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UNCLAS SECTION 01 OF 12 TOKYO 002216 
 
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:  DAILY SUMMARY OF JAPANESE PRESS 04/24/06 
 
INDEX: 
 
(1) Japan-US defense chiefs' talks; Agreement reached on cost of 
relocating US Marines to Guam; Japan to pay 6 billion dollars or 
59% of total cost; Barracks and schools to be covered 
 
(2) Agreement of defense chiefs on sharing of cost of Guam 
relocation: Need for government to explain appropriateness of 
Japan bearing such a large share, double of that at the start 
 
(3) Chief Cabinet Secretary Abe expresses interest in running for 
LDP presidency, says "I will not make visiting Yasukuni Shrine a 
campaign pledge" 
 
(4) Minshuto goes back to "Ozawa's game plan;" Momentum gathering 
under three-headed system; Confidence growing for going on 
offensive 
 
(5) With "Koizumi style campaign," LDP suffers stinging defeat in 
Lower House by-election; Defeat may provide a new source of 
internal trouble for LDP presidential race and Upper House 
election 
 
(6) Editorial: Calling off maritime survey - time to speed up 
diplomacy to put out the embers 
 
(7) MV-22 Osprey likely to replace Futenma helos: Nukaga 
 
(8) FTC comes up with strict requests prior to privatization of 
postal services, including call for opening up of mail delivery 
network to other firms 
 
(9) FTC report urges abolishing Japan Post's "privileges," 
focusing on problems left unsolved, like monopolies, legal 
preference, to bring about fair competition 
 
(10) Hokkaido to regulate opening of large stores in semi- 
industrial areas, loophole in restricting store openings 
 
ARTICLES: 
 
(1) Japan-US defense chiefs' talks; Agreement reached on cost of 
relocating US Marines to Guam; Japan to pay 6 billion dollars or 
59% of total cost; Barracks and schools to be covered 
 
ASAHI (Top Play) (Excerpts) 
Evening, April 24, 2006 
 
Defense Agency Director General Fukushiro Nukaga yesterday 
afternoon (morning of April 24, Japan time) met with Secretary of 
Defense Rumsfeld at the US Department of State. They discussed 
the sharing of the cost of relocating US Marines in Okinawa to 
Guam, the focus of USFJ realignment. It was agreed at the meeting 
that Tokyo would pay 6.9 billion dollars (approximately 700 
billion yen) or 59% of the total amount of 10.27 billion dollars 
(approximately 1.19 trillion yen). Prospects have now become 
strong that the realignment talks can now be concluded, as Tokyo 
and Washington had already agreed in principle on other spending 
areas concerning USFJ realignment. The two countries will likely 
hold a meeting of the Security Affairs consultative Committee or 
a so-called two-plus-two meeting of defense and foreign ministers 
to reach a formal agreement on a final report on USFJ 
realignment. 
 
TOKYO 00002216  002 OF 012 
 
 
 
The US side, which had called on Japan to pay 75% of the total 
cost, and the Japanese side, which had insisted on bearing 
approximately 3 billion dollars (approximately 350 billion yen), 
have apparently come to terms. According to explanations provided 
by Nukaga, Japan will pay 2.8 billion dollars (approximately 320 
billion yen) as a direct fiscal outlay. In addition, it will also 
invest 1.5 billion dollars (approximately 170 billion yen) in a 
special company to be newly established and extend 1.79 billion 
dollars (approximately 21 billion yen) in loans through Japan 
Bank for International Cooperation (JBIC). Invested and loaned 
money will be used for the construction of houses for families of 
Marines, from which rent income can be expected. 
 
Fiscal spending will only cover the facilities that have no 
direct connection with military drills, such as barracks, 
government offices and schools. Such fiscal payments will not 
cover expenses for the construction of training grounds, runways 
and entertainment facilities. 
 
Since this is the first time for Japan to render financial 
assistance for the construction of US forces' overseas 
facilities, the government will embark on the work to enact a law 
that provides a legal basis for the bearing of Guam relocation 
costs. The plan is to present such a bill when the May 
consecutive holidays are over and have it clear the current Diet 
by June 18. 
 
