JOINT STATEMENT
49 U.S.-Japan Business Conference
U.S.-Japan Business Council/Japan-U.S. Business Council
Tokyo, Japan
November 9, 2012th

The U.S.-Japan economic partnership has been the cornerstone of peace and prosperity in
the Asia-Pacific region for 60 years. In order to maintain this foundation as the basis forcontinued economic and security stability in this critical region, restoring strong economic
growth in the United States and Japan is essential. In recognition of this, and the fact thatgrowth in both economies will have to rely more on business expansion given theconstraints on fiscal and monetary policy, members of the U.S.-Japan Business Council andJapan-U.S. Business Council (hereinafter, "the Councils") set as the overall theme of the 49th
U.S.-Japan Business Conference “Restoring Private Sector-Led Growth.”
1. THE JAPANESE AND U.S. ECONOMIESJapanese Economic Priorities
Amid intensifying global competition, Japanese companies face six primary difficulties: (1)an appreciation of the yen that has adverse effects on exports; (2) heavy corporate tax andsocial insurance premiums that hinder corporate investment and hiring; (3) lagging
FTA/EPA negotiations with major trade partners; (4) rigid labor regulations that discourage
diversified employment patterns; (5) stringent environmental regulations that impose
burdens on Japanese companies relative to those other countries; and (6) significant
electricity supply shortages that raise operating costs and uncertainty.
Concrete, far-reaching initiatives and specific policies are needed to offset these constraints
on Japanese economic growth. Given Japan’s rising debt, the ability of the Government ofJapan to provide new stimulus measures is limited. Accordingly, the Councils concur thatthe primary strategy should be to unleash private sector driven activity through reforms
that liberalize trade, reduce taxes, increase labor market flexibility, ease regulations in waysthat reduce cost and compliance burdens without compromising consumer andenvironmental safety, and ensure a stable and affordable energy supply, as outlined moredetail below.
1U.S. Economic Priorities
While housing prices show signs of stability and consumers are increasing purchases ofdurable and non-durable items, the U.S. economy still faces significant headwinds,
including slower growth in major export markets, policy uncertainty and regulatory hurdles
in the United States, and continued deleveraging by corporations and consumers. The
unresolved debate over the U.S. fiscal situation also creates significant uncertainty for the
short term, while demanding viable, longer term solutions. The Councils urge the U.S.
government to move decisively and with urgency to resolve the “fiscal cliff” situation while
outlining a balanced and sustainable longer term strategy to reduce U.S. deficits and overall
debt.
As in Japan, there are serious constraints on U.S. fiscal and monetary policy that will limit
the extent to which additional stimulus or monetary easing can be applied. As outlined
below, the Councils therefore urge the U.S. government to take decisive and urgent action
to implement reforms that stimulate private sector expansion through trade liberalization,
lower taxes and regulation on businesses, and development of domestic energy resourcesin an environmentally responsible manner.
2. US-JAPAN ECONOMIC RELATIONS AND COOPERATION IN THE ASIA-PACIFICThe Councils recognize that Asia-Pacific is the growth center for the world economy andthat the ability of U.S. and Japanese firms to trade and invest freely in the region is a criticalfactor in the growth of the U.S. and Japanese economies. Accordingly, in the Councils’ view,
the United States and Japan can and should play leading roles in helping establish arules-based, high standard economic architecture for the region, with the establishment of
a Free Trade Area of the Asia Pacific (FTAAP) as the long-term goal.
To this end, it is essential that Japan participate in the highest standard regional tradenegotiation underway, the Trans-Pacific Partnership Agreement (TPP). The Councils concurthat Japan’s entry into TPP is in the strategic economic interests of Japan and the UnitedStates and strongly support Japan’s participation in the TPP negotiations as soon as possible,
fully understanding and committed to the same high standards, comprehensive scope, andambitious timetable as the current partners.

