DAILY SUMMARY OF JAPANESE PRESS 08/25/06

UNCLAS SECTION 01 OF 11 TOKYO 004891

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SUBJECT: DAILY SUMMARY OF JAPANESE PRESS 08/25/06


INDEX:

(1) Poll on Koizumi cabinet, political parties, post-Koizumi race,
Yasukuni Shrine issue

(2) Poll: Public ratifies Koizumi's decisions on SDF Iraq dispatch,
Diet dissolution over postal privatization, Yasukuni homage

(3) Japan proposes 16-nation FTA in Asia during meeting of economic
ministers

(4) Commentary by Takashi Koyama on Bush administration visibly
neglecting Asia policy

(5) Seiron column: Remove immature anti-American view of history
from Yushukan Museum; Dignity of Yasukuni Shrine could be damaged

(6) 2006 LDP presidential race: Gravitation of pedigree (Part 2):
Alma mater

(7) Chinese farmers upset by Japan's uniform regulations on
pesticide residue; Dispute might be sparked, with drop in shipments

ARTICLES:

(1) Poll on Koizumi cabinet, political parties, post-Koizumi race,
Yasukuni Shrine issue

ASAHI (Page 4) (Full)
August 23 2006

Questions & Answers
(Figures shown in%age, rounded off. Parentheses denote the results
of the last survey conducted July 22-23.

Q: Do you support the Koizumi cabinet?

Yes 44 (43)
No 40 (40)

Q: Which political party do you support now?

Liberal Democratic Party (LDP) 39 (36)
Democratic Party of Japan (DPJ or Minshuto) 14 (16)
New Komeito (NK) 2 (3)
Japanese Communist Party (JCP) 2 (2)
Social Democratic Party (SDP or Shaminto) 2 (1)
People's New Party (PNP or Kokumin Shinto) 0 (0)
New Party Nippon (NPN or Shinto Nippon) 0 (0)
Liberal League (LL or Jiyu Rengo) 0 (0)
Other political parties -- (--)
None 34 (35)
No answer (N/A) + don't know (D/K) 7 (7)

Q: Who do you think is appropriate to become the next prime
minister? Pick only one from among those listed below.

Taro Aso 14
Shinzo Abe 53
Sadakazu Tanigaki 10
Others 14

Q: Do you expect policy debates in the LDP's upcoming presidential

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election?

Yes 24
No 60

Q: What would you like to be most debated in the LDP presidential
election? (One choice only)

Asia diplomacy 15
Consumption tax 29
Economic disparities 32
Local revitalization 12
Constitutional revision 7

Q: Prime Minister Koizumi paid homage at Yasukuni Shrine on Aug. 15,
the anniversary of the end of World War II. What do you think about
this?

It's good 49
He shouldn't have done so 37

Q: Would you like the next prime minister to pay homage at Yasukuni
Shrine?

Yes 31 (20)
No 47 (60)

Q: Mr. Aso says Yasukuni Shrine should be placed under state
control, and he also says he will not visit there until then. Do you
support this stance?

Yes 50
No 31

Q: Mr. Abe says he will not clarify whether he will pay or paid
homage at Yasukuni Shrine. Do you support this stance?

Yes 32
No 54

Q: Mr. Tanigaki says he wants Yasukuni Shrine to unenshrine Class-A
war criminals as war leaders, and he also says he will not pay
homage there for the time being. Do you support this stance?

Yes 49
No 36

Q: Do you think the Yasukuni Shrine issue should be debated in the
LDP presidential election?

Yes 45
No 49

Q: Do you think the next prime minister's Yasukuni homage will have
a bad influence on Japan's Asia diplomacy?

Yes 64
No 24

Q: Yasukuni Shrine is where Class-A war criminals are also enshrined
as well as the war dead. Do you feel something wrong with this?

Yes 41

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No 47

Q: Would you like the current LDP-led coalition government to
continue, or would you like it to be replaced with a DPJ-led
coalition?

