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Cablegate: Japan Economic Scope for October 27, 2008

VZCZCXRO8831
RR RUEHFK RUEHKSO RUEHNAG RUEHNH
DE RUEHKO #3028/01 3040802
ZNR UUUUU ZZH
R 300802Z OCT 08
FM AMEMBASSY TOKYO
TO RUEHC/SECSTATE WASHDC 8404
INFO RUCPDOC/USDOC WASHDC
RUEHFK/AMCONSUL FUKUOKA 0686
RUEHNAG/AMCONSUL NAGOYA 8751
RUEHNH/AMCONSUL NAHA 3044
RUEHOK/AMCONSUL OSAKA KOBE 4469
RUEHKSO/AMCONSUL SAPPORO 1259

UNCLAS SECTION 01 OF 05 TOKYO 003028

SENSITIVE
SIPDIS

STATE FOR EAP/J

E.O. 12958: N/A
TAGS: ECON ETRD EFIN EAGR PREL SENV JA
SUBJECT: Japan Economic Scope for October 27, 2008

SENSITIVE BUT UNCLASSIFIED. PLEASE PROTECT ACCORDINGLY.

1. (U) This cable contains the Japan Economic Scope for
October 27, 2008.

Business
--------

2. (SBU) Japan to Start Voluntary Carbon Footprint Labeling with
Domestic Companies

The Ministry of Economy Trade and Industry (METI) plans to start an
experimental voluntary carbon footprint labeling program in early to
mid 2009 involving approximately 30 domestic companies. Industry
associations will design the basic methodology for computing the
carbon footprint of different product categories, subject to review
by an expert GOJ panel. METI will try to harmonize the
methodologies used with an eventual ISO international standard in
three years. U.S. industry is concerned about the accuracy of the
labeling and its possible trade-distorting effects.
Environment and Energy
----------------------

3. (U) JAEA Forecasts Decreasing Oil Dependence, Increasing Nuclear
Power Use

The Japan Atomic Energy Agency's (JAEA) "Nuclear Power Vision 2100"
report forecasts a decrease in oil dependence and a substantial rise
in nuclear power. The October 2008 report forecasts a 42 percent
drop in energy consumption by 2100 compared to 2000, resulting from
a decline in population (falling to just over 64 million by
century's end) and improved energy conservation. Notably, the
report forecasts significant cuts in energy consumed in the
transportation sector, crediting the advent of hydrogen fuel-cell
and rechargeable battery-powered vehicles. The JAEA predicts
Japan's energy sources will shift from fossil fuels, which is
projected to fall to 28 percent (currently 75 percent), to
electricity, which is expected to rise to 62 percent (currently 28
percent). To meet this growing electricity demand, the report
forecasts an increase in nuclear power generation, with number of
nuclear power plants increasing to 231. Nuclear power's share of
the electricity supply will grow to 67.1% and, significantly, teh
report forecasts zero dependence on oil for power generation.

Food and Agriculture
--------------------

4. (SBU) Agriculture Featured on NHK's "Global Food Crisis"

Japan's national television station, NHK, featured U.S. agriculture
in a two-part series on the global food crisis aired October 18-19.
NHK interviewed U.S. Grains Council executives, who featured
prominently in the piece. The program delved into America's role in
the current international food situation, which it likened to the
global financial crisis, asserting both stem from the U.S. policies.
In addition, the "ethanol boom" was again singled out as a major
cause of the world's troubles.

The program stated the U.S. began exploring new markets for U.S.
grain products in the 1980s and promoted trade liberalization around
the world, starting with Japan. As U.S. grain exports increased
rapidly, so did other countries' dependence on U.S. grain. While
NHK rightly pointed out many governments have restricted food
exports during the crisis, the program asserted the global food
crisis has taught Japan its overdependence on food imports must be
reversed. It also failed to highlight the U.S. role as a reliable
supplier throughout the food crisis.

The program's second installment focused on Japan's struggle to
secure a stable supply of low-cost food amid soaring global food
prices, featuring a miso maker in Japan struggling to purchase
soybeans. The program noted global farmland is expected to increase
by only eight percent over the next 30 years from 2000, while global
demand for food is expected to increase by 56 percent during the
same period. Countries are therefore trying to increase crop yields
by using biotechnology. The piece could help build eventual public
acceptance of biotechnology, an improvement from past
agriculture-related Japanese TV programming. Looking at Japan's low
food self-sufficiency rate, the program also reported on efforts to
boost the production of feed-use rice as an alternative to corn
imports.

