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Cablegate: Japanese Morning Press Highlights 07/06/07

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UNCLAS SECTION 01 OF 12 TOKYO 003077

SIPDIS

SIPDIS

DEPT FOR E, P, EB, EAP/J, EAP/P, EAP/PD, PA;
WHITE HOUSE/NSC/NEC; JUSTICE FOR STU CHEMTOB IN ANTI-TRUST DIVISION;
TREASURY/OASIA/IMI/JAPAN; DEPT PASS USTR/PUBLIC AFFAIRS OFFICE;
SECDEF FOR JCS-J-5/JAPAN,
DASD/ISA/EAPR/JAPAN; DEPT PASS ELECTRONICALLY TO USDA
FAS/ITP FOR SCHROETER; PACOM HONOLULU FOR PUBLIC DIPLOMACY ADVISOR;
CINCPAC FLT/PA/ COMNAVFORJAPAN/PA.

E.O. 12958: N/A
TAGS: OIIP KMDR KPAO PGOV PINR ECON ELAB JA

SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 07/06/07

Index:

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

4) Yokosuka sailor nabbed by police for two stabbings

Nuclear fallout:
5) Chief cabinet secretary will not protest US special envoy
Joseph's comment justifying US atomic bombing of Japan to expedite
end of war
6) Debate over atomic bombings: Possible to balance nuclear
deterrence and abolition stances

Election season:
7) Hit by Kyuma flap, Abe Cabinet support rate sags to 32 % in
Yomiuri poll
8) Diet closes and election season starts, with 369 candidates ready
to fight for Upper House seats
9) Diet ends with backlog of bills that bear Prime Minister Abe's
policy imprint
10) Tug of war begins between ruling and opposition camps as to
which side will win the majority of Upper-House seats in July 29
election
11) Prime Minister Abe in press conference focuses on cleaning up
pension mess, with social security cards possibly by fiscal 2011
12) Abe does not rule out a consumption tax, promises debate in fall

13) Minshuto head Ichiro Ozawa meets press: If my party loses the
election, I quit as president

Trade affairs:
14) USTR Schwab, METI Minister Amari agree to keep working to
restart WTO round
15) June statistics show 1.5 fold increase in imports of US beef in
a month
16) M&As by foreign firms in Japan during Jan-June show 1.5 fold
increase
17) ANA plans to make Okinawa the hub for its Asia cargo operations
beginning in 2009

Articles:

1) TOP HEADLINES

Asahi:
With the end of the Diet session, election campaign kicks off: Abe
eager to stay on

Mainichi:
MEXT revises ordinance to offer condolence payments to students who
commit suicide outside school

Yomiuri:
Upper House race begins with end of Diet session: Abe emphasizes
achievements and predicts victory, while Ozawa plans to pursue
ruling bloc

Nikkei:
Ahead of campaign, Abe unveils a plan to issue social security cards
by fiscal 2011, but avoids mentioning his responsibility for the

TOKYO 00003077 002 OF 012


outcome of the election

Sankei:
Survey of retired administrative vice ministers on amakudari found
that 25% landed cushy jobs from 1990 to 2006

Tokyo Shimbun:
More than 40% of retired ranking bureaucrats reemployed thanks to
good offices of their ministries, but this practice will be illegal
once law is revised

Akahata:
Diet session ends and campaign for the Upper House starts; JCP to
demonstrate its role as "reliable opposition party"

2) EDITORIALS

Asahi:
(1) Diet session ends without resolving politics-and-money issue
(2) Sochi chosen as venue for 2014 Winter Olympics: Russia's values
questioned

Mainichi:
(1) Campaign: "Abe politics" will be questioned
(2) Debate over atomic bombs: That their use was a mistake should be
starting point of nuclear nonproliferation

Yomiuri:
(1) Pension payment records: Steady implementation of "road map"
essential
(2) Responsible policy debate important in election campaign

Nikkei:
(1) 2007 Upper House election: Ruling and opposition parties should
compete over measures to resolve pension issue

Sankei:
(1) We expect parties to engage in constructive policy debate
(2) One year since DPRK missile launches: Pyongyang cannot be
allowed to flout UNSC resolution

Tokyo Shimbun:
(1) Press briefings: Abe remained evasive throughout
(2) Terrorist attacks in UK: What led doctors to extremism?

