As a member of the EU, Greece has harmonized its legislation with EU rules and regulations. The WTO-TRIPS agreement has been incorporated into Greek legislation as of February 28, 1995 (Law 2290/95).

Despite Greece's legal framework for and voiced commitment to copyright protection, piracy of copyrighted material, especially audio-visual works for television, remains widespread. Greece took an important step toward addressing this problem by enacting a new copyright law in February 1993 (Law 2121/93), which contains a high standard of protection for all copyrighted works.

Furthermore, Law 2328/95 (media law) establishes a new systematic legal framework for the radio-television market, whose anarchic development encouraged copyright piracy. However, that law it is not yet fully implemented.

The inability of rights holders to obtain effective action against TV stations pirating copyrighted works resulted in Greece being elevated to the USTR's "Priority Watch List" under the "Special 301" provision of the 1988 Trade Act, in December 1994. Just prior to an out-of cycle review by USTR in December 1996, the Greek government presented an "Action Plan" of specific steps it would take by April 1997 to reduce audio-visual piracy.

While some of these steps were taken, the Greek government lagged behind severely in licensing television stations in accordance with the provisions of the 1995 media law; the process, while finally underway, is less than half-way through as of June 1998. As a result, the U.S. Government has launched a WTO TRIPS non-enforcement challenge. Consultations under WTO auspices were started in June 1998.

Although Greek trademark legislation is fully harmonized with that of the EU, another intellectual property protection problem is the lack of effective protection of trademarks, particularly in the apparel sector. Claims by U.S. companies of counterfeiting appear to be on the increase.

Intellectual property appears to be adequately protected in the field of patents. Patents are available for all areas of technology. Compulsory licensing is not used.

Patents and trade secrets are protected by law for a period of twenty years. There is a potential problem concerning the protection of test data relating to non-patented products. Violations of trade secrets and semiconductor chip layout design are not problems in Greece.

Transparency of the Regulatory System

As an EU member, Greece is required to have transparent policies and effective laws for fostering competition. In practice, however, the process is not transparent due to overlapping laws and confusion in their application.

Foreign companies consider the complexity of government regulations and procedures -- and their inconsistent implementation by the Greek civil administration -- to be the greatest impediment to operating in Greece.

In order to simplify and expedite the investment process, a quasi-state investment promotion agency, the Hellenic Center for Investment (ELKE), was established in 1996.

ELKE functions as a one-stop shop for assisting investors in cutting through red tape and acquiring the numerous permits needed to proceed with investments. It also advises the government on ways to streamline the investment process and generally to improve the investment climate in Greece.

Greek government laws and policies generally do not negatively affect the efficient mobilization and allocation of investment. However, labor laws remain quite restrictive regarding the dismissal of personnel.

Under current regulations, both private and public companies are prohibited from firing or laying-off more than 2 percent of their total workforce per month without a special prior dispensation from the government. Reforms in labor legislation are planned for 1998.

Foreign investors often complain about frequent changes in tax policies (there is a new tax law practically every year). Tax laws sometimes include discriminatory provisions, e.g., the 1998 tax bill increased corporate tax rate from 35 to 40 percent for all corporations that have registered shares but do not trade them on the Athens Stock Exchange (ASE).

Though in principle this change would not violate Most Favored Nation or National Treatment obligations, one practical result is to provide a tax subsidy to Greek firms based on their utilization of the ASE.

Efficient Capital Markets and Portfolio Investment

Greece has an efficient capital market and the private sector has access to a variety of credit instruments. Credit is allocated by private banks -- and increasingly by public ones too -- on market terms, and is equally accessible by private Greek and foreign investors. A number of American banks operate in Greece, serving both the local and international business community.

An independent regulatory body, known as the Capital Market Committee, supervises the Athens Stock Exchange and encourages and facilitates portfolio investments. Both owner-registered, and bearer bonds and shares are traded in the Athens Stock Exchange.

It is mandatory for the shares of banking, insurance and public utility companies to be registered. Greek corporations listed on the Athens Stock Exchange that are also state contractors are required to have all their shares registered.

A few state-controlled banks dominate the Greek banking industry. Private Greek and foreign banks do, however, comprise an increasingly competitive and generally profitable private sector, holding about one third of the banking system's assets.

