COMMISSION OF THE EUROPEAN COMMUNITIES 
COM(95) 73 final 
Brussels, 08.03.1995 
COMMUNICATION FROM THE COMMISSION TO THE COUNCIL 
EUROPE AND JAPAN : THE NEXT STEPS 
'i 
Table of contents 
1. INTRODUCTION 
2. THE CHANGING CONTEXT 
3. ASSESSMENT OF CURRENT RELATIONS 
4. COMPARING THE EFFECTIVENESS OF US AND EU POLICIES TOWARDS 
JAPAN 
5 POLITICAL RELATIONS 
5.1 Proposals 
6. ECONOMIC RELATIONS 
6.1. Trade and Investment Flows 
6.2. Sectoral Market Access Questions 
6.3. Structural Market Access Questions 
6.4. The Trade Assessment Mechanism (TAM) 
6.5. The deregulatory dialogue 
6.6. Investment 
6.7. Trade in Services 
6.8. Export Promotion 
6.9 Industrial Cooperation 
6.10. Research and Development 
6.11 Involvement of Member States and European Business 
6.12 The knowledge imbalance 
6.13 Macro-economic issues 
6.14 Information Society 
6.15 Proposals 
7. COOPERATION IN OTHER FIELDS 
8. CONCLUSIONS 
Annex I Statistics 
Annex II Progress in Market Access in 1993/1994 
Annex Ml The Existing Framework of Commission/Japanese Cooperation 
Communication of the Commission to the Council 
Europe and Japan : The Next Steps 
1. INTRODUCTION 
Japan is changing. A new generation is coming to the fore, questioning the 
country's role in the world following the end of the Cold War. Cultural changes are 
at work as technology and travel increase the impact of external factors in Japan. 
The party political system is being transformed, there is a perceptible shift towards 
consumer Influence and a desire to change the bureaucratic system so that it 
becomes more responsive to the democratic will. There is a new interest in 
deregulation in response to the need to enhance competitiveness so that Japanese 
business can live with the high value of the yen. 
The Union too is changing. The entry into force of the Maastricht Treaty provides for 
the development of a common foreign and security policy. The Union has 
completed the Internal Market and has just been enlarged by the accession of three 
new Member States. It is preparing for EMU and for future enlargement to the 
countries of central and eastern Europe. 
We have much in common. The EU and Japan are industrialised democracies 
facing the challenges of world economic interdependence. We share a key interest 
in a stable, multilateral economic system and in the maintenance of global security. 
Both are developing new approaches to foreign and security policy in which the links 
with the US will remain strong but not omni-present. Each is striving for constructive 
relationships with Russia and China and with different parts of Asia. Both are faced 
by the challenge of remaining competitive in international markets with many new 
competitors. Finally, in different ways, each partner is struggling to develop a 
political role commensurate with its economic weight. 
Internal and international changes combine to provide an opportunity for the EU to 
further develop its relations with Japan. These are based on the 1991 Declaration 
and on conclusions adopted by the Council in June 1992. Policy towards Japan is 
also formulated in the context of the Union's Asia strategy as set out in 1994. It 
combines strengthening of dialogue and cooperation with sustained pressure for 
market opening, which is already producing results. Besides reviewing the 
economic and trading relationship and making proposals for increasing the 
effectiveness of EU policy, including in the fields of cooperation, this Communication 
suggests ways for the Union to develop its political relations with Japan. In doing so, 
the Union can actively support and participate in Japan's greater political 
involvement in global foreign and security policy. 
2. THE CHANGING CONTEXT 
The political upheavals over the last two years in Japan are a reflection of increased 
voter dissatisfaction with the existing system, of the changing perspectives of 
consumers, and of a general questioning about the country's place and role in the 
world after the ending of the Cold War. As a result, the party system is being 
transformed, in the general expectation that new forms of government will be more 
susceptible to normal electoral pressure. There is a greater readiness to take on 
international commitments, a stronger feeling of independence, and a determination 
to see value for money. These changes are taking place against a background of 
rapid change in Asia which has wide-ranging implications for Japan. 
Japan is seeking a greater role on the world stage, commensurate with its standing 
as a major economic power. There is in Japan a new interest in the possibility of 
playing a larger role in Asia. Japan participates actively in regional confidence 
building measures such as the ASEAN Regional Forum, of which the Union is also a 
member. Japan has now clearly and publicly announced its desire to become a 
permanent member of the UN Security Council. This, together with resentment of 
the tactics employed by the United States in pursuit of its bilateral economic 
objectives is leading to a certain reappraisal of relations with the United States. 
On the economic side, the bursting of the economic bubble and the recession, which 
has only recently come to an end, have led to a new outlook on the part of both 
consumer and industry. Value for money, rather than the conspicuous consumption 
of luxury goods, has become the watchword. Price comparisons, particularly with 
price levels in other countries, are increasingly made and publicised. There is 
increasing consumer interest in the availability of cheaper products from abroad. 
Although Japanese industry, particularly in its most competitive sectors, is 
undertaking strenuous efforts, through technological innovations and job-shedding, 
to maintain competitivity at a Yen rate to the Dollar of 100 or even below, there is no 
doubt that the impact of the high Yen has been to force industry to review areas in 
which the totality of production takes place in Japan. One response is to invest in 
offshore production facilities. Japanese industry increasingly accepts the 
globalisation of the world economy, and is now investing heavily in the high-growth, 
lower cost Asian region. In addition, Japanese industry is now becoming more open 
to the possibility of diversifying its supplies of components to include more imports. 
This changed attitude has been one of the factors favouring the expansion of 
industrial cooperation activities between the EU and Japan over the last twelve 
months. 
The above trends have led to a widespread conviction among both consumers and 
industry that the dense network of regulation which exists in Japan maintains both 
consumer prices and industrial costs far higher than is necessary. This has led 
industry and the industry-friendly parts of the Administration to give strong support to 
the Government's deregulation exercise, and the public is being made aware that 
successful deregulation is a means to provide lower consumer prices. This broad, 
support is the best indication that the 5-year deregulation programme to be 
published by the Government by the end of March 1995, can be successfully 
implemented, despite the entrenched opposition of parts of the Administration and of 
certain vested interests. This will, however, require a continued firm commitment on 
the part of the Japanese government. 
3. ASSESSMENT OF CURRENT RELATIONS 
To date the focus of EU-Japan relations has been largely economic. In particular 
relations have been dominated by the EU view that unnecessary and unacceptable 
obstacles hamper access to the Japanese market. At the same time the Japanese 
current account surplus is perceived as excessively high. This has led to strains in 
the relationship. 
There is an undeniable imbalance in the current economic relationship. Since the 
completion of the Internal Market, Japanese exports face almost no structural 
barriers in the world's largest unfragmented market, which is subject to powerful 
rules enforcing competition, Japanese inward investment is welcomed and 
sometimes even subsidised and Japanese companies established in the EU benefit 
fully from national treatment. In contrast, as has been well documented, EU and 
other non Japanese companies face a range of administrative and structural barriers 
when exporting to Japan and also meet obstacles if they attempt to invest directly in 
Japan. 
In recent years the EU has overhauled its approach to these problems, taking into 
account Member State and other experience. It has also made a close study of the 
US approach and its results in order to see whether elements of it could be 
incorporated into the EU approach. Major changes have been made to the way in 
which the EU identifies and tackles obstacles to competing with, and in Japan. This 
relatively new and more focused approach, which is described in the economic 
relations section of this Communication, is now producing tangible results. 
4. COMPARING THE EFFECTIVENESS OF US AND EU POLICIES TOWARDS 
JAPAN 
The US has had since the end of World War II, a developed political and security 
relationship with Japan. It has provided Japan's security guarantees and it can be 
argued that Japan has done much to accommodate US economic demands in order 
not to damage their overall relationship, including the security alliance. In recent 
years the US administration has conducted a publicly aggressive policy of seeking 
specific import targets which it views as commitments and which it threatens to 
enforce under its unilateral 301/super 301 provisions unless they are met. 
