JOINT STATEMENT
53rd JAPAN-U.S. BUSINESS CONFERENCE

The Promise of Globalization
U.S.-Japan Business Council / Japan–U.S. Business Council
Tokyo
November 3-4, 2016

Overview
1. The U.S.-Japan Business Council (USJBC) and Japan-U.S. Business Council(JUBC) and (hereafter, the “Councils”) held the 53rd meeting of the Japan-U.S.
Business Conference (hereinafter, the “Conference”) in Tokyo on November 3-4,
2016, under the Conference theme: “The Promise of Globalization." This
Conference assembled business leaders from the world’s largest advanced
economies, the United States and Japan, who confirmed their shared values andvision for a free, open and rules-based global trading system. These leaders further
confirmed a determination to expand cooperation, and to pursue stable andsustainable growth not only in the markets of the two countries, but in the global
economy as well.
2. The Councils expressed concern over calls by some voices around the world forpolicies that threaten to constrict economic ties between nations, rather than expand
and improve them. They further agreed the United States and Japan have a shared
responsibility to build upon the strong foundations for growth, which are madepossible through respect for the market mechanism and the associated rules thathave facilitated the expansion of the global economy. The Councils confirmed ashared belief that the two countries – representing one of the world’s most importantbi-lateral economic relationships -- have a special responsibility to cooperate to
update and augment the rules and regulations of trade and commerce in ways that
support broad-based economic growth, new and higher-paying jobs, greater
openness and efficiencies, and mutually beneficial economic integration.
3. Despite an increase in economic and geopolitical uncertainty, the Asia-Pacific region
has been and will remain the center of global economic growth, as well as a key
source of growth for both the United States and Japan. The strong ties between our
two nations serve as a pillar for the peace and prosperity in that region, and therelationship supports the region’s development. In this regard, the ratification andimplementation of the Trans-Pacific Partnership (TPP) agreement by member
countries will update, expand and improve economic integration not only between
Japan and the U.S., but across the region as well.
4. In addition to the deepening and advancement of globalization, the Conference
covered a broad range of additional topics, including the promises and challenges of1

innovative, 4th generation industries, such as the Internet of Things (IoT), artificial
intelligence, big data and robotics. The Conference addressed the economic, socialand political challenges of aging populations, as well as the need for greater
workforce diversity resulting from the active engagement of women and foreign
workers. Further discussion also was held on key industrial sector topics, including
financial services, energy, healthcare, and travel and tourism.

The Global Economy and Key Challenges Facing the United States and Japan
5. The economies of industrialized countries, including the United States and Japan,
are continuing to recover from the 2008 financial crisis, although growth remains
short of expectations. Volatility in natural resource prices and slowing growthamong some newly-industrializing economies continue to create risks anduncertainty.
6. The Councils noted the dangers of over-emphasizing monetary policy in pursuing
macro-economic goals, and underscored how successful government stewardshipof economic matters also requires political leadership and broad consensus to takethe bold measures needed to address cyclical and structural challenges.

Priority Challenges and Issues in the United States:
7. Challenges facing the United States include the need to forge a stronger consensus
among and within the Congress, the executive branch, and the American public for
new policy, regulatory, and fiscal approaches that will support the critical role thatlarge and small businesses play in growing the economy and providing new jobs.
8. Facing a demographic shift from the gradual retirement of the baby boom generationfrom the workforce, the Councils agreed on the continued need for comprehensive
immigration reform.
9. Opportunities to strengthen investment in U.S. infrastructure also remain unfulfilled
and need further attention, including the construction of a high-speed rail networkand revamping rail lines across the United States.
10. The Councils also urge the new U.S. administration to foster a positive businessenvironment at home, and underscored the need to continue attracting foreign
direct investment (FDI). FDI from Japan already directly generates more than
900,000 jobs across the nation. The importance of this investment is magnified
when considering both the direct and indirect jobs supported by Japanese FDI in
the United States, surpassing 1.5 million combined direct and indirect U.S. jobs inthe automotive sector alone.

