JAPANESE MORNING PRESS HIGHLIGHTS 02/27/06

UNCLAS SECTION 01 OF 12 TOKYO 001023

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SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 02/27/06


Index:

1) Top headlines
2) Editorials
Prime Minister's weekend scheduled: None

Minshuto in crisis:
3) Although 58% of public see no need for Minshuto head Maehara
to resign over phony e-mail caper, party takes a hit in
popularity in Kyoto poll
4) Minshuto lawmaker Nagata to apologize today for using phone
e-mail to attack LDP in Diet
5) Perception gap in Minshuto over enormity of issue of false
charges against son of LDP's Takebe
6) Blacked out portions of controversial e-mail used by
Minshuto to attack LDP are revealed

Defense and security issues:
7) MSDF leaks from virus-infected computer were marine location
software data
8) USFJ realignment talks focus on joint use of Kadena AIR Base
9) Transport ministry in computer simulation claims Yokota AIR
space control costing civilian airlines a bundle to avoid area
10) Another thousand Okinawa Marines slated for transfer off the
island under USFJ realignment, making total of 8,000
11) In addition to 8,000 Marines to be moved from Okinawa, three
US facilities also will be closed
12) US sounds out GSDF to retain some officers in Basra after
troop withdrawal from Samawah
13) US, British, Australian commands accept Japan's two-staged
plan to remove GSDF from Samawah by end of May

14) Foreign Ministry will try best to persuade Iran to give up
nuclear ambitions during visit of Iran's foreign minister, who
arrives in Tokyo today

15) Newly appointed ambassador to China Miyamoto is a member of
the China school in the Foreign Ministry

16) ITER project: Japan will use its 20% budget share to
contract construction work from South Korea

17) Beef ban issue: USDA report acknowledges lack of training of
US inspectors on conditions for export of beef to Japan

Articles:

1) TOP HEADLINES

Asahi and Mainichi:
Torino Winter Olympics ends with Japan winning only 1 gold medal;
Ninagawa comes in fourth in men's slalom

Yomiuri:
1 million households, mostly aged, expected to go on welfare in
fiscal 2005; Working-age people on welfare also rising

Nihon Keizai:
Yamato, Seino to jointly establish distribution company to
cultivate new demand

Sankei:

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Horie e-mail: Minshuto's Nagata to make apology possibly today;
Leadership may be able to avert taking responsibility

Tokyo Shimbun:
Freelance reporter fabricated "Horie e-mail" to send it to
himself

2) EDITORIALS

Asahi:
(1) Torino Winter Olympics ends
(2) Successful satellite launches create more players in space

Mainichi:
(1) Bid-rigging: DFAA must not prey upon national security
(2) Treatment for giving up smoking should not go overboard

Yomiuri:
(1) JAL must straighten up and fly right
(2) Japan's FTA talks need momentum from talks with Chile

Nihon Keizai:
(1) Manpower in local areas attracting plants

Sankei:
(1) Low morality exposed by leakage of MSDF information
(2) Religious conflicts in Iraq: Turn critical situation into
opportunity

Tokyo Shimbun:
(1) MSDF information leakage: Stricter information management
necessary
(2) Speedy patent examination process vital

3) OPINION

Poll: 58% see no need for Maehara to resign; DPJ substantially
down in public support

TOKYO SHIMBUN (Page 2) (Full)
February 27, 2006

Kyodo News conducted a telephone-based spot nationwide public
opinion survey on Feb. 25-26 over an opposition Democratic Party
of Japan (DPJ or Minshuto) lawmaker's parliamentary pursuit of
Livedoor's alleged emailed order to send money to an LDP
executive's son. In the survey, respondents were asked if they
thought DPJ President Seiji Maehara should resign as party
president. In response to this question, 27.6% answered "yes",
with 58.7% saying "no" though he is responsible, and 7.8% saying
he is not responsible.

Public support for the DPJ was 11.3%, showing a substantial drop
of 5.7 percentage points from the last telephone-based poll in
January. The figure is the lowest ever since the merger of the
DPJ and the Liberal Party in October 2003, and it shows the
public's wavering trust in the DPJ.

