TOKYO VISIT BY U.S. SECRETARY OF COMMERCE GUTIERREZ

UNCLAS TOKYO 001916

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SENSITIVE
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E.O. 12958: N/A
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SUBJECT: TOKYO VISIT BY U.S. SECRETARY OF COMMERCE GUTIERREZ


SENSITIVE BUT UNCLASSIFIED -- PLEASE PROTECT ACCORDINGLY.


1. (SBU) SUMMARY. On March 30, 2006, in Tokyo, Secretary of
Commerce Carlos M. Gutierrez met with Japan's Minister of
Economy, Trade and Industry; Minister of Health, Labor and
Welfare; and Minister of Land, Infrastructure and Transport.
He raised beef, enhanced cooperation on IPR protection and
enforcement, medical devices and drug pricing and regulatory
systems, tourism, and public works (design/construction).
His counterparts raised topics including the Administration's
Competitiveness Initiative, an issue regarding the WTO
Government Procurement Agreement and Japan Railways
companies, and whaling, and briefly mentioned DHS Secretary
Chertoff's recent Tokyo visit and Transportation Secretary
Mineta's participation in a recent security conference. END
SUMMARY.


2. (SBU) Secretary of Commerce Carlos M. Gutierrez met with
his ministerial counterparts at the Ministry of Economy,
Trade and Industry (METI),Ministry of Health, Labor and
Welfare (MHLW),and Ministry of Land, Infrastructure and
Transport (MLIT) on March 30 in Tokyo, Japan. While in
Tokyo, Secretary Gutierrez also gave a speech to the American
Chamber of Commerce in Japan (ACCJ) on March 31 and
participated in an event on March 30 with Mr. Ralph Lauren at
the newly opened Polo Ralph Lauren store.


3. (SBU) METI MEETING: Secretary Gutierrez and Minister of
Economy, Trade and Industry Toshihiro Nikai addressed several
issues during their meeting including the Competitiveness
Initiative and METI's New Economic Growth Strategy, IPR and
other issues related to China, the new Joint Initiative by
the Commerce Department and METI for Enhanced Cooperation on
IPR and Other Issues, tourism, a possible new educational
exchange program for Japan, beef, and whaling.


4. (SBU) After discussing Japan's victory in the World
Baseball Classic, Minister Nikai said he applauded the State
of the Union Address and was impressed by the
Administration's Competitiveness Initiative. He explained
that METI recently issued its New Economic Growth Strategy
and noted that Japan's economy had been in a dark tunnel for
15 years and is now gradually emerging.


5. (SBU) When Minister Nikai asked about the Secretary's
recent China visit, Secretary Gutierrez mentioned the
following areas with pending issues that need to be resolved:
market access, IPR protection and enforcement, and
transparency. Minister Nikai said he had urged Chinese
Commerce Minister Bo Xilai during his February visit to
Beijing to give further consideration to the importance of
protecting IPR. Secretary Gutierrez encouraged Minister
Nikai to continue his efforts. Secretary Gutierrez said the
joint initiative that he and Minister Nikai would announce
after their meeting would signal to many countries the
importance of IPR protection and enforcement. Minister Nikai
agreed.


6. (SBU) Secretary Gutierrez said he understood that Minister
Nikai is an expert on tourism and asked for his insights on
how to attract more Japanese tourists to the United States.
Minister Nikai encouraged Commerce to continue its current
activities and described his long involvement in the tourism
issue, which included his participation in the first meeting
of bilateral consultations on tourism at the Commerce
Department about 15 years ago. He explained that he would
like to introduce in Japan a scholarship program, modeled on
the Fulbright Program, for students from Japan and other
Asian countries and possibly some U.S. students.


7. (SBU) Secretary Gutierrez raised the beef issue, assuring
Minister Nikai that U.S. beef is safe. Secretary Gutierrez
said the U.S. Government is committed to ensuring there are
no future incidents and urged Japan to open its market to
U.S. beef imports. Minister Nikai said the beef issue is not
in his portfolio, but he will give good thought to the
Secretary's remarks. He said he has heard much about beef

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from USTR Portman and Agriculture Secretary Johanns when he
has met them at WTO meetings. Minister Nikai briefly raised
the whaling issue, stating his hope that the U.S. and
Japanese Governments can respect each other's culinary
cultures and put this issue behind us.


8. (SBU) JOINT INITIATIVE FOR ENHANCED COOPERATION ON IPR AND
OTHER ISSUES: Immediately after their meeting, Secretary
Gutierrez and Minister Nikai announced to the press a Joint
Initiative between the Commerce Department and METI for
Enhanced Cooperation on IPR and Other Issues. The Joint
Initiative involves exchanging information, sharing
resources, and working together to build stronger
government-industry relationships to address IPR concerns,
especially in third countries, by enhancing cooperation on
IPR protection and enforcement. The Joint Initiative's
activities include: developing best practices for government
outreach to industry including SMEs, sharing information on
enforcement activities, working together toward streamlining
patent procedures and harmonizing patent laws, and
strengthening technical assistance. In addition, the
Commerce Department and METI will enhance cooperation on
standards and conformity assessment, export controls, clean
development and climate, and information technology security.


9. (SBU) MHLW MEETING: During his meeting with Minister of
Health, Labor and Welfare Jiro Kawasaki, Secretary Gutierrez
raised issues including beef and medical device and drug
pricing and regulatory systems. On beef, Secretary Gutierrez
said U.S. beef is safe. He explained that the U.S.
Government is committed to meeting the standards and
specifications in our agreement with Japan and ensuring there
are no future incidents. He urged Minister Kawasaki to give
full consideration to restoring imports of American beef.


