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UNCLAS SECTION 01 OF 11 TOKYO 004470 
 
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: JAPANESE MORNING PRESS HIGHLIGHTS 08/09/06 
 
 
Index: 
 
1) Top headlines 
2) Editorials 
3) Prime Minister's daily schedule 
 
Yasukuni issue: 
4) Yomiuri poll: 50% of Japanese want the next prime minister to 
stay away from Yasukuni Shrine, and 62% want enshrined Class-A war 
criminals removed 
5) Prime Minister Koizumi hints that he will visit Yasukuni on Aug. 
15 as per his original pledge to the public 
6) Chief Cabinet Secretary Abe rejects idea of removing Class-A war 
criminals from Yasukuni 
7) Foreign Minister Aso presents private proposal to secularize 
Yasukuni Shrine as means of removing the Class-A war criminals 
enshrined there 
8) Nine of Koizumi cabinet members say they will avoid Yasukuni on 
Aug. 15 
 
9) Meeting between Foreign Minister Aso, ROK Foreign Minister Ban 
covers familiar territory of Yasukuni, summit meetings, and EEZ 
issue 
 
10) Foreign Ministry to beef up domestic and overseas mission staff 
 
 
Political agenda: 
11) 4,6000 dignitaries attend funeral of late Prime Minister 
Hashimoto 
12) LDP policy chief Nakagawa wants party to set a timetable for 
amending Constitution 
13) Looking less likely that Yamasaki, Nukaga with run in LDP 
presidential election 
14) Nikai, Koga ready to throw their support behind Abe for LDP 
president 
 
15) Japan, China, ROK, ASEAN to agree to E. Asia EPA by 2011 
 
16) Government calculates need to hike consumer tax by 3.9% to stop 
revenue losses 
 
Articles: 
 
1) TOP HEADLINES 
 
Asahi: 
Public servants to be allowed to take half-day parental leave 
starting next fiscal year 
 
Mainichi: 
691 public and school swimming pools shut down 
 
Yomiuri: 
Poll: 50% oppose Yasukuni visits by next prime minister, 62% support 
unenshrinement of Class-A war criminals 
 
Nihon Keizai: 
Nippon Paper Group completes additional share purchase in Hokuetsu 
 
Sankei: 
Government estimates a hike in consumption tax to 8.9% necessary in 
 
TOKYO 00004470  002 OF 011 
 
 
2015 to finance ballooning social security expenditures 
 
Tokyo Shimbun: 
Tokorozawa public health department admits defects in application 
form for opening pools in Saitama 
 
2) EDITORIALS 
 
Asahi: 
(1) Debate on Yasukuni: Abe also should step into ring 
(2) Japan expects to join hands with Mongolians 
 
Mainichi: 
(1) Defects founds in many pools nationwide 
(2) Policy of limiting annual issuance of government bonds to 30 
trillion yen did much 
 
Yomiuri: 
(1) Make swimming pools safe for children 
(2) National personnel Authority's annual recommendations: Wage 
reform for public servants takes a step forward 
 
Nihon Keizai: 
(1) Deepen dialogue on future options for Yasukuni Shrine 
(2) Take thorough measures for safety management of swimming pools 
 
Sankei: 
(1) Under Aso's private plan, Yasukuni would no longer be a shrine 
(2) Take double safety measures to prevent accidents in pools 
 
Tokyo Shimbun: 
(1) Defects in pools: Thorough safety measures urged 
(2) Further reform necessary for salaries for civil servants 
 
3) Prime Minister's Official Residence (Kantei) 
 
Prime Minister's schedule, Aug. 8 
 
NIHON KEIZAI (Page 2)  (Full) 
August 9, 2006 
 
09:30 
Attended an executive meeting at party headquarters. Met incoming 
Nagano Governor Murai, with Education, Culture, Sports, Science and 
Technology Minister Kosaka, Secretary General Takebe, and others. 
 
10:01 
Attended a cabinet meeting at Kantei. Met Cabinet Office 
International Peace Cooperation Headquarters Chief Tarui. Followed 
by Cabinet Secretariat Head Yamamoto. 
 
