DAILY SUMMARY OF JAPANESE PRESS 05/17/06

UNCLAS SECTION 01 OF 14 TOKYO 002715

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SUBJECT: DAILY SUMMARY OF JAPANESE PRESS 05/17/06

INDEX:

(1) Koizumi orders cabinet decision on "big-boned policy
guidelines" before end of current Diet session, rejecting LDP's
call for postponement

(2) Okinawa Times-Asahi Shimbun joint poll in Okinawa Prefecture
on Koizumi cabinet, political parties, Gov. Inamine, USFJ
realignment, Futenma relocation

(3) Poll on USFJ realignment

(4) Minshuto bill amending Fundamental Law of Education includes
rightist expressions for patriotism, religion, perplexing LDP

(5) Poll on education law amendment

(6) Leaders of Mindan, Chongryon to hold first meeting today to
resolve conflict, issue joint statement

(7) Reconciliation between Mindan, Chongryon as top leaders meet
and issue a joint statement of cooperation toward uniting
resident Koreans in Japan

(8) Post-Koizumi contenders - A study of Taro Aso (Part 2): Under
pressure from his background, he makes himself out to be a bad
guy

(9) Poll: 92.5% read newspapers

(10) Self-protection of bureaucrats a universal practice

(11) Yachi faction on the rise

(12) Market opening efforts stalled; Patriotic economy; Rising
protectionism; Japan rushing to defend itself against inflow of
foreign funds

ARTICLES:

(1) Koizumi orders cabinet decision on "big-boned policy
guidelines" before end of current Diet session, rejecting LDP's
call for postponement

TOKYO SHIMBUN (Page 1) (Abridged slightly)
May 17, 2006

Prime Minister Junichiro Koizumi has ordered the Liberal
Democratic Party to fine-tune "big-boned policy guidelines"
before the current Diet session ends on June 18 for a cabinet
decision in June, rejecting the party's informal request to
postpone it until July.

According to a person connected with the LDP, Koizumi said in
response to a senior Policy Research Council executive's call to
defer the planned cabinet decision: "That's out of the question.
You must work hard for a cabinet decision before the current Diet
session adjourns."

A growing number of LDP lawmakers are calling for an extended
Diet session to get a bill to amend the Fundamental Law of
Education and other bills approved. But Koizumi has repeatedly
declared, "I'm not thinking of extending the session."

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Koizumi is believed to have rejected the LDP's request in order
to demonstrate his resolve to settle important bills before June

18.

"Big-boned policy guidelines" show directions regarding the
government's important policies, such as economic and fiscal
policies. The Council of Economic and Fiscal Policy compiles them
around in June every year for a cabinet decision. They are
reflected in compiling budgets for the following fiscal year.

To sum up the Koizumi reform drive, this year's guidelines are
expected to incorporate strategies for expenditure-and-revenue
reform and economic growth. The government plans to adopt the
guidelines in June.

(2) Okinawa Times-Asahi Shimbun joint poll in Okinawa Prefecture
on Koizumi cabinet, political parties, Gov. Inamine, USFJ
realignment, Futenma relocation

OKINAWA TIMES (Page 3) (Full)
May 14, 2006

Questions & Answers
(Figures shown in percentage, rounded off.)

Q: Do you support the Koizumi cabinet?

Yes 34
No 45
Other answers (O/A) + no answer (N/A) 21

Q: Which political party do you support now?

Liberal Democratic Party (LDP) 22
Democratic Party of Japan (DPJ or Minshuto) 15
New Komeito (NK) 3
Japanese Communist Party (JCP) 2
Social Democratic Party (SDP or Shaminto) 4
People's New Party (PNP or Kokumin Shinto) 0
New Party Nippon (NPN or Shinto Nippon) --
Liberal League (LL or Jiyu Rengo) --
Okinawa Socialist Masses Party (OSMP or Shadaito) 1
Other political parties 0
None 40
O/A + don't know (D/K) 13

Q: Do you support Okinawa Governor Keiichi Inamine?

