments will support the development of tourism resources that will provide business
opportunities for micro-entrepreneurs as well as local, small- and medium-sized enterprises.