The view is sometimes expressed that the EU would get further in its efforts to 
increase its exports to Japan if it was more vigorous and modelled its approach on 
that of the US. The validity of this view needs to be challenged, quite apart from the 
fact that the EU does not have the same all-embracing relationship with Japan and 
that it is opposed to unilateral trade sanctions which it regards as a destabilising 
factor in world trade. 
There is growing recognition internationally (including in the US) that, while the 
aggressive target setting approach may have produced results in the case of certain 
individual products in the past, it is unlikely to do so in the future. This is largely 
because of the changes which are taking place in Japan. Japan is becoming more 
resistant to entering into agreements with the US which are now seen to be 
discriminatory, contrary to the functioning of the market economy and to promote the 
type of government interference in the market which the forces for change in Japan 
are aiming to reduce. Such US demands are increasingly being seen as 
perpetuating an unequal, one way relationship. Finally such unilateral action is 
increasingly being rejected in favour of more impartial market opening processes 
such as GATT/WTO. Therefore despite some success in the past this approach is 
unlikely to be productive in the future and there are signs that the US Administration 
is now reviewing it with a view to change. 
The Commission has monitored all US-Japan agreements closely. It has pressed 
for, and obtained, a system of parallel monitoring to ensure that all market opening 
measures under the US/Japan Framework agreement are taken on an MFN basis 
and are open to EU as well as US companies. There is a unity of purpose between 
the EU and US in seeking further market opening in Japan and there is scope for co­
operation in some areas. However disagreement over how to achieve results has in 
the past led to each of the parties pursuing its own approach. 
The EU strategy of persistent, consistent and global pressure for change is one 
factor which has produced results in certain areas. Through identification of 
obstacles and constant reiteration of complaints regarding contentious issues and 
the setting up of parallel, constructive dialogue, results have been obtained in 
several important areas such as the general rules on public procurement, the 
acceptance of European certification e.g. for textiles inflammability, standards for 
electrical appliances (see Annex II for details). Negotiations have been launched on 
mutual recognition agreements (MRAs) and agreement has been reached on 
improvements with respect to distribution and food labelling. Moreover the 
Japanese have accepted the aim of reducing the current account surplus 
substantially as a proportion of GDP. This Communication argues in favour of re­
inforcing the economic approach on economic relations which has already shown it 
can produce results. 
However the effectiveness of the Union's action would be greatly enhanced if 
Member State contacts, whether at working or Ministerial level, could be effectively 
coordinated with those of the Commission. It does not assist the credibility of EU 
action in Tokyo when the Community and its Member States make parallel 
demarches on subjects linked to market penetration, such as the Japanese 
deregulation programme. A better approach is to harness both Commission and 
Member State resources with the aim of pursuing a clearly-defined set of goals 
through coordinated action. The fact that Member State companies are in 
competition with each other for contracts and orders in Japan should not detract 
from the value of a co-ordinated upstream approach. A fragmented, national 
approach allows Japan to play one Member State off against another and seriously 
weakens the image of the Union, thus reducing its ability to deliver the results sought 
by all. Member States should continue their national efforts but these should be 
developed in coherence with the wider EU framework and all Ministerial and 
administrative approaches should have an EU as well as a national component. 
The Member State embassies in Tokyo have accumulated considerable expertise in 
trade matters. Together with the Member States the Commission will seek ways of 
exploiting this knowledge pool for the collective benefit. 
5. POLITICAL RELATIONS 
The 1991 Declaration sets out the principle of integrated dialogue with Japan. It 
commits the parties to "firmly endeavour to inform and consult each other on major 
economic issues, which are of common interest to both parties, be they political, 
economic, scientific, cultural or other". However, the political dimension of the 
relationship has to date been under-developed. This reduces the ability of both 
partners to achieve their aims. In practice it is not an option to concentrate on one 
area and neglect others. The EU will not improve its own image in Japan until it is 
seen to have political weight to match its position as an economic and technological 
power. 
It is clear from their common interest in a stable and multilateral world order that a 
strengthened Japanese world role could be in the interest of the EU since on many 
occasions they could support each other in international fora. Even where policy 
conclusions differ, dialogue will help to increase understanding and perhaps narrow 
differences. 
Although meetings at the level of Foreign Ministers and Political Directors have 
taken place on a regular basis, bilateral summits have been held under 
inappropriate conditions or not at all, and there have been long delays in organising 
Ministerial meetings with the Commission. On substance, the dialogue has hardly 
proceeded beyond the level of exchanges of views and information and there have 
been few examples of concrete cooperation. 
Japan is now showing greater willingness to assume international political 
responsibilities commensurate with its economic power. For example, Japan has 
responded to UN requests by sending military and civilian personnel to Cambodia 
and Mozambique. It has sent a contingent to Rwanda and has been active on 
regional issues of global concern such as North Korea's nuclear status. Japan has 
observer status in the OSCE and participates in the G24. Japan has become the 
largest international donor of humanitarian aid after the EU and its Member States. 
In an expanded political relationship the Union can encourage Japan to continue 
and expand its increasing role in international affairs. There are many areas where 
the Union and Japan could co-operate more fully: disarmament and non-
proliferation, conflict prevention and resolution, development and humanitarian 
assistance, aid to the countries of central and eastern Europe as well as the NIS. 
So far the Union and Japan have taken one political initiative together in the UN to 
establish a register of Conventional Arms, with the aim of improving transparency of 
arms transfers. 
5.1 Proposals 
The considerable potential of the structures provided under the 1991 Declaration 
should now be fully exploited. This will require political will on both sides as well as 
reinforcement of current procedural arrangements. 
1) The European Union should commit itself to conducting with Japan a political 
dialogue taking full advantage of Japan's greater readiness to take on 
international commitments. To this end it should engage in discussions with 
Japan to 
(a) identify concrete areas for cooperation in the political field. 
(b) exchange regular and privileged information regarding the Union's 
and Japan's political discussions. 
(c) institute regular working-level contacts between officials to prepare 
meetings at Political Director and Ministerial level; 
(d) clarify the principle of annual EU-Japan summits being held 
alternately in Japan and in Europe (thus removing an ambiguity which 
has recently made it difficult to agree summit dates and venues), and 
agree that the dates for each summit will be agreed at the previous 
summit. 
2) In the context of an agreement on the future restructuring of the UN system 
including an enlargement of the Security Council, the Commission considers 
that the Japanese bid for a permanent seat on the Security Council should be 
supported by the EU. 
6. THE ECONOMIC RELATIONSHIP 
6.1. Trade and Investment Flows 
Japan is the world's third largest economy after those of the EU and the US and is 
thus potentially the Union's second largest market. 
However, by preventing imports reaching an appropriate level, market access 
obstacles in Japan artificially increase the discrepancy between national saving and 
investment. This leads to the persistence over time of a high Japanese current 
account surplus. In the years 1984-1994 the surplus reached peaks of 4.2% of GDP 
in 1986, then 3.2% in 1992; it is estimated to have since fallen to 2.7% in 1994 (see 
statistics in Annex I) and is likely to come down to around 2.5% in 1995. 
This in turn has contributed to the considerable appreciation of the Yen in the first 
half of the nineties which has reduced Japanese export competitivity. The result is 
less trade, to the detriment of Japan and its trading partners. European Union 
policies should aim to deal with the problem of the surplus through increased trade 
generated by the removal of market access obstacles. 
The EU current account deficit with Japan reflects Japan's overall position vis-à-vis 
the rest of the world, and remains unacceptably high. Nevertheless certain positive 
elements exist, or have developed recently, which suggest that a more positive trend 
may be emerging: 
- the EU surplus on trade in services (including investment income) is steadily 
rising. The latest available figures, published by EUROSTAT, for 1992, show a 
surplus of 10.5 billion ECU; 
- the EU deficit on trade in goods decreased by 15.6% in 1993, and is estimated to 
have decreased by a further 18% in 1994 to a value of 18.5 billion Ecu. While 
this decline was due in 1993 largely to a fall in Japanese exports as a result of 
recession in Europe, the improvement in 1994 has been driven by a 15% 
increase in EU exports. It is of particular interest that this increase has been 
achieved across a broad range of export products and not concentrated on 
traditional luxury items. The figures confirm the growing interest of Japanese 
business in buying intermediate and capital goods from Europe (and, incidentally, 
confirm the correctness of emphasising these sectors in the Gateway to Japan 
export promotion programme). 
