Joint Statement
50 US-Japan Business Conference
U.S.-Japan Business Council/Japan-U.S. Business Council
November 15, 2013
Washington DCth

The U.S.-Japan Business Council and Japan-U.S. Business Council (hereinafter, "the Councils")
marked an important milestone with the 50th U.S.-Japan Business Conference held November
14-15, 2013. Meeting this year under the theme “Pacific Partners: Opportunities for
Collaboration and Growth in the 21st Century,” the 50th conference allowed members to reflect
on the changes in the U.S.-Japan economic relationship over this time, and to envision the next
50 years.
The Councils acknowledged the improvement in the tone and substance of the conference andour economic relationship over the years: from serious tensions over market access and trade
deficits throughout the 1970s, 1980s and 1990s, to the much more positive tone andconstructive approach in recent conferences. Indeed, the Councils come away from the 50th
Conference assured of the increasingly close and cooperative economic ties between ourcountries and the many opportunities to expand the commercial dimensions of our bilateralrelationship in ways that will strengthen the overall U.S.-Japan alliance and contribute tosustained growth in both countries.
The Councils look forward to working closely with each other, and our respective governments,
in the areas outlined below for the mutual benefit of our respective member companies andthe U.S. and Japanese economies. Given the changes in the global business environment andcorporate dynamics, the Councils also pledge to work together to refine and enhance ourbilateral activities in order to maximize our ability to fulfill this mission.
U.S. and Japanese Economic Growth and Key Issues
With emerging economies in a decelerating trend and the Eurozone emerging slowly andunevenly from recession, there are heightened expectations for the U.S. and Japan to become
the leading force in the world economy. The U.S. and Japanese economies have recovered
moderately and the most extreme risks seem to have passed, but the Councils recognize there
are vulnerabilities in each country and, by extension, the global economy.
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Fiscal and Monetary Policy Challenges
In particular, the Councils have concerns with fiscal and monetary policy challenges of theUnited States and Japan, which pose some downside risks to the world economic outlook.
First, understanding that the balance between fiscal consolidation and growth policy isimportant and delicate, the Councils urge both governments to establish credible
medium- and long-term fiscal plans that are implemented gradually in ways that willstabilize the global financial system. The Councils strongly urge the U.S. Congress andadministration to take into account the unsettling effect the recent debt ceilingextension had on global markets and confidence in the United States as an investment
destination and avoid similar situations in the future.

Second, the process of scaling back quantitative easing (QE), or “Tapering”, could lead toa sharp increase in long-term interest rates and excess volatility in the global financial
and capital markets. The Councils urge both central banks, especially the Federal
Reserve Board, to ensure effective communication on the exit strategy and a carefulcalibration of its timing and pace. The Bank of Japan’s quantitative easing policy isproving effective in reversing deflationary trends and stimulating domestic demand, as
intended, and should be continued for the near term. It is the Councils’ view that thispolicy does not constitute currency manipulation, but is similar to what the Federal
Reserve and other central banks have done to support domestic recovery and pricestability, a position taken repeatedly by the G-7.

In addition to careful macroeconomic management, both countries need to move forward withbold and aggressive micro policies that will stimulate greater investment and businessexpansion that leads to job creation and higher household incomes.
United States
The Councils urge the Obama administration and U.S. Congress to move forward on thefollowing measures:Market-based measures to support domestic energy production, particularly by taking
full advantage of new discoveries of shale oil and gas.

2Regulatory reforms that reduce administrative and cost burdens and provide regulatory
certainty for businesses.



Tax reforms that lower the statutory U.S. corporate tax rate to OECD norms over time.

