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P 300753Z MAR 06
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INFO RUEHOO/CHINA POSTS COLLECTIVE
RUEHSS/OECD POSTS COLLECTIVE
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RUEHNAG/AMCONSUL NAGOYA 5422
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RUEHBS/USEU BRUSSELS
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UNCLAS SECTION 01 OF 03 TOKYO 001692 
 
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TAGS: ETRD EAGR PREL ECON JA
SUBJECT: DUSTR BHATIA IN TOKYO: SURVEYS THE RELATIONSHIP 
 
 
TOKYO 00001692  001.2 OF 003 
 
 
SESITIVE BUT UNCLASSIFIED -- PLEASE PROTECT ACCORDINGLY 
 
¶1.   (SBU) Japan is a key partner for the United States in 
its overall trade policy, and both countries need to do more 
to deepen the relationship in coming months.  That is how 
Deputy U.S. Trade Representative Karan Bhatia underscored the 
importance to the United States of Japan and the region 
during meetings in Tokyo March 20.  He described the priority 
the United States attaches to establishing deeper regional 
economic integration, pointing to the FTA negotiations 
Washington has launched with Korea and Malaysia.  He and his 
Japanese hosts at the Prime Minister's Office, and the 
Foreign, Trade, and Agriculture ministries, agreed to work 
hard to advance the bilateral partnership in coming months as 
Japan selects a new Prime Minister.  Bhatia reminded all 
parties, however, it will be hard to proceed as long as 
Japan,s market remains closed to U.S. beef.  Bhatia 
underscored the urgency of reaching a successful conclusion 
of the Doha trade round, and called on Japan to cooperate on 
WTO cases Washington is considering filing against China. 
End summary. 
 
Bilateral Partnership 
--------------------- 
 
¶2.   (SBU) Notwithstanding the irritant that beef represents 
on overall U.S.-Japan bilateral relations (septel), the 
partnership the two countries have forged over the past five 
years should be reinvigorated in coming months.  Assistant 
Chief Cabinet Secretary Hiroyasu Ando told Ambassador Bhatia 
that there were no "serious" economic issues between the two 
countries.  Bhatia agreed that the atmosphere had much 
improved and said that, other than beef, the challenges ahead 
lay more on capitalizing on opportunity rather than 
minimizing problems.  Bhatia said that Japan was our closest 
and largest partner in the region and we should seek to 
"deepen and broaden" the relationship.  The two countries 
should be thinking how to do this, he added, in the context 
of the Prime Minister's visit to the United States 
tentatively set for June. 
 
¶3.   (SBU) Deputy Foreign Minister Mitoji Yabunaka and Vice 
Trade Minister Kazumasa Kusaka agreed that the relationship 
had progressed smoothly over the past five years and both 
their ministries were looking to identify the best way 
forward.  The departure from office of Prime Minister Koizumi 
by the end of the summer makes it difficult to launch any 
dramatic new initiatives at the moment.  Both governments, 
according to Kusaka, should take advantage of the intervening 
months before the summit in June to study the architecture of 
the relationship over the past five years to assess what 
worked and what did not work.  Although no public statement 
need be made, both sides should develop a common 
understanding on these points.  At the summit, the leaders 
could instruct their staffs to develop proposals for changes 
in the architecture to be presented to the President and new 
Prime Minister at their first meeting.  Yabunaka suggested 
that the two governments should hold talks in April or May to 
prepare for a Bush-Koizumi summit. 
 
¶4.   (SBU) A consistent theme conveyed to Ambassador Bhatia 
about reshaping the future dialogue was that the United 
States and Japan should work more closely together on IPR and 
energy issues.  This was Ando's view at the Prime Minister's 
office, and Yabunaka and Kusaka echoed it in their separate 
meetings.  On IPR, Ando and Kusaka said they hoped the United 
States would consider favorably Japan's idea of a 
non-proliferation agreement on counterfeit goods.  Ando said 
the Prime Minister was "personally interested" in such a 
multilateral agreement.  Ambassador Bhatia said there was no 
disagreement with the objective and we would continue to 
study the idea but we were concerned if the tactic could work 
with China. 
 
¶5.   (SBU) Bhatia also raised "secure trade," exploring how 
to use technology to protect transportation systems and 
reduce transaction costs, as another area for future 
 
TOKYO 00001692  002.2 OF 003 
 
 
cooperation.  On this issue, Kusaka complained that the 
Department of Homeland Security (DHS) focuses perhaps too 
much on security without taking into account adequately 
commercial concerns.  With better coordination, he said the 
United States could achieve the same security at less cost. 
Bhatia also raised with Assistant Cabinet Secretary Ando the 
hope that the two governments could make more progress in 
bilateral aviation talks.  The current bilateral agreement is 
quite restrictive, and Bhatia expressed his hope that Japan 
might consider modest liberalization that would give air 
carriers of both nations greater service opportunities.  Ando 
pledged to consider this but was otherwise noncommittal. 
 
