JAPANESE MORNING PRESS HIGHLIGHTS 04//06

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

DPJ race:
4) Ichiro Ozawa, Naoto Kan to face off in party election
tomorrow
5) Ozawa gets pole position, Kan gearing up for last-lap duel
6) Ozawa, Kan hints at touching up party's foreign, security
policies

Economic agenda:
7) US-Japan patent highway to open in July
8) US presents Japan with beef processing checklist
9) FSA suspends JPMorgan bank for 6 months
10) Japan to enter into FTA talks with 6 Gulf states, eyes
making inroads into money, telecom markets
11) Japan to aim for 4% growth, curb tax raise: LDP fiscal panel
report
12) GOJ ministry to abolish selective bidding to prevent 'dango'
bid rigging
13) Japan to backpedal on space exploitation

Defense issues:
14) Never back down on Futenma proposal: Nago mayor
15) North Korean delegates to visit Japan for coordination with
US counterparts ahead of 6-party talks
16) 4-nation meeting set for April 10 over Iraq
17) US, Japan to work together for advanced radar system

Articles:

1) TOP HEADLINES

Asahi, Mainichi, Yomiuri, Sankei & Tokyo Shimbun:
Ozawa, Kan declare candidacy for Minshuto presidential race, with
Ozawa running ahead of Kan; Mid-ranking, junior members hold key

Nihon Keizai:
Land Ministry plans to scrap designated competitive bidding
system next fiscal year to stem bid rigging

2) EDITORIALS

Asahi:
(1) Two heavyweights to face off in Minshuto presidential
election
(2) Japan Skating Federation pouring cold water on medals

Mainichi:
(1) Successor to third-longest-serving prime minister likely to
face difficult tasks
(2) Gimmicks will not bring about fiscal reconstruction

Yomiuri:
(1) East Asia must unit against "yellow sand"
(2) Despite resignation of Thai prime minister, embers of crisis
remain

Nihon Keizai:

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(1) Don't miss opportunity strengthen ties with Saudi Arabia
(2) Koizumi surpasses Nakasone in terms of time in office

Sankei:
(1) Minshuto candidates should speak of basic policy
(2) With Thai prime minister's resignation, Thailand urged to
establish stable, mature democratic politics

Tokyo Shimbun:
(1) One-on-one fight for Minshuto presidency
(2) Resignation of Thai prime minister provides good chance to
promote democracy

3) Prime Minister's Official Residence (Kantei)

Prime Minister's schedule, April 5

NIHON KEIZAI (Page 2) (Full)
April 6, 2006

10:35
Met at Kantei with Foreign Affairs Secretary Romulo of the
Philippines.

11:05
Attended the opening ceremony of the initial joint workshop for
national servants, held at Yoyogi's National Olympic Memorial
Youth Center.

11:32
Returned to Kantei.

13:53
Met with Ambassador for Peace in the Middle East Arima.

14:22
Met with Fuji Xerox Supreme Advisor Yotaro Kobayashi, who serves
as Japanese chairman of the New Japan-China Friendship 21st
Century Committee, MOFA Asian and Oceanian Affairs Bureau chief
Sasae, and others.

15:30
Met with Japan Medical Association President Karasawa and others,
followed by Senior Vice Foreign Minister Shiozaki and Japan
Center for International Exchange Director Yamamoto.

18:03
Attended a wake for former Yamato Transport Labor Union President
Toshio Tsukamoto held at a hospital in Kasugacho.

18:50
Dined at the Hotel Okura with LDP Policy Research Council
Chairman Nakagawa, Diet Affairs Committee Chairman Hosoda, New
Komeito policy chief Inoue, and Diet affairs chief Higashi.

21:05
Returned to his residence.

4) Minshuto (Democratic Party of Japan) presidential race
tomorrow: Ozawa, Kan declare their candidacies with determination
to recreate the party; Key to election lies with mid-level and
junior lawmakers

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YOMIURI (Top play) (Lead paragraph)
April 6, 2006

Minshuto will hold a joint plenary session tomorrow afternoon of
its members of both the houses of the Diet and choose its leader
to succeed current President Seiji Maehara, who earlier expressed
his intention to resign from his post. Ichiro Ozawa, 63, former
party vice president, and Naoto Kan, 59, former party president,
yesterday met the press separately and formally announced they
would run for the presidential race. The major focus of attention
in the election campaign is how the two candidates intend to
rebuild the party, which has lost public confidence due to the
recent fake email fiasco. In addition, bringing the party to
power and creating a consensus on the party's basic policies in
such areas as foreign and security affairs are other challenges
for the new president. The groups of members supporting the two
candidates are intensifying their moves to win as many votes as
possible from other groups in the party. The key apparently lies
in the moves of mid-level and junior lawmakers who have yet to
decide whom they will support.