Finally, latest figures show no change in the very large imbalance between EU 
investment in Japan and Japanese investment in Europe (see Annex I), even if 
Japanese investment in Europe has recently levelled off. 
6.2. Sectoral Market Access Questions 
Steady if unspectacular progress has been made in eliminating specific obstacles to 
market access in Japan (see Annex II). This progress has resulted from the 
combined pressure of the EU, the US and other third country partners, and forces in 
favour of change, particularly deregulation, in Japan. 
Depending on the nature of the problem, different forms of action are available to 
the Community: 
- WTO dispute settlement. Up till now very few issues have been deemed likely to 
give rise to a successful panel, a notable exception being liquor tax 
discrimination. Nonetheless the Commission will continue to pursue violations of 
WTO rules wherever they arise, e.g. consideration is currently being given to the 
possible discriminatory impact of the US/Japan agreement on mobile telephones 
(Motorola); 
- multilateral negotiation within the WTO. This route has proved only moderately 
successful, but the implementation of Uruguay Round results can be expected to 
clarify certain rules (e.g. on quota licences) and remove obstacles particularly in 
the areas of government procurement, standards (e.g. sanitary and 
phytosanitary), and in some areas of services; 
- the regulatory dialogue (see below); 
- bilateral pressure. The EU supports the disciplines of the multilateral trade 
regime and does not therefore attempt to apply pressure on Japan through 
threatening illegal trade sanctions. It seeks to explain convincingly why market 
access measures are also in Japan's own direct economic interests. Increased 
imports can benefit the consumer and lower the costs of intermediate 
manufactured products and services to industrial buyers. It also emphasises that 
allowing bilateral problems to fester will inevitably have an effect on other 
elements of the relationship. 
The Commission has now developed, with the full cooperation of the Member States 
and their representatives in Tokyo, as well as the European Business Community 
and industry federations, a comprehensive working document designed to serve as 
a mechanism to identify and keep track of all obstacles impeding EU exports This 
provides, in each case, a description of the problem and identifies the action to be 
requested of the Japanese government. 
6.3 Structural Market Access Questions 
Access to the Japanese market is hampered not just by sectoral obstacles which are 
relatively straightforward to identify, but also by more deep-seated structural 
obstacles, e.g. the Keiretsu phenomenon. 
These are related to specific characteristics of the Japanese economy and society. 
In some cases the appropriate European response can only be to understand these 
differences and attempt to take account of them in doing business with Japan. In 
other cases, where the practices concerned are inimical to the operation of an open, 
international economy, the EU must insist that these practices be changed. 
One example is the field of competition policy. This is an area in which Japanese 
attitudes are changing and where dialogue between policy experts from the 
Commission, which has many years of experience of an active policy for promoting 
competition, and their Japanese counterparts in the Japan Fair Trade Commission 
(JFTC) can help to catalyse change in the right direction. One particular area of 
emphasis is anti-competitive practices in the distribution sector which make market 
penetration by imports difficult. In conformity with the Council's 1992 conclusions, 
the Commission has now established a genuine dialogue with the JFTC (see 
Annex III) whose position within the Japanese system has also been strengthened. 
This can provide a good base for pushing for more open competition on the 
Japanese market. 
European companies have traditionally identified the activities of the keiretsu, 
closely-knit horizontal and vertical groupings of Japanese companies, as an obstacle 
to open competition in Japan, but the EU has never defined a clear objective in 
addressing this issue. It is certainly true that Japanese business is dominated to a 
very considerable extent by groupings of companies bound together by long-term 
business relationships, often but by no means always underpinned by cross-
shareholding. These groupings are effective in allowing new business to be 
developed in innovative fashion among their members. They are, however, anti­
competitive to the extent that they dominate particular markets and exclude 
newcomers, whether Japanese or foreign. The changing economic circumstances 
in Japan are also bringing about a change in the keiretsu, especially in the vertical 
supplier relationship. European industry should be on the look-out for new business 
opportunities, especially through industrial cooperation. The Commission will 
continue to aim at the increase of competition and the elimination of collusive 
practices in Japan. If these efforts do not achieve rapid enough progress, the 
Commission will explore ways of facilitating the integration of European companies 
into existing networks including the Keiretsu. 
10 
6.4. The Trade Assessment Mechanism (TAM) 
The TAM has now been set up as a regular forum for analysis with Japan of trade 
issues, in conformity with the Council conclusions of June 1992. It has proved 
useful in analystng trade issues in terms of their relative economic importance to the 
Union, putting the discussion of these issues on an objective basis and preparing 
the ground for political decisions taken in other fora e.g. the extension of the 
EU/Japan industrial cooperation programme m 1994, the launching of MRA 
negotiations in November 1994, the coordination of EXPROM/IMPROM 
programmes, and the abolition of certain specific market access obstacles (see 
Annex II). 
6.5. The regyjafory dialogue 
The Japanese government now appears to be serious in wanting to make 
substantial progress on deregulation, in spite of the opposition it will certainly meet 
from interested parties. Industry is pressing for significant movement, and a 
campaign has been launched to make consumers aware that successful 
deregulation means lower prices for them. 
The Community succeeded in 1994 in inaugurating a continuing dialogue with Japan 
on deregulation questions. This should allow EU expertise on regulation, acquired 
particularly through the Single Market exercise, to feed into the Japanese 
programme. The Commission has already transmitted to the Japanese government 
a request list to assist in the preparation of the 5-year programme to be announced 
at the end of March 1995. It will monitor closely the 5 year programme and the 
annual reviews of it over the period 1995-2000. It will insist that these contain clear 
and unequivocal commitments, timetables for implementation and early and rapid 
implementation of important measures (front loading). 
It will be important for the Community to make full use of this new opportunity for 
dialogue throughout the duration of the deregulation programme, which it is the 
intention of the Japanese government to subject to a process of continuing 
adaptation. 
It will also be appropriate to build on the climate of mutual confidence which has 
been established to develop a programme of regulatory cooperation under the 
existing dialogue structures (Ministerial, High Level Consultations) to ensure that 
future proposals for regulation by the two sides avoid the creation of new obstacles 
to trade. 
6.6. Investment 
The fact that there is far more Japanese investment in the EU than vice versa is in 
part explained by the existence of obstacles to foreign investment in Japan. The 
resistance of the Japanese system to inward investment, especially through mergers 
and acquisitions, prevents EU companies from having access to the Japanese 
market. It may also mean that EU companies do not enjoy the advantage of 
positioning on the Asia-Pacific markets conferred by a solid presence in Japan. 
H 
This issue can be tackled both bilaterally and multilaterally. The Union will continue 
to be open towards and to encourage inward investment which it will seek to 
integrate fully into the local economy. It will look to Japan to work together to secure 
similar openness and integration for EU investment in Japan. As part of its 
submission on deregulation the Commission has requested progress in the areas of 
competition law (e.g. relaxation, increased transparency and streamlining of the 
regulations and laws concerning mergers and acquisitions), accountancy (adaptation 
of Japanese accounting standards to international standards, improvements in the 
regulations concerning the status of shareholders with companies). These areas will 
be monitored as part of the wider deregulation follow-up exercise. 
Foreign direct investment is an integral part of the world wide trend towards the 
creation of a truly global system of markets and production. The Commission 
believes that a world wide legal framework for such investment now needs to be 
established. The introduction of transparent, coherent and liberal multilateral rules 
will also enable progress to be made with regard to obstacles to inward investment 
in Japan. 
6.7. Trade in Services 
Statistics on the EU's balance of payments with Japan show that its deficit on trade 
in manufactured goods has traditionally been partly compensated by a surplus on 
services (including investment income) (see Annex I). 
