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Cablegate: Japanese Morning Press Highlights 07/19/07

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UNCLAS SECTION 01 OF 12 TOKYO 003301

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 07/19/07

Index:

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

Earthquake aftermath:
4) Ambassador Schieffer visits Niigata, offers relief goods for
quake victims
5) IAEA director intends to send experts to fully inspect nuclear
plant shaken by Niigata earthquake

North Korea problem:
6) North Korea promises to disable nuclear facilities by end of year

7) Japan at six-party talks proposes restart of its working group
with North Korea
8) Japan's chief delegate to six-party talks reiterates tough stance
of no aid to DPRK without progress on abduction issue
9) Pyongyang may have a new card to use against Tokyo in six-party
talks:issue of treatment of Chongnyon (Chosen Soren) in Japan

10) Japan to join the ICC, previously refused out of concern for US

11) US House of Representatives will delay full vote on
comfort-women resolution until after the Upper House election

Election ruckus:
12) Yomiuri Internet poll: High interest in the Upper House race,
with 45 %of respondents favoring the opposition Democratic Party of
Japan (Minshuto)
13) Mainichi survey of seven political parties on constitutional
revision finds LDP, New Komeito positive, DPJ reserving views
14) Prime Minister Abe asked by incumbent LDP lawmaker in Osaka to
replace controversial farm minister
15) Abe will avoid campaigning in Kochi area due to local LDP
candidate's criticism of his "beautiful country" concept

16) Doha Round: Japan unhappy with WTO chair's proposal, seeks
changes

Articles:

1) TOP HEADLINES

Asahi:
Chuetsu earthquake: Fire from transformer due to soft ground causing
bridges supporting cable to tilt

Mainichi:
Chuetsu earthquake: Danger of active fault underestimated? TEPCO
admits it discovered fault before constructing nuclear power plant

Yomiuri:
Chuetsu earthquake: 87 %of victims did not expect another quake;
half of respondents not prepared

Nikkei:
Kashiwazaki-Kariwa nuclear power plant likely to be suspended for
more than a year until government confirms safety

Sankei:

TOKYO 00003301 002 OF 012


Former Japanese Communist Party Chairman Kenji Miyamoto dies:
Hypocrisy of "manual" revolutionary

Tokyo Shimbun:
Suspension of operations at Kashiwazaki Nuclear Power Plant: TEPCO
asks six utility companies for power supply with summer peak just
ahead

Akahata:
Chuetsu earthquake: Chairman Shii pledges to do his utmost to help
victims rebuild

2) EDITORIALS

Asahi:
(1) Former Security Intelligence Agency director general indicted:
Unusual development
(2) Japanese Communist Party: How can it transcend the Miyamoto
era?

Mainichi:
(1) Order to suspend operation at nuclear power plant: TEPCO urged
to fulfill its accountability, conduct far-reaching investigation
(2) Shady ties between politics and money: There is no help for
setting internal regulation on political fund control now

Yomiuri:
(1) Earthquake resistance of nuclear power plant: Confirm safety
with latest knowledge
(2) Former JCP Chairman Miyamoto: Death of charismatic leader who
shored up party

Nikkei:
(1) Buyout of Dow Jones & Co. will portends future of media
(2) Erosion of organized crime groups as reported by police white
paper

Sankei:
(1) Earthquake and Kashiwazaki nuclear power plant: Learn lessons
from disaster
(2) Upper House election a good opportunity to compete over measures
for transparent political funds

Tokyo Shimbun:
(1) Academic performance test: Put children first
(2) Former JCP chairman passes away: He lived through turbulent
history of the party

Akahata:
(1) Earthquake resistance of nuclear power plant: Drastic measures
to address unexpected incident urged

3) Prime Minister's Official Residence (Kantei)

Prime Minister's schedule, July 18

NIKKEI (Page 2) (Full)
July 19, 2007

08:48
Left Haneda Airport by ANA243.


TOKYO 00003301 003 OF 012


10:05
Arrived at Fukuoka Airport.

10:42
Delivers a campaign speech in front of the Tenjin Twin Building in
Fukuoka.

11:25
Attended informal talks with various groups at the Hotel New Otani
Hakata. Had lunch with his secretaries and others at a Tempura
restaurant in the hotel.

13:24
Gave a campaign speech in front of JR Kokura Station in
Kita-Kyushu.

14:19
Left the station by limited express, the Sonic No. 27.

15:36
Arrived at the JR Beppu Station.

15:45
Gave a speech on the site vacated by Kintetsu Department Store in
Beppu, Oita.

