Executive Summary

For seven years the United States-Japan Investment Initiative has facilitated active discussion and cooperation on ways to improve the climate for foreign direct investment (FDI) in Japan and the U.S. and even globally. The importance of FDI to both countries’ continued economic prosperity makes the Initiative a critical pillar of the bilateral economic relationship.

Both Japan and the U.S. welcome FDI. This year, both sides shared concerns on growing investment protectionism worldwide and shared the view on the need to retain the confidence of the investment community. Thus, both sides reconfirmed their basic policy to advance open investment regimes both at home and in third countries.

In Japan, Prime Minister Fukuda has maintained Japan's national goal and policies of promoting FDI. In 2007, Japan's stock of FDI rose ¥2.3 trillion yen to ¥15.1 trillion ($130 billion) the biggest increase in five years. Mergers and acquisition (M&A) activity by foreign companies in Japan also increased substantially in 2007. The Expert Committee on FDI Promotion, established in January 2008, made its recommendations in May 2008. In response to this, the Japanese Government announced it will act on the recommendations and undertake certain new measures to expand FDI.

FDI in the U.S. is growing at a rate faster than that of the gross domestic product (GDP.) The U.S.' stock of FDI exceeded $1.78 trillion in 2006. In May 2007, President Bush reaffirmed that the U.S. welcomes inward FDI and invited other nations to join the U.S. in supporting open investment policies. Investment continues to be a powerful force linking our two economies. For example, as of 2006, Japan Automotive Manufacturing Association members had invested almost $31 billion in parts and manufacturing facilities in the United States and employed more than 400,000 Americans. The Department of Commerce operates the Invest in America program to complement the efforts of individual state governments in stimulating economic growth and creating jobs through inward investment.

The Investment Working Group (IWG) has developed into a forum for positive and mutually beneficial discussion of a wide range of issues important to investors in both countries. In 2007-2008, the IWG discussed:
(a) ongoing policy-level efforts in both countries to promote FDI;
(b) the regulatory framework in each country to review FDI with national security implications;
(c) individual issues raised previously, including revision of Japan's labor-related laws and systems, deregulation in the field of education, M&A related issues including corporate defensive measures, visas and other consular issues, and maritime counterterrorism measures and secure trade;
(d) aspects of each country's investment agreements with third countries, including reports on progress with negotiations. For the first time, both countries discussed the domestic impacts of the deteriorating global investment climate and reconfirmed their open investment policy.

The IWG expanded its private sector outreach begun in 2007 by inviting business representatives to the IWG. Also, public outreach under the initiative continued with a Japan-U.S. investment seminar in Osaka in September 2007, and Invest Japan Symposiums in Washington, D.C., and Miami in October 2007.

The U.S.-Japan Investment Initiative will continue its activities under the direction of Leaders to promote measures to improve the investment climate in our respective countries.

United States-Japan Investment Initiative 2008 Report (PDF:345KB)

Division in Charge

Americas Division, Trade Policy Bureau

Release Date

July 3, 2008

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