JAPANESE MORNING PRESS HIGHLIGHTS 03/03/06

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SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 03/03/06


Index:

1) Top headlines
2) Editorials
3) Prime Minister's daily schedule

Minshuto (Democratic Party of Japan) in disarray:
4) Yomiuri poll: 70% of public critical of Minshuto's e-mail
caper in the Diet; 60% want lawmaker Nagata to resign
5) To save the day, Minshuto appoints elderly lawmaker, known
as the "living dictionary," to manage party's Diet affairs
6) Minshuto head Maehara seems to have completely surrendered
his leadership in the party
7) Many in LDP, unconvinced by Minshuto apologies, punishment
of Nagata, still want to "attack" party

8) Vacuum created in the Diet due to the Minshuto brawl
ironically allowed the budget to pass the lower house with little
debate

Defense and security issues:
9) Foreign Ministry in annual arms control white paper finally
tackles issue of China's military buildup
10) JDA chief Nukaga appeals to eight local heads around Iwakuni
base to accept transfer of carrier jets from Atsugi
11) JDA issues stern warning to Mitsubishi Electric, halts new
defense contracts

12) Government planning to release oil stockpile if sanctions
imposed on Iran, embargoing oil flow to Japan

13) Administrative reform plan targets policy-related financial
institutions by halving their balance of funds by end of FY08 in
GDP terms

14) Important bills left to pass in last half of Diet

Beef ban:
15) USDA Secretary Johanns hardens stance toward resolving US
beef import issue
16) Japan's white paper on agriculture for FY05 spotlights the
US beef issue

Articles:

1) TOP HEADLINES

Asahi:
Hollowing out of Diet: Budget bill gets through Lower House
without questioning; All Minshuto (DPJ) did is to make apology

Mainichi:
DFAA-involved bid-rigging scandal: Tokyo District Public
Prosecutors Office questioning all general contractors

Yomiuri:
Poll: 70% are "not convinced" about Minshuto's response to e-mail
fiasco; 60% call for resignation of lawmaker Nagata

Nihon Keizai:
Toyota accepts labor union's 1,000-yen wage hike request; Leading
electric manufacturers also grant wage hikes for first time in

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five years

Sankei:
US-India summit: US will extend cooperation to India in nuclear
development, removing restrictions on technology exports

Tokyo Shimbun:
Overcrowded juvenile facilities in Tokyo; Number of children in
need of urgent care rising due to surge in child-abuse cases

2) EDITORIALS

Asahi:
(1) Reconstruction of JAL: No future for sick organization
(2) India's nuclear program: The danger of US recognition

Mainichi:
(1) Inactive Diet: Taxpayers' money is wasted
(2) Health insurance lawsuit: Continuing the work of Mr. Sugio

Yomiuri:
(1) JAL's fresh start: Share sense of crisis needed
(2) Diet debate: Go back to basics

Nihon Keizai:
(1) World powers should unite to avoid an Iranian nuclear crisis
(2) Questions about President Roh's speech

Sankei:
(1) Budget passes Lower House; We hope Koizumi will complete his
reform
(2) North Korea: Tighten the net

Tokyo Shimbun:
(1) Passage of budget: Diet debate needs to return to normal
(2) Spring wage increase offensive: Labor unions should make
good use of this robust economy

3) Prime Minister's Official Residence (Kantei)

Prime Minister's schedule, March 2

NIHON KEIZAI (Page 2) (Full)
March 3, 2006

09:02
Arrived at Kantei.

09:59
Attended a Lower House Budget Committee meeting.

12:06
Returned to Kantei.

13:01
Attended the Lower House Budget Committee meeting.

15:48
Met at Kantei with Public Affairs Headquarters deputy chief Seko.

16:40
Attended a Lower House plenary session.

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18:26
Met Lower House Speaker Kono and his deputy Yokomichi and other
ruling party executives.

18:45
Returned to Kantei.

19:23
Returned to his residence.

