DAILY SUMMARY OF JAPANESE PRESS 04/24/06

UNCLAS SECTION 01 OF 12 TOKYO 002216 SIPDIS SIPDIS DEPT FOR E, P, EB, EAP/J, EAP/P, EAP/PD, PA WHITE HOUSE/NSC/NEC; JUSTICE FOR STU CHEMTOB IN ANTI-TRUST DIVISION; TREASURY/OASIA/IMI/JAPAN; DEPT PASS USTR/PUBLIC AFFAIRS OFFICE; SECDEF FOR JCS-J-5/JAPAN, DASD/ISA/EAPR/JAPAN; DEPT PASS ELECTRONICALLY TO USDA FAS/ITP FOR SCHROETER; PACOM HONOLULU FOR PUBLIC DIPLOMACY ADVISOR; CINCPAC FLT/PA/ COMNAVFORJAPAN/PA. E.O. 12958: N/A TAGS: OIIP KMDR KPAO PGOV PINR ECON ELAB JA SUBJECT: DAILY SUMMARY OF JAPANESE PRESS 04/24/06 INDEX: (1) Japan-US defense chiefs' talks; Agreement reached on cost of relocating US Marines to Guam; Japan to pay 6 billion dollars or 59% of total cost; Barracks and schools to be covered (2) Agreement of defense chiefs on sharing of cost of Guam relocation: Need for government to explain appropriateness of Japan bearing such a large share, double of that at the start (3) Chief Cabinet Secretary Abe expresses interest in running for LDP presidency, says "I will not make visiting Yasukuni Shrine a campaign pledge" (4) Minshuto goes back to "Ozawa's game plan;" Momentum gathering under three-headed system; Confidence growing for going on offensive (5) With "Koizumi style campaign," LDP suffers stinging defeat in Lower House by-election; Defeat may provide a new source of internal trouble for LDP presidential race and Upper House election (6) Editorial: Calling off maritime survey - time to speed up diplomacy to put out the embers (7) MV-22 Osprey likely to replace Futenma helos: Nukaga (8) FTC comes up with strict requests prior to privatization of postal services, including call for opening up of mail delivery network to other firms (9) FTC report urges abolishing Japan Post's "privileges," focusing on problems left unsolved, like monopolies, legal preference, to bring about fair competition (10) Hokkaido to regulate opening of large stores in semi- industrial areas, loophole in restricting store openings ARTICLES: (1) Japan-US defense chiefs' talks; Agreement reached on cost of relocating US Marines to Guam; Japan to pay 6 billion dollars or 59% of total cost; Barracks and schools to be covered ASAHI (Top Play) (Excerpts) Evening, April 24, 2006 Defense Agency Director General Fukushiro Nukaga yesterday afternoon (morning of April 24, Japan time) met with Secretary of Defense Rumsfeld at the US Department of State. They discussed the sharing of the cost of relocating US Marines in Okinawa to Guam, the focus of USFJ realignment. It was agreed at the meeting that Tokyo would pay 6.9 billion dollars (approximately 700 billion yen) or 59% of the total amount of 10.27 billion dollars (approximately 1.19 trillion yen). Prospects have now become strong that the realignment talks can now be concluded, as Tokyo and Washington had already agreed in principle on other spending areas concerning USFJ realignment. The two countries will likely hold a meeting of the Security Affairs consultative Committee or a so-called two-plus-two meeting of defense and foreign ministers to reach a formal agreement on a final report on USFJ realignment. TOKYO 00002216 002 OF 012 The US side, which had called on Japan to pay 75% of the total cost, and the Japanese side, which had insisted on bearing approximately 3 billion dollars (approximately 350 billion yen), have apparently come to terms. According to explanations provided by Nukaga, Japan will pay 2.8 billion dollars (approximately 320 billion yen) as a direct fiscal outlay. In addition, it will also invest 1.5 billion dollars (approximately 170 billion yen) in a special company to be newly established and extend 1.79 billion dollars (approximately 21 billion yen) in loans through Japan Bank for International Cooperation (JBIC). Invested and loaned money will be used for the construction of houses for families of Marines, from which rent income can be expected. Fiscal spending will only cover the facilities that have no direct connection with military drills, such as barracks, government offices and schools. Such fiscal payments will not cover expenses for the construction of training grounds, runways and entertainment facilities. Since this is the first time for Japan to render financial assistance for the construction of US forces' overseas facilities, the government will embark on the work to enact a law that provides a legal basis for the bearing of Guam relocation costs. The plan is to present such a bill when the May consecutive holidays are over and have it clear the current Diet by June 18. Guam relocation cost (Total cost) 10.27 billion dollars (Japan's share) 59% = 6.09 billion dollars (of which 2.8 billion dollars are as fiscal expenditures from the general account) (US share) 41% = 4.18 billion dollars (of which 3.18 billion dollars are as fiscal spending) Breakdown of Japan's share (Fiscal payment) 2.8 billion dollars (Loan) 1.79 billion dollars (through JBIC) (Investment) 1.5 billion dollars Items covered by Japan's share (Houses for families of Marines) 