JOINT STATEMENT
54th JAPAN-U.S. BUSINESS CONFERENCE

U.S.-Japan Ties at a Critical Juncture
U.S.-Japan Business Council / Japan–U.S. Business Council
Washington, D.C.
November 3, 2017

Overview and Key Themes

1. The U.S.-Japan Business Council (USJBC) and Japan-U.S. Business Council (JUBC)(hereafter, the “Councils”) held the 54th meeting of the U.S.-Japan Business
Conference (hereinafter, the “Conference”) in Washington on November 2-3, 2017,
under the Conference theme: “U.S.-Japan Ties at a Critical Juncture." Today, anumber of security and economic challenges in the Asia-Pacific require greater U.S.Japan cooperation. North Korea’s continued pursuit of nuclear weapons and a
growing number of territorial and maritime disputes are among the most prominent
security concerns facing the two countries. In addition, the liberal international
economic order has come under intense scrutiny in recent years. These themes
remained top of mind for participants throughout the Conference.
2. This Conference assembled business leaders from the United States and Japan, who
confirmed their commitment to promoting a free, open and rules-based global trading
system; setting an example for sustainable economic growth; and maintaining regional
stability. Throughout the conference, the Councils stressed the need for the U.S. andJapanese business communities to be in lock-step at this critical juncture, where weface growing uncertainty not only over regional security, but also regarding the shifting
U.S. stance on trade – particularly in the Asia-Pacific region. The Councils underscoredthe importance of promoting shared values in order to preserve and build on thecontributions made by U.S. and Japanese businesses to global economic growth,
including through development of extensive value chains across the region.
3. The Councils agreed that a rules-based free-trading system promotes economic growth,
job creation, and innovation and resilience of participating economies. The Councils
duly recognize the Government of Japan’s leadership in pursuing the Trans-PacificPartnership (TPP-11) since the US decision to withdraw from TPP. The Councils
expressed their hope that discussions between the United States and Japan on abilateral framework will be accelerated with a view to deepening their economic
relations, and setting high trade and investment standards throughout the Asia-Pacificregion.

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4. The Councils emphasized that the U.S.-Japan Alliance is essential to stability andprosperity across the world and underscored the importance of strengthening thecommercial relationship as a fundamental pillar of the U.S.-Japan relationship. The
Councils encourage the governments of both countries to commit themselves to further
improving market access and pursuing high standards and more comprehensive
cooperation in areas such as digital commerce, competition with state-owned
enterprises, regulatory practices, and intellectual property protection, among others.
They applauded both governments for their renewed engagement through the U.S.Japan Economic Dialogue, including on more effective enforcement activities against
unfair trade practices by third countries. They emphasized the need for private-sector
input into the dialogue and encouraged both governments to ensure concrete
outcomes that create meaningful opportunities for the private sector. A priority area isenhanced collaboration on quality infrastructure, both bilaterally, and throughout the
Asia-Pacific region, including closer cooperation on infrastructure projects andstandards setting through APEC, in the activities of the Asian Development Bank
(ADB), and in other regional fora.

Key Challenges Facing the United States and Japan
5. The Councils expressed their commitment to addressing mutually concerning
protectionist trends in third countries, including those related to: government subsidies
to state-owned enterprises, excess manufacturing capacity, market access restrictions,forced technology transfers, and burdensome and restrictive data policies that will havesevere implications for global innovation. The Councils recognized China’s growing
economic influence and committed to working together to promote a level playing fieldfor U.S. and Japanese companies. At the Conference business leaders’ attention was
brought to the “Made in China 2025” policy and potential concerns associated withsuch industrial policies.
6. The Councils expressed concern over rising protectionist sentiment on a global scale,and in particular that guided by oversimplified metrics related to trade deficits andsurpluses. Metrics should take into account basic macroeconomic principles as wellas the benefits that are realized from the free flow of goods, services, labor and capital.
The Councils encourage both governments to avoid adopting economic policies that
protect one industry, sector or market at the expense of others. To realize the benefitsof a vigorous and innovative economy, both governments must take measures toensure market competition stays healthy, robust and impartial. To that end, theCouncils expressed concern over a number of U.S. proposals tabled in the North
American Free Trade Agreement (NAFTA) modernization negotiations and urge U.S.
negotiators to reconsider those proposals that would be harmful to U.S. businesses,
such as the local content requirements in the automotive sector, as well as Japanesefirms with substantial investments in the United States and across North America.
7. With both countries facing demographic challenges posed by aging populations andshrinking workforces, improving overall productivity of both countries’ workforces is2critical to ensuring sustained growth and long-term competitiveness. Greater
workforce productivity can be achieved through structural changes and public-private
partnerships that promote diversity and incentivize individual and collective
performance; optimal employment of skills, education and experience of mid-career
professionals and new entrants; an enhanced focus on preventative healthcare to
mitigate health risks associated with aging; and the removal of barriers to women andforeign workers entering the workforce.

