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Cablegate: Japanese Morning Press Highlights 08/27/07

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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 08/27/07


Index:

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

Cabinet and LDP executive shuffle today:
4) Foreign Minister Aso accepts LDP secretary general's post; Abe
critic in the LDP, Upper House member Masuzoe to be appointed to a
cabinet post
5) Nikai to be chairman of the LDP General Council
6) Defense Minister Koike opts out of the next cabinet: Will now
serve as an ordinary foot soldier in the Diet

Scandals:
7) Internal Affairs and Communications Minister Suga's political
group had free office space but claimed in political funds report 20
million yen in office expenses
8) Justice Minister Nagase's support organization took 3 million yen
fee from organization bringing in foreign trainees to Japan

Defense and security issues:
9) LDP to shelve constitutional reinterpretation option for allowing
Japan the use of right of collective self-defense
10) Prime Minister Abe says he will seek understanding of Democratic
Party of Japan (DPJ) for bill extending Anti-Terrorist Special
Measures Law
11) Embargoed Japanese goods being shipped to North Korea via Taiwan

12) After 4-year hiatus, Japanese, Chinese defense ministers to meet
in Tokyo on Aug. 29, with Japan to press issue of China's increased
defense spending
13) Defense Ministry to deploy F-15s to Okinawa to prepare for
possible future Chinese aggression against Senkakus or other islands


14) Alarmed by Chinese moves, Defense Ministry putting in full
efforts to draft space and marine strategies
15) Defense Ministry to introduce new formula for equipment
procurement in order to constrain budget expenditures
16) Government requesting 312.5 billion yen in allocations for
Okinawa development projects in fiscal 2008 budget

Japan-ASEAN relations:
17) Japan, ASEAN reach general agreement on EPA under which Japan
would scrap almost all tariffs on ASEAN imports
18) Japan hoping that its new EPA with ASEAN will add momentum to
its free-trade strategy

Articles:

1) TOP HEADLINES

Asahi:
Another eight high schools found to have given university
examination fees to their students to achieve high scores for
college examination pass rates

Mainichi: Tokyo Shimbun:
Aso accepts to serve as LDP secretary general: Reshuffled Abe
cabinet to be launched this evening


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Yomiuri:
Reshuffled Abe cabinet to be launched today: Masuzoe most likely to
join cabinet for first time

Nikkei:
Tokyo Stock Exchange to list exchange-traded fund with underlying
assets of gold starting next spring: Arguments calling for
reorganization of bourses could rekindle flare up again

Sankei:
Cabinet reshuffling, changing of LDP leadership lineup today: Nikai
likely to be appointed as Executive Council chairman; Aso as
secretary general; Former Iwate Governor Masuda also likely to join

SIPDIS

Akahata:
Welfare Benefits Problem Countermeasures Council holds meeting to
promote anti-poverty campaign

2) EDITORIALS

Asahi:
(1) German Chancellor to visit Japan: good opportunity to learn
measures to prevent global warming
(2) Drinking and driving: Root out addiction to alcohol

Mainichi:
(1) Chancellor Merkel to visit Japan: Learn Germany's achievement in
CO2 reduction
(2) Economic partnership agreement: Concern about fate of
agricultural policy

Yomiuri:
(1) ODA: Cutting ODA budget is questionable
(2) Fisheries industry: How can major fishing country be revived?

Nikkei:
(1) Make most of financial functions to prevent global warming

Sankei:
(1) Nuclear reactor: Regain reason that existed 50 years ago
(2) Reorganization of department stores: First thing to do is to
compete with new business models

Tokyo Shimbun:
(1) Global warming preventive measures: No preparedness felt from
Interim report
(2) Whistle-blowing: Do not let someone's good conscience go to
waste

Akahata:
(1) Death from starvation case in Kitakyushu City: Crime committed
by civil servants deprives citizen of his right of existence

3) Prime Minister's Official Residence (Kantei)

Prime Minister's schedule, August 24

NIKKEI (Page 2) (Full)
August 25, 2007

Morning
Attended a welcome ceremony at the prime minister's official

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residence in Putrajaya, Malaysia. Held a meeting with Prime Minister
Abdullah. Attended a ceremony to sign a joint statement. Met with
economic mission members.