Yes 58
No 27
O/A+N/A 15


Q: The Japanese and US governments have now reached a final
agreement on the realignment of US forces in Japan, including
Futenma airfield's relocation to another site in Okinawa
Prefecture and Okinawa-based US Marines' redeployment to Guam. Do
you support this final accord?

Yes 27
No 55
O/A+N/A 18

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Q: To what extent do you think this US military realignment will
reduce Okinawa's base-hosting burden? Pick only from among those
listed below.

Very much 6
Somewhat 24
Not very much 47
Not at all 19
O/A+N/A 4

Q: To what extent do you think Okinawa Prefecture's public
opinion has been reflected in the Japan-US agreement? Pick only
one from among those listed below.

Very much 3
Somewhat 20
Not very much 49
Not at all 24
O/A+N/A 4

Q: Do you think this US military realignment will help develop
Okinawa?

Yes 27
No 56
O/A+N/A 17

Q: The final agreement incorporates a plan to relocate Futenma
airfield to a coastal area of Camp Schwab, a US military base
located in the northern Okinawa prefectural coastal city of Nago.
The government plans to lay down a V-shaped pair of 1,800-meter
shore-based airstrips stretching out to the sea. Do you support
this coastal plan?

Yes 19
No 69
O/A+N/A 12

Q: (Only for those who answered "yes") Why? Pick only one from
among those listed below.

Because it will lead to base realignment and reduction in Okinawa
3
Because it will lessen danger 8
Because base-hosting localities can expect the government to help
their economic development 4
Because the Japanese and US governments have agreed to do so 2
O/A+N/A 2
Not on the list 81

Q: (Only for those who answered "no") Why? Pick only one from
among those listed below.

Because it won't lead to base reduction in Okinawa 14
Because it will be another source of harm to local communities
16
Because local public opinion is not well reflected 13
Because it will disrupt the natural environment 25
O/A+N/A 1
Not on the list 31

Q: Do you appreciate Nago Mayor Yoshikazu Shimabukuro for his

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agreement with the government to build two V-shaped runways over
the issue of Futenma airfield's relocation?

Yes 22
No 60
O/A+N/A 18

Q: Gov. Inamine has asked the government to set up a temporary
helipad at Camp Schwab for Futenma-based helicopters. However, he
has now basically agreed with the Defense Agency director general
on the government's plan. Do you appreciate his agreement this
time with the defense chief?

Yes 36
No 46
O/A+N/A 18

Q: Do you think this US military realignment will be a plus to
Japan's national security, or do you otherwise think it will be a
minus?

Plus 31
Minus 43
O/A+N/A 26

Polling methodology: The survey was conducted May 13-14 in
Okinawa Prefecture by the Okinawa Times and the Asahi Shimbun
over the telephone on a computer-aided random digit dialing (RDD)
basis. For the survey, respondents were chosen from among Okinawa
Prefecture's voting population on a three-stage random-sampling
basis. Valid answers were obtained from 919 persons (66%).

(3) Poll on USFJ realignment

MAINICHI (Page 2) (Abridged)
May 17, 2006

Questions & Answers
(T = total; P = previous; M = male; F = female)

Q: The Japanese and US governments have now reached a final
agreement on the realignment of US forces in Japan. Japan and the
United States will consolidate their military cooperation through
realignment steps such as locating their commands at US military
bases in Japan. Do you support this consolidation?

T P M F
Yes 45 52 39
No 43 44 42

Q: The final agreement includes redeploying 8,000 Okinawa-based
troops of the US Marine Corps to Guam and moving some US military
base functions from Okinawa to mainland prefectures. Do you
appreciate such steps for the purpose of alleviating Okinawa's
base-hosting burden?

