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Benita Ferrero-Waldner

European Commissioner for External Relations and European Neighbourhood Policy

New Visions for EU-Japan Relations

Opening of Joint EU-Japan Symposium
Brussels, 6 April 2006

1. Welcome

Ambassador Kawamura,

Ambassador Yamamoto,

Distinguished guests,

I am very pleased to welcome you to the Joint Symposium “New Visions for EU-Japan Relations”, organised by the European Commission and Japan’s Ministry of Foreign Affairs. I am especially pleased to welcome friends and colleagues who have travelled far to participate.

It was at last year’s Summit in Luxembourg that we decided to bring together stakeholders for an in-depth discussion on how to further strengthen EU-Japan relations. That is why you are here.

The EU and Japan have developed a solid and mature relationship, based on our traditionally close economic cooperation. We have begun to strengthen our political ties and cooperate well in addressing global challenges, such as pandemics and infectious diseases, climate change, and UN reform.

All this is underpinned by the core values and principles we share: democracy, rule of law, protection of human rights, good governance, the market economy, solidarity with developing countries, and environmental protection.

The question we put to you in this symposium is:

What more can we do to promote our joint interests and concretely strengthen our partnership?

2. Why are EU-Japan relations important?

Let us take a moment to consider why EU-Japan relations are important.

As two of the world’s leading economies, it is not surprising that EU-Japan relations have been dominated by economic factors. Together, we account for 40% of world Gross Domestic Product.

In 2004 and 2005, trade between the EU and Japan in goods and services was worth around €145 billion per year. In purely nominal terms that makes Japan the EU’s fifth largest trading partner. Yet Japan is the EU’s second economic partner after the US – if we take into account services, imports of Japanese goods produced in China and cross-investments.

For much of this decade the EU was Japan’s main foreign investor ($5.5 billion on average in the years 2002 to 2004). Japanese companies, meanwhile, invested around €10 billion of new investment in the EU in 2004 alone, more than in any other region, including the US and China. The number of Japanese affiliates in Europe increased by 50 per cent in the last eight years, with expansion particularly noticeable in our new Member States. They also provided much valued employment and technology transfer - and fostered economic networks between European and Japanese businesses.

The prospects for further increasing trade and investment between Japan and the EU are therefore good, in particular because of the sustained upswing of the Japanese economy - heading for its fifth consecutive year of growth, now under more favourable conditions where deflation has ended.

Confidence in Japan has clearly returned and this is welcome news for everyone. During the restructuring period the Japanese government made the decision to welcome foreign investment and even to double it by 2006. But this was only from 1% to 2% of GDP, which is still low. It is particularly important that this remains a key priority. So we very much welcome PM Koizumi’s pledge to double the level of investment again by 2011.

But there is a snag: fostering bilateral investment means removing obstacles. Let me cite three concerns for European businesses:

  • Foreign companies have to pay taxes on unrealized capital gains when they undertake merger and acquisition in Japan: this inhibits investment.
  • 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 the new Commercial Code will make some European companies technically illegal. These companies are doing business in Japan, but are registered off-shore, as they always have been. The law should be changed to reflect the legislators’ intent - which was not to create legal uncertainty for foreign businesses.

If the target for increasing foreign investment is to be met, issues like these must be addressed. Similarly we are aware that Japan has concerns about how some EU Regulations function. We will continue to discuss all these matters in our regulatory reform dialogue.

We know the European Union is a complex entity. But Japan benefits from our successes: the single market, single currency, and larger economic space. Our relations should reflect this – 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.

In the coming two days I encourage you to reflect on how we can improve economic links.

We have a common interest, for instance, in setting international standards.

We also have many common interests to pursue in the WTO Doha Development Agenda. We count on Japan to work with us to reach an ambitious and balanced agreement benefiting all WTO Members.

Another important factor in developing our economies is our scientific and technical know-how. Our prosperity rests on knowledge-based economies; so scientific cooperation makes sense. We are currently negotiating an Agreement on Science and Technology. And we are both key partners of the ITER project, hopefully developing a new source of energy.

Is there more untapped potential here? What are your views?

3. Developing our political cooperation

We also have much in common beyond the economic sphere. We are both looking for ways to develop our roles on the world stage, extending the reach of our diplomacy and taking a more active role in areas outside our immediate neighbourhood.