16:48
Met with Oita assembly members at a hall in Oita.

17:16
Gave a speech in a shopping district.

19:07
Met Lower House member Seishiro Eto at Hita City Hall. Later,
attended a speech meeting sponsored by the LDP Oita Prefectural
Chapter.

21:04
Stayed at a hotel in Beppu. Stayed there.

4) US envoy delivers relief goods

NIHON KEIZAI (Page 38) (Full)
July 19, 2007

US Ambassador to Japan Thomas Schieffer meeting Niigata Governor
Hirohiko Izumida at Niigata Airport yesterday told him that the US
government will deliver relief supplies to the victims of the
Niigata Chuetsu earthquake. US military aircraft reportedly
delivered 100 portable air conditioning units and bottled water to
the prefecture. Touching on Japan's assistance in the wake of
Hurricane Katrina, Ambassador Schieffer indicated that the United
States is pleased to give something back.

5) IAEA chief: "Full inspections are necessary to reactors in Japan"
by dispatching safety experts to Japan

MAINICHI (Page 3) (Full)
July 19, 2007

Haruyuki Aikawa, Vienna


TOKYO 00003301 004 OF 012


International Atomic Energy Agency (IAEA) Director General Mohamed
ElBaradei, currently visiting Malaysia, referred yesterday to the
recent leak of radioactive water from a reactor of the
Kashiwazaki-Kariwa nuclear power plant following the Chuetsu
Offshore Earthquake on July 16: "We need to carry out full
inspections of nuclear reactors in Japan, focusing on their
structure and other details," adding: "The IAEA is ready to join"
the planned accident investigation by the Nuclear and Industrial
Safety Agency of Japan. Reuters and other news agencies reported on
these remarks by IAEA chief. He is expected to dispatch security
experts to Japan.

ElBaradei made this analysis: "The main cause seems to be that the
earth tremor was far stronger than has been predicted." Upon saying
that the reactors and the system of the power plant have not been
damaged in the quake, he remarked: "It is important to learn a
lesson about an earthquake."

6) DPRK "to disable its nuclear facilities possibly by end of year"

YOMIURI (Page 1) (Full)
July 19, 2007

Hiroaki Matsunaga, Masahiko Takekoshi

The chief delegates to the six-party talks on the North Korean
nuclear issue gathered together at the Diaoyutai State Guest House
in Beijing yesterday afternoon. Their session is to last for two
days. In line with the February six-party agreement, they discussed
how to facilitate the "next-stage steps" to follow the "first-stage
steps," which included the shutdown of nuclear facilities in
Yongbyon in North Korea and other issues. On the two major
next-phase steps of a full declaration of all of North Korea's
nuclear programs and the disablement of its nuclear facilities,
according to an account by the South Korean side, North Korean Vice
Foreign Minister Kim Kye Gwan, the North's chief negotiator in the
six-party talks, indicated that he would think his country would be
able to consider implementing those two steps by the end of the year
if the conditions are met.

The United States aims to get the session this time to reach
agreement on the implementation of the "next-phase steps" by the end
of the year. How to set a specific timetable for that end in
discussion at working groups is likely to come into focus from now
on. However, discussion is bound to run into difficulties, given
that in return for the implementation, the North is certain to make
such demands as Japan and the US lifting their "hostile policy"
toward it. Also, the North is likely to clash with other member
countries over which programs should be declared and which nuclear
facilities should be disabled.

South Korean chief delegate Chun Young Woo, director of the Office
of the Diplomatic Policy of the Ministry of Foreign Affairs and
Trade, told a press briefing after the session: "North Korea has
indicated an intention to declare its nuclear programs and disable
its nuclear facilities within the next five to six months."

US chief delegate Christopher Hill, assistant secretary of state,
was noncommittal about whether agreement would be reached on the
completion of the implementation by the end of the year, but he said
that on the last day of the discussion today, China, the host of the
session, would issue a chairman's statement, which is expected to

TOKYO 00003301 005 OF 012


include a goal date for the completion of the implementation,
emphasizing, "We had a good discussion." On the question of when to
hold a six-party foreign ministerial session, however, Hill revealed
that it would be difficult to set a timetable for it during the
discussion this time.

Hill also spoke of 950,000 tons of heavy fuel oil in additional aid
to North Korea in return for the North to implement the next-phase
steps and revealed that North Korea had a capacity to receive only
50,000 tons of oil per month. He also revealed an intention to
consider alternative measures, such as repairing power plants,
expanding the capacity to store heavy fuel oil and supplying
electricity.