Afternoon
Host a reception at the Mandarin Oriental Hotel in Kuala Lumpur.
Attended a Japan-Malaysia business forum. Met King Mizan at his
palace. Held a press conference at the Hotel Nikko Kuala Lumpur.
Held informal talks with accompanying reporters.

Night
Attended a dinner party hosted by Prime Minister Abdulla at the
Mandarin Oriental Hotel. Stayed at the Hotel Nikko Kuala Lumpur.

Prime Minister's schedule, August 25

NIKKEI (Page 2) (Full)
August 26, 2007

Morning
Met former Japanese students who were studying in Malaysia at the
Hotel Nikko Kuala Lumpur. Left Kuala Lumpur International Airport by
a government plane.

19:03
Arrived at Haneda Airport.

19:36
Called at Imperial Palace to report his return.

19:52
Returned to his official residence.

Prime Minister's schedule, August 26

NIKKEI (Page 2) (Full)
August 27, 2007

10:57
Had his hair cut at a barber shop in the Hilton Hotel.

13:27
Met Secretary General Nakagawa at his official residence.

4) Aso to become LDP secretary general, Masuzoe likely be appointed
minister in cabinet shuffle

ASAHI (Page 1) (Full)
August 27, 2007

Prime Minister Shinzo Abe will today shuffle his cabinet and the
three top executives of the Liberal Democratic Party and launch the
new cabinet tonight. The prime minister yesterday asked Foreign
Minister Taro Aso to serve as secretary general of the LDP and Aso
accepted. It has been decided that LDP Upper House Diet Affairs
Committee Chairman Tetsuro Yano will serve in his first cabinet post
and Land, Infrastructure and Transport Minister Tetsuzo Fuyushiba, a
member of the New Komeito, will be retained in his current post.
Yoichi Masuzoe, policy chief of the LDP caucus in the House of
Councillors, is rumored to be picked for a cabinet post. Abe has
decided to reduce from five to three the number of special advisors
to the prime minister, posts which were set up to strengthen the

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function of the Prime Minister's Official Residence (Kantei).

Yesterday afternoon at his official residence, Abe carried out final
coordination with LDP Secretary General Hidenao Nakagawa on the new
cabinet and LDP lineups. Aso served as chairman of the LDP Policy
Research Council, minister of internal affairs and communications,
and foreign minister in the government of Prime Minister Junichiro
Koizumi, and he is currently serving as foreign minister in the Abe
administration. He enjoys Abe's strong confidence. His foreign
policy is similar to that of Abe. The focus is on how much Aso will
be able to manage the party since he hails from a small faction
which has only 16 members.

Abe will not accept recommendations from the factions, but he is
expected to give priority to factional balance in the party. The
dominant view is that the prime minister will pick former Foreign
Minister Nobutaka Machimura, who heads a faction to which Abe used
to belong, as chief cabinet secretary. Abe apparently wants to
appoint Masuzoe to the cabinet to win support from the forces
opposing him.

In the wake of the LDP's crushing defeat in the July 29 Upper House
election, Abe has said that he wants to make efforts to revitalize
regional economies. He, therefore, is considering naming former
Iwate Gov. Hiroya Masuda to the cabinet.

Meanwhile, Abe reportedly told Upper House Caucus Chairman Hidehisa
Otsuji, who had called on the prime minister to appoint Yano, on the
phone on the night of Aug. 25: "I understand the (Upper House side's
intention)." It has now decided that Deputy Chief Cabinet Secretary
Seiji Suzuki will succeed Yano as chairman of the Diet Affairs
Committee.

Abe will pick the three new LDP executives this morning and hold a
cabinet meeting to accept the resignations from the cabinet
ministers. After meeting with New Komeito Chief Representative
Akihiro Ota, he will name the new cabinet ministers, setting up
reorganization headquarters in the Kantei. He plans to hold press
conference after completing an attestation ceremony of the cabinet
ministers tonight.

Taro Aso: Age 66; head of the Aso faction; served as foreign
minister, internal affairs and communications minister, and chairman
of the LDP Policy Research Council; graduated from Gakushuin
University; elected nine times to the Lower House from the Fukuoka
No. 8 constituency.

