[Federal Register Volume 60, Number 180 (Monday, September 18, 1995)]
[Notices]
[Pages 48158-48160]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-23052]



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FEDERAL MARITIME COMMISSION


Inquiry Into Port Restrictions and Requirements in the United 
States/Japan Trade

September 12, 1995.
AGENCY: Federal Maritime Commission.

ACTION: Notice.

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SUMMARY: The Federal Maritime Commission is collecting information 
regarding certain restrictions and requirements for the use of port and 
terminal facilities in Japan, to determine whether they create 
conditions unfavorable to shipping in the United States/Japan trade, or 
constitute adverse conditions affecting U.S. carriers that do not exist 
for Japanese carriers in the United States. The Commission is 
collecting information regarding (1) The ``prior consultation'' system, 
a process of mandatory discussions and operational approvals for port 
usage; (2) mandatory weighing and measuring requirements; (3) 
restrictions on Sunday work; and (4) the disposition of the Japanese 
Harbor Management Fund.

DATES: Comments may be submitted on or before November 17, 1995.

ADDRESSES: Send submissions to: Joseph C. Polking, Secretary, Federal 
Maritime Commission, 800 North Capitol Street, NW., Washington, DC 
20573-0001, (202) 523-5725.

FOR FURTHER INFORMATION CONTACT:
Robert D. Bourgoin, General Counsel, Federal Maritime Commission, 800 
North Capitol Street, NW., Washington, DC 20573-0001, (202) 523-5740.

SUPPLEMENTARY INFORMATION: The Federal Maritime Commission 
(``Commission'') is collecting information about certain restrictions 
and requirements for the use of port and terminal facilities in Japan, 
to assess whether they create conditions unfavorable to shipping in the 
United States/Japan trade, or constitute adverse conditions affecting 
U.S. carriers that do not exist for Japanese carriers in the United 
States. The Commission is specifically concerned with: (1) The effects 
of the ``prior consultation'' system, a process of mandatory 
discussions and operational approvals involving Japanese port and 
terminal management, shoreside labor unions, and containership 
operators; (2) the requirement that all containerized cargo exported 
from Japan be weighed and measured, apparently without regard for 
commercial necessity; (3) restrictions on the operation of Japanese 
ports on Sunday; and (4) the disposition of the Japan Harbor Management 
Fund.

Prior Consultation

    The prior consultation system in Japan is administered and 
controlled by the Japan Harbor Transportation Association (``JHTA''), 
an association of companies providing harbor transportation services, 
including terminal operators, stevedores, and sworn measures. Under 
this system, carriers serving Japan must consult with JHTA about any 
operational matters involving Japanese ports or harbor labor. Such 
matters appear to include, inter alia, inauguration of new services, 
rationalization agreements between carriers which involve vessel 
sharing or berthing changes, changes in stevedoring contractors, 
technological or equipment changes, weighing and measuring, and Sunday 
work. Prior consultation also appears to be required for minor matters, 
such as change of vessel name or route, or substitution of vessels. 
After it consults with a shipowner, JHTA may conduct consultations with 
labor interests, then approve or deny the shipowner's request.
    This system of consultations--between JHTA and carriers on the one 
hand, and JHTA and unions on the other--originated in the 1960's, as a 
means for resolving labor disputes arising out of the introduction of 
containerization. Over time, however, prior consultation requirements 
have been extended to even minor matters, such as vessel substitution, 
which do not appear to involve potential labor relations issues. While 
its scope has increased, the prior consultation system itself has 
remained characterized by a lack of transparency. The process is said 
to lack written records, clear written bases for decisions, and appeal 
rights, and to include a system of closed ``pre-prior consultation'' 
meetings to determine which user requests will be accepted for prior 
consultation.
    Because of its broad discretion to review and disapprove virtually 
all aspects of shipowners' harbor operations, JHTA appears to have 
amassed an exceptional level of control over the market for terminal 
operations and services in Japan. In particular, it appears that 
shipowners have no free choice of terminal operators and stevedores; 
instead, JHTA assigns operators to carriers, virtually eliminating 
competition in this area. Circumvention of JHTA in dealings with 
individual operators is generally viewed to be impossible, as it could 
lead to disapproval of shipowner plans and disruption of cargo handling 
labor.
    It appears that the prior consultation requirement and the 
attendant lack of competition in the harbor services market has had a 
number of adverse effects on carriers serving Japan. These include 
increased port charges and costs, inefficiency, and inflexibility. 
Among other things, the prior consultation requirement may impede the 
ability of shipowners, both individually and in vessel sharing 
consortia, to reduce costs by rationalizing port operations and dealing 
with operators of their choice.

