Cablegate: Japanese Morning Press Highlights 07/22/08

DE RUEHKO #2006/01 2040055
P 220055Z JUL 08




E.O. 12958: N/A



Defense and security affairs:
1) Okinawa Prefecture Assembly passes resolution against relocating
Futenma Air Station, making completion of realignment project on
time doubtful (Sankei)
2) Government, Okinawa Prefecture agree to set up working team to
find a way to remove the danger of Futenma Air Station (Mainichi)

3) Deadlock continues on Okinawa's plan to move Futenma relocation
site into the sea (Asahi)
4) Government upset by Okinawa's intransigence on Futenma relocation
issue (Asahi)

5) Government plans to send fact-finding mission to E. Timor as part
of decision on whether to dispatch troops for PKO (Yomiuri)

ASEAN forum:
6) Foreign Minister Koumura arrives in Singapore for ASEAN ARF
(Tokyo Shimbun)
7) Japan, ROK, China to agree to jointly support ASEAN, including
agricultural area (Yomiuri)

WTO Doha Round:
8) Farm and trade ministers plan negotiation strategy for reaching
compromise between advanced and developing countries at the WTO
round (Nikkei)
9) WTO agricultural talks: Government considering accepting drop in
rice tariff of 20 to 50 PERCENT (Asahi)

10) Survey of 100 top companies in Japan finds 43 expect economic
recession to set it, led by high costs of materials (Yomiuri)

Political scene:
11) Prime Minister Fukuda will make final decision on cabinet
shuffle on July 29 (Asahi)
12) Speculation abounds about how Fukuda will come down on Cabinet
shuffle (Yomiuri)


1) Okinawa assembly adopts resolution against Futenma relocation

SANKEI (Page 2) (Abridged)
July 19, 2008

The Okinawa prefectural assembly yesterday adopted a resolution
opposing the government's plan to relocate the U.S. Marine Corps'
Futenma Air Station in the island prefecture's central city of
Ginowan to a coastal area of Camp Schwab, a U.S. military base in
the prefecture's northern coastal city of Nago, with a majority of
votes from the opposition parties. Okinawa Prefecture's Governor
Hirokazu Nakaima, who has conditionally accepted Futenma airfield's
relocation within the prefecture, will inevitably harden his
attitude to call for the government to modify the Futenma relocation
plan. Meanwhile, Japan and the United States have agreed to complete
Futenma relocation in 2014. The government will now face even more
difficulties in carrying it out as scheduled.

The government plans to complete an environmental assessment by the
end of July next year and go through procedures by the end of next
year for land reclamation off the coast of Camp Schwab. However, if

TOKYO 00002006 002 OF 008

the government has to suspend its ongoing environmental assessment
or if the governor is substantially late in his approval of land
reclamation, it will be impossible to complete Futenma relocation by
2014. In that case, the agreement between Japan and the United
States may founder.

2) Government, Okinawa agree to establish working group to study
ways to eliminate danger of Futenma Air Station

MAINICHI (Page 2) (Full)
July 19, 2008

The council to discuss the relocation of Futenma Air Station among
the central government and affected local governments in Okinawa met
on July 18 at the Prime Minister's Official Residence (Kantei). As a
result, an agreement was reached to set up a working team for the
central and prefectural governments to jointly study ways to remove
dangerous aspects of Futenma Air Station before the planned
relocation, as requested by Okinawa. An accord was also reached to
set up a working group for the central government and prefectural
governments to exchange views on a construction plan for the
relocation site and the environmental impact assessment that began
in March this year.

The governments of Japan and the United States are in accord to
relocate Futenma Air Station to the coastal area of Camp Schwab in
Nago by 2014. But relocation work has been stalled due to Okinawa's
request for moving the relocation site into the ocean.

Given the situation, to eliminate the danger of Futenma Air Station
before its relocation, Tokyo and Washington reached an agreement in
August last year on eight items, including a shift in flight paths
of U.S. military helicopters. In the council's previous meeting in
April, Governor Hirokazu Nakaima proposed the establishment of the
joint working team. The working team to be composed of division
director-level officials of the Defense Ministry and Okinawa
prefectural government will begin work before the end of this

Although Okinawa has called for the closure of Futenma Air Station
in three years and other matters, the U.S. government has not
responded to them. Under the circumstances, whether the working team
can come up with any effective conclusion remains to be seen.