5) Abe to appoint Nikai as minister of internal affairs and
communications, Aso as LDP secretary general

SANKEI (Top Play) (Lead paragraph)
August 27, 2007

Prime Minister Shinzo Abe will today shuffle the cabinet and the top
executives of the Liberal Democratic Party (LDP). After going
through an attestation ceremony of the cabinet ministers at the
Imperial Palace, he will launch the new cabinet. It has been decided
so far that Foreign Minister Taro Aso will serve as LDP secretary
general. It will also likely that Diet Affairs Committee Chairman
Toshihiro Nikai will be picked as minister of internal affairs and
communications, and former Agriculture Minister Tadamori Oshima as
Nikai's replacement. It has been also decided that Tetsuro Yano,

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chairman of the Upper House caucus, will join the cabinet, and that
Land, Infrastructure and Transport Minister Tetsuzo Fuyushiba,
Economic and Fiscal Policy Minister Hiroko Ota, and Special Advisor
(on Abduction Issue ) Kyoko Nakayama will be retained in their
posts. In response to public criticism of the economic gaps between
the urban and regional areas, Abe is carrying out coordination on a
plan to name former Iwate Gov. Hiroya Masuda to the cabinet.

6) Defense Minister Koike indicates intention to support Abe from
outside the cabinet

MAINICHI (Page 1) (Full)
Eve., August 25, 2007

Ryuko Tadokoro

Defense Minister Yuriko Koike returned from India this morning.
Meeting with the press corps at Narita Airport, she spoke of her
earlier remarks denying she would stay on in the current post and
noted: "I've conveyed to Prime Minister (Shinzo) Abe my intention to
work hard as an ordinary foot soldier to support the prime
minister." Koike thus revealed that she conveyed her intention to
leave the cabinet to the prime minister. She also commented,
"Because the prime minister is the person who appoints the cabinet
members, I'll follow the prime minister's decision." When asked when
she conveyed her intention to the prime minister, Koike said, "I've
previously conveyed my intention to the prime minister." When asked
how the prime minister responded to her, Koike said, "I can't say
anything about that," avoiding specific comments.

Denying again that the trouble over the selection of a new
administrative vice defense minister was the reason for her not to
stay on, Koike commented: "I think it is better to replace the
defense minister in order to have Diet deliberations go more
smoothly."

7) Two organizations affiliated with Internal Affairs and
Communications Minister Suga found to have reported 20 million yen
as office expenses, despite their offices located in Suga's own
building

YOMIURI (Page 1) (Excerpts)
August 25, 2007

The Yomiuri Shimbun learned that the ruling Liberal Democratic
Party's (LDP) Kanagawa Chapter's Second Constituency Branch Office
of which Internal Affairs and Communications Minister Suga served as
representative and his political organization had reported a total
of 19.56 million yen in their reports on political funds for 2005,
although their main offices are located in a building possessed by
Suga himself. Cases where lawmakers located their main offices in
the Diet Members' Building or their parents' houses so that they did
not pay the rent but reported office expenses in their political
fund reports are becoming a big problem, as evidenced by the cases
of former Agriculture Ministers Toshikatsu Matsuoka and Norihiko
Akagi.

The two organizations -- the branch office and the supporters'
organization -- associated with Suga had their main offices in a
three-story building in Tori Town, Minami Ward, Yokohama. The two
organizations initially were tenants of the building, but in
December 2004, Suga purchased the building and the lot from a

TOKYO 00003948 006 OF 012


construction material company located in Yokohama's Naka Ward. The
two organizations reported a total of 21.03 million yen and a total
of 16.2 million yen in their 2003 and 2004 political fund reports,
respectively, but even in 2005, when they did not have to pay rent,
they reported a total of 19.56 million yen as office expenses in
their political funds reports, with 16.7 million yen reported by the
branch office and 2.86 million yen by the supporters' organization.

8) 3 million yen paid to NPO associated with Justice Minister Nagase
by leading organization accepting foreign trainees

ASAHI (Top play) (Excerpts)
August 25, 2007

The Asahi Shimbun learned that two organizations affiliated with the
Industrial Foundation for International Personnel Management (IPM
located in Tokyo's Shinjuku Ward) had paid a total of 3,000,000 yen
during a period from 2006-2007 to the nonprofit organization
"Yuyukoronjuku" (located in Tokyo's Minato Ward) of which Justice
Minister Jinen Nagase had served as honorary principal chairman. The
NPO serves as a political-support organization of Nagase. The IPM's
director, as well, had donated a total of 360,000 yen to Nagase's
political organization. Suspicions are arising that the justice
minister, who is in a position to supervise and give guidance to
organizations accepting foreign trainees, had received money in
various forms from some of those organizations under his oversight.

