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RUEATRS/TREASURY DEPT WASHDC PRIORITY
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RUEAIIA/CIA WASHDC PRIORITY
RUEHIN/AIT TAIPEI PRIORITY 6141

C O N F I D E N T I A L SECTION 01 OF 07 TOKYO 005568 
 
SIPDIS 
 
SIPDIS 
 
NSC FOR D. WILDER, V. CHA 
OVP FOR M. KOEHLER 
DOD FOR R. LAWLESS 
 
E.O. 12958: DECL: 09/25/2016 
TAGS: PGOV MARR ECON EINV ETRD EFIN EAGR PREL TSPL
SENV, JA 
SUBJECT: U.S. POLICY PRIORITIES FOR ABE ADMINISTRATION 
 
 
Classified By: AMBASSADOR J. THOMAS SCHIEFFER.  REASONS 1.4 (B)(D). 
 
¶1.  (C) Summary and Table of Contents.  New Prime Minister 
Shinzo Abe has outlined an ambitious policy agenda for his 
administration, with important implications for a number of 
U.S. foreign policy goals.  This cable highlights the most 
significant initiatives from a U.S. perspective and assesses 
their prospects for success. 
 
Political Issues 
---------------- 
-- Education Law (para 5) 
-- Conspiracy Law (para 6) 
-- Constitutional Revision (para 7) 
-- U.S.-style NSC (para 8) 
 
Political-Military Issues 
------------------------- 
-- Collective Self-Defense (para 9) 
-- Upgrade JDA (para 10) 
-- Anti-Terrorism Special Measures (para 11) 
-- Permanent Dispatch Law (para 12) 
-- USFJ Realignment (para 13) 
-- Host Nation Support (para 14) 
-- Defense Spending (para 15) 
-- Arms Export Controls (para 16) 
-- Spy Satellites (para 17) 
 
Trade and Investment Issues 
--------------------------- 
-- WTO Doha Round (para 18) 
-- FTA (para 19) 
-- Privatized Japan Post (para 20) 
-- Anti-Counterfeiting Trade Agreement (para 21) 
-- IPR Case Against China (para 22) 
-- APEC (para 23) 
-- FDI (para 24) 
 
Financial Issues 
---------------- 
-- Fiscal Consolidation (para 25) 
-- Transparency in Financial Regulation (para 26) 
-- Full-File Credit Bureau System (para 27) 
-- BSE Guidelines (para 28) 
-- Biotech (para 29) 
-- Imported Rice (para 30) 
-- Food Safety (para 31) 
 
Environment, Science, Technology 
-------------------------------- 
-- India Nuclear Deal (para 32) 
-- Whaling Quotas (para 33) 
-- Bio-Security, Bio-Safety (para 34) 
 
End Summary and Table of Contents. 
 
¶2.  (SBU) In his campaign platform and speeches, new Prime 
Minister Shinzo Abe vowed to give ""high priority"" to several 
pieces of legislation held over from the last regular Diet 
session, including bills to revise the Basic Education Law 
(para 5), upgrade the Japan Defense Agency to a Ministry 
(para 10), amend the Anti-Organized Crime Law to recognize 
the crime of conspiracy (para 6), and define the procedures 
for a national referendum on constitutional revision (para 
7).  Abe will want to gain early passage of as many of these 
measures as possible to demonstrate his strong leadership and 
avoid contentious debate just prior to unified local and 
Upper House Diet elections in Spring 2007. 
 
¶3.  (SBU) The main opposition Democratic Party of Japan (DPJ) 
has promised to oppose the education and conspiracy measures, 
but may be willing to reach an agreement on the Defense 
Agency and referendum bills.  The extraordinary Diet session 
is expected to run slightly longer than usual this year -- 
from September 26 to December 15 -- reflecting the large 
number of bills under consideration.  The proposals to 
criminalize conspiracy and formalize the national referendum 
process may be held over to the regular Diet session in the 
spring. 
 
¶4.  (C) This cable is intended to assess the likelihood that 
key U.S. policy goals will be realized under an Abe 
administration, based largely on the agenda set forth in his 
campaign platform and other public statements.  We have rated 
prospects for success on the following scale:  Excellent 
(higher than 75 percent); Good (50-75 percent); and Poor 
(lower than 50 percent).  The list is not meant to be 
exhaustive. 
 