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Priority Challenges and Issues in Japan:
11. In tandem with continued monetary and fiscal measures aimed at overcoming
deflation, it is imperative that Japan make structural and regulatory reform thehighest economic policy priority. To that end, it remains essential that the Japanese
government work in close cooperation with domestic and foreign businesses andother stakeholders to identify and implement specific reform measures that will bemost effective in generating higher productivity and economic growth and sustaining
investor confidence over the medium- to long-term.
12. To overcome deflation and fuel demand, it is necessary to ease consumer
uncertainty about the future and build trust, which requires maintaining asustainable social security system and a strong commitment to fiscal consolidation.
Concretely, this includes setting a target for a primary fiscal budget balance surplus
by FY2020 and pursing pro-growth policies that will allow for the planned increasein the consumption tax in October of 2019.
13. Japan, with a declining population, must make continued efforts to address aparticularly acute demographic challenge. The government’s call to "realize
diversified working methods by diversified people," which includes empowering
women and achieving greater participation of the elderly in the workplace, has
become imperative. It is also important for Japan to reform its labor regulations topermit greater flexibility for employers, such as expanding the so-called white collar
exemption, adopting other measures that value performance over hours worked,
and facilitating greater acceptance of foreign workers.
14. It is also necessary to plan for investments and improvements to deteriorating
infrastructure, with particular care given to the prevention and mitigation of the
disruptive capacity of natural disasters.

Strengthening and Advancing Globalization
15. The Councils expressed concern over the global proliferation of protectionist andanti-globalization sentiment. In recent months, public opinion has shown a tendency
to turn against economic integration and free trade agreements. Participants in the
Conference agreed the benefits of a rules based trading system far outweigh thechallenges, and stressed the need to address fears of economic dislocation as theindustrial structure changes along with technological advancement.
16. The Trans-Pacific Partnership (TPP) agreement has the potential to usher in a newera of inclusive growth, prosperity and cooperation across the Asia-Pacific byadvancing trade among countries representing 40 percent of global GDP. The pact
will set high standards and rules that promote trade in new areas such as the digital
economy, investment, protecting innovation and labor rights. It will also facilitate3

great opportunities for small- and medium-sized businesses, and raise labor
standards. These outcomes are precisely what is needed to dispel fears that
globalization has, among other things, caused wealth disparities and a declining
middle class. But it is also imperative that these and other high standards also areincluded in other new multilateral and bilateral trade agreements currently undernegotiation, such as the Trade in Services Agreement (TiSA), the Transatlantic
Trade and Investment Partnership (TTIP), Japan-EU Economic Partnership
Agreement and the Regional Comprehensive Economic Partnership (RCEP).
17. The Councils support the progress in trade liberalization over the years, noting
those advances have fueled growth and helped millions climb out of poverty. The
Councils further remain committed to the cause of TPP, and its promise of open,transparent and inclusive markets. The Councils expect Japan’s legislature willsoon approve the trade agreement, and they urge the US to exert strong leadershipand take all necessary measures, as soon as possible, thereby passing thelegislation needed to deliver the promise of this comprehensive trade pact to all 12
member nations, and to create new opportunities for growth.
18. Along with trade, direct investment has been another force that has transformed,
and contributed substantially to, our bilateral economic relationship. With an open
climate that welcomes foreign direct investment, the United States has been a large
recipient of investment from Japan, which ranks number one in terms of “flow” ofinvestment and number two (second to the United Kingdom) for the “stock” ofinvestment from abroad. This investment has made significant contributions toregional economic growth in the United States, to the labor market, and to reduced
trade friction. Japanese investment has been an overwhelming success for bothcountries, and stands as a powerful example of the benefits of trade andglobalization, and has further contributed to people-to-people exchanges that haveresulted from increased travel, overseas study, and cultural exchanges.
19. Japan also continues to seek foreign investment, including from the United States.
This will bring new ideas and new money that will improve Japan’s growth andeconomic vitality. Japan will become an even more business-friendly country byproviding further incentives, regulatory and tax reforms, and fostering greater
receptivity to mergers and acquisitions by foreign entities. USJBC member
companies, meanwhile, already have large investments throughout Japan and
expect to make further sizable contributions. The Councils support measures to fuelfurther investment in areas ranging from tourism to research and development.
20. The Councils support efforts by the governments of the United States and Japan to
update and augment the rules and regulations of trade and commerce, both throughcontinued government-to-government dialogue, as well as between members of theprivate sector and other stakeholders. Such activity will support broad-based
economic growth, new and higher-paying jobs, greater openness and efficiencies.

