JOINT STATEMENT
52 Japan-U.S. Business Conference- Next Generation Collaboration U.S.-Japan Business Council / Japan-U.S. Business Council
Washington D.C.
December 3-4, 2015nd

The U.S.-Japan Business Council and Japan-U.S. Business Council (hereinafter the“Councils”) held their 52nd Annual U.S.-Japan Business Conference in Washington D.C.
December 3-4, 2015. With a theme of “Next Generation Collaboration” the Councils
highlighted the increasing range and depth of the shared objectives and collaboration
between the U.S. and Japan in the economic, political and security spheres.
The Councils would like to acknowledge and commend the intense efforts made byleaders and officials from both countries to move the bilateral relationship in such
positive directions in 2015, as punctuated by the very positive summit meeting between
President Obama and Prime Minister Abe in April. The Councils welcome theinitiatives listed in the joint Fact Sheet agreed upon at their summit meeting. Given theimportance of bilateral relationship between the two countries, the rapid pace ofinnovation and the urgent need for public policy to keep up, it is important to continue
to reinforce and establish further dialogues, that will help advance new innovations andimprove the growth environment through appropriate regulatory and policy
coordination in sectoral and cross-cutting areas, in consultation with the Councils andother business organizations.
The Councils recognize the significant opportunities before us to expand mutually
beneficial collaboration even further through the initiatives highlighted below.

ECONOMIC OUTLOOK AND POLICYThe Councils expressed significant concern over the global economic outlook, withslower growth in the European Union and emerging markets such as China of particularconcern. In light of such external headwinds, the Councils note that it is more
important than ever that both governments sharpen their focus and strengthen efforts
to overcome domestic resistance to economic reforms that will stimulate new domestic
demand and investment.

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U.S. Economy and Policy
The U.S. continues to carry the global economy amidst the emerging market downturn.
Accordingly, the timing of a possible interest rate increase by the Federal Reserve is ofprimary interest. In this regard, the Councils appreciate the clear communication about
the timing of such a policy move.
The Councils commend the recent agreement to extend the U.S. debt ceiling as apositive measure signaling the ability of both branches of government to cooperate toachieve needed stability in U.S. policy, which in turn bolsters market and business
confidence. However, consistent movement on a number of critical economic policy
matters such as immigration, tax, regulatory policy, energy policy and trade is essential
for the U.S. economy to move to higher growth plateaus.
Japanese Economy and Policy
The Councils welcome the direction and accomplishments of the Abe government’s
economic policies over the past three years. Prior to the Abe government, the Japanese
economy was faced with six challenges-- a strong yen exceeding 80 yen to the dollar, ahigh effective corporate tax rate, delays in the key trade agreement negotiations, electric
power constraints, overly rigid labor and environmental regulations. To its credit, theAbe government is systematically tackling these and other challenges, with somepositive results. The strong yen has currently subsided due to the quantitative andqualitative easing by the Bank of Japan. Although still high, the effective corporate tax
rate was lowered. The TPP negotiations were concluded, and electricity costs are likely
to decrease marginally in the form of a fall in resources, so the situation is gradually
being resolved.
As a result, companies are reaching record recurring profit margins, and the benchmark
Nikkei stock index reached 15 year highs exceeding 20,000 yen. The unemployment
rate has fallen to the lowest level in the past 20 years, and the jobs-to –applicant ratio is
at its highest level in the past 23 years. The rate of wage increases is at the highest levelin the past 17 years. Furthermore, the number of foreign visitors to Japan as of the endof September has already surpassed the record full year figures achieved in 2014.
Despite these positive signs, the quarterly GDP growth rate from July to September
was negative for the second consecutive quarter following April to June, which indicatesthat further measures are needed to deliver sustained growth in economic andinflationary terms. Growth in personal consumption and equipment investment alsolack strength. The long duration of deflation and the increase in the social security
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burden due to the acceleration of an aging population and declining birth rate, as well
as a higher consumption tax, may be hindering consumption due to a bleak future
outlook causing a defensive mindset in spite of wage increases.
Prime Minister Abe’s most recent three new arrows of a “strong economy” “support
for child-rearing” and an “improved social security” – are welcome initiatives. So, too,is the goal to achieve nominal GDP of 600 trillion yen by around 2020 by firmly
addressing the mid to long term supply side challenges while confronting the prolonged
effects of deflation. In order to achieve this goal and a primary balance surplus, it isnecessary to accomplish structural reforms that boost productivity so all Japanesecitizens, as well as companies, can participate actively in the workforce and society. The
Councils thus expect and urge the Japanese government to exert continued strong
political leadership and accelerate implementation of deregulation and systemic
structural reforms that remove uncertainty of the future so that companies andindividuals may participate actively.
TRADE AND INVESTMENT
The Councils appreciate the diligence of all trade ministers in reaching conclusion of
the Trans Pacific Partnership (TPP) negotiations. The Councils have consistently
supported the conclusion of a TPP agreement that brings the United States and Japan
together under a new framework of free trade. The Councils remain fully supportive ofachieving this outcome and will work actively in the legislative approval process.
The Councils recognize the enormous new opportunity that the TPP agreement
potentially holds for deepening and broadening our bilateral trade and investment
relationship, and integrating both economies further into regional trade. By bringing
together the United States and Japan under a free trade agreement that substantiallyeliminates or reduces most tariffs, establishes high-standard rules in areas such as ecommerce and copyright protection, and reinforces transparency in customs andregulatory affairs, the Councils anticipate significant new growth in trade andinvestment among all participants countries through the TPP agreement.
The Councils continue to stress the importance of high standards in the U.S., Japan andother economies as essential to bolster new innovations that will drive future growthand competitiveness. In this regard, the Councils call on both governments to exert
greater leadership in cooperation with one another and the other governments toestablish higher standards and best practices across the Asia-Pacific region in areas suchas intellectual property protection, e-commerce, competition, regulations and standards.

