JAPAN'S DEREGULATION REQUESTS FOR THE EU
(ADDITIONAL LIST)

May 7, 1998
Ministry of Foreign Affairs

On the occasion of the EU-Japan High-level Meeting on Deregulation on March 2, 1998, the Government of Japan (GOJ) has provided the EU side with a List of Deregulation Requests ("Japan's Requests and Comments regarding EU regulations and access to EU markets"; hereafter referred to as "March list"). At that Meeting, the Japanese side indicated its intention to submit an additional list of requests after the necessary examination. The following list contains additional requests which emerged from such examination.

The GOJ would like to ask the EU to consider the following requests, in addition to those contained in the "March list", and to submit the results of its examinations to the Japanese side.

1. Visas (See also the March list, 2."Business Stay or Work Visas")

In many of the EU Member States, it takes an extremely long time to obtain or renew work visas. This gives rise to obstacles for the Japanese companies operating in those countries in planning a smooth and systematic employment or transfer of the employees. Furthermore, in some of the Member States, the administrative procedures of issuing and renewing the visas are not very clear; different decisions depending on the officials in charge and the lack of clear guidelines for visa issuance have often been noticed. Since the Schengen Agreement has come into effect, it is expected that in the field of justice and interior the EU-wide co-operation will also be strengthened. Therefore, the GOJ would like to ask the European Commission to tackle this matter and to enable a fundamental solution.

As a more specific matter, in addition to the requests of March, the GOJ would like to point out the problems regarding the requirement of a non criminal certificate for application for work visas in Spain.

In Spain, an applicant of work visa must present a certificate issued by the police authorities of all countries, where the applicant has resided for five years until the day of the application, and certifying that he has never committed criminal offenses. However, it requires a long time and a great deal of work to obtain such a certificate, if the applicant has lived in foreign countries other than Japan. The GOJ is of the view that for a Japanese applicant a non criminal certificate of the Japanese authorities is to be sufficient.

2. Employment (See also the March list, 13."Employment")

Employment regulations and labor practices in Europe are in many points severer for employers than those in Japan. In particular, many Japanese companies operating in Europe have difficulties meeting requirements regarding the dismissal and transfer of their employees as well as their work hours and wages. These difficulties may not be necessarily attributable to the matter of "regulations", but they give rise to obstacles for the Japanese companies operating in Europe. The GOJ would like to request a solution of these actual problems.

More specifically, the GOJ would like to ask that the following three problems be solved in addition to the issues it pointed out in its March list.

1. Employment security in Sweden

The Swedish employment security law provides for the so called "last-in, first-out" rule whereby the priority is given to guaranteeing the job of employees who have worked for a longer time when employers reduce their workforce. Many of the Japanese companies in Sweden have pointed out that this rule has blocked them from hiring talented people and has thus contributed to the aging of their workforce. Therefore, they complained that it is hard to maintain the vitality of the companies. The GOJ would like to ask the situation be improved.

2. Directive on workers' councils

If the EU directive on workers' councils comes to application, management of the Japanese companies which have factories or branches in several countries in Europe would be required to arrange regular meetings with leaders of their workers' councils at each factories or branches. This would give the management heavy burdens such as preparations for and expenses of such meetings. The GOJ requests that appropriate measures be taken to lessen such burdens.

3. Minimum wages in Belgium

In Belgium, minimum wages are determined according to the length of workers' service and the types of work they are engaged in under the labor-management agreements in each industrial sector. Companies cannot hire any employee unless they abide by the agreements, regardless of the individual workers' ability. The GOJ requests that this rigid wage system be improved.

3. Retail business (See also the March list, 5."Retail business")

The GOJ seeks solution to the following problems related to retail business in Austria.

1. Problems related to the "minimum lot"

The Austrian retailers as well as department stores want to sell goods each with a wrapping box bearing the name of the manufacturer. However, there is an agreement in Austrian industry which requires retailers to buy wholesale a minimum lot of 5,000 to 10,000 units of the same product per year if they want to sell goods each with such a box. On the other hand, retailers cannot but abandon laying a large stock of the same product in order to avoid risks of dead stock because the Austrian market is comparatively small. The GOJ requests the minimum-lot requirement be abolished.

2. Restrictions on new shops' entry into the market

In Austria, the number of shops that sell a certain proprietary article in one area has traditionally been limited to one. The regulation allows the first shop which started selling such a article in each area to monopolize the sale of them while blocking other shops from entering the market. Therefore, it prevents retailers from setting up a shop of such articles and companies from starting business in this field. The GOJ urges this regulation be abolished.