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Participation in TPP would boost Japan’s economic growth by increasing two-way tradewith member economies, reducing operating costs for businesses in Japan, lowering prices
for Japanese consumers, and opening the way for more foreign direct investment in Japan.
The expansion of U.S. exports to Japan as a result of TPP would also benefit U.S. companies
and the U.S. economy overall. A stronger economic relationship between the U.S. andJapan would surely solidify overall ties at a critical time, thus helping ensure regional
stability.
To facilitate this commitment, the Councils encourage the U.S. and Japanese governments
to make the utmost effort to reach agreement on Japan’s participation in their consultative
discussions. Furthermore, the Councils pledge their continued efforts to assist in thisprocess by providing accurate information about the terms and benefits of TPP publicly andto political leaders in both countries to correct any misunderstanding about the terms andrequirements of TPP.
In other trade initiatives, the Councils strongly support U.S.-Japan cooperation in expanding
the product coverage and membership under the Information Technology Agreement (ITA)
as a means of forming multilateral rules under the World Trade Organization (WTO).
Cooperation in APEC continues to offer great opportunities for the US and Japan to work
together to advance mutually beneficial initiatives. In particular, the Councils support andappreciate the strong leadership exerted by the U.S and Japanese governments regarding
the recent agreement within APEC to eliminate and reduce tariff rates and barriers applied
to environmental goods and services (EGS), and technological innovation of EGS.
In order to achieve global penetration of products that are good for the environment, weneed to widen the range of products that are recognized as environmental products. This isparticularly true for LEDs and storage batteries, the integral components of smart grids,
which need to be recognized as environmental products.
The Councils agree that the U.S. and Japan can succeed in strengthening our economies
only if both governments look beyond their borders to endorse and promote strong IP
regimes that foster innovation and commercially sustainable technology diffusion. Both the
U.S. and Japan have been proponents of the WTO Agreement on the Trade Related Aspects3

of Intellectual Property Rights (TRIPS), and have similarly robust protections for intellectual
property. Advancing these protections in third countries and in multilateral organizations isa shared goal of the U.S. and Japan. The Councils thus urge both governments to deepen
U.S.- Japan collaboration on IP to protect the investment of Japanese and U.S. enterprises,
universities and government research. To support this objective, the Councils will form a
Working Group of U.S. and Japanese companies to engage with both governments toenhance bilateral cooperation on IP.
3. ENERGY and U.S.-JAPAN COOPERATION
In light of the high uncertainty regarding the costs and stability of the electricity supply inJapan in the aftermath of the Great East Japan Earthquake and accident at the Fukushima
Dai-Ichi nuclear plant, ensuring a stable energy supply at economically feasible costs is a
critical pillar of economic growth strategy for Japan. This is vital not only to maintain andexpand domestic industries and employment but also to offer an attractive businessenvironment to foreign corporations operating in Japan. The Councils therefore strongly
urge the Government of Japan to clarify the policy direction as quickly as possible.
The Councils encourage the Government of Japan to pursue a diversified, cost-effective andrealistic energy mix that will support economic growth in the short and long terms.
There are several critical elements of this:

Maintaining a sufficient level of nuclear power generation to cover current andfuture demand for electricity by industrial and household users;

Promoting the technological development of nuclear power generation withenhanced safety in light of the lessons learned from the accident at the Fukushima
Dai-Ichi nuclear plant;



Adopting a sustainable strategy for the use of thermal power sources such asliquefied natural gas (LNG), including importation of LNG from the United States;

Accelerating the development of renewable energy technologies.

