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Cablegate: Japanese Morning Press Highlights 07/18/07

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PP RUEHFK RUEHKSO RUEHNAG RUEHNH
DE RUEHKO #3276/01 1990118
ZNR UUUUU ZZH
P 180118Z JUL 07
FM AMEMBASSY TOKYO
TO RUEHC/SECSTATE WASHDC PRIORITY 5590
INFO RUEKJCS/SECDEF WASHDC PRIORITY
RHEHAAA/THE WHITE HOUSE WASHINGTON DC PRIORITY
RUEAWJA/USDOJ WASHDC PRIORITY
RULSDMK/USDOT WASHDC PRIORITY
RUCPDOC/USDOC WASHDC PRIORITY
RUEAIIA/CIA WASHDC PRIORITY
RUEKJCS/JOINT STAFF WASHDC//J5//
RHHMUNA/HQ USPACOM HONOLULU HI
RHHMHBA/COMPACFLT PEARL HARBOR HI
RHMFIUU/HQ PACAF HICKAM AFB HI//CC/PA//
RUALSFJ/COMUSJAPAN YOKOTA AB JA//J5/JO21//
RUYNAAC/COMNAVFORJAPAN YOKOSUKA JA
RUAYJAA/CTF 72
RUEHNH/AMCONSUL NAHA 4527
RUEHFK/AMCONSUL FUKUOKA 2108
RUEHOK/AMCONSUL OSAKA KOBE 5696
RUEHNAG/AMCONSUL NAGOYA 1187
RUEHKSO/AMCONSUL SAPPORO 2893
RUEHBJ/AMEMBASSY BEIJING 7933
RUEHUL/AMEMBASSY SEOUL 3992
RUCNDT/USMISSION USUN NEW YORK 5059

UNCLAS SECTION 01 OF 12 TOKYO 003276

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 07/18/07


Index:

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

Niigata-Nagano earthquake:
4) Ambassador Schieffer announces US offer of $100,000 relief to
quake victims
5) TEPCO's nuclear power plant had 50 incidents due to quake,
including small radiation particles leaking into air
6) Prime Minister Abe criticizes TEPCO for slowness in reporting on
quake damage
7) Opposition parties worried about impact on Upper House election
of Niigata-Nagano earthquake

Election run up:
8) Yomiuri's pre-election survey portends ruling camp's loss of
majority in the Upper House
9) Yomiuri poll: Abe Cabinet support rate sinks below the 30 % line,
with 78 % of voters expressing "interest" in the upcoming election
10) Nikkei net survey shows rapidly rising voter interest in the
political scandals plaguing the Abe administration
11) Minshuto (Democratic Party of Japan) fears it may not make the
target in the election of winning 55 seats
12) Ruling camp worried about 10 % jump in early voting (absentee
votes), compared to last election
13) LDP's Koichi Kato, titular leader of liberal wing of the LDP,
blasts Abe diplomacy as "old-fashioned"

Defense and security:
14) PACOM Commander Keating meets Foreign Minister Aso, Defense
Minister Koike
15) Adm. Keating in meeting with Koike steers clear of issue of
providing FX information

North Korea problem:
16) Six-party talks on North Korea start today with participation of
chief delegates
17) US, DPRK's conciliatory mood evident at start of six-party
talks, leaving Japan with a feeling of isolation

18) WTO farm negotiations: New chairman's proposal for lowering
tariffs would be harsh on Japan

19) Still BSE skittish, Japanese consumers, despite dropping prices,
continue to stay clear of US beef

Articles:

1) TOP HEADLINES

Asahi:
Fault that caused Niigata quake found to extend below nuclear power
plant

Mainichi:
Cold rain pours on 9,000 evacuees in areas hit by quake in Niigata
for second night

Yomiuri:
Ruling coalition may lose majority in Upper House election

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Nikkei:
METI prepares guidelines for fair implementation of management
buyout

Sankei & Tokyo Shimbun
TEPCO reports 50 problems at nuclear plants after quake

Akahata:
JCP engaged in fund-raising activities for quake-hit residents

2) EDITORIALS

Asahi:
(1) Problems at power plants in quake: Thorough safety measures
urged
(2) Government's role: Use wisdom of market to resolve pension mess