The IPM was established in 1993. It has until now accepted some
2,800 Chinese trainees and introduced them to domestic firms. Nagase
reportedly had served as honorary chair of the IPM since its
foundation and stepped down around September 2005, immediately
before he assumed the post of deputy chief cabinet secretary.

According to the IPM director, the two IPM-affiliated companies that
had donated money to the NPO "Yuyukoronjuku" were "Neo Plan"
represented by the IPM director and "Yen Plan" led by the director's
wife. These two groups had each paid 100,000 yen monthly as
supporting members to that NPO from May 2006 through July 2007. The
money they had paid to the NPO totaled 3,000,000 yen. Reportedly,
they were asked by Nagase's secretary to join the NPO as members.

As the reasons why the two companies donated money to the NPO, the
IPM director explained: "I donated in part because I hoped to see
Mr. Nagase succeed in the political world." The director also said
he took it into consideration that it appeared difficult to track
this sort of donation. Given this, the NPO might have been used as a
shield for political donations. The two companies declared losses in
two fiscal years, 2005 and 2006.

9) LDP to shelve reinterpreting right to collective defense

NIKKEI (Page 2) (Abridged slightly)
August 26, 2007

The Liberal Democratic Party has decided to shelve its plan to
produce this fall a set of proposals on altering the interpretation
of Constitution with regard to the right to collective self-defense.
The New Komeito has expressed its opposition to changing the
constitutional interpretation to allow the country to exercise the
right. The reason is that now that the House of Councillors is
controlled by the opposition following the July election in which
the ruling bloc suffered a crushing defeat, improving relevant

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legislation, including the Self-Defense Forces Law, has become
difficult.

The LDP launched in late April a special committee on the right of
collective self-defense chaired by LDP policy chief Shoichi Nakagawa
following the government's Council for Rebuilding the Legal
Foundation of National Defense. The LDP committee was planning to
produce a set of proposals ahead of the government's experts panel.
However, given the Abe administration's declining momentum, the LDP
panel is not in a mood to discuss the matter calmly, according to a
committee member.

Although the party plans to put together views in the party on the
current situation and challenges regarding the right of collective
self-defense, it plans to abstain from showing any direction in its
proposals.

10) Prime Minister Abe to seek DPJ understanding for extension of
Antiterrorism Law

NIKKEI (Page 2) (Excerpts)
August 25, 2007

Yushi Kihara, Kuala Lumpur

Visiting Prime Minister Shinzo Abe held a press conference on Aug.
24 at a hotel in Kuala Lumpur, in which he stated on the issue of
extending the Antiterrorism Special Measures Law: "I will discuss
foreign policy with the opposition camp, as well. I want the
Democratic Party of Japan to understand how much Japan's activities
are appreciated and expected by the international community."

He indicated in his remarks that with an eye on passage of the law
in the fall extraordinary session of the Diet, he would seek
understanding from the DPJ, which has opposed an extension of the
Antiterrorism Law. He, however, refrained from mentioning any
specific response, including corrections to a bill to extend the
antiterrorism law.

11) North Korea is believed to have obtained Japanese products via
Taiwan

SANKEI (Page 2) (Excerpts)
August 25, 2007

Against the backdrop of Japan's tight export control against North
Korea following the country's nuclear and missile tests, North Korea
is strongly suspected of shifting to "diversionary trade" of
importing high-tech Japanese equipment via Taiwan. Pyongyang is
believed to have begun taking advantage of the system allowing Japan
to export supplies to Taiwan, whose direct exports to North Korea
are prohibited. Some corporations run by Koreans in Japan have
offices in Taiwan. Public security authorities are highly alarmed,
believing that they are trying to make Taiwan, which actively trades
with North Korea, into a new base for procuring Japanese products.