4) Poll on DPJ email fiasco: 70% see DPJ action as unconvincing;
60% urge Nagata to resign

YOMIURI (Top play) (Abridged)
March 3, 2006

The leading opposition Democratic Party of Japan (DPJ or
Minshuto),in a recent parliamentary session, took up the issue
of the former Livedoor Co. president's alleged email directive to
send money to a ruling Liberal Democratic Party (LDP) executive's
son. In response, the Yomiuri Shimbun conducted a telephone-based
spot nationwide public opinion survey on March 1-2. DPJ Diet
Affairs Committee Chairman Yoshihiko Noda has resigned from his
party post to take responsibility. In the Diet, Hisayasu Nagata,
a House of Representatives member with the DPJ, took up the email
(later found to be a fake) and asked questions about its content.
On this issue, the DPJ went no further than to suspend Nagata's
party membership for six months. Asked about this way of taking
responsibility, 70% of respondents answered that it was
"unconvincing." Respondents were also asked if they thought
Nagata should resign from his Diet post. In reply to this
question, 60% answered "yes," with 32% saying "no." Respondents
were further asked if they thought DPJ President Maehara should
resign as his party's head. In response, "yes" and "no" were even
at 45%.

In the meantime, the approval rating for the Koizumi cabinet was
35.0%, with the disapproval rating at 35.0%. The support rate was
up 2.8 percentage points from a telephone-based spot survey
conducted in January after the Livedoor scandal, and the
nonsupport rate was down 1.1 points. In the breakdown of public
support for political parties, the LDP stood at 42.9%, up 4.0
points from this January's spot survey. The DPJ was at 15.1%,
down 2.1 points.

5) Kozo Watanabe becomes Minshuto's Diet Affairs Committee
chairman

MAINICHI (Page 5) (Slightly abridged)
March 3, 2006

Former House of Representatives Vice Speaker Kozo Watanabe
assumed yesterday the post of Minshuto's (Democratic Party of
Japan) Diet Affairs Committee chairman. The 73-year-old veteran
lawmaker was first elected to the Diet when he was 37. He served
in such cabinet posts as health and welfare minister, home
affairs minister, and trade minister. He has experience as one of
the seven prefects of the former Takeshita faction in the Liberal
Democratic Party (LDP).

He took part in the formation of the now defunct Shinseito (Japan

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Renewal Party) in 1993, and that of the now defunct Shinshinto
(New Frontier Party) in 1994. He served as Lower House vice
speaker from 1996 to 2003. He severed as the LDP's Diet affairs
chief in 1987 and as Shinshinto's Diet Steering Committee
chairman. He is well versed in Diet affairs. The main opposition
party now relies on a professional.

He has a desire to leave his name in history as one of the
persons who formed a two party system. He belonged to the debate
club of Waseda University. He enjoys great prestige among young
lawmakers.

Both Watanabe and Ichiro Ozawa, former Minshuto vice president,
have been serving in the Diet for the same length of time. He
calls Prime Minister Junichiro Koizumi "Koizumi-kun," just like
the premier were his junior. When Watanabe was LDP Diet affairs
chief, Koizumi was his deputy.

He initially turned down the request, but he said after accepting
the post, "If nobody takes the post, our party will go down."
However some party members are critical about the appointment of
Watanabe, saying that it seems to be a move to turn the clock
back.

While Minshuto is having a difficult time, Watanabe's political
caliber will be tested.

6) Minshuto's Maehara totally surrenders in e-mail fiasco;
Leadership falls decisively

SANKEI (Page 2) (Excerpts)
March 3, 2006

Minshuto (Democratic Party of Japan) President Seiji Maehara and
fellow lawmaker Hisayasu Nagata offered yesterday their separate
apologies to Prime Minister Junichiro Koizumi and Liberal
Democratic Party (LDP) Secretary General Tsutomu Takebe. After a
big fuss, the largest opposition party was able to install former
House of Representatives Vice Speaker Kozo Watanabe in the
party's Diet Affairs Committee chairman post. Watanabe, a supreme
advisor to the party, is 73 years old, 30 years senior to
Maehara. With Maehara's "total surrender," the party was able to
prevent itself from flying apart. Given the situation, Watanabe's
role this time is to try to keep the sinking Maehara ship afloat.
Maehara is losing completely his grip on the party.

