DAILY SUMMARY OF JAPANESE PRESS 10/09/07

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E.O. 12958: N/A TAGS: OIIP KMDR KPAO PGOV PINR ECON ELAB JA SUBJECT: DAILY SUMMARY OF JAPANESE PRESS 10/09/07 Index: (1) Outline of draft legislation: New anti-terrorism special measures law (tentative name) (Sankei) (2) Fukuda tells Lower House Budget Committee that MSDF operation is not violation of Constitution (Yomiuri) (3) US experts give warning to Japan on MSDF's withdrawal (Sankei) (4) Alleged diversion of Japanese fuel by US vessel -- End-users must be clarified (Yomiuri) (5) China to attack Japan's southwestern archipelago if Japan gets involved in Taiwan: China's top brass officer (Sankei) (6) Interview with Victor Cha, former director for NSC Asian Affairs: Improvement in abduction issue is condition for delisting North Korea as state sponsor of terrorism (Sankei) (7) LDP, DPJ preparing for next Lower House election (Nikkei) (8) Sankei poll on triangular mergers: Respondents viewing them as a threat drop from 46 PERCENT to 21 PERCENT ; Companies are steadily adopting defense measures (Sankei) (9) How about food safety? BSE (Part 1): Antipathy deep-seated among Japanese consumers to increasing US beef on shelves (Asahi) ARTICLES: (1) Outline of draft legislation: New anti-terrorism special measures law (tentative name) SANKEI (Page 5) (Full) October 6, 2007 ¶1. Purpose of the law In order to contribute positively and independently to the efforts of the international community to stop and eliminate international terrorism, refueling operations by the Self-Defense Forces (SDF) toward the vessels of each country participating in maritime interdiction operations (MIO) will continue to be carried out similar to the cooperative assistance operations that are now going on under the current anti-terrorism special measures law (United Nations Security Council Resolution No. 1368 and 1776 to be written in). ¶2. Operational contents stipulated in the law Similar to the cooperative assistance operations now being carried out based on the current anti-terrorism special measures law, the SDF will limit its refueling operations to ships of each country participating in MIO. ¶3. Relation to the Diet (1) Specific details of operational provisions, such as the SDF unit. There will be provisions in the new anti-terrorism special measures law stipulating the contents of Diet approval items found in the current anti-terrorism special measures law. TOKYO 00004721 002 OF 013 (2) Fulfilling the provision on reporting to the Diet. In addition to the item on reporting to the Diet found in the current anti-terrorism special measures law, there will be a new one making it mandatory to report to the Diet after one year the operations carried out based on the new anti-terrorism special measures law. ¶4. Time limit for the law The law will be limited to two years. However, under this law, there is nothing hindering the time limit from being set for less than two years, or extended longer than that. (2) Fukuda tells Lower House Budget Committee that MSDF operation is not violation of Constitution YOMIURI NET (Abridged slightly) 11:45, October 9, 2007 The House of Representatives Budget Committee conducted this morning the first basic question-and-answer session under the Fukuda cabinet, with Prime Minister Fukuda and all cabinet ministers attending. Touching on Democratic Party of Japan (Minshuto or DPJ) President Ichiro Ozawa's view that the Maritime Self-Defense Force's refueling operation in the Indian Ocean is a violation of the Constitution, Prime Minister Fukuda said: "It does not constitute the use of armed force, and the operation has been limited to non-combat zones. The operation does not run counter to the Constitution." Foreign Minister Masahiko Komura also said: "The operation is in line with the consensus of the international community, based on a UN resolution." Regarding Ozawa's eagerness for participation in the International Security Assistance Force (ISAF) in Afghanistan, Defense Minister Shigeru Ishiba said: "Under the Constitution, Japan is not allowed to join the ISAF, which involves the use of armed force." Fukuda, touching on the ruling coalition's crushing defeat in the July House of Councillors election, also said: "We have neglected problems resulting from (structural) reforms. We must renew our resolve to make utmost efforts for the stability and happiness of the people." Given the opposition bloc's control of the Upper House, Fukuda also asked for the opposition camp's cooperation in running Diet affairs. They were responding to questions by Liberal Democratic Party Policy Research Council Chairman Sadakazu Tanigaki and former Defense Agency Director-General Gen Nakatani. (3) US experts give warning to Japan on MSDF's withdrawal SANKEI (Page 3) (Full) October 6, 2007 Yoshihisa Komori, Washington The Antiterrorism Special Measures Law is certain to expire shortly. TOKYO 00004721 003 OF 013 If the Maritime Self-Defense Force (MSDF) now refueling multinational-force vessels in the Indian Ocean withdraws from the Indian Ocean, what reaction will arise in the United States, which has strongly wanted the MSDF to continue its refueling operations? The Sankei Shimbun interviewed