Meanwhile, Japan's chief negotiator Kenichiro Sasae,
director-general of the Asian and Oceanian Affairs Bureau of the
Foreign Ministry, during the session touched on the question of
Japan's participation in aid to North Korea and said: "We hope our
country will contribute to (the six-party talks) in a way to resolve
the pending issues between Japan and North Korea and improve
bilateral ties." He reiterated the government's previous policy of
not taking part in the aid program for the North without any
progress on the abduction issue.

7) Japan proposes resuming working group talks with North Korea

NIKKEI (Page 2) (Excerpts)
July 19, 2007

Manabu Shimada, Beijing

In the first-day meeting of chief delegates to the six-party talks
on July 18, Foreign Ministry Asian and Oceanian Affairs Bureau
Director General Kenichiro Sasae reiterated Japan's policy of first
seeking a resolution of the abduction issue as a precondition for
aid to North Korea. Sasae said: "I hope that Japan and North Korea
first will step up efforts to improve their ties by resolving their
pending issues, enabling Japan to positively contribute to the
six-party framework." He also proposed the two countries resume
talks of the Japan-North Korea working group on normalization of
diplomatic ties, which were suspended in March, prior to the next
foreign ministerial session of the six-party talks scheduled for
September.

Sasae did not use the word "abduction." Meanwhile, North Korea
stopped short of criticizing Japan in the meeting yesterday, though
it has attacked the Japanese government recently over its stance,
linking it also with Japan's move to auction off the land and
building of the headquarters of the General Association of Korean
Residents in Japan (Chongryon). Without conducting heated debate,
both sides have apparently given priority to bringing about progress
in the talks.

Sasae said that he and Vice Foreign Minister Kim Kye Gwan, North
Korea's chief negotiator, met briefly after the meeting. The brief
contact reportedly was "only a greeting." According to a source
accompanying Sasae, they exchanged a few words and shook hands.
Japan is hopeful for an opportunity to hold a separate meeting with
North Korea in Beijing to urge it to resume bilateral working group
talks.

In the six-party talks, North Korea indicated a positive stance

TOKYO 00003301 006 OF 012


about implementing the next steps toward denuclearization. In
response, the negotiators exchanged views on the provision of fuel
oil to the North.

Once talks start on specific aid to North Korea, Japan will find
itself in a difficult situation for its stance of maintaining the
policy of offering no energy aid before progress on the abduction
issue. Other countries concerned might see Japan, eager to settle
only the abduction issue, as being negative about North Korea's
denuclearization.

8-1) Bilateral talks between Japan, DPRK unlikely to occur for time
being

YOMIURI (Page 2) (Full)
July 19, 2007

Hiroaki Matsunaga, Beijing

The Japanese government wants to obtain understanding about the
importance of the abduction issue from other six-party members
during the ongoing session of the chief delegates to the six-party
talks. But North Korea has yet to show any sign of responding to
direct dialogue with Japan. Japan, which wants both the nuclear and
abduction issues to advance together, has no choice but to wait at
present.

"They should know what the pending issue between Japan and North
Korea implies," Japan's chief delegate to the six-party talks,
Kenichiro Sasae, director-general of the Asian and Oceanian Affairs
Bureau of Japan's Foreign Ministry, said, albeit indirectly, during
the session yesterday to other countries about how important the
abduction issue was for Japan. He thus again emphasized Japan's
policy of not participating in aid to North Korea without any
progress on the abduction issue.

During the same session, however, North Korean Vice Foreign Minister
Kim Kye Gwan, the North's chief delegate to the six-party talks,
never referred to Japan-North Korea relations. Sasae sat next to
Kim. After the session, the two exchanged greetings, shaking hands,
but, "They only exchanged greetings or the like," one Japanese
government official said.

North Korea has reiterated through its media that the abduction
issue has been already settled, aiming strong language at Prime
Minister Abe, who wants to resolve the abduction issue.

Analyzing these moves by North Korea, a senior Japanese Foreign
Ministry official said: "Because they are in a difficult situation,
they are making noise." Japan has firmly upheld its basic policy of
pursuing both dialogue and pressure. In fact, Japan will not take
part in aid programs, such as provision of heavy fuel oil to the
North as agreed on in the earlier six-party talks, unless the
abduction issue makes progress.

