INVESTIGATIONS BY US, EU FOCUS GLOBAL SPOTLIGHT ON JAPAN'S PORTS

INVESTIGATIONS BY US, EU FOCUS GLOBAL SPOTLIGHT ON JAPAN'S PORTS

The pattern for most industry meetings and conferences is that as much good information is generally communicated during coffee breaks as in the formal proceedings.

The buzz both on and off stage at a symposium Monday and Tuesday in Kobe on Japan's port system was why both the Federal Maritime Commission and the European Union decided last week to investigate Japan's waterfront practices at the same time.The news of the investigations came as top executives from Asian, U.S. and European shipping companies met in Kobe and called on Japan to change many of these same complaints or risk falling behind other Asian ports.

Some said the action by Washington and Brussels was timed to coincide with the Kobe gathering, given the impact it would have just as Japan hosted the top executives in the industry.

"My belief for doing it now is to focus on this gathering," said George Hayashi, president of American President Lines Ltd. "The whole world is watching."

Japanese Ministry of Transport officials reportedly received the FMC and EU complaints in the middle of last week. Officially, Japanese ministry officials say waterfront practices are a private sector issue over which they have no control.

FIVE PRACTICES QUESTIONED

The FMC issued an "Information Demand Order Regarding Port Restrictions in Japan" that asks for a detailed explanation of five Japanese waterfront practices - prior consultation, mandatory weighing and measurement, Sunday work rules, the Harbor Management Fund and government supervision of port transport services.

Prior consultation gives Japanese waterfront officials enormous leverage by requiring that even the smallest carrier change be approved by them.

Mandatory weighing involves having each container individually weighed and measured, a practice carriers say is designed solely to create work.

Sunday operations in Japan, meanwhile, have been effectively restricted for several years at major ports. While greater leniency has been allowed recently under an "emergency" exemption linked to the Kobe earthquake, the change isn't permanent and the work is very costly.

Finally, the Harbor Management Fund is for longshoremen welfare benefits. Industry officials say there is inadequate information about where the money goes and how it's used.

A HISTORICAL PROBLEM

Many of these issues have been raised by foreign shipping carriers and the FMC for years with few results. "The problem is not new but rather historical," APL's Mr. Hayashi told the two-day Symposium on the Revitalization of the Port of Kobe. "But for whatever reason, the FMC and EU reacted and set this particular time to issue their order."

Asked why the timing was so coincidental, Mr. Hayashi said he didn't think it was coordinated but was instead designed to get full industry attention given the Transport Ministry's hosting of the symposium.

Others speculated that the FMC move might be tied to politics surrounding proposed U.S. shipping deregulation. Under consideration is a move to kill the FMC and officials at the conference said the agency might be raising the issue now to justify its existence.

Another theory had it that Japan might have even encouraged the investigations as a way to use foreign pressure to change waterfront practices.

US, EU GANGING UP?

One Japanese shipping official, however, raised concerns that the United States and Europe might be ganging up on Japan.

Wolfgang Hubner, Paris-based head of the maritime transport division of the Organization of Economic Cooperation and Development, downplayed that idea.

The requests by the United States and the European Union are not out of the ordinary, he said. The FMC generally collects information and then decides whether to pursue the issue further. "It's going too far to say this is a U.S. demand," Mr. Hubner said.

The EU used a "Note Verbale" to Tokyo in requesting more information of its own on Japanese port practices, he added. This is a back-channel request for clarification on a particular issue and is not made public, he said.

Mr. Hubner added that he's been involved in drafting a number of these EU requests over the years. The EU is not singling out Japan, he added.

"It's not something saying someone is ganging up on Japan," he said. ''That's a very important distinction in terms of diplomatic relations."

That said, company officials at the two-day conference questioned whether foreign government pressure would achieve change given sensitive underlying labor issues.