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Cablegate: Japan Economic Scope for December 8, 2008

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RR RUEHFK RUEHKSO RUEHNAG RUEHNH
DE RUEHKO #3362/01 3460119
ZNR UUUUU ZZH
R 110119Z DEC 08
FM AMEMBASSY TOKYO
TO RUEHC/SECSTATE WASHDC 9348
INFO RUCPDOC/USDOC WASHDC
RUEHFK/AMCONSUL FUKUOKA 1365
RUEHNAG/AMCONSUL NAGOYA 9351
RUEHNH/AMCONSUL NAHA 3723
RUEHOK/AMCONSUL OSAKA KOBE 5156
RUEHKSO/AMCONSUL SAPPORO 1933

UNCLAS SECTION 01 OF 04 TOKYO 003362

SENSITIVE
SIPDIS

STATE FOR EAP/J

E.O. 12958: N/A
TAGS: ECON ETRD EFIN EAGR PREL SENV JA
SUBJECT: Japan Economic Scope for December 8, 2008

SENSITIVE BUT UNCLASSIFIED. PLEASE PROTECT ACCORDINGLY.

1. (U) This cable contains the Japan Economic Scope for
December 8, 2008

Business
--------

2. (U) American and Kyushu Companies to Develop Rapid Vehicle
Charging Stations

Ener1, a New York based energy storage company, announced a deal
with Kyushu Electric Power (Kyuden) to develop rapid recharging
stations for electric vehicles. According to Ener1, Kyuden is
already developing advanced rapid charging stands for electric
vehicles and plans to integrate the system with a battery pack from
Ener1's lithium-ion battery subsidiary, EnerDel. The two companies
hope to make the first integrated charging station available by
March 2009. Once developed, the rapid recharge system will allow
drivers to recharge up to 80 percent of a vehicle's battery capacity
in less than 20 minutes. The ability to recharge lithium-ion
batteries rapidly is seen as an important step toward the widespread
adoption of electric vehicles.

3. (U) ACCJ Elects New President, Board Members

The ACCJ on December 4 elected Thomas W. Whitson, a KPMG Partner and
20 year resident of Japan, as President for 2009. ACCJ re-elected
as Tokyo Vice Presidents Michael J. Alfant (President and CEO,
Fusion Systems Japan Co., Ltd.) and William R. Bishop, Jr.
(Director, Government & Public Affairs, Nippon Becton Dickinson
Company, Ltd) to join elected incumbent Tokyo Vice Presidents
Laurence W. Bates (General Counsel, General Electric Japan, Ltd.),
Kumi Sato (President, Cosmo Public Relations Corporation), and Mark
F. Schwab (Vice President, Pacific, United Airlines, Inc.). ACCJ
also re-elected incumbent Treasurer Nasir Majid (Partner,
International Assignment Solutions, PricewaterhouseCoopers).

In addition, as ACCJ Tokyo Governors, ACCJ elected Andrew Conrad
(Senior Vice President, Aflac International, Inc.), Bruce J.
Ellsworth (Director, Government Affairs - Japan, Johnson & Johnson
Family of Companies), Patricia O'Keefe (Director, USC International
Offices - Tokyo, University of Southern California), Douglas
Peterson (Chairman, Representative Director, President and CEO,
Nikko Citi Holdings Inc.), Jay Ponazecki (Partner, Morrison &
Foerster LLP), Mitsuyo Teramura (Senior Manager, Government Affairs,
Federal Express Corporation), and Jim Weisser (President, PBXL), to
join incumbents Christopher K. Ellis (Representative Director and
President, Chrysler Japan Co., Ltd.), James Foster (Director,
Corporate Affairs, Microsoft Japan), Tad Johnson (General Manager,
P&W Aftermarket Japan KK), John Kakinuki (General Counsel, GE
Consumer Finance Co., Ltd.), and Nicole W. Piasecki (President,
Boeing International Corporation).