---------------- 
Political Issues 
---------------- 
 
¶5.  (C) Revise the Basic Education Law: 
 
Proposed amendments to the 1947 Basic Education Law emphasize 
traditional values, volunteerism, and patriotism as 
educational ideals, in an attempt to revitalize Japan's 
troubled education system.  Changes to compulsory education 
and the school year calendar would put students on track for 
study at U.S. institutions.  The opposition Democratic Party 
of Japan is seeking extended debate on this legislation, 
which was held over from the last Diet session over 
disagreements within the ruling LDP. 
-- Likelihood:  Good 
 
¶6.  (C) Criminalize conspiracy: 
 
Amending the Anti-Organized Crime Law would criminalize 
conspiracy, a requirement for Japan to ratify the 2000 UN 
Convention Against Transnational Organized Crime, and provide 
Japan with an additional mechanism for dealing with 
terrorism-related crimes. 
-- Likelihood:  Good 
 
¶7.  (C) Revise the Constitution: 
 
Passing a bill to stipulate procedures for a national 
referendum would provide the means for future amendment to 
Japan's Constitution.  Legislation to revise the constitution 
must be approved by a two-thirds majority of both houses of 
the Diet, then ratified by a national referendum.  Japan, 
which has never revised its post-war constitution, currently 
has no procedures for carrying out the required referendum. 
Efforts to revise the Constitution will likely encounter 
significant pushback from coalition partner Komeito, in 
addition to the opposition parties. 
-- Likelihood of constitutional revision:  Poor 
-- Likelihood of referendum bill passing:  Excellent 
 
¶8.  (C) Create a U.S.-style National Security Council: 
 
Creating a cabinet-level agency to coordinate national 
security policy from within the Office of the Prime Minister 
would strengthen and speed decision-making and intelligence 
coordination.  It would also allow for more effective 
cooperation with U.S. agencies. 
-- Likelihood:  Excellent 
 
------------------------- 
Political-Military Issues 
------------------------- 

¶9.  (C) Lift the ban on the exercise of collective 
self-defense: 
 
It may not be necessary to revise the constitution in order 
for Japan to relax the current ban on exercising the right of 
collective self-defense.  All that may be required is a 
reinterpretation of the meaning of Article 9.  It may also be 
possible for Prime Minister Abe to administratively change 
Japanese Self-Defense Force rules of engagement to allow the 
use of force to defend U.S. forces deployed in and around 
Japan. 
-- Likelihood:  Excellent 
 
¶10.  (C) Upgrade the Japan Defense Agency to a Ministry: 
 
Upgrading the Japan Defense Agency, currently an external 
organ of the Cabinet Office, will give the Defense Ministry 
authority to establish ordinances and submit proposals at 
Cabinet meetings. 
-- Likelihood:  Excellent 
 
¶11.  (C) Extend the Anti-Terrorism Special Measures Law: 
 
Revising the Anti-Terrorism Special Measures Law would allow 
the Maritime Self-Defense Forces to continue providing 
refueling support to U.S.-led coalition forces in the Indian 
Ocean beyond the current November 1 expiration date. 
Opposition parties, and even some in the LDP, question the 
appropriateness of continuing this mission during a time of 
decreasing demand and high oil prices. 
-- Likelihood:  Excellent 
 
¶12.  (C) Pass a permanent dispatch law for the Self-Defense 
Forces: 
 
Abe has called for a permanent law to dispatch Self-Defense 
Forces as needed, including for operations conducted outside 
of UN auspices, to avoid the need to pass special measures 
each time.  The law would allow Japan to respond to emergency 
calls for peacekeeping assistance in a more timely manner, 
although it would almost certainly incur criticism from 
neighbors China and Korea. 
-- Likelihood:  Good 
 
¶13.  (C) USFJ Realignment/DPRI: 
 
Provide direct budgetary outlays for construction of new U.S. 
facilities in Japan and on Guam and authorize the Japan Bank 
for International Cooperation (JBIC) to extend loans for 
projects on Guam.  Providing financial assistance to local 
governments in base-hosting communities would lessen 
opposition to base realignment. 
-- Likelihood:  Excellent 
 
¶14.  (C) Renew host nation support (HNS) at current or higher 
levels: 
 
The current Special Measures Agreement expires in 2008. 
Japan may agree to extend the current agreement for another 
three years.  In his comments to date, Abe has hinted at the 
need to reduce Japan's HNS outlays. 
-- Likelihood:  Good 
 
¶15.  (C) Increase defense spending: 
 
JDA has requested a 1.5 percent increase in its FY2007 budget 
to pay for accelerated Ballistic Missile Defense (BMD) 
projects.  The Finance Ministry will decide on the request by 
the end of December. 
-- Likelihood:  Excellent 
 
¶16.  (C) Relax arms export controls: 
 
There is growing interest within the LDP and industry to 
relax Japan's self-imposed arms export limits, both to 
enhance R&D cooperation with the United States and, 
eventually, export Japanese weapon systems to friendly 
countries. 
-- Likelihood:  Excellent 
 
¶17.  (C) Develop spy satellite technology: 
 