Mandatory Weighing and Measuring

    Currently, it appears that all containerized cargo exported from 
Japan is required to be weighed and measured by one of two sworn 
measuring associations, Nippon Kaiji Kentei Kyokai and Shin Nihon 
Kentei Kyokai, both of which appear to be members of JHTA. This policy 
is set forth in a 1980 

[[Page 48159]]
memorandum between JHTA and the Japan Council of Port and Harbor 
Transport Workers' Unions. Rates for weighing and measuring services 
are filed with, and approved by, the Japanese Ministry of Transport 
(``MOT'').
    There is no clear justification for the policy of mandatory 
weighing and measuring of cargo. Internationally applied liability 
conventions do not require carriers to weigh and measure cargo, as 
carriers may accept shipper-provided weights and measurements. 
Furthermore, in many instances physical weighing and measuring of cargo 
may not even take place; instead, measurers' figures may be derived 
from samples or statistical information.
    It appears that mandatory weighing and measuring was implemented to 
provide constant work for sworn measures, as the industry shifted 
toward the use of containers and box-rated cargo. However, the 
justification for continuing this practice indefinitely is unclear, 
given that many harbor workers have retired or left the ports since the 
introduction of containerization in Japan's trades over two decades 
ago. Also, it appears that the measuring companies have recently 
increased weighing and measuring charges--with MOT approval--based in 
part on a need to attract new labor to perform these services.

Sunday Work

    In recent years, the performance of harbor work on Sundays in 
Japanese ports has been either severely restricted or prevented 
altogether, causing inefficiency and disruption for both carriers and 
shippers. Recent press reports have indicated a provisional easing of 
restrictions on Sunday work; however, the extent of that progress is 
not clear.
    Prior to 1988, work was not performed on Sundays at Japanese ports. 
In 1988, a policy of limited Sunday work was put in place; carriers 
wishing services on Sunday were allowed to seek prior consultation and 
approval from JHTA. However, Sunday work was discontinued entirely in 
1991. It appears that Sunday work was halted as a result of an ongoing 
dispute involving JHTA and the two large harbor labor organizations, 
the National Council of Dockworkers' Unions of Japan and the Japanese 
Confederation of Port and Transport Workers' Unions, regarding 
compliance with a 1991 labor agreement.
    The restriction of Sunday work has been a matter of longstanding 
concern for the United States Government, and has been raised in 
bilateral maritime discussions with Japanese officials. In September 
1992 Maritime Administrator Warren G. Leback indicated that the Sunday 
work practices caused serious problems for U.S. carriers, and affected 
ship scheduling throughout the Pacific Basin.
    It has recently been reported that an ``Agreement on Exceptional 
Measures for the No-Cargo-Handling-on-Sundays System'' was concluded by 
JHTA, representing harbor management, and the labor groups, the Japan 
Council of Port and Harbor Transport Workers' Unions and the Japanese 
Confederation of Port and Transport Workers' Unions. This agreement, 
effective June 11, 1995, calls for the implementation of Sunday cargo 
handling at Japan's six major ports: Tokyo, Yokohama, Nagoya, Osaka, 
Kobe, and Kitakyushu. The agreement is said to be ``provisional'' in 
nature, and is effective for one year only.
    The agreement is reported to contain several conditions for the 
provision of Sunday work. Sunday work is limited to terminals which 
conform to the ``5-9 Accord'' labor agreement (signed May 9, 1991) 
which guarantees, among other things, a 5-day work week, 8-hour days, 
limits on overtime, and certain numbers of Saturdays, Sundays, and 
holidays off. Only carriers who have paid all MOT-approved port charges 
will be eligible. Cargo will be moved only between vessels and 
containeryards; no cargo will be accepted at the yard or delivered on 
Sunday.
    It appears that Sunday work will be from 8:30 a.m. to 4:30 p.m. 
only. Extra wages will be determined regionally, and carriers and 
harbor transportation firms will be required to apply for Sunday work 
through the district harbor transportation associations by noon on 
Fridays. The trade press has reported that fees for Sunday cargo 
handling will be 60 percent higher than ordinary fees.
    Despite these positive steps, a number of concerns regarding Sunday 
work remain. We are uncertain of the extent to which the agreement has 
been implemented, as well as the effects of remaining restrictions and 
increased fees applicable to Sunday work. Also, the outlook for a long-
term solution to the Sunday work issue is unclear, given the one-year 
``provisional'' nature of the recent agreement.