5) Ozawa has edge on Kan in support ahead of Minshuto
presidential race; Focus is on which candidate junior, mid-level
members will support

ASAHI (Top Play) (Lead paragraph)
April 6, 2006

At their press conferences yesterday, former Minshuto (Democratic
Party of Japan) Vice President Ichiro Ozawa, 63, and former
Minshuto President Naoto Kan, 59, announced their candidacies for
the party's presidential race, which will take place on April 7.
Both Ozawa and Kan stated that they would make efforts to
revitalize the party, which has been damaged by the false email
fiasco, stressing their clear stance of opposing the ruling
Liberal Democratic Party (LDP). At present, Ozawa has secured
support from most groups in the party and a majority of the
party's House of Representatives members. The focus are now on
whether Kan will be able to win support from junior and mid-level
lawmakers, who are called "independents within the party," and
whether the two veteran lawmakers can cooperate after the
election in order to unite the party.

6) Ozawa, Kan suggest revising Maehara's foreign and security
policy lines

YOMIURI (Page 3) (Full)
April 6, 2006

Two Minshuto (Democratic Party of Japan) presidential candidates,
Ichiro Ozawa and Naoto Kan, explained to the press corps
yesterday about their basic policy lines and their ways of
managing the party, suggesting that they would revise the current
party leadership's foreign and security policy, typified by DPJ
President Seiji Maehara's view of China as a threat.

Ozawa stressed, "It's essential for the party to discuss and lay
out the basic principles of the nation, for instance, national
security, social welfare, and the tax system." Ozawa avoided
making it clear whether he would continue Maehara's foreign and
security policy or reverse it, but he revealed his intention to

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clearly depart from Maehara's top-down style of unifying views in
the party.

On the other hand, Kan stated, "I can build a consensus in the
party on two elements: no overseas dispatch of the Self-Defense
Forces for wars and participation in United Nations-led
peacekeeping activities on our own initiative." A variety of
views exist in the party about foreign and security policy, like
the one held by President Maehara and another by the group of
former socialists, but Kan said he was confident he could unify
such views. When asked about the view of the China threat, Kan
noted, "It's only natural to seek transparency in military
spending; the question is how to express it on the diplomatic
front." He thus appeared cautious about using the term "threat."

As one of the distinctions in internal affairs with the Koizumi
administration, Ozawa and Kan both insisted on the need to
resolve social disparities, with Ozawa emphasizing the importance
of "humanity" and Kan using the word "ties." The two candidates
are of the opinion that it is necessary to rectify a society
excessively oriented toward competition.

The two candidates are sometimes called the "destroyer" and the
"dogmatist" due to their past ways of managing parties. When
asked about this, Ozawa asserted: "My personal motto is that
sincerity trumps all. Keeping this in mind, I will unify the
party. By placing the right people in the right posts, I can
reach this goal. I have no special methods or techniques." Kan,
too, stated, "The duo of Mr. Ozawa and I will absolutely not be
defeated by whomever the Liberal Democratic Party chooses as its
president or secretary general." Kan did not refer to differences
in party management between Ozawa and himself.

7) Japan, US to introduce dual examinations to speed up patent
process in July

YOMIURI (Page 9) (Full)
April 6, 2006

The governments of Japan and the United States have reached an
agreement in principle on the mutual use of patent screenings in
order to speed up the process of granting concurrent patents in
both Japan and the US. The Patent Office of the Ministry of
Economy, Trade, and Industry revealed yesterday that this would
start in July. Although each country's patent office will make a
final decision on whether to grant a patent, the introduction of
the system will shorten the examination time and expedite the
registration of patents overseas.

The expectation is that it will take 27 months until a decision
is made on a patent application in Japan in fiscal 2005. Japan
aims to conclude a similar accord with South Korea next spring.
It has also negotiated with Britain and Canada on the
introduction of this system.