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Specifically, the Councils urge such leadership and greater coordination in othermultilateral/plurilateral and regional trade initiatives, including Environmental Goods
Agreement (EGA), the Trade in Services Agreement (TiSA), APEC and others. The
Councils reaffirm the importance of an early and successful conclusion to negotiations
regarding the Trade in Services Agreement (TiSA), and recognize the TiSA framework
should be inclusive to encourage development of various types of already existing andfuture business models of services, including services accepted in the participating
countries but limited elsewhere.
THE DIGITAL REVOLUTION
Technological innovations and the uptake of information and communications
technology (ICT) have continued to bring about rapid and wide-scale digitalization andnetworking of systems and services, widespread use of massive data, high-speed
computers, and ultra-fast networks. In addition to improvements in productivity andsafety in ICT use, new values are being generated. Further expansion of the Digital
Revolution into burgeoning areas such as the Internet of Things (IoT) is not only critical
for the competitiveness of individual companies, but the U.S. and Japanese economies
overall. The U.S. and Japan should lead the international community towards the full
realization of its transformative potential of the “Digital Revolution” through strategic
collaborations.
Government has an important role to play in fostering the digital revolution, primarily
in setting the appropriate policy environment and competitive conditions – the “digital
ecosystem”– that allows private companies to innovate and develop new products andservices. The pace of technological change is so rapid that governments cannot
anticipate development of the digital revolution through specific policy targets andmeasures, so finding the proper balance in standards, regulatory approaches and bestpractices that support the smooth and rapid development of new, innovative products
and services, while protecting consumers and security, is essential for the fulldevelopment of a robust and safe digital economy. Overly restrictive or prescriptiveplanning, regulation, and forced standard setting will impede rather than support thisgrowth. In short, a light regulatory touch is required, and to the maximum extent
possible, market forces should determine market outcomes.
The Councils emphasize the following areas where both countries should put priorities:
First, to ensure rapid growth and smooth development of the Internet of Things, Japanand the U.S. should continue to discuss higher-level IoT value creation, big data andartificial intelligence, and applications that will contribute to sustainable growth,
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solutions to global-scale problems, and creation of new industries and business models.
Any efforts to develop country-specific or unique standards should be resisted, as thiswill complicate market dynamics and hinder the growth of the IoT, and the Councils
encourage the U.S. and Japanese governments to work collaboratively in developing
approaches that support the adoption of market-driven international standards,
including through recognized standard-setting bodies and consortia.
Second, in order to fast-track the global “Digital Revolution,” Japan and the U.S. should
establish an environment for the safe and secure use of data that serves as the basis forcorporate activities. Ensuring the free exchange of data across borders and creatinginternationally harmonized rules on protection of personal information will contributeto development of the digital economy globally. As the U.S., Japanese and othergovernments weigh steps to help address privacy and security challenges, it remains
critical that any requirements on the collection, processing, storage, or transmission ofdata are not made unreasonably cumbersome, do not create barriers to cross-borderdata flows, and avoid mandates for the localization of data storage within particularcountries. In doing so, the U.S. and Japan would enforce the idea that privacy
protection is in no way linked to where data is stored.
Third, the realization of the “Digital Revolution” further highlights the importance andurgency of cyber security measures, an area that has been subject to previous
discussions and collaborations between Japan and the U.S. With the increase in both
quality and quantity of corporate data, the protection of trade secrets, R&D data, andpersonal information has become an extremely important management issue forenterprises. Also, cyberattacks, which are increasingly becoming faster and more widespread, constantly pose serious threats to governments and enterprises, and, inparticular, the protection of critical infrastructures has become an issue of utmost
national importance. Accordingly, Japanese and U.S. governments and industry players
should hold concrete discussions regarding the sharing of security-related information,
improvement of defense capabilities, reinforcement of human resources, promotion ofinternational collaborations, and pursuit of public-private partnerships in the field ofcyber security.
Fourth, innovation is the core catalyst of competition and growth in the digital economy,
and the United States and Japan – as two leading innovators – share a common interestin combatting the growing abuse of competition policies in the third countries toachieve industrial policy goals. The fast-changing nature of technology markets
suggests that they are already highly competitive, with little room for anti-competitive
conduct. Accordingly, the Councils urge global competition policy authorities to adopt
cautious approaches, particularly with respect to market intervention, in the digital
economy.
5 / 12Fifth, protection and enforcement of intellectual property rights is the foundation of
innovation and the key to the expansion of the Digital Revolution. To this end, theCouncils urge both governments to work closely with each other and the private sectors
to ensure that intellectual property protection laws, regulations, and strategies for
enforcement adequately support and protect existing rights as well as new ideas andbusiness models within today’s rapidly changing technological environment.
MEETING THE FINANCIAL AND HEALTHCARE NEEDS OF AGING
SOCIETIESThe Councils continue to address the mounting financial and healthcare delivery
challenges facing both countries stemming from rapidly aging societies.
The Councils agreed that macro-economic and structural reform measures that drivestrong economic growth must be a core focus for governments to help ensure that thegrowing financial retirement needs of their citizens can be met. However, the Councils
also recognize that greater economic growth alone is not sufficient to fully meet thebroad range of challenges that result from large demographic shifts.
The Councils particularly stressed the importance of making the necessary targeted
investments in human capital that meet the financial and health needs of retirees as well
as of their supporting families. These investments are critical both in terms ofenhancing the security of retirement for the elderly as well as fulfilling the higher levelof economic growth that only a healthy and happy population can produce.
To bridge growing gaps and as a core tool to stimulate new growth, further reforms,
new incentives, and other key policy initiatives are needed to ensure security for all
individuals in their retirement finances, healthcare finances, and healthcare delivery.
While both the United States and Japan face challenges related to their aging societies,
Japan’s challenge is especially acute as, based on current demographic projections,nearly 40% of the Japanese population is projected by 2050 to be 65 years of age orolder. In response, going forward the Councils will examine ways for governments toaddress these challenges and develop recommendations in the following areas: Measures to further boost individual retirement savings and pensions; Adopting innovative approaches that help individuals better plan for and meet thecosts of healthcare that they face; and6 / 12

