Cablegate: Daily Summary of Japanese Press 01/25/08

DE RUEHKO #0206/01 0250933
P 250933Z JAN 08





E.O. 12958: N/A



(1) FTC to abolish penalty-assessment system in bid-rigging, cartel
cases two years later (Nikkei)

(2) Interview with LDP Secretary General Bunmei Ibuki: DPJ should
shift to dialogue line (Yomiuri)

(3) Japan-U.S. Joint Committee decides to return Gimbaru to Japan;
Helipad relocation plan gains momentum (Ryukyu Shimpo)

(4) 2008 regular Diet session:
Provisional-rate-is-for-the-sake-of-ecology argument; LDP -
"Abolition will increase CO2 emissions; DPJ - "LDP is deceiving tax
payers" (Mainichi)

(5) Government to boost trade insurance for resource development to
one trillion yen (Nikkei)

(6) Rengo, Keidanren leaders start discussion on spring labor
offensive; Fierce battle on wage increase (Sankei)


(1) FTC to abolish penalty-assessment system in bid-rigging, cartel
cases two years later

NIKKEI (Top play) (Full)
January 25, 2008

The Fair Trade Commission (FTC) has decided to boldly review the
current penalty-assessment system (shinpan seido) under which the
watchdog judges whether to impose penalties on companies violating
the Antimonopoly Law. The FTC plans to enable companies dissatisfied
with surcharge payments or other administrative measures imposed on
them by the commission in bid-rigging or cartel cases to appeal
directly to the courts. In planned corporate merger and unfair
pricing cases, the FTC will change the current structure and make it
possible for the FTC to make a judgment after listening to
explanations from companies concerned. The FTC's decision reflects
growing calls from the business community for scrapping the
penalty-assessment system.

The FTC intends to specify the planned changes to the
penalty-assessment system in a bill amending the Antimonopoly Law it
plans to submit to the ongoing ordinary Diet session.

Under the current system, the FTC passes judgment on appeals filed
by businesses against penalties the commission had handed down, such
as surcharge payments or other administrative measures, on them for
big-rigging or cartel practices. The FTC will first abolish this
post-verdict assessment system in two years. It then will introduce
a system to enable businesses accused of big-ridding or cartel
practices, on which speedy judgment is required, to file complaints
directly with the courts.

For other illegal practices, such as planned corporate mergers and
unfair pricing practices, the FTC will introduce a prior-verdict
system under which FTC investigators and the accused firms will
present their respective views and evidence. Based on such
information, the FTC will determine penalties.

TOKYO 00000206 002 OF 008

On the planned systemic changes, the bill is expected to include the
wording: "The current post-verdict assessment system will be
eliminated after detailed studies are conducted within two years
from now."

The business community and the Liberal Democratic Party have long
been calling for changes to the post-verdict assessment system,
raising a question about fair judgment by the FTC because it has
acted as both prosecutor and judge. But the FTC's basic guidelines
for the Antimonopoly Law, released last October, stated that the
post-verdict assessment system would be kept in place for the time
being. In part because the guidelines also called for stricter
penalties for repeated offenders, the business world became more
vocal in demanding abolishing the FTC's penalty-assessment system.

To ensure the passage of its bill amending the Antimonopoly Law in
the current ordinary Diet session, the FTC judged that it would have
to offer some concessions on the penalty-assessment system. Based on
its new revision plans, the commission will launch final
coordination with the ruling coalition and relevant government
agencies. But some are calling for completely scrapping the
assessment system and entrusting all cases to the courts. So the FTC
may be pressed for more concessions.

(2) Interview with LDP Secretary General Bunmei Ibuki: DPJ should
shift to dialogue line

YOMIURI (Page 4) (Full)
January 25, 2008

Interviewer: Hajime Furukawa

-- How do you plan to discuss policy issues with the major
opposition Democratic Party of Japan (DPJ) in the current ordinary
session of the Diet?

