DAILY SUMMARY OF JAPANESE PRESS 06/09/06

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SUBJECT: DAILY SUMMARY OF JAPANESE PRESS 06/09/06


INDEX:

(1) Government's panel finalizes action plan for 2006 to create a
nation built on intellectual property

(2) Post-Koizumi race: Researching Yasuo Fukuda (Part 3); Has
personal networks in US and China

(3) Post-Koizumi race: Researching Yasuo Fukuda (Part 4)

(4) The challenges of a resources-poor country (Chapter 3)-Energy
security (Part 7): Japan oil majors; 2 gov't affiliates' merger
the key

(5) Natural resources wars -- rise of nationalism: Central Asia
now wooed by world powers; Japan's "selflessness" may be an
advantage

(6) Letters to the editor page: US' annual report of
recommendations on deregulation intended to apply pressure on
Japan for American firms' access

ARTICLES:

(1) Government's panel finalizes action plan for 2006 to create a
nation built on intellectual property

ASAHI (Page 4) (Full)
June 9, 2006

In a meeting at the Prime Minister's Office yesterday, the
government's Strategic Council on Intellectual Property, headed
by Prime Minister Koizumi, finalized its annual intellectual
property action plan for 2006. The plan reiterates the need for
corporations to submit only well-chosen patent applications. It
also proposes reviewing the resale price maintenance system for
CDs and revising the Copyright Law to lower the demarcation line
between broadcasting and telecommunications.

In the meeting, Prime Minister Koizumi indicated that the
government would aim to implement the measures in the plan in
cooperation with business and academic circles.

The government has worked out an annual plan since 2003. The
report for this year sets forth the goal of making Japan "a
nation built on the world's most advanced intellectual property."

The plan also suggests the need to change their stance of giving
priority to filing patent applications. Even if the patent
system, which is premised on disclosing information, is not used,
confidential know-how will be legally protected under the Illegal

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Competition Prevention Law, as long as it is kept strictly and
secretly in-house.

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There are many cases in which a company files a patent
application for its idea or invention but does not take
procedures for registration. Many companies want to increase the
number of applications as researchers' achievements, but if they
ask for screening for registration, they will be charged about
200,000 yen. New ideas or inventions will be not protected if
they are unregistered.

"Unintentional outflows of technology" cases have been reported

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recently, such as a case in which foreign firms have made use of
information on patent applications available for general public
perusal in order to make their own new products. The committee
calls for "modulated protection measures," as said by committee
director general Arai.

The intellectual property action plan for 2006 calls for
reviewing the resale price maintenance system for CDs, reading:
"The way of operation and effectiveness of the system should be
reviewed to enable users to select from among many price
choices." But the CD industry will inevitably react negatively to
this measure.

The report also proposes revising the Copyright Law to
disseminate IP multicast broadcasting. But this measure might
have an impact on the operations of local TV commercial stations.

Key points in the intellectual property action plan for 2006

(Creation of intellectual property)
Strengthen the comprehensive system in universities, and set
rules for business, academic and governmental cooperation

(Protection of intellectual property)
Speed up the screening process, and expand the human
foundation in the Patent Agency.
Improve the environment to prevent the outflow of technology
and the flow of know-how to foreign countries through patent
applications.
Strengthen measures to protect information on new varieties
of plants and genetic resources for livestock in the agriculture,
re,
forestry and fisheries areas.
Enact a treaty at an early date to prevent the spread of
counterfeits and pirated copies.
Prevent illegal transactions at the online auction

(Creation of culture-creation state by utilizing contents)
Submit a bill amending the Copyright Law to the Diet as
early as possible in fiscal 2006 to regard retransmitted
terrestrial broadcasting based on the IP multicast formula as
cable broadcast.
Review the operation and effectiveness of the resale price
maintenance system for CDs.
Create a rich food culture, foster attractive regional
brands, and improve competitiveness in the fashion business.

(2) Post-Koizumi race: Researching Yasuo Fukuda (Part 3); Has
personal networks in US and China

NIHON KEIZAI (Page 2) (Full)
June 8, 2006

Unusual red-carpet treatment in US

The scene was the state of Tennessee on May 12. A car pulled up
in front of a mansion in the middle of a rich forest, and a small
mall
dog wagging its tail came out to greet former Chief Cabinet
Secretary Yasuo Fukuda. The dog's name was Taishi (ambassador),

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and his owner is former US Ambassador to Japan Howard Baker, who
was driving the car with Fukuda from the airport. Fukuda and
Baker in the past have held more than 100 discussions. That day,

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they talked about such issues as Japan's relations the US and
with China, and between the US and China until midnight, while
sipping wine.

