BDRT 2006 Recommendations
PART I

1 Introduction
The EU-Japan Business Dialogue Round Table (BDRT) held its annual meeting inTokyo on 13 and 14 July 2006 under the co-chairmanship of Mr. Yotaro Kobayashi andMr. Georges Jacobs in the presence of Mr. Toshihiro Nikai, Minister of Economy,
Trade and Industry (METI), Mr. Yasuhisa Shiozaki, Senior Vice-Minister andMr. Kiyohiko Toyama, Vice-Minister for Foreign Affairs (MOFA), and Ms NorikoFuruya, Vice-Minister for Internal Affairs and Communications (MIC); and from theEU, Mr. Günter Verheugen, Vice-President, Member of the Commission for Enterprise& Industry.
The annual meeting took place after the important bilateral Summit on 24 April 2006.
At that meeting it was agreed that in the current new environment the EU and Japan,
which are global partners, should intensify their close mutual cooperation on bilateral aswell as multilateral levels.
The EU-Japan Summit leaders shared the view that energy markets are becoming more
integrated and that energy security has become an important element in policy-making.
They also confirmed the importance of reaching agreement on opening markets forgoods and services, as well as strengthening rules in the context of the Doha
Development Agenda (DDA).
Therefore this year’s BDRT meeting focused all its attention and devoted a major partof its time to a profound, open and practical exchange of opinions between private andpublic sectors in the presence and with the full participation of the EU and Japanese
Authorities.

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The following four points were the focus of discussion:
1. Global Competition: Common Difficulties and Experience
2. IPR and Counterfeiting Issues
3. Global Resources Issues, including Energy problems
4. Mergers, Acquisitions and Regulatory Environment

2 EU-Japan Actions Immediately Requested
Since the start of the 10-Year Action Plan for EU-Japan Cooperation in 2001, progresshas been made concerning Economic Dialogue, Promotion of Two-Way Investment,
Intellectual Property Rights (IPR), Information & Communication Technologies (ICT),the Changing Energy Climate, Regulatory Reforms, and Global Environment Issues.
The last EU-Japan Summit, which was held in April 2006, reviewed implementation ofthe Action Plan with satisfaction.
The BDRT respects the increase of the dialogues between the EU and Japan on major
economic issues, which have contributed toward creating better business conditions
between the EU and Japan. However, the BDRT strongly feels that concrete actions
beyond dialogue by the experts of both sides are needed to create business opportunities
in certain areas, in which the BDRT has made Recommendations.
(1) Work on avoiding double taxation and reducing compliance costs associated withtransfer pricing taxation
・ All out-dated treaties between Japan and EU Member States should be revised,using the new UK- Japan treaty as the model.
・ The EU Authorities should support that EU Member States form a joint forumwith the Japanese Authorities, which would be similar to the Joint Transfer
Pricing Forum established among EU Member States.
(2) Smooth translation of “Innovation” in Life Sciences and Biotechnology to real“social benefits”
・ Develop a plan incorporating multiple perspectives based on cooperation fromacademia, authorities and industry to promote the public understanding ofLS/BT, and implement the plan through the strong initiatives of authorities.

2・ Establish a mechanism for dialogue between the authorities and industries tofacilitate innovation in healthcare bio such as medicines by improvement ofresearch and development (R&D) environments as well as pricing policies
reflecting their values under officially controlled pricing systems.
(3) Information and Communication Technologies
・ Promote dialogue to enhance security and reliability of ICT systems
indispensable to critical social infrastructure, deploying security measures suchas biometric technology.
・ Approaches to common issues to the EU and Japan such as overcoming social
problems by utilising ICT and promotion of education of children for the future
generations.
・ Further partnership between the EU and Japan concerning R&D andinternational standardisation in ICT areas such as the next generation networkand digital home.
・ Development of a regulatory environment by the EU and Japan such as
deregulation for promotion of digital convergence, open access to markets, andfurther competition by businesses.
(4) IPR and Counterfeiting
・ Establish an international rule for IPR protection enforcement especially on
non-proliferation of counterfeits and pirated.
・ Collaborate to strengthen measures against IPR infringements in Asian
countries, and to establish a balanced policy for the content protection andprivate copying with its fair compensation.
(5) Joint R&D
・ Demonstration projects such as bio-chemicals, bio-materials and/or bio-fuels.
The BDRT is prepared to work closely with the Authorities and other experts to design
and implement the work programmes, and the BDRT would request that the Authorities
take the necessary initiatives immediately.

3 Towards a Broader, Deeper and More Dynamic Cooperation3

At the last EU-Japan Summit, priority actions to be taken by the next Summit wereagreed upon, where strengthening the Economic and Trade Partnership utilising theDynamism of Globalisation for the Benefit of All is one of the objectives.
The BDRT recommended in 2003 that negotiating a Foreign Direct Investment (FDI)
Enhancement Agreement, establishing a framework for mutual efforts to promote andfacilitate an increase in FDI, and focusing on the following four areas are effective andpractical steps to solve the pending issues.
1) Eliminating tax-related investment barriers such as withholding taxes on dividend
payments between parent companies and subsidiaries and on interest and royalty
payments among affiliated companies;
2) Facilitating business development through the smooth movement of humanresources;
3) Facilitating tax-neutral cross-border corporate reorganisations; and4) Promoting regulatory reform.
The BDRT’s ultimate goal is to set up a broader, deeper and more dynamic cooperation
between both regions. Therefore, the BDRT believes that the time has come to proceed
to a mid-term review of the EU-Japan 10-Year Action Plan in order to better take into
account the new world economic situation and the outcome of the Doha Development
Round. The private sector should clearly be involved in this process in order to reflect
the many challenges faced by today’s industries.
The first step taken by the BDRT towards its main objective is the setting-up of aworking party whose mandate would be to deal with these issues, looking into thebackground of or reasons for those recommended items under the proposed FDI
Framework Agreement which have not shown good progress so far. Based on theresults of that survey, the BDRT will consider all possible ways to reach a new era ofEU-Japan relations which implies a new scope of cooperation. This includes thepossibility of initiating discussions between the EU and Japan on alternative forms ofeconomic integration consistent with commitments to the WTO.
In addition, the BDRT is of the view that the successful conclusion of the WTO DohaDevelopment Agenda is an urgent and top trade priority. It has made Recommendations
every year requesting the Authorities to make utmost efforts to reach a satisfactory
conclusion.

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The BDRT would like to ask both Authorities to give strong support in order to carryout these Recommendations.
4 Longer-Term Perspective
In the 20th century, we achieved tremendous economic development. However, in the21st century, we are facing challenges that could threaten our sustainable developmentin the future, namely:⚫
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Emerging new economic power called BRICs (Brazil, Russia, India and China)
Environmental concerns and global warming effectSharp rise of oil priceUncertainty of world trade and investment regime and deployment of FTA (FreeTrade Agreement), RTA (Regional Trade Agreement) and EPA (EconomicPartnership Agreement)
Lack of consideration for intellectual property value
Proper usage of Information Technology
Widening gap between rich and poor
Increase of security concerns for both business and people⚫

Conflict of culture around the world

Major world institutions have not changed since WWII. BDRT members feel there isa need to address an institutional deficiency to cope with the new global challenges.
The BDRT believes the consideration might be given to establishing a Study Group
comprising of officials, academia, and the business community to make concrete
proposals within a three-year period.

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