DAILY SUMMARY OF JAPANESE PRESS 09/25/08

UNCLAS SECTION 01 OF 14 TOKYO 002653 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 09/25/08 INDEX: (1) U.S. nuclear-powered carrier George Washington enters port of Yokosuka in first such deployment in Japan (Asahi) (2) Nuclear flattop deployment-Anxiety over safety (Part 2): Barrier to disaster contingency planning; Gulf unfilled over anticipated accidents (Tokyo Shimbun) (3) Three scenarios for Aso administration on timing for dissolving Lower House, according to progress in deliberations on extra budget bill, public support (Asahi) (4) Scanner column: Both ruling coalition, DPJ aiming to please public; Policy made without debate on revenue sources (Yomiuri) (5) Special contribution by Yukio Okamoto (Part C): Japan at crossroads to determine its future course (Sankei) (6) MSDF refueling mission a test for national interests (Sankei) (7) Japanese business circles concerned about China's new regulation on disclosure of secret information on IT equipment (Yomiuri) (8) U.S. financial crisis likely to change map of Japan's business world: Can Japanese banks make best use of lessons learnt from collapse of bubble economy? (Tokyo Shimbun) (9) Prime Minister's schedule, Sept. 24 & 25 (Nikkei) ARTICLES: (1) U.S. nuclear-powered carrier George Washington enters port of Yokosuka in first such deployment in Japan ASAHI (Top play) (Excerpts) Eve., September 25, 2008 The U.S. Navy's nuclear-powered carrier George Washington (GW) entered the port of Yokosuka City in Kanagawa Prefecture this morning for deployment at the Yokosuka Naval Base. This is the first time since a U.S. Navy carrier was deployed to Japan in 1973 for a nuclear-powered carrier to be home ported in Japan. The U.S. armed forces are moving ahead with plans to make the Pacific a stronghold for the war on terror and other objectives, and this deployment is part of the strengthening of its military power (in the region). The new U.S. carrier being deployed to Japan is the fourth to be home ported at Yokosuka since the Midway. The GW replaced the Kitty Hawk, a conventionally-powered carrier, which will soon be retired. The vessel in May was damaged by fire, set off by seamen smoking cigarettes, and its arrival was delayed. The U.S. armed forces has in its arsenal 10 nuclear-powered carriers, but this is the first one to be deployed permanently overseas. A nuclear-powered carrier, which uses enriched uranium, has not need for being supplied with fuel. It can carry a high amount of ammunition and fuel used by its jets. For that reason, it has a combat capability of twice the time span of conventional carriers that operate on fuel oil. At the ceremony welcoming the arrival, U.S. Ambassador to Japan Schieffer said: "The United States does not have a more important alliance than the one with Japan. This vessel will heighten Japan's TOKYO 00002653 002 OF 014 national security and increase the national security of the U.S., as well. Since its safe operation is guaranteed, it can operate to the extent of its capability." (2) Nuclear flattop deployment-Anxiety over safety (Part 2): Barrier to disaster contingency planning; Gulf unfilled over anticipated accidents TOKYO SHIMBUN (Page 26) (Full) September 25, 2008 On Sept. 5, ahead of the arrival of the USS George Washington, a nuclear-powered aircraft carrier of the U.S. Navy, at the Yokosuka base, an executive from the All Japan Garrison Forces Labor Union (Zenchuro) was at the Defense Ministry in Ichigaya, Tokyo, where he vented his anger on a senior official of the ministry, who was hesitant about planning safety measures. "You may believe nuclear-powered warships are accident-free," the labor union leader told the official. "But," he went on, "you'd better change that way of thinking." He added, "You should take safety measures premised on accidents." The U.S. Navy's Yokosuka base has a dockyard called the Ship Repair Facility (SRF),where aircraft carriers and other warships undergo maintenance and repair. Japanese employees working there number about 1,800. Zenchuro has demanded that the base should have all Japanese workers there carry a compact dosimeter with them. However, the U.S. Navy will not grant the demand, explaining that Yokosuka also comes under U.S. safety standards. In the United States, only those who work within nuclear-powered warships' restricted areas near their reactors are required to carry dosimeters with them. Those working in other areas-both in and outside nuclear-powered warships-are not required to do so. There is no sign to indicate that the U.S. military will allow Japanese workers, who have no work to do within the restricted areas, to carry dosimeters. The U.S. Navy says there is no radiation leakage outside the restricted areas of its