3. Restrictions under the law regulating retailers' opening hours

With the revision of the law regulating retailers' opening hours in January 1997, retailers are now allowed to sell for longer hours. However, in comparison with other EU Member States, the retailers' opening hours in Austria are still strictly restricted as follows:

Under the amended law, retailers are allowed to be open from 6:00 a.m. to 7:30 p.m. on weekdays and from 6:00 a.m. to 5:00 p.m. except in tourist spots. Shops are banned from opening on Sundays and national holidays except in tourist spots, and if they want to sell on Sundays and national holidays outside tourist spots, they must obtain permission from the provincial government. However, as provincial governments in Austria seldom issue such permission, the chance is quite slim for the Japanese retailers to do business on such days.

On the other hand, shops outside tourist spots which obtained such permission before the law was enacted are allowed to continue to do business even on Sundays and national holidays as vested rights. As a result, new comers are virtually excluded from operating on such days. The GOJ requests that such unfairness be corrected and newcomers be easily granted permission to open their retail shops on Sundays and national holidays.

4. Financial services

The GOJ requests that the following problems in Austria be solved.

1. Large loan restrictions on banks

The Japanese banks' branches in Austria are not subject to the large loan restrictions that apply to foreign banks' branches of the other EU Member States. Under that restrictions, the upper limit on loans that branches of EU countries' banks in Austria can extend is calculated on the basis of the whole capital in their home countries. However, the upper limit on loans that the Japanese banks' branches can extend is calculated only on the basis of the capital of the Austrian branches. Therefore, the amount of each loan the Japanese banks can grant is severely restricted and, thus, they are at a disadvantage against their EU-based counterparts. According to some source, among the EU Member States, only Portugal and Austria have such regulations. The GOJ request that the Japanese banks be subject to the same rules as those for banks of EU Member States.

2. Barriers to loan processing of foreign banks

As their customary business practices, the Austrian banks do not issue deed of consumption loans which require a revenue stamp, when granting short-term loans, because the stamp duty is quite high in the country. If a Japanese bank, which has representative offices in Austria, intends to arrange a loan contract between its branch in another country (including EU Member States) and a Japanese company in Austria (including companies belonging to the same group as the bank), she will be at a disadvantage in terms of the costs as compared with Austrian banks which have the above-mentioned customary business practices. Such practices are distorting fair competition between financial institutions.

3. Market access barriers to foreign insurance companies

Most of the non-life insurance policies that the Austrian insurance companies sell are long-term policies with 10 to 20 years duration. By way of contrast, the most of non-life insurance policies in Japan have a duration of one year. If policyholders cancel their contracts before their policies reach maturity, high cancel charges are being imposed on them. They are also required to pay the premiums for the rest of the insurance period and the discount of the premiums, which has been granted them under such long term contracts - the longer the contract duration, the higher the discount rate. Furthermore, such insurance contracts are automatically renewed unless the policyholders notify the insurers that they will cancel their contracts three months prior to the maturity date. Under that circumstances, it is extremely difficult for policyholders to switch to another insurance company. The situation blocks especially insurers being newly in the market from a free competition.

5. Transportation

The GOJ seeks the improvement of the following issues regarding the EDI supported port services.

The EU Member States are now introducing EDI supported registration systems for ships arriving at and departing from a port in these countries, in order to speed up such procedures. However, as each Member State has a different format of registration to be submitted to the port authorities, it costs shipping companies, whose vessels call at two or more ports in Europe, too much money to develop their own computer software to deal with such different formats. The GOJ requests that the EU develop a unified computer software for the registration systems.

6. Standards and certification (See the March list, 6. "Standards and certification")

The GOJ requests correction of the following problems regarding the standards and certification in the EU. The GOJ is of the view that it would be desirable to unify standards and specifications in as many fields as possible in order to further benefit from the single market.

1. Abolition of juxtaposition of CE marking and national standards

Legally, it is possible to retail products that have obtained the CE marking in all the EU Member States even if they do not comply with the respective Member States' national standards such as DIN (Germany) or SNGF (France). However, the products are actually to conform to such national standards if the Japanese companies want to sell them in Europe because many consumers ask for such national standards' conformity. The GOJ requests that the standards in the EU be unified so that a product that obtains the CE marking be automatically regarded as approved in accordance with such national standards.

2. Unification of criteria for permitting food additives and preservatives

Each EU Member State has its own criteria for permitting the use of food additives and preservatives for food. The GOJ requests that the criteria be unified.

7. Pet Foods

Abolition of prohibition to import pet foods into EU

The import of pet foods from Japan into EU had been without any difficulties in the past. Recently, their import from Japan (including ornamental fish foods) has been suddenly prohibited on the grounds that Japan is not on the List of the Third Countries, from where the import of pet foods is allowed (under the EC-regulation 94/278/EC). The GOJ requests the European Commission to put Japan on the aforementioned Third Countries List immediately. In the meantime, provisional measures should be taken in order to enable a resumption of the import from Japan.

In addition, the GOJ would like the European Commission to explain the reason clearly, why Japan has not been put on the aforementioned Third Countries List.

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JAPAN'S DEREGULATION REQUESTS FOR THE EU(ADDITIONAL LIST)