2.55 billion dollars (The amount can be reduced to 2.13 billion dollars, if private housing facilities are used.) (Others) Barracks, schools, government offices, etc. (The construction of all these facilities is to be covered by fiscal payments) (2) Agreement of defense chiefs on sharing of cost of Guam relocation: Need for government to explain appropriateness of Japan bearing such a large share, double of that at the start ASAHI (Page 3) (Excerpts) Evening, April 24, 2006 Analysis: With coordination between the Japanese and US governments stalled over the share of the cost of relocating Marines on Okinawa to Guam, Defense Agency Director General TOKYO 00002216 003 OF 012 Nukaga directly went to the United States and resolved the issue through direct negotiations with Defense Secretary Rumsfeld. Although Japan will assume the bulk of the cost and the US compromised on the burden, it is hard to say that the appropriateness and necessity of Japan paying such a huge amount -- $6.09 billion (approximately 700 billion yen) -- has been properly explained to the Japanese people, so a clear explanation is crucial. "It is like building a new town in the jungle," was the expression used by a government source, referring to the Guam relocation. If approximately 17,000 persons are moved, including family members, the cost of building facilities other than housing also has to be covered. Considering the situation that no other place in Japan would accept the Marines, there is a case to be made for it being unavoidable for the Japanese government to bear the burden to a certain extent. It is indeed rare for such a large number of US soldiers to be transferred outside of Okinawa Prefecture. Chief Cabinet Abe stressed the significance of that move when he said, "We will speed up the lightening of Okinawa's burden (by covering the cost)." With the outlook now for the implementation of the reversion of US facilities inside the prefecture, the burden on Okinawa, where 75% of US bases are now located, will indeed by lightened, looking at the package as a whole. Still, the overall total of approximately 1.19 trillion yen is a huge amount, as the government itself pointed out from before. Although Japan avoided paying for such other facilities as training areas, one government source stressing, "We will not pay for anything not related to the move," Japan's burden has doubled from the amount originally stated to approximately 700 billion yen. The main basis for the expenditures as explained domestically by the Japanese government stems from Japan's request to move them to Guam to lighten Okinawa's burden, since there was no need to relocate the Marines to Guam, 2,500 kilometers away from their command in Okinawa that stands ready to respond to a contingency on the Korean Peninsula or the like. However, the opposition already has pointed out that there are already US Air Force and Navy units deployed to Guam, so the Marines being transferred there will only strengthen the Guam bases as a part of the US' global force transformation, which all along was the US' intention. Turning to Okinawa, the main fighter unit of the Marines will remain in the prefecture. Although there has been a resolution of the Futenma Air Station relocation issue, one more focal point in the realignment talks, this is for the prefecture only a game of musical chairs. Okinawa will remain the US forces' strategic hub, and the reality of the prefecture bearing an excessive burden will remain. (3) Chief Cabinet Secretary Abe expresses interest in running for LDP presidency, says "I will not make visiting Yasukuni Shrine a campaign pledge" MAINICHI (Page 1) (Full) April 22, 2006 TOKYO 00002216 004 OF 012 On April 21, Chief Cabinet Secretary Shinzo Abe, who is seen as a leading contender to succeed Koizumi as prime minister, sat down for an interview with the Mainichi Shimbun. When asked about visits to Yasukuni Shrine in the event that he were prime minister, Abe stated: "In order to keep from making this into a political or diplomatic issue, I have no intention of proclaiming that I will go." With this, Abe expressed his intention to part ways with Koizumi, who made his visits to Yasukuni as prime minister a public pledge. Abe also stated: "I will continue to pray for the repose of those who fought and died for the country and to express my respect for them." Speaking on the election for the presidency of the Liberal Democratic Party in September, Abe expressed interest in running, stating: "Those politicians who would forgo running this time because the nation is facing serious problems have no qualification to lead the country." Following the resignations of Seiji Maehara as president of the opposition Democratic Party of Japan and the rest of his young leadership team over the phony email scandal, there are growing calls within the LDP hoping for someone with more experience than the 51-year-old Abe. Abe responded to this by saying, "While maturity and experience are important, the figure of youth is