DAILY SUMMARY OF JAPANESE PRESS 10/05/07

UNCLAS SECTION 01 OF 06 TOKYO 004704 SIPDIS SIPDIS DEPT FOR E, P, EB, EAP/J, EAP/P, EAP/PD, PA; WHITE HOUSE/NSC/NEC; JUSTICE FOR STU CHEMTOB IN ANTI-TRUST DIVISION; TREASURY/OASIA/IMI/JAPAN; DEPT PASS USTR/PUBLIC AFFAIRS OFFICE; SECDEF FOR JCS-J-5/JAPAN, DASD/ISA/EAPR/JAPAN; DEPT PASS ELECTRONICALLY TO USDA FAS/ITP FOR SCHROETER; PACOM HONOLULU FOR PUBLIC DIPLOMACY ADVISOR; CINCPAC FLT/PA/ COMNAVFORJAPAN/PA. E.O. 12958: N/A TAGS: OIIP KMDR KPAO PGOV PINR ECON ELAB JA SUBJECT: DAILY SUMMARY OF JAPANESE PRESS 10/05/07 Index: (1) First meeting of the Council on Economic and Fiscal Policy under Fukuda cabinet; Shift of policymaking power to ruling camp underway (Nikkei) (2) Bill amending Antimonopoly Law includes administrative surcharges against unfair labeling; Bullying subcontractors also to become subject to punishment (Tokyo Shimbun) (3) Interview with Defense Minister Ishiba: Government is accountable for fuel conversion allegations (Asahi) (4) Interview with Foreign Minister Masahiko Komura -- Dialogue and pressure policy will not change (Mainichi) (5) Keio University Prof. Masao Okonogi: Improvement in Japan-North Korea relations the next challenge (Sankei) ARTICLES: (1) First meeting of the Council on Economic and Fiscal Policy under Fukuda cabinet; Shift of policymaking power to ruling camp underway (Nikkei) NIKKEI (Page 5) (Full) October 5, 2007 The government's Council on Economic and Fiscal Policy yesterday met for the first time after the Fukuda administration was inaugurated. In the meeting, Prime Minister Yasuo Fukuda indicated that his administration would continue the basic policy of the former Abe cabinet, emphasizing: "We will promote the two key challenges of stable economic growth and fiscal reconstruction." Under the current state of the reversal of strengths between the ruling and opposition parties in the House of Councillors, the weight of policymaking power has been gradually shifting from the government to the ruling camp. Some observers anticipate the Council on Economic and Fiscal Policy may lose its influence as the driving force for structural reforms. The prime minister spoke most earnestly about the task of preparing measures to support local communities. Local people are dissatisfied at the current state in which they cannot enjoy the fruit of economic growth. Such discontent brought about a crushing defeat to the ruling coalition in the Upper House election. Support for local community is as part of efforts to solicit local support in preparation for a snap election to be held after the House of Representatives is dissolved. Four private-sector panel members, reflecting the prime minister's desire, proposed formulating a plan to revitalize local economies, focusing mainly in four areas, such as the establishment of a local power reconstruction corporation. The plan was accepted in the meeting. The private-sector members also intend to listen to local voices. Even so, the Cabinet Secretariat, instead of the economic policy council, will be in charge of drawing up the plan. The secretariat, under the lead of Internal Affairs and communications Minister Hiroya Masuda, plans to compile an outline for the plan in November. One bureaucrat said: "It will be acceptable if a report is made to TOKYO 00004704 002 OF 006 the panel in the final stage." Over social security and tax reforms, State Minister in Charge of Economic and Fiscal Policy Hiroko Ota said in a press conference held after the meeting that the panel would present several patterns regarding relations between pension and medical benefits and burdens such as tax and premium payments. The panel will also discuss a proposal by the Democratic Party of Japan (DPJ) to use tax money to finance the basic pension. The prime minister, however, has instructed officials to create a committee of the government and the ruling camp tasked with pushing ahead with tax and social security reforms. It remains to be seen how the proposed panel will be differentiated from the existing economic panel. An aide to the prime minister said: "Tax and social insurance are political matters. So nothing will move forward unless the ruling bloc is involved." The Council on Economic and Fiscal Policy served as the control tower for reforms under the Koizumi and Abe cabinets. Now that the opposition bloc has control in the Upper House, there is no guarantee for all decisions made in the council to be adopted in the Diet. Ota said: "We will steadily conduct discussion," but adding: "I cannot say what will be of the exit of policy." One private-sector member was overheard saying: "The best thing to do is to change the current policymaking panel into an advisory panel again." (2) Bill amending Antimonopoly Law includes administrative surcharges against unfair labeling; Bullying subcontractors also to become subject to punishment (Tokyo Shimbun) TOKYO SHIMBUN (Page 1) (Slightly abridged) October 5, 2007 A Fair Trade Commission (FTC)-initiated bill amending the Antimonopoly Law was revealed on Oct. 4. A major feature of the bill is a focus on an expansion of trade practices subject to the administrative surcharge system, a system that is applied to bid-rigging and cartel practices. Following such incidents as Meat Hope's false labeling of food products, the FTC intends to protect consumers with strengthened disciplinary measures, by adding unfair labeling, such as advertising products with copies that differently represent the actual products, to the list of trade practices