T P M F
Yes 13 18 9
Yes to a certain extent 51 52 51
Not very much 17 17 17
No 9 9 9

Q: The US government says Japan's share of costs for US military

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realignment in Japan would be about 3 trillion yen. What do you
think about this?

T P M F
Japan should share the realignment cost for its national security
8 11 6
Japan should share the realignment cost but the amount is too
high
72 70 74
There's no need to share the cost
12 15 10


Polling methodology: The survey was conducted May 13-14 over the
telephone with the aim of calling a total of 1,000 voters across
the nation on a computer-aided random digit sampling (RDS) basis.
Answers were obtained from 1,061 persons.

(4) Minshuto bill amending Fundamental Law of Education includes
rightist expressions for patriotism, religion, perplexing LDP

TOKYO SHIMBUN (Page 2) (Excerpts)
May 16, 2006

Minshuto (Democratic Party of Japan) finalized a set of
counterproposals to the government's bill amending the
Fundamental Law of Education during a meeting yesterday of its
Council on Basic Education Problems. According to a veteran
lawmaker, the opposition party's bill contains "many expressions"
the Liberal Democratic Party (LDP) wanted to use but didn't as a
result of its concessions to the New Komeito.

The Minshuto's bill represents "patriotism" as "fostering a mind
that loves Japan" in the preamble.

But the government's bill specified it as "fostering an attitude
that loves the nation and homeland," though the LDP wanted to use
the word "mind." LDP conservatives have the impression that the
government's bill includes just cut-and-paste expressions,
compared with the Minshuto bill that is filled with simple
expressions.

The Minshuto bill incorporated this expression: "fostering
religious sensitivity," although the LDP wanted to include a
similar expression to that in the government bill but couldn't.

The LDP has been perplexed at Minshuto's presentation of such a
bill that is "more rightist than the government's bill," as said
by a junior member. LDP members had not anticipated that Minshuto
lawmakers linked to labor unions would easily give the nod.

A lawmaker responsible for education policy said: "The Minshuto
bill is better than ours." There are even some LDP members who
expressed expectations for negotiations with Minshuto on revising
the government's bill during the Diet deliberations to start
tomorrow.

Even if the Minshuto bill is greatly tinged with the LDP color,
the LDP finds it difficult to respond to revision negotiations
due to the presence of the New Komeito, its ruling partner.

The LDP intended to underline in deliberations on the bill that
the Minshuto is a hodge-podge group, based on the judgment that

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the main opposition party would be unable to compile a
counterproposal. This expectation was dashed, and the tables now
seem to be turned.

In a press conference yesterday, Chief Cabinet Secretary Shinzo
Abe criticized the Minshuto bill and tried to check its moves,
saying: "The bill apparently reflects some political motives. I
wonder if the bill is based on a consensus in the party."

LDP Secretary General Tsutomu Takebe also stressed no intention
of revising the bill, saying: "(The government bill) includes
best measures." The LDP intends to try to shake up lawmakers
coming from labor unions and the former Socialist Party by
pointing out how rightist the Minshuto draft is.

(5) Poll on education law amendment

YOMIURI (Page 2) (Full)
May 17, 2006

Questions & Answers
(Figures shown in percentage. Parentheses denote the results of a
survey conducted in April.)

Q: The government has introduced a bill to the Diet at its
current session to amend the Fundamentals of Education Law,
stipulating educational ideals and objectives. What do you think
is important in particular? If any, pick as many as you like from
among those listed below.

Add the wording "respect public spirit" 36.0
Add the wording "inherit traditions" 20.6
Add the wording "cultivate affluent sentiments and moral fiber"
48.4
Add the wording "make much of relation between occupations and
lives, nurture work-oriented attitudes" 26.0
Add the wording "love our country and its land" 25.9
Add the wording "nurture attitudes contributing to the
international community's peace and development" 28.5
Add the wording "parents have the primary responsibility to
educate their children" 24.0
Cross out the current stipulation of 9-year compulsory education
for a flexible period of compulsory education 6.0
Other answers (O/A) 0.1
Nothing in particular + no answer (N/A) 17.2

Q: Do you support the government's draft bill to revise the law?