4The Digital Revolution: Potential and Challenges
21. The Conference saw a continuation of last year’s focus on the digital economy, withboth sides continuing their work on supporting technological innovation, including
the adoption of international standards, upholding cross-border free flow of data,
strengthening cyber-security, and protecting intellectual property. The Councils
emphasized the importance of government engagement in bilateral andinternational public-private consultations, thereby avoiding regulatory and otherpolicies that create obstacles to innovation. The Councils also underscored theimportance of international harmonization of policy approaches, and welcomed theendorsement of these and other principles at the G7 ICT Ministers Meeting and theG7 Leaders Meeting.
22. As stated in the “Charter for the Digitally Connected World” adopted by G7, theglobal economy has a significant opportunity to achieve growth through data-driven
innovation, while taking into account privacy and data protection. By its very nature,
the internet should not recognize borders, and business entities and individuals
should benefit from its potential, regardless of geographic location. Cyber security
concerns are growing, particularly in the areas of both information systems andcontrol systems for the IoT. The Councils urge both governments to reassure thepublic so businesses can secure the free and safe distribution of data. The Councils
noted open innovation is essential for the development of the digital economy, andurged both governments to promote stronger cyber security policies aimed at
supporting the stable development of digital economy.
23. The development of new technologies and the creation of new business models
underpinning the “4th Generation Industrial Revolution” are rapidly advancing inareas such as the IoT, Artificial Intelligence, big data, robotics, self-driving vehicles,
and drones. With the digital revolution has come the sense of unlimited new
possibilities as well as fears of shrinking markets for traditional manufactured goods,
and the resulting closure of legacy factories. Economic growth is the only long-term
answer to these fears, and both Councils focused on the opportunities for existing
industries to evolve, benefit and grow through the utilization of new technologies
and digital economy innovations. The Councils further called for the promotion ofsuch innovation, and the widespread application of IoT across industries, while
maintaining technology-neutral policies.
24. As reflected in the industry-specific supplements to this Joint Statement, theCouncils seek to advance, for example, the expanded use of big data andtelemedicine. Faced with aging populations, they call for access to innovative
medicines and medical devices to improve health, welfare, workplace efficiency,
and labor market utilization. They encourage the development and utilization ofnavigation, digital translation, as well as greater accessibility for international
payment cards in promoting tourism. The Councils called for greater conservationand efficiencies in the energy sector through smart grids and smart cities, as well as

5for better consumer accessibility to financial services through “Fintech” and“InsTech” innovations.
Demographic Change: Threats and Opportunities
25. The Councils have focused attention on the growing challenges both countries facein responding to aging populations, including in the areas of health and welfare,retirement savings, and pensions, and have identified the following areas as priority
advocacy objectives that will help reduce the burdens on governments throughprivate sector solutions to these large social and political challenges:
 New steps to expand and improve private retirement savings and saving
options New steps to encourage greater labor flexibility and diversity in the workplaceand introduce new workers
 New investments in health and the introduction of new management systems
that are necessary to support a healthier, longer-serving workforce, and toincrease productivity in the workplace Increased focus on sustainable fiscal policies related to social welfare
spending New steps to ensure public retirement programs are sustainable Embracing new technologies, such as health IT, that improve productivity
26. The Councils agreed to continue to broaden their focus on this important topic,
including ways in which the private sector can contribute to the increased
participation of senior citizens in the workforce, or take advantage of innovations inthe sharing economy, and equalize opportunities for women and minorities in theworkforce. Leveraging technology and considering new labor policies, including
those related to foreign workers, are other areas for further discussion andadvocacy.