needed to achieve breakthroughs." Citing the examples of Bill Clinton and Tony Blair, both of whom took their nation's highest office in their forties, Abe commented: "The important thing is what kind of results are going to be achieved. Youth can be covered for by surrounding yourself with experienced people in listening to what they say." Addressing South Korea's opposition to the proposed maritime survey near the Takeshima (Dokdo) islets, Abe stated: "I don't want to make any waves. The best thing would be if the two countries can reach a diplomatic agreement that paves the way to a smooth resolution. It is because I have this desire that I decided to send Vice Foreign Minister Yachi to South Korea." (4) Minshuto goes back to "Ozawa's game plan;" Momentum gathering under three-headed system; Confidence growing for going on offensive TOKYO SHIMBUN (Page 3) (Abridged) April 24, 2006 The major opposition Minshuto (Democratic Party of Japan) won yesterday's House of Representatives by-election for Chiba Constitution No. 7, which the party's new leadership characterized as a poll to set the tone for Japanese politics. The outcome not only blew away the stigma of the e-mail fiasco but it also signaled the revival of the (invincible) "Ozawa myth" both to Minshuto and other parties. The party has switched to the offensive for the first time since its humiliating setback in the Lower House election last year. Last night when it became certain that Kazumi Ota would win the seat, Minshuto President Ichiro Ozawa held a press conference at party headquarters along with his deputy Naoto Kan and Secretary General Yukio Hatoyama. Ozawa said: "This election has made us realize that we can accomplish anything as long as we remain united, restoring confidence." Before the official kickoff of the election campaign, every TOKYO 00002216 005 OF 012 Minshuto member had been prepared to face a defeat. Ozawa's goals were to solidify the all-party approach and to tighten his grip on the party. The Chiba by-election has completely realized his two goals. Minshuto's mood turned around with the establishment of the Ozawa leadership April 11, the day the election campaign for the Chiba polls officially kicked off. The Ozawa leadership has effectively created a tense atmosphere in the largest opposition party, which had often been mocked as a "college circle." Ozawa also spearheaded the election campaign himself. He made five trips to Chiba Constituency No. 7 to stump for Ota at low- profile places like an industrial complex to solicit votes in person. The Ozawa leadership also collected from its members their lists of acquaintances living in Constituency No. 7. In the final stage of the election campaign, a dozen or so party members stumped for Ota daily in front of 10 railway stations based on those lists. Minshuto has never implemented such a meticulous well-calculated plan, according to a party source. The Ozawa-Kan-Hatoyama system also gave a boost to Ozawa's game plan. Campaign speeches by the three Minshuto leaders were as appealing as those by the LDP's potential successors to Koizumi. The e-mail hullabaloo had cost Minshuto its public trust due to its youthfulness and immaturity. There is no doubt, however, that the triple-headed system led by Ozawa, a seasoned lawmaker, has helped Minshuto restore public trust as a party capable of taking the reins of government. The combination of Ozawa, who is strong in conservatives, and Kan, who is popular among civic groups, has also helped Minshuto expand its support base. The Chiba polls, the first national election under Ozawa, have proven that Minshuto was invincible under the Ozawa-Kan duo. The Chiba by-election boded well for the Ozawa-led Minshuto, who aims to force the ruling coalition into a minority in the House of Councillors election next year. Tokyo Shimbun exit poll shows unaffiliated voters' return to Minshuto The Tokyo Shimbun conducted exit polls at polling stations in the Chiba No. 7 constituency April 23. According to the polls, 28.2% of the unaffiliated voters, who had contributed to the LDP's overwhelming victory in last year's Lower House election, voted for the LDP candidate, Ken Saito, while 57.3% voted for Minshuto's Kazumi Ota. In the exit poll conducted during last year's Lower House proportional representation election, 32.6% of the swing voters said they voted for the LDP as against 38.2% for Minshuto. The diminishing gap tells an ending to the "Koizumi theater" with many switching their side to Minshuto. Additionally, 55.3% of all the respondents and 66.4% of the swing voters expressed hope for the largest opposition party. Even 29.9 % of those voted for the LDP -- more than one out of four -- said they harbor hope for Minshuto. Although Minshuto had lost public trust due to the e-mail fiasco, a sense of expectation seems to TOKYO 00002216 006 OF 012 be growing for the larges opposition party due to the appointment of Ichiro Ozawa as party head and other factors. Furthermore, 19.2% of those who had voted