US Business Roundtable
U.S-Japan Economic Partnership Agreement
Business Roundtable and the Nippon Keidanren believe that a United States-Japan Economic Partnership Agreement (EPA) holds tremendous potential for the U.S., Japanese, and world economies, and urge their governments to begin discussion toward a framework for negotiation of such an agreement as soon as possible.
To facilitate the launch of such discussion, our governments should initiate a joint U.S.-Japan industry-academia-government study and research. The joint study should be launched as soon as possible. Business Roundtable and Keidanren will work together to provide private sector input on the structure and substance of negotiations for the following reasons:
– The U.S.-Japan economic relationship is critical to each country’s economy, stable regional development in Asia, and global growth. Together, the two economies account for 40 percent of global GDP.
– Each country is a key developer of technology and know-how in manufacturing and services, and the two economies are deeply entwined.
– The United States sells more goods and services to Japan than any other country outside of NAFTA, and the U.S. buys more goods from Japan than any other country save China.
– Japan trades with the U.S. more than any other country, and Japanese companies invest more in the U.S. than any other country in the world. Japan’s investments in the United States employ roughly 600,000 American workers. Likewise, the U.S. is the biggest foreign investor in Japan.
These economic facts reflect unprecedented good economic relations in recent years. A U.S.-Japan EPA would build on this interdependence by providing longer-term stability and new opportunities for growth in the U.S.-Japan economic relationship, symbolizing the continued vitality of the countries’ alliance. Moreover, an EPA would facilitate the ability of both countries to continue and enhance their roles as global economic leaders in a dynamically changing global landscape. Finally, an EPA between the United States and Japan could be constructive in facilitating broader economic integration in the Asia Pacific region.
A U.S.-Japan EPA should be a comprehensive and high-level agreement. While the economies are entwined, barriers remain; there is significant untapped potential from this tremendous economic relationship, for instance:
– Bilateral trade and investment has grown only gradually in recent years, and inefficient regulation impedes economic growth.
– An EPA would improve this situation by removing tariffs and other barriers to trade in goods and services, ensuring an open investment environment, promoting regulatory reform, and facilitating secure and efficient movement of goods and persons.
Moreover, an EPA presents an opportunity for the world’s two largest economies to set forth a blueprint of what international economic liberalization should look like in the 21st century.
– An EPA could establish a new paradigm for economic openness. In particular, an EPA could break new ground on addressing important issues that United States and Japanese businesses confront worldwide, including liberalization of trade in services and investment, protection of intellectual property rights, and difficult regulatory issues, and establish high-quality templates for dealing with these issues that could be taken up in other bilateral, regional and multilateral trade agreements.
An EPA must complement, not replace, other efforts to expand economic growth through trade and investment.
– In particular, the U.S. and Japan must continue to push aggressively for multilateral liberalization at the WTO, including conclusion of the Doha Development Agenda.
– At home, each country has important work to do on their domestic agendas to ensure that their firms and workers are maximally competitive.
But while world trade talks move slowly, the governments have an opportunity to push ahead and lead by example, to demonstrate the importance of open trade, investment and regulatory reform, and to establish a new foundation for United States-Japan economic relations.
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Business Roundtable (www.businessroundtable.org) is an association of chief executive officers of leading U.S. companies with $4.5 trillion in annual revenues and more than 10 million employees. Member companies comprise nearly a third of the total value of the U.S. stock markets and represent over 40 percent of all corporate income taxes paid. Collectively, they returned $112 billion in dividends to shareholders and the economy in 2005.
Roundtable companies give more than $7 billion a year in combined charitable contributions, representing nearly 60 percent of total corporate giving. They are technology innovation leaders, with $90 billion in annual research and development spending - nearly half of the total private R&D spending in the U.S.
Nippon Keidanren (www.keidanren.or.jp) is the key representative organization for Japanese business and industry with 1,662 members. It represents the interests of 1,351 leading, 130 industrial sector associations, and 47 regional economic organizations. Keidanren is committed to contributing to the further development of the national and global economy. Keidanren proactively works towards better business environment both at home and abroad.