The 26th EU-Japan Business Round Table (BRT) annual meeting was held in Tokyo on 12 February 2025.
Led by the Japanese chairman, Nobuhiro Endo, Special Advisor to NEC, and the EU chairman, Belém Garijo, CEO of Merck, business leaders representing over 50 companies and organizations from both Japan and the EU met and lively discussions were held with the participation of Japanese Minister of Economy, Trade and Industry Yoshiharu Muto, as well as government officials from the EU, including Kerstin Jorna, Director-General for Growth of the European Commission, and Jean-Éric Paquet, Ambassador of the EU Delegation to Japan.
For this meeting, under the title "Japan & the EU – Global Partnership in a Changing World," discussions focused on the two main themes of economic security and industrial competitiveness, and a policy proposal was adopted for the Japanese and EU governments, which will be submitted to the leaders of both governments in the future.
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EU-Japan Business Round Table | EU-Japan
From Japan's perspective, the EU represents Japan's third largest trading partner (total exports and imports) after China and the United States, and is its second largest investment partner (both inward and outward) after the United States. From the EU's perspective, Japan represents the seventh largest trade and (inward) investment partner. As such, there is a strong economic relationship between Japan and the EU, but the EU's presence from Japan's perspective is greater than that of Japan in the EU.
Since its establishment in 1999, the EU-Japan Business Round Table (BRT) has been holding policy dialogues between business leaders from both sides to strengthen Japan-EU economic relations. Both the Japanese and EU governments place great importance on this private dialogue, and its recommendations are reflected in the themes of government-level summit meetings and other such discussions. The BRT's greatest achievement to date has been its strong, long-term push for the conclusion of the Japan-EU Economic Partnership Agreement (Japan-EU EPA), which led to intergovernmental negotiations, an agreement, and its coming into force in 2019. Since then, trade volume between Japan and the EU has been increasing.
Below, I would like to look back on the discussions at this year's BRT Annual Meeting and share my impressions. (On a personal note, I am deeply moved that this conference has continued to be a meaningful forum since the first meeting in 1999, when I participated as the Director in charge at the Ministry of International Trade and Industry.)
Firstly, what was most striking was that, overall, there was almost complete agreement among the public and private sector participants from Japan and the EU regarding their perceptions of the situation, the challenges faced, and the directions should take.
At the beginning of the meeting, Minister Muto mentioned the importance of Japan and the EU working together to deepen cooperation in areas including promoting innovation, energy security, strengthening the rules-based free trade order, and ensuring economic security.
Participants from both the public and private sectors of Japan and the EU repeatedly stressed the importance of addressing these challenges and of Japan-EU cooperation to achieve this.
It has been a recent trend within the BRT for both sides to engage in aligned discussions, but this tendency seemed particularly strong this time.
The background to this is the geopolitical turmoil around the world, including the Russia-Ukraine war and the conflict between the United States and China. Furthermore, the return of US President Donald Trump to power and his subsequent rapid implementation of policies that embody America First principles, such as withdrawing from the Paris Agreement and raising tariffs, cast a shadow over the situation.
In this context, it seemed that Japan and the EU, as trustworthy partners that share values such as democracy, market economy, the rule of law, and multilateralism, are becoming increasingly aware of their mutual desire to cooperate in solving each other’s problems and those facing the globe.
Second, regarding economic security, while both sides shared the recognition of the issues and the direction of their responses, the EU side seemed to have a stronger sense of an impending crisis.
The Japanese side expressed support for the three Ps, or basic principles of Promotion, Protection, and Partnership, contained in the EU's Economic Security Strategy published in 2023, and called for strengthening Japan-EU partnership in areas such as cybersecurity, science and technology, AI governance, and data collaboration.
Additionally, many participants from the public and private sectors of both Japan and the EU pointed out the importance of ensuring the resilience of supply chains, including those for critical minerals. From this perspective, Japan and the EU both emphasized the importance of cooperation with countries in the so-called Global South.
Particularly in this instance, the tone of the EU’s call for cooperation seemed especially strong and earnest. This may be due to the fact that the EU has been suffering from an energy crisis since Russia invaded Ukraine due to its excessive reliance on Russian natural gas and other supplies, and this sense of crisis is now spreading to the issue of its current dependence on China, particularly in the field of clean energy-related technologies.
These issues raised are also in line with the agreement reached at the intergovernmental Japan-EU High-Level Economic Dialogue in May 2024 to launch the Transparent, Resilient and Sustainable Supply Chains Initiative.
