Washington, D.C. - Members of the U.S.-Japan Business Council and the Japan-U.S. Business Council (the “Councils”) held the 59th Annual U.S.-Japan Business Conference on October 11-12 in Washington, D.C. The Councils jointly represent 135 companies from both the United States and Japan, with sectors ranging from digital economy and financial services, to healthcare innovation and energy and infrastructure, and to travel, tourism, and transportation.
The COVID-19 pandemic continues to have a staggering impact on business and society, further exacerbating existing economic and social challenges. In addition, Russia’s aggression against Ukraine has not only shaken the international order but also had a tremendous impact on our economic activities and the lives of our citizens in ensuring our national security in the future. In line with the common intention of seeking cooperation to strengthen economic security, the governments of the United States and Japan launched a new framework called the Japan-U.S. Economic Policy Consultative Committee (the Economic “2+2”) in July 2022. The Councils welcome this effort to develop the U.S.-Japan alliance from an economic perspective.
At the same time, the global health crisis and changes in the international order resulting from security crises have presented the opportunity to reevaluate our approach to creating a more resilient future. In this context, the Conference convened senior business leaders from the United States and Japan, who shared common views on the importance of promoting innovative technologies, particularly in healthcare; modernizing infrastructure; and tackling macroeconomic challenges facing both of our societies.
The Councils also believe that the United States and Japan should further enhance coordination and cooperation in close partnership with like-minded countries that share our basic values with respect to freedom, democracy, human rights, and the rule of law, helping to facilitate a more transparent, rules-based international economic order. Towards these ends, the Councils committed to:
1. Support government policies that establish the right policy architecture and regulatory environment in promotion of innovation in healthcare, and promote access for all people and relevant entities to digital health tools, pharmaceuticals, and medical devices that are critical to public health interventions. Over the past two years, the COVID-19 pandemic has highlighted the challenges to healthcare systems across the globe, but it has also catalyzed innovations, accelerated the development and deployment of new technologies, and emphasized greater cross-border collaboration. The Councils also believe that the application of new technologies to the healthcare area is an urgent challenge as we look ahead to the future aging of society in both countries. American and Japanese companies have been leaders in this transformation, and the two business communities can lead in promoting innovation and ensuring broad access to these new healthcare tools bilaterally and globally. Therefore, the Councils recommend that both governments:
- Promote more robust mechanisms for bilateral cooperation on digital health, such as working-level dialogues, to maintain regular information sharing beyond COVID-19;
- Ensure close coordination among the government agencies responsible for regulations, reimbursement, and oversight of government policy on healthcare innovation;
- Pursue fair, transparent, and predictable reimbursement reforms for pharmaceuticals, medical devices, and digital tools to reflect the value of these innovative products in the context of the overall healthcare system;
- Support cross-border data flows to allow clinicians, researchers, healthcare companies and patients to have access to comprehensive information across borders to drive decision-making, while ensuring privacy protection of health data and increasing patients’ trust;
- Ensure that the respective legal and regulatory frameworks in the United States and Japan are up to date and in line with the need for developing a broad health IT infrastructure, specifically regarding cross-border data flows, privacy considerations, and AI guidelines;
- Promote data interoperability between health IT infrastructure, devices, and clinical systems to optimize patients’ access to care;
- Commit to flexible, risk-based frameworks that encourage AI innovation and collaborate across borders to advance sound and interoperable practices in healthcare, while partnering with the private sector, academia, and civil society to ensure patient confidence in AI;
- Increase investments in cybersecurity to protect patients’ data, ensure uninterrupted care, and secure the entire health ecosystem;
- Continue to promote paperless operations, which are essential to digital transformation in all sectors but particularly affect healthcare;
- Introduce pricing schemes dedicated for digital therapeutics such as software as a medical device (“SaMD”) and for innovative therapeutics such as regenerative medicine, cell therapy, and gene therapy; and
- Enable Decentralized Clinical Trials, allowing a hybrid of in-person and remote visits to medical institutions for trial participants by making maximum use of digital tools.
2. Support governments’ efforts to build smart and modern infrastructure that can withstand the test of time, providing meaningful economic and quality of life enhancements to people in both countries and around the world. The Councils believe continued investment in infrastructure will be critical for long-term economic recovery, and welcome both governments’ push to modernize domestic infrastructure, including through the implementation of the U.S.