for LDP candidates in the 2005 Lower House lection said they cast their ballots for the Minshuto, while 13.8% of those who had supported Minshuto candidates in the 2005 polls said they voted for the LDP candidate in the Chiba race. (5) With "Koizumi style campaign," LDP suffers stinging defeat in Lower House by-election; Defeat may provide a new source of internal trouble for LDP presidential race and Upper House election NIHON KEIZAI (Page 3) (Excerpts) April 24, 2006 The Liberal Democratic Party (LDP) is increasingly alarmed, since the party's candidate was defeated in Sunday's House of Representatives by-election election for the Chiba No. 7 district. It is unavoidable that its defeat will kill the LDP's momentum that brought about an overwhelming victory to the LDP in last year's Lower House election. Chances are that many LDP members will strengthen criticism of the Koizumi reform drive for downplaying regional cities and will be increasingly dissatisfied with the party leadership's top-down management. The defeat in the by-election has provided a new source of trouble for the September party leadership race and next summer's Upper House election. LDP Secretary General Tsutomu Takebe stressed in a press conference held last night following the defeat: "The focus was on the new Minshuto leadership. We don't need to be discouraged." However since the LDP was defeated even though it fought the election with concerted efforts, some LDP lawmakers said that the tide might have turned. In the wake of the uproar in Minshuto due to the fake email fiasco, many LDP members initially looked to the by-election with some optimism. With Ichiro Ozawa's assumption of the Minshuto presidency, concern quickly spread in the LDP. "We took time to make up for the delay," said Takebe. "It was a mistake that we forced Mr. Seiji Maehara to step down from the presidency," LDP General Affairs Council Chairman Fumio Kyuma stated. During the campaign, Prime Minister Koizumi made only one campaign speech, but such post-Koizumi contenders as Chief Cabinet Secretary Shinzo Abe and Yasuo Fukuda delivered speeches in Chiba for the party's candidate. Takebe visited the electoral district almost every day. Koizumi protgs elected to the Diet in last year's Lower House election, including Taizo Sugiura, supported the campaign. However, voters took a cool view toward such campaigning. Ozawa, however, steadily called at organizations and companies and scored with unaffiliated voters. An LDP Diet Affairs Committee member said: "Criticism of Mr. Takebe will inevitably come up. Koizumi's protgs elected to the Diet will weaken." The LDP will likely be forced to review its campaign strategy with next year's Upper House election in mind. Taku Yamasaki released a comment: "A little neglect may breed mischief." (6) Editorial: Calling off maritime survey - time to speed up TOKYO 00002216 007 OF 012 diplomacy to put out the embers MAINICHI (Page 5) (Full) ll) April 22, 2006 A resolution to the dispute between Japan and South Korea over a Japanese maritime survey around the Takeshima (Dokdo) islets was achieved at the last minute through tense vice-foreign-minister- level talks. While we welcome the fact that a collision has been averted for the time being, it is not as though an agreement was reached regarding the nature of the maritime survey that was the proximate cause of this dispute. We must keep in mind that this issue could reemerge at any time. Learning lessons from this dispute, we see that it is necessary to speed up discussions toward the quick establishment of rules regarding maritime surveys in what each nation claims as its own exclusive economic zone (EEZ) and that these talks should be held in parallel with negotiations regarding demarcating the actual EEZs. This dispute began when the South Korean government moved to propose Korean names for underwater topography in the area at a meeting of the International Hydrographic Organization in Germany in June, including an attempt to change the name of the Tsushima Basin to Ulleung Basin. Every country has the right to name undersea topography. South Korea decided, however, that if it were to give Korean names to the underwater features near Takeshima, its claim to sovereignty would be bolstered. Roughly 30 years earlier, Japan conducted a maritime survey of the area ahead of South Korea, and the name Tsushima Basin made its way onto nautical maps. In response, South Korea has been conducting oceanic surveys for the past four years. Rather than simply renaming undersea topography, South Korea's real aim is connected with the issue of sovereignty. While South Korea was conducting maritime surveys, Japan refrained from doing so in the same area. However, when it became clear that South Korea was going to propose Korean names at the conference, it was decided that survey ships from the Japan Coast Guard would be sent to the area. In response, the South Korean government reacted in a manner devoid of cool-headedness, mobilizing its police