In early August, Taiwan's Justice Department arrested Hua Yue
Enterprise (Taipei) executives for allegedly having illegally
exported Japanese computer components that could be converted for
military use to North Korea. The company is believed to have
exported computer numerical control components to North Korea on 14
occasions from last August through this past July by falsely

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claiming the cargo to be bound for China. Japanese computers and
stainless pipes were also included in the cargo.

According to security authorities, what has fallen in the hands of
North Korea is software used for missile control. In addition,
highly acid-resistant stainless pipes are extremely tightly
controlled in Japan for exports as a material indispensable for
producing nuclear substances and rocket engine components.

In March this year in Taiwan, trading company executives were
arrested for illicitly exporting to North Korea a precision metal
processing machine tool that could be used in processing ammunition.
Arrests of company executives for illegal exports to the North are
on the rise. Components in the machine tool that was illicitly
exported were imported from Japan and assembled in Taiwan. Such
components are not allowed to be exported to North Korea.

Last year, Japanese police arrested executives of two companies run
by Koreans in Japan who were involved in the illegal export via
Taiwan of a freeze dryer that can be used in developing bio weapons
on suspicion of violating the Foreign Exchange and Foreign Trade
Control Law.

12) Japan concerned about China's defense buildup

TOKYO (Page 2) (Full)
August 27, 2007

China's National Defense Minister Cao Gangchuan will visit Japan on
a five-day schedule from Aug. 29 and will meet his Japanese
counterpart.

China's defense chief will visit Japan for the first time in nine
and a half years since Chi Haotian visited in February 1998. Japan
and China will now hold a defense summit for the first time in four
years since Shigeru Ishiba visited China and met with Cao in
September 2003 when Ishiba was director general of the Defense
Agency, now the Defense Ministry.

Japan and China, which have suspended defense exchanges since former
Prime Minister Junichiro Koizumi paid homage at Yasukuni Shrine,
will now resume them. However, there is a deep gulf between the two
countries over the rapid increase in China's defense spending. There
are many challenges in store for the two countries.

Prime Minister Abe visited China in October 2006. Abe then met with
Chinese President Hu Jintao and other Chinese leaders. At that time,
Japan and China agreed on mutual confidence-building measures
(CBMs). In the defense summit this time, Japan and China are
expected to discuss carrying out mutual fleet visits at an early
date and setting up a hotline between their defense officials.

However, Japan remains distrustful of China over its nontransparent
defense spending, taking the position that China has boosted its
defense spending with a double-digit increase for 19 years in a row
and that there are questions about the transparency of the budget.
Meanwhile, Japan has been strengthening its alliance with Japan. In
addition, Prime Minister Abe has advocated building a framework of
Japan, the United States, India, and Australia. China is
increasingly becoming wary of that move, taking it as a coalition
against China. As it stands, Japan and China have not built an
environment to facilitate cooperation.

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On Aug. 24, Defense Minister Yuriko said she would not be involved.
"We've been troubled since the appointment of a successor to the
vice defense minister, so I wonder if she can talk with her Chinese
counterpart in an appropriate manner." With this, one of the Defense
Minister's officials voiced concern.

13) F-15 deployment to Okinawa eyed

SANKEI (Page 5) (Abridged)
August 27, 2007

The Air Self-Defense Force will deploy F-15 fighter jets to its Naha
base in Japan's southernmost island prefecture of Okinawa, Defense
Ministry officials said yesterday. The F-15 deployment to Okinawa is
intended to secure mastery of the air and strengthen readiness for a
possible violation of Japan's territorial airspace while in
preparation for a possible invasion of the Senkaku islets and other
islands. In this F-15 deployment, the Defense Ministry plans to
replace F-4 mainstay fighters currently deployed to the Naha base
with F-15 fighters deployed to the ASDF's Hyakuri base in Ibaraki
Prefecture. The F-15 is superior to the F-4 in mobility and dogfight
capability. The ASDF will deploy F-15s to Okinawa and step up
interoperability with F-15s deployed to the US Air Force's Kadena
base on the island prefecture in an aim to increase deterrence on
China.

The ASDF's Naha base currently deploys the 302nd Fighter Squadron
with about 20 F-4s and will replace them with about 20 F-15s from
the 204th Fighter Squadron. The ASDF is expected to complete its
F-15 deployment to Okinawa in fiscal 2008.