10:59 
Met Cabinet Intelligence Director Mitani. Followed by Deputy Foreign 
Minister Nishida and European Affairs Bureau Director General 
Harada. 
 
14:02 
Attended the funeral of former Prime Minister Ryutaro Hashimoto at 
Nippon Budokan. 
 
16:15 
Met at Kantei with Deputy Chief Cabinet Secretary Nagase, prime 
 
TOKYO 00004470  003 OF 011 
 
 
ministerial assistant Makino, Deputy Foreign Minister Nishida, and 
others. 
 
17:03 
Attended a meeting of ministers involved in drawing up monthly 
economic reports. 
 
18:05 
Met National Personnel Authority President Tani, with Chief Cabinet 
Secretary Abe and others. Later, met Deputy Chief Cabinet Secretary 
 
SIPDIS 
Nagase. 
 
19:08 
Returned to his official residence. 
 
4) Poll: 50% opposed to next premier's visit to Yasukuni Shrine, 62% 
favor separating Class-A war criminals from shrine 
 
YOMIURI (Top play) (Full) 
August 9, 2006 
 
The Yomiuri Shimbun conducted a face-to-face nationwide public 
opinion survey on Aug. 5-6, in which respondents were asked if they 
would like the next prime minister to pay homage at Yasukuni Shrine. 
In response, "no," including "no to a certain degree," totaled 50%, 
with "yes" reaching 40%. "No" was up 8 percentage points from this 
June's survey, and "yes" down 6 points. The Yomiuri Shimbun has 
asked the same question in three previous surveys since February 
this year. In the latest survey, negative answers outnumbered 
affirmative ones for the first time. 
 
When Prime Minister Koizumi run in his ruling Liberal Democratic 
Party's presidential election in 2001, he pledged to pay homage at 
Yasukuni Shrine on Aug. 15, the anniversary of the end of World War 
II. In the survey, a total of 49% were negative and a total of 43% 
affirmative when asked if they would like him to do so. The survey 
shows that an increasing number of people are cautious about the 
prime minister's Yasukuni homage. 
 
In the survey, respondents were also asked if they thought Class-A 
war criminals should be separated off from those enshrined at 
Yasukuni Shrine. In response, "yes" accounted for a total of 62%, 
with "no" totaling 24%. As seen from these figures, many showed 
their understanding for the idea of unenshrining the Class-A war 
criminals from Yasukuni Shrine. 
 
In the meantime, the late Emperor Showa (Hirohito) was quoted as 
voicing his displeasure with the enshrinement of the Class-A war 
criminals at Yasukuni Shrine, according to a former Imperial 
Household grand steward's notes disclosed last month. In this 
connection, respondents were asked if they were affected by the 
imperial quotes when thinking about the prime minister's Yasukuni 
visits, with "yes" accounting for a total of 37% and "no" totaling 
55%. 
 
However, "yes" to that question came from 46% of those opposed to 
the next prime minister's Yasukuni homage. This seems to be one of 
the reasons why the number of those opposed to the next premier's 
Yasukuni homage has increased. 
 
In the breakdown of answers from those who support Chief Cabinet 
Secretary Abe-one of the three potential post-Koizumi 
 
SIPDIS 
 
TOKYO 00004470  004 OF 011 
 
 
candidates-about the next premier's Yasukuni homage, affirmative 
answers totaled 55%, with negative answers 38%. Among those 
supporting Foreign Minister Aso, affirmative answers accounted for 
51% and negative ones 46%. As seen from these figures, affirmative 
answers outnumbered negative ones both among Abe supporters and 
among Aso supporters. Among those backing Finance Minister Tanigaki, 
however, affirmative answers accounted for no more than 26%, with 
negative ones totaling 69%. Tanigaki has clarified that he would 
abstain from paying homage at Yasukuni Shrine if he became prime 
minister. This seems to be one of the reasons why negative answers 
substantially outnumbered affirmative ones among Tanigaki 
supporters. 
 
Respondents were further asked about a place appropriate for the 
state to mourn for the war dead. In response to this question, 35% 
picked Yasukuni Shrine at present, with 24% choosing Yasukuni Shrine 
that separates the Class-A war criminals, 19% preferring a new 
national secular memorial under state control, and 8% favoring 
Chidorigafuchi Cemetery. "Yasukuni Shrine at present" topped all 
other answers but was lower than the combined total of 52% for 
separating the Class-A war criminals from Yasukuni Shrine and 
mourning for the war dead at other facilities. 
 