Prime Minister told reporters last night at the Prime Minister's
Official residence, wearing an expression of relief:

"I think Mr. Maehara has been experiencing a lot of hardships,
but the public has high hopes for the largest opposition party. I
want him to learn a lesson from the incident and control the
party so as not to repeat the same mistake. I would like him to
take it a lesson to develop as a politician."

Secretary General Yukio Hatoyama also apologized to Takebe at the

SIPDIS
Diet chamber. Takebe, referring to the LDP's second set of
questioners to Minshuto, responded by saying, "If you give us
clear answers, we will put an end to the matter."

7) Livedoor e-mail uproar: LDP still dissatisfied with Minshuto's
response

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MAINICHI (Page 5) (Excerpts)
March 3, 2006

The ruling Liberal Democratic Party (LDP) has put off a
settlement of the e-mail fiasco. The reason is because it has
judged that giving the main opposition party Minshuto (Democratic
Party of Japan) detailed requests will be useful material to
constrain Minshuto. The LDP has been severely criticizing
lawmaker Hisayasu Nagata at the House of Representatives' plenary
session, which approved a decision (by the Lower House Steering
Committee) to refer a motion calling for punishment against
Nagata to the Committee on Discipline. Some in the ruling
coalition have called for refraining excessive pressure on the
main opposition party, with senior New Komeito remarking, "If we
press the opposition too hard, the public mood might change." The
ruling camp has begun considering what would be a good timing for
putting an end to the matter, while using flexible tactics.

In response to the open letter of questionnaires the LDP
presented on March 1, Nagata and the LDP leadership admitted that
the basis of the accusation concerning the e-mail message had
vanished and that the e-mail was a fake.

The LDP, however, is not satisfied with Minshuto's responses. LDP
Acting Secretary General Ichiro Aisawa stated: "I wonder why they
can't come out and say it was a fake e-mail and a complete
fabrication that 30 million yen was paid (to LDP Secretary
General Takebe's son)."

Aisawa, presenting the second set of questions, which contained
an example of an apology, pressed Minshuto to respond again.

The e-mail issue is the best tool for the LDP to attack Minshuto.
A senior LDP member commented: "As long as this matter is
unresolved, Minshuto cannot take tough stances in Diet debate."
The LDP lawmaker's remark suggests that the Diet management will
go smoothly as long as settlement of the e-mail issue is delayed.

8) Remaining half of Diet session may lack substance; Minshuto
members make apologies; Budget bill passes Lower House without
heated debate; Koizumi expected to renew his vow to accomplish
reform drive

ASAHI (Top play) (Almost full)
March 3, 2006

The tide has turned in favor of the ruling bloc because of the e-
mail hullabaloo. The fiscal 2006 budget bill cleared the Lower
House in its plenary session last evening. At the Diet, the major
opposition party Minshuto (Democratic Party of Japan) was
supposed to demonstrate its political presence by relentlessly
attacking the Koizumi reform drive. Instead, Minshuto lawmakers
who took the floor as questioners had to bow deeply in apology
for the e-mail in question that has turned out to be bogus. Now
that the opposition bloc has lost its momentum to pursue the
Koizumi administration's policies because the largest opposition
party has followed a self-destructive course because of the e-
mail flap, the remaining Diet session may become devoid of
substance. Prime Minister Junichiro Koizumi, who once seemed to
have lost his grip on his party after the Livedoor incident, is
expected to re-solidify his reform drive once again by taking

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advantage of this situation. With the Liberal Democratic Party
presidential election coming up in the fall, the focus is also
shifting to how prospective post-Koizumi candidates, who have
been keeping their distances from the premier over the Imperial
House Law issue and other issue, will respond now.