Harbor Management Fund

    In Docket No. 91-19, Actions to Address Conditions Affecting U.S. 
Carriers Which do not Exist for Foreign Carriers in the U.S./Japan 
Trade, the Commission launched an investigation into a fund, known as 
the ``Harbor Management Fund,'' collected by JHTA from ocean carriers. 
In particular, the Commission examined whether JHTA, with the support 
of MOT, coerced payments from carriers into the fund by threatening 
labor instability and unavailability. It was alleged that the fund was 
to be used for import distribution centers or other projects from which 
U.S. carriers would receive no economic benefits.
    Docket No. 91-19 was discontinued on June 13, 1991, based on an 
agreement between JHTA and participating carriers. It was agreed that 
collections from carriers for the fund would be discontinued after 
March 31, 1992, and similar assurances were provided by the Government 
of Japan Minister of Transport to American President Lines. Also, JHTA 
committed to use the fund proceeds only for harbor labor-related 
purposes, to ensure that benefits would accrue to all carriers 
contributing to the fund.
    While collections for the fund were stopped in 1992 as agreed, it 
appears that the commitment to use remaining proceeds for labor-related 
purposes has not been satisfied. When Docket No. 91-19 was 
discontinued, the Commission directed Japanese carrier parties to file 
quarterly reports on the status of the fund. The last of these reports, 
filed May 31, 1994, showed that only nominal amounts had been expended 
from the fund since 1992. Fund activity for the past year, as well as 
JHTA's plans for disposition of the fund monies, remain unclear.
Government Supervision of Port Transportation Services

    While port services in Japan are generally provided by private 
companies, the Government of Japan may exercise substantial regulatory 
control and oversight over these operators. For example, under the 
Japanese Port Transportation Business Law, persons wishing to provide 
port transportation services must apply for a certificate from MOT. In 
deciding whether to grant such a certificate, MOT evaluates, inter 
alia, whether the business in question ``has an appropriate plan to 
perform the business,'' and whether it would ``cause port 
transportation supply to be excessively over transportation demand.'' 
Art. 5 & 6. It appears that restrictive use of this licensing authority 
by MOT may effectively prevent new operators from entering terminals to 
compete with existing JHTA members, and to prevent non-Japanese flag 
lines from establishing their own terminal operations in Japan.
    MOT also has broad statutory authority to correct restrictive or 
unfair 

[[Page 48160]]
harbor practices. Rates charged by port transportation businesses must 
be approved by MOT, which determines whether the rates are reasonable 
and non-discriminatory. Art. 9. MOT must approve operators' ``terms and 
conditions on port transportation,'' to determine that ``there is no 
fear that the terms and conditions may impede the benefits of users,'' 
and also approve any changes in operators' business plans. Art. 11 & 
17. If MOT determines that the port transportation businesses ``impeded 
benefits of users'' it may order changes in business plans, terms and 
conditions, or rates. Art. 21.
    JHTA itself operates with the permission of, and under the 
supervision of, MOT. JHTA was incorporated in 1965 as a ``juristic 
person'' under Article 34 of the Civil Code of Japan, which provides 
that public interest, not-for-profit organizations may be incorporated 
subject to the permission of ``competent authorities.'' As the 
competent authority, MOT may, inter alia, annul its incorporation if 
JHTA violates MOT orders or acts in contravention of the public 
interest.\1\

    \1\ See Regulations Regarding the Incorporation and Supervision 
of Juristic Persons Belonging to the Jurisdiction of the Minister of 
Transport, Ministry of Transport Regulations No. 22 (1969), Art. 11.
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    In addition, it appears that the Japanese Fair Trade Commission 
(``FTC''), which administers the Antimonopoly Law, exercises some 
authority over JHTA. It was reported in the press that, in the 1970's 
and 1980's, the FTC warned JHTA that the prior consultation system 
might be in violation of the Antimonopoly Law of Japan. Because of 
these concerns, the JHTA announced in 1985 the abolishment of the prior 
consultation system. However, it appears that the prior consultation 
system was reestablished in 1986, with the conclusion of an agreement 
between JHTA and an organization of Japanese carriers. The terms of 
that agreement expressly state that it was concluded ``under the 
guidance of the Ministry of Transport,'' and the agreement was signed, 
as a witness, by an MOT official.
    Antimonopoly concerns resurfaced in 1990, when four stevedoring 
companies in Tokyo and Yokohama filed a complaint with the FTC, 
claiming that JHTA and prior consultation had incapacitated their 
businesses. While the resolution of these complaints is not clear, it 
has been reported in the press that in 1993 MOT advised JHTA to take 
remedial action to ensure that the prior consultation system is 
administered in a fair manner. Also, in 1994, the FTC released a report 
calling for a review of the existing licensing system and for 
substantial deregulation of the harbor transportation system.