nuclear-powered warships. This account comes from the U.S. Navy's confidence in the structural safeguards of its nuclear-powered warships. However, the U.S. Navy has never substantiated its word about their safety, citing confidentiality as a reason. Due to such unaccountability, there are deep-seated concerns among the base workers about being exposed to radiation at work. They are also growing distrustful of the Defense Ministry for it does not seem to be working on the U.S. military to persuade it to let them carry dosimeters. A man working at the SRF for over 20 years lamented: "If we are exposed to radiation, we need to know when and where we were exposed. Otherwise, we will encounter troubled when we apply for workers' accident compensation insurance. If we carry dosimeters with us, we can also prove there is safety." There is also a deep gulf between Japan and the United States in their awareness of how to address nuclear disasters. In September 2006, the USS Honolulu, a nuclear-powered submarine, called at the Yokosuka base. After the Honolulu left port, a trace of radioactive substance was detected from seawater sampled near the TOKYO 00002653 003 OF 014 Yokosuka base. Later on, it was brought to light that the USS Houston, also a nuclear-powered submarine, had leaked radiation. However, the U.S. Navy stressed that it was not an accident, denying its radiological effects on public health and the environment. Based on the actual results of operation over the past 50 years, the U.S. Navy says there can be no nuclear reactor accident. This year as well, Yokosuka City therefore could not make a scenario for its joint disaster drill with the U.S. Navy in anticipation of a nuclear reactor accident. Yokosuka City compromised so as to ensure that the U.S. Navy provides information without delay. However, there were strong calls from among the city's local residents for an evacuation drill anticipating a nuclear reactor accident. The city therefore had to plan it separately. The evacuation drill is without participation from the U.S. Navy, which is the party concerned. The anxieties of Yokosuka's base-neighboring residents cannot be dispelled. (3) Three scenarios for Aso administration on timing for dissolving Lower House, according to progress in deliberations on extra budget bill, public support ASAHI (Page 4) (Full) September 25, 2008 The Aso administration, which was inaugurated yesterday, will have to soon decide on when to dissolve the House of Representatives and hold a general election. The administration will make a decision, reflecting progress in deliberations on the fiscal 2008 supplementary budget bill and public support for the administration. ¶1. Voting on Oct. 26 if talks between both camps collapse before start of deliberations If the new cabinet receives high public support and sees the Democratic Party of Japan (DPJ) and other opposition parties unwilling to cooperate in enacting the extra budget bill, the government would dissolve the Lower House at an early date. In this scenario, the prime minister would dissolve the Lower House on Oct. 3 just after a representative interpellations session in the extraordinary Diet session. It would set the dates of official announcement and voting for the election at Oct. 14 and Oct. 26, respectively. This is the shortest course for the government to be able hold the election while public support for it is still high. Premised on this scenario, the ruling coalition has made preparations under the lead of Election Committee Chairman Makoto Koga. In the course of deliberations on the extra budget bill, however, the opposition bloc will inevitably step up attacks against the government over the pension record-keeping fiasco, illegal transactions in tainted rice, and other problems. A veteran New Komeito lawmaker voiced apprehension that in this case, gaffes will prove fatal to the ruling coalition. This scenario is also aimed at dissolving the Lower House before the DPJ finishes preparations for the election. TOKYO 00002653 004 OF 014 ¶2. Voting in early November if deliberations protracted in Upper House Prime Minister Aso, who gives priority to buoying up the economy, is eager to enact the second budget bill into law. Reflecting his wish, the ruling camp has begun looking into holding a Lower House Budget Committee session on Oct. 6, with no dissolution on Oct. 3. If the opposition side cooperates in enacting the extra budget bill and reaches an agreement with the ruling coalition in several days of deliberations, the government might dissolve the Lower House in early October and carry out the election on Nov. 2 or 9. Some suppose that if the date is set at Nov. 2, voter turnout might be low, advantageous to the ruling coalition, because Nov. 1, 2 &3 are