UNCLAS TOKYO 000373

SIPDIS

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: ECON ETRD APECO ASEAN JA
SUBJECT: S/P DIRECTOR KRASNER DISCUSSES ASIAN REGIONAL
ARCHITECTURE WITH MOFA OFFICIAL


1. (SBU) S/P Director Krasner January 12 met with MOFA
Senior Official Deputy Director General Masashi Mizukami to
discuss East Asian "architecture." Mizukami said the GOJ
was only now starting to coordinate its positions on the
multiple proposals for different forms of East Asian
integration. He stated that in Japan's view, APEC is a good
forum but not the only one.


2. (SBU) He admitted that the GOJ was somewhat surprised by
the U.S. call for a Free Trade Area of the Asia Pacific
(FTAAP) at the recent APEC summit in Hanoi because when ABAC
had proposed a similar idea two years earlier the U.S. had
dismissed it. For Japan, the first priority on trade
liberalization remained the Doha Round (DDA) of the WTO.
Nevertheless, Japan supported the U.S. proposal at Hanoi
although it did not see the U.S. idea as more or less
appropriate than competing integration proposals. Rather,
Japan would like regional players to begin to study the
various proposal concurrently so that, depending on future
economic circumstances, they could later decide which path to
take. At the same time, Mizukami noted, that there was some
doubt within the GOJ (although he did not indicate how
widespread it was) as to the seriousness of the United
States' FTAAP proposal. Some in the GOJ saw it a "tactical"
move to push the EU into making additional concession in the
DDA.


3. (SBU) For Japan, APEC had both advantages and
disadvantages. One advantage is "coverage"; APEC consists of
21 members covering approximately 60 percent of world trade.
On the negative side, APEC is not an appropriate forum for
negotiation since it is difficult to build a consensus within
the organization to take concrete actions. An advantage of
Japan's "ASEAN plus 6" proposal is that it includes India
which was a growing factor in the region, while APEC has the
advantage of including Taiwan, although this, Mizukami noted
several times, was " a very sensitive issue", especially for
the Chinese who, he explained, are insisting that only "one
China" can negotiate trade liberalization.


4. (SBU) Krasner assured Mizukami that the FTAAP was a
"sincere" proposal on the part of the United States and not a
tactical move to increase leverage in the DDA. At the same
time, the FTAAP proposal did not signal a lessening of U.S.
support for the WTO, which remained the U.S.' top trade
priority. The United States was moving forward
simultaneously on trade liberalization in bilateral, regional
and global arenas and saw these efforts as complimentary, not
contradictory. The U.S. shared Mizukami's concern's about
the difficulty of reaching "concrete" outcomes in APEC but
noted that, after almost 20 years, APEC has history behind
it" and the challenge for members was to find ways to provide
the organization a more focused agenda. S/P staffer James
Green noted that, for the United States, the inclusion of
Taiwan was one of APEC's key advantages. China today is in a
much stronger regional position than it was at the time of
the first APEC Leaders' Meeting in 1993 so that any new
regional structure would almost certainly exclude Taiwan.
Since the WTO includes both Hong Kong and Taiwan as separate
members, Krasner added he believed there would be a way to
address these concerns within APEC in the process of moving
forward on an FTAAP.


5. (SBU) In response to final question as to whether, in
Japan's view, there was any other regional organizations that
could fulfill what the United States saw as the key unifying
role of APEC, Mizukami briefly mentioned a less obviously but
tangible benefit of APEC's current structure. As opposed to
an "academic-type forum" such as the OECD, APEC's system of
rotating hosts provided the opportunity for small and
medium-sized economies to take a leadership role in the
region and grab the attention of world leaders. Vietnam's
experience was an excellent example of this intangible
benefit. He described 2006, the year Vietnam both hosted APEC
and joined the WTO, as "a turning point" for that country
equivalent to Japan's hosting of the Olympic Games in 1964.


6. (U) This cable was cleared by S/P Director Krasner.
MESERVE