Priority Challenges and Issues in the United States:
8.

The Councils support development of broad consensus among Congress, theexecutive branch, and the American public on comprehensive policies that will enablelarge and small businesses to grow the economy and generate new jobs. The
Councils urge the U.S. administration to prioritize domestic policies that favor
economic growth, pursue a wide-ranging and rules-based approach to global trade,and ensure that transparency, predictability and a commitment to the rule of law
continue to drive foreign investment into the United States.

9. The Councils applaud the focus on tax reform by the U.S. administration and Congress.
Tax reform legislation should lower tax rates for all businesses to a level that will
enable them to compete successfully in the global economy, attract foreign
investment to the United States, increase capital for investment, and drive job
creation. In addition, the Councils believe that tax reform legislation should ensure
industry-specific neutrality and avoid special tax benefits or penalties targeted to one
industry versus another. The Councils also appeal to both governments to review
their respective taxation systems to ensure fairness for citizens of both countries
working in the other to optimize the free flow of people between the two countries.
10. The United States’ travel, transportation and energy infrastructure is increasingly
overburdened and in disrepair from decades of underinvestment and neglect. Repair
and improvement of infrastructure projects will present major foreign direct
investment opportunities, and will directly enable the seamless movement of goods,
services and people across state and international borders. The Councils encourage
the U.S. government to prioritize improving existing U.S. infrastructure and to support
investment in advanced transportation projects, such as the construction of highspeed rail lines in the western and northeastern corridors and in Texas, as doing so
will not only facilitate transportation, but will produce high-paying, skilled jobs for U.S.
workers.
11. The U.S. faces a shrinking workforce resulting from increasing retirement of the babyboomer generation, and will need to find ways of leveraging all of its labor potential
to realize long-term economic expansion. With respect to immigration reform, theCouncils encourage the U.S. government to pursue administrative reforms, along withmuch needed legislation that overhauls an outdated immigration system.

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Priority Challenges and Issues in Japan:
12. Structural and regulatory reform will be an essential complement to current monetaryand fiscal measures aimed at overcoming deflation. To do this successfully, theJapanese government must convince consumers and investors alike that national
finances are sustainable and that social safety net programs will remain viable in themedium to long term.
13. Japan faces an acute demographic challenge, with over 40% of the population projected
to be over age 65 by 2025. The Japanese government must develop innovative ways
to increase individual and collective worker productivity to ensure that the growing
costs of entitlement and social security programs are sustainable. This will
necessitate the elimination of structural and cultural barriers to women entering theworkforce, and consideration of enhanced participation of the elderly population andforeign workers. It is also imperative that the Japanese government implement criticallabor reforms, including by developing a mechanism for legalized severance, as wellas establishing an effective white-collar exemption and other measures to incentivize
performance over hours worked.
14. To overcome those challenges and enable sustainable and resilient growth, theCouncils recognize the concept of “Society 5.0” and urge the Government of Japan
to collaborate with business to set a concrete action plan and ensure steady
implementation of the strategy. In particular, the Councils believe that the greater
usage of data is the key to success and it is the most important to implement a seriesof policies to enable it in an expeditious manner.