Yesterday, one of the highlights in the current Diet session,
Minshuto lawmakers were busy bowing to ruling party members in
apology and finding a new Diet affairs chief. Kazuhiro Haraguchi,
who took the floor as questioner in yesterday's Lower House
Budget Committee session, was forced to make an apology along
with Yorihisa Matsuno. Haraguchi said, "We are determined to
improve our party on this occasion to conduct Diet debate with
dignity."

The following conversation reportedly took place at the Lower
House plenary session between Prime Minister Koizumi and
Minshuto's Maehara while the former tapping the shoulder of the
latter:

Koizumi: Don't be too discouraged. Keep your spirit high.

Maehara: We caused you trouble.

Koizumi is looking ahead beyond the e-mail mess. He told
reporters about the remaining Diet session:

"I have characterized the current Diet session as administrative
reform promotion Diet, so I think the Diet will return to that
line. All cabinet ministers are required to devote themselves to
their jobs."

Koizumi is expected to work hard to keep his momentum through
reform debates with the aim of an early passage of administrative
reform promotion legislation, including a bill to reduce the
number of public servants. Koizumi's mind is clearly set to
incorporate the reform promotion legislation in the "big-boned
policy" to be produced in June to hand his reform drive down to
his successor.

Although his last goal is to break away with deflation, how the
public will react to the Livedoor-triggered growing income
disparity is unknown.

On the diplomatic front, the outlook is dim for resolution of
issues between Japan and the US, such as the realignment of US
forces in Japan, the planned withdrawal of the SDF from Iraq, and
the resumption of US beef imports. What to do with Japan's Asia
diplomacy, which has stalled due to the Yasukuni Shrine issue,
remains a weighty challenge.

A key also lies in how post-Koizumi candidates, such as Chief
Cabinet Secretary Shinzo Abe, Finance Minister Sadakazu Tanigaki,
Foreign Minister Taro Aso, and former Chief Cabinet Secretary
Yasuo Fukuda, will deal with Koizumi's efforts to revamp his
reform policy, given the changes in the environment surrounding
the Koizumi administration.

9) Foreign Ministry's white paper on disarmament expresses strong
concern about China's military buildup for first time

TOKYO SHIMBUN (Page 3) (Excerpts)

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March 3, 2006

The Foreign Ministry will incorporate in its annual report a
passage expressing strong concern about China's arms buildup for
the first time, according to informed sources yesterday. Although
it does not identify the country as China, the ministry will
include in the 2006 white paper on Japan's disarmament and
nonproliferation diplomacy the passage noting "the arms buildup
is a challenge that will directly affect Japan's national
security."

In the 2005 version, the Foreign Ministry just stated: "Each
nation will carefully watch China's moves in the military area."
The tone of Japan's sense of alarm is stronger in the 2006 paper
than in the previous one. Foreign Minister Taro Aso stated last
December that China's military expansion is posing a
"considerable threat." The report falls in line with this remark
and is expected to draw a strong reaction from China again.

The Foreign Ministry will brief its draft in a meeting of the
Liberal Democratic Party's Foreign Affairs Division today and
then release the white paper in the middle of March.

The white paper will state: "In Asia, there is a country that has
been expanding armaments and has not fully uncovered its arms
strength, constituting a matter of concern in the neighboring
region." China's defense budget increased annually in the double-
digit range for the 17th consecutive year until last year. In
addition, the US Defense Department criticizing in its annual
report last year the non-transparency of China's defense budget,
noting: "Its actual defense budget is two to three times higher
than the announced amount," A senior Foreign Ministry official
said: "It is apparent that the identity of the nation in question
is China."

10) Defense chief seeks local heads understanding on Iwakuni
redeployment

TOKYO SHIMBUN (Page 2) (Full)
March 3, 2006

Defense Agency Director General Fukushiro Nukaga met with the
heads of eight municipalities neighboring the US Marine Corps'
Iwakuni base in Yamaguchi Prefecture, including Yu Town Mayor
Toshimitsu Makimoto, and sought their understanding on a plan to
redeploy US carrier-borne aircraft from the US Navy's Atsugi base
to the Iwakuni base.