Discussion

    The Commission is statutorily charged with addressing restrictive 
or unfair foreign practices in the maritime services area. Section 19 
of the Merchant Marine Act, 1920, 46 U.S.C. app. Sec. 876, authorizes 
the Commission, inter alia:

    To make rules and regulations affecting shipping in the foreign 
trade not in conflict with law in order to adjust or meet general or 
special conditions unfavorable to shipping in the foreign trade * * 
* including intermodal movements, terminal operations, * * * and 
other activities and services integral to transportation systems, 
and which arise out of or result from foreign laws, rules, or 
regulations or from competitive methods or practices employed by 
owners, operators, agents, or masters of vessels of a foreign 
country; * * *.

    Also, the Foreign Shipping Practices Act of 1988, 46 U.S.C. app. 
Sec. 1710a (``FSPA''), authorizes the Commission to

    Investigate whether any laws, rules, regulations, policies, or 
practices of foreign governments, or any practices of foreign 
carriers or other persons providing maritime or maritime-related 
services in a foreign country result in the existence of conditions 
that--
    (1) Adversely affect the operations of United States carriers in 
the United States oceanborne trade; and
    (2) Do not exist for foreign carriers of that country in the 
United States under the laws of the United States or as a result of 
acts of United States carriers or other persons providing maritime 
or maritime-related services in the United States.

    Under the FSPA, if the Commission determines that such adverse 
conditions exist, it may ``take such action as it considers necessary 
and appropriate against any foreign carrier that is a contributing 
cause to, or whose government is a contributing cause to, such 
conditions.'' Such action may include limitations on sailings, 
suspension of tariffs, suspension of agreements, or fees not to exceed 
$1,000,000 per voyage.
    The Commission has serious concerns that prior consultation, 
mandatory weighing and measuring, and restrictions on Sunday work may 
create conditions unfavorable to shipping in the U.S. trade with Japan, 
or conditions which adversely affect the operations of U.S. carriers in 
Japan that do not exist for foreign carriers in the United States. In 
addition to subjecting carriers to potentially high costs and charges, 
such restrictions may prevent carriers from pursuing efficiency through 
the rationalization of harbor operations, thereby disadvantaging 
importers, exporters, and carriers in the U.S.-Japan trades. The 
Commission is further concerned that commitments regarding disposition 
of the Harbor Management Fund, made upon the discontinuation of Docket 
No. 91-19, may not be fully satisfied.
    While these matters are largely administered by JHTA and private 
terminal operators, they appear to be implemented with the approval and 
cooperation of the Government of Japan. Such support may include the 
protection of JHTA operators from competition by MOT's restrictive use 
of licensing authority, the approval of charges for unnecessary 
mandatory weighing and measuring, and the failure of the Government of 
Japan to use its substantial regulatory and oversight authority to 
prevent JHTA from abusing its effective control over harbor operations 
and the prior consultation system.
    Therefore, by this Notice, the Commission is inviting all 
interested parties to file information, views, and comments with 
respect to prior consultation, mandatory weighting and measuring, 
Sunday work, and the Harbor Management Fund, and their effects on the 
oceanborne carriage of goods between the United States and Japan. 
Confidential or sensitive information and documents submitted pursuant 
to this Order shall, upon request of the responding parties, be treated 
confidentially to the full extent permitted by law; provided, however, 
that such confidential treatment shall not foreclose use by the 
Commission of such information in any subsequent formal proceeding.
    Also, by separate Orders issued pursuant to Section 19(6) of the 
Merchant Marine Act, 1920, 46 U.S.C. app. Sec. 876(6), and section 
10002(d) of the Foreign Shipping Practices Act, 46 U.S.C. app. 
Sec. 1710a(d), the Commission is requiring ocean common carriers in the 
U.S./Japan trades to provide information on these matters. It is 
expected that the information received in response to this Notice and 
the corresponding Orders will allow for a full consideration of these 
matters, and will enable the Commission to determine whether further 
action in this area is warranted.

    By the Commission.
Joseph C. Polking,
Secretary.
[FR Doc. 95-23052 Filed 9-15-95; 8:45 am]
BILLING CODE 6730-01-M