three American experts on Japan-US security relations. Dr. James Auer, who is currently professor at Vanderbilt University, once served as Japan desk director at the Department of Defense (DOD). He noted: "It would trigger a sense of deep disappointment in the United States in terms of national politics, regardless of Republican or the Democratic party facilitation. As part of the global war on terrorism, the US and Pakistan have been engaged in the antiterrorism campaign in the Indian Ocean. Japan committed itself to providing logistic support for the campaign. But Japan's logistical support is being used as a domestic political bargaining chip, and the service is about to stop. Those concerned Americans who know well Japan's domestic circumstances would file their discontent with Japan." Besides cooperation in the war on terror, Dr. Auer pointed out that Japan is a major consumer of oil transported (from the Middle East) to Japan via the Indian Ocean. He made this comment: "If Japan gives priority only to domestic politics, brushing aside international aspects, then it would significantly damage its reputation." "Criticism of Mr. Ichiro Ozawa, president of the major opposition Democratic Party of Japan (DPJ),would increase in the US because he has essentially caused this situation as a means to attack the ruling bloc." Nicholas Szechenyi, researcher at the Center for Strategic & International Studies, said: "Purely in military terms, even if Japan withdraws its vessels from the Indian Ocean, it would not bring about any serious loss in the overall campaign against terrorism. But politically and diplomatically, it would be a serious backtracking for Japan." Szechenyi noted that Japan's decision to withdraw its vessels from the Indian Ocean would only lead to its losing the good reputation it has earned internationally, given that as a world leader, Japan has been recognized by other countries and has won their respect as evidenced by international opinion polls conducted by the British Broadcasting Corporation (BBC). John Tkacik, senior research fellow on China issues at the Heritage Foundation, who also a student of Japan-US security issues, made this comment about the case of Japan discontinuing its refueling mission in the Indian Ocean: "Psychologically, it would deal a serious blow to the US-Japan alliance. The American public, too, may widely share the critical view that Japan is moving away from the US, and that it may follow a self-centered path and become unwilling to contribute to the Japan-US alliance and international community." Tkacik continued: "The US has given the impression that the Japan-US alliance has been becoming a tight bond like the US-Britain alliance, overcoming the differences of views between the political parties of the two countries. But if Japan suspends its refueling TOKYO 00004721 004 OF 013 mission in the Indian Ocean, this impression would collapse. Criticism that the Japan-US alliance is still a one-way street would spread widely instead." Tkacik added: "I am absolutely furious about Mr. Ozawa, who is merely one leader of the opposition bloc but who is selfishly playing with an operation linked to the Japan-US alliance, taking advantage of the current political situation in Japan, even though such activitie3s should have been backed by all parties. The left-wing group in the US would denounce the Bush administration for a failure in its Japan policy if Japan withdrew its vessels from the Indian Ocean. Anyway, it would lead to weakening the base of the Japan-US alliance." (4) Alleged diversion of Japanese fuel by US vessel -- End-users must be clarified YOMIURI (Page 11) (Abridged slightly) October 9, 2007 Allegation Based on copies of declassified US Navy documents it has obtained, the nonprofit organization Peace Depot pointed out last week the possibility of the fuel provided to a US supply vessel by the Maritime Self-Defense Force having been used in the Iraq war. On February 25, 2003, about a month before the start of the Iraq war, the USS Pecos received about 800,000 gallons (3,000 kiloliters) of fuel from the MSDF supply vessel Tokiwa. According to Peace Depot, it was highly likely that the Kitty Hawk, which received this fuel from the Pecos, was engaged in a surveillance mission in the Persian Gulf. The organization accused the MSDF's action as a deviation from the Antiterrorism Law's purpose of supporting the Operation of Enduring Freedom (OEF) in the wake of 9/11. The matter was also taken up at the Diet in May 2005, in which then Chief Cabinet Secretary Fukuda and others indicated that the US oiler had received 200,000 gallons (750 kiloliters) of fuel -- the volume consumed by an aircraft carrier in a day -- from the Tokiwa and that there was no problem with it because the Kitty Hawk was carrying out OEF. But it has become clear from the US Navy documents obtained by Peace Depot that the Tokiwa provided 800,000 gallons of fuel, four times the volume the government indicated. This has complicated the matter even further. Facts The MSDF's ship-to-ship refueling began in December 2001. The government has exchanged with 11 countries notes indicating that the MSDF would provide fuel gratis to naval vessels participating in the OEF. All