holidays. Many ruling party members, however, expect the opposition bloc to resort to tactics to prolong deliberations in a move to prevent the bill from clearing the Diet in the opposition-controlled House of Councillors, as Aso said in a press conference yesterday, "We were often betrayed by the opposition bloc over its commitments." In actuality, DPJ Diet Affairs Committee Chairman Kenji Yamaoka proposed deciding through talks to dissolve the Lower House, but many in the opposition camp are still calling for thorough deliberations. If the opposition bloc continues to refuse voting on the bill in the Upper House, the prime minister might decide to dissolve the Lower House while emphasizing the opposition's uncooperative stance, before getting the bill through the Diet. In this case, the voting date is likely to be set at Nov. 2 or 9. On the 4th, the U.S. presidential election will take place. Many in the ruling camp, out of fear that momentum might gather for a change of government if Democratic candidate Barack Obama wins the election, are now calling for voting on the 2nd. The New Komeito and the Soka Gakkai initially envisioned voting on Nov. 9, but they have begun to say that voting on Oct. 26 is too early. They are now eyeing Nov. 2. ¶3. Dissolution in November or later if priority given to enacting extra budget bill Meanwhile, some ruling members see the prime minister as aiming to get the extra budget bill through the Diet to the last. To have the bill enacted over the resistance of the opposition camp, it will be necessary to apply the article stipulating that if the Upper House fails to take final action within 30 days after the receipt of the budget bill passed by the Lower House, the decision of the Lower House shall be the decision of the Diet. In this case, Lower House dissolution will be put off to November or later. The New Komeito, backed by Soka Gakkai, does not want to see the voting date delayed to Nov. 9 or later. Ruling party members have begun preparations, setting up election offices. The more the day of Lower House dissolution is delayed, the more the risk of a drop in public support for the cabinet will increase. It will not be easy for the administration to decide to delay dissolution. (4) Scanner column: Both ruling coalition, DPJ aiming to please public; Policy made without debate on revenue sources TOKYO 00002653 005 OF 014 YOMIURI (Page 3) (Full) September 24, 2008 The ruling Liberal Democratic Party (LDP) and its coalition partner New Komeito agreed yesterday on a set of policies to be pursued under a Taro Aso administration. With an eye on the looming House of Representatives election, most of the policies, including an income tax cut and review of the medical system for people aged 75 or older, are aimed to please the public. Ichiro Ozawa, president of the main opposition Democratic Party of Japan (DPJ),has come up with priority policy items, which would cost totaling 22 trillion yen, as his platform to take over the reins of government. However, neither the LDP nor the DPJ have clarified where they would find the revenue sources for implementing their policies. There remain many hurdles for them to overcome. LDP, New Komeito refers to increase on burden on public At a New Komeito convention yesterday in Tokyo, Aso delivered a speech, in which he stressed: "The financial crisis has begun to affect the economy. So, we will have to implement the emergency economic package, which was compiled by the LDP and New Komeito." Aso's speech was met by an explosion of applause. A main feature of the economic rescue package is a flat-sum tax cut in the income and residential taxes, which were requested by the New Komeito. Then LDP Secretary General Aso accepted the New Komeito's demand. A scale of 2 trillion yen is envisioned as the cut. The administrative agreement reached on Sept. 23 between the LDP and New Komeito specifies first the steady implementation of the economic package. It incorporates such items as lending money to small and medium-sized companies facing capital shortfall, improving measures for people receiving no pension benefits or small amounts, as well as looking into the possibility of providing free infant care, as the New Komeito has demanded. New Komeito leader Akihiro Ota stated in a press conference yesterday: "The New Komeito protests the daily lives of people. Which party can help people out of straitened circumstances would become a campaign issue for the next Lower House election." Aso has clarified a stance of giving priority to revitalizing the economy for a while, putting off fiscal reconstruction. In addition, he also said during his campaign for the LDP presidential race that he would review the medical system for people aged 75 or older. The sudden announcement