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

4. (SBU) Japan's Trial Emissions Trading Scheme Yet To Attract
Participants

No companies have yet joined Japan's new trial domestic emissions
trading scheme, an official from the Ministry of Environment (MOE)
Market Mechanism Office told a November 19 international emissions
trading conference. The official hopes last-minute applications
will flood in before the December 12 deadline. The GOJ has already
been open to recruiting applications for a month.

At the same conference, International Carbon Action Partnership
(ICAP) Project Manager Dr. Martin Bergfelder explained the GOJ's
trial does not qualify for ICAP participation; ICAP includes only
mandatory cap and trade systems with absolute caps. Japan's system
is voluntary and allows intensity targets rather than mandatory
absolute targets. He added that an intensity target precludes
telling if an environmental objective is met. Asked off line about
Japan's scheme, told emboff that even a small step could be worth
taking.

Hosted by the Institute for Global Environmental Studies (IGES), an
MOE-related think tank, the conference drew 130 attendees from
industry, international organizations, research institutions and the
press.

5. (U) Merrill Lynch to Withdraw from Japan Electric Power Exchange


TOKYO 00003362 002 OF 004

The Japan Electric Power Exchange, which administers Japan's nascent
wholesale electric power trade, announced Merrill Lynch will
withdraw from the exchange in January 2009, according to media
sources. Merrill was the first foreign trader to enter the exchange
in early 2007 in what was then reported as a major step toward
liberalization of Japan's electricity sector. While the firm has
not commented publicly on the reasons for its withdrawal, analysts
have noted there has been little growth in Japan's wholesale
electricity market. The market reportedly provides less than one
percent of the country's total power consumption, compared to the
approximately 44% share of the U.S. electricity market held by
wholesale power marketers (per data from the Energy Information
Administration).

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

6. (U) Unapproved Biotech Event (E32) Found in U.S. Corn Shipment

Ministry of Health, Labor, and Welfare (MHLW) informed the Embassy
November 18 that a shipment of U.S. corn had tested positive for
Dow's Event 32 (E32). E32 is not approved in Japan, and MHLW
currently tests U.S. corn shipments for it. The MHLW has not made
any special announcement about the finding, but may do so once
further test results are known.

Japan is the largest market for U.S. corn, valued at nearly $3
billion. Since April, the use of biotech corn for food (starch) has
increased dramatically. Cargill and Dow are negotiating disposal of
this corn lot, about 600 MT. The finding may make it more
difficult, however, to argue for an end to MAFF's E-32 testing.

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

7. (U) GOJ and UN Fund Assistance to Chernobyl-Affected Areas

The GOJ and UN agreed November 18 to extend assistance totaling $2.6
million to the "Human Security for Individuals and Communities in
Chernobyl-Affected Areas through Local Information Provision
(International Chernobyl Research and Information Network)" project.
The project is implemented by UNDP, IAEA, WHO and UNICEF, through
the Trust Fund for Human Security, and will benefit people in
Ukraine, Belarus, and Russia. The project is expected to address
information deficiencies and improve behavioral patterns and
perceptions of people living in areas contaminated by the Chernobyl
accident.

8. (U) GOJ, UN Fund Program For Children At Risk In Senegal.

The GOJ and the UN agreed November 18 to extend assistance totaling
$2.6 million through the Trust Fund for Human Security to a project
entitled "Inter-agency Programme for Improving the Situation of
Children at Risk in Senegal," to be implemented in Senegal by the
ILO and UNICEF. The project aims to improve the lives of
disadvantaged children in the Thies region by:

-- Strengthening communities, local government, religious leaders
and NGOs through awareness-raising campaigns and training on child
labor and birth registration;

-- Liberating children from child-labor by providing them with
informal/formal education, life skills training, vocational training
and health care services;

-- Supporting families of targeted children through implementing
income-generating activities;

-- Promoting birth registration through supporting local NGOs and
Community-based Organizations; and

-- Establishing a community-based child labor monitoring system.