The Hyakuri base, according to an ASDF staff officer, had been
positioned as "the last line of metropolitan air defense" in Japan's
northern-oriented strategy against the now-defunct Soviet Union's
possible invasion during the Cold War. Replacing the Naha-based F-4
fighters with F-15s can be called an instance that typifies a shift
to southwestern-oriented strategy with China in mind.

The Defense Ministry will also earmark 112.3 billion in its budget
estimate for fiscal 2008 to renovate 32 F-15s in order to enhance
their combat capability. The F-22A Raptor, a state-of-the-art
stealth fighter developed by the United States, was a likely
candidate for Japan's follow-on mainstay fighter (FX). However, the
United States will not provide Japan with any data about the F-22A.
The Defense Ministry therefore deems it difficult to select a
fighter model by the summer of next year as planned. The ministry,
which has so far had plans to renovate only eight F-15s, will now
substantially increase the number of F-15s for modernization with
upgraded radar performance and missile efficiency.

14) Japan putting in serious efforts to ready space, sea strategies

SANKEI (Page 1) (Abridged)
August 27, 2007

The Defense Ministry will set up a new division, tentatively called
the "Office of Space and Ocean Policy" or "OSOP" for shirt, which is
in charge of planning space and sea strategies, officials said
yesterday. China has been projecting its space and ocean activities.
With an eye to this move, the Defense Ministry will launch the
office in the summer of next year.

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OSOP will be installed in the Defense Policy Division and will be
staffed with five persons or so. In July, Japan's own law of the sea
came into effect. OSOP will plan space and ocean policies. In
addition, the new office will also engage in interdepartmental
coordination with other government ministries and agencies as well
as international coordination with foreign defense ministries and
international organizations. The Defense Ministry's budget estimate
for fiscal 2008 totals 4.8172 trillion yen, an increase of 0.7%
or 35.7 billion yen over the ministry's initial budget for the
current fiscal year. The ministry will also earmark costs for
establishing OSOP.

15) Equipment contracts: New system to curb procurement expenses;
Defense Ministry to encourage companies to reduce prices

NIKKEI (Top Play) (Excerpts)
August 25, 2007

The Defense Ministry will launch a drive to reform its system of
procuring defense equipment, including fighter planes and spare
parts for repairs, starting in fiscal 2009. Judging that it is
difficult to urge companies to make rationalization efforts under
the present system of adding a 5% profit to cost prices after the
completion of ordered products, the ministry will instead adopt a
system under which companies can receive portions of costs saved
during a production process as their profits, thereby curbing
procurement prices. Another aim of the introduction of a new system
is to boost the competitiveness of the defense industry on the
equipment market.

Defense equipment generically indicates weapons, protective
equipment, systems used mainly by the Ground, Maritime and Air
Self-Defense Forces. Such equipment used by the GSDF includes tanks,
all-wheel-drive armored trucks, carrier helicopters, rifles and so
on. The MSDF uses Aegis ships, submarines. The ASDF uses fighter
planes, missiles and transport planes. These products are often
procured, based on discretionary contracts.

Companies that received orders for such products usually work out
prices by adding profits the costs needed immediately before the
delivery. It takes several years for companies to deliver ordered
equipment. Since low cost prices mean low profits, the present
system does not encourage manufacturers to make cost-cutting efforts
so much.

The envisaged system is aimed at encouraging manufacturers to cut
cost prices, while maintaining a general framework of the current
system of adding a 5% profit to cost prices. To be precise,
prices are set when the Defense Ministry allocates contracts to
start the manufacturing of ordered products to companies. Companies
will be entitled to receive portions of costs saved by their own
efforts made by immediately before the delivery.

16) Cabinet Office requests 312.5 billion yen in Okinawa package

SANKEI (Page 5) (Full)
August 25, 2007

The Cabinet Office on August 24 produced an Okinawa-related
budgetary request for FY2008 totaling 312.51 billion yen (up 18.3%
from this year's initial budget) including 15.597 billion yen in a

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preparatory fund for the Okinawa Institute of Science and
Technology. In new businesses, the budget places priority on
developing human resources in tourism and other areas. Specifically,
39 million yen was appropriated for a project to foster highly
skilled human resources with the aim of producing international
tourist resorts, and 224 million yen for the House of Asian Youths
project to promote exchanges with other Asian nations. In addition,
a total of 10 billion yen -- the same as last year -- was earmarked
for an aid package for development of the northern area, which is
based on the planned relocation of Futenma Air Station. However,
whether or not the government can actually secure the funds for the
northern area depends on developments in the year-end budget
compilation.