Ambassador Baker is an influential Republican who has close ties
with President George W. Bush. He worked hard to set up meetings
for Fukuda with key US government officials, including Vice
President Richard Cheney. Many observers in political circles
think that the Bush administration gave especially warm treatment
to a Japanese lawmaker with no current government position
because Fukuda is a potential candidate to succeed Koizumi as
premier and because he has communication channels to China.

In August 2003, Fukuda joined a delegation that visited China to
commemorate the 25th anniversary of the conclusion of the Japan-
China Friendship Treaty, which was signed by his father, Prime
Minister Takeo Fukuda. The delegation, which also included former
Prime Minister Ryutaro Hashimoto met President Hu Jintao. In the
meeting, Fukuda said: "My father laid the track, and I will run
trains on it." He met alone with Prime Minister Wen Jiabao.

It was extremely unusual for a chief cabinet secretary, who
usually handles cabinet matters, to go abroad. One reason was his
long acquaintance with Chinese diplomats since he was a private
secretary to his father. At that time, he often visited the

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Chinese embassy in Tokyo.

Wu Dawei, then Chinese Ambassador to Japan and currently vice
foreign minister, arranged Fukuda's China visit, though it took
six months. Vice Minister Wang Yi (incumbent ambassador to Japan)
was the person with whom Fukuda secretly met in Beijing. In the
meeting, Fukuda implored earnestly: "It is not good that all
exchanges are suspended." Fukuda and the two Chinese diplomats
have known each other for 20 years.

Japanese business circles have high hopes for Fukuda's personal
channels to China. Fukuda has known Jiro Ushio, president of
Ushio Inc., and Hiroshi Okuda, former chairman of the Japan
Business Federation, since his father was prime minister. He
plays golf once in a while with Momofuku Ando, the founder of
Nisshin Foods. He often exchanges views with former Vice Finance
Minister Hiroshi Hota, secretary to then Prime Minister Takeo
Fukuda, and former MITI Vice Minister Yuji Tanahashi.

As a private secretary to his father, Fukuda hosted regular
luncheon meetings with Takeo Shiina, senior advisor of IBM Japan,
and other business leaders, to exchange views on political,
economic and cultural matters.

Fukuda attends meetings of the "Maryu Association" comprising
graduates of Azabu High School. He is the oldest of the Diet
members who belong to this association. Kaoru Yosano, Takeo
Hiranuma, Yuya Niwa, and Sadakazu Tanigaki are his juniors. He
surprisingly has connections with Taku Yamasaki, Koichi Kato, and
Junichiro Koizumi. He and Koizumi used to be called each other by
nicknames: "Jun-chan" and "Yasuo-san." Fukuda, along with Kato
and Yamasaki, established last year a parliamentary group to
consider creating a national war memorial to replace Yasukuni
Shrine. In concert with Fukuda, Kato and Yamasaki have called for
a review of Japan's Asia policy, as a main campaign issue for the
upcoming presidential election of the Liberal Democratic Party
(LDP).


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Cut and dried way of speaking

Fukuda has few close friends in the Mori faction to which he
belongs. He is one of the senior members who coordinates
activities in the faction. One senior member commented on him:
"He is snappish. When he happens to meet young members, he
reportedly ignores them."

Seishiro Eto, one of those who have openly expressed their
support for Fukuda, hosted a party for Fukuda, who there stated
as if he didn't know: "Mr. Eto is well versed in reading the
political future. I don't think I should be forced by him to
run." He told his aides: "Factions are like cotton candy. It is
difficult for a faction to unite." Some lawmakers think that
Fukuda is like Koizumi, who is blunt and dislikes hanging out
with other politicians.

Major personal networks

Political circles:
Parliamentary group to consider building a national war memorial:
Taku Yamasaki; Koichi Kato

Mori faction:
Yoshiro Mori; Seishiro Eto

Azabu Junior and Senior High Schools:
Ryutaro Hashimoto; Kaoru Yosano; and Sadakazu Tanigaki

Economic circles:
Hiroshi Okuda; Jiro Ushio

Overseas:
Former US Ambassador to Japan Howard Baker; China's Vice Foreign
Minister Wu Dawei

(3) Post-Koizumi race: Researching Yasuo Fukuda (Part 4)

NIHON KEIZAI (Page 2) (Abridged)
June 9, 2006

Yasuo Fukuda believes that Japan must improve its relations with
China and South, but is also cautious about revising the
Constitution, as are many people. Such a sense was nurtured
through his 17 years of service at an oil firm. "It is
diplomacy's responsibility to create the right environment where
corporations can engage in negotiations and do business
comfortably," Fukuda said crisply.

