[Title] General Affair Council Conclusions

research and development

Commission communication to the Council

29 of May 1995.

Recalling its conclusions on the Asia strategy and on the basis of the Commission communication entitled "Europe and Japan: the next steps", the high quality of which it emphasised, the Council discussed relations between the EU and Japan and came to the following conclusions:

I. Overall conclusions

1.The Council welcomes the intensity of the dialogue between the EU and Japan, established on the basis of the Joint Declaration of 18 July 1991 and of its conclusions of 15 June 1992. It emphasises that these relations are one of its priorities. They must be based on a consistent, long-term approach, backed up by regular assessment of results achieved.

2.The Council has taken good note of the Commission's analysis and suggestions concerning the political aspects of bilateral relations between the European Union and Japan, It cannot, however, accept the proposals made in point 2 regarding enlargement of the United Nations Security Council, a matter which does not have the consensus of the Member States. It welcomes the desire shown by Japan to play a political role more in keeping with its economic weight in the world. It is accordingly in favour of strengthening political dialogue between the European Union and Japan.

In the economic sphere, the Council confirms the soundness of the constructive policy followed since 1992, combining dialogue and co-operation on matters of mutual interest with a pro-active approach to resolving clearly 1 .identified problems regarding market access and Community business presence.

It notes that such a strategy has enabled the establishment of a good working relationship with the Japanese authorities and has led to the resolution of several trade problems. At the same time, it notes the persistence of a large range of obstacles to market access and investment, which prevents European firms from realising their full potential. The Council wishes to continue and reinforce the strategy of the EU, namely in the following directions:

･ on substance, the improvement of market access will have to be pursued in a more active way, by developing the bilateral and multilateral negotiations on specific issues and by stressing the importance of horizontal questions and of full respect for WTO rules;

･ on procedure, this strategy will generate regular reports by the Commission and will be based as far as possible on co-ordinated action by the Commission and the Member States, particularly at the level of representations of the Member States and the Commission in Tokyo.

II. Political dialogue

The Council considers that the potential of the structures put in place by the 1991 Declaration must be exploited to the full (six-monthly meetings between Japan and the European Troika at Ministerial and at Political Director levels), The possibility of holding annual summits (Presidency/Commission and Japan) alternately in Europe and Japan seems a particularly desirable one. The principle of alternating venues could be raised at the next meeting of this type in Paris on 19 June 1995.

Political dialogue may of course cover all subjects of common interest, which the Council asks the Political Directors to identify more clearly when preparing each meeting.

Discussion on deepening the dialogue, notably as regards contacts to be maintained locally in Tokyo, should be taken further. Care should also be taken to ensure that Japanese public opinion is more aware of the political dialogue between the European Union and Japan.

III. Economic and commercial relations

The Council takes a positive view of the quality and the closeness of relations established by the Community in the economic sphere. It notes with satisfaction the initial concrete results obtained, although these have been relatively modest. A series of structural and sectoral obstacles, clearly identified by the Commission, hinders exports to Japan, as well as the development of investment, and contributes to the high trade imbalance, even if the latter has been reduced.

The Council encourages the Commission to continue and reinforce its action.

1. Market access

･ improvement of market access

The removal of sectoral obstacles to market access, whether for agri-foodstuffs, industrial goods or services, remains a priority for the European Union, in spite of progress made up to now and the steps forward taken under the Uruguay Round. The Council is concerned at the persistence of non-tariff and regulatory and administrative barriers and at the obstacles thrown up by the distribution system.

･ TAM

The Trade Assessment Mechanism has brought about a considerable improvement in knowledge of markets on each side and served to build up a climate of confidence. The Council calls on the Commission to continue the exercise, keeping a close watch on the follow-up to analyses carried out, and to look into its extension to services, subject to the spheres of competence of the Community and its Member States.

･ WTO

= The Council asks the Japanese authorities to contribute fully to the positive conclusion of ongoing negotiations on services.