LDP-led coalition 38
DPJ-led coalition 29

Polling methodology: The survey was conducted Aug. 21-22 across the
nation over the telephone on a computer-aided random digit dialing
(RDD) basis. Respondents were chosen from among the nation's voting
population on a three-stage random-sampling basis. Valid answers
were obtained from 836 persons (53% ).

(2) Poll: Public ratifies Koizumi's decisions on SDF Iraq dispatch,
Diet dissolution over postal privatization, Yasukuni homage

NIHON KEIZAI (Page 1) (Full)
Eve., August 22, 2006

Prime Minister Junichiro Koizumi will step down in a month. Even so,
his cabinet's popularity is still sustained high at around 50%.
Koizumi has been in office for five years and a half to date, and
public opinion surveys conducted by the Nihon Keizai Shimbun show
that the general public has ratified a number of important political
decisions he made in the past. Koizumi has made direct appeals to
the nation on the aim of his decision making. This Koizumi magic
also seems to have worked well.

On Aug. 15, Koizumi paid his sixth homage at Yasukuni Shrine since
coming into office as prime minister. In the latest telephone-based
poll, 48% endorsed his recent Yasukuni homage, with 36% against it.
As seen from these figures, affirmative opinions outnumbered
negative opinions. In a previous poll taken in late July,
affirmative opinions accounted for 28% and negative ones at 53%,
showing that the affirmative figure was far lower than the negative
one.

The late Emperor Showa (Hirohito) was displeased with the
enshrinement of Class-A war criminals at Yasukuni Shrine, according
to the late former Imperial Household Grand Steward Tomohiko
Tomita's diary and notebook discovered right before this July's
survey. This point was noted in that survey for respondents when
they were asked if they thought Koizumi should pay homage at
Yasukuni Shrine. So the results of previous surveys cannot be simply
compared. In this June's survey as well, however, those who think
Koizumi should do so on Aug. 15 accounted for only 17%.

Previous surveys also show the public ratification of Koizumi's
decisions. In a survey conducted in December 2003, for instance, 33%
supported Koizumi's decision to send Self-Defense Forces troops to
Iraq in the wake of the terrorist attacks in the United States (TN:
sic),with 52% opposing it. In another survey taken in February 2004
after the SDF-including Ground Self-Defense Force troops-was ordered
out to Iraq, 43% supported the Iraq-bound dispatch of SDF troops,
with 42% against it. As seen from these figures, the proportion of
affirmative opinions topped that of negative ones.

In August last year, Koizumi dissolved the House of Representatives
for a general election after his government's package of postal
privatization bills was voted down in the Diet. In an earlier survey
conducted in July last year, 24% supported Koizumi's stance of

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dissolving the Diet for his postal privatization drive, with 43%
saying he should not stick to the legislation of postal
privatization during that Diet session and should go for the
legislation of postal privatization with understanding obtained from
those opposing it and 22% absolutely opposing it. In another survey
taken right after his dissolution of the Diet over his postal
privatization initiative, however, affirmative opinions accounted
for 53%, and negative opinions 33%.

Koizumi met the press immediately after dissolving the Diet. Even
now, some lawmakers in the ruling and opposition parties still
presume that his punch shown in that urgent press conference drew
public support. The general public used to be negative at first
about his initiative but suddenly turned affirmative to shore him up
after his decision making. He has long been in office. Will this
enigma continue for his successor?

(3) Japan proposes 16-nation FTA in Asia during meeting of economic
ministers

NIHON KEIZAI (Page 3) (Excerpts)
August 25, 2006

Takeshi Kawanami, Kuala Lumpur

Trade ministers from 16 countries in the Asia-Pacific region -
Japan, China, South Korea, and the 10 member nations of the
Association of Southeast Asian Nations (ASEAN),and additionally
India, Australia, and New Zealand - held their first meeting on Aug.

