I. Background and Overview of Mission

1. Japan and the EU, the world's largest single market, are important economic partners and are building a close relationship by fostering the growth of trade and investment. The Great East Japan Earthquake resulted in an unprecedented national crisis for Japan, and the country is currently making every effort to achieve economic and social reconstruction. In order to steadily revitalize its economy, Japan needs more than ever to further expand and strengthen trade and investment with key countries and regions, especially the EU.
2. For a long time, Keidanren has been actively advocating the Japan-EU Economic Integration Agreement (EIA), and the Joint Press Statement of the Japan-EU Summit at the end of May to launch a process toward negotiations can be viewed as the first step toward achieving an EIA. At the same time, European countries are reviewing and restructuring their energy and environmental policies in light of the Fukushima Daiichi Nuclear Power Station accident and its impact, aiming to achieve economic growth while addressing climate change.
3. The Keidanren Mission to Europe visited France, Germany, the UK, and the EU capital of Brussels to exchange views with heads of government and major economic organizations. Through this exchange, the mission described the Japanese business community's efforts to achieve post-earthquake reconstruction and economic revival and explained its responses to the nuclear power station accident triggered by the natural disaster. The mission also heard how European energy policy is changing in the wake of the nuclear accident.

Dates:

July 4 to July 8, 2011

Visited Persons/Organizations:

France:

Minister for Economy, Finance and Industry François Baroin,
French Business Confederation (MEDEF),
Chamber of Commerce and Industry of Paris,
AREVA

Germany:

Chancellor Angela Merkel,
Vice Chancellor and Federal Minister of Economics and Technology Philipp Rösler,
German Chancellery's Director General of the Economic and Financial Policy Division Lars-Hendrik Röller,
Federation of German Industries (BDI)

United Kingdom:

Prime Minister David Cameron,
Secretary of State for Business, Innovation and Skills Vince Cable,
Confederation of British Industry (CBI)

Brussels:

European Council President Herman Van Rompuy,
BUSINESSEUROPE

Members:

Mission Leader:

Hiromasa Yonekura (Chairman)

Mission Members:

Fumiaki Watari (Chairman of the Board of Councillors),
Katsuaki Watanabe (Vice Chairman),
Yorihiko Kojima (Vice Chairman),
Mutsutake Otsuka (Vice Chairman),
Katsutoshi Saito (Vice Chairman),
Koji Miyahara (Vice Chairman),
Yoshio Nakamura (Vice Chairman/Director General)

II. Key Discussion Points and Outcomes

1. Outlook for energy and environmental policy (including nuclear power) in countries visited

1. (1) We explained that, given Japan's lack of natural resources, nuclear energy needs to be positioned as one element in an optimal energy mix for the country, with the prerequisite that safety be assured. We gained the understanding of governments and organizations visited on this point.
2. (2) In France, Minister for the Economy, Finance and Industry François Baroin observed that the French public recognizes the importance of nuclear power as a fundamental national strategy and stated that the government aims to continue promoting nuclear power while boosting investment to strengthen plant safety through inspections. At the same time, the country intends to expand the introduction of diverse renewable energy sources.
3. (3) Executives of global nuclear energy company AREVA emphasized the importance of nuclear power from the perspectives of energy independence, greenhouse gas (GHG) reduction, job creation, and economic efficiency. Future initiatives will continue to assure nuclear safety and transparency in parallel with renewable energy development.
4. (4) In Germany, Vice Chancellor and Federal Minister of Economics and Technology Philipp Rösler explained the government's intention to withdraw from nuclear power generation and introduce natural energy sources while continuing to ensure that the country's energy-intensive industries remain competitive in the global market.
5. (5) At the meeting with the Federation of German Industries (BDI), it was noted that Germany's sudden announcement of its withdrawal from nuclear power generation occurred against a backdrop of majority (80%) public opposition to nuclear power and that the decision was closely intertwined with domestic politics relating to nuclear policy. Renewable energy and thermal power generation will have to make up for future shortfalls, and there are fears that this will jeopardize environmental goals such as GHG reduction and result in further electricity price hikes that may hamper industrial competitiveness. BUSINESSEUROPE echoed these concerns and expressed the view that nuclear power may be reassessed in the future.
6. (6) Given these circumstances, it was agreed that there is extensive potential for cooperation between the industrial communities of Japan and Germany in the development of energy-saving technologies, an area of strength for both countries.
7. (7) At the meeting with the Confederation of British Industry (CBI), both sides agreed that relying solely on generating power from fossil fuels is problematic, and that it is necessary to continue investing in nuclear power based on the prerequisite of ensuring transparency and implementing safety measures.
8. (8) European Council President Herman Van Rompuy noted that the Fukushima Daiichi Nuclear Power Station accident had a major impact on public opinion in Europe, but that reactions had varied and, with the exception of Germany and Italy, many countries intended to continue nuclear power generation. While each EU member has the right to determine its own energy mix, Mr. Van Rompuy explained that the EU will conduct rigorous stress tests in roughly half the countries in the union to reassure people in these member nations.
9. (9) This series of discussions reconfirmed that although nuclear power occupies different positions in each nation's energy policy, it has a certain role to play, especially in resource-poor countries. Another key outcome was a shared recognition of the importance for Japanese and European companies to collaborate in developing technologies in areas such as nuclear power, renewable energy, and energy efficiency enhancement.