Japan: Launching the Third Arrow
The Councils commend and support the Abe government’s broad economic policy framework,
dubbed Abenomics, encompassing bold monetary easing policy, flexible fiscal policy, and “Third
Arrow” growth measures. In light of macro constraints, the Councils agree that the criticalelement for achieving sustainable long-term growth is bold regulatory and structural reforms tospur private investment and private sector-led growth, including in critical sectors such as
agriculture, health care, ICT, and travel and tourism. To this end, the Councils urge the Abegovernment to initiate and implement Third Arrow measures including agricultural reforms,
labor market reforms, tax reforms that lower the corporate tax rate to the OECD average and,especially, regulatory reforms that reduce administrative and cost burdens and provide
regulatory certainty for businesses.
Foreign Direct Investment
The Councils stress the importance of foreign direct investment (FDI) as a critical source ofeconomic growth and employment in both countries. The USJBC has emphasized to Congressand other stakeholders the strong and positive contribution Japanese investment makes to the
U.S. economy in terms of output, employment, tax revenue and trade, and encourages moreinvestment by Japanese companies in the United States through both Greenfield investment
and Mergers & Acquisitions. The Councils welcome the new initiative by the Obamaadministration and Select USA to encourage and facilitate more FDI in the United States, butsuggest that greater regulatory and policy certainty are essential for investment decisions.
The Councils continue to be concerned by the relatively low level of FDI in Japan (less than 4%of GDP), but are encouraged by the Abe government’s recognition that Japan needs more of it
to help stimulate economic growth and new employment. As the government formulates
policies and measures to promote more FDI, it is important to note that sustained economic
growth and bold regulatory and other economic reforms that create a truly business friendly
environment are the most important factor to attract FDI in either country. Accordingly, theCouncils urge the Government of Japan to move forward with bold reforms to improve thebusiness environment, including through regulatory and legislative changes that create newinvestment opportunities for domestic and foreign companies and level the playing field forforeign investors. The Councils urge the Government of Japan to work closely with the private
3sector in identifying such opportunities and to move boldly to take advantage of them,
particularly with the 2020 Tokyo Olympics in mind.
U.S.-Japan Trade and Economic Cooperation: TPP and other Initiatives
There are many opportunities for the United States and Japan to support global and regional
growth and prosperity by supporting expansion of trade and investment and establishment ofhigh standards and rules for commerce. The Councils agree that the United States and Japan
should play the leading roles in moving the world system to greater trade liberalization,
cooperation and expansion as a means of boosting economic growth in both countries, andglobally, and pledge to accelerate efforts to support this objective.
In particular, in the Councils’ view, the United States and Japan can and should play leadingroles in helping establish a rules-based, high-standard economic architecture for the AsiaPacific region, with the establishment of a Free Trade Area of the Asia-Pacific (FTAAP) as thelong-term goal.
TPP
The Councils commend the Obama administration and the Abe government for moving boldly
to bring Japan into the Trans-Pacific Partnership negotiations despite domestic industry andpolitical opposition in both countries. Japan’s entry into the negotiations is truly a gamechanging development that makes TPP more commercially significant for all parties, andprovides a historic opportunity to strengthen the U.S.-Japan economic relationship and alliance.
As the largest and most sophisticated economies in the TPP negotiations, the U.S. and Japan
have many common interests. The Councils therefore urge both governments to work closely tosecure a comprehensive, high-standard agreement that will eliminate tariff and non-tariffbarriers to trade in all manufactured and agricultural goods, services and investment while
establishing new rules and disciplines in critical “21st Century” areas such as intellectual
property, investment, competition/State-Owned Enterprises (SOEs), cross-border data
movement, regulatory coherence and transparency, and supply chain and trade facilitation
measures. TPP’s impact will go far beyond the TPP itself. In light of other major multilateraland plurilateral trade negotiations also underway, it is particularly important that TPP establish
high standards and strong rules that will serve as a template for these other initiatives so that
trade in goods and services, as well as investment, will to continue to grow in the coming
decades.

4Given the substantial immediate and longer term benefits to be achieved, the Councils urge theU. S. and Japanese governments to lead the TPP negotiations to a successful conclusion as soon
as possible. The Councils support the objective to conclude negotiations by the end of 2013,
but agree that the timetable should not drive an outcome that does not meet the ambition andhigh standards envisioned and committed to by the leaders of the TPP partners in 2011. As thenegotiations enter the final stages, it is particularly important that the United States and Japandemonstrate leadership by finding practicable solutions that establish high standard rules in
21st Century areas and, consistent with the commitment to a comprehensive agreement,
improve market access through the elimination of tariffs on all goods, with flexibilities ontiming as needed for a few products.
The parallel bilateral negotiations between Japan and the United States are an essential
element of a strong overall TPP agreement that, in combination with the broader TPP
negotiations, should produce significant and mutually beneficial improvements in the bilateral
trade and investment relationship. Accordingly, it is important that these negotiations result in
additional firm commitments and concrete measures to eliminate tariff and, especially, nontariff measures in all areas outlined in the agreements between the U.S. and Japanese
governments on April 12, 2013.
In line with the points above, the Councils pledge to work closely with each other and bothgovernments to promote wider understanding of the importance of TPP to the U.S. andJapanese economies among legislators and other stakeholders in both countries.
Other Agreements
The United States and Japan should take strong leadership positions in driving various othermultilateral or plurilateral negotiations such as the Information Technology Agreement II (ITA2), APEC Environmental Goods and Services, Trade in Services Agreement (TISA), and Trade
Facilitation agreement currently underway to successful conclusion in a timely manner. The
overriding objective in all should be to eliminate tariff and non-tariff barriers to trade on as
many products or services as possible, including through expansion of product coverage underthe ITA-2 and APEC Environmental Goods & Services negotiations; eliminate chokeholds thatdrive up costs and create inefficiencies in moving goods; and establish new rules that facilitate
21st Century trade and investment.

