DAILY SUMMARY OF JAPANESE PRESS 02/01/07

UNCLAS SECTION 01 OF 07 TOKYO 000474

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SUBJECT: DAILY SUMMARY OF JAPANESE PRESS 02/01/07


INDEX:
(1) Responsibility of Kyuma for remarks critical of US Iraq policy;
Person who undermines confidence in Japan unqualified to be defense
minister

(2) Merger examination with global share in mind: FTC sets new
guidelines with focus on degree of oligopoly: Likely to encourage
corporate reorganization

(3) Repercussions of Yanagisawa's comment referring to women as
"baby-bearing machines"; Can he escape from attack?

(4) Abe administration experiences three uproars involving cabinet
ministers in only four months

ARTICLES:
(1) Responsibility of Kyuma for remarks critical of US Iraq policy;
Person who undermines confidence in Japan unqualified to be defense
minister

Commentary by Naoyuki Agawa, professor at Keio University

SANKEI (Page 11) (Excerpts)
February 1, 2007

Defense Minister Fumio Kyuma said in a press conference at the Japan
National Press Club on Jan. 24: "Although President Bush decided (to
go to war) probably because he suspected Iraq might have nuclear
weapons, I think his decision was a mistake." Kyuma also attributed
the current confused situation in Iraq to the lack of the US
government's follow-up measures.

Even in the US, many people believe that the Bush administration
fabricated nonexistent weapons of mass destruction and easily
accepted less credible information. The ambiguous decision-making
process regarding the Iraq war is behind the current criticism of
the Bush administration's Iraq policy.

Many Japanese people who hate the use of armed force have harbored a
vague anxiety about the Iraq war. Kyuma's statement represented
their feelings, in a sense.

Kyuma, though, is not an academic or a commentator. The 2006 Defense
White Paper specified the Japan-US security arrangement as "the
bedrock of Japan's national defense policy." Criticism of the US by
the top officer responsible for the nation's defense policy has a
weighty meaning.

Of course, Japan does not support all US policies. In diplomatic
negotiations, Japan and the US often differ with each other.
However, once the US makes a decision on a key policy that does not
directly involve Japan, it is a matter of courtesy for Japan, as its
ally, to support the decision. That is why the Koizumi cabinet,
though it had frequently urged the US to be prudent until it went to
war, supported its ally's military option in Iraq in the end.

Defense Minister Kyuma's statement breaks the rules of courtesy. Any
individual is free to have doubts about the Iraq war and think the
war was improper. But it should be impermissible for the defense
minister to publicly criticize the war in his official capacity.

When Prime Minister Koizumi was under heavy fire from China and
South Korea for his visits to Yasukuni Shrine, the Bush

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administration issued no critical comments. Some US government
officials reportedly viewed the prime minister's shrine visits
unfavorably, but such negative views did not come to the fore.

If Defense Secretary Rumsfeld had said, "Though this is my personal
view, Prime Minister Koizumi should refrain from paying homage at
Yasukuni Shrine," what response would Japan have made? I think
Japan-US relations would have been seriously damaged.

Kyuma made a grave remark that could undermine the current state of
the Japan-US alliance relationship, when the Bush administration is
having hard time in searching for a future Iraq policy. I wonder how
American soldiers and their families received the Kyuma remark. Will
even the Democratic Party, which is opposed to the Bush
administration's Iraq policy, trust a defense minister who makes
careless statements?

According to press reports, Kyuma also made a remark criticizing the
response of the US to the issue of the relocation of US forces'
Futenma Air Station. He said that the US does not listen to
Okinawa.

Last December, Kyuma said in the Diet that Japan's support for the
United States' military option in Iraq was based on Prime Minister
Koizumi's personal view. Later, however, he withdrew this remark.
Asked if he supported the Iraq war on that occasion, Kyuma replied:
"I do not have such feelings," adding, "I thought at that time that
the US decision on the Iraq war was a mistake. In my personal view,
I still think so."

Kyuma made a similar statement again, probably based on his firm
view about the Iraq war as a politician. In such a case, why did he
receive the offer for the post of defense minister in the cabinet,
which supports the Bush administration's Iraq policy? If he would
like to continue to make this kind of remarks, I recommend he should
step down from the cabinet.