Japan must not intimidate Asian neighbors

Fukuda once criticized Prime Minister Koizumi's visits to
Yasukuni Shrine: "Now is the time for Japan to assist China as
much as possible to facilitate its growth."

In order for Japan to survive as a main international player, it
is essential not only to maintain good economic relations with
China but also to guide that country to deal appropriately with
the environment, energy, and other issues. It is not wise,
therefore, to create a situation where Japan cannot fully exert
its influence. Such is Fukuda's logic.

Fukuda is a member of the Group of Lawmakers Who Pay Their

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Respects at Yasukuni Shrine. But he did not visit the shrine
during his tenure as chief cabinet secretary apparently to avoid
creating a political issue. His advisory panel also produced a
report calling for a secular national memorial facility. As a
member of a nonpartisan parliamentary league, he is still calling
for a nondenominational facility. He is also supportive of the
idea of removing Class-A war criminals from Yasukuni.

He is opposed to Japan rushing to amend its constitution, since
such might set off alarms across Asia, not to mention China and
South Korea.

He believes it is the government's top priority to drive home
that Japan will not intimidate other countries and that it will
maintain peaceful relations through talks.

His views are based on the so-called Fukuda Doctrine, announced
by his father Takeo Fukuda 30 years ago as a basic policy toward
Southeast Asia.

The doctrine advocates such principles as not turning Japan into
a major military power and forging relations of trust with Asian
neighbors. In following those principles, Fukuda believes Japan's
prosperity hinges on Asia's stability. He has even suggested
innovating the Fukuda Doctrine to produce his own Asia policy.

At the May 3 Jordan summit of former presidents and prime
ministers, Fukuda declared: "All issues must be dealt with
centering on universal values, such as human dignity,
nonviolence, justice, tolerance, and respect." His father
established this forum with the aim of setting universal ethical
standards.

Fukuda also thinks a consumption tax hike is inevitable in order
to reduce the fiscal deficit, as there are limits to such
makeshift approaches as selling state-owned assets. In a speech
in May, he even said: "A 5% tax hike will generate 12 trillion
yen of revenue; 120 trillion yen in 10 years."

Facing up to history

Alarmed by the declining population, Fukuda thinks Japan should
open its door to foreign workers to some extent in order to
remain vibrant as a major economic power.

Pursuing structural reform and eliminating the social disparity
are equally important to Fukuda who puts high priority on stable
economic development.

Fukuda also launched in the ruling coalition last year a
parliamentary members' council to strengthen and promote the
national archives office system. The council is aimed at shifting
control over public documents by central and local governments to
the National Archives of Japan from the viewpoint that they are
public property. During his visit to the United States in May,
Fukuda visited the US National Archives in Washington.

Fukuda might think it is a lawmaker's responsibility to look
ahead into the future from a broad perspective by facing up to
history.

(4) The challenges of a resources-poor country (Chapter 3)-Energy
security (Part 7): Japan oil majors; 2 gov't affiliates' merger

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the key

SANKEI (Page 3) (Full)
June 7, 2006

On Oct. 2 last year, Japanese corporations demonstrated their
presence in Libya, an oil-producing country in Africa with the
world's ninth largest amount of confirmed oil reserves. A large
number of leading oil developers, including international oil
majors headquartered in the United States or Europe, bid for
mining rights to oil fields in Libya. In this bidding, five
Japanese firms attained rights to six of 26 mining areas.

The bidding was the second round after the United States decided
in September 2004 to call off its economic embargo against Libya.
The first round of bidding was held in January last year.
However, all Japanese bidders were defeated by their rivals. So
this time around, the second-time bidders from Japan had
something in mind to expect. They minimized their shares and
presented terms that were to Libya's advantage. The bidding was
fully open with all participants' terms shown on the screen. When
the screen showed Japanese-tendered conditions, the rivals were
surprised to see Japan's tender that was too advantageous to
Libya, according to one Japanese bidder.

Even so, Libya is one of the few countries in the world with
hopeful oil reserves remaining undeveloped. "Japan has
established a bridgehead there," says Fumiaki Watari, president
of the Petroleum Association of Japan (PAJ). This fact is very
significant when it comes to Japan's energy strategy.