In the meeting, the local heads asked Nukaga to detail the
redeployment plan. "The government will appropriately respond to
the neighboring municipalities from an overall perspective,"
Nukaga said. With this, Nukaga stressed that the government has
been considering measures, such as subsidization.

Meanwhile, the city of Iwakuni will poll its residents on March
12 to ask its residents whether to accept the planned
redeployment of fighter jets to Iwakuni. In the meeting, Nukaga
and the municipal heads exchanged views on this matter.

11) Defense Agency suspends new contacts, warns Mitsubishi
Electric


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SANKEI (Page 3) (Abridged)
March 3, 2006

The Defense Agency decided yesterday to suspend its entry into
new contracts with Mitsubishi Electric Corp. (MELCO) and
Mitsubishi Research Institute, Inc. (MRI) until the agency can
confirm their steps to prevent info leakage from recurring. The
two firms are alleged to have been involved in the outflow of
missile data to an entity affiliated with the pro-Pyongyang
General Association of Korean Residents in Japan (Chongryun). The
leaked materials were about the Ground Self-Defense Force's
surface-to-air missiles (SAM). The government is now studying an
information security agreement with the United States as a step
to strengthen the bilateral alliance. In response to this move,
the agency decided to take such an unprecedented punitive action
against the two firms over their leakage of defense secrets.

Defense Agency Director General Fukushiro Nukaga called in MELCO
President Tamotsu Nomaguchi and MRI President Masayuki Tanaka to
the Defense Agency and strictly warned them. "Both of your
companies have extremely grave responsibilities as contractors
handling highly classified information," Nukaga told them. Nukaga
also told them to come up with info leakage preventive measures.
In addition, the defense chief also told them that the agency has
decided to take punitive actions, such as suspending its entry
into new contracts with the two companies until the agency can
confirm that there is no fear of recurrence.

The Defense Agency asked MELCO to work out a report on a
prototype of the future SAM missile from 1994 through 1995, and
the report's graphs describing missile performance and other
technical data flowed to the Science and Technology Association
of Korean Residents in Japan.

12) Government to released nation's stockpiled oil in event of
embargo imposed on Iran

SANKEI (Page 1) (Excerpts)
March 3, 2006

The government decided yesterday that it would release official
stockpiles of oil if an embargo is imposed against Iran as part
of economic sanctions for its nuclear development program. In
past emergencies, the government had supplied oil stored by the
private sector. If state oil is actually released, this would be
the first such case. Should an oil export embargo be laid on
Iran, Japan will receive a serious blow because it imports 15%
(230 million barrels annually) of its oil from that nation.

The Foreign Ministry, the Ministry of Economy, Trade and
Industry, and other concerned ministries have already started
work to map out measures to ensure stable oil supplies, as well
as to look into the impact of such economic sanctions on the
Japanese and world economy. The international community is likely
to consider such sanction measures as restricting governmental
exchanges, suspending the issuance of visas, withdrawing the
embassies from Iran; and freezing its assets overseas, in
addition to an oil embargo.

Japan imports nearly 90% of its oil from the Middle East region.
From the viewpoint of energy security, the government intends to
look into exploring new oil suppliers in other areas and

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expanding new energy development.

Iran houses the Azadegan oil field, in which Japanese companies
have 75% of all concession rights. Keeping this in mind, some
government officials are calling for caution about sanctions
against Iran.

The US, though, has announced it would take a resolute step in a
bid to stop Iran's nuclear ambitions. In addition, even France
and Germany, which clashed with the US on the occasion of the
Iraq war, have fallen in step with the US. Given this, many
insist that Japan should give priority to international
cooperation.

Iran produces 5.1 % (4.08 million barrels daily) of the total
volume of oil in the world, but there will be less impact on the
US and European countries than on Japan even if an embargo is
imposed on Iran. The US does not import oil from that nation, and
the European countries are less dependent on Iran's oil.