requests for oil from OEF-participating countries first go to the combined maritime forces headquarters in Bahrain for coordination with the MSDF liaison officers there, and then they are conveyed to the SDF command in Yokosuka City, Kanagawa Prefecture. As the next step, the SDF fleet command upon receiving the defense minister's approval issues an order to the refueling unit in the Indian Ocean to provide the fuel. In many cases, the MSDF has refueled supply vessels instead of TOKYO 00004721 005 OF 013 destroyers on the OEF, and this has raised suspicion about the diversion of Japanese oil. In fact, of the 480,000 kiloliters of fuel the MSDF provided to foreign vessels as of Aug. 31, 2007, 270,000 kiloliters went to supply ships. An MSDF officer said: "The MSDF supply vessels should have made certain that they refueled supply vessels only and that the vessels refueled by the MSDF provided that fuel to other vessels in their respective operational areas. We were hardly aware of where the Japanese fuel ultimately went." Fleet Commander Adm. Yoji Koda took this view: "All countries are aware that the MSDF refuels the OEF vessels alone. When the option of refueling Australian naval vessels was considered four years ago, the Australian Navy, which was mostly supporting the Iraq war, refused the MSDF service, saying that such would be a deviation of the spirit of the Antiterrorism Law. If Japanese oil had been used for other purposes, that would concern faith." Challenges Whether Japanese oil has been used for other purposes remains unclear. There are two challenges for the government and MSDF. One is, in refueling foreign ships, the MSDF should have ascertained how its fuel would eventually be used. Back in late February 2003, the US-led OEF and the Operation Southern Watch (OSW) were underway simultaneously in the region. Some US naval vessels were taking part in both operations -- a breeding ground for suspicion of diversion of Japanese oil. This can explain why the MSDF has "drawn a line" in the refueling area. Chances for diversion are slim at present because the area of the MSDF operation is limited and only because a few vessels are taking part in the operation. But in the event the MSDF has to refuel supply vessels in the future, it must make certain that the combined maritime forces headquarters discloses the names of the end-users. Another point is that the government is accountable for any SDF operations. Did the government seek the full understanding of the OEF participating countries about the MSDF operation when it decided to dispatch troops to the Indian Ocean? Following the government's decision in 1994 to send ground troops to Zaire for helping refugees in Rwanda, then Defense Agency Director-General Tamazawa briefed President Mobutu in person on the purposes and the duration of their mission. Activities must be controlled by the capital. That would require regular reporting to the Diet and probing discussions. The Defense Ministry explained that the MSDF had mistaken the (200,000 gallons of fuel) for that to a US destroyer that also received fuel on the same day. If Diet reporting was mandatory, any mistakes would be pointed out in discussions. (5) China to attack Japan's southwestern archipelago if Japan gets involved in Taiwan: China's top brass officer SANKEI (Page 1) (Full) September 28, 2007 While Japan's eyes are riveted on North Korea's nuclear issue, the balance of power over the Taiwan Straits are now undergoing a sea change. TOKYO 00004721 006 OF 013 Last November, a private-sector organization held a Japan-China military forum in Tokyo. The forum was not open. A general from the People's Liberation Army was there. This top brass officer from China was quoted as warning: "We're ready to use armed force to stop Taiwan from becoming independent. Japan should never get involved in that event. If Japan does, we will have to attack the Southwestern Islands." This remark was based on a prepared paper, according to a source who participated in the forum. It was not an ad hoc threat. The Southwestern Islands constitute an archipelago of contiguous islands outlying from the southern extremity of Kyushu to an island near Taiwan. China has prepared its military for more than 10 years to unify Taiwan. The Chinese military threatened Taiwan with its missile launches into waters near Taiwan and landing maneuvers from the summer of 1995 through the spring of the following year. However, the United States dispatched two aircraft carriers. China ate dirt as it had to suspend the maneuvers. Since then, China has probed sea areas ranging from the Southwestern Islands to the Ogasawara Islands in order to block the US military's intervention against China's invasion of Taiwan, according to a retired general of the Self-Defense Forces. This SDF veteran used to watch the Chinese military's moves. US Forces Japan may move south to defend Taiwan, and Japan may also back up US military operations. In that case, the Chinese military would move out to occupy the Southwestern Islands. "They will place mines," the retired SDF general said. "And," this SDF veteran added, "their submarines will ambush to block Japanese and US support for Taiwan." Concurrently, the Chinese military