VZCZCXRO8913
RR RUEHCHI RUEHFK RUEHHM RUEHKSO RUEHPB
DE RUEHKO #3104/01 1570817
ZNY CCCCC ZZH
R 060817Z JUN 06
FM AMEMBASSY TOKYO
TO RUEHC/SECSTATE WASHDC 2901
INFO RUEHZU/ASIAN PACIFIC ECONOMIC COOPERATION
RUEHNE/AMEMBASSY NEW DELHI 8037
RUEHFR/AMEMBASSY PARIS 4942
RUEHPF/AMEMBASSY PHNOM PENH 0583
RUEHGO/AMEMBASSY RANGOON 2104
RUEHVN/AMEMBASSY VIENTIANE 1501
RHMFISS/COMUSJAPAN YOKOTA AB JA
RUEHBS/USEU BRUSSELS
RHHMUNA/HQ USPACOM HONOLULU HI

C O N F I D E N T I A L SECTION 01 OF 03 TOKYO 003104 
 
SIPDIS 
 
SIPDIS 
 
DEPARTMENT PASS USTR FOR AUSTR CUTLER 
USTR ALSO FOR JNEUFFER, MBEEMAN 
PARIS FOR USOECD 
 
E.O. 12958: DECL: 06/06/2016 
TAGS: ECON ETRD PREL JA APECO
SUBJECT: METI VALUES RELATIONS WITH THE UNITED STATES AND 
APEC 
 
REF: A. TOKYO 3045 
     ¶B. TOKYO 2991 
 
Classified By: Ambassador J. Thomas Schieffer. 
Reason:  1.4 (b/d). 
 
¶1.  (C)  Summary.  Japanese Trade Minister Nikai's 
proposal for an East Asian Free Trade Area was meant 
to preempt Chinese proposals for a low-standards 
Asian FTA, not to exclude the United States from the 
region, according to Vice Trade Minister Kazumasa 
Kusaka.  Kusaka claimed that METI still valued APEC 
but seemed unenthusiastic about strengthening its 
role.  He said his Minister had no intention to 
"tilt" towards China.  End Summary. 
 
Explaining Minister Nikai's Asian FTA Proposal 
--------------------------------------------- - 
 
¶2.  (C)  Ministry of Economy, Trade and Industry 
(METI) Vice Minister for International Affairs 
Kusaka told U.S. Ambassador to APEC Mike Michalak 
over dinner on June 2 that METI Minister Toshihiro 
Nikai's proposal for an East Asian free trade area 
was meant to preempt Chinese proposals for a low- 
standards Asian FTA.  Kusaka claimed that METI had 
become quite concerned last year when Japan was 
unable to do more than delay a Chinese proposal for 
a low standards FTA among the 13 "ASEAN plus Three" 
members.  Japan opposed this proposal, but with no 
support from Korea or any of the ASEAN countries, it 
was only able to delay a decision for a year by 
calling for a "track two" study.  Unfortunately this 
study would conclude that such an agreement would 
boost regional economic integration.  Therefore, 
METI decided that it should attempt to broaden (by 
including Australia, New Zealand, and India) and 
deepen (by seeking to include more than just trade 
in goods) this proposal and focus it on the post 
2010 period by which time the "plus Three" were 
scheduled to conclude their separate FTA talks with 
ASEAN.  Kusaka claimed that Japan's intention in 
including Australia and India was to slow down this 
process immensely.  Australia, he noted, would 
demand a high standards FTA that would be difficult 
for the ASEANs to accept.  India's presence would 
extend the debate and delay any concrete outcome. 
 
¶3.  (C)  Kusaka claimed that METI had some 
bureaucratic support for its push for an Asian FTA. 
He claimed that the Foreign Ministry's "Asian 
School" was supportive, even as he acknowledged that 
MOFA's America hands were opposed.  (Note:  We have 
heard a different story from MOFA's Economic Bureau. 
According to MOFA Economic Affairs Bureau Director 
General Kaoru Ishikawa, he had been "yelling at" 
METI at interagency meetings but that the 
Agriculture Ministry had been even more critical of 
METI's proposal.  Ishikawa claimed that the Ministry 
of Health, Labor, and Welfare -- because of movement 
of persons issues -- was also opposed and that the 
Ministry of Finance was "also leaning against" 
METI's proposal.  One of METI's problems, Ishikawa 
pointed out, was its failure to consult with other 
ministries before announcing this idea.  End note.) 
 
Japanese Views on APEC 
---------------------- 
 
¶4.  (C)  When asked how the Minister's proposal fit 
into Japan's vision for APEC, Kusaka said that Japan 
valued APEC, because of the presence of Taiwan and 
Hong Kong and because of its role in bridging the 
economies across the Pacific Ocean.  However, APEC 
had turned into a "talk shop" because its membership 
was "too broad."  Moreover, China clearly preferred 
the ASEAN Plus Three and East Asian Summit (EAS) -- 
where Taiwan was not a member -- and therefore 
resisted progress in APEC particularly on the 
 
TOKYO 00003104  002 OF 003 
 
 
security agenda.  Kusaka said, however, that Japan 
valued APEC's role in bridging the east and west 
sides of the Pacific Ocean and wanted to see APEC 
succeed.  Moreover, he noted, that Japan would host 
APEC in 2010.  Amb. Michalak pointed out numerous 
areas on APEC's economic and security agendas where 
we had advanced U.S. and Japanese interests. 
 