Guam relocation cost 
 
(Total cost) 10.27 billion dollars 
(Japan's share) 59% = 6.09 billion dollars (of which 2.8 billion 
dollars are as fiscal expenditures from the general account) 
 
(US share) 41% = 4.18 billion dollars (of which 3.18 billion 
dollars are as fiscal spending) 
 
Breakdown of Japan's share 
 
(Fiscal payment) 2.8 billion dollars 
(Loan) 1.79 billion dollars (through JBIC) 
(Investment) 1.5 billion dollars 
 
Items covered by Japan's share 
 
(Houses for families of Marines) 2.55 billion dollars (The amount 
can be reduced to 2.13 billion dollars, if private housing 
facilities are used.) 
 
(Others) Barracks, schools, government offices, etc. (The 
construction of all these facilities is to be covered by fiscal 
payments) 
 
(2) Agreement of defense chiefs on sharing of cost of Guam 
relocation: Need for government to explain appropriateness of 
Japan bearing such a large share, double of that at the start 
 
ASAHI (Page 3) (Excerpts) 
Evening, April 24, 2006 
 
Analysis: With coordination between the Japanese and US 
governments stalled over the share of the cost of relocating 
Marines on Okinawa to Guam, Defense Agency Director General 
 
TOKYO 00002216  003 OF 012 
 
 
Nukaga directly went to the United States and resolved the issue 
through direct negotiations with Defense Secretary Rumsfeld. 
Although Japan will assume the bulk of the cost and the US 
compromised on the burden, it is hard to say that the 
appropriateness and necessity of Japan paying such a huge amount 
-- $6.09 billion (approximately 700 billion yen) -- has been 
properly explained to the Japanese people, so a clear explanation 
is crucial. 
 
"It is like building a new town in the jungle," was the 
expression used by a government source, referring to the Guam 
relocation. If approximately 17,000 persons are moved, including 
family members, the cost of building facilities other than 
housing also has to be covered. Considering the situation that no 
other place in Japan would accept the Marines, there is a case to 
be made for it being unavoidable for the Japanese government to 
bear the burden to a certain extent. 
 
It is indeed rare for such a large number of US soldiers to be 
transferred outside of Okinawa Prefecture. Chief Cabinet Abe 
stressed the significance of that move when he said, "We will 
speed up the lightening of Okinawa's burden (by covering the 
cost)." With the outlook now for the implementation of the 
reversion of US facilities inside the prefecture, the burden on 
Okinawa, where 75% of US bases are now located, will indeed by 
lightened, looking at the package as a whole. 
 
Still, the overall total of approximately 1.19 trillion yen is a 
huge amount, as the government itself pointed out from before. 
Although Japan avoided paying for such other facilities as 
training areas, one government source stressing, "We will not pay 
for anything not related to the move," Japan's burden has doubled 
from the amount originally stated to approximately 700 billion 
yen. 
 
The main basis for the expenditures as explained domestically by 
the Japanese government stems from Japan's request to move them 
to Guam to lighten Okinawa's burden, since there was no need to 
relocate the Marines to Guam, 2,500 kilometers away from their 
command in Okinawa that stands ready to respond to a contingency 
on the Korean Peninsula or the like. 
 
However, the opposition already has pointed out that there are 
already US Air Force and Navy units deployed to Guam, so the 
Marines being transferred there will only strengthen the Guam 
bases as a part of the US' global force transformation, which all 
along was the US' intention. 
 
Turning to Okinawa, the main fighter unit of the Marines will 
remain in the prefecture. Although there has been a resolution of 
the Futenma Air Station relocation issue, one more focal point in 
the realignment talks, this is for the prefecture only a game of 
musical chairs. Okinawa will remain the US forces' strategic hub, 
and the reality of the prefecture bearing an excessive burden 
will remain. 
 
