DAILY SUMMARY OF JAPANESE PRESS 05/08/08

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SUBJECT: DAILY SUMMARY OF JAPANESE PRESS 05/08/08


INDEX:

(1) Japan, China need to produce visible results through strategic,
mutually beneficial cooperation (Nikkei)

(2) Japan-China Joint Statement on Climate Change (The Ministry of
Foreign Affairs of Japan)

(3) Aso, Yosano, Koike, Koizumi, Tanigaki keep casting covetous eyes
on prime minister's post after Fukuda (Tokyo Shimbun)

(4) Kakushin (nitty-gritty) column: Debate on Constitution -
international contributions likely to flare up again in the fall,
with expanding scope of SDF activities reaching limit (Tokyo
Shimbun)

(5) Interview with Surugadai University Professor Emeritus Hiroshi
Honma -- Government must not be satisfied with improved SOFA
administration (Akahata)

(6) Agreement reached on full lifting of embargo on Japanese rice
exports to China: Farm products to become touchstone for export
expansion; Still mountain of issues, including eliminating price
gaps, increasing productivity (Nikkei)

ARTICLES:

(1) Japan, China need to produce visible results through strategic,
mutually beneficial cooperation

NIKKEI (Page 1) (Full)
May 8, 2008

The leaders of Japan and China signed a joint statement that pledges
promoting a mutually beneficial relationship based on common
strategic interests, as new guidelines for future bilateral
relations. The statement advocates building a future-oriented
relationship and blueprints a bilateral relationship that can
contribute to the world in the new era. Even so, such outstanding
issues such as gas exploration rights in the East China Sea and the
poisoning of frozen dumplings imported from China to Japan have been
left unattended. To ensure improvement in Japan-China relations,
both countries need to produce visible results through strategic,
mutually beneficial cooperation.

Prime Minister Yasuo Fukuda: "I hope this year will be recorded in
history as the year of development in Japan-China relations."

Chinese President Hu Jintao: "China-Japan relations are now at the
starting point of a new chapter of history."

In a conference press conference held after their meeting, Fukuda
and Hu emphasized that Japan-China relations have entered a new
phase.

Fukuda aims to score high marks on the diplomatic front, given
declining public support for his administration. Meanwhile, Hu,
faced with international criticism for his response to the riots in
Tibet, wants to make relations with Japan a breakthrough in the
impasse in promoting foreign policy in the run-up to the Beijing
Olympics in August. They had no big grins on their faces during the
press conference, reflecting the difficult circumstances surrounding

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them.

Ten years have passed since former Chinese President Jiang Zemin
visited Japan. During the past decade, Japan-China relations were
seriously strained over historical issues. But what affected the
bilateral relations most significantly was a structural change, that
is, China's growing economic strength. The two countries have become
even more interdependent in the economic area, but discord also
occurred in various areas.

Although China has enjoyed high-speed, two-digit economic growth,
distortions have also been exposed, like the widening gap between
rich and poor and environmental pollution. China has come up with a
national goal to create a harmonious society. But in order for China
to continue sustainable economic growth and stabilize society,
cooperation from the industrialized countries that have a similar
experience is indispensable.

For Japan, reconstructing relations with China is also essential.
China's market is becoming more attractive to it, but as seen from
its response to the torch relay, China is also a unique economic
power. How should Japan deal with such a neighbor that is growing
rapidly while being saddled with various risks? How should Japan
lead that nation to making a soft landing? This question has become
a major theme that will directly affect Japan's national interests.
In drawing up diplomatic strategies toward the United States,
Russia, and other countries, as well, it is important for the two
countries to stabilize their bilateral relations.

"We have unavoidably contradictions or problems in
country-to-country relations. What is important is to maintain
comprehensive friendship." Using almost the same expression, Fukuda
and Hu emphasized the significance of Hu's visit to Japan, though
some pointed out the bad timing of the visit.

