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UNCLAS SECTION 01 OF 10 TOKYO 004895 
 
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 08/28/06 
 
 
Index: 
 
1) Top headlines     3 
2) Editorials     3 
Prime Minister's weekend schedule: None 
 
Iran problem: 
3) Visiting former Iranian President Khatami warns of "new crisis" 
if sanctions imposed on his country 
4) Iran warns Japan that other countries are waiting if it pulls 
back from Azadegan oil field project 
5) Mitsutoyo Company also illegally exported nine other military-use 
units Iran, as well 
 
6) Japan planning to work on countries friendly to North Korea to 
urge it to return to six-party talks, abduction talks 
 
7) South Korea again planning maritime survey in disputed waters 
near Takeshima isles 
 
8) Prime Minister Koizumi departs today for central Asia tour 
 
Defense and security affairs: 
9) Government decides to extent anti-terror law a year to allow 
continued refueling of US, British vessels in Indian Ocean 
10) USFJ to participate in Tokyo's disaster-prevention drill on 
Sept. 1 at governor's request 
11) Foreign Minister Aso in LDP presidential campaign comes out in 
favor of Japan's use of collective self-defense 
12) Chief Cabinet Secretary Abe in election campaign wants permanent 
law for overseas SDF dispatch as Japan's international contribution 
 
13) Abe calls for strategic dialogue of Japan, US, Australia 
 
Political agenda: 
14) In poll of LDP secretaries general from local chapters, 66% see 
key campaign debate as income disparity issue 
15) Komura faction now supports Abe candidacy 
16) Prime Minister Koizumi insisted on Sept. 22 Diet reopening in 
order to allow new prime minister Abe chance speedily firm up his 
administration, key posts 
17) Minshuto (Democratic Party of Japan) working on former LDP 
postal rebels, Social Democratic Party to cooperate in Upper House 
election to crush LDP 
 
18) Japan-Philippines FTA negotiations: auto tariff scrapping will 
be put off, revisited in 2009 
 
Articles: 
 
1) TOP HEADLINES 
 
Asahi: 
Health, Labor, and Welfare Ministry to put emphasis on easing pain 
for cancer patients 
 
Mainichi: 
Mentally incompetent arsonist who was kept in hospital for three 
months unable to receive compensation due to Fukuoka High Court's 
decision 
 
Yomiuri: 
 
TOKYO 00004895  002 OF 010 
 
 
Public schools to be ranked on a scale of five 
 
Nihon Keizai: 
Firms bought 1.68 trillion yen worth of their own stocks in Apr-Jul 
quarter to protect against takeover bids, M&A 
 
Sankei: 
Special tourist railway to bring trains back to Usui Pass 
 
Tokyo Shimbun: 
Oji paper gives up bid for Hokuetsu 
 
Akahata: 
60-year-old Oki Electric Industry employee wins continued 
employment 
 
2) EDITORIALS 
 
Asahi: 
(1) Tax reform: LDP presidential candidates must discuss tax hikes 
(2) Niigata plebiscite 10 years ago must not be used as a tool for 
municipal merger 
 
Mainichi: 
(1) New CPI: Prices of some products dropping 
(2)  Gifu slush fund scandal destroyed public trust 
 
Yomiuri: 
(1) Cell phone number portability: Not everything is portable 
(2) Rising labor costs may dim China's appeal 
 
Nihon Keizai: 
(1) Expectations high for public procurements that are transparent 
and fair 
(2) Koizumi must play up Japan's leadership in Central Asia 
 
Sankei: 
(1) Deployment of USS Shiloh: Right to collective defense must be 
resolved 
(2) Visit to China by members of Association of the Families of 
Victims of Kidnapped by North Korea: Tighten noose around North 
Korea 
 
Tokyo Shimbun: 
(1) Scandals involving local governments: Greater awareness 
essential 
(2) Eliminate doping in sports 
 
Akahata: 
(1) Painful plan must not be pressed on Okinawa 
 
3) Khatami warns of "new crisis if sanctions imposed on Iran" over 
nuclear issue 
 
YOMIURI (Page 2) (Full) 
August 28, 2006 
 
In a press conference in Kyoto yesterday, visiting former Iranian 
President Khatami reiterated his country's determination to continue 
its nuclear development program, saying that the program is intended 
for peaceful purposes as guaranteed under the Nuclear 
Nonproliferation Treaty (NPT) and is not for military purposes. He 
 
TOKYO 00004895  003 OF 010 
 
 
then warned that if the United Nations Security Council imposes 
economic sanctions on Iran in the event of Iran not suspending its 
uranium enrichment program by the end of this month, "a new crisis 
will be brought into the Middle East, and the measure will be proved 
to be wrong." 
 
