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present extensive difficulties for the uninitiated foreign investor. There are several industry sectors which are either closely regulated or prohibited outright to foreign investors, including domestic air transport, aircraft manufacturing, banking and the state monopolies (e.g., railways, tobacco manufacturing and electrical power). While privatization of state-owned enterprises is under intense political debate, there seems to be little chance of foreign investors taking a major stake in these companies. Recent examples in the food and chemical sectors show that there is a strong preference for a "national" solution. The expansion of modern distribution units, such as chain stores, department stores, supermarkets, hypermarkets, and franchises, is severely restricted by local practice and national legislation which subjects applications for large retail units above a certain merchandising surface to a lengthy and cumbersome authorization process. Investment incentives consisting of tax breaks and other measures were implemented to attract industrial investment to depressed areas, especially in the south of Italy.

In September 1990, the Italian Parliament approved an anti-trust law. The new law gives the government the right to review mergers and acquisitions over a certain threshold. The government has the authority to block mergers involving foreign firms for "reasons essential in the national economy" if the home government of the foreign firm does not have a similar anti-trust law or applies discriminatory measures against Italian firms. A similar provision in the law applies to purchases by foreign entities of five or more percent of an Italian credit institution's equity.

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Italy subscribes to EC directives and Organization for Economic Cooperation and Development (OECD) agreements on export subsidies. Through the EC, it is a member of the GATT Subsidies Code. Italy has an extensive array of export promotion programs. Grants range from funding of travel for trade fair participation to funding of export consortia and market penetration programs. Most programs are aimed at small-to-medium size firms. Italy provides direct assistance to industry and business firms to improve their international competitiveness. This assistance includes export insurance through SACE, the state export credit insurance body, as well as direct export credits.


Protection of u.s. Intellectual Property

The Italian Government is a member of the World Intellectual Property Organization, and a party to the Berne and Universal Copyright conventions, the Paris Industrial Property and Brussels Satellites conventions, to the Patent Cooperation Treaty, and to the Madrid Agreement on International Registration of Trademarks.

Intellectual property rights protection is marked by inadequate enforcement of copyrights, including widespread record, video and computer software piracy. Because of the serious piracy problems, in May 1991 Italy was again placed on

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the U.S. Trade Representative's "Watch List" under the Special 301 provision of the 1988 Trade and Competitiveness Act.

In past years, software piracy has been the intellectual property problem of particular concern to U.S producers. However, the approval of the EC Software Directive should create a new set of circumstances in the European software market. In October 1991, a bill was introduced into the Italian Parliament to make the EC Software Directive a part of Italian domestic law. The Italian software industry appears to be supporting early adoption of the bill.

Italy is a net importer of intellectual property, particularly patents. We are unaware of any major cases in the last year that have arisen due to alleged patent infringement. In order to allow for an adequate period of patent protection for pharmaceutical producers, including many U.S. companies operating on the Italian market, a law was passed in the summer of 1991 permitting pharmaceutical producers to obtain a special certificate that extends patent protection beyond the usual 20 years.

It is nearly impossible to accurately estimate the value of foregone exports of u.s. intellectual property due to the problems of patent infringement, copyright piracy and counterfeiting. However, U.S. software producers put the cost of software piracy alone at around of $750 million annually.

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The Workers' Statute of 1970 provides for the right to establish a trade union, to join a union and to carry out union activities in the workplace. Trade unions are not government controlled, and the Constitution fully protects their right to strike, which is frequently exercised. In practice, the three major labor confederations have strong ideological ties to the three major political parties and administer certain social welfare services for the Government, which compensates them accordingly.

Perhaps as the result of a 1990 law limiting the right to strike in essential public services, Italian workers went on strike much less in 1991 than in previous years. The number of hours lost to strikes declined by 40 percent in the first four months of 1991.