Among the Japanese bidders, Mitsubishi Corporation grabbed the
largest number of oil-mining areas. Its stake in each mining area
is low, ranging from 10% to 20%. However, Mitsubishi Corp. also
became a successful co-bidder of four mining districts in its
tieups with Teikoku Oil Co., Ltd., Japan Petroleum Exploration
Co., Ltd. (JAPEX),and Nippon Oil Corporation.

The top five Japanese trading houses, including Mitsubishi Corp.,
have energy rights in the world, totaling about 350,000 barrels
per day. This amount is equivalent to about 8% of Japan's crude
oil imports. The Japanese trading companies are also behind-the-
scenes energy businesses exploring potential mining districts
with their worldwide webs of networks and securing oil-mining
rights against the backdrop of their financial power.

In many cases, however, an oil-developing company's plant-
operating results or its business scale could affect its overseas
acquisition of rights to energy resources. Japanese oil
developers are no match for US and European oil majors as far as
their scale and plant operation are concerned. Then, what is
needed for Japan to win hopeful projects in the world? "Japan
needs a core company to explore natural resources," said Masahisa
Naito, chairman and CEO at the Institute of Energy Economics,
Japan (IEEJ).

"We were once rejected before we even made our bid," said
Kunihiko Matsuo, chairman of INPEX Corporation. Matsuo revealed
this when he announced INPEX Corp.'s business merger with Teikoku
Oil in a press conference in November last year. In Japan, INPEX
Corp. is a leading firm. However, it could not even participate
in international bidding. This fact made the two companies merge
their businesses.

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In April, INPEX Holdings Inc. made its debut as a holding company
of the two oil developers. Its daily output of crude oil and
natural gas is over 370,000 barrels. The new company has now
become an oil developer of middle standing in the world. Even so,
it is still far behind international oil majors whose production
of crude oil alone is over 2 million barrels.

The top shareholder in INPEX Holdings is the government. In
Japan, however, there is one more government-affiliated oil
developer. It is JAPEX, which is capitalized by the government at
49.9%. These two companies, if they merge, will be a step closer
to becoming an international oil major of Japan's own. However,
the Ministry of Economy, Trade and Industry (METI) is hesitant to
work on the two companies for their business merger. "It would be
difficult if they don't feel like it," a senior METI official
said.

JAPEX has been making good showings with the recent high price of
crude oil. Its president, Yuji Tanahashi, is therefore negative
about business merger with INPEX Holdings. The two companies'
presidents are both from the Ministry of International Trade and
Industry (MITI),the predecessor of METI. The question is why
METI would not work on the two companies to merge their business.
"That's probably because," one oil industry source said, "They
hesitate for fear of losing their post-retirement jobs."

Against the backdrop of the skyrocketing prices of crude oil
around the world, Japan-a country with few natural resources-is
about to expand its oil exploration again. On the world market,
however, competition for energy resources is intensifying with
the rise of China and other factors. In order for Japan to ensure
its stable procurement of energy resources, Japan will need to
establish its own energy strategy beyond its stakes.

This is the last of Chapter 3 in a seven-part series.

(5) Natural resources wars -- rise of nationalism: Central Asia
now wooed by world powers; Japan's "selflessness" may be an
advantage

NIHON KEIZAI (Page 7) (Full)
June 9, 2006

The Japanese government invited foreign ministers from countries
of Central Asia (Central Asia Plus Japan) to a meeting on June 5.
Central Asia is now the focus of international attention due to
the oil and natural gas resources located under the Caspian Sea.
The meeting, the first in two years, adopted an action program
including energy cooperation. The Central Asian countries voiced
their support for Japan's bid for a permanent seat on the United
Nations Security Council (UNSC). Their positive attitude toward
Japan drew international attention, notably China's.

The Central Asian countries that attended the meeting are also
the members of the Shanghai Cooperation Organization (SCO),in
which China and Russia take part. The SCO in its summit
conference last year adopted a declaration opposing Japan's bid
for a permanent seat on the UN Security Council. Meeting the
press on June 6, SCO Secretary General Zhang Deguang chided those
countries that appeared to have changed their minds by noting:
"The SCO's position (about UN reforms) remains the same."


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Central Asia, which lies in between China and Russia, is now the
scene of a scramble for natural resources among world powers,
including the United States. Because it is geographically close
to the former Soviet bloc, the area is under the strong sway of
Russia, but Kazakhstan recently has seen a surge in investment
from China, which outstripped Russia's investment in 2003 and
raised its investment amount to a double of Russia's in 2004.