Yes 28.1
Yes to a certain degree 37.6
No to a certain degree 8.6
No 5.6
N/A 20.1

Polling methodology
Date of survey: May 13-14.
Subjects of survey: 3,000 persons chosen from among all eligible
voters throughout the country (at 250 locations on a stratified
two-stage random sampling basis).
Method of implementation: Door-to-door visits for face-to-face
interviews.
Number of valid respondents: 1,788 persons (59.6%).
Breakdown of respondents: Male-49%, female-51%.

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(6) Leaders of Mindan, Chongryon to hold first meeting today to
resolve conflict, issue joint statement

NIHON KEIZAI (Page 3) (Slightly abridged)
May 17, 2006

The pro-Seoul Korean Residents Union in Japan, known as Mindan,
and the General Association of Korean Residents in Japan, or
Chongryon, have been at loggerheads for all of the 60-year
postwar period. Mindan leader Ha Byong Ok and Chongryon leader So
Man Sul will meet this morning with the aim of reconciling their
policy differences and forming a coalition. This will be their
first top-level meeting.

Mindan issued a statement yesterday noting: "The two groups in
Japan will hold a meeting to resolve their conflicts and issue a
joint statement." Seven Mindan representatives will visit
Chongryon's head office in Tokyo today.

Mindan and Chongryon have locked horns due to a difference in
ideology since they were inaugurated. In the wake of the South-
North summit in June 2000, however, momentum has been gathering
for reconciliation among Korean residents in Japan. The two
groups have already started exchanges and action to unify them at
the regional level.

On the national level, the Chongryon Central Committee adopted in
September 2005 the policy of "abandoning the distrust and
antagonism in the past and sharing the determination to bring
about unification." Mindan also installed as president Ha, who
calls for uniting based on broad common interests.

According to informed sources, an idea floated in late April
suggesting that both groups should jointly form a preparatory
panel in commemoration of the 6th anniversary of the South-North
joint declaration on June 15. The two leaders are expected to
decide in their meeting today to (1) confirm reconciliation in
the joint statement; and (2) hold a summit meeting regularly.
They will participate in the event held in Guangzhou, South
Korea, in commemoration of the 6th anniversary of the South-North
joint declaration in June.

One person well informed of circumstances on the Korean Peninsula
sees "the declining influence of Chongryon" behind the
unprecedented unification move. Mindan has more than 400,000
members, while Chongryon has officially announced that the number
is about 200,000, but it has been reported that a number of
members seceded from it recently over the exposure of the
abduction issue.

The Japanese government has been ratcheting up pressure on
Chongryon, seriously affecting the flow of funds from that group
to Pyongyang by imposing a fixed asset tax on Chongryon-related
facilities, as well as taking other measures. Some observers
analyze that Chongryon wants to demonstrate its flexible stance
by holding talks with Mindan.

South Korean President Roh Moo Hyun has been promoting an
appeasement policy toward North Korea. Shigeru Yokota, the father
of a Japanese abduction victim, is now visiting South Korea, but
the South Korean government has declined to meet him, apparently
out of consideration to North Korea.

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Chief Cabinet Secretary Shinzo Abe said in a press conference
yesterday: "The government will continue to take the stance of
holding talks and applying pressure." He added: "The Public
Security Investigation Agency has an interest in Chongryon from
the viewpoint of maintaining national security. We will carefully
watch its moves."

