Cablegate: Japanese Morning Press Highlights 04/12/07

DE RUEHKO #1605/01 1020107
P 120107Z APR 07





E.O. 12958: N/A


1) Top headlines
2) Editorials
3) Prime Minister's daily schedule

Visit of Chinese Premier Wen Jiabao:
4) Abe, Wen agree to strengthen economic ties, speed up strategic
mutually-beneficial relationship, focusing on energy, environmental
5) Talks between Prime Minister Abe, Premier Wen avoid historical
6) China agrees to resume imports of Japanese rice
7) Gist of conversation between Abe, Wen

8) WWII comfort-station owner in Indonesia, later enshrined at
Yasukuni, was "ordered by Japanese military" to set up facility:

Defense and security affairs:
9) PACOM Commander Adm. Keating, Defense Minister Kyuma agree to
cooperate in promoting USFJ realignment plan
10) Lower House ready to adopt USFJ realignment legislation
11) Japan, US, Australia to hold bureau director-general-level talks
today on security affairs

Political issues:
12) National referendum bill on constitutional amendment process to
be adopted by Lower House committee today over opposition 's
13) Minshuto (Democratic Party of Japan) head Ozawa avoiding
debating Abe in Diet, focusing instead on campaign stumping for
Upper House election
14) More faked records of political expenses uncovered at Minshuto
lawmaker Nakai's office
15) Another irregularity for Agricultural Minister Matsuoka
involving nine years of suspicious entertainment expenses

16) Japan, US begin study of possible EPA

17) Finance Ministry plans restrictions on foreign company
affiliates forming triangular mergers in Japan, particularly the
forming of "paper companies"



Asahi, Mainichi, Yomiuri, Nihon Keizai, Sankei and Tokyo Shimbun:
Abe, Wen agree on building "strategic, reciprocal relations" and
boosting bilateral economic relations with emphasis on environment,
energy; Specific plans for joint gas development this fall; Abe to
visit China later this year

National reformist council announces that 54 renowned figures are in
favor of thorough discussion on national referendum legislation and
protecting Article 9


(1) Japan-China summit: Reciprocal visits needed
(2) Kanemi oil symptoms: Squarely address question of dioxin

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(1) Regular summit talks essential for Japan and China
(2) North Korea must keep its promises

(1) Don't let political issues hinder Japan-China ties
(2) Will envisioned human resource bank really work?

Nihon Keizai:
(1) Tokyo, Beijing must make greater efforts to melt the ice

(1) Japan-China summit: Clear reciprocal path essential
(2) Pressure on North Korea necessary for dialogue

Tokyo Shimbun:
(1) Six-party talks must not create problems for future
(2) G7: Greater risk awareness called for

(1) Danger of state-controlled broadcasting

3) Prime Minister's Official Residence (Kantei)

Prime Minister's schedule, April 11

NIHON KEIZAI (Page 2) (Full)
April 12, 2007

Met at Kantei with Foreign Ministry Asian and Oceanian Affairs
Bureau Chief Sasae, joined by Chief Cabinet Secretary Shiozaki.

Met with Special Advisor Nemoto, followed by Lower House member
Tokuichiro Tamazawa.

Attended groundbreaking ceremony for redevelopment of the Otemachi
2-chome district at Nippon Keidanren Hall. Met later with Tokyo Gov.

Met at Kantei with Shiozaki.

Met with Deputy Chief Cabinet Secretary Matoba.

Cabinet Intelligence Director Mitani.

Welcomed Chinese Premier Wen. Held welcoming ceremony for Wen and a
meeting with him.

Attended signing ceremony for joint press statement.

Hosted dinner party for Wen.

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Returned to his official residence.

4) Abe, Wen agree on boosting Japan-China economic cooperation
focusing on environment, energy; Greater efforts for a strategic,
reciprocal relationship affirmed

NIHON KEIZAI (Top play) (Excerpts)
April 12, 2007

Prime Minister Shinzo Abe met yesterday with visiting Chinese
Premier Wen Jiabao at his official residence for about one hour and
40 minutes. The two leaders agreed to establish, among other things,
a Japan-China economic ministerial conference to realize "strategic,
reciprocal relations" between the two countries centering on the
environmental and energy areas, as was agreed upon last October
between Abe and Chinese President Hu Jintao. They also affirmed
close cooperation on the North Korean nuclear and abduction issues.
Abe officially expressed his intention to visit China later this

Wen is the first Chinese premier to visit Japan since Zhu Rongji in
October 2000. Abe and Wen, who signed two joint statements on
environmental conservation and energy cooperation, released a joint
press statement after the summit.

