VZCZCXRO4549
PP RUEHFK RUEHKSO RUEHNAG RUEHNH
DE RUEHKO #0474/01 0320849
ZNR UUUUU ZZH
P 010849Z FEB 07
FM AMEMBASSY TOKYO
TO RUEHC/SECSTATE WASHDC PRIORITY 0278
INFO RUEKJCS/SECDEF WASHDC PRIORITY
RHEHAAA/THE WHITE HOUSE WASHINGTON DC PRIORITY
RUEAWJA/USDOJ WASHDC PRIORITY
RULSDMK/USDOT WASHDC PRIORITY
RUCPDOC/USDOC WASHDC PRIORITY
RUEAIIA/CIA WASHDC PRIORITY
RUEKJCS/JOINT STAFF WASHDC//J5//
RHHMUNA/HQ USPACOM HONOLULU HI
RHHMHBA/COMPACFLT PEARL HARBOR HI
RHMFIUU/HQ PACAF HICKAM AFB HI//CC/PA//
RHMFIUU/COMUSJAPAN YOKOTA AB JA//J5/JO21//
RUYNAAC/COMNAVFORJAPAN YOKOSUKA JA
RUAYJAA/COMPATWING ONE KAMI SEYA JA
RUEHNH/AMCONSUL NAHA 2200
RUEHFK/AMCONSUL FUKUOKA 9735
RUEHOK/AMCONSUL OSAKA KOBE 3204
RUEHNAG/AMCONSUL NAGOYA 9182
RUEHKSO/AMCONSUL SAPPORO 0737
RUEHBJ/AMEMBASSY BEIJING 5667
RUEHUL/AMEMBASSY SEOUL 1752
RUCNDT/USMISSION USUN NEW YORK 3156

UNCLAS SECTION 01 OF 07 TOKYO 000474 
 
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:  DAILY SUMMARY OF JAPANESE PRESS 02/01/07 
 
 
INDEX: 
(1) Responsibility of Kyuma for remarks critical of US Iraq policy; 
Person who undermines confidence in Japan unqualified to be defense 
minister 
 
(2) Merger examination with global share in mind: FTC sets new 
guidelines with focus on degree of oligopoly: Likely to encourage 
corporate reorganization 
 
(3) Repercussions of Yanagisawa's comment referring to women as 
"baby-bearing machines"; Can he escape from attack? 
 
(4) Abe administration experiences three uproars involving cabinet 
ministers in only four months 
 
ARTICLES: 
(1) Responsibility of Kyuma for remarks critical of US Iraq policy; 
Person who undermines confidence in Japan unqualified to be defense 
minister 
 
Commentary by Naoyuki Agawa, professor at Keio University 
 
SANKEI (Page 11) (Excerpts) 
February 1, 2007 
 
Defense Minister Fumio Kyuma said in a press conference at the Japan 
National Press Club on Jan. 24: "Although President Bush decided (to 
go to war) probably because he suspected Iraq might have nuclear 
weapons, I think his decision was a mistake." Kyuma also attributed 
the current confused situation in Iraq to the lack of the US 
government's follow-up measures. 
 
Even in the US, many people believe that the Bush administration 
fabricated nonexistent weapons of mass destruction and easily 
accepted less credible information. The ambiguous decision-making 
process regarding the Iraq war is behind the current criticism of 
the Bush administration's Iraq policy. 
 
Many Japanese people who hate the use of armed force have harbored a 
vague anxiety about the Iraq war. Kyuma's statement represented 
their feelings, in a sense. 
 
Kyuma, though, is not an academic or a commentator. The 2006 Defense 
White Paper specified the Japan-US security arrangement as "the 
bedrock of Japan's national defense policy." Criticism of the US by 
the top officer responsible for the nation's defense policy has a 
weighty meaning. 
 
