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Cablegate: Japan Economic Scope for November 18, 2008

VZCZCXRO6382
RR RUEHFK RUEHKSO RUEHNAG RUEHNH
DE RUEHKO #3216/01 3260741
ZNR UUUUU ZZH
R 210741Z NOV 08
FM AMEMBASSY TOKYO
TO RUEHC/SECSTATE WASHDC 8980
INFO RUCPDOC/USDOC WASHDC
RUEHFK/AMCONSUL FUKUOKA 1100
RUEHNAG/AMCONSUL NAGOYA 9111
RUEHNH/AMCONSUL NAHA 3461
RUEHOK/AMCONSUL OSAKA KOBE 4890
RUEHKSO/AMCONSUL SAPPORO 1671

UNCLAS SECTION 01 OF 02 TOKYO 003216

SENSITIVE
SIPDIS

STATE FOR EAP/J

E.O. 12958: N/A
TAGS: ECON ETRD EFIN EAGR PREL SENV JA
SUBJECT: Japan Economic Scope for November 18, 2008

SENSITIVE BUT UNCLASSIFIED. PLEASE PROTECT ACCORDINGLY.

1. (U) This cable contains the Japan Economic Scope for
November 18, 2008.

Environment and Energy
----------------------

2. (U) METI, Japan Power Exchange Rolls Out "Green Power" Trading
Scheme

The Japan Electric Power Exchange, which operates the wholesale
electricity trade, introduced a "Green Power" trading scheme on
November 17. Initially, wholesale buyers and sellers will be able
to specify the type of electricity generation they want to purchase
or sell from non-CO2 emitting sources, including hydropower, wind
power, nuclear energy, and solar power. Once emissions-trading
begins (currently scheduled for April 2009), electricity generated
by thermal power can be "zeroed out" by the purchase of carbon
credits. The green energy will reportedly retail at prices 10
percent higher than conventional electricity. Firms that purchase
green electricity will be able to claim the energy as
carbon-neutral, reducing their overall carbon footprint. The
Ministry of Economy, Trade and Industry estimates the electricity
generation industry accounts for about 30 percent of Japan's CO2
emissions and expects the green energy exchange to help Japan to
meet its CO2 reduction targets and promote the production of
alternative energy.

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

3. (U) Efficiency Campaign Launch

Despite cuts in the GOJ's overall budget, politicians recently
approved an additional 1.7 billion yen ($17 million) for the
Ministry of Agriculture, Foresty, and Fisheries (MAFF) to promote
food-related "self -sufficiency strategic Public relations." Using
full page advertisements in major newspapers, MAFF launched the
"Food Action Nippon" campaign October 6, to the Japanese public to
"share their concerns about imports and take specific action to
raise self-sufficiency." The program includes a social networking
website (http://www.syokuryo.jp), which lists celebrity supporters
ranging from actors and chefs to Olympic athletes. Companies are
encouraged to submit on-line applications to use the Food Action
Nippon campaign logo in their own public relations and advertising
activities.

4. (U) U.S. Embassy and MAFF Team Up on Biotech Outreach

AgTokyo gave presentations earlier this month at a roundtable
discussion on risk communication and biotechnology held in Kyoto.
The event was part of a nationwide series of public outreach events
sponsored by MAFF and the first to include U.S. Embassy
representation. About 40 government officials, industry
associations, NGOs, and media were present. The event was organized
by MAFF's Kinki regional office and the Osaka Prefecture
University.

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

5. (U) Japan-Philippines EPA to Take Effect December 11

The Governments of Japan and the Philippines exchanged notes
November 11 on the Japan-Philippines Economic Partnership Agreement
(EPA) that will bring the agreement into effect December 11. The
EPA includes provisions for trade liberalization and facilitation of
investment and business environment, movement of people, and
cooperation in a broad range of areas, including human resources
development.

The Japan-RP agreement is Japan's ninth EPA, following existing
agreements with Singapore, Mexico, Malaysia, Chile, Thailand,
Indonesia, Brunei, and a multilateral EPA with ASEAN countries
scheduled to take effect December 1.

6. (SBU) JICA To Fund ODA Yen Loans With Bond Issue

The Japan international Cooperation Agency's (JICA) Director of
Public Affairs confirmed media reports the agency will issue a 30
billion yen bond before the end of the year and a 50 billion yen
bond in the next fiscal year to finance Overseas Development
Assistance. The bond issue, reportedly the agency's first-ever,

TOKYO 00003216 002 OF 002


will supplement a declining ODA budget. The official denied media
speculation that bond financing will increase in the future and
increase JICA's independence, explaining the GOJ's official ODA
budget is still an important part of the agency's financing and JICA
must assess the costs of bond issuances before committing to
additional bonds.

Transportation
--------------

7. (SBU) Japan's Air Talks: Stalemate With China; Agreement with
England

The Ministry of Land, Infrastructure, Transport and Tourism (MLIT)
announced civil aviation talks held November 5-7 in Tokyo between
Japan and China did not result in an agreement. A web-based
industry news source, Travel Vision, states Japan proposed scheduled
international flights to cities such as Shanghai and Beijing, which
China rejected saying it lacks addtional capacity at these cities'
airports, in particular at Shanghai's Hongqiao International
Airport. China reportedly offered alternative destinations such as
Guangzhou. An MLIT official said the agenda for the two days of
negotiations covered discussions on the overall bilateral aviation
relationship, including daytime operations at Haneda airport, and
nighttime operations at both Haneda and Narita airports.

In contrast, civair talks on November 11 and 12 between Japan and
the UK generated some progress, according to MLIT. Officials
reportedly agreed to allow one daily, nighttime flight for each
respective flag carrier to operate between Tokyo's Haneda and
London.

MLIT has been pursuing negotiations with various countries to fill
slots at Narita and Haneda; both airports are stated for expansion
after 2010. Japan aims to create a network to Europe and America
during Haneda's nighttime hours. The UK is the second country after
France to agree to such flights.

8. (SBU) FedEx Bid Farewell Nagoya's Centrair

FedEx has decided to terminate its struggling Nagoya operation at
Centrair and move its central Japan hub to Osaka's Kansai airport,
effective March 2009. Haruya Kato, FedEx's Managing Director for
Japan/Guam/Saipan, told Consulate Nagoya's PO on November 10 that
the express delivery company's decision stems from insufficient
business to sustain its service of six flights per week from Nagoya
to Tokyo's Narita. Cost-conscious Nagoya customers have resisted
FedEx's marketing overtures, preferring instead to rely on
long-established land and sea to transport their goods.

FedEx will give its 25-member Nagoya staff the option to relocate to
Osaka, but will retain its sales and collection offices in Centrair
beyond next March to allow Nagoya-based customers to continue to use
FedEx's more limited services, according to Kato. FedEx plans to
announce its official decision sometime next spring, and asked that
this information be kept close-hold until then.

On a related note, Centrair reported its first-ever loss since its
opening three years ago, amounting to $3 million during the
six-month period of April through September 2008.

SCHIEFFER

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