In the survey, respondents were also asked if they thought
Toshiyasu Nagata, a House of Representatives member who took up
the email issue in the Diet, should resign his Diet seat. In
response to this question, "yes" accounted for 37.6% with "no" at

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22.9 % . However, 37.9% answered they "can't say which." Nagata's
future course seems to be up to how the DPJ handles the email
issue.

The approval rating for the Koizumi cabinet was 51.8%, down 1.1
points from the last survey. The disapproval rating was 37.2%, up
2.9 points. In the breakdown of reasons for supporting the
Koizumi cabinet, 38.2% picked "there's no other appropriate
person," up 8.0 points from the last survey. However, there was a
decrease in the proportion of positive reasons, such as "because
something can be expected of its administrative reform." In
particular, the proportion of those picking "because something
can be expected of its foreign policies" dropped to 0.3%.

Polling methodology: The survey was conducted over a period of
two days, Feb. 25-26, on a random digit dialing (RDD) basis. The
computer-aided RDD methodology, which makes and puts out
telephone numbers at random for polling, can survey those who do
not have their telephone numbers listed in telephone directories.
Among those randomly generated telephone numbers, those actually
for household use with one or more eligible voters totaled 1,488.
Answers were obtained from 1,027 persons.

4) Lawmaker Nagata to apologize in day or two for e-mail fuss;
Minshuto to decide on position before end of the week

ASAHI (Page 1) (Full)
February 27, 2006

The largest opposition party Minshuto (Democratic Party of Japan)
decided yesterday to have its House of Representative member
Hisayasu Nagata make an apology at a press conference in a day or
two for having alleged without conclusive proof in the Diet (that
former Livedoor Co. President Takafumi Horie had sent his staff
an email ordering a transfer of 30 million yen to Liberal
Democratic Party (LDP) Secretary General Tsutomu Takebe's son).
Diet Affairs Committee Chairman Yoshihiko Noda will accompany
Noda at the press conference. Minshuto intends to put an end to
the e-mail issue without the resignation of Nagata.

The LDP will consider whether to submit to the Diet a motion to
punish Nagata after watching the press conference.

The main opposition party intends to hold a press conference to
announce the results of its investigation into the credibility of
the e-mail before the end of this week when the fiscal 2006
budget is scheduled to clear the Lower House.

The party has found through its investigation that the sender and
recipient of the e-mail were both the same person who provided
the e-mail to Nagata. A party member familiar with the issue
explained that the source might have forwarded the e-mail
obtained from someone else to his own e-mail address and printed
it, and therefore, it cannot be proved that the e-mail is fake.
However, it is a fact that Nagata did not make his allegation
with a true and correct copy.

Hatoyama told reporters yesterday, "(Nagata) should apologize on
his own to the public in a day or two."

Appearing on an NHK talk show program yesterday, Maehara stated:
"We have not arrived at a conclusion that the e-mail is 100%

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credible. I sincerely apologize for lawmaker Nagata having posed
questions based on such information." Hatoyama also said on a
Fuji TV program, "(The party leadership) needs to apologize
before finding the result of the investigation." Asked about how
the party leaders should take responsibility, Hatoyama responded,
"Now is not time to arrive at a conclusion. We will reveal the
results of our investigation into the matter and make a decision
after seeing public opinion."

LDP Acting Secretary General Ichiro Aisawa stated on a TV Asahi
program yesterday: "We will decide" on whether to submit a motion
to punish Nagata "after seeing (his press conference). If he
decides to give up on his Diet seat, that would be one option to
take political responsibility."