The Right to Organize and Bargain Collectively

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The right of workers to organize and bargain collectively is protected by the Constitution and is freely practiced throughout the country. Labor-management relations are governed by legislation, custom, collective bargaining agreements, and labor contracts. A key element of labor-management-government cooperation affecting the industrial relations climate is the 1986 agreement on indexing wages (scala mobile) to the cost of living every six months. National collective bargaining agreements in fact apply to all workers regardless of union membership.


The law prohibits antiunion discrimination by employers against union members and organizers. A new law in 1990 encourages workers in small enterprises (i.e., fewer than 16 employees) to join unions and requires "just cause" for dismissals from employment.

c. Prohibition of Forced or Compulsory Labor

Forced or compulsory labor, which is prohibited by law, does not exist in practice.


Minimum Age for Employment of Children

Under current legislation, no child under 15 years of age may be employed (with some specified exceptions). The Ministry of Labor, having consulted with the labor organizations, may,

an exception, authorize the employment on specific jobs of children over 12 years of age.


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Minimum work and safety standards are established by law and buttressed and extended in collective labor contracts. The Basic Law of 1923 provides for a maximum workweek of 48 hours

no more than 6 days per week and 8 hours per day. The 8-hour day may be exceeded for some special categories. Most collective labor agreements provide for a 36- to 38-hour week. Overtime may not exceed 2 hours per day or an average of 12 hours per week.

There is no minimum wage set under Italian law; basic wages and salaries are set forth in collective bargaining agreements. National collective bargaining agreements contain minimum standards to which individual employment agreements must conform. In the absence of agreement between the parties, the courts may step in to determine fair wages on the basis of practice in related activities or related collective bargaining agreements.

Basic health and safety standards and guidelines for compensation for on-the-job injury are set forth in an extensive body of law and regulations. In most cases these standards are exceeded in collective bargaining agreements.


Rights in Sectors with u.s. Investment

Conditions do not differ from those in other sectors of the economy.


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U.S. Department of Commerce, Survey of Current Business
August 1991, Vol. 71, No. 8, Table 11.3

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The Latvian government says that its overriding goal is "to manage a smooth transition to a market economy, at the same time recreating the integrity of the Latvian economy as a separate unit." To this end, the government has passed a flurry of new legislation establishing the framework for a market economy. Ultimately, Latvia would like to serve gateway economy between Europe and Russia. But for the moment, the economic situation remains unsettled.

Changes to the Latvian constitution reintroduced guarantees of individual property rights. New types of businesses are now permitted: individually and family-owned enterprises, cooperatives, and privately and publicly held companies. Privatization of state properties will proceed in stages. The first step is the division of current ownership between Soviet-owned, republic-owned, and locally-owned properties. Enterprises nationalized in 1940 will be returned to their original owners, and the government hopes to stimulate new investment both from Latvian and foreign investors.

Other items for reform include: implementing a customs service, creating its own national currency, creating a strong central bank, reforming the taxation system, and stimulating foreign investment in Latvia.

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Latvia's Department of Foreign Trade is optimistic that the new currency, called the lat, will be put into circulation by the second half of 1992. The Latvian government expects the lat to be backed by an IMF loan and gold reserves of $120 million. Currently the Soviet ruble remains in use currency.


In the meantime, any person or legal entity licensed by the Bank of Latvia may buy or sell hard currency at free market rates. There are 28 currency exchange points in Latvia, and market exchange rates fluctuate daily.

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Patterns of Industrial Ownership: As of September 1991, heavy industry was still primarily subordinate to Moscow. Many enterprises are no longer jointly controlled by Moscow and Latvia, but are controlled by Latvia alone. А privatization program will take place in 1991-2, during which industrial facilities will be available for purchase by both Latvians and foreigners.

A non-state sector began to emerge in 1989, after enabling Soviet legislation passed in 1988. The number of people employed in the cooperative sector jumped from 8,800 in 1988 to 198,700 in 1990, giving Latvia the largest cooperative sector of any Baltic country.

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