9. (U) Group Reviews Climate Change Program Loan to Indonesia

The GOJ extended a loan up to 30.8 billion yen ($308 million) to
Indonesia, January 2008, to support GOI efforts to address climate
change issues. This Climate Change Program Loan is the first case
based on the Cool Earth Partnership.

Notes were exchanged in August and the Steering Committee met for
the first time November 14 in Jakarta to review progress under the
loan. Participants also discussed enhancing monitoring arrangements

TOKYO 00003362 003 OF 004


and other future steps.

10. (U) Yen Loan To Peru

The GOJ will provide a Japanese ODA loan of up to 22.13 billion yen
($221.3 million) to the Government of Peru to implement four
projects (water supply/sewage systems and electric power projects).
The two sides exchanged notes on November 22 in Peru.

11. (U) Japanese Instructors Support African Peacekeeping

Japan is dispatching instructors as part of Japan's ongoing
assistance for Peacekeeping Operation (PKO) centers in Egypt and
Ghana. They will train African soldiers and civilians engaged in
peacekeeping operations or humanitarian activities.

-- Two Ground Self-Defense Force officers and the Director of the
Hiroshima Peace-builder Centers were dispatched as instructors for a
two-week training program from November 23 at the PKO center in
Egypt (Cairo Regional Center for Training on Conflict Resolution &
Peacekeeping in Africa). The officers will share Self-Defense Force
experiences in humanitarian and reconstruction assistance in Iraq
and international emergency relief operations, while the professor
will focus on the importance of human resource development in the
field of international peace cooperation.

-- A senior JICA peace-building advisor was dispatched as trainer
for a two-week November training program in Ghana. The program is
aimed at West African government officials on peace-building
activities from a developmental viewpoint, focusing on controlling
small arms and light weapons. Japan has provided assistance for
these PKO centers to enhance peacekeeping capabilities of African
countries. The GOJ will continue to provide not only financial
assistance but also Japanese experts and specialists.

Trade
-----

12. (U) Japan Reviews Easing Application for Trade Remedies

Japan's trade remedies -- e.g., anti-dumping duties, countervailing
duties, safeguards -- are under review by a Ministry of Finance
study group. The group, consisting of academics interested in trade
policy and the head of JETRO (Japan External Trade Organization),
could submit recommendations to the Ministry as early as December.

The focus to date has been how to simplify procedures to apply for
trade remedies, and a possible mechanism to trigger them. The
Ministry has said any changes resulting from the group's
recommendations will be consistent with WTO rules.

Japan has only initiated a handful of trade remedy cases since 1995,
while it has been subject to over 100 suits from other countries
during the same period, according to a media report. It has been
suggested that cumbersome, time consuming procedures, relative to
Japan's trading partners, have discouraged Japanese industry from
initiating more cases.

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

13. (SBU) GOJ Proposing 20% Ownership Cap in Privatized Narita
Airport

The Ministry of Land, Transport And Infrastructure (MLIT) has
proposed no single investor, foreign or domestic, be allowed to own
more than 20 percent of Narita International Airport Corp. (NAA),
after its expected 2010 IPO. Under the proposal, the Ministry would
retain a permanent 33 percent stake in the company for itself. MLIT
submitted its proposal to the Cabinet Office Study Group on Airport
Infrastructure November 27. MLIT Deputy Director for Metropolitan
Airports, whose office prepared the proposal, confirmed the
Ministry's aim is to maintain de-facto control over Narita, due to
the airport's "public nature", even after ostensible privatization.
An NAA official told Embassy any decision on investment restrictions
is up to the government and would be based on security concerns, but
his personal opinion is all shares should be put on the open market.
In contrast, high-level NAA management has stated publicly some
level of government ownership is appropriate. Whether MLIT's
proposed share cap would apply post-facto to already-privatized
Japan Airport Building Co., which operates passenger terminals at
Haneda, Tokyo's domestic hub, is not clear. The study group's final
report is due before the end of the year.


TOKYO 00003362 004 OF 004


SCHIEFFER

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