Japan-European Union (EU) Regulatory Reform Dialogue in Brussels in FY2005

24 March, 2006

1. Date and attendees

(1) Date: Friday, 21 March, 10:00-16:30
Venue: European Commission Headquarters in Brussels

(2) Attendees from the Japanese side: Mr. Kaoru Ishikawa, Director-General of the Economic Affairs Bureau of the Ministry of Foreign Affairs (MOFA) (Co-Chair); Ms. Tomiko Ichikawa, Director of the Economic Integration Division of MOFA; officials from five ministries; and officials from the Permanent Mission of Japan to the European Union (EU).

(3) Attendees from the EU side: Mr. Karel Kovanda, Deputy Director-General of the External Relations Directorate General of the European Commission (EC) (Co-Chair); Ms. Florika Fink-Hooijer, Head of Unit for Japan, Korea, Australia, New Zealand; officials from the EC and governments of the EU Member States; and officials from the Delegation of the European Commission in Japan.

(4) As preparatory meetings, the experts' meetings on telecommunications, pharmaceuticals, and environment and the director-level meeting were held on 20 March.

2. Overview

The meeting primarily discussed Japan's proposals to the EU.

(1) Commercial Laws and Business Practices

With regard to the cross-border offset of profits and losses within the EU, the EU side explained that a new Communication was being prepared, which would be presented in June. For the early implementation of "a Directive on cross-border mergers," the EU side explained that the European Commission was taking proper actions towards Member States. Regarding the early introduction of the European Private Company Statute, the EU side explained that a public consultation was currently underway, expecting to receive comments from the Government of Japan.

(2) Information and Intellectual Property

The Japanese side requested the early establishment of the Community Patent System, and stated that it would submit its opinions for the consultation carried out by the European Commission. In addition, the Japanese side requested the EU for its support for a possible international legal framework on preventing the proliferation of counterfeit and pirated goods, which is proposed by Japan. The EU side stated that the protection of intellectual property rights is one of its priority issues, and that it intended to further examine the legal framework proposed by Japan.

(3) Employment

The Japanese side made requests to related Member States (Italy, Belgium, the Netherlands, Germany, France, Switzerland, and the Czech Republic). Belgium explained that its layoff and sick-leave systems essentially depend on labour-management consultations, and that it was working for flexible labour hours.

Furthermore, the Japanese side explained the status of progress concerning the conclusion of social security agreements.

(4) Legal Services

France explained that it was making efforts to introduce a system for Foreign Legal Consultant (FLC) (Germany was not present at the meeting).

(5) Telecommunications and Broadcasting Services

The Japanese side requested the opening of dominant telecommunications carriers' networks to promote the spread of broadband. It also called for the prohibition on government officials currently in office to concurrently serve as executives at existing telecommunications carriers, in order to ensure government neutrality in competition. In response, the EU side explained that each Member State was imposing necessary regulations on dominant telecommunications carriers. The EU side also explained that it held a different view on the neutrality of Member State governments and that the present measures were sufficient.

Furthermore, with regard to the regulation requiring broadcasters to reserve over 50 percent of their transmission time for "European Works," the Japanese side called for the relaxation of the regulation on multi-channel broadcasts such as satellite broadcasting and CATV at the very least. In response, the EU side explained that matters of culture largely fall under the competence of Member States, and that ultimately such matters were up to their own judgment.

(6) Financial Services

With respect to the EU's decision on the equivalence of accounting standards, the EU side indicated the necessity to consider the technical advice of the Committee of European Securities Regulators (CESR), the situation following the adoption of international accounting standards (IAS) in the EU, and the progress of the convergence of Japanese and US accounting standards with IAS. In light of this necessity, the EU side echoed what Commissioner Charlie McCreevy had already remarked, by stating that the European Commission viewed that the best possible course would be to extend the timing for decisions on the equivalence by two years, thereby maintaining the status quo until 2009 so as to realize the maximum degree of convergence. The Commission also stated that it intended to send its EC proposal to Japanese authorities as soon as its content was decided.

(7) Construction

With regard to restrictive measures on the entry of Japanese companies into the Belgian construction market, Belgium conveyed its understanding that such measures were consistent with the General Agreement on Trade in Services (GATS), adding that it would issue a formal reply to Japan as the request from Japan has now become clearer.

(8) Medicine/Pharmaceutical

The EU side explained that most Member States implemented the maximum examination period of 60 days as stipulated in the Clinical Trial Directive, and that it was initiating corrective procedures for France, which was in violation of the directive.

Further, with respect to parallel imports of pharmaceuticals in the EU, the EU side explained that while the price setting falls under the competence of Member states, the issue was now being discussed in the forum set up as a follow-up to the G10 Medicines Group.