The area of services is one in which the EU is not only the leader worldwide but also 
remains highly competitive vis-à-vis Japan. Nevertheless, very little attention is 
given to services in public discussion of EU/Japan relations. This does not reflect a 
lack of attention to market access issues in the Community's dealings with the 
Japanese government, in which financial and legal services have been among the 
most prominent sectors in the recent past. Rather it reflects the poor state of 
bilateral EU/Japan statistics in the field. Not only are overall balance of payments 
statistics not available until well over a year after the event, but they are, for Japan, 
also not available broken down by individual sector, except for the two classical 
sectors (in terms of balance of payments accounts) of tourism and transport 
(although more detailed estimates are available from the EU side). In addition, 
Japanese figures for the same flows differ greatly from EU figures, particularly with 
respect to income from investments on which they suggest a Japanese surplus. 
If the EU is to give this sector the attention it deserves in its relations with Japan, it 
will therefore have to begin by improving the availability of statistics. A specific 
EU/Japan exercise is likely to be long and difficult and will require close cooperation 
from Japan. The Commission will study how best an improvement can be brought 
about, with a view to proposing appropriate measures to the Council. 
In the meantime, the Commission intends to consult widely within service sectors in 
Europe with a view to proposing a new Export Promotion Programme designed to 
help sectors which are competitive in other industrialised countries but do not 
perform so well in Japan to make the most of Japanese market opportunities. There 
is also agreement in principle to extend the TAM exercise to services, which will 
assist this approach. 
12 
6.8. Export Promotion 
The EU is faced with three serious problems within Europe when promoting its 
exports to Japan. 
First, insufficient European companies are aware of the importance of the Japanese 
market, both in terms of its size but also because of the advantages it brings to a 
company which successfully establishes a presence on it. Much current attention 
focuses on the future market opportunities to which current rates of growth in other 
Asian countries such as China may lead. The fact remains that Japan's GDP is 
currently some ten times that of China and the Japanese market represents perhaps 
the largest single homogeneous market for EU products (the US market being much 
more fractured and heterogeneous). In addition European firms which secure a 
foothold in Japan expose themselves to a climate of creativity and product 
innovation from which they can derive an increased competitive edge in other world 
markets. The development of relations with Japanese companies itself also 
provides an effective route into many Asian markets into which they are currently 
expanding. Too few European companies are aware of these opportunities, which 
need to be explained to them. 
Second, the peculiarities of the Japanese market are such that a specific 
programme devoted to assisting exporters to become familiar with them and to learn 
how to operate successfully in a Japanese business environment forms an essential 
ingredient of commercial policy towards Japan. 
Third, the level of entry costs into the Japanese market is high and thus the benefits 
to be gained through joint efforts by European companies are considerable. This 
leads to considerable economies of scale for many sectors if an EU-wide market 
penetration effort is undertaken. 
For all these reasons, a significant EU budget has been devoted to the promotion of 
exports, particularly from small- and medium-sized companies, to Japan for many 
years. Much of it goes to the long-running and successful ETP programme. In more 
recent years the Commission has developed, in close cooperation with 
representatives of Member State export promotion authorities, cost-effective, 
focused procedures for introducing European companies to the Japanese market in 
its "Gateway to Japan" programme. The time has now come to confirm the 
correctness of this approach. The Commission intends to propose, in parallel with 
this Communication, a Council Regulation providing the programmes promoting 
exports to Japan with a firm, legal basis. 
In 1995 the budget devoted to export promotion to the Japanese market has, for the 
first time since it was heavily cut in 1993, again reached the same nominal level as 
in 1992. Within this time period the Yen/ECU rate has gone from 162,01 in 
January 1992 to 125,62 in January 1995. The large share of EXPROM activity 
which takes place in Japan, including the working expenses of the ETP Programme, 
now costs correspondingly more in terms of ECU. In other words, at a time when 
the Union is attempting to reinforce its policy towards Japan, the real level of its 
export promotion activity is lower than for many years. The Commission will 
examine the possibility of requesting a substantial increase in ECU terms in the 
Japan-EXPROM budget for 1996, taking into account the overall constraints on the 
external chapter of the budget. 
13 
The effectiveness of the Commission's EXPROM activities, particularly its "Gateway 
to Japan" programme, has been further enhanced by the conclusion of an 
administrative arrangement with MITI, which has set up a structure to ensure that 
Japanese import promotion programmes effectively support and reinforce the EU's 
EXPROM activities. 
6.9 Industrial Co-operation 
The same aim, of improving European industry's knowledge of and ability to seize 
market opportunities in Japan is pursued by the Industrial Cooperation Programme, 
jointly run by the Commission and by MITI, which has been considerably expanded 
in 1995. 
One of the first major examples of industrial co-operation between the EU and 
Japanese industries is the EU - Japan Centre for Industrial Co-operation in Tokyo, 
set up in 1987. Its objectives are to promote successful business relations between 
European and Japanese companies by making selected European senior 
executives fit to enter into industrial co-operation activities with Japanese 
corporations in and outside Japan. It also provides European businesses with 
detailed information on Japanese market conditions and with assistance and 
contacts in Japan. After the approval of an independent statute and its own financial 
regulation in 1994/95, the possibilities for additional activities of the Centre in the 
field of EU - Japan industrial co-operation are currently under study. Their 
successful implementation will depend on the political flexibility of both sides as well 
as on the availability of financial resources. 
A range of industrial co-operation programmes in specific fields have been 
developed and supported by the Commission and MITI since 1992. These activities 
have covered automobile parts and components, consumer electronics and 
computers and business machines. The results of these programmes have been 
very positive and, under the general framework of the EU-Japan Industrial Policy 
and Co-operation Dialogue, the Commission and MITI have jointly agreed to expand 
these activities to other sectors. 
Other activities, such as the Human Resources Training Programme and Fellowship 
programmes aimed at the training of European industrialists and scientists, 
contribute to reducing the cultural gap and help raise Europeans' knowledge of 
Japan towards the very high level of understanding that Japanese industrialists and 
scientists have of Europe. 
6.10 Research and Development 
Co-operation in R&D has proved to be a powerful catalyst for further industrial co­
operation. Japan is making a determined effort to play an important role in 
international science and technology. Specific actions have been taken to promote 
this policy through funding collaboration and opening the domestic science base to 
foreigners. However significant barriers remain. Collaboration with the EU has been 
at a relatively low level. 
Barriers to collaboration are often rooted in concerns about industrial 
competitiveness which also encompass intellectual property rights issues. Closely 
related are barriers arising from restrictions on R&D policies. Broader policy issues 
such as non-proliferation, trade friction and regulation also play a role. There can be 
mistrust of the other party's motives. Cultural and linguistic barriers have to be 
overcome. 
14 
The International Co-operation Programme ("Activity 2") of the Fourth Framework 
Programme supports scientific and technological fellowships given to young 
European researchers who study in Japan, in order to set the base for the 
development of science and technology co-operation. Furthermore, participation by 
Japanese partners in some of the specific programmes of the Fourth Framework 
Programme is now possible on a project by project basis. 
The recent discussions in the context of the Global Information Society have 
demonstrated that both the EU and Japan see opportunities for advancing their 
relations through increased co-operation in R&D and more specifically in R&D for 
information and technological technologies. 
6.11 Involvement of Member States and European Business 
It has become abundantly clear since the last Council debate on Japan, that the 
resources available to the EU and its Member States in dealing with Japan could be 
better coordinated and the implementation of the Union's policy towards Japan 
made more efficient and more effective. 
With this in mind, the Commission needs to have close co-operation with 
representatives of Member States. The 113 Committee will retain as regards 
commercial policy questions the role conferred on it by the Treaty, and the 
Commission expresses the wish that adequate time may be found for regular 
discussion of questions related to Japan. In addition, the Commission values the 
opportunity for day-long, in depth discussion of Japan policy in its Japan Experts 
Group. In order to make this more productive, it intends to hold meetings of this 
group at more regular intervals (at least three times a year) and to finance on a 
regular basis the participation of two experts from capitals, in order to benefit from 
the Member States' full range of expertise and their experience of contacts with 
Japan, even when this is spread across more than one Ministry. Finally, the 
Commission attaches importance to benefiting from input from the Member States' 
Embassies in Tokyo, which should be kept closely in touch with the development of 
thinking in the Community Institutions. 
