EBC Board of Governors' Meeting

Thursday, 25 May 2006; Europa House 6F, 08:30 a.m.-10:30 a.m.

Attendees: R. Collasse, M.Reiterer, A. Murray, J.Edberg, K. Harris, H. Meuller, A. Pockett, J-F Minier, G. Keown,
T. Varlid, H. Porat, C. Eklund, M. Lachaussee, M.Makinen, H. Tempel, D. Buckley, R. Kracklauer,
F. Cazzoli, A. Kangro, V di Bello (for Mr. A. Tucci); B. Winderickx (for J. Bertrand & D. Delgorge),
G. Schlosser (For P. Baron), M. Hoffmann, S. Kamijo, C. Vellekoop, A. Ponzetta, A. Carbajo

Regrets: M. Arnold, R. Mason, P. Baron, D. Delgorge, J. Bertrand, V Trelut, H. De Mestier, D. Hoffmann,
A Tucci, K-U Grathwohl, J-P Oulevey; S. Ginoux, S. Saugnes

A. INTRODUCTIONS
The Executive Director introduced Kathie Harris, who is joining the EBC Secretariat on a part-time basis.

B. REPORT FROM THE EC DELEGATION
Michael Reiterer, Deputy Head of the Delegation of the European Commission to Japan, summarized recent key developments.

1. EU-Japan Summit, 24 April 2006: Commission President Barroso took the opportunity of the Summit to stress the need for Japan to improve its investment climate and raised a number of specific issues, including Article 821 and problems linked to EU airlines operating in Japan. Prime Minister Koizumi underlined Japan's increasing openness to FDI and expressed willingness to enter into discussions on investment related issues whenever required. The Delegation understands that to be an engagement by the Japanese PM and not a personal one by Mr. Koizumi.
2. EC Delegation talks with Ministry of Transport, 10 May 2006 on air service agreements: The EC Delegation made clear that Japan's failure so far to recognize EU competence on this issue is both unacceptable and anomalous with the rest of the world. Bilateral air service agreements have to be changed to include the "community designation clause", opening up bilaterally agreed frequencies to all EU carriers but without increasing the number of bilaterally agreed frequencies. The EC Delegation indicated it would shortly return to the Ministry in the expectation of receiving proposals on how to move forward.
3. EU-Japan Business Dialogue Round Table, Tokyo 13-14 July 2006: Commission Vice President Verheugen (Commissioner for Enterprise and Industry) has expressed disappointment that only six CEOs are signed up to attend the event and has indicated that he will himself contact a number of CEOs to elicit more support.
4. WTO Doha Development Agenda (DDA): The European Commission wants to achieve a breakthrough in the DDA negotiations by tabling a revised EU offer on agriculture, but has stressed that any such offer will be conditional on reciprocal offers from developing countries (China, India, Brazil, etc.) as well as the US and Japan.
5. EU Constitutional Treaty: The Commission has launched an action plan, signaling the end of the "period of reflection" that followed the referendum results in France and The Netherlands.
   
   EU Enlargement: The Commission has issued conditional opinions on Bulgaria and Romania, paving the way for accession to the EU on 1 January 2007, provided they address a number of outstanding issues. Their accession would complete the current wave of EU Enlargement although a number of other countries are recognised as candidates or potential candidates.

