VZCZCXRO8981
RR RUEHCHI RUEHFK RUEHHM RUEHKSO RUEHNAG RUEHPB
DE RUEHKO #1730/01 2100710
ZNR UUUUU ZZH
R 290710Z JUL 09
FM AMEMBASSY TOKYO
TO RUEHC/SECSTATE WASHDC 4977
INFO RUEHZU/ASIAN PACIFIC ECONOMIC COOPERATION

UNCLAS SECTION 01 OF 02 TOKYO 001730 
 
SENSITIVE 
SIPDIS 
 
STATE PASS USTR, EAP/J 
 
E.O. 12958: N/A 
TAGS: EINV ECON PGOV PREL APECO JA
SUBJECT: APEC SENIOR OFFICIAL KURT TONG'S MEETINGS ON APEC AND 
U.S.-JAPAN ECONOMIC RELATIONS 
 
¶1. (SBU) SUMMARY: Acting U.S. Senior Official for APEC Kurt Tong 
emphasized the need to focus on discrete outcomes rather than 
process in U.S.-Japan economic relations, as well as in setting the 
agenda for consecutive APEC host years, during meetings with senior 
GOJ officials and U.S and Japanese business leaders on July 24. 
Representatives from the American Chamber of Commerce in Japan 
(ACCJ) and Japan's APEC Business Advisory Council (ABAC) both 
expressed a desire to expand dialogue regarding Japan's role in the 
regional economy.  Japanese government interlocutors assessed the 
GOJ's stance toward APEC engagement would not change significantly 
under a Democratic Party of Japan (DPJ)-led government.  END 
SUMMARY. 
 
BUSINESS PERSPECTIVES 
--------------------- 
¶2. (SBU) Over breakfast with the ACCJ Board of Directors, ACCJ Vice 
President Larry Bates said the chamber is interested in expanding 
its engagement with APEC, particularly through joint events with 
Japan's APEC Business Advisory Council delegation.  Bates noted the 
two groups have worked jointly on financial issues in the past.  The 
ACCJ also has an ongoing dialogue with the Keidanren, which 
functions as a secretariat for Japan's ABAC team, and the two 
business groups released a joint statement July 21 on calling for 
initiatives to overcome the economic downturn, including IPR 
protection measures and customs harmonization.  The ACCJ board 
members also agreed that APEC would be a useful vehicle for engaging 
Japan on issues that are important to the bilateral relationship and 
Japan's role in the regional economy.  Microsoft's Jim Foster 
offered the ACCJ's upcoming White Paper on IT (due to be released in 
September) as an example of an ongoing area of engagement that could 
be expanded within APEC.  Foster stressed Japan must take more steps 
to harmonize its IT policies with global norms and avoid following a 
"Galapagos" style growth model. 
 
¶3. (SBU) The ACCJ board members shared their assessments of the 
upcoming Lower House election and potential changes under a 
Democratic Party of Japan (DPJ)-led government.  Bates said the DPJ 
appears to be maturing as it contemplates policies to encourage 
economic reform, however its proposal to increase the number of 
political appointments so as to limit bureaucratic influence over 
policymaking may undermine the GOJ's ability to implement effective 
policies.  ACCJ Governor Mitsuyo Teramura questioned the 
availability of experts from outside the party to consult the DPJ's 
leadership as it attempts to translate its ideals into workable 
policies.  The ACCJ members are uncertain the DPJ can find another 
Heizo Takenaka, for example.  Regarding U.S. bilateral economic 
relations with Japan, Tong urged the ACCJ to define concrete 
measures that might improve U.S.-Japan trade and investment ties, 
and which might win the support of the DPJ in the first year of its 
possible governing leadership. 
 
¶4. (SBU) Separately, Gempachiro Aihara, Chairman of Japan's APEC 
Business Advisory Council delegation, said he looks forward to 
working with his U.S. counterparts and with the Keidanren to develop 
an agenda for the consecutive Japan-U.S. APEC years.  Tong relayed 
the ACCJ's interest in working with Japan ABAC members and suggested 
the groups explore holding a joint event around the time of the next 
ABAC meeting in Danang in late August. 
 
METI PERSPECTIVES ON REGIONAL TRADE POLICY 
------------------------------------------ 
¶5. (SBU) Ministry of Economy, Trade and Industry (METI) Economic 
Partnership Division Director Noriyuki Mita, who chairs the APEC 
investment experts group and directs METI's Free Trade Agreements 
efforts, said showing some progress toward a Trans-Pacific 
Partnership (TPP) is essential and asked about the future direction 
of U.S. trade policy.   Tong said he expects the administration to 
more clearly define its trade policy later this year following the 
push for health care reform.  He added the fate of the KORUS FTA in 
the Congress will be a major litmus test for U.S. trade policy. 
 