(3) Chief Cabinet Secretary Abe expresses interest in running for 
LDP presidency, says "I will not make visiting Yasukuni Shrine a 
campaign pledge" 
 
MAINICHI (Page 1) (Full) 
April 22, 2006 
 
 
TOKYO 00002216  004 OF 012 
 
 
On April 21, Chief Cabinet Secretary Shinzo Abe, who is seen as a 
leading contender to succeed Koizumi as prime minister, sat down 
for an interview with the Mainichi Shimbun. When asked about 
visits to Yasukuni Shrine in the event that he were prime 
minister, Abe stated: "In order to keep from making this into a 
political or diplomatic issue, I have no intention of proclaiming 
that I will go." With this, Abe expressed his intention to part 
ways with Koizumi, who made his visits to Yasukuni as prime 
minister a public pledge. Abe also stated: "I will continue to 
pray for the repose of those who fought and died for the country 
and to express my respect for them." 
 
Speaking on the election for the presidency of the Liberal 
Democratic Party in September, Abe expressed interest in running, 
stating: "Those politicians who would forgo running this time 
because the nation is facing serious problems have no 
qualification to lead the country." 
 
Following the resignations of Seiji Maehara as president of the 
opposition Democratic Party of Japan and the rest of his young 
leadership team over the phony email scandal, there are growing 
calls within the LDP hoping for someone with more experience than 
the 51-year-old Abe. Abe responded to this by saying, "While 
maturity and experience are important, the figure of youth is 
needed to achieve breakthroughs." Citing the examples of Bill 
Clinton and Tony Blair, both of whom took their nation's highest 
office in their forties, Abe commented: "The important thing is 
what kind of results are going to be achieved. Youth can be 
covered for by surrounding yourself with experienced people in 
listening to what they say." 
 
Addressing South Korea's opposition to the proposed maritime 
survey near the Takeshima (Dokdo) islets, Abe stated: "I don't 
want to make any waves. The best thing would be if the two 
countries can reach a diplomatic agreement that paves the way to 
a smooth resolution. It is because I have this desire that I 
decided to send Vice Foreign Minister Yachi to South Korea." 
 
(4) Minshuto goes back to "Ozawa's game plan;" Momentum gathering 
under three-headed system; Confidence growing for going on 
offensive 
 
TOKYO SHIMBUN (Page 3) (Abridged) 
April 24, 2006 
 
The major opposition Minshuto (Democratic Party of Japan) won 
yesterday's House of Representatives by-election for Chiba 
Constitution No. 7, which the party's new leadership 
characterized as a poll to set the tone for Japanese politics. 
The outcome not only blew away the stigma of the e-mail fiasco 
but it also signaled the revival of the (invincible) "Ozawa myth" 
both to Minshuto and other parties. The party has switched to the 
offensive for the first time since its humiliating setback in the 
Lower House election last year. 
 
Last night when it became certain that Kazumi Ota would win the 
seat, Minshuto President Ichiro Ozawa held a press conference at 
party headquarters along with his deputy Naoto Kan and Secretary 
General Yukio Hatoyama. Ozawa said: "This election has made us 
realize that we can accomplish anything as long as we remain 
united, restoring confidence." 
 
Before the official kickoff of the election campaign, every 
 
TOKYO 00002216  005 OF 012 
 
 
Minshuto member had been prepared to face a defeat. 
 
Ozawa's goals were to solidify the all-party approach and to 
tighten his grip on the party. The Chiba by-election has 
completely realized his two goals. 
 
Minshuto's mood turned around with the establishment of the Ozawa 
leadership April 11, the day the election campaign for the Chiba 
polls officially kicked off. The Ozawa leadership has effectively 
created a tense atmosphere in the largest opposition party, which 
had often been mocked as a "college circle." 
 
Ozawa also spearheaded the election campaign himself. He made 
five trips to Chiba Constituency No. 7 to stump for Ota at low- 
profile places like an industrial complex to solicit votes in 
person. The Ozawa leadership also collected from its members 
their lists of acquaintances living in Constituency No. 7. In the 
final stage of the election campaign, a dozen or so party members 
stumped for Ota daily in front of 10 railway stations based on 
those lists. Minshuto has never implemented such a meticulous 
well-calculated plan, according to a party source. 
 
The Ozawa-Kan-Hatoyama system also gave a boost to Ozawa's game 
plan. Campaign speeches by the three Minshuto leaders were as 
appealing as those by the LDP's potential successors to Koizumi. 
 