A bill to enable Japan to develop reconnaissance satellites 
solely for military use would allow the Self-Defense Forces 
to break out of the current legal constraints imposed by 
Japan's ratification of a 1967 UN treaty limiting use of 
space to peaceful purposes, which limit development to 
technologies more suited to civilian use. 
-- Likelihood:  Excellent 
 
--------------------------- 
Trade and Investment Issues 
--------------------------- 
 
¶18.  (C) Assistance in achieving a successful Doha Round: 
 
Japan professes to want a successful conclusion to the 
now-stalled Doha multilateral trade round, but has done 
little to date to push the process forward -- preferring 
instead to let the Europeans take the lead in blocking 
progress over efforts to open up agricultural trade. 
Japanese officials have expressed their frustration that the 
United States has been too ambitious in its market opening 
goals. 
-- Likelihood:  Poor (unless the United States and EU forge 
their own agreement first) 
 
¶19.  (C) Agreement on strengthening the bilateral economic 
relationship toward the objective of an FTA: 
 
The Abe administration may go along with a new initiative to 
strengthen the bilateral economic relationship including a 
building blocks approach toward eventual FTA negotiations, 
but high-level USG engagement will be essential.  Current GOJ 
policymakers indicate contentment with the status quo, 
distraction from Asian partners and fear of the necessary 
fight with domestic agricultural interests. 
-- Likelihood:  Good/Poor (with adequate high-level 
engagement) 
 
¶20.  (C) Create a ""level playing field"" for privatized Japan 
Post: 
 
As postal banking and insurance units begin their transition 
to privatized status in October 2007, as much as $3.2 
trillion in currently underutilized assets may become 
available to domestic and international capital markets.  In 
considering new products that will compete with the products 
of U.S. companies, the Cabinet will be weighing its needs to 
maintain employment and to ensure the entities can 
successfully raise capital against the effect of the new 
products on financial markets, including through unfair 
competition.  We believe that the PM will follow the lead of 
the expert privatization committee on this issue, but ideally 
we would like to see the Cabinet proactively endorse the 
principle that the new entities should not introduce new 
products before satisfying all the regulatory requirements 
private firms face. 
-- Likelihood of PM committing to ""equal footing"":  Good (if 
we press for it) 
-- Likelihood of specific commitment to no new products 
without level playing field:  Poor 
 
¶21.  (C) Agreement with U.S. on text for Anti-counterfeiting 
Trade Agreement before the end of 2006: 
 
A successful agreement would set a new international ""Gold 
Standard"" for IPR protection and enforcement, raising the bar 
above current treaties.  The new Abe Cabinet will likely 
support the idea in concept but may not be willing to change 
Japan's own laws to comply. 
-- Likelihood:  Good 
 
¶22.  (C) Joint action in WTO case against China on IPR: 
 
If Japan were to join the U.S. case against China at the WTO, 
it would increase pressure on China to improve its IPR 
enforcement, a key USG trade objective.  Pro-China Trade 
Minister Nikai opposed Japan joining the WTO case, and unless 
the new Trade Minister is a hard-liner on China, the new 
minister is likely to take the same position because a) 
Japanese industry opposes the WTO case and b) GOJ wants to 
give its dialogue with China on IPR more time to produce 
results. 
-- Likelihood:  Poor 
 
¶23.  (C) Support for APEC as the sole vehicle for regional 
economic integration: 
 
APEC is the forum in which the United States can exercise the 
greatest influence on regional economic integration.  Abe's 
deep-seated concern over growing Chinese influence in the 
region -- shared by much of the Japanese bureaucracy and 
business -- and APEC's incapacity to impose binding 
resolutions on its member economies will probably mean no 
substantive change in Japan's tendency to pursue the 
development of other regional fora such as ASEAN Plus 6 or 
the East Asian Summit. 
-- Likelihood:  Poor 
 
¶24.  (C) Clear support for an open FDI regime: 
 
In order to help U.S. business and to support Japan's 
economic recovery, we want both a clear statement from the 
new Cabinet that the announced goal of doubling Japan's stock 
of FDI by 2010 remains in place and, more specifically, the 
imposition of few limits on the kinds of stock eligible for 
swaps and tax deferral on capital gains in M&A activities. 
Although latent fear of foreign investment in the general 
population could cause Abe to countenance a further delay or 
unworkable regulations for M&A stock swaps, all indications 
to date are that he is generally pro-investment. 
-- Likelihood:  Excellent (for the general policy statement); 
Excellent (on stock swaps) 
 
---------------------------------- 
Macroeconomic and Financial Issues 
---------------------------------- 
 
¶25. (C) Maintenance of a course toward medium-term fiscal 
consolidation: 
 