(7) Reconciliation between Mindan, Chongryon as top leaders meet
and issue a joint statement of cooperation toward uniting
resident Koreans in Japan

ASAHI (Top play) (Excerpt)
Evening, May 17, 2006

Ha Byonk Ok, leader of Mindan, the pro-Seoul Korean Residents
Union in Japan, and So Man Sui, head of the Chosen Soren
(Chongryon in Korean),the pro-Pyongyang Association of Korean
Residents in Japan, held their first top-level meeting ever this
morning at Chongryon Headquarters in Tokyo's Chiyoda Ward. In a
joint statement issued after their meeting, they used the
expression "historical meeting" to describe their session. In
accordance with the South-North Korean joint declaration issued
in June, 2000, they proclaimed "a change from antagonism and
rivalry to conciliation and unity (or harmony)." They came out
with a clear stance of putting an end to their history of
conflict that spanned over a half-century.

(8) Post-Koizumi contenders - A study of Taro Aso (Part 2): Under
pressure from his background, he makes himself out to be a bad
guy

NIHON KEIZAI (Page 2) (Almost full)
May 17, 2006

"Don't worry. Jiro can do it even though I can't," Taro Aso would
often say to his mother, Kazuko, when he was a child. Jiro was
two years junior to Taro, but Jiro did everything better than
Taro whether it was his studies or sports. A prevailing notion in
the Aso family was that the future of the family would be in the
hands of Jiro.

Aso, however, stopped saying such words when he was 23. The
reason was because Jiro died in an accident at sea. Those who
knew Taro and Jiro said equally: "The two brothers always got
along well." It can easily be imagined how shocked Aso was by the
death of his brother. But Aso's biological sister, Yukiko Soma,
looking back on those days, said: "The death of Jiro might have
helped my elder brother to develop his own faculties."

On his mother's side was Aso's grandfather, former Prime Minister
Shigeru Yoshida, and Toshimitsu Okubo, a Japanese statesman in
the Meiji era (1968-1912). Aso was also a great-grandson of
Takichi Aso, a former member of the House of Lords who was dubbed
the coal baron in Fukuoka Prefecture.

The little ruffian of the coal mines

Aso was brought up with severe discipline. Kazuko cautioned her
children against extravagant lifestyles and fed her family rice
cooked with barley (a staple food for the poor). Aso became a
kind of little ruffian among the kids in that coal-mining town
rather than be seen as a child of a wealthy family. Around then,

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he was already making himself out to be a bad guy. His cousin,
Koichiro Noda, a science-fiction writer, explained: "The
privileged position of his family may have been a burden on him."

When he was a third-grade elementary school student, Aso moved to
Tokyo where he was enrolled in the Gakushuin Elementary School.
He was then no longer a standout among his peers. He perhaps
finally was able to relax. Former Administrative Vice Foreign
Minister Masahiro Akiyama, a classmate, said: "When I think of
Aso, all I recall about him was his laughing face. A barbed
tongue, did he have such? I can't recall it."

Aso says half-jokingly: "Having Shigeru Yoshida as my grandfather
was more trouble than it was worth." But his sense of values was
developed under the influence of Yoshida, who doted on Aso too
much, and would even bring him along to news conferences.

Yoshida's friends like Hayato Ikeda (later a prime minister)
called on Yoshida at his residence. They became something like a
catalyst that led Aso to politics. Reporters assigned to cover
Yoshida sat at the same breakfast table. Aso cultivated his views
of history and of the state from what he learned by listening to
political discussions among those adults and their talk about the
past.

"You shouldn't judge people by how they look. But people will
judge you by how you look," Yoshida said. This advice has become
the basis for Aso to become meticulous about his belongings and
clothes. Even now he buys a suit of clothes at a tailor shop at
Aoyama, Tokyo, where he bought his suit for the first time when
his mother brought him there.

"He tends to look cool"

The trigger that led Aso to become a politician was his
assumption of chairmanship of the Japan Junior Chamber of
Commerce in 1978, when he was serving as president of Aso Cement.
In 1979, when he decided to run in a Lower House election for the
first time, his mother strongly opposed his candidacy. But he ran
anyway, following his grandfather's words: "Once you decide to do
something, never waver but just do it."