Mainichi:
(1) Quake & power plants: Make utmost efforts to ensure safety
(2) Illegal manipulation on achievement test: Think more about
children

Yomiuri:
(1) Education reform: Discussion needed from long-term viewpoint
(2) Police white paper: Enhance efforts to cut off gangsters'
financial resources

Nikkei:
(1) Strengthen quake-resistance standards for nuclear power plants,
prepare better safety measures
(2) Relations between Britain, Russia rapidly cooling

Sankei:
(1) Full consideration must be given to the weak in quake-hit area
(2) Don't allow gangsters' funds to flow into securities market

Tokyo Shimbun:
(1) Government must present stricter quake resistance standard for
power plants
(2) Eliminate financial sources and guns for gangsters

Akahata:
(1) 2007 Upper House election & farm villages: JCP determined to
take policy to resuscitate agriculture, guarantee food safety

3) Prime Minister's Official Residence (Kantei)

Prime minister's schedule, July 17

NIKKEI (Page 2) (Full)
July 18, 2007

07:54
Attended a meeting of the Strategic Council to Think about the
Future of Food at Kantei.

08:06
Met with MOFA Asian and Oceanian Affairs Bureau Director-General
Sasae. Afterwards, attended a monthly economic meeting of relevant
cabinet members.


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09:01
Attended a cabinet meeting. Afterwards, met with Minister of
Internal Affairs and Communications Suga.

10:11
Met with Cabinet Intelligence Director Mitani and then Deputy Chief
Cabinet Secretary for Crisis Management Noda.

13:11
Met with Deputy Chief Cabinet Secretary Matoba.
15:03
Attended a meeting of relevant bureau directors-general on the
Chuetsu earthquake in Niigata Prefecture.

15:57
Met with House of Representatives member Yoshiaki Harada at LDP
headquarters.

17:00
Met with LDP Policy Research Council Chairman Nakagawa.

18:30
Filmed message for the international exchange student program "Japan
Tent."

19:07
Arrived at Kantei residence.

4) US offers $100,000 in relief to quake victims

SANKEI (Page 5) (Full)
July 18, 2007

The Ministry of Foreign Affairs announced that the US government
will extend $100,000 in relief aid to help the victims of the
Chuetsu earthquake in Niigata Prefecture. US Forces Japan (USFJ)
also made an offer of goods to Japan. The Japanese government
intends to accept these offers. When another earthquake hit Niigata
in October 2004, the US likewise extended $50,000 in relief aid and
offered 10,000 plastic sheets.

5) TEPCO reports 50 problems at nuclear power plants, radioactive
substances emitted into atmosphere

ASAHI (Page 1) (Slightly abridged)
July 18, 2007

Tokyo Electric Power Co. (TEPCO) announced yesterday that inspectors
discovered radioactive substances emitted into the atmosphere from
the main exhaust pipe at the No. 7 nuclear reactor of its
Kashiwazaki-Kariwa nuclear power plant in Niigata Prefecture after
the plant was hit by a major earthquake. The company also reported
that a total of 50 problems were found at the seven reactors in the
power plant, such as 100 drums containing low-level nuclear waste
falling over and water leaking from a conduit pipe. The July 16
quake exposed the unexpected weak points of a nuclear power plant.

After the earthquake, inspectors checked possible radiation leaks at
the seven reactors yesterday afternoon. As a result, iodine,
chromium, and cobalt were detected from the No.7 reactor.

According to TEPCO, the amount of substances emitted into the

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atmosphere was an estimate 300 million vectors, about one-thousandth
of the amount allowed by safety regulations, so there will be no
harmful effect on the environment. Radioactive substances are not
usually leaked out of the plant. It remains unknown why they were
emitted into the air.

At the No. 1-5 reactors, the shifting of an exhaust duct was
discovered, but the possibility is reportedly slim that radioactive
water was leaked.

About 100 drums containing low-level nuclear waste fell over at a
warehouse, and the lids on several drums came off. In inspecting the
floor, TEPCO detected 0.5 vectors of radiation per square meter. A
total of 22,000 drums are stored at two warehouses.

