EBC Council/ Committee Chairmen Meeting Minutes

February 20, 2003; 08:30 - 10:30 a.m.

Held at Europa House, 1st Floor

In attendance:

R. Collasse (EBC Chairman)
A.Murray (EBC Executive Director)
R.Murray (Committee Chairman - Automobiles)
N. Boltze (Committee Chairman - Automotive Components)
G. Roth (Committee Chairman - Animal Health)
W. Veenhoven (EOB - Netherlands)
D. Pfeiffer (EOB - Germany)
H. Mueller (Chamber President - Austria)
P. Finas (Committee Chairman - Banking/Securities)
R. Mason (Committee Chairman - HR)
P. Sinnaeve (Committee Chairwoman - E-Com)
Y. Oishi (Chamber Representative - Belgium)
E. Gimenez-Burgos (Chamber Representative - Spain)
H. Endo (Committee representative - Medical diagnostics)
L. Devret (Chamber Executive Director - France)
E. Fiore (Chamber Executive Director - Italy)
V. Heiberg (Chamber President - Denmark)
C. Bystedt (Chamber Executive Director - Finland)
T. Kullberg (Chamber President - Switzerland)
S. Lorenz (Chamber representative - Germany)
M. Hancock (Committee chairman - Legal services)
L. Dubois (Committee chairman - IPR)
B. Anquez (Chamber president - France)
H. De Mestier (EOB - France)
R. Mountford (Committee chairman - Asset Management)
P. Dupponteil (EC Delegation representative)
E. Laschan (Representative - Austria)
J. Sandbach (Committee representative - Telecommunications)
C. Ochsner (Chamber president - Switzerland)
C. Sedgman (EBC Policy Director)

1. Comments from EC Delegation - Mr. Philippe Duponteil

Philippe Duponteil reported that the WTO mini-ministerial held over past weekend yielded mixed results in the main areas under discussion (agriculture, trips/health, investment/competition/industrial products). Two commissioners attended: Mr. Lamy (Trade) and Mr. Fischler (Agriculture), both of whom also held short bilaterals with their Japanese counterparts (Hiranuma/METI and Oshima/MAFF resp.). METI bilateral focused on competitive bidding practices for civil aviation in Japan (ie. Airbus) and competition in the telecoms sector.

2. Year 2003 membership confirmation, invoicing process and related matters

EBC in the process of confirming committee membership and will send a complete list to the chambers for invoicing by the end of the month. There is a substantial loss of members amounting in value to around 1.5 million yen or more. Committee chairmen will be advised .

New contact details of committee chairs, EOBs, chamber presidents and chamber directors provided separately.

Articles related to EBC White Paper launch provided separately.

3. EFPIA letter

Richard Collasse met with Martin Wright (Chairman of EFPIA in Japan) last week to discuss EFPIA participation in the EBC on an ongoing-basis. Letter sent to EFPIA from EBC Secretariat subsequent to this meeting offering proposals for EFPIA membership in the EBC provided separately. Now must wait for EFPIA to decide.

Action: All chamber representatives asked to lobby chamber members who are also members of EFPIA to consider joining the EBC as outlined in attached letter.

4. Request for FDI/Business Fundamentals Committee

Markus Janssen, the EBC's representative on the Prime Minister's Investment Promotion Council, has suggested that the EBC form an FDI/Business Fundamentals Committee.

Action: Suggestion approved, EBC Secretariat to commence outreach for members pending receipt of some supporting descriptive information from M. Janssen

5. EBC letter to Greek Embassy regarding FDI

Provided separately.

6. Current policy and committee related activities:

Triangular mergers: Approved by Cabinet as part of bills submitted by METI revising corporate revitalization laws and now must pass the Diet. METI keeping quiet as there is likely to be opposition from within the ruling party. METI couldn't secure tax advantages (i.e. capital gains deferrals currently available to wholly domestic mergers) from MOF (also, the timing of the tax reform season worked against these reforms)

Insurance - Policy Holder Protection Corporation (PPC): Will be topped up with 20-25 billion from industry under 3-year plan with support from the Life Insurance Association. Most foreign firms voted against this proposal on principle, but can live with this amount. The EU ambassador sent a letter to the FSA in late January on request from EBC members pointing out that in the long run a pre-funded plan is unworkable. In the short term, this issue is closed.