When Aso likes to read books; he underlines what he thinks i is
important to understand. He secretly learned calligraphy and now
he can write a letter by using a brush. His old friend portrays
Aso as "a hardworking person who pretends not to work hard." His
sister said: "He tries to make himself look cool."

When asked about differences with other post-Koizumi contenders,
for instance, Shinzo Abe, Aso says: "Unlike the others, I am a
cheerful person." But at one point he was told by his friend
lawmaker, "You have tended to have a frown on your face since you
became cabinet minister." So, Aso is now trying to smile.

(9) Poll: 92.5% read newspapers

TOKYO SHIMBUN (Page 3) (Full)
May 17, 2006

The Japan Newspaper Publishers and Editors Association (Nihon
Shinbun Kyokai or NSK for short) conducted an opinion survey of
public access to and ratings for the five major segments of the
media: newspapers, television, radio, magazines, and the

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Internet. In the survey, respondents were asked if they read
newspapers, and 92.5% of them answered "yes." This shows that the
newspapers are highly esteemed even in the multimedia age.

NSK has conducted three surveys in 2001, 2003, and this time in
October last year. A total of 6,000 persons were chosen from
among those aged 15-69 for the latest survey, and answers were
obtained from 57.4%.

In the survey, asked how many days of the week they spend their
time reading newspapers (morning editions),respondents said the
average number was 5.6 days, showing that they read newspapers
almost every day. In addition, 93.0% supported door-to-door paper
delivery services. Newspapers were reconfirmed as the key source
of information in the media.

The survey also probed into the public image and evaluation of
various other types of media. In this rating, the newspapers
topped all other media as "indispensable information sources"
(53.6%),"socially influential entities" (53.4%),and "good
sources to know about local communities" (52.1%). In addition,
respondents also gave high marks to television, citing commercial
broadcasters for "friendliness" (67.0%) and the official
broadcaster NHK for "accurate information" (43.8%).

In the survey, respondents were further asked if they access the
Internet. In response, more than 60% answered "yes," showing an
increase of about 3%age points over the last survey. "Newspapers
and television are still the key players in the mass media," NSK
concluded.

(10) Self-protection of bureaucrats a universal practice

BUNGEISHUNJU (Pp. 234-235) (Abridged slightly)
June 2006

Mock six-party talks held in Tokyo in mid-April to discuss the
North Korean nuclear issue demonstrated that bureaucrats of any
country are skilled in protecting themselves and avoiding taking
responsibility.

It all started with the Foreign Ministry's frustration with the
Prime Minister's Official Residence (Kantei),especially with
prime minister's secretary, Isao Iijima, over deadlocked Japan-
North Korea relations. "Things have not been quite right since
Deputy Foreign Minister Mitoji Yabunaka (who entered the ministry
in 1969) was removed from responsibility." Criticism was directed
at Asian and Oceanian Affairs Bureau Director General Kenichiro
Sasae. Iijima has a poor impression of Sasae, who was close to
former Chief Cabinet Secretary Yasuo Fukuda, Iijima's "enemy." In
an apparent attempt to solidify his position for the next five
months before Prime Minister Koizumi steps down, Sasae lobbied
the United States and South Korea for trilateral talks.

US Assistant Secretary of State Christopher Hill also jumped into
the spotlight at that point. Although Hill compiled a joint
statement following the six-party talks last September, there has
been no progress in the talks since then. Hill, regarded as an
attention seeker in the US government, readily jumped at Sasae's
proposal for the trilateral talks.

South Korean chief negotiator, Chun Young Woo, also become
director of the Office of the Diplomatic Policy just last year.

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Sasae, Hill, and, Chun were all too eager to meet in Tokyo to
play up their profiles.

