CZECH REPUBLIC AMCHAM REVIEWS ITS AGENDA WITH

UNCLAS SECTION 01 OF 02 PRAGUE 000478

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SUBJECT: CZECH REPUBLIC AMCHAM REVIEWS ITS AGENDA WITH
AMBASSADOR CABANISS


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2. (SBU) Summary: American Chamber of Commerce in the Czech
Republic (AmCham) priorities for the coming year include the
traditional ones of commercial register reform and a new
bankruptcy code. The AmCham is also preparing initiatives on
a new labor code, health care reform and technical training
for future workers. All these priorities are heavily
influenced by the current unsettled political situation. The
AmCham board is communicating with the likely successors of
the current Social Democratic Party (CSSD) government in the
opposition Civic Democratic Party (ODS). End Summary.


3. (SBU) The Board of Directors of the American Chamber of
Commerce in the Czech Republic met over breakfast at the
Ambassador's residence in Prague on March 30 to review its
agenda for the year in light of a change of government that
looks more and more likely. The meeting brought together
representatives of fifteen U.S. and Czech companies. The
Ambassador urged the AmCham board not to slacken its efforts
to promote key reforms, even though a lame duck CSSD
government or a technocratic interim government would seem
unlikely to pass them. The opposition ODS needs to hear the
message, and sometimes politicians, even lame duck ones, can
surprise us, he said.


4. (SBU) AmCham Executive Director Weston Stacey reported on
progress toward a new law on company registration and a new
bankruptcy code. When the commercial register law passed the
lower house of parliament, the Chamber of Deputies, it added
an amendment permitting forced buyouts of minority
shareholders under some circumstances. The upper house, the
Senate, opposes that provision, and passed the commercial
register law without it. It will return the bill to the
House of Deputies, which hopefully will finalize its
enactment without the buyout provision, fulfilling a
long-held AmCham and Embassy priority. Stacey deems the
prospects for passage as good.


5. (SBU) A new bankruptcy code is another priority, but it
remains caught up in debate within the government. There is
only a small chance it will emerge from the government and
reach the parliament for passage before the political
situation is well-settled. The government has agreed to
propose a cap on social security contributions at three times
the average wage, which is now about Kc 17,000 ($740).
However, the proposal is part of an overall tax bill now in
preparation that will have tough sledding through the
parliament under the current circumstances.


6. (SBU) Stacey introduced three new priority areas for
AmCham activity. The first of these is influencing the shape
of a new labor code. All around the table agreed that the
existing labor code lacks flexibility, especially as regards
termination of employees, hiring of temporary workers and use
of independent contractors. Some observed that the situation
is still not as bad as in some Western European countries,
but they agreed the issue deserves the AmCham's attention.
Stacey said that the AmCham has already been in contact with
members of the ODS who may be in the government soon, and had
been offered a chance to assist in shaping the new code. The
ODS approach is to de-emphasize the labor code as a separate
body of law and merge its provisions into the civil and
commercial codes.


7. (SBU) Stacey said that the current health care system in
the Czech Republic is inefficient, does not deliver quality
care to patients, and is too expensive for employers. Frank
Watanabe, country managing director for Eli Lilly, said that
there is a high level of dissatisfaction among companies,
insurors, doctors, and patients alike. The current
government is unlikely to take any action. Again, in this
area, the ODS is likely to have an impact, and U.S. companies
would like to have input early in the policy-making process.
Watanabe said that there is agreement among foreign embassies
and chambers of commerce that the system needs change.
However, because the American system for delivery of health
care is so different from the Czech and European, there is
not likely to be strong support for solutions closely based
on the American model. The AmCham should push transparency
and efficiency, he concluded. The Ambassador noted that the
regions will become more significant players on health care,
because they are taking responsibility for regional public
hospitals.


8. (SBU) Another priority is sustaining the Czech Republic's
advantage of a well-trained workforce, especially in
technical disciplines. According to Jaroslav Dolezal of
Honeywell, students are now beginning to prefer degrees in
law, accounting and other kinds of service provision and are
avoiding engineering and the apprentice programs that have
long been a feature of the Czech educational system. It is
getting harder to find well-trained shop workers. The AmCham
needs to find partners in promoting technical education,
Dolezal said, and the Academy of Engineers has expressed
interest.


9. (SBU) The meeting finished with a review of the current
chaotic political situation, which has been reported septels.
Stacey said that Martin Jahn, the Deputy Prime Minister for
the economy, hopes to persevere with preparation of a new
economic strategy for the country, and with the bankruptcy
legislation. Stacey mentioned ODS plans for a 15% flat tax
and revision or abolition of investment incentives as
upcoming issues the AmCham will have to keep track of, and
about which it will have to make its opinions known.
CABANISS