The southern city of Aqtau in Kazakhstan is undergoing a boom in
port-facility building. The country is aiming to participate in
the Baku-Tbilisi-Ceyhan (TBC) pipeline project, which would
enable crude oil to be transported from Azerbaijan on the other
side to Turkey without passing through Russia. Western firms,
such as BP (formerly British Petroleum) and Unocal are taking the
lead in this project.

The Central Asian countries are gauging world powers in light of
the political implications. Uzbekistan hosted an international
conference in May, where it offered favorable conditions for
participation in joint development of oil and natural gas fields
in the country, but those who attended the conference were
executives from such companies as Russia's Gazprom and China's
National Petroleum Corporation (CNPC). Except for Royal
DutchShell, no other Western firms were invited to the
conference.

The Karimov government of Uzbekistan subdued by force an anti-
government movement that emerged in the eastern part of the
country in May 2005. The actions were later denounced by the US
and Europe. Favoring China and Russia, the Karimov government
made all US troops leave the country. The government also has
made clear its position of having China and Russia as business
partners in developing natural gas fields in the Aral Sea. The
US, alarmed by the possibility of China and Russia gaining
increasing influence on that country, has now begun looking for
ways to improve relations with it.

President Bush invited President Aliyef of Azerbaijan to the
White House in April and praised Aliyef: "You have played an
important role in (the energy area)." Although the Aliyef
government has been assailed for its oppression of the opposition
parties, it has a grip on crude oil from the Caspian Sea to be
transported to Europe. The Bush administration is trying to
expand its network of allies to include Central Asia. It does not
mind being criticized for having a double standard, namely,
advocating democracy but willing to overlook a country's lack of
democracy if it can get access to natural resources.

In the 19th century, Britain and Russia unfolded a Great Game
over which country would gain hegemony over Central Asia. Now the
conflict of national interests of various countries is seen in
the same region. This situation may be called a reemergence of
the Great Game. Any new entry into the Game may be an unwelcome
thing not only for China but also for others.

However, Japan's forte is that it has never had ambitions to
expand its territory historically. In fact, as Foreign Minister
Taro Aso stated: "For Central Asia to be at the mercy of other
countries or be forced to submit to other countries is
unacceptable." For countries that have been tossed about by
territorial disputes, it would be easy to accept a strategy free
from any hegemonism. Japan in this sense has a chance to gain an
entry card into the Great Game.

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(6) Letters to the editor page: US' annual report of
recommendations on deregulation intended to apply pressure on
Japan for American firms' access

TOKYO SHIMBUN (Page 5) (Full)
June 9, 2006

Question: What is the annual report of recommendations on
deregulation submitted by the US every year since the Mizawa
Cabinet? (60-year-old female from Saitama City)

Answer: The report is officially called "Submission under the
Japan-US Enhanced Initiative on Deregulation and Competition
Policy." The Japanese and US governments have presented their
respective reports of recommendations to the other side every
year.

Japan and the US formally started the exchange of reports based
on an agreement reached between Prime Minister Junichiro Koizumi
and US President Bush in June 2001. Deregulation dialogues under
the Enhanced Initiative have continued since Prime Minister
Kiichi Miyazawa and President Clinton launched the Japan-US
Framework Economic Talks in July 1993.

At that time, trade friction was escalating between Japan and the
US. In the US government, there was strong dissatisfaction with
the various regulations imposed by the Japanese government,
deeming such regulations as blocking exports to Japan and
contributing to the United States' huge trade deficit with Japan.

Although both Japan and the US submit respective reports to each
other, the initial purpose of the exchange arrangement is to
facilitate the operations of American companies in Japan by the
easing of regulations in the Japanese market.

The Foreign Ministry conveys US requests to relevant government
agencies and asks them to make replies to the US.

Deregulatory measures taken in response to recommendations from
the US include those to establish law schools, abolish the Large-
Scale Retail Store Law, and strengthen the application of the
Antimonopoly Act.

Prime Minister Koizumi achieved his long-cherished plan to
privatize three postal services. In connection with this, too,
the 1995 US report called on Japan to scrap the postal insurance
service.

Though it is desirable to minimize regulations, the government
should promote deregulation not for the benefit of American firms
but from the viewpoint of the Japanese people.

(Political desk: Yoichi Toyoda)

SCHIEFFER