Uphold the Financial Sector's Role in Promoting Sustainable Economic Growth
27. The financial sector faces cyclical and structural challenges that are creating
uncertainty, volatility in the markets, and complexity in the financial ecosystem. At
the same time, new regulations and aggressive monetary policies are putting
downward pressure on the profitability of financial institutions. The Councils urge
both governments to monitor the potential negative impact on the financial sector of
the tensions over the US political transition and the UK/EU Brexit negotiations.
28. The Councils believe transparent capital markets and strong financial services
sectors play a critical role in promoting sustainable economic growth, and the twosides agreed the financial services industry promotes growth not only as an
employer, but also through products and services provided to governments,
businesses, and consumers. Accordingly, the Subcommittee on Financial Services

6has identified the following areas as requiring particular attention by, and action
from, the governments:
1) Regulatory Challenges
Although financial products and services enable innovation and unlock productivity
that lead to new sources of growth, ongoing national and global regulatory reform
efforts, taken in their entirety, run the risk of imposing severe burdens andlimitations on financial institutions, ultimately raising costs and impairing market
access for end users. Such an outcome would run contrary to the objectives of the
Financial Stability Board and the G20, which have called for strong, sustainable,
and balanced growth.
Regulatory Reforms: The Councils fully support reasonable regulatory reforms
designed to strengthen the global financial system and our respective domestic
systems. The Councils, however, urge the governments to avoid measures thatwould introduce excessive volatility, destabilize the market for long-term
insurance and, as a result, deny customers choice. Taking steps now can form alasting framework for financial stability and economic growth, striking the rightbalance between preventing another financial crisis while not impeding thesector’s ability to provide needed liquidity and support macroeconomic growth.

Regulatory Coherence and Consistency: Furthermore, the Councils urge bothgovernments to cautiously monitor the cumulative impact of regulation and toenhance cross-border cooperation and coordination among global regulators, inorder to promote greater international regulatory consistency and avoid applying
rules on an extraterritorial basis. There is also a concern about the one-size-fitsall approach to global regulation, which may lead not only to new risks for the
global financial system, but may also inhibit the supply of long-term funding
through the capital markets.

2) New Measures to Re-ignite Sustainable GrowthCentral Bank Policy Measures: The Councils support the Bank of Japan’s
objective of stimulating the Japanese economy, and appreciate the goal behindthe central bank’s decision to impose negative interest rates (NIR). Both Councils
support measures that would result in increased bank lending to deserving
borrows, thus bringing about increased spending, growth and inflation.
At the same time, the Councils see little evidence to date that the NIR policy has
achieved its intended goals and instead see the policy may be resulting inunintended consequences. For long-term investors such as life insurancecompanies and banks, the negative interest rate policy reduces the usefulness ofproviding traditional products to customers, while also significantly eroding thevalue of these businesses over time. The longer the NIR policy is in place, theless customers will seek out investments and retirement policies that are key to7managing the rapid aging of society. Indeed, the NIR policy may discourage
spending among Japanese consumers, as particularly retirees confront the needto save more against a declining investment return on their savings.
Structural and Regulatory Reform: The Councils do note the recent new
framework, announced by BOJ, may ease some of the challenges related to NIR.
However, the Councils believe it would be difficult for Japan to rid itself of thechallenge of deflation through monetary policy alone, and underscored the needfor the Japanese government to promote a prompt and consistent action for the
structural and regulatory reform as a top prioritized issue of economic policy. In
this context, rather than continue to develop and impose yet more regulations, theCouncils urge that now is the time to undertake a thorough review of the current
set of reforms.