Japan has made major contributions to the Balkans and to Iraq, in addition to its important work in countries nearer home such as Afghanistan and Sri Lanka.

The EU too is becoming more engaged politically around the world. Aceh, Sudan, Congo, Moldova (Transnistria), Rafah border crossing in Palestine/Israel are all recent examples. We provide significant regional assistance to the Balkans and through the European Neighbourhood Policy with a view to creating peace, stability and better governance on our borders. And we are the world’s largest donor of development aid, including significant assistance to the Asia-Pacific Region.

No country today can solve problems alone. So like-minded partners such as the EU and Japan must work together, especially when our democratic values are challenged across the world.

Let’s be frank - our political relationship has not kept pace with these developments. Enhanced cooperation across the whole spectrum of current challenges will strengthen us both, whether in Central Asia, the Middle East and Africa, or on specific subjects like energy, development issues, crisis management and the fight against terrorism.

As a long-established democracy, Japan is a natural strategic partner for Europe. Our cooperation on the KEDO project to address the specific problem of North Korea’s nuclear ambition is a concrete example.

4. Working together more

We can, however, and should do more together. Both sides, I believe, agree on this.

Last year’s Summit made a start by agreeing to focus on what we could do jointly to promote global and regional stability. The first fruit of this new emphasis was the strategic dialogue on security in East Asia. This is a vitally important region for our economic prosperity and security. The new dialogue provides a forum for in-depth strategic discussions, to better understand each other’s perspectives. It is working well and needs to develop further.

One focus has been the need to encourage China to be a responsible member of the international community.

We both want China to embrace democracy and the rule of law and respect human rights. We have noted Japan’s concern about China’s military spending and the arms embargo issue. But it is also certainly in everyone’s interest that relations between countries in the region improve and that regional cooperation be strengthened. What more can be done to improve relations in the region? How else can Europe contribute?

Today’s symposium should also look at how our partnership with Japan fits in with the EU’s overall strategy in Asia. We will hold the next Asia-Europe Meeting summit in Europe in September. Are we using this instrument properly? Should the EU and Japan provide more leadership here? We believe it is crucial for us to follow the East Asia Summit’s development closely and we intend to become an observer. How can Japan help?

Let me mention two other issues where we must work more closely together: energy and the environment.

Energy. According to the International Energy Agency, the demand for energy will increase 50% by 2030. Part of this is due to inefficiencies in India and China: to achieve the same GDP output, China needs ten times as much energy as Japan, seven times as much as the EU. This has significant repercussions on the environment and global markets. Japan and the EU have led the discussion by organising an ASEM seminar on energy efficiency. And last month the Commission published its green paper on energy.

Environment. Our citizens are increasingly concerned about climate change and other threats to the environment. We will boost our cooperation in this field with the High-Level Consultations on the Environment next Monday. Climate change is happening faster than predicted. We must act quickly and engage all emitters in an effective post-Kyoto global regime.

The EU and Japan have a global responsibility on both energy and the environment. What more can we do together? We are keen to hear your suggestions.

5. The importance of people to people contacts

Underpinning this cooperation are personal connections and contacts. While much unites us, our cultures are quite different. We need to draw inspiration from these differences – much as we have done in bringing together different European cultures in the EU.

Japanese and Europeans are fascinated by each other’s society and culture. In my experience, Japanese people are well informed about the various aspects of European culture, for instance our celebration of Mozart’s 250th birthday this year.

Yet awareness of the EU as a political and economic entity is low. The People-to-People Exchange Year in 2005 certainly increased awareness of the EU in Japan, with over 1900 events in Japan and the EU. The two recently established EU Institutes in Japan and our Tokyo Delegation will continue that good work. As, I know, will our partners in Japan.

We need to tap into the enthusiasm of our young people, who were active in hundreds of these events last year. Many of you work hard to promote these links. I am sure you want to share your experiences and I will be interested in your suggestions for how we can maintain the momentum and sustain the achievements of the EU-Japan Year.

6. Conclusion

Each of you has been invited to participate in this Symposium because of your expertise in EU Japan relations. And because of your enthusiasm. I know that the discussions will be stimulating and maybe even provocative.

Your ideas will not go unnoticed. Quite the reverse: the results of this symposium will be incorporated into a report to the EU-Japan summit.

I am confident that you will come up with innovative ideas on this important relationship. I wish you every success – and I look forward to discussing your ideas.

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