Günter Verheugen
Vice President of the European Commission responsible for Enterprise and Industry

Further Improving EU-Japan Business Ties

EU-Japan Business Dialogue Round Table annual meeting
Brussels, 8 July 2005

Honourable members of the Round Table,

Ladies and Gentlemen,

Let me thank you very much for having invited me to this joint session of the Business Dialogue Round Table. It is for the first time that I participate at this important forum in my capacity as Commissioner for Enterprise and Industry and I am looking very much forward to engaging in an active dialogue with you. The European Commission attaches great attention to the work of the Round Table as such and especially to your recommendations which this time tackle six major issues that are indeed in the centre of our interest: competitiveness, the WTO and the hopefully successful completion of the Doha Development Agenda negotiations, investment in Japan and the EU, open markets, energy challenges and the rise of new competitors.

I would like to exchange with you views on the new European economic agenda and share with you some thoughts about the initiative "Better regulation for jobs and growth" which is not just an EU-issue, but also relevant in the improvement of the EU-Japan dialogue on regulatory reforms.

A new economic agenda for Europe: Growth and Competitiveness

The European Union can look back on quite remarkable economic and social developments over the last decades. The Union has created a Single Market. We possess a single Euro currency that consolidates economic stability and deepens the potential of economic integration. We have consolidated a fair participative social model. 25 nations are now united together in a political Union of stable and democratic countries.

But the European Union is confronted with new challenges. No doubt we are sharing a considerable number of them with Japan:

• how to foster competitiveness while maintaining our common mode of sustainable development and social responsibility,
• how to establish a successful industrial policy dialogue,
• how to ensure efficiency and new inventions in the research sector,
• how to cope with major global and social changes, namely our biggest challenge, a major demographic change with low birth rates and ageing populations.

Since we have entered the 21^st Century, our economy no longer seems in full swing. In some EU Member States we are losing, not creating jobs. The gap in terms of growth compared to the US is starting to widen. At the same time, economies like India and China are growing 4 to 5 times faster than in the EU.

Those challenges led us to re-launch the so-called Lisbon strategy. This strategy of the year 2000 had the ambitious goal of making the EU the most competitive knowledge based economy in the world by 2010. But the EU, so far, has not fulfilled the objectives in terms of economic growth, investment in research, or generation of employment.

In March this year, the Heads of States and governments of the EU-Member States endorsed a major proposal from the European Commission to set up a new policy. This strategy intends to increase our ability to create more and better jobs, to raise our capacity to grow through improvements in education and innovation, and to ensure that Europe remains an attractive location for investment, work and research.

Competitiveness is the key of our re-newed Lisbon Agenda!

We need to accept competition as the basic rule for the market place. It implies that we fully support the idea of open and free markets. It implies also a restrictive understanding of the role of public authorities. They have to create the right framework conditions which will encourage entrepreneurship, give businesses legal certainty and predictability, organise a level playing field and vigorously enforce competition rules.

The goals of the strategy for jobs and growth can only be achieved in the closest possible partnership between EU-Member States and the Commission. For the time being we are working with the Member States to establish annual national plans, which will bring us step by step closer to the final Lisbon goals. In addition a single EU growth plan focusing on key areas such as an effective internal market, free and fair trade and better regulation will be a tool to help creating a strong industrial base.

Better Regulation

Let me take you to my second subject, which is an essential part of our Growth and Competitiveness Agenda: Better Regulation.

Better Regulation is directly linked to competitiveness because it is important for business confidence. Businessmen - rightly - often complain about being overburdened by regulations that make their life cumbersome. I would certainly not pretend that business can be done without regulation. But we need to get things right to create incentives for business, cut unnecessary costs and remove obstacles to innovation. I have gone on record by saying that Better Regulation will be the hallmark of my stint as Commissioner for enterprise and industry.

I am talking about the need to fight excessive red-tape, to look carefully on the concrete impact of our legislation upon those who generate wealth, prosperity and jobs before we define and implement new regulations and rules. A positive regulatory environment is one of the key determinants of competitiveness, growth and employment, not only with regard to the EU Internal Market but also in respect of investments in both, Japan and the EU.

