C O N F I D E N T I A L TOKYO 005820

SIPDIS

SENSITIVE
SIPDIS

TREASURY FOR CAROL CARNES
USTR FOR AUSTER CUTLER AND DAUSTR BEEMAN

E.O. 12958: DECL: 10/05/2016
TAGS: EAGR ECON EFIN JA PK KZ LI
SUBJECT: EB DAS MOORE COVERS ECONOMIC AGENDA AT FINANCE
MINISTRY

REF: TOKYO 05773

Classified By: CDA Joseph Donovan, for reasons 1.4 (B) and (D).


1. (C) Summary: EB DAS Chris Moore covered a range of
issues with Ministry of Finance Senior Deputy Director
General Rintaro Tamaki, including Central Asia, the recent
G-7 and IMF meetings, the economic priorities of the new
Abe administration, and possibilities for ongoing U.S.-
Japan dialogue on economic cooperation. DAS Moore's other
meetings in Tokyo will be covered septels. End summary.


2. (C) At the Finance Ministry on September 21st, Senior
Deputy Director General Rintaro Tamaki and DAS Moore
discussed the outcome of the recent G-7 and IMF/World Bank
meetings in Singapore, which both agreed had seen progress.
Moore noted the successful roundtable discussions the
United States hosted in Singapore with Pakistan and
Kazakhstan, and encouraged Japan to play a vital role in
international efforts to promote development in the western
border region of Pakistan and to foster regional
integration in Central Asia. Tamaki expressed particular
interest in Central Asia, noting former Prime Minister
Koizumi's visit there. He asked about the State
Department-Treasury Department balance of responsibility on
both Afghanistan reconstruction and Central Asian economic
integration. Moore confirmed the Administration's strong
interest in both areas and highlighted State's cooperative
work with Treasury and other agencies. On the State
Department's role in Liberia, Moore noted the tremendous
amount of goodwill for the West African country on display
in Singapore. Moore added that for Liberia and other
countries to emerge from years of difficulty, they needed
sustained peace and stability and the continued assistance
of the global community, including Japan.


3. (SBU) Asked about the economic priorities of the Abe
administration, Tamaki said that the incoming prime
minister was primarily interested in social stability and
Japan's aging society. While affirming that fiscal
consolidation was on track and that a spirit of reform was
imbued within the bureaucracy, Tamaki said that Abe would
need to mobilize all available measures to increase Japan's
birthrate -- this would be critical to ensuring pension
system sustainability and "fundamental" to correcting
Japan's demographic and fiscal problems. Tamaki also
mentioned Abe's interest in employment issues, including
reducing poverty and unemployment by stimulating job re-
training programs. Meanwhile, to stem Japan's mounting red
ink, Tamaki said that the consumption tax was the most
important "pillar" on the revenue side.


4. (C) Moore stressed the need for continued dialogue on
the two countries' economic agenda. The United States
remained very interested in Japan's efforts on postal
privatization, among others, and stressed the need for a
level playing field before advancing with privatization.
Tamaki mused about Treasury Secretary Paulson's recent
talks with China, which prompted Tamaki to recall the yen-
dollar talks of the 1980s. The MOF official praised
current U.S.-Japan communications as being at a level two
or three times higher than Sino-U.S. discussions.
Regarding the status of tax treatment of triangular
mergers, Tamaki said that the Ministry of Finance tax
office would solve the problem by spring, and that the
chief problem was not with U.S. firms, but with their
European counterparts. EB DAS Moore has cleared this cable.
DONOVAN