The Commission also intends to remain in close contact with European business, 
both directly and through representative organisations. It will continue to welcome 
information from European business on any specific problems encountered 
regarding access for goods and services to the Japanese market. 
6.12 The Knowledge Imbalance 
Many more Japanese businessmen have acquired knowledge and experience of 
Europe than vice versa. This knowledge imbalance favours Japanese companies 
selling in Europe relative to European companies selling in Japan. The Commission 
will therefore continue to encourage and promote, wherever possible in cooperation 
with the Japanese government, periods of stay by current or future European 
businessmen in Japan. The following programmes already exist: 
the Commission's Executive Training Programme; 
the Commission's Science and Technology Fellowship Programme; 
15 
the Japanese Government's Manufacturing Technology Fellowship Programme; 
JETRO's Export to Japan Study Programme; 
Japan/EU Industrial Cooperation Centre programmes. 
These existing programmes could usefully be supplemented by initiatives to further 
promote the teaching of Japanese and an understanding of Japanese culture, law 
and business practices in the EU. Institutions offering such courses could be 
brought together in a network. The current level of exchange visits by Europeans to 
Japan should be brought up to the current levels of US-Japan interchange. In this 
way a start can be made on remedying the lack of mutual understanding between 
Japan and Europe, which was identified in the Asia strategy paper as a general 
problem in EU relations with Asia. 
6.13 Macro-Economic Issues 
The bilateral EU-Japan dialogue on macro-economic issues needs to become more 
intense and systematic; especially in the context of moves towards EMU. Specific 
issues such as the macro-economic effects on Japan and its partners of issues such 
as deregulation, the impact of an ageing population should be pursued and the 
dialogue extended to other areas. 
Finally greater effort must be made in multilateral fora to co-operate with Japan to 
achieve common aims, such as burden sharing in macro-financial assistance, 
reducing the US budget deficit. This will require effective co-ordination of Member 
State positions in some of these fora. 
6.14 Information Society 
The realisation of the global information society is subject to significant government 
debates and projects both in Japan and in Europe. Through the established 
dialogue on communication related issues, first exchanges have taken place 
between Japanese and European actors (private and from the public sector) to 
compare positions on important related issues (such as deregulation, new 
regulatory aspects, market access problems, the development of global 
applications, standardisation and interoperability of global networks etc.). Both 
Japan and the EU have signalled interest in global pilot projects recommended by 
the G7 conference held in Brussels on 25-26 February. 
16 
6-15 Proposals 
Although the general thrust of policy on economic relations should be maintained, its 
implementation needs to be reinforced. The Commission will continue to use all 
contacts with Japan in a systematic way to press for further market opening and 
removal of all obstacles to trade. EU/Japan cooperation must also be expanded and 
reinforced. There is a general need to render more visible to the Japanese public in 
general, but also to politicians and the administration, the specific nature and the 
intensity of the EU's relations with Japan. As indicated in the Communication on a 
new strategy for Asia, an information strategy for Japan is under preparation in the 
Commission. 
The Commission also proposes to 
make full use, where appropriate, of the WTO; 
monitor closely the way in which access to procurement opportunities in Japan 
is guaranteed in accordance with the Japanese offer under the GATT 
Government Procurement Agreement; 
carry forward discussions under the TAM, with a view to increasing its 
contribution to the resolution of market access problems and to trade creation; 
develop the deregulatory dialogue into an effective instrument for the continued 
exchange of views with Japan on regulatory questions in general and the 
Japanese deregulation programme in particular; 
draw up an inventory of the most important measures which would improve the 
climate for foreign investment in Japan, working closely with the European 
Business Community in Tokyo, and seek to achieve these through existing 
dialogue mechanisms; 
use the existing dialogue on competition policy to push for more open 
competition on the Japanese market; 
encourage the development of relations between European industry and 
Japanese industry, including with the keiretsu; 
in order to develop the possibilities offered by the services sector, the 
Commission will examine the potential for increasing European exports of 
services to the Japanese market, for improving the data available on these 
exports, and on this basis propose a new Export Promotion Programme in this 
area; 
continue and consolidate existing export promotion programmes (ETP and 
Gateway to Japan) and within the overall constraints of the budget will examine 
the possibility of requesting a substantial increase in the budget available for 
them from 1996 onwards; 
maintain, reinforce and expand existing industrial cooperation programmes; 
use the Fourth Framework Programme to increase technological co-operation 
with Japanese companies and universities, for example in the area of anti-
seismic research or technologies and training linked to the establishment of the 
global information society; 
17 
propose to Member States and industry integrated campaigns with regard to 
specific items on the market access agenda, coordinated in advance so that 
the maximum effectiveness is obtained from Community solidarity; 
make the maximum possible use of the expertise available in the European 
Business Community in Tokyo; 
develop better links with business in Europe; 
coordinate Member-State and Commission resources in Tokyo, in order to 
strengthen European cooperation with Japan and to monitor changes in Japan 
e.g. in the field of deregulation; 
promote the creation of a network of academic institutions in Europe which 
have established programmes allowing students to graduate with an economic 
or business qualification combined with a first-hand knowledge of Japan; 
invite Member States to establish an inventory of their activities designed to 
encourage intellectual and cultural exchange between Europeans and 
Japanese, and on this basis identify areas in which a European programme 
could be a useful complement to Member State activities; 
examine with the Japanese government how the current level of exchange 
visits by Europeans to Japan can be increased to levels nearer those of 
Japanese visiting Europe and Americans visiting Japan; 
examine whether a common programme could be developed to supplement 
and increase the effectiveness of Japanese language teaching throughout the 
Union; 
propose appropriate funding for the development of the above activities, within 
the limits of the available resources. 
In addition, the Presidency and the Commission should propose to the Japanese 
authorities the organisation of a major conference in Tokyo on EU-Japan 
cooperation, bringing together the representatives of government, academics and 
the private sector, in which it is hoped that Member States will be strongly 
represented from their capitals. Such a conference would highlight existing Member 
State bilateral programmes and identify areas in which EU activities should be 
strengthened or launched. 
7. CO-OPERATION IN OTHER FIELDS 
Since the adoption of the 1991 Declaration a broad range of regular meetings has 
been instituted between the European Commission and the Japanese government, 
which provide a framework for policy dialogue and should now be built upon to 
develop concrete cooperation based on specific projects (see Annex III for a 
description of the existing framework for dialogue). Such projects should be 
identified, inter alia, in the following areas: 
WTO activities; 
18 
development aid and humanitarian assistance projects; 
environment, including environmental technology; 
the adaptation of society to labour market, demographic and technological 
developments; 
Research and Development; 
business cooperation in the Asia-Pacific region; 
information society; 
education; 
culture. 
9. CONCLUSIONS 
Developments in the EU and Japan call for a review of the relationship. This 
Communication argues in favour of increasing the weight of the EU-Japan political 
relationship both for its intrinsic merits and as a counterweight to US influence. 
Japan will seek an increasing role in international affairs - the EU can either 
welcome and support this process and thereby seek to exert some influence over it 
or it can be passive, watching it happen without any attempt to shape it. The 
Commission recommends the former option, believing that the Union has much to 
gain from supporting the emergence of a new Japan which will be a partner working 
towards its own goals of global peace and security and an open, multilateral trade 
environment. A stronger political relationship will also have its effect on the bilateral 
economic relationship. It will help to reduce current trade tensions and to identify 
ways in which co-operation can replace conflict. 
In the light of the foregoing the Council is invited to: 
- adopt the approach set out in this Communication; 
- decide to deepen the political dialogue with Japan, as proposed in section 5; 
- reinforce its approach on economic matters, as proposed in section 6.11, and in 
particular to carry forward the TAM, to develop the dialogue on deregulation, 
competition and industrial co-operation, to explore ways of improving the climate 
for EU investment in Japan and relations between EU and Japanese industry 
and to develop ways of reducing the knowledge imbalance; 
- invite the Commission to pursue the approach outlined and where appropriate to 
bring forward new proposals, including those relating to the 1996 budget within 
the limits of the available resources. 
