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Cablegate: Japan Economic Scope for December 16, 2008

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RR RUEHFK RUEHKSO RUEHNAG RUEHNH
DE RUEHKO #3448/01 3530850
ZNR UUUUU ZZH
R 180850Z DEC 08
FM AMEMBASSY TOKYO
TO RUEHC/SECSTATE WASHDC 9572
INFO RUCPDOC/USDOC WASHDC
RUEHFK/AMCONSUL FUKUOKA 1519
RUEHNAG/AMCONSUL NAGOYA 9480
RUEHNH/AMCONSUL NAHA 3876
RUEHOK/AMCONSUL OSAKA KOBE 5310
RUEHKSO/AMCONSUL SAPPORO 2085

UNCLAS SECTION 01 OF 03 TOKYO 003448

SENSITIVE
SIPDIS

STATE FOR EAP/J

E.O. 12958: N/A
TAGS: ECON ETRD SENV EFIN EAGR PREL JA
SUBJECT: Japan Economic Scope for December 16, 2008

SENSITIVE BUT UNCLASSIFIED. PLEASE PROTECT ACCORDINGLY.

1. (U) This cable contains the Japan Economic Scope for
December 16, 2008

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

2. (U) METI Unveils Sample Carbon Footprint Labels at Eco Fair

The Ministry of Economy, Trade and Industry (METI) publicly unveiled
samples of its proposed carbon footprint labels December 11 at the
"Eco Products 2008" trade show in Tokyo. The tenth annual show, was
organized by the Nihon Keizai Shimbun newspaper (Nikkei) and the
Japan Environmental Management Association for Industry (JEMAI) and
drew an estimated over 170,000 consumers and representatives from
green industries, government and environmental NGOs. More
information is on the Eco Products Fair web site.
http://www.eco-pro.info/eco2008/english/index .html

METI intends to launch a voluntary trial carbon footprint labeling
program in early to mid 2009. The program, based on the U.K. model,
initially covers basic consumer goods.

According to Shintaro Ishihara from METI's Distribution Policy
Division, METI will use feedback from the Eco Products fair to
develop appropriate guidelines. METI is seeking competitive bids
from private contractors to carry out the market experiment. At the
same time, it is recruiting companies to participate in the
voluntary labeling program. The carbon footprint labeling program
has caused concern among U.S. companies that they may be
disadvantaged in the Japanese market. See TOKYO 2964 for further
details.

3. (U) Chinese Pollution Pushes Japan's Photochemical Smog to
Unprecedented Levels

Chinese pollution has helped raise Japan's photochemical smog to
unprecedented levels, experts agreed at a recent symposium in Tokyo.
According to Teruyoshi Hayami, Ministry of Environment (MOE)
Director, of the Air Environment Division, a record 28 prefectures
published photochemical smog advisories in 2007. These prefectures
include Niigata and Ohita, which had never issued such advisories
before.

4. (U) Japan-India Conference Highlights Barriers to Energy
Conservation in India

A recent Japan-India conference, "Partnership between Japan and
India Towards a Low-Carbon Economy - Business Opportunities in
India: Energy Efficiency and Renewable Energy", in Yokohama revealed
several potential areas for Japanese help in promoting energy
conservation in India. Dr. Rajendra Pachauri, Chair for the
Intergovernmental Panel on Climate Change (IPCC), and a 2007 Nobel
Peace Prize winner, opened the conference by praising the strong
cooperation between Japan and India on energy technology.

Seigou Mizunuma, Executive Managing Officer of Electric Power
Development (J-POWER), stressed Japan's coal power generation
efficiency is the world's highest. If Japan's best practices were
used in India, China and the U.S., the results would mean a cut of
about 1.3 billion tons of CO2, a number equivalent to Japan's total
annual CO2 emissions.