vessels and threatening to seize Japanese ships, transforming the issue of undersea topography into a volatile dispute over territory. In the meeting in Seoul between Vice Foreign Minister Shotaro Yachi and South Korean First Vice Minister for Foreign Affairs and Trade Yu Myung Hwan, a clash was narrowly averted with an agreement for Japan to cancel the survey while South Korea would hold off on proposing its own names at the conference in June. South Korea maintains on the issue of the names, however, that it will "pursue the matter at an appropriate time," meaning that Seoul has not said it has given up on the idea. If South Korea decides at a future conference that the time is "appropriate" and TOKYO 00002216 008 OF 012 Japan reauthorizes a survey, the same problem will recur. The agreement between Japan and South Korea also stated that the two countries will resume negotiations on demarcating their respective EEZs in May. But with South Korea contending that a return of Takeshima is "not up for discussion," negotiations on the EEZs will not be easy. More than anything else, it is crucial for Japan and South Korea to quickly agree on principles for maritime surveys in the Takeshima area in line with international treaties. And in order to keep the academic question of naming undersea topography from leading to territorial rows, Japan should work on international organizations to create new rules, such as suspending naming such undersea features until disputes are resolved. (7) MV-22 Osprey likely to replace Futenma helos: Nukaga OKINAWA TIMES (Page 2) (Full) April 21, 2006 TOKYO-The US Marine Corps will likely deploy the MV-22 Osprey, a tiltrotor vertical/short takeoff and landing (VSTOL) aircraft, to a new facility to be built in a coastal area of Camp Schwab in the city of Nago, Okinawa Prefecture, as an alternative for Futenma airfield in the prefecture, Defense Agency Director General Fukushiro Nukaga stated before the House of Representatives Security Affairs Committee in its meeting held yesterday. "I hear that the US Marine Corps has plans to replace the carrier helicopters with the Osprey in the future," Nukaga said. It is the first time the defense chief admitted to the possible deployment of MV-22s in Okinawa on an official occasion. He was replying to a question asked by Akihisa Nagashima, a member of the leading opposition Democratic Party of Japan (DPJ or Minshuto). However, Nukaga reiterated his usual explanation, stating: "In February, the Foreign Ministry inquired of the US government through diplomatic channels. Their answer was that they have no specific plans to deploy the MV-22 Osprey in Japan." With this, Nukaga stressed that the United States has yet to decide on its deployment. The alternative facility for Futenma airfield is designed to have a V-shaped pair of airstrips with an overall length of 1,800 meters (1,500 meters excluding buffer zones or overrun areas at both ends). "I don't know why they need to build two runways for only three liaison airplanes (to be redeployed from Futenma airfield)," Nagashima noted. "The (Futenma-based) CH-46 midsize carrier helicopters and CH-53 heavy-lift helicopters have now become superannuated," Nagashima stated, adding: "Their follow-on aircraft model, the MV-22 Osprey, reportedly needs a 1,550-meter runway. This exactly matches (the length of the alternative facility's tarmacs)." With this, Nagashima asserted that the Osprey's deployment might be in mind. Nagashima also presented a US Defense Department document, which says the Pentagon's renovation-purpose budget intended to extend the service life of CH-46 choppers will run out in the US TOKYO 00002216 009 OF 012 government fiscal year of 2008. "Judging from this budgetary document, it's logically conceivable that they will replace those CH-46 helicopters with MV-22 Osprey aircraft after fiscal 2008," Nagashima pursued. "Last fall," Nukaga replied, "the Japanese and US governments released an interim report (on the realignment of US forces in Japan),incorporating an agreement to lay down a 1,800-meter runway." The defense chief added, "Based on it, we held talks with the local hosts." "The Defense Facilities Administration Agency has definitely denied the Osprey's deployment," Ginozason Village's Mayor Hajime Azuma said. According to a senior official of the Nago city government, Nukaga also nixed the Osprey's deployment in his recent talks with the city's officials. (8) FTC comes up with strict requests prior to privatization of postal services, including call for opening up of mail delivery network to other firms ASAHI (Top Play) (Full) April 21, 2006 The postal privatization process will start in October of next year. Prior to the privatization of the mail delivery service, the Fair Trade Commission (FTC) has finalized a report that includes measures to ensure fair competition between the privatized company and private-sector entities, from the viewpoint of the principles of the Antimonopoly Act. The report will be released