At the No. 6 reactor, water containing a small amount of radiation
flowed into the sea through the ditch from the spent fuel pool on
July 16. On this problem, although the roof is still leaking, the
outflow of water stopped, according to TEPCO. In addition, seven
other transformers besides the one that caused the fire just after
the earthquake were found damaged.

A TEPCO spokesperson said: "Other transformer fires could have
broken out. Our system for putting out fires did not properly
function. We must improve our safety system, including antiseismic
reinforcement construction work."

6) TEPCO reports late, PM offers strong criticism

TOKYO SHIMBUN (Page 1)
July 18, 2007

Regarding the spate of problems surrounding the Tokyo Electric Power
Co. (TEPCO) as a result of the Niigata Chuetsu earthquake, in
particular the leakage of radioactive water from TEPCO's
Kashiwazaki-Kariwa nuclear power plant, Prime Minister Shinzo Abe
yesterday afternoon offered strong criticism: saying "(TEPCO's)
reports were late. I have given them a sharp reminder that these
types of reports must be made rigorously and with haste.We must have
them reflect on their actions." The prime minister emphasized:
"Nuclear plants cannot operate without the citizens' trust. Speedy
reporting and disclosure of information are necessary in order to
obtain this trust."

7) Earthquake off Chuetsu region: Opposition parties are limited in
what they can do to make quick response; Concern about impact on
upcoming Upper House election

TOKYO SHIMBUN (Page 2) (Full)
July 18, 2007

Opposition parties are concerned about a possible political impact
of the earthquake that occurred off the Chuetsu area of Niigata
Prefecture. They are making a public appeal about their quick
responses to the disaster, as if to compete with Prime Minister Abe,
by dispatching senior officials to quake-stricken areas. However,
what they can do and their media exposure are naturally limited.

Senior opposition party members yesterday visited various disaster
sites. Democratic Party of Japan (DPJ or Minshuto) Secretary General
Yukio Hatoyama yesterday afternoon inspected Tokyo Electric Power
Co.'s (TEPCO) Kashiwazaki-Kariwa Nuclear Power Plant, where water

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containing radioactive substance has spilled out. He also visited
evacuees at a primary school in Kashiwazaki City. DPJ head Ichiro
Ozawa, acting head Naoto Kan and Hatoyama met at the party
headquarters in the afternoon. They agreed to call on the ruling
camp to set up a Lower House disaster countermeasures special
committee.

Japanese Communist Party Chairman Kazuo Shii took part in an
on-the-street campaign to raise funds for disaster victims. The
Social Democratic Party (SDP) dispatched an investigation team led
by party head Mizuho Fukushima to Kashiwazaki City. Deputy Secretary
General Masaki Itokawa of the People's New Party (PNP) inspected the
damaged shopping district in the city.

However, some opposition party members complained that once a
disaster occurs, it works to the advantage of the ruling camp, as a
DPJ source put it. No matter how hard the opposition camp tries to
listen to the voices of victims at disaster sites, it is the
government and the ruling camp that take concrete measures from the
standpoint of the state. Voters pay attention to the ruling parties,
submerging the presence of the opposition parties.

Chances are that the pension flap, which the opposition parties
intend to use as the greatest ammunition in the Upper House
election, might lose its impact. Criticizing the government for its
response to the issue could give the impression that the opposition
camp's themes are working as a drag if they overdo it.

With the sluggish approval ratings for the Abe cabinet in mind, one
senior DPJ official said, "The earthquake this time will not work in
favor of the opposition camp, but its impact will not be so great as
to change the current trend." However, there is a growing concern
that a natural disaster, an incident that has been most afraid of,
has occurred, as a mid-ranking DPJ member said.

8) Upper House election situation survey: Ruling coalition may lose
its majority; DPJ moving to become number one party; LDP facing
tough races in single-seat districts

YOMIURI (Top play) (Excerpt)
July 18, 2007

Prior to the 21st election for the House of Councilors on July 29,
the Yomiuri Shimbun carried out a nationwide opinion poll in order
to gauge the election situation, backed up by the results of
coverage by all the daily's local branches.The Liberal Democratic
Party (LDP) is facing tough battles in the single-seat districts and
other election districts, and the party lacks momentum in the
proportional representation segment, as well. The New Komeito, too,
is having difficulty gaining seats, so the possibility is strong
that the opposition parties could secure 122 seats, or the majority
line in the Upper House. It appears that voters are reacting
strongly to such issues as missing pension records. The Democratic
Party of Japan (DPJ or Minshuto) is moving ahead in both the
district and proportional races, and the likelihood is that it may
become the number one party in the Upper House, adding the seats
that were not up for election. However approximately 50 % of the
voters have not made up their minds about who to vote for in the
district races, and approximately 30 % have not settled on which
party to vote for in the proportional races. So until the day of the
election, there remains a possibility that the situation could
change again.

