Japan's requests and comments regarding
EU regulations and access to EU markets

March 2, 1998

Legal Services
Business Stay or Work Visas
Driver's licenses
Relaxation of plant quarantine requirements
Retail business
Standards and certification
Tourism
Marine transport services
Shipbuilding
Telecommunications
Products of fermentation
TSE
Employment
Others

1. Legal Services

The establishment of a system in France whereby foreign lawyers are able to engage in the legal services of theirown countrie's law

Japan has been requesting to the EU that France establish a system that would allow foreign lawyers to engage in the legal services of their own countries' law without having to undergo any special examinations, as is permitted in Japan under Japan's law regarding foreign lawyers. The European Commission has replied that the restriction in France is a part of the GATS schedule of the European Community and its Member States which has been accepted by Japan. Japan remains unconvinced, however, on this EU explanation, because the EU itself raises its request on deregulation regarding foreign lawyers in Japan in bilateral deregulation dialogues despite the fact that Japanese restrictions in question are part of the GATS schedule of Japan.

Japan considers that the EU comments and replies are made on behalf of Member States including France, and, therefore, Japan would like the Commission to make substansive explanation including how France has reacted to Japan's request on legal services.

Japan continues to make this request.

2. Business Stay or Work Visas

(1) Deregulation on requirement at offices of foreign concerns in Greece

According to the reply received last July from the European Commission and Greek authorities, the following applies for the issuing of a work permit to third country nationals:

(i) Companies that employ at least five EU nationals are allowed to hire one non-EU national.

(ii) If more than five EU nationals are employed, the company has to maintain the ratio of 10 EU nationals to 1 foreign national.

Although the above mentioned requirements do not apply to persons working in management positions or possessing a specific technical/scientific knowledge, they nevertheless greatly restricts Japanese companies' flexibility in expanding their activities in Greece by increasing the number of their Japanese resident staffs. Japan requests to abolish such requirements.

(2) Improvement of visa issuance procedures in Greece

Of the three points raised by Japan, viz., (i) the difficulties in obtaining a Greek business stay or work visa in Japan before leaving for Greece, (ii) the requirement to leave Greek territory once as part of visa application procedures when applying for a business stay visa after arriving in Greece, and (iii) the requirement to return to Japan once in order to obtain a work visa after arriving in Greece, the Commission and Greek authorities merely acknowledged last July that the third point is true. They have not given any clarification even on the current situation regarding (i) and (ii). Japan requests explanation thereon and improvement of such situation.

(3) Extension of the validity period of a work visa in Germany

According to the reply received last July from the Commission and German authorities, the majority of Japanese employees of non-German companies in Germany are executive employees who do not need a work permit. It is also possible to obtain a residency permit in order to extend business stay and, after a period of five years, a permanent work permit. Compared to other third country citizens, it was also pointed out that Japanese benefits from preferential treatment in many respects compared to other third coutry nationals. However, before a work permit can be issued or extended, German employment authorities must establish whether a German or EU citizen can be found to fill the position, and this makes extension of residency permits uncertain. In addition, the procedures for frequent extensions of residency permits hamper the activities of Japanese companies present on German market and of Japanese employees. Japan requests that serious consideration be given to the extension of the valid period of a work visa to two or three years at the stage prior to the obtention of a permanent visa.

(4) Work Visa and related problems in Italy

As a result of system changes in October 1997, all Japanese workers of firms incorporated in Italy serve in the status of an employee (CEO is the only exception). This requires those who did not have to do to obtain working visas for employees. It generally takes three months to obtain a working visa. Because of this additional procedure, it takes longer than before for Japanese workers to leave for new post in Italy. Japan requests that Japanese workers who need an employee visa should be limited to a narrower range. In addition, Japan asks that the period of time required to obtain a working visa be reduced.

3. Driver's licenses

(1) Requests concerning EC Directive on driving licenses

On July 29, 1991 the Council of the European Communities adopted the Council Directive on Driving Licenses (91/439/EEC) [hereafter referred to as EC Directive], and EU members were to make and amend their domestic laws based on the EC Directive. In some EU countries, as a result of the amendment or the new legislation, Japanese driver's license holders applying driving license in those countries are treated differently from before. The EC Directive is not, however, clear on how persons from non-EU countries are to be treated, which leaves room for large discretion of individual member countries. Since some EU countries have been treating Japanese driver's license holders in an arbitrary and disadvantageous manner regarding driver's licenses, Japan asks that the situation be remedied.

