Japan and the United States should revitalize their economic partnership by creating a new bilateral mechanism to ensure sustained growth, the American Chamber of Commerce in Japan said in a report Thursday.
“If the (world’s) largest economy and the second-largest economy articulate a vision of economic integration and move toward that, it could have a positive impact on multilateral and global (free trade) talks,” ACCJ President Charles Lake said at a news conference at the Foreign Correspondents’ Club in Tokyo.
Lake said the mechanism should include Cabinet-level dialogue to address bilateral, regional and global issues confronting the two countries.
The ACCJ said such a partnership, which it calls an economic integration agreement, would promote institutional cooperation in information technology security, intellectual property rights, trade and defense, and could serve as a model for agreements with other countries.
Lake emphasized that increasing foreign direct investment in Japan will play a key role in helping Prime Minister Shinzo Abe’s efforts to achieve sustainable growth.
His remarks follow a call by the Japan Business Federation (Nippon Keidanren), the country’s most powerful business lobby, to tighten regulations on foreign companies seeking to buy out Japanese firms, amid persistent fears in Japan of hostile takeovers by foreign companies.
Nippon Keidanren has asked that restrictions be tightened on so-called triangular mergers, which allow a Japanese subsidiary of a foreign company to take over a Japanese firm by swapping some of the parent’s stock for a controlling share of the target company without putting cash on the table. The change is designed to allow foreign investors to acquire Japanese firms.
Both the ACCJ and European Business Council have expressed concern over Keidanren’s move. “Both the ACCJ and the EBC are surprised that a senior delegation from a leading business organization would reportedly take a stance that would largely hinder foreign direct investment into Japan, potentially endangering Japan’s growth and ultimately hurting its long-term global competitiveness,” the two groups said in a joint statement.
In 2005, FDI flows into Japan fell 64 percent from the previous year to hit its lowest level since 1996.
Japan’s cumulative FDI stock was 2.2 percent of its gross domestic product, compared with 14.3 percent in China, 8.0 percent in South Korea and 13.0 percent in the United States. Japan has set a target of doubling the FDI share by 2010.