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9) Yomiuri poll: 78 % express "interest" in Upper House election;
Abe Cabinet support rate sinks below 30 % line

YOMIURI (Page 1) (Excerpt)
July 18, 2007

In a telephone-based nationwide opinion poll carried out by the
Yomiuri Shimbun on July 14-16, 78 % of the respondents expressed
either great or some "interest" in the upcoming Upper House
election. This is a 13-point jump from the level of interest (65 %)
in the Upper House election expressed in a poll in 2004. Just
looking at those expressing "great interest" in the election, there
was a 15-point jump. On the question of whether the voters would "go
to the polls without fail," 70 % answered affirmatively, slightly
down from the 73 % who chose this answer in 2004. This reveals that
interest in the election and actually desiring to vote are not
necessarily linked.

10) Net poll on priority policies ahead of Upper House election:
Question of "politics and money" rises to second due to Akagi
scandal

NIKKEI (Page 3) (Abridged slightly)
July 18, 2007

The results of the third Internet-based opinion poll ahead of the
July 29 House of Councillors election showed changes in respondents'
answers to a question asking their priority polities. Measures
against the pension payment recordkeeping errors have constantly
taken the top place since the first poll three weeks ago. At the
same time, the question of "politics and money" scandals came in
second in the latest poll, surpassing medical and nursing care and
welfare. The question of politics and money has been drawing much
attention due to Agriculture Minister Norihiko Akagi's shady office
expenses and other issues.

In the survey, 61 % of respondents pointed out measures against the
pension fiasco as their top priority. Although this figure was far
greater than other issues, it dropped 2 percentage points from the
previous poll a week ago.

The question of politics and money increased 6 percentage points to
53 %, and medical and nursing case and welfare dropped 3 percentage
points to 49 %.

Akagi's office expenses scandal broke out on July 7 in the middle of
the previous poll (July 6-9). Prime Minister Shinzo Abe clearly
defended Akagi following his explanation. But voters are still
paying high attention to it, given the opposition parties' calls for
his voluntary resignation or Abe's dismissal of him.

In the previous regular Diet session, the ruling bloc successfully
enacted the revised Political Funds Control Law requiring political
fund-management organizations to attach receipts to their fund
reports for every item costing 50,000 yen (excluding labor costs).
In response to a question asking if voters highly evaluate a series
of measures taken by the ruling camp, including the law revision,
'yes' dropped 5 percentage points to 28 %, while 'no' increased 6
percentage points to 65 %.

The positive evaluation of the government and ruling bloc's measures

TOKYO 00003276 007 OF 012


against the pension fiasco also decreased 5 percentage points to 44
%, while the negative evaluation increased 3 percentage points to
40 %.

Asked for a desirable administration after the election, those
pointed to a non-LDP coalition administration led by the Democratic
Party of Japan accounted for 37 % of the total, an increase of 2
percentage points. A coalition administration by part of the LDP and
the DPJ came in second at 24 %, down 1 percentage point, followed
by a coalition administration led by the LDP and the New Komeito at
12 %, down 2 percentage points. An LDP administration marked 7 %,
the same as the last time.

Asked if they were "interested" in the Upper House election, 49 % of
respondents said they were strongly interested, up 3 percentage
points, while 39 % said they were interested to some extent, down 2
percentage points. In other words, a total of 88 % of respondents
said they were interested in the election.

11) Minshuto President Ozawa believes party will fall short

ASAHI (Page 4) (Full)
July 18, 2007

Minshuto (Democratic Party of Japan) President Ichiro Ozawa, Acting
President Naoto Kan, and Secretary General Yukio Hatoyama yesterday
discussed election strategy for the middle and later stages of the
campaign for the July 29 House of Councillors election based on the
results of its internal polling. Hatoyama said, "Campaign efforts in
some districts are insufficient." Ozawa then took a severe view,
saying, "Under these circumstances, we won't be able to attain our
goal of winning 55 seats.