The Japanese side also pointed out the importance of data in value creation and the importance of data collaboration, and called for Japan and the EU, as trusted partners, to create globally harmonized and interoperable rules, which was echoed by the EU side. This is an argument that is in line with the Japan-led Data Free Flow with Trust (DFFT) initiative.
The EU also pointed out that while there are cases where it is necessary to protect domestic industries from the perspective of economic security, the benefits of globalization should not be forgotten, and the free trade system should not be impeded. This is the EU's concept of Open Strategic Autonomy, which Japan can sympathize with.
Third, it is noteworthy that the policy recommendations call for the "establishment of a comprehensive Japan-EU cooperation framework on competitiveness" as a response to the issue of industrial competitiveness. This also likely reflects the recognition of the situations of industrial competitiveness which Japan and the EU face. To date, the cooperation framework between Japan and the EU has been successful in green, digital, and supply chain (economic security) fields, and the novel proposal is to add "competitiveness" to the list.
From the EU side, there were numerous references to the Draghi Report (The Future of European Competitiveness), which was published in September 2024 and serves as the policy guideline for the European Commission under the second term of the Von der Leyen administration that began in December.
In particular, the report's messages that 1) the EU must close the gap with the United States and China in the advanced technologies, 2) decarbonization must be compatible with competitiveness, and 3) it is necessary to ensure security and reduce dependence (on China for critical minerals and on Asia for digital technology), seemed to represent a consensus on the EU's understanding of the situation.
With regard to competitiveness, the EU side has often encouraged participants to better utilize the scale of the Japan-EU relationship, which together accounts for 30% of global GDP and has a total population of 600 million. There was also a call for the development of new markets for green products and the like, taking advantage of the scale that this represents.
The EU also pointed out that they should aim for synergy effects that complement Japan's strengths (education, human resources, small and medium-sized enterprises, etc.) and weaknesses (digital transformation, low productivity, etc.) with their own strengths (diversity, academia, etc.) and weaknesses (excessive regulation, fragmented markets, lack of research and development, rising populism, etc.). Naturally, it is clear that the EU is well aware of its own weaknesses.
In contrast, the Japanese side shared its positive circumstances in which the country has finally overcome many years of deflation and is seeing an increase in private investment. Nevertheless, the challenges regarding future economic growth and industrial competitiveness were shared with the EU.
In particular, Japan and the EU were in complete agreement that the key areas for competitiveness are GX (Green Transformation) and DX (Digital Transformation). There was also a shared recognition that these two areas represent both challenges and opportunities for both Japan and the EU.
Therefore, there were high expectations for the Japan-EU Green Alliance (from 2021) and the Japan-EU Digital Partnership (from 2022).
Japan and the EU also shared the view that the keys to competitiveness are technology, development, and innovation. From this perspective, both sides repeatedly expressed their hope for Japan's associated membership (negotiations are currently underway) in the EU Horizon Europe Programme (a research and development programme totalling €97.6 billion from 2021 to 2027).
Finally, in my personal opinion, we should utilize frameworks such as the BRT to further strengthen joint operations by the public and private sectors of the EU and Japan, in terms of both policy and business, as well as in large-scale strategies and practical tactics.
The EU's "Brussels effect" is often pointed to as a phenomenon in which rules and regulations are spread around the world under a grand vision and philosophy, resulting in the development of favorable business models. Indeed, historically, Europe has been a mission-oriented leader in creating global order.
Japan, on the other hand, has historically adopted foreign technology, culture, and rules to develop its economy and industry, while at the same time making constant improvements to suit Japan's actual circumstances.
The world is currently undergoing a period of change, with the center of the global economy shifting from Europe and the United States to Asia. While China currently has an overwhelming presence in Asia, Japan's public-private approach to the development of the region, which has fine-tuned the Japanese economic development model to suit local conditions in the economic and industrial spheres, is still highly regarded today.
Considering that Europe's strengths are its philosophy and rules-oriented approach, and Japan's strengths are its practical activities tailored to actual conditions, the two can be considered highly complementary. In other words, the "Brussels effect" and the "Tokyo effect" are mutually complementary, and synergies can be generated through joint operations.
Thus, there is a need for a Japan-EU partnership that aims to realize the "Brussels-Tokyo effect."
The Japan-EU partnership appears to have entered a period of evolution where favorable timing, geographical advantages, and people-to-people relationships have come together. For this very reason, I feel that further efforts must be undertaken from the parties involved, including myself, to implement the partnership.
(The above is the author's personal opinion, and does not represent the official opinion of the organization to which he belongs.)
March 17, 2025
>> Original text in Japanese