24. In the meeting, Japan proposed a 16-nation economic partnership
agreement (EPA). In response, agreement was reached to launch
private-sector-level talks. The accord is aimed to advance regional
economic integration by liberalizing trade and investment. In
realizing this goal, however, many hurdles have to be overcome.

Products worth 9 trillion dollars in region

In an ASEAN+3 ministerial meeting on Aug. 24, agreement was reached
to hold working-level talks on an EPA initiative involving the 13
countries. In an unofficial meeting held afterward by the 13 ASEAN
countries plus India, Australia, and New Zealand over lunch, the
countries expressed support for the Japan's 16-nation proposal.

Economy, Trade and Industry Minister Toshihiro Nikai said in a press
conference: "Japan won acceptance from most participants for its
proposal." The Japanese proposal will be studied simultaneously with
the 13-country proposal.

There are about 3 billion people In those 16 countries, and total
production is valued at approximately 9 trillion yen. If the EPA
initiative is implemented, the region will be the third largest free
trade area, following the North America Free Trade Area (NAFTA) and
the European Union (EU). Should the Japanese plan be implemented, it
would become easier to establish a division-of-labor system in the
region because there would be no tariffs to bar a work-division
process. For example, even if Japan assembled products in China with
parts made in Japan and then exports the finished products to
Malaysia, duties would not be imposed anywhere in the process under
the agreement. Further, if unified rules on cargo transport are
introduced, it would become easier to mobilize persons and goods
beyond borders.

A senior METI official said: "Japan is aiming to seize the

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initiative and thus lessen China's influence" under the 16-nation
free trade plan.

High hurdle before liberalizing farm products

Kiyoshi Noda, Kuala Lumpur

In past talks on concluding free trade agreements (FTA),farm
products blocked negotiations from going smoothly. Now that Japan
has made a proposal that encompasses a wider area of the Asian
region, Japan will unavoidably be pressed harder to open up its
agricultural market.

Chinese Vice Commerce Minister Yi Xiaozhun and South Korean Trade
Minister Kim Hyun Chong both said on Aug. 24: "The first priority is
ASEAN+1 FTA talks. The second priority is an economic partnership
agreement involving ASEAN, Japan, China, and South Korea."

China put into effect an FTA on goods with ASEAN in 2005. South
Korea has also signed an agreement this May. But Japan is still
engaged in negotiations with the aim of concluding an FTA with ASEAN
next spring.

Japan has so far been reluctant to hold bilateral talks with
Australia because it hopes to continue protecting domestic farm
products. If the tariffs on imports from China are removed, domestic
small to medium-sized manufacturers will inevitably receive a
serious blow. A wider-range EPA would bring about a more painful
effect on Japan than FTAs.

In the Japanese government, too, views about the METI plan are
split. A senior Foreign Ministry official said: "Will a plan that
excludes the US be acceptable?" A senior official at the Ministry of
Agriculture, Forestry and Fisheries stated: "When considering
agricultural issues, it might be premature to hold negotiations with
China and Australia."

Prior to the meeting, one trade minister of an ASEAN member nation
grumbled: "We don't want to be pressed to choose between the
Japanese plan or the Chinese plan." The officer must have been
finding himself caught in the crossfire between the China-proposed
13-nation plan and the Japan-proposed 16-nation plan.

(4) Commentary by Takashi Koyama on Bush administration visibly
neglecting Asia policy

MAINICHI (Page 2) (Abridged slightly)
Evening, August 24, 2006

The United States is called "the world's cop," but reportedly senior
East Asia experts have been leaving the US State Department one
after the other. What is happening there? Mainichi Shimbun
interviewed Takashi Koyama, 58, who is knowledgeable of the
Department's personnel affairs, to find an answer to that question.

Following the missile launches on July 5 by Pyongyang, the Japanese
government made tremendous efforts to get the UN Security Council
adopt a resolution against North Korea. The UNSC eventually settled
with a resolution condemning the North, but the United States'
response was odd. In his State of the Union Address in January 2002,
President Bush advocated a preemptive strike approach to pound a
threat before it became a reality. He also called for early
sanctions against North Korea. But following the July 5 missile

TOKYO 00004891 006 OF 011


launches, US government officials, their arms folded, seemed
unenthusiastic about dealing with the North,.