Sectoral Priorities:
15. Digital Economy - The Councils applaud both governments for the focus they arebringing to digital economy-related issues and also encourage them to continue tocollaborate and advocate for the principles in third countries, regions and otherinternational fora to prevent digital protectionism. The Councils support the
governments’ efforts to share best practices with other countries and regions, andhope for increased dialogue between the U.S., Japan, and others. A detailed
overview is provided in the digital economy supplement, and prioritizes areas related
to: allowing cross-border data flows, avoiding data localization and cloud computing
requirements, avoiding requirements of source code disclosure, enhancing
cybersecurity cooperation, improving critical infrastructure necessary to support
technological advances and connectivity, and strengthening intellectual property
protection.

416. Financial Services – The Councils support regulatory and supervisory efforts that
achieve an appropriate balance between strengthening financial stability, benefiting
the wider public interest, and preserving the ability of financial institutions to drive
economic growth. In that regard, the Councils highlight the extensive employment,
credit, liquidity, and risk management financial institutions provide, which are criticalto the functioning of the economy and financial systems around the globe. The
Councils support government efforts to promote regulations and international
standards that: allow appropriate risk-taking necessary to finance growth; maintain alevel playing field; are proportionate to the issue they aim to address; achieve
consistency across jurisdictions where appropriate; and avoid unintended
consequences. These areas, and other priorities, are further discussed in the
Financial Services Sector supplement.
17. Energy - The Councils recognize that energy security is paramount to national security,and that diversified energy mix which incorporates renewable and non-renewableenergy sources will ensure reliable, resilient and environmentally sustainableeconomic growth. The Councils applaud both governments for their continued
collaboration on innovative nuclear energy generation technologies as a means of
producing emissions-free energy and welcome the Statement of Intent signed by bothgovernments which desires to strengthen the special bond between two nations
through greater industrial cooperation. We recognize that there are abundant
collaboration opportunities to ensure nuclear power generation facilities are safe andsurvivable when natural disasters strike. The Councils also recognize that the U.S.
shale revolution, especially in the production of natural gas and Liquefied Natural Gas(LNG), holds great potential for increased energy trade, cooperation and security
between the U.S., Japan and the broader Asia-Pacific region, and the Councils urge
both government promote cooperation in this area.
18. Healthcare - The Councils note their ongoing commitment to public-private
collaboration toward addressing pressing healthcare challenges, improving healthoutcomes and raising economic productivity worldwide.
They advise bothgovernments to further improve the healthcare environment in both countries in a waythat allows for greater efficiency and fully acknowledges the value of innovation. In
that regard, the Councils underscore the importance of ensuring that pricing andreimbursement systems fully recognize real-world patient and caregiver value andare efficient, transparent, and consistent. In addition, the Councils note theimportance of ensuring regulatory practices that encourage global development andresult in first-in-world approvals. The Councils also note the importance ofcollaboration across the public, private, and academic sectors and encourage both5

governments to provide platforms for efficient translational, pre-clinical, and clinicaldevelopment that will spur innovative R&D.
19. Travel, Tourism and Transportation – Travel between the United States and Japan
helps forge close ties and common values between our peoples and secure thefoundation for the strong partnership between our two countries. The Councils
recognize that international travel and tourism have been an important recent driverof economic growth in both countries. Just over the past four years, the number of
inbound international travelers to Japan has tripled, and the Councils commend theGovernment of Japan for its focus on improvements aimed at enhancing
transportation infrastructure and in providing convenience for foreign visitors to Japan,
and encourage the US government to explore ways to improve the environment
around international travel and tourism to the United States. The Councils believethat the 2020 Tokyo and 2028 Los Angeles Olympic and Paralympic Games can spurfurther economic growth, and also provide significant opportunities for public-private
sector collaboration to help make the Games a success. The Councils believe thatthe recent authorization of integrated resorts (IR) by the Diet of Japan will enhance
growth in this sector and, as Japan considers appropriate regulations, the Councils
encourage the Japanese government to address public concerns while maintaining
the positive potential IR has for tourism and investment for the Japanese economy.

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