Recommendationsof theEU-Japan Business Round Table
to the Leaders of the European Union and Japan
Rome, 28 & 29 April 2011

Working Party C
Innovation, Information & Communication Technologies

Working Party Leaders:Dr. Jean-Yves LE GALL
Chairman & CEO
Arianespace

Mr. Fredrik ALATALO
President andRepresentative Director
Nippon Ericsson K.K

Mr. Chiaki ITO
Corporate
Executive Advisor
FUJITSU Ltd.

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List of Abbreviations
Abbreviation
AEO
ICAO
ICT
IEC
ITA
ECJ
ENS
MRA
NAMA
NATO
NGBN
NTB
PDCA
SGAE
SME
WTO

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Meaning
Authorized Economic Operator
International Civil Aviation Organization
Information, Communication Technology
International ElectrotechnicalCommission
Information Technology Agreement
European Court of Justice
Entry Summery Declaration
Mutual Recognition Agreement
Non Agricultural Market AccessNorth Atlantic Treaty Organization
Next Generation Broadband Network
Non-Tariff BarrierPlan, Do, Check, Action
Sociedad General de Autores y Editores
Small and Medium EnterpriseWorld Trade Organization

Recommendations from both
European and Japanese industries
ICT
WP-C / # 01 / EJ to EJ

Execution of Growth strategy and ICT strategy

Both Authorities should implement detailed action plans with specific targets and use
PDCA cycles to monitor the status of each item. ICT Strategy Progress Reports foreach action should be published on the Authority’s websites.
<Background>
The BRT welcomes both Authorities’ recognition that ICT is an engine for growth
and that they have designed ICT strategies that are consistent with their growthstrategies. In May 2010, the EU confirmed its Digital Agenda IT strategy is an
essential part in the “EU 2020” growth strategy. The Japanese Government
published a New Growth Strategy in June 2010, a New Information Communication
Technology Strategy in May 2010 and an implementation plan in June 2010.

WP-C / # 02 / EJ to EJ

Deployment of Next Generation Broadband Networks(1) Regulations should provide necessary legal certainty for investors. Technologies
should be able to evolve on their own merits – innovation and investment
decisions should not be hampered by technology-prescriptive regulations.
(2) Both Authorities should provide the necessary stimuli to industry to encourage theprovision of high-speed fixed or mobile broadband servicesin the areas where
deployment by private sector investment is difficult. (such as less-populatedareas).
(3) To promote the use of ICT, both Authorities should enhance the social benefits of
the next generation broadband network by encouraging education, healthcare
and other government services.
(4) To permit a more efficient use of the spectrum, both Authorities should free up as
many frequencies as possible for use by mobile broadband. Moreover, both
Authorities should strive for a harmonised use of the spectrum to ensure
economies of scale and thereby lower service prices incurred by consumers.
<Background>
The BRT welcomes the European Digital Agenda plan to deliver fast and ultra fast
broadband in Europe. If the Agenda’s goals are to be achieved, the right regulatoryenvironment for investment and innovation is critical.
High-speed broadband networks provide the basic underlying infrastructureneeded to make nearly all other services and applications of the future informationsociety a reality. Academic research and empirical evidence have shown that a
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widespread and reliable broadband infrastructure will improve productivity,
stimulate innovation, accelerate growth, and create jobs.
Thus, high-performance fixed and mobile telecommunications infrastructures havebecome decisive factors in the global competitiveness of modern knowledge-based
economies. Social development, future growth and jobs will largely depend on theability to provide for an innovation and investment-friendly regulatory framework.
Due to different subscriber density and demand in different regions and over time,different technologies and topologies are best suited for different scenarios. The
principle of technology neutrality in any regulation is therefore crucial.
Innovation and investment for next generation mobile broadband are becoming
increasingly critical for the above-mentioned policy objectives.

WP-C / # 03 / EJ to EJ

Using ICT to address social challenges

To promote ICT use by the public sector, both Authorities should prioritise budget
allocation for innovative ICT projects in areas such as healthcare, education, central
and local government. Where appropriate, laws and rules which could impede
advanced ICT usage should be deregulated.
<Background>
If the benefits of NGBN are to be maximised, the public sector must promote theuse of ICT projects. Public sector services have a greater potential than private
sector services for using ICT. Such ICT usage will drive the creation of newservices and raise the efficiency of public services and contribute to solving
complex societal challenges.