8-2) Sasae in six-party talks: Japan will provide aid if abduction
issue moves forward

TOKYO SHIMBUN (Page 2) (Full)
July 19, 2007

Yuji Hiraiwa, Beijing

TOKYO 00003301 007 OF 012

In the first-day meeting of chief delegates to the six-party talks
on July 18, Foreign Ministry's Asian and Oceanian Affairs bureau
Director General Kenichiro Sasae stated: "Japan will participate in
economic and energy aid (to North Korea) if Japan and North Korea
resolve their pending issues and improve bilateral ties." He thus
indicated Japan's willingness to provide the North with aid in
return for its implementation of the first step toward disarmament.

Some delegates also made remarks calling for improvement in
relations between Japan and North Korea, but Vice Foreign Minister
Kim Gye Gwan, North Korean chief negotiator, reportedly made no
remarks related to Japan.

Sasae met with delegates from China and Russia separately at the
Diaoyutai State Guesthouse on the morning of the same day. He also
had "probing conversations," as said by a source of the Japanese
delegation, with the chief negotiators of the United States and
South Korea without sitting down, but there was no contact with
North Korea.

Kim and Sasae sat next to each other during the meeting. They
reportedly shook hands when the meeting ended and had a brief
conversation without discussing any serious matters.

9) Fraud case involving Chongryon may be used as diplomatic card by
DPRK

ASAHI (Page 7) (Full)
July 19, 2007

Nanae Kurashige, Beijing

The North Korean official media is intensifying its objection
against Japan over the fraud case involving the property of the
pro-Pyongyang General Association of Korean Residents in Japan
(Chongryon) headquarters. Some expect that North Korea will take up
this issue in six-party talks to use it as a fresh excuse to delay
implementing specific measures for denuclearization.

On July 10, the Korean Central News Agency (KCNA) called the Abe
administration the "Abe gang" and harshly stigmatized it, arguing,
"A thoughtless clampdown against Chongryon would lead it to pay a
heavy price." General Secretary Kim Jong Il in meeting with Chinese
Foreign Minister Yang Jiechi on July 3 reportedly criticized Japan's
handling of Chongryon.

Reacting to this, one senior Foreign Ministry official of Japan
explained: "Chongryon serves in effect as a consular office of North
Korea. Pyongyang is perhaps irritated by its inability to do
anything about the investigations." Another Japanese government
official concerned noted: "We injected a huge amount of taxpayers'
money into (bankrupt Chogin credit unions) to protect depositors.
Rather, I think it is a good opportunity to explain our action was
fair law enforcement."

KCNA is increasingly trying to unsettle Japan. For instance, on July
15, it reported: "The future hinges on what action the United States
and Japan will actually take to remove the hostile policy." One
Japanese government official has taken this move as "implying that
Japan as well as the US has become a country North Korea is most
concerned about." But Japan is becoming nervous about the North's

TOKYO 00003301 008 OF 012


moves that could affect the progress of the six-party talks.

10) Japan to join International Criminal Court

MAINICHI (Page 2) (Full)
July 19, 2007

The government yesterday submitted to UN Secretary General Ban Ki
Moon its instrument accepting the Rome Treaty that stipulates the
establishment of the International Criminal Court (ICC), which
prosecutes and punishes individuals who have committed humanitarian
and war crimes based on international law. Japan will become the
105th country in October to join the international court.

The ICC is based in The Hague. The court prosecutes and punishes
instead of countries concerned individuals who have committed
genocide, crimes against humanity, war crimes, and crimes of
incursion (undefined). Recently the ICC issued arrest warrants for
Sudan's minister in charge of humanitarian affairs and senior
militia organization officials in connection with the Darfur
conflict. The court does not deal with the issue of abductions by
North Korea, since it handles crimes committed after its
establishment.

Japan was cautious about joining the ICC in consideration of the
United States. However, under the lead of Prime Minister Shinzo Abe,
who promotes value-driven diplomacy, including the rule of law, the
government passed bills ratifying the Rome Treaty through the Diet
in the latest regular session. Japan is expected to pay 3 billion
yen per year, the largest amount among the member countries. Fumiko
Saiga, ambassador in charge of human rights, will run in a
by-election to fill the vacated judicial seat, which will take place
in December.

11) US House of Representatives to take floor vote of wartime
comfort-women resolution after Upper House election in Japan

ASAHI (Page 4) (Full)
July 19, 2007

Washington, Yoshisuke Komurata

There is a strong possibility that the full floor vote on the
wartime comfort-women resolution by the US House of Representatives
will be delayed until after the Upper House election in Japan on the
29th. The Washington Post on July 18 reported this comment by
Congressman Mike Honda, the resolution's sponsor: "Out of
consideration for Prime Minister Abe prior to the Upper House
election, the House leaders have agreed to take a vote on the
resolution after that election."