Factor-based tax: Has been approved by the Cabinet and submitted to the Diet. Reform will basically split the Corporate Enterprise Tax into three separate taxes: an income allocation portion, a value-added portion (salaries, interest and rent paid, etc.), and a capital allocation portion. Problems for foreign firms: computing the value-added portion will require that firms establish value-added for their GLOBAL operations; ability to take advantage of foreign tax credits. But on the whole, European firms are likely to benefit from this new tax (as long as they are making money!). METI briefed the EBC and ACCJ tax committees on this tax and asked the EBC to distribute a questionnaire to gauge the impact this new tax will have on companies in Japan. This will be sent out shortly.

Food additives: The MHLW submitted a set of 46 food additives to the Food and Sanitation Council on Dec. 19th for "priority" consideration for addition to Japan's food additive list. For the most part, these additives line-up with the EBC priorities (though a number of EBC requests were ignored). The EBC Food Committee Chair and Policy Director have been meeting with consumer groups (Shodanren, Co-op) to gauge their support for reforms to Japan's food regulations (and food additives in particular). Goal is to get these food additives through the tests and approved as soon as possible.

Changes to food regulation: A number of new bills have passed the Diet revising Japan's regulatory structure surrounding food safety (recall that the EBC made a comment to the MHLW on this in December). For example, a food safety commission will be established under the cabinet office and 3rd party testing will be allowed. Looks good on paper but remains to be seen what sort of effect his will have on food producers (especially foreign producers) regarding costs involved in complying with the new regulations.

Asset Management: Likely to see complete access to Yucho and Kampo funds as a result of bills currently being considered by the Diet, which was top priority for committee. Three new position papers provided separately.

In-vitro diagnostics: English translation of OTO ruling (described in previous meetings) provided separately.

Legal services: New legislation expected over the next year allowing foreign/domestic partnerships, but hiring of domestic lawyers by foreign lawyers is likely to come with some strings attached.

Banking/Securities: First activity as merged committee: Visit to Deputy Commissioner for International Affairs at the FSA (Feb.12)

New chairman for the Telecoms committee: Manual Ceva (Equant) (Replaces Lisa Suits of C&W who has gone back to London)

Mr. Yukihiro Yamada (Chanel) has taken over chairmanship of the cosmetics committee

Richard Murray reported that the relationship with Japan Automobile Importers Association and European car producers has been improving recently.

7. Outreach for Japan Times

Japan Times visited the EBC Offices in preparation for Europe Day. Companies may be contacted regarding the "Europe Day Supplement". Information from the Japan Times will be distributed to all EBC members by e-mail.

8. Report on meetings with Koizumi

English transcript of Richard Collasse's speech provided separately.

Letter to EU Ambassadors explaining the details of the lunch provided separately.

Richard Collasse to follow up with Shimada-sensei who chaired the meeting and advises the prime minister on economic affairs.

9. Meeting with METI/ Ms. Tani re investment impediments

Richard Collasse, Casey Sedgman and Alison Murray met with Tani/METI in follow-up to the Koizumi luncheon to talk about some of the specific impediments firms are facing investing in Japan. Other meetings with individual companies with FDI interests in Japan have been set up subsequent to this meeting.

10. Meeting with Commissioner Lamy

As part of Mr. Lamy's visit to Japan to participate in the WTO Mini-ministerial Richard Collasse was invited along with the heads of Mitsubishi Motors, Cable and Wireless and Airbus in Japan to brief Mr.Lamy on the "state-of-play" for European firms doing business in Japan.

11. Meeting with Ambassador Zepter

Richard Collasse and Alison Murray met with Ambassador Zepter on February 18th. Topics of conversation included:

• Gathering those of the ambassadors of the 10 candidate member states with a presence in Japan for Richard Collasse to brief them on the EBC

• EUJBDRT

• Timing for this year's EBC White Paper

• Luncheon meeting with PM and related follow-up activities (see above)

• Support from the EBC for Aichi Expo 2005   Action: EBC to send letter to President Prodi asking for EU support of the Aichi Expo.

