No C 230/14 Official  Journal  of the European  Communities 10. 9. 81 
Opinion  on the economic  and  commercial  relations  between  the European  Community  and 
Japan 
The opinion  of the Committee  is not based  on any text. 
A. LEGAL  BASIS  FOR  THE  OPINION 
At its 185th  plenary  session  held  on 25 and  26 February  1981,  the Committee,  acting  on a 
proposal  from  the Bureau,  decided  to deliver  an opinion  on the abovementioned  subject  on its 
own initiative. 
B. OPINION  OF THE  ECONOMIC  AND  SOCIAL  COMMITTEE 
The Economic  and Social  Committee  prepared  its opinion  on the above  matter  at its 189th 
plenary  session  held  in Brussels  on 1,2  and  3 July  1981. 
The full text of the opinion  is as follows: 
THE  ECONOMIC  AND  SOCIAL  COMMITTEE, 
Having  regard  to the Treaty  establishing  the European 
Economic  Community, 
Having  regard  to its decision,  taken  on 26 February  1981, 
instructing  the Section  for External  Relations  to draw  up 
an opinion  on economic  and  commercial  relations 
between  the European  Community  and  Japan, 
Having  regard  to its Rules  of Procedure,  and in particular 
the fourth  paragraph  of Article  20 thereof, 
Having  regard  to the opinion  issued  by the Section  for 
External  Relations  at its meeting  on 9 June  1981, 
Having  regard  to the report  submitted  by Mr Evain,  the 
rapporteur, 
Having  regard  to the discussions  at its 189th  plenary 
session  held  on 1,2  and  3 July  1981  (meeting  of 1 July 
1981), 
HAS ADOPTED  THE  FOLLOWING  OPINION 
nem con with  one  abstention: 
1. There  are a number  of factors,  especially  in the 
economic  sphere,  which  account  for  Japan's  present 
competitive  edge  over  the other  industrialized  countries. 
These  are set out in the first  chapter  of the report:  Japan's 
small  social  security  budget,  its low level  of development 
aid to the Third  World,  its low military  expenditure. 
It can therefore  be said  that  there  is at present  a situation 
of unequal  competition  between  Japan  and  the other industrialized  nations,  particularly  the Member  States  of 
the Community. 
One must  nevertheless  recognize  the efforts  made  (and  the 
results  obtained)  by Japanese  industry  to achieve  a high 
standard  of quality  in its products  and  to devise 
marketing  methods  suited  to the European  market  -
efforts  backed  up by very  favourable  finance  terms  for 
buyers. 
2. Among  the  major  industrialized  countries  it is 
Japan  that  has been  most  successful  in coping  with  the 
second  big rise in oil prices.  In 1980,  it had a growth  rate 
(5%)  considerably  higher  than  that  of Europe  and  the 
USA,,  while  at the same  time  keeping  inflation  within 
reasonable  limits  (7%). 
This achievement  was  largely  due  to the  vigorous 
expansion  of exports  ( + 15 %), which  was  concentrated 
on a limited  number  of markets  (including  the EEC),  and 
products  (particularly  cars  and  electronic  good  for the 
mass  market). 
This explains  the  present  severe  strains  in relations 
between  the  Community  and  Japan.  Since  the 
Community  is the world's  largest  import  market,  there  is 
every  reason  to expect  that  the pressure  of Japanese 
exports  will  increase  further  in the coming  years.  The 
consequences  will  be felt not only  on the Community 
market  but also  on third  country  markets.  This  second 
aspect  of the problem  - although  it is not the subject  of 
this opinion  - is at least  as important  as the first. 
The need  for a Community  policy 
3. The  question  now  facing  the  Community  is 
whether,  in the present  crisis,  it can stand  by and watch  its 
10. 9. 81 Official  Journal  of the European  Communities No C 230/15 
major  economic  and  social  objectives  being  jeopardized 
by excessive  foreign  competition,  or whether  it ought  to 
limit  the effects  of this  competition  so as to preserve 
employment  and  social  achievements  and  make  it 
possible  to develop  in the Community  the industries  that 
are essential  for  the  future  (particularly  advanced 
technologies). 
Freedom  must  of course  be preserved  in world  trade.  But 
inactivity  by  the  Community  in  the  present 
circumstances,  far from  promoting  the freedom  of world 
trade,  would  pave  the way  for uncontrolled  protectionist 
reactions  that  would  threaten  not only  the unity  of the 
Community  market  but  also  international  trade  as a 
whole.  Some  leading  figures  on the Japanese  economic 
scene  are themselves  aware  of this  risk.  Others  still seem 
to refuse  to take  this  into  account. 