Of course, Japan does not support all US policies. In diplomatic 
negotiations, Japan and the US often differ with each other. 
However, once the US makes a decision on a key policy that does not 
directly involve Japan, it is a matter of courtesy for Japan, as its 
ally, to support the decision. That is why the Koizumi cabinet, 
though it had frequently urged the US to be prudent until it went to 
war, supported its ally's military option in Iraq in the end. 
 
Defense Minister Kyuma's statement breaks the rules of courtesy. Any 
individual is free to have doubts about the Iraq war and think the 
war was improper. But it should be impermissible for the defense 
minister to publicly criticize the war in his official capacity. 
 
When Prime Minister Koizumi was under heavy fire from China and 
South Korea for his visits to Yasukuni Shrine, the Bush 
 
TOKYO 00000474  002 OF 007 
 
 
administration issued no critical comments. Some US government 
officials reportedly viewed the prime minister's shrine visits 
unfavorably, but such negative views did not come to the fore. 
 
If Defense Secretary Rumsfeld had said, "Though this is my personal 
view, Prime Minister Koizumi should refrain from paying homage at 
Yasukuni Shrine," what response would Japan have made? I think 
Japan-US relations would have been seriously damaged. 
 
Kyuma made a grave remark that could undermine the current state of 
the Japan-US alliance relationship, when the Bush administration is 
having hard time in searching for a future Iraq policy. I wonder how 
American soldiers and their families received the Kyuma remark. Will 
even the Democratic Party, which is opposed to the Bush 
administration's Iraq policy, trust a defense minister who makes 
careless statements? 
 
According to press reports, Kyuma also made a remark criticizing the 
response of the US to the issue of the relocation of US forces' 
Futenma Air Station. He said that the US does not listen to 
Okinawa. 
 
Last December, Kyuma said in the Diet that Japan's support for the 
United States' military option in Iraq was based on Prime Minister 
Koizumi's personal view. Later, however, he withdrew this remark. 
Asked if he supported the Iraq war on that occasion, Kyuma replied: 
"I do not have such feelings," adding, "I thought at that time that 
the US decision on the Iraq war was a mistake. In my personal view, 
I still think so." 
 
Kyuma made a similar statement again, probably based on his firm 
view about the Iraq war as a politician. In such a case, why did he 
receive the offer for the post of defense minister in the cabinet, 
which supports the Bush administration's Iraq policy? If he would 
like to continue to make this kind of remarks, I recommend he should 
step down from the cabinet. 
 
(2) Merger examination with global share in mind: FTC sets new 
guidelines with focus on degree of oligopoly: Likely to encourage 
corporate reorganization 
 
NIHON KEIZAI (Page 3) (Abridged) 
February 1, 2007 
 
The Fair Trade Commission (FTC) on Jan. 31 revealed a draft plan to 
revise guidelines for approving corporate mergers. The new 
guidelines include an eased standard for screening planned mergers, 
prioritizing an index gauging the degree of oligopoly of an industry 
as a whole (Herfindahl-Hirschman Index = HHI) instead of the share 
of a company created as a result of the merger on the domestic 
market. Mergers of companies in an industry that is exposed to 
international cooperation will be approved even if a domestic share 
of a company created as a result of a merger becomes outstanding, by 
taking into account the HHI of the global market. 
 
The FTC yesterday presented new draft guidelines at a Liberal 
Democratic Party (LDP) committee meeting. The draft was approved and 
will be adopted as early as April. 
 
The present guidelines set strict conditions, such as that mergers 
can only be approved with almost no screening if a merged company's 
domestic market share is 25 percent or lower. Under the new 
guidelines, which abandon the use of the so-called market share 
 
TOKYO 00000474  003 OF 007 
 
 
standard, a decision will be made, based on the HHI. 
 
Products with high internationality 
 
In addition, depending on types of industries, overseas markets will 
be taken into consideration in determining HHI. Currently HHI is 
worked out, based on the domestic market, in principle. For products 
that are exposed to international competition, the global market is 
taken into consideration in determining the degree of oligopoly. If 
a product is competing in the Asian region, then the HHI of that 
product's industry is worked out, based on the Asian market. 
 