 Taking steps that help harness advanced information technologies (IT) that
improve patient care.
As Japan confronts its challenges in meeting the needs of its aging population, theapproaches that Japan takes will be instructive to the United States and other countries
also facing similar challenges.
UPHOLD THE FINANCIAL SECTOR’S ROLE IN PROMOTINGSUSTAINABLE ECONOMIC GROWTH
Transparent capital markets and strong financial services sectors play a critical role inpromoting sustainable economic growth. The financial services industry promotes
growth not only as an employer, but also through products and services provided togovernments, businesses, and consumers. These products and services enable
innovation and unlock productivity, leading to new sources of growth. Despite thesebenefits, ongoing national and global regulatory reform efforts, taken in their entirety,
run the risk of imposing severe burdens and limitations on financial institutions,
ultimately raising costs and impairing market access for end users, contrary to theobjectives of the Financial Stability Board and the G20, which have called for strong,sustainable, and balanced growth.
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 ofreforms.
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 that would introduce volatility, destabilize themarket for long-term insurance and as a result deny customers choice. Taking steps
now can form a lasting framework for financial stability and economic growth, striking
the right balance between preventing another financial crisis while not impeding thesector’s ability to provide needed liquidity and support macroeconomic growth.
Furthermore, the Councils urge both governments to cautiously monitor the
cumulative impact of regulation and to enhance cross-border cooperation andcoordination among global regulators, in order to promote greater international
regulatory consistency and avoid applying rules on an extraterritorial basis. There is alsoa concern about the one-size-fits-all approach to global regulation, which may lead to
new risk for the global financial system.