4. In  view  of the seriousness  of the problems,  it is vital 
that the Community  adopt  a coherent,  united  attitude 
and a clearly-articulated  policy  towards  Japan.  If it is to 
implement  this  policy,  the Community  must: 
— enhance  the standing  of its institutions  vis-a-vis  the 
Japanese  authorities  (particularly  that  of  the 
Commission,  which  is normally  empowered  to act in 
the area  of commercial  policy), 
— ensure  alignment  of the  attitudes  and  acts  of the 
various  Member  States  in respect  of Japan. 
Despite  the fact  that  in the immediate  future  the Member 
States,  or at any rate  some  of them,  will  be continuing  to 
engage  in purely  national  talks  and  measures  parallel  to 
the Community  moves,  the Committee  would  urge  that 
the Community  as such  should  as soon  as possible  begin 
to take  over  sole  responsibility  for  discussing  and 
organizing  EEC/Japan  commercial  relations,  since  any 
commitment  entered  into  by a Member  State  has 
consequences  for the other  Member  States. 
In the  meantime,  it is essential  that  there  be prior 
consultations  on national  measures  and  that  they  be 
approved  as far as possible  at Community  level. 
5. There  are certain  general  aspects  of relations  with 
Japan  that  should  be raised  in a multilateral  framework, 
i.e. together  with  the USA.  One  example  is the problem 
posed  by the concentration  of Japan's  industrial  effort  on 
highly  export-oriented  activities.  The  recent  statement  by 
the Japanese  Government  that  it intends  in future  to steer 
the growth  of the  economy  more  towards  meeting 
domestic  market  demand  - an issue  of great  importance for the future  - will  thus  probably  form  one of the points 
to be discussed  at the next  summit  of the industrialized 
countries. 
But the Community  can rely  only  on itself  when  it comes 
to dealing  with  the more  urgent  and specific  aspects  of its 
economic  and  commercial  relations  with  Japan.  The 
arrangement  recently  arrived  at concerning  the limitation 
of Japanese  car sales  on the US market  - and  on the 
Canadian  market  - is proof  that  the USA  is resolved  to 
tackle  the specific  problems  of Japanese  competition  on a 
purely  bilateral  level,  and that  it rules  out any idea  of an 
alliance  or even  coordination  with  the Europeans  in this 
matter. 
In these  circumstances,  the move  by the US Government 
to protect  its own  market  can  only  intensify  Japanese 
pressure  on Community  and  third-country  markets,  and 
thus makes  it even  more  necessary  for the Community  to 
assert  its own  will  to act. 
6. In  the long  run,  the solution  to the problem  of 
relations  with  Japan  can  lie only  in boosting  the 
competitiveness  of Community  firms  and in speeding  up 
their  adjustment  to changes  in the world  market.  All 
Community  policies  must  follow  this  line  of approach. 
In the immediate  future,  action  is needed  on two  fronts 
for a limited  period:  (a) defensive  action  must  be taken  on 
the Community  market  so as to stem,  where  necessary, 
excessive  increases  in particular  types  of imports;  (b) a 
parallel  offensive  must  be conducted  to penetrate  the 
Japanese  market,  since  Community  firms  have  generally 
not been  active  enough  in this  area. 
Defence  of the Community  market 
7. For  the  sectors  most  affected  or threatened  by 
Japanese  competition  and those  of particular  importance 
for the Community's  industrial  future,  measures  must  be 
taken,  or maintained,  in the  form  of self-restraint 
agreements  with  Japan,  voluntary  self-discipline  by Japan 
or action  by the Community  itself.  Community  firms  also 
have  a role  to play  here  (cf. point  9). 
The arrangements  adopted  by the  Council  in 1981 
concerning  the statistical  monitoring  of a number  of 
imports  from  Japan  can  be meaningful  only  if they  are 
backed  up by a clear  declaration  of intent  to take  steps  at 
Community  level  to curb  imports  if certain  ceilings  are 
exceeded. 
No C 230/16 Official  Journal  of the European  Communities 10. 9. 81 
8. Account  must  be taken  of the disparate  nature  of 
the Community's  trade  defences  against  Japan.  Quotas  or 
similar  restrictions  are at present  applied  by a number  of 
Member  States  vis-a-vis  Japan;  these  arrangements 
operate  in different  ways  and have  different  legal  bases. 