Asked about the proposal by six countries, including the United 
States, China, and Russia, to construct light-water reactors in 
exchange for Iran's suspension of uranium enrichment, Khatami flatly 
replied: "We cannot entrust (our energy policy) to an empty 
promise. 
 
4) Iran warns Japan: "China, Russia also eager to develop Azadegan 
oil field 
 
YOMIURI (Page 2) (Full) 
August 28, 2006 
 
Taketo Kudo, Teheran 
 
Regarding the Azadegan oil field in the southwestern part of Iran, 
for which Inpex Corp. of Japan has concession rights, the news 
agency operated by the Iranian Petroleum Ministry released the 
following statement by the president of the Oil Development 
Technology Corporation under the state-run Iran Oil Corporation: 
 
"Should Iran be unable to launch development of the oil field with 
Japan by Sept. 15, we will launch efforts for joint development with 
domestic firms, China, or Russia." 
 
5) Mitsutoyo also exported nine sets of precision machines to Iran; 
Business transaction since 1980s; Importers include military 
organization 
 
TOKYO SHIMBUN (Top Play) (Excerpts) 
August 26, 2006 
 
The Public Safety Bureau of the Tokyo Metropolitan Police Department 
has investigated Mitsutoyo, a leading precision measuring instrument 
manufacturer based in Kawasaki City, over alleged illegal exports to 
Iran. As a result, it was found yesterday that the company has 
exported a total of nine precision machines to that nation since the 
1980s. Some invoices carried the names of Iran's military 
organizations. The investigation has thus unveiled that the company 
has engaged in trade with Iran, a country suspected of nuclear 
weapons development, for more than 20 years. Among the five who were 
arrested, President Kazusaku Tezuka (67) and Managing Director 
Hideyo Chikugo (66) are reportedly denying the allegations, while 
three others, such as Vice Chairman Norio Takatsuji and three former 
employees, have totally admitted the charges. 
 
According to the investigation, Mitsutoyo exported precision 
machines, including three-dimensional measuring instruments to Iran 
- two in the 1980s, six in the 1990s and one in 2002. The exports of 
precision measuring instruments and related software in 1997 and 
2002 are suspected of being unlicensed export cases, a violation of 
the Foreign Exchange and Foreign Trade Control Law. 
 
Some business transactions between Mitsutoyo and Iran were carried 
out through an Iranian trading company located in Shibuya Ward, 
Tokyo, whose premise the Public Safety Bureau searched on the 25th. 
The police seized some invoices that carried the names of Iranian 
 
TOKYO 00004895  004 OF 010 
 
 
military organizations, such as the "Revolution Defense Force." 
 
The Public Safety Bureau suspects that the trading company might 
have been a front company responsible for procuring goods for Iran's 
military organizations. 
 
6) Government aims to apply pressure on North Korea through friendly 
countries over six-party talks, abduction issue 
 
NIHON KEIZAI (Page 2) (Full) 
August 28, 2006 
 
In an effort to break the impasse in its stalled relations with 
North Korea, the government will ask countries that have established 
friendly ties with Pyongyang to increase mutual visits among their 
senior government officials and provide information held by their 
embassies in the North. By indirectly applying pressure on North 
Korea through this, the government aims to bring about the 
resumption of the six-party talks, as well as a settlement to the 
abduction issue. 
 
According to the Foreign Ministry, 155 countries have diplomatic 
ties with North Korea, and 42 countries of them have set up their 
diplomatic missions in Pyongyang, including 20 that also host North 
Korea's missions. 
 
Of the 42 countries, Prime Minister Junichiro Koizumi visited Sweden 
in May. In August, he went to Mongolia on the 10th and will tour 
Uzbekistan on the 29th. Foreign Minister Taro Aso also visited 
Bangladesh in July and asked its government to urge the North to 
suspend its missile launches. 
 
In August, Defense Agency Director General Fukushiro Nukaga visited 
Indonesia, and State Minister in charge of Science and Technology 
Iwao Matsuda and Land, Infrastructure and Transport Minister Kazuo 
Ktagawa visited Libya and Slovakia, respectively. Matsuda is the 
first Japanese cabinet minister to have visited Libya. He affirmed 
with leader Moamer Kadhafi that Japan and Libya would cooperate in 
dealing with North Korea. 
 