The e-mail hullabaloo had cost Minshuto its public trust due to 
its youthfulness and immaturity. There is no doubt, however, that 
the triple-headed system led by Ozawa, a seasoned lawmaker, has 
helped Minshuto restore public trust as a party capable of taking 
the reins of government. The combination of Ozawa, who is strong 
in conservatives, and Kan, who is popular among civic groups, has 
also helped Minshuto expand its support base. 
 
The Chiba polls, the first national election under Ozawa, have 
proven that Minshuto was invincible under the Ozawa-Kan duo. 
 
The Chiba by-election boded well for the Ozawa-led Minshuto, who 
aims to force the ruling coalition into a minority in the House 
of Councillors election next year. 
 
Tokyo Shimbun exit poll shows unaffiliated voters' return to 
Minshuto 
 
The Tokyo Shimbun conducted exit polls at polling stations in the 
Chiba No. 7 constituency April 23. 
 
According to the polls, 28.2% of the unaffiliated voters, who had 
contributed to the LDP's overwhelming victory in last year's 
Lower House election, voted for the LDP candidate, Ken Saito, 
while 57.3% voted for Minshuto's Kazumi Ota. 
 
In the exit poll conducted during last year's Lower House 
proportional representation election, 32.6% of the swing voters 
said they voted for the LDP as against 38.2% for Minshuto. The 
diminishing gap tells an ending to the "Koizumi theater" with 
many switching their side to Minshuto. 
 
Additionally, 55.3% of all the respondents and 66.4% of the swing 
voters expressed hope for the largest opposition party. Even 29.9 
% of those voted for the LDP -- more than one out of four -- said 
they harbor hope for Minshuto. Although Minshuto had lost public 
trust due to the e-mail fiasco, a sense of expectation seems to 
 
TOKYO 00002216  006 OF 012 
 
 
be growing for the larges opposition party due to the appointment 
of Ichiro Ozawa as party head and other factors. 
 
Furthermore, 19.2% of those who had voted for LDP candidates in 
the 2005 Lower House lection said they cast their ballots for the 
Minshuto, while 13.8% of those who had supported Minshuto 
candidates in the 2005 polls said they voted for the LDP 
candidate in the Chiba race. 
 
(5) With "Koizumi style campaign," LDP suffers stinging defeat in 
Lower House by-election; Defeat may provide a new source of 
internal trouble for LDP presidential race and Upper House 
election 
 
NIHON KEIZAI (Page 3) (Excerpts) 
April 24, 2006 
 
The Liberal Democratic Party (LDP) is increasingly alarmed, since 
the party's candidate was defeated in Sunday's House of 
Representatives by-election election for the Chiba No. 7 
district. It is unavoidable that its defeat will kill the LDP's 
momentum that brought about an overwhelming victory to the LDP in 
last year's Lower House election. Chances are that many LDP 
members will strengthen criticism of the Koizumi reform drive for 
downplaying regional cities and will be increasingly dissatisfied 
with the party leadership's top-down management. The defeat in 
the by-election has provided a new source of trouble for the 
September party leadership race and next summer's Upper House 
election. 
 
LDP Secretary General Tsutomu Takebe stressed in a press 
conference held last night following the defeat: "The focus was 
on the new Minshuto leadership. We don't need to be discouraged." 
However since the LDP was defeated even though it fought the 
election with concerted efforts, some LDP lawmakers said that the 
tide might have turned. 
 
In the wake of the uproar in Minshuto due to the fake email 
fiasco, many LDP members initially looked to the by-election with 
some optimism. With Ichiro Ozawa's assumption of the Minshuto 
presidency, concern quickly spread in the LDP. "We took time to 
make up for the delay," said Takebe. "It was a mistake that we 
forced Mr. Seiji Maehara to step down from the presidency," LDP 
General Affairs Council Chairman Fumio Kyuma stated. 
 