Abe started off his meeting with Wen with the remark, "I expect your
visit to Japan will serve as a big step forward toward building a
strategic, reciprocal relationship between our two countries." In
response, Wen said, "I believe that will be the most important
achievement in this trip." Abe revealed a plan to visit China later
this year and also invited President Hu to visit Japan early next
year. Wen replied, "We would like to consider it positively."

Regarding historical views, Wen stated: "Historical issues, if they
are settled amicably, could result in a good political foundation
for the development of bilateral relations; if handled poorly, they
could become an obstacle." Abe replied, "Japan has been following a
peaceful path."

On the Taiwan issue, Wen said, "China will not accept an independent
Taiwan." In response, Abe said, "We do not take two-China policy or
support Taiwan's independence."

The two leaders also agreed that the two countries would jointly
develop gas fields in a comparatively broad area of waters in the
East China Sea acceptable to the two sides. The next
bureau-chief-level talks will be held in May. The two countries will
aim at reaching an agreement on joint development by this fall.

On the North Korean nuclear issue, Abe and Wen also agreed that
Pyongyang must faithfully implement the initial steps, such as
shutting down and sealing its nuclear facilities, as was agreed upon
at the six-party talks in February. Wen announced that China would
provide necessary cooperation to Japan for an early settlement of
the abduction issue.

5) Japanese, Chinese prime ministers avoid pursuing history issue,
confirm cooperation on North Korean nuclear issue, and maneuver on
abduction and Taiwan issues

NIHON KEIZAI (Page 2) (Excerpts)

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April 12, 2007

Quite apart from the peaceful atmosphere at the diplomatic events
designed to give the impression of cooperative stances, Prime
Minister Shinzo Abe and Chinese Premier Wen Jiabao in their meeting
yesterday had penetrating exchanges on pending issues.

Wen broached the intended subject of his conversation, saying:

"If we can deal skillfully with the issue of historical views, that
would become a good political base for improving bilateral ties. But
if we cannot, the issue will hinder our efforts to move relations

This year marks the 35th anniversary of normalization of diplomatic
ties between Japan and China, as well as the 70th anniversary of the
Marco Polo Bridge Incident. China therefore is sensitive about the
history issue.

The Chinese premier without a doubt had the Yasukuni-Shrine issue in
mind. Wen added: "Progress on bilateral relations after Prime
Minister Abe visited China compared to twists and turns in the
relationship in recent years have proved that." He sought to
constrain Abe by referring to the worsening of ties brought on by
visits to Yasukuni Shrine by Prime Minister Junichiro Koizumi.

Abe, under advice to "handle the historical issue properly," dodged
the remark by responding: "My desire is for Japan to continue moving
ahead as a peaceful country; that is my view of history." A joint
press statement included the same expression stipulated in last
October's press statement that the two countries should face the
history issue squarely while looking ahead into the future. Abe and
Wen thus avoided pursuing the history issue.

6) Resumption of rice exports to China: Japanese products dependent
on Chinese market

TOKYO SHIMBUN (Page 9) (Full)
April 12, 2007

The governments of Japan and China signed an agreement yesterday to
resume Japan's exports of rice to China after four years of
suspension. Prime Minister Shinzo Abe and visiting Chinese Premier
Wen Jiabao confirmed the details of the agreement during their
meeting yesterday afternoon. The Japanese government has set forth
the goal of increasing exports of agriculture, forestry and
fisheries products to one trillion yen by 2013. Rice might become a
powerful card for Japan to meet this goal. Farmers across the nation
now have growing expectations for the Chinese market with 1.3
billion people.

In China, about 128 million tons of rice is consumed annually, about
15 times more than in Japan. The average price of rice per kiloliter
is about 50 yen in China, but the number of those who earn more than
10 million yen annually is now larger there than in Japan, owing to
its rapid economic growth. Agriculture, Forestry and Fisheries
Minister Toshikatsu Matsuoka emphatically said: "It is significant
for Japan to be able to export rice, which is the symbol of Japanese
farm products, to China, in which high-end consumers are increasing
as its economic level has risen."