Koyama explained such a stance this way:

"The US State Department, from Secretary Condoleezza Rice on down,
places low priority on Asia. North Korea is placed way below such
countries as Iraq, Iran, and Lebanon. It clearly reflects America's
desire to see issues in East Asia be worked out independently. As
evidenced by Rice, the US is now only interested in moves by major
powers, such as China and Russia. China is the only country in Asia
the US attaches importance to; Japan and the Korean Peninsula are
marginal."

In Koyama's view even the friendship between Prime Minister Koizumi
and President Bush is superficial and has nothing to do with US
foreign policy.

"The level of interest in East Asia was low even when the Bush
administration had such pro-Japan figures as former Deputy Secretary
of State Richard Armitage and National Security Council Senior Asian
Director Michael Green. The tendency has been accelerated with
Rice's assumption of office in January 2005. There are virtually no
senior Asia experts at the US State Department."

On June 3, US Secretary of Defense Donald Rumsfeld delivered a
speech in Singapore at an invitation of the International Institute
for Strategic Studies. Koyama, who was in the audience, described
the Rumsfeld speech this way:

"He simply listed Asian countries as a diplomatic gesture without
discussing any specific issues or what must be done. He also
speculated about whether North Korea wanted to produce nuclear
weapons or become a member of the international community. It
sounded like someone else's business. He didn't exhibit a keen
awareness of the North Korean issue. An effort to understand Asia
was clearly lacking."

According to Koyama, three senior officials in charge of North Korea
affairs left the State Department starting late last year. They are
former Korea Country Director James Foster, former Special Envoy
Joseph DeTrani, and an official who secretly negotiated with North
Korea on over 20 occasions. An international economic expert has
filled one of the three posts.

"Foster, who was originally a Japan expert, was assigned to handle
Korean Peninsula affairs, which was absurd. Apparently top-level
officials regard Japan and North Korea as the same. Important jobs
are now left to people who don't know much about East Asia, and that
reflects the State Department's current posture. Assistant Secretary
of State for East Asian and Pacific Affairs Christopher Hill often
comes to Japan on the North Korean issue. He is actually an expert
on East Europe, such as Poland. Having served as ambassador to South
Korea for only a year, he is unfamiliar with Korean affairs. Rice
appoints people to posts outside their fields for no specific
purposes."

Hill creased a stir in the State Department after the six-party
talks last September.

"He told Rice that the United States should hold direct talks with
North Korea. His advice was immediately squashed. His advice drew a
fierce backlash from a senior White House official siding with Vice

TOKYO 00004891 007 OF 011


President Cheney, who thinks North Korea needs pressure, not
dialogue. The official is not an East Asia expert. Such a thing
could happen behind the back of Rice. Korean experts quit one after
another chiefly because they were disappointed with Rice, who cannot
compete with Cheney's hard-line approach. Former Japan Country
Director David Straub is a good-natured person. After resigning from
the State Department, Straub publicly criticized the White House's
North Korea policy."

Neglecting Asia epitomizes Bush diplomacy. During the Clinton era,
decisions were made from the bottom up beginning with hearing views
from regional experts. Today, the Bush administration takes a
top-down approach.

The Secretary of State is responsible to iron out differences in
views between the White House and the State Department to operate
diplomacy smoothly.

"Rice lacks that ability. She is on friendly terms with President
Bush, who calls her his foreign policy tutor. But she neither gives
advice to Cheney or other hardliners nor has she shifted her
direction toward utilizing experts. Instead, she has given key posts
to her friends since Stanford University. She hasn't taken any step
to end the conflict between the White House National Security
Council the State Department."