WP-C / # 04 / EJ to EJ Harmonisation of regulations for cloud computing
usage in the EU and Japan< Recommendation>(1) Given the importance of data portability and interoperability in cloud computing
and to ensure the private sector can develop innovative cross-industry
applications and services, both Authorities should review regulations prohibiting
applications from using cloud computing. The European Commission should
coordinate with relevant authorities in the Member-States to ensure there is aseamless deployment across the whole EU.
(2) The EU and Japanese Authorities should begin a cloud computing dialogue toharmonise regulations on cloud computing and thereby facilitate cross bordertransactions and international data transfers within the EU and with Japan while
enhancing the balance of privacy, data protection and the free flow of information.

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WP-C / # 05 / EJ to EJ

ITA maintenance and expansion(1) Both Authorities should ensure that the current ITA is reviewed at the earliest
opportunity and that additional electronic goods should be granted duty-freestatus in addition to those that already have that status. The broadest possible
expansion (including large portions of Chapters 84, 85 and 90) of the scope isneeded so that current and future innovative technological developments should
not cause product classification uncertainties. Such effort would also be
realizedthrough successful negotiation and agreement on theElectronics/Electrical sectoral initiative proposed in the WTO/NAMA． The EUshould implement the WTO panel in the ITA dispute by the end of June 2011 toaddress new convergence technology ITA products being reclassified as dutiable.
(2) The geographical coverage of the ITA should be expanded by encouraging morecountries to join the ITA and the electronics/electrical sectoral initiative.
Membership should be promoted as a means of boosting efficiency andproductivity, improving the investment climate, helping bridge the digital divideand enabling the move to a more energy-efficient and climate-friendly society.
(3) Effective mechanisms (such as fora for industry to explain state of the art
technology to government) are needed to ensure the ITA is kept up to date andreflects technological developments<Background>
By extending duty-free status based on the ITA, Japan and Europe will benefit fromthe development of a major industrial sector that is a driver of productivity,
innovation, job creation, improved competitiveness and service quality in virtually
all other sectors and in public services. Such a change will require a successful
outcome to the electronics/electrical sectoral initiative proposed in the WTO-NAMA
negotiation – an ITA review by the WTO ITA Committee would be insufficient.
An ITA expansion would boost trade in the whole electronics sector, remove
uncertainties relating to product classification and would ensure technologicaldevelopments in the sector are more likely to be reflected as newly-developed
products are more likely to fall in these chapters. Many non-participants still levy
high duties on, and impose many NTBs against, imports of IT products. The
removal and prevention of NTBs is of the utmost importance to the Japanese andEuropean electronics industries. Positive developments through the extension of
product scope and additional participants in the ITA would be compromised if NTBs
were not properly addressed. NTBs undermine level playing fields in current andfuture ITA states. NTBs often increase after the abolition of duties and taxes.

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WP-C / # 06 / EJ to EJ
Fundamental Review of the Copyright Levy Systemand the Compensation System for Audio and Video Private Copying(1) The EU and Japan should cooperate / have a dialogue to review fundamentallythe compensation system for private copying and thereby promote the lawful useof digital content.
(2) Any review should consider, in a comprehensive manner, methods – including
new content distribution practices – available to secure compensation for rights’holders and creators from private copying. The goal should be to enable theestablishment of a system which is transparent, fair and equitable to consumers,
rights’ holders, service and equipment providers, etc.
(3) The EU and Member-State Authorities should ensure that compensation for
private copying remains a priority issue for the wider copyright debate on theEuropean digital economy agenda. EU-level action is required if transparency andlegal certainty is to be achieved.
(4) The forthcoming Directive on Collective Rights Management should address
copyright levies once and for all.
<Background>
Current compensation is based on copyright levies and, in the EU at least, dates
back to the analogue era. Copyright levies compensate for revenue loss caused byprivate copying but do not address piracy. With current, emerging and expanding
business models (such as online content distribution (using DRM and/or) based oncontracts with individual users), copyright levies may impose double payments for
consumers. Moreover, the rules of the current levy system vary enormously acrossEurope – there is no benchmark for determining which products are subject tolevies or what amount to charge. The ECJ ruling in C-467/08 Padawan v SGAE
also makes a review of the system justifiable.

