DAILY SUMMARY OF JAPANESE PRESS 06/03/08

UNCLAS SECTION 01 OF 10 TOKYO 001516 SIPDIS DEPT FOR E, P, EB, EAP/J, EAP/P, EAP/PD, PA; WHITE HOUSE/NSC/NEC; JUSTICE FOR STU CHEMTOB IN ANTI-TRUST DIVISION; TREASURY/OASIA/IMI/JAPAN; DEPT PASS USTR/PUBLIC AFFAIRS OFFICE; SECDEF FOR JCS-J-5/JAPAN, DASD/ISA/EAPR/JAPAN; DEPT PASS ELECTRONICALLY TO USDA FAS/ITP FOR SCHROETER; PACOM HONOLULU FOR PUBLIC DIPLOMACY ADVISOR; CINCPAC FLT/PA/ COMNAVFORJAPAN/PA. E.O. 12958: N/A TAGS: OIIP KMDR KPAO PGOV PINR ECON ELAB JA SUBJECT: DAILY SUMMARY OF JAPANESE PRESS 06/03/08 INDEX: (1) Ruling party executives eager to eliminate wasteful spending; Tanigaki has consumption tax hike in mind; Nakagawa thinks spending must be cut first (Nikkei) (2) METI Minister Amari stresses need to lower abnormally high oil prices in interview prior to energy ministerial on June 7-8 (Tokyo Shimbun) (3) METI to introduce CO2 emission-labeling system for food, daily necessities (Tokyo Shimbun) (4) Biofuel effect assessment to be conducted; COP-9 picks Nagoya to host COP-10 (Tokyo Shimbun) (5) Deliberations on bill amending Antimonopoly Law likely to be put off, with priority given to bills related to people's daily lives (Nikkei) (6) Editorial: Independent administrative agency reform bill; Ruling, opposition parties should find common ground (Asahi) (7) Defense Ministry concerned about "vacuum" in Japan's security setup (Mainichi) (8) Medical system for elderly a major campaign issue for Okinawa prefectural assembly election (Tokyo Shimbun) ARTICLES: (1) Ruling party executives eager to eliminate wasteful spending; Tanigaki has consumption tax hike in mind; Nakagawa thinks spending must be cut first NIKKEI (Page 2) (Excerpts) June 3, 2008 The subject of trimming wasteful spending has cropped up in the ruling bloc's policy discussion on hiking the consumption tax rate. Although the Liberal Democratic Party and New Komeito are in accord on the need to increase the efficiency of the state budget for fiscal 2009, there are huge gaps in motives of those calling for reducing waste. Some are skeptical about whether the ruling bloc, which has applied pressure for greater spending, can come up with any effective reform plan. Former LDP Secretary General Hidenao Nakagawa appearing on a television program yesterday announced his determination to cut expenditures. He also unveiled a plan to set up a study group on June 5 to inspect the government's wasteful spending in the Machimura faction, in which he serves as a secretary. Meanwhile, LDP Policy Research Council Chairman Sadakazu Tanigaki, an advocate of a consumption tax hike, indicated in his May 29 speech that he would launch work to trim the fat off state spending. He will launch a waste elimination project team (PT) on June 3. The team plans to put together by August the results of surveys of such sectors as public works project and social security to reflect them in the fiscal 2009 budget. Although the two groups' ostensible objectives seem the same, their TOKYO 00001516 002 OF 010 real aims are quite different. The PT's main aim is to play up its total devotion to streamlining the spending with the aim of obtaining voters' understanding of the need to raise the consumption tax. In fact, the envisaged reform plan will be produced by Yoichi Miyazawa, a lawmaker supportive of a consumption tax hike. In contrast, the Nakagawa study group's aim is to avoid an early consumption tax hike on the grounds that efforts for reducing wasteful spending are insufficient. The New Komeito also set up last November a project team to prevent the wasteful use of tax money. Its objective is close to Nakagawa's aim of putting off hiking the consumption tax. New Komeito Representative Akihiro Ota, speaking to reporters at the Prime Minister's Official Residence (Kantei) yesterday, indicated his party's intention to put time into considering ways to reduce wasteful spending, saying, "In order to reduce waste, we will exert our energy into all administrative bodies systematically." For streamlining expenditures, PTs are expected to focus on such costly sectors as public works project, social security, and education. With the approach of the next Lower House election, ruling party members with vested interests in those sectors are applying pressure for greater spending. Some LDP lawmakers think that the effort will not advance any further than reviewing budgets for some public-interest corporations. DPJ eyes drastic reform The Democratic Party of Japan, which regards the concentration of power on the Kasumigaseki bureaucratic district and the amakudari practice of former government officials landing lucrative jobs in the private sector after retirement as a breeding ground for the rigid allocation of budget money, is calling for drastic reform of the system itself that resulted in waste. The party plans to produce