Japan Economic Scope for September 8, 2008

UNCLAS SECTION 01 OF 02 TOKYO 002493 SENSITIVE SIPDIS STATE FOR EAP/J E.O. 12958: N/A TAGS: ECON ETRD EFIN EAGR PREL JA SUBJECT: Japan Economic Scope for September 8, 2008 SENSITIVE BUT UNCLASSIFIED, PLEASE PROTECT ACCORDINGLY ¶1. (U) This cable contains the Japan Economic Scope from August 25, 2008 Food and Agriculture -------------- ¶2. (U) FM Koumura Pledges Continued Support For Afghanistan, after Death of Non-Governmental Organization Aid worker. Foreign Minister Koumura pledged Japan's continued efforts for Afghanistan's reconstruction despite the recent murder of a Japanese aid worker in the country. Koumura made the pledge in a telephone conversation with Afghan Foreign Minister Rangin Dadfar Spanta August 28. Terrorists kidnapped and murdered NGO worker Kazuya Ito in eastern Afghanistan August 26. FM Koumura said the government of Japan condemns heinous crimes such as abduction, murder and terrorist acts, but reiterated Japan needs to continue its effort to help Afghanistan achieve peace and rebuild itself. Eight Japanese NGOs are working in Afghanistan, which includes 20 to 30 Japanese citizens who go in and out of Afghanistan regularly. According to MOFA, thirty-nine officials from the Japan International Cooperation Agency (JICA) also provide agricultural education and other forms of educational aid in Afghanistan. ¶3. (U) Japan Contemplates Russian G-8 Agriculture Ministerial Proposal Minister of Agriculture, Forestry and Fisheries (MAFF) Seiichi Ota met with Russian Minister of Agriculture Alexei Gordeyev in Tokyo August 19. They discussed Russian grain sales to Japan and Gordeyev's proposal made during the July Toyako G-8 Summit to hold an agricultural ministerial meeting in Japan later this year. The ministerial would focus on food prices and food security. MAFF Vice Minister Shirasu's August 28 press statement indicates Japan is willing to host the summit in Japan later this year. ¶4. (U) MAFF Develops New Support Programs For Rice Producers The ruling Liberal Democratic Party wants the Ministry of Agriculture, Forestry and Fisheries (MAFF) to include additional support for rice farmers in its JFY09 budget request. MAFF reportedly is planning to set aside about 300 billion yen ($2.8 billion) for these measures under the auspices of programs to raise food self-sufficiency. MAFF will likely include some incentive and subsidy measures to promote production and consumption of non-table rice. MAFF is also formulating a tax cut package for consideration by the Ministry of Finance (MOF)in response to a Prime Minister's directive to all ministries. Ministries must submit their by the end of September. Japan's Foreign Relations -------------- ¶5. (U) The Ministry of Foreign Affairs' Overall And ODA Budget Requests For FY2009 MOFA at the end of August submitted its budget request of 747.1 billion yen for FY2009 (April 2009-March 2010) to the Ministry of Finance, a ten percent increase from FY2008. The ministry is seeking funds to set up seven new embassies (Samoa, Palau, Barbados, Estonia, Kyrgyzstan, Benin, and Rwanda),to implement policy pledges at this year's summit and TICAD IV, and to raise the number of Foreign Ministry personnel by more than 200 and local embassy staff by 174. MOFA is also requesting a 13.6 percent increase in its overseas development assistance (ODA) budget to 500.62 billion yen. One senior MOFA International Cooperation Bureau official said MOFA is hoping to salvage Japan's falling diplomatic presence as a top donor. The ODA budget request includes a 10.1 percent increase to 174.8 billion yen (approximately 1.748 billion US dollar) of grant aid for food assistance, the Cool Earth Partnership mechanism, and projects to achieve the 2015 millennium development goals related to poverty elimination, health, education, and gender issues. Politics and Reform -------------- ¶7. (U)Space Policy Bureau Open For Business The Government of Japan officially established a Space Policy TOKYO 00002493 002 OF 002 Headquarters within the Prime Minister's Secretariat August 27, pursuant to the Fundamental Space Law 2008. The new organization will be chaired by the Prime Minister and report to Minister of State for Science and Technology Policy and Food Safety, Consumer Affairs, and Space Policy. Pursuant to the new law, the headquarters is charged with formulating during the next year a national space strategy that for the first time takes into account industrial and national security interests, in addition to the current GOJ space focus on research and development through MEXT. One of the first issues on the Headquarters' agenda will be whether to develop a new mid-size launch vehicle, the GX-rocket. Development of the rocket has been hindered by a lack of Ministry-level funding and difficulty in creating a planned public-private partnership. Transportation -------------- 8.(U)MLIT Begins Review of Antitrust Immunity for International Air Transport Fares Japan Civil Aviation Bureau's (JCAB) has started a private study group to review current Anti-trust Immunity (ATI) for international air transport fares, according to the ministry's web site. This step comes in response to a December 2007 request made by the Japan Fair Trade Commission (JFTC). The study group will focus on two issues: The effect of various tariff agreements(i.e. IATA Tariff Agreement, Carrier Tariff Agreement, Code Share Agreement, Pool Agreement, Agreement related to Multilateral Interline Traffic, Agency Agreement, Service Agreement, FFP Agreement) on user convenience and the international air transport market; and how ATI policy should be applied in the future, taking into consideration recent moves by Europe and Australia to abolish the antitrust immunity, the current international air transport market in Asia, and the aim of advancing aviation liberalization in the international air transport sector. The study group will hold a total of six meetings and will publish its findings by the end of JFY 2008 (March 2009). ¶9. (SBU) Nagoya Officials Express Concern over United Airline's Discontinued San Francisco Flights Aichi Governor Kanda, Nagoya Mayor Matsubara and Chubu Economic Federation Chairman Kawakuchi told Consulate Nagoya Principal Officer they have "serious concerns" about United Airlines' (UA) recent decision to discontinue direct flights between Nagoya and San Francisco beginning this fall due to rising fuel costs and a lack of business class passengers. With the projected termination of the Nagoya-San Francisco flight, the only remaining direct flight between Nagoya and a U.S. destination will be Northwest Airline's Nagoya-Detroit service. Nagoyans have expressed strong interest in securing a direct flight between Nagoya and a U.S. West Coast city, particularly Los Angeles. ZUMWALT