2. Japan-EU Economic Integration Agreement (EIA)

1. (1) Keidanren highlighted the further expansion and diversification of economic exchange to be gained from a Japan-EU EIA and made strong requests for a prompt start to EIA negotiations.
2. (2) French Minister of Economy, Finance and Industry François Baroin responded by noting that Japanese government commitments on non-tariff barriers (NTB) and deregulation of public procurement are prerequisites for beginning negotiation, and expressed the hope that an EIA would lead to major economic growth for both France and Japan.
3. (3) The meeting with the French Business Confederation (MEDEF) made it clear that although there had been considerable opposition to a Japan-EU EIA a few years ago, more companies were now in agreement as they contemplated expanding into Japan. This confirmed changing attitudes toward an EIA in the French business community.
4. (4) German Vice Chancellor and Federal Minister of Economics and Technology Philipp Rösler indicated that although there is some criticism of an EIA in the German business community, swift and clear signs from the Japanese government and business community regarding NTB abolition could prompt the German government to lobby the EU more strongly in favor of such an agreement.
5. (5) When Keidanren suggested to German Chancellor Angela Merkel that business dialogue on a sectoral basis could be effective in resolving the NTB issue, she agreed that this was an excellent idea.
6. (6) German Chancellery's Director General of the Economic and Financial Policy Division Lars-Hendrik Röller welcomed the Japanese cabinet's decision to open up the country and promote a high-level economic partnership, and Keidanren was very encouraged by his statement that the German government would monitor the progress of business community dialogue and, at the appropriate time, lobby the EU to start negotiations.
7. (7) The Federation of German Industries (BDI), which previously opposed a Japan-EU EIA, declared that it would revise its policy to accept the start of negotiations conditional on clarification of requests for specific market-opening measures and trade barriers.
8. (8) British Prime Minister David Cameron commented that the UK is at the forefront of the move within the EU to promote a Japan-EU EIA, but that Japan needs to address the NTB issue in order for the UK to convince other EU members of the merits of such an agreement.
9. (9) European Council President Herman Van Rompuy stated that the EU is prepared to enter into negotiations once scoping exercise is completed, but that the ball is now in Japan's court. He explained that the EU has resolved to begin internal preparations required for (a) the start of scoping and (b) the launch of negotiations. For the first time, BUSINESSEUROPE expressed the view that it would support the commencement of EIA negotiations provided that scoping exercise reaches a successful conclusion.
10. (10) Overall, a shared recognition of the importance of an EIA was a key outcome of discussions with the EU side. All countries repeatedly requested that Japan address the NTB issue, but we were able to confirm that the trend is toward accepting the start of EIA negotiations if conditions are met during the scoping exercise.
11. (11) Keidanren will continue calling on all relevant parties to achieve the swift conclusion of scoping exercise and the prompt start of negotiations.