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BEEMAN, NEUFFER
PARIS FOR OECD
GENEVA FOR USTR

E.O. 12958: DECL: 04/24/2011
TAGS: ECON PREL EAID EAGR ETTC ENRG JA IN CH
SUBJECT: MOFA DEPUTY MINISTER PUSHES FOR NEW ECONOMIC
FRAMEWORK

REF: STATE 60256

Classified By: Joseph R. Donovan, Charge d'Affairs a.i. for reason 1.4
(b,d)


1. (C) Summary: Deputy Foreign Minister for Economic
Affairs Mitoji Yabunaka proposed that the U.S. and Japan
begin preparations for a new U.S. Japan economic framework in
a meeting with the Charge on April 24. The full proposal,
with a broad focus and more emphasis on cooperation could be
fleshed out over the summer and rolled out at the time of the
next U.S.-Japan summit with the new Prime Minister later this
year, Yabunaka explained. He acknowledged that the beef
problem has hindered progress on a new economic agenda and
said he hoped both U.S. and Japanese officials would move as
soon as possible to resolve it. He urged the U.S. to finish
its audit of meat plants soon so bilateral meetings to review
the results could start. Yabunaka downplayed the recent METI
proposal for an East Asia Free Trade Agreement (FTA) as an
unvetted concept, not GOJ policy. He praised the Strategic
Development Alliance (SDA). Yabunaka was cautious on the
U.S.-India Civil Nuclear Cooperation Initiative, recognizing
the strategic importance of India, but expressing concern
about the non-proliferation precedent. End Summary.

Preparing for the Bush/Koizumi Summit and a New Economic
Framework


2. (C) Yabunaka said that his recent talks in the U.S. had
underscored the depth of the bilateral relationship. It also
showed the need for strengthening the economic consultative
mechanism so that both sides keep each other informed about
upcoming issues and decisions. The U.S. and Japan should lay
the groundwork for a new economic framework which could be

announced at the Bush-Koizumi meeting in June, according to
Yabunaka. He recommended broadening the bilateral economic
agenda to include regional and global issues where we agree
and can work together. Yabunaka suggested three areas where
we share common approaches: 1) IPR, 2) energy, 3) secure
trade which he said would improve security and lower
transaction costs. He explained that Japan is already engaged
with the U.S. on the Proliferation Security Initiative (PSI)
and there might be additional ways to enhance cooperation
between our Customs services, for example. While he believes
the Economic Partnership for Growth and Regulatory Reform
Initiative should continue to be a fundamental part of the
new framework, Yabunaka recommended that the process be
streamlined. The process should be more focused on fewer,
more significant issues. He also proposed that in preparing
for the G-8, "smaller groups" might be able to meet and
exchange views and ideas more freely. Economic
Minister-Counselor drew Yabunaka's attention to Ambassador
Schieffer's April 19 speech which emphasized greater
U.S.-Japan economic integration to enhance our global
competitiveness. Yabunaka welcomed the idea and said that
economic integration could include agriculture, too, because
it is an important part of bilateral trade. (Comment: We
believe Yabunaka was referring to non-tariff aspects of trade
in agricultural goods. End Comment.)

Mechanics of getting to a new framework


3. (C) Yabunaka proposed to have sub-cabinet meetings in
May and June to pave the way for a joint statement at the
time of a possible Bush/Koizumi meeting that would refer to a
strengthened U.S.-Japan economic framework, or mechanism as
he called it. Following the June summit, the proposal could
be fleshed out in meetings in August and September and be
ready to announce at the next U.S.-Japan summit -- with the
new Japanese Prime Minister -- before the end of the year.
Yabunaka said he would be willing to go to the U.S. in May or
June for a brief visit. He added that the talks could also
occur on the fringes of the G-8 sherpa meetings in Russia on
May 18-19 and/or June 15-16.