will land its troops on Taiwan. "When they invade the main island of Taiwan, they would make frontal attacks from the east," a Taiwan military source said. "They would also attack from behind (i.e., from the west)," the source added, "and that's their scenario we anticipate." The main island of Taiwan is only 110 kilometers away from the island of Yonagunijima on the western tip of the Southwestern Islands. The Chinese general's warning can be taken to divide Japan and the United States. It was apparently based on China's military readiness to unify Taiwan. Taiwan's Sungshan Airport is on the northern extremity of Taipei City. On the northern side of this airport is an arcane military base, which is called the "Hengshan command post." This heavily fortified underground facility, which can endure a nuclear attack, is to serve as operational headquarters for government and military leaders, from the president on down, if and when Taiwan comes under attack from the Chinese military. The fortress is networked with fiber optics and is fully loaded with hi-tech systems, reportedly commanding a panoramic view of enemy moves on a supersize liquid crystal screen in the event of a Chinese military invasion. The command post, also linked up with the US Pacific Command in Hawaii, is Taiwan's nerve center for its defense. The hi-tech base, however, has been attacked by Chinese hackers, who are called "online army troops." Taiwan forces have been annually TOKYO 00004721 007 OF 013 conducting military exercises and intelligence wargames, centering on the Hengshan command post, in preparation for China's military invasion. In recent years, however, the command post has frequently encountered serious incidents. For instance, the command post often came under attacks from China's online troopers. In those cyberattacks, its maneuver scenarios were stolen in their entirety. Moreover, its computer systems were even destroyed. Taiwan forces have maintained their qualitative superiority of equipment and operational systems over China. However, such cyberattacks show that Taiwan's hard- and software superiority is gradually becoming uncertain. China's military invasion of Taiwan is believed to begin with jamming and destroying Taiwan's communication systems and to go on with missile attacks and landing operations. For now, however, Taiwan is feared to be seriously damaged in intelligence and psychological warfare, a prelude to a war. In Taiwan, President Chen Shui-bian and his administration have a growing sense of crisis. One official of Chen's government presumes that China cannot attack Taiwan until the Beijing Olympics, so Chen and other Taiwan leaders are now gearing up for Taiwan's independence. In the spring of next year, a presidential election will take place in Taiwan. Along with that political event, Chen is planning to poll residents on the advisability of joining the United Nations in the name of Taiwan. China was strongly repulsed by the plan. Beijing called it a move for Taiwan's choice of becoming independent. Taiwan could face an emergency at any time should China and Taiwan misread each other's will. That is an emergency of Japan. Brain-dead between US, China Even if Taiwan manages to do its presidential election and referendum uneventfully, there are even more difficulties in store for Taiwan. China's military potential is expected to substantially outpace Taiwan's armed forces in and after 2010. Then, a war is even more likely to break out. China-as one case for it to use armed force against Taiwan in and after 2010-is now beginning to cite the case where the Taiwan government indefinitely refuses peace talks for the unification of China and Taiwan. Furthermore, in March 2005, China established an anti-secession law, which allows China to attack Taiwan at any time against whatever China regards as an act of seceding. If and when a war breaks out between China and Taiwan, US forces would stand behind Taiwan. Also, in that eventuality, Japan may back up US forces. In that case, it could escalate into a major war involving Japan, the United States, China, and Taiwan. In the face of such a serious situation, however, Japan is covered in a curious silence. China warns: "The Taiwan issue is an internal affair of China. Any foreign intervention is unacceptable." Overwhelmed by such a strong posture of China, Japanese politicians and government officials have fallen brain-dead. However, Japan can never be an outsider of this difficult problem. There is almost no doubt that the United States will come to the help of Taiwan under the Taiwan Relations Act, which stipulates "serious concern" about the security of Taiwan, if and when China moves out in an attempt to unify Taiwan with its use of armed force, TOKYO 00004721 008 OF 013 unless otherwise Taiwan unilaterally declares independence. If USFJ launches into operations, China's naval forces would strike US military bases on Okinawa and in other parts of Japan. Then, if Japan backs up US forces under its regional contingency security law, it would be also inevitable for Japan to enter into a state of war with China. Even so, Japan cannot refuse to back up US forces. If Japan does, its alliance with the United States will collapse at