Community-level  harmonization  is necessary,  but this 
must  not involve  any  weakening  of the Community's 
bargaining  position  vis-a-vis  Japan.  Such  harmonization 
should  also  be conditional  upon  a significant  change  in 
Japan's  behaviour. 
9. Import  controls  can only  be a temporary  measure. 
They  should  therefore  be accompanied  in all cases  by 
efforts  by the  sectors  or firms  in question  to make 
progress  in the areas  of adaptation,  restructuring  and 
marketing.  Community  back-up  measures,  for example 
pragmatic  implementation  of the competition  rules,  as in 
Japan  (see  the Committee's  opinion  of 30 April  1981  on 
Community  competition  policy  in the light  of the current 
economic  and  social  situation),  could  provide 
encouragement  for these  efforts  where  necessary. 
Access  to the Japanese  markets 
10. The  dismantling  of tariffs  and  other  barriers 
impeding  access  to the Japanese  market  should  remain 
one of the subjects  to be dealt  with  in any  talks  with 
Japan. 
It is true  that  a number  of measures  have  already  been 
taken  by the  Japanese  to eliminate  the obstacles  to 
imports  incorporated  in regulations.  Some  of the 
difficulties  encountered  by firms  exporting  to Japan  have 
nothing  to do with  government  decisions  but are related 
to the structure  and  the very  nature  of the Japanese 
economy. 
However,  there  are still  real  obstacles  in the form  of 
regulations,  and  the  Community  should  secure  their 
removal.  This  is the case  particularly  in the agro-food 
sector,  where  certain  customs  duties  have  remained  at a 
prohibitive  level  (alcoholic  beverages,  biscuits,  etc.).  In 
the milk  products  and  meat  sectors,  for  example, 
Community  exporters  have  come  up against  barely 
surmountable  obstacles.  In the case  of many  industrial 
products,  the  difficulties  with  customs  clearance, 
approval  procedures  and the tests  to be carried  out locally 
form  quite  distinct  barriers.  The  Community's  efforts  to 
have  them  removed  have  not  produced  any  tangible 
results.  Consequently,  a good  number  of Community 
firms  find  access  to the Japanese  market  barred  or have 
received  little  encouragement  to make  the effort  needed  to 
penetrate  this  market. 
At all events,  the  Japanese  market  calls  for specific 
marketing  methods,  which  Community  firms  will have  to 
adopt,  particularly  in order  to fit in with  the distribution 
system  peculiar  to this  market. 11. The  Council  decision  of 25 November  1980 
concerning  a substantial  increase  in the short  term  in 
Japanese  imports  of Community  products  should  be 
followed  up, i.e. the Community  should  announce  the 
measures  it will  have  to take  if this  increase  dqes  not 
materialize. 
For example,  the Community  could  fix a minimum  ratio 
for the coverage  of Community  imports  from  Japan  by 
Community  exports  to that  country,  to be achieved  by a 
certain  deadline. 
Failing  such  a commitment  by the  Japanese,  the 
Community  should  give  consideration  to making  use of 
the possibilities  offered  by the General  Agreement  on 
Tariffs  and  Trade,  particularly  in Article  VIII  (which 
deals  with  the conditions  imposed  on imports),  in Article 
X (which  provides  for  the  administration  of trade 
regulations  in an 'impartial  and reasonable  manner')  and 
in Article  XXIII  (which  provides  for action  against 
measures  nullifying  or impairing  the benefits  accruing 
under  the Agreements). 
Two-way  flow  of investments 
12. Japanese  industrial  investment  in the Community 
will doubtless  increase  in the coming  years.  This  trend 
should  be  largely  beneficial  to the  Community 
(employment,  technology,  etc.)  if a certain  measure  of 
control  can be exercised. 
There  must,  however,  be no competition  among  the 
Member  States  in attracting  these  investments.  It would 
also be desirable  for  the  Member  States  and  the 
Commission  to agree  on a number  of guidelines,  of which 
Japanese  investors  could  be informed,  so that  they  take 
Community  employment  needs  into  account  in their 
projects. 
The Community  should  make  sure  that  its own  firms 
benefit  on a reciprocal  basis  from  the possibility  of ' 
investing  freely  in Japan. 