4. (C) MOFA had started looking at ways to re-vitalize the
U.S.-Japan economic relationship in late 2005, expecting the

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beef issue to be resolved, according to Yabunaka. The
lingering issue has damaged our ability to move ahead on
economic integration initiatives, he said. It was not
feasible now to put in place the new economic framework in
time for the June leaders meeting, but at least we could
refer to it in the summit statement.


Beef


5. (SBU) Yabunaka said he hoped the USDA audit results will
be ready very soon so that the two sides could sit down by
mid-May and reach basic agreement for re-starting the beef
trade. He stressed that he wanted to be able to move as soon
as possible and that it was important to get the issue
behind us. (Comment: Although he did not say so directly, he
clearly wanted to reach agreement on re-opening the market
before PM Koizumi's visit to the U.S. in June. End Comment.)

East Asia Architecture/APEC


6. (SBU) The Charge reiterated the USG position on East
Asian Architecture, emphasizing that the USG does not favor
the creation of a new East Asian organization which would
exclude the U.S. or take away from APEC and ARF. He asked
about MOFA's views on Trade Minister Nikai's East Asia
Economic Partnership proposal. Yabunaka stressed that the
proposal had not been coordinated with other ministries and
that it was simply a "grand concept" yet to be organized and
vetted within the Japanese government. It is not a policy
goal of the GOJ, he added. He said that Nikai came up with
the idea as a way to respond to the expected Chinese proposal
for an East Asia FTA at the ASEAN 3 trade ministerial which
Nikai would attend in August. Yabunaka added that there
might be a case for having a regional FTA rather than a
network of bilateral FTAs, but that this was a long-term
vision rather than a concrete GOJ policy. Yabunaka told the
Charge that Japan often makes the point of telling others
that the U.S. must be a part of the region's economic as well
as its political and security architecture. He went on to say
that for Japan, APEC as an organization confirms the U.S.
interest in the region and that Japan appreciates APEC's
inclusive nature. However, Yabunaka believed that there is a
need to re-energize its activities; both the U.S. and Japan
are frustrated with the difficulties in advancing activities
within APEC, he said. Japan would like to work with the
United States to explore how to make APEC a more productive
entity. In reply to the Charge's question about possible
future APEC members, Yabunaka said the GOJ has no position on
expanding APEC.

SDA


7. (SBU) Yabunaka was pleased with what we've achieved so
far under the Strategic Development Alliance and would like
see if we can do more together. He agreed that the U.S. and
Japan should return to focus more on Pakistan, including
workforce development. He would also like to see how we can
extend bilateral coordination into other areas such as
Central Asia and perhaps Africa. Yabunaka plans to take part
in the proposed May 16 videoconference on SDA to share
information on best practices.

U.S.-India Civil Nuclear Cooperation Initiative


8. (SBU) After mentioning that he talked in Washington
about the U.S.-India agreement, Yabunaka stated that Japan
recognizes the strategic importance of India and bringing it
into the international fold on nuclear issues, but that Japan
wanted to ensure that there would be adequate safeguards so
as not to undermine the system as a whole. He wanted to
know more about which facilities are excluded and what
specific safeguard measures would be in place. Yabunaka said
that some in the Nuclear Suppliers Group are very upset, but
that Japan is working with others to try to bridge their
differences with the U.S. initiative. Yabunaka was
interested in Congress's attitude towards the agreement with
India. He thought it seemed like a reasonable arrangement

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with India, but that questions remain about a double standard
and whether countries such as Iran might take advantage of
that. As an aside on Iran, Yabunaka pointed out that the GOJ
is unhappy about the current "3 3" arrangement EU 3 of UK,
France, Germany plus U.S., Russian, China) which excludes
Japan.

Comment:

9. (C) Yabunaka is looking for a way to move ahead on a new
bilateral economic agenda, hoping the beef issue will be
resolved soon. Although Yabunaka might like to speed up the
process of re-opening the beef trade and take the issue away
as an irritant in U.S.-Japan economic relations, the problem
lies in the foot-dragging of other Japanese government
entities, not MOFA. Charge plans to raise the beef issue
again with the Prime Minister's Foreign Policy Advisor.

DONOVAN