Cablegate: Japanese Morning Press Highlights 07/25/06

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UNCLAS SECTION 01 OF 10 TOKYO 004126

SIPDIS

SIPDIS

DEPT FOR E, P, EB, EAP/J, EAP/P, EAP/PD, PA;
WHITE HOUSE/NSC/NEC; JUSTICE FOR STU CHEMTOB IN ANTI-TRUST DIVISION;
TREASURY/OASIA/IMI/JAPAN; DEPT PASS USTR/PUBLIC AFFAIRS OFFICE;
SECDEF FOR JCS-J-5/JAPAN,
DASD/ISA/EAPR/JAPAN; DEPT PASS ELECTRONICALLY TO USDA
FAS/ITP FOR SCHROETER; PACOM HONOLULU FOR PUBLIC DIPLOMACY ADVISOR;
CINCPAC FLT/PA/ COMNAVFORJAPAN/PA.

E.O. 12958: N/A
TAGS: OIIP KMDR KPAO PGOV PINR ECON ELAB JA

SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 07/25/06

Index:

1) Top headlines
2) Editorials
3) Prime Minister's daily schedule

WTO Doha Round collapses:
4) WTO Doha Round talks collapse over impasse in agricultural trade

5) Japan feels tremendous sense of disappointment as Doha Round
collapses and talks suspended indefinitely
6) Fear of growing protectionism as WTO trade talks collapse, FTA
trend likely to accelerate
7) Japan expects to feel major impact from collapse in WTO talks,
including no tariff cuts

8) Japan's beef inspectors return from US but some of US processing
facilities didn't pass their muster

9) Japan announces support for draft resolution on Iran

North Korea problem:
10) Five North Koreans denied entry into Japan
11) China banks clamp down on North Korean money-laundering in Macao

Political agenda:
12) 60% opposed to prime minister visiting Yasukuni in Asahi poll
13) Prime Minister Koizumi says he will disregard polls in making up
mind on Yasukuni visit
14) Will Koizumi or even Abe visit Yasukuni on August 15,
anniversary of end of WWII, creating political turmoil
15) Fukuda is out of the LDP race but political debate over Yasukuni
continues to grow
16) Tanigaki trying to establish identity as LDP contender despite
Abe's big lead by focusing on Yasukuni, tax issues

Articles:

1) TOP HEADLINES

Asahi:
Poll: Opposition to Yasukuni visit by next prime minister increases
to 60% ; About 60% also attach importance to late emperor's
displeasure with enshrinement of Class-A war criminals

Mainichi:
Central Social Insurance Medical Council to consider market
principles for co-payments

Yomiuri:
Internal Affairs and Communications Ministry eyes using mail
delivery for census forms from 2010

Nihon Keizai:
Financial derivatives: FSA to ease listing regulations next summer

Sankei:
Will Abe visit Yasukuni Shrine on August 15? Koizumi determined to
make his own decision

Tokyo Shimbun:

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Live donor for liver transplant paralyzed by drug overdose at Gunma
University Hospital

2) EDITORIALS

Asahi:
(1) LDP presidential candidates must clarify whether they will visit
Yasukuni Shrine
(2) Paloma water heater accidents expose danger of family-owned
businesses

Mainichi:
(1) Search for ways to avoid bloodshed in Lebanon
(2) Cloned human embryonic stem cell research a good opportunity to
review bioethics

Yomiuri:
(1) Law would help police follow money trail
(2) Oji's hostile takeover bid for Hokuetsu ushers in new age

Nihon Keizai:
(1) Wave of hostile TOB reaches paper-manufacturing industry
(2) Relief measures for emigrants to Dominican Republic

Sankei:
(1) European forces must be sent to Lebanon to end violence
(2) Correct bad practices before considering basic labor rights

Tokyo Shimbun:
(1) Fully prepared against flood damage
(2) Cyberspace requires regulation

3) Prime Minister's schedule, July 24

NIHON KEIZAI (Page 2) (Full)
July 25, 2006

11:10
Met Cabinet Office Senior Vice Minister Kakazu at Kantei.
16:58
Met Assistant Deputy Secretaries General Ando and Saka.
19:02
Attended Fifth Anniversary Town Hall Meeting in Tokyo at Akiba
Square.
20:00
Returned to his official residence.