The FTC will judge whether the industry in question has 
internationality or not. Products that can be easily traded in many 
countries due to low transportation cost and low tariff barriers or 
products with high substitutability can be regarded as having an 
international nature. Semi-conductors and liquid crystal will likely 
be regarded as products traded on the global market. Steel will be 
regarded as products on the Asian market. 
 
Then, it will be determined that in an industry where the degree of 
oligopoly of 5-10 higher-ranked companies is low, there will be no 
problem for higher-ranked companies to amalgamate. Even in an 
industry where high degree of oligopoly exists, a company with a low 
share can be merged with almost no examination. 
 
Stricter screening will be made for a merger of fairly large company 
in an industry with a high HHI. However, the market share standard 
will also be applied under new guidelines as a standard for 
determining whether to apply simplified examination to planned 
mergers that are regarded as posing few problems. The condition for 
approval in such a case is that a share of a company resulting from 
a merger is 35 percent or lower. Overseas markets will be taken into 
account in applying this standard. Conditions for determining the 
HHI itself will also be eased. 
 
If draft revisions were applied to 178 mergers over the past five 
years, cases that do not require screening would increase from three 
to 54. If cases that require only simplified examination were 
included, the number would expand from 48 to 84. 
 
For instance, in the case of the domestic liquid crystal TV market, 
Sharp, the largest company in the industry, commands a 47 percent 
share. The HHI of five higher-ranked companies comes to 2900. It 
would therefore be difficult to approve Sharp's merger with another 
company. However, if liquid crystal televisions are recognized as an 
international commodity, then, it would be easier to approve its 
merger, because Sharp's share on the global market is 20 percent and 
the HHI of five higher-ranked companies in the industry comes down 
to 929. 
 
Technical innovation to be taken into account 
 
The new guidelines will take improvement of productivity and 
technical innovation as a result of a merger into consideration. If 
planned mergers lead to consumer benefits with the mergers promoting 
large-scale R&D contributing to a drop in the prices of products or 
if mergers would bring about new markets due to development of new 
products, then applications for such mergers will be granted even if 
the share and HHI of a company created as a result of the merger 
exceed the set ceiling. 
 
However, a proposal made by the Ministry of Economy, Trade and 
 
TOKYO 00000474  004 OF 007 
 
 
Industry (METI) for raising the share standard from 35 percent or 
lower to 50 percent or lower has been dropped. The adoption of the 
new guidelines is not a major deregulation for companies based on 
the domestic market. Some take the view that overseas markets have 
already been taken into account for some of international 
commodities. As such, to what extent corporate reorganization will 
advance under the new guidelines is unclear. 
 
Industrial circles give certain scores to new guidelines as 
expanding range of options 
 
Industrial circles have generally given high scores to the new 
guidelines with Takehiro Fukuda, general director of the treasury 
section of Elpida Memory, saying, "We appreciate the expanded range 
of options for corporate reorganization." Corporate M&As likely will 
pick up further speed, spurred by the removal of a ban on triangular 
mergers, which will make it easier for foreign companies to take 
over Japanese companies. 
 
The yardstick for gauging competitiveness in the chip industry is 
not a domestic share but a global share. The combined share of 
Renaissance Technology and NEC Electronics on the microcomputer 
market tops 60 percent, but it comes down to only about 30 PERCENT 
on the global market. Amid the falling prices and growing 
international competition, there is the possibility of the new 
guidelines spurring the reorganization of the domestic 
semi-conductor industry. 
 
The beer industry pins hopes on the adoption of the new guidelines 
with Senior Managing Director Kazuhiro Sato of Kirin Brewery noting, 
"The revised guidelines will lead to prompt management decisions 
enhancing corporate competitiveness. The industry circles take the 
view that the new guidelines will encourage corporate reorganization 
and provide companies with an opportunity for looking into an even 
more efficient management environment." 
 