From overseas, Japan received the foreign ministers of Poland and 
Egypt, the vice prime minister from Cambodia and others. In October, 
the Bulgarian vice prime minister will come to Japan. 
 
The Foreign Ministry has picked countries to which cabinet minister 
will go based on the degree of their diplomatic relations with North 
Korea. 
 
7) South Korea set to resume research activities near Takeshima in 
October 
 
TOKYO SHIMBUN (Page 1) (Excerpts) 
August 28, 2006 
 
It was learned yesterday that the South Korean government plans to 
carry out research activities in waters near Japan again in 
mid-October. The area covered by the survey plan is expected to 
include the Japan-claimed exclusive economic zone (EEZ) around the 
Takeshima islets and its territorial waters, as Seoul did in July. 
The Takeshima islets (Dokdo in South Korea) are currently under 
South Korean control. 
 
 
TOKYO 00004895  005 OF 010 
 
 
The Japanese government has already gained information about the 
planned research activities. Tokyo and Seoul are coming closer to 
starting negotiations on a plan to introduce a prior notification 
system as part of efforts to avid a dispute over maritime surveys in 
the water area. Given this, the government is concerned about the 
recent moves by South Korea. Upon listening to detailed explanations 
from Seoul at the Japan-South Korea EEZ demarcation talks slated for 
early September in Seoul, the government intends to ask the Seoul to 
exercise self-restraint. 
 
Despite Japan's repeated protests, however, South Korea implemented 
research activities in July to study the concentration of slat 
contents in sea current in the Japan-claimed EEZ and its territorial 
waters. 
 
It therefore is uncertain if Seoul will accept Japan's request. 
Should South Korea forcibly go through with the planned survey, 
Japan will consider the possibility of undertaking its own marine 
research activities in protest. 
 
8) Prime Minister Koizumi to visit Central Asia today; Japanese 
still remembered in Uzbekistan; Hard-working detainees built 
infrastructure 
 
SANKEI (Page 2) (Excerpts) 
August 28, 2006 
 
Prime Minister Junichiro Koizumi will visit Kazakhstan and 
Uzbekistan in Central Asia starting today. During the trip, Koizumi 
will hear the story of Japanese in Uzbekistan, which was once a part 
of the USSR. Uzbeks are still grateful for the assets Japanese 
detainees left after World War II. 
 
Among the countries Koizumi will visit this time, the spotlight 
tends to be focused on Kazakhstan, as it is drawing close attention 
from the international community for its rich energy resources. 
However, there is a major reason that made Koizumi to decide to 
visit Uzbekistan. 
 
Approximately 25,000 Japanese were sent to Uzbekistan from Siberia 
from 1945 through 1946 after the end of World War II. These people 
were housed in 13 camps and forced to labor. Nevertheless, Japanese 
detainees left a favorable image on the people of Uzbekistan. 
Pro-Japanese sentiment is strong in Central Asia, especially in 
Uzbekistan. 
 
9) Antiterrorism law to be extended by another year 
 
ASAHI (Page 4) (Abridged slightly) 
August 26, 2006 
 
The government decided on Aug. 25 to extend the Antiterrorism 
Special Measures Law, scheduled to expire in November. Coordination 
is underway to extend it for one year until November 2007. The 
government aims to get a bill to extend the law approved in the next 
special Diet session to be convened after the Sept. 20 LDP 
presidential election. The final decision on whether to extend the 
law will be made by the next prime minister. Chief Cabinet Secretary 
Shinzo Abe, who is eager to enhance the Japan-US alliance and holds 
a commanding lead in the LDP presidential race, has decided to 
extend the law before launching his administration. 
 
 
TOKYO 00004895  006 OF 010 
 
 
The law provides legal grounds for the Self-Defense Forces to extend 
rear-area support to the multinational forces in Afghanistan, such 
as US and British vessels. In the wake of 9/11, the law took effect 
in November 2001 as temporary legislation good for two years. It was 
extended for two years in 2003. The law, which was extended for only 
one year last year due to Koizumi's reluctance, is scheduled to 
expire on Nov. 1. 
 
The government has decided to extend the law once again, concluding 
that the SDF's refueling mission in the Indian Ocean should be 
continued for the sake of the Japan-US alliance, now that the SDF's 
mission in Iraq, Japan's major assistance for the US, ended in 
July. 
 