Despite a myriad of problems pending between Japan and China, it has
become possible for the leaders of Japan and China to make
reciprocal visits as promised. This is a sort of progress. The key
point is how to construct a mechanism to bear fruit through
cooperation on such occasions.

This year marks the 30th anniversary of Deng Xiaoping's visit to
Japan and the start of China's reform and open-door policy. During
this period, providing yen loans was a major tool for Japan's
cooperation to China, but Japan has decided to end providing fresh
yen loans to China starting this year. In the environment area, some
have suggested creating a fund to be financed jointly by Japan and
China, but the two countries have yet to crafted means for policy
coordination and cooperation in response to the structural change in
bilateral relations.

The statement proposes promoting a future-oriented relationship, but
Japan and China have separated in popular sentiment. In preliminary
negotiations, a Chinese representative said: "We are no longer in
the era in which only leaders make diplomatic decisions." In order
to obtain public understanding, the two countries have to continue
to show the results of cooperation both at home and abroad.

It is also imperative to improve the political foundation to carry
out new challenges. Given that the opposition camp has control in
the House of Representatives, the Fukuda administration remains
unable to draw up a medium- and long-term diplomatic strategy and

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even a roadmap needed for resolving immediate issues. A Japanese
government source said: "The Japanese government now finds it
difficult to make a bold diplomatic decision. This affected China's
posture in drafting the joint statement."

The Lake Toya Summit will be held in early July, and the Beijing
Olympic Games will take place in August. A Japan-China-South Korea
summit is scheduled for this fall. Japan and China will proactively
grope for chances for their leaders to make reciprocal visits, so
there are still chances for the two countries to achieve results.
But if they are slow to make an arrangement to that end, a hazy may
hang over the blueprint mapped out during the "trip in the warm
spring" as said by President Hu.

(2) Japan-China Joint Statement on Climate Change

Source: Ministry of Foreign Affairs home page, posted May 5, 2008


1. The governments of Japan and China (hereinafter called "both
sides") recognized the need to make efforts together hand-in-hand
and to cooperate on climate change, a common threat facing human
beings.


2. Both sides confirmed the goals and the principles promised in the
"United Nations Framework Convention on Climate Change (UNFCC)" and
the "Kyoto Protocol" and again stated the "Japan-China Joint
Statement on Further Strengthening Cooperation on Environmental
Conservation" signed by both sides in April 2007. Based on this
joint statement, the two countries have decided to further boost
cooperation on measures to deal with climate change, deepen
dialogues and exchanges, promote practical cooperation, and build a
partnership to deal with climate change so that the two countries
will put the strategic, mutually beneficial relationship into
action.


3. Both sides confirmed that the "UNFCC" and the "Kyoto Protocol"
are appropriate and effective frameworks for countries on the globe
to deal with climate change. Both sides again stated that based on
common but differentiated responsibilities and based on each
country's capability, the industrialized countries take the
initiative in reducing greenhouse gas emissions and that by
providing developing countries with funds or transferring technology
to them, they can implement the promises in the conventions and
would endorse them.


4. Both sides highly value the Intergovernmental Panel on Climate
Change's (IPCC) assessment reports and reaffirmed the ultimate
objective of stabilizing greenhouse gas concentrations at a level
that would prevent dangerous anthropogenic interference with the
climate system.


5. The Japanese side expressed a view that in order to achieve the
above objective, greenhouse gas emissions in the world must be at
least halved by 2050. The Chinese side expressed a view that it
would pay attention to the Japanese side's view and that it would
discuss methods and measures with other countries to achieve the
ultimate objective in the UNFCCC.


6. The Japanese side again stated that it would achieve the goal for
reducing greenhouse gas emissions by 6 PERCENT during a period from
2008 through 2012 proposed by the "Kyoto Protocol" and in line with
the plan to achieve the goal, and that it would continue a

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country-specific goal for constraining greenhouse gas emissions in
2013 and beyond. The Chinese side will proactively deal with climate
change under a framework that will enable sustainable growth, strive
to implement a Chinese national program on climate change, and
freshly contribute to protecting world climate. Both sides mutually
appreciated their respective approaches.