3) Futenma offshore relocation plan hits snag

ASAHI (Page 4) (Abridged)
July 19, 2008

On the pending issue of relocating the heliport functions of the
U.S. Marine Corps' Futenma Air Station in Okinawa Prefecture, the
government explored the feasibility of moving the planned site of an
alternative facility into the sea. This offshore relocation plan,
however, has now hit a snag. The government and Okinawa Prefecture
are still wide apart over how far to move the relocation site to an
offshore area. Moreover, the United States has reminded Japan that
the Futenma relocation plan should be carried out as agreed. It has
been 12 years since the United States agreed with Japan to return
Futenma airfield. Futenma relocation has yet to find a way out.

"Including the idea of moving the site (of an alternative base to an
offshore area), if there is a proposal from the governor, we will

TOKYO 00002006 003 OF 008

respond in a sincere manner."

On July 18, the government held a consultative meeting with local
officials from Okinawa's prefectural and municipal governments at
the prime minister's office over the planned relocation of Futenma
airfield, with Chief Cabinet Secretary Machimura presiding. In the
meeting, Machimura touched on Okinawa's proposal to move the
relocation site into the sea. The government wanted to reach an
agreement that day. However, the government could not do so.

In 2006, the Japanese and U.S. governments agreed on the current
plan for Futenma relocation. This plan is to build a V-shaped pair
of airstrips at Henoko Point in Okinawa Prefecture's northern
coastal city of Nago. Okinawa has asked the government to move the
relocation site into the sea for noise abatement and other reasons.
The planned construction of a new base needs to fill up public
waters, and the Okinawa governor has authority for approval. If
Okinawa Prefecture opposes the Futenma relocation, the government
cannot set about constructing a new base. Consequently, the U.S.
military's realignment may go under in its entirety.

The government's scenario was to comply with the Okinawa governor's
request and then to consult with the United States on revising the
Futenma relocation plan. The government, centering on Machimura, has
held negotiations with Okinawa Prefecture over the past several

"It's all right to move the runways to an offshore area. If you say
the relocation site should be moved 100 meters, then we will study
it." With this, Machimura sounded out Okinawa Prefecture's Governor
Hirokazu Nakaima. In this February's consultative meeting, Machimura
declared, "We want to reach a settlement at an early date, with the
offshore plan in mind as well." Machimura repeatedly met with
Nakaima thereafter and told him that the government would consider
taking additional incentive measures for Okinawa's development.
According to a government official, Nakaima also consented to the
government's plan to consult with the United States on revising the
relocation plan.

However, the government and Okinawa confronted over how far to move
the planned relocation site. The government, as a result of its
study, told Okinawa that the relocation site can be moved about 55
meters without doing an environmental assessment over again. Okinawa
insisted that the site can be moved further after several
environmental assessments. However, the government made no
concessions, maintaining that it is a circumvention of the law.

4) Nakaima growing impatient

ASAHI (Page 4) (Full)
July 19, 2008

Okinawa Prefecture is growing impatient with the lack of progress on
its proposal for Futenma airfield's offshore relocation. "I thought
it would be easy to meet our request at this level even without
consulting the U.S. government, but I was wrong," Okinawa
Prefecture's Governor Nakaima told a news conference on July 18.

Since last fall when the Fukuda cabinet came into office, Machimura
has explored the possibility of moving the planned relocation site
of Futenma airfield into the sea, relying on his personal channel
with Machimura, who was Nakaima's junior at the former Ministry of

TOKYO 00002006 004 OF 008

International Trade and Industry. However, Nakaima could not find
any common ground with the government. "When Chief Cabinet Secretary
Machimura became our counterpart, we were in a mood for talks," a
senior official of Okinawa Prefecture said. "But," he added, "few of
our requests have been granted."