Akahata:
(1) End of Diet session: Time for reliable opposition party

3) Prime Minister's Official Residence (Kantei)

Prime Minister's schedule, July 5

NIKKEI (Page 2) (Full)
July 6, 2007

10:15
Met at the Kantei with Japanese chair Akio Mimura and others of the
group on Japan-Brazil strategic economic partnership.

10:37
Met Yasuo Wakisaka and other members on the American Football World
Cup Japan team, followed by advisor Nemoto.

TOKYO 00003077 003 OF 012

11:12
Called on Upper House President Ogi, Vice President Imaizumi, and
other Upper House factions in the Diet building accompanied by LDP
Upper House Caucus Secretary General Toranosuke Katayama, Chief
Cabinet Secretary Shiozaki and others.

11:33
Returned to the Kantei.

12:50
Attended a Lower House lawmakers' meeting in the Diet building.

13:03
Attended a Lower House plenary session. Afterward called on Lower
House Speaker Kono and Vice Speaker Yokomichi accompanied by LDP
Diet affairs chief Nikai, Shiozaki and others.

13:34
Attended an election campaign headquarters meeting at party
headquarters. Afterward attended an Upper House election campaign
kick-off ceremony.

13:55
Met LDP Secretary General Nakagawa.

14:05
Met Japan YPO chairman and others in the presence of Lower House
member Yasutoshi Nishimura and others. Afterward met Lowson
President Takeshi Niinami and others in the presence of Nishimura.

15:04
Met former Finance Minister Shiokawa in the presence of Nakagawa and
LDP Organization Headquarters chief Kazuaki Miyaji. Nakagawa and
Miyaji stayed on.

16:06
Met at the Kantei with Okinawa, Northern Territories Minister
Takaichi, followed by Lower House members Taimei Yamaguchi and
Akihiro Nishimura. Afterward met New Komeito head Ota.

17:06
Attended a government and ruling coalition liaison meeting on the
pension issue.

18:00
Held a press conference.

18:46
Returned to his official residence.

19:23
Had a telephone conversation with British Prime Minister Brown in
the presence of advisor Seko and Foreign Ministry European Affairs
Bureau chief Harada.

19:53
Returned to his official residence.

22:54
Appeared on an NTV program.


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23:40
Returned to his official residence.

4) US sailor stabs 2 women

SANKEI (Page 31) (Full)
July 6, 2007

A girl was found bleeding from the abdomen yesterday morning on a
street at Umahoricho, Yokosuka, Kanagawa Prefecture. A person
working at a nearby construction site found her asking for help, and
he called the police at around 8:30 a.m. A Uraga Police Station
officer rushed to the scene and found another woman bleeding in a
room of an apartment across the road. The girl was 16 years old and
from Tokyo's Suginami Ward. She sustained minor injuries. The other
one in the apartment was a 26-year-old woman from Ayase, Kanagawa
Prefecture. She was stabbed in the back and has serious but not
life-threatening injuries, according to the police.

Kanagawa prefectural police found a 19-year-old US Navy sailor, who
had fled the scene, at a department store near Yokosuka Chuo Station
on the Keihin Kyuko railway line at around 10:30 a.m., and the
police arrested him there on suspicion of attempted murder. The
arrested sailor is a seaman recruit (nitou-suihei) assigned to a
frigate stationed at the US Navy's Yokosuka base. He has admitted to
the charges. "I looked for a relationship with the girl but she
refused, so I got mad and stabbed her," he was quoted as telling the
police.

According to police investigations, the girl and the woman got to
know the US serviceman about a week ago near the Yokosuka base. They
stayed overnight with the US sailor at the apartment. They quarreled
in the morning, and the sailor ran away after stabbing the girl and
the woman in the apartment. The girl jumped out the window of the
apartment and asked for help, the police said.

US Naval Forces Japan Commander James Kelly said: "We will cooperate
with the Japanese police authorities. We pray for the victims'
speedy recovery."

