Barroso: samenwerking EU-Japan verder versterken (en)

SPEECH/06/243

José Manuel Barroso

President of the European Commission

EU-Japan - a Mature Relationship with Untapped Potential

Tokyo Chamber of Commerce

Tokyo, 21 April 2006

Mr. Hayashi, Mr Sasaki,

Ladies and Gentlemen,

I would like to thank the Keizai Koho Centre for co-organising this symposium today.

The European Commission has worked closely with the Centre and with Keidanren over many years and I am delighted therefore to have this opportunity to set out my ideas about how the EU and Japan can work together more effectively to address the key issues of concern to our citizens.

We are meeting today in Tokyo in more propitious, optimistic circumstances than have existed in Japan for a number of years. The renewed business and consumer confidence is palpable and plain for all to see.

Japan is entering its fifth consecutive year of economic growth backed up by strong consumer spending and corporate investment. Deflation has ended, corporate balance sheets are in much better shape and the results of restructuring efforts are being reflected in favourable economic indicators.

In short, " Japan is back ".

The revitalisation of the Japanese economy is, of course, good news for Japan, but also for Asia, since Japan's economy is 60% of total Asian GDP. It is also important for the European Union, which is Japan's major investor and, with the US and China, one of its main trading partners. With EU-Japan trade turnover standing at around €145 billion euros per year and our joint GDP at 40% of the world total, it is obvious we each have a big stake in the health of each others' economies. Our business community, therefore, holds annual meetings - the Business Dialogue Round Table - to recommend steps on how to promote further the economic relationship.

We very much hope Japan will continue its reform path as it deals with other outstanding economic challenges.

In Europe, we have different economic and political problems to overcome. Last year's rejections of the EU Constitution in the Netherlands and France were certainly a setback to the process of European integration. But, this does not mean that the EU is paralysed. On the contrary. Enlargement to another 10 member states has given the Union a further strong impetus.

The delay in the ratification of the Constitutional Treaty has provided us with time to reflect on the appropriate response and on the meaning and future of the EU. And, we have learnt some important lessons for the future.

First, we must react more effectively to the challenges of globalisation and be seen to respond better to the real concerns of our citizens - about employment, security, crime, illegal immigration, security, and terrorism. The way to respond to these challenges is more "Europe" not less.

Second, we need to increase our international competitiveness. Globalisation is a positive force with the potential to generate prosperity to lift millions out of poverty. But, competition from emerging countries means the EU must also promote economic reform and social modernisation.

We are addressing these matters in a determined way through our "growth and jobs" strategy, which we call "the Lisbon strategy", which aims at further reforming our economy and making sure the single market for goods, services, and energy works more seamlessly.

Above all, we need to invest more in education and technological innovation to make Europe a more dynamic and competitive knowledge-based economy.

Investment in knowledge is increasingly important to both Europe and Japan and the foundation of our economic prosperity. That's why our Spring summit agreed to reinvigorate the "Lisbon agenda" and create a European Institute of Technology as a flagship for European excellence in education, research and innovation. We need to strengthen those capacities and cooperate closely with our partners, including Japan. The early conclusion of an EU-Japan Science and Technology Agreement would do much to facilitate our cooperation in these areas. We are both major contributors to the ITER project, an innovative thermonuclear energy project to research future sources of energy.

We are confronting and addressing our challenges and we have charted a path to strengthen our economy and prepare ourselves for the future.

We are the world's largest trader and investor and we must not allow any institutional set-back to influence our openness to the world. We are open for business, and we will remain so.

That naturally means cooperating closely with our international partners. With Japan, we focus particularly on facilitating mutual flows of investment in each others' economies.

European industry has answered Prime Minister Koizumi's call to double investment in Japan by 2008. Indeed for much of this decade the EU was Japan's main foreign investor ($5.5 billion dollars on average in the years 2002 to 2004). Next week, for example, the Swedish furniture retailer IKEA will open a 40,000 square metre store in Chiba, which will be the first of 10-to-12 stores the company plans to open in Japan over the next few years. This is a significant investment in Japan and will create around 8,000 jobs.