5. (U) USDA: Health Ingredients Japan 2008 Exhibition


TOKYO 00003028 002 OF 005


Benefiting from the continuing consciousness about health in the
Japanese food sector, U.S. exhibitors at the Health Ingredients
Japan 2008 Show displayed a broad range of products to over 42,200
visitors. Products ranged from food ingredients, nutraceuticals,
processing/testing equipment, and health foods featuring functional
attributes and organically grown ingredients. U.S. Embassy
Agricultural Trade Office Tokyo sponsored the U.S. Pavilion with
nine booths, including an information booth and lounge, and featured
six exhibitors, including three cooperators (the Wisconsin Ginseng
Board, California Fig Advisory Board, and the Cherry Marketing
Institute).

6. (SBU) AMS Discusses Organic Recognition with MAFF

USDA and Agricultural Marketing Service (AMS) officials visited
Tokyo October 15 - 17 to review the GOJ's accreditation system for
certifying agents that comply with National Organic Program (NOP)
standards. The AMS met with Ministry of Agriculture (MAFF)
officials, visited the Food and Agricultural Materials Inspection
Center (FAMIC), and organic green tea farms in Shizuoka prefecture.
AMS plans to release a report in a few weeks suggesting areas for
improvement. Japan plans to export organic green tea to the U.S.


7. (U) ATO Hosts Biannual Cooperators Meeting

The Agricultural Trade Office (ATO) on October 20 gave presentations
on the upcoming re-launch of the www.myfood.jp food image campaign
and the newly launched "V5 Healthy Eating" campaign. Japan is home
to 49 cooperators with a requested $30.8 million in Market Access
Program funding for 2009. The ATO presents seminars twice a year to
share information and develop mutually beneficial programs. The V5
campaign is designed to support all cooperators by promoting the
concept of "meal salads" to trade and consumers and creating recipes
for websites, print, and television using a wide range of
ingredients. These two campaigns are key components of the ATO's
efforts to provide platforms for cooperators to promote their
products in the Japanese market.

8. (SBU) Hokkaido Meeting on Revising Biotech Crop Regulations Lacks
Focus

The Hokkaido Prefectural Government (HPG) hosted the first in a
series of seven opinion exchange meetings on food safety and
security on October 7. The HPG promised a focused discussion on
whether to revise its three-year old biotech crop regulations (due
for renewal in 2009; see 2007 Sapporo 29). Ten panelists selected
from various occupations such as consumer entities, school lunch
nutritionists, local fishery coops, processed food companies,
farmers, village agricultural sections, as well as thirty government
officials and about fifty members of the public, attended the
kickoff meeting in Sapporo. The meeting was divided into three
sections: HPG reports on the current status of various activities
under prefecture ordinance regarding food safety and security,
reactions from each of the ten representatives, and finally opinions
from those attending in the audience.

The actual focus, however, was extremely vague. Panelists raised a
broad spectrum of food safety issues, very few actually related to
biotech. In fact, biotech crops came up only during initial
presentations when HPG representatives reported no farmers or
research institutions had submitted any requests to grow biotech
crops since the 2006 implementation of Hokkaido's regulatory regime.
During open discussions, the meeting turned into verbal battle
between biotech supporters and opponents over the safety of biotech
crops. The meeting ended with a consumer rights representative
declaring "consumers will only accept biotech if these crops are
scientifically proven to be absolutely safe to consume."

9. (SBU) MAFF Official Assigned To "Tainted Rice" Reform Team
Commits Suicide?

Media organizations recently reported a MAFF official in charge of
the Plant Protection Division and the Food Safety and Consumer
Affairs Bureau hanged himself in his home on Friday afternoon.
Police suspect the official, Director Yoshiro Tokura, committed
suicide, according to the press. Although Tokura was not directly
involved in the tainted rice scandals, he was assigned to a newly
established team of MAFF officials to address the issue. A senior
MAFF representative was quoted in Mainichi as saying it is unclear
whether the suicide was related to the tainted rice scandals. Some
media report the alleged suicide was more likely the result of
family problems.


TOKYO 00003028 003 OF 005


Japan's Foreign Relations
-------------------------

10. (U) JICA President Visits Washington

Cooperation Agency President Sadako Ogata explained advantages she
expects to flow from the recent reorganization of aid institutions
in Japan, in which the Japan Bank for International Cooperation was
recently folded into the Japan International Cooperation Agency
(JICA). Her October 14 speech in Washington at a conference
co-hosted by JICA and the World Bank came just two weeks after her
organization effectively became the world's largest bilateral
development agency.

