Regulatory Developments Regulatory reforms by the Government of Japan have not reached the field of aeronautics where no improvements have been observed over recent years. Rather than facilitating foreign investments into the country, Japanese authorities seem to be preparing a set of stricter rules that risk hampering the potential for cooperation between Japan and the rest of the world. Already the legal limitation of foreign participation in the capital of Japanese aeronautical firms constitutes a significant hindrance to European investments and presence in Japan (see: Aeronautical Law article 4). Recent cases of Ministry of Economy, Trade and Industry (METI) suspensions or re-assessment of export authorisation for equipment that has for many years been supplied by Japanese companies on commercial aircraft programmes seem to go against the interests of all Japanese companies, and may undermine confidence in the reliability of Japanese suppliers. It would also be inconsistent with METI's efforts to promote industrial cooperation. Since the end of World War II, the Japanese aeronautics industry has been trying to rebuild domestic capability with strong financial support from the Japanese government. Attempts by METI to promote Japanese independence in the field of aeronautics through national projects have not achieved the level of success expected. Japanese companies still rely heavily on defence contracts, which account for over 50% of their total aerospace turnover, and on partnerships with Boeing for commercial contracts. The Japanese market for large commercial aircraft and helicopters is one of the largest in the world, and has historically been dominated by the United States. The EBC would like Japanese companies to recognise the benefits of competition, the risk of depending on a single source, and the benefits of diversifying their suppliers. European companies provide state-of-the-art technology, high-quality final products and goods, as well as after-sales customer support. Prospects for EU-Japan Economic Integration The cooperation between Kawasaki
Heavy Industries (KHI) and Eurocopter on the BK117 helicopter, and also
between KHI/Mitsubishi Heavy Industries (MHI) and Rolls-Royce on Trent
1000, are encouraging examples of successful cooperation between the
European and Japanese aeronautics industries. However, due to the
long-standing relationship with North American companies, and limited
information about the European aerospace sector, the Japanese industry is
at times reluctant to work with European businesses. Proactive
collaboration with successful European companies would enable Japanese
companies to strengthen their position in commercial aeronautics. By
participating in a wider range of projects, Japanese firms would be able
to expand their international business opportunities and further develop
their technological base. The EBC feels that there is much room for
large-scale joint development programs between the Japanese and European
industries, especially in the field of transport aircraft, and urges the
Japanese Government and aerospace industry to give serious consideration
to such an initiative. Priorities
Key Issues and Recommendations ■ Promoting competition Yearly status report: limited progress. Although European manufacturers of commercial aircraft, engines, components, and navigational equipment offer state-of-the-art technology at internationally competitive prices, the European share of the Japanese market for commercial aircraft and related equipment is still considerably less than the worldwide average. The Japanese aeronautical sector suffers from a general lack of transparency in equipment procurement as exemplified by the modernization of air traffic management. Although European companies are recognized worldwide as setting state-of-the-art standards, they have the greatest difficulties with new equipment procurement in Japan. The EBC strongly deplores this situation which may keep Japan behind the latest progress in safety standards. Recommendation:
■ Promoting industrial co-operation Yearly status report: limited progress. Cooperation in commercial aircraft development is still heavily biased in favour of North America. METI's support for the Boeing 787 programme should not limit the potential of future collaboration with Europe. The EBC is still convinced that there are mutually beneficial opportunities for cooperation between European and Japanese firms. METI's support on the Trent 1000 engine and the agreement on supersonic technologies should pave the way for more aeronautic cooperation. Although this may have symbolic significance, the scale of Japanese financial support for such activities with European companies remains significantly below that of activities with US companies. Recommendation:
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