once. If China successfully unifies Taiwan, Japan's sealane will be under China's control and the East China Sea will be China's inland sea. Of course, Japan cannot secure its southwestern archipelago of Senkaku islets. Japan should now face up to the Taiwan issue, bearing its gravity in mind. In addition, Japan should also step up its dialogue and cooperation with both the United States and China and also with Taiwan-not only in order for Japan to maintain its national security but also in order for the region to maintain its peace. However, Japan is a far cry from that at present. First of all, Japan and the United States have held almost no discussions between their foreign and defense ministers on how to ready the two countries for a crisis of Taiwan. "The US military wants Japan's backup against Chinese submarines," an SDF source says. "But," this source added, "they say nothing about this matter, probably because they think we may spill the beans." Taiwan wants to post its military personnel in Japan on a standing basis to get and keep in touch with the Defense Ministry and the SDF. However, Japan remains reluctant for fear of irritating China. The United States posts its military attaches to Taipei for military exchanges with Taiwan. However, Japan is out of the loop. For Japan, Taiwan's crisis really "depends on how things go," according to the SDF veteran. There is a hopeful factor. In late August, Chinese Defense Minister Cao Gangchuan visited Japan. At the time, Japan and China basically agreed to set up a hotline between their defense authorities to avoid an eventuality. Japan should now work to build confidence with China in order to avoid a crisis in the East China Sea and the Taiwan Straits. Meanwhile, Japan should also step up its security dialogue with the United States and Taiwan. From now on, the United States and China would further intensify their power games over hegemony in the Asia-Pacific region. Japan, sandwiched between the two big powers, should have its own role they cannot do. This is the second of a series on Japan's defense posture. (6) Interview with Victor Cha, former director for NSC Asian Affairs: Improvement in abduction issue is condition for delisting North Korea as state sponsor of terrorism SANKEI (Page 7) (Full) October 5, 2007 Victor Cha, former director for Asian affairs of the National Security Council (NSC),who served as deputy chief negotiator of the US delegation to the six-party talks on North Korea's nuclear TOKYO 00004721 009 OF 013 ambition until the end of April, revealed on Oct. 3 to the Sankei that North Korea's implementation of the second-phase actions agreed to on that same day and improvement in the abduction issue would be necessary conditions for delisting the North as state sponsor of terrorism. -- What's your assessment of the six-party agreement? Cha: The agreement stipulates that North Korea would disable its nuclear facilities and provide a complete and correct declaration of all of its nuclear programs by the end of 2007. It is important to decide on specific measures and the date in negotiations with North Korea. Therefore, the accord is good. There are left only three months until Dec. 31. Six-party talks have a rocky road ahead. -- The agreement did not specified the date when the US would remove the North from its list of state sponsors of terrorism. Cha: If Pyongyang wants to remove itself from the list by the end of this year, it should implement the agreement and improve its relations with Japan and address the abduction issue. I am not speaking of the position of the US government, but these two matters are absolutely necessary. -- It is difficult to determine on improvement in bilateral relations and in the abduction issue. Cha: I don't think we can specify clearly in advance. The Fukuda administration has to determine whether there has been improvement or not. Japan should take an uncompromising stance toward North Korea, but it should also take a practical approach. -- There is a continuing argument over the definition of disabling North Korea's nuclear weapons. Cha: Disablement stems from the (complete, verifiable, irreversible disarmament) principle. Therefore, it is not appropriate to criticize the six-party talks for changing its policy and abandoning the principle. It stands between freezing and abandoning. -- It is said that about one year is needed to reactivate nuclear facilities. Cha: It took only several weeks for North Korea to restart its nuclear programs after having dismissed International Atomic Energy Agency (IAEA) inspectors in 2002. Compared with that, one year is a good bit of time. It is difficult to use a core after it has not been used for one year. It is different from just turning a light off and on. -- The agreement did not mention the uranium enrichment problem. Cha: Speaking of my experience in negotiations, we have had a long and serious debate on this issue. The US' position is clear. This issue must be resolved. -- How do you assess the South-North Korea summit? Cha: The summit this time was held in a more sober atmosphere than in 2000 between North Korean leader Kim Jong Il and then South Korean President Kim Dae Jung. It was probably because the second summit was held