19 
EU/JAPAN: MAIN ECONOMIC INDICATORS 
GROSS DOMESTIC PRODUCT 
(Billion ECU) I 1993 I EU.,=1 OO&llii 
Japan 3617.5 67.4 
EU 5365.8 100.0 
USA I 5417 3 | 100.9 
Source: European Commission Services 
GDP GROWTH 
ik1985:; msm msm gl::9'8.8.l W9Q® mm mm 1992 1993- • 1994Q 1995('^|i1.996(^ 
Japan 
EU 
USA 5,0 
2,4 
5,0 2,6 
2,8 
2,6 4,1 
2,9 
3.1 6,2 
4,2 
3,9 4,7 
3,5 
2,7 4,8 
3,0 
0.8 4,0 
1.5 
•1.1 1.3 
1,1 
2,6 0,1 
-0,4 
3.0 0,7 
2.6 
3.9 2.2 
2.9 
2.7 2.7 
3.2 
2.3 
Source: European Commission Services 
EU EXPORTS IN 1993 
(Billion ECU) . I Value |% of total EU exports 
EUexp to Japan 22,7 4,66% 
EU exp to USA 85J | 17,48% 
Source: Eurostat 
EU IMPORTS IN 1993 
(BillionECU) iValué? %i^|^ta|ËU|Iprta 
EUimp from Japan 
EU imp from USA 47,2 
83.7 9,74% 
17.27% 
Source: Eurostat 
JAPANESE CURRENT ACCOUNT SURPLUS AS % OF JAPANESE GDP 
1:985^ 1986; :1987 1:1988: 
3.6% 4.2% 3.6% 2.7% 
Source: European Commission Services 1:9891! mm mm 1992 1993 1.994Ç) 1995(^^1996(") 
2.0% 1.2% 2.2% 3.2% 3.1% 2.7 % 2.5% 2.5% z m x 
Page 1 
r 
EU/JAPAN: MAIN ECONOMIC INDICATORS 
JAPANESE TRADE WITH THE EU 
(Bil!ibl^E0U)i|IiI|i| mm 11:9861 Msm mm m&m mm IÎMI §1:9921! ;1993f i;1994 
_E^ttgt6JtheîE,U^P 
ÏSiSiïiiilMIBll 26.23 31.17 32.66 39.66 43.47 42.04 47.75 48.12 48.22 48,31 
3,10% 18,83% 3,21% 21,43% 9,61% -3,29% 13,58% 0,77% 0,20% 0,18% 
16,19 18,41 15,39 20,39 25,54 27,52 25,66 24,06 25,74 29,82 
5.00% 13,71% -16.40% 32,49% 25,26% 7,75% -6,76% -6.24% 6,98% 15,85% 
JapahlsiTrade Balance; 10,04 12,76 17,27 19,27 17,93 14,52 22,09 24,06 22,48 18,49 
annual % increase 2,03% 27,09% 35,34% 11,58% -22,28% -19,02% 52,13% ,8,92% -6,57% -17,75% 
Source: Japan's Ministry of Financ : the figures shown are published in US $ and have been converted using average annual 
USS/ECU exchange rates 
EU/JAPAN TRADE IN SERVICES (billion ECU) 
Services :1:98:5I mm mm mwm$&Ê$$sm wm® msm msm mm wsm 4.94 
3.10 4.85 
3.05 5.41 
3.13 6.46 
3.96 7.76 
4.37 7.81 
4.52 7.58 
4.71 9.37 
5.72 na 
na na 
na 
Et-iB'âlàlittel 1.84 1.80 2.28 2.50 3.39 3.29 2.87 3.65 na na 
I n vestment i n come; msm ii986| mm m&SÊÊÊÊÊmm mm mm mm mm mm 9.40 
6.08 9.99 
6.97 11.34 
8.23 16.34 
11.10 24.47 
16.26 25.14 
16.80 29.01 
19.72 22.45 
15.57 na 
na na 
na 
E01Bâià1ffi 3.32 3.02 3.11 5.24 8.21 8.34 9.29 6.88 na na 
Source: Eurostat 
YEN/ECU EXCHANGE RATE 
19851 .1986) 11987* mm 1989 1990 ,1991, 1992 iS9;3! i.994;i 
180.56 165.00 166.60 151.46 |51.94 183.68 166.49 164.21 130.15 121,32 
Source: Eurostat 
Notes: (*) EC Estimate 
(••) EC Forecast 
r* Page 2 
EU/JAPAN: MAIN ECONOMIC INDICATORS 
JAPANESE DIRECT INVESTMENT OVERSEAS 
(million US $) 
FY 1993 Cumulative total 
to 31/03/94 
EU(1ip 7.111 77.782 
USA > • ] 14.725 177.098 
Note: EU (11) includes: UK, Netherlands, Germany, Luxemburg, France 
Spain, Belgium, Italy, Ireland, Portugal, Greece 
Source: Japan's Ministry of Finance 
FOREIGN DIRECT INVESTMENT IN JAPAN 
(million US S) 
FT 1993 Cumulative total 
to 31/03/94 
EU (9) 539 5.635 
USA 930 12.174 
Note: EU (9) includes: UK, Netherlands, Germany, France, Ireland, Belgium, 
Denmark, Luxembourg, Italy 
Source: Japan's Ministry of Finance 
Page 3 
Market Access Problems in Japan 
Progress made since January 1993 Annex II 
i\ 
Market Access Problems in Japan 
Progress made since January 1993 
The consistent and global approach followed with regard to Japan (constant 
reiteration of contentious issues, parallel to setting up constructive and hands-on 
dialogue in several important areas), combined with the internal Japanese 
pressure for reform and better integration in the world economy have produced 
the following results since January 1993: 
Public procurement. In the area of public procurement the Japanese 
government announced in January its Government Action Plan for 
procurement, which was due to be implemented from April 1st onwards. This 
plan guarantees clarification of procedures, provides for rules against bid-
rigging and also guarantees a right of complaint before an independent 
review body in case a bidding company feels discriminated. However, its 
practical implementation, in particular at the local government level, is 
..-unclear * • • "••• , >' 
The Administrative Procedure Law, which came into effect on October 1st, is> 
designed to simplify and clarify administrative procedures and to provide for 
obligations such as the necessity to indicate time frames for processing 
applications, or to put down administrative guidance on paper. It is in line 
with the general line concerning the planned deregulation package, a main 
part of which is the streamlining and improvement of administration 
procedures. If the law is fully implemented it will respond to our long­
standing complaint that administrative guidance by Ministries is non-
transparent and obstructive. However, the law appears to have some 
loopholes. 
À long-standing EU request has been the reinforcement of the competences 
and the action undertaken by the Fair Trade Commission. The personnel 
resources of the FTC have been raised by 8% since last year and by a total 
of 60% with respect to 1989 levels. Recent changes jn policy of the FTC 
concern administrative guidance providing a stricter interpretation of the Anti-
Monopoly Act, and stricter guidelines concerning Public Tendering Deadlines. 
The FTC has also completed two studies on anti-competitive practices at the 
request of the Commission. 
In the area of foreign lawyers, long insistence by the EU on liberalisation of 
the existing legal situation has borne fruit; foreign legal consultants in Japan 
may now use their home firm name (be it with a Japanese addition saying 
"foreign legal consultant"), and the requirements for prior experience have 
been reduced. Other measures, such as the possibility of collaborating with 
Japanese lawyers in a joint enterprise, hâve also been included in the new 
law, adopted by the Diet in May/ 
In financial services, a whole range of reforms is proposed as part of the 
deregulation package adopted on July 5. This would include, among other 
things, the introduction of a brokerage system in the insurance field, plans to 
change over from a licensing system for insurance products to a file-and-use 
system, and a whole range of other liberalisations, procedural improvement 
and reforms of existing regulations. Unfortunately, the planned measures 
cannot be considered an adequate response to European requests, and the 
deregulation request list transmitted to the Japanese oh the 28th of October 
reiterates the EU's continued concerns. 