U.S.-JAPAN INVESTMENT INITIATIVE: 
NEED FOR CLEAR DELIVERABLES 
--------------------------------- 
¶6. (SBU) Tong stressed to METI Trade Policy Bureau Americas Division 
Director Yasushi Akahoshi the need to develop clear deliverables 
that the U.S.-Japan Investment Initiative could achieve in the next 
year or two, if the Initiative is continued, noting that some 
officials in Washington assess it has produced more talk than action 
in recent years.  Akahoshi agreed, saying the U.S.-Japan Investment 
Initiative is useful as "good gaiatsu" for encouraging change within 
Japan.  Akahoshi offered the example of the Cabinet Office's program 
to expand investment and proposed measures for reforming the mergers 
and acquisition process as successful deliverables. 
 
¶7. (SBU) Akahoshi said he expects little change in GOJ engagement 
with APEC under a DPJ-led government, observing the party's 
manifesto calls for developing strong ties with Asia (septel).  In 
this regard, Akahoshi suggested APEC may even gain stronger support 
 
TOKYO 00001730  002 OF 002 
 
 
at the political level under the DPJ if it is perceived as an 
effective vehicle to deepen Japan's engagement with Asia. 
 
MOFA ECONOMIC AFFAIRS DG SUZUKI ON 
APEC, BILATERAL DIALOGUE 
---------------------------------- 
¶8. (SBU) MOFA Director General for Economic Affairs Yoichi Suzuki 
said Japan needs to do more to promote regional integration and that 
APEC serves as a vehicle for Japan to further open its economy. 
Suzuki added that DPJ leader Yukio Hatoyama has stated he intends to 
strengthen Japan's relationship with its Asian neighbors, and Suzuki 
said APEC will likely be at the top of a DPJ administration's agenda 
for advancing regional economic integration. 
 
¶9. (SBU) Turning to the bilateral economic relationship, Suzuki said 
the United States will naturally be at the top of the GOJ's agenda 
following the August 30 election, as the new Prime Minister's first 
overseas travel would likely be to the G-20 financial summit in 
Pittsburgh.  Suzuki added the U.S.-Japan economic dialogue is 
important for MOFA in pushing issues to the GOJ leadership, such as 
agriculture reform and climate change.  Tong stressed the need for 
substance, rather than process in the U.S.-Japan economic dialogue. 
Noting the U.S. Strategic and Economic Dialogue with China, Suzuki 
identified a need to manage perceptions to avoid the appearance that 
Japan has fallen off the U.S. leadership's agenda.  Tong said this 
can best be accomplished through a dialogue that produces results, 
just as with the S&ED. 
 
MOFA DEPUTY FOREIGN MINISTER OTABE ON 
U.S. ENAGAGEMENT IN ASIA 
------------------------------------- 
¶10. (SBU) Deputy Foreign Minister Yoichi Otabe said Japan welcomes 
U.S. "reengagement" with the APEC process and a broader return to 
Asia, noting Secretary Clinton's signing of the Treaty of Amity and 
Commerce with ASEAN in Phuket July 22.  Speaking of regional 
economic development, Otabe said the U.S. and Japan should work 
through organizations such as APEC and the OECD to encourage 
"inclusive growth".  Turning to APEC, Otabe noted the APEC Leaders' 
Summit will occur shortly before the UN meetings on climate change 
in Copenhagen and that climate change should also be on bilateral as 
well as the APEC agendas.  Otabe also inquired whether issues such 
as food security, which could figure prominently in the APEC agenda, 
and was highlighted in the L'Aquila G8 Leaders' Statement, should 
not be coordinated bilaterally before being moved to a multilateral 
stage.  Tong stressed that the United States and Japan should 
coordinate closely in their APEC efforts to ensure an effective 
"one-two punch" on issues of concern when hosting the forum in 2010 
and 2011. 
 
¶11. (SBU) Turning to the need for a new bilateral economic dialogue, 
Otabe said it is important that the United States and Japan discuss 
bilateral issues and coordinate on multilateral issues. 
Specifically he cited coordination on China as essential and 
suggested discussions on policy steps Beijing should take to 
strengthen the social safety net and discourage precautionary 
savings so as to stimulate growth.  Tong reviewed the points he made 
to Suzuki on the need for any possible future U.S.-Japan economic 
dialogue to make concrete progress on issues as well as to serve as 
a coordination forum for multilateral issues.  He added that the 
perception in Washington has been the discussions have been far too 
process-oriented, and have produced few tangible results.  Otabe 
agreed on the need for results and indicated he had told Deputy NSA 
Mike Froman that Japan also wants a dialogue that produces results. 
 
 
ZUMWALT