10) YOMIURI (Page 2) (Abridged) 
August 26, 2006 
 
US Forces Japan (USFJ) will participate in a disaster drill to be 
conducted by the Tokyo metropolitan government on Sept. 1, Disaster 
Preparedness Day, officials said yesterday. A US naval ship will 
carry metropolitan government personnel as earthquake-affected 
commuters to Kanagawa Prefecture. In addition, US military 
helicopters will also deliver relief goods. USFJ cooperated in 
relief operations for those affected in the Hanshin Earthquake of 
the Osaka-Kobe area and the Chuetsu Earthquake of Niigata 
Prefecture. However, this is the first time for USFJ to send troops 
and naval vessels to participate in a local government's drill. 
 
The disaster drill will be conducted in anticipation of a strong 
earthquake that hits Tokyo and its metropolitan environs. It will be 
conducted by 8 prefectural and municipal governments in the 
metropolitan area, including Tokyo, with Prime Minister Koizumi 
participating. USFJ will participate in the drill at the request of 
Tokyo Governor Shintaro Ishihara. "They have bases nearby, so it 
would be better to (ask them to) use their capabilities," Ishihara 
said. 
 
The Tokyo metropolitan government presumes that it would be 
difficult for up to approximately five million people, including 
tourists, to get home in the event a major earthquake hits Tokyo and 
its metropolitan environs. The metropolitan government plans to lift 
elderly persons and children to prefectures near Tokyo through sea 
or river routes in case transportation facilities are paralyzed or 
arterial roads are cut off. The drill this time will also employ 
ships for river and sea transportation. 
 
USFJ will send a naval vessel to the port of Tokyo from its Yokosuka 
base in the city of Yokosuka, Kanagawa Prefecture, to sealift 30 
metropolitan government personnel to Yokosuka. In addition, two US 
military helicopters deployed to the Yokota base, located in the 
city of Fussa and other municipalities in the metropolis of Tokyo, 
will airlift medical supplies and other relief goods to the training 
site in Tokyo's Adachi Ward and to a heliport at USFJ's Akasaka 
Press Center in Tokyo's Minato Ward. 
 
"The fire department authorities and the Self-Defense Forces alone 
cannot respond to the Tokyo earthquake, so we'd like to ask USFJ for 
rear support," a metropolitan government official said. 
 
11) Constitution should be reinterpreted for Japan's participation 
in collective self-defense: Aso 
 
 
TOKYO 00004895  007 OF 010 
 
 
YOMIURI (Page 2) (Abridged) 
August 28, 2006 
 
Foreign Minister Aso, appearing on an NHK news program aired 
yesterday, suggested the need for the government to reinterpret the 
Constitution so Japan can exercise the right of collective 
self-defense. "Japan has the right but cannot use it-that's the 
government's interpretation (of the Constitution)," Aso said. "So," 
Aso added, "it would be more realistic to change such an 
interpretation." 
 
Aso, who has now announced his candidacy for the ruling Liberal 
Democratic Party's forthcoming presidential election, is an advocate 
of amending the Constitution. However, Aso took the position that 
the nation should discuss the right of collective self-defense, 
aside from constitutional revision, in order to make it possible for 
Japan to exercise the right at an early date. 
 
Among other LDP presidential candidates, Finance Minister Tanigaki, 
basing his assertion on the government's constitutional 
interpretation for years, has been insisting on the necessity of 
going through constitutional revision in order to make it possible 
for Japan to participate in collective self-defense. 
 
12) Abe eager to establish permanent SDF deployment law 
 
YOMIURI (Page 1) (Excerpts) 
August 26, 2006 
 
Chief Cabinet Secretary Shinzo Abe delivered a speech in a seminar 
on the SDF Iraq mission's for reconstruction support, held at a 
Tokyo hotel on Aug. 25 by the nonprofit organization US-Japan Link. 
In the speech, Abe called for the establishment of a permanent law 
to enable the overseas deployment of the SDF, saying: 
 
"It's necessary to have a permanent law for (the SDF's overseas 
deployment). By establishing such legislation, we could make a rapid 
response (to an emergency). The Liberal Democratic Party is having 
discussion on the issue, and the government needs to work toward 
creating such legislation." 
 
Defense Agency Director-General Fukushiro Nukaga also noted in the 
same seminar: 
 
"It's desirable to establish a general (permanent) law so that the 
government could promptly respond at its own decision while seeking 
approval from the Diet." 
 