As a result of this June's election for the Okinawa prefectural
assembly, the ruling parties led by the Liberal Democratic Party and
New Komeito failed to retain a majority. Those affiliated with the
opposition parties that are opposed to Futenma relocation within
Okinawa Prefecture won a majority of the seats. On July 18, the
Okinawa prefectural assembly adopted a resolution opposed to the
planned relocation of Futenma airfield to Henoko Point in Nago City.
The assembly's gallery was filled with local residents opposing the
Futenma relocation.

"It's regrettable," Nakaima said. He went on: "I want to ask them
when Futenma will be returned to us, and I also want to ask them if
this possibility is in sight." However, there is still no solution
in sight for Okinawa in its negotiations with the government. One
senior official of Okinawa Prefecture said: "The United States has
not pledged to revise the relocation plan, so I wonder how far our
proposal is feasible in our talks with the government."

5) Government to send fact-finding team to East Timor before
discussing advisability of PKO dispatch

YOMIURI (Page 4) (Full)
July 19, 2008

The government decided on July 18 to send to East Timor a
fact-finding team composed of eight personnel from the Cabinet
Office, Foreign Ministry, and Japan Coast Guard to consider
assistance, including a dispatch of JCG personnel to UN peacekeeping
operations there.

The team will be dispatched for about a week from late July. Its
mission will be to collect requests and information on the situation
of the country from the East Timor government and the United Nations
Integrated Mission in Timor-Leste (UNMIT), which is conducting
security operations and assisting the country in its efforts to
nurture a national police force.

Chief Cabinet Secretary Nobutaka Machimura in a press conference on
the evening of July 18 said: "We need to grasp what kinds of
assistance are available and the country's needs. We have yet to
decide on sending personnel to that country (under the PKO
cooperation law)."

6) Foreign Minister Koumura arrives in Singapore

TOKYO SHIMBUN (Page 2) (Full)
July 22, 2008

Yuji Nishimura, Singapore

Foreign Minister Masahiko Koumura arrived in Singapore on the
evening of July 21 to attend a foreign ministerial of the
Association of Southeast Asian Nations (ASEAN) members and Japan,
China and South Korea, which will start on the July 22, as well as a
conference of the ASEAN Regional Forum.

TOKYO 00002006 005 OF 008

Besides the ASEAN-hosted meetings, Komura is expected to hold
bilateral talks on the 22nd with his Chinese and Singaporean
counterparts Yang Jiechi and George Yong-Boon Yeo.

In an effort to repair strained relations with South Korea due to
the Japanese government's decision to mention Japan's ownership of
the long disputed Takeshima Islets, called Dokdo in South Korea, in
its new teaching guidelines for social studies for junior high
schools, Koumura hopes to have an opportunity to hold talks with his
South Korean counterpart Chung Jong Hwan.

7) Japan, China, South Korea to agree on creating ASEAN support fund
for agriculture and other sectors

YOMIURI (Page 2) (Full)
July 21, 2008

Japan, China, and South Korea will jointly establish a fund to help
the Association of Southeast Asian Nations (ASEAN) improve its
information technology infrastructure and agricultural productivity.
The three countries are expected to reach an agreement in an
ASEAN-plus-Three meeting of foreign ministers to be held in
Singapore on July 22.

The size of the fund will initially be about 300 million yen. Ten
percent will be covered by ASEAN members. The remaining amount will
be evenly split by Japan, China, and South Korea.

Instead of directly supporting agriculture and IT projects, the fund
will be used for related budgets to prepare such projects.

For instance, ASEAN nations could use the fund to hold seminars and
symposia to consider ways to increase rice production in response to
the food crisis. Japan, China, and South Korea are aiming to
strengthen ties with ASEAN.

8) WTO: Both industrialized and developing countries should make
concessions, say agriculture, METI ministers

NIKKEI (Page 3) (Full)
July 22, 2008

Japanese ministers at a meeting of the World Trade Organization
(WTO), which opened in Geneva on July 21, revealed their negotiation
policies. Agriculture Minister Masatoshi Wakabayashi said, "It is
necessary for both industrialized countries and developing countries
to make concessions in order for the ministerial to reach a
settlement." Economic, Trade and Industry Minister Akira Amari
noted, "Japan has already accepted pain in the agricultural field.
We would suffer a setback unless we can achieve results in the
mining and manufacturing area."