of his decision appears to be aimed at reducing negative factors for his party going into the Lower House election. Although the ruling coalition has decided to implement the flat-sum tax cut in fiscal 2008, it has postponed a conclusion on those who would be subject to the flat-sum tax cut, the amount to be reduced, and how to secure necessary revenue sources. It is believed that a huge amount of public funds is required to reduce the sense of unfairness between those who pay taxes and the elderly, reviewing the health care system for the elderly. TOKYO 00002653 006 OF 014 The ruling coalition's set of policies does not include any items aimed at boosting the public's burden. As to measures to secure revenue resources, the ruling camp says that the local branches of the government offices should be abolished or scaled down, and that wasted tax money should be cut by strictly reviewing general and special account budgets. A senior LDP member lamented, saying: "It seems that we are reviewing all policies that would be attacked by the DPJ. We should not take an obsequious attitude." Although the LDP has severely criticized the DPJ's 22 trillion yen platform as being pork-barrel largesse and having no revenue sources to back it, some in the LDP said that they could not criticize the DPJ. Regarding a review of the medical system for people aged 75 or older, one New Komeito member said: "Our supporters have finally understood the system by our scrupulous explanations. If we say the system would be reviewed, they will be confused. This could lead to our being attacked by the opposition." 22 trillion yen of reserve funds insufficient for DPJ to implement policies The special feature of the platform presented on Sept. 21 by DPJ President Ozawa is that the priority policy items would be implemented in three stages. The aim is to make clear the image how the policies should be implemented. Ozawa has judged that it would be easier to secure funds if they are implemented gradually. He plans to decide this month on a roadmap to implement them and include the roadmap in the party's manifesto (set of campaign pledges) for the next general election. Deputy President Naoto Kan told reporters yesterday in Akita City: "We can calculate concrete costs for the platform for taking over political helm. For the first fiscal year, 6 to 10 trillion yen would be needed; and a little more would be increased for the second fiscal year, and a total of 22 trillion yen would be needed subsequently. " The DPJ's manifesto for last year's Upper House election specified a policy of allocating 15.3 trillion yen for such measures as support for child-rearing. Since the abolishment of provisional tax rates such as a gasoline tax is added to that manifesto, the amount of revenue sources necessary to implement the manifesto has ballooned to 22 trillion yen. The DPJ appears to be aiming at competing against the Aso government because Aso has now prioritized revitalizing the economy rather than structural reforms. The question is how to find the 22 trillion yen needed. Ozawa explained: "We will gradually shift 22 trillion yen, or 10 PERCENT of the 212 trillion yen of the government's general and special account budgets, to fund the implementing of the policies." The DPJ has said that budgets for projects and areas whose priorities are low would be reduced. However, if the budgets are actually slashed, lawmakers having close ties with those projects and areas will be certain to oppose the idea. TOKYO 00002653 007 OF 014 Therefore, it is uncertain whether the DPJ can specify budget items in its manifesto. There is a view in the DPJ that reserve funds (maizoukin),including surpluses from the special account budgets, should be used for the time being. There are limits to the temporary use of the reserve funds because most of the DPJ's policies are permanent measures. Hiromitsu Ishi, president of the Open University of Japan, pointed out: "Under the present law, special account budgets are required to be used for specific purposes. So, they cannot be used freely. Since how the DPJ will secure the 22 trillion yen has yet to be made clear, it is hard to believe that the party will be able to implement its policies. If the DPJ aims to take over the reins of government, it should talk honestly about (the fiscal condition) to the public." (5) Special contribution by Yukio Okamoto (Part C): Japan at crossroads to determine its future course SANKEI (Pp. 1-3) (Abridged slightly) September 19, 2008 Japan has excellent nongovernmental organization (NGO) members. In Afghanistan, NGO members have removed antipersonnel mines, taught agricultural methods, including irrigation, engaged in school education, and provided medical assistance. Without any governmental backing or