5) Gaps in views of Minshuto executives on Diet uproar caused by
"e-mail" issue

YOMIURI (Page 2) (Excerpts)
February 27, 2006

The main opposition party Minshuto (Democratic Party of Japan)
executive has gone along with a plan to have its House of
Representative member Hisayasu Nagata, who is at the center of
the e-mail scandal, remain in his Diet post, by letting him make
an official apology today. However, it is obvious that there
still remain gaps in views of the executive members on adverse
effects on Diet debate caused by Nagata's questions, as well as
his lack of efforts to check the credibility of the e-mail.
Depending on trends in public opinion, Minshuto may continue to
waver internally regarding Nagata's future course of action and
the accountability of the party leadership.

Appearing on a Fuji TV program yesterday, Secretary General Yukio
Hatoyama stated, "I apologize for causing confusion in the Diet
session, which has to conduct deliberations on the FY 2006
budget." President Seiji Maehara, however, clearly stated on a TV
Asahi program yesterday: "We have been severely pursuing a set of
four issues, including the earthquake-proof data falsification
scam. I don't think the Diet is in a state of confusion."

Regarding the criticism of Minshuto for failing to confirm the
credibility of the e-mail, Hatoyama implicitly criticized Diet
Affairs Committee Chairman Yoshihiko Noda, with commenting,

"It is probably the problem of lack of my political presence that
I was not well informed of (the e-mail issue) in advance. It is
true that we lacked a crisis management awareness. I'm not happy
with such criticism."

6) Sender and recipient of e-mail in question both found to be
freelance reporter, Minshuto determines

TOKYO SHIMBUN (Top Play) (Full)
February 27, 2006

In the e-mail fiasco involving former Livedoor President Takafumi
Horie and Liberal Democratic Party Secretary General Tsutomu
Takebe's son, the sender and recipient of the e-mail in question
had been unknown because those portions had been blacked out. But
it was unveiled yesterday through investigations by the
Democratic Party of Japan (Minshuto) that both the sender and

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recipient are the same person and not Horie. According to several
party members, the person who introduced the e-mail to House of
Representatives member Hisayasu Nagata, a Minshuto member, is a
freelance reporter.

A Minshuto member, though, said: "The allegation cannot be
completely denied," keeping in mind the possibility that the
contents of the e-mail were altered. The opposition party has
continued fact-finding inquiries from persons concerned and
intends to announce the results of the investigation by the end
of this week if things go smoothly.

In an effort to look into the e-mail's authenticity, the party
investigation team poured its energy into finding out the sender
and the recipient of the e-mail, portions which reportedly had
already been blacked out when Nagata obtained it. As a result,
the party found the e-mail address of the freelance reporter
printed on the mail, according to informed sources. It is
believed that the reporter sent it to his own mail address for
some reason.

Minshuto has confirmed, though, that the mail is highly likely to
have actually been sent out at 3:21 p.m. on Aug. 26 of last year,
as it says on the e-mail's time-stamp. Given this, a party member
commented: "Little attention had been paid to relations between
Livedoor funds and political circles as of last August, so the
possibility cannot be completely ruled out that the controversial
e-mail had been created based on some information on an e-mail
actually sent out by Livedoor."

In this connection, Diet Affairs Committee Chairman Yoshihiko
Noda stated on a TV program yesterday:

"It is difficult to prove the authenticity of the e-mail at
present, but I do not support the allegation that it was
fabricated. Even if some parts of the e-mail were altered, there
are some that seem credible in content."

7) Marine chart software for all vessels found to have been
leaked along with leakage of MSDF's information; Fear of
strategic accuracy being known to other countries

MAINICHI (Top play) (Excerpts)
February 26, 2006

It was learned yesterday that marine chart software, developed
independently for antisubmarine patrolling in Japanese waters,
had been leaked out along with the data recently leaked out from
the Maritime Self-Defense FORCE (MSDF). The software can show a
color image of seafloor topography of a specified sea area in
three dimensions, which makes it easy to work out a strategy.
According to an MSDF official concerned, the software was
developed as the basic software used for all vessels, submarines
and patrol aircraft, and is still in use. Given the fear of
strategic accuracy being known to other countries through the
leaked software, Japan will be forced to change its national
defense plan.

