Recommendationsof theEU-Japan Business Round Table
to the Leaders of the European Union and Japan[Tokyo, April 19-20]
Working Party C
Information & Communication Technologies (ICT)Working Party Leaders:Dr. Horst Melcher
Deutsche Telekom AG

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Mr. Chiaki ItohFujitsu Limited

TABLE OF CONTENTS Overview

LIST OF ABBREVIATIONS ........................................................................................................... 3
RECOMMENDATIONS SUPPORTED BY EUROPEAN AND JAPANESEMEMBERS........................................................................................................................................... 4
NEW PATH FOR GROWTH BY ADOPTION OF ICT ........................................................... 4
C-EJ-1: Sustainable Growth towards Low Carbon Society .................................................................. 4
C-EJ-2: Knowledge-Based Growth ........................................................................................................... 6

NEW REGULATORY/INSTITUTIONAL FRAMEWORK THAT PAVES THE NEW
PATH FOR GROWTH...................................................................................................................... 7
C-EJ-3: Taxation System that Supports the New Path for Growth ..................................................... 7
C-EJ-4: Data Protection, Utilization, and Security in the Cloud Computing Era .............................. 8
C-EJ-5: The Right Regulatory Environment for Investment in NGN ................................................... 9
C-EJ-6: ITA & Trade Security ..................................................................................................................... 9
C-EJ-7: Fundamental Review of the Copyright Levy System and the Compensation System for
Audio and Video Private Copying ........................................................................................................... 11

RECOMMENDATION SUPPORTED ONLY BY JAPANESE MEMBERS .................. 13
C-E-1: International Transfer of Personal Data in the Cloud Computing Era ................................. 13

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List of Abbreviations
AEO
COP
GeSI
GHS
ICT
ICT4EE
IT
JBCE
MOU
NGN
PUE
WP

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Authorized Economic Operator

Conference of the Parties
Global e-Sustainability Initiative
Greenhouse Gas
Information Communication Technology
ICT for Energy Efficiency
Information Technology
Japan Business Council in Europe
Memorandum of Understanding
Next Generation Network
Power Usage EffectivenessWorking PartyRecommendations Supported by European andJapanese Members
New Path for Growth by Adoption of ICTC-EJ-1: Sustainable Growth towards Low Carbon Society
At the Fifteenth Conference of the Parties to the United Nations Framework
Convention on Climate change (COP15) held in Copenhagen last December, theConference of the Parties “took note of the Copenhagen Accord,” and theparticipants could not agree on a post-Kyoto Protocol framework. However, climatechange continues to be one of the biggest challenges for both industrialized anddeveloping modern societies.
The Japanese government stated that Japan will aim to reduce its emissions by
25% by 2020, compared to the 1990 level, on the condition that a fair and effective
international framework is established in which all major economies participate.
In March 2007 the EU’s leaders endorsed an integrated approach to climate andenergy policy. The EU Heads of State and Government set a series of demanding
climate and energy targets to be met by 2020. These are:•••A reduction in EU greenhouse gas emissions of at least 20% below 1990 levels
20% of EU energy consumption to come from renewable resources
A 20% reduction in primary energy use compared with projected levels, to beachieved by improving energy efficiency.

Collectively these are known as the 20-20-20 targets.
The EU leaders also offered to increase the EU’s emissions reduction to 30%, on
condition that other major emitting countries in the developed and developingworlds commit to do their fair share under a global climate agreement.
To achieve these goals, authorities should prioritize the role ICT can play inachieving a low-carbon society. Studies such as the GeSI SMART 2020 study haveshown that the benefit of wide utilization of intelligent ICT solutions can lead to 15%
global emissions reductions in other sectors by 2020. Greater deployment of ICT
and high-tech solutions are therefore key to unlocking energy-saving potential inother sectors.

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In its recommendation “on mobilizing ICT to facilitate the transition to an energyefficient, low carbon economy” issued in October 2009, the European
Commission asks the ICT industry to even exceed the overall 2020 reduction
targets by 2015.
Countermeasures against climate change can not be seen just as a burden andshould be recognized as new opportunities to promote growth.

In response, the ICT sector has announced the creation of an ICT for Energy
Efficiency (ICT4EE) Forum. It is supported by four key industry associations of thesector (Digital Europe, GeSI, JBCE and TechAmerica). Green IT Promotion in
Japan also has signed a MOU with ICT4EE.
The Forum is pursuing the ambitious goal of not only improving energy-efficiency
processes in advance of the EU 2020 targets but also taking a global andharmonized approach. Progress towards such targets should be measurable andverifiable. Therefore the forum intends to adopt and implement a common
framework to measure the sector's energy and carbon footprints, set targets, andbenchmark progress. Moreover, it will also initiate dialogues with specific sectors(building & construction, transport & logistics, energy supply) with the aim ofidentifying how ICT solutions can contribute to the more intelligent and efficientuse of energy. When it comes to this kind of initiative, Japanese and European
authorities should play the role of a facilitator, e.g. regarding the dialogue
between the ICT sector and other sectors.