Bunmei Ibuki, secretary general of the ruling Liberal Democratic
Party (LDP): According to opinion polls, those who approved passage
of the new antiterrorism legislation outnumbered those who
disapproved. But when asked about adoption in the Lower House by a
re-voting on the legislation that requires a two-third majority, a
large number of those polled called such a method "inappropriate."
This could be taken as a criticism for both sides' failure to
discuss the bill in detail. I think both the ruling and opposition
parties need to take this criticism seriously and show wisdom as to
how to hold subject-selective policy debate, how to establish a
policy consultative body, and further how to form a grand

-- How will you deal with the selection of a successor to the
current Bank of Japan (BOJ) governor?

Ibuki: The BOJ governor has more influential on money markets than
the finance minister. The finance minister and the BOJ governor are
the key officers for fiscal and financial affairs. It is illogical
to argue that a former bureaucrat is not qualified for the post. We
will welcome the DPJ's recommendation, but if the DPJ argues that it
will not approve anyone who is not recommended by it, nothing can be

-- The DPJ is opposed to a bill revising the Special Taxation
Measures Law, the purpose of which is to maintain the current

TOKYO 00000206 003 OF 008

gasoline tax rate.

Ibuki: This is not a simple question of whether to construct roads
or not. If the bill is not adopted, local governments would suffer
budgetary shortfalls. If the public is asked which to prefer, a
higher tax or a lower tax, it is only natural for the public to
prefer a lower tax. It is wrongheaded to focus on only one aspect of
the public feelings and make it a source for a political struggle.
Tax-related bills to back the estimated revenue have never failed to
be approved by the end of the year, once the budget bill was
approved. If the bills backing the estimated revenues are not
adopted, annual expenditures will not be underwritten. The Upper
House must make clear its attitude by March 31; otherwise the
principle of (putting finances under the parliament's control) will
crumble at its foundation.

-- Regarding the basic pension, the government intends to raise the
ratio of the amount to be financed by the national coffers in fiscal
2009 to 50 PERCENT . But debate on a consumption tax hike has

Ibuki: We must figure out how much of an automatic increase in tax
revenues there will be in fiscal 2009. Prime Minister Fukuda called
on the DPJ to join the Council on Social Security, but the DPJ
refuses to do so. The DPJ in a way is suffering a trauma from its
victory in the latest Upper House election. It does not appear it
will recover from it before the next Lower House election.

-- When do you think the next Lower House election will take place?

Ibuki: If the DPJ opts for holding discussions with the ruling bloc
on tackling policy issues, I think we will become flexible about the
timing of the next Lower House election. If the DPJ remains in its
current state of mind and should the ruling parties lose their
current two-thirds majority of seats in the Lower House, the Diet
will not be able to function. That's why we have concluded that the
Lower House will not be dissolved before the termination of the
term, because the Diet will be no longer be able to function. If the
DPJ asserts that it is necessary to seek the judgment of the public,
then the DPJ should become willing to hold discussions with the
ruling bloc.

-- How many seats would you aim to win in the next Lower House

Ibuki: We don't have any intention to set the stage for the next
Lower House election. But if we accept the opposition bloc's
challenge, the ruling bloc, namely, the LDP and its junior coalition
partner New Komeito, will aim to garner at least 241 seats, which
constitutes a majority. Our desire is to grab a single-party

-- Do you think another political realignment will occur?

Ibuki: I think political groups may be reorganized under the
leadership of a party that wins in the next Lower House election. If
the LDP wins that election, the opposition parties in the Upper
House could crumble.