5) Prime Minister Koizumi eager to visit Yasukuni Shrine on Aug. 15 
 
MAINICHI (Page 1) (Full) 
August 9, 2006 
 
Asked by reporters about whether his pledge to visit Yasukuni Shrine 
on Aug. 15 made during the campaign for the 2001 Liberal Democratic 
Party (LDP) presidential election was valid, Prime Minister 
Junichiro Koizumi responded last night, "Yes, the election promise 
is still valid." He reiterated, however, that he would make a 
decision appropriately. Koizumi's aide said, "He will visit the 
shrine during the period between the 13th and 16th." He has so far 
visited the shrine five times as prime minister, avoiding Aug. 15, 
the anniversary of the end of World War II. Prior to leaving the 
prime minister's post in September, Koizumi apparently expressed his 
enthusiasm to visit the shrine on Aug. 15. 
 
Koizumi made the pledge during an April 2001 debate ahead of the LDP 
presidential election, saying: "It is natural for a politician to 
offer his respect and appreciation to the war dead. I will visit 
Yasukuni on Aug. 15 if I become prime minister, no matter how much I 
may be criticized." 
 
Concerned about a negative reaction from China and South Korea, 
however, he visited the Shinto shrine on Aug. 13, 2001. He has since 
visited Yasukuni once a year on such occasions as the spring and 
fall festivals and on New Year's Day. 
 
After paying homage at the shrine in April 2002, Koizumi explained 
the reason for avoiding Aug. 15, stating: 
 
"Causing anxiety and a sense of alarm in Japan and overseas by 
insisting on a Yasukuni visit on the Aug. 15 anniversary of the end 
of the war or around Aug. 15 goes against my will." 
 
Meanwhile, a senior LDP member commented last night: "He's not going 
to surprise people and forgo a visit on Aug. 15." 
 
6) Abe negative about separation of Class-A war criminals from 
 
TOKYO 00004470  005 OF 011 
 
 
enshrined souls at Yasukuni Shrine 
 
YOMIURI (Page 2) (Full) 
August 9, 2006 
 
Chief Cabinet Secretary Shinzo Abe, interviewed by the monthly 
magazine Bungeishunju on sale on Aug. 10, expressed a negative view 
about the idea of removing Class-A war criminals from Yasukuni 
Shrine, the Yomiuri Shimbun has learned. Abe stated about the 
Liberal Democratic Party (LDP) presidential election in September 
that in order to protect Japan, a beautiful country with a long 
history, firm determination even at the risk one's life is 
required. 
 
Abe said that the Yasukuni issue should not be made a political 
issue, let alone a diplomatic one. Successive prime ministers made 
efforts to avoid such a situation. Four former premiers -- Masayoshi 
Ohira, Zenko Suzuki, Yasuhiro Nakasone, and Ryutaro Hashimoto -- and 
incumbent Prime Minister Junichiro Koizumi have paid homage at that 
Shinto shrine even though Class-A war criminals were enshrined there 
in 1978. Abe stated that there is no prime minister who supports 
Japan's wartime militarism even though they paid homage at a shrine 
that enshrines the leaders of the war. Abe indicated he was negative 
about the view calling on the prime minister to stop visiting 
Yasukuni. 
 
7) Aso advocates secular status for Yasukuni 
 
NIHON KEIZAI (Page 2) (Abridged) 
Eve., August 8, 2006 
 
Foreign Minister Taro Aso, meeting the press yesterday after a 
cabinet meeting, unveiled a plan to resolve the Yasukuni Shrine 
issue. The plan urges Yasukuni Shrine to give up its religious 
status and incorporate the shrine with special status under a new 
law for state control. His plan suggests the need for the Diet to 
discuss and determine who should be mourned there. This advocacy 
paves the way to separate Class-A war criminals from those enshrined 
at Yasukuni Shrine. 
 
