The Journal The Authority on Global Business in Japan


February 2014

Building Bridges
Council promotes economic ties, celebrates 50th anniversary

By Bruce J. Ellsworth

US–Japan economic relations recently hit a milestone when business and government leaders gathered in Washington, DC for the 50th U.S.–Japan Business Conference.

Held on November 14–15, the event was organized by the U.S.–Japan Business Council (USJBC) and its Japanese counterpart, the Japan–U.S. Business Council (JUBC).

The Washington-based USJBC is an association whose mission is to support US business interests in Japan while promoting stronger economic ties between the two countries.

The USJBC has played a unique role since its inaugural conference in 1961.

Held alternatively each year in Japan and the United States, the conference enables industry and government leaders to hold substantive discussions on how to improve the business environment in areas including agriculture, trade, investment, taxation, labor, energy, environment, information technology, healthcare, financial services, and tourism.

The personal bonds formed during the conference open up direct channels of communication that help break longstanding deadlocks and catalyze new forms of collaboration.

The conference culminates with the announcement of a comprehensive set of joint policy proposals outlining a long-term vision and practical next steps for improving the business environment.

Many ACCJ leaders are active in the USJBC, which also issues policy reports, convenes high-profile symposia, and organizes visits in Washington and Tokyo for legislators and government officials.

At the 50th conference, then-USJBC Chairman Charles D. Lake II said, “For five decades the annual business conference has been the premier forum for business executives from both countries to come together to discuss pressing issues and identify solutions and opportunities for collaboration.

“Through our discussions, joint recommendations, and ongoing work together, the councils are laying the foundation for robust economic growth in both countries for future generations.”

The USJBC doesn’t seek to replicate or replace the role of other, often more specialized, industry associations. Rather, it helps resolve the problem of inconsistent and even contradictory policy demands from different industry groups by bringing US and Japanese companies from diverse industries together to find common ground. This, in turn, helps the governments focus and take concrete action in areas with greater likelihood of success.

On the occasion of the organization’s 25th anniversary in 1988, then-US President Ronald Reagan said that “by raising the level of trust and confidence between us, you’ve formed a firm base upon which our two nations can work together for our mutual benefit.”

In 1997, former US President Bill Clinton said, “the U.S.–Japan Business Council has long demonstrated the progress that we can achieve when leading firms of our nations work together to resolve the issues facing them.”

At the 50th conference, United States Secretary of State John Kerry, United States Trade Representative Michael Froman, Senator Max Baucus, and Congressman Devin Nunes all spoke about the importance of business in promoting investment, job growth, and trade.

Working with its counterpart Japanese association, the USJBC’s annual policy statement is hand-delivered to the Japanese prime minister every year.

“By bringing in our Japanese counterparts and showing how much of a win-win situation exists on both sides of the Pacific, the USJBC is highly complementary to the ACCJ’s role as the voice of American business in Japan,” said Thomas Clark, executive counsel for government affairs and policy at GE Japan and member of the ACCJ Board of Governors.

At the height of US–Japan trade friction in the 1980s, the USJBC helped lower the political temperature on both sides of the Pacific and steered policy debate in constructive directions.

The policy proposals in the annual joint statement have closely mirrored the topics covered in bilateral negotiations over the years. They have served as a virtual road map to which government negotiators refer in the resolution of trade disputes and promotion of cooperation.

Although trade friction between the United States and Japan has declined in recent years, the USJBC has maintained an impressive track record.

During 2000–2002, the USJBC called for aggressive action on the non-performing loan problem in Japan’s banking sector, strengthening the hand of pro-reform leaders and paving the way for an effective cleanup.

During 2000–2004, the USJBC took the lead in calling for the revision of the US–Japan Tax Treaty for the first time in over 50 years, collaborating closely with the ACCJ and Keidanren (Japanese Business Federation).

In 2006, the USJBC pushed for new triangular merger rules in Japan, thus helping to bridge differences of opinion between US and Japanese industry ahead of the passage of a key law.

From 2006 to 2010, the USJBC advocated faster new-product reviews and pro-innovation pricing incentives for medical products, reinforcing similar calls from pharmaceutical and medical device industry groups.

According to Dave Smith, a USJBC board member and president of Johnson & Johnson Vision Care Japan: “The USJBC helped the pharmaceutical and medical device industries in the United States and Japan to find common ground on ways to promote innovation.”

Further, the USJBC has broadened its focus beyond bilateral issues to promote greater US–Japan collaboration and joint leadership in the region and around the globe.

This includes the harmonization of standards among the 21 members of the Asia–Pacific Economic Cooperation group as well as the reduction of tariffs in the World Trade Organization.

During 2011–2013, the USJBC led efforts to promote Japan’s entry into the Trans-Pacific Partnership (TPP) negotiations, working closely with the ACCJ and Keidanren.

In addition, the USJBC has become a significant player in promoting greater bilateral cooperation on energy.

The council has been a strong supporter of US exports of liquefied natural gas to Japan because of the benefits for US companies in the downstream power market in Japan.

The USJBC has proposed that the two governments this year launch a broader public–private Strategic Energy Dialogue, which would build on existing sector dialogues on renewables and nuclear energy.

“The USJBC joint statements over the past five years reflect an increasing degree of alignment between US and Japanese business on topics such as the promotion of new energy technologies, trade in environmental goods and services, and minimizing greenhouse gases,” according to GE’s Clark.

“Energy efficiency is key to the growth of aviation, which drives economic growth and prosperity, and brings people together,” said George L. Maffeo, president of Boeing Japan and a board member of the ACCJ and the USJBC.

One of the focus areas for 2014 will be the provision of recommendations on ways to develop Japan’s tourism industry in line with the third arrow of Abenomics and Tokyo’s 2020 Olympic goals.

The USJBC has enjoyed strong leadership over the decades. Most recently, ACCJ President Emeritus and Aflac Japan Chairman Charles D. Lake II served as USJBC chairman for two years.

He provided strategic vision in integrating USJBC and the US Chamber of Commerce and in putting the organization at the forefront of debate about Japan’s entry into the TPP.

“The USJBC has pursued a robust agenda with an active role in both capitals,” said Dr. John Lechleiter, Eli Lilly global CEO, who in January was appointed chairman of the USJBC.

“Today, the top priority on the agenda continues to be the TPP, which has the potential to reignite economic growth and job creation.

“The USJBC can play a vital role in helping to forge a cooperative and mutually beneficial relationship between the two countries; one that strengthens our economies and our leadership in the Asia–Pacific region,” Lechleiter said.

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DividerBruce J. Ellsworth is director of corporate government affairs & policy for the Johnson & Johnson Family of Companies in Japan.