For the first time, a single agency will be able to provide "a
complete package of assistance," including technical help, grant
aid, and soft loans for medium to long-term development. She also
highlighted the recent establishment of the JICA Institute, which
will attract both domestic and foreign scholars to explore
development assistance issues. Ogata spoke about how her expanded
agency can collaborate with other partners to fight poverty,
especially in Africa.

11. (SBU) Aso-Singh Pledge Accelerated EPA Talks

Prime Minister Aso and Indian PM Manmohan Singh concluded their
summit in Tokyo with no announcement of an Economic Partnership
Agreement. The leaders instead issued a joint statement affirming a
Strategic and Global Partnership that calls for concluding an EPA as
early as possible. In a press interview, PM Singh expressed hope an
agreement could be concluded by the end of the year, though analysts
cited the need to simplify procedures for generic drugs and the
removal of tariffs on auto parts as significant obstacles. The
Aso-Singh statement also announced a 450 million yen ODA loan for
the first phase of the Delhi-Mumbai Dedicated Freight Corridor rail
project. Japan is going ahead with the low-interest loan despite
U.S. and other OECD partners' objections that the project is
commercially viable and incompatible with OECD tied aid rules.

12. (U) MOFA Hosts 4th Israeli-Palestinian Confidence-Building
Conference

The Ministry of Foreign Affairs will host the Fourth Conference for
Confidence-Building between Israel and the Palestinians October 22 -
23 in Tokyo; it last convened in March 2007. The chief Israeli
delegate, Minister of the Interior Meir Sheetrit, and chief
Palestinian delegate, PLO Negotiations Head Dr. Sa'eb Erekat, will
attend the conference with other government officials and academic
experts from both sides who are familiar with the Middle East Peace
Process and the local situation.

The Conference aims to exchange views on the status of the Middle
East Peace Process, prospects for the development of the Palestinian
economy, perspectives on the "Corridor for Peace and Prosperity"
initiative, and the feasibility of a comprehensive Middle East
peace, and other topics for peaceful coexistence between Israelis
and Palestinians. The conference represents one of Japan's policy
pillars for promoting the Middle East Peace Process.

13. (U) Japan-China-South America Trilateral Summit Dates Floated

Prime Minister Aso floated December 6 or 7 as potential dates for
Japan to host a trilateral summit between Japan, China, and South
America, according to media reports. Japan postponed the summit,
originally scheduled for September, following the resignation of PM
Fukuda. Potential agenda topics for the meeting, which could be
held in Fukuoka, include the financial crisis, climate change and
the DPRK's nuclear program. The timing of the proposed summit calls
into question earlier media predictions of a November 30 Lower House
election.

14. (U) Japan Urges IMF, World Bank to Help Affected Poor Nations

Japan called on the IMF and the World Bank October 13 to implement
steps to help developing economies affected by the ongoing global
financial turmoil and pledged support for the two institutions'
endeavors to that end. Bank of Japan Governor Masaaki Shirakawa
told a plenary session of the IMF/WB annual meeting in Washington
the IMF should provide financial aid to help emerging and smaller
countries inject capital into their financial institutions and
guarantee deposits amid the credit crisis. He also urged the WB to
contemplate how it could compensate for expected declines in private
capital flows to developing countries due to the global credit
crunch. "Japan stands ready to supplement needed funds," Shirakawa

TOKYO 00003028 004 OF 005


said, in reference to the envisaged IMF aid.

He also expressed expectations that the WB and the new JICA "will
make their aid more effective and efficient and produce robust
results by means of an exchange of best practices and know-how and
its close coordination and cooperation."

15. (U) Japan's ODA Budget Requests Total 771.87 Billion Yen, up
10.2 Percent

Budget requests for Japan's foreign aid in fiscal 2009, starting
next April, total 771.87 billion yen (about $7.72 billion), up 10.2
percent from the initial fiscal 2008 budget, the Ministry of Foreign
Affairs (MOFA) announced October 8. Despite the government's hope
to expand aid, including a pledge to double official development
assistance to Africa by 2012, negotiations with the Finance Ministry
are expected to be tough given the overall tight fiscal situation.
Ten of the 13 government ministries and agencies involved are
requesting budget increases for their respective Official
Development Assistance (ODA) expenditures.

