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;
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SECDEF FOR JCS-J-5/JAPAN,
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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

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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

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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

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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

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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.


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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