(2) Merger examination with global share in mind: FTC sets new
guidelines with focus on degree of oligopoly: Likely to encourage
corporate reorganization

NIHON KEIZAI (Page 3) (Abridged)
February 1, 2007

The Fair Trade Commission (FTC) on Jan. 31 revealed a draft plan to
revise guidelines for approving corporate mergers. The new
guidelines include an eased standard for screening planned mergers,
prioritizing an index gauging the degree of oligopoly of an industry
as a whole (Herfindahl-Hirschman Index = HHI) instead of the share
of a company created as a result of the merger on the domestic
market. Mergers of companies in an industry that is exposed to
international cooperation will be approved even if a domestic share
of a company created as a result of a merger becomes outstanding, by
taking into account the HHI of the global market.

The FTC yesterday presented new draft guidelines at a Liberal
Democratic Party (LDP) committee meeting. The draft was approved and
will be adopted as early as April.

The present guidelines set strict conditions, such as that mergers
can only be approved with almost no screening if a merged company's
domestic market share is 25 percent or lower. Under the new
guidelines, which abandon the use of the so-called market share

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standard, a decision will be made, based on the HHI.

Products with high internationality

In addition, depending on types of industries, overseas markets will
be taken into consideration in determining HHI. Currently HHI is
worked out, based on the domestic market, in principle. For products
that are exposed to international competition, the global market is
taken into consideration in determining the degree of oligopoly. If
a product is competing in the Asian region, then the HHI of that
product's industry is worked out, based on the Asian market.

The FTC will judge whether the industry in question has
internationality or not. Products that can be easily traded in many
countries due to low transportation cost and low tariff barriers or
products with high substitutability can be regarded as having an
international nature. Semi-conductors and liquid crystal will likely
be regarded as products traded on the global market. Steel will be
regarded as products on the Asian market.

Then, it will be determined that in an industry where the degree of
oligopoly of 5-10 higher-ranked companies is low, there will be no
problem for higher-ranked companies to amalgamate. Even in an
industry where high degree of oligopoly exists, a company with a low
share can be merged with almost no examination.

Stricter screening will be made for a merger of fairly large company
in an industry with a high HHI. However, the market share standard
will also be applied under new guidelines as a standard for
determining whether to apply simplified examination to planned
mergers that are regarded as posing few problems. The condition for
approval in such a case is that a share of a company resulting from
a merger is 35 percent or lower. Overseas markets will be taken into
account in applying this standard. Conditions for determining the
HHI itself will also be eased.

If draft revisions were applied to 178 mergers over the past five
years, cases that do not require screening would increase from three
to 54. If cases that require only simplified examination were
included, the number would expand from 48 to 84.

For instance, in the case of the domestic liquid crystal TV market,
Sharp, the largest company in the industry, commands a 47 percent
share. The HHI of five higher-ranked companies comes to 2900. It
would therefore be difficult to approve Sharp's merger with another
company. However, if liquid crystal televisions are recognized as an
international commodity, then, it would be easier to approve its
merger, because Sharp's share on the global market is 20 percent and
the HHI of five higher-ranked companies in the industry comes down
to 929.

Technical innovation to be taken into account

The new guidelines will take improvement of productivity and
technical innovation as a result of a merger into consideration. If
planned mergers lead to consumer benefits with the mergers promoting
large-scale R&D contributing to a drop in the prices of products or
if mergers would bring about new markets due to development of new
products, then applications for such mergers will be granted even if
the share and HHI of a company created as a result of the merger
exceed the set ceiling.

However, a proposal made by the Ministry of Economy, Trade and

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Industry (METI) for raising the share standard from 35 percent or
lower to 50 percent or lower has been dropped. The adoption of the
new guidelines is not a major deregulation for companies based on
the domestic market. Some take the view that overseas markets have
already been taken into account for some of international
commodities. As such, to what extent corporate reorganization will
advance under the new guidelines is unclear.