The Japanese side has been working strongly on the Congress, with
Ambassador to the US Ryozo Kato sending letters to Speaker Pelosi
and others stating, "If the resolution is adopted, it would have an
adverse effect on Japan-US relations." Although the date for the
floor vote in the House has not yet been set, since the House is
scheduled to go into summer recess on August 4, the outlook for the
floor vote reportedly is during the week of July 30. The resolution
will most likely be adopted with the yays outweighing the nays in
vote.

12) Online poll on Upper House election: 45 %of highly interested

TOKYO 00003301 009 OF 012


respondents will vote for DPJ

YOMIURI (Page 2) (Full)
July 19, 2007

Those who are highly interested in the July 29 House of Councillors
Election and are eager to go to the polling stations are likely to
vote for the Democratic Party of Japan (DPJ or Minshuto), according
to the fifth opinion survey conducted by the Yomiuri Shimbun on July
18 of 1,000 Internet users. Among those who answered that they were
extremely interested in the upcoming election and would go to the
polling stations without fail, the rate of support for the DPJ was
twice as high as that for the Liberal Democratic Party.

Some 72 %of respondents said that they were very interested in the
Upper House election, an increase of 13 percentage points from the
first poll in mid-June. Of them, 45 %said they would vote for the
DPJ, 22 %for the LDP, 4 %each for the New Komeito and the Japanese
Communist Party, and 2 %each for the Social Democratic Party, the
People's New Party, and the New Party Nippon. Of those who are
somewhat interested in the election, 27 %said they would vote for
the DPJ and 21 %for the LDP.

A total of 77 %said they will cast their votes without fail on or
before the voting day, and 19 %said they will go to the polling
stations if they can. Of those who said they will go to the stations
without fail, 43 %indicated that they will vote for the DPJ; 21 %for
the LDP; 5 %for the New Komeito; 4 %for the JCP; and 2 %each for the
SDP, the PNP, and the NPN. Of those who said they will vote if they
can, 26 %picked the DPJ and 23 %the LDP.

13) Opinion survey of major political parties: LDP, New Komeito
favor constitutional revision, DPJ withholds view

MAINICHI (Page 1) (Full)
July 19, 2007

The Mainichi Shimbun conducted an opinion survey of seven major
political parties to find out their views on the Constitution and
security policy. In response to a question on constitutional
revision, "approval" or "conditional approval" came back from the
Liberal Democratic Party, the New Komeito, and the People's New
Party. The Democratic Party of Japan's (DPJ or Minshuto) answer was:
"We will support it if it makes it better but will oppose it if it
makes it worse." The Japanese Communist Party, the Social Democratic
Party, and the New Party Nippon said "no" to constitutional
revision.

The LDP has drafted a new constitution of its own, while the New
Komeito is under discussion to add new ideas to the Constitution.
The LDP is also eager to revise Article 9, while the New Komeito
thinks it should be left intact.

Views were also split between the two ruling parties over the
question of allowing the country to exercise the right to collective
self-defense, which is now being studied by a blue-ribbon panel
under Prime Minister Shinzo Abe. The LDP aims to open the door for
the right, whereas the New Komeito is reluctant to do so.

The major opposition DPJ's answer to the question on collective
defense was that it should be discussed on a case-by-case basis. The
DPJ is apparently more positive than the New Komeito toward

TOKYO 00003301 010 OF 012


exercising that right. The DPJ also in its response on Article 9,
mentioned that brakes should be included in the Constitution,
withholding its clear position.

The parties opposing constitutional revision were not monolithic,
either. The JCP for instance answered that Japan should completely
implement all clauses in the Constitution. The SDP's answer was: "We
will not deny constitutional revision if that is what the people
want, but we will definitely oppose the LDP's plan which is designed
to make changes for the worse."

14) Shuzen Tanigawa, LDP candidate for Upper House race, urges Abe
to sack Agriculture Minister Akagi

MAINICHI (Page 2) (Full)
July 19, 2007

Shuzen Tanigawa, 73, a candidate on the ticket of the ruling Liberal
Democratic Party (LDP) for the Osaka prefectural district in the
July 29 House of Councillors election, revealed in a speech on July
17 that he had asked Prime Minister Shinzo Abe to dismiss
Agriculture, Forestry and Fisheries Minister Norihiko Akagi over a
political fund scandal involving his political management
organization. Increasingly alarmed by adverse wind toward the LDP,
Tanigawa apparently expressed dissatisfaction with Akagi.