GHS emission reductions by ICT in other areas are known around the world, so
we recommend that the EU and Japan act as aggressive regions onenvironmental activities to conduct a campaign for enlightenment.
In order to expedite the introduction of solutions, we continue to request the
governments of both the EU and Japan to support the development of common
metrics and processes for the measurement of GHG reduction by ICT, such as
the ongoing efforts in ITU which visualize reduction effects in terms of theenvironmental burden, thus improving persuasiveness in the market.
With the spread of cloud computing, data centers are expected to be the area
where power consumption will increase in the future. Therefore, as common
metrics, in addition to IT equipment and IT solutions, data center energy
efficiency is important. PUE is the most popular index in this field but PUE onlyshows the efficiency of the data center facility. The Green IT Promotion Council iscreating the new index “Datacenter Performance per Energy (DPPE)” covering
overall productivity, including IT equipment. We propose to use this index forenvironment-related institutional settings.

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Both the governments of the EU and Japan are recommended not only topromote R&D and field trials for innovation, but also to share the results to enable
others in developed countries and developing countries, where we foresee thatthe use of ICT applications will be expanded in the future, to contribute to thedevelopment of a low-carbon society.
ICT-enabled infrastructure such as smart grids has a huge potential for the
reduction of greenhouse gases. Smart grids can contribute to lower energy
consumption not only in buildings, but also with regard to energy distribution.
They allow for decentralized and flexible energy supply and distribution, which isessential for an efficient use of renewable energy sources. Most renewablesources are volatile and often unpredictable in nature, as they depend on natural
phenomena to generate power. Thus, any type of power infrastructure using asignificant portion of intermittent renewable energy resources benefits fromhaving means of effectively managing supply and demand. Efficient network
management relies on real-time data from multiple sources instead of historical
average consumption data. Smart metering can provide this real-time information.
As a result, the roll-out of smart meters is a prerequisite for smart grids. It istherefore essential that authorities support and encourage the roll-out of smart
meters as much as possible. To accelerate investment in this area, authorities
could start a dialogue with industry with regard to the harmonization of meterfeatures, data protocol, data privacy, and data security.
C-EJ-2: Knowledge-Based Growth

Both the EU and Japan are establishing a long-term growth strategy plan forgrowth not only as a short-term response to recover from the economic crisis.
The ICT industry should play a strategic role in economic growth, job creation,and innovation. ICT is functioning as social infrastructure of all industries, andstrategic use of ICT is effective in the economic policy for each industry. Thus,
ICT strategy should be consistent with growth strategy.
Knowledge-based growth will be achieved by the creation, distribution, andsharing of knowledge among societies. Therefore, the Next Generation Network(NGN), cloud computing, and supercomputers are key components.

Both governments are encouraged to continue their efforts to create regulatory
and economic incentives for the utilization of NGN. Cloud computing has thepotential to enlarge the application fields of ICT in e-government, healthcare,education, green IT, local revitalization, and agriculture. In order to promotestrategic investments in those fields, a regulatory review in each sector for cloudcomputing deployment is required. Existing information systems need innovativeand continuous overhauls to address changing needs from society and the latest
technologies.

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ICT’s role as an engine for knowledge creation also needs to be recognized. The
next-generation supercomputer will drive the advancement of simulation
technology and provide innovation in R&D. Computing capability of thenext-generation supercomputer will enable us to solve highly complex problems inphysical science and life science. Using simulation results, development time andthe cost of new products will be significantly reduced and bring about innovative
ways of manufacturing. Furthermore, supercomputers are also useful forlarge-scale complex systems like nature. Emulating nature will contribute toaddressing global social problems such as climate change.

New Regulatory/Institutional Framework that Paves the New Path for Growth
C-EJ-3: Taxation System that Supports the New Path for Growth(Applying reduced VAT rate to eBooks)
We strongly support a reduced taxation rate on “culture.” In the EU, thelong-standing application of a reduced VAT rate on culturally worthy products hashelped to spread fine culture widely and rapidly at lower prices, and has highly
contributed to the development of rich culture and improvement of the quality oflife.
The latest innovation provided us with the new option of reading books byelectronic means, i.e. eBook, rather than on paper. In light of the lower price,
availability of contents, search performance, and resource saving, this new
method provides even better access to fine culture than the original method.
Consumers, however, are obliged to bear a higher cost to enjoy the benefits of thelatest technology due to the fact that the eBooks are subject to the standard VAT
rate in the EU. Respecting the spirit of a reduced VAT rate for “culture” and inorder to end the unnecessary discrimination against eBooks compared with paper
books, we urge that eBooks be taxed at the reduced VAT rate in the EU, and at
most at the same rate as paper books.
(Greenhouse Gas Emissions of Data Centers)
Regulations have been introduced in the UK and Tokyo to make it obligatory to
reduce the total amount of CO2 at each facility in an effort to reduce greenhousegas emissions.