The focus for Japan is whether it can block the introduction of a
tariff cap system designed to constrain all tariffs on farm products
below a designated level and secure 8 PERCENT of all farm products
as key items whose tariff cuts can be eased as exceptions.
Wakabayashi said, "I will continue talks until I can obtain
satisfactory results."

9) Rice tariff: Government considering accepting 20 PERCENT -50
PERCENT cut at WTO talks; Opposed to uniform tariff cap

TOKYO 00002006 006 OF 008

ASAHI (Page 1) (Full)
July 21, 2008

The Japanese government has begun considering lowering rice tariffs
by about 20 PERCENT -50 PERCENT at the multilateral free trade
under the World Trade Organization (WTO) with the intention to
accept proposals by the chairman of the WTO's agriculture
negotiations. However, it will strongly oppose a proposal for
uniformly imposing an upper limit on tariffs on farm products. It
will make its stand clear at a ministerial to be held in Geneva
starting on July 21 for a settlement before year's end.

Rice became subject to tariffs after the Uruguay Round. The current
tariff is about 340 yen per kilogram (778 PERCENT on an ad valorem

According to the chairman's latest proposal, farm products of
industrialized countries will be categorized into general items and
key items for protection. Tariffs will be lowered accordingly. The
margin of a cut in tariffs on key items would be within one-third to
two-thirds of such tariffs on general items.

Each country will likely be able to designate a specific proportion
of all its trade items as key items. The Japanese government plans
to include rice in a list of key items. An estimate worked out,
based on the chairman's proposal, found that a new tariff on rice
would become approximately 180 yen to 260 yen per kilogram.

Rice grown in Thailand, the largest rice exporter in the world, at
present is about 80 yen per kilogram. Even if a new tariff is set at
the lowest level of 180 yen, the import price would become about 260
yen. Transportation cost would also be added to this price. Japanese
rice is about 230 yen per kilogram. The government says that since
its quality is high, it can still maintain competitiveness. For this
reason, the Japanese government has now almost reached a common
understanding that it will have to accept a tariff increase in line
with the chairman's proposal, as one negotiator said.

Regarding a cut in tariffs on farm products, Brazil and other
exporters are calling for the introduction of a tariff cap system.
Uniformly setting a tariff cap of 100 PERCENT has been floated. If
realized, imported Thai rice would become cheaper than domestic
rice. The Japanese government is determined not to accept such a

Japan has sought to have 10 PERCENT -15 PERCENT of its farm
products -- 1,332 -- to be accepted as key products. However,
following the chairman's proposal of 4 PERCENT -6 PERCENT , it has
changed to a flexible stance with Agriculture Minister Wakabayashi
saying, "I want to secure at least 8 PERCENT ."

A ministerial at the WTO is expected to continue for about a week.
In addition to tariffs, agriculture subsidies will also be on the
table. A reduction in tariffs on mined and manufactured products is
also on the table to be tackled in tandem with farm products. The
WTO is aiming for a general agreement on overall products. If the
ministerial this time falls apart, reaching an agreement within the
target of this year will be difficult.

10) Poll: Number of companies that see the economy is in a recession
increases to 43

TOKYO 00002006 007 OF 008

YOMIURI (Page 1) (Full)
July 19, 2008

The Yomiuri Shimbun on July 18 tallied the results of a business
survey it conducted on 100 leading companies. To a question on the
current state of the economy, 43 companies, 1.5 times more than the
number in the previous survey (April, 2008) which was 29 companies
then, replied that they felt the economy was already in a recession.
Only two companies thought that the economy was recovering, but the
pace was moderate. In the survey carried out in November 2007, 67
companies replied that the economy was moderately recovering. The
results indicate a pessimistic view has rapidly spread this year.

