MOFA ECONOMIC CHIEF ON EAS-APEC DIFFERENCES, FTA

C O N F I D E N T I A L SECTION 01 OF 02 TOKYO 001634 SIPDIS SIPDIS DEPT PASS USTR FOR CUTLER, NEUFFER, BEEMAN C O R R E C T E D C O P Y////ADDED SIPDIS AS CAPTION////// E.O. 12958: DECL: 03/28/2016 TAGS: ECON ETRD PREL PGOV APECO ASEAN JA SUBJECT: MOFA ECONOMIC CHIEF ON EAS-APEC DIFFERENCES, FTA STRATEGY, AND ECONOMIC PARTNERSHIP WITH U.S. REF: TOKYO 1483 TOKYO 00001634 001.2 OF 002 Classified By: Ambassador J. Thomas Schieffer. Reason: 1.4 (b,d) ¶1. (C) Summary: The Foreign Ministry's (MOFA) obsession with China is driving Japan's interest in the East Asian Summit (EAS),the Director General of MOFA's Economic Affairs Bureau told the U.S Senior Official for APEC on March 23. The MOFA official has endeavored to brief the Foreign Minister on the continued importance of APEC in order to keep the EAS from dominating Japan's thinking on regional integration. He also outlined Japan's new strategy on free trade agreement (FTA) negotiations and how he had helped to promote the Foreign Ministry as the lead agency for Japan's economic diplomacy. He indicated Japan would look into providing some funding to support a U.S.- proposed project designed at enhancing APEC-ASEAN cooperation and discussed ideas for a new economic partnership arrangement with the United States. End summary. -------------- APEC and EAS -------------- ¶2. (C) In a March 23 meeting with MOFA Economic Affairs Bureau Director General Kaoru Ishikawa, U.S. Senior Official for APEC Ambassador Michael Michalak noted that, during a recent trip to Washington, MOFA Vice Minister Shiozaki had urged the United States to participate in the East Asian Summit and had ignored APEC in his remarks. The MOFA Asia Bureau is the main supporter of the EAS, Ishikawa replied. He linked this position with the Asia Bureau's obsession with China. Ishikawa said that he had been briefing FM Aso on the importance of APEC, stressing both that it is a rules-making international organization at time when those types of bodies are in the ascendancy and that it includes Taiwan. (Minami passed Amb. Michalak a series of charts on the economic importance of the various Asian organizations including ASEAN plus 3, the EAS, and APEC, with APEC obviously by far the most important body.) Ishikawa added that while it was hard to pressure China bilaterally on issues without inciting strong resistance from the Chinese, multilateral fora could be used effectively to urge China's compliance with international rules and norms. -------------- EPAs/FTAs -------------- ¶3. (C) Ishikawa acknowledged that he had been called in by LDP Policy Research Committee Chairman Hidenao Nakagawa to explain why Japan's free trade agreements and economic partnership agreements were proceeding so slowly. In response, Ishikawa had devised the new streamlined strategy for FTA negotiations that FM Aso outlined in his March 8 speech. (See reftel.) He also indicated that the language Aso had used highlighting the leading role of the Foreign Ministry in economic diplomacy had been something of a coup. "Don't say that around METI officials!" Ishikawa cautioned about the coup remark. He traced this position to his successful addition of a strong defense of the Foreign Ministry's role in economic diplomacy into the Prime Minister's response to a question posed in a Diet Budget Committee session. The Prime Minister's response had been formally cleared interagency, Ishikawa said, but stressed nevertheless that he (Ishikawa) was in danger of being "attacked" as a result of this "victory." (Comment: We had heard that, unlike the Prime Minister's remark, the Foreign Ministry's speech was not cleared interagency. End comment.) ¶4. (C) Ishikawa also drew attention to the parts of Aso's speech on a possible FTA with the United States. He stressed that the current ambivalent language was a more positive to an FTA than the flat "no" that had been Japan's position earlier. ¶5. (C) Ishikawa also stated that he had met with the Australian Ambassador and had suggested the possibility of a more limited trade agreement than the full "economic partnership agreement" that had been envisioned. He noted that it would not be possible for Japan to negotiate a FTA that would meet WTO standards, but that a more limited arrangement might be possible. Once an agreement had been struck with Australia, such an model might be used with the United States. He added that he had received some support TOKYO 00001634 002 OF 002 from (unnamed) senior bureaucrats in the Ministry of Agriculture, Forestry and Fisheries (MAFF). -------------- Cooperation with ASEAN -------------- ¶6. (C) Amb. Michalak outlined his ideas for greater APEC- ASEAN cooperation and described the pilot project on avian influenza (AI) that the United States envisioned. Michalak also asked whether Japan could provide funding to assist the ASEAN members who could not receive aid from the United States: Cambodia and Burma. Ishikawa asked APEC Office Director Minami to look into whether some of the USD 1.5 billion that Japan had pledged in development assistance to fight AI could be used for that purpose. Michalak then indicated that Japan should consider the possibility of including support for ASEAN in the framework of the U.S.- Japan Strategic Development Alliance. -------------- New U.S.-Japan Economic Partnership -------------- ¶7. (C) Ishikawa raised the topic of a new economic partnership with the United States and called for an approach very close to the U.S. "building block" concept. Amb. Michalak suggested to Ishikawa a number of areas that might be included in a new U.S.-Japan economic partnership. These included IPR protection (particularly regarding China),secure trade/supply chain security, and energy issues. Action in these areas would still require some sort of regulatory reform dialogue and bilateral investment talks, but they would be capped by a new, streamlined sub- cabinet meeting, which would focus on more strategic questions. Ishikawa indicated that he agreed with this proposed framework. (Note: Director General Ishikawa's comments on Japan's suspension of U.S. beef imports are reported septel.) ¶8. (U) Ambassador Michalak has cleared this message. SCHIEFFER