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RUEHGV/USMISSION GENEVA 2904

C O N F I D E N T I A L SECTION 01 OF 03 TOKYO 004662 
 
SIPDIS 
 
SIPDIS 
 
DEPT PASS USTR FOR AUSTR CUTLER 
USTR ALSO FOR NEUFFER, BEEMAN, AND MEYERS 
GENEVA ALSO FOR USTR 
PARIS FOR USOECD 
 
E.O. 12958: DECL: 08/15/2016 
TAGS: ECON ETRD EINV PREL JA APECO
SUBJECT: MOFA SAYS ASEAN PLUS 3 FTA PROCESS ADVANCING 
 
 
TOKYO 00004662  001.2 OF 003 
 
 
Classified By: Ambassador J. Thomas Schieffer. 
Reason:  1.4 (b,d) 
 
¶1.  (C)  Summary:  The ASEAN Plus 3 Economic 
Ministers, when they meet next week in Kuala 
Lumpur, will likely recommend the creation of a 
formal intergovernmental study group as a prelude 
to actual free trade agreement (FTA) negotiations 
among the 13 ASEAN Plus 3 countries.  According 
to an official of the Japanese Foreign Ministry, 
Japan's "ASEAN Plus 6" (ASEAN Plus 3, along with 
Australia, India, and New Zealand) idea will 
likely come up at a working lunch of the Economic 
Ministers of those sixteen countries on August 
24, where the Japanese plan to propose the 
creation of an "academic study group" to examine 
that concept.  The Foreign Ministry official, 
however, was not confident that a decision to 
pursue the idea would emerge from the August 24 
lunch, but did indicate the possibility that an 
endorsement of the ASEAN Plus 6 proposal (for a 
study only) might emerge from the East Asian 
Summit meeting in December.  End summary. 
 
--------------------------------------------- 
ASEAN Plus 3 Econ Ministers To Recommend Next 
Step Toward FTA 
--------------------------------------------- 
 
¶2.  (SBU)  ECOUNS and Econoff met August 14 with 
Atsuyuki Oike, Director of the Economic 
Partnership Division of Japan's Ministry of 
Foreign Affairs (MOFA).  Oike oversees all 
Japan's FTA and Economic Partnership Agreement 
(EPAs) negotiations and has been kept in the job 
for over two years already -- a relatively long 
time in MOFA terms -- because of his expertise. 
Oike will also be MOFA's representative on the 
delegation to the ASEAN Economic Ministers 
meeting in Kuala Lumpur the week of August 21. 
(Note:  Economy, Trade and Industry Minister 
Toshihiro Nikai will head the Japanese 
delegation.  End note.) 
 
¶3.  (SBU)  Oike said that the ASEAN Plus 3 
Economic Ministers, based on the report of a 
multinational academic study group, will likely 
decide to recommend to their respective leaders 
the creation of a formal intergovernmental study 
group as the prelude to possible FTA negotiations 
among the 13 ASEAN Plus 3 countries.  The actual 
establishment of the intergovernmental group, 
however, would need to be directed by the ASEAN 
Plus 3 leaders themselves who will meet during 
the annual ASEAN summit/East Asian Summit in 
December.  The intergovernmental study would be 
expected to last about two years before 
substantive negotiations would begin. 
 
------------------------------------------- 
No Diplomatic Groundwork for Nikai Proposal 
------------------------------------------- 
 
¶4.  (C)  Asked about Chief Cabinet Secretary 
Abe's apparent endorsement two weeks ago of the 
"ASEAN Plus 6" (ASEAN Plus 3, along with 
Australia, India, and New Zealand) idea, floated 
by Minister Nikai earlier this year, Oike said 
that Japan's policy was the same as explained at 
the U.S.-Japan sub-cabinet working group in June. 
Nonetheless, Nikai will likely raise it at a 
working lunch of the Economic Ministers of the 
sixteen "ASEAN Plus 6" countries on August 24, 
according to Oike.  At that event, Japan plans to 
propose the creation of another academic study 
group, composed this time with participants from 
Australia, New Zealand, and India, to examine the 
question of wider participation in any regional 
 
TOKYO 00004662  002.2 OF 003 
 
 
FTA.  However, Oike noted, no document or joint 
statement has been prepared for that meeting, nor 
has Japan raised this proposal directly with the 
other participating countries.  Consequently, he 
was not confident that a decision to launch an 
academic study group on the ASEAN Plus 6 idea 
would emerge from the August 24 lunch.  Oike did 
acknowledge the possibility that an endorsement 
of the proposal (for a study only) might come out 
of the EAS meeting in December.  As of now, he 
thought India would enthusiastically support the 
idea, Australia would be a bit cautious, and New 
Zealand would fall somewhere in between. 
 
