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Senior officials from Japan and the European Union will hold a series of talks in Tokyo this week focusing on the privatization of Japan’s postal services, China’s economy, the progress in Japan’s bad-loan problem and the impact of EU expansion on bilateral relations.

The two sides will convene a meeting on regulatory reform Thursday, with the EU side planning to request that Japan apply the same supervisory structure to privatized postal-related entities and their private-sector competitors, according to EU officials.

“To establish a level playing field, the new corporations should be subject to the same supervisory structures and legal and regulatory requirements as the private sector,” according to a list of EU policy proposals.

“A new independent regulator for postal services, which is separate from (the Internal Affairs and Communications Ministry), should be established,” it says, cautioning against the ministry continuing to be the regulator and a de facto stakeholder in the privatized entities.

The EU also plans to urge Japan to put the “kampo” life insurance services under the same regulations as private operators and not allow any new or altered kampo products until a level playing field is established, a request also filed by the United States.

Japan’s basic policy on postal privatization, adopted in September, calls for splitting Japan Post into four entities that will take over its mail delivery, savings, life insurance, and management of over-the-counter services at post offices under a holding company, with the process beginning in 2007 and ending by 2017.

During the regulatory reform meeting, the EU is expected to express serious concern over “the lack of, or relatively little,” deregulation by Japan in transportation and sanitary rules, including those on food additives.

Also Thursday, Japan and the EU will hold a financial affairs meeting to discuss their macroeconomic situations and developments in fixing the bad-loan mess in Japan’s banking sector, with the participation of representatives from the Bank of Japan and the European Central Bank.

It will be the first time that the BOJ and the Frankfurt-based ECB have taken part in the vice ministerial meeting.

Although an EU official in Tokyo said exchange rates “are not on the agenda” of the meeting, sources familiar with the talks said it would be natural for the two sides to air their views on foreign exchange issues, given the recent weakness of the dollar against the yen and euro, and world financial leaders’ calls on China to reform its dollar-pegged currency system.

Hiroshi Watanabe, vice finance minister for international affairs, will represent the Japanese side, while Klaus Regling, director general for economic and financial affairs at the European Commission, will head the EU delegation.

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