high salaries like civic servants, they have worked only with a sense of mission. There are female members, as well. Several years ago when the Japanese government workers were not allowed to go out of the capital of Kabul, I saw several Japanese female members working hard in remote places like Herat. I saw similar scenes in Iraq, as well. Western governments have given careful protection and financial support to their own NGOs. They have given assistance to foreign NGOs, as well. Some Japanese NGOs have received more funds from the U.S. government than from the Japanese government. The Japanese government's support for NGOs is very small -- 0.2 PERCENT of the official development assistance (ODA) budget. When American NGO workers are put in danger, a U.S. military helicopter would come to rescue them. The helicopter is boarded by American NGO workers and local workers in that order, so there would be no room for Japanese NGO workers. Japanese nationals would have to come up with evacuation methods independently. The government should enhance its support for NGOs fundamentally so that they can purchase vehicles and wireless applications to be used in time of an emergency and can step up their support activities throughout the world. ? Heroic aid workers The war on terror in and around Afghanistan is a matter of great concern to the international community. Some 40 countries have sent troops, border guards, and police officers to Afghanistan in compliance with a request from President Hamid Karzai. They are now conducting activities to secure security, which is essential for national reconstruction. The International Security Assistance Force (ISAF) consists of 53,000 troops from countries around the world. TOKYO 00002653 008 OF 014 Japan is not one of them. When asked by Afghan citizens why Japanese troops do not come, Japanese NGO members reportedly answer, "You got us instead." I met a brilliant young Japanese man in Phnom Penh in 1992. After speaking of his dream of bringing peace to Cambodia, the young man said: "Japan does not do anything, so we must work hard." His name was Atsuhito Nakata. Tanaka, who was working for peace-building in Cambodia as a UN volunteer, was shot to death by guerrillas in the following year. Japan boasted being the world's largest aid provider in the 1990s. Subsequently seeing a drop of 40 PERCENT in the amount, Japan has been overtaken by major Western countries. One ODA project after another has been terminated. Such a situation may take a toll on front-line aid workers. Aren't workers from the Japan International Cooperation Agency (JICA) or Japan Overseas Cooperation Volunteers (JOCV),who extend technological cooperation free of charge, bearing greater burdens? The government's decision not to join peacekeeping operations or to back away from economic cooperation may spur the heroic sense of mission of thoughtful NGO and aid workers. Forcing governmental responsibility onto individual goodwill and courage is the state's negligence. ? Not even monetary contribution The opposition bloc is trying to withdraw the refueler from the waters off Somalia in the Indian Ocean based on absurd logic. Withdrawal from the Indian Ocean means Japan's departure from the war on terror and the international mutual aid society, forcing its duty of protecting its own commercial vessels onto other countries. In 1991, Japan tried to contribute to the Gulf War by offering money alone. As a result, the country came under global criticism and ridicule. This time around, Japan has not even offered money. As I wrote for this newspaper on Nov. 28, 2007, there are many things Japan can do besides dispatching SDF vessels as long as there is a political will. But Japan has not done any of those things. Is Japan going to turn itself into a state that timidly hopes that its people and vessels will not be attacked by terrorists and pillagers? Is Japan going to become a state that continues praying that no evil will fall on it? Does Japan believe that the day will come when terrorists and pillagers say, after reading Article 9 of the Constitution, that they will stay away from Japan? Seeing NGO and JOCV workers making great achievements at various parts of the world, I do not think there is any need for Japan to become such a state. Japan has many young people with courage and a sense of mission. What kind of country should we hand over to them? We are probably at the most critical postwar crossroads to determine the future course of Japan. (6) MSDF refueling mission a test for national interests SANKEI (Page 9) (Abridged slightly) September 24, 2008 By Satoshi Morimoto, professor, Takushoku University graduate TOKYO 00002653 009 OF 014 school Still breeding ground for terrorists Although the political situation