(3) Japan-U.S. Joint Committee decides to return Gimbaru to Japan;
Helipad relocation plan gains momentum

TOKYO 00000206 004 OF 008

RYUKYU SHIMPO (Page 1) (Full)
January 25, 2008


Tokyo and Washington agreed at the Japan-U.S. Joint Committee
meeting yesterday on complete return of the U.S. military's Gimbaru
training area in Kin Town, as is specified in the SACO (Special
Action Committee on Okinawa) final report. It covers an area of
approximately 60 hectares. The helipad will be moved to the Blue
Beach training area and the mud removing and firefighting training
facilities to the south side of Camp Hansen. The Ministry of Defense
(MOD) will design the new facilities, including the helipad, and
start construction after the Japan-U.S. Joint Committee reached an
agreement on implementing the plan. The start of construction is

The new felicities will be designed in the future. The helipad on
the Gimbaru training area is a 30 m by 30 m square. MOD explained to
local municipalities that (1) no new facilities would be built on
the Blue Beach training area, although the existing facilities would
be improved, (2) it would be a simple, removable facility using
landing mats, and (3) it would be 1.6 km away from the residential

The mud removing facility is a pool-shared facility to remove mud
and dirt from U.S. military vehicles. The firefighting training
facility is a building where U.S. military fighters conduct drills
by actually setting things on fire.

The return of the Gimbaru training area has been delayed due to Kin
Town's opposition to the Blue Beach relocation plan. Kin Town Mayor
Takeshi Gibu officially accepted the relocation in June 2007, citing
his plan to push ahead with a vacated land utilization program and
other factors.

Comment by Kin Town Mayor Takeshi Gibu: I will make utmost efforts
to advance the vacated land utilization plan as the pump-priming

(4) 2008 regular Diet session:
Provisional-rate-is-for-the-sake-of-ecology argument; LDP -
"Abolition will increase CO2 emissions; DPJ - "LDP is deceiving tax

MAINICHI (Page 5) (Full)
January 25, 2008

As grounds for their insistence to retain the provisional rate of
taxation on gasoline, leaders of the government and the ruling
parties are underscoring that it has an aspect of being a measure to
combat climate change. Their argument is that if bills related to an
amendment to the tax code fail to obtain Diet approval by the end of
March, when the provisional tax rate expires, gasoline prices would
drop 25 yen per litter, encouraging the use of cars, which would
increase carbon dioxide (CO2) emissions. They want to use the global
environment issue as primary justification, with this July's Lake
Toya Summit in Hokkaido close at hand. However, the opposition camp
is reacting sharply against the ruling camp's stance, with one
saying, "They are mixing up different issues.

In opposition to the Democratic Party of Japan's (DPJ or Minshuto)

TOKYO 00000206 005 OF 008

call for scrapping the provisional gasoline tax rate, the government
and the ruling parties on Jan. 15 switched the focus of argument,
asserting that they are opposed to lowering gasoline prices for the
sake of the global environment." Fukuda raised a question during a
press conference: "Given environmental issues, it is questionable
whether just saying cheaper gas prices are better will do." A number
of government and ruling party officials made statements playing up
the need to retain the provisional tax rate, intertwined with the
Lake Toya Summit. Chief Cabinet Secretary Nobutaka Machimura said,
"If Japan lowers gasoline prices at a time when the G-8 summit is
close at hand, would the international community view it as
seriously tacking the environmental issue?"

This argument of the government is based on the estimate made in
October last year by the National Institute for Environmental
Studies, an independent administrative agency. It estimated that if
the original tax rates on gasoline and light oil were reinstated,
CO2 emissions would annually increase about 8 million tons in the
2008-2012 period, making it even more difficult for Japan to achieve
the goal set under the Kyoto Protocol.

The government is also insisting that Japan's gasoline prices are
cheaper than those in other advanced countries. The share of the tax
in gasoline prices is approximately 40 PERCENT , while the rate is
over 60 PERCENT in Britain and Germany. As such, the government
insists that though prices have gone up due to soaring crude oil
prices, the rise is still within the acceptable scope.

The opposition camp is opposing the government's and the ruling
camp's strategy of dealing with public opinion using the global
environment as justification.