This marine chart software was developed by an engineering
official at the MSDF's Operation and Development Unit (currently
Vessel Development Unit) around 2000. The purpose was to make it
easier to work out a strategy by using a highly detailed image of

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seafloor topography in three dimensions. The software was
upgraded 16 times until September 2002.

According to the manual and other files that come with the
software, when an area is specified on the computer screen, a
bird's eye-view of seabed topography is shown along with
geographic latitude and longitude, as well as depth, and a cross-
section image also can be shown. When an island shown on the
chart is clicked, data relating to the island, such as its name,
circumference, and area, are shown. The software has a number of
functions, such as calculating a specified ground area and show
sun-rising time and sun-setting time, the direction and altitude
of the sun quickly.

8) US bases in Okinawa: Japan, US in US military realignment
talks agree on joint use of Kadena base and Camp Hansen

Mainichi (Page 1) (Excerpts)
February 26, 2006

By Masaki Miyashita

In the ongoing talks on the realignment of US forces in Japan,
the Japanese and US governments have agreed on plans for joint
use of the US Kadena AIR Base and the US Marine Corps' Camp
Hansen between the US forces and the Self-Defense Forces (SDF),
the Mainichi Shimbun learned yesterday. This is the first
agreement in accordance with the interim report on the
realignment of US bases in Okinawa, released last October. The
joint-use plans will be incorporated in the final report to come
out at the end of March. But local objections to the plans are
likely to intensify because strengthening of military links comes
first before anything else amid slow progress in talks on burden
reduction, such as noise reduction at the Kadena base and a cut
in US Marines in Okinawa.

According to the agreement, the US AIR FORCE and the AIR Self-
Defense FORCE (ASDF) will conduct joint drills - aerial combat,
search and rescue, and transportation - by using F15-fighters
with the Kadena base as the center of the drills. In Camp Hansen,
the Marine Corps and the Ground Self-Defense FORCE (GSDF) will
conduct combat and live-fire training. The objective is to
reinforce joint operational capabilities, assuming an emergency
in Japan and a response to a large-scale terrorist attack. Both
bases are the facilities for the US forces' exclusive use, so
there is the need to follow the procedures for joint use in
accordance with the Japan-US Status of Forces Agreement.

9) Land, Infrastructure and Transport Ministry's simulation: 470
commercial flights being forced to make detours or steep turns
daily to avoid Yokota RAPCON zone; Number of flights expected to
increase to 650 in 2006

ASAHI (Top play) (Excerpts)
Evening, February 25, 2006

About 470 fights taking off from and landing at Haneda and Narita
Air Ports are being forced daily to make detours, steep climbing
turns, or other measures due to the rights to AIR traffic control
owned by Yokota AIR Base in Tokyo, known as Yokota radar approach
control (Yokota RAPCON),according to the Land, Infrastructure
and Transport Ministry's first ever simulation. With Haneda and

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other airports scheduled to accommodate more flights in 2009,
Yokota RAPCON is expected to affect an estimate 650 flights that
year. The simulation underpinned the theory that a partial return
of the southern part of Yokota RAPCON will lead to shorter flight
time and less fuel.

The airports' operational hours show that at present a plane has
to make a detour around Yokota RAPCON every two minutes, but the
frequency is expected to increase to every 90 seconds in 2009 and
beyond. Experts have repeatedly pointed out that Yokota RAPCON
has been restricting flight routes in Japan and its proximity,
causing near misses. The Japanese and the US government have been
conducting talks for a return of the airspace to Japan. The
ministry's simulation has nothing to do with the bilateral talks,
according to a ministry source.

According to the simulation, at present about 190 flights from
Haneda to northern Kyushu, such as Fukuoka, and Chugoku and
Shikoku are forced to climb steeply over Tokyo Bay in order to
rise over Yokota RAPCON. Without Yokota RAPCON, flight time can
be shortened by three minutes. Conversely, 240 flights from such
destinations to Haneda are forced to spend nine extra minutes to
go around the southern edge of Yokota RAPCON. In addition, some
40 flights from Narita to such destinations as South Korea's
Seoul and China's Beijing need to spend seven extra minutes to
fly over the Boso area.

