Japan and the European Union need to expand cooperation on multiple fronts, including security, energy and technological innovations, European Commission President Jose Manuel Barroso said at a recent seminar in Tokyo.

“The EU and Japan are in many ways natural strategic partners. . . . Yet, the nagging feeling remains that we are not doing enough and that our political relationship has not kept pace with the developments,” Barroso said at the April 21 event held at the Tokyo Chamber of Commerce and Industry. He was visiting Japan for a three-way summit with Prime Minister Junichiro Koizumi and Chancellor Wolfgang Schuessel of Austria, the current EU president.

Barroso, a former prime minister of Portugal who has headed the commission since 2004, was speaking on the theme, “The EU and Japan: a mature relationship with untapped potential.” The seminar was jointly organized by Keizai Koho Center and the European Union Delegation of the European Commission to Japan.

Economic health

Lauding Japan for its fifth consecutive year of economic growth, Barroso said both EU and Japan “have a big stake in the health of each other’s economies.” Revitalization of Japan’s economy is important not just for Asia but for Europe, which is Japan’s major investor and one of its main trading partners, he noted.

For years, the EU has focused on facilitating mutual flows of investments, he said.

EU companies have invested $5.5 billion in Japan a year on average between 2002 and 2004, while Japanese firms invested around 10 billion euro in the EU in 2004 alone. The number of Japanese-affiliated firms in Europe rose by 50 percent in the last eight years, with the increase particularly noticeable in new EU member states, he said.

While welcoming the development, Barroso urged Japan to improve its investment environment further by removing some “barriers” — including rules requiring foreign companies to pay taxes on unrealized capital gains when they undertake mergers and acquisitions here, as well as some cumbersome requirements on foreign firms merging with Japanese companies.

Japan and the EU also can do more to strengthen their cooperation on international economic issues, including joint efforts for a successful conclusion of the Doha round of World Trade Organization talks, he said.

Convergent positions

However, he told the audience, “economic cooperation is not enough” in today’s interdependent world.

Noting that the EU and Japan share the same core values and principles, Barroso stressed that two parties must “stand together and promote our common values globally.”

Barroso said the EU and Japan “need to intensify our political dialogue with a view to sharing analyses, and whenever possible, achieving convergent positions on international issues.”

Saying that the two sides already work together on tackling issues such as the nuclear programs of North Korea and Iran, Barroso said the EU is “ready to go deeper” in its dialogue with Japan on security-related issues — an area where it lags behind Japan’s key ally, the United States.

“This is a recognition that no country can solve today’s problems alone. Like-minded partners such as the EU and Japan must work together, especially when our democratic values are challenged around the world,” he said.

As major importers of energy, the EU and Japan need to deepen cooperation for secure and stable energy supplies, he said. The two sides already cooperate well in the field of nuclear supplies, but could also explore ways to promote energy efficiency, he added.

In areas of environment protection, the EU and Japan could work together to devise concrete ways to engage all emitters of global-warming gases to an effective post-Kyoto Protocol regime, he said.

Barroso also urged Japan to work more closely with Europe on research and technology.

In the face of the rapid aging of their populations and intensifying competition with emerging economies like China and India, “both our economies will rely on knowledge in the future as the basis for wealth creation,” he said. “Working together, we can maximize our achievements and pool resources for more cost-effective approaches.”

Barroso said the EU is placing priority on education and technological innovation “to make Europe a more dynamic and competitive knowledge-based economy,” citing a recent decision to create a European Institute of Technology “as a flagship for European excellence in education, research and innovation.”

Also speaking at the forum, Hajime Sasaki, chairman of NEC Corp. and co-chairman of the Committee on Europe-Nippon Keidanren, hailed the deepening economic ties between Japan and the EU.

Japan’s direct investment in the EU in 2004 reached some 790 billion yen on a net flow basis — roughly the same level as the 810 billion yen in the United States, he noted. Incoming investments from the EU in Japan have also climbed to levels comparable to those from the U.S., he added.

Japan’s economic relationship with the EU has entered a new phase, with the bloc’s expansion into a grouping of 25 member states in May 2004. Creation of an integrated market with a total population of 450 million and a combined GDP of 10 trillion euro “substantially expanded the potential of doing business in Europe,” he said.

The expansion had come at a time when Japanese companies — finally out of the tough times that had persisted since the 1990s and ready to be on the offensive again — are beginning to rebuild their overseas operations, he said. “Time is ripening for Japan to further solidify its economic ties with Europe.”

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