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There is great potential for the United States and Japan to cooperate significantly in theseareas, and the Councils urge both governments to set greater energy cooperation as one of
the top bilateral economic priorities involving both the public and private sectors going
forward. To support this objective, the Councils will form an Energy Working Group of U.S.
and Japanese companies to engage with both governments to support U.S. LNG exports toJapan.
4. FINANCIAL SERVICES
The health of the macro economy and stability of the financial system are closely linked,
and as such, the recent uncertainties in the global economy threaten again the stability of
the global financial system only a few years after the turmoil of 2008. The Councils trustthat both governments will pursue sound policies that will strengthen the global financial
system and promote sustainable economic growth. Furthermore, the Councils call on bothgovernments to continue working through the G20, the Financial Stability Board (FSB) or
other global standards-setting bodies, while ensuring transparency and accountability to
duly elected leaders, to strengthen the current framework of global economic governancefor pursuing the strong, sustainable and balanced expansion of the global economy.
In the macro-economic area, it is clear both Japan and the US have large and growing fiscal
imbalances that are unsustainable for the long term, and the Councils urge bothgovernments to take concrete actions for keeping fiscal discipline and consolidating publicfinance, which will stabilize the global financial system further.
The Councils, meanwhile, fully support regulatory measures to strengthen the global
financial system. Nonetheless, the Councils remain concerned about the potential for
unintended consequences of the current global regulatory reforms on financial markets
including capital markets, which threaten to harm the sector’s ability to fuel growth. The
Councils urge both governments to be careful, when considering and implementing newdomestic regulatory measures, to ensure that the regulatory environment neither places anunnecessary burden on the financial industry and market participants nor creates newopportunities for regulatory arbitrage. Moreover, the Councils continue to urge that, in thespirit of the 2009 Pittsburgh summit, the rules should be coordinated and harmonized to
avoid extraterritorial application and possible overlap of conflicting requirements. Thus, theCouncils welcome moves by regulators in both countries to expand dialogue with industry
5and consider the views of market participants when crafting and implementing newreforms.
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 bestpractices. With regard to the Japanese postal financial entities, the Councils continue tobelieve that ensuring equivalent conditions of competition is essential before determining
whether the postal financial entities broaden their range of products.
5. HEALTH CARE INNOVATIONThe R&D-based pharmaceutical, medical device and diagnostics industries haveconsistently played a vital role in economic growth and high-wage job creation in both the
U.S. and Japan. These industries provide real economic value to the U.S. and Japan throughimproved patient care, health outcomes, and healthcare system efficiency. Sustained andenhanced competitiveness in these sectors is vital not only to economic recovery, but,
more importantly, to improving the health and well-being of people across the U.S. andJapan. As such, the Councils urge the U.S. and Japanese governments to pursue policies
that foster innovation in the healthcare sectors and speed access to life-saving andlife-enhancing medical products.
To expedite access to healthcare products, the Councils welcome continued progress by
Japan toward reducing the drug, vaccine, device and diagnostics lags and look forward to
improvements in U.S. regulatory processes resulting from the 2012 reauthorization of
PDUFA and MDUFA. The Councils appreciate the close collaboration with MHLW as itprepares to revise Japan’s Pharmaceutical Affairs Law and anticipate that revisions will ease
the regulatory burden on medical device and diagnostics companies in Japan.
To promote innovation, the Councils support policies that encourage companies tointroducing advanced products and therapies to U.S. and Japanese patients, such as theprice maintenance pilot pricing system for pharmaceuticals in Japan. The Councils strongly
encourage the U.S. and Japanese governments to repeal polices, such as Japan’s Foreign
Average Price Rule (medical device) and Special Repricing for Market Expansion Rule(pharmaceutical) as well as the U.S. medical device tax, that run counter to innovation and6detract from the ability of pharmaceutical and medical device companies to create jobs andgrow the economy.
Healthcare IT: The Councils also embrace the potential of Healthcare IT for new growth toimprove healthcare efficiency while optimizing healthcare costs, and to provide personalcare based on adequate privacy rules, all of which will ultimately contribute to better
patient outcomes. With this in mind, the Councils endorse the Japan's Five Year Medical
Innovation Strategy which identifies the key elements of Healthcare IT, such as electronic
health records and telemedicine which can be utilized for homecare and emergency care.
6. DISASTER MANAGEMENT and ICT
The earthquake and tsunami that struck the north-east of Japan on March 11, 2011, andfloods, typhoons and hurricanes that often cause extensive damage to the region, allremind us that the Asia-Pacific region is highly vulnerable to the impacts of natural
disasters. Recognizing that economic impacts caused by such natural disasters are huge,
the Councils reaffirm the significance of U.S.-Japan Joint initiatives between the public andprivate sectors to reduce multiple disaster risks at home and abroad, and strengthen theresiliency of our communities.
The following issues are some key elements of disaster management and ICT's roles that
U.S. and Japan can cooperate on towards a more resilient society:Promoting and facilitating the use of Business Continuity Plan (BCP) thatencompasses the whole supply chain, recognizing the importance of delivery of
goods and services following the disaster.

Implementing the resilient ICT network infrastructure that contributes to highly
accurate disaster prediction, and secure communication networks in times ofnatural disaster.

Establishing Cloud based Management System for Private/Government related data
to recover from disaster without critical data loss.

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Utilizing the Traffic Information Data for motor vehicles in the event of natural
disasters, which is recognized as an example of "Big Data", will help to provide
effectively passable driving routes with rescue teams and volunteers groups andothers.

7. IMPROVING THE BUSINESS ENVIRONMENT
Reduction of Corporate Tax
Given that Japan and the United States have the highest statutory corporate tax rates
among major economies, the Councils are pleased that both governments are discussing
reductions in these rates as part of broader fiscal and economic policy discussions. The
Councils support significant reductions in the corporate tax rates in both countries as ameans of improving the U.S. and Japanese business environments, which will translate into
more investment, economic output, and jobs.
Consumer Redress Mechanisms
The Councils urge both governments to ensure that major new initiatives that could affectthe liability environment for businesses and investors, such as the proposed consumer“class action” proposal currently under consideration in Japan, undergo careful cost/benefit
analysis and stakeholder review before approval in order to avoid unintended
consequences that could impose undue costs or uncertainty on businesses, thus adversely
affecting the business environment and Japanese economy. In particular, it is importantthat such systems are not applicable on a retroactive basis, contain clear standards ofcommonality, and do not supersede existing regulatory authority.

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