Haneda Airport is scheduled to open its fourth runway in 2009 and
Narita Airport is expected to expand its second runway to 2,500
meters to increase their capability to handle takeoffs and
landings to 1.4 and 1.1 times, respectively. This also means that
Yokota RAPCON will affect a total of 646 flights: 266 from
Haneda, 336 to Haneda, and 44 to Narita.

10) US vows to cut 8,000 Marines in Okinawa

ASAHI (Page 3) (Full)
February 27, 2006

The United States has told Japan that it would be possible to
reduce up to about 8,000 US Marines in Okinawa as a step for the
planned realignment of US forces in Japan to alleviate the island
prefecture's base-hosting burden, sources revealed yesterday.
Meanwhile, the Japanese and US governments have already released
an interim report incorporating a bilateral agreement to reduce
about 7,000 Okinawa-based Marines. The two governments, slated to
come up with a final report in late March, would like to work out
details about their respective shares of the cost of Marine
relocation to Guam. The US government wants this to be settled
along with Futenma airfield's relocation. However, the government
is facing difficulties in its coordination with base-hosting
local communities.

The US government has offered to reduce Okinawa-based Marines,
including those assigned to the 3rd Marine Expeditionary Force's
headquarters at Camp Courtney, a US military base located in the
city of Uruma, and the greater part of them will be moved to
Guam. The 31st Marine Expeditionary Unit-currently based at Camp
Hansen in the town of Kin and other municipalities-and most other
combat troops are expected to remain deployed in Okinawa.

In realignment talks, the Japanese government asked the US

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government to show grounds for the US government's estimated
costs for Marine relocation to Guam. The US government, in its
calculation of troop cuts, deemed it possible to carry out a
reduction of up to 8,000 troops from the current deployment of
about 15,000 Marines in Okinawa. Their family dependents are
expected to total about 10,000.

Japan and the United States are to share costs for relocation to
Guam. However, the Japanese government has asked the US
government to show detailed grounds for the US government's
estimate amounting to approximately 8 billion dollars. In
addition, the two governments have yet to finalize their
respective shares in the costs.

Furthermore, the US government's position is that it would be
difficult to move the Okinawa-based Marines if Futenma airfield
cannot be relocated from the city of Ginowan to Cape Henoko in
the city of Nago. The US government has been insisting on
settling Marine relocation to Guam and Futenma relocation to
Henoko as a "package" to maintain deterrence.

Nago Mayor Yoshikazu Shimabukuro, however, has been calling for
the Japanese government to modify the Cape Henoko plan. Prime
Minister Koizumi has rejected the call. There has been no
progress in coordination between the government and local
authorities.

11) Final Japan-US coordination on USFJ realignment will add
another 1,000 US Marines to tally to make reduction of Marines on
Okinawa total 8,000; Three facilities also to be fully returned

YOMIURI (Top play) (Excerpt)
February 26, 2006

It was learned on Feb. 25 that the US government has informed the
Japanese government that in connection with the reduction of US
Marines stationed on Okinawa -- a showcase feature of the
realignment of US forces in Japan -- it is thinking of adding
another 1,000 more than originally planned, as a result of close
examination of troop relocation possibilities, to bring the total
number to 8,000 troops. In addition, the Japanese and US
governments are now in the final process of coordinating the
inclusion in the final report on USFJ realignment the
consolidation and realignment of four facilities in south and
central Okinawa that were not set by the interim report last
October. Three of the four facilities that will be included in
the final report in March will be fully returned: Naha Military
Port in Naha City, Makiminato Service Area in Urasoe, and Camp
Kuwae in Chitancho. The fourth facility, Camp Zukeran in Ginowan
will be partially returned.