In his speech, the 73-year-old politician clarified that he had told
Abe on July 14 when the prime minister gave a campaign speech for
Tanigawa:

"If you don't dismiss Akagi as soon as possible, we won't be able to
fight in the election. If he does not step down, we will lose the
race. It is important for politicians to decide whether to resign by
themselves."

Tanigawa also criticized Akagi, who appeared with a bandaged face
before reporters after a cabinet meeting on July 17, for failing to
explain the reason for his face, just saying, "Nothing wrong about
this." He said:

"What's wrong with him? Don't you think that's strange? A
politician is a public figure. Voters gave him their precious
ballots to represent them. He should have offered sufficient
explanations to the public."

15) Prime Minister Abe excludes Kochi from campaign trail schedule

YOMIURI (Page 4) (Full)
July 19, 2007

It was revealed yesterday that Prime Minister Shinzo Abe would not
visit Kochi Prefecture, although he had planned to set out on a
stumping tour of the Shikoku area on July 20 for the July 29 House
of Councillors election. According to a senior member of the ruling
Liberal Democratic Party (LDP), the reason is likely that Abe will
be taking revenge on Kohei Tamura, a candidate on the LDP's ticket
in the Kochi prefectural district, who criticized Abe's policy of
creating "a beautiful country."

Abe initially planned to visit Kochi on the 21st after stumping in
the prefectures of Tokushima, Kagawa, and Ehime on the 20th. Tamura
said in a speech on the 16th in Kochi:

TOKYO 00003301 011 OF 012

"I would feel like a fool if the prime minister came to give
campaign speeches in which he plays up his policy of creating a
beautiful country, a picture that he created in his mind."

16) WTO talks: Japan to call for revision of chairman's proposal,
saying, "It is unacceptable"

YOMIURI (Page 11) (Full)
July 19, 2007

The chairmen of the agricultural committee and the mined and
manufactured products committee on July 17 presented new proposals
during the multilateral trade talks (Doha Round) at the World Trade
Organization. The Japanese government released this comment
yesterday: "The proposals are unacceptable in their present state."
Japan is taking a stance of seeking revisions. The United States
Trade Representative (USTR) also was cautious about the proposals,
saying, "The proposals will require a detailed analysis." The talks
will move into full swing starting in September, based on the
chairmen's proposals. However, whether they will bring progress to
the talks amid growing opposition among member nations is unclear.

Key items cut back

Issuing a joint comment on the chairman's proposal, four ministries,
including the Ministry of Agriculture, Forest and Fisheries (MAFF)
and the Ministry of Economy, Trade and Industry (METI) underscored,
"We will seek revisions wherever necessary through talks to be held
starting next week."

Japan is most dissatisfied with a proposal limiting the ratio of key
agricultural items eligible for exceptionally high tariffs to 4 %or
6 %of all levied trade items.

If these rates are applied to Japan, the number of key items allowed
to Japan will be either 40 or 60. The proposal is extremely harsh
for Japan now has more than 200 high-tariff items, such as rice,
sugar and dairy products, a senior MAFF official explained. A
proposal for a ceiling tariff system of constraining tariffs on
agricultural products below a certain level, which Japan has been
opposing, was not included in the package. However, a clause
mandating countries with many high-tariff items, such as Japan, to
import those items with low tariffs has been included.

France also opposing chairman's proposal

The chairman's proposal has also urged the US to reduce agricultural
subsidies for domestic farmers either to 13 billion dollars or to
16.4 billion dollars. However, the US has only indicated readiness
to give in to a cut to 17 billion dollars. With the presidential
election next year, whether it can make a concession is in a
delicate situation.

The EU has not yet issued an official comment. However, the
chairman's proposal seeks tariff cuts in high-tariff products 60
%larger than the level the EU proposed. Chances are that if France,
which attaches importance to protecting domestic agriculture,
opposes the proposal, coordination of views within the EU could take
time.

Industrialized countries unhappy

TOKYO 00003301 012 OF 012

The number of developing countries' trade items whose tariffs will
actually be lowered from the present level under the chairman's
proposal on mined and manufactured products will be no more than 40
%of all trade items, which is smaller than 45.6 %as proposed by
Japan, the US and the EU. METI intends to seek expansion in the
scope of tariff cuts by developing countries, noting that it would
be meaningless unless tariff cuts lead to substantive trade
expansion.

SCHIEFFER

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