Joint Statement: 60th U.S.-Japan Business Conference

Tokyo, Japan - Members of the U.S.-Japan Business Council and the Japan-U.S. Business Council (the “Councils”) held the 60th Annual U.S.-Japan Business Conference on October 3-4 in Tokyo. The Councils jointly represent 134 companies from both the United States and Japan, with sectors including the digital economy, financial services, healthcare, energy, infrastructure, travel, tourism, and transportation.

Although the World Health Organization declared an end to the Covid-19 pandemic in March, disruptions to the global economy continue, exacerbated by Russia’s ongoing aggression against Ukraine. With these heightened security challenges, we are now at a turning point in history, where the past trend of globalization has come into question.

Under these circumstances, the Councils applaud the G7 Hiroshima Summit that was held in May this year, when the G7 nations expressed their strong will to strengthen a free and open international order based on the rule of law and agreed on the imperative of fostering economic resilience by deconcentrating and diversifying supply chains. The Councils welcome the agreement to deepen partnerships not only among the G7 countries, but also with leaders of countries in the so-called Global South. Based on the outcomes of the G7 Summit, as well as recalling that government-level cooperation between the United States and Japan has expanded and deepened in a variety of areas under frameworks such as the U.S.-Japan Economic Policy Consultative Committee and Japan-U.S. Commercial and Industrial Partnership, the Councils commit that the business communities of the United States and Japan, as strong partners, will together actively confront the challenges facing the world.

The Conference convened senior business leaders from the United States and Japan, who shared common views on challenges, such as addressing climate change and energy security with realistic and effective actions; strengthening the resiliency of semiconductor supply chains; promoting innovation and appropriate governance in AI; and fostering innovation in the healthcare sector. The Councils also believe that collaboration should be further strengthened in third country markets, including those in the Global South, to foster more resilient, sustainable, diverse, and inclusive societies and promote a more transparent and rules-based international economic order. To achieve these goals, the Councils committed to:

1. Encourage both governments to work together to ensure energy security in the Indo-Pacific region and to make realistic energy transitions toward carbon neutrality.

With the Covid-19 pandemic and heightened geopolitical risks including Russia’s aggression in Ukraine, ensuring stable energy supplies has become an urgent issue for many countries. At the same time, international cooperation to achieve carbon neutrality remains a top priority. The business communities of both countries should promote the adoption of realistic solutions to the so-called energy trilemma (ensuring energy security, equitable access to energy, and a sustainable global environment) with specific action plans. Therefore, the Councils recommend that both governments:

• Promote realistic steps to advance the energy transition and an optimal energy mix with currently available diverse measures such as renewable energy (solar, wind, geothermal), LNG, hydrogen co-firing, ammonia co-firing, and effective use of existing nuclear power plants depending on each region and industry, based on the concept of technology neutrality focusing on the objective contribution to the reduction of GHG;
• Strengthen cooperation including financial and non-monetary support for relevant industries among the U.S., Japan and other like-minded countries to promote technology innovation such as Carbon Capture, Utilization and Storage (CCUS), innovative reactors, and efficient production of sustainable aviation fuel (SAF) to achieve carbon neutrality by 2050;
• Promote carbon-recycling products such as e-methane (synthetic methane) and eFuel (synthetic fuel), and bilaterally coordinate CO2 counting bilaterally to promote those products.
• Enhance the development of energy infrastructure in so-called Global South countries appropriate to the situation in each country;
• Request that the adoption of new regulations, such as the Carbon Border Adjustment Mechanism (CBAM) in the EU, be transparent and consistent with WTO rules; and
• Further promote transition finance including formulating an appropriate evaluation framework that supports feasible and realistic energy transitions.

2. Support government efforts to ensure the stable supply of semiconductors.

In the midst of the Covid-19 pandemic, the semiconductor supply chain was disrupted, with tremendous consequences in diverse industries around the world. Semiconductors are an essential resource supporting the modern economy, and it is an urgent challenge for both countries to ensure a stable supply in the face of heightened security risks. It is also important for economic growth in both countries that they take the lead in semiconductor innovation, which plays a key role in promoting digital transformation. Therefore, the Councils recommend that both governments:

• Enhance cooperation to optimize secure and resilient supply chains, including diversification of procurement sources (including critical minerals), a sound science-based regulatory system to ensure access to necessary essential materials, including chemicals, and support companies’ decisions to seek optimal placement of production bases;
• Continue and strengthen the support for innovation promotion and supply chain optimization, and avoid the policy of excessive preferential treatment of domestic businesses that impede optimal supply chain resilience;
• Identify future competitive technology area and formulate strategy for developing its competitiveness;
• Strengthen cooperation between the public and private sectors of the U.S. and Japan to promote innovation in next-generation technologies such as high-density integration, optoelectronic integration, and silicon carbide (SiC) semiconductor materials and power devices; and
• Foster cooperation between and among countries in the development and implementation of regulations for advanced technologies.