12) US sounds out Japan on GSDF deployment to Basra

TOKYO SHIMBUN (Page 2) (Full)
February 27, 2006

Washington, Kyodo

The US government has recently sounded out the Japanese
government on sending Ground Self-Defense FORCE officers to the
southern Iraqi city of Basra to have them participate in a
provincial reconstruction team (PRT) for the purpose of helping

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Iraq improve its security and administrative capabilities,
sources said yesterday. In addition, the US government has also
asked Japan to expand the scope of AIR Self-Defense FORCE
activities using C-130 transport planes to two localities,
including Baghdad, sources close to Japan-US relations revealed.

The US government, which wants to have Iraq establish its
legitimate government at an early date, has repeatedly urged
Japan to participate in the PRT, with an eye on Japan's planned
withdrawal of GSDF troops in late May. However, this is the first
time that the US government has called for Japan's engagement
with specific place names.

The Japanese government remains cautious about participating in
the PRT for fear of casualties among GSDF personnel. However,
some Japanese government officials take it as "a de facto request
to dispatch GSDF troops to Basra," and the Japanese government is
continuing internal consultations. The government will likely be
pressed to come up with an extremely difficult decision along
with that on the expansion of airlift missions.

13) US, Britain, Australia concurs with Japan's plan to withdraw
GSDF from Samawah during end of March to May

YOMIURI (Page 1) (Excerpt)
Evening, February 25, 2006

In a meeting on Feb. 24 (local time) of working-level foreign and
security affairs officials at the British Defense Ministry in
London, the Japanese government has briefed and received the
concurrence of the US, British, and Australian governments on a
plan to start withdrawal of Ground Self-Defense FORCE (GSDF)
troops carrying out humanitarian assistance activities in Samawah
in southern Iraq in late March, and complete the pull out by mid-
May. There is a possibility of the start of the withdrawal being
delayed due to the changes in the public security situation at
the local site, so Prime Minister Koizumi is thinking of making
the final determination on the timing, looking at the moves of
the other countries' troops and the political process in Iraq.

14) Iranian foreign minister to arrive in Japan today; Prime
Minister, Foreign Minister to call for giving up on nuclear
ambitions

ASAHI (Page 2) (Full)
February 27, 2006

Iranian Foreign Minister Manuchehr Mottaki will arrive in Japan
today. He will meet Foreign Minister Taro Aso the same day and
pay courtesy call on Prime Minister Junichiro Koizumi tomorrow.
Should the United Nations Security Council adopt a resolution
calling for economic sanctions against Iran for its resumption of
nuclear research activities, including uranium enrichment,
Japan's oil policy will be enormously affected. Japan imports 15%
of its petroleum from Iran and is pushing ahead with a project to
independently exploit a large-scale oil field in that nation.
Keeping this in mind, Japan intends to convey to Mottaki the
international community's strong reaction to his country's moves,
urging Iran to give up on its nuclear ambitions.

Iran is the third largest oil supplier to Japan, following Saudi
Arabia and United Arab Emirates. The nation houses the Azadegan

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oil field in its southwest part, in which Japanese companies have
engaged in developing oil. The two countries have established
friendly ties, and Japan has taken a different stance toward the
nation from that of the US, which deems the nation as part of the
"axis of evil."

In a press briefing held prior to a meeting with Mottaki, Aso
said: "I will say what the other side doesn't want to hear,"
indicating that he would try to persuade Iran to give up its
nuclear research activities.

The Japanese side is ready to seek a peaceful solution by taking
such an approach as praising the proposed plan for Iran to carry
out the uranium enrichment process in Russia as "constructive,"
as Aso has noted.

Iran has asserted: "Peaceful use (of nuclear weapons) has been
allowed for Japan, a member nation of the Nuclear Non-
Proliferation Treaty (NPT),like Iran." Keeping this in mind, the
Japanese government will explain that the International Atomic
Energy Agency (IAEA) recognized as a result of nearly 30 years of
surveillance that "there are no doubts about Japan converting
nuclear material for military use." Based on this, Japan will
urge Iran to cooperate with IAEA inspections.