In his advocacy, Aso proposes putting Yasukuni Shrine under state 
control as a national facility. This is aimed at making it possible 
for the Emperor and foreign officials to pay their respects there. 
Aso began around this January to study specific ideas and worked out 
his proposal at this point, a month before the ruling Liberal 
Democratic Party's Sept. 8 announcement of its presidential 
election. 
 
Aso proposes specific steps to make Yasukuni Shrine secular. In 
concrete terms, he urges Yasukuni Shrine and 52 other shrines for 
the war dead in the nation to give up their religious status, rename 
Yasukuni Shrine as a national memorial for the war dead, and utilize 
10-20 billion yen to be returned to the state coffers from the Peace 
Memorial Special Fund, an independent administrative entity. 
 
Aso also notes that the doctrine of Yasukuni Shrine will not be the 
one and only mourning criterion if the shrine is incorporated with 
secular status. In the meantime, Yasukuni Shrine has deemed it 
impossible to unenshrine the Class-A war criminals. However, Aso 
implies that it would be possible to do so if the shrine is given 
special legal status. In addition, Aso asserts that Yasukuni 
Shrine's controversial war museum, Yushukan, should be placed under 
 
TOKYO 00004470  006 OF 011 
 
 
government control for appropriate displays. 
 
8) Nine cabinet ministers will not visit Yasukuni Shrine on Aug. 15; 
Tanigaki urges Koizumi to stay away 
 
ASAHI (Page 2) Full) 
Eve., August 8, 2006 
 
After a cabinet meeting on Aug. 8 of the 17 cabinet ministers, 
excluding Prime Minister Junichiro Koizumi, nine members said that 
they would not visit Yasukuni Shrine on Aug. 15, the anniversary of 
the end of World War II. There were no ministers who said they would 
go. Thirteen of the ministers, excluding four now overseas, answered 
questions. 
 
The nine ministers include Finance Minister Sadakazu Tanigaki; Koki 
Chuma, state minister in charge of regulatory reform; Land, 
Infrastructure and Transport Minister Kazuo Kitagawa; Education 
Minister Kenji Kosaka; Financial Affairs Minister Kaoru Yosano; 
Science and Technology Minister Iwao Matsuda; Health, Labor and 
Welfare Minister Jiro Kawasaki; Kuniko Inoguchi, minister in charge 
of measures for the declining birthrate; and Economy, Trade and 
Industry Minister Toshihiro Nikai. Environment Minister Yuriko Koike 
did not clarify her intention. She is expected to be overseas on 
Aug. 15. 
 
Matsuda explained why he would not go, saying, "I want to place 
importance on relations with Asia." Kosaka said, "When it comes to 
official visits, we should give consideration to reactions from 
other countries." Kawasaki stated: "It's a matter for individuals to 
decide." 
 
Tanigaki, however, urged Koizumi to think carefully about an Aug. 15 
visit, saying: "I wonder about the actions of the prime minister 
being decided on based solely on individual freedom. Perhaps he 
should think about that point a bit more." 
 
Chief Cabinet Secretary Shinzo Abe, meanwhile, stated: "With this 
becoming a political and diplomatic issue, I will refrain from 
saying whether or not I went there and whether or not I will go 
there again." 
 
Agriculture Minister Shoichi Nakagawa said: "I visit Yasukuni on 
Aug. 15 every year. I have yet to make a decision this year, though 
there is no particular reason for me to change my plans." Foreign 
Minister Taro Aso refrained from revealing his plans. 
 
9) Japan-South Korea foreign ministerial: Foreign Affairs and Trade 
Minister calls for removing obstacles to holding summit; Wants prime 
minister to stop visiting Yasukuni Shrine 
 
TOKYO SHIMBUN (Page 3) (Full) 
August 9, 2006 
 
Foreign Minister Taro Aso yesterday evening met in Tokyo with South 
Korean Foreign Affairs and Trade Minister Ban Ki-moon, who is now in 
Japan to attend the funeral of the late former Prime Minister 
Ryutaro Hashimoto that is being jointly held by the Cabinet and the 
Liberal Democratic Party (LDP). 
 