After the meeting, Hatoyama told reporters: "We will reschedule our
campaigns focusing on electoral districts where we are fighting head
to head. We are not allowed any optimism."

Ozawa is in charge of stumping in the prefectural electoral
districts in the Tohoku region. Minshuto has stepped up its support
in Tochigi Prefecture and the Hokuriku area, with Hatoyama saying,
"We are doing a good job." It intends to add efforts to the
campaigning in the Chugoku, Shikoku, and Kyushu regions, where the
party is engaged in tough battles. Over the weekend senior party
members will deliver speeches in three to five districts in which
the party is fielding two candidates.

The largest opposition party will bring up the pension record
fiasco, as well as issues involving money and politics, including
the money scandal involving Agriculture Minister Akagi.

Hatoyama indicated that his party would refrain from carrying out
election activities in Niigata Prefecture where a severe earthquake
occurred. He stated: "We should consider that disaster victims may
take our activities as performances for winning the election."

12) Absentee voting rate increases by 10 % over 2004 Upper House
election

ASAHI (Page 4) (Excerpts)
July 18, 2007

The ruling and opposition parties are now paying attention to the

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turnout of early voting for the July 29 House of Councillors
election. The reason is that the level of absentee voting will
likely become an indicator forecasting the results of the Upper
House race. According to an interim announcement on a poll conducted
on July 13-15 by the Ministry of Internal Affairs and Communications
(MIAC), the number of voters (in the prefectural electoral
districts) totaled 683,046, up 10.46 % from that of the 2004
election. Some in the ruling camp praise the increase as a result of
their calling on voters to cast their votes earlier than due, since
July 29 will be the first Sunday after schools close and children
begin their summer holiday period. But a senior New Komeito member
said, "A high turnout rate will not be good for us."

In the previous Upper House election, although 7.17 million people
cast their votes earlier than the voting date, the turnout for the
poll (in the electoral districts) was 56.57 % or the fourth lowest
in the postwar period, since the voter turnout on election day
remained low. In the 2005 House of Representatives polls, there were
9.96 million absentee voters. The voter turnout was 67.51 % (in the
single-seat constituencies), the highest rate since 1996 when the
mixed electoral system of small and proportional representation
constituencies was introduced.

One of the ruling Liberal Democratic Party (LDP) executive members
sees the increase in the absentee voting rate this time around as
favorable, saying:

"The organizations of candidates running in the proportional
representation segment also are working well compared to the
elections three and six years ago. Such is more than we expected.
Some offices have already telephoned to voters asking whether they
have voted or not."

The senior New Komeito member commented: "The number of absentee
votes may exceed 10 million."

13) Kato criticizes Abe's diplomatic sense as outdated

YOMIURI (Page 4) (Full)
July 18, 2007

Former Liberal Democratic Party Secretary General Koichi Kato in a
speech in Tokyo yesterday expressed his hope for a shift in foreign
policy by means of a change of prime minister, saying: "The pendulum
always swings (from right to left). The country's foreign policy
will regain balance if a well-balanced person becomes prime
minister." Kato also harshly criticized the government's North Korea
policy, saying: "Prime Minister Abe and Foreign Minister Aso's
diplomatic senses are too ideological and outdated. They should
guide a country of that sort (North Korea) into the right path. They
have lost sight of the larger trend."

14) Close Japan-US cooperation confirmed for US force realignment

YOMIURI (Page 4) (Full)
July 18, 2007

US Pacific Command Commander Timothy Keating, now visiting Japan,
met separately yesterday with Foreign Minister Taro Aso and Defense
Minister Yuriko Koike. As a result, they confirmed that Japan and
the United States would continue cooperating closely in implementing
missile defense and the realignment of US forces in Japan. In his

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meeting with Koike, Keating expressed a sense of alarm toward
China's military buildup, saying: "Although military leaders have
stressed that the military buildup is for self-defense, we must keep
an eye on military modernization in China."