During the campaign, Prime Minister Koizumi made only one 
campaign speech, but such post-Koizumi contenders as Chief 
Cabinet Secretary Shinzo Abe and Yasuo Fukuda delivered speeches 
in Chiba for the party's candidate. Takebe visited the electoral 
district almost every day. Koizumi protgs elected to the Diet 
in last year's Lower House election, including Taizo Sugiura, 
supported the campaign. 
 
However, voters took a cool view toward such campaigning. Ozawa, 
however, steadily called at organizations and companies and 
scored with unaffiliated voters. An LDP Diet Affairs Committee 
member said: "Criticism of Mr. Takebe will inevitably come up. 
Koizumi's protgs elected to the Diet will weaken." The LDP will 
likely be forced to review its campaign strategy with next year's 
Upper House election in mind. Taku Yamasaki released a comment: 
"A little neglect may breed mischief." 
 
(6) Editorial: Calling off maritime survey - time to speed up 
 
TOKYO 00002216  007 OF 012 
 
 
diplomacy to put out the embers 
 
MAINICHI (Page 5) (Full) 
ll) 
April 22, 2006 
 
A resolution to the dispute between Japan and South Korea over a 
Japanese maritime survey around the Takeshima (Dokdo) islets was 
achieved at the last minute through tense vice-foreign-minister- 
level talks. 
 
While we welcome the fact that a collision has been averted for 
the time being, it is not as though an agreement was reached 
regarding the nature of the maritime survey that was the 
proximate cause of this dispute. We must keep in mind that this 
issue could reemerge at any time. 
 
Learning lessons from this dispute, we see that it is necessary 
to speed up discussions toward the quick establishment of rules 
regarding maritime surveys in what each nation claims as its own 
exclusive economic zone (EEZ) and that these talks should be held 
in parallel with negotiations regarding demarcating the actual 
EEZs. 
 
This dispute began when the South Korean government moved to 
propose Korean names for underwater topography in the area at a 
meeting of the International Hydrographic Organization in Germany 
in June, including an attempt to change the name of the Tsushima 
Basin to Ulleung Basin. 
 
Every country has the right to name undersea topography. South 
Korea decided, however, that if it were to give Korean names to 
the underwater features near Takeshima, its claim to sovereignty 
would be bolstered. 
 
Roughly 30 years earlier, Japan conducted a maritime survey of 
the area ahead of South Korea, and the name Tsushima Basin made 
its way onto nautical maps. In response, South Korea has been 
conducting oceanic surveys for the past four years. Rather than 
simply renaming undersea topography, South Korea's real aim is 
connected with the issue of sovereignty. 
 
While South Korea was conducting maritime surveys, Japan 
refrained from doing so in the same area. However, when it became 
clear that South Korea was going to propose Korean names at the 
conference, it was decided that survey ships from the Japan Coast 
Guard would be sent to the area. 
 
In response, the South Korean government reacted in a manner 
devoid of cool-headedness, mobilizing its police vessels and 
threatening to seize Japanese ships, transforming the issue of 
undersea topography into a volatile dispute over territory. 
 
In the meeting in Seoul between Vice Foreign Minister Shotaro 
Yachi and South Korean First Vice Minister for Foreign Affairs 
and Trade Yu Myung Hwan, a clash was narrowly averted with an 
agreement for Japan to cancel the survey while South Korea would 
hold off on proposing its own names at the conference in June. 
 
South Korea maintains on the issue of the names, however, that it 
will "pursue the matter at an appropriate time," meaning that 
Seoul has not said it has given up on the idea. If South Korea 
decides at a future conference that the time is "appropriate" and 
 
TOKYO 00002216  008 OF 012 
 
 
Japan reauthorizes a survey, the same problem will recur. 
 
The agreement between Japan and South Korea also stated that the 
two countries will resume negotiations on demarcating their 
respective EEZs in May. But with South Korea contending that a 
return of Takeshima is "not up for discussion," negotiations on 
the EEZs will not be easy. 
 
More than anything else, it is crucial for Japan and South Korea 
to quickly agree on principles for maritime surveys in the 
Takeshima area in line with international treaties. 
 
And in order to keep the academic question of naming undersea 
topography from leading to territorial rows, Japan should work on 
international organizations to create new rules, such as 
suspending naming such undersea features until disputes are 
resolved. 
 