Global reorganization is under way in the steel industry. Chances 
are that the Asian market as a whole instead of the domestic market 
will be taken into account in judging whether to approve planned 
mergers in the steel industry. 
 
An executive of a leading steel company said, "We welcome the FTC 
judges whether to approve a merger application, based on a larger 
market." However, Japan imports only a small amount of hot coils 
used for a wide range of purposes, such as autos. Shares of Japanese 
companies in the Asian market are also high. As such, the new 
guidelines will not immediately spark reorganization in the steel 
industry. 
 
In the meantime, the impact of the new guidelines on areas that are 
not exposed to international competition is limited. A mood for 
seeking corporate reorganization is mounting in the paper industry. 
However, since the industry is based on the domestic market, its 
response is no more than that they want to pin down the details of 
the new guidelines. 
 
M&As between Japanese companies last year marked a record high of 
2,760, up 1 percent from the preceding year, or 15 trillion yen in 
monetary terms, a jump of 30 percent. The application of the new 
guidelines and the lifting of the ban on triangular mergers are 
bound to raise a corporate desire for reorganization. 
 
(3) Repercussions of Yanagisawa's comment referring to women as 
 
TOKYO 00000474  005 OF 007 
 
 
"baby-bearing machines"; Can he escape from attack? 
 
TOKYO SHIMBUN (Page 24) (Full) 
January 31, 2007 
 
Health, Labor and Welfare Minister Hakuo Yanagisawa apologized 
yesterday for his calling women "baby-making machines." However, 
repercussions from his discriminatory remark continue to spread, as 
seen in one citizens' group visiting the Health, Labor and Welfare 
Ministry to lodge a protest. A look at the past shows there were too 
many discriminatory remarks by politicians to mention. Will 
Yanagisawa be able to escape from the barrage of criticism? 
 
Yanagisawa stated in a speech delivered on Jan. 27 in Matsue City: 
 
"The number of women aged 15 to 50 is fixed. Since the number of 
baby-bearing machines and devices are fixed, I think all we can ask 
is for each of them to do her best." 
 
On Jan. 29 female Diet members belonging to the main opposition 
party Minshuto (Democratic Party of Japan), the Japanese Communist 
Party (JCP), and the Social Democratic Party (SDP), handed 
Yanagisawa a letter calling on him to resign. On Jan. 30 several 
civic organizations, including the I Women's Conference (Ai Jyosei 
Kaigi), called at the welfare ministry to submit a letter calling on 
Yanagisawa to withdraw his remarks, as well as to step down from his 
post. The letter stated: 
 
"(Yanagisawa's comment) is associated with the past population 
policy of giving birth to children to increase the nation's 
population; but he also meant that he is trying to shift the 
responsibility for the low birthrate to women. He has ignored 
women's rights." 
 
Before submitting the letter to the ministry, various civic groups 
protested outside the Health, Labor and Welfare Ministry, taking 
turns. Demonstrators wore masks of Prime Minister Shinzo Abe and 
Yanagisawa and conducted a mock performance of tossing about female 
mannequins, ordering them to: "Make babies!" 
 
Sumiko Shimizu, standing advisor to the I Women's Conference, 
pointed out: 
 
"At the United Nations International Conference on Population and 
Development (ICPD), the reproductive right of women is not 
controlled by their countries. How then he can make such remarks?" 
 
She continued: 
 
"There are many women who want to have two or more children, but the 
employment system and housing situation do not allow them to do so. 
The low birthrate is because public policy is insufficient; it is 
not because women don't want to give birth." 
 
Another civic group member lamented: 
 
"I was just recently told by a person who was urged to quit her job 
when she told the company of her pregnancy, even nine months were 
left until her contract expired. I can't believe that the health, 
labor and welfare minister, who should be cracking down on the many 
companies that lack morals, made remarks indicating that women are 
responsible for the low birthrate. Providing a promising livelihood 
for women would be one measure to counter the falling birthrate." 
 