Japan's exports of agriculture, forestry and fisheries products in

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2006 surged to 374.1 billion yen, up 13% over the previous year. In
order to attain the goal of one trillion yen, Japan needs to grow
exports by 15% every year. Japan's exports of rice to Taiwan, the
United States, and Hong Kong have been on the rise, but its scale
remains small at 967 tons or 426 million yen. Once Japanese rice
attracts Chinese consumers, Japan will be able to sharply boost
imports of rice.

The National Federation of Agricultural Cooperative Associations
serves as the liaison office for exports. Its official said: "If
exports of rice to China go smoothly when domestic production
adjustment is underway, farmers will certainly be encouraged. We
would like to address the challenge in a positive manner." The
association will station an official in charge of rice exports in
Beijing starting in mid-April to promote market research and
negotiations with China.

The Ministry of Agriculture, Forestry and Fisheries plans to also
call on China to import beef, fruits, vegetables and other products
from Japan. But in a meeting yesterday, a Chinese official
responsible for quarantine asked Matsuoka to lift the embargo
imposed on certain products for quarantine reasons, such as fresh
chicken, wheat straw for feed, and fresh vegetables. Japan will
unavoidably be pressed to open its market to China in exchange for
expanding exports to China.

7) Japan-China summit talks

ASAHI (Page 2) (Full)
April 12, 2007

The following is the Japanese government's press briefing on main
points from yesterday's Japan-China summit meeting.

Greenhouse effect gas reductions

Prime Minister Abe: It's important to cooperate in building an
effective framework for the years from 2013 on. Japan would like to
talk with China.

Prime Minister Wen: China supports the Kyoto Protocol but does not
accept its indicators. We also want to push ahead with cooperation
on climate change.

Historical perception

Wen: The history issue is a matter that concerns the feelings of the
people and the political foundation of relations between Japan and
China. China is neither being being sticky about the past nor is it
playing the history card.

Abe: Japan will move forward as a nation of peace. That's my
feeling, and that's the perception of history I hold.

East China Sea development

Abe: It's important to carry out joint development in a
comparatively wide range of waters that is acceptable to both Japan
and China. Let us make it a symbolic project in the East China Sea
for peace, cooperation, and friendship.

Wen: I would like our two countries to agree to carry out joint

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Abduction issue

Abe: North Korea has not shown an earnest attitude, just taking the
position that this problem has already been settled. Japan will
continue to work strongly on North Korea, and Japan would like
China's continued cooperation.

Wen: I understand the Japanese people's sentiment, and my thoughts
are with the Japanese people. We want to offer the necessary

Defense, military affairs

Abe: It's extremely important for us to build confidence. Japan
would like to further continue defense exchanges, including the
opportunity for the Chinese defense minister to visit Japan by this
fall. I also hope to see more transparency in the military area.

Wen: China also would like to welcome the Japanese defense
minister's visit to China at an appropriate time. We would like to
consider mutual fleet visits as well. China's defense capability
will be used only to maintain its national security and unification.
It will not threaten any country.

8) Comfort station opened "in accordance with the former Japanese
military's orders," according to international court of war crimes'
ruling handed down to owner now enshrined at Yasukuni Shrine

TOKYO SHIMBUN (Page 1) (Full)
April 12, 2007

Koki Miura, Berlin

It became known yesterday that a judgment document handed down by an
international court of war crimes managed by the Dutch Forces in
connection with a Japanese man who had run a commercial comfort
station in Japan's occupied Indonesia during World War II -- and
later enshrined at Yasukuni Shrine -- indicated that the comfort
station had been opened in accordance with the former Japanese
Imperial Army's orders. The document also includes a testimony by a
woman who was arrested and put in detention by the military police.
This testimony is taken as a material showing the Japanese
military's "coercion."

The legal document was obtained by free-lance journalist Taichiro
Kajimura (60), who lives in Berlin, while researching in a library
in the Netherlands. Kajimura will soon publicize the document in a
weekly magazine.

In the international court of war crimes, a Japanese man running a
commercial comfort station "Sakura Club" in Batavia (currently
Jakarta), Indonesia, was charged with coercing women into
prostitution. The man was sentenced in October 1946 to 10 years of
imprisonment and later died in prison.