7. Both sides again expressed their political resolve to strive to
resolve the climate change issue through international cooperation,
based on the principle of "common but differentiated
responsibilities" under the "UNFCCC" and the "Kyoto Protocol"
frameworks. Both sides have come to share the perception that active
participation in negotiations to strengthen effective processes and
frameworks to be applied up to 2012 and in 2013 and beyond agreed on
in the Bali road map will lead to results at a conference of parties
to the UNFCCC and the Kyoto Protocol in Copenhagen slated for the
end of 2009.


8. The Japanese side stated that a sector-specific approach is very
significant in terms of setting a country-specific goal for reducing
a total amount of greenhouse gas emissions. The Chinese side stated
that the sector-specific approach is an important method to
implement the emission reduction indicator and take action. Both
sides stated that they would further discuss the role of the
sector-specific approach.


9. Both sides shared the perception that measures to prevent
pollution and deal with climate change would benefit each other,
compensate each other, promote sustainable growth, and have a
significant meaning in building an eco-civilization. Both sides have
decided to strengthen studies and cooperation in this area.


10. Both sides have come to share the perception that because
science and technology are important to deal with climate change,
the two countries will strengthen scientific studies to deal with
climate change as well as working-level cooperation concerning
development and transfer of technology for relaxation and
adaptation. Both sides have decided to carry out technical
cooperation in the following priority realms:

(1) Energy saving, improvement in energy efficiency, new energy, and
renewable energy
(2) Clean coal technology (improvement in facilities in coal thermal
power plants and improvement in efficiency of such plants)
(3) Capture and use of methane
(4) Carbon capture and storage (CCS)
(5) Adaptation to climate change


10. Both sides will continue to strengthen mutually beneficial
cooperation in Clean Development Mechanism (CDM) projects and
encourage both sides' firms to actively participate in the projects.
Both sides will discuss how to improve and maintain the CDM.


11. Both sides will bolster cooperation to adapt to climate change
through the following measures:

(1) Studies and analyses of negative effects and fragility of
climate change
(2) Studies and analyses of socioeconomic effects of climate change
and costs
(3) Strengthen anticipation competence in science, technology, and
institutions on climate change and its impact

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(4) Research and development of technology and measures for climate
change
(5) Improve awareness of the need to reduce fragility and adapt to
needs when establishing and implementing a sustainable development
strategy


12. Both sides will work together in such areas as strengthening
capacity-building, improving the national awareness, human exchanges
and training


13. Both sides will discuss the question of how to invest as much
money as possible to deal with climate change, including encouraging
the private-sector and banking institutions to play their roles. The
Chinese side positively appreciated the Japanese side's
implementation of international cooperation under its "Cool Earth
Partnership" in order to deal with climate change in developing
countries to which Japan has provided financial support. The
Japanese side positively appreciated the policies and measures the
Chinese side has taken to deal with climate change and stated that
Japan was ready to help the Chinese side to engage in activities
related to climate change, particularly, promoting the
implementation of the Chinese national program on climate change.


14. Both sides have decided that the National Development and Reform
Commission of China and related government offices of Japan will
take the responsibility to implement this Joint Statement.

Both sides will implement this Joint Statement in concrete terms by
further holding talks between their related sectors.


15. This Joint Statement was signed by the Japanese government's
representative and the Chinese government's representative on May 7,
2008, in Tokyo.

(3) Aso, Yosano, Koike, Koizumi, Tanigaki keep casting covetous eyes
on prime minister's post after Fukuda

TOKYO SHIMBUN (Page 2) (Full)
May 8, 2008

Those Liberal Democratic Party members regarded as possible
candidates to succeed Prime Minister Yasuo Fukuda are now actively
on the move. Fukuda's sway over the LDP has drastically declined due
to the defeat of the LDP candidate in the Lower House by-election
for Yamaguchi No. 2 constituency, and because of the confusion
created by the reinstatement of the provisional tax rates, including
the gasoline tax. Speculation is rife in the LDP that calls for
replacing Fukuda will arise after the Group of Eight (G8) summit in
Hokkaido in July -- the assumption being that the party could not
win the next Lower House election under his leadership.

