4th Report of the Market Access Ombudsman Council (March 17, 1997)

4-(3) Deregulation in order to lower harbor fees

1. Complainant: Belgium-Luxembourg Chamber of Commerce

2. Ministry concerned: Ministry of Transport

3. Background:

(1) Outline of the Port Transportation Business Law

The Port Transportation Business Law was adopted in 1951, and the framework for the current provisions of the law was established in 1959. The aim of the law is to promote public welfare by establishing order in port transportation and the healthy development of port transportation activities (Port Transportation Business Law, Article 1).

Port transportation activities refer to port transportation activities, regardless of whether they are for profit or not. Port transportation activities involve loading or unloading cargo from ships in port in response to demand by others, transporting cargo to cargo handling places, and sorting or storing the cargo in cargo handling places.

(2) Licensing system for operations

In order to ensure order in port transportation, Article 4 of the Port Transportation Business Law mandates a licensing system for port transportation operations. If an entity wishes to handle port transportation business, they must receive a license for this from the Minister of Transport for each type of activity (general port transportation business, port stevedoring business, lighter transportation business, raft transportation business, tallying business, surveying business, weight measuring business) and for each port (although a common license applies for tallying business, surveying business and weight measuring business). The Minister is required to examine the application and grant the license, based on standards such as whether the new operation will supply more service than demand in particular port warrants.

(3) Certification system for fares and charges

A ministerial ordinance sets fees and charges for port transportation activities, and approval from the Minister must be approved from the Minister according to ministerial ordinance obtained for this. Approval is also required when fares and charges are changed.

4. Complaint:

Port and import handling charges are frequently many times the cost of shipping by sea, and the difficulty of obtaining a license to become a port transportation operator means that there is little competition and contributes to higher prices.

To stimulate competition, the Port Transportation Business Law should be amended or the current law applied more flexibly regarding the granting of licenses for applications made for engaging in port transportation activities.

5. Results of deliberation:

Ports are the link between domestic and international distribution, and from the viewpoint of market access it is vital that they be operated efficiently. At present, the Port Transportation Business Law requires permits for port transportation operations and uses an approval system for fees and charges. Severe restrictions on entry into this business and price controls impede market mechanisms and fail to meet users' needs. As a result, distribution costs for foreign goods are very expensive, which leads to concerns that they may be at a disadvantage compared to domestic products. Accordingly, a fundamental review of the Port Transportation Activities Law should be undertaken.

After this complaint was raised, the concerned ministry changed its stance and has now adopted a policy of abolishing supply-demand adjustment for port transportation and has made it clear that it will begin a concrete study of this matter. The ministry will also review price controls at the same time. These are positive steps, but changes should be made in the following directions:

(1) The concerned ministry intends to abolish supply-demand adjustment in three to five years' time, but adjustment should be abolished as soon as possible.

(2) In the review process, the rigid fee schedule should be made more flexible and greater use of discounts made, to provide a greater variety of fees and charges and lessen the burden on businesses.

(3) In addition, when specific deregulatory measures are taken, these should be adequately publicized so that parties wishing to operate port transportation are not hampered from doing so due to misunderstandings of the system.

Government decision (March 25,1997)

4-(3) Deregulation in order to lower harbor fees

(1) Policies will be changed to abolish control on supply-demand adjustments after establishing measure to ensure the smooth operation of ports and harbors, and price regulation will be reviewed as well. To carry this out, the Administrative Reforming committee will have deliberations concerning the abolishment of control on supply demand adjustments in FY 1997.

(2) While this is being studied, the system of fees, including further development of discount fee system will be approved more flexibly, in order to diversify fares and charges and reduce the burden on operators.

(3) In addition, when specific deregulatory measures are taken, these will be adequately known in public in order to avoid misunderstanding of system.