10. (SBU) Minister Kawasaki responded that since the January
incident, he and the MAFF Minister have been like sandbags,
pummeled by the public with questions about how they could
have allowed beef imports without having seen the U.S.
facilities. They had explained that they based their
decision on the relationship of trust between the United
States and Japan. As a result of the
government-to-government consultations during the week of
March 27, Minister Kawasaki said he now understands the
erroneous acts that resulted in the January incident. He
explained that the consultations went one step further to
address how the U.S. Government can ensure the remaining 38
establishments will not make a similar mistake. Because the
Commerce Secretary came all the way to see him for this
meeting (held at 7:30 pm),he understands the important
weight of this issue for the United States.


11. (SBU) On medical device and drug pricing, Secretary
Gutierrez said he is surprised that Japan's pricing system
does not reward innovation and deprives Japanese patients of
the world's best devices and drugs. He said U.S. firms are
very concerned that MHLW may decide to change prices every
year instead of the current practice of every two years. He
urged MHLW not to move to annual price cuts. Kawasaki
responded that MHLW has introduced a pricing system that
evaluates the innovativeness of a product. He said he made a
commitment to Ambassador Schieffer on this issue last year
and will make further efforts.


12. (SBU) Secretary Gutierrez expressed concern that Japan's
slow regulatory system is preventing Japanese patients from
having access to the most innovative products, noting that
devices available in Japan are 3-4 generations behind those
available in the United States and several new drugs are not
available in Japan. He said he is aware of Japan's
demographic challenges and the importance of innovative
products. Secretary Gutierrez encouraged MHLW to speed up
the regulatory approval process. On devices, Minister
Kawasaki responded that as the staffing at the regulatory
agency increases, he expects the pace of approvals to
improve. On drugs, he said the only area where MHLW needs a
new system is clinical trials and added that MHLW is making
efforts in this area.


13. (SBU) Minister Kawasaki said MHLW recognizes it may need
to revamp its healthcare system regarding how best to treat
cancer and may move to using more innovative drugs and
devices, in contrast to the past reliance on surgeries.
Secretary Gutierrez encouraged Minister Kawasaki to let us

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know if we can help and said we also are interested in
providing input for Japan's healthcare reform process.

14. (SBU) MLIT MEETING: During his meeting with Minister of
Land, Infrastructure and Transport Kazuo Kitagawa, Secretary
Gutierrez raised issues including tourism, public works
(design/construction),and geostationary satellites.
Minister Kitagawa raised an issue related to the WTO
Government Procurement Agreement (GPA) and Japan Railways
(JR) companies and briefly mentioned DHS Secretary Chertoff's
recent Tokyo visit and Secretary Mineta's participation in a
recent security conference.


15. (SBU) On tourism, Secretary Gutierrez said the Commerce
Department plans to launch an advertising campaign this
summer to encourage Japanese tourists to visit the United
States and welcomed Minister Kitagawa's support. Kitagawa
expressed support and noted the importance of exchanges
between the citizens of our two countries particularly given
the strength of our bilateral relationship. Secretary
Gutierrez mentioned we are pleased Japan's economy is
growing. Minister Kitagawa said Japan's economy has emerged
from a dark tunnel, and spring is on its way.


16. (SBU) On public works, the Secretary explained that U.S.
design and construction firms are eager to contribute their
expertise to public works projects in Japan and encouraged
MLIT to include them in projects covered by the 1988 Major
Projects Arrangements (MPA) and 1994 Public Works Agreement,
which includes the Action Plan. Minister Kitagawa responded
that Prime Minister Koizumi's basic position is that Japan
wholeheartedly welcomes FDI, and MLIT agrees with this
approach. Secretary Gutierrez encouraged Minister Kitagawa
to ensure that MPA procedures will be used for all
procurements for the Central Japan International Airport.
Minister Kitagawa said MLIT would continue its discussions
with Commerce on this issue.


17. (SBU) On WTO GPA issues, Minister Kitagawa explained that
Japan requested that three fully privatized JR companies be
removed from GPA coverage and said MLIT would like the U.S.
Government to withdraw its objection. He said he understands
the U.S. Government has demanded that the operational safety
of transportation exemption be removed. Minister Kitagawa
explained that procurements for the safe operation of
railways are very important and should continue to be
exempted from the GPA. Secretary Gutierrez said he
understands these issues are being discussed by USTR and the
Japanese Government.


18. (SBU) On geostationary satellites, Secretary Gutierrez
encouraged MLIT to continue its efforts particularly in the
Western Pacific where we rely heavily on Japan. Kitagawa
said he hopes for even stronger collaboration and noted that
another satellite recently was launched. On other topics,
Minister Kitagawa mentioned DHS Secretary Chertoff's recent
Tokyo visit and Transportation Secretary Mineta's
participation in a security conference that included several
countries.


19. (SBU) PRESS COVERAGE: Secretary Gutierrez also had
several press interviews on March 30. During an interview
with Nihon Keizai Shimbun (Nikkei),he discussed his recent
visit to China, including preparations for the upcoming Joint
Committee on Commerce and Trade, the importance of US-Japan
cooperation on promoting better protection of intellectual
property around the world, and the safety of US beef. In
response to a question on currency reform in China, the
Secretary noted the concern in Congress on the Chinese

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currency and the yuan's impact on the US trade deficit.
Nikkei misquoted and mischaracterized portions of the
Secretary's remarks in a March 31 article. The article said

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he called for a further appreciation of the yuan and that he
described the US bilateral trade deficit as the major cause
of the overall global deficit. Embassy Press Office staff
called Nikkei's editor responsible for the final version of
the article to complain about the misquotes and
mischaracterizations. The editor apologized for the sloppy
reporting and said he would monitor future reporting more
closely.
SCHIEFFER