However, there are still various barriers to promoting energy
conservation in India, according to Takeshi Sekiyama, General
Manager for the International Cooperation Department of the Energy
Conservation Center, Japan, a Ministry of Economy, Trade and
Industry (METI)-related organization. Cheap energy prices
subsidized by the Government of India (GOI), shortages of
infrastructure, difficulties in searing financing scarcity of
experts and information, limits on foreign investment, and high
tariffs all work against improvements in energy efficiency. T.N.
Thakur, Chairman and Managing Director of PTC India, a GOI-initiated
public-private partnership focused on developing a power market,
countered that rising electric bills would encourage greater
conservation in the future.

Insurance and Investments
-------------------------

5. (SBU) Insurance Policyholder Protection Fund Extended

The Diet extended the life insurance Policyholder Protection

TOKYO 00003448 002 OF 003


Corporation (PPC) December 12 through a revision to the Insurance
Business Law (IBL). The PPC, which provides a safety net in case of
life insurers' bankruptcies, consists of a pre-funded industry
contribution and a "government fiscal commitment" which can be
called upon if industry funding is insufficient. The Diet's action
authorized the system for an additional three years, until March
2012, including the government's commitment.

The PPC had been scheduled for a full review by the Financial
Services Agency (FSA)advisory council in the run-up to its
reauthorization, during which U.S. industry planned to advocate for
changing the PPC to a post-funded system. However, the FSA cut
short the normal deliberative process and pushed a straight
extension of the current system through for Diet consideration.
Financial Services Agency officials shared that the decision to
short-cut the deliberative process came from a political directive,
as ruling LDP politicians reacted to policyholder unease over the
failure of a small Japanese life insurer and global financial
turmoil.

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

6. (U) Japan's Statement in the Doha Financing for Development
Conference

At the Doha conference reaffirming the Monterrey Consensus, Vice
Foreign Minister Minorikawa emphasized the need to carry out all
existing commitments. Japan will aggressively support developing
countries which may be seriously affected by the financial crisis.
Japan International Cooperation Agency (JICA) also participated in
discussion about foreign direct investments and private fund flows.
JICA emphasized the important role the Official Development
Assistance (ODA) plays to encourage more private funds for
development projects in the context of global financial uncertainty,
which has affected the availability of private fund flows.

7. (U) GOJ Stops Yen Loans to Vietnam

Unlike past years, Japan made no pledge during the recent
Consultative Group meeting held in Vietnam. The GOJ stopped
providing any new loans to Vietnam after a Japanese ODA consultant
firm was indicted over the bribery case involving Vietnamese
government officials,. Ministry of Foreign Affairs official said
Japan will suspend its yen loans until the Vietnamese government
works out a recurrence prevention plan and punishes officeholders
implicated in teh scandal. Japan had been Vietnam's largest donor.
Japan annually provided about $600 million of ODA to Vietnam in the
past few years, about 75 percent of which in the form of loans.

8. (U) GOJ to Provide Loan Assistance To Egypt

The GOJ is providing a loan of 23.9 billion yen (about $260 million)
to Egypt for three loan projects. The note was exchanged between
Japanese Ambassador Ishikawa and Egyptian Minister of International
Cooperation, Aboulnaga on December 4. The three loan projects
include: support for small enterprises, construction of a solar and
gas integrated power plant, and electricity supply system
improvement.

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

9. (U) Toyota's Mississippi Plant Another Victim Of Economic
Downturn?

Plummeting car sales in the U.S. have convinced Toyota, the world's
biggest automaker, to postpone plans to produce the Prius hybrid car
in Mississippi.

NHK reported December 16 that Toyota has decided to postpone
indefinitely the construction of its plant in Mississippi. However,
a Toyota executive told Consulate Nagoya construction of the plant
will be completed by the spring of 2009. About 90 percent of the
construction has already been completed, but the installation of
equipment and machinery will have to wait until the U.S. auto market
improves. Toyota saw its car sales in the U.S. drop 34 percent in
November compared to the same month last year. The popular Prius
was hit even harder, with sales of this environmentally friendly
vehicle dropping 48 percent.

Toyota originally planned to produce Highlander SUVs at its
Mississippi plant, its eighth plant in North America, but changed
plans in July make fuel-efficient Prius models there instead.

TOKYO 00003448 003 OF 003

SCHIEFFER

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