Japan is also a major investor in the EU. Japanese companies invested around €10 billion euros in the EU in 2004 alone. That's more than in any other region, including in the US and China. The number of Japanese affiliates in Europe increased by 50% in the last eight years, with expansion particularly noticeable in the new Member States.

I welcome this. In today's globalised world we must work together to create the right environment for our businesses to flourish.

From our perspective, there are areas where Japan could improve that environment, especially by removing barriers to investment. Let me give some examples:

Foreign companies have to pay taxes on unrealized capital gains when they undertake mergers and acquisition in Japan.

Businesses have to undertake complicated triangular schemes involving a subsidiary in Japan when they merge with a Japanese company: this de facto requirement should be scrapped.

From next month, Article 821 of the new Commercial Code will make some European companies technically illegal - although this had not been the intent of the legislator.

Changes in these areas would further Japan's goal to be an open, flexible and competitive market economy. They would enhance the positive results that have emerged from our two-way Regulatory Reform Dialogue, for example: the opening of the legal services market to allow foreign lawyers to practise in Japan and the recent announcement by the Ministry of Land, Infrastructure and Transport to scrap designated bidding for public procurement in construction works.

Of course, the single European market doesn't function perfectly yet either, as Japan has pointed out. We've received a number of useful suggestions, including, for example, reforms to commercial laws and practices that allow Japanese companies to benefit fully from the Single Market, and proposals to improve the living and working conditions of expatriates. These reforms have already been enacted and are already making Japanese investment in Europe easier.

The European Union is a complex entity but it is indisputable that Japan benefits from our single market, our single currency and our expanding economic space. Our relations must keep pace with these changes - which is why, for example, we need to modify the bilateral air services agreements between EU Member States and Japan to make them consistent with EU law.

Our economic cooperation also has an important multilateral dimension, notably our joint responsibility to bring the WTO Doha Development Round to a successful and ambitious conclusion. We would like to see Japan become more active in the WTO process, and I take advantage of having so many business people in the audience here to appeal to you to support the Round, including in the field of services. We would also like Japan to support initiatives such as promoting Geographical Indications. This should certainly appeal to Japanese producers of "uji green tea" and "Kobe beef", for example.

In short, there is much we can do to strengthen our economic cooperation.

But, in today's interdependent world economic cooperation is not enough.

At a time when our core values are being challenged by terrorists and dictators, those who share the same fundamental beliefs must stand together and promote our common interests globally.

The EU and Japan share the same core values.

Together, we believe in democracy and the rule of law, the protection of human rights and minorities. We respect religious beliefs, promote good governance and act in solidarity with developing countries. We advance high environmental standards and we advocate the primacy of the market economy.

We also believe strongly in multilateralism centred on the UN.

We both look for ways to develop our roles on the world stage, by using our considerable "soft power".

Japan has made major contributions to the Balkans and to Iraq, not least by deploying Self-Defense Forces, and in Afghanistan and Sri Lanka, where we work side by side.

Japan has also stood behind EU efforts to address the nuclear problem in Iran.

For its part, the European Union is promoting stability and security, first and foremost in our own region, through a variety of means.

We are preparing for the arrival of Romania and Bulgaria into our Union. Japan is a major investor, donor and creditor to these countries.

[I understand you have a very famous Bulgarian import. On Monday I shall be meeting with the Bulgarian ozeki Kotooshu and together with Prime Minister Koizumi will present him with a European designed kesho-mawashi. I hope it brings him good fortune in his quest to become "Yokozuna".]

[Returning to our efforts to promote stability and prosperity around us,] we are currently negotiating membership with Turkey and Croatia and assisting the Balkans to give them a European perspective.

For countries to our South and East, we have devised the European Neighbourhood Policy to create an area of peace, stability and better governance on our borders in return for economic and political reform.