(9) Environment

The Japanese side expressed its concerns and requested the response by the EU regarding the EU directives including the Directive on waste electrical and electronic equipment (WEEE), the Directive on the restriction of the use of certain hazardous substances in electrical and electronic equipment (RoHS), the Proposal for a framework directive for setting eco-design requirements for Energy-using Products (EuP), and the proposed Directive on mobile air conditioners, together with proposal for a regulation concerning the registration, evaluation, authorization and restriction of chemicals (REACH), which is one of the items of the greatest interest for the Japanese side. Concerning the REACH, the EU side explained that the Commission intended to make a proposal based upon the political agreement reached at the end of last year. Furthermore, the EU side explained that it would create and announce guidelines for the future enforcement of the RoHS, and that in terms of the proposed directive for EuP, organizations from outside the EU region, including Japanese companies, may participate in the Consultation Forum. As for the proposal for the Directive on mobile air conditioners, the EU also stated that it intended to continue consultations with relevant organizations.

(10) Work and Residence Permits

The Japanese side explained that simplifying and expediting the process for work and residence permits in the EU Member States is one of the most serious concerns for Japanese enterprises in Europe. As such, the Japanese side explained its individual requests and sought improvements from each of the relevant Member States (Italy, Spain, France, Portugal, Austria, the Czech Republic, Hungary, the United Kingdom, Greece, Ireland, Belgium, Poland, Finland, the Netherlands and Denmark).

In response, Poland, Ireland, Greece, the United Kingdom, Portugal, Finland and Belgium explained their respective efforts and recent progress.

Furthermore, the Japanese side requested that the EU should make clear distinction between economic migrants and intra-corporate transferees in its Green Paper on an EU approach to managing economic migration. The EU side explained that it would plan to address intra-corporate transferees in its proposal for a directive on economic migrants, which was currently being prepared by the European Commission by incorporating Japan's opinions, and in the ensuing directives on each individual field. The European Commission also stated that the general directive would be introduced by 2007 and a directive related to intra-corporate transferees by 2009.

(11) Driving Licenses

The Japanese side reiterated its appreciation for the progress which enabled the return of Japanese driving licenses from Member States via Japanese embassies when Japanese driving licenses were exchanged for driving licenses of EU Member States. At the same time, the Japanese side called for improvements in the status of implementation in the Czech Republic, Greece, and Slovakia. In response, government delegates from the aforementioned three countries explained the progress in their respective countries.

(12) Simplification of the EU Regulations ("Better Regulations")

Concerning the "Better Regulations," announced by the European Commission in September 2005, the Japanese side expressed its view that the measures would not negatively impact the harmonization of individual regulations in each Member State. In response, the EU side explained that the "Better Regulations" is an approach which attempts to reduce administrative costs and it is not intended to alter its competence structure with Member States.

(13) Implementation Cycle of the Japan-EU Regulatory Reform Dialogue

The both sides agreed that the EU would submit its proposals to Japan by approximately two months prior to the Tokyo Meeting, and that they would complete the exchange of final written replies by the end of May.

In addition, discussions were held on the EU's proposals to Japan, including Japan's investment environment (Article 821 of the Corporate Law, triangular mergers and the related taxation measures), financial services (system of reinsurance for Small-amount Short-term Insurance Providers), and pharmaceuticals and medical devices (acceleration of the approval process for new drugs, extension of the term of protection for new drug data).

3. Results

The meeting achieved, through the above consultations, concrete progress and gained certain positive responses regarding the following Japanese proposals to the EU.

(Commercial Laws and Business Practices)

  • Early establishment of a directive recognizing offsets of profits and losses
  • A Directive on cross-border mergers
  • European Private Company Statute

(Supplementary Points)

  • Elimination of the problem of double payment of social security fee

(Financial Services)

  • Assessment of equivalence between Japanese accounting standards and international accounting standards (IAS)


  • Promotion of broadband


  • Compliance with the examination period stipulated in the Clinical Trial Directive


  • Registration, Evaluation, Authorization and Restriction of Chemicals (REACH)

(Fundamental Matters Related to the Business Environment)

  • Green Paper on an EU approach to managing economic migration

(Reference 1)

(Reference 2)

The officials from the related Directorates-General of the European Commission attended the meeting to respond to all proposals raised by the Japanese side. In addition, out of the 16 Member States whose attendance was requested by Japan, 12 countries including France, Belgium, and the United Kingdom attended and provided explanations on matters requested by the Japanese side that fall under the competence of these Member States.

(Reference 3)

Starting 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. Following the meeting in Tokyo in November 2005, this is the second meeting in FY2005.

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