a manifesto (campaign pledges) for the next Lower House election vowing to boldly shift power from the central government to local governments and to abolish individual subsidies. As for reform of road-related tax revenues, the party has already adopted a basic policy to: (1) abolish the special account, (2) cancel the medium-term road construction plan costing 59 trillion yen over a ten-year period, and (3) consider totally abolishing the local development bureaus as outposts of the Ministry of Land, Infrastructure and the Transport (MLIT). The DPJ has also criticized the government's and ruling bloc's plan to free up road-related revenues for general spending as only a shift of interests from the MLIT to the Finance Ministry. The party aims to shift the weight of the road construction mechanism to local districts as a means to cut waste. About the amakudari issue, the DPJ has pointed out that approximately 12.6 trillion yen has flown into public-interest corporations and other organizations that hire a good number of retired government officials in the form of discretionary contracts. (2) METI Minister Amari stresses need to lower abnormally high oil prices in interview prior to energy ministerial on June 7-8 TOKYO SHIMBUN (Page 9) (Full) June 3, 2008 TOKYO 00001516 003 OF 010 Economy, Trade and Industry Minister Akira Amari responded to an interview with Tokyo Shimbun and other news companies prior to the meeting of the energy ministers of the Group of Eight (G-8) countries, China, India, and South Korea scheduled for June 7-8 in Aomori City. He emphasized his readiness to devote himself to drawing up a message calling for lowering skyrocketing oil prices. He said: "The participants are major consumer countries, so it will be possible for the whole world to deal with the issue with a sense of crisis." The flow of speculative money into the market has pushed up oil prices to over 130 dollars per barrel. Amari said: "The current prices are abnormal. The high oil prices have led to raising the prices of natural resources and food. The current burden is unbearable for developing countries." He then pointed out that high oil prices would deal a serious blow to the global economy and could lead to pulling the prices down. He said: "It is totally wrong for oil producers to think that high oil prices will augment the value of exports." In the message to be issued in the environment summit, he intends to urge the oil-producing countries to fully increase output and to upgrade the reserve capacity of such facilities as oil centers. Amari said: "All the participant countries account for two-thirds of global energy consumption." He thus stressed the extensiveness of the G-8 summit's influence. The energy issue, which is closely linked to global warming, will also be high on the agenda at the energy ministerial. Amari said: "Energy saving will contribute to reducing energy procurement and enhancing competition, resulting in reinforcing energy security. Energy saving will thus bring about various advantages." He will work on the participant countries to reach an agreement on forming an international framework to support measures to save energy. Specifically, Japan is ready to pledge to transfer its renewable energy and clean-coal technologies, as well as to offer cooperation in producing legal frameworks and developing human resources. (3) METI to introduce CO2 emission-labeling system for food, daily necessities TOKYO SHIMBUN (Page 9) (Full) June 3, 2008 The Ministry of Economy, Trade and Industry (METI) yesterday announced plans to introduce a system to require manufacturers of foodstuffs and daily necessities to label the amount of carbon dioxide (CO2) emitted during the production process. The ministry will produce guidelines with leading distribution companies and food manufacturers and will implement the system in FY2009 on a trial basis. METI thinks that if consumers, based on the label, begin to select goods with fewer CO2 emissions, manufacturers will step up efforts to reduce gas emissions and eventually contribute to curbing global warming. In Britain, some major supermarket chains have already introduced this system, but this will be the first case in Japan. To take potato chips for example, the total amount of CO2 emitted in the whole process, including potato cultivation, production, and TOKYO 00001516 004 OF 010 distribution, is displayed on the package. METI will establish a study group in June to work out specifics about calculation and labeling methods and will compile a set of guidelines by next March. (4) Biofuel effect assessment to be conducted; COP-9 picks Nagoya to host COP-10 TOKYO SHIMBUN (Page 3) (Full) May 31, 2008 Koki Miura, Bonn The ninth Conference of the Parties of Convention on Biological Diversity (COP9),being held in Bonn, Germany, decided on the afternoon May 30 