But Rice has not made any serious mistakes in dealing with the
Lebanon situation. A softened approach to the Arab world and her
initiative to get the UN adopt Lebanon ceasefire dissolution under
France's leadership are commendable.

But Koyama is still critical of Rice:

"Rice worked very hard to buy time to let the Israeli military
destroy 12,000 Hezbollah missiles, leaving everything else to
Israel. As for Iraq, she has also been the beck and call of the
heavyweight, who started the war there. Embattled in Iraq, the US
cannot take more risks."

With armed insurgents still dominant, law and order has yet to
returned to Iraq. The dominant view is that the Bush
administration's plan to spread democracy to the Middle East has
failed.

"The US must have realized that as much as it wants to pound Iran,
it cannot bear the cost independently. As for North Korea, the
Clinton administration succeeded in blocking that country's
production of plutonium. But because the Bush administration has
left the program unaddressed, the North can resume nuclear testing
at any time. I think the US administration is now keenly aware of
limitations to the top-down approach."

Takashi Koyama: Tokyo native; graduated from the Keio University
English Literature Department; became visiting researcher at the
Johns Hopkins University School of Advanced International Studies
(SAIS) in 2004 after serving as a national newspaper correspondent
in Cairo, Dhahran (Saudi Arabia),and Washington; currently serves
as Tokyo-based editor-in-chief of the Internet newsletter Policy
Agenda, handling domestic and foreign affairs.

(5) Seiron column: Remove immature anti-American view of history
from Yushukan Museum; Dignity of Yasukuni Shrine could be damaged


TOKYO 00004891 008 OF 011


SANKEI (Page 15) (Full)
August 24, 2006

Hisahiko Okazaki, former ambassador to Thailand

In an op-ed column of the August 20 edition of the Washington Post,
George F. Will, who is known as a conservative opinion leader,
mentions that if Shinzo Abe becomes prime minister, it would be
helpful if he would discontinue the practice of visiting Yasukuni.

As a reason for that, Mr. Will simply notes that it is necessary for
Japan to repair deteriorated Japan-China relations. His argument
does not have any points from the perspective of the US' global
strategy. Rather, being a historian, the tone of his argument is
neutral and speculative. There is no critical tone toward Japan.

For instance, referring to Japan's stance that as long as China
interferes with Japan's domestic affairs, it will not listen to it,
he quotes Admiral Nelson's Fire Poker Principle.

Speaking with some of his officers the night before Trafalgar,
Nelson picked up a poker and said: It doesn't matter where I put
this - unless Bonaparte says I must put it there. In that case, I
must put it someplace else. Mr. Will quoted this anecdote as a
neutral historic example.

He wrote the article with much humor and sufficient composure,
except for one part concerning the exhibits at the Yushukan Museum:
"The Greater East Asian War" began because, when the New Deal failed
to end the Depression, "the only option open to Roosevelt was to use
an embargo to force resource-poor Japan into war. The US economy
made a complete recovery once America entered the war." That is
disgracefully meretricious - and familiar. For years a small but
vocal cadre of Americans - anti-FDR zealots - said approximately
that."

Mr. Will introduces the presence of a minor but quotable argument
but clarifies his contempt toward their argument. At the same time,
he fairly notes that neither Koizumi nor Abe included the museum in
his visits to the shrine.

I do not agree with some points in his argument. Or rather, I should
say that though he is a historian whom I respect, there are some
mispresentations of the facts about the international situation in
his article.

Displays at museum impermissible in terms of intellectual moral

Anti-Japanese demonstrations in China in April 2005 had nothing to
do with Yasukuni Shrine. The government-initiated demonstrations
were intended to oppose Japan's entry into the United Nations
Security Council (UNSC). They were not the outcome of the prime
minister's visits to Yasukuni.

When Prime Minister Koizumi visited Yasukuni last October, I
supported his visit, noting that there would be no anti-Japanese
demonstrations except for protest movements by a small number of
people allowed during the heightened police alert. As a matter of
fact, no demonstrations took place. No demonstrations occurred when
he visited the shrine on Aug. 15, either.