in Japan is chaotic, I want to see those responsible for state affairs fairly and squarely discuss what serves Japan's national interests in the international community. In order to maintain peace and stability, lawmakers must have sharp insights and the ability to think strategically about possible changes. Further, if the government fails to carry out what must be done, the country would not be able to pursue its national interests or win international credibility. The economy will not pick up, either. Achieving freedom and peace takes determination and efforts to defend them, even if it means risking some things and paying the due price. For instance, the government must stand firm against insurgents like those who killed Kazuya Ito, a Japanese aid worker, in Afghanistan recently. Still unable to maintain law and order independently, Afghanistan has become a breeding ground for terrorists, and the Taliban has now regained influence. That is why some 40 countries, including Western countries, are engaged in security operations in Afghanistan, the main battlefield in the war on terror. In order to maintain the security of the free world, Islamic terrorists in and around Afghanistan must be contained. That is why those countries are conducting the antiterrorism operations despite the fact that they have already lost over 900 lives. The United States is expected to strengthen the operations in Afghanistan regardless of who wins the presidency. Many European counties have also decided to send additional troops. Coalition vessels helped Japanese ships Many countries have deployed naval vessels to the Indian Ocean in order to prevent terrorists from taking opium out of this area to earn hard currency and from bringing arms and ammunition into this area. To support these maritime operations, Japan has deployed its vessels to the Indian Ocean for seven years. Japan has redeployed its vessels because the law for this mission was enacted in mid-January this year after extending two extraordinary Diet sessions. The Maritime Self-Defense Force has already refueled foreign naval vessels on over 40 occasions. Terrorists have learned that information, and the MSDF has not accomplished much over the last year when compared to earlier times. Still, the fact remains that the MSDF mission is vital for international peace and stability. Japan is a maritime state. The country also imports about 90 PERCENT of its crude oil from the Middle East. Tanker routes in the Indian Ocean are a lifeline supporting our comfortable livelihood. Some Japanese ships have encountered pirates in this sea and have been helped by foreign naval vessels engaged in the Maritime Interdiction Operations. While the free world is conducting its antiterrorism activities in Iraq, Afghanistan, and the Indian Ocean, Japan is not allowed or should not even try to withdraw from them. It is crystal clear how the option of dropping out of the joint effort with countries sharing such values as freedom, peace, and democracy will undermine Japan's national interests. TOKYO 00002653 010 OF 014 Lawmakers not thinking of the future of the country or the people's livelihood cannot be called true legislators. Political parties taking action irrespective of national interests cannot be called true political parties. If Japan failed to extend the Antiterrorism Special Measures Law, the MSDF's withdrawal from the Indian Ocean might coincide with the inauguration of the next U.S. president on Jan. 20, 2009. In view of the unclear future course of North Korea, the security of Japan in Eat Asia, and the Japan-U.S. alliance, it is impossible for Tokyo to opt for such an option, however. Options other than refueling Even if the activities in the Indian Ocean are to be continued, that does not mean Japan's cooperation and contribution is sufficient. International cooperation in Afghanistan serves Japan's national interest, and that requires a clear national strategy. Japan must realize that contributing to the people of Afghanistan is its responsibility as a member of the international community. There are many things Japan can do in Afghanistan. Dispatching C-130 cargo aircrafts and transport helicopters for an airlift mission is one option. Forming a provincial reconstruction team (PRT) to extend military-civilian cooperation is another option. It is also conceivable to provide medical and logistical support. The question is, whether political leaders have the firm political will and whether they can win public support for the enactment of legislation. Whether or not they can endure the risks and price associated with the deployment of the SDF is also an important factor. Pursuing national interests involves some risks. A country averting risks without a strong resolve cannot win