= The Council reaffirms its attachment to WTO rules, in particular the MFN clause, which are to be strictly respected. This applies, for example, to the US-Japan agreements, in particular in the car sector. In this context the Council welcomes the assurances given by the Japanese government on the occasion of the ministerial meeting of November 1994, The Council calls on the Commission to discuss multilateral surveillance and multilateral application of the US-Japan sectoral agreements within the WTO.

= Furthermore, the Council states its willingness to have recourse to WTO dispute settlement where appropriate.

2. Cross-sectoral and structural issues

Clearly, the improvement of EU-Japanese commercial relations depends to a large extent on decisions to be taken by the Japanese authorities in the following fields:

･ deregulation

While recognising the efforts made by the Japanese Government in its plan announced on 31 March 1995, the Council considers that it does not entirely live up to expectations and that new measures should swiftly be announced and introduced. It calls on the Commission to continue the dialogue entered into with the Japanese authorities, with a view in particular to the review to be held at the end of the first year's application.

･ investments

Unlike those of the EU, the Japanese economy is still difficult for foreign investments to gain access to. The improvement of investment conditions is a priority, to be addressed both bilaterally and multilaterally, The Council welcomes proposals for the listing of measures to improve the investment climate and for facilitating the relations of European businesses with the Keiretsu.

･ technical obstacles

The reduction of all kinds of technical obstacles (standards, certification, testing etc.) must form a priority, particularly through the conclusion of mutual-recognition agreements and through dialogue on deregulation.

･ competition

The Commission's action. aimed at contributing to effective application of competition rules in Japan in liaison with the JFTC (Japan Fair-Trade Commission), needs to be continued.

･ government procurement

The opening of government procurement markets must also be pursued.

3. Bilateral co-operation

Besides efforts to facilitate trade, the Community has developed a policy of co-operation with Japan. Such action has produced worthwhile results. The Council approves the proposals put forward by the Commission in its communication, in particular on the following points:

･ research and development, within the fourth framework programme. A key topic will be information-society technology;industrial co-operation aimed at the establishment of close links between businesses. Special attention is to be paid to SMEs;

･ reciprocal information on the EU and Japan in order to put right the "knowledge imbalance" and make known the opportunities for development in both areas;

･ development co-operation for third countries, within the limits of Community programmes.

･ environment, especially with a view to developing solutions to global environmental problems.

4. Export promotion

The Council recognises the value of trade promotion in the EU's policy towards Japan, welcomes the development of increasing synergies with Japanese import promotion activities. It recalls its 1992 conclusions on the need for complementarity between the Community's actions and those of the Member States.

IV. Organisation of future work

The Council would like the EU to make effective use of all the means at its disposal in its relations with Japan. In particular:

･ the Article 113 Committee is to hold regular discussions on economic relations between the EU and Japan;

･ co-operation in Tokyo between Commission representatives and Member States' embassies, which has already produced significant results, is to be stepped up (subject to the Treaty's provisions), especially as regards preparation for EU missions on the spot, information gathering and contacts with the local authorities. In particular, joint working parties could be set up on specific subjects (agri-foodstuffs trade, health rules and services);

･ more generally, the Council asks the Commission to schedule regular meetings with Japanese authorities, in consultation with the Article 113 Committee, for the purpose of negotiations on market access in priority sectors for European firms and on horizontal topics such as the harmonisation of standards and competition policy , without prejudice to the negotiations conducted in the multilateral framework.

･ contact between the business world, in particular the European Business Community (EBC) in Tokyo, and the Commission is to be increased under the various arrangements proposed by the Commission in its communication.

The Council showed its interest for the Commission's proposal to hold a conference on EU-Japan co-operation, involving representatives from governments, the universities and the private sector. The conference may make a useful contribution to raising the level of knowledge about Japan among those responsible in the EU and to reinforcing co-operation between Japan and the EU at all levels, It will be subject to evaluation and careful follow-up.

The Council instructs the Commission to report back to it on the developments in EU-Japan relations by the end of 1996.