FOREIGN MINISTRY SEEKS DIALOGUE ON REGIONAL

C O N F I D E N T I A L SECTION 01 OF 02 TOKYO 000450

SIPDIS

SIPDIS

NSC FOR TONG
STATE PASS USTR FOR AUSTR CUTLER, DAUSTR BEEMAN
PARIS FOR USOECD
TREASURY FOR IA - DOHNER, POGGI, HAARSAGER, CARNES
GENEVA ALSO FOR USTR

E.O. 12958: DECL: 02/20/2028
TAGS: ECIN ECON PREL PGOV APECO JA
SUBJECT: FOREIGN MINISTRY SEEKS DIALOGUE ON REGIONAL
ARCHITECTURE

TOKYO 00000450 001.2 OF 002


Classified By: Amb. J. Thomas Schieffer. Reason: 1.4 (b,d)


1. (C) Summary: Japanese Foreign Minister Koumura
may propose increased dialogue with the United States
on regional economic architecture during his February
27 meeting with Secretary Rice. Some in the Foreign
Ministry appear concerned Japan is being excluded from
U.S. initiatives such as the investment talks with the
"P4" countries that could lay the groundwork for a
future trans-Pacific free trade agreement and would
like to increase discussions with the United States on
APEC-based models. Nevertheless, deliberations within
the Foreign Ministry on whether to broach this
proposal formally have yet to conclude, and no other
GOJ agencies, including those likely to oppose an
APEC-centered approach such as the Trade and
Agriculture Ministries, have been consulted. End
summary.


2. (C) In preparation for FM Masahiko Koumura's
February 27 meeting with Secretary Rice, the Japanese
Ministry of Foreign Affairs (MOFA) is preparing a
talking point asking for increased dialogue with the
United States on Asian regional architecture,
according to MOFA Second North American Affairs
Division Director Noriyuki Shikata. Meeting with
econoffs February 20, Shikata indicated this proposal
had yet to be fully coordinated within the Ministry
itself and had not been raised with other relevant GOJ
agencies, notably the Ministry of Economy, Trade, and
Industry (METI). Nevertheless, MOFA's Economic
Affairs Bureau hopes by raising this point in the
meeting with the Secretary and, by explaining the
background to this relatively anodyne language, there
may be an opening to begin to bring U.S. and Japanese
thinking on regional architecture more into alignment.
Shikata added MOFA Economic Affairs Deputy Director-
General Kusaka would call NSC Asian Affairs Director
Tong to convey the same message at 7:00 p.m.
Washington time February 20.


3. (C) This dialogue on regional architecture,
Shikata outlined, would take place between senior
officials on both sides and would center on APEC as
the primary forum. With Singapore, Japan, and the
United States hosting APEC in 2009, 2010, and 2011
respectively, there is a clear opportunity for these
three like-minded economies to advance significantly
the process of developing a new regional architecture.
Shikata suggested initial discussions could take place
on the margins of the February 25 APEC CTI Trade
Policy Dialogue and during the Senior Officials'
Meeting the following week. The dialogue, however,
should not be limited to the APEC Senior Officials,
Shikata stressed. Other relevant officials, such as
from USTR and NSC on the U.S. side, should also
participate.


4. (C) Shikata said the Japanese had not yet
determined on which of the three main models for
regional architecture -- ASEAN Plus 3, ASEAN Plus 6,
or the APEC-based Free Trade Agreement of the Asia-
Pacific (FTAAP) -- to focus its resources. Within
MOFA, the North American Affairs and Economic Affairs
Bureaus were most inclined to pursue the FTAAP model
because it most closely conforms to PM Fukuda's desire
to develop a regional architecture that does not
exclude the United States, Shikata indicated.
Moreover, in contrast to a U.S.-Japan bilateral free
trade agreement, whose potential critics are numerous,
the FTAAP concept, Shikata observed, is relatively

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more difficult for other offices and agencies to
oppose in the Japanese political context. Initial
consultations with MOFA's Asia Bureau (which has
tended to disregard APEC as a vehicle for regional
integration) had been generally positive although
these internal discussions had not concluded. METI,
though, would not be consulted until later in the
process, Shikata added.


5. (C) Increased dialogue between the United States
and Japan is needed, however, because Japan remains
uncertain over U.S. objectives, Shikata noted. He
indicated the recent announcement of the discussions
between the "P4" countries (Singapore, Chile, Brunei,
and New Zealand) and the United States on a possible
trans-Pacific investment agreement had raised
questions in Tokyo whether the United States is
looking to use the P4 as a platform for expanding
regional architecture.

Comment
--------------


6. (C) The U.S. announcement of talks with the P4
appears to have rattled the portions of MOFA charged
with handling U.S. affairs who perceive the United
States may be developing a set of partners within APEC
-- committed to substantial trade and investment
liberalization -- that does not include Japan.
Nevertheless, it was clear from Shikata's remarks that
he was speaking only for a particular faction within
MOFA and not for the GOJ. Despite repeated
declarations that Japan has yet to embrace any
particular model for regional integration, the METI-
devised "Closer Economic Partnership with East Asia"
(the so-called "ASEAN Plus 6" option),which excludes
the United States, remains the only Japanese proposal
formally on the table and continues to enjoy support
not only within METI but from the Japanese business
community as well. Shikata and his superiors may be
maneuvering to shift GOJ policy on regional
architecture, but at present, they are clearly not
ready to take on METI and the other vested interests
(such as the Agriculture Ministry) which have little
or no interest in FTAAP.
SCHIEFFER