Industrial circles give certain scores to new guidelines as
expanding range of options

Industrial circles have generally given high scores to the new
guidelines with Takehiro Fukuda, general director of the treasury
section of Elpida Memory, saying, "We appreciate the expanded range
of options for corporate reorganization." Corporate M&As likely will
pick up further speed, spurred by the removal of a ban on triangular
mergers, which will make it easier for foreign companies to take
over Japanese companies.

The yardstick for gauging competitiveness in the chip industry is
not a domestic share but a global share. The combined share of
Renaissance Technology and NEC Electronics on the microcomputer
market tops 60 percent, but it comes down to only about 30 PERCENT
on the global market. Amid the falling prices and growing
international competition, there is the possibility of the new
guidelines spurring the reorganization of the domestic
semi-conductor industry.

The beer industry pins hopes on the adoption of the new guidelines
with Senior Managing Director Kazuhiro Sato of Kirin Brewery noting,
"The revised guidelines will lead to prompt management decisions
enhancing corporate competitiveness. The industry circles take the
view that the new guidelines will encourage corporate reorganization
and provide companies with an opportunity for looking into an even
more efficient management environment."

Global reorganization is under way in the steel industry. Chances
are that the Asian market as a whole instead of the domestic market
will be taken into account in judging whether to approve planned
mergers in the steel industry.

An executive of a leading steel company said, "We welcome the FTC
judges whether to approve a merger application, based on a larger
market." However, Japan imports only a small amount of hot coils
used for a wide range of purposes, such as autos. Shares of Japanese
companies in the Asian market are also high. As such, the new
guidelines will not immediately spark reorganization in the steel
industry.

In the meantime, the impact of the new guidelines on areas that are
not exposed to international competition is limited. A mood for
seeking corporate reorganization is mounting in the paper industry.
However, since the industry is based on the domestic market, its
response is no more than that they want to pin down the details of
the new guidelines.

M&As between Japanese companies last year marked a record high of
2,760, up 1 percent from the preceding year, or 15 trillion yen in
monetary terms, a jump of 30 percent. The application of the new
guidelines and the lifting of the ban on triangular mergers are
bound to raise a corporate desire for reorganization.

(3) Repercussions of Yanagisawa's comment referring to women as

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"baby-bearing machines"; Can he escape from attack?

TOKYO SHIMBUN (Page 24) (Full)
January 31, 2007

Health, Labor and Welfare Minister Hakuo Yanagisawa apologized
yesterday for his calling women "baby-making machines." However,
repercussions from his discriminatory remark continue to spread, as
seen in one citizens' group visiting the Health, Labor and Welfare
Ministry to lodge a protest. A look at the past shows there were too
many discriminatory remarks by politicians to mention. Will
Yanagisawa be able to escape from the barrage of criticism?

Yanagisawa stated in a speech delivered on Jan. 27 in Matsue City:

"The number of women aged 15 to 50 is fixed. Since the number of
baby-bearing machines and devices are fixed, I think all we can ask
is for each of them to do her best."

On Jan. 29 female Diet members belonging to the main opposition
party Minshuto (Democratic Party of Japan),the Japanese Communist
Party (JCP),and the Social Democratic Party (SDP),handed
Yanagisawa a letter calling on him to resign. On Jan. 30 several
civic organizations, including the I Women's Conference (Ai Jyosei
Kaigi),called at the welfare ministry to submit a letter calling on
Yanagisawa to withdraw his remarks, as well as to step down from his
post. The letter stated:

"(Yanagisawa's comment) is associated with the past population
policy of giving birth to children to increase the nation's
population; but he also meant that he is trying to shift the
responsibility for the low birthrate to women. He has ignored
women's rights."

Before submitting the letter to the ministry, various civic groups
protested outside the Health, Labor and Welfare Ministry, taking
turns. Demonstrators wore masks of Prime Minister Shinzo Abe and
Yanagisawa and conducted a mock performance of tossing about female
mannequins, ordering them to: "Make babies!"

Sumiko Shimizu, standing advisor to the I Women's Conference,
pointed out:

"At the United Nations International Conference on Population and
Development (ICPD),the reproductive right of women is not
controlled by their countries. How then he can make such remarks?"