subject to the imposition of administrative surcharges. The outline includes the application of administrative surcharges to the abuse of dominant bargaining position, meaning that a company in an advantageous position pressures smaller companies to buy their products. The aim is to prevent large companies from bullying subcontractors. The FTC will undertake coordination of views with the government and the ruling parties and submit the bill to the regular Diet session around next March. It will aim at implementing it before the end of the next fiscal year, by securing Diet approval at an early date. However, business circles will likely oppose the proposal for strengthening the regulation. Disciplinary measures against unfair labeling currently include issuing warnings against and orders to halt unfair practices. Administrative surcharges will be added to those punitive measures. At present, the unfair labeling is regulated under the Law for TOKYO 00004704 003 OF 006 Preventing Unjustifiable Extra or Unexpected Benefit and Misleading Representation (LPUEUBMR),but it would be incorporated into the amended law or the LPUEUBMR would be amended. Monopolization by way of pushing competitors out of the market would also become subject to administrative surcharges. Surcharges imposed on companies that played a leading role in cartels would also be increased. The administrative surcharge leniency system aimed at encouraging offenders to submit information on their illegal trade practices before coming under scrutiny would also be expanded so that surcharges applied to offenders can be reduced, if they cooperate for investigations by providing information even after violations came under scrutiny. According to the amendment to the law, a system of notifying the FTC of the acquisition of other companies' stocks by companies of a certain size would be changed from the present ex post facto system to a prior notification system as adopted in Europe and the US. The period of limitation of the application of the surcharge system would be extended from the current three years to five years as practiced in the US so as to ensure consistency with international rules. Exchange of information with overseas authorities would also be eased in order to improve a cooperative system for investigations into international cartels, which are on the increase. The bill will unlikely incorporate a hike in administrative surcharges, an issue discussed by government officials, and the scrapping of the umpire system as requested by business circles. (3) Interview with Defense Minister Ishiba: Government is accountable for fuel conversion allegations (Asahi) ASAHI (Page 4) (Full) October 5, 2007 -- The major opposition Democratic Party of Japan (DPJ) remains opposed to continuing the Maritime Self-Defense Force's (MSDF) refueling operations in the Indian Ocean. "If both of us can share the perception that there is something Japan should do instead of maritime refueling, I think it is theoretically possible to create such a law. In response to the criticism that information disclosure is insufficient, we are maximizing our efforts and working hard to disclose information." -- What impact do you think the suspension of the refueling mission will have? "There would be an enormous impact. (Instead of Japan),another nation would have to engage in that mission. It would be a tremendous burden. I wonder whether it is really good to say 'Please secure the safety of this sea area. Please allow our country's tankers to navigate it.'" -- New legislation is unlikely to contain a requirement for Diet approval. Does this mean a backdown in civilian control? "Under the current Antiterrorism Special Measures Law, we can be engaged in operations of refueling, transportation, search or rescue. The cabinet has decided at its meeting what operations Japan will carry out and has obtained Diet approval. New legislation specifies what Japan will do and states a large part of a basic TOKYO 00004704 004 OF 006 plan. So, I think that the Diet will be properly involved in the process of enacting the legislation into law." -- The amount of fuel Japan indirectly provided to a US carrier that later headed for the Iraq war was corrected from the initial 200,000 gallons to 800,000 gallons. The provided fuel might have been converted for the Iraq war. "Then Chief Cabinet Secretary Fukuda said that '200,000 gallons would be used up in one day. (So the provided fuel would not have been used for the Iraq war).' That is correct. But the more speed goes up the more fuel is used. A number of factors, such as when the carrier arrived at where or the speed of the carrier, must be considered. I think the government is accountable to the public on the question of whether the fuel provided by Japan was used for the Iraq war or not, including information provided by the United States. Because the public also has a strong interest in the matter, I personally want to explain it before the start of Diet debate (on new legislation)." -- On the relocation of the US military's Futenma Air Station in Okinawa, the Okinawan residents are calling on the central government to change its current relocation plan so that the airfield will be constructed offshore. "I think the current relocation plan is the best one. There is no change in my position that no change will be made to the plan unless there is any rational reason. Although I have a good understanding of Okinawa's heavy military burden and its historical circumstances, I would like to (visit