Joint Statement 38th Annual U.S.-Japan Business Conference U.S.-Japan and Japan-U.S. Business Councils
February 18, 2002 Washington D.C.
The U.S.-Japan and Japan-U.S. Business Councils (hereafter the “Councils”) agreed at their 38th Annual Japan-U.S. Business Conference that the United States and Japan have great responsibilities, as the largest economies, at this time of global economic instability.
Accordingly, both countries must exercise leadership commensurate with these responsibilities by: (1) putting in place policies and measures necessary to restore public and market confidence and bring about economic recovery; and (2) maintaining open domestic markets while leading multilateral efforts to foster greater trade and investment liberalization at a time of heightened security risks and growing resistance to globalization.
- U.S. Economy
- Despite some downside risks, there are signs that the U.S. economy is emerging from a shallow recession, and that economic growth will begin to accelerate later this year. This is due in large part to the fiscal and monetary policy measures taken to offset the effects of a sharp contraction in corporate investment, surprisingly stable consumption, and the underlying productivity and restructuring efforts of U.S. corporations.
Nevertheless, the U.S. Council believes that the U.S. recovery is expected to be more moderate than previous ones, making it unlikely that U.S. demand can serve as the sole source of growth for other world economies in the near term.
- Japanese Economy
- With the Japanese economy once again in recession, there are growing concerns in both Councils over deflation, rising unemployment, high levels of public debt, non-performing loans and underlying assets that are not being disposed of in a timely manner. Moreover, while both Councils support the economic reform agenda of Prime Minister Koizumi, there are strong concerns that difficult but necessary decisions to implement key measures are being delayed. The costs of such delay are high.
Therefore, the Councils urge Japanese leaders to move with greater urgency and boldness to get the economy on a sustainable growth path. It is particularly important to move quickly to implement structural reform measures that aim to enhance competition and private sector dynamism, which in turn will increase productivity and return on assets. Most critical are:
・Accelerated regulatory reform throughout the economy based on market principles that ensures a level playing field between competitors, including between public and private entities.
・Implementation of comprehensive measures on a scale sufficient to resolve the non-performing loan and excess debt problems, and dispose of distressed assets in a timely manner.
・Accelerated corporate restructuring, including greater use of the revised Commercial Code and other legal mechanisms, to reduce chronic overcapacity and alleviate deflationary pressure.
・Review and revise the existing tax regime to stimulate the economy and encourage private sector initiative.
- U.S.-Japan Economic Partnership for Growth
- Given their major stakes in the vitality of the U.S. and Japanese economies, the Councils see a central role for Japanese and American companies in supporting the economic reform agenda, and thus are committed to working with both governments in the U.S.-Japan Economic Partnership for Growth.
In particular, the Councils will work closely with the private sector members to set priorities and suggest issues for consideration by the Private Sector-Government Commission.
- Corporate Governance
- Recognizing that improved corporate governance is an essential element of corporate restructuring and economic growth, the Councils agree to expand their activities in this area.
- The Councils support the work program approved at the WTO Doha Ministerial, and urge the U.S. and Japanese governments to continue exercising the strong leadership and flexibility needed to bring about a meaningful conclusion to negotiations by January 1, 2005.
- Global Climate Change
- The Councils reaffirm the importance of effective, balanced, and inclusive approaches to preserving the global environment with the participation of both developed and developing countries. The Councils pledge to continue working toward a better understanding of the climate change issue, including a careful evaluation of the Bush administration’s recently announced policy to control greenhouse gas emissions.
- U.S.-Japan Tax Treaty
- Both Councils agreed to urge their respective governments to expeditiously complete formal negotiations to update the 1971 US-Japan Tax Treaty. In an age of globalization and electronic commerce, an updated treaty is essential. The Councils recommend that formal negotiations be completed within one year so that the treaty can be signed.
- Automotive Industry Talks
- Information and Communication Technology
Recognizing the tremendous productivity gains realized in both the U.S. and Japan through information and communication technology (ICT), the Councils seek to generate a new era of economic growth led by ICT investment, accelerated deployment of broadband infrastructure, as well as the development of affordable broadband services and attractive applications/content.
The Councils seek to achieve this through competition, open standards, regulatory restraint, and public policies that encourage investment, innovation, and consumer demand. The Councils also support strong protections for intellectual property in the digital environment that balance the interests of all stakeholders, including rights holders, service providers, device manufacturers, and consumers.