5) Japan will not protest "justification of atomic bombings":
Shiozaki

ASAHI (Page 4) (Full)
July 6, 2007

Chief Cabinet Secretary Shiozaki, meeting the press yesterday,
indicated that the Japanese government would not lodge a protest
with the US government over US Special Envoy for Nuclear
Nonproliferation Robert Joseph's recent remarks justifying the
atomic bombings of Hiroshima and Nagasaki. "I heard he made the
remark in his personal capacity," Shiozaki said, adding: "I think
it's important to step up our efforts to eliminate nuclear weapons
so that these weapons that have brought about tremendous suffering
to humanity will never be used in the future."

6) Debate over atomic bombings: Nuclear deterrent, abolition can go
together

SANKEI (Page 1) (Excerpts)
July 6, 2007


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Akio Takahata

"Most historians would agree that the use of the atomic bombs
brought to a close a war that would have cost millions more lives,"
said US Special Envoy for Nuclear Nonproliferation Robert Joseph on
July 3.

"There's no change in my stance that I cannot condone the use of
atomic bombs," said Prime Minister Shinzo Abe on July 4.

Former Defense Minister Fumio Kyuma's controversial remarks have now
again brought to the fore the perception gap between Japan and the
United States over the question of the atomic bombings. One month
from now, the peace memorial ceremonies to console the souls of
those who were lost due to the atomic bombs will take place. What
should Japan to do to deal with this deep division?

The use of nuclear weapons is no doubt an inhumane act, and the
indiscriminate slaughter of civilians must be condemned. It is only
natural for Japan to call on the nuclear powers in the world,
including the United States, to scrap their nuclear weapons.

This appeal by Japan has often come under the criticism that while
seeking nuclear abolition, Japan for its security has relied on the
US "nuclear umbrella." Japan has been torn over whether to pursue
"nuclear deterrence" or "nuclear abolition." But that is not limited
to Japan.

Special Envoy Joseph used the logic that because the atomic bombings
of Hiroshima and Nagasaki hastened the end of the war, their use was
appropriate. But historians have been divided over this logic. In
fact, in reaction to Joseph's remarks, a Russian vice foreign
minister who joined the same press briefing asked permission to
speak and warned: "A variety of views have been voiced by historians
over the pros and cons of the use of nuclear weapons in the late
days of the war."

Even in the US, at the time of the Korean War, President Truman
rejected General MacArthur's call for the use of atomic weapons, and
President Kennedy, faced with the Cuban Missile Crisis, was torn
over 13 days about whether to use nuclear arms. "The Day After," a
US television movie aired on ABC in the 1980s, when President Reagan
was in office, depicted the aftermath of a nuclear war.

This film revealed a nuclear disaster to the American people, but it
was criticized for distorting the reality of the nuclear deterrence
during the Cold War. Political consideration was required at the
time, because America's unilateral disarmament would have had a
negative impact on its arms control talks with the USSR.

Given that we are torn between an ideal world and reality, the
important thing is not to be trapped by simple dualism like forcing
to choose between nuclear deterrence and nuclear abolition. Since
the end of World War II, Japan has followed its pacifist
Constitution, while it has built peace and prosperity under the
Japan-US security arrangements. While aiming for the ideal of
nuclear abolition, Japan has relied on the nuclear umbrella. Given
this, the challenge for Japan is to strike a balance between the
two.

By signing the San Francisco Peace Treaty, Japan abandoned its right
to claim compensation against the Allies. This means Japan cannot

TOKYO 00003077 006 OF 012


claim compensation for the loss of lives due to the atomic bombings.
But this is one thing, and appealing to the US government and its
people about the inhumanity of the atomic bombings is another. Japan
at times gives a candid advice to the US, and Japan does so because
it is America's ally.

It is also necessary for Japan to freshly address such issues as
nuclear nonproliferation without being obsessed with past events,
given the current situation surrounding it. The six-party talks
urging North Korea to abandon its nuclear ambitions are an important
step toward denuclearizing the Korean Peninsula. At the same time,
Japan should ask the US to correct its perception about the atomic
bombings and request that the nuclear powers should implement the
nuclear disarmament obligation set forth in the Treaty on the
Non-Proliferation of Nuclear Weapons. Pursing both is not
contradictory and is not wrong, either.

