Cablegate: Japan Economic Scope for September 16, 2008

DE RUEHKO #2548/01 2610550
R 170550Z SEP 08




E.O. 12958: N/A
SUBJECT: Japan Economic Scope for September 16, 2008


1. (U) This cable contains the Japan Economic Scope from
September 9, 2008


2. (U) JFTC Requests Merger Plan From BHP Billiton, Establishes
Exclusive Review Team

The Japan Fair Trade Commission (JFTC) has ordered mining giant BHP
Billiton to submit its plans for a $147 billion takeover of rival
Rio Tinto. JFTC's request is the first time the agency has proposed
to review a prospective merger between two foreign entities. JFTC
Secretary General Matsuyama confirmed that the JFTC established an
exclusive team of eight members in July to review the market
situation. The JFTC established such an exclusive team only once
before in 1970. The JFTC is unlikely to complete its review of the
planned merger until December.

3. (U) Japan Association of Corporate Execs to Visit United States.

Senior researchers from the Association of Corporate Executives
(Keizai Doyukai) met with the Economic section September 2 to
discuss their September 23-28 visit to New York and Washington.
EMIN noted U.S. concern that the bilateral economic relationship was
not living up to its potential. Both governments need to show more
creativity in working together on regional and global economic
issues. Staffers agreed the GOJ has failed to articulate to the
Japanese public a dynamic vision for the bilateral relationship.
While in the United States, Doyukai members plan to meet a cross
section of USG officials and private sector policy experts to obtain
insight into current U.S. business conditions and learn more about
likely policy proposals of the next U.S. administration. The
results of the trip will feed into a report on the future of the
U.S.-Japan economic relationship the Association will issue later
this year.

4. (SBU) Japan-U.S. Business Council Worries About Stagnant Economic

Japan-U.S. Business Council (JUSBC) Executive Director told EMIN
Sept 2 that Council members worry Japan's political drift --
underlined by the PM's recent resignation -- is delaying needed
economic reform. In the past, large Japanese corporations could
ignore most political discord, but now Japan's economic recovery
depends on firm government leadership. Continued political
uncertainty is damaging Japan's reputation abroad and discouraging
needed inward investment, he said. JUSBC will host the 45th
U.S.-Japan Business Conference in Tokyo October 6-7 with the
Minister of Health, Labor and Welfare Yoichi Masuzoe as the headline
speaker. The draft conference agenda includes discussion of IPR,
Healthcare Reform, prospects for a U.S.-Japan FTA, and Energy,
Environment, and the post-Kyoto Framework.

Environment and Energy
5. (U) Japan Takes Next Step in R&D of Coal Gasification and CCS

The Japan Electric Power Development Company (J-Power) and the New
Energy Development Organization (NEDO), the GOJ's public R&D
management organization, are engaged in a joint project to develop
multi-purpose coal gasification technology with the potential to
reduce CO2 emissions by as much as 30 percent above the level of
existing thermal power generation systems.

The co-development of highly efficient thermal electric power
generation and CCS technology figures prominently in the GOJ's "Cool
Earth-Energy Innovative Technology Program".

6. (U) Japan to Step Up Methane Hydrate Research

Japan has stepped-up its focus on extracting methane hydrate, an
alternative gas energy source, with a target date of 2012 for trial
methane production, according to Ministry of Economy, Trade and
Industry (METI) officials and media reports. Reserves of deep-sea
methane hydrate (a sherbet-like compound of methane and frozen water
molecules that becomes methane gas when heated) near Japan are
relatively abundant, elevating the resource's potential as an
alternative to imported fuel stocks in Japan's energy mix. However,
the economics of extracting methane from methane hydrate remain

TOKYO 00002548 002 OF 002

unknown and researchers must overcome several technical and
environmental obstacles before the resource can become commercially

7. (U) Japan Seeks Stable Coal Supply Against Fierce Competition

Securing stable, diversified sources of coal, research and
investment in zero-emission coal-fired power generation and Carbon
Capture and Sequestration (CCS) technology and continued emphasis on
resource diplomacy are the pillars of Japan's coal policy, according
to Ministry of Economy, Trade and Industry (METI) Agency for Natural
Resources and Energy (ANRE) Coal Division Director Hirotoshi
Kunitomo. Speaking at the Japan Coal Energy Center's Clean Coal Day
2008, Kunitomo said Japan, which is almost completely reliant on
imported coal and is traditionally the largest importer, faces
increasing competition from China, which is predicted to become a
net importer this year. Accordingly, Japan is moving to diversify
its source of supply beyond such traditional suppliers as Australia
and to secure more varied types of coal, which accounts for 23
percent of Japan's electricity generation. To this end, the GOJ is
supporting private companies in overseas mining ventures by
providing credit guarantees and trade insurance. To increase global
coal mining output, the GOJ is also providing producing countries
such as China, Vietnam, Indonesia, and India with assistance to
upgrade their coal industries with more efficient mining technology.

Japan's Foreign Relations

8. (U) Official Development Assistant Loan to Bulgaria To Develop
Two International Ports

The Japan Bank for International Cooperation (JBIC) signed on August
29 an official development assistance (ODA) loan totaling 36,932
million yen ($348 million) with Bulgaria. The loan will finance the
"New Container Terminals Development Project at the Ports of Varna
and Bourgas". The project consists of building container terminals
and their ancillary facilities such as port security, and installing
necessary equipment at the two ports. The loan will be used for
construction of the terminals, access roads to the ports and
consulting services. The container terminals will be operated by
private firms to be selected in a concession contract. JBIC will
also provide technical assistance in selection of the operators

9. (U) Japan-India Economic Partnership Agreement Negotiations - 9th

Japan and India held the ninth round of Economic Partnership
Agreement (EPA) negotiations September 8-12 in New Delhi at the
Ministry of Commerce and Industry. In this round, both sides
discussed market access of trade in goods and such issues as rules
of origin, general rules, customs procedures, trade in services,
investment, intellectual property, and official development
assistance cooperation.

Technology, Telecom, and IPR

10. (U) Japan Patent Office to Launch Patent Strategic Portal

The Japan Patent Office (JPO) recently announced plans to launch a
new pilot program, the "Patent Strategic Portal." This website will
pool patent application data, and make it available to users for
analysis and more strategic thinking about patents. The site will
host information in six general categories, including: basic patent
information (for 10 years); examination status list (since Jan.
2001); first examination list (2006-07); projected timing for
examination of un-examined applications; list of appeals
(applications requesting appeal against rejections); and simple
analytical reporting. Eligible applicants who have filed more than
20 applications in the past 10 years can access the first five
categories, while applicants filing more than 400 applications in 10
years can access the analytical reports. Roughly 10,000 Japanese
firms have filed more than 20 applications in 10 years and would be
eligible to apply for access to the portal.


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