Japan Economic Scope for December 16, 2008

UNCLAS SECTION 01 OF 03 TOKYO 003448 SENSITIVE SIPDIS STATE FOR EAP/J E.O. 12958: N/A TAGS: ECON ETRD SENV EFIN EAGR PREL JA SUBJECT: Japan Economic Scope for December 16, 2008 SENSITIVE BUT UNCLASSIFIED. PLEASE PROTECT ACCORDINGLY. ¶1. (U) This cable contains the Japan Economic Scope for December 16, 2008 Environment and Energy -------------- ¶2. (U) METI Unveils Sample Carbon Footprint Labels at Eco Fair The Ministry of Economy, Trade and Industry (METI) publicly unveiled samples of its proposed carbon footprint labels December 11 at the "Eco Products 2008" trade show in Tokyo. The tenth annual show, was organized by the Nihon Keizai Shimbun newspaper (Nikkei) and the Japan Environmental Management Association for Industry (JEMAI) and drew an estimated over 170,000 consumers and representatives from green industries, government and environmental NGOs. More information is on the Eco Products Fair web site. http://www.eco-pro.info/eco2008/english/index .html METI intends to launch a voluntary trial carbon footprint labeling program in early to mid 2009. The program, based on the U.K. model, initially covers basic consumer goods. According to Shintaro Ishihara from METI's Distribution Policy Division, METI will use feedback from the Eco Products fair to develop appropriate guidelines. METI is seeking competitive bids from private contractors to carry out the market experiment. At the same time, it is recruiting companies to participate in the voluntary labeling program. The carbon footprint labeling program has caused concern among U.S. companies that they may be disadvantaged in the Japanese market. See TOKYO 2964 for further details. ¶3. (U) Chinese Pollution Pushes Japan's Photochemical Smog to Unprecedented Levels Chinese pollution has helped raise Japan's photochemical smog to unprecedented levels, experts agreed at a recent symposium in Tokyo. According to Teruyoshi Hayami, Ministry of Environment (MOE) Director, of the Air Environment Division, a record 28 prefectures published photochemical smog advisories in 2007. These prefectures include Niigata and Ohita, which had never issued such advisories before. ¶4. (U) Japan-India Conference Highlights Barriers to Energy Conservation in India A recent Japan-India conference, "Partnership between Japan and India Towards a Low-Carbon Economy - Business Opportunities in India: Energy Efficiency and Renewable Energy", in Yokohama revealed several potential areas for Japanese help in promoting energy conservation in India. Dr. Rajendra Pachauri, Chair for the Intergovernmental Panel on Climate Change (IPCC),and a 2007 Nobel Peace Prize winner, opened the conference by praising the strong cooperation between Japan and India on energy technology. Seigou Mizunuma, Executive Managing Officer of Electric Power Development (J-POWER),stressed Japan's coal power generation efficiency is the world's highest. If Japan's best practices were used in India, China and the U.S., the results would mean a cut of about 1.3 billion tons of CO2, a number equivalent to Japan's total annual CO2 emissions. However, there are still various barriers to promoting energy conservation in India, according to Takeshi Sekiyama, General Manager for the International Cooperation Department of the Energy Conservation Center, Japan, a Ministry of Economy, Trade and Industry (METI)-related organization. Cheap energy prices subsidized by the Government of India (GOI),shortages of infrastructure, difficulties in searing financing scarcity of experts and information, limits on foreign investment, and high tariffs all work against improvements in energy efficiency. T.N. Thakur, Chairman and Managing Director of PTC India, a GOI-initiated public-private partnership focused on developing a power market, countered that rising electric bills would encourage greater conservation in the future. Insurance and Investments -------------- ¶5. (SBU) Insurance Policyholder Protection Fund Extended The Diet extended the life insurance Policyholder Protection TOKYO 00003448 002 OF 003 Corporation (PPC) December 12 through a revision to the Insurance Business Law (IBL). The PPC, which provides a safety net in case of life insurers' bankruptcies, consists of a pre-funded industry contribution and a "government fiscal commitment" which can be called upon if industry funding is insufficient. The Diet's action authorized the system for an additional three years, until March 2012, including the government's commitment. The PPC had been scheduled for a full review by the Financial Services Agency (FSA)advisory council in the run-up to its reauthorization, during which U.S. industry planned to advocate for changing the PPC to a post-funded system. However, the FSA cut short the normal deliberative process and pushed a straight extension of the current system through for Diet consideration. Financial Services Agency officials shared that the decision to short-cut the deliberative process came from a political directive, as ruling LDP politicians reacted to policyholder unease over the failure of a small Japanese life insurer and global financial turmoil. Japan's Foreign Relations -------------- ¶6. (U) Japan's Statement in the Doha Financing for Development Conference At the Doha conference reaffirming the Monterrey Consensus, Vice Foreign Minister Minorikawa emphasized the need to carry out all existing commitments. Japan will aggressively support developing countries which may be seriously affected by the financial crisis. Japan International Cooperation Agency (JICA) also participated in discussion about foreign direct investments and private fund flows. JICA emphasized the important role the Official Development Assistance (ODA) plays to encourage more private funds for development projects in the context of global financial uncertainty, which has affected the availability of private fund flows. ¶7. (U) GOJ Stops Yen Loans to Vietnam Unlike past years, Japan made no pledge during the recent Consultative Group meeting held in Vietnam. The GOJ stopped providing any new loans to Vietnam after a Japanese ODA consultant firm was indicted over the bribery case involving Vietnamese government officials,. Ministry of Foreign Affairs official said Japan will suspend its yen loans until the Vietnamese government works out a recurrence prevention plan and punishes officeholders implicated in teh scandal. Japan had been Vietnam's largest donor. Japan annually provided about $600 million of ODA to Vietnam in the past few years, about 75 percent of which in the form of loans. ¶8. (U) GOJ to Provide Loan Assistance To Egypt The GOJ is providing a loan of 23.9 billion yen (about $260 million) to Egypt for three loan projects. The note was exchanged between Japanese Ambassador Ishikawa and Egyptian Minister of International Cooperation, Aboulnaga on December 4. The three loan projects include: support for small enterprises, construction of a solar and gas integrated power plant, and electricity supply system improvement. Transportation -------------- ¶9. (U) Toyota's Mississippi Plant Another Victim Of Economic Downturn? Plummeting car sales in the U.S. have convinced Toyota, the world's biggest automaker, to postpone plans to produce the Prius hybrid car in Mississippi. NHK reported December 16 that Toyota has decided to postpone indefinitely the construction of its plant in Mississippi. However, a Toyota executive told Consulate Nagoya construction of the plant will be completed by the spring of 2009. About 90 percent of the construction has already been completed, but the installation of equipment and machinery will have to wait until the U.S. auto market improves. Toyota saw its car sales in the U.S. drop 34 percent in November compared to the same month last year. The popular Prius was hit even harder, with sales of this environmentally friendly vehicle dropping 48 percent. Toyota originally planned to produce Highlander SUVs at its Mississippi plant, its eighth plant in North America, but changed plans in July make fuel-efficient Prius models there instead. TOKYO 00003448 003 OF 003 SCHIEFFER