international respect or trust. This concerns the responsibility and dignity of a state. If Japan cannot extend the Antiterrorism Law, its future will be bleak, and it might endanger the Japan-U.S. alliance, as well. Getting the supplementary budget past the Diet is important, but Japan needs to realize that for its future, it is far more important to demonstrate to the rest of the world its resolve and its ability to continue the international cooperation. (7) Japanese business circles concerned about China's new regulation on disclosure of secret information on IT equipment YOMIURI (Page 11) (Abridged slightly) September 24, 2008 Members of the Japan-China Economic Association's (JCEA, chaired by Fujio Cho, Toyota Motors chairman) delegation to China on September 23 met with senior officials of the Ministry of Commerce. They conveyed a strong concern harbored by Japan's economic circles about China's plan to establish a new system that forces the disclosure of secret information regarding IT equipment. However, the Chinese side stood firm in their stance of introducing the new system in May 2009 as planned. Japan, the U.S. and European countries are increasingly opposing the introduction of a system that is unprecedented in the world. Future talks are expected to face complications. Shigeji Ueshima, vice chairman of the JCEA and an advisor to Mitsui & Co. during the talks strongly asked the Chinese side to take a second look at the plan, noting: "Such a system could serve as a disturbing factor for bilateral cooperation for trade and investment in the high-tech area. It will also have an impact from the TOKYO 00002653 011 OF 014 perspective of protecting intellectual property rights." However, the Commerce Ministry Asian Affairs Bureau Director General Lu Kejian directly confronted, replying: "The envisaged system is in line with international standards. It is also in compliance with regulations set by the World Trade Organization (WTO)." Regarding intellectual property rights, too, Lu said, "Our planned system also stipulates confidentiality regarding its application." The talks thus ended in failure. The IT regulation planned by China is aimed at the forcible disclosure of the source code, the design of software. This would threaten companies' intellectual property rights. There is also concern in security terms, because it means that the products of exporting companies are to be exposed completely under such a system. The exposure of the source code of Windows could give rise to a sharp increase in hackers and attacks by computer viruses. The new regulations have thus contents that could meet opposition from all over the world, as a top person in a leading precision equipment manufacturer said. Detailed rules on implementation Concerning the objective of the new system, the Chinese side during the talks explained that it is aimed at preventing scams and the circulation of harmful information. Many products subject to the system are related to the Internet and networks. China appears to aim to strengthen information control within the country with authorities obtaining the source codes of software. The immediate focus is on the details of the rules on the implementation of the system. That is because detailed rules will stipulate what products are subject to what rules. Detailed rules were at first supposed to be released in May. The timetable was, however, postponed due to growing opposition to the new system from Japan, the U.S. and Europe. The Ministry of Economy, Trade and Industry intends to press ahead with talks with China in an effort to prevent China from setting serious rules. Special treatment seen in past However, there have been cases in which China treated specific companies as exception to its regulations. For this reason, various countries intend to call on China to withdraw the planned system in a cooperative way. However, some countries are trying to hold bilateral talks in an effort to prevent their own countries' companies from being placed at a disadvantage. If the talks remain unsettled by the time when the system is put into practice -- May, 2009, Japan and other countries may file a complaint against China with the WTO on the charge of violating the WTO agreement. (8) U.S. financial crisis likely to change map of Japan's business world: Can Japanese banks make best use of lessons learnt from collapse of bubble economy? TOKYO 00002653 012 OF 014 TOKYO SHIMBUN (Page 9) (Full) September 25, 2008 The financial crisis that started in the United States is now redrawing the map of the financial world in both Japan and the U.S. Japanese financial institutions are moving ahead in a bid to boost their overseas operations, taking the advantage of worsening business conditions in America. However, in