Regional Integration 
-------------------- 
 
¶6.   (SBU) Ambassador Bhatia underscored the high priority 
that the United States attaches to boosting its economic 
integration in Asia.  In describing the FTA negotiations 
Washington has launched with Korea and Malaysia, he said that 
the United States wants to "signal that we favor open markets 
in the region."  The Japanese officials wished the United 
States luck in what is a very ambitious FTA agenda.  Yabunaka 
noted that he was intimately involved in Japan's FTA talks 
with Malaysia.  The climate there, he said, was very 
political.  He predicted that autos would figure prominently. 
 Kusaka underscored that the talks Washington has launched 
with Korea were "strategically" the most important.  Bhatia 
noted that agreements varied from country to country, often 
with very different approaches -- from broad FTA to sector 
specific deals.  On the prospect that the United States and 
Japan could eventually work on their own FTA, Yabunaka 
demurred: "I'm not sure it would be a plus for us." 
 
Doha Round 
---------- 
 
¶7.   (SBU) Bhatia underscored in all his meetings -- 
including at the Agriculture Ministry -- that the United 
States attaches enormous priority to reaching a successful 
conclusion to the Doha Round and it was time for all 
participants to "put their cards on the table."  Hong Kong 
was not a failure, but the United States would like to see 
much more progress -- and is looking to Japan to show 
flexibility.  The Administration is not counting on an 
extension to Trade Promotion Authority, so the deadlines are 
very real.  Bhatia noted that there was no strong political 
consensus for trade agreements in the United States at the 
moment; trade negotiators must work hard to reach agreements 
that will enjoy broad bipartisan support.  He noted the close 
calls already, including the one vote margin of victory for 
the Central American Free Trade Agreement (CAFTA) passed last 
summer. 
 
¶8.   (SBU) Kusaka and Yabunaka claimed Japan wants to have a 
successful trade round too.  Kusaka said that when Japan's 
flexibility was needed, Japan was ready -- particularly in 
the non-agricultural, or NAMA, talks.  Japan has the most 
WTO-friendly leadership ever, he argued, from the Prime 
Minister to the Agriculture and Trade ministers.  PM Koizumi 
has the "courage" to make decisions, Agriculture Minister 
Nakagawa "understands" the issues, and Trade Minister Nikai 
has the political clout to make things happen.  At the 
Agriculture Ministry, where the institution is not known to 
be as forward leaning on Doha as its minister, Vice Minister 
Hiroyuki Kinoshita conceded to Ambassador Bhatia that Doha 
was an important priority of the Prime Minister's.  He added 
that the ministry must work to advance the talks, but noted 
-- somewhat elliptically -- the need to protect vulnerable 
sectors. 
 
China WTO Cases 
--------------- 
 
¶9.   (SBU) In the context of the WTO discussion, Bhatia 
stressed Washington's hope that Japan would support the 
United States in two cases it plans to file against China in 
 
TOKYO 00001692  003.2 OF 003 
 
 
dispute settlement, on IPR and auto parts.  The Deputy Trade 
Representative said that filing a WTO case ought not to 
disrupt bilateral relations and is indeed the sign of a 
mature relationship.  Japan should not be uneasy about 
joining the United States in these cases.  In China, there 
are reform elements and there are mercantilist elements, and 
the best way to support the reform process is to hold 
authorities there to their WTO obligations.  Bhatia said the 
United States understands the importance of bringing strong 
cases for consideration in Geneva, and was preparing them. 
 
¶10.   (SBU) The GOJ is still studying the U.S. proposals and 
is far from a consensus on what role Japan should play.  Ando 
agreed largely with Bhatia's description of the issue.  We 
should no longer treat China as an apprentice in the WTO, he 
said, but as a full-fledged "responsible stakeholder." 
Kusaka, reflecting the ambivalence of Minister Nikai -- who 
is believed to be loath to confront Beijing -- was 
non-committal.  He told Bhatia that Japan wanted to help the 
reformers in China too, but suggested there were other ways 
to do this.  He described some programs that Japan has 
undertaken in China to educate mid-level bureaucrats in 
regional governments to understand their legal obligations 
better on IPR enforcement.  And U.S. and Japanese 
corporations should be cooperating more in areas of mutual 
concern and should not hide behind governments.  It was 
important that China hear a consistent message from its 
trading partners.  But arm-twisting China, he asserted, could 
be counter-productive, particularly if it looks like Japan 
and the United States are "ganging up" on the Chinese. 
 
Still Working on Consensus 
-------------------------- 
 
¶11.   (SBU) Yabunaka noted that Trade Minister Nikai was the 
biggest obstacle in the Japanese cabinet to taking a stand in 
the WTO against China on IPR and auto parts.  Nikai was 
widely regarded as "very pro-China," he said.  The Vice 
Foreign Minister reassured Bhatia that Japan was still 
examining the U.S. initiative "very carefully."  He noted 
ruefully that Japanese commercial interests had certainly 
been affected by China's non-compliance over the years. 
DONOVAN