8) USDA presents government with list of items to be checked at
US meat-processing plants

TOKYO SHIMBUN (Page 9) (Full)
April 6, 2006

The US Department of Agriculture (USDA) presented the Japanese

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government with a list of items to be checked at meat-processing
plants in the US as BSE safeguard measures, reflecting on a
recent incident of specified risk materials found in a US beef
shipment to Japan, according to informed sources yesterday.

The Agriculture, Forestry, and Fisheries Ministry and the Health,
Labor, and Welfare Ministry will start looking into the contents
of the list. If necessary, Japan will ask the US to add items.

Once Japan gives approval, USDA will inspect 37 slaughterhouses
and packing plants in the US it certified for exporting beef to
Japan to check if there is no problem in their slaughtering
process.

9) Some operations of JP Morgan Trust Bank suspended for six
months

MAINICHI (Page 9) (Excerpts)
April 6, 2006

Japanese regulators suspended some operations of JP Morgan Trust
Bank for six months starting April 13 and ordered the company to
improve its operations for allegedly failing to properly evaluate
real estate used to obtain loans. The Financial Services Agency
(FSA) made this announcement yesterday. The FSA also issued a
business improvement order against the Tokyo branch of JP Morgan
Chase Bank over loose compliance in the real-estate
securitization business. The bank was told to prepare and
implement a plan to strengthen its internal management framework,
including more stringent screening of bank transactions.

10) Government to call for deregulation in financial,
telecommunications sectors in FTA negotiations with 6 Persian
Gulf nations

NIHON KEIZAI (Page 5) (Full)
April 6, 2006

Japan will start negotiations in July with the Gulf Cooperation
Council (GCC), composed of six Persian Gulf nations, on
concluding a free trade agreement (FTA). The government has
decided to call on the GCC in the negotiations to lower tariffs
and to ease foreign currency regulations in the financial and
telecommunications sectors. Both sides will officially decide
today to start negotiations and hold a preparatory meeting in
May. The GCC is expected to urge Japan to lower tariffs on
petrochemical products. Both aim to ink a deal in 2008.

The GCC is a tariff alliance composed of Saudi Arabia, Bahrain,
Kuwait, Oman, Qatar, and the United Arab Emirates. Each nation
has imposed a roughly 5% tariff on all imports. Japan aims to
boost its exports of autos and construction machinery by having
these countries lower the tariffs. The government also intends to
call on the GCC to liberalize services, including financial,
telecommunications, and auto maintenance businesses.

The preparatory meeting will be held in Riyadh, Saudi Arabia, in
late May. Japan imports 75% of its crude oil from the GCC. The US
and China are taking the lead in the global FTA race. Japan also
aims to maintain a stable oil supply by deepening ties with the
GCC through an FTA.


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11) LDP's fiscal reform study panel suggests realizing nominal
economic growth of 4%, minimizing tax hikes, reducing
expenditures over 5 years

NIHON KEIZAI (Page 1) (Excerpts)
April 6, 2006

A fiscal reform research panel of the Liberal Democratic Party
(LDP), chaired by the party's policy chief Hidenao Nakagawa, has
formulated an interim report on reform of state revenues and
expenditures. The report proposes minimizing tax hikes by
realizing nominal economic growth of 4% (real growth of 2-3%) and
by strictly cutting expenditures. It suggests tax hikes be
implemented in consideration of the economic situation. It also
proposes an early formulation of a reform program, which would
include measures to reduce social security expenditures, by
fiscal 2011.

12) Land, Infrastructure, and Transport Ministry to abolish
designated bidding system possibly in fiscal 2007 to prevent bid
rigging; Preliminary bidding system eyed to exclude ineligible
companies

NIHON KEIZAI (Top play) (Excerpt)
April 6, 2006

The Land, Infrastructure, and Transport Ministry has basically
decided to abolish in fiscal 2007 the limited tender system to
select designated bidding companies for public works projects.
The ministry intends to completely replace this system with an
open bidding system that does not specify bidding companies for
projects ordered by the ministry. The goal is to eliminate bid
rigging and reduce project costs by increasing competition. The
ministry, however, plans to introduce a "preliminary bidding
system" to weed out unfit firms.