(7) MV-22 Osprey likely to replace Futenma helos: Nukaga 
 
OKINAWA TIMES (Page 2) (Full) 
April 21, 2006 
 
TOKYO-The US Marine Corps will likely deploy the MV-22 Osprey, a 
tiltrotor vertical/short takeoff and landing (VSTOL) aircraft, to 
a new facility to be built in a coastal area of Camp Schwab in 
the city of Nago, Okinawa Prefecture, as an alternative for 
Futenma airfield in the prefecture, Defense Agency Director 
General Fukushiro Nukaga stated before the House of 
Representatives Security Affairs Committee in its meeting held 
yesterday. "I hear that the US Marine Corps has plans to replace 
the carrier helicopters with the Osprey in the future," Nukaga 
said. It is the first time the defense chief admitted to the 
possible deployment of MV-22s in Okinawa on an official occasion. 
He was replying to a question asked by Akihisa Nagashima, a 
member of the leading opposition Democratic Party of Japan (DPJ 
or Minshuto). 
 
However, Nukaga reiterated his usual explanation, stating: "In 
February, the Foreign Ministry inquired of the US government 
through diplomatic channels. Their answer was that they have no 
specific plans to deploy the MV-22 Osprey in Japan." With this, 
Nukaga stressed that the United States has yet to decide on its 
deployment. 
 
The alternative facility for Futenma airfield is designed to have 
a V-shaped pair of airstrips with an overall length of 1,800 
meters (1,500 meters excluding buffer zones or overrun areas at 
both ends). "I don't know why they need to build two runways for 
only three liaison airplanes (to be redeployed from Futenma 
airfield)," Nagashima noted. 
 
"The (Futenma-based) CH-46 midsize carrier helicopters and CH-53 
heavy-lift helicopters have now become superannuated," Nagashima 
stated, adding: "Their follow-on aircraft model, the MV-22 
Osprey, reportedly needs a 1,550-meter runway. This exactly 
matches (the length of the alternative facility's tarmacs)." With 
this, Nagashima asserted that the Osprey's deployment might be in 
mind. 
 
Nagashima also presented a US Defense Department document, which 
says the Pentagon's renovation-purpose budget intended to extend 
the service life of CH-46 choppers will run out in the US 
 
TOKYO 00002216  009 OF 012 
 
 
government fiscal year of 2008. "Judging from this budgetary 
document, it's logically conceivable that they will replace those 
CH-46 helicopters with MV-22 Osprey aircraft after fiscal 2008," 
Nagashima pursued. 
 
"Last fall," Nukaga replied, "the Japanese and US governments 
released an interim report (on the realignment of US forces in 
Japan), incorporating an agreement to lay down a 1,800-meter 
runway." The defense chief added, "Based on it, we held talks 
with the local hosts." 
 
"The Defense Facilities Administration Agency has definitely 
denied the Osprey's deployment," Ginozason Village's Mayor Hajime 
Azuma said. According to a senior official of the Nago city 
government, Nukaga also nixed the Osprey's deployment in his 
recent talks with the city's officials. 
 
(8) FTC comes up with strict requests prior to privatization of 
postal services, including call for opening up of mail delivery 
network to other firms 
 
ASAHI (Top Play) (Full) 
April 21, 2006 
 
The postal privatization process will start in October of next 
year. Prior to the privatization of the mail delivery service, 
the Fair Trade Commission (FTC) has finalized a report that 
includes measures to ensure fair competition between the 
privatized company and private-sector entities, from the 
viewpoint of the principles of the Antimonopoly Act. The report 
will be released today. The report calls for measures to 
significantly ease market-entry restrictions in the business of 
delivering general mails, such as letters and post cards, which 
is now dominated by Japan Post. It also proposes enabling other 
entities to make access to its postal mail network. The report is 
likely to have a major impact on the business operation of the 
new firms to be set up after Japan Post is split. 
 
Under the Postal Privatization Law enacted last year, Japan Post 
will be split in October of next year into four businesses, 
including mail delivery and financial service, under a holding 
company. The government plans to reduce its capital in these 
firms gradually, but the government's Committee on Postal 
Privatization is still engaged in discussing how to secure fair 
competition. 
 