4) WTO talks put on hold: Multilateral framework at turning point;
Gaps over farm produce remain unfilled; Talks might not resume for
several years

YOMIURI (Page 9) (Excerpts)
July 25, 2006

The multilateral trade talks (Doha Round) at the World Trade
Organization, which aim at establishing trade liberalization rules,
have broken down in effect when a ministerial meeting of the Group
of Six on July 26 failing to fill gaps in their views on
liberalization of agricultural products. The recent G-8 Summit (St.
Petersburg Summit) adopted a target of reaching an agreement in
outline by mid-August. However, WTO members gave priority to their
domestic circumstances, including protection of agriculture, instead

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of to trade liberalization talks. This will likely call into
question the rationale for the existence of the WTO.

It took only several dozen minutes for the ministerial on the 24th
to fall through.

Meeting the press after the talks, Peter Mandelson, commissioner of
the European Union for Trade, harshly criticized the US: "The US did
not show any flexibility at all. It has grabbed profits but never
given away. That is the cause of the collapse of the talks."

Though the talks have effectively collapsed, Agriculture Minister
Nakagawa told reporters, "It may take several months or even several
years before we can resume the talks, but the Doha Round is not
dead." The postponement of the talks to reach a framework accord is
the fourth since the Hong Kong ministerial meeting late last year.
Procedures for resetting a deadline for reaching an accord will
likely be discussed from now on.

5) Japan deeply disappointed at suspended Doha Round

MAINICHI (Page 11) (Full)
July 25, 2006

Commenting on the suspended Doha Round, a senior official of the
Ministry of Economy, Trade, and Industry (METI) took a serious view:
"If major countries go for bilateral talks, Japanese trade will be
placed in a difficult situation." METI Minister Toshihiro Nikai once
again underscored the importance of the Doha Round, saying: "Japan
is a trade-oriented country. If you consider the profits Japan will
gain in the event of successful WTO trade talks and the losses it
will suffer in the event of a failure, it is clear which way we
should go." In fact, Japanese industry has missed an opportunity to
expand exports of manufactured goods to developing countries due to
the failed multilateral talks at the WTO.

For Japan, which is lagging behind the US and the EU regarding free
trade agreements, the multilateral framework of the Doha Round was a
setting where it could have made its presence felt, as a source
involved in the negotiations put it. Since it had intended to check
the US and the EU, which tend to favor bilateral trade agreements,
by contributing to efforts to bring the Doha Round to a successful
conclusion, negotiators are greatly disappointed at the outcome.

At the same time, those in the agricultural sector are relieved at
the fact that further liberalization of the rice market has been
avoided. However, some have voiced a sense of alarm, believing that
when the round resumes, Japan will face a call for even greater
concessions.

The Ministry of Agriculture, Forestry, and Fisheries (MAFF)'s stance
is complex, as it was on the defensive. It succeeded in defending
the agricultural market by not bowing to requests from the US and
Brazil for substantive market opening. However, it was unable to
present a concessions plan it had prepared and failed to achieve a
"small accord," which it had aimed at. Working on the assumption
that the Doha Round would reach an accord, MAFF has been promoting
agricultural reform, including training farmers. However, some are
concerned that the sense of urgency might decline given that Japan
managed to survive calls to open its agricultural market for the
time being.

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6) Protectionism may grow with collapse of WTO talks; FTA trend
likely to gain momentum

NIHON KEIZAI (Page 5) (Full)
July 25, 2006

Ichimura, Geneva

Global free trade talks collapsed on July 24. The suspension of the
World Trade Organization's Doha Round is a major setback for the
global free trade system that has contributed to global growth
through expanded trade. Set off by the collapse, protectionism may
gain momentum in various countries.

In a press conference held after the last-ditch negotiations, US
Trade Representative (USTR) Susan Schwab emphatically said: "We had
a proposal including measures to open up our market still further,
but other developed countries did not present any specific
concession plans." In reaction, European Union (EU) Trade
Commissioner Peter Mandelson pointed the finger at the United
States, claiming: "The US refused to accept other countries'
proposals, resulting in a suspension of the talks."