Aso gives priority to harmony and strengthens own ability

On April 28, the day after the LDP candidate was defeated in the
Lower House by-election, Taro Aso, 67, a former LDP secretary
general who has already thrown his hat in the ring for the next
party presidential race, stressed in a meeting of his faction: "It
is absolutely necessary to prevent the party from running about in
confusion."

If Aso takes a clear anti-Fukuda stand at a time when the government
and ruling parties are having a hard time coping with the DPJ's

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political offensive, the result would not only benefit the DPJ but
also create resentment of the largest faction, the Machimura
faction, which has supported Fukuda. Aso seems to have judged that
it would be advisable to refrain from taking actions for the time
being that would make him stand out.

In fact, the Aso faction, which was formed with a membership of 15
in December 2006, now has 20 members. Aso has been energetically
delivering speeches in rural areas in order to increase his
supporters.

Yosano suddenly emerging as candidate by criticizing Prime Minister
Fukuda

Kaoru Yosano, 69, a former chief cabinet secretary, has suddenly
emerged as a presidential candidate. Although Yosano was once
regarded as Fukuda's personal advisor, he has recently often leveled
criticism at Fukuda instead. Appearing on a commercial TV program on
May 1, he made a candid statement about Fukuda, saying: "The prime
minister needs to make a public appeal about such major challenges
as fiscal reconstruction." He has just come out with his first book,
which includes such pet views as the need to hike the consumption
tax to 10 PERCENT . Speculation abounds that his book might be a
preparatory step to run for the presidential election.

Yosano plans to focus his activities within a new study group that
includes fellow lawmakers. There is a possibility that calls for him
to run in the party leadership race will become stronger.

Koike active to form parliamentary leagues

Former Defense Minister Yuriko Koike, 55, visited China in late
March along with Hidenao Nakagawa, a former secretary general. Koike
and Nakagawa formed on April 1 a parliamentary league to achieve
Kyoto Protocol goals. In his meeting on April 9 with Koike and Seiji
Maehara, a vice president of the DPJ, former Prime Minister
Junichiro Koizumi, 66, reportedly said: "There are two candidates
for the prime minister's post here." Chances are that if she became
Japan's first female prime minister, she would be popular among the
public.

However, a senior member of the Machimura faction, to which Koike
belongs, took an icy view: "Should the faction field a candidate for
the presidency, we would back Chief Cabinet Secretary Nobutaka
Machimura. Nobody will support her." So, it is unclear whether
support for Koike will expand or not.

Any possibility of Junichiro Koizumi running in presidential race

Although Koizumi has clearly rejected the possibility of his running
again for the party presidential election, there are strong calls
from LDP members for him to do just that. His positive remarks in
meetings and speeches have encouraged speculation that Koizumi might
run again for the presidential post. However, a veteran lawmaker
said:

"He has no intention to run again for the presidency. Seeing the
maneuvering between the ruling and opposition camps due to the
lopsided Diet (in which the opposition camp controls the Upper House
and the ruling camp holds the majority of the Lower House),he just
cannot help expressing himself. He has no desire to run again."


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Many LDP members say Sadakazu Tanigaki lacks demonstration

Many in the LDP have said that Policy Research Council Chairman
Tanigaki, 63, who ran in the presidential race before last, lacks
eagerness to run again, despite his having served in a key post. He
first needs to strengthen his political footing in order to be a
presidential candidate, since he will be in a new faction to be
formed on May 13 when his faction and the Koga faction merge.

