JOINT STATEMENT
48 U.S.-Japan Business Conference
U.S.-Japan Business Council/Japan-U.S. Business Council
New York, NY
December 2, 2011th

This has been a momentous year for Japan and the U.S.-Japan relationship due to the Great
East Japan Earthquake occurring March 11, 2011. In the face of this triple disaster, theopportunity for the United States and Japan to realize a strong bond – “kizuna” – has arisen.
Through Operation Tomodachi and related public and private efforts, the United States has
shown its strong partnership with Japan, as Japan has shown for the United States after natural
disasters such as Hurricane Katrina. It is in this spirit that the 48 th U.S.-Japan Business
Conference was held in New York City December 1-2, 2011.
There was particular emphasis on Japan’s reconstruction and recovery at the Conference
between senior executives belonging to the U.S.-Japan Business Council and Japan-U.S.
Business Council (hereafter, “the Councils”), with a central theme, “From Recovery to
Revitalization.”
1. JAPANESE AND U.S. ECONOMIC SITUATION
Although Japanese companies' activities have recovered sooner and more robustly than
expected after 3.11, the Japanese economy is still facing a severe situation. Corporate activities,
such as exports and production are weakening because of the global financial markets'
turbulence triggered by the Eurozone sovereign debt crisis, the slowdown of the world
economy and the continuing historic high yen. In addition to that, a severe employment
situation persists. The Councils urge the Government of Japan to take quick and decisive action
on all fronts.
The U.S. economy is showing some signs of modest improvement as indicated by third quarter
GDP growth of 2.1% on an annualized basis, a significant uptick from the previous quarter.
Increased consumer spending, inventory reduction and business investment are all positive
signs and should be closely watched for sustainable trends. There are still significant concerns
about the U.S. economy. Most notable is the need to address long-term debt andunemployment in a serious and balanced manner.
Both governments need to implement policies that foster economic growth while maintaining agood balance of financial discipline. The Councils continue to stress that comprehensive tax,
fiscal and social security reform is essential in both countries. In this regard, the Councils
welcome efforts by the Government of Japan to finalize the plan on comprehensive reform oftaxes and social security by the end of this year, including consideration of a gradual increase in
the consumption tax rate and other measures. The Councils encourage the U.S. government tocontinue to work diligently on means of reducing long term U.S. debt.

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The Councils urge both governments to focus on measures that will create a more hospitableenvironment for domestic and foreign companies operating in the United States and Japan byestablishing globally competitive corporate tax rates, a smart regulatory approach that ensuressafety and smooth market functioning without imposing unreasonable costs or administrative
burdens, and a firm commitment to open trade and investment.
Strong political leadership is required in both countries to ensure sound economic management,
as well as the further enhancement of U.S.-Japan cooperation on global economic policy
matters.
2. RECOVERY FROM 3.11
The Councils recognize that significant progress has been made on many fronts with regard to
recovery in the Tohoku region, and commend the efforts by national and local officials,
volunteers, employers and employees of private firms, and others to cope with the situation.
Significant challenges remain. First and foremost is reactor and radiation containment andmitigation. The Councils encourage the Government of Japan to continue to cooperate closelywith the U.S. and other governments in this area, including the dissemination of easily
accessible and understandable information about safety standards and best practices forradiation levels to ensure human health and safety, and to prevent unjustified discrimination
against Japanese products. Continued efforts to get accurate information about actual
conditions in Japan into the public domain through media campaigns, advertising, and othermeans should also be made in order to accelerate the return of tourism, scientific, educational,
and cultural exchange to previous levels.
The Councils urge the Government of Japan to immediately establish a new “Restoration
Agency” – an entity with strong leadership that keeps various restoration activities under its
firm and sole control.
As difficult as some of the challenges are, there are also opportunities for Japan to enact
measures that boost short and long-term recovery.
 The Tohoku disaster highlighted the importance of Japanese suppliers in global supply
chains for autos, electronics, chemicals and other industries, as well as the need fordiverse and secure supply chains.
 The Government of Japan should place high priority on the important role that theprivate sector can play in accelerating recovery in Tohoku. To encourage Japanese andforeign companies to maintain existing businesses and/or invest in new ones in Tohoku,
the Councils urge the Government of Japan to move quickly and decisively to set up a
Reconstruction Special Zone System in the region. In general, targeted andunconventional measures are essential, and require appropriate support through tax,
budget and regulatory measures. Regulatory measures that can expedite private
activity such as fast-track permitting for reconstruction projects and new businesslicenses, and tax incentives for companies investing in new plants and facilities can and2/7