New Opportunities: The arrival of new financial technologies, known as FinTech
or InsTech, presents the financial services industry with new markets andbusiness opportunities, while promising to increase dramatically customer
convenience. The Councils urge both governments to maintain a regulatoryenvironment that doesn ’ t suppress innovation in this developing market, butrather supports the ability of participants to respond flexibly to new opportunities,
while maintaining an appropriate focus on customer protection and ensuring thestability of payment system.

3) Strengthening U.S.-Japan Leadership in Global Economic Governance
The Councils call on both governments to continue working through the G20, theFinancial Stability Board, and other global standards-setting bodies, while ensuringtransparency and accountability to duly elected leaders, so as to strengthen thecurrent framework of global economic governance for pursuing the strong,sustainable and balanced expansion of the global economy. Against this backdrop,
the Councils believe that regularized bilateral Japan U.S. government-togovernment consultations would facilitate joint Japan-U.S. leadership in the financial
regulatory process.

Energy Sector and Challenges of Innovation
29. The United States and Japan remain natural energy partners for a range of reasons,
including their complementary relationships in energy production and consumption
as well as their focus on energy efficient technologies. Both countries have theopportunity to deepen these relationships to achieve a stronger strategic
partnership and presence in the Asia-Pacific that promotes stable, reliable energy
development and innovation. The Councils believe the U.S. and Japanese
governments, in cooperation with the private sector, should remain engaged on key
topics such as renewable energy, natural gas, hydrogen energy, energy-saving

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technologies, energy storage, artificial intelligence, and the Internet of Things to
help address these urgent climate change concerns.
30. The Subcommittee on Energy has developed recommendations aimed at further
leveraging our partnership to achieve a more sustainable energy mix through an allof-the-above approach by government and business that achieves the optimum
balance for growth and the environment.
1)

Natural Gas: The Councils support Japan’s continued development of adiversified, balanced portfolio approach to LNG imports, including from theUnited States, Australia, and others. This will enable LNG to contribute toJapan’s growth as a stable, affordable source of fuel for electric power
generation and other uses as a cleaner alternative than other fossil fuels.

2) Nuclear Energy: The Councils support a measured, cautious return by Japan tothe use of nuclear power as an important source of carbon-free energy
production. Japan’s nuclear energy utilization goal for 2030 can only beachieved by securing the trust of the public following Japan’s 2011 nuclear
disaster. This will require greater awareness of the rigor of new standards andoversight for the industry introduced since that time. The Councils alsoemphasize the importance of further enhancing business cooperation in the
nuclear sector as critical partners who are committed to nuclear safety andglobal non-proliferation. The Councils also support the timely renewal of the
U.S.-Japan Agreement on Peaceful Uses of Nuclear, the bedrock of thecooperative relationship between the two nations.
3) Coal and Carbon Capture: To meet Paris Agreement targets, U.S.-Japan should
accelerate cooperation in the areas of carbon capture from fossil fuel electricity
generation and other technological developments.
4) Renewable Energy: The Councils support further efforts by the governments topromote the utilization of renewable energy technologies. Achieving the mostefficient feed-in tariff structure that supports both demand response and energy
storage systems is a key element in creating a healthy electricity market thatprovides for peak load generation capabilities.
5)

Leveraging Distributed Energy and ICT Technology: The Councils draw
attention to the importance of ensuring the free, unfettered flow of data acrossborders in order to maintain remote monitoring of distributed and cogeneration
facilities, usage of which is growing, and for joint U.S.-Japan leadership insetting and spreading this standard.