Minister of Economy, Trade, and Industry Toshihiro Nikai said:
"Since each country tried to avoid being criticized for making
concessions first, the talks went round and round and did not get
anywhere." Even while expressing a willingness to make concessions,
cabinet ministers were hesitant to present specific proposals, as
shown by Agriculture, Forestry, and Fisheries Minister Shoichi
Nakagawa's remark: "Although we prepared our own proposal, there was
no opportunity to submit it."

The suspension of the talks will give impetus to free trade
agreements (FTA) based on the principle of "most favored nation
treatment" that has each nation involved open up its markets on
equal terms. Many countries are expected to move in this direction,
and those countries that cannot conclude FTAs, like developing
countries, may eventually be placed at a disadvantage in trade.

7) Suspension of WTO Doha Round to deal blow to Japan, with tariff
cut plans aborted

NIHON KEIZAI (Page 5) (Full)
July 25, 2006

The suspension of the World Trade Organization's (WTO) Doha Round
will deal a serous blow to Japan.

Japan will miss a good opportunity to expand trade with Brazil and
other influential developing countries. Japan, the United States,
and European countries have imposed 2% -4% tariffs on industrial
products, but those imposed by influential developing countries,
including Brazil and India, are at the 30% level. In the Doha Round,
negotiations were carried out on a plan to reduce rates to 15%. The
momentum toward trade liberalization will be undermined with the
collapse of the WTO talks.

Other major agenda items were the liberalization of services,
including deregulation of foreign investment and the financial and
telecommunications sectors. Japan was aiming at expanded operations
in Southeast Asian countries. Discussions on measures to facilitate
trade, including the simplification of trade procedures, will also

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be put off.

8) Inspections by MAFF found problems at some US meatpackers;
Package authorization of 35 processing plants will likely be
affected

YOMIURI (Page 9) (Full)
July 25, 2006

Japan placed a second ban on US beef imports, following the
discovery of specified risk materials in shipments. In a move to
remove the ban, the Ministry of Agriculture, Forestry and Fisheries
(MAFF) and the Ministry of Health, Labor and Welfare (MHLW) have
dispatched a survey mission to the US to inspect meatpackers that
are authorized to export products to Japan. The survey results
revealed that inspections found problems at some of the 35
facilities inspected. A senor MHLW official noted, "There are
problems at one or two plants." The two ministries will undertake
coordination regarding whether to give authorization to those
facilities as well."

Tokyo and Washington had agreed on June 21 to hold close
consultations in the event of on-the-spot inspections finding
improper facilities. However, Secretary of Agriculture Mike Johanns
has indicated his intention not to allow the Japanese side to select
meatpackers eligible for exports. He called for package approval of
the 35 plants, noting, "What is important in the inspections is not
to select eligible facilities on an individual basis but to judge
the cattle inspection system as a whole."

The Japanese survey mission inspected 35 meatpackers and ranches
over a period of about a month starting on June 26 and returned home
on July 23. The two ministries will compile a report and formally
decide to resume US beef imports, once they obtain approval from the
Liberal Democratic Party on the 26th.

9) Japan announces support for draft resolution on Iran

YOMIURI (Page 4) (Full)
July 25, 2006

At a press briefing yesterday, Administrative Vice Foreign Minister
Shotaro Yachi referred to the question of whether to give support to
a draft resolution on Iran introduced by Britain and France to the
United Nations Security Council and stated that Japan would
basically support the resolution, noting: "If many countries agree
the contents of the resolution, Japan will consider supporting it."

10) Japan refuses to admit 5 North Koreans

SANKEI (Page 2) (Full)
July 25, 2006

The Ministry of Justice yesterday rejected five North Korean
nationals' applications for entry into Japan. The five North Koreans
had made the applications for the purpose of attending a meeting of
North Korean residents to be held in Japan late this month.

The ministry, according to immigration authorities, tightened up its
examination of entry applications from North Korean nationals for
the first time in accordance with the government's recent decision
on sanctions against North Korea in the wake of that country's

TOKYO 00004126 006 OF 010

missile launches.

The five North Korean nationals had applied to the Japanese
government for permission to visit Japan for about one week from
late this month for the purpose of participating in a meeting of
North Korean residents in Japan to be held in Tokyo and other
locations for the return of their kin's ashes.