that the 10th meeting of COP would be hosted by the city of Nagoya in October 2010. COP-9 presents a basic policy of setting up country-by-country numerical targets as a new strategy of preserving species. If the basic policy is adopted at the COP10 conference, the numerical targets would become an international index known as the "Nagoya targets." Following the COP-9 decision that Nagoya will hold the COP-10 meeting, Environment Minister Ichiro Kamoshita delivered a speech on the last day in which he stated: "Based on the great achievements at COP-9, Japan will make efforts for the success of COP-10, which will be held in 2010, and to see that it will become a milestone for biological diversity." The COP-9 conference proposed a policy of setting country-by-country numerical goals for 2011 and beyond, citing that countries should set up quantitative targets if possible. Regarding the utilization of biological resources, the toughest confrontational issue, and profit-sharing, Various possibilities, including the creation of a legally-binding international framework, will be looked into. Japan, which will chair COP-10, intends to propose a "Satoyama" plan as a model for coexistence of human beings and nature. COP-9 started on May 19 in Bonn with about 6,000 participations, including representatives from 191 countries, regions and non-profit organizations. On May 30, the last day of the meeting, COP-9 adopted a resolution calling for a set of guidelines for research on the effects of biofuel, such as the adverse impact on the food supply. The resolution stresses concerns about the positive and negative effects of biofuel production and utilization on biological diversity. In order to find the appropriate production level and use of biofuel, the resolution calls for creating guidelines for an environmental impact assessment, including the effect on the ecosystem. Japan's leadership to be tested (Commentary) Since Nagoya will host the COP-10 meeting in 2010, Japan will have to bear responsibility for tackling the problem of preserving species. However, since there are many issues to which Japan TOKYO 00001516 005 OF 010 objects, views questioning Japan's leadership are being raised. Japan will play up its "Satoyama" plan as a model for coexistence of humans and nature at COP-10. That plan is now being gradually recognized by the international community, with the Italian representative to COP-9 noting, "We are paying attention to Japan's Satoyama." However, a source in the German foreign ministry said: "There are fierce conflicting interests (among member countries)" in concrete discussions. Especially, the issues of using species and profit-sharing became fierce confrontation between the North and South in COP9. Japan was the forefront of opposing the idea of creating a legally binding international framework called by developing countries. With the leadership of Germany, COP-9 reached a conclusion that discussion would continue on the issues, including whether to create a legally binding framework. Japan's response was ridiculed by a source familiar with German foreign policy, saying: "Certain countries attempted resistance." Germany showed its presence by announcing its annual contribution of 500 million euros (approximately 82 billion yen) for forest protection. Japan's leadership will be tested by COP-10. (5) Deliberations on bill amending Antimonopoly Law likely to be put off, with priority given to bills related to people's daily lives NIKKEI (Page 2) (Full) June 2, 2008 The fates of the bills on the Diet agenda will be determined before the ongoing session is adjourned on June 15. The ruling and opposition camps have clashed head-on over a bill amending the Antimonopoly Law, which features stiffer penalties against companies that play a leading role in price-fixing cartels. The bill is thus likely to be carried over to the extraordinary Diet session in the fall. The two camps have agreed to support an increasing number of bills related to the daily lives of the population, but on bills over which the two sides have been at odds, the ruling coalition has no choice but to rely on its two-thirds majority in the House of Representatives (to override bills rejected in the opposition controlled House of Councillors). Although a mood of compromise is growing between the two camps, the results are still limited. Of the 80 bills submitted by the government to the ongoing Diet session, 49 had cleared the Diet as of June 1. About 70 bills, or about 80 PERCENT of the total, are expected to pass the Diet by the end of the session, lower than the 92 PERCENT recorded in the regular Diet session last year. The government and the ruling camp have remained unable to move ahead with deliberations as they had expected, given the opposition camp's control of the House of Councillors. The number of bills on