Exchange  of technology 
13. Although  it continues  to buy more  patents  than  it 
sells (in 1980,  Japan  bought  $1 300  million  worth  of 
patents,  while  its sales  of patents  totalled  only  $354 
million),  Japan  is - and  will  be increasingly  so in the 
coming  decade  - one  of the world's  major  centres  of 
technical  and  industrial  innovation.  The  Community 
should  therefore  avoid  concentrating  too much  on the 
defensive  aspect  in its relations  with  that  country.  It 
should  follow  Japan's  development  carefully  and expand 
the transfer  of technology  in both  directions. 
10. 9. 81 Official  Journal  of the European  Communities No C 230/17 
It is essential  that  Community  industry  be able  to 
anticipate  the future  direction  of Japan's  industrial  - and 
hence  export  - strategy.  There  are already  contacts  on 
this subject  in Tokyo  between  the industrial  and scientific 
attaches  of the Member  State  embassies.  It is necessary  to 
take a step further  and give  consideration  to the setting-up 
in Tokyo,  at the  Community  delegation  there,  of a 
permanent  Community  industrial,  technological  and 
scientific  observation  post  with  the task  of monitoring 
technical  and  investment  trends  in Japan.  Similarly,  a 
constant  watch  should  be kept  on the development  of the 
economic  and social  situation  there. 
Community  industrial  interest  groups  should  be 
associated  with  this initiative  and more  particularly  with 
steps  at Community  level  to disseminate  and utilize  the 
results  obtained. 
Study  visits  to Japan  by  top-level  scientists  and 
technicians  would  also  be worth  arranging. 
14. The  purchase  of Japanese  licences  and patents  by 
Community  firms  should  be facilitated  by the move 
proposed  above.  It should  thus  be possible  to reserve  the 
trend  of the past  20 years,  during  which  Community 
firms  have  systematically  sold  patents  and  licences  to 
Japan.  Perhaps  it should  even  be recommended  that  any 
major  transfer  of technology  should  involve  not merely  a 
financial  quid  pro quo  but also  an economic  follow-up 
conducive  to a permanent  intensification  of industrial 
cooperation  between  Europe  and Japan. 
15. It  will at all events  be necessary  to keep  transfers  of 
technology  between  the Community  and  Japan  on a 
two-way  footing.  Cooperation  should  therefore  be 
developed  in areas  where  the Community  has a technical 
lead (the  aerospace  industry,  the  defence  industry, 
nuclear  engineering,  the exploitation  of oil and  other 
minerals,  etc.). 
Training 
16. Japanese  businessmen  and  executives  are much 
better  prepared  for  working  in Europe  than  their Community  counterparts  are  for  working  in Japan. 
Looking  ahead,  as many  Europeans  as possible  must 
therefore  be made  aware  of the  importance  of 
cooperation  with  Japan.  In this area  initiatives  could  be 
taken  or developed  by the Community. 
For example,  the  Commission  has  drawn  up"  a 
programme  of long-term  training  courses  in Japan  for 
young  Community  executives  and  technicians.  This 
programme  has the full cooperation  of the Japanese  firms 
that will  be receiving  the trainees.  This  programme 
should  be expanded  (the  number  of trainees  should  at 
least be doubled,  to start  with). 
The Community  should  also  encourage  (a) short-term 
missions  to Japan  with  the object  of making  Community 
economic  and social  interest  groups  alive  to the realities  of 
Japan,  and (b) the teaching  of Japanese. 
Conclusion 
17. Given  the setbacks  that  have  been  suffered  since 
the beginning  of the year  in the Commission's  talks  with 
the Japanese  authorities,  the present  situation  between 
the Community  and  Japan  can  be described  as very 
unsatisfactory. 
In these  circumstances,  the Committee  thinks  that  four 
general  lines  of action  should  be followed: 
— the Community's  political  will vis-a-vis  Japan  should 
be strengthened, 
— the Commission's  standing  with  the  Japanese 
authorities  should  be enhanced, 
— there  should  be negotiations  with  Japan  on specific 
points  determined  beforehand  by the Member  States 
and the Commission, 
— decisions  should  be taken  now  on purely  Community 
measures  that  would  be implemented  if these 
negotiations  did not produce  satisfactory  results. 
Done  at Brussels,  1 July  1981. 
The Chairman 
of the 
Economic  and  Social  Committee 
Tomas  ROSEINGRAVE