We offer these neighbours, who do not currently have an accession perspective, a stake in the EU's internal market and in our projects and programmes. We already have seen results; for example, Ukraine has just held free and fair elections, thereby confirming its commitment to democracy.

Energy is an important priority in our neighbourhood, especially after the problems we have seen earlier this year between Russia, Ukraine and Moldova. Energy cooperation therefore will be a key subject on our agenda with Russia this year.

Beyond our neighbourhood, we are undertaking missions around the world in support of international peace and security: for example, in Africa - where we have supported directly the African Union in Darfur and we are planning a new mission to Congo, to add to the two already on the ground; in the Middle East; and in Southeast Asia, where we have, with ASEAN, monitored the implementation of the peace agreement in Aceh.

The EU also supports the Six Party Talks on North Korea and has contributed nearly 500 million euros to North Korea for humanitarian assistance and in support of the KEDO project.

We have begun a promising strategic dialogue with Japan to address regional security issues in East Asia. The European Union is developing relations progressively with China and we are encouraging it to be a responsible member of the international community, to embrace democracy, the rule of law and to respect human rights.

We also want to see relations between countries of the East Asian region improve; differences on territorial and other matters should be settled peacefully through dialogue and diplomacy. Regional cooperation in East Asia should be strengthened. The East Asian Summit process seems promising in this context and the EU could become an observer. We also believe we should use the Asia-Europe Summit meeting - ASEM - more effectively.

Ladies and gentlemen,

This rapid "tour d'horizon" demonstrates that the EU and Japan are in many ways natural strategic partners. Our approaches to problems and our interests coincide more often than not.

Yet, the nagging feeling remains that we are not doing enough and that our political relationship has not kept pace with developments. How can we redress this weakness?

I propose we focus on five elements for the future.

First, we need to intensify our political dialogue with a view to sharing analyses and, whenever possible, achieving convergent positions on international issues. This is a recognition that no country can solve today's problems alone. Like-minded partners such as the EU and Japan must therefore work together, especially when our democratic values are challenged across the world.

Secondly, we need to create a natural reflex of cooperation within our administrations and more broadly between our civil societies.

The 2005 EU-Japan Year of People-to-People Exchanges had this goal in mind. Almost 2000 events were held in Japan and across Europe at grassroot level. Its success demonstrates the enormous potential we can tap here. In this context, I would want to express here at Keidanren my sincere gratitude to Chairman Okuda for the role that he played as chairman of the organising committee in Japan.

Thirdly, we need to focus on our citizens' demand for secure and stable energy supplies. According to the International Energy Agency, the energy demand will increase 50% by 2030.

Both Japan and the EU are major importers of energy. We are cooperating well in the field of nuclear supplies. How can we build on the recent ASEM seminar here in Tokyo to promote energy efficiency?

Fourthly, on the environment, climate change is a particularly pervasive threat. At a High-Level Consultation on the Environment earlier this month we agreed jointly to devise concrete measures to act quickly to curb emissions and to work together to engage all emitters in an effective post-Kyoto global regime.

And finally, we must cooperate more closely on research and technology. Both our economies will rely on knowledge in the future as the basis for wealth creation. Working together we can maximise our achievements and pool resources for more cost-effective approaches.

Other domains in which Japan and the EU can co-operate to find solutions include the issue of ageing society and associated problems on social insurance, and pensions. The recent avian flu crisis has underlined the need to address global problems in tandem with like-minded partners.

The challenges are daunting. But with political will and a spur of cooperation we can and will make progress.

It is my firm conviction therefore that Japan and the EU can make a more significant contribution to promoting security, stability, and prosperity in the world.

This is the agenda that, together with Chancellor Schussel of Austria I aim to move forward with PM Koizumi at our Summit meeting on Monday.

Ladies and Gentlemen, it's a good time to be in Japan. The more so as we are on the brink of a new and even more positive era in EU-Japan relations.

Thank you for your attention.