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In this context, the Councils call on both governments to continue working throughthe G20, the Financial Stability Board, and other global standards-setting bodies, while
ensuring transparency and accountability to duly elected leaders, 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-to-government consultations
would facilitate joint Japan-U.S. leadership in the financial regulatory process.
U.S.-JAPAN HEALTHCARE COLLABORATIONThe R&D-based pharmaceutical and medical device industries continue to play a vitalrole in improving the health and welfare of people in the world, including emerging
markets, by driving economic growth and job creation, as well as developing innovative
healthcare solutions that support the lengthening of the average healthy lifespan andreduction of the economic burden of disease.
The Councils recognize and welcome that good progress has been made over the last
several years in improving the competiveness and attractiveness of the markets in bothcountries. In particular, the Councils applaud legislative changes in Japan that separate
medical device from pharmaceutical regulations, the development of the Agency for
Medical Research and Development (AMED), and the promotion of the Sakigake policy.
The Councils appreciate the steady decreases in approval times for pharmaceuticals andmedical devices by the Pharmaceuticals and Medical Devices Agency (PMDA), as wellas Japan’s maintenance of the pilot program that provides price stability forpharmaceuticals over the patent/exclusivity period. The Councils welcome theintroduction of 21st Century Cures Act (HR 6) in the U.S., and support its full passage.
Moving forward, the Councils seek to collaborate with both governments to further
incentivize innovation and improve health outcomes. The Councils encourage
regulatory authorities to continue promoting fundamental policies that support industry
innovation, including R&D measures that facilitate and protect innovation; expeditious
regulatory review and approval processes; and transparent, stable and predictablepricing and reimbursement procedures that take into account the high costs ofinnovation.
GLOBAL ENERGY AND JAPAN-U.S. COOPERATION
Despite dramatic changes in the global energy picture due to the global supply-demand
imbalance and resulting rapid decline in crude oil and natural gas prices over the past
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year and a half, the need for close collaboration between the U.S. and Japan on energy
matters remains a central component of the bilateral relationship. Effective U.S. - Japan
coordination on both energy policy and commercial energy matters can be instrumental
in helping achieve energy security, environmental conservation, economic efficiency
and safety while also meeting key national security objectives in both countries. Close
cooperation among business, government, academia, and the public is important toachieve the best outcomes.
Accordingly, the Councils suggest the following approaches in order to build a "NextGeneration Collaboration" between Japan and the United States on energy.
Continuing to Hold Comprehensive High-Level Public-Private Dialogue on Energy
As the importance and necessity of Japan-U.S. cooperation in the energy sector comesto light, the Councils appreciate such dialogues have been held between the twocountries, not only government-to-government, but also public-private consultations,especially between the Councils and officials from the governments of both countries,
and would like to encourage these to continue.
Cooperate to Achieve a Low Carbon Society
The Councils support close technical cooperation on various projects aimed atachieving the objectives of enhanced efficiency, reducing carbon emissions andincreasing energy security, including innovative technologies in areas such as natural gas
production that have helped reduce carbon emissions from energy production tohistoric lows. Japan is advancing high level technology in areas such as energy efficiency
and clean coal technology. These complementary approaches provide a strong basis forboth sides to step up information exchanges and technical cooperation in both areas tohave the greatest impact.
The Councils propose promoting technical cooperation on high-efficiency gas-fired
power plants and on measures to lower the cost of and promote the widespread
adoption of Carbon Capture and Storage (CCS) technology. Reducing the cost of CCS
in particular can be an effective means of encouraging improvements to conventional
coal-fired power plants with high CO2 emissions and strengthening policy towards coal
fired generation. The Councils believe that this initiative will provide effective measures
to emerging countries where energy consumption increase is expected for their