In order to achieve these two goals, political wisdom and ideas are
essential. Newly installed Defense Minister Yuriko Koike noted,
"Japan should play a role in leading the efforts not to allow the
use of atomic bombs again." In this regard, we hope to see Prime
Minister Abe and his staff make even more efforts.

7) Poll: Cabinet support down to 32%

YOMIURI (Page 1) (Abridged)
July 6, 2007

The approval rating for Prime Minister Abe and his cabinet was 32.0
% in the Yomiuri Shimbun's third telephone-based serial public
opinion survey conducted July 3-5 on the upcoming election for the
House of Councillors, down 2.4 %age points from the second survey
taken June 26-28. The disapproval rating was 53.9%, up 2.1 points.

The support rate was up slightly from the first survey (32.9%) to
the second survey (34.4%). It seemed to keep up in the face of
public backlashes over the issue of the government's pension
record-keeping flaws. However, it dropped again, though slightly.
This can be taken as reflecting former Defense Minister Fumio
Kyuma's resignation over his A-bomb remarks and the prime minister's
way of responding to this issue.

8) Diet closes: Prime stopped short of clarifying his responsibility
for Upper House election results; 369 candidates expected to
contend

MAINICHI (Page 1) (Full)
July 6, 2007

Now that the ordinary Diet session went into recess yesterday, the
ruling and opposition parties have virtually kicked off their
campaigns for the July 29 Upper House election to be officially
announced on the 12th. The major campaign issue is the pension
problem. The focus will be on whether the ruling camp can maintain a
majority combining seats that are not up for the election this time.
Prime Minister Shinzo Abe, president of the Liberal Democratic Party
(LDP), during a press conference on the 5th stressed that it is only
natural that the Upper House election will ask the leadership and
reliability of party heads." However, he steered clear of making any
in-depth comment on his responsibility for the outcome of the
election, noting, "I have no intention of making any comments on the
premise of our party being defeated in the election. I would like to

TOKYO 00003077 007 OF 012


wait for the result without any preconceived notion. In contrast,
Democratic Party of Japan (DPJ or Minshuto) head Ichiro Ozawa
expressed his determination to step down, unless the ruling parties
lose a majority. A battle over a victory-or-defeat line is thus also
heating up.

Following the recess of the Diet session, the prime minister
yesterday evening admitted that the situation for the Upper House
election is very harsh. However, he indicated a stance of
challenging the opposition parties, saying, "The election will ask
voters which side had stronger points in their arguments -- Shinzo
Abe or Ichiro Ozawa, and whether our commitments were really based
on facts." Abe stressed his achievements noting, "I have steadily
built a base for the creation of a beautiful country." He cited the
passage of three education-related bills and the national referendum
bill as evidence. He also indicated a stance of fighting the
election with a policy-oriented approach.

Asked about a victory-or-defeat line in the Upper House election,
Ozawa during an interview with various news organizations said, "It
is to gain a majority combining votes garnered by all opposition
parties." He indicated his resolve to quit if he fails to force the
LDP and New Komeito into the minority, noting, "If we fail to
achieve the target, it would be meaningless for me to stay on." He
apparently tried to shake the prime minister by clarifying the way
he will take responsibility in the event of the opposition camp
losing the election.

According to a Mainichi poll, 369 candidates -- 214 for single-seat
constituencies and 155 proportional representation blocs -- are
expected to run as of July 5. The number has already topped 320 in
the previous election in 2004, which saw the smallest number of
candidates since 1983, when the proportional representation was
introduced. The current competition rates are 2.93 for the
single-seat constituency and 3.23 for proportional representation
constituencies.

9) Diet session ends; Several bills having strong Abe's policy
imprint carried over to next Diet session

TOKYO SHIMBUN (Page 2) (Full)
July 6, 2007

The 162-day regular session of the Diet closed yesterday. During the
session, opposition parties severely grilled the government and
ruling coalition over former Agriculture Minister Toshikatsu
Matsuoka's regenerated water issue and the pension record
mismanagement fiasco. The government and ruling camp often was on
the defense. As a result, there remains a backlog of bills having
Prime Minister Shinzo Abe's policy imprint.

