JAPANESE MORNING PRESS HIGHLIGHTS 12/04/08

UNCLAS SECTION 01 OF 08 TOKYO 003305 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: JAPANESE MORNING PRESS HIGHLIGHTS 12/04/08 Index: 1) Top headlines 2) Editorials 3) Prime Minister's daily schedule (Nikkei) Fiscal policy switch: 4) Gov't veering away from fiscal reconstruction (Yomiuri) 5) Gov't cites international cooperation to get over financial crisis as reason for fiscal policy changeover (Yomiuri) Convention on Cluster Munitions: 6) Cluster bomb ban inked in Oslo by about 90 countries, including Japan (Mainichi) 7) U.S., Russia, China sit out (Sankei) 8) Prime Minister Aso says Japan will work on U.S., China to join cluster bomb ban (Mainichi) 9) Gov't to budget alternative ordnance (Yomiuri) North Korea problem: 10) U.S., Japan, ROK band together, but still differ on how to verify North Korea's nuclear declaration (Tokyo Shimbun) 11) Pyongyang reportedly to enter 2nd phase "by March next year" to abandon nuclear program (Nikkei) Defense & security agenda: 12) House panel likely to approve MSDF refueling extension bill on Dec. 16 (Asahi) 13) Base-hosting governors meet with USG, GOJ officials over U.S. military presence, seek to mitigate burden (Mainichi) Global warming: 14) Japan to buy CO2 emission rights for 700 billion yen (Mainichi) Agricultural topics: 15) MAFF to liberalize farmland lease for businesses (Asahi) 10 Articles: 1) TOP HEADLINES Asahi, Yomiuri & Tokyo Shimbun: Government sets budget principles, shelving spending cut policy Mainichi: Japan and some 90 countries sign treaty banning cluster bombs Nikkei: Nippon Oil, Nippon Mining to merge, creating world's 8th-largest petroleum firm Sankei: Big Three seek 3.2 trillion yen for bailout; GM in serious situation Akahata: Isuzu's non-permanent workers form union 2) EDITORIALS TOKYO 00003305 002 OF 008 Asahi: (1) Shift in spending cut policy: Fiscal discipline necessary to overcome crisis 
 Mainichi: (1) Government should give more consideration to welfare and employment issues (2) Promise to free up revenues from road-related tax a lie? Yomiuri: (1) State budget for FY2009: Need to pay careful attention to economy and employment (2) Turmoil in Thailand: Find ways to ease political unrest Nikkei: (1) In order to revitalize economy, expenditures should be expanded (2) Bailout plan for Big Three appropriate? Sankei: (1) Budget compilation: Maintain fiscal discipline (2) State control: Recommendations should be completely implemented Tokyo Shimbun: (1) Shelving spending cut policy without debate unacceptable (2) Japan should learn lesson from Big Three Akahata: (1) Need for substantial change in "big-boned" economic and fiscal policy 3) Prime Minister's Official Residence (Kantei) Prime Minister's schedule, December 3 NIKKEI (Page 2) (Full) December 4, 2008 07:58 Met with LDP Tax System Research Commission Chairman Tsushima, Subcommittee Chairman Yanagisawa and advisors Noda, Machimura and Ibuki. 10:22 Met with Chugoku Economic Federation Chairman Fukuda at the Kantei. 11:10 Met with former Chinese Foreign Minister Li Zhaoxing, followed by Ashikaga Mayor Yoshitani and others. Then met with Utsunomiya Mayor Sato. 12:03 Award ceremony for persons of merit for promoting barrier-free universal design. 14:14 Met with Deputy Chief Cabinet Secretary Konoike, followed by Lower House member Jiro Akama. Then met with special advisor to party president Shimamura and Public Relations Headquarters chief Furuya. 15:17 Met with Cabinet Intelligence Director Mitani, followed by National TOKYO 00003305 003 OF 008 Chamber of Agriculture President Ota and other. LDP Agricultural and Marine Product Research Commission Chairman Futa and Upper House member Kishi were present. Then met with Fukuoka Chapter Chairman Kurauchi. 16:15 Met with Deputy Foreign Minister Sasae. 17:03 Council of Economic and Fiscal Policy meeting. 18:42 Special cabinet meeting. 19:07 Met with LDP Policy Research Council Chairman Hori and his New Komeito counterpart Yamaguchi. 19:37 Met with Diet Affairs Committee Chairman Oshima, Lower House Diet Steering Committee Chairman Kosaka and Chief Cabinet Secretary Kawamura and Secretary General Hosoda were present. 21:20 Met with his secretary at a bar in Imperial Hotel. 23:24 Arrived at the private residence in Kamiyamacho. 