Infrastructure Investment and Jobs Act. The Councils also recognize the role the United States and Japan can play in leading the infrastructure development in third countries through initiatives such as the G7’s Partnership for Global Infrastructure and Investment. To ensure improved safety, mobility, and quality of life for decades to come, the Councils recommend that both governments:
- Recognize that infrastructure modernization should be comprehensive and complete, and should include healthcare system, energy security, clean energy, transportation, and digital connectivity;
- Promote collaboration between the two governments and the private sector to develop a realistic roadmap for innovation and implementation in the above areas;
- Formulate a flexible and realistic approach to achieve a desirable energy mix based on a technology neutral approach to reducing CO2 emissions;
- Promote domestic energy production, infrastructure development and diversification of energy supply necessary to enhance energy security, including increasing the capacity and efficiency of U.S. LNG exports to the Indo-Pacific region;
- Strengthen cooperation in clean energy technologies and infrastructure, such as LNG, sustainable aviation fuel (SAF), hydrogen, Carbon Capture, Utilization and Storage (CCUS) and nuclear;
- Promote U.S.-Japan cooperation in building next-generation infrastructure, including advanced data centers and 5G, 6G or Beyond 5G, and WiFi 6, as well as further spreading the use of online services that enables the efficient use of existing and new infrastructure and resources, and improves the quality of life in remote areas, such as e-hailing applications and short-term rental services;
- Enhance bilateral collaboration in technology development related to the protection of critical infrastructure;
- Advance infrastructure technologies and equipment supported by the U.S., Japan, and like-minded countries that are committed to the rule of law and the fundamental importance of market mechanisms in economic decision making;
- Encourage scaling up public financing and promoting investor friendly policies in emerging economies to increase investor confidence and leverage private financing to help bridge the infrastructure gap and fuel economic growth;
- Address and bridge the digital divide to ensure that everyone is equipped to participate in today’s modern economy and benefit from a 21st digital economy;
- Promote the development and production of semiconductors in the United States, Japan, and other like-minded countries to strengthen the trusted supply chain of critical technologies pertinent to every aspect of infrastructure;
- Enhance collaboration among allies and like-minded countries through the Indo-Pacific Economic Framework and/or friend-shoring to deepen relationships and diversify supply chains for critical raw materials used in storage batteries, such as rare metals and battery cells; and
- Explore streamlining the CFIUS screening process for investment from trusted countries like Japan, which will facilitate investment and bilateral cooperation on building resilient supply chains and developing important advanced technologies that are critical to our mutual shared economic prosperity and national security, such as battery technology and energy storage systems.
3. Encourage governments to pursue policies that reduce rising prices and support a sustainable society: As the global economy continues to suffer under the weight of high inflation, the Councils encourage the governments to focus on policies that address root causes of the inflation and mitigate the negative impact on consumers and businesses. The Councils also recognize the importance of fair rule-based governance for a sustainable future at a time when the international economic order is faltering. Therefore, the Councils recommend that both governments:
- Allow monetary policy the room it needs to stabilize prices for as long as necessary for the price level to hit its target;
- Promote corporate governance to ensure market credibility, including transparency of corporate accounting performance, and compliance with rules;
- Eliminate tariffs based on overly broad application of national security policies, such as U.S. import restrictions based on Section 232 of the U.S. Trade Expansion Act;
- Recommit to the WTO’s Trade Facilitation Agreement’s articles on express delivery shipments which include provisions on simplifying border processes and removing unnecessary or duplicative documentation or paperwork, which is time consuming and expensive for traders, particularly SMEs, without concordant benefits or impacts on safety or security;
- Agree to a robust set of rules to lower costs associated with the customs clearance process of those shipments, in alignment with the WTO’s Trade Facilitation Agreement, such as higher customs de minimis levels and a simplified “bucket system” for classification of goods, where a small number of categories covers a broader range of goods found in the Harmonized System;
- Advance U.S.-Japan cooperation globally to eliminate market-distorting measures, such as harmful industrial subsidies, trade-distorting actions by state-owned enterprises and unnecessary tariffs or unfair trade practices, as well as address challenges such as those related to data localization, forced technology transfer including those that are conducted on a de facto basis, and the protection of intellectual property rights; and
- Strengthen supply chain security and resilience between Japan, the United States, and other like-minded countries to curb cost-push inflation while keeping away from unilateral and discriminatory measures.
Our sector-specific recommendations for the digital economy, financial services, energy and infrastructure, healthcare innovation, and travel, tourism, and transportation can be found in the supplements that follow.