soon before the South Korean presidential election. TOKYO 00004721 010 OF 013 It is significant that President Roh Moo Hyun was able to get a promise from Kim Jong Il that South and North Korea would jointly make efforts to implement the six-party agreement. -- The joint declaration issued by the two Koreas included that they would hold meetings to build a reconciliation structure. Cha: It is too early for the two Koreas to push forward with a peace agreement. I think that they probably just drew up a grand picture heading in that direction. (Interviewed by Takashi Arimoto, Washington) (7) LDP, DPJ preparing for next Lower House election NIKKEI (Page 2) (Full) October 8, 2007 With a dissolution of the House of Representatives coming closer, the ruling Liberal Democratic Party (LDP) and the largest opposition Democratic Party of Japan (DPJ) have increased the pace in selecting their candidates to run in the next Lower House race. The LDP has chosen candidates to run in 280 out of 300 single-seat electoral districts. The party has to hurry now to pick candidates to run in the remaining 12 single-seat constituencies, leaving out eight seats, which it has decided to concede to its coalition partner, New Komeito. Secretary General Bunmei Ibuki instructed the 18 deputy secretaries general to complete before the end of their year fact-finding surveys on electoral districts across the nation. The aim of the fact-finding surveys is to choose those candidates who definitely will win their races. Appearing on a Fuji TV program, Ibuki stated on Oct. 7: "One option is that candidates will be chosen through elections of local members of the party (in each electoral district)." This would be a set of primary elections by local members of the party. In addition to this, an idea has emerged for determining "local power" by the results of its own opinion polls in electoral districts as well as by campaign activities by lawmakers. In the background is that coordination on the selection of candidates will likely be difficult in six constituencies, in which there are two incumbents -- one is a postal rebel and the other is one of the so-called "Koizumi children" - politicians who were elected in the 2005 Lower House election for the first time. The typical example is the Gifu No. 1 district, in which a "female contest" will likely occur between Yukari Sato and Seiko Noda. Some have contended that the Koizumi children lack "local (vote-getting) power." Ibuki is expected to attend a meeting of the secretaries general of the Hokkaido bloc, were the number of votes obtained in the proportional representation segment was low in the July Upper House election. The party headquarters took the initiative in choosing candidates for the 2005 Lower House election. The LDP reportedly, however, will respect the views of the prefectural chapters in selecting candidates for the next Lower House election. The main opposition Democratic Party of Japan (DPJ and Minshuto) has endorsed 204 candidates for single-seat constituencies. The DPJ will file 250 to 260 candidates. The party will strengthen election TOKYO 00004721 011 OF 013 cooperation with other opposition parties, including the Social Democratic Party (SDP). DPJ President Ichiro Ozawa resumed his nationwide stumping tour in late October. He might pick candidates on his own in electoral districts where it is having trouble cooperating with other opposition parties. There is a rumor that the DPJ may score with LDP lawmakers who might leave the party due to a result of coordination on the selection of candidates between the postal rebels and Koizumi children. Of the 300 single-seat electoral districts, the DPJ predicts that there will be 20 to 30 "vacant districts" where the opposition parties will not field any candidates. Postal rebel candidates will run in 13 single-seat constituencies. Many of the 13 districts will overlap with the vacant districts. One veteran DPJ lawmaker commented: "The LDP might file postal rebels or Koizumi children in the vacant districts." There is a speculation in the ruling coalition that the DPJ might aim to split the LDP conservatives by winning conservative independent lawmakers over to its side. (8) Sankei poll on triangular mergers: Respondents viewing them as a threat drop from 46 PERCENT to 21 PERCENT ; Companies are steadily adopting defense measures. SANKEI (Top Play) (Full) October 9, 2007 In a poll conducted by the Sankei Shimbun of 134 leading companies, only 20 PERCENT of respondents replied that they view triangular mergers, which have paved the way for the buyouts of Japanese companies by foreign companies, as a threat, a substantial drop from the number in the previous survey carried out in late April. About 30 PERCENT replied that they adopted measures to defend against takeover bids. The number of respondents who consider M&As as a management strategy reached about 70 PERCENT , indicating that a growing number of companies are now providing for the arrival of full-fledged M&As. The quickly growing awareness of M&As is seen in the survey results. The questionnaires were sent to 134 leading companies in mid-September. A ban on triangular mergers, a method of mergers allowing foreign companies to acquire Japanese