Clyde Prestowitz and Robert Cohen in Financial Times (02/02/05)
Financial Times, Copyright 2005 Financial Times Ltd.
February 2, 2005
LETTERS TO THE EDITOR: Give us a liberalisation without cross-subsidies
By ROBERT COHEN and CLYDE PRESTOWITZ
From Mr Clyde Prestowitz and Mr Robert B. Cohen.
Sir, While correctly noting that the "real issue is money",
youreditorial "Koizumi's challenge" (January 27) misses the realpoint
about Japan's Post Office privatisation. Far from liberalising
theinsurance market, the present plan will tilt the tables in favour of
the newprivatised entities and against real private insurers. After
privatisation,Kampo, the Post Office's insurance arm, will continue to
control 40 percent of Japan's life insurance assets and 30 per cent of
its individualsavings deposits without any rules against
cross-subsidising its three newsiblings.
The European press, especially, should appreciate the shortcomings
ofliberalisation where the government still keeps its finger in the
pie. TheDeutsche Post liberalisation includes many of the problems
Junichiro Koizumi,Japan's prime minister, has failed to address.
Among these are failure to limit business diversification based
oncross-subsidisation from ongoing monopoly or quasi-monopoly
activities. Suchfunds facilitated Deutsche Post's acquisition of DHL
and AirborneExpress and enabled practices that have resulted in large
fines levied by theEuropean Commission for anti-competitive activity.
Rather than applaud Mr Koizumi, you should insist on a liberalisation
thatremoves significant subsidies and special treatment for
the"privatised" Post Office. Clyde Prestowitz, President Robert
B.Cohen, Fellow Economic Strategy Institute, Washington, DC 20007, US