North Korea, which had been suffering under America's financial
sanctions, also dispatched Vice Foreign Minister Kim Gye Gwan to
Tokyo in the faint hope of talks with the United States.
Representing China, which proudly regarded itself as an
intermediary, Vice Foreign Minister Wu Dawei also arrived in
Japan. The lineup of such members raised the stakes.

Government officials had low expectations for the talks, however.
Sasae whispered into the ears of Foreign Minister Taro Aso and
Chief Cabinet Secretary Shinzo Abe, "Chances are slim for US-DPRK
talks to occur on the sidelines of the six party talks."
Washington also sent Director for Asian Affairs at the National
Security Council Victor Cha to Japan to keep an eye on Hill so
that he would not behave audaciously, driven by ambition.

The Tokyo conference ended without producing any tangible
results. Despite that, Sasae proudly took the credit for the
Tokyo session, over which the involvement of former Deputy
Foreign Minister Hitoshi Tanaka (who entered the ministry in
1969) was mentioned. Sasae simply demonstrated a standard
bureaucratic style.

(11) Yachi faction on the rise

BUNGEISHUNJU (Page 234) (Abridged slightly)
June 2006

The full text of a suicide note left behind by a diplomat at the
Consulate General in Shanghai found its way into a newspaper, and
a sensitive document on South Korea policy also was leaked. These
incidents exposed the sloppiness of the Foreign Ministry's
information control. The view is rife that insiders discontented
with recent personnel appointments leaked them.

Word is out in the open that the post of administrative vice
foreign minister, now occupied by Shotaro Yachi (who entered the
ministry in 1969),will be handed over in succession first to
Ambassador to Indonesia Shin Ebihara (who joined the ministry in
1971) then to Asian and Oceanian Affairs Bureau chief Keiichiro
Sasae (1974),next to North American Affairs Bureau chief Chikao
Kawai (1975) and then to Minister to the United States Akitaka
Saiki (1976). They are all referred to as members of the "Yachi
faction." It is widely rumored in the ministry that officials not
belonging to the Yachi faction can never climb up to the vice
minister's post.

In fact, such members as Deputy Foreign Minister Tsuneo Nishida
(1970),Deputy Vice Minister for Foreign Policy Masaharu Kono
(1973),European Affairs Bureau Director General Chikahito Harada
(1974),Prime Ministerial Secretary Koro Bessho (1975),and
Foreign Policy Bureau Deputy Director General Koji Tsuruoka
(1976) -- are known as capable officials -- have been falling
behind in the vice minister's race.

The same trend is also evident at the division director level.
International Legal Affairs Division Director Takeo Akiba (1982),
who is expected to become the first "non-China School" official
to head the China and Mongolian Division, is a promising Yachi
faction member. First North American Division Director Takeo Mori
(1983),an ace among the junior to mid-level officials, regards

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himself as a "direct descendant" of Akiba. Akiba, who has served
in the now-defunct Treaties Bureau, belongs to the American
School, like Yachi. Although Mori belongs to a different language
school, he, too, has served in the Treaties Bureau.

Rivalries between language school-denominated factions,
especially between the China School and the Russia School, used
to create tensions in the Foreign Ministry. But the decline of
those two large language schools has pushed Yachi faction members
belonging to the American School to center stage.

(12) Market opening efforts stalled; Patriotic economy; Rising
protectionism; Japan rushing to defend itself against inflow of
foreign funds

ASAHI (Page 9) (Excerpts)
May 17, 2006

Akio Mimura, president of Nippon Steel Corporation, on March 29
categorically told reporters, "It is only natural for us to
protect our company." Just before he made this comment, Nippon
Steel had come up with a policy of countering takeover bids
jointly with Sumitomo Metal Industries and Kobe Steel, with which
it cross-holds stocks, though they are rivals.