Survey on 100 leading companies

The survey was carried out from July 7 through 14. As factors
(multiple replies were allowed) that are having an adverse impact on
the economy, 92 companies cited the steep rise in the prices of raw
materials, including crude oil and grain. Replies, such as "sluggish
consumer spending," given by 47 companies, or "a fall in U.S.-bound
exports," cited by 46 companies, were noticeable. Only nine
companies cited "the rapid high yen-weak dollar-trend," compared
with 39 in the previous survey.

Regarding a consumption tax hike, seven companies thought that the
consumption tax should be hiked at an early date, while 37 companies
took a stand that a consumption tax increase would be unavoidable in
the future. More than 40 PERCENT of respondents thus approved a
hike in the consumption tax. In the November 2007 survey, seven
companies replied that the consumption tax should not be increased.
However, no companies objected to a consumption tax hike in the
latest survey.

11) Prime Minister Fukuda considering cabinet shuffle, to make final
decision by July 29

ASAHI (Page 1) (Full)
July 21, 2008

Prime Minister Yasuo Fukuda is planning to shuffle his cabinet
before an extra ordinary Diet session is convened, possibly in late
August. He will make a final decision by July 29 when the cabinet
approves budgetary request guidelines for fiscal 2009. Fukuda hopes
to make clear his political stance by shuffling the cabinet, most
members of which were kept on from the government of former Prime
Minister Shinzo Abe.

When Fukuda formed his cabinet last September, he retained 15 of the
17 ministers of the Abe cabinet. The dominant view in the ruling
camp is that the cabinet should be shuffled in order to boost the
Fukuda government's popularity, which has been low. A person close
to Fukuda indicated on the 20th that Fukuda had decided to shuffle
the cabinet, saying: "The Prime Minister no longer is wavering on

Fukuda has been vacationing at his official and private residences,
as well as at a hotel in Tokyo. The possibility is high that he will
shuffle the cabinet before coming up with such policy measures as
ones dealing with medical care for the elderly, a set of five social
welfare steps, and additional ways to halt soaring fuel prices.

TOKYO 00002006 008 OF 008

Fukuda appears to be carrying out a shuffle sometime between late
July and early August at the earliest. The focus is on whether he
can display his own political identity in handling a bill extending
the Afghan refueling support special measures law, which will become
an important issue in the upcoming extra session, as well as in
picking a minister for a consumer affairs agency minister. Attention
will be also on how Chief Cabinet Secretary Nobutaka Machimura and
Health, Labor and Welfare Minister Yoichi Masuzoe will be treated.
If Fukuda finds it difficult to put his favorites in his new
cabinet, he may forgo shuffling the cabinet.

12) Prime Minister Fukuda resumes official duties today, may make
decision to shuffle cabinet

YOMIURI (Page 4) (Full)
July 22, 2008

Wrapping up his summer vacation, Prime Minister Yasuo Fukuda is to
resume his official duties today. During the six-day vacation,
Fukuda appears to have looked into a strategy of managing his
government in the future, while staying at a Tokyo hotel. The major
focus of attention is now whether he will carry out a cabinet

Fukuda stayed at his official residence adjacent to the Prime
Minister's Official Residence on July 16. Since the 17th, he and his
wife Kiyoko stayed at the hotel, without going any place far. There
were no politicians who called on him at the hotel, according to
sources concerned. He reportedly exchanged views on a political
timetable on the phone with senior members of the ruling coalition.

In addition to coordination with the ruling parties on a political
calendar with an eye on the upcoming extraordinary Diet session,
Fukuda will have to deal with such political issues as the
compilation of budgetary request guidelines for fiscal 2009, as well
as a set of five relief measures for social welfare. He is expected
to discuss with New Komeito leader Akihiro Ota this week a timetable
for shuffling the cabinet and for convening in the fall an extra
Diet session.

If Fukuda shuffles the cabinet, it would be the first time for him
since he assumed office last September. Of the 17 cabinet ministers,
15 came from the cabinet of former Prime Minister Shinzo Abe. Many
in the ruling camp have called on Fukuda to shuffle the cabinet to
display his own political identity. Meanwhile, some have taken a
cautious stance about a shuffle, fearing that if a scandal involving
a new cabinet minister is discovered, the new cabinet would grind to


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