The judgment document wrote that the comfort facility was opened
"because the defendant was ordered by the Gunseikanbu (meaning the
military government staff office, a Japanese term used in the
judgment document) on June 2, 1943 to open a brothel." The document
indicates that the brothel was opened in line with the military's

TOKYO 00001605 007 OF 011

strong request, noting, "The defendant raised an objection to the
first order for him to open a brothel, but he carried out the second

The comfort station was operated under the military police's
supervision and brought in 20 Western women from internment camps
and other locations. According to a testimony in the judgment
document, the comfort station offered both prostitution and dining
services. Women were initially allowed to choose between those two,
but afterwards even minors were forced into prostitution. If they
refused to provide sexual services, they were threatened by this
phrase, "The military police will come for you." Some women fled
from the brothel and were later apprehended and put in detention by
the military police. Based on this testimony, the judgment document
recognized that "it is certain that most women were forced into
prostitution against their will."

9) Kyuma vows efforts for USFJ realignment

NIHON KEIZAI (Page 2) (Full)
April 12, 2007

Defense Minister Fumio Kyuma yesterday met with US Pacific Forces
Commander Keating at the Defense Ministry. Referring to the issue of
realigning US forces in Japan, Kyuma clarified that Japan would
steadily push ahead with realignment plans. He said, "This is an
important issue for the US Pacific forces, too." He also said, "We'd
like to make our utmost efforts, so we will deliver on what we

10) Diet committee to vote on US military realignment bill

TOKYO (Page 2) (Full)
April 12, 2007

The House of Representatives Committee on Security Affairs held a
meeting of its directors yesterday and decided to wrap up its
deliberations today on a government-introduced package of special
legislative measures for the planned realignment of US forces in
Japan, including a plan to subsidize local governments affected by
realignment. The ruling coalition will take a vote after general
deliberations. The committee is expected to pass the special
legislation with a majority from the ruling Liberal Democratic Party
and its coalition partner, the New Komeito. The ruling coalition
will take a vote tomorrow on the legislation in a plenary sitting of
House of Representatives members to get it through the lower

11) Japan, US, Australia to hold working-level security talks today
in Tokyo

MAINICHI (Page 5) (Full)
April 12, 2007

Japan, the United States, and Australia will hold their first
trilateral meeting of working-level foreign affairs and defense
officials today in Tokyo. The meeting will be held with the
participation of Foreign Ministry North American Affairs Bureau
Director General Shinichi Nishimiya, Defense Ministry Defense Policy
Bureau Director General Kazuo Ofuru, US Deputy Assistant Secretary
of Defense Shinn, and Australian Vice Defense Minister Noble. They
will exchange views about the regional security environment, such as

TOKYO 00001605 008 OF 011

the situation in North Korea. In March, Japan and Australia held a
meeting of their defense ministers and released a signed joint
declaration that incorporated the idea of strengthening trilateral

12) Ruling parties to hold vote on national referendum bill today at
Lower House special committee

TOKYO SHIMBUN (Page 2) (Full)
April 12, 2007

The Lower House Special Committee on the Constitution in its
directors' meeting yesterday discussed a timetable for deliberations
on the national referendum bill stipulating the proceedings for
constitutional revision. The ruling parties suggested taking a vote
on the bill today, but the opposition camp raised an objection. Taro
Nakayama of the ruling Liberal Democratic Party (LDP), chair of the
committee, exercised his authority and decided to assemble a
committee meeting this morning and discuss the major opposition
Democratic Party of Japan's (Minshuto) revision bill.

This afternoon after deliberations on Minshuto's revision bill are
over, the ruling camp intends to put both the ruling parties' bill
and Minshuto's bill to a vote, regardless of Minshuto's response.
The ruling parties aim to take a vote on their bill at a Lower House
plenary session tomorrow and send it to the Upper House so that the
bill will be enacted during the current Diet session.

The ruling parties' secretaries general and Diet policy chiefs met
in Tokyo yesterday afternoon and confirmed their plan to take a vote
on their bill at a committee meeting today and get the bill approved
in the Lower House on April 13. Three opposition parties --
Minshuto, the Social Democratic Party, and the People's New Party --
held a meeting of their Diet policy chiefs yesterday morning and
confirmed their policy line of opposing taking a vote in a committee
meeting today.