She continued:

"There are many women who want to have two or more children, but the
employment system and housing situation do not allow them to do so.
The low birthrate is because public policy is insufficient; it is
not because women don't want to give birth."

Another civic group member lamented:

"I was just recently told by a person who was urged to quit her job
when she told the company of her pregnancy, even nine months were
left until her contract expired. I can't believe that the health,
labor and welfare minister, who should be cracking down on the many
companies that lack morals, made remarks indicating that women are
responsible for the low birthrate. Providing a promising livelihood
for women would be one measure to counter the falling birthrate."

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One demonstrator said:

"When the HIV-tainted-blood scandal came up, Mr. Yanagisawa made
efforts to resolve the issue positively although he was in the
ruling camp. We are shocked because that such a politician made such
a remark."

Politicians have repeatedly made remarks discriminating women and
racial discrimination statements.

In 1983 when (then) Prime Minister Yasuhiro Nakasone visited
Hiroshima, he told atomic-bomb victims: "Worry often brings on
illness." This is a notoriously discriminatory comment, which has
been talked about by human rights organizations and other
organizations.

Regarding the intellectual level of American people, Nakasone
remarked in 1986: "Since there are many African-Americans and people
coming from Puerto Rico and Mexico in the US, the intellectual level
is extremely low."

(The late) Deputy Prime Minister Michio Watanabe stated in 1988:
"Even if African-Americans are bankrupt, they say 'I don't have to
pay, for there always is a tomorrow.' They don't care." In 2003 then
Prime Minister Yoshiro Mori's statement is well known: "It is
strange that women having only one child after enjoying their lives
say that the nation should take care of them when they get old with
taxpayers' money."

With politicians repeatedly saying that there was no malicious
intent, the media usually got tired of criticizing and the matter
was settled. This pattern has been repeated. Yoko Sakamoto,
representative of the civil law reform information network, said:

"In the past, there were politicians who lost their posts because of
their controversial comments. Recently politicians do not resign
their posts. The day is gone that politician's remarks are called
into serious question."
Percent

(4) Abe administration experiences three uproars involving cabinet
ministers in only four months

TOKYO SHIMBUN (Page 2) (Abridged)
February 1, 2007

Although only four months have passed since the Abe administration
was inaugurated, it has experienced a number of scandals involving
cabinet ministers.

On Jan. 27, Health, Labor and Welfare Minister Hakuo Yanagisawa made
a remark comparing women to baby-bearing machines. This remark did
not create a great uproar immediately, but on the morning of Jan.
29, the contents of Yanagisawa's controversial remark were reported
widely, upsetting the public. At almost the same time, Prime
Minister Abe tried to calm down the situation with "a reprimand,"
and this approach only added fuel to the fire of public
indignation.

Given this, the object of their anger was directed at Yanagisawa as
well as the prime minister.


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When scandals involving Masaaki Honma, who then chaired the
government's Tax Commission; and Genichiro Sata, who was state
minister in charge of administrative reform, came to light, the
prime minister said, "I want you to continue to carry out your
duty," and "I want you to give an explanation to the people." With
such a stance, the prime minister gave the impression that he was
being lenient to his aides.

In actuality, however, the prime minister was very upset by the
Yanagisawa remark. Abe shouted at Yanagisawa in admonishing him on
the phone. But such anger of the prime minister has not been
transmitted to the public.

It remains to be seen whether the prime minister will protect
Yanagisawa to the last or decide to dismiss him under pressure from
the ruling camp and the public.

If Abe protects Yanagisawa to the last, he will continue to be
exposed to public criticism, but even if the prime minister
dismisses Yanagisawa, he will be criticized as taking an "irresolute
attitude."

The Yanagisawa problem is the most troublesome problem among the
scandals reported so far. Popularity rates of the Abe administration
have dropped to 40 percent, with loss of support coming from women.
But the Yanagisawa remark would further bring down the current
support rates.

What is worse, deliberations on the FY2007 budget bill are about to
start. Attention is being paid to what cabinet ministers say. The
Yanagisawa gaffe could not come at a worse time.

SCHIEFFER