POSTAL PRIVATIZATION: JAPAN AND U.S. SHOULD

C O N F I D E N T I A L TOKYO 002921

SIPDIS

STATE FOR E, EEB AND EAP/J
NSC FOR LOI, RUSSELL
USTR FOR AUSTR CUTLER, BEEMAN AND LEE

E.O. 12958: DECL: 12/22/2019
TAGS: ECON EFIN PGOV JA
SUBJECT: POSTAL PRIVATIZATION: JAPAN AND U.S. SHOULD
DISCUSS QUIETLY

REF: STATE 129118

Classified By: Deputy Chief of Mission James P. Zumwalt;
Reasons 1.4 (b) and (d)


1. (C) Summary: The USG and GOJ should quietly resolve any
differences regarding Japan's postal privatization process,
Financial Services Agency Senior Vice Minister Kouhei Ohtsuka
told the DCM December 21 in response to points in reftel.
Ohtsuka welcomed USG statements that postal privatization is
an internal, domestic matter, and he requested the USG
continue to emphasize this point. The United States and
Japan should develop a "win-win" solution quietly, he
asserted, noting the media would like to construe the matter
as trade friction. He asked the USG to understand the
sensitivity of the postal privatization debate in Japan,
particularly in rural areas. End summary.


2. (C) The DCM delivered ref points December 21 to Financial
Services Agency Senior Vice Minister Kouhei Ohtsuka. In
response, Ohtsuka said the USG should "rest assured" that he
understands USG concerns. Referring to a front-page article
in the national Nikkei newspaper quoting DUSTR Marantis,
Ohtsuka welcomed statements that privatization is an
internal, domestic Japanese issue. The USG should continue
to express this point publicly, Ohtsuka said, but he also
encouraged the USG to take a different perspective to the
privatization debate than four or five years ago. The U.S.
and Japan should develop a "win-win" solution quietly, he
asserted, noting that the media would like to construe the
matter as trade friction. To the extent that the United
States emphasizes that postal privatization is an internal
matter, it will be easier for the public to accept the idea
of competition and fairness, Ohtsuka claimed.


3. (C) The GOJ does not plan to nationalize Japan Post again
but will continue on the path of privatization to create a
publicly-traded company. In this process, the GOJ will place
attention on fairness and on the need to create a level
playing field for foreign companies in all three areas of
banking, insurance, and express mail. Ohtsuka noted a
December 25 public hearing in which the American Chamber of
Commerce in Japan (ACCJ) will participate, and he welcomed
ACCJ and the Conference of Asia Pacific Express Carriers
(CAPEC) participation in such hearings.


4. (C) Ohtsuka and other politicans sense that the Japanese
public has been "feeling stress," compounded by a change in
government and the "embarrassing" fact that policy
coordination within the bureaucracy does not occur smoothly.
In addition, media bias has polarized the debate. Likening
Japan's rural areas to the American frontier, Ohtsuka
contended that given rural and urban differences in
perspectives on the postal system, the GOJ must take into
consideration the important role of the post office in rural
areas. He asked twice during the meeting that the USG
understand how sensitive this issue is in Japan.


5. (SBU) Ohtsuka said he regretted that his schedule did not
allow him to meet AUSTR Wendy Cutler during her visit, but he
hoped there would be a future opportunity.


6. (C) Comment: Ohtsuka also raised concerns about Futenma,
emphasizing the importance of resolving the matter and, at
the same time, tying the issue to the "stress" felt by the
general population. Ohtsuka's concern about Futenma and
emphasis on resolving the postal issue quietly epitomize the
DPJ's delicate balancing act between emphasizing the
importance of bilateral cooperation with the United States
while also demonstrating toughness and independence in public.
ROOS