15) Adm. Keating avoids stating whether US will provide Japan with
FX information

ASAHI (Page 4) (Full)
July 18, 2007

Defense Minister Yuriko Koike met yesterday with visiting Admiral
Timothy Keating, commander of the US Pacific Fleet. Regarding a
next-generation main combat fighter, for which Japan plans to pick a
model, Koike called on Keating to provide information on the
state-of-the-art stealth fighter F-22 Raptor, saying, "I would like
your full cooperation so that we can study the fighter's
capabilities."

The US Congress prohibits exports of the F-22 for military security
information protection. Keating stopped short of clarifying whether
the United States would comply with her request, saying, "We would
like to study together with Japan what's important for Japan and our
future."

16) Chief delegates to six-party talks to meet today

MAINICHI (Page 6) (Full)
July 18, 2007

Akiko Horiyama, Beijing

The six-party talks aimed at resolving the North Korean nuclear
issue will hold a two-day session of their chief delegates in
Beijing and discuss a full declaration of nuclear programs and
disablement of nuclear facilities. The chief delegates from the six
countries, including US Assistant Secretary of State Christopher
Hill, arrived in Beijing one after the other. Japan's chief
delegate, Kenichiro Sasae, director-general of the Foreign
Ministry's Asian and Oceanian Affairs Bureau, told reporters in
Beijing: "I think the meeting will begin with questions about North
Korea's view about disablement."

Bilateral talks between the chief delegates of the United States and
North Korea, between Japan and the US, and between Japan and South
Korea were held yesterday for prior coordination of views ahead of a
session of the chief delegates. Referring to Japan-DPRK talks, Sasae
said, "We are ready to respond to talks," but no bilateral talks
with North Korea were arranged.

The focus of the chief-delegate session is on what the North Korean
delegate will say about the DPRK's highly-enriched uranium (HEU)
program. North Korea is likely to call on the US to delist it from
the state sponsors of terrorism and provide a light water reactor.
The six-party talks will resume for the first time since March, when
they went into recess over the issue of how to handle North
Korea-related money at Banco Delta Asia in Macao.

17) US, DPRK stress reconciliation, making clear their stance of
leading "six-party talks"

SANKEI (Page 7) (Full)

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July 18, 2007

Takashi Arimoto, Toshu Noguchi, Beijing

On the eve of a session of the chief delegates to the six-party
talks on the North Korean nuclear issue, the US and North Korean
delegates yesterday visited their respective embassies in Beijing
and stressed their reconciliatory mood, thereby making clear that
they would now take the lead in the multilateral talks. The
implementation of the six-party agreement that included the North's
shutdown of its nuclear facility and the lifting of the freeze on
North Korea's funds has helped to restart the six-party talks.
However, given that the US and North Korea have been until recently
at odds over the "next-phase steps," such as (abolition) of highly
enriched uranium (HEU) nuclear programs, "The test starts now," US
Assistant Secretary of State Christopher Hill said.

"We are in the same ballpark," Hill told reporters last night and
stressed that there was no big difference between him and North
Korean Vice Foreign Minister Kim Kye Gwan in terms of aiming for
progress on the "next-phase steps."

Earlier in the day, Kim visited the US Embassy in Beijing and had a
short meeting with Hill. Afterwards, the two officials dined
together at a Szechuan Chinese food restaurant nearby. After lunch,
Hill visited the North Korean Embassy in Beijing.

Hill appears to be making up for the delay until now by producing
results as quickly as possible, since the Bush administration's
remaining term of office is onlya year and a half. The mutual visits
to the embassies yesterday are viewed as part of the
"confidence-building efforts," following Hill's visit to Pyongyang
late June.

On the lifting of the freeze on North Korean funds, Hill fully
accepted the North's request for a full return of the funds, but on
the HEU programs, Hill stressed, "A transparent approach is
necessary." Should he accept halfway measures, he would be simply
exposed to criticism in the US, and the result could affect talks
with Iran on its nuclear issue.

North Korea, which successfully extracted concessions from the US,
appears to be growing more confident that multilateral talks will go
in its favor. When Kim arrived in Beijing, he told reporters with a
smile: "Please wait for (the fruit of the session)." North Korea
apparently wants to follow the same negotiating pattern of first
holding talks between the US and North Korea and then getting a
bilateral agreement to be approved at a six-party meeting as it did
in the US-North Korea talks in Berlin in January.