3. Support government efforts to build optimal AI governance to maximize the social benefits of AI applications.

Technological innovation in AI, including generative AI, is advancing rapidly. It is important for both the U.S. and Japan to promote the development and utilization of AI technologies that enhance the productivity of a wide range of economic activities. There is also an urgent need to mitigate social risks such as invasion of privacy and the dissemination of misinformation and confidential information, and job displacement. Therefore, the Councils recommend that both governments:

Strengthen bilateral and public-private collaboration on policymaking to achieve both optimal governance, including the improvement of the interoperability, and promotion of appropriate uses of AI with a human-centric perspective in order to maximize the social benefits of the technology;

• Promote the Hiroshima AI Process adopted at the G7 Summit for the development of international rules aimed for trustworthy AI as the basis for promoting safe AI usage, including industry consultation and sharing technical expertise on AI development and utilization;
• Develop the standardization necessary for the formulation of international rules and foster trust among the countries concerned as the basis for the standardization;
• Strengthen the technical and investment aspects of cybersecurity to address emerging risks associated with the advancement of AI; and
• Address and bridge the digital divide to ensure the broadest possible participation in the 21st century’s digital economy.

4. Encourage government initiatives to promote innovation and ensure stable supply for healthcare goods that support health and welfare.

In both countries, which face the challenges of an aging population and widening economic disparities, the provision of accessible, advanced medical and care services is a fundamental necessity to ensure the wellbeing of the people. It is important that both countries promote cooperation in ensuring stable supplies of medical goods and access to advanced medical care, as well as improving convenience and efficiency through the utilization of digital technology. Therefore, the Councils recommend that both governments:

• Enhance closer coordination between government agencies in the U.S. and Japan to promote innovation in healthcare and nursing care;
• Collaborate to diversify supply chains, including inputs to ensure a stable and secure supply of pharmaceuticals and medical devices;
• Establish rules and infrastructure for efficient utilization of healthcare and nursing care data;
• Reform pricing schemes in Japan to enhance the predictability of investments in innovative therapies such as regenerative medicine, gene therapy, digital therapeutics, and drug discovery innovation; and
• Promote harmonization of regulations in order to promptly approve safe and effective pharmaceuticals and medical devices.

5. Pursue policies to further deepen partnerships with countries in the Indo-Pacific region.

Global markets have been increasingly fragmented in recent years. The pandemic itself, policy responses to it, and Russia’s aggression in Ukraine disrupted supply chains in different ways, leading to various problems such as the global energy crisis and food shortages. Under these circumstances, promoting a Free and Open Indo-Pacific (FOIP) requires cooperation among many countries in the region. To strengthen U.S.-Japan leadership in promoting FOIP, the Councils recommend that both governments:

6. Recognize the pivotal role of the financial services sector in addressing shared challenges and strengthening the global economy.

The Councils encourage efforts by both governments to support the growth of a healthy financial system, realize a sustainable society, advance international cooperation in finance, promote digital financial innovation, and secure a brighter future. Therefore, the Councils recommend that both governments:

• Aim for regulatory coherence, a level playing field, and careful consideration in the review of financial regulation and supervision to maximize the prudential deployment of private capital.
• Encourage efforts to support financial inclusion of developing countries, such as by promoting sustainable finance, blended finance initiatives, and innovation of financial structures through multilateral development banks.
• Pay close attention to the financial needs of small and medium sized enterprises and adapt regulations to meet those needs.
• Promote digital financial innovation in areas such as data connectivity and AI.
• Pursue policies to support Japan’s development as an international financial center and as a nation facilitating asset management. The Councils applaud Prime Minister Kishida’s recent announcement of new initiatives to bolster Japan’s asset management sector.

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.

Digital Economy - ENG / JPN

Energy and Infrastructure - ENG / JPN

Healthcare Innovation - ENG / JPN

Digital Health Call to Action - ENG / JPN

Financial Services - ENG / JPN

Travel, Tourism, and Transportation - ENG / JPN