Data centers house integrated server and network equipment, and as theequipment operates 24 hours a day, the power consumption per floor area is
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large. However, the outsourcing of equipment to a specialized operator andmanagement in a data center will make for more efficient operation than theindividual companies’ management of IT equipment, because of the sharing of air
conditioning and power facilities and virtualization technology. We request
governments to recognize the contribution of data centers to a low carbon society.
These must be taken into account when considering additional requirements for
operators of data centers, which would hamper their competitiveness in relation
to general offices.

C-EJ-4: Data Protection, Utilization, and Security in the Cloud Computing Era
The significance of cloud services is not only the efficient use of IT infrastructure,
but the crossing of business and industry borders. The social system as a whole
can promote the integration and sharing of vast amounts of information andknowledge. Consequently, an "information society“ with the participation of all
individuals and companies can be realized.
Along with the expanded use of ICT, accelerated information storage is enabling
new value-added services through cloud computing. In the near future, newservices with cloud computing that handles enormous data process such as
real-time stream data can be deployed as a new infrastructure for ourbusinesses.
The connected society and cloud computing are crucial elements in that process.
Cloud computing is a mechanism to provide computing resources in data centersthrough fixed or mobile IP connectivity. The development shows that mobile
connectivity is rapidly evolving to become the default connectivity of most devicesof the future. Indeed, fixed connectivity will fulfill the extreme bandwidth demandsof specific areas and devices.
On the technology side, high dependability must be ensured to deploy cloudcomputing as an infrastructure for businesses of the EU and Japan. Government
support is expected for the promotion of R&D and standardization of the basic
technologies that underpin operational continuity, security, data storage, and theprocess of stream data. A technology for anonymizing the large amount of data
can convert the data into highly value-added services, and is critical in promoting
the use of cloud computing.
Last but not least, governments should foster a secure feeling in the market aboutcloud computing by deploying it for their e-Governments and presenting
successful cases. UK is one example of a country having recently adopted an ICT
strategy which is aiming at the establishment of a government cloud, or “G-Cloud”.

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The government cloud infrastructure will enable public sector bodies to select andhost ICT services from one secured, resilient, and cost-effective shared network.
Cloud services will provide enterprises and private users with a variety of services.
These services may vary from simple text-based information services to highresolution multi-media services providing the user with a rich experience. In orderto cater for this, the governments of both Japan and the EU should stimulate theintroduction of mechanisms where the cloud and its services can request and get adifferent quality of service from the underlying network (NGN).

C-EJ-5: The Right Regulatory Environment for Investment in NGN
High-speed broadband networks are the decisive input factor for achieving allother ICT-related policy objectives since they provide the basic underlying
infrastructure needed to make nearly all other services and applications of the
future information society a reality. Cloud computing is just one example of the
future applications that depend on high-speed broadband deployment. Academic
research and empirical evidence have shown that a widespread and reliablebroadband infrastructure will improve productivity, stimulate innovation, accelerate
growth, and create jobs. Demand for bandwidth at work, at home, or on the move is
growing constantly. High-performance fixed and mobile telecommunications
infrastructures have thus become a decisive factor for the global competitiveness ofmodern knowledge-based economies. Hence, social development as well as future
growth and jobs will largely depend on the ability to provide for an innovation- andinvestment-friendly regulatory framework. When regulating, authorities should take
into account the investment risks companies are willing or not willing to take andcome up with differentiated regulatory responses targeted to the amount ofinvestment risks companies are willing to take. On top of that, regulation should
provide for the necessary legal certainty for investors.
Due to different subscriber density and demand in different regions and over time,different technologies and topologies are best suited for different scenarios.
Therefore the principle of technology neutrality in any regulation is crucial. It is also
important to let different technologies evolve on their own merits and not to stifle
innovation and hamper investment by making regulation prescriptive ontechnologies.
C-EJ-6: ITA & Trade Security(ITA)
The expansion of the Information Technology Agreement (ITA) is crucial for
Japan's and Europe’s future, not only as a factor of development of a majorindustrial sector in its own right, but also as a driver of productivity, innovation, job
creation, improved competitiveness, and service quality in virtually all other