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Global Energy and U.S.-Japan Cooperation
The energy profiles of the United States and Japan have changed dramatically over the past few
years. The United States has emerged as a leading producer of carbon fuels due to new
discoveries and recovery methods for shale oil and gas. The shale revolution provides asignificant competitive advantage to the U.S. economy that could, under the right policy
framework, contribute significantly to domestic growth and trade expansion. Combined withfurther development of renewable technologies and improvements in efficiency, the UnitedStates can potentially become a net exporter of energy in the years ahead.
Japan has been affected by the shutdown in nuclear electricity generation in the aftermath of
the Tohoku disaster. Among other things, this has led to higher energy costs for corporate andhousehold users and sharp increases in carbon fuel imports for thermal electric power
generation. As Japan is at a critical point in determining its energy roadmap for the future, theCouncils urge the government to work closely with the user groups including business and theenergy industry in outlining an energy policy mix that will support economic growth, provide
stable and affordable electricity for industrial and household users, and encourage
development and use of new energy technologies. In the Councils’ view, a stable, predictable
and affordable electricity supply is an essential element for economic growth in the short andlonger terms. To this end, it is important for Japan to continue its use of nuclear power as asource of electricity.
While there are many challenges posed by these developments, the Councils believe the UnitedStates and Japan have a historic opportunity to increase government and private sector
cooperation in ways that will help meet them while ensuring sustainable and secure energy
supplies for our economies and reducing adverse environmental impacts.
To maximize this opportunity, the Councils strongly urge the U.S. and Japanese governments toestablish and institutionalize a comprehensive, high-level U.S.-Japan Strategic Energy Dialoguethat would facilitate regular engagement between senior U.S. and Japanese government
officials and business executives on a comprehensive range of energy issues. This dialogue
should encompass policy, technological development and commercial application andopportunities in the major sectors of energy production, use and related technologies,
including: carbon (oil, LNG, clean coal); renewables (solar, wind, geothermal, biomass,
alternative fuels, batteries); demand management/efficiency (smart grid/meter, efficientbuilding materials); and nuclear power with enhanced safety.

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The Councils look forward to working with both governments to develop a timetable andagenda for the Strategic Energy Dialogue in the coming months, with a goal of holding the first
Strategic Energy Dialogue in 2014.

Healthcare Innovation
The pharmaceutical and medical device industries note the remarkable progress made over the
past decade in developing a shared industry vision toward adoption of healthcare policies inboth countries that support innovation and rapid adoption of leading pharmaceuticals andmedical devices in the U.S. and Japan.
The Councils also emphasize that strong, globally competitive, innovation-based
pharmaceutical, medical device and diagnostic industries are critical components of strong
domestic economies in both countries, contributing significantly to R&D, employment, trade
and tax revenue. Accordingly, the Councils applaud the both governments for recognizing theimportant role the health care sector plays in overall economic growth, and look forward toengaging with officials from relevant ministries on ways to support industry growth anddevelopment while improving overall patient care.
To this end, the Councils encourage the regulatory authorities in the U.S. and Japan to continue
promoting fundamental policies that support industry innovation – such as R&D measures thatfacilitate and protect innovation, as well as expeditious regulatory review and approval process,transparent and predictable pricing and reimbursement procedures that take into account thehigh costs of innovation. The Councils welcome plans in the Japan Revitalization Strategy toestablish a “control tower” function (Japanese version of NIH) in medical R&D to accelerate
practical application of innovative medical technologies of potential benefit to patientsworldwide.
The Councils also note the increasing importance of international trade to industry success.
Given the sophistication of the U.S. and Japanese industries and relative transparency of theregulatory processes, the U.S. and Japan should work closely together in developing rules andpractices in other countries that will support sound medical treatment. In particular, theCouncils urge the U.S. and Japan to collaborate closely in the TPP negotiations to ensure the
TPP agreement includes the strongest possible pharmaceutical IPR standards, as well as toensure transparency and procedural fairness in other participating countries related to medical
device and pharmaceutical reimbursement.
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Financial Services
The Councils stress that strong and transparent financial systems, capital markets and financial
services sectors are essential to U.S., Japanese and global economic growth. Accordingly, theCouncils fully support regulatory reform to strengthen the global financial system, and ourrespective domestic systems.
However, the Councils remain concerned about the potential for unintended consequences of
the current domestic and global regulatory reforms on financial and capital markets, which
threaten to harm the sector's ability to fuel growth. In this new regulatory environment, theCouncils believe that supervisory measures should be appropriate to attain appropriate
supervisory objectives and not go beyond what is necessary to achieve those objectives. In thisregard, it is especially important for regulators to take into account the fundamental
differences between banking and insurance when setting regulatory structures and capital
standards.
The Councils also worry about "the balkanization of regulation" - regulatory fragmentation
across national jurisdictions, which will lead to greater ring-fencing of capital and liquidity, andreduce efficiencies and systemic resilience of the global financial system. In this context, theCouncils call on both governments to continue working through the G20, the Financial Stability
Board or other global standards-setting bodies, while ensuring transparency and accountabilityof duly elected leaders, to strengthen the current framework of global economic governancefor pursuing the strong, sustainable and balanced expansion of the global economy.
Furthermore, the Councils urge both governments to cautiously monitor the cumulative impactof regulation and to enhance cross-border cooperation and coordination among global
regulators, in order to promote greater international regulatory consistency avoiding
extraterritorial application.

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