should be approved quickly. The Special Zone System offers a significant opportunity
to create an environment that can potentially invite a broad range of participants andinvestment in R&D, manufacturing and delivery from industry and institutions not only
from Japan but from abroad, including the United States. To maximize this potential,
the Councils urge the Government of Japan to make special efforts to consult withindustry representatives in order to enact the most effective possible measures.
 The loss of personal data including patients’ case records, family registers, and otherinformation by many residents of Tohoku indicates a need for better electronic recordkeeping methods as a protection against loss of such information in natural disasters. In
order to minimize these risks, cloud data storage and electronic medical records will beeffective and secure solutions. Therefore, the Councils urge the Government of Japanto take steps to promote cloud computing infrastructure for better e-government andonline services.
While aid and special initiative are vital, achieving sustainable growth in the overall economy
will ultimately be the best way to foster recovery in the Tohoku region. Accordingly, theCouncils urge the Government of Japan to move swiftly ahead to implement key elements of
the New Growth Strategy, as adjusted in the aftermath of 3.11.
3. US-JAPAN ECONOMIC RELATIONS AND COOPERATION IN THE ASIA-PACIFICThe Councils believe that a stronger economic relationship between the United States andJapan is a critical pillar of the overall bilateral relationship, and that it is even more important
after 3.11. At a time when both governments, as well as companies from both countries, lookto emerging markets for growth opportunities and strategic economic advantage, solidifying
trade and investment ties between the United States and Japan should remain a top priority forboth countries. The U.S.-Japan economic relationship is a mature one, but there are still
untapped market opportunities in both countries, as well as ways to strengthen the economic
partnership. Accordingly, the Councils urge U.S. and Japanese government officials to renew
their commitment to work together, and with the private sectors, to take the bilateral
economic relationship into the 21st Century through more innovative, collaborative andproactive means of government-to-government and business-to-government engagement.
The Councils recognize that as two of the largest economies and closest partners in the
dynamic Asia-Pacific, Japan and the United States can play leading roles in helping shape thefuture growth and economic architecture of the region, with Free Trade Area of the Asia Pacific(FTAAP) in mind as an ultimate goal. The Councils urge the U.S. and Japanese governments andprivate sectors to continue in their efforts to set a path that will accelerate and achieve
substantial regional economic integration and promote more open trade and investment,
regulatory and standards harmonization and technical cooperation in key industries such as life
sciences, ICT, energy and environment, finance, and transportation. Japan’s recent
commitment to enter into consultation toward participating in the TPP negotiations is anespecially important development in this regard, and the Councils commend the Noda
government for making this bold decision. The Councils believe the TPP provides a
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comprehensive platform from which U.S. and Japanese officials can address these and otherissues within a regional context that will provide significant benefits to both economies, theAsia-Pacific, and global trading system.
The Councils believe that Japan’s participation in a comprehensive, high-standard TPP
Agreement will benefit the Japanese economy, as it will the other TPP economies, andstrengthen the U.S.-Japan economic partnership. TPP is clearly the most viable path to FTAAP
underway at present and the Councils urge both governments to devote maximum attention
and energy to concluding this agreement as soon as possible.
The Councils look forward to working as constructive partners to identify and find solutions to
the main issues, and to working with both governments to make the process for Japan’s entry
into TPP as smooth as possible.
4. ENERGY & ENVIRONMENT
The 3.11 disaster and accident at the Fukushima Dai-Ichi nuclear reactors had a severe impact
on people in Fukushima. The first priority should clearly be to minimize the impact, and help
the people in the vicinity of the reactors regain their former daily livelihoods. The disaster also
resulted in a drastic decrease in electrical generation and the restart of nuclear reactors outsideof Tohoku is delayed due to the lack of regulatory certainty and political consensus from local
governments. Ensuring stable electricity supply is thus an urgent matter for the Japanese
economy and people, as well as domestic and foreign companies operating in Japan.
The nuclear accident has also required a new look at Japan’s medium- and long- term energy
policy. As the Government of Japan evaluates the direction of energy policy going forward, theCouncils respectfully suggest that the Government review priorities while considering each of
the so-called 3Es -- energy security, economic growth and environmental protection – with afocus on the following areas: 1) development of diversified and secure energy sources toensure sustainable base energy production, including nuclear (with enhanced safety regulation),
renewable, and fossil fuels; 2) technologies to improve efficiency of energy usage: and 3)
international contributions to address energy security, climate change and nuclear plant safety
among other global issues. The above areas contain issues of : 1) introduction of more
renewable energies in an efficient manner, for example, through an open-standard smart gridthat enables more efficient delivery of diverse sources and technology development of electric
power storage; and 2) pursuing an efficient electronic power system. It is important that therevised policy, especially its objectives and targets, is realistic and doable. Given the fact that it
takes time to establish new power plants and other energy supply, overestimated targets
would directly cause a shortage of energy supply. The current Japanese climate policy and its
mid-term emission reduction target should be reviewed thorough in accordance with therestructuring of energy policy.
The Councils recommend that the U.S. Government, in cooperation with the Government ofJapan, promote development of low carbon technologies including clean coal, nuclear safety,
and energy efficiency. In particular, upon thorough examination of Fukushima, and by sharing
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the lessons learned, the U.S. and Japanese governments should cooperate in establishing
improved safety measures and global safety standards for nuclear power generators andpromoting nuclear technology development.
The Councils would also like to commend both governments for the green free trade
agreement reached at the APEC meeting last month. This is extremely beneficial to thedevelopment of the energy market in a sustainable direction. The Councils respectfully requestthat the intended actions outlined in the agreement be implemented as soon as possible.
5. FINANCIAL SERVICES
The Councils are encouraged by steps taken in the United States and Japan to restore
confidence in the financial system, including through their active participation in theformulation and implementation of the rescue plan to help stem the Eurozone sovereign debt
crisis. More broadly the Councils support the global effort to strengthen financial systemoversight currently being led at the G-20 and Financial Stability Board and hope that the UnitedStates and Japan will continue to exert strong leadership in this area. There is concern thatsome new regulatory capital requirements for financial institutions could inhibit sustainableeconomic recovery, including in their impact on small and medium enterprises.
The Councils urge governments of both nations to be cautious when considering andimplementing new domestic regulatory measures so as to ensure the regulatory environment
does not place unnecessary burden on the financial services industry, while at the same timecreating new opportunities for regulatory arbitrage, and undermining the aim of achieving amore robust financial system. Furthermore, the Councils continue to believe that, whereappropriate, financial regulation should also respect both country and sectoral differences andbe applied on a non-discriminatory basis.
On the domestic front, as implementation in the U.S. of the Dodd-Frank Act moves forward, theCouncils hope that providing protection for consumers and investors, fostering innovation, andenabling adaptation to changes in the financial markets will be emphasized, while avoiding
measures that could inhibit economic growth. In addition, the councils welcome continued
efforts to further modernize U.S. state-based insurance regulation and ensure that reinsurance
regulation is consistent with global best practices. In Japan, the Councils welcome the FSA’s
continued commitment to improving the quality of financial regulation by enhancing dialogue
with financial institutions, dissemination of information, and research functions to promptly
grasp both domestic and international market developments, and improving the transparency
and predictability of its regulatory actions.
With regard to the Japanese postal financial entities, the Councils continue to believe that
ensuring equivalent conditions of competition is essential in determining whether the postal
financial entities broaden their range of products.