13) Outstanding loan balance of new government-affiliated
financial institutions as of end of fiscal 2008 set at half of
GDP in 2004; Administrative reform promotion bill leaves source
of contention over law that authorizes existing public banks

NIHON KEIZAI (Page 2) (Full)
March 3, 2006

The full text of an administrative reform promotion bill
featuring the reorganization of government-affiliated financial
institutions was unveiled yesterday. The draft noted that the
outstanding loan balance at the end of fiscal 2008 of a public
financial institution to be established anew, by combining
existing ones, is set to be no more than half the fiscal 2004
gross domestic product (GDP). It also mentioned the complete
privatization of Shoko Chukin Bank and the Development Bank of
Japan but did not call for the abolition of their legal
authorization. Since there is room left for various government
agencies to involve themselves in the new bank for the purpose of
securing positions for their retirees, there is concern that the
reform will become ineffectual.

Government agencies in Kasumigaseki are strongly opposed to the
bill. Regarding amakudari, it simply stipulates that
consideration should be given so that positions are not limited
to people with specific experience in the public sector. The bill
has opened the way for private citizens to take such positions,
but it stopped short of placing a ban on amakudari.

Regarding the complete privatization of Shoko Chukin Bank and the
Development Bank of Japan, concerned government agencies strongly
insist on the preservation of the law that authorizes their
existence. The law stipulates that government agencies with
supervisory authority over those institutions have jurisdiction.
It also mentions the details of operations of those financial
institutions. Economy, Trade, and Industry Vice Minister Hideji
Sugiyama said that the legal framework was necessary so that
small and medium-size businesses can receive financing.

Internal Affairs and Communications Minister Heizo Takenaka is
calling for scrapping the law. He insists that the management of
the new entity should be in compliance with the Banking Law, as

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is the case with other private banks. Since the two sides remain
at odds over this issue, how to handle the law will most likely
remain a source of contention.

Coordination on the handling of the Japan Bank for International
Cooperation among the Finance Ministry, the Foreign Ministry, and
METI had run into snags, but a settlement has finally been
reached on a proposal for dividing it into two functions. The key
to smooth negotiations will be whether the efficacy of official
development assistance (ODA) can be boosted by eliminating
concerned government agencies' sectionalism.

14) Next focus of Diet deliberations is on key bills: No
prospects in sight for submission of amendment to Basic Education
Law, national referendum bill

NIHON KEIZAQI (Page 2) (Full)
March 3, 2006

With the Lower House passage of the fiscal 2006 budget bill, the
focus of Diet sessions will shift to the handling of key bills.
Top priority for the government and the ruling camp is to secure
the early enactment of administrative reform promotion
legislation, which they characterize as the final touch of the
series of the Koizumi reforms. In conjunction with the
presentation of the bill by the government on Mar. 10, the ruling
parties plan to set up a special committee in the Diet possibly
in the middle of this month for intensive deliberations on the
bill.

The government and the ruling parties are having difficulty
coordinating views on other key bills, though. The Liberal
Democratic Party (LDP) is calling for the inclusion of the word
"patriotism" in a bill amending the Basic Education Law, while
the New Komeito is taking a cautious stance toward the proposal.
Views of LDP members are split between the Upper and Lower Houses
over the national referendum legislation, which stipulates
specific procedures for revising the Constitution. There are no
prospects in sight for coordination with the Democratic Party of
Japan (DPJ = Minshuto).

The LDP has been eager to pass both bills. Many members want to
see them enacted while Prime Minister Koizumi, with his high
public support ratings, is in office. If it becomes difficult to
obtain Diet approval for that bill because of a delay in its
submission to the Diet, it will likely jeopardize the prime
minister's power base.

Among bills planned for submission to the current Diet session,
the submission of a bill amending the Imperial House Law, which
is aimed to allow females and their descendants to ascend the
Imperial throne, and a set of bills for upgrading the Defense
Agency to an agency status will likely be put on the backburner.