Regarding the SDF's overseas deployment, Japan has such legislations 
as the UN Peacekeeping Activities Cooperation Law allowing SDF 
personnel to be engaged in UN peacekeeping activates, the 
Antiterrorism Special Measures Law, a time-limited legislation, and 
the Iraq Humanitarian Reconstruction Support Special Measures Law. 
Prime Minister Junichiro Koizumi has also expressed a similar view, 
saying that the establishment of a permanent law, rather than a 
special law or a law of specified duration, should be considered in 
the future. 
 
13) Abe advocates strategic dialogue among Japan, US, Australia, and 
India 
 
MAINICHI (Page 1) (Full) 
 
TOKYO 00004895  008 OF 010 
 
 
August 27, 2006 
 
The Liberal Democratic Party's (LDP) Hokuriku and Shinetsu regional 
chapters held a convention on Aug. 26 in Toyama City, inviting three 
LDP presidential candidates. At the convention, Chief Cabinet 
Secretary Shinzo Abe advocated a "strategic dialogue" among the 
 
SIPDIS 
leaders and foreign ministers of Japan, the United States, 
Australia, and India. He stated, "I think it would be good to create 
a framework for dialogue to spread our sense of values, along with 
India and other counties." He is expected to include this idea in 
his policy platform, which he will announce on Sept. 1. 
 
Japan, the US, and Australia have continued discussions on security 
issues in the Asia-Pacific region and the world. Abe is looking to 
check China by including India in the "strategic dialogue." 
 
14) Poll of LDP local execs: 66% urge debate on how to correct 
social divide 
 
TOKYO SHIMBUN (Page 1) (Abridged) 
August 27, 2006 
 
With the ruling Liberal Democratic Party's presidential election 
ahead, Kyodo News Service polled the party's local secretaries 
general, including their deputies, in the nation's 47 prefectures. 
In the survey, 31 persons or 66.0% picked the nation's social divide 
between Tokyo and local areas for correction when they were asked 
what they would like to be debated in the election. In addition, 
they were also asked who they thought would be appropriate to become 
their party's next president (as successor to Prime Minister 
Junichiro Koizumi), and 29 persons gave specific names. Among them, 
21 persons named Chief Cabinet Secretary Shinzo Abe. This shows that 
Abe is leading all other candidates among the LDP's local executives 
as well. They also voiced concerns about the race led by Abe, ahead 
of next year's simultaneous local elections and House of Councillors 
election. 
 
Meanwhile, five persons supported Foreign Minister Taro Aso and two 
persons recommended Finance Minister Sadakazu Tanigaki. The LDP's 
Kanagawa prefectural chapter executive was the only one to back up 
Senior Vice Justice Minister Taro Kono, a lawmaker elected from 
Kanagawa Prefecture. There were 18 persons who gave no answer or 
picked two or more candidates. 
 
In the survey, they were also asked if they thought the next prime 
minister should pay homage at Yasukuni Shrine. In response, 14 
persons answered "yes," with 9 persons saying "no." 
 
15) LDP's Komura faction to back Abe in presidential election; Five 
of 9 factions support Abe 
 
ASAHI (Page 2) (Excerpts) 
August 28, 2006 
 
Factions in the Liberal Democratic Party (LDP) have decided on whom 
they will back in the September party leadership race. With the 
Komura faction's decision to support Chief Cabinet Secretary Shinzo 
Abe, five of the nine LDP factions intend to back Abe. Adding new 
House of Representatives members, who are called as "Koizumi's 
children" to the number of five faction members, the number of LDP 
members supporting Abe will make up more than a majority of the LDP 
Diet members. Abe will certainly dominate his opponents since many 
 
TOKYO 00004895  009 OF 010 
 
 
in the Tsushima and Yamasaki factions, which will allow their 
members to cast their votes independently, favor Abe. 
 
The Komura faction held yesterday a study session in a Karuizawa 
hotel, Nagano prefecture, in which the faction decided to support 
Abe. Faction head Masahiko Komura, former foreign minister, told 
reporters, "We considered who would be able to implement our 
policies." He indicated that Abe's dominance in the race was a major 
reason for his faction's decision. 
 