15) Yuji Miyamoto named next ambassador to China

YOMIURI (Page 4) (Full)
February 25, 2006

Yuji Miyamoto, ambassador in charge of Okinawa affairs, a member
of the so-called "China School," a group of specialists in the
Chinese in the Foreign Ministry, was appointed yesterday to serve
as next ambassador to China. The ministry initially intended to
pick Yutaka Iimura, incumbent ambassador to Indonesia, a non-
China School member, to the post, but it later made an unusual
step to back off from its plan, having met a negative response
from the Prime Minister's Official residence. A high ministry
official commented on Miyamoto's appointment: "He is not a person
to try to gain China's favor even though he belongs to the China
School. He has his own opinions."

16) ITER: Japan to place 20% or 11 billion yen worthy of orders
with South Korea from its budget framework; Acknowledgement of
support for Japan's bid to host project

MAINICHI (Page 3) (Excerpts)
February 27, 2006

In the construction of the International Thermonuclear
Experimental Reactor (ITER),the government has decided to
allocate approximately 11 billion yen for projects or about 20%
of Japan's budget to South Korea. In the original plan, the
government intended to place orders for such with Japanese
companies. Japan has obtained preferential treatments, including
an expanded procurement framework in return for giving in to the
EU on the construction site for facilities for the ITER. South
Korea had been resentful of Japan alone being preferentially
treated. It can, therefore, be said that the government's measure
is a reward to South Korea for its support for Japan's campaign.
The South Korean government has reportedly accepted the offer.


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Cadarache in the southern part of France has been selected as a
site for the construction of the ITER. Japan, the EU, South
Korea, the US, Russia, China and India will take part in the
project. The construction costs are expected to total
approximately 570 billion yen. The EU, which has succeeded in
hosting the project, will shoulder 45% of the total construction
costs. The remaining six countries will shoulder approximately 9%
respectively.

In return for giving up on its desire to host the ITER project,
Japan last June obtained the right to preferential treatments,
including that the EU procures 20% of the construction expenses
it shoulders from Japanese domestic companies; related facilities
should be built in Japan and the framework for Japanese personnel
should be increased.

South Korea had supported Japan's efforts to invite the project.
According to an informed source, there was a secret deal between
the two countries that if Japan succeeds in hosting the project,
Japan will increase procurement from South Korea.

South Korea had complained of the decision that Japan alone is to
be awarded with preferential treatments in return for its giving
up its bid to host the project, saying, "South Korea and Japan
are in the same situation in the sense they are not the host
country for ITER." Tokyo and Seoul have repeatedly held talks to
settle this issue.

As a result, the two countries agreed that the Japanese
government places orders with South Korea for projects worth
about 11 billion yen out of 9% or approximately 52 billion yen of
the ITER construction costs, on which Japan has the right to
place orders.

The construction of ITER itself is expected to start next year or
later.

17) Inclusion of backbones: US inspector says, "I did not receive
training on export requirements"; Not aware of conditions for
Japan-bound exports

YOMIURI (Page 1) (Slightly abridged)
Evening, February 25, 2006

In connection with the inclusion of backbones, a risk material
that should have been as part of measures to prevent BSE
infection, it has been learned that two USDA inspectors who
authorized exports of products in question to Japan never
received training on meat exports and did not know export
conditions at all. The two testified in response to a hearing of
circumstances conducted by the USDA.

It has become clear that a sloppy checking system in the US has
given rise to the inclusion of backbones in the Japan-bound
shipment. The testimony will bring to light the faulty meat
control administration in the US.

The USDA on Feb. 17 submitted a report on the circumstances that
have led to the inclusion of spinal columns and a package of
measures designed to prevent a recurrence. The statements were
unveiled through the deposition taken from the inspectors, which
the USDA released as an appendix to the report.

TOKYO 00001023 012 OF 012



According to the statements, Inspector Wai Or, who authorized the
export of beef by Atlantic Veal & Lamb Inc. in New York was hired
nine months ago. He did not receive any training or orientation
on export procedures. He did not know export requirements for
Japan, either. He reportedly noted that he thought his USDA
veterinarian supervisor was responsible for that.

SCHIEFFER