Private banks in Greece are in good financial health and are expanding their market share. State banks have a large exposure to public enterprises of questionable financial health. Total combined assets of the five largest banks are estimated at $80 billion.

There is a limited number of cross-shareholding arrangements in the Greek market. To date, the objective of such arrangements has not been to restrict foreign investment.

In sectors open to private investment, foreign investment is not prohibited or restricted, by either law or regulation or by private sector efforts or practices.

Political Violence

Greece is a stable parliamentary democracy currently governed by a socialist government. There are, however, several indigenous terrorist groups that regularly denounce American capitalism and "imperialism."

The most notorious are "17 November" and "ELA", which have a history of committing murders and bombings directed against American (including killing five U.S. government employees), Turkish and Greek government targets.

There have been several terrorist attacks against the property of American and other foreign businesses in recent years but no private American businessman has been the victim of a terrorist attack. American businesses keep a generally lower profile in Greece compared to other EU countries. In 1998 (through May), six U.S. businesses have been attacked.

Corruption

Bribery is considered a criminal act and the law provides severe penalties for infractions. However, diligent implementation and enforcement of the law remains an issue.

The problem is most acute in the area of government procurement. It is a widely-held belief that political influence and other considerations, such as loyalty to old suppliers, plays a significant role in the evaluation of bids.

Bribery cannot be deducted from taxes, but "facilitative payments" by companies of up to 3 billion drachmas ($10 million) or one percent of gross revenues (whichever is less) received abroad can be deducted from taxable income.

This provision will be terminated by legislation currently being drafted which will implement the OECD Convention on the Fight against Bribery of Foreign Government Officials.

The judicial authorities are responsible for investigating and prosecuting corruption cases. In cases where politicians are involved, the Greek Parliament decides whether parliamentary immunity should be lifted to allow a special court action to follow.

In recent years, there have been a number of investigations of alleged corruption; there was even a special court action against politicians, including the then-Prime Minister, in 1989. However, nobody has been convicted to date.

Greek law cannot be extended to apply to criminal acts outside the Greek territory, therefore, a bribe to a foreign official would be subject to the laws of the country where the bribery takes place.

As a signatory of the OECD Convention on the Fight against Bribery of Foreign Government Officials, the Greek government is committed to penalizing those who commit bribery abroad. The Convention should be ratified by the end of 1998.

Bilateral Investment Agreements

Greece has bilateral investment protection agreements with Armenia, Georgia, Ukraine, Russia, Latvia, Lithuania, Uzbekistan, Croatia, Slovenia, Poland, Hungary, Romania, Bulgaria, Albania, Serbia ("FRY"), the People"s Republic of China, Morocco, Tunisia, Zaire, Egypt, and Cuba.

An Agreement with Chile has also been signed but has not been ratified by the Greek Parliament. Investments by EU member states are governed and protected by EU regulations.

Greece and the United States have the 1954 Treaty of Friendship, Commerce and Navigation, which covers a few investment protection issues, such as acquisition and protection of property and impairment of legally acquired rights or interests.

Also, Greece and the United States have the 1950 Treaty for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income.

Despite the existence of this Treaty, which provides national treatment with respect to all taxes imposed on citizens and subjects of the other contracting state, Greek tax laws sometimes include discriminatory provisions.

For example, the 1994 legislation increased the corporate tax rate from 35 to 40 percent for all foreign companies and all Greek corporations not listed in the Athens Stock Exchange.

In practice, this meant that U.S. and other foreign bank branches (due to their status as branches rather than locally incorporated subsidiaries) were required to pay a taxation rate of 40 percent, while Greek banks paid only 35 percent.

This discriminatory provision was remedied by the tax law of 1997, which raised the tax rate on profits of all banks to 40 percent. However, the 1998 legislation also included a new discriminatory provision as it increased corporate tax rate from 35 to 40 percent for all corporations which have registered shares but do not trade them on the Athens Stock Exchange (ASE).

Though in principle this change would not violate Most Favored Nation or National Treatment obligations, one practical result is to provide a tax subsidy to Greek firms based on their utilization of the ASE.

OPIC and other Investment Insurance Programs

Full OPIC insurance coverage for U.S. investment in Greece is currently available only on an exceptional basis. OPIC and the Greek Export Credit Insurance Organization signed an agreement in April 1994 to exchange information relating to private investment, particularly in the Balkans.