12. Meeting with EU Counsellors

Richard Collasse met with the EU Commercial Counsellors group February 19th to brief them on his meeting with the PM and talk about matters related to FDI in Japan (c.f. letter from EBC on this subject provided separately)

13. Meeting with informal investment group

Held February 19th. Attendance from MOF for the first time. Discussion focused on operationalizing the PM's stated desire to double FDI into Japan in the next five years as announced in his speech to open the current Diet session.

14. Individual meetings with committee chairs

Richard Collasse recently met with HR and Medical Equipment committee chairmen; intends to meet with the others as promised.

Action: Committee chairs are kindly asked for their proactive cooperation in helping to set up meetings between the committees and EBC Chair (e.g. invitation to regular committee meeting, or an informal meeting over breakfast, lunch or dinner)

15. Presentations to chambers

Richard Collasse to address the German Chamber April 15th.

Chambers pending: BCCJ, NBF, SCCIJ, BLCCJ, DCCJ.

Possibility raised of having a joint session involving all chambers that have not hosted a briefing for their members with Richard Collasse. Will be pursued by relevant EOB and executive directors. Ian de Stains of the BCCJ has offered to coordinate this event.

16. Meetings with ambassadors to EU candidate countries

Pending (refer to item 11) above).

17. Outcome of Jan 16 meeting with Nikkei re possibility of seminar

Good news: Nikkei generally supports the idea of sponsoring a seminar, either in conjunction with the EUJBDRT or separately focusing on the EBC and its activities. Bad news: Director of the International Bureau, Maezawa-san has been posted to Europe and President Tsuruta will be stepping down. Both of these people were close contacts of Richard Collasse. Consequence: not likely that anything will be arranged until next year.

18. EU Japan Business Dialogue Roundtable

New Japan side chair: Kobayashi of Fuji Zerox

New Japan side WG1 chair: Honda of Japan Tobacco

Confirmation of new members: list provided separately

Meeting with EU Sherpas: Goal is to organize a meeting with Japan-based Sherpas of European-side members before April

Timing and planning of 2003 RT: Main conference in Brussels on May 27th and 28th (members list, conference agenda, letter from Viscount Davignon provided separately). Plans have been floated to increase number of interim meetings between the members (working level?).

Pending issues:

• Working group membership

• List of Japanese participants (promised beginning of March)

19. EOB Liaison responsibilities

Revisions were distributed separately

20. Year 2003 White Paper

Goal for this year: focus on what has changed (and what hasn't). Perhaps change in format, although not substantial. Production of the white paper will still be entirely dependent on sponsorships.

Likely to be no "splashy" launch this year due to funding constraints (see below).

Action: All members and chamber representatives are asked to forward any comments on focus/format/contents of this year's White Paper to Richard Collasse via EBC Secretariat.

21. EBC/ACCJ Golf Match

Erik Ulner (EOB - Finland) has volunteered to organize a "mini-Ryder Cup" with Bob Grondine of the ACCJ. Details to follow later.

22. Year 2002 Revenue & Expenses

Details provided separately. 2002 operating deficit: 340,406 yen although 2,462,686 yen remained in the bank thanks to a surplus in 2001.

23. Year 2003 predicted income loss

Alison Murray reported that a fall in revenue for Year 2003 is being predicted as follows:

Loss of pharmaceutical committee members: approx. 1.3 million yen
Loss of CLEPA representation contract: 2.1 million yen
Loss in committee membership due to general attrition: 1.4 - 2.0 million yen

EBC to cover this shortfall in short term by reducing staff at the EBC Office and setting up 3 new committees (motorcycles, retail and investment) to encourage new membership.

Action: Chamber representatives asked to promote the EBC and its committees with the goal of increasing EBC committee membership.

24. EBC Fund-raising activities - suggestions from the table

Agreement to address EBC long-term funding at next EBC Taskforce meeting (see below)

25. EBC Taskforce Meeting

Next EBC Taskforce meeting scheduled for March 25th, 6:30 pm at the EBC Offices in Sanbancho (Bento Meal). Details and sign-up to follow.

26. AOB

None.

End of record.