WP-C / # 07 / EJ to EJ

Balancing of trade facilitation and security

Both Authorities should cooperate and lead the international harmonisation of rules
and operations to achieve efficient public and private sector operations, balance
trade facilitation and the assurance of safety and security. Both Authorities should
drive aggressively an initiative to remove barriers to realising a balance between
trade facilitation and the ensure security. In particular:(1) Security regulations that have been tightened despite the existence of the MRA
on AEOs should be examined and considered for deregulation.
(2) The EU and Japan should consider adopting an international standard for
security regulations (like the ICAO) as although companies have to comply withinternational standards such as UL or IEC, the implementation of current
regulations varies between countries.
<Background>Working Party C
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Multinational companies witha global supply chain implement activities to achieveboth trade facilitation and ensure security. Although in June 2010, the EU andJapan signed an MRA on AEOs, from 2011 EU and Japanese companies will face
additional burdens through the implementation of 24-hours advanced notice of
ENS rules.

WP-C / # 08 / EJ to E

Applying reduced VAT rate to e-Books

To end the unnecessary discrimination between e-Books and paper books, e-Books
should also be liable for the reduced VAT rate applied in the EU to “culturally-worthy”
items and the rate charged should not exceed the rate applied to printed publications.
<Background>
The BRT strongly supports a reduced taxation rate on “culture.” In the EU, thelong-standing application of a reduced VAT rate on culturally-worthy products hashelped spread fine culture widely and rapidly at lower prices, and has contributed
to the development of rich culture and improvement of the quality of life.
e-Books are currently liable for the standard rate of VAT in the EU. Thanks to theirlower price, availability of contents, possibility of searching and their saving ofresources e-Books offer even better access to fine culture than printed books.

INNOVATION IN GENERALWP-C / # 9 / EJ to EJ
Cooperation between the EU and Japan on 21stCentury societal challenges(1) Both Authorities should support flagship projects and innovative solutions tocommon societal challenges through deregulation and inviting investment andexpertise from EU and Japanese industry.
(2) An EU-Japan dialogue should be established to evaluate how best to stimulate
research and innovation in general and how to ensure they benefit consumers
and industry. Best practice from around the world (such as allowing venture
capital to be used for investment in innovation or entrepreneurship) should bestudied and adopted.
(3) The EU and Member-States should create European Innovation Partnerships for
smart cities, water efficient Europe, sustainable supply of non-energy raw
materials for a modern society, smart mobility for European citizens and industry,
agricultural productivity and sustainability.
<Background>
The EU and Japan share common societal challenges such as aging population,
climate changes, resources constraints etc. Innovation is the key engine formaintaining competitiveness and sustainable long term growth.
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The BRT supports activities on healthcare issues referred to in the European
Innovation Partnership mentioned in the October 2010 Innovation Union. The
Japanese Government and Industry have a similar approach – green innovationand life innovation are important pillars in the Government’s New Growth Strategy.
At the heart of Nippon Keidanren’s December 2010 “Sunrise Report” is the idea of‘future city model projects’. Examples of such projects are: low carbon,
environmentally-friendly communities; advanced medical care and nursing; next
generation transportation and distribution systems; advanced R&D; next generation
e-government and e-society; international tourism hub; child-rearing support andadvanced education.
Although the level of research in Japan and Europe is generally high,improvements as to how Japan and the EU can leverage research and innovationcommercially are possible.

WP-C / # 10 / EJ to EJ
Continuous Investment for Innovation (Education,
test-bed project, Government procurement)
Given current budgetary constraints it is vital that both Authorities mobilise allnecessary policy tools to ensure smart spending by the public sector and that theyuse public procurement as an instrument for creating and harnessing innovation.
The EU, Member-States and Japan should allocate strategic budgets for innovation
investment particularly on education in science, technology, engineering andmathematics fields, and on developing competent human resources in S&T, R&D
and test-bed projects.
<Background>Innovation policy should not be limited to just science and technology in the R&D
sector. Innovation, science & technology and ICT policiesare related and whendifferent authorities cooperate on their implementation, the full potential of their
possibilities can be assured. Because investment in innovation will encourage
growth and job creation, public procurement in early stages of thecommercialisation of new products and services is important as it will generatemany opportunities for businesses concerned.