"There's no humanitarian issue with refusing to let them in," a
ministry official said.

The ministry held an emergency meeting of Tokyo and other regional
immigration officials on July 5 when North Korea fired missiles. In
the meeting, the ministry instructed them to implement the
government's decision on sanctions against North Korea.

The Japanese government does not admit any North Korean government
personnel in principle. In addition, the Japanese government has
also decided to tighten up immigration checks on nongovernmental
personnel. Based on this decision, immigration authorities are
scrutinizing North Koreans' applications to check their status and
purpose.

The Japanese government will strictly apply laws and ordinances, as
well as to implement sanctions, in order to intensify pressure on
North Korea, a government source said.

11) China possibly punishes North Korea for yuan forgery

SANKEI (Page 2) (Abridged)
July 25, 2006

SEOUL-The Bank of China (BOC), one of China's four national
commercial banks, has frozen its North Korean accounts over North
Korea's moneylaundering and currency counterfeiting, according to
Park Jin, a South Korean lawmaker with the leading opposition
Hannara Party (Grand National Party). "This has considerably damaged
North Korea," Park said. When he visited the United States in
mid-July, US government officials revealed the bank's action, Park
said.

In September last year, the United States imposed financial
sanctions on Banco Delta Asia, a Macau bank, for its alleged
involvement in moneylaundering for North Korea. The United States
conducted investigations into the Macau bank and also looked into
the BOC's Macau branch. As a result, US investigators discovered
counterfeit bills. The US government asked the Chinese government to
freeze the BOC's North Korean accounts. Those forged banknotes
included not only US dollar bills but also Chinese yuan notes,
according to Park.

12) Poll: 60% opposed to next premier's Yasukuni visit

ASAHI (Top play) (Full)
July 25, 2006

The Asahi Shimbun conducted a telephone-based nationwide public
opinion survey on July 22-23, in which respondents were asked if
they thought the next prime minister should visit Yasukuni Shrine.
In response to this question, 60% answered "no," with 20% saying
"yes." In a previous survey taken in January this year, "no"
accounted for 40%, with "yes" at 28%. This time around, "no"

TOKYO 00004126 007 OF 010

substantially increased. Respondents were also asked if they thought
Prime Minister Koizumi should visit Yasukuni Shrine. In response,
"no" accounted for 57%, nearly double 29% for "yes." Meanwhile, the
late Emperor Showa (Hirohito) made a statement voicing his
displeasure with the enshrinement of Class-A war criminals in World
War II at Yasukuni Shrine, according to recently discovered records.
In the survey, respondents were further asked if they would weigh
this statement when thinking about whether it would be appropriate
for a prime minister to visit Yasukuni Shrine. In response, "yes"
accounted for 60%.

In the survey this time, respondents were asked if they thought it
would be better for the next prime minister to visit Yasukuni
Shrine. In response to this question, "no" accounted for about 60%
among all generations. The proportion of negative answers was 46%
among those who support the Koizumi cabinet and 47% even among those
who support the ruling Liberal Democratic Party. Meanwhile, the
proportion of affirmative answers was about 30% among those who
support the Koizumi cabinet and among those who support the LDP. In
this January's survey, the proportion of negative answers was at the
30% level both among Koizumi cabinet supporters and among LDP
supporters. The figures show changes in the attitudes of those who
used to support the premier's visits to Yasukuni Shrine. Such
changes appear to have raised the proportion of negative answers.

In the latest survey, Chief Cabinet Secretary Abe was most popular
as the next prime minister. Even among his supporters, 52% said he
should not visit Yasukuni Shrine if he comes into office as prime
minister, with 29% insisting that he should visit the shrine.

In past surveys, public opinion was split over Prime Minister
Koizumi's Yasukuni visits. In last October's survey, H=NClQ[IPQ does not think
he should do so.
In the survey, 29% supported Koizumi's Yasukuni visits. They were
further asked when they thought he should visit Yasukuni Shrine. In
response, 45% suggested any day but Aug. 15, with 39% preferring
Aug. 15.