In March this year the Commission took the first step to launch its Better Regulation initiative. I intend to ensure a systematic use of impact assessment and public consultation before any legal and regulatory initiative is adopted. In the elaboration of new legislative proposals and of their accompanying impact assessments, all stakeholders will be given ample opportunity to be heard and to contribute. I also intend to ensure that if legislation is not needed and voluntary commitments or other tools can equally deliver the same results, then this is the approach that will be adopted.

I would be particularly pleased if those goals would be shared by our Japanese partners because I do believe that better regulation principles would certainly help solving market access problems you are too often faced with. Together with the Japanese Government, we need to explore the possibility of defining a more focussed regulatory dialogue, well in advance of the formal adoption of new pieces of legislation.

A pre-emptive work, based on transparency and co-operation between our regulators could and should avoid regulatory divergences before they appear. The "a priori" dialogue I am suggesting would help us preventing trade irritants which are often caused by the implementation of divergent regulations. A major contribution of this new dialogue could be the promotion of better technical regulations and standards between the EU and Japan.

The role of the Round Table in further improving EU-Japan economic relations

Between Japan and the EU a very good climate of co-operation has been built up over the years. It would grasp to short to reduce our relation to the fact that our two economies account for 40% of the world total GDP and that Japan is the EU's third largest export market and the EU Japan's second largest export market.

We share more: promotion of global peace and stability in a changing world, responsibility for the global economic system, the protection of the environment and the promotion of sustainable development for present and future generations. We are both committed to solving global problems through a co-operative and consensual approach. The 10 year EU-Japan Action Plan, agreed in 2001, provides us with an excellent basis to broaden the field for our bilateral activities and to steer our relationship.

The very fruitful co-operation established between the Ministry for Economy, Trade and Industry (METI) and the Commission's Directorate General for Enterprise and Industry has helped a lot to work together to face and overcome mutual economic challenges. We have established a successful industrial policy dialogue. We have useful exchanges on overall competitiveness issues and our experts have entered into vivid dialogues on a number of important and future-oriented issues as, for example, on biotechnologies. I also have to stress the very valuable role of the EU-Japan Centre for Industrial Cooperation. This unique "joint venture" between our administrations is instrumental in supporting business investments in Europe and Japan.

When I talk about the EU-Japan dialogue I am turning myself to you, distinguished members of the EU-Japan Business Round Table.

The Round Table is itself a tangible and visible example of EU-Japan business cooperation. You form a unique and independent forum providing valuable advice from the business sector on how to further improve the EU/Japan trading relationship. I would like to take the opportunity to express my personal and sincere thanks and my highest appreciation to Viscount Davignon for his commitment and his great efforts in having chaired the Round Table. You stand for the ambition to make EU-Japan collaboration work and you have been a trustful partner in our common efforts to further strengthening EU-Japan relations.

The EU-Japan Business Dialogue Round Table needs to continue to support the Japanese Government and the European Commission by providing us with information, analysis and recommendations based on concrete business experiences in order to allow us to draw the necessary policy conclusions.

Let me suggesting in this respect some more practical elements for our future co-operation that might be worth to be further explored:

I very much welcome the adoption of your Mission Statement which will certainly help to structure your work. I would see some room for manoeuvre to enhance the Round Table's visibility.

A solid and authentic representation of businesses interests is the key to your success. I invite you to consider broadening the Round Table's membership to representatives of those business sectors that require an enhanced dialogue and contribute to solid EU-Japan trade relations. I namely see a need to ensure for a sufficient representation of the financial sector in the Round Table. I know that this has been an issue under consideration for some years and I believe it is time to have such an important sector represented. I do also hope that we will be able to welcome at the next meeting representatives of companies from the 10 new EU Member States.

I would like to conclude by congratulating Baron Jacobs for his nomination as EU Co-Chairman of the Round Table. I wish you the right touch for the challenging tasks ahead and I am looking forward to a fruitful future co-operation. I can assure you that I am committed to engage myself in a strong and continuous dialogue with European and Japanese industry in order to make EU-Japan economic relations work and grow.

Thank you very much for your kind attention!