WP-C / # 11 / EJ to EJ

Incentives to drive innovation at Private sectors

To facilitate private sector’s role as an engine for growth, the Authorities should
create better conditions for businesses be they domestic/foreign, large or small. In
particular, given on-going technological developments, the Authorities in the EU andJapan should periodically review rules and regulations, to reform outdated rules andregulations or harmonise others within the EU and Japan thereby creating a bigger
market and incentivising the commercialisation of new products and services.
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The scope of tax credits for R&D should be expanded to encourage private sector
investment in R&D.

WP-C / # 12 / EJ to EJ

Continuous investment for R&D Infrastructure

We recommend the EU and Japan for continuous investment on R&D Infrastructuresin national laboratories and universities.
<Background>
In open innovation era, investment in the R&D infrastructure is important from theview point to retain and attract excellent talents from all over the world. As ICT isenabling technology and it should be positioned as driver and contributors for allother innovations. Evolution of computing power enables the next-generation
supercomputer to meet the various complex demands from researchers in physicalscience and life science and bring breakthrough. Investment in R&D infrastructuresuch as supercomputers will contribute exponentially to other industry verticals

WP-C / # 13 / EJ to EJ
clusters

Business cooperation between EU and JapaneseStrengthen business cooperation between EU and Japanese clusters<Background>
Clusters create a fertile business environment at local level fostering innovation,
increasing productivity, enhancing cooperation between academia and industry,
and facilitating internationalisation of SMEs. Japan and EU countries have manyclusters, some of them world-class, innovation-driven and competitive in global
markets, and open to international cooperation. There is an increasing businessinterest and scope from both sides to strengthen cooperation between clusters.
To facilitate and have a more institutionalised and sustainable approach, a MoU
has been signed between the European Cluster Collaboration Platform and the
EU-Japan Centre located in Tokyo and Brussels. Thanks to this MoU, Japaneseclusters will be able to use this platform to identify partners in EU countries (andvice versa), explore opportunities with them, develop visiting schemes for theircompanies and start developing joint R&I projects.

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INNOVATION IN AERONAUTICS, SPACE AND DEFENCE
Aeronautics
WP-C / # 14 / EJ to EJ(Civil and Defence)

Government-Led Industrial Cooperation in Aerospace

The Authorities of Japan and the EU should accelerate work to significantly upgrade
the scale of EU-Japan industrial cooperation in both civil and defence aeronautics
and space, stimulated by government funding.
<Background>
Europe's aerospace industry has long been a major supplier of civil, defence anddual-use (both civil and defence) systems and subsystems to the world market.
Japan also has advanced aerospace technologies, although its industry faces theconstraints imposed by domestic policy. Both industries are now challenged by
new world entrants making fast progress.Successful Europe-Japan industrial
cooperation already exists in aeronautics, for example in helicopters and aeroengines, but the real cooperation potential is much greater.We strongly believe thata government-led cooperation between Japanese and European aerospaceindustries would result in many gains on both sides. Joint technology and project
development with various world partners are necessary for aerospace companies
to establish and maintain a high technological level and adequate competitiveness.
It is also a necessity for governments faced with severe budgetary constraints. Twoworkshops on EU-Japan Cooperation in Aerospace R&T took place in Tokyo in2009 and 2010. They were very promising, although mainly concerned preliminary
R&T in civil Aeronautics.

WP-C / # 15 / EJ to EJ

Environmental Issues in Aeronautics Technology

The Authorities of Japan and Europe should establish broad bilateral cooperation on
environmental issues.
<Background>
Europe and Japan support mostly separate research programmes onenvironmental issues, from noise to emissions. One joint effort is part of a small
French-Japanese programme on high speed aeronautics technologies. We believethat the eco-technology at all aircraft speeds is one of the fields where further
cooperation between Europe and Japan could yield significant cooperation andbusiness opportunities.