With an eye on the House of Councillors election this month, the
government and ruling camp tried to play up their achievements such
as the passage of a national referendum bill setting constitutional
amendment procedures and bills related to education reform.

In addition to the above bills, a bill to reform the Social
Insurance Agency, a bill amending the National Civil Service Law and
other measures were enacted during the regular session. Ruling
Liberal Democratic Party (LDP) Diet Affairs Committee Chairman
Toshihiro Nikai stated: "We have achieved many results."


TOKYO 00003077 008 OF 012


The opposition camp, however, assumed the stance of facing down with
the ruling bloc, pursuing Health, Labor and Welfare Minister Hakuo
Yanagisawa's reference to women as "child-bearing machines," and the
pension record mismanagement by the Social Insurance Agency.

As a result of being preoccupied with the pension record fiasco, the
government and ruling coalition had to carry over to the next
session three bills related to labor affairs, which are expected to
be deliberated at Diet committees, and a bill to unify pension
programs. A bill to set up a Japanese version of the US National
Security Council was also carried over due to much time spent for
deliberations on a bill to revise the Iraq Special Measures Law. As
it stands, several bills, on which the Abe government placed
priority, were carried over to the next Diet session.

10) Diet session ends, focus shifted to Upper House election; Abe
eager to remain in office; Victory-or-defeat-line may put ruling
bloc at advantage

ASAHI (Top play) (Excerpts)
July 6, 2007

The 166th ordinary Diet session closed yesterday, prompting the
ruling and opposition parties to engage in full-fledged campaigning
to win a majority of seats through the July 29 House of Councillors
election. Major opposition Democratic Party of Japan (Minshuto or
DPJ) President Ichiro Ozawa indicated that if his party failed to
achieve a majority in the upcoming election, it would be meaningless
for him to remain as DPJ head, apparently in a bid to demonstrate
difference with Prime Minister Shinzo Abe, who has kept avoiding
mentioning his responsibility. Abe, on the hand, appearing on a
television program expressed his eagerness to stay on. As for the
opposition camp, Hiroyuki Arai and Shinpei Matsushita announced that
they would leave the New Party Nippon (NPN) and the DPJ,
respectively. Because their seats are not up for election, there is
a possibility that the ruling camp's majority line will be lowered.

Two Upper House members leave opposition parties

With the Upper House election drawing closer, stormy developments
continued to unfold until the end in the Diet session that closed
yesterday.

NPN lawmaker Hiroyuki Arai indicated yesterday that he and Makoto
Taki, a House of Representatives member, would leave the party to
become independents. Arai, holding a press conference in the Diet
building, attributed the decision to their discontent with party
management by party head Yasuo Tanaka, saying: "The party is not in
a situation to play up its campaign pledges in a responsible
manner."

Arai is on friendly terms with Prime Minister Abe. Arai in fact
voted for Abe in the Diet prime ministerial election last fall.
There has been rumor that Arai would leave the opposition bloc
depending on the results of the Upper House election. Arai ruled out
the option of rejoining the Liberal Democratic Party, but asked if
he would remain as an independent even after the Upper House
election, he said: "Under the circumstances, I cannot comment on the
future."

Shinpei Matsushita's departure from the DPJ would be more "painful"
to the party, according to a former cabinet minister of the LDP.

TOKYO 00003077 009 OF 012

Matsushita, holding a press conference at the Miyazaki prefectural
office building yesterday, announced his departure from the DPJ,
citing his decision to back a non-DPJ candidate in the upcoming
election. Matsushita said: "I'm right in the middle between the
ruling and opposition blocs."

In order for the ruling camp to keep a majority, it will need to win
64 seats in the election. If Arai and Matsushita, whose seats will
not be up for election, were to join the ruling camp, its number of
seats not for grabs will increase from the 58 to 60, thereby
lowering its victory line by two to 62 seats.

A senior Machimura faction member of the LDP described (Arai and
Matsushita's seats) as "valuable seats." General Council Chairman
Yuya Niwa said high spiritedly: "We should accept anyone willing to
join the LDP with open arms. It is desirable for a broad range of
forces to join together in conducting politics under a two-party
system."

