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Japan-European Union (EU) Regulatory Reform Dialogue in Tokyo
(Overview)

November 25, 2004

1. Date and attendees

(1) Date: Thursday, November 11, 9:30-17:30
      Venue: The Mita Conference Hall

(2) Attendees from the Japanese side: Mr. Kenichiro Sasae, Director-General of the Economic Affairs Bureau (Chair); Mr. Makita Shimokawa, Director of the Economic Integration Division; and officials from 12 ministries and agencies

(3) Attendees from the EU side: Mr. Fernando Valenzuela, Deputy Director-General, External Relations Directorate-General of the European Commission (Chair); Mr. Seamus Gillespie, Head of Unit for Japan, Korea, Australia, New Zealand, External Relations Directorate-General of the European Commission; officials from the European Commission; and officials from the Delegation of the European Commission in Japan

(4) Mr. Alexander Schaub, Director-General, Internal Market Directorate-General of the European Commission, who was visiting Japan on other business, participated in the discussion on areas under his supervision, namely financial services, postal services and governmental procurement.

(Note) Established in 1994, the Japan-EU Regulatory Reform Dialogue has been annually held in Tokyo and Brussels in recent years. Every year, each side submits proposals for regulatory reform for the other side and both sides discuss the modality of regulations in Japan and the EU with a view to improving the business environment. This meeting was the first one to be held in FY2004. The next meeting is scheduled to be held in Brussels in early 2005.

2. Overview

(1) EU's Proposals for Regulatory Reform in Japan

      Japan's Proposals for Regulatory Reform Dialogue in EU

(2) At this meeting, the discussions were focused primarily on the EU's proposals to Japan. In addition to proposals that had been raised in past years (information society, pharmaceuticals and cosmetics, air transport, quarantines, etc.), the discussion also addressed new items such as the privatization of the postal services, defensive measures against hostile mergers and acquisitions (M&A) and "Urgent Adjustment Areas" for the liquor retail license system.

(3) Vigorous discussions were held at the meeting on the proposals from the EU side, which includes the following topics.

(a) Promoting foreign direct investment (FDI) in Japan
Various measures to promote investment with an aim to facilitate and encourage investors' entry into the Japanese market, the use of Public Comment Procedure and "No Action Letter" (NAL) system, the problem of double payment for social insurance contribution, and the relaxing of conditions for residence status.

(b) Financial services
Elimination of overlapping regulations and more effective use of the no-action-letter by the Financial Services Agency (FSA).

(c) Postal services
Creating a level playing field in the course of privatizing the Japan Post, Placing its successor corporations under equivalent supervisory control as is applied to the private sector.

(d) Government procurement
Improvement of the tendering procedures for construction and other areas. (Both sides also exchanged practices on the Private Finance Initiative (PFI)/Public Private Partnership (PPP) and electronic procurement.)

(e) Market regulations for pharmaceuticals, medical devices, blood plasma and cosmetics
Improvement of the registration process for new drug applications and adoption of international standards for medical devices.

(4) Japan's proposals for the EU were also discussed at this meeting with the Brussels meeting in mind.

(a) Expediting the EU's work to confirm the equivalence between Japan's accounting standards and the international accounting standards (IAS).

(b) Elimination of the Japanese concern regarding the new chemical regulation in EU: the Registration, Evaluation, Authorization and Restriction of Chemicals (REACH) system.

(c) Establishment of public comment procedures and "No Action Letter" system in EU.

(d) Consideration of Japan's request with respect to the Standard Contractual Clauses concerning the Data Protection Directive.

(e) Establishment of a system to accept foreign lawyers in France and permission for foreign lawyers in Germany to provide legal services pertaining to third-country laws.

(f) Simplification of the process of issuing visas, residence and work permits, and harmonization of this process at the EU level.

(g) Resolution of the problem of driving licenses, which affects Japanese enterprises operating in Europe.

3. Results

At this meeting, both sides confirmed that the Japan-EU Regulatory Reform Dialogue is an effective means to promote regulatory reform in Japan and the EU and to promote investment. The EU side expressed appreciation for Japan's efforts in areas such as financial services, postal services, the revision of the Commercial Code to authorize triangular mergers and the promotion of the conclusion of bilateral social security agreements.

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