(4) Kakushin (nitty-gritty) column: Debate on Constitution -
international contributions likely to flare up again in the fall,
with expanding scope of SDF activities reaching limit

TOKYO SHIMBUN (Page 3) (Full)
May 3, 2008

Tetsuya Furuta

Debate on the relationship between the Constitution and Japan's
international contributions is likely to flare up again in the fall
or after. The ruling Liberal Democratic Party (LDP) was forced under
the divided Diet to temporarily suspend the Self-Defense Forces'
(SDF) refueling mission in the Indian Ocean last year. Learning a
lesson from that case, the LDP has now embarked on discussion of
permanent legislation that would make it possible for Japan to
dispatch the Self-Defense Forces (SDF) abroad as needed. Meanwhile,
the government's approach of broadening the SDF's purview of
activities bit by bit has reached its limit. The relationship
between Article 9 of the Constitution and international
contributions need to be reconsidered.

Debate on international contributions is likely to resurface as the
Maritime Self-Defense Force's (MSDF) refueling mission now going on
in the Indian Ocean under the New Antiterrorism Special Measures Law
is to end next January and the Air Self-Defense Force's (ASDF)
airlifting activities conducted under the Iraq Special Measures Law
will expire in July 2009.

In the Upper House, which is dominated by the opposition bloc, the
major opposition Democratic Party of Japan (DPJ) is opposed to
extending those activities. If no action is taken, there is a strong
possibility that the suspension of the refueling mission in the
Indian Ocean will occur once more. Should the SDF troops who are
deployed there again be forced to pull out, the government would
lose a key component of its international contributions.

The best policy for the government and the ruling bloc to avoid such
a case would be to involve the DPJ in the process and enact
permanent legislation for overseas SDF dispatch in the extraordinary
session of the Diet this fall. But the LDP's junior coalition
partner New Komeito remains cautious about enacting such
legislation. Instead, the party has cited as priority policy agendas
preventive measures against a recurrence of a collision between an
Aegis ship and a private vessel. Debate on permanent legislation in
the ruling camp has yet to get started.

After the United Nations Peacekeeping Operations Law was enacted in
1992, overseas dispatch of SDF personnel began in full swing. At
first, five principles for overseas dispatches, for instance,
obtaining a cease-fire agreement between the parties in conflict,
were strictly observed in order to put restrictions on overseas
dispatches. Destinations for dispatches and the use of weapons were

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both limited.

Unconstitutional judgment handed down

Since the terrorist attacks on the United States in 2001, the
government has established a series of laws, such as the
Antiterrorism Special Measures Law and the Iraq Special Measures
Law, in a way to respond to America's call for Japan to provide
logistical support. As a result, the SDF's purview of activities has
been broadened to cover even de facto "combat zones", for instance,
the Indian Ocean and Iraq. In order to avoid cases of exercising the
right to collective self-defense, an act prohibited in the
government's interpretation of the Constitution, the government
created this logic: activities in non-combat zones would not
involve linking to the use of force by other countries.

But last month, the Nagoya High Court handed down a ruling about the
deployed ASDF personnel in Iraq that said the ASDF's airlifting (of
armed soldiers in the multinational force to the Baghdad combat
zone) were acts that could be identified as being linked to the use
of force by other countries.

The government has assumed a wait and see attitude toward the
ruling, with Prime Minister Yasuo Fukuda noting, "There is no
problem about the airlifting." But in the course of debate on
permanent legislation, the government will be forced to discuss the
relationship between the overseas dispatch of the SDF and the
Constitution.

LDP, DPJ wide apart

The government and the ruling bloc are pinning high hopes on the
DPJ's cooperation to enact permanent legislation for overseas SDF
dispatches. Former DPJ President Seiji Maehara has noted: "The
government has repeatedly added changes to its previous views to
meet the reality, but now it is no longer possible to continue to do
so." However, the DPJ as a party is not in a mood to directly take
up the constitutional issue.

Furthermore, the LDP and the DPJ are wide apart in their views over
UN resolutions, which Japan has made the ground for overseas
dispatches of the SDF.

Some LDP lawmakers assert that the Diet should allow the SDF to
operate broadly without being bound by UN resolutions in order to
deal with the growing number of peacekeeping operations that are
being more frequently carried out by a multinational force other
than the UN or the "coalition of the willing." Some also insist that
the types of activities the SDF would take part in should be
broadened to cover guard, maintenance of security, and ship
inspections.