¶5.  (C)  When asked how Japan sought to 
differentiate APEC and the EAS, Kusaka said that 
Japan thought the EAS should evolve into a 
"functional" organization for a pursuing topics that 
were not exclusionary in nature.  Therefore, its 
natural role would be to address issues such as the 
environment, avian influenza, and maritime piracy. 
Progress in these areas in the EAS, he claimed, 
would not damage U.S. interests since all could 
enjoy the benefits of EAS cooperation.  He also said 
that Japan strongly supported U.S. membership in the 
EAS. 
 
Aren't You More concerned about ASEAN Plus Three? 
--------------------------------------------- ---- 
 
¶6.  (C)  Kusaka asked why the United States was so 
concerned about the East Asian Summit and not the 
ASEAN Plus Three.  In his view, U.S. interests were 
more threatened by the ASEAN Plus Three process, 
which clearly excluded the United States and where 
Japan was the sole champion of the advanced 
industrial democracies.  (Comment: He implied that 
Korea was reluctant to oppose China in the forum 
thereby increasing the "burden" on Japan.  End 
comment.)  In contrast, Japan had succeeded in 
maneuvering three other democracies into the EAS 
structure and had also succeeded in leaving the door 
open to U.S. membership.  He encouraged the United 
States to consider joining the EAS process.  For 
these reasons, Kusaka said, the United States should 
welcome Japanese attempts to steer action away from 
the ASEAN Plus Three towards the EAS process. 
 
Thou Dost Protest Too Much?: No China "Tilt" METI 
Claims 
--------------------------------------------- ---- 
 
¶7.  (C)  Kusaka emphasized that Minister Nikai had 
not focused on Japan's interests in China at the 
expense of Japan-U.S. relations in formulating his 
Asia trade strategy.  He noted that Nikai had been 
instrumental in providing PM Koizumi "political 
cover" for his decision to deploy troops to Iraq. 
In addition, he had led a delegation of Japanese 
tourists to New York soon after 9/11.  This 
demonstrated Nikai's support for U.S.-Japan 
relations, Kusaka claimed. 
 
¶8.  (C)  After repeating several times that Nikai 
was not "pro-China," Kusaka admitted that his 
Minister felt the USG did not fully appreciate his 
strong support of U.S.-Japan relations.  Kusaka said 
that Nikai was essentially a "local politician" who 
was accustomed to people coming to him with 
requests.  China had taken advantage of this trait 
skillfully by inviting Nikai to China where Nikai 
was impressed by the quality of his reception.  METI 
staff, Kusaka said, were now arranging for Nikai to 
visit the United States in July in an attempt to 
remind their minister of the importance of the U.S.- 
Japan relationship.  Kusaka also said Nikai would 
visit Oregon and New Mexico in addition to 
Washington DC.  Kusaka said that even after Nikai 
left the Ministry in September he would continue to 
influence Japan's trade policy. 
 
METI Recognizes the Importance of US-Japan 
Consultations 
------------------------------------------ 
 
 
TOKYO 00003104  003 OF 003 
 
 
¶9.  (C)  Kusaka said that Trade Policy Director 
General Kitamura and he were both eager to continue 
close relations with the United States.  He had 
visited Washington DC in January this year to 
propose an intensified bilateral economic dialogue, 
and had been disappointed that the United States did 
not want to engage on important topics like East 
Asian architecture because of the bilateral dispute 
over beef imports.  After Minister Nikai's Asian FTA 
proposal, Kusaka said, METI understood the U.S. 
message on the need to consult in advance of taking 
major policy decisions on East Asian architecture. 
Therefore, he was looking forward to traveling to 
the United States for meetings with USG counterparts 
on June 14. 
 
Comment 
------- 
 
¶10.  (C)  Kusaka is in a difficult bureaucratic 
position.  As a friend of the United States he 
understands our concerns about METI's proposal for 
an Asian FTA that does not include the United 
States.  Nonetheless, he has to defend his 
minister's position, but also was sending us clear 
signals that the USG should cultivate Minister 
Nikai, who will be an important figure in Japanese 
trade policy issues for years to come.  Kusaka hopes 
that the United States will solve Japan's policy 
problem by joining the East Asian Summit, thereby 
validating Japan's strategy of attempting to move 
the locus of effort away from the ASEAN Plus Three. 
He was clearly unenthusiastic about the alternative 
approach -- working together in APEC.  Kusaka's 
attitude toward APEC is particularly striking in 
that he was one of the METI officials who 
participated in its creation. 
 
¶11.  (U)  Ambassador Michalak has cleared this 
message. 
SCHIEFFER