On the other hand, the North has made clear its stance of isolating
Japan from other member nations. The pro-Pyongyang General
Association of Korean Residents in Japan's (Chongryon) newspaper
Choson Sinbo in its electronic edition dated yesterday reported:
"Japan-North Korea relations are getting worse and worse. No
bilateral dialogue are likely to take place for the time being." One
source connected with the six-party talks also noted that during the
session of the chief delegates, Kim would bring up the recent
fraudulent case concerning the sale of Chongryon's property and
criticize the Japanese government's response.

18) WTO agricultural talks: New chairman's proposal harsh to Japan,

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limiting number of high tariff items to 4 % or 6 % of total trade
items

YOMIURI (Page 9) (Excerpts)
July 18, 2007

Geneva, Kaku Watanabe

Agricultural Committee Chairman Crawford Falconer during a meeting
of the multilateral trade talks at the World Trade Organization
(WTO) yesterday presented a new chairman's proposal aimed at
settling agricultural talks, the primary concern, by the end of the
year. The package contains severe specifics for Japan, including
limiting the number of key trade items eligible for exceptionally
high tariffs, which Japan wants to apply to rice and some other
items, to up to 4 % or 6 % of all trade items.

Meeting the press after presenting the package of proposals,
Falconer clarified his stance of urging member nations to make
concessions, noting, "A final agreement will be very close to the
package, or the talks will end without an agreement."

The chairman's proposal noted that key items should be up to 4 % or
6 % of all trade items. This is close to 1 %, the number the US
wants to see, but far below the 10 % or 15 % called for by net
importers of agricultural products, such as Japan.

Provided that this proposal is adopted, Japan's key items will be no
more than about 40 or 60. The number of items which Japan regards as
important tops 200 -- 17 for rice, 20 for flour, 47 for dairy
products, and 56 for sugar. The outlook is that a majority of these
products will not be treated as exceptions under the proposal.

The package did not directly mention the introduction of a ceiling
on tariffs to lower tariffs on agricultural products to a set level,
a proposal which Japan and other countries are strongly opposing.

19) Moving away from beef? US beef back on store shelves, but
wholesale prices remain sluggish; Drop in distribution of short
plate during import suspension to blame?

TOKYO SHIMBUN (Page 8) (Slightly abridged)
July 18, 2007/07/18

Wholesale prices of beef, which had been hovering at high levels,
are beginning to drop due. The reason is that the beef supply has
sharply increased since June, following a partial revision of import
conditions imposed on US beef and sluggish consumption due to
unseasonably cool weather. Some have pointed out that the suspension
of US beef imports has put a dent on supply of the boneless short
plate preferred by Japanese, giving rise to a trend of consumers
moving away from beef.

Imports of US beef had been banned since 2003, following the
discovery of a BSE-infected cow. US beef imports resumed last
summer. However, imports have been limited with such import
conditions as opening all boxes for inspection and limiting beef
eligible for export to cattle aged 20 months or younger. In
addition, wholesale beef prices had been hovering at high levels due
to the growing cost of feed caused by soaring corn prices.

However, US beef imports in June, based on preliminary figures

TOKYO 00003276 012 OF 012


issued by the animal quarantine station, sharply increased to
approximately 4,300 tons, about 1.5 times higher than the amount
imported in May, following the June introduction of sampling
inspection instead of the practice of opening all boxes. The average
price of beef carcass at the Tokyo Central Wholesale Market marked
1,069 yen per kg, down about 15 % from the February level and about
10 % from the previous year.

With the launching of Japan-US talks to review the cattle age
condition, there has appeared a possibility of import conditions
being eased possibly early next year. The outlook for an increased
supply appears to have affected market prices. US Meat Export
Federation Chairman Philip Seng expressed hope: "Japan's imports of
US beef will reach 40,000 tons this year and return to the pre-ban
level in a few years' time."

Retail prices at supermarkets are showing signs of dropping.
However, consumer demand for beef is sluggish. The peak period for
beef demand is mid-summer, but pessimistic voices are being heard
among retailers, with one executive of a food manufacturer noting,
"Beef sales this year will be no better than previous years."

SCHIEFFER

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