today. The report calls for measures to significantly ease market-entry restrictions in the business of delivering general mails, such as letters and post cards, which is now dominated by Japan Post. It also proposes enabling other entities to make access to its postal mail network. The report is likely to have a major impact on the business operation of the new firms to be set up after Japan Post is split. Under the Postal Privatization Law enacted last year, Japan Post will be split in October of next year into four businesses, including mail delivery and financial service, under a holding company. The government plans to reduce its capital in these firms gradually, but the government's Committee on Postal Privatization is still engaged in discussing how to secure fair competition. The FTC report singles out problems expected to arise in the mail delivery business, reflecting concerns among private-sector firms about possible pressure from the newly established mail delivery company on their business operations, given Japan Post's decision to advance into the international logistics service. The report notes that if Japan Post offers the parcel and international mail delivery services while monopolizing the mail delivery business, the company will be able to enjoy an advantage in competing with private firms in the same line as it can save money by using common mail trucks and other equipment in its several businesses. "Providing uniform service nationwide" is a precondition for firms in different lines to launch the mail delivery service. The FTC, though, emphasized the need to abolish this condition. The report sees it desirable for the privatized firm to allow trucking companies and international distribution companies to TOKYO 00002216 010 OF 012 use its mail delivery network for a charge. It also suggests that the usage charge for the privatized firm and such private-sector companies should be the same. The report also calls for reviewing the exemption of mail vans from the application of such regulations as parking and passage prohibition, the mail forwarding system under which the new addresses of those who moved out are available, and simplified customs clearance procedures, calling them "public privileges." Should these measures be taken, the FTC intends to judge whether or not acts infringes on the Antimonopoly Act in a stricter manner. The report noted: "The future application of the system is extremely important in privatizing postal services," adding: "Unless equal competitive conditions (between the privatized firm and private-sector firms) are secured, the basic principle of postal privatization will lack a finishing touch." Regarding the report, the FTC will solicit views from many persons and consult with experts and related institutes. In applying the Antimonopoly Law to the privatized firms, the watchdog intends to use the report as its basic set of guidelines. (9) FTC report urges abolishing Japan Post's "privileges," focusing on problems left unsolved, like monopolies, legal preference, to bring about fair competition ASAHI (Page 8) (Full) April 22, 2006 A report released by Fair Trade Commission (FTC) yesterday focuses on problems left unresolved in privatizing Japan Post, such as how to liberalize the mail delivery business, which is now dominated by Japan Post, and how to promote the liberalization of Japan Post's postal delivery network to private- sector rivals. The report also indicates an eagerness to set up general rules when Japan Post enters the private sector. The report is likely to have a major impact on privatization plans involving government-affiliated financial institutions. "The same situation could occur in Japan as those in Germany and France," said an FTC official responsible for the report. When postal services were privatized in Europe, the issue of monopoly was taken up as a problem. Since postal services were privatized in 1995, its rival firms have criticized Germany Post for its overseas businesses through corporate buyouts as "using the funds earned in the areas it monopolizes to buy companies." In actuality, the privatized German firm was charged on setting unfairly low prices in its monopolizing areas in violation of the European Community (EU) Competition Law. When the Mail Delivery Law was enacted in 2003, the Ministry of Internal Affairs and Communications (MIAC) allowed Japan Post to exclusively handle mail with a weight lighter than a certain level, assuming liberalization measures to bring down the minimum weight level little by little. However, Prime Minister Koizumi insisted on the need for newcomers to offer mail delivery services nationwide. The TOKYO 00002216 011 OF 012 administration carried out coordination to require companies intending to start regular mail delivery services to set up 100,000 postal boxes across the nation, and it eventually set up a system that makes it difficult for newcomers to start a mail delivery service. In the discussions on postal privatization held so far, no