However, DPJ President Ichiro Ozawa will not endorse any overseas
dispatch of the SDF without a UN resolution authorizing such. In
addition, regarding active participation in UN operations, Ozawa
noted: "It would not violate the Constitution even if such
participation involves the use of armed force." His stance is
opposed to the government's interpretation that even in the case of
participation in UN-led operations, the use of force would not be
allowed.

(5) Interview with Surugadai University Professor Emeritus Hiroshi

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Honma -- Government must not be satisfied with improved SOFA
administration

AKAHATA (Page 3) (Full)
May 8, 2008

In the wake of a string of brutal crimes by U.S. military personnel,
calls are growing for revising the Japan-U.S. Status of Forces
Agreement (SOFA). But the government is dismissive of revising the
pact. This newspaper asked Hiroshi Honma, a professor emeritus (of
international law) at Surugadai University, about the issue.

Embracing U.S. discretion

-- The government intends to deal with brutal crimes committed by
U.S. military personnel by improving SOFA application, based on a
Japan-U.S. Joint Committee agreement.

Ending the matter by improving SOFA implementation only means not
changing the pact and leaving the matter to U.S. discretion.

In November 2002, a U.S. Marine major attempted to sexually assault
a foreign woman in Okinawa. The U.S. side subsequently refused to
hand over the major to police custody before indictment, saying it
was an attempted rape. Attempting to rape a woman is a serious crime
in Japan.

The U.S. side probably feared that since the crime was by an
officer, handing him over would lower military morale. In contrast,
the U.S. military is willing to hand over into police custody rank
and file service members before indictment by giving "sympathetic
consideration."

Why is government negative about revising the SOFA?

-- Why is the government reluctant to revise the SOFA?

There has been no convincing explanation from the government. It
explained, for example, that revising the SOFA with Japan would
affect SOFAs with other countries. But the SOFA with Germany (the
so-called Bonn Agreement) was revised (in 1993),the one with Italy
(in 1995),and the pact with South Korea (in 2001).

The revised Bonn Agreement includes a set of rules for the use of
bases and environmental conservation -- contents that go far beyond
that in the SOFA with Japan.

The criminal trial jurisdiction clause was not revised, however.
That is because the U.S. Congress takes the view that the U.S.
Constitution is the best in the world when it comes to guaranteeing
the rights of the accused and that the rights of U.S. military
personnel overseas must be guaranteed, transcending the sovereignty
of other countries.

In 1957, an American soldier named William S. Girard shot to death a
woman collecting spent cartridges in Gunma Prefecture. In this case,
the accused argued that it was unconstitutional for the United
States to abandon primary jurisdiction. The U.S. Supreme Court
dismissed the argument, saying that abandoning jurisdiction was not
unconstitutional, while acknowledging that primary jurisdiction
rested with the United States. There is no guarantee that a similar
case will not occur. Japan needs a legal system to vie with the

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United States instead of being satisfied by saying that the
Japan-U.S. SOFA is most advanced regarding the criminal jurisdiction
procedures.

Violation of police powers

On March 19, a taxi driver was killed in Yokosuka, Kanagawa
Prefecture. In connection with this case, a U.S. sailor has been
arrested on two charges: desertion and murder accompanied by
robbery.

The SOFA specifies which side -- Japan or the United States -- has
primary jurisdiction over the one being criminally charged. But the
pact does not envisage a case in which the jurisdiction of Japan and
the United States vie with each other over two different criminal
charges.

A certain set of rules is included in what was agreed upon by the
Japan-U.S. Joint Committee. Still, in the event the U.S. side
independently finds a suspect who is believed to have committed an
extremely brutal crime, like the Yokosuka taxi driver murder case,
the most fundamental and conceivable system is for the United States
to ask Japanese police to arrest him.

The U.S. military seized the suspect matter-of-factly and brought
him back to a U.S. base without taking him to Japanese police in
advance. Such an act is a violation of Japanese police powers.