(2) Treatment of Japanese driver's licenses in Italy and Spain

Italy and Spain have adopted domestic laws on driver's licenses in accordance with the EC Directive and contend that bilateral agreements must be reached in order that the exchange of Japanese driver's licenses into local licenses continues to be possible. Justification for such an argument is not clear, and Japan requests that the procedures for exchange of driver's licenses keep possible.

(3) Treatment of Japanese driver's licenses in Austria

Austria's domestic laws related to drivier's licenses amended in November 1997 in accordance with the EC Directive requires a Japanese drivier's license holder to turn over his Japanese license to Austrian authorities when he exchanges his Japanese license into an Austrian license and Austria is considering returning the Japanese drivier's licenses to the Japanese Embassy in Austria. Japan requests that they should be returned directly to their holders.

Furthermore, the amended statutes require that, at the application of license exchange, applicants provide proof that they have stayed or had their address in Japan for more than six months after the issuance of their Japanese driver's licenses. Japan would ask that measures to relax the conditions for the exchange of licenses such as the exemption from the submission of the proof be taken.

(4) Treatment of Japanese driving licenses in Great Britain

According to revision of British laws concerning driver's licenses amended in 1996 in accordance with the EC Directive, when being exchanged to a British driver's license, the Japanese driver's license must be turned over to the British authorities. British authorities are considering returning those Japanese licenses to the Japanese licensing authorities or the Embassy of Japan in Great Britain. Japan requests that the Japanese driving license be returned directly to its holder.

(5) Abolition of the procedures to get local driver's license in Greece

In Greece, according to the Presidential Decree issued in January 1995 in accordance with the EC Directive, non-EU country driver's licenses can no longer be exchanged into Greek licenses. Now, in order for individuals holding non-EU country driver's licenses to be able to drive in Greece, they must either obtain an international driver's license or take a driving test and pass it to obtain a Greek license. Japan requests that the system whereby Japanese drivers' licenses can be exchanged into Greek licenses be restored.

(6) Treatment of Japanese driver's licenses in Sweden and Portugal

In Sweden and Portugal, a Japanese driver's license was returned directly to its holder, after its exchange into a local one. However, according to 1996 amendments of domestic laws in accordance with the EC Directive, driver's licenses are prohibited from returning directly to their holders. Japan asks that the license be returned to their holders as before.

(7) Return of Japanese driver's licenses in Ireland

In Ireland, at present when the driver's licenses are exchanged, the Irish authorities send the Japanese driver's licenses to the Embassy of Japan in Ireland, and the Embassy returns them to their holders. Japan requests the licenses returned directly to it's holders.

(8) Treatment of Japanese driver's licenses in Germany

In Germany, when a Japanese individual applies for exchange of a Japanese driver's license into a German driver's license, he must submit the Japanese license to Strassenverkehrsamt (local transportation office), who keep it for as long as he is using the German license. This gives rise to problems when a person has to return quickly to Japan because of urgent business or for a temporary stay etc. and does not have time to complete the procedures for recovering the Japanese license: he cannot drive in Japan. Therefore, as we have already requested, Japan asks that when a Japanese driver's license is exchanged into a German driver's license, the original Japanese license be returned to its holder.

4. Relaxation of plant quarantine requirements

(1) Shortening of the cultivation period under quarantineconditions for bonsai plants from 2 years

Based on the fact that the Anoplophora malasiaca has a life cycle of up to two years, the EU has been requiring a period of two-years under quarantine conditions for Japanese bonsai plants prior to their export. Since not all bonsai plants are a host for the Anoplophora malasiaca, Japan regards the application of the same quarantine period to all bonsai plants as excessive requirement, whether they are host plants or not. Japan requests that the two year quarantine period should be required only for host plants.

(2) Elimination of the requirement that bonsai plants for export to the EU must be on shelves at least 50 centimeters above the ground

Japan would like to know the progress of the EU's study on Japan's comments (conveyed last July) regarding the EU's reply on this issue last May.