In January, Mittal Steel Company of the Netherlands, which has
become the world's largest steel company after taking over a
number of competitors, announced that it had taken over Arcelor
of Luxemburg, the world's second-largest steel manufacturer. The
three Japanese steel makers' joint move appears to be an effort
to defend themselves from Mittal's possible advance into the
Japanese market. An executive of Japan Steel Corporation
stressed, "It will be a threat to the domestic industry as a
whole, if any of steel companies, which prop up the industry's
competitiveness, is taken over by a foreign company."

Atsushi Yokoyama, deputy manager of the System Research
Department of the Daiwa Institute of Research, said, "Following
the recent series of takeover bids, an increasing number of
companies are now trying to take measures against takeover bids."
They are trying to defend themselves from foreign companies and
investment funds that are actively engaging in border-crossing
mergers and acquisitions of companies (M&As),using affluent
funds.

The government is assisting companies in their effort to solidify
their defensive posture. For instance, the government had planned
to lift a ban on triangular mergers in the process of compiling a
new corporate law. However, in mid-March last year, it postponed
the enactment of the envisaged law. Business circles complained
about the contents of the planned law, which was intended to make
M&As easier. They claimed, "If the ban is lifted, foreign
companies will launch major takeover bids."

According to M&A consulting company Recof Corp., the number of
M&As in Japan has sharply increased since 2000, but cases in
which foreign companies take over domestic companies have leveled
off.

The Daiwa Institute of Research pointed out that the cross-
holding of stocks among business players that appear to be
intended to defend themselves against takeovers is reviving. The
ratio of cross-held stocks dropped to 1.45% in 1999 on a monetary

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basis, but it rose to 2.025% in 2004.

Irresolute toward international negotiations

Seiichi Ota, a Lower House member, during a meeting of the
Agriculture, Forestry, and Fisheries Trade Research Council held
in late April at the LDP headquarters welcomed the stalled trade
liberalization talks at the World Trade Organization (WTO),
saying, "To tell the truth, it would be better if the talks
fail." He also said, "In order to have rice treated as an
exception, it is necessary for Japan to maintain that belief in
the sprit of rice cultivation peculiar to Japan is culture." He
thus emphasized that Japan should not succumb to a call for
lowering tariffs on rice.

The multilateral trade talks (Doha Round),which started in 2001
with the aim of expanding global trade, were postponed, failing
to meet the April 30 deadline for an agreement on new trade
rules.

In view of the bogged-down WTO trade talks, the government and
business circles are now focusing on signing free trade
agreements. However, Japan has so far succeeded in concluding
such a trade pact with only three countries.

Japan and the Philippines reached a consensus on an FTA,
including the acceptance of nurses and nursing-care workers, but
they have not yet signed the accord.

That is because Japan wants to limit the number of workers it
accepts each year to several hundred on the grounds that the
wages of Philippine workers are low; it is concerned that an
influx of foreign workers all at once could worsen working
conditions for Japanese workers. The Philippines denies the
possibility.

Other Asian countries, such as South Korea and Thailand, are also
calling on Japan to open its labor market for nurses and other
types of workers in short supply in Japan. However, the Ministry
of Health, Labor, and Welfare stands firm on its position that
the objective of accepting nurses from abroad is to promote
technical exchange and has nothing to do with adjusting supply
and demand.

WTO member nations will aim to map out liberalization rules by
the end of July at the Doha Round. Liberalization of trade in
services, which would make progress in the financial and
communications sectors easier, would be advantageous to Japan,
but there is no sign of the government making a political
decision. Business circles hope for the success of the Doha
Round, but they are shunning the advance of foreign firms into
the Japanese market as a result of liberalization.

Inward-looking industrialized countries

A senior official of the Ministry of Economy, Trade, and Industry
expressed concern: "In trade, weak countries should be given a
handicap like in golf so that all countries can play. If
industrialized countries refuse to give in, weak countries will
turn their backs and withdraw into seclusion." As a matter of
fact, industrialized countries, such as Japan, the US and
European countries, are increasingly becoming inward-looking.


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DONOVAN