(6) Agreement reached on full lifting of embargo on Japanese rice
exports to China: Farm products to become touchstone for export
expansion; Still mountain of issues, including eliminating price
gaps, increasing productivity

NIKKEI (Page 5) (Full)
May 8, 2008

With President Hu Jintao's visit to Japan as the occasion, the
governments of Japan and China yesterday reached a final agreement
on the complete lifting of the embargo on Japanese rice exports to
China, one of the pending issues between the two countries. Rice
consumption in Japan is dwindling. The lifting of the ban on the
exports of rice to the Chinese market, where annual consumption of
rice is said to be 20 times more than the amount consumed in Japan,
will become a touchstone for Japan's strategy to expand exports of
farm products. However, a gap in rice prices between the two
countries is huge. There are also other issues to clear, including
improving productivity and making Japanese rice a brand-name
product. Japan and China have also agreed to cooperate with each
other regarding promotion of investment and measures for small- and
medium-size businesses. The first visit to Japan by a Chinese
president in a decade is boosting a mood for strengthening ties on
the economic front.

Agreement reached on promotion of investment, measures for small-
and medium-sized businesses

Both the Japanese and Chinese leaders during a joint press
conference announced that they had agreed to completely lift the
embargo on Japanese rice exports to China. Since it had been viewed
that an agreement on export conditions would be reached by the end
of March, an Agriculture, Forestry and Fisheries (MAFF) official
explained, "Coordination has taken an unexpectedly long time."

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Japan's rice exports to China have been suspended since 2003 due to
the review of the quarantine system on the Chinese side. Exports
were partially resumed last year as a provisional measure. According
to MAFF, it would be possible to fully resume rice exports as early
as June, if a rice milling plant and a warehouse in Kanagawa
Prefecture, which have already undergone a certain extent of
inspection, are used.

However, starting exports using other milling plants requires
another checking process to confirm that there are no harmful
insects in China-destined rice, which takes one year to complete.
Though the checking period has been cut short from three years as
the Chinese side had originally requested, many take the view that
even if the embargo is lifted, export volume would not increase
anytime soon.

Japan exported 940 tons of commercial-use rice in 2007. The annual
domestic demand for rice is approximately 8 million tons, of which
only about 1 PERCENT is for export. Some export items, such as
apples, have produced some results, in China or Taiwan, where
people' income level has risen.

However, the price of Japanese rice was about 20 times higher than
Chinese rice in general as of a time when exports were resumed last
year on a provisional basis. The same MAFF official also said that
124 tons were exported in provisional shipments, of which 24 tons in
the first shipment were sold out soon due to their rarity, but the
remaining amount remains unsold. Rice exports will hold the key to
predicting how to sell agricultural products that have great price
gaps with overseas products and whether they can earn money abroad.

Japanese rice is sold in China as a high-class gift item. Though
there is a growing concern about a rice shortage in Asia and Africa,
there are surpluses in Japan. In addition, it is difficult to expect
rice demand to expand over the long term due to the declining
birthrate and the aging of the population.

Food imports from China in 2007 rose to approximately 920 billion
yen, which is 20 times more than Japanese exports to that nation. In
order to create brand-name farm products, improving productivity in
the agricultural area will be crucial.

Japan and China have also signed a memorandum for cooperation on the
trade and investment area and between small and mid-size businesses
of the two countries. Economy, Trade and Industry (METI) Minister
Akira Amari on the 7th met with National Development and Reform
Commission Chairman Zhang Ping and Commerce Minister Chen Deming.
They agreed to promote sustainable development of the economies of
both countries and push forward efforts to accelerate investment.
They have also confirmed that they promote close exchanges of
opinions aimed at promoting investment.

Regarding small- and medium-sized businesses, they have agreed to
reinforce assistance for mutual market access. Other agreements
reached between them include holding a regular meeting to discuss
product safety and establishing a system to share accident
information possibly later in the month.

DONOVAN