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industrial sectors and public services. In particular, the focus should be on thefollowing aspects.
The scope of the expansion should cover the products determined as being
included within the scope of the current agreement plus additional products.
The broadest possible expansion of the scope of the ITA, including at least large
portions of chapters 84, 85, and 90 is needed in order to ensure that current andfuture innovative technological developments do not result in uncertainties
regarding product classification. It is noted that there are concerns around theworld over ITA-covered products being reclassified as dutiable. In fact, some newconvergence-technology ITA products have already lost their zero-tariff status.
Such expansion would boost trade in the whole electronics sector, remove
uncertainties regarding product classification, and would ensure the reflection oftechnological developments in the sector as future products would also be
expected to fall within these chapters.
The removal and prevention of non-tariff barriers is of utmost importance for theJapanese and European electronics industries. Every positive development interms of both extended product scope and additional participants of the ITA would
be compromised if non-tariff barriers were not properly addressed, resulting in a
deteriorated level playing field in the other current and future ITA member states.
Unfortunately, the use of Non Tariff Barriers (NTB’s) often increases after abolitionof duties and taxes.
Many more countries should be encouraged to participate in the new agreement.
Many non-participants still levy high duties on and impose many NTB’s against
imports of IT products. Thus membership should be promoted as a means ofboosting efficiency and productivity, improving the investment climate as well as anecessary tool to bridge the digital divide and enable the move to a moreenergy-efficient and climate-friendly society.
Finally, the establishment of effective mechanisms is needed to keep the newagreement up to date to ensure that technological developments are reflected in
the agreement.
Taking into account these aspects, Japan and the EU should drive not only
maintenance of the current ITA but should jointly strive for a review of the ITA assoon as possible.
(Striking a Balance between Security and Facilitation of Trade)
Amid a global trend of stricter security measures, the multinational companies
which build the international supply chain have been taking action to pursue
supply chain security by striking a balance between security and the facilitation of
trade.

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However, neither Authorized Economic Operator (AEO) programs nor the advancecargo manifest declaration rules developed around the world based on the WCO
SAFE Framework on Standards are necessary the same, and excessive
tightening of regulations such as Importer Security Filing and Additional Carrier
Requirements (U.S. "10+2" Program) is enforced. The multinational companies of
the EU and Japan share concerns about further burdens on businesses andunwanted hindrances to smooth trade as a result of such regulations.
In such an environment, we repeat that the EU and Japan must lead theinternational harmonization of trade institutions to strike a balance between
security and the facilitation of trade, and to realize efficient public-private
operation.
More specifically, governments are expected to:(1)

Implement the mutual recognition of AEO programs between the EU
and Japan as soon as possible, and exempt from the application of
the EU advance cargo manifest declaration rules, just like the caseadmitted by the mutual recognition of AEO between the EU and
Switzerland;(2)Standardize the importing and exporting declaration data based on
the WCO Customs Data Model (*) and exchange electronic
information. Finally, we hope that export declaration data in Japan
become import declaration data in the EU.

As the world economy is still sluggish, the EU and Japan should take a leadingrole in striking a balance between international supply chain security and thefacilitation of trade by a launching positive initiative with ICT infrastructure.
*: Mandate in Lyons summit (G7) in 1996
C-EJ-7: Fundamental Review of the Copyright Levy System and theCompensation System for Audio and Video Private Copying
In order to promote further lawful use of digital content, it is necessary to
implement dialogue/cooperation between the EU and Japan concerning afundamental review of the compensation system for private copying. Currently
compensation is paid by means of copyright levies, a system which dates back to
the analog era (at least in Europe). Copyright levies are a way of compensating
for revenue loss caused by private copying, but they are not intended to fightpiracy.
This move is based on existing common business models utilizing DRM, as wellas other emerging business models, including the on-line distribution of content
on the basis of contracts with individual users, which is also expanding. In thesecases copyright levies may impose a double payment for consumers.
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Furthermore, the rules of the current levy system vary enormously across Europe.
There is no European benchmark for determining what products are subject tolevies, or what amount is to be charged.
In reviewing the systems, we should take into consideration in a comprehensive
manner the methods available, including the above new content distribution
practices, to secure compensation for private copying for right holders andcreators. The goal should be to enable the establishment of a system which istransparent, fair, and equitable to such interested parties as consumers, rightholders, service providers, and equipment providers.
This increased transparency and legal certainty can be achieved only through theapplication of objective European criteria by a political and legislative intervention
at the European level. The European Commission and member states must
therefore ensure that private copy compensation remains firmly on the agenda asa priority in the wider copyright debate on the European digital economy agenda.

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Recommendation Supported only by Japanese
Members
C-E-1: International Transfer of Personal Data in the Cloud Computing Era
The international harmonization of regulations and international data transfer
regime between EU and Japan should be streamlined so as to develop a better
environment for businesses to mutually provide highly value-added services. The
objective should be to build and implement a reliable and cost-effective regime forbusinesses in the EU and Japan. In this regard, the European Commission should
consider granting the adequacy status to Japan on condition that data importers
in Japan have obtained the Japanese Privacy Mark.

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