13) Japanese-version of GPS to be scaled down substantially

ASAHI (Page 3) (Abridged slightly)
April 6, 2006

The public and private sectors have decided to substantially
scale down the Quasi-Zenith Orbit Satellite program designed to
have a set of three satellites cover the nation's skies around
the clock to utilize their information in the Japanese-version of
the Global Positioning System (GPS). Although the public and
private sectors have been crafting the plan, which was originally
envisaged by the private sector, there are no prospects for
embarking on it on a commercial basis. As a result, the
government has decided to launch only one satellite in fiscal
2009 to conduct testing. The public and private sectors reported
their decision yesterday to the Space Activities Commission.

Envisaging a business to provide GPS functions, high quality
image, sound, and data broadcasting services to automobiles, the
private sector established in 2002 a company called New Satellite
Business financed by Mitsubishi Electric Co. and other firms.
They planned to pay 80 billion yen of the total project cost of
170 billion yen. But demand for such services has diminished due
to the spread of high-performance mobile phones and terrestrial
digital broadcasting.


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The Japanese satellite will be combined with US GPS satellites in
the testing to determine the possibility of a highly accurate
positioning system. The government will bear the total cost
estimated at 32 billion yen. The public and private sectors will
consider if they should launch the remaining two satellites after
seeing the test results.

14) Shimabukuro determined to stick to Nago plan on Futenma
relocation

TOKYO SHIMBUN (Page 2) (Full)
April 6, 2006

Nago Mayor Yoshikazu Shimabukuro returned to Okinawa from Tokyo
last night after winding up talks with Defense Agency Director
General Fukushiro Nukaga on the planned relocation of the US
Marine Corps' Futenma Air Station. The mayor told reporters at
Naha Airport on his April 4 talks with the defense chief, "I told
him that I will absolutely not budge an inch regarding Nago's
plan (to move the runway further offshore)." Thus the mayor
reiterated his plan not to make any concessions as long as the
flight path goes over land.

The Defense Agency has proposed turning the direction of the
runway 10 degrees counterclockwise to remove residential areas
from the flight path. But concerned about noise and possible
accidents, Nago has not changed its stance. Shimabukuro's comment
revealed the wide gap between the central government and Nago.

15) North Korean chief negotiator in six-party talks to visit
Japan

TOKYO SHIMBUN (Page 1) (Full)
April 6, 2006

North Korean Vice Foreign Minister Kim Kye Gwan, the country's
chief envoy to the six-party nuclear talks, Han Song Ryol, the
deputy permanent representative to the United Nations, and three
other officials have submitted requests to visit Japan to attend
an international academic conference on the East Asian security
starting April 9 in Tokyo. Japanese government officials
revealed yesterday that the requests are expected to be approved
soon.

US Assistant Secretary of State Christopher Hill will attend the
conference. The Japanese government intends to actively work to
realize a meeting between Hill and Kim. Japan's lead negotiator
on the six-party talks Kenichiro Sasae, director general of the
Foreign Ministry's Asian and Oceanian Affairs Bureau, will hold
separate talks with Hill and Kim.

The expectation is that the Japanese government will exchange
views with the North Korean delegate on a resumption of
intergovernmental negotiations with the goal of repairing
bilateral relations, which have deteriorated since the last time
the two governments held talks in February.

16) Japan, US, UK, Australia to discuss Iraq situation on April
10

SANKEI (Page 5) (Full)
April 6, 2006

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Japan, the United States, the United Kingdom, and Australia
yesterday decided to hold working-level talks of foreign and
defense officials to discuss the Iraq situation. They will
exchange views on such topics as a review of the political
process and the security situation, focusing on the delay in
launching a full-fledged government in Iraq due to the conflict
between Shiites and Sunnis.

In this regard, the Liberal Democratic Party yesterday held a
project team meeting on the Iraq issue at party headquarters. In
the meeting, a government official who took part in the meeting
made this explanation about when to withdraw Self-Defense Forces
troops from Iraq: "Based on the discussion with other countries,
we'd like to determine a withdrawal process."

17) Japan, US to start joint research on new radar

NIHON KEIZAI (Page 2) (Full)
April 6, 2006

Japan and the United States will begin joint research on advanced
radar and operational systems for missile defense, the Defense
Agency announced yesterday. The joint research will start in the
current fiscal year and continue over the next two years for
deployment. Japan will invest 5.1 billion yen in the research
project. The two countries will enhance their current radar
systems in order to counter ballistic missiles with a range of
3,000 kilometers.

SCHIEFFER