discussion was conducted on this issue, either. The report also pointed out Japan Post's hidden advantages. Tobu Department Store formed a business tie-up with Japan Post on delivery services last year, stopping its long lasted partnership with Yamato Transport Co., focusing on Japan Post's ability to learn new addresses and other strong points. Japan Post's delivery vehicles are also permitted to stop in no-parking zones. Calling these advantages "public privileges," the report called for reviewing the privileges. MIAC has also made efforts to deal with this issue. This January, after a decision was made on the privatization of postal services, a private panel was set up under MIAC Minister Takenaka. On April 20, the ministry also put together into a report measures to open up Japan Post's mail delivery network to private-sector rivals and to allow newcomers to offer mail delivery services in only certain districts. It will soon start discussing details on these measures. FTC gives warning for privatized firms The FTC judged it necessary to give a warning before the Koizumi cabinet sets new frameworks for privatized firms under its slogan of "shifting authority from the public sector to the private sector." Related industries have already expressed concerns about possible pressure on their businesses from the postal savings and Kampo life insurance corporations in addition to the mail delivery firm to be established after Japan Post enters the private sector. A decision has been made to privatize the Development Bank of Japan and the Shoko Chukin Bank in fiscal 2008, but discussion has yet to start on their future business options after they are privatized. The report said: "There will be more areas in which 'public firms' pressure on private-sector firms' is being taken up as a problem but no clear-cut rules are set." An FTC official said that the commission wanted to discuss how to apply the Antimonopoly Act and "would like to be actively involved in the privatization process from the stage of forming systems of the privatized firms." The FTC issued a similar warning when public deregulation measures were taken in the public sector, such as on the occasions of the breakup and privatization of Japanese National Railways and the breakup and reorganization of NTT. But some officials in the FTC have complained: "Such warnings have not been taken seriously." In actuality, the FTC repeatedly asked the private panel under Takenaka to join its discussions on future options for mail delivery services as an observer, but the panel declined the request. Attention is to be paid to how the competition watchdog will turn the principles in the report into action. TOKYO 00002216 012 OF 012 (10) Hokkaido to regulate opening of large stores in semi- industrial areas, loophole in restricting store openings ASAHI (Page 1) (Full) April 24, 2006 Hokkaido will adopt location guidelines that regulate the openings of large stores as early as June. The aim is to prevent downtown shopping areas from becoming hollowed out due to the opening of large shopping malls in the suburbs of large cities. The government has already presented bills amending three town- building laws, including the City Planning Law, with the same purpose. Hokkaido has decided to regulate the opening of large stores on its own, judging that government regulations cannot stop the opening of large stores in semi-industrial suburban areas. Under the planned guidelines, Hokkaido will urge each municipality to designate suburban areas categorized as semi- industrial areas in city planning as special-use areas in accordance with the City Planning Law. Since large stores can be opened in semi-industrial areas under the government-sponsored revisions, Hokkaido will designate such areas as special-use areas so that it can regulate the floor space and height of stores to be opened there. Hokkaido has determined that it will not be able to prevent traditional shopping areas from being eviscerated unless it regulates the opening of larges stores in semi-industrial areas, because large stores that opened in such areas account for 40% of total large stores that opened in Hokkaido over the past five years in terms of floor space. The guidelines are not legally binding, but Hokkaido will urge each municipality to act in accordance with them. Outline of location guidelines to be introduced by Hokkaido (Request to companies that will open stores in Hokkaido) Notification of store-opening plans three months earlier than the timeframe set under the existing law Early holding of briefings to concerned local communities Presentation of measures that will contribute to host communities (Requests to municipalities) Designate semi-industrial areas as special-use areas and regulate the floor space and height of stores to be opened in such areas (Role of Hokkaido) Disclose store-opening and local contribution plans submitted by companies Disclose opinion papers submitted by local governments, residents, and companies DONOVAN NOVAN