During the talks, Ban noted: "It is currently impossible to hold a 
summit between our countries. This situation is abnormal. It is 
 
TOKYO 00004470  007 OF 011 
 
 
important to eliminate obstacles for the sake of the normalization 
of ties at the earliest date possible." With the anniversary of the 
end of World War II on Aug 15 approaching, we tacitly called on 
Prime Minister Junichiro Koizumi not to visit Yasukuni Shrine. 
 
Aso simply noted, "I would like to cooperate for strengthened 
bilateral relations through frequent meetings with Mr. Ban." 
 
Referring to the Takeshima/Dokdo islets, over which both Japan and 
South Korea claim sovereignty, Aso has again proposed introducing a 
prior notification system intended to prevent an unexpected 
contingency from occurring in the event of either country conducting 
a scientific survey in waters claimed by both countries as their 
EEZ. Ban responded: "I am aware of the importance of both of our 
countries forming an amicable maritime order. South Korea is still 
continuing to looking into specific measures." 
 
Aso and Ban also discussed North Korea's ballistic missile issue. 
They reaffirmed their stance of strengthening bilateral cooperation 
for the early return of Pyongyang to the six-party framework in 
accordance with the resolution adopted by the United Nations 
Security Council. 
 
10) LDP proposes having more than 150 embassies abroad to reinforce 
Japan's diplomacy 
 
NIHON KEIZAI (Page 2) (Abridged) 
Eve., August 8, 2006 
 
The ruling Liberal Democratic Party held the first meeting of its 
special committee this morning, seeking to consolidate and reinforce 
Japan's diplomacy. The committee, with former Prime Minister Yoshiro 
Mori presiding, worked out a report of urgent recommendations to be 
budgeted for next fiscal year. In its report, the committee points 
to the weakness of Japan's diplomatic corps overseas as compared 
with Europe, the United States, and China. The report suggests the 
need for Japan to have 2,000 more diplomats at its overseas posts 
for a global posting setup of 7,500 diplomats. In addition, the 
report also says Japan should have more than 150 embassies abroad. 
The Foreign Ministry will incorporate these recommendations in its 
budget request. 
 
11) 4,600 Japanese and foreign dignitaries attend Hashimoto's 
funeral 
 
YOMIURI (Page 4) (Full) 
August 9, 2006 
 
The funeral of former Prime Minister Ryutaro Hashimoto, who passed 
away in July, was held at the Nippon Budokan Hall in Tokyo 
yesterday. The cabinet and the Liberal Democratic Party organized 
the funeral. About 4,600 local and foreign dignitaries, including 
Crown Prince Naruhito, attended the funeral. 
 
Representing the cabinet, Prime Minister Junichiro Koizumi delivered 
a eulogy: 
 
"On the slogan 'Reform and Creation,' he devoted his political 
career to reforms to reinvent the country's political, 
administrative, economic, and social systems." 
 
12) LDP policy chief: Next LDP president should show timetable for 
 
TOKYO 00004470  008 OF 011 
 
 
constitutional reform 
 
NIHON KEIZAI (Page 2) (Full) 
August 9, 2006 
 
Liberal Democratic Party (LDP) Policy Research Council Chairman 
Hidenao Nakagawa, referring in a speech in Tokyo to the post-Koizumi 
government, stated yesterday: 
 
"The next LDP president should aim to form a solid government, 
serving the two full terms of six years. The next government as a 
constitutional reform government should present a timetable and 
policy direction for constitutional revision." 
 
13) 2006 LDP presidential race: Cautious views growing about 
Yamasaki, Nukaga joining race; Many eager to back Abe, the right 
horse 
 
YOMIURI (Page 4) (Excerpts) 
August 9, 2006 
 
Former LDP Vice President Taku Yamasaki, who heads the Yamasaki 
faction, and Defense Agency Director-General Fukushiro Nukaga of the 
Tsushima faction are considering running in the September LDP 
 
SIPDIS 
presidential race. But cautious views are growing in their 
respective factions. Given Chief Cabinet Secretary Shinzo Abe's big 
lead, the trend reflects the desire of politicians to back the right 
horse. 
 