Investments in China by Japan have become once again active from
around the time the prime minister visited the shrine last year. The

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problem is an artificial impediment that no summits have been held
for quite a while. In my view, there should be a view based on the
historical perspective that matters can go smoothly without such
meetings.

After reading Mr. Will's article, I realized that what he cannot
permit from a historian's intellectual integrity are the items
exhibited at the Yushukan Museum.

The museum's displays reflect part of an anti-Americanism that can
be seen anywhere in the world, though that in Japan may be weaker
than in other countries. At the back of the first edition of
Fuyosha's new (revisionist) history textbook, which have been used
for the past four years, is the concept that since the
Russo-Japanese war, the US consistently plotted to destroy Japan,
its rival in East Asia. When it screened those textbooks, the
Ministry of Education ordered in a sensitively nervous manner, to an
unnecessary degree at times, that descriptions on China and South
Korea should be rewritten, but it allowed the anti-American
segments.

I was not involved in the writing of the first edition at all.
However, since I had an opportunity to be involved in the writing
afterwards, I deleted all anti-American descriptions from the second
edition.

It is impossible to protect Yasukuni as is

It may be an objective fact that the US finally emerged from the
recession because of the wartime economy. However, I can only use
such expressions as immature as a historical judgment, unilateral,
cheap and lacking intellectual moral as Mr. Will did in describing
my impression of such a view of history.

I urge the Yushukan Museum to remove those controversial
descriptions. Other displays, whether they are wartime films
intended to inspire will to fight, are part of testimony to history.
It is legitimate for the museum to exhibit such objects. The cheap
view of history displayed at the museum hurts the dignity of the
shrine. I am serious. I must say that it will become impossible for
me to protect Yasukuni Shrine, if the Yushukan Museum continues to
display those items.

(6) 2006 LDP presidential race: Gravitation of pedigree (Part 2):
Alma mater

ASAHI (Page 38) (Abridged)
August 24,2006

The Eastpress, a publisher known for its subculture-type
publication, published an educational book for the first time last
fall. It is entitled "The education of Azabu."

The book was published under the supervision of Masaru Sato (75),
former teacher of "Azabu High School," an integrated junior and
senior high schools in Motoazabu, Tokyo, who also has experience
teaching Finance Minister Sadakazu Tanigaki. Printed in the book are
personal interviews with politicians who graduated from Azabu, and
an interview with Nobuhiro Hikami (61),headmaster of the school. So
far, 15,000 copies have been sold, and this is unusual for
educational books.

In his dialogue, Tanigaki talked about former Chief Cabinet

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Secretary Yasuo Fukuda, who was regarded as the strong candidate for

SIPDIS
the Liberal Democratic Party (LDP) presidential election at first,
saying: "I sensed a bit of his Azabu School origins. Mr. Fukuda's
news conferences were said to be cold, but they were very
sophisticated."

From long ago, the school has been known as "the big tree," along
with Kaisei and Musashi high schools. While many of its graduates
enter the University of Tokyo every year, the school is famous for
its liberal ethos.

The alumni include many Diet members, with late Prime Minister
Ryutaro Hashimoto at the head of the list; there are total of 12
Upper and Lower House members, including Tanigaki, Fukuda,
Agricultural Minister Shoichi Nakagawa, and former Environment
Minister Shunichi Suzuki. There is a political group called
"Maryukai" that supports these members.

Why do Diet members wish to send their sons to Azabu? Headmaster
Hikami, who is also a former classmate of Tanigaki, says: "As
expected, I think it is the school spirit described as
self-reliance."

Chief Cabinet Secretary Shinzo Abe spent 16 years from elementary
school to university at Seikei Gakuen in Kichijoji, Tokyo.

Lower House member Katsuei Hirasawa (60),who was Abe's tutor when
Abe was in elementary school, has a vivid memory of Abe. It was when
Hirasawa took Abe to the University of Tokyo's Komaba festival,
where he was studying.