13) Party-head debate will not take place before April 22, since
Minshuto President Ozawa places priority on stumping tour in
Fukushima, Okinawa

MAINICHI (Page 5) (Slightly abridged)
April 12, 2007

Chances are that no one-on-one debate between Prime Minister Shinzo
Abe and Minshuto (Democratic Party of Japan) President Ichiro Ozawa
will take place before April 22, the day of the Upper House
by-elections in Fukushima and Okinawa prefectures, the second half
of the unified nationwide local elections. The reason is that Ozawa
was reluctant to debate since he has been busy with his stumping
tour of electoral districts where single seats are up for grabs in
the Upper House election this summer. Many in the party are now
unhappy with Ozawa's stance, with one junior lawmaker saying, "I
want him to show the public his determination to take the lead in
election campaigning."

Since April 11 was a Wednesday when party-head debates regularly
take place, the ruling Liberal Democratic Party (LDP) called on
Minshuto to hold a debate. The main opposition party, however,
insisted that intensive deliberations on the issue of politics and
money should first be held at the Lower House Budget Committee. An
agreement, therefore, was not reached. Under an agreement between

TOKYO 00001605 009 OF 011

the ruling and opposition camps, a party-head debate is not held in
the week when a question-and-answer session takes place at the
attendance of the prime minister. Therefore, a senior Minshuto
member said:

"If we agree to hold a party-head debate, it means that we will
allow the LDP to put off an intensive debate questioning the prime
minister about Agriculture Minister Toshikatsu Matsuoka's huge
utility expenses issue."

Senior members of the two parties' Diet affairs committees carried
out coordination last month on a plan to hold a party-head debate on
April 4, but Ozawa stated in a press conference on March 23:

"I want to conclude my stumping tour of electoral districts where
single seats are up for grabs before the Golden Week holidays from
late April to early May. So I would like to hold it at an
appropriate time after then."

Minshuto Secretary General Yukio Hatoyama called on Ozawa for an
early opening of a debate, but Ozawa told him: "I want you to leave
it to me."

Although Minshuto is fighting a defensive battle, a party-head
debate is a golden opportunity to demonstrate the political presence
of opposition parties. Since Minshuto did not make much effort to
make its presence felt with unaffiliated voters in the first-half of
the unified nationwide elections, many participants at a study
session on April 10 of junior and mid-level lawmakers voiced the
view that the party head's political sway was being questioned.

14) Former Justice Minister Nakai found to have made fraudulent
political fund report

TOKYO SHIMBUN (Page 2) (Full)
April 12, 2007

Former Justice Minister Hiroshi Nakai (elected in proportional
representation to the Lower House) of the opposition Democratic
Party of Japan (Minshuto) yesterday revised his political fund
reports for 2003 and 2004 and reported on revisions to the Ministry
of Internal Affairs as his own fund management organization
"Kowakai" recorded other expenses as utility costs. Nakai's office
member stressed: "Those reports recorded the usage charge for an
official vehicle and other items in the utilities category. This was
an error on the part of a bookkeeper. But there was no change in the
total amount." Nakai himself is to meet the press today and give an
account of this failure.

Kowakai is located in the Diet Members' Building, where electricity
and water expenses are paid by public expense, but it recorded 5.46
million yen in 2003 and 2.36 million yen in 2004 as the utilities

(07041203ku) Back to Top

15) Agriculture Minister Matsuoka's funds management body fails to
report details of 86 million yen recorded as social expenses over
nine years from 1997

ASAHI (Page 39) (Excerpts)

TOKYO 00001605 010 OF 011

April 12, 2007

The funds management organization of Agriculture, Forestry and
Fisheries Minister Matsuoka failed to record the details of a total
of about 86 million yen entered in its financial reports as social
spending from 1997 through 2005, including for what the money was
used. Politicians are required to record the amount of money and the
purpose of its use if they declare more than 50,000 yen as social
spending in each case. Although large sums of money were recorded as
social spending, Matsuoka's office unprecedentedly did not enter the
required details in each case. Matsuoka has yet to give an
explanation about his questionable office expenses and utility

In the expenditure column in the sheet, there are two categories:
ordinary outlays, including office expenses and utility charges, and
spending for political activities, including organizational
activities costs and election campaign fees.