(3) Elimination of limitations on the import of Japanese Pinus and other bonsai plants

The EU limits the authorized period for imports of Pinus, Chamaecyparis and Juniperus bonsai plants to two years, and renews its authorisation on request from Japan. Because of this import period limitation, imports will not be permitted after the authorized period expires unless there is a request for an extension of the import period. There is, however, no scientific basis for limiting the effective import period to two years, and Japan considers the restriction to be excessive. Japan requests the EU's consideration for revision of these import regulations to enable the continuous imports of these plants, unless any problems in quarantine arise.

(4) Relaxation of controls on the import of cherry trees from Japan

The EU prohibited the import of cherry trees from Japan on June 1, 1993 by an EC directive on plant quarantine. Japan requests that the import of Japanese cherry trees be permitted as early as possible, by granting exemptions measures from the EU directive.

As Japan already submitted the data necessary for the EU's consideration of exemption measures in December 1997, Japan would like to know the outcome of discussions on this matter at the Standing Plant Health Committee.

5. Retail business

EU response to the French move to strengthen the law regulating large-scale retailers

In order to protect self-employed small- and medium-sized retailers, the French government decided to strengthen the 1973 Royer Law that sets regulations regarding the opening of large-scale retail stores. The bill to amend the law was approved by both chambers of the French parliament in June 1996.

The amendedment included:

the space of commercial facilities subject to the approval of the screening committee was changed to 300 square meters or larger from 1,000 square meters or larger;
the categories of commercial facilities requiring approval was expanded (for example, hotels with 30 rooms or more, multi-purpose theaters with 1,500 seats or more, etc.);
public hearings are required when commercial facilities with a space of 6,000 square meters or larger are built or expanded.

According to the Commission's explanation given last May, this issue is one of Member State competence and the Commission transmitted this request to the French Government, but the Commission has not explained its own understanding on the necessity and rationale for strengthening of the regulations on retail businesses in France. Japan continues to seek further elaboration from the Commission in this respect.

Moreover, the Commission has compared the density of large-scale retail stores in Japan and France in its reply, and Japan would like also to have statistics or other data which provided the basis of the comparison the Commission made of the density of large scale retail stores in France and in Japan.

6. Standards and certification

(1) Unification of the standards for plugs and sockets within the EU

Japan welcomes the progress being made, through the establishment of a voluntary European standard etc. toward the harmonisation of standards for low voltage plugs and sockets in EU member states, with the exception of the United Kingdom. While six different systems are currently used regarding those for lager appliance up to 16 Amps, Japan is aware that efforts are pursued in the EU for their unification. Japan expects that further efforts will be made for the increased convenience for users.

(2) Drivers' Helmets

Japan adopts the system of self-certification by manufacturers for drivers' helmets. Thus, drivers' helmets manufacturers of the EU can introduce their products into the Japanese market without additional test or approval, once they certified that their products conform to the standards stipulated in the Law on the Safety of the Products for Daily Consumption.
In the EU, drivers' helmets are subject to the certification by governmental authority. In case that Japanese manufacturers export their products to the EU Member States, the products must be tested and certified by the competent authority of the State concerned.
Furthermore, while all EU Member States except United Kingdom, Portugal, Greece and Ireland (i.e. eleven States) grant type approval for drivers' helmets in accordance with the uniform technical prescriptions defined under the UN-ECE Revised 1958 Agreement (Regulation 22), thus allowing those manufacturers who have obtained type approval in one of these eleven States to put their products on the market in other ten States, the United Kingdom and other three countries have not accepted these uniform techinical prescriptions and proceeding to the certification based on their respective national technical regulations. In particular, according to the information from Japanese major drivers' helmets manufacturers, the certification procedure of the British BSI costs them considerably and it sometimes takes even six weeks for applicants to obtain certification. This became strong impediments for manufacturers to cut prices. Such inconsistency within the EU market, which is supposed to be the "single" one, cannot be justified in the eyes of drivers helmets' producers in Japan.
Japan hopes that the European competent authorities introduce the drivers' helmets certification procedures which would allow Japanese helmets to be circulated more smoothly with a lower cost throughout the EU area. It expects expedicious reactions on the followings:
1. As an immediate action, every effort should be made in the EU to convince the United Kindom to apply the uniform technical prescriptions for drivers' helmets defined under the UN-ECE Revised 1958 Agreement.
2. When the European Communities will acceed to the Agreement as scheduled, Regulation 22 on drivers' helmets should be applied in the United Kingdom, Portugal, Greece and Ireland. Japan requests that the application of the single harmonized standard on drivers helmets be assured throughout the EU Single Market, including these four countries.
Furthermore, Japan requests that the EU would introduce the self-certification system for drivers' helmets in the future, as is currently the case in Japan.