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6. HEALTH CARE INNOVATIONThe R&D-based pharmaceutical and medical device industries contribute significantly to thehealth and welfare of the peoples of the U.S. and Japan as well as to their economies. At a time
when economic recovery and sustained growth are essential in both countries the Councils
encourage the U.S. and Japanese governments to actively pursue policies in these sectors thatspur innovation and employment while increasing public health.
The Councils welcome Japan’s focus on reducing the drug, vaccine and device lags while
continuing to pursue reforms that aim to make Japan’s markets more attractive andcompetitive. There has been a positive direction in pharmaceutical pricing policies as well as in
drug approval times. The Government of Japan should take the opportunity of the 2012 cycleof reforms to solidify the positive trends in pharmaceutical pricing as well as build on the
progress seen in pharmaceutical approval times.
The Councils appreciate recent decisions by the Japanese government to approve new vaccinesthat are important for public health and to support this decision with a supplemental budgetfor
2011 . The Councils also appreciate the efforts by both governments for supporting in the
Vaccine Policy Exchange to exchange views on best practices.
The ongoing efforts to amend the Pharmaceutical Affairs Law in Japan provide a good
opportunity to revise the regulatory framework for Medical Devices. The Councils hope theregulations will become more transparent and reasonable through those efforts. The Councils
also request that consideration be given to repealing the U.S. Medical Device tax commencing
in 2013 so that it will not undermine the industry’s activities for developing innovative products
and therapies.
7. OTHERSTAXATION
Given that Japan and the United States have the highest statutory corporate tax rates among
OECD economies, bringing these rates in line with OECD averages should be a high priority forpolicymakers in both countries. As high-cost economies, tax policy is one important factor
affecting business decision-making in the global economy.
Tax policy and incentives that promote innovation and entrepreneurship should also be apriority in the United States and Japan. In this regard, the net operating loss (NOL) carryforward period in Japan should be extended indefinitely in order to compare to world standards
and encourage investment in new companies and new areas of the economy.
In further regard to tax policy, the Councils applaud the recent discussions between Japan andthe United States to refine their bilateral tax treaty, so as to encourage deeper economic
exchange between the countries, and to promote growth and efficiency along with economic
integration. However, the Japanese Ministry of Finance abruptly proposed to introduce
measures to disallow deductions for interest paid in connection with certain cross-border
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funding to prevent "tax avoidance". As this proposal could have negative impact on normal
operation of Japanese companies and foreign firms located in Japan, the Councils respectfullyurge the Government of Japan to postpone this change until a more comprehensive impact
analysis has been done.
MEASURES TO PROMOTE TRAVEL
To facilitate immigration processes at entry to a country promotes movement of people, notonly enhancing efficiency of international businesses but also contributing to economic growththrough such industries as tourism and transportation. From this point of view, the Councils
encourage the U.S. and Japanese governments to facilitate travel between the two countries bystreamlining pre-departure security procedures and cooperating on pre-approved traveler
programs such as “Global Entry” and “Automated Gates.”

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