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Cablegate: Codel Boswell's December 13-15 Visit to Japan: The

VZCZCXRO1357
PP RUEHFK RUEHHM RUEHKSO RUEHNAG RUEHNH
DE RUEHKO #3338/01 3432251
ZNR UUUUU ZZH
P 082251Z DEC 08
FM AMEMBASSY TOKYO
TO RUEHC/SECSTATE WASHDC PRIORITY 9274
INFO RUEHBJ/AMEMBASSY BEIJING 6717
RUEHHI/AMEMBASSY HANOI 1101
RUEHUL/AMEMBASSY SEOUL 2716
RUEHFK/AMCONSUL FUKUOKA 1308
RUEHHM/AMCONSUL HO CHI MINH 0121
RUEHNAG/AMCONSUL NAGOYA 9299
RUEHNH/AMCONSUL NAHA 3667
RUEHOK/AMCONSUL OSAKA KOBE 5099
RUEHKSO/AMCONSUL SAPPORO 1877
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC

UNCLAS SECTION 01 OF 03 TOKYO 003338

SENSITIVE
SIPDIS

STATE - H FOR CODEL BOSWELL
USTR FOR AUSTR CUTLER AND EHOLLOWAY

E.O. 12958: N/A
TAGS: EAGR ETRD ECON PREL JA
SUBJECT: CODEL BOSWELL'S DECEMBER 13-15 VISIT TO JAPAN: THE
AGRICULTURAL AGENDA

REF: A. TOKYO 3209
B. TOKYO 3204

1. (SBU) Post warmly welcomes CODEL Boswell's December 13-15
visit to Japan to discuss key agriculture-related issues.
Your time in Tokyo provides an excellent opportunity to
underscore the importance of U.S.-Japan trade in food and
food products; to emphasize the vital role U.S. agricultural
exports play in addressing Japan's food security and food
safety concerns; and to urge Japan to adopt a comprehensive
set of science-based regulations to allow greater market
access for U.S. exporters. The United States is Japan's
largest food supplier, accounting for one-fifth of Japan's
total agricultural imports. Japan is the largest consumer of
U.S. agriculture products outside NAFTA, with U.S. exports,
aided by strong grain prices, increasing 15 percent last year
to reach $11.6 billion. Despite the enormous volume of
trade, we still face serious challenges.

Food Security
-------------

2. (SBU) With imports accounting for sixty percent of Japan's
food consumption, food security is a major concern for the
Government of Japan (GOJ). In December, Agriculture Minister
Ishiba announced the government's latest plan to raise
Japan's food self-sufficiency, this time to 50 percent. The
target, like previous ones, is likely to fail. However,
setting targets such as these appeal to certain GOJ
officials, who rely on them as useful cover to justify
Japan's protectionist agricultural policies, which include an
arsenal of stringent border controls and domestic price
supports. Several factors account for Japan's relatively low
rate of self-sufficiency in agriculture and the steady
decline in domestic output since the mid-1980s. The shortage
of arable land limits Japan's maneuverability on food
production. So too does the country's rapidly dwindling farm
population; over 70 percent of Japan's farmers are aged 60 or
older. Large-scale agriculture is rare; the landscape is
dominated by small farms that average only four acres in size
(about one percent the scale of a commercial U.S. farm).
Shifting consumption patterns have increased dependence on
imports.

3. (SBU) The United States has been Japan's top supplier of
agricultural products since the end of World War II. Japan
is the largest export market for U.S. corn, buying $2.6
billion in 2007, and is almost totally dependent on U.S. corn
supplies. On average, half the calories consumed by Japanese
livestock come from U.S. feed. Japan is also the largest
market for U.S pork ($1.1 billion), and wheat ($800 million),
and buys several billion dollars in processed foods annually.

Misguided Food Safety Concerns
------------------------------

4. (SBU) Japanese consumers are preoccupied with food safety
and are often influenced by GOJ officials and media who tend
to conflate food safety and food security concerns. Japanese
policy makers are known to focus on isolated food safety
issues in the broader debate over domestic food security.
Recent scandals involving tainted food imports, especially
from China, have led to calls for stricter scrutiny of
imported food, more stringent labeling requirements, and
other restrictive regulations with little scientific basis.
Politicians and regulators fail to address specific problems
from particular countries, producers, shippers and, in some
cases, domestic sources, while repeating local concerns about
the safety/wholesomeness of foreign food in general.