which both camps have been at loggerheads is decreasing. Such bills include a bill amending the Special Taxation Measures Law and a special measures bill on highway tax revenues. But of the some 20 government-sponsored bills still left in the Lower House, only five are expected to clear the current Diet session, including a bill amending the Juvenile Law. The ruling coalition has judged it difficult to enact in the current session about 10 bills, including a bill designed to support the government health insurance system with assistance from corporate health insurance society. It intends to continue to discuss these bills in TOKYO 00001516 006 OF 010 the Lower House in the next session. On the bill amending the Antimonopoly Law, not even deliberations have started yet. The Democratic Party of Japan (DPJ),while approving the government plan in outline, has judged it necessary to obtain a guarantee for fair procedures to be taken. The main opposition party has unofficially presented to the Liberal Democratic Party (LDP) an amendment to the bill, calling for hearings to be held by the Fair Trade Commission and for lawyers to be allowed to attend questioning. The government and the ruling camp are reluctant to totally accept the DPJ plan, on the ground that the plan will affect the legal system as a whole. It seems impossible to start even negotiations on revising the bill during the current session. A number of DPJ members have voiced opposition to a bill designed to help joint ventures financed by the public and private sectors and others saddled with excessive debts reconstruct their businesses by establishing regional industrial revitalization corporations. One member said: "The bill will make it ambiguous to clarify where responsibility lies for a slump in business. In the party, many are calling for putting off a conclusion, rather than rejecting the bill. Nonetheless, as seen from an agreement reached recently between the ruling and opposition camps to seek the passage of a bill aimed at reforming the public servant system, momentum is certainly gathering for them to make concessions. The LDP, the New Komeito, and the DPJ are eager to reach an agreement on issues related to the people's daily lives and to a secure social environment by lawmaker-initiative legislation before the end of the session. The three political parties are apparently concerned that if they fail to enact such bills into law, the voters would form a negative impression about them. LDP Diet Affairs Committee Chairman Tadamori Oshima emphasized in a speech in Sapporo on May 31: "Some DPJ members should be aware that as long as they continue to raise opposition to everything, they will not be able to fulfill their responsibilities to the people. Such a development will contribute to forming a new type of Japanese democracy." Even so, in the extraordinary Diet session in the fall, the focus of attention will be on how to treat the law governing the Maritime Self-Defense Force's refueling mission in the Indian Ocean, which expires next January. The DPJ is expected to oppose the bill. As it stands, on controversial bills, the situation in which the ruling and opposition camps find it difficult to cooperate with each other remains unchanged. (6) Editorial: Independent administrative agency reform bill; Ruling, opposition parties should find common ground ASAHI (Page 3) (Full) June 3, 2008 One hundred and one independent administrative agencies are under the jurisdiction of central government agencies. The predecessors of those independent administrative agencies are either special public corporations or various agencies' operating divisions. A bill reforming their mechanism is now under deliberation in the Diet. The bill itself should be basically promoted. However, the close of TOKYO 00001516 007 OF 010 the Diet session is drawing near. We urge both the ruling and opposition parties to make efforts to enact the bill by finding common ground and taking the time. Following the criticism that there are many unnecessary projects that have become hotbeds for amakudari (golden parachute) practices, reform of independent administrative organizations have been looked into. The bill prepared by the government includes some of the results of such efforts. One of such results is a proposal for a new method of assessing the performance of independent administrative agencies. At present, an assessment committee attached to each relevant government agency is in charge of assessing their performance. Under the proposed bill, a new committee consisting of members appointed by the prime minister would be established for sole jurisdiction over all independent administrative agencies. At present, peer review by colleagues is rampant. For instance, the Ministry of Agriculture, Forestry and Fisheries' assessment committee gave the second best