MOFA, which considers ODA one of Japan's most important diplomatic
tools, made the largest request, 500.62 billion yen (about $5
billion), up 13.6 percent, followed by the Finance Ministry at
174.65 billion yen (about $1.75 billion), up 0.3 percent. Japan's
ODA budget has been cut for nine straight years. This situation has
led Japan, formerly the world's largest donor, to be surpassed by
Germany and France in 2007, and to drop to fifth place among 22
major donors in terms of ODA disbursements. The Cabinet's final
approval of the budget is expected in December.

16. (SBU) For Now, No Nuclear Talks With India (SBU)

Japan has no concrete plans to begin negotiations with India on a
bilateral civil nuclear cooperation agreement, according to MOFA
officials. Officials did not preclude the possibility Japan will
engage with India at a later date, but said for now the best Japan
can do is to not oppose the Nuclear Suppliers Group exception that
has been carved out for India. The Nikkei reported October 20 PM
Aso would discuss Japan's position on the issue with visiting Indian
PM Singh on October 22. Commenting on the press report, MOFA
officials said that the topic is "still under consideration" as an
agenda item for the PM's discussions.

Politics and Reform
-------------------

17. (SBU) GOJ And Local Officials Launch Commission To Plan For Land
Use After Base Realignment

In another sign local Okinawan officials believe the DPRI base
realignment plan will be implemented, a GOJ-funded commission was
launched October 22 to work with local governments to develop
recommendation for future disposition of lands returned as part of
the southern consolidation and U.S. military facilities. An
initiative of the Prefectural Government, the commission includes
representatives of two base-hosting cities (Ginowan and Chatan),
several Tokyo-based urban planning experts and representatives of
the Cabinet Office and the Okinawa Prefectural Government.

Technology, Telecom, and IPR
----------------------------

18. (U) An Incremental Victory On Japan IPR Enforcement

A Cultural Affairs Agency study committee has issued a draft report
recommending the copyright law be revised to make illegal the
downloading of illegal content or content from illegal sources. The
step follows U.S. regulatory reform recommendations noting the
weakness of Japanese law if distribution is illegal but downloading
and possession are not. A Cultural Affairs Agency contact advised
the committee's final report should be published before year's end.
The Agency has started preparations to revise the copyright law.

19. (U) NIMS Hosts Young Scientists on Nano Mechanics

The National Institute of Materials Science (NIMS) hosted the
U.S.-Japan Young Scientists Symposium on Nano Mechanics-related
Active Systems October 8, 2008. The National Science Foundation
(NSF) and Ministry of Education, Culture, Sports, Science and
Technology (MEXT) supported the event as part of the "U.S.-Japan
Nanotechnology Program" established in 2003.

Symposium participants included 12 U.S. researchers, 13 Japanese

TOKYO 00003028 005 OF 005


researchers, and representatives from the host institution, MEXT and
NSF. The symposium program consisted of three sessions, a tour of
the NIMS, research presentations, and a reception/dinner. The
research talks focused on nano tools, hybrid nanomaterials, and
nano-biomedical materials and devices. The U.S. team praised the
first-rate facilities and the research conducted by the Japanese
institutions.

In addition to participating in the symposium, the U.S. team visited
the University of Tokyo, AIST (National Institute of Advanced
Industrial Science and Technology) in Tsukuba Science City, Kyoto
University, and Osaka University.

Trade
-----

22. (SBU) GOJ Ponders "High Risk" Chemical Registration Law

Japan is considering legislation to require chemical companies to
register the manufacture and import volume of certain products,
according to a front-page Nikkei article today. A health ministry
official told us this law will not be as expansive as the EU REACH
Directive, although it will be "loosely based" on REACH
(Registration, Evaluation and Authorization of Chemicals). The
official further indicated the new legislation will focus on
chemicals considered high risk, and that its list of monitored
chemicals should be considerably shorter than that established under
REACH.

23. (SBU) GOJ Finalizes Domestic Trial Emissions Trading Scheme

The GOJ finalized details of its voluntary trial emissions trading
scheme and began recruiting participants October 21, according to an
MOE contact. Recruitment will continue until mid-December, but
trading will not start until late 2009. The delay allows time for
the trading scheme's Secretariat (comprised of METI, MOE and other
agencies' officials) to verify the self-selected targets of the
participating companies. The MOE contact confirmed press reports
that over 1,000 companies are likely to participate.

SCHIEFFER

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