16) Special Diet session to be convened on Sept. 22 to pave way for 
Abe administration by avoiding confusion over personnel 
appointments 
 
ASAHI (Page 4) (Excerpts) 
August 26, 2006 
 
A decision to convene a special Diet session on Sept. 22 shortly 
after the Sept. 20 LDP presidential election reflects the strong 
wishes of outgoing Prime Minister Koizumi. Assuming that Chief 
Cabinet Secretary Shinzo Abe will win the LDP presidency, Koizumi's 
aim apparently is to pave the way for an "Abe setup" in anticipation 
of a showdown with the Ozawa-led Minshuto (Democratic Party of 
Japan) by avoiding as much confusion as possible in determining a 
new lineup of LDP executives and forming a new cabinet. 
 
Koizumi told reporters in Kyoto on Aug. 25: "The new LDP president 
will be determined on Sept. 20, so I think the next (special) Diet 
should be convened as soon as possible. Once the new LDP president 
is picked, the focus will shift to forming a new cabinet, which will 
be done by the person named prime minister in the Diet." 
 
Given Abe's predominance in the LDP presidential race, the Kantei 
side, including Koizumi and Abe, has begun studying a timetable 
after the LDP presidential election. Koizumi and Abe compared their 
schedules on Aug. 24. 
 
The government and the ruling coalition considered a plan to convene 
the Diet on Sept. 29. A government official explained, "The 
timetable was moved up because it's better not to leave a gap 
between the LDP presidential election and determining the new LDP 
leadership and new cabinet." 
 
17) Minshuto active in boosting election cooperation with SDP and 
LDP rebels 
 
MAINICHI (Page 2) (Excerpts) 
August 28, 2006 
 
The main opposition party Minshuto (Democratic Party of Japan) is 
now actively working on strengthening cooperation with the Social 
Democratic Party (SDP) and former Liberal Democratic Party (LDP) 
rebels who bolted against the LDP's decision to privatize postal 
services in single-seat constituencies up for grabs in next summer's 
House of Councillors election. President Ichiro Ozawa played golf on 
Aug. 22 with the former postal rebels. On Aug. 23, Secretary General 
Yukio Hatoyama held talks with SDP Secretary General Seiji Mataichi 
and the two agreed that their parties would cooperate in the Upper 
House election, by jointly recommending candidates belonging to no 
party in single-seat constituencies. The reason is that Minshuto is 
concerned about a delay in selecting its own candidates. Since there 
are mixed motives among those involved, it will be difficult for the 
 
TOKYO 00004895  010 OF 010 
 
 
two parties to form united front. 
 
People's New Party head Tamisuke Watanuki, former trade minister 
Mitsuo Horiuchi, and former METI minister Takeo Hiranuma, who played 
golf with Ozawa, will all run in single-seat constituencies in 
Toyama, Yamanashi and Okayama prefectures. Ozawa told Watanuki 
during luncheon: "I'm counting on your cooperation in Fukui. We wish 
to field a unified candidate in Ishikawa." 
 
18) Scrapping of auto tariffs put on hold in FTA with Philippines: 
Renegotiations on compact cars in 2009 
 
NIHON KEIZAI (Page 3) (Excerpts) 
August 28, 2006 
 
Japan and the Philippines are aiming at signing a final agreement on 
an economic partnership agreement (EPA), including a free trade 
agreement (FTA). However, it was found that the unveiled specifics 
of the final agreement have backed away from the original agreement 
in principle on the total abolition of auto tariffs imposed by the 
Philippines, the focus of the FTA talks. Tariffs on compact cars 
will instead be kept intact until further negotiations in 2009. 
Tariffs on large vehicles will be abolished only in stages. The 
outlook is that the leaders of the two countries will sign the 
agreement as early as September and that the accord will take effect 
by the end of next year. 
 
Japan and the Philippines agreed in principle on the signing of an 
EPA in November 2004. They decided to eliminate tariffs on more than 
90% of trade items. In the auto sector, they agreed to immediately 
scrap tariffs on vehicles with a displacement of over 3,000 cc and 
those on vehicles of less than 3,000 cc 2010. In the FTA that Japan 
and Thailand agreed in principle on in September 2005, though, 
Thailand kept its auto tariffs, which brought a sharp reaction from 
the Philippines, leading to renegotiation on this point. 
 
In this agreement, Japan made concessions to allow tariffs on 
vehicles of more than 3,000 cc to be eliminated in stages by 2010 
and for tariffs on compact cars to be reduced from 30% to 20% with 
further negotiations in 2009. 
 
DONOVAN