companies using their subsidiaries in Japan, was removed in May. According to the results of the poll, only 21.6 PERCENT of respondents replied that they view triangular mergers as a threat, falling below 50 PERCENT who replied that they do not view such as a threat. In the previous survey conducted on 120 companies before the lifting of the ban, 46.7 PERCENT of pollees viewed triangular mergers as a threat, replying, "Corporate buyouts by foreign companies would increase." However, since hostile takeover bids are in fact difficult under the present system, the sense of alarm appears to have weakened. Some respondents sent cautious replies, such as that requirements for mergers should be made stricter and that they will closely watch how legal systems will be consolidated. However, replies such as that feasibility of triangular mergers is low and that such mergers are not a threat if companies make efforts to enhance their value were visible. The triangular merger of the Nikko Cordial Group with Citigroup, a TOKYO 00004721 012 OF 013 leading US financial group, was released after the poll. However, since Citigroup had a business tie-up with the Nikko Cordial Group, the merger between the two companies was not a hostile takeover. Thirty-seven companies, or 27.6 PERCENT of respondents, replied that they had already adopted measures to fend off takeover bids, extensively exceeding 17.5 PERCENT in the previous survey. Of the 37 companies, 15 introduced such measures over the past year, bearing out the fact that an increasing number of companies adopted such measures in readiness for stockholders meetings, which were concentrated in June this year. Many proposals were made at those meetings. In addition, three companies replied that they would adopt such measures before the end of next year. Thirteen companies answered that they had a plan to do so, but when to do so had yet to be decided. The number of companies that have already introduced such measures and companies that are positive about doing so totaled about 60 PERCENT , if the number of companies that are considering doing so is included. The number of companies that replied that they would use M&As as a management strategy reached 90 or 67.2 PERCENT of respondents. As reasons for that, many companies said that they want to expand their business, avoid risks involved in advancing into foreign countries, and save time. Regarding hostile M&As, 28.4 PERCENT replied they would refrain from resorting to such a method, noting that the environment for adopting such a method has yet to be consolidated in Japan. The reasons they gave included that it will increase costs; there will be no merger effects, even if they succeed in such a merger; and such a method is against their management principles. However, 6.0 PERCENT replied that they would adopt such a measure both at home and abroad, if circumstances require. (9) How about food safety? BSE (Part 1): Antipathy deep-seated among Japanese consumers to increasing US beef on shelves ASAHI (Page 3) (Full) October 8, 2007 We see beefs that bear tags reading "delicious and safe" and "American beef" on shore shelves recently. The leading supermarket chain Seiyu began this March placing US beef on the store shelves after the government lifted a ban on imports levied in reaction to the discovery of the first case of BSE in the United States in December 2003. Makoto Ishimi, a buyer of livestock products, said that a growing number of consumers want to have cheap, juicy US beef. Other leading supermarkets followed Seiyu, with Ito-Yokado Co. and Uny Co. resuming US beef in June and the Daiei Co. in August. The total volume of imported US beef skyrocketed from about 2,000 tons until May to about 4,000 tons in August. For US beef, Japan has set the requirements of exporting only beef from cattle 20 months of age or younger and removing specified risk materials (SRM) such as the brain and spinal cord. At ports and airports in Japan, quarantine officers carry out sampling inspections. TOKYO 00004721 013 OF 013 Nonetheless, vertebral columns were found in a veal shipment from the US only one month after the ban on imports was lifted in later 2005, underscoring the sloppiness of US processing procedures. Japan again imposed a ban on US beef imports for six months. Under such a situation, Seiyu dispatched its employees to the plants certified to export beef to it, and they reportedly confirmed that the plants have introduced a double check system for SRM removal. Again, though, inspectors discovered the internal organs and the tongues from cattle of uncertain age in US veal shipments this spring in quarantining beef from another dealer. Consumers now have strong antipathy to the safety of US beef. Although US beef imports certainly increased, the volume still remains low at only 800,000 tons annually. While Japan was restricting US beef imports, beef from Australia sharply increased. Now, seven times more beefs have been imported from Australia than those from the US. The US is calling on Japan to ease its import requirements, but it is questionable that the US will be able to stimulate demand in Japan for its beef when Japanese consumers are still harboring strong distrust in the product. DONOVAN