The FTC report singles out problems expected to arise in the mail 
delivery business, reflecting concerns among private-sector firms 
about possible pressure from the newly established mail delivery 
company on their business operations, given Japan Post's decision 
to advance into the international logistics service. The report 
notes that if Japan Post offers the parcel and international mail 
delivery services while monopolizing the mail delivery business, 
the company will be able to enjoy an advantage in competing with 
private firms in the same line as it can save money by using 
common mail trucks and other equipment in its several businesses. 
 
"Providing uniform service nationwide" is a precondition for 
firms in different lines to launch the mail delivery service. The 
FTC, though, emphasized the need to abolish this condition. 
 
The report sees it desirable for the privatized firm to allow 
trucking companies and international distribution companies to 
 
TOKYO 00002216  010 OF 012 
 
 
use its mail delivery network for a charge. It also suggests that 
the usage charge for the privatized firm and such private-sector 
companies should be the same. 
 
The report also calls for reviewing the exemption of mail vans 
from the application of such regulations as parking and passage 
prohibition, the mail forwarding system under which the new 
addresses of those who moved out are available, and simplified 
customs clearance procedures, calling them "public privileges." 
 
Should these measures be taken, the FTC intends to judge whether 
or not acts infringes on the Antimonopoly Act in a stricter 
manner. 
 
The report noted: "The future application of the system is 
extremely important in privatizing postal services," adding: 
"Unless equal competitive conditions (between the privatized firm 
and private-sector firms) are secured, the basic principle of 
postal privatization will lack a finishing touch." 
 
Regarding the report, the FTC will solicit views from many 
persons and consult with experts and related institutes. In 
applying the Antimonopoly Law to the privatized firms, the 
watchdog intends to use the report as its basic set of 
guidelines. 
 
(9) FTC report urges abolishing Japan Post's "privileges," 
focusing on problems left unsolved, like monopolies, legal 
preference, to bring about fair competition 
 
ASAHI (Page 8) (Full) 
April 22, 2006 
 
A report released by Fair Trade Commission (FTC) yesterday 
focuses on problems left unresolved in privatizing Japan Post, 
such as how to liberalize the mail delivery business, which is 
now dominated by Japan Post, and how to promote the 
liberalization of Japan Post's postal delivery network to private- 
sector rivals. The report also indicates an eagerness to set up 
general rules when Japan Post enters the private sector. The 
report is likely to have a major impact on privatization plans 
involving government-affiliated financial institutions. 
 
"The same situation could occur in Japan as those in Germany and 
France," said an FTC official responsible for the report. 
 
When postal services were privatized in Europe, the issue of 
monopoly was taken up as a problem. Since postal services were 
privatized in 1995, its rival firms have criticized Germany Post 
for its overseas businesses through corporate buyouts as "using 
the funds earned in the areas it monopolizes to buy companies." 
In actuality, the privatized German firm was charged on setting 
unfairly low prices in its monopolizing areas in violation of the 
European Community (EU) Competition Law. 
 
When the Mail Delivery Law was enacted in 2003, the Ministry of 
Internal Affairs and Communications (MIAC) allowed Japan Post to 
exclusively handle mail with a weight lighter than a certain 
level, assuming liberalization measures to bring down the minimum 
weight level little by little. 
 
However, Prime Minister Koizumi insisted on the need for 
newcomers to offer mail delivery services nationwide. The 
 
TOKYO 00002216  011 OF 012 
 
 
administration carried out coordination to require companies 
intending to start regular mail delivery services to set up 
100,000 postal boxes across the nation, and it eventually set up 
a system that makes it difficult for newcomers to start a mail 
delivery service. In the discussions on postal privatization held 
so far, no discussion was conducted on this issue, either. 
 
The report also pointed out Japan Post's hidden advantages. Tobu 
Department Store formed a business tie-up with Japan Post on 
delivery services last year, stopping its long lasted partnership 
with Yamato Transport Co., focusing on Japan Post's ability to 
learn new addresses and other strong points. Japan Post's 
delivery vehicles are also permitted to stop in no-parking zones. 
Calling these advantages "public privileges," the report called 
for reviewing the privileges. 
 