17) Japan, ASEAN agree to sign EPA; Japan to repeal more than 90%
of tariffs soon

YOMIURI (Page 1) (Full)
Evening, August 25, 2007

Manila

Japan and the Association of Southeast Asian Nations (ASEAN) held an
economic ministerial meeting in Manila on Aug. 25 and agreed in
principle to reach an economic partnership agreement (EPA),
centering on free trade agreements (FTA). Both sides will ink the
accord in November when their leaders meet in Singapore. The pact is
expected to take effect next year.

Japan will scrap tariffs on more than 90% of imports from the
region immediately after the pact comes into effect. The items
subject to tariff removal will be increased to more than 93% of
all imports within 10 years. But rice will not be covered by the
agreement.

The six original ASEAN countries, including Indonesia, will repeal
tariffs on more than 90% of imports from Japan in terms of both
value and items. Of the later members, Vietnam will abolish more
than 90% of tariffs within 15 years, and three countries,
including Cambodia, will scrap over 85% of tariffs within 18
years.

The EPA will be Japan's first multinational accord. Under the pact,
tariffs will not be imposed or will be reduced even if components or
fully assembled products are moved within the ASEAN region, for
instance, in a case in which Japan exports a liquid crystal panel to
Malaysia and again exports a TV set assembled there to Thailand. The
business community has welcomed the accord, based on the view that
it will become easier for Japanese firms to construct plants in
various countries in the region and to divide work.

ASEAN has already concluded free trade agreements (FTA) with China
and South Korea. The FTAs with China and South Korea came into
effect in July 2005 and in June 2007, respectively. Given this,
Japan was being pressed to quickly conclude a pact.

Minister of Economy, Trade and Industry Amari told reporters after
the ministerial meeting: "We were able to mark a great step forward
toward integrating the economies of East Asia," stressing the
significance of the agreement.

18) Agreement between Japan, ASEAN to sign EPA likely to add

TOKYO 00003948 012 OF 012


momentum to free trade strategy

NIKKEI (Page 3) (Full)
August 26, 2007

Japan and the Association of Southeast Asian Nations (ASEAN composed
of 10 countries) yesterday came to a general agreement to conclude
an economic partnership agreement (EPA). Japan has no regional trade
bloc, like the European Union (EU), so it is an important challenge
for the nation to form a free trade zone with ASEAN and countries in
the Asia-Pacific countries, such as China, South Korea, Australia,
and India. The progress in negotiations on concluding an EPA with
ASEAN is likely to give momentum to Japan's free trade strategy.

Minister of Economy, Trade and Industry Akira Mari told reporters
yesterday: "This marks a great step forward to realize the concept
of an East Asia Community," indicating his eagerness for an
expansion of EPAs. Trade in the Asia-Pacific region grew more than
10 fold over the past 20 years in value terms. The Japanese
government estimates that if 16 countries in the Asia-Pacific region
reach an EPA, it will bring about an economic effect worth
approximately 5 trillion yen. The government also aims to sign EPAs
with the United States and the European Union (EU).

Japan proposed in earlier EPA talks with ASEAN that it would
promptly remove tariffs on about 90% of imports from the region.
South Korea, which has already inked a deal with ASEAN, has agreed
to immediately abolish about 60% of tariffs. China will phase out
tariffs on all imported products. If Japan is able to present bold
liberalization plans, like the one with ASEAN, the East
Asia-Community concept must take on a realistic touch.

In the EPA talks with ASEAN, though, Japan placed such high-tariff
agricultural products as rice, dairy products, and beef outside the
reach of the agreement. China and Australia are expected to call on
Japan to open up its agricultural market wider. Unless Japan
encourages Japanese farmers to bolster their competitiveness and
liberalize the market, it might be difficult for a free trade system
to be established in the Asia-Pacific region, as Japan desires.


MESERVE

© Scoop Media

 
 
 
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