5. (SBU) The MAFF and the Ministry of Health, Labor and
Welfare (MHLW) are charged with managing risk in Japan's food
supply. The Food Safety Commission (FSC), an independent
agency responsible for risk assessment and communication, has
been moderately successful in reviewing food safety issues
from a scientific point of view. USG efforts have centered
on urging Japan to continue to adopt science-based

TOKYO 00003338 002 OF 003


regulations that align with international food safety
standards, including in connection with sales of U.S. beef.

Beef Talks Stalled
------------------

6. (SBU) Japan was the largest overseas market for U.S. beef
($1.3 billion) up until 2003, when the GOJ banned U.S.
imports following the discovery of Bovine Spongiform
Encephalopathy (BSE) in a single cow in Washington State of
Canadian origin. Japan partially reopened its market in July
2007, but has allowed little improvement in access for U.S.
producers since then. GOJ regulators zealously enforce the
technical agreement we have for trade in beef and beef
products. Currently, Japan limits imports of U.S. beef to
certain cuts from animals aged 20 months or less. The USG
intervenes regularly on behalf of U.S. exporters to gain
entry for beef shipments, which Japanese officials frequently
stop on the basis of minor packaging or paperwork
discrepancies that have nothing to do with food safety. The
GOJ has also suspended two major U.S. beef plants (located in
Nebraska and Kansas) for technical violations. Thanks to the
U.S. Meat Export Federation and other advocacy groups, the
image of U.S. beef has improved among Japanese consumers,
with beef exports to Japan increasing 64 percent to $265
million during the first eight months of 2008 compared to the
same period last year.

7. (SBU) Japan continues to delay moving towards World
Organization for Animal Health (OIE) consistency for imported
U.S. beef products. In May 2007, the OIE designated the U.S.
as a controlled-risk country for BSE. The OIE guidelines
indicate all beef and beef products from controlled risk
countries may be imported provided certain tissues are
removed prior to export (i.e., specific risk materials or
SRMs). Japan has suggested it might consider somewhat
relaxing restrictions on U.S. beef (e.g., possibly allowing
cuts of beef from animals up to 30-months of age), but
continues to propose steps that fall short of full market
access based on OIE guidelines and science.

Pork Trade a Success, but also Troubled by Fraud
--------------------------------------------- ---

8. (SBU) Japan is the largest market for U.S. pork ($1.1
billion in 2007) and trade is growing; imports increased 27
percent in the first eight months of 2008, the result of
competitive U.S. prices and a shift in Japanese preferences
for pork over other meats. The U.S. Meat Export Federation
has introduced an effective new subway-based marketing
campaign and seeks to consolidate U.S. market share, which
has risen to 44 percent compared to 33 percent three years
ago. Against this backdrop of success, Japan's method for
collecting import duties on pork (i.e., the "gate price
system") distorts trade and encourages legitimate traders to
import a mix of high and low value pork cuts out of synch
with actual demand: the "gate price" imposes higher tariffs
on lower priced pork imports and encourages tariff fraud via
over-invoicing of lower value pork cuts. On September 1,
Tokyo Customs revealed that Mitsubishi Corporation, a major
Japanese trading house, allegedly failed to report some 4.2
billion yen (about $40 million) in tariffs on pork imports.
The USG is concerned that hard-won successes by U.S. pork
exporters could be undermined should the GOJ take too
heavy-handed an approach in dealing with tariff-related fraud.

Agricultural Biotech
--------------------

9. (SBU) The GOJ's regulatory system for biotech crops is
complex, costly and causes problems for U.S. farmers and
exporters. The accidental low-level presence of unapproved
biotech events has been a frequent source of trade tension
between the U.S. and Japan. Since the late 1990s, U.S.
potatoes, papayas, corn, and rice have all been subject to
expensive testing or segregation or have been temporarily
banned. Progress has been made to persuade the GOJ to

TOKYO 00003338 003 OF 003


eliminate some of its superfluous biotech testing
requirements for U.S. feed corn. Despite the country's
wariness of biotech products, Japan is the largest per capita
importer of biotech crops in the world. However, Japanese
consumers are largely uninformed about the benefits and lack
of risk connected with biotech food. Given the importance of
Japan's market, major U.S. biotech crop companies and farm
organizations have told us they have no incentive to grow new
biotech varieties of corn or soybeans until after they have
been approved in Japan. Japan's regulators therefore stand
to influence the access U.S. farmers have to new production
technologies.

Animal Cloning
--------------

10. (SBU) Following the U.S. Food and Drug Administration's
January finding that cloned animals do not pose unique food
health concerns, Japan's Food Safety Commission began
conducting its own food safety review. This review is
scheduled to be completed in early 2009. Japanese regulators
have hinted that countries that use somatic cell cloning
technology in commercial livestock production may face
process-based labeling requirements.
SCHIEFFER

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