MIAC has also made efforts to deal with this issue. This January, 
after a decision was made on the privatization of postal 
services, a private panel was set up under MIAC Minister 
Takenaka. On April 20, the ministry also put together into a 
report measures to open up Japan Post's mail delivery network to 
private-sector rivals and to allow newcomers to offer mail 
delivery services in only certain districts. It will soon start 
discussing details on these measures. 
 
FTC gives warning for privatized firms 
 
The FTC judged it necessary to give a warning before the Koizumi 
cabinet sets new frameworks for privatized firms under its slogan 
of "shifting authority from the public sector to the private 
sector." 
 
Related industries have already expressed concerns about possible 
pressure on their businesses from the postal savings and Kampo 
life insurance corporations in addition to the mail delivery firm 
to be established after Japan Post enters the private sector. A 
decision has been made to privatize the Development Bank of Japan 
and the Shoko Chukin Bank in fiscal 2008, but discussion has yet 
to start on their future business options after they are 
privatized. 
 
The report said: "There will be more areas in which 'public 
firms' pressure on private-sector firms' is being taken up as a 
problem but no clear-cut rules are set." An FTC official said 
that the commission wanted to discuss how to apply the 
Antimonopoly Act and "would like to be actively involved in the 
privatization process from the stage of forming systems of the 
privatized firms." 
 
The FTC issued a similar warning when public deregulation 
measures were taken in the public sector, such as on the 
occasions of the breakup and privatization of Japanese National 
Railways and the breakup and reorganization of NTT. But some 
officials in the FTC have complained: "Such warnings have not 
been taken seriously." 
 
In actuality, the FTC repeatedly asked the private panel under 
Takenaka to join its discussions on future options for mail 
delivery services as an observer, but the panel declined the 
request. 
 
Attention is to be paid to how the competition watchdog will turn 
the principles in the report into action. 
 
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(10) Hokkaido to regulate opening of large stores in semi- 
industrial areas, loophole in restricting store openings 
 
ASAHI (Page 1) (Full) 
April 24, 2006 
 
Hokkaido will adopt location guidelines that regulate the 
openings of large stores as early as June. The aim is to prevent 
downtown shopping areas from becoming hollowed out due to the 
opening of large shopping malls in the suburbs of large cities. 
The government has already presented bills amending three town- 
building laws, including the City Planning Law, with the same 
purpose. Hokkaido has decided to regulate the opening of large 
stores on its own, judging that government regulations cannot 
stop the opening of large stores in semi-industrial suburban 
areas. 
 
Under the planned guidelines, Hokkaido will urge each 
municipality to designate suburban areas categorized as semi- 
industrial areas in city planning as special-use areas in 
accordance with the City Planning Law. Since large stores can be 
opened in semi-industrial areas under the government-sponsored 
revisions, Hokkaido will designate such areas as special-use 
areas so that it can regulate the floor space and height of 
stores to be opened there. 
 
Hokkaido has determined that it will not be able to prevent 
traditional shopping areas from being eviscerated unless it 
regulates the opening of larges stores in semi-industrial areas, 
because large stores that opened in such areas account for 40% of 
total large stores that opened in Hokkaido over the past five 
years in terms of floor space. The guidelines are not legally 
binding, but Hokkaido will urge each municipality to act in 
accordance with them. 
 
Outline of location guidelines to be introduced by Hokkaido 
(Request to companies that will open stores in Hokkaido) 
    Notification of store-opening plans three months earlier 
than the timeframe set under the existing law 
    Early holding of briefings to concerned local communities 
    Presentation of measures that will contribute to host 
communities 
 
(Requests to municipalities) 
    Designate semi-industrial areas as special-use areas and 
regulate the floor space and height of stores to be opened in 
such areas 
 
(Role of Hokkaido) 
    Disclose store-opening and local contribution plans 
submitted by companies 
    Disclose opinion papers submitted by local governments, 
residents, and companies 
 
DONOVAN 
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