Okinawa) and hear firsthand voices of the Okinawan people." (4) Interview with Foreign Minister Masahiko Komura -- Dialogue and pressure policy will not change (Mainichi) MAINICHI (Page 5) (Full) October 5, 2007 -- How are you going to proceed with talks with the Democratic Party of Japan (Minshuto or DPJ) on new antiterrorism legislation? Komura: The law now in force allows diverse activities, some requiring Diet approval. The new legislation will specify exactly what the troops will be doing. I will make utmost efforts so that it will be able to obtain support from the opposition parties. -- Mr. Foreign Minister, in a speech at the UN General Assembly, you expressed strong eagerness to normalize diplomatic relations with North Korea. How are you going to advance relations with North Korea? Komura: The North must disable its nuclear facilities, fully declare its nuclear programs, and settle the abduction issue. We will have to elicit major political decisions from the North by telling them: "We want to normalize diplomatic relations. We are ready to settle the past accounts." What North Korea refers to as "settling the past" specifically means large-scale economic cooperation. But Japan cannot give a large sum of money for settling the past under the current situation where the (mid-range ballistic missile) Rodong has Japan in its range. -- The Fukuda administration puts high priority on dialogue. How are TOKYO 00004704 005 OF 006 you going to balance dialogue and pressure? Komura: The principle of dialogue and pressure will not change. Japan's response differs from when the North is intimidated by the labeling as an "axis of evil" nation by the United States from when it is in a pleasant mood. One must not pay attention only to the prospect that Japan's (response) will change because the Abe administration has been replaced by the Fukuda administration. -- What is your view of the recent six-party agreement? Komura: I cannot give it a perfect score, though it has moved a step forward. The deadline for the United States to delist North Korea as a state sponsor of terrorism has not been set out of consideration for Japan's standpoint. The roles to be played by the five countries (excluding North Korea) in the process of disabling North Korea nuclear facilities, including financial contributions, will be worked out in time. -- How are you going to settle the feud with China over gas exploration in the East China Sea to result in a visit to China by the prime minister? Komura: The matter is not a stumbling block to the prime minister's China visit. In the recent Japan-China foreign ministerial, I told my counterparty that China should go ahead and make a political decision and that Japan would respond to it flexibly. I will do my utmost for resolving this matter. -- Should the prime minister visit China before the end of the year? Komura: He should visit China at the convenience of the two countries. It does not matter if it is later this year or early next year. (5) Keio University Prof. Masao Okonogi: Improvement in Japan-North Korea relations the next challenge (Sankei) SANKEI (Page 7) (Full) October 5, 2007 The joint declaration issued by the two Koreas has a strong impression of lining up with South Korean President Roh Moo Hyun's aim to regularize the expansion of South-North Korea relations while in office. The agreement includes detailed contents on political, economic and military areas, more specific than expected. It can be said that the agreement has built a framework that may constrain the next South Korean government. As for as the impact on the next presidential race in South Korea, it is not contents that will benefit a certain candidate over another, and will like not influence the election much. The contents bring no risk to North Korea. In South Korea, however, since it enters into specifics, the agreement will likely bring both expectations and backlashes. In particular, the two Koreas will not build a peace cooperation special zone in the Yellow Sea since they have remained at odds over the demarcation of a military boundary. The issue will likely be taken up in a meeting of the defense ministers in November. The expectation is that military officers will oppose the notion of creating a special peace-cooperation zone. TOKYO 00004704 006 OF 006 On the other hand, the joint declaration between the two Koreas will have a great impact on the international community. The summit between the leaders of South and North Korea is apparently linked to the six-party talks. The release of the joint declaration the day after the six-party talks reached an agreement is aimed at taking advantage of that event. I think that if the six-party talks failed to come up with an accord, the joint declaration would not have included such detailed contents. North Korean leader Kim and South Korean President Roh probably share the view that the implementation of the joint declaration will give impetus to the six-party talks to realize its agreement. The hidden aim of the joint declaration is to help improve Japan-North Korea relations. Pyongyang has now worked on improving its relations with the United States and Seoul. The leaders of the two Koreas are expected to next work on improving relations with Japan. The reason for my saying that is the fact that the joint declaration does not mention infrastructure development in North Korea using South Korean aid. This is because Seoul and Pyongyang both expect Japan to provide such. Tokyo should be aware of this. DONOVAN