Under the rules on enforcing the Political Funds Control Law, social
expenses are included in the category of activity expenses. If the
cost is more than 50,000 yen in each case, it is required to mention
such details as the purpose of use, the amount, the date, and the
destination in a report, attaching receipts. But regarding what
types of expenditures should be classified as social spending, "that
determination is entrusted to each group," according to an official
of the Internal Affairs and Communications Ministry.

Matsuoka's political fund organization declared as organizational
activities costs in its 2005 funds report 21.04 million yen in
social spending, 7.92 million yen in organization policy expenses,
and 7.52 million yen in public relations fees.

The group entered the details for about 25 cases of organization
policy expenses and 34 cases of public relations fees, but regarding
social expenses, it recorded no details, entering only the total

16) Economic partnership agreement: CEFP urges launching of Japan-US
joint study

NIHON KEIZAI (Page 5) (Full)
April 12, 2007

The Council on Economic and Fiscal Policy (CEFP) yesterday held a
working group meeting. Participants agreed that Japan should
promptly launch joint studies with the US for the conclusion of a
bilateral economic partnership agreement (EPA). The working group
will draft an interim report as early as this month and submit it to
the CEFP. Since an EPA with the US will necessitate opening the
agricultural market, views of government officials are split.
However, the CEFP indicating a direction will likely spur
discussions in the government.

The CEFP working group yesterday sorted out points at issue for an
interim report. The panel pointed out that Japan should first sign a
pact with the Association of Southeast Asian Nations (ASEAN) in view
of the fact that Japan is lagging behind China and South Korea in
signing EPAs with Asian countries. Regarding an EPA with the US,
participants underscored that a Japan-US EPA would lead to
strengthened bilateral relations through active trade and investment
activities. They also agreed on the perception that it is necessary

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to set a deadline on negotiations for a speedy conclusion of an EPA
with that nation.

Regarding the agricultural area, a fetter to trade talks, a proposal
was made for drafting a five-year reform road map to enhance
productivity. Participants from MAFF indicated a stance of delving
into problems with past policies and compiling specific measures in
order to improve productivity as early as this fall. Others said
that they had already sorted out points at issue and that the panel
is slow in taking action.

17) Triangular merger: Finance Ministry set standards restricting
subsidiaries of foreign corporations eligible for tax deferral: Aim
is to prevent use of paper companies

ASAHI (Page 10) (Full)
April 12, 2007

A ban on a triangular merger system is to be lifted in May.
Following the move, the Finance Ministry has set a guideline for a
measure to defer taxation on stockholders of a Japanese company who
receive foreign stocks as merger consideration in the event where
foreign companies take over Japanese companies using this system.
The requirement for being entitled to this guideline is that a
Japanese subsidiary of a foreign corporation has business substance,
such as employees and an office, in Japan. The aim is to prevent
triangular mergers using paper companies. Subsidiaries that are in
the process of preparing to launch operations will also be eligible
for this regulation, if they have already started sales campaigns,
market surveys, etc.

The new guideline will be included in a Finance Ministry ordinance
to be released shortly. Requirements to be entitled to tax deferral
include that a Japanese subsidiary of an acquiring foreign
corporation has (1) employees, permanent executives and an office in
Japan and that it is in the same line of business as a company it
will absorb is in terms of commodities, services, know-how and
targeting customers. Even if a subsidiary has no sales record at the
time of the merger, it will be eligible for the regulation, if it is
based in Japan firmly enough so that it cannot pull out easily, such
as that it has prepared to launch business in Japan, applied for the
authorization right of enterprise and registered its intellectual
property right.

The removal of the ban on triangular mergers will make it easier for
foreign corporations to buy out Japanese companies in the form of
having its Japanese subsidiary take over a Japanese company. An
acquiring foreign corporation transfers its stocks to stockholders
of a targeted Japanese company as merger compensation.

In this case, if it is judged that capital gains have occurred at
the stage of stockholders of the Japanese company giving away stocks
of the disappearing company, and such gains are regarded as subject
to taxation, the stockholders will need cash to pay the tax.
European and US business circles have called for a tax deferral
measure, under which taxation is deferred until stockholders
actually give away their stocks.


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