TOKYO 00000474  006 OF 007 
 
 
 
One demonstrator said: 
 
"When the HIV-tainted-blood scandal came up, Mr. Yanagisawa made 
efforts to resolve the issue positively although he was in the 
ruling camp. We are shocked because that such a politician made such 
a remark." 
 
Politicians have repeatedly made remarks discriminating women and 
racial discrimination statements. 
 
In 1983 when (then) Prime Minister Yasuhiro Nakasone visited 
Hiroshima, he told atomic-bomb victims: "Worry often brings on 
illness." This is a notoriously discriminatory comment, which has 
been talked about by human rights organizations and other 
organizations. 
 
Regarding the intellectual level of American people, Nakasone 
remarked in 1986: "Since there are many African-Americans and people 
coming from Puerto Rico and Mexico in the US, the intellectual level 
is extremely low." 
 
(The late) Deputy Prime Minister Michio Watanabe stated in 1988: 
"Even if African-Americans are bankrupt, they say 'I don't have to 
pay, for there always is a tomorrow.' They don't care." In 2003 then 
Prime Minister Yoshiro Mori's statement is well known: "It is 
strange that women having only one child after enjoying their lives 
say that the nation should take care of them when they get old with 
taxpayers' money." 
 
With politicians repeatedly saying that there was no malicious 
intent, the media usually got tired of criticizing and the matter 
was settled. This pattern has been repeated. Yoko Sakamoto, 
representative of the civil law reform information network, said: 
 
"In the past, there were politicians who lost their posts because of 
their controversial comments. Recently politicians do not resign 
their posts. The day is gone that politician's remarks are called 
into serious question." 
Percent 
 
(4) Abe administration experiences three uproars involving cabinet 
ministers in only four months 
 
TOKYO SHIMBUN (Page 2) (Abridged) 
February 1, 2007 
 
Although only four months have passed since the Abe administration 
was inaugurated, it has experienced  a number of scandals involving 
cabinet ministers. 
 
On Jan. 27, Health, Labor and Welfare Minister Hakuo Yanagisawa made 
a remark comparing women to baby-bearing machines. This remark did 
not create a great uproar immediately, but on the morning of Jan. 
29, the contents of Yanagisawa's controversial remark were reported 
widely, upsetting the public. At almost the same time, Prime 
Minister Abe tried to calm down the situation with "a reprimand," 
and this approach only added fuel to the fire of public 
indignation. 
 
Given this, the object of their anger was directed at Yanagisawa as 
well as the prime minister. 
 
 
TOKYO 00000474  007 OF 007 
 
 
When scandals involving Masaaki Honma, who then chaired the 
government's Tax Commission; and Genichiro Sata, who was state 
minister in charge of administrative reform, came to light, the 
prime minister said, "I want you to continue to carry out your 
duty," and "I want you to give an explanation to the people." With 
such a stance, the prime minister gave the impression that he was 
being lenient to his aides. 
 
In actuality, however, the prime minister was very upset by the 
Yanagisawa remark. Abe shouted at Yanagisawa in admonishing him on 
the phone. But such anger of the prime minister has not been 
transmitted to the public. 
 
It remains to be seen whether the prime minister will protect 
Yanagisawa to the last or decide to dismiss him under pressure from 
the ruling camp and the public. 
 
If Abe protects Yanagisawa to the last, he will continue to be 
exposed to public criticism, but even if the prime minister 
dismisses Yanagisawa, he will be criticized as taking an "irresolute 
attitude." 
 
The Yanagisawa problem is the most troublesome problem among the 
scandals reported so far. Popularity rates of the Abe administration 
have dropped to 40 percent, with loss of support coming from women. 
But the Yanagisawa remark would further bring down the current 
support rates. 
 
What is worse, deliberations on the FY2007 budget bill are about to 
start. Attention is being paid to what cabinet ministers say. The 
Yanagisawa gaffe could not come at a worse time. 
 
SCHIEFFER