JAPAN POST INSURANCE UPDATE

C O N F I D E N T I A L SECTION 01 OF 02 TOKYO 000335

SIPDIS

USTR FOR BEEMAN AND HOLLOWAY
NSC FOR LOI

E.O. 12958: DECL: 02/09/2019
TAGS: EFIN ECON PREL JA
SUBJECT: JAPAN POST INSURANCE UPDATE

REF: A. STATE 3451

B. TOKYO 176

C. TOKYO 295

Classified By: CDA Jim Zumwalt for reasons 1.4 b/d.


1. (U) Please note action request contained in paragraph 9.

Summary
--------------

2. (C) Japanese officials hope to avoid discussion of Japan
Post Insurance and level playing field concerns during
Secretary Clinton's first visit to Japan, MOFA officials told
Emboffs during a February 10 meeting, and suggested using
other venues available to discuss U.S. concerns. Officials
from MOFA and other relevant agencies stressed Japan Post
Insurance has not submitted an application for a new product
that would compete with U.S. insurers' products. Nor, they
said, would an application mean automatic approval. The
officials sought further clarification of USG concerns. End
summary.


3. (U) Ministry of Foreign Affairs (MOFA) Second North
America Division Director Noriyuki Shikata called in Econoffs
February 10 to discuss Japan Post Insurance and ref
demarches. Ministry of Internal Affairs and Communications
(MIC) Postal Savings and Postal Life Insurance Policy
Division Manager Takeshi Kuroda, Office for the Promotion of
Privatization of Postal Services (OPJP) Manager Takahiro
Yamada, and MOFA Economic Affairs Service Trade Division
Official Kazuki Shimizu attended the meeting, as did MOFA
Second North America Division officials Hiroaki Ichiba, Kenzo
Nemoto, and Takashi Ishitobi.


3. (C) Shikata stated Japanese officials hope to avoid a
discussion of Japan Post Insurance and level playing field
concerns during the Secretary's visit. Instead, Shikata
suggested USG concerns about Japan Post entities enjoying an
unfair advantage over U.S. or other competitors should be
handled through working or senior official-level channels.
He noted insurance is discussed under both the Regulatory
Reform Initiative and yearly bilateral Insurance
Consultations and suggested the issue would be more
appropriately handled within those frameworks.


5. (C) Emboffs pointed out Japan Post Insurance appears to be
moving ahead with its application for a new insurance
product. This action has ratcheted up concerns among
industry and the USG. Emboffs noted the issue has been
discussed over the past few weeks with members of Congress
and officials at State, USTR, and the NSC, and noted again
our demarche (refs A and B) and other interactions in
Washington and Tokyo.

A Question of Process
--------------

6. (C) Shikata repeated the GOJ's points, that: 1) Japan Post
Insurance has not submitted an application for a new product;
and 2) that there is an application review and approval
process in place. Regarding the second point, FSA Postal
Savings and Insurance Supervisory Deputy Director Akinari
Nakano emphasized the submission of an application would not
mean the application would be approved and, that if it were
approved, it would still take considerable time before any
new product reached the market.


7. (C) Shikata then raised questions focused on two key
issues. First, he asked the USG to spell out specific
concerns about a lack of equal competitive conditions.
Second, he asked if the USG intends to convey the message the
FSA should refuse to accept an application from Japan Post
Insurance. (Note: in a separate meeting, FSA officials had
told Emboffs an insurance industry representative had
previously argued it would be inappropriate for the FSA to
accept a new product application from Japan Post Insurance.
End note.)


8. (C) Emboffs noted the long-standing U.S. position the

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Japan Post entities should not be allowed to issue any new or
altered product prior to the establishment of equal
competitive conditions. Emboffs said they had also heard
government officials had briefed the LDP postal privatization
project team that the GOJ expected to receive an application
for a new insurance product. (Note: Industry provided
information to us from the project team about this
development. End note.) Emboffs also noted MIC Minister
Hatoyama's recent statements to the press regarding a Japan
Post tender offer and his reported February 9 statement to a
Diet committee in which he indicated he would view favorably
certain product applications by Japan Post Bank. Such
statements, Emboffs said, created an atmosphere where
observers might question whether new product applications
could be handled transparently and apolitically. Prime
Minister Aso's recent statements covered by the media, both
for and against the overall postal privatization process,
raise further questions over the direction the GOJ is taking
postal privatization.

Department Guidance Requested
--------------

9. (C) Action Request: To advance U.S. advocacy on this
issue, Embassy requests further guidance on the issues listed
in paragraph 7. We would appreciate guidance as well in
responding to the point made by some GOJ officials that Japan
Post Insurance and Japan Post Bank will need to issue new
products prior to their planned 2010 or 2011 initial public
offerings (IPO) to show they can succeed as private sector
entities and to increase their IPO value. Is it, they ask,
the USG position that no level playing field can exist prior
to the IPO? Embassy appreicates Washington agencies' support
and guidance.
ZUMWALT