WP-C / # 16 / EJ to EJ

Cooperation in aircraft certification

Establish cooperation between Japanese and European aircraft certification
authorities.
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<Background>
There is very little cooperation between Japanese and European aircraft
certification authorities although both have close cooperation with U.S. certification
authorities.

Space
WP-C / # 17 / EJ to EJ

Civil Purpose Satellite Technology

In the civil satellite technology field, Japanese space Authorities (at Cabinet level)
and European space Authorities (EU Commission, European Space Agency, andEurope’s national space agencies) should establish a common mechanism for a
formal and permanent dialogue with the purpose of identifying further mutually
beneficial subjects of cooperation.
<Background>
Europe and Japan have many complementarities in satellite technology and similarneeds in terms of space telecommunications, broadcasting and observation.

WP-C / # 18 / EJ to EJ

Defence Purpose Satellite Technology

The Authorities of Japan and EU Member Statesshould establish a regular dialogue
aimed at sharing experience on defence purpose satellites.
<Background>
In the defence field as well, European satellite manufacturers have developed
considerable and universally recognised know-how and experience. This knowhow and experience could be shared with Japanese manufacturers through indepth industrial cooperation backed by a regular dialogue between the Authorities
of Japan and EU Member States.

WP-C / # 19 / EJ to EJ

Mutual Backup of Government Satellite Launches

Japanese and EU space authorities should bring about a mutual backup cooperation
scheme of all government launches using their respective satellite launcher fleets.
<Background>
Europe's satellite launcher Ariane 5 and Japan’s H-IIA are used in an arrangement
to back up each other's satellite launches on a commercial basis. This reduces therisk of long launch delays due to launcher technical problems. Years of discussions
between Japan’s MEXT and the European Space Agency towards a similar backup arrangement for government launch missions have not produced results.
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Defence
WP-C / # 20 / EJ to EJ

Exchange and Protection of Classified Information

Japan and European countries should make official agreements for government andindustry to exchange and protect classified information pertaining to joint
development.
<Background>
European and Japanese defence industries have many complementarities and could,
if they were allowed to fully cooperate, jointly develops high performance and costefficient products and technologies that are necessary to the forces of both sides.
This is made almost impossible as European and Japanese companies cannot
directly exchange classified information on the products or technologies that are to
be developed.

WP-C / # 21 / EJ to J

Relaxation of the Three Principles on Arms Exports

Japan should relax the three principles on arms exports (‘3Ps’) to allow it toparticipate, in certain defined circumstances, in joint R&D and production of defence
equipment with NATO and other like-minded countries. Changes should be made in
the form of clear guidelines, rather than one-off exceptions for specific purposes.
<Background>
Japan’s 3Ps prevent it from participating in international collaborative projects andsupplying equipment to allies. Relaxing the principles would offer greater capability
potential and partnership opportunities by enabling them to participate
in development programmes. It would bring technology benefits to Japaneseindustries and result in large budgetary savings. Relaxing the 3Ps would assist
Japan in meeting the objectives in its new National Defence Program Guidelines.

WP-C / # 22 / EJ to J Facilitation of Re-export of Defence Equipment Imported
for Demonstration Purposes
Japanese Authorities should implement arrangements to facilitate re-exports ofdefence equipment imported for the purposes of demonstrations at forums such as
trade fairs and exhibitions.
<Background>
The 3Ps make it difficult for foreign firms to re-export defence equipment they
import for the purposes of demonstrations at trade fairs, exhibitions and otherforums. This severely constrains their ability to market their products. Special reexport arrangements for defence equipment imported into Japan for these
purposes would give Japanese procurement agencies a better understanding of
the full range of options available.
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Recommendations from European industry
INNOVATION IN AERONAUTICS, SPACE AND DEFENCE
GeneralWP-C / # 23 / E to J

Removal of unlimited liability for public tenders

Unlimited liability should be removed from the terms and conditions of public tenders,
as this puts foreign bidders at a considerable disadvantage in relation to local
contenders.
<Background>
The Japanese government currently requires companies bidding for public tenders
to offer unlimited liability as part of their bid. This requirement is not found in othermarkets. Moreover, there are other options open to the Japanese government toaddress its liability concerns.