C. REPORT FROM THE CHAIRMAN

1. JIC meetings (13 March, 29 March, 15 May, 29 May)
   Efforts are being made to refocus the monthly JIC meetings on the real issues holding back FDI in Japan. The latest list of items included in the regulatory reform process reflects many concerns raised by the EBC. A new "Invest in Japan" program is to be launched, aiming to further double FDI. This needs to be underpinned by concrete ideas for action: the JIC will submit proposals and both EFPIA and EUCOMED have been contributing to the process.
2. BCCJ lunch presentation (17 May)
   The Chairman is open to invitations from Member State Chambers of Commerce to give presentations on the aims and work of the EBC, and has already given one such presentation to the BCCJ on 17 May. A similar presentation is scheduled for the ICCJ on 30 May.
3. ETP24 presentation (22 May)
   The Chairman gave an overview of the role and work of the EBC to the current ETP group on 22 May, to be followed by a visit to a local Chanel operation, offering a real-life example of the issues facing businesses in Japan.
4. Dinner with Diet Members Tamura, Koba and Onodera (22 May)
   This was largely a social event, but proved a useful opportunity to discuss EBC messages on Article 821, triangular mergers and FDI with an apparently receptive group of law-makers.
5. Briefing meetings with Ambassador Zepter (27 March, 25 May)
   Regular meetings continue to offer a chance to share information on the hot issues for business, such as Article 821 and triangular mergers.
6. Investment Group lunches (24 March, 25 May)
   These lunch events are staged as an exchange of views with the Japanese Government on FDI. The EBC will take the opportunity of the meeting today to propose that Clara Gaymard, President of the "Invest in France Agency", should be invited in November to have lunch with members of the Government and to make an afternoon presentation to the Keizaidoyukai, illustrating as an example for Japan, the very positive contribution FDI can make to an economy such as France, where a significant number of jobs are now provided by foreign companies.
7. Meeting with new ACCJ President, Charles Lake (6 April)
   The new ACCJ President reaffirmed his organisation's commitment to maintaining a regular dialogue with the EBC and also confirmed that the ACCJ will be publishing a White Paper in October 2006. This raises issues in respect of how to launch the EBC White Paper, if the risk of competing events is to be avoided. The Chairman therefore proposed that the EBC should focus this year on bringing the messages in its 2006 White Paper directly to the Japanese Government through a targeted "door-knock" program in November. Meetings should be sought with Directors General or Vice Ministers in key Ministries, with each EBC delegation led by the EBC Chairman or Senior Vice-Chairman / Vice-Chairman, accompanied by the relevant Committee Chair(s). The EBC Secretariat would coordinate arrangements, with dates to be fixed in diaries as soon as possible.
   No objections were raised to this proposal.
8. Participation in Dinner Meeting with Commission President Barroso (21 April)
   The EBC greatly appreciated not just the opportunity to discuss business concerns with the Commission President but also his subsequent raising of these concerns in discussions with the Japanese Government.

D. EU-JAPAN BUSINESS DIALOGUE ROUNDTABLE
An early draft program for the EU-Japan Business Dialogue Round Table on 13-14 July 2006 was distributed. It was noted that this draft does not reflect the fact that Laurent Dubois, Chairman of the EBC Patents, Trademarks and Licences Committee, has agreed to make a presentation for the EU-side in the Joint Session on IPR and Counterfeiting on Day Two. Attention was also drawn to the following:

• There will be a new pre-Working Party on Financial Services, chaired by AXA on the EU-side (with participation of Rabobank) and by Nomura Securities on the Japanese side. The EBC Policy Director has developed a first draft discussion paper (distributed to participants).
• The EBC Chairman will make a speech on "Market Access: Mergers & Acquisitions and the Regulatory Environment" during the Joint Session on Day Two, focusing on broad political issues rather than the specific concerns raised on Day One.
• Baron Jacobs, the EU Co-Chairman of the Round Table, has yet to appoint a sherpa to replace Mr. Kawan (who will not be coming to Japan), and so has asked whether the EBC Executive Director could take on the role in Japan. The EBC Chairman proposed to agree to this request. The Meeting supported his proposal pending the provision of specific details of the task.

The Chairman stressed that every effort is being made to secure further CEO-level participation from the EU-side at the Round Table. The Meeting pointed out that participants on the Japanese side are often former CEOs, who remain on the company board, but no longer have operational responsibilities and so are more likely to be available than European CEOs, who have to weigh participation against other competing priorities. It may be more realistic, and indeed relevant, to widen the target on the EU side to include other Executive Board Members who have a specific responsibility for Japan, or Japan specialists within national business federations. Moreover, securing CEO participation is made more difficult by the relatively low profile of the Round Table and its timing during the European holiday season - linking the event more closely to the much higher profile EU-Japan Summit in April could help to address both problems.
Michael Reiterer responded that the value of the Round Table dialogue lies in the direct involvement of business leaders and so cautioned against other levels / types of participation, such as business federations. He agreed that the timing should ideally be directly linked to the Summit but also pointed out that, for the Japanese side (business and government), especially in years when the Round Table is held in Europe, the optimum timing would be around Golden Week.