(3) Abolition of excessive customs measures in Greece (Directive on Low-Voltage and Directive on EMC (Electromagnetic Compatibility))

When appliances applicable to the Directives on Low-voltage and EMC are imported into Greece from outside the European Union, the importers are required to have "the declaration of registration" attested by the Ministry of Development for the custom clearance by submitting the self-declaration of conformity and the pamphlet of the products together with the payment of 5,000 Drs to the Ministry. Even though the Low-voltage and EMC Directives allow in principle self-declaration of conformity by manufacturers for the conformity assessment, this excessive measure by the Greek custom authority fundamentally changes the nature of these regulations to the governmental certification. On these grounds, it is Japan's view that the measure should be abolished forthwith.

(4) Uniformity of sound pressure regulations for stereo headphones

With regards to regulations on sound pressure for stereo headphones currently under consideration in France and Belgium, they are planning to introduce different regulatory standards. In order to preserve the uniformity of the Common Market within the EU, Japan is of the view that common regulatory standards and measurement means should be agreed in the EU as a whole if regulations are to be introduced on this matter.

(5) Consistency of the application of European directives to construction machinery

Britain's Health and Safety Executive has been enacted with excessive rules for the standards of visibily support equipments for the construction machinery (large dump trucks etc.), which are not required by any other EU country and in the harmonised standard (EN474-1) for machinery. In addition, for excavators, the Noise Limitation Directive (95/27/EC) stipulates that the period of validity for certificates of approval issued by a notified body be 5 years, while the Government of Germany stipulates a shorter period. It is Japan's view that such inconsistency of the application of directives on construction machinery should be rectified.

7. Tourism

(1) Abolition of nationality requirements for tour guidelicenses in Italy, Spain and Portugal

According to the legislations on tour guides in the countries listed above, only EU nationals including nationals of those countries can obtain tour guide qualifications. While the EU has explained that the nationality requirements for guides in these countries are covered by the GATS schedule of the EC and its Member States, Japanese tourists visiting these three countries are compelled to hire local guides who cannot speak Japanese plus Japanese interpreters and thus to pay totally redundant cost. Japan requests the abolition of the nationality requirements in tour guide related legislations of these countries.

(2) Easing of excessive investigations of Japanese tour conductors by tourist police in Italy.

Of the nearly 1,520,000 Japanese overseas tourists each year, many travel on packaged tours. Tour conductors and interpreters usually accompany them. In Italy, tour conductors are often suspected of acting as tour guides; for example, when they are briefing their tourist groups on time schedules or meeting places, they are often mistaken for tour guides. This leads to excessive investigations by the local tourist police, hampering the tour conductors' activities, which have nothing to do with those of tour guides. Japan requests that the Italian government prevent such excessive investigations by the tourist police.

In its reply in July, the EU explained that the performance of tour conductor duties in Italy is not covered by GATS committments. Japan is not contending that conformity with GATS is a problem; Japan is seeking an realistic solution to a problem that actually exists at present.

(3) Relaxation of requirements regarding qualifications for tour guides in Greece

With regard to tourist guiding in Greek museums and archaeological sites, Hellenic legislation requires that these activities can be exclusively exercised by individuals that obtained the respective diploma of the Tourist Guide Schools of the Hellenic Tourist Organisation. This requirements should be abolished.

8. Marine transport services

(1) Clarification on the Community Guidelines on State Aid to Maritime Transport

In July 1997, the EU officially announced the "Community Guidelines on State Aid to Maritime Transport." Japan is concerned that the introduction of a state aid regime could heavily distort international commercial competition in maritime transport services and adversely affect free and fair practices in this sector. No clear explanation has been made so far as to the background and the philosophy that led to the Guidelines. Japan would like to know the views of the European Commission and the developments ever since thereon, particularly on the following points:

With regard to the existing state aid regimes of each Member State, will the EU reexamine the conformity of state aid regimes with the Guidelines by assessing each of them separately?
Regarding the maximum level of aid, the Guidelines stipulate in "Limit to Aid" that "a reduction to zero of taxation and social charges for seafarers and of corporate taxation of shipping activities is the maximum level of aid which may be permitted," and that "it is considered that the total amount of aid in the form of direct payments should not exceed the total amount of taxes and social contributions collected from shipping activities and seafarers." If these conditions are actually applied, competition in the maritime transport service sector would be seriously distorted. Japan would like to know the views of the European Commission in this regard.