The recent problem concerning the importation of Mineral Waters was solved 
by the Japanese side amending its regulations as proposed at the High-Level 
Consultations in July this year. 
The Japanese authorities have finally accepted on-board cold treatment for 
lemons exported from Spain in containers with four sensors (they had 
previously insisted on six sensors). Whilst this solves one problem in the 
phytosanitary field for one Member State, there is still much progress to be 
made in the area of market access for agricultural products and foodstuffs 
from the EU as a whole. 
Although the elimination of the liquor tax differential remains one of the EU's 
key requests, it is also true that the Japanese authorities have made 
progress in reducing this differential in two budgets, fiscal 1989 and fiscal 
1994. ^ 
Large scale retail stores law: the Japanese authorities have acceded to one 
of the EU requests, i.e. to abolish the moratorium on liquor sales for such 
stores of over 10.000 m2. This remains an important concession, although a 
similar liberalisation should be introduced for smaller stores. 
Requirement for consultation with neighbouring shopkeepers, was abolished. 
Since the last Ministerial, January 1993, the regulations on closing hours and 
compulsory closing dates have been relaxed for large-scale retail stores (law 
adopted on May 1st, 1994). The number of regulations that limit the 
operation of large-scale retail stores, however, is still large, and further 
progress need to be made. 
From April 1995 a date indicating the freshness limit ("use by" or "best 
before") will be introduced instead of the use of a "date of manufacture". 
This new system, in line with the Codex Alimentarius, is welcomed by the 
Commission. 
However the following request remains on the table: MAFF should (i) issue 
an administrative instruction which would state that it is not necessary to use 
the date of manufacture in addition to the "use by" or "best before" date, and 
(ii) refrain from making any public announcement saying that the Japanese 
government could not prohibit the indication of the "date of manufacture". -
The Commission has welcomed MITI's initiative to put forward a constructive 
proposal to assuage the long-standing issue of "linen" and "ramie" textiles which^ 
are both labelled with the world "asa". Although the EU request of making if 
compulsory that labels clearly differentiate between "asa linen" and "asa ramie" 
is maintained , the Commission is willing to engage with industry, MITI and 
JETRO, in promotional activities, based on voluntary additional labelling, at least 
for an appropriate test duration. 
The Commission has welcomed MITI's intention to change all 500 electrical 
appliances (with limited exceptions) from Category A (Government certification) 
to Category B (self-certification) over the coming five years. However, it 
maintains its request that any transition period, during which electrical 
appliances could be based on either long-standing Japanese JIS standards 01 
new standards based'on IEC, should be no longer strictly necessary. 
is 
Annex III 
The Existing Framework of Commission /Japanese Cooperation 
1. INDUSTRIAL POLICY ANDCOOPERATION 
The strengthening of EU-Japan industrial co-operation constitutes a major EU policy. 
It started with a certain number of individual initiatives, later to pave the way for a 
more systematic approach. A joint pilot programme in the field of consumer 
electronics was initiated in 1991 and launched in 1993. In view of the success of 
this programme, similar projects are being launched in other areas such as car parts 
(the first JAMA-CLEPA seminar "Selling European Car Parts to Japanese 
Automobile Manufacturers" was held in Paris on the 6th and 7th of March 1995), 
computer and office equipment (Japanese European Information Technologies 
Subcontract Programme), and may be extended to other sectors. 
The establishment of a regular EU-Japan Industrial Policy and Industrial Co­
operation Dialogue at Ministerial Level was initiated during the Ministerial meeting in 
January 1993. Annual High-Level Meetings take place at Director-General level 
towards the middle of the year, and an annual mid-term review is conducted at 
Director level towards the end of the year. The aim of the Dialogue is to create a 
forum for reviewing individual co-operation schemes, building on their experience 
and multiplying such initiatives. The first Dialogue took place in Brussels on 26-27 
May 1993 and was mostly devoted to the discussion of ways of stimulating industry-
to-industry contacts on a bilateral level. 
The second Dialogue took place on 14 June 1994. It agreed to extend industrial co­
operation to auto parts and office equipment, to create a new Working Group on 
Information Policy and to establish a regular Industrialists Round Table, in which 
leading industrialists from both partners will participate. The first Industrialists Round 
Table has taken place on 9 February 1995. The industrialists decided to exchange 
information especially on normalisation issues and to launch working groups on 
various areas such as deregulation, privatisation, environment, standardisation, 
protection of intellectual -property rights, creation of a global information 
infrastructure, venture business, strategies vis à vis Third World Countries and the 
Employment market. 
The scope of the IPWG is to exchange information in relation to the development of 
a world-wide information infrastructure, promote policy convergence between EU 
and Japan and to develop joint projects and applications in information technologies. 
It discusses in particular the legal and institutional framework, interoperability, R&D, 
human resources, applications and evaluation of market potential. 
In addition to the training courses offered by the EU-Japan Industrial Co-operation 
Centre, the Commission selects and financially supports young European engineers 
to participate in the Japanese "Manufacturing Technology Fellowship Programme" 
which enables them to work in Japanese plants for a period of 6 to 11 months. 
re 
The mandate for the "Intelligent Manufacturing System* Go-operation Programme, 
involving the EU, Japan, EFTA countries, the USA, Canada and Australia is 
currently under discussion in the Council. This programme involves European 
companies from automative, aerospace, chemical, information technologies, 
machine tools sectors, and has a lot of potential. 
2. CO-OPERATION IN THE AREA OF COMPETITION POLICY 
The dialogue in the area of competition policy is conducted in thé form of annual 
high-level consultations between the Japanese Fair Trade Commission and the 
European Commission, at Director-General level. These consultations are regularly 
flanked by a meeting between the Chairman of the Fair Trade Commission and the 
Commissioner responsible for Competition Policy (Mr. Van Miert). In addition, since 
1993, regular seminars on competition policy are held alternately in Tokyo and 
Brussels. 
On the basis of a European Commission request, the FTC has carried out two 
studies on specific areas (agrochemical distribution and synthetic rubber industry) in 
which possible violation of competition rules is detrimental to European exporters. 
The two sidesare now assessing the results of these reports. 
Two seminars on EU-Japan competition policies, with the participation of 
competition authorities/industrial and 00^5^1x16^ associations, Members of the 
European -.Parliament and academic circles; were held in Tokyo (November 1993) 
and in Brussels (September 1994). 
Finally, in December 1994, the FTC has launched, at the request of the 
Commission, a study on the possible violation of competition rules in the sector of 
earth moving equipment. 
3. SCIENCE & TECHNOLOGY CO-OPERATION 
At the Ministerial meetingjn January 1993, it was agreed to establish à Forum on 
Science and Technology where policy can be discussed and co-ordinated, and 
where ongoing bilateral projects can be reviewed. This idea was confirmed in the 
summer of 1993 through an official exchange of letters between Commissioners Sir 
Leon Brrttan, Bangemann and Ruberti on the one hand, and Japan's Minister of 
Foreign Affairs Muto on the other hand. 
The first meeting of the S&T Forum at Ministerial level took place in June 1994. In 
addition, the visit to Japan by Commissioner Rubèrti at the occasion of the Forum 
has given new impulses to the dialogue between various Japanese institutions and 
the Commission. These meetings have laid the foundations for a possible academic 
exchange programme between Japan and the EU. They have also given the 
opportunity to review the on-going bilateral co-operation as well as the multilateral. 
The focus was on human resources questions induding the Commission's Science 
and Technology Fellowship Programme in Japan which is linked with the Japanese 
Science and Technology Fellowship and since December 1994 with the Japanese 
Society for Promotion of Science. 
4. CO-OPERATION IN TELECOMMUNICATIONS AND RELATED SECTORS 
A close working relationship has been established with the Ministry of Posts and 
Telecommunications (MPT) since the beginning of a Community 
telecommunications policy in 1986. 
Annual exchanges on communications policy between MPT and the Commission 
take place at Director General Level. These Plenary Meetings are complemented by 
annual exchanges at the level of administration experts in the so-called Network 
Working Group (NWWG)to discuss in detail topics of mutual interest. The NWWG 
currently also launches practical collaborative activities such as testing 
interoperability of ISDN terminal equipment, an exercise to whiGh Japanese and 
European companies are associated. A separate group (tri-lateral US/J/EU) 
discusses annually issues related to future land-mobile telecommunications system 
from the standardisation and the frequency usage perspective. 