11) Prime Minister: Government plans to introduce social insurance
cards in fiscal 2011

NIHON KEIZAI (Top Play) (Excerpts)
July 6, 2007

In a press conference at the Prime Minister's Official Residence
yesterday to mark the end of the ordinary Diet session, Prime
Minister Shinzo Abe announced a package of measures the government
will take in dealing with the pension fiasco. The prime minister
categorically said, "The errors in pension management must be
completely fixed by my cabinet." He revealed that the package
includes measures to complete the checkup of unidentified pension
records ahead of schedule and to introduce social insurance cards in
fiscal 2011 to help uniformly manage pension payments and medical
care data. Abe also said that he would ask voters for their judgment
on the "credibility' of what his administration has achieved, such
as securing of fiscal resources, in policy debate with the
opposition camp in the run-up to the House of Councillors election.
But he stopped short of mentioning the win-or-loss line for the
election.

The prime minister apologized for the pension problem, saying: "I
offer my apology as the head of the administration." He then
stressed: "The government will check all unidentified pension
records and pay pension benefits to all people who have properly
paid pension premiums. We will take every measure we should take."

12) Prime minister indicates plan to consider consumption tax hike
in debate in fall on tax-reform proposals

NIHON KEIZAI (Page 1) (Excerpts)
July 6, 2007

Appearing on a TV program last night, Prime Minister Shinzo Abe
indicated that the government would consider a hike in consumption
tax in discussion in the fall on tax revision proposals for the next
fiscal year. He said: "We will carry out a sweeping tax reform in
the fall. I have not said at all that we will not raise the
consumption tax." Abe made this remark in replying to a question
about resources to fund the proposed measure to raise the rate of
the burden that the basic pension places on the national treasury.

TOKYO 00003077 010 OF 012

13) Minshuto President Ozawa declares he will resign if opposition
camp fails to win majority in Upper House election; Warns about
optimistic mood in the party

TOKYO SHIMBUN (Page 2) (Full)
July 6, 2007

Minshuto (Democratic Party of Japan) President Ichiro Ozawa
yesterday revealed his view that he would step down from his post if
the opposition camp failed to win a majority in the House of
Councillors election on July 29. He had previously refrained from
clarifying his responsibility for the outcome of the Upper House
race. The leader of the largest opposition party vowed to fight as
if his back was to the wall in the election to follow the end of the
regular Diet session.

In an interview with the Tokyo Shimbun and other newspapers, Ozawa
stressed his determination for the opposition camp to trade places
with the ruling coalition, stating: "If I cannot achieve that, it
would be meaningless for me to remain in the party head's post. I
have been campaigning with such a resolve."

Secretary General Yukio Hatoyama and other lawmakers in Minshuto had

SIPDIS
said that Ozawa would quit his post if the party suffered a defeat
in the Upper House race. There had been also an observation that he
would remain in his post if the party won a large number of seats.

Ozawa's declaration apparently aims to tighten up his party, in
which an optimistic mood is now growing, as well as to keep a good
chance for the opposition to trade places with the ruling camp.

Another reason is that there were calls for the resignation of Prime
Minister Shinzo Abe in the ruling Liberal Democratic Party (LDP)
since Abe has not expressed his intention on the future course of
his action in case the ruling coalition loses its majority in the
Upper House. Hatoyama said: "The LDP has avoided talking about
responsibility, but our leader has shown his readiness to assume
responsibility."

In the interview Ozawa also expressed his willingness to become
prime minister if the opposition camp obtained the reins of
government. The dominant view, however, was that Ozawa was not eager
for the prime minister's post due to health concerns, although it is
only natural for the leader of the largest opposition party to show
his enthusiasm for the prime ministership. Therefore he seems to
have determined to dispel such doubts in some in his party that the
party can fight in the July 29 Upper House race and the next Lower
House election under Ozawa, even though he would not become a prime
ministerial candidate.

Hatoyama made this comment about Ozawa's declaration: "He said what
he should say." LDP Diet Affairs Committee Chairman Toshihiro Nikai,
however, took a cooler view: "He might have said it as part of his
election strategy."