4) Government decides to shift from spending cut policy YOMIURI (Top play) (Lead para.) December 4, 2008 The government at a special cabinet meeting yesterday adopted a basic policy on the compilation of the fiscal 2009 budget. Regarding the budget request guidelines for fiscal 2009, which incorporate constraint on growth in social security spending and a cut in public works, the basic policy includes the words "maintain the guidelines," which is weaker than the previous words "firmly maintain." In readiness for a further decline in the economy, the basic policy indicates a government stance of increasing public spending in a flexible manner with the expression that a decisive response will be made in a timely and flexible way. The government has thus clearly indicated a stance of giving priority to turning the economy around instead of implementing fiscal reconstruction, by effectively switching from the fiscal reconstruction policy line, which has been in place since 2006 during the Koiuzmi administration. 5) Government sets budget principles: Policy shift with cooperation with U.S. and European countries as justification YOMIURI (Page 9) (Excerpts) December 4, 2008 The government yesterday adopted a basic policy on the compilation of the fiscal 2009 budget, in which it included a decision to put off the fiscal reconstruction policy line. As justification for the policy switch, the government cited cooperation with the U.S. and European countries in addressing the financial crisis. Since there is concern that public spending will increase without principles in TOKYO 00003305 004 OF 008 areas unrelated to efforts to address the financial crisis, the government will likely have to reset its guidelines for maintaining the fiscal discipline. Later in the day, Prime Minister Aso told reporters, "I will consider fiscal reconstruction over the medium term. I will focus on economic stimulus measures for the next three years." He thus denied the view that the government had shifted from the fiscal reconstruction policy line. State Minister for Fiscal and Financial Policy Nakagawa echoed his view: "The government will not abandon the fiscal discipline. However, it will give consideration to the economic situations in Japan and the world, as they are beginning to change." However, the adopted basic policy gives a strong impression that priority has been given to economic stimulus measures. The government has now backpedaled on its consideration for the fiscal discipline. Gist of basic policy on fiscal 2009 budget compilation ? There is mounting concern that the downward trend of the Japanese economy will become protracted and serious. ? Depending on circumstances, a decisive approach should be made in a timely and flexible way, based on the financial summit declaration, while maintaining the budget request guidelines for the fiscal 2009 budget. ? "Peace of mind for people," "strengthening financial and economic stability" and "demonstration of local potential" should be made key areas. ? Make efforts to achieve the goal of moving the primary balance of the central and local governments into the black by fiscal 2011. 6) Some 90 countries, including Japan, sign treaty banning cluster bombs MAINICHI (Top play) (Lead paragraph) December 4, 2008 Katsumi Sawada, Oslo A signing ceremony for the Convention on Cluster Munitions (Oslo treaty) banning the use, manufacturing, and possession of cluster bombs, was held at the Oslo City Hall on Dec. 3. Unexploded bomblets often cause damage to civilians. The treaty also stipulates support for victims and the disposal of unexploded bombs. Some 90 countries are expected to sign the treaty. The pact will come into effect about half a year after the first 30 countries have ratified it. Following the Landmine Ban Treaty (that went into effect in 1999), this is the second pact that will take effect under the initiative of like-minded countries and nongovernmental organizations (NGOs). Citizens-led disarmament diplomacy has opened up a new horizon. 7) Some 100 countries, including Japan, sign cluster bomb ban treaty; U.S, Russia and China not included SANKEI (Page 2) (Excerpt) December 4, 2008 Masato Kimura, London A signing conference for the Convention on Cluster Munitions was TOKYO 00003305 005 OF 008 held in Oslo on December 3. Damage to civilians by unexploded bomblets has long been a problem. Some 100 countries, including Japan, the UK, Germany and France, signed the treaty. Finland, which borders Russia, did not sign the pact. The absence of such major producers as the United States, Russia and China also offered a glimpse into the severe reality of international politics. 