Four mid-level and junior members of the Yamasaki faction, including 
Ryotaro Tanose, held talks with Yamasaki yesterday in Tokyo. In the 
session, they urged Yamasaki to display leadership in a way that 
would unite the faction, including the question of his possible 
candidacy for the presidency. They also insisted on enlivening the 
presidential race by utilizing the faction's policy proposals to 
guide it to a victory in next year's Upper House election. In 
response, Yamasaki said: "I will make a decision after thinking 
things through. I am planning to reach a clear decision after the 
mid-August Bon holiday break." 
 
Their request was taken to mean a call on Yamasaki to give up his 
candidacy. That is because many Yamasaki faction members are eager 
to rally around Abe, although some still think their leader should 
join the race. LDP Policy Research Council Vice Chairman Akira 
Amari, former Education Minister Takashi Kosugi, and former Defense 
Agency Director-General Yoshinori Ono of the Yamasaki faction 
attended yesterday a meeting of veteran LDP lawmakers supporting 
Abe. 
 
Meanwhile, former Health and Welfare Minister Yuji Tsushima, who 
heads the Tsushima faction, met yesterday with General Council 
Chairman Fumio Kyuma at LDP headquarters. Kyuma expressed a cautious 
view about Nukaga joining the race, saying: "No one in the faction 
is actively urging him to run in the race. I think many feel the 
same way as I do." Tsushima and others have confirmed a plan to 
discuss the matter among faction leaders to reach a conclusion in 
mid-August or later. 
 
Some mid-level and junior members of the Tsushima faction are 
calling for fielding Nukaga, but many executives and mid-level 
members are leaned toward forgoing his candidacy. 
 
 
TOKYO 00004470  009 OF 011 
 
 
14) Koga, Nikai decide to support Abe in LDP presidential race; 
Abe's predominance clear 
 
YOMIURI (Page 1) (Abridged slightly) 
August 9, 2006 
 
Former LDP Secretary General Makoto Koga, who heads the Niwa-Koga 
faction in the party, and Economy, Trade and Industry Minister 
Toshihiro Nikai, who heads the Nikai faction, have decided to 
support Chief Cabinet Secretary Shinzo Abe in the September LDP 
presidential election. Koga conveyed his decision to Policy Research 
Council Chairman Nakagawa, who is close to Abe. With the decision to 
back Abe by Koga, who was regarded as a leader of anti-Abe forces, 
the great majority of the Niwa-Koga faction members is also expected 
to throw their support behind Abe. The Nikai faction is also likely 
to rally around Abe in unison. Abe's predominance has now become 
evident, with some 190 LDP lawmakers out of the 403 having made up 
their minds to back him. 
 
According to a person concerned, Koga met Nakagawa earlier this 
month in Tokyo. In the session, Koga expressed his intention to 
support Abe, saying: "A battle with an Ozawa-led Minshuto is 
expected to occur in the next three years. Veteran lawmakers need to 
back up Mr. Abe, who is still young." Koga reportedly also expressed 
eagerness to serve as a mediator between senior lawmakers, who have 
strong aversion to a drastic generational change, and Abe. 
 
Meanwhile, Nikai, a pro-China lawmaker, originally showed concern 
over Abe's Asia policy, but he has decided to back Abe based on his 
close ties with Nakagawa. The Nikai faction released yesterday a set 
of policy proposals that stopped short of referring to the Yasukuni 
issue, indicating simply to discuss Asia policy in the party. 
 
Nakagawa, Koga, and Nikai are scheduled to meet in mid-August or 
later to confirm their plan to rally around Abe. 
 
Ten senior LDP lawmakers, including party tax commission chairman 
Hakuo Yanagisawa of the Niwa-Koga faction, former Management and 
Coordination Agency chief Seiichi Ota, and Agriculture, Forestry and 
Fisheries Minister Shoichi Nakagawa of the Ibuki faction, held talks 
with Abe yesterday in Tokyo and clarified their support for Abe. 
 
Yanagisawa and others attended the meeting because former Health and 
Welfare Minister Yuya Niwa, another leader of the Niwa-Koga faction, 
has approved to back Abe. 
 