the past, Japanese financial institutions failed in their initial drive to advance into the overseas market, so it is unknown whether they can become international business players, taking advantage of the current financial crisis. Reporting on the Japanese banks' aggressive moves, the Wall Street Journal headlined, "The Japanese are back!" Japanese financial institutions were once saddled with massive amounts of bad loans, but they now want to advance into foreign countries or expand business operations by using as leverage their investments in or takeovers of faltering European and U.S. financial institutions. The Sumitomo Mitsui Financial Group (SMFG) on September 24 revealed their plan to invest in Goldman Sachs, a leading U.S. securities firm. The two companies had once capital ties. SMFG is aiming to build a footing for its mergers and acquisitions operations abroad through investment in Goldman Sachs. Mitsubishi UFJ Financial Group (MUFJG),which has decided to acquire a 900 billion yen stake in Morgan Stanley, also aims to strengthen its M&A operations. Among securities houses, Nomura Holdings has bought the Asian and European operations of Lehman Brothers. Nomura's operational bases in Asia and Europe will double in one shot. In the insurance industry, AIG, which is now under state control, could sell off its group companies in Japan to cut back on their business losses. Japanese life and non-life insurers are eager to buy those companies. However, Naoko Nemoto, an analyst at Standard and Poors, took a cautious stand, although she highly evaluated such opportunities: "If Japanese financial institutions do not invest now, they might never have a chance to catch up with the global restructuring going on." Leading U.S. securities firms which Japanese banks plan to bail out are still saddled with highly risky financial products. Nemoto pointed out, "There still remains risks of their going under." In the event those companies file for bankruptcy, the stocks Japanese companies obtained through investment will become no better than waste paper. Investing in such companies could become a yet another cause for concern for business management. The latter half of the 1980s, when the economic bubble was at peak, saw a wave of Japanese banks purchasing U.S. financial institutions. However, the local staff soon left the companies acquired by Japanese banks because they found it too difficult to adapt themselves to the Japanese-style management. As a result, most Japanese companies had to pull out of operations in the U.S., selling the recently acquired financial assets. Can Japanese companies make the best use of lessons they had learned in the past? That will be the key as to whether they can use their investments and takeovers as means to absorb the know-how from the TOKYO 00002653 013 OF 014 acquired companies and their personnel. (9) Prime Minister's schedule, Sept. 24 & 25 NIKKEI (Page 2) (Full) September 25, 2009 Yasuo Fukuda 08:56 Met at Kantei with Chief Cabinet Secretary Machimura. 09:02 Attended cabinet meeting. 10:25 Met with Special Advisor Ito, followed by Deputy Chief Cabinet Secretary for Crisis Management Ito, Cabinet Public Relations Secretary Ogawa, Cabinet Intelligence Director Mitani, and followed by Deputy Chief Cabinet Secretary Futahashi. 11:20 Met with Futahashi, deputy chief cabinet secretaries Shionoya and Iwaki. 11:52 Met with Machimura, Shionoya, Iwaki and Futahashi. 12:51 Received bouquet from reprehensive of Kantei staff at front gate of Kantei. 13:02 Attended Lower House plenary session. 13:46 Arrived at Imperial Hotel. 15:22 Attended Lower House plenary session. 15:34 Arrived at Imperial Hotel. Taro Aso 16:52 Attended Lower House plenary session. 16:55 Named 92nd prime minister. Met with Fukuda, Machimura, LDP Secretary General Hosoda and Diet Affairs Committee Chairman Oshima. 17:06 Called on DPJ President Ozawa and other officials at their offices in the Diet building. 17:49 Met at Kantei Chief Cabinet Secretary Kawamura, and deputy chief cabinet secretaries Matsumoto and Konoike. 18:17 TOKYO 00002653 014 OF 014 Met with New Komeito leader Ota, attended by Hosoda and New Komeito Secretary General Kitagawa. Set up headquarters to pick new cabinet lineup, along with six LDP executives, including Hosoda and Upper House Chairman Otsuji, and New Komeito's Ota and Kitagawa. 18:35 Held press conference. 19:00 Called new cabinet ministers in his office, attended by Hosoda, Ota and others. Hosoda remained. 20:15 Received call from U.S. President Bush. 21:38 Made informal report to the Emperor at the Imperial Palace. Invested with prime minister by the Emperor. Attended Imperial attestation ceremony. 01:00 Issued at Kantei assignments to positions. 01:15 Held first cabinet meeting. SCHIEFFER