Deputy DPJ President Naoto Kan during a press conference yesterday
said, "If the government characterizes the provisional gas tax rate
as an environment-related tax, it should abolish special road tax
revenues. It should instead propose a tax that will do good for the
environment. Otherwise, their argument is inconsistent." He thus
rebutted, saying that as long as the government wants to give an
environmental significance to the provisional tax rate, it should
establish an environmental tax. Motohisa Furukawa of the DPJ at a
Lower House plenary session pursued the prime minister, "Switching
the purpose of the provisional tax rate from road construction to
environment protection without revising the relevant law is
tantamount to deceiving tax payers."

There is an argument from within the LDP calling for an
environmental tax. However, the DPJ deems it extremely difficult to
introduce that tax in fiscal 2008.

(5) Government to boost trade insurance for resource development to
one trillion yen

NIKKEI (Top Play) (Full)
January 24, 2008

The government has decided to boost the amount of trade insurance it
underwrites for natural resource development to one trillion yen.
This figure is more than three times larger than the current level.
The government aims to curb surging oil prices by promoting oil
field development. The government initially envisioned that the
trade insurance would cover projects of natural resource development
by Japanese firms, but it will allow insurance to be bought on

TOKYO 00000206 006 OF 008

projects led by foreign firms. It will call on countries concerned
to buy insurance and will expand the scope of projects eligible for
the trade insurance by the end of this month if everything goes

Nippon Export and Investment Insurance, an independent
administrative agency, provide coverage on resource development
projects that involve Japanese companies. If a project is stopped or
suspended due to terrorism or a natural disaster, the insurance
covers losses incurred by banks, trading houses and other firms that
invested in or provided loans for the project. The insurance also
covers cases in which shares are reduced as a result of a takeover
by the government of the resource-producing nation. Premiums for
this type of insurance are 50 PERCENT to 70 PERCENT lower than
those for ordinary trade insurance, given that the insurance is
intended to support resource development. For instance, more than
one billion yen in insurance premiums is needed on a loan of 100
billion yen, but the amount is only 300 to 500 million yen in the
case of this insurance.

This trade insurance was launched in April, 2007, set off by the
Russian government's intervention in the Sakhalin 2 oil and natural
gas development project, in which Japanese firms held stakes. The
insurance was used on loans offered by Mizuho Corporate Bank and
others for a uranium mining project in Kazakhstan.

Behind the sharp rise in crude oil prices are such factors as an
increase in demand, the inflow of speculative funds, and a decline
in spare productive capability due to a lack of investment when oil
prices remained low. The Ministry of Economy, Trade and Industry
expects that Japan will increase its oil production capabilities in
the Gulf of Guinea in Africa, in which there reportedly is an
abundance of oil, and in the Middle East by making full use of the
trade insurance, as part of efforts to bring down oil prices.

The new type of trade insurance is also available for projects to
develop rare metals, indispensable in producing high-tech devices,
such as cellular phones, in Brazil and other Latin American
countries, Southeast Asia, and the Republican of South Africa.
Further, the government wants the insurance to be used on projects
to develop natural gas in the Middle East and Vietnam, as well as
uranium in Central Asia.

The government will also allow the insurance to be bought on
projects led by foreign firms but if Japanese companies are involved
and if some output will be exported to Japan.

A sharp increase in insurance payments in the Gulf War worsened the
financial conditions of the trade insurance business. But insurance
payments began to decrease in the mid-1990s, increasing collected
money. Its balance has been shifted into the black. The government
judges that although resource development is at a high risk, there
is some strength to expand the scope of projects eligible for trade

METI Minister Akira Amari will announce the policy of expansion at a
conference of oil consumer countries to be held in Davos,
Switzerland, around Jan. 25. Participating in the conference will be
U.S. Energy Secretary Sam Bodman, British Secretary of State for
Business Enterprise and Regulatory Reform John Hutton, EU Energy
Commissioner Andris Piebalgs, and International Energy Agency chief
Nobuo Tanaka. Amari is expected to emphasize that the new type of

TOKYO 00000206 007 OF 008

insurance will be available for foreign firms.