E. REPORT FROM THE EXECUTIVE DIRECTOR

1. Trip by Alison Murray to Brussels for ETP training and other visits (19-23 February)
   Eurochambres sponsored the Executive Director to travel to Brussels in February to undertake ETP training. The opportunity was taken to schedule a number of additional appointments during the same week with the European Commission, Eucomed, Baron Jacobs (Co-Chair of the RT), EU-Japan Centre for Industrial Cooperation, etc. A copy of the full visit program was distributed to participants.
2. ETP promotion activities and consultations (Lunch 18 April)
   Promoting the ETP has proved time-consuming but fruitful: the lunch event in April was well attended and the EC/Eurochambres target of two applicants from Japan has been exceeded, with three strong candidates applying already and at least 3 others in the process of applying. Overall, this response is good given the delay in launching the programme by the EC/Eurochambres (beyond the EBC's control), resulting in a very short time for potential candidates to secure their employers' support before the June deadline. The European Commission & Eurochambres had set a target of 120 applications, but will likely receive about 80-90
   The EBC will be reimbursed costs for all promotional activities as well as the training trip (see item 1 above).
3. EUCOMED agreement and visit (11-13 April)
   EUCOMED are seeking to raise their profile in Japan and planning a number of visits here. The EBC has entered into an agreement to arrange these visits for them for a fee.
   It was noted that EUCOMED's efforts may well bear fruit: their argument that unnecessary delays in registering new medical equipment penalize Japanese patients seems to be spurring the Government into action, particularly in the area of clinical data acceptance.
4. Exploratory meeting (5 April) for new Media & Communications Committee and follow-up (9 June)
   The possibility of setting up a new EBC Committee on Media & Communications has generated a lot of interest, initially mainly from journalists but also now from public relations companies and others. A number of issues of common interest have been identified. A meeting will be held on 9 June to explore further.
5. Summary of main Secretariat visits and activities
   Meetings have recently taken place with
   • A senior official from the Foreign Ministry of The Netherlands with Ambassador Hamer - to explain the EBC's work and provide a briefing on the main issues of interest at present (March 17)
   • Ms. Tuula Hautala-Niemi, ETP Project Manager from the European Commission in Brussels for a follow-up discussion after the ETP kick-off training session in Brussels in February (March 24)
   • Martina Kuhlmann of Eurochambres - to discuss their "Gateway to Japan" project and updating of market research reports (the EBC Secretariat has been contracted to update three reports in late 2006-2007) (April 11)
   • JETRO Director of the Invest Japan Division- JETRO ise now trying to promote secondary investment in Japan from foreign companies who already have a presence here and EBC members can expect to receive outreaches from JETRO on related activities.
     The Executive Director and Policy Director attended a dinner hosted by the Japan-Ireland Economic Association and had the opportunity to meet with the Foreign Minister of Ireland, the Honourable Mr. Dermot Ahern .
6. Other
   Following many years when the Keidanren Europe Committee did not respond to invitations to the annual White Paper launch and the EBC Cocktail party, a letter with a paper on EU-Japan relations have now been received, to which the EBC will respond positively.

F. WHITE PAPER 2006
The current schedule is:

• Secretariat to launch sponsorship outreach in June
• Translation and production in September
• Door-knock in November

G. REPORT FROM THE POLICY DIRECTOR

1. Cross-cutting items
   • Article 821: The Ministry of Justice has recently issued a notification to the other ministries to re-state their old position that the new law is not intended to target companies. While this provides more comfort than previous statements in parliament and the resolution attached to the bill when passing the house of councilors, the EBC will continue to press for the actual wording of the law to be revised.
   • Triangular mergers: After President Barroso raised this issue with the Japanese Government, media reports suggested there might be some progress on tax treatment - but as yet this has not been officially confirmed. The EBC continues to work closely with METI to see this happen.
2. Committee items
   • Human Resources Committee: The Committee paper proposing abolition of re-entry permits has been discussed with the Ministry of Justice, who indicated interest in the proposal, but indicated that there is little prospect of immediate action.
   • Liquor Committee: Appeals have been launched to limit further increases in the tax on wine.
     