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economic growth from now on, and contribute to the global greenhouse gas
suppression.
Approach to Nuclear Power Generation and Japan-U.S. Cooperation
The Councils recognize that nuclear energy continues to be important as a clean sourceof base-load energy. The decommissioning of Fukushima Daiichi Nuclear Power Plant
and rehabilitation and reconstruction of the surrounding area continues to be achallenge for Japan. As this process moves forward, it is necessary for all public andprivate entities involved to share accurate information with the Japanese public and theworld on a timely basis. From this effort, Japan can help other countries operating
nuclear facilities enhance their safety procedures. By the same token, other countries
can help Japan enhance safety through regular dialogue and exchange of best practices
and standards.
Finding Solutions to Future Energy Problems by Utilizing Big Data
The utilization of big data has the potential to cause a major transformation toconventional unidirectional type large scale power generation, transmission, anddistribution systems. Distributed power sources, which have been considered as
relatively inefficient and not as economical as centralized power generation, can be apractical option thanks to innovative technology development.
Continued Importance of Hydrocarbons and Diversification of Resource Suppliers
Even with the focus on lowering carbon emissions and finding alternative sources ofenergy through renewable sources, efficiency and other measures, the practical reality
is that hydrocarbons will continue to play an essential role in energy production in Japanand the United States for the foreseeable decades ahead.
For Japan, diversification of oil and gas supplies is a matter of national security to theextent that over-reliance on a single region for the majority of imports makes Japanvulnerable to potential supply disruptions and reduces its energy security. In this regard,
the export of LNG from the United States to Japan, which is poised to begin soon as
infrastructure changes are completed, has a much greater meaning than ordinary
commercial trade. So, too, would exports of U.S. –produced crude oil. The Councils,
therefore, urge the United States to lift the ban on the export of crude oil for the mutual
economic and energy security benefit of both countries. The U.S. allows global trade of
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a vast array of products from agriculture, electronics and automobiles. Crude oil shouldbe afforded this same treatment.
TRAVEL & TOURISM
The Councils discussed the subject of Travel and Tourism (T&T) for the first time at
the Japan-U.S. Business Conference last year. T&T is one of the key drivers of the U.S.
economy, and significantly contributes to job growth there. Needless to say, T&T is
becoming increasingly important to Japan as well. According to the World Travel andTourism Council, the T&T sector accounted for 9.8 percent ($7.6 trillion) of global
GDP in 2014. More notably, the T&T sector is expected to grow 3.8 percent annually,suggesting this sector has huge growth potential in the United States, and particularly
in Japan.
Prime Minister Shinzo Abe last year made T&T one of the key pillars under his “Third
Arrow” economic growth plan, with goals to increase the number of inbound foreign
tourists to 20 million by 2020. The number of foreign tourists visiting Japan fromJanuary to September this year jumped 48.8 percent year-on-year to 14.48 million,
according to the Japan National Tourism Organization. Spending by foreign tourists inJapan reached 2.6 trillion yen from January to September. Although there are positive
signs showing growth in inbound tourism, revenue from the tourism industry in Japanis lower than that in the United States. Spending by foreign tourists in Japan remains
half of spending by foreign travelers in the United States.
To achieve the Abe government’s ambitious goal to increase GDP by 20 percent to 600
trillion yen, the Japanese government must turn T&T into an active and aggressive
strategy.
As Japan hosts the 2020 Tokyo Olympics/Paralympics, the upcoming games should
serve as a major milestone for Japan to achieve that goal. The government must takespecific actions such as overhauling visa requirements swiftly.
Looking to the future of T&T beyond 2020, the economic impact of building Integrated
Resorts (IRs) is a focal point. Additionally, IRs could resolve accommodation and
MICE (Meetings, Incentives, Conferences and Exhibitions) shortages in Japan. The
Councils strongly support the introduction of IRs in Japan and urge the Diet to approvethe enabling legislation as early in 2016 as possible so that the subsequent development
process may begin. The Councils will also make further efforts to gain public
understanding about IRs and programs that can address any social issues.

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Regarding the United States, the Councils urge the United States government toimprove its visa system. The United States needs to facilitate business travel for
professionals working on short-term assignments and ease the inconvenience ofcustoms and shorten the time-consuming immigration process at major entry airports.
To this end, a program like Global Entry is extremely beneficial. The Councils urge thegovernments of both countries to work together with the private sector to bring Japan
into the Global Entry network.
Furthermore, the Councils urge the United States to take actions such as improving
airport access to railway and bus networks that offer comfortable and frequent service,
and upgrading intra-city high-speed railway systems similar to Japan’s bullet trains.
The Councils believe the development of the T&T industry is an indispensable element
to facilitate the exchange of people between the United States and Japan to usher in a
new era of collaboration.

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