8) Aso to urge U.S., China to sign cluster bomb ban treaty MAINICHI (Page 2) (Full) December 4, 2008 Keiichi Shirato Touching on the fact that Japan has signed the cluster munitions ban treaty, Prime Minister Taro Aso indicated to reporters at the Prime Minister's Office yesterday that he would urge such countries as the United States and China to join the treaty. He said: "I would like to work upon as many non-signatory countries as possible to join the treaty. This is a historic event." 9) Cluster bomb treaty signed; Government to allocate funds for alternative weapons in supplementary budget YOMIURI (Page 2) (Full) December 4, 2008 The government decided yesterday to include the maintenance cost of precision-guided bombs replacing cluster bombs in a fiscal 2008 second supplementary budget to be submitted to the next regular Diet session in January. Approximately 7.3 billion yen is included in the budgetary request for fiscal 2009. But the government has now decided to frontload the cost, concluding that in order to maintain the country's defense capabilities, obtaining alternative weapons is indispensable. As alternative weapons, the Defense Ministry has decided to introduce precision-guided M-31 rockets for a multiple-launch rocket system and laser JDAM kits for fighters. Their maintenance costs were included in the fiscal 2009 budgetary request. 10) Japan, U.S., ROK demonstrate solidarity, but gaps remain on how to verify North Korea's nuclear declaration TOKYO SHIMBUN (Page 2) (Abridged slightly) December 4, 2008 Negotiators on North Korea's denuclearization -- Foreign Ministry Asian and Oceanian Affairs Bureau Director General Akitaka Saiki, U.S. Assistant Secretary of State Christopher Hill and South Korea's envoy Kim Sook -- held a meeting yesterday in Tokyo. Ahead of the next round of the six-party talks slated for Dec. 8, the three nuclear envoys banded together, but differences appeared in their positions on how to verify North Korea's nuclear declaration. In the meeting, the three negotiators agreed to aim at pressing the North to agree to verify its nuclear disarmament in writing, including sampling of nuclear materials. Although sampling is indispensable for verifying the amount of plutonium, Pyongyang has refused to accept it. The agreement reached in October between the United States and North Korea is unclear on TOKYO 00003305 006 OF 008 this point. The Japanese government, therefore, has strongly demanded that a deal be put down in writing. The Japanese side appears to have reminded the Bush administration not to make an easy concession. After the meeting, Hill softly sought to constrain the Japanese government, which has insisted on the need for the codification of a verification protocol. He said: "North Korea's denuclearization is not the only purpose of the six-party-talks. Another purpose is to build relations among countries in the region." South Korea also has called for the codification of a verification protocol, but its real intention is to resume Inter-Korean dialogue by taking advantage of progress on the six-party talks. 11) South Korean media report on completion by next March of second phase of North Korea's denuclearization NIKKEI (Page 2) (Full) December 4, 2008 The chief delegates to the six-party talks of Japan, the United States and South Korea yesterday discussed in Tokyo steps to be taken at the next round of the six-party talks, which is expected to begin in Beijing on Dec. 8. They confirmed a policy course to aim at completing by next March the second-phase measures of the disablement of nuclear facilities and energy aid for the nuclear abolition of North Korea. They also agreed to let other countries take over Japan's share of aid equivalent to 950,000 tons of heavy fuel oil, which Tokyo has been refusing to provide due to a lack of progress on the abduction issue. These developments have been reported by some South Korean media as accounts from an official of its Foreign Affairs and Trade Ministry. A senior Japanese Foreign Ministry official has denied those developments, saying: "Such specifics were not discussed." The meeting was held among Foreign Ministry Asian and Oceanian Affairs Bureau Director-General Akitaka Saiki, U.S. Assistant Secretary of State Christopher Hill, and South Korean Foreign Affairs and Trade Ministry Korean Peninsula Peace and Security Affairs Special Representative Kim Sook. They also confirmed the need to put into writing an effective means to verity the nuclear programs declared by the North, including the sampling of its nuclear facilities. 