In the latest survey, respondents were asked about the late Emperor
Showa's statement after they were asked about the propriety of Prime
Minister Koizumi and his successor visiting Yasukuni Shrine. In
response to that question, a total of 63% answered that they would
weigh the statement, broken down into 24% weighing it very much and
39% weighting it to a certain extent. In the meantime, a total of
33% answered that they would not weight it. In their breakdown, 21%
said they would not weight it very much, with 12% saying they do not
weigh it at all. The proportion of those who weigh it very much goes
up with generations. Among those aged 70 and over, the figure
reached 33%.

Among those who weigh it very much, 10% answered that they would
support the next prime minister's Yasukuni visit, with 82% opposing
it. Among those who do not weight it at all, however, opinion was
split with 10% supporting it and 35% opposing it. The figures show
that those who weigh the imperial statement tend to oppose prime
ministerial visits to the shrine.

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13) Koizumi: Opinion poll results will not affect shrine visit

MAINICHI (Page 2) (Full)
July 25, 2006

In opinion polls conducted by the Mainichi Shimbun and other news
companies, many expressed opposition to a visit to Yasukuni Shrine
by the prime minister on the August 15 end-of-the-war anniversary.
Asked by the press at his official residence yesterday about such
results, Prime Minister Junichiro Koizumi said: "They will not
affect (my decision on whether to visit Yasukuni Shrine)."

14) Will Yasukuni issue make waves ahead of LDP presidential race?
Chief Cabinet Secretary Abe to stay away on 8/15?

SANKEI (Top play) (Excerpts)
July 25, 2006

Chief Cabinet Secretary Shinzo Abe, viewed as the front-runner in
the upcoming Liberal Democratic Party (LDP) presidential election in
September, has perhaps strategically avoided making clear his
position about the question of a visit to Yasukuni Shrine on Aug.
15, the anniversary of the end of World War II. Speculation is
rampant that with the recent discovery of a memo revealing that the
late Emperor Showa (Hirohito) had expressed displeasure at the
enshrinement of the so-called Class-A war criminals at Yasukuni
Shrine together with other war dead, Abe may forgo a shrine visit.
Meanwhile, Prime Minister Junichiro Koizumi, when asked yesterday
about a shrine visit, hinted at a visit, stating: "I don't think it
will become a campaign issue (in the presidential race). It is a
personal matter."

Asked by reporters yesterday, Abe stated: "I have no intention of
saying whether I will visit, whether I visited, or when I might
visit." He did, though, restate his previous position: "I have
visited the shrine in order to pray for the repose of those who
fought and died for the nation and offer my respect for them. This
sort of feeling is still with me and will not change in the
future."

Abe visited the shrine on Aug. 15, 2004, when he served as LDP
secretary general, and in 2005, when he served as deputy LDP

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secretary general. But an aide to Abe made this analysis: "He will

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refrain from visiting the shrine on Aug. 15, because he doesn't want
to make waves unnecessarily." A mainstay LDP member conjectured: "I
think Mr. Abe may not visit the shrine even after coming to power as
prime minister."

In contrast, Koizumi, when asked yesterday whether he will visit the
shrine on Aug. 15, underscored his intention to make his own
decision, stating: "I don't think I need to take opinion polls into
account when making a decision."

Koizumi has achieved postal privatization, one of his campaign
pledges, and perhaps he wants to close his term as prime minister by
realizing a shrine visit on Aug. 15, one of his remaining pledges.

However, if he did so, he would meet with objections from not only
China and South Korea but also even within Japan. In addition, there
is a possibility that Abe may see some supporters turn their back on
him. Being increasingly nervous about such a development, according
to a government official, the Prime Minister's Official Residence

TOKYO 00004126 009 OF 010

(Kantei) "asked relevant officials to survey and analyze what impact
there will be if the prime minister visits Yasukuni Shrine."

A scenario worked out by a person close to Abe takes these
circumstances into account. According to this person, Abe will
attend a large meeting planned in his hometown, Yamaguchi
Prefecture, on Aug 12, and will formally declare his candidacy in
late August after the fuss over Yasukuni quiets down. Along with the
declaration of his candidacy, Abe will release a policy platform,
but the platform will not mention Yasukuni, such as whether to visit
the shrine or whether to construct a new memorial facility to
console the souls of the war dead.