9Increasing Healthy Life Expectancy through Healthcare Innovation
31. Innovation is at the center of healthcare industry in United States and Japan. Thishas helped improve people’s health and raise economic productivity worldwide. The
Councils advise both governments to further improve the environment for
healthcare innovation in a way that allows for greater efficiency and fully
acknowledges the value of innovation as follows:
1) Promote R&D: Facilitate collaboration across the public, private, and academic
sectors and provide platforms for efficient translational, pre-clinical and clinicaldevelopment that will spur innovative R&D.
2) Sound Regulation: Further develop regulatory systems that are efficient,transparent, and consistent. Such systems help encourage global development
and result in first-in-world approvals by minimizing country-specific requirements
and maximizing harmonized international standards and practices.
3) Rewarding Innovation: Ensure that pricing and reimbursement systems fullyrecognize the value of innovation in an efficient, transparent, and consistent
way while providing full protection for inventions and data.
4) Preventive Care and Health and Productivity Management: Promote
preventative care and Health and Productivity Management to reduce theeconomic burden of disease and extend healthy life expectancy and improve
efficiency in the workplace through digitalization and community-based carewith the ultimate goal of sustaining a healthy and productive workforce. In
addition, speed efforts to recognize the health benefits of functional foods, suchas health foods and dietary supplements.
5) Global Cooperation: Cooperate with other countries and regions including in the
Asia Pacific region to improve health and thereby lay a strong foundation forsustainable economic growth and greater international trade.

Leveraging the Opportunities of Tourism
32. Close ties and shared values between the people of the United States and thepeople of Japan are an important foundation of the global partnership between our
nations. Growth in travel and tourism therefore provides not only economic benefits,
but can also strengthen the US-Japan partnership. The Councils are encouraged
that Japan has made important strides in recent years in terms of improving
services and infrastructure for tourists, which has contributed to the substantial
increase in tourism in Japan in recent years. This increase has resulted in a triplingof the amount of spending by foreign visitors in Japan, in just the last three years.

1033. However, more work remains to be done. With the 2020 Tokyo Olympics andParalympics now clearly in sight, the Japanese government is pursuing additional
measures to provide for further improvements, as well as to set the stage forcontinued growth in the numbers of visitors to Japan even after the Olympics
conclude. The Councils support these and other efforts, including the government’s
policy direction based on its “three perspectives” and “ten reforms,” toward
promoting sustained, long-term growth in tourism as a key contribution to Japan’s
ambitious goals to grow its economy.
34. The travel and tourism industry also has long been a key factor for the U.S.
economy, and the Councils believe that further improvements in access andconvenience for tourists visiting the United States would improve U.S. economic
growth.
35. The following are the Subcommittee on Travel and Tourism’s priority areas of focus
and advocacy:1) Promoting More Business and Conference Travel – MICE & IR: Japan lags far
behind other nations in the availability of MICE (Meeting, Incentives, Conference
and Exhibition) facilities that provide world-class, desirable venues for businessand conference travel. Authorizing Integrated Resort (IR) facilities would
represent one important step toward addressing this shortage, and the Councils
therefore strongly support the introduction of IRs in Japan and urge the Diet toapprove enabling legislation that would allow the development process to begin.
The Councils also will continue making efforts to advance public understanding
about IRs, and encourage programs to address any social concerns that theirauthorization could present.
2) ATM/Payment Card Acceptance: The Councils recognize and appreciate thatbanks in Japan, including JUBC member companies, have recently increased
the acceptance rate of foreign issued ATM and payment (credit and other) cards,
and continue to support additional measures to improve the rate in retail andother outlets.
3)

Reducing Wait Times for Arrival and Departure Processing: The Councils
support further efforts by both governments to eliminate long wait times atairport and other arrival and departure points for international visitors.

4) Improvements to Airports and Airport Transportation Infrastructure: The Councils
underscore the importance of improving airport transportation and airport accessin both countries, including through the construction of high-speed rail systems,
as well as efforts to further expand the functions of metropolitan airports as wellas upgrading local airports.

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