The GOJ has set forth guidelines to reach primary fiscal 
balance by 2011, which is important for maintaining Japanese 
growth and addressing global imbalances.  Although Abe and 
others have raised the idea of further social spending (e.g., 
the so-called ""second chance"" program), the remarks have been 
couched in the framework of achieving the announced goal of 
fiscal balance. 
-- Likelihood:  Excellent 
 
¶26.  (C) Enhanced transparency in financial regulation: 
 
This is a primary issue for U.S. financial firms operating in 
Japan and for the development of Japanese financial markets 
in order to enhance the efficiency of operations and promote 
innovation.  Abe can influence progress toward this goal in 
his selection of ministers and other senior officials, but 
actual achievement of this goal will require more 
fundamental, long-term cultural changes in Japan's regulatory 
agencies. 
-- Likelihood: Poor/Good 
 
¶27.  (C) Introduction of a ""full-file"" credit bureau system: 
 
The USG and U.S. financial industry see credit bureau reform 
as an important step in financial market development that 
would enhance risk management.  No GOJ agencies have 
indicated a willingness to act on this yet, and there is 
little pressure from the political realm to push forward 
legislation on this issue. 
-- Likelihood: Poor 
 
------------------- 
Agricultural Issues 
------------------- 
 
¶28.  (C) Adoption of BSE guidelines that would eliminate the 
age restriction on U.S. beef imports: 
 
Japan at a minimum should accept a cut-off age for U.S. beef 
imports of 30 months in line with OIE standards.  This 
""litmus test"" would be a major step in bringing Japan on 
board as a responsible international player in dealing with 
quarantine issues.  Japan should also establish with us the 
Working Group (WG) as stipulated in the October 2005 US-Japan 
joint understanding by the end of 2006 with a commitment to 
reaching a conclusion by summer 2007. 
-- Likelihood:  Good 
 
¶29.  (C) Agreement to a bilateral protocol to deal with 
commingling of an unapproved biotech agent and allocates more 
resources to the biotech product approval process: 
 
This would require working with the Ministry of Heath, as 
well as members of the Food Safety Commission and Ministry of 
Agriculture, and would affect U.S. grain industries, 
particularly corn, soybeans and rice whose exports roughly 
$3.2 billion annually.  Biotech developers would also benefit 
greatly. 
-- Likelihood:  Good 
 
¶30.  (C) Achievement of market access for imported rice: 
 
Even though Japan is typically our largest export for rice, 
the vast majority of that rice sits in government warehouses 
due to a 1993 Cabinet decision that says:  ""Imported rice is 
not to disrupt the supply and demand of domestically grown 
rice."" 
-- Likelihood:  Poor 
 
¶31.  (C) Adoption of international standards and sound 
science as at the basis for food safety policy: 
 
Japan's system of official control and pest risk assessments 
needs to be rationalized in line with international norms. 
We should encourage Japan to accept the concept of 
""regionalization"" (when there is a problem, look at the 
limiting import restriction to the area(s) where the problem 
exists rather than closing off the entire country) in the 
event of a sanitary or phytosanitary problem. 
-- Likelihood:  Good 
 
------------------------------------------- 
Environment, Science, and Technology Issues 
------------------------------------------- 
 
¶32.  (C) Support for India Nuclear Deal generally, and 
specifically in the Nuclear Suppliers' Group: 
 
This is an important part of the U.S. policy to promote the 
safe development of civil nuclear power, to improve nuclear 
security and to make India a responsible nuclear player. 
-- Likelihood: Excellent 
 
¶33.  (C) Agreement to support renewal of an aboriginal 
whaling quota for Alaskan Inuits prior to the June 2007 
International Whaling Commission Meeting: 
 
This issue has important domestic political implications, as 
it is a fundamental part of Alaskan politics.  Japan will try 
to extract concessions from us in return for support for our 
quota, possibly resulting in unwanted escalation of this 
issue in Washington. 
-- Likelihood: Poor 
 
¶34.  (C) Increased cooperation with the U.S. on 
counter-terrorism issues, such as bio-security, bio-safety, 
critical infrastructure and secure trade: 
 
Since 9/11, the U.S. has made a real effort to increase 
collaboration and cooperation on these issues.  Japan has 
been reluctant to participate, believing that terrorism is 
not a serious problem in Japan. 
-- Likelihood: Good 
 
¶35.  (C) Deepen US-Japan cooperation on climate change issues 
as Japan moves to ""post-Kyoto"": 
 
Japan may be shifting its climate policy away from Kyoto. 
Should this trend develop, we should emphasize cooperation in 
the Asia Pacific Partnership, and other climate change fora 
that offer pro-growth, technology-based solutions to climate 
change. 
-- Likelihood: Poor 
SCHIEFFER