12) Upper House panel to take vote on refueling extension bill on Dec. 16 ASAHI (Page 4) (Full) December 4, 2008 Toshimi Kitazawa, chairman of the House of Councillors' Committee on Foreign Affairs and Defense, proposed yesterday in a committee meeting taking a vote on a bill amending the new Antiterrorism Special Measures Law designed to extend by one year the Maritime Self-Defense Force's refueling mission in the Indian Ocean. The expectation is that if the ruling and opposition camps can coordinate a timetable for intensive deliberations on civilian control, which the opposition bloc has called for, the committee will put the bill to a vote as early as Dec. 16. TOKYO 00003305 007 OF 008 13) 14 base-hosting governors meet with Japanese, U.S. government officials, seek to lighten burden MAINICHI (Page 5) (Full) December 4, 2008 The Japanese and U.S. governments held their first three-party liaison conference at the Foreign Ministry yesterday with representatives from the governments of 14 prefectures that host U.S. military bases, including Tokyo and Hokkaido. In the meeting, local government representatives asked the Japanese and U.S. governments to lessen their prefectures' base-hosting burden. Incidents and accidents involving U.S. Forces Japan have been discussed in an intergovernmental joint committee of Japan and the United States. However, the 14 base-hosting prefectures, represented by Kanagawa Gov. Shigefumi Matsuzawa, have asked the Japanese and U.S. governments to hold a three-party conference for a periodical exchange of views. In the meeting, Matsuzawa and other participants took up such issues as the noise problem of U.S. military bases in Japan and they insisted that the planned realignment of U.S. forces in Japan-which reached a bilateral agreement in 2006-should make headway in accordance with its roadmap. 14) Japan to buy emission rights worth 700 billion yen MAINICHI (Page 1) (Excerpts) December 4, 2008 The total amount of emission rights that the government and industry circles will purchase in order to meet Japan's target of reducing greenhouse gas emissions promised under the Kyoto Protocol on global warming was revealed yesterday. Japan will buy carbon emission rights at least 350 million tons worth approximately 700 billion yen in international markets. As domestic greenhouse gas emissions have been on the increase, if Japan fails to cut its emissions, its costs for emissions trading could increase further. The decision was reported in a joint meeting yesterday of the Environment Ministry and the Ministry of Economy, Trade and Industry. In the breakdown of the 350 million tons, the Federation of Electric Power Companies of Japan will purchase 190 million tons and the Japan Iron and Steel Federation 59 million tons. The government will also purchase about 100 million tons with tax money. In addition, about ten other industries are now considering buying emission rights. 15) Agriculture Ministry decides to liberalize lease of farmland to boost entrance of corporations ASAHI (Page 7) (Full) December 4, 2008 The Ministry of Agriculture, Forestry and Fisheries (MAFF) on December 3 announced a policy of reforming the farmland system featuring boosting the advance of corporations into the agricultural sector, by liberalizing, in principle, the lease of farmland. Its aim is to clarify the separation of the possession of farmland from the use of such, by amending the Agricultural Land Law enacted in 1954, which stipulates that farmers should own the land. MAFF wants to submit a bill amending related bills, including the Agricultural TOKYO 00003305 008 OF 008 Land Law, to the regular Diet session next year. MAFF Minister Ishiba presented the plan at a meeting of the government's Council on Economic and Fiscal Policy held the same day. When companies advance into the agricultural sector, they either lease farmland or set up an agricultural production corporation, which can own farmland. However, it is municipalities that decide whether to carry out the leasing of farmland. They can also designate farmland to be used in the business. Since farmland in poor condition has often been offered for such a purpose, business circles have been calling for improvement. The guidelines for establishing an agricultural production corporation limit the ceiling of one company's investment ratio to 10 PERCENT or lower. MAFF plans to ease this limit. It will work out a specific figure later. Farmers are exempt from paying the inheritance tax if they inherit farmland from their parents. MAFF plans to apply this system, even if inherited farmlands are leased. It will confer on the matter with the Finance Ministry. SCHIEFFER