rating on a scale of one to five to the Forestry and Forest Products Research Institute, which was later abolished following the discovery of a government-led bid-rigging practice. It would be difficult to correct the inefficiency of organizations, based on assessment made under the influence of concerned government agencies, because government offices tend to attach importance to defending their own organization. The reform drive also targets the personnel appointment system. Under the proposed bill, a public recruitment system would be adopted for the selection of top personnel and auditors, a watchdog of the organizations, of independent administrative agencies. These posts have often been filled by former bureaucrats. However, under the new system, their appointments would require cabinet approval. Under such a system, it may become possible to appoint private citizens who launch a bid for those posts. The bill also mandates the return of unnecessary assets possessed by independent administrative agencies, such as housing compounds and recreation facilities, to the government. According to an estimate by the government's administrative reform promotion secretariat, assets totaling over 600 billion yen can be sold off. Selling such assets will thus bring about valuable fiscal resources at a time when the fiscal condition is stringent. Those proposals are a step forward to reforming independent administrative agencies. Many proposals made by the DPJ overlap with those proposed by the government. It may be impossible for them to agree on every item. However, they should at least cooperate with each other in order to realize at an early date reform proposals both can agree on. The divided Diet cannot be used as an excuse for stalling reforms that can be implemented, if the government puts its mind to it. Apart from those reform items, it is also important to remember that the key part of the reform is to keep really necessary agencies in place and eliminate unnecessary ones. The consolidation and rationalization plan, which the government presented at the end of last year, has been left unfinished. It TOKYO 00001516 008 OF 010 stipulated that the number of independent administrative agencies should be reduced to 86. However, since the goal was to be achieved in a manner of a mere juggling of numbers -- some were to be merged and others were to be turned into special public corporations, the 86 agencies might include those that should be abolished. Some agencies, such as those aimed at nurturing science, technology and culture, should be kept in place in view of their public nature. It is important to continue the work of sorting out independent administrative agencies, by identifying such agencies and determining unnecessary organizations and projects. (7) Defense Ministry concerned about "vacuum" in Japan's security setup MAINICHI (Page 7) (Full) June 3, 2008 "The Foreign Ministry stopped thinking about defense and became cold as soon as they cleared the issue with the United States. They tried to play cool." With this, a senior official of Japan's Defense Ministry vented his frustration at the Foreign Ministry because the government held discussions at the Foreign Ministry's initiative for Japan's consent to a treaty banning cluster munitions. The Foreign Ministry and the prime minister's office went all out to consider the United States. Eventually, the treaty's text incorporated a clause allowing joint operations with the United States, which is not a signatory of the treaty. The Foreign Ministry therefore deemed it possible to ensure a 'safety valve' for the Japan-U.S. alliance, and then the Foreign Ministry moved for a de facto ban on all cluster bombs. After that, the Defense Ministry voiced concerns about Japan's national defense. However, the Foreign Ministry was in no mood to listen. "They wouldn't listen at all," a senior official of the Defense Ministry said. "There was a tide," he added. The Defense Ministry, which was left behind, had no way to resist. "Defense Minister Shigeru Ishiba said in a press conference on the morning of May 30: "The cluster bombs we have at present are not for fun or a joke." So saying, Ishiba was apparently upset. The Self-Defense Forces has cluster bombs for the purpose of bringing the coastline under control in order to block enemy troops from landing in Japan. "I wonder what to do about the vacuum in our national security," one of the Defense Ministry's officials said. The Defense Ministry is concerned about the deterioration of Japan's defense functions. "The neighbors of Britain (which decided to prohibit cluster bombs) are European countries. In the case of Japan, there are China and Russia among its neighbors. Japan's security environment is quite different from Britain's. We need the same bombs (as those of China and Russia)." With this, another