In order to foster dialogue between industry representatives, the Commission has 
taken the initiative to organise a Forum on Communications (Paris, June 1994) 
which gathered about 150 industrialists from Japan and Europe to discuss regulatory 
aspects, market access and technology trends. MPT will organise a second meeting 
of the kind in September 1995 in Kyoto. 
The contacts at different levels have a multiple objective: information gathering on 
policy trends in Japan for the telecommunications, broadcasting and multimedia 
sector (also as a complement in the corresponding multi-lateral exercises such as 
GATS/NGTB, ITU, UPU etc.) follow-up of the deregulation process in Japan which is 
of particular importance in the telecommunications sector given the globalisation of 
the multimedia and communication industry; articulation of European positions for 
specific aspects of market access problems (including, in the telecommunications 
services sector), co-operation in standardisation. The emergence of a global 
discussion on information society has dominated many of the recent exchanges. 
The G7 conference on global information society (Brussels, February 1995) will 
recommend about 12 pilot projects in which Japanese and European players have 
manifested interests. 
5. CO-OPERATION IN SOCIAL AFFAIRS 
Co-operation within the area of social affairs was launched at the visit of 
Commissioner Papandreou to Japan in 1990. Activities started in 1991, with a 
tripartite (involving government, employers' associations and trade union 
representatives) conference on industrial relations in Brussels. During the meeting 
between Commissioner Papandreou and the Japanese Minister for Labour Okabe in 
October 1991, it was agreed to pursue co-operation by organising the following 
events, on an annual basis: 
a tripartite conference/seminar discussing current topics. This seminar or 
conference is understood to be flanked by a high-level meeting; 
an annual exchange programme for industrial relations experts; 
a joint study programme. 
In 1994 the EC/Japan symposium held in Tokyo was devoted to "Changing 
Employment/Environment - flexibility of employment practices". At the High Level 
Meeting, Commissioner Flynn and the Japanese Minister for Labour Mr Hamamoto, 
emphasised the importance of the existing cooperation between the EU and Japan 
in the field of social affairs that contributes to fetter mutual understanding of each 
other's problems; systems and policies. 
6 CO-OPERATION IN AID FOR DEVELOPMENT 
The decision to start co-operation and bilateral dialogue in matters of ODA was 
taken during the visit of President Defers and Commissioner Àndriessen to Japan in 
1991 Since then, there have been four: bilateral meetings at Director-Genera; level, 
in October 1991, in July 1992» « October 1993, andlh July 1994. The dialogue has 
been concentrating so far on policy issues, rather than concrete projects, although 
theairn is to arrive at concrete co-operation activities. 
7. CO-OPERATIONWPROTECTIONOFTHEENVIRONMENT 
Dialogue between the EU and Japan m this area has been going on for over a 
decade. Dialogue and co-operation in; environmental matters was initiated officially in 
1977 by an exchange&f fetters, and high-level consultations (Director-General le^ 
have been held regularly since 1990. It is an area which continues to gain 
importance for both sides. Recent topics of the dialogue include a broad range of 
issues, notably implementation of global environmental conventions; follow-up to the 
19^2 United Nations Conference on Environmentand Development, and waste 
management* and the strengthening of the légal framework for environmental 
protection, all topics of importance to Japan, and the ËU. ' 
Trie breadth of the topics being discussed demonstrates the importance attached by 
both Japan and thé EU to a joint approach to finding solutions to global 
environmental problems. In addition, the Maastricht Treaty stresses the need to 
take environmental considerations into account in other policy areas. In this context, 
Trade and Environment has become one of the foremost topics in the EU-Japan 
environmerital dialogue. 
8.CO-OPERATION INTHE CULTURAL AREA 
There is also some bilateral co-operation in me cultural sphere at European level. 
Thé joint declaration of 1991 cites culture as one of the areas in which co-operation 
should be strengthened and developed. Until the ratification of the Maastricht Treaty 
progress in terms of coeperMion in this area has been jiroife^^^ 
It has only been possible to organize a few actions such as orchestra tours (Yomiuri 
Symphony Orchestra in the cultural capital of Europe 1993, Antwerp; and the tour of 
Japan by the European Youth Baroque Orchestra in the Autumn of 1993) and a 
series of annual seminars in comparative studies developed between Sophia 
University and the European University Institute of Firenze with the support of the 
•Japan;Foundation. '•-• --''j-):":--: r-'"'1 
On the basis of the Maastricht Treaty (article 128) and the Council Conclusions of 
10November 1994-European Community action in support of cultural exchange 
should respect the principle of subsidiarily and the requirement to supplement 
Mernber States actions. 
9. CO-OPERATION IN EDUCATION 
In the 1992 communication to the Council on education, the Commission stated that 
co-operation in the field of higher education with the US could serve as a model for 
possible co-operation with Japan. On June 10, Professor Ruberti, in a meeting with 
the then Japanese Minister of Education, Mrs. Akamatsu, confirmed the mutual 
desire to exchange views at all levels on matters of interest in the field of education 
and academic exchanges. Issues such as the quality of Universities and ways to 
increase the number of university exchanges have been mentioned. 
It is proposed that efforts should be undertaken on each side to explore the 
possibilities for a balanced co-operation in the areas of higher education and 
vocational training, such as joint curriculum development, including associated 
exchanges of staff and students, mutual recognition of academic credits and 
industry. - university co-operation. These activities should build on experience 
already gained in the area of transnational education and training co-operation. 
10. DIALOGUE ON MACROECONOMIC AND FINANCIAL SERVICES ISSUES 
An institutionalised dialogue was set up in 1991 at the Director-General level 
between the European Commission and the Ministry of Finance on Macroeconomic 
issues and financial services. The last meeting took place in Tokyo on 22 July 1994. 
This dialogue should enable both sides to better understand the economic situation 
in the respective areas. In addition, it provides an opportunity for solving market 
access problems, particularly in the field of financial services. Finally, it offers scope 
for discussions related to macro-financial assistance to economies in transition and 
to developing countries. 
High level consultations take place on a yearly basis between the Japanese 
Economic Planning Agency and the Directorate General for Economic and Financial 
Affairs. These consultations provide an opportunity for analysing the evolution of the 
world economic situation with particular emphasis on Japan and the EU. Recently a 
dialogue has begun on specific issues viz. the macroeconomic effects of the 
suppression of barriers to trade (internal market, deregulation) and the budgetary 
consequences of an ageing population. 
11. DIALOGUE ON TRANSPORT ISSUES 
In 1992 annual talks between the European Commission and the Ministry of 
Transport were set up at Director-General level. These have taken place in April of 
each year alternating between Tokyo and Brussels. 
This dialogue should enable both sides to better understand the development of 
transport policy within and between the European Union and Japan. By opening a 
channel of communication permitting early discussion of new developments it should 
also serve to enhance understanding thereby reducing potential conflict. It also 
offers potential for cooperation in transport issues affecting the larger Asia-Pacific 
region. ; 
2° 
12. NEW PROJECTS 
The idea of creating a "European House" in Tokyo has been launched by the 
European Parliament It concerns thé establishment of a centre for EU- related 
activities in Tokyo, that would have the advantage of offering economies of scale for 
several areas in which the EU and its Member States are already active (e.g. 
industrial co-operation, export promotion) and providing a basis for new activities, 
such as the establishment of a European cultural presence in the Japanese capital. 
This project would be jointly organised and financed by the EU and Japan. A 
feasibility study on such a European House has been launched with the Japanese 
authorities, md the project is currently being carried out by the European Business 
Community (EBC) in Tokyo. 
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ISSN 0254-1475 
COM(95) 73 final 
DOCUMENTS 
EN 11 
Catalogue number : CB-CO-95-094-EN-C 
ISBN 92-77-86685-3 
Office for Official Publications of the European Communities 
L-2985 Luxembourg i