(6) Rengo, Keidanren leaders start discussion on spring labor
offensive; Fierce battle on wage increase

SANKEI (Page 2) (Full)
January 24, 2008

Japanese Business Federation (Nippon Keidanren) Chairman Fujio
Mitarai and Japan Trade Union Confederation (Rengo) chairman
Tsuyoshi Takagi yesterday held their first meeting this year at the

Keidanren Hall in Otemachi, Tokyo. With the meeting,
labor-management negotiations in the annual labor offensive were in
effect launched. Although the unions are calling for a distribution
of profits to help family finances because of good corporate
performances, management has toughed its position due to growing
concern about downward adjustments in operating performances owing
to the stronger yen and falling stock prices. A tug-of-war over
whether to raise wages will likely intensify between labor and

At the beginning of the meeting, Takagi opened with this salvo: "In
an attempt to boost consumer spending, which is the axis of the
economy, pay raises are necessary." He demanded a rise in wages by
playing up the present serious situation. He told Mitarai: "It is
necessary for the management to feel responsibility for the issue of
10 million non-regular employees having an annual income of less
than 2 million yen.

Mitarai, however, said: "The U.S. subprime mortgage crisis has
escalated and affected stock market prices that are now low. We
cannot be optimistic about the situation." He did not deny that an
expansion of consumer spending was important. He underscored the
impact made by the changing internal and external economic
situations on business results.

Ahead of this year's spring wage offensive, Keidanren called for
giving consideration to family budgets in a report by its
management-labor policy panel. The organization shifted its
position, taking a flexible stance of allowing value-added companies
with positive earnings to raise wages. The reason for the change is
that although corporate performances are certain to post record
profits for five years in a row, the lack of allocation of profits
to households has impeded economic recovery.

Labor, buoyed up by a long-absent tail wind, will not budge from its
hard-line stance. The Japan Federation of Basic Industry Workers'
Unions, which is organized by the Japan Federation of Steel Workers'
Unions and Japan Confederation of Shipbuilding and Engineering
Unions, is seeking a 3,000 yen monthly pay raise per worker. The
Japanese Electrical Electric and Information Union has called for a
wage increase of more than 2,000 yen, and the Confederation of Japan
Automobile Workers' Unions wants an increase of at least 1,000 yen.
The Federation of All Toyota Workers' Unions will demand a pay raise
of more than 1,000 yen in this year's spring wage round for the
first time in seven years.

Keidanren, which assumes the offensive, has sought to constrain the
labor union side's strategy. Management-Labor Policy Committee
Chairman Takao Kusakari said: "This is not the time for raising
wages equally." Toyota Motors Chairman Fujio Cho commented: "Raising
wages has now become very difficult. It will not be that easy."

TOKYO 00000206 008 OF 008

Seven & i Holdings Co. Chairman Toshifumi Suzuki said: "We are not
in a position to raise wages since consumer spending has been
hovering at a low level. The recent sharp appreciation of the yen
has thrown business managers into confusion prior to the March
closing of annual accounts."

Toshihiro Nagahama, chief economist of the Dai-Ichi Life Research
Institute, pointed out:

"Electrical machinery and auto industries, which lead the spring
wage offensive, are most significantly affected by the strong yen.
So this spring's negotiations will be carried out under severe

He said: "It is expected that the level of pay raises this spring
will be lower than last year's 1.87 PERCENT ," depending on the
impact of falling stock prices and rising exchange rates.

Wage bargaining is not the only issue for the annual
labor-management talks. Rengo demands this year the improvement of
labor conditions for dispatched workers and part-timers, as well as
an overtime pay increase in order to correct the problem of full
timers working long hours.

Keidanren, however, has insisted that a raise in the minimum wage
and overtime pay will decrease job opportunities. It has insisted on
the need to introduce a labor system that prioritizes the work-life
balance by introducing various ways of working.

The labor unions will present their requests to their companies
before the end of February. After the unions receive replies in
mid-March, labor-management negotiations will continue. However, how
pay raise negotiations will turn out remains a cloudy issue.


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