senior official of the Defense Ministry criticized the fact that Japan was affected by Europe. However, the treaty allows joint operations. This seemed be good for the Defense Ministry. One of the Defense Ministry's officials said: "The United States will use cluster bombs in the event of an emergency on the Korean Peninsula. If the SDF and shipping companies cannot transport them, that's a problem. But we've cleared this problem." TOKYO 00001516 009 OF 010 However, the Defense Ministry is now saddled with a heavy workload. Japan has four types of cluster munitions. Its procurement of cluster munitions for the Air and Ground Self-Defense Forces totals 27.6 billion yen. All of their cluster munitions are subject to scrapping. The ASDF and the GSDF will have to sustain an enormous amount of losses from an all-out prohibition, including vehicles to launch cluster munitions. The ASDF will need 10 billion yen to scrap its cluster munitions, according to an ASDF staff officer. Japan is still in dire fiscal straits. Meanwhile, Japan is going to debate how to prepare alternatives. The treaty reportedly exempts the newest generation of so-called "smart" cluster munitions. If Japan is going to replace its cluster munitions with these smart ones, it will inevitably take a large amount of money, and it will also take time. "Cluster bombs are effective weapons for deterrence, but if the government says it will agree to prohibit cluster munitions for Japan and its people, then we will comply with that and scrap them," a senior official of the Defense Ministry said with a deeply-troubled look. This is the last of a three-part series. (8) Medical system for elderly a major campaign issue for Okinawa prefectural assembly election TOKYO SHIMBUN (Page 2) (Excerpts) June 2, 2008 The ruling and opposition camps are engaged in a fierce campaign battle for the June 8 Okinawa prefectural assembly election. The focus is now on whether the ruling bloc can maintain its majority under strong national criticism of the newly introduced medical system for people aged 75 and older. At present, 27 Okinawa prefectural assembly seats are held by the ruling Liberal Democratic Party and New Komeito that are supporting Governor Hirokazu Nakaima and 20 seats by the opposition parties, including the Social Democratic Party of Japan, Japanese Communist Party, Social Democratic Party, and Okinawa Social Mass Party. One seat remains vacant. The win-lose line is set at a 25-seat majority. As of May 30, the day the campaigning officially kicked off, 74 individuals filed their candidacies. Problems associated with U.S. bases in the prefecture have always been campaign issues in the past. But this time around, DPJ Okinawa Chapter Public Relations Committee Chairman Tadashi Uesato said: "The majority of the DPJ candidates are focused on the new medical system for the aged rather than on base issues in their campaigns." In his kick-off ceremony, a certain DPJ candidate also said vigorously, "Everyone says that the new medical system is absurd. The system must be abolished." On June 1, DPJ Deputy President Naoto Kan, JCP Chairman Kazuo Shii, and SDP head Mizuho Fukushima all visited Okinawa to stump for their respective candidates. Meanwhile, the ruling parties have been explaining the government's policy to improve the new medical system in a desperate effort to obtain the understanding of voters. The LDP has been running a television commercial in Okinawa in which former LDP Lower House member Koichi Hamada states, "The Liberal Democratic Party is a party that cherishes the elderly." TOKYO 00001516 010 OF 010 There are no signs of the storm of criticism of the government waning, however. A senior LDP Okinawa chapter official said discouragingly: "Elderly people are really angry. It is going to be an uphill battle for us." A New Komeito official also noted: "At least half an hour is necessary in order to obtain the understanding of voters regarding the medical system. Maintaining the majority seems hard." The ruling bloc is being forced to run a negative campaign, saying, "If the opposition bloc wins a majority, the prefectural administration would be thrown into turbulence." LDP Okinawa Chapter Secretary General Tetsuji Shingaki emphasized, "In order to realize Governor Nakaima's pledge to revitalize the industries and create more jobs, the ruling camp must keep its majority." A veteran candidate running on the LDP ticket underlined the need for the stability of the prefectural administration, saying, "As a ruling party, we are going to implement the governor's pledges," without touching on the medical issue. LDP Election Strategy Council Chairman Makoto Koga, General Council Chairman Toshihiro Nikai, and New Komeito Representative Akihiro Ota have all visited Okinawa in a desperate effort to give a boost to their candidates. SCHIEFFER