The breakdown of support for Abe at present: 86 Mori faction 
members, most of the 15 Nikai faction members, over 30 members of 
the 48-member Niwa-Koga faction, more than 30 members of the 70 
unaffiliated lawmakers, and some 10 members out of the 32-strong 
Ibuki faction. In addition, several members each of the Tsushima, 
Yamasaki, and Komura factions have expressed their support of Abe. 
 
15) ASEAN+3 aims to create EPA covering all of East Asia in 2011 
 
NIHON KEIZAI (Page 1) (Full) 
August 9, 2006 
 
In their ministerial meetings later this month, 13 countries - 
Japan, China, South Korea, and the members of the Association of 
Southeast Asian Nations (ASEAN) - are likely to decide to start 
talks on an economic partnership agreement (EPA) covering the entire 
 
TOKYO 00004470  010 OF 011 
 
 
East Asian region. They plan to start laying down rules in a wide 
range of areas, including intellectual property, in addition to 
abolishing tariffs on goods. The 13 countries aim to begin 
government-to-government talks next year and conclude an agreement 
in 2011. 
 
In a bid to lessen China's influence, Japan wants an EPA that covers 
a wider area in the region. Economy, Trade and Industry Minister 
Toshihiro Nikai is ready to propose that India, Australia, and New 
Zealand be added to the 13 countries. Should agricultural countries 
like Australia join the accord, however, Japan would be urged to 
speed up the opening of its farm market, and the negotiations 
eventually might encounter difficulty. 
 
In the ASEAN+3 economic ministerial in 2004, China came up with the 
idea of an EPA. A panel of experts from the public and private 
sectors has pushed ahead with drafting a plan. The plan is likely to 
be adopted in the ministerial meeting slated for late this month. 
 
Under the draft plan, the governments of the 13 countries would 
begin discussion next year and full-scale negotiations in 2009. They 
would make preparations to abolish tariffs on goods, and undertake 
liberalization and create rules regarding services, investment, and 
other areas. In 2011, they would conclude the negotiations and 
completely end tariffs on general goods in 2016. 
 
If realized, the region would be a free trade zone worth 7-8 
trillion dollars in production, making it the third largest 
following the North American Free Trade Agreement (NAFTA) and the 
European Union (EU). 
 
Preparations are underway for ASEAN to reach free trade agreements 
(FTA) with China, India, South Korea, Japan and other countries. 
This development has contributed to move the EPA concept forward. 
 
16) Government estimates need to hike consumption tax to 8.9% in 
fiscal 2015; Social security expenses to increase 
 
SANKEI (Top Play) (Excerpts) 
August 9, 2006 
 
The government and the ruling parties are now considering the 
possibility of covering an increased portion of social security 
expenses (the portion funded by tax revenues) through a hike in the 
consumption tax. It was revealed yesterday that the government 
estimates that it is necessary to raise the consumption tax 3.9 
points by 2015. The government also projects the need to further 
hike the tax 7 points by 2025. The predominant view in the ruling 
camp is to raise the consumption tax to 8% from the current 5%. 
According to this plan, a lack of funds to finance social security 
is bound to become a problem several years after the hike, having a 
major impact on future consumption tax discussions. 
 
The tentative estimate has been calculated by automatically working 
out consumption tax rates needed to finance an increase in social 
security expenses based on the Outlook for the Payments and Burden 
of Social Security Benefits (figures projected in May 2006) compiled 
by the Ministry of Health, Labor and Welfare, which discounts the 
effects of the ongoing medical system reform, and data provided by 
the Ad Hoc Council for Discussion on the Fiscal System. Estimated 
revenues from the consumption tax per percentage point are 2.7 
trillion yen in 2015 and 3.2 trillion yen in 2025. 
 
TOKYO 00004470  011 OF 011 
 
 
 
The government and the ruling camp are aiming at achieving a primary 
balance in fiscal 2011. The increase in social security expenses 
this year is projected at 5.8 trillion yen, combining 2.7 trillion 
yen to finance an increase in the state's share of the basic pension 
to 50% and 3.1 trillion yen to finance the social security system, 
including medical services and nursing-care expenses. The 5.8 
trillion yen is equivalent to 2.3% in terms of consumption tax, 
meaning that a 3% hike in the consumption tax could cover increased 
social security expenses. 
 
SCHIEFFER