(2) Problem of the cargo reservation scheme for import ofcoal in France

France contends that, for military reasons, 40% of seaborne coal import must be carried on ships owned or operated by member nations of the EEA (European Economic Area). Japan would like to know whether the coal import can be considered procurement of services which governmental organizations purchase for governmental use, as stipulated under Article 13 of GATS (government procurement).
If it does not come under Aticle 13 of GATS, Japan asks that this scheme be abolished.
If the coal import comes under Article 13 of GATS, it would not constitute a problem under GATS. However, from the standpoint of liberalisation of ocean transport, it is desirable that the requirement would be abolished at an earliest possible time. Japan will continue to monitor this issue in the future.

9. Shipbuilding

Aid to the shipbuilding industry

Grant aid for shipyards in Germany, Spain, and Greece was approved at the Council of the EU Industry Ministers in April 1997. Japan regrets that such measures were proposed and approved despite its warning that they could be in violation of the mutual consent in the Final Act of the negotiations concerning the OECD Shipbuilding Agreement.
The extension of the Seventh Council Directive on Aid to Shipbuilding up until the end of 1998 and a new regime that will replace the existing scheme were discussed at the Council of the EU Industry Ministers in November 1997. The contract-related production aid under this Directive apparently distorts fair competitive conditions in the shipbuilding market, and it should be abolished immediately. In addition, the Communication of the European Commission "Towards a New Shipbuilding Policy" (Com [97] 470 final) dated 1st October, which proposes to maintain a contract-related aid scheme until the end of the year 2000, may have an adverse effect on the possibility of the early ratification of the Shipbuilding Agreement by the United States.
According to the said Communication, the introduction of vague and unclear measures such as investment aid and restructuring aid is being considered. Any kinds of new aid which the Shipbuilding Agreement prohibits should not be introduced even before the Agreement comes into force. Japan requests a comprehensive and detailed explanation in this regard.

10. Telecommunications

Requests regarding the EU's proposed directives on licenses COM (95)545 and on interconnection COM (95)379

As to licensing and interconnections, Japan is paying close attention to the specific systems that EU Member States adopted by January 1998 in accordance with the EC directives, and we ask that detailed information be provided regarding this subject.
Licensing and interconnections procedures should be applied without discrimination to not only companies established within the EU but also to those outside of the EU. As the GATS agreement went into effect in January 1998, we will pay attention to whether the commitment of the EU and its member nations is being faithfully carried out.
Licensing and interconnection procedures of each Member States (including licensing standards, standard processing period, and specific interconnection regulations) should be publicised in not only the official bulletins of each State but also in the official bulletins of the EU, both in the official language of the country as well as in English. The EU tells that it announces its directives in EU bulletins in the official languages of the EU, including English. For the convenience of enterprises outside of the EU, Japan hopes that the domestic laws of EU Member States based on the EU directives should also be publicised in English in EU's official bulletin.
Interconnection tariff and methods for calculating interconnections fees of each country should be made public and be easily accessible to other countries and the access methods should be clearly indicated. The same goes for opinions from carriers and government thinking on the establishment of rules on interconnections to the establishment of interconnection tariff.