Key bills which government and ruling parties aim for enactment
during current Diet session

Administrative reform promotion bill
Mentions ideals and timelines for reforming 10 areas, including
the integration and disbandment of government-affiliated
financial institutions and a net reduction in public servants.


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Set of bills reforming the medical services system
A rise in the share of medical expenses to be covered by patients

Amendment to the Building Standards Law
Strengthen penalties against illegal architectural design and
supervision over private-sector inspection agencies.

Amendment to the Law on the Prevention of Collusive Bidding at
the Initiative of Government Agencies
Strengthen, expand punishments on public servants who were
directly involved in bid-rigging

Bills on which coordination of views is not going smoothly

Amendment to Basic Education Law
LDP is calling for the inclusion of the word "patriotism," but
the New Komeito is opposing the proposal.

National referendum bill
Stipulates procedures for a national referendum aimed to revise
the Constitution.

Set of bills for upgrading the Defense Agency (JDA) to a ministry
status
Upgrade JDA, currently an extra-ministerial bureau of the Cabinet
Office, to ministry status, which enables it to establish
ministry ordinances and propose agenda items for cabinet
meetings.

15) Beef issue: US agriculture secretary takes hard-line stance,
revealing irritation with possible protraction of Japan's second
ban on beef imports

YOMIURI (Page 9) (Full)
March 3, 2006

Eiji Hirose, Washington

In an interview on March 1 with the Yomiuri Shimbun, US Secretary
of Agriculture Mike Johanns criticized Japan for its strict
action of the reinstatement of an embargo on US beef imports.
This is the first criticism he has made in public. His hardened
attitude reflects America's irritation at growing calls in Japan
to be cautious about resuming US beef imports.

In dealing with the discovery of vertebral columns - a material
prohibited by Japan to be exported - in the US beef shipment to
Japan, Johanns until recently had fully admitted to the US
mistake and he had reiterated that Japan's second import ban on
US beef "is understandable."

But in the interview this time, Johanns turned the argument
around. For instance, he said, "The beef issue shouldn't be
affected by political science but should follow science." He
emphasized that in his view, Japan's second ban on beef imports
was "an overreaction," saying, "If one vehicle imported from
Japan was found to have a defect, should the US completely halt
imports of Japanese cars?"

His criticism came in the background that the US has failed to
avoid a worst-case scenario, namely that the US had hoped that a
report released in February by the Department of Agriculture

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(USDA) would lead to Japan's early lifting of the embargo on US
beef imports, but on the contrary, the report highlighted the
sloppy beef administration in the US, thereby making Japan even
more cautious about resuming US beef imports.

Johanns announced a policy of allowing Japanese government
officials to inspect US facilities on a regular basis after the
resumption of beef imports. He did so perhaps out of his strong
sense of alarm that in order to publicize the safety of US beef,
he would have to take whatever measures possible.

In the US Congress, some legislators are already beginning to
call for economic sanctions against Japan. The Japan-US beef
dispute had been settled late last year with Japan's lifting of
the ban on US beef imports, but the Congress is again taking a
serious look.

16) Agricultural Report for 2005 likely to emphasize "offensive"
stance, according to its draft

YOMIURI (Page 9) (Full)
March 3, 2006

Major points of the Agricultural Report of Food, Agriculture, and
Farm Villages that the Ministry of Agriculture, Forestry and
Fisheries (MAFF) will finalize by this spring were revealed
yesterday. The report is full of "offensive agricultural
approaches" as promoted by Prime Minister Koizumi, for instance,
a response to violations of the right to new plant variety and
promotion of farm product exports by taking advantage of the
Japanese food boom abroad.

The report deals with the reinstatement of the ban on US beef
imports in the wake of the discovery of specified risk materials
in the US beef shipment to Japan and bird flu that might spread
worldwide. In order to ensure consumer confidence in food, the
report emphasizes the importance of fully familiarizing
agricultural organizations and food processing firms with the
observation of laws, as well as making clear who are producers
and who are consumers. Besides, the report points out the need to
make arrangements to urge retired baby-boomers to settle down in
farm villages.

SCHIEFFER