14) Close Solidarity with US in WTO negotiations; US and Japan
officials in agreement

NIKKEI (Page 5) (Full)
July 6, 2007


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Yesterday during his visit to Australia, Minister of Economy, Trade
and Industry Akira Amari met individually with US Trade
Representative Schwab and New Zealand Minister of Trade Goff. Amari
and Schwab agreed to cooperate closely in order to wrap up World
Trade Organization multilateral trade negotiations (the Doha Round)
by the end of the year.

15) Imports of US beef in June increase by 1.5 compared to the
previous month

NIKKEI (Page 5) (Full)
July 6, 2007

Imports of US beef in June reached 4311 tons - 1.5 times the amount
of beef imported in May. Importers view the lifting of 100 % box
inspection at Japanese ports in mid-June as having a big effect.
The high demand of the summer season has also caused domestic
companies to increase imports. However, imports of US beef were
still only one-fifth of pre-ban levels.

The number comes from information gathered by the Farm Ministry on
the amount of US beef that passed animal quarantine inspection in
June. After animal quarantine, the beef must pass through customs
procedures, resulting in slight discrepancies between the customs
tally and the trade tally.

16) M&As of Japanese companies by foreign firms reach record high

TOKYO SHIMBUN (Page 8) (Full)
July 6, 2007

It was learned yesterday that M&As of Japanese companies by foreign
firms during the Jan.-June period reached a record high for the
first half of the year at 146, up 87.2 % from a year earlier.

Cases in which foreign companies carried out M&As in a bid to
strengthen their presence in Japan were noticeable, as can be seen
in the purchase of Nikko Cordial by Citigroup. Acquisitions of
Japanese stocks by foreign investment funds also contributed to the
increase in M&As. Foreign capital will likely continue to target
Japanese companies backed by the liquidity-driven global market.

According to the tally (including ongoing cases, such as buyouts)
made by Recof, an M&A research and intermediate service company, the
total value of M&As (based on the officially announced value) in the
reporting period reached 2.0313 trillion yen, greatly exceeding the
544 billion yen recorded in all of 2006. The figure is a new high
for the first half of any year.

An expert in corporate mergers pointed out, "Many foreign companies
are advancing into Japan in anticipation of the Japanese economy
moving in a steady manner and in hopes of obtaining some of the
abundant financial assets held by households."

Given the breakdown of the M&As, 83 cases involved investment
companies centered on investment funds (including business
corporations aimed for investment recovery). Cases in which
investment funds were active were also pronounced, as can be seen in
Steel Partners Japan Strategic Fund, a US investment fund, tendering
a takeover bid for Bull Dog Sauce.

17) ANA to make Okinawa hub for Asia-bound air freight operations

TOKYO 00003077 012 OF 012

ASAHI (Page 2) (Full)
July 6, 2007

All Nippon Airways Co. (ANA) yesterday announced plans to use Naha
Airport as a hub for Asia-bound air freight operations starting in
2009. The company aims to increase transportation efficiency by
collecting cargo bound for different destinations in Asia at Naha
Airport and loading them there.

The company plans to expand its air freight operations by initiating
new cargo flights between Naha and such major Asian cities as Seoul
and Beijing, in addition to flights between Naha and Haneda and
between Naha and Kansai. It is considering an increase in the number
of cargo planes from the current 4 to 10 and flying them every day.
The company plans to load by 3:00 a.m. cargo that arrives at Naha by
planes that leave between 9:00 p.m. and 11:00 p.m. from domestic
airports and to have the cargo arrive at their destinations by early
morning.

Meanwhile, Japan Air Lines Co. (JAL) is expanding direct flights
between domestic airports and major Asian cities by promoting the
downsizing of cargo planes. The difference in the strategies of ANA
and JAL thus has been underscored. JAL previously possessed only 12
large cargo planes, but it introduced mid-sized aircraft on July 3.
It plans to introduce three more next fiscal year and reduce the
number of large ones.

In the airfreight market in Asia, where growth is continuing, FedEx
Corp. of the US and DHL of Germany have established vast networks,
enjoying large market share there. These giant rivals have offered
customers next-day delivery and other services by using Shanghai
Airport and Guangzhou Airport as hubs. In the Asia cargo market,
competition is expected to heat up further.

SCHIEFFER

© Scoop Media

 
 
 
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