Space Equipment
WP-C / # 24 / E to EJ

Approval of Satellite Launch Service Providers

The approval by Japanese Authorities of foreign launch service providers through theenvisioned approval system of Japanese commercial satellite launch projects should
be fair and consistent with commercial world practice as recognised and formalisedby the French Space Operations Act of June 2008 and associated by-laws.
<Background>
Japanese Authorities contemplate Space Operations legislation that would require
Japanese users of satellite launch services to obtain an official approval before
they contract for launch, and that would also require them to only use reliablelaunch service providers approved by Japanese Authorities. We have no issue
with such legislation if it cannot be used to make competition in Japan difficult for
EU launch service providers. Japanese Authorities will soon decide whether topromulgate such a legislation.

WP-C / # 25 / E to EJ

Legitimate use of Private Finance Initiative projects

Authorities should explicitly ban their own use of Private Finance Initiative (PFI)
projects to protect local satellite makers and launch service providers.
<Background>
Using PFI is a legitimate way for a government agency to procure space-based
services in a budget-efficient manner. Authorising domestic candidate companies
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to include their own commercial payloads (so-called hosted commercial payloads)
in the satellites that they will procure to provide the services is also legitimate. But
barring foreign suppliers from bidding for the satellite and the launch service on the
grounds that the government procures a government-only space-based service is
not legitimate because the presence of the hosted commercial payload makes it acommercial satellite. If this practice is not explicitly banned, much of thecommercial satellite and launch services markets may vanish piecemeal into
supposedly government programmes. (Note: We do not dispute the practice of
launching purely government satellites by a local government launcher.)
WP-C / # 26 / E to J

Opening the market for space ground equipment

Procurement of integrated systems should be encouraged.
<Background>
Japan's international procurement of space ground equipment is often broken up insmall lots. This tends to benefit Japanese over foreign suppliers. Integrated
systems have better cost performance and are more reliable.
Defence
WP-C / # 27 / E to EJ Internationally recognized procurement processes for
defence equipment and services
The following should be applied to all defence procurement processes. (1) Clear
statements of requirements, communication of any changes (2) Advising of timelines
and adherence to them(3) Notice of evaluation criteria and the weightings given eachcriterion(4) Acceptance of English-language documentation (5) Application of NATO
standards (6) Full public disclosure of the basis of awards (7) Opportunities to appeal
award decisions, without the requirement to withdraw from the competition.
<Background>
Certain reforms have already taken place in defence procurement processes.
Further reforms would strengthen transparency and competition.
WP-C / # 28 / E to EJ
contracts

Greater emphasis on life cycle life costs in awarding

Life Cycle Costs should form the basis of all relevant defence contract awards.
<Background>We welcome the greater emphasis placed to date on Life Cycle Costs by Japan inits defence procurement. Budgeting based on life cycle costs allows governments
to better plan their defence expenditure. It also creates fairer competition between
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bidders for contracts as it demands fuller disclosure of cost information. EU
companies have great experience in modelling and predicting Life Cycle Costs andare confident about their predictions. This is the normal way of doing things in thecivil aviation world.

WP-C / # 29 / E to J
defence equipment

Examination of innovative procurement approaches for

We recommend Japan study implementing innovative procurement schemes,
including receiving information on the experience of Europe in these areas.
<Background>
Japan could achieve cost reductions through implementation of innovative
procurement practices, such as Performance Based Logistics, Private FinanceInitiatives, Commercial off-the-shelf ("COTS") solutions and leasing schemes.

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Recommendations from Japanese industry
ICT
WP-C / # 30 / J to E
Computing Era

International Transfer of Personal Data in the Cloud

The international data transfer regime between EU and Japan should be streamlined
so as to develop a better environment for businesses. The two governments should
then launch the adequacy finding procedure under the EU directive as soon as
feasible.
<Background>We support the EU Commission’s initiative to explore the feasibility of establishing
EU certification schemes in the field of privacy and data protection. In exploringsuch feasibility, it will be important to look at the global dimension of certification
schemes because such schemes will have an impact on global businesses
operating both inside and outside the EU/EEA.

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