--------------------------------------------- -- 
Japan Relatively Weak Entering Discussions, but, 
in the End, Indispensable 
--------------------------------------------- -- 
 
¶5.  (C)  Oike admitted that Japan could very 
easily become isolated in an intergovernmental 
study group on an ASEAN Plus 3 FTA because of its 
insistence on inclusion of provisions related to 
deregulation and investment.  The Chinese and 
Koreans, he indicated, were in basic agreement on 
their model for advancing regional integration, 
i.e., moving step-by-step from trade 
liberalization focused on tariff reductions and 
gradually increasing the scope of liberalization. 
(He said the Chinese, though, were adamantly 
opposed to making commitments on "behind the 
border" issues like deregulation and investment.) 
Japan, however, lacked a similarly agreed basis 
for regional economic integration and was much 
more capable of achieving what it wanted on a 
bilateral basis rather than through inevitably 
complicated negotiations with ASEAN collectively 
-- let alone ASEAN plus China and Korea -- Oike 
noted. 
 
¶6.  (C)  Oike confessed that Japan's own 
discussions with ASEAN had not gone well because 
Japan wanted to have a more comprehensive 
package.  That said, he believed Japan would have 
some leverage in the ASEAN Plus 3 discussion 
because, even though Japan might be isolated, it 
could not be easily excluded -- there is no 
"ASEAN Plus 2," and the ASEAN states, in 
particular, want Japan as a participant in any 
regional economic accord. 
 
¶7.  (C)  Apart from the lack of a Japan-ASEAN 
agreement, the other critical link missing was 
any sort of economic agreement or understanding 
with China, Oike stressed.  Although Japan's FTA 
negotiations with South Korea were suspended, a 
few rounds of discussions had, at least, taken 
place and a basis had been laid for further 
talks.  No such foundation exists with China, 
however. 
 
--------------------------------------- 
Bilateral Talks Unlikely to Be Affected 
--------------------------------------- 
 
¶8.  (C)  Oike indicated that the start of the 
ASEAN Plus 3 intergovernmental FTA study group 
would not affect Japan's ongoing bilateral FTA 
negotiations with ASEAN members.  He expressed 
confidence that Japan would sign the long- 
negotiated agreement with the Philippines in the 
very near future, hopefully before Prime Minister 
Koizumi leaves office in September.  (Oike added 
that the main sticking point with the 
Philippines, contrary to press reports, related 
to investment measures and not to the movement of 
workers.)  In contrast, Japan has not been 
pushing to sign the agreement with Thailand, the 
 
TOKYO 00004662  003.2 OF 003 
 
 
text of which has been completed for several 
months, because it does not want the agreement to 
become an issue in Thai domestic politics during 
the current political uncertainty in that 
country.  Oike also noted that the negotiations 
with Indonesia, in which he has participated 
personally, had been progressing well. 
 
------------------------------- 
U.S. Engagement Still Important 
------------------------------- 
 
¶9.  (SBU)  The engagement of the United States in 
the process of East Asian economic integration 
remained important, according to Oike.  He 
recognized that APEC continued to be the main 
institution through which the United States 
wished to exercise its influence.  Oike added 
that Japan also valued APEC and would, in fact, 
be hosting APEC in the year 2010. 
 
------- 
Comment 
------- 
 
¶10.  (C)  Oike was fairly frank regarding Japan's 
weak prospects at Kuala Lumpur of further slowing 
down the move toward an ASEAN Plus Three FTA. 
Nevertheless, we believe that his assessment of 
the interests, particularly among ASEAN members, 
of keeping Japan active in the process is also 
probably correct.  Consequently, one key issue 
will be the extent to which the Japanese are 
willing to bargain hard to secure their interests 
on deregulation and investment in the face of 
political pressures and practical impediments 
that would tend to push the process toward a 
"lowest common denominator" deal on trade in 
goods alone. Another issue is whether the "ASEAN 
plus 6" idea will get enough steam behind it to 
eclipse the ASEAN plus 3 project, especially if 
the latter falters. 
SCHIEFFER