If Abe forgoes a shrine visit, an aide to Abe says, the concern is
that "he may let down the conservatives who have fervently supported
him for his response to North Korea and other issues."

15) 2006 LDP presidential election: Yasukuni debate still active
after Fukuda's withdrawal of race; Tanigaki and others eager to
unite members in place of Fukuda

MAINICHI (Page 2) (Excerpts)
July 25, 2006

Debate on the Yasukuni Shrine issue has flared up again in the
Liberal Democratic Party with the party presidential election in
September approaching. Former Chief Cabinet Secretary Yasuo Fukuda,
who has been critical of Prime Minister Junichiro Koizumi's shrine
visits, announced that he would not run in the race so as not to
split national opinion. But with the revelation of a memorandum
showing Emperor Showa's displeasure with the enshrinement of Class-A
war criminals at Yasukuni Shrine, the controversial Tokyo shrine is
certain to become a campaign issue. It might be a good opportunity
for post-Koizumi contenders who have been lagging far behind Chief
Cabinet Secretary Shinzo Abe to turn the tables.

Abe indicated in a speech on July 23 that politics should stay away
from the Class-A war criminal unenshrinement debate, now prevalent
in political circles, saying:

"It is a matter for the shrine and the Japan War-Bereaved
Association to make a decision under the principle of separation of
politics and religion. They are not criminals under domestic law.
The government has been paying survivors' pensions as well. There is
a serious misconception."

But Abe stopped short of mentioning whether or not he will visit the
shrine once he becomes prime minister.

Meanwhile, Finance Minister Sadakazu Tanigaki declared on July 22:
"I will abstain from visiting Yasukuni Shrine for the time being."
Appearing on a television program on July 23, he also likened the
issue of Class-A war criminals enshrined at Yasukuni to a splinter
struck in his throat, showing some understanding toward the
unenshrinement argument. Tanigaki apparently clarified his position
in an effort to unite LDP members in place of Fukuda.

Foreign Minister Taro Aso, a hardliner toward China and South Korea
like Abe, has been struggling to differentiate himself from Abe by
proposing in speeches the approach to make Yasukuni Shrine a
nonreligious organization. Aso has been making preparations to
unveil his solution to the Yasukuni issue timed with the planned

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announcement of his official candidacy around August 20.

Being incumbent cabinet ministers, Tanigaki and Aso find it
difficult to come up with policies critical of the Koizumi reform
line. But for starters, they intend to make clear distinctions with
Abe over the Yasukuni issue in the wake of Fukuda's withdrawal from
the race.

16) Tanigaki underscores difference in views from Abe's over
consumption tax, Yasukuni issue

SANKEI (Page 5) (Excerpts)
July 25, 2006

In a meeting of Tanigaki faction members in Tokyo yesterday, Finance
Minister Sadakazu Tanigaki stressed he would focus on the
consumption tax in his Liberal Democratic Party (LDP) presidential
election campaign. Tanigaki stated: "I would like to frankly speak
of the present (severe) fiscal condition and my prescription for
that." Tanigaki will officially announce his candidacy on July 27.
Keeping in mind Chief Cabinet Secretary Shinzo Abe has become the
clear frontrunner now that former Chief Cabinet Secretary Yasuo
Fukuda has given up his candidacy, Tanigaki is eager to demonstrate
the difference in his views from Abe's on the consumption tax and
the Yasukuni issue.

On the consumption tax, LDP Policy Research Council Chairman Hidenao
Nakagawa, who is close to Abe, has said: "The margin of increase in
the tax rate would be 1-2%." But Tanigaki countered this argument in
a NHK program on July 23, saying: "I do not think the current
situation is so rosy." As measures to reduce the nation's debt in a
stable way, he indicated the necessity for a larger-scale tax hike.

In the same TV program, Tanigaki likened the enshrinement of Class-A
war criminals at Yasukuni Shrine to "a fish bone stuck in the
throat," echoing former LDP Secretary General Makoto Koga's call for
separating war criminals from the shrine. On July 22, Tanigaki
indicated that he would refrain from visiting Yasukuni, underscoring
a different stance from that of Abe, who has indicated his
understanding toward Prime Minister Junichiro Koizumi's visits to
Yasukuni Shrine.

SCHIEFFER

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