H. COMMENTS FROM COMMITTEE CHAIRS PRESENT

1. Airline Committee: Pricing of airfares is highly regulated in Japan, which ultimately damages consumer interests. A Committee paper setting out the benefits of change will be discussed with the Ministry at a meeting on 26 May.
2. Automobile Committee: Problems recently arose when a manufacturing component in some imported vehicles was found to be in breach of current Japanese regulations due to its use of an explosive device, leading to a ban on all affected imports and to product recalls. The Japanese authorities are working on a new regulation and seem to be making efforts to expedite the process.
3. Banking Committee: Treatment of conglomerates continues to be a major concern, especially given what sometimes could be perceived as inconsistency of the Japanese regulator's approach. A recent meeting with the FSA did little to clarify the situation so the Committee has now decided to work with the ACCJ banking committee and selected Member State embassies to develop a macro perspective that might help convince the FSA of the case for change.
4. Medical Equipment Committee: Discussions have been held with EUCOMED to ensure that the EBC will remain the voice of the European industry in Japan and that EUCOMED will conduct discussions with the Japanese authorities in collaboration with the EBC Medical Equipment Committee. Meanwhile, the Committee's work continues towards greater coordination of medical equipment standards between Japan, the EU and US; a significantly reduced timescale for product approval in Japan; and revision of the Government's reimbursement pricing policies (and hence health budgets) to ensure the full cost of the product is covered.
5. Retail, Wholesale and Distribution Committee: Recent meetings have discussed the revision of the City Planning Law which will make it more difficult to build large-scale retailing facilities. The somewhat satisfactory outcome of the discussions with the government is that is that essential parts of the new restrictions will not apply to the fourteen cities in Japan with a population larger than 1,000,000. The Committee has also taken up the case of operators such as DHL whose businesses will be affected by the way the Government is carrying out the privatisation of Japan Post. The Committee gas been discussing the issue of parallel imports and been instrumental in organizing a special meeting with other concerned committees.

I. FUNDING & FUNDING LINES

1. Audit of Statement of Cash Balances and of Cash Receipts and Disbursements - 2005
   The EBC Treasurer confirmed that the annual audit had been carried out on 31 March - copies of the audit were distributed to participants. He noted the temporary distortional effect in both revenue and disbursements of an erroneous over-payment by a member company that had subsequently been repaid (see note 6 in the Statement).
2. Update on current status of:
   1. Stakeholder payments: The Executive Director advised that most payment installments for 2006 are up-to-date.
   2. Committee member payments: A large majority of Committee members met the payment deadline. Action is being taken to follow-up with those who have not paid.
   3. ETP: Reimbursement from Eurochambres of costs for Executive Director's training in Brussels is still awaited. Eurochambres may itself still be waiting for funding to come through from the European Commission. If there is a delay, the EBC will ask Eurochambres to advance the funds, to avoid the possibility of being temporarily thrown into the red.
   4. EUCOMED / EW / ETPA: all payments are up-to-date.

J. ORGANISATIONAL ITEMS

1. JIEA (Japan Ireland Economic Association)
   JIEA will henceforth replace Enterprise Ireland in the EBC Board of Governors.
2. Committee Chairmen Representatives
   The nomination of the Chairman of the Airline Committee, Otto Benz, as the third Committee Chairmen Representative on the Board of Governors was confirmed. The up-to-date list of the Board of Governors was distributed to participants.

K. 4th NORTH-AMERICA-EUROPE GOLF CHALLENGE IN JAPAN (DAIMLERCHRYSLER CUP)
The fourth annual event is scheduled for Friday 29 September. Approaches are now being made to potential sponsors.