Signs criticizing the Eisaku Sato cabinet of those days were
plastered everywhere on the noisy campus, and the university
students were crying out "anti-Sato." It is said Mr. Abe was
surprised at the atmosphere at Komaba, which was directly opposite
from Seikei, and asked the following question many time: "How come
they are anti-Sato?"

Seikei posted an interview with Abe in the 2006 summer issue of its
public-relations bulletin. North Korea launched Taepodong on 5 July,
the day the interview was scheduled. The person in charge of the
interview was expecting a cancellation, but Abe granted him five
minutes time. In the interview, Abe said, "My grandfather Nobusuke
Kishi recommended that I go to Seikei." He also said, "I feel a
sense of security with the personality of Seikei graduates. I do not
feel the same with graduates from other universities."

Foreign Minister Taro Aso left the grand "Aso residence" in Iizuka
city, Fukuoka prefecture, when he was in the third grade of
elementary school, and transferred to Gakushuin Primary School in
Tokyo.

His mother Kazuko, daughter of former Prime Minister Shigeru
Yoshida, who was busy serving as the first lady, asked for a tutor,
"Can anybody look after Taro?" His tutor was Hideo Tokito, a former
Waseda University student.

According to Tokito, now 75 years old, Aso was not good at
mathematics when he was in junior high. Gakushuin was where the
children from good families went, but he had trouble making the
grade.

What made Tokito surprised while he once visited Aso's residence was

TOKYO 00004891 011 OF 011


to see so many key government and business leaders there. He said,
"The environment in the residence was not good for studying calmly."
But he got a glimpse of Aso learning about kingcraft.

(7) Chinese farmers upset by Japan's uniform regulations on
pesticide residue; Dispute might be sparked, with drop in shipments

ASAHI (Page 2) (Slightly abridged)
August 25, 2006

The "positive list system" Japan introduced this spring has caused
controversy in China. Japan is China's largest agricultural
exporting country. The system has led to reducing China's exports to
Japan. It could spark a trade dispute between Japan and China. But
the Chinese government, while asking Japan to simplify its
inspection procedures, is also eager to urge domestic farmers to
adopt measures to reduce residual pesticides, taking advantage of
the new Japanese system as gaiatsu (foreign pressure). The stance is
in response to growing calls from domestic consumers for ensuring
the safety of food.

Asahi Breweries, Sumitomo Chemical, and Itochu set up a company with
a capital of 1.5 billion yen in China. In its opening ceremony in
Beijing on Aug. 24, its chairman Iwasaki said: "We would like to
meet growing needs in urban areas in China for safe and delicious
farm products."

This spring, the company started farm management by using Japan's
environmental technology of farmland with an area of 100 hectares in
Caiyang City, Shandong Province. Minimizing the use of pesticides,
the company uses generated solar energy.

Expectations have been placed on the company from persons concerned
in both Japan and China, as a Shandong Province government senior
official saying: "We hope the company will become a model for
cooperation in the agricultural sector." Such voices reflect
concerns that the issue of pesticide residue might become a new
source of dispute between the two countries.

In meeting with Minister of Health, Labor and Welfare Kawasaki when
he visited Japan in late May, Chinese Commerce Minister Bo Xilai
criticized Japan's new system and asked Japan to simplify its
procedures. Kawasaki will visit China on Aug. 27, and Chinese
officials are scheduled to come to Japan on Aug. 28. As it stands, a
tug of war will continue between both sides over Japan's positive
list system.

According to Chinese statistics, about 8 billion dollars worth of
farm products was exported from China to Japan in 2005, accounting
for 30% of overall imports. In June, however, its exports to Japan
dropped 18% below the same month a year ago.

A MHLW official said: "The drop in exports greatly attributed to
ill-preparedness on the Chinese side," but the Chinese Ministry of
Commerce issued a statement in July noting: "Several thousands
Chinese firms and several millions of farmers will be seriously
affected."

DONOVAN