11. Products of fermentation

Strengthening of regulations concerning European pharmacopoeia monographs

Currently in Europe the safety of the manufacture process and the quality of pharmaceutical products are maintained and guaranteed by a combination of "quality standards by pharmacopoeia for individual products" applied through specific methods for various pharmaceutical products, such as amino acids, antibiotics, vitamins and raw materials for producing pharmaceuticals (including fermented products), along with "process control" based on "good manufacturing practice" (GMP). Pharmaceutical products and raw material manufacturers have already been manufacturing them using GMP and market their products in accordance with European Pharmacopoeia, and are thus able to fulfill the "product standards" established by the Pharmacopoeia in each countries in which they are sold.
In February 1997 it became known that the European Pharmacopoeia Commission (of which the EC is a member) is planning to establish new monograph requirements for substances that have been through fermentation processing. This new monograph approach to regulating pharmaceutical products and raw material is being directed only because that have been fermented during their manufacture, and therefore the new "production process rules" are only applicable to fermented products.
The traditional fermentation products and their processes have a long history of safe. Therefore, there is no ground to single out them and for subjecting them to additional regulatory requirements without science-based reasons.
With regards to this issue, Japan has concluded that (i) there is no scientific foundation for imposing additional regulations in the European Pharmacopoeia concerning "production process control" for special pharmaceutical methods that are only applicable to fermented products, and that (ii) technically some of the contents, such as the definition of regulating scope of the producer microorganism, the method to characterise the producer microorganism and the limitation of the number of passage, seems to be unreasonable and also technologically impracticable in most cases. Moreover, (iii) there is a grave concern that enforcement of such regulations would result in damage to the stable supply of fermented pharmaceutical products, raw materials, etc. which are indispensable for medical purposes within Europe.
We understand that the EC is going to make a directive on the basis of the European Pharmacopoeia Commission's decision. Therefore we would like to request the European Commission to intervene the movement to adopt the monograph and to make it sure, that the above mentioned problems be solved bearing the realities of the situation in mind.

12. TSE

Prohibition of the use of TSE-risk materials

According to the European Commission Decision of 30 July 1997 (97/534/EC), from 1 January 1998, the use for any purposes of materials derived from the brain, spinal cord, eyes, and tonsils from bovine, ovine and caprine animals, and from the spleen from ovine and caprine animals will be prohibited within the EU. (The enforcement has been postponed to begin from April 1.) In addition, for exports of foodstuffs, pharmaceuticals, medical devices, cosmetic products and others (including these products' starting materials or intermediate products) from countries or regions outside of the EU to the EU, a certificate and declaration signed and issued by the competent authorities of the country of production to the effect that the said product does not contain any of the prohibited risk material specified above as raw material will be required. This decision is expected to become a heavy obstacle for Japan to export tallow and others, as well as products (foodstuffs, pharmaceuticals, medical devices, cosmetics, etc.) containing or derived from those materials to the EU.
Sufficient study based on scientific grounds, international standards and other resources should be carried out when introducing any regulation. With the aim of preventing infectuous diseases among domestic animals and ensuring the safety of meat, measures against such infectuous diseases and others are being enforced in Japan. For example, notification in case of the discovery of any animals infected with specially designated diseases like TSE, etc. is mandatory according to the Domestic Animal Infectious Diseases Control Law (under the jurisdiction of the Ministry of Agriculture, Forestry and Fisheries) and the Abattoir Law (under the jurisdiction of the Ministry of Health and Welfare). However, there have been no reports of any incidences of BSE in Japan to date. This situation has been reported to the International Office of Epizootics (OIE). Moreover, in order to control risks, in addition to requiring exporting countries to conform to the conditions stipulated by the International Animal Health Code when exporting animals and animal products to Japan, Japan prohibits the feeding of meat-and-bone meal and others from ruminants to bovines within Japan. Through these and other measures, Japan meets the conditions for being classified as a BSE-free country.
Based on the situation described in section (2) above, Japan requests the EU to:
1. exempt from the decision tallow and others, whose country of origin is Japan, in which there has been no case of BSE to date, as well as products (foodstuffs, pharmaceuticals, medical devices, cosmetics, etc.) containing or derived from those materials;
2. provide first the scientific grounds for including risk materials related to not only BSE but also TSE of any region including TSE-free countries in general, as materials for the purpose of EU decision.

13. Employment

(1) Problems related to employment in Germany

Japan seeks rapid correction of the following problems related to employment in Germany.

The amount of vacations (including both paid vacations and official holidays) that accompanies wages paid by employers' side is excessive. Specifically, 40 days of paid vacations including 30 days of paid vacations and 10 days of official holidays are provided (in Japan the figure is 31 days). Furthermore, six weeks of paid sick time with 100% pay is guaranteed. (Despite the recent enactment of a law stipulating 80% pay, in reality there has been no change on this point.) In addition, workers can take up to six weeks of paid recovery time (Kur) once every two years when they get physician's certificates.
At firms with more than five regular employees, the employees can establish consultative councils on business operations that, once established, require cooperative decision-making on business matters extending to the workers' employment, which means that the management side of business cannot decide such matters by oneself.
Germany has laws for the purpose of protecting employees from being discharged, which make it extremely difficult to discharge workers in response to business conditions, such as the need for rationalizing operations, after they have been hired. Even though there are justifiable reasons for discharging employees, such as the closing of a part of the business, firms are oblidged to discharge most recently hired employees first (generally, they are young workers in the prime of their working years), which are obstacled to the business restructure for the employers. Moreover, the right of firms to make a fixed-term employment is only allowed on cases in which a fixed contractual term is less than 24 months (until recently, the term was 18 months). Therefore, the firms have to be very cautious about hiring new employees.

(2) Problems related to employment in Italy

Due to the civil law in Italy, it is impossible to conclude fixed-term employment contracts. Once a worker is hired, the worker cannot be discharged without the reasons set forth in the labor agreement, but causes for discharge set forth in the labor agreement are limited to illegal acts such as violence or embezzlement. This means that the employer cannot discharge an employee for rational reasons such as the need to improve the efficiency of business operations. Those hinder the healthy operations of companies and Japan requests that this matter be rectified without delay.

(3) Problems related to employment in Spain

Regulations related to overtime work and time off are excessivelysevere. (Article 35, Item 2 of the Labor Charter)
Working time in excess of legally prescribed working hours is limited to 80 hours per year. However, this has to be reserved for production slowdowns due to equipment breakdown and cannot be used to increase production in response to sudden increases in demand, causing companies to miss sales opportunities. Japan requests that more flexible regulations be enacted for increasing the limits on overtime as described above.
A workers' wage level cannot be lowered even when the worker is demoted (Article 39, Item 3).
Once a given wage level has been attained, it cannot be reduced even if the worker's skills have declined. Japan requests that this regulation be eliminated to allow adjustments of wages corresponding to position and skills.
Regulations related to transfers of workers in group are excessively strict (Article 40).
In cases in which companies transfer over 10% of all employees to different regions to work for more than one year there, they are required to get prior approval from the labor union by a majority of the members (unions have the right of refusal) and to inform the government. Due to these requirements, when there are great differences in workloads of different factories, it is impossible to temporarily transfer employees to other locations in order to equalize workloads per person. Although consultations with labor unions are necessary, Japan requests that the situation be rectified to permit the business managers to make the final decisions on this matter.
Compensation for dismissal is excessively high (Article 56, Item 1)
The amount of compensation that must be paid to former employees is set at the rate of 45 days multiplied by the number of years of service (for a maximum of 42 months). Under new regulations, the compensation to newly hired employees is set at the rate of 33 days multiplied by the number of years of service. Japan requests that this new regulation be applyed to all employees.

14. Others

(1) Speeding up of settlement of trade accounts in Greece

In the settlement of trade accounts in Greece, local banks, in an attempt to make profits from interest rate fluctuation, often delay settlement of accounts for a few days, or even up to a week in worst cases, even when Japanese traders have settled their accounts on the due date. Regarding this issue, the Greek bank federation (UHB) has commented that these claims have no basis in fact and that Greek banks try to settle trade accounts as quickly as possible. If these claims can be further substantiated in fact, Japan will again make a request regarding this issue.

(2) Participation of non-EU member countries in infrastructure projects in Greece which are subsidized from EU

At present only EU member countries are permitted to participate in above mentioned subsidized projects. Japan requests that also non-EU member countries be allowed to take part in such projects.

Regarding this matter, according to replies received last July from the Commission and Greek authorities, Japanese companies should have the same access as EU companies to projects subsidized by the EU structural fund subject to the Agreement on Government Procurement. As Greece is currently going through ratification procedures for the Government Procurement Agreement, it is expected that Greek practices will soon be harmonized with those of the EU. Japan is now reviewing whether are examples of Japanese companies